Tuesday, January 6, 2009

Tuesday Notes - Little Conviction

4:30pm As day two comes to a close, it's clear that I'm still trying to find my 2009 sea legs and match the market's pulse ... which has been a bit of an awkward dance as the year gets underway. About the best thing I can say is that I've done a decent job of avoiding any trouble and not getting stubborn or frustrated, although if it continues for much longer, I'm going to start getting a bit peeved at my "treading water" performance. And for those who followed the 2008 journey, that's traditionally been a good thing as I seem to trade better and more focused when ticked off at myself. Simply put, another gear seems to kick in.

Like Monday, pullback entries on trend or breakout attempts (one of my favs, along with fading extreme emotion) were suspect at best, with the market quickly retreating back to -- or beyond -- initial consolidation points after any attempted run. Similarly, the VIX was pretty useless as it provided few clues and could never get its motor running. Yet like any sustained market rhythm, this too shall pass.

Which brings me to the attached "beta" scorecard (click to enlarge), which is an attempt at capturing my view of the underlying environment -- both the market's and mine -- as well as my performance in matching the environment. It's pretty self-explanatory, and includes various elements of my trading that have sometimes caused me trouble in the past, including my traditionally poor performance late in the day.

Using today as an example, I never felt strong conviction with the market's pace (more critical to me than any chart pattern), didn't feel I was able to match the market's pulse very well, yet scored high in adjusting to changing expectations on entries where the market didn't do as I positioned.

I may tweak this over time, yet think it may be a good tool to initially help me refocus on the 2009 task at hand. Keep in mind scores for the market elements of the "environment" section merely reflect my perception of preferred market patterns and rhythms, as what works for one trader may not work for another with a different style.

There will always be many ways to paint the blank canvas, as no two traders will ever trade alike.


trader said...

Isn't today's market's pace different from the holiday's? why do you think you can't match the market pace? Is it your psychological enemy preventing you from taking your weapon and firing?

Don Miller said...

Not sure trader, although firing has never been an issue with me ... I'm just firing BBs instead of bullets and have little problem with that so long as I'm not on my game, or simply not matching the market's game. The worst thing I could do right now would be to up size.

Hopefully time will help me find my rhythm.

MACDOW said...

Hi Don
Firstly I was very interested in your score card. I am using a similar paper version with a few things that I am trying to improve on and monitor. Last year I discussed an idea with a programmer in mumbai to put a simple program together (non commercial) so I could easily fill in the data and then have a weekly , monthly and finally yearly view of my statistics.A sort ofdatabase with a graphic interface. Well he hummed and hared because of my low budget but we are still looking to do it this year. I will give it away free when its working but please dont hold your breath it might take a while!

Your reply was interesting to trader. Shooting BBs. Do you mean that when the market is slow or not quite tradable you still trade but small and without conviction. I find that when its slow I stop trading because I am waiting for volumn to pick up. Then when it does I "panic" not really a panic but often miss the first trade / wave. Should I rather try your approach of keeping on trading but with much reduced size? It does make good sence.

Don Miller said...

Hi Macdow -

I try not to "recommend" any particular style as experience has shown that everyone is wired differently, and there are many ways to approach this crazy business. There are certainly common themes and concepts, but we all paint the pic differently.

In terms of my "BB" comment and my own trading, I meant when I'm not quite in rhythm with the market I tend to keep trading (trigger pulling has rarely been an issue for me), but simply lighter ... and that's the mode I'm currently in.

If the market is slow, flat, etc., I'd better not be trying to trade much, although as Merc member I do sometines provide market liquidity (buying on bid, selling on ask), but usually keep it to a minimum.

So the "BB" comment was more related to my own being in or out of sync ... keeping in mind the market itself may be very tradable and I'm simply off my game.