The Weekend Trader

This Week's Trade - Quite a market dance this week as the band kept alternating from Waltz to Disco to Classical and then the Mamba. Seemed just when traders got comfortable with one, the song changed. Talk about needing to stay on your toes. Then again, I suppose if this were easy, we'd have a staff of monkeys and would be lying on the beach listening to far better music.

Early Bird Gets the Worm - Repeating one of Friday's comments, it was interesting that both the ES and DAX markets did provide early pullback shorts and follow-through from Thursday's late-day range breaks ... with emphasis on early as in their overnight sessions. ES indeed dropped 12 points (1274 to 1262) off its overnight high before the moonshot. Guess the final short-term ES barf happened for the most part in the lower liquid Globex session.

Trader Imperfection - One of the things I tried to stress when I traded live for teaching or demo purposes was that I wanted people to see firsthand the significant number of imperfections in my own trading. Let's face it, name the last day -- or any day -- where you optimized entry point, contract size, and holding time on every opportunity presented. It never happens. Yet in my view, the perception of required precision was one of the greatest negative side effects resulting from the unregulated chatrooms and trade callers over the last decade. For it seemed no one ever made a mistake, everyone posted gains which were inflated and without losses, and room gurus would find excuses every time their calls didn't work. I remember one time the leader actually left the room and hid! That was a damn shame.

I'm not sure about you, but I screw up hourly. I suboptimize size, miss ideal entry spots, get distracted, lose focus, don't let winners run enough, step away from the market right before the move, misinterpret a signal, get shaken and stirred, etc. One of these mistakes happens every hour of every day for 250 days a year. Some days, I flat out suck. And I want to be extremely careful with this next comment which I feel is necessary for shock value and which I state with all due humility -- I expect to earn fully auditable seven figures this year after expenses. But forget about the number, my point is the only way I can expect to profit is to do so by accepting my humanity and constant flow of mistakes. Let's bring out all the cliches -- you don't score if you don't shoot; a .400 hitter fails 60% of the time; it's not how many times you get hit, it's how many times you get back up; yadda, yadda, yadda.

We are imperfect beings, and that ain't going to change.

Trading Coaches - Dr. Steenbarger had a great post on Tuesday discussing trading coaches and why he never went into private practice of counseling. I faced a similar dilemma when I was asked to teach years ago during which time I found teaching trading to be one of the most challenging tasks I'd ever pursued -- more so than all the hard hits I took learning my own trading -- in part because I'd take student failures to sleep with me and ask myself if they should be doing this or if I could have taught better. And yes, many shouldn't be trading, which is a highly personal decision. And while I tried to find innovative ways to "do it right" and provide seat belts for the apprentice driver, it was frankly hard to be fully at peace. Plus, the resulting energy loss zapped focus on my own trading (which was why I was asked to teach in the first place!)

I will say I'm very much at peace now. I look back at those years knowing I did the best I could, and now feel perhaps sharing personal trading diaries can do more good ... with pimples and warts in full view as always. Who knows. I suppose we'll have all the answers in the next life.

Emerging Blog Community - I'll be out of touch most of the weekend, and will catch up on any comments on Monday. Keep the dialogue coming. I do read and respond and feel we've started to build a nice little community of professional and honorable traders to support each other. It's been nice to see some old friends and make some new ones, even if it's just in writing. Perhaps some day, we'll share stories in person over a drink or two.

Enjoy the weekend.