Friday, November 28, 2008

Friday Notes - Warning Signs

1:15pm Well, this week may go down as the 20th consecutive winner (marginally at +$17K with daily chip scores of +$9K, -$1K, +$10K, -$2K, +$1K), HOWEVER there are glaring warning signs heading into the final month that I need to address if I'm to finish this race the way I intended to. Two "must address" items that come to mind are (1) intensity that I'd grade a 2 on a scale of 1 to 10 (10 being the strongest), and (2) hesitancy such that for the first time all year, I'd frankly describe my trading as "playing not to lose".

Now part of this may reflect a slow Holiday trading week, exacerbated by the reduced volatility to which I'm still getting accustomed. Yet there are clearly many symptoms of something larger going on, including too many scratched trades on good entries that simply take more time to develop, losing focus during "lull before the storm" periods, "sleeping in" until well after the Europe open, trading sizes as if I had 10% the capital I do, and taking lower probability second entries rather than pouncing on the first.

It's frankly the largest struggle I've had with myself all year, including those few days of large draws (at least I was aggressive during those times ... and this type of treading water trading bothers me more than any real financial loss). Sure, the rhythm has changed and I may be trying to dance the waltz with a Mamba beat. But our job is to continually recognize the conditions and adjust accordingly, and I haven't done that very well.

I'm not even going to address the attached monthly equity chart, except to note the topping pattern at the end of November which is similar to the closes of March, April, and July.

Part of what's happening may very well be psychological, as word has apparently spread in the industry (through none of my own doing aside from openly sharing this diary) of what I'm on pace to accomplish this year. It all started a few weeks ago when my broker sent me an email congratulating me on breaking a certain unmentioned equity mark -- which I of course committed myself to not looking at until December 31 (argggghhh!). Then Larry Connors sent his congrats. Then the interview requests began, one of which I finally granted for an old friend last week.

I suppose this was one risk of doing the live blog play-by-play. And it's not the pressure, as I've been in the public eye over much of the last decade and typically thrive under increased scrutiny. Rather, it's trying to block out everything that's happened this year and simply focus on the here and now.

The point is January through November is now irrelevant, and December is the only month that matters. One month. 22 daily hands to be dealt. And then and only then will it be time to officially end the race and look at the score. And even after that, I'll still just be one trader whose only mission this year was to get closer to reaching his fullest potential as I figure out what to do in 2009.

We all know what happened to the Patriots in last year's Super Bowl. All it took was one brief loss of defensive focus and a Hail Mary helmet catch to go from 18-0 to a roadkill footnote. We also know the story of Archie Karas who went from +$40 Million to nothing due to sheer greed and a downward spiral that began so innocently, yet from which he could never recover. Most of the temporary internet bubble stock millionaires lost all of their gains, with many losing much more as they continued to double down at perceived "bargain prices" on the way down to zero. The list is long.

And so the job isn't yet done. For the final time this year, it's time to dig out of one last hole, and if I keep making the same recent mistakes, I'll find I'm throwing dirt back on myself.

We're close. But close only counts in horseshoes and hand grenades.

Monday begins the sprint to the finish.

Look for a video over the weekend.

1 comment:

Eric D said...

Don - Your post reminds me of another that I read several weeks ago, where a person had their equity curve as compares to the S&P. The comment was 'would you short this???' in reference to their equity curve. No way in hell would I short your equity curve.

Your numbers look great & appear to be very consistent. I think that it is normal for people to look for some good news in the industry when it seems like it has been bad news all year. Your case fits the bill perfectly for that.

Hope you had a great & relaxing thanksgiving. It was nice for me as my family was together & my brother who is an oil engineer in Angola was able to be here for the holiday.

Regards,
Eric