The Weekend Trader - Nine Lives

While I believe in rarely if ever looking back at my trading "life", I couldn't help doing a small amount of research to determine how many days I've had in recent memory that I would classify as "brain cramp" days that resulted in a significant loss. And so I decided to look back at my records since I joined the Merc in 2004 to see how may days I'd figuratively lost my lunch. Although in some cases it may have been close to literally.

The answer? Nine, which includes this past Tuesday. (btw, while Tuesday was a tiny dent %-wise, I'd still classify it as a brain cramp day as I let the distraction send me into the Maverick Top Gun nose-dive). So nine times out of the last 60 months or 1,260 trading days, I coughed up a major hairball. Whether you call it going on tilt, revenge trading, or whatever, it happened. And it hurt.

Now most know that I don't trade a "system". Frankly, I hate systems as they often preclude one from using experience and judgement. Plus, there's no room for personal creativity. I was reminded of this the other day when I was watching the current Poker After Dark re-runs where they have all the math guys playing a tourney against each other. It was like watching six robots play against each other with no creativity, and the game pace was atrocious.

So I instead prefer personal judgment. As I mentioned in last month's interview with Tim Bourquin (of which a free online transcript is now available), I consider myself a discretionary trader who bases his decisions largely, but not solely on technical analysis. Simply put, as my career has evolved, I've learned to simply trust my judgment and interpretation of current market action.

Yet since that judgment is of course not always correct, perhaps I am trading a system. A system based on probability that my judgment is right. A system that expects and allows for the times when I'm not on my game or my decisions are skewed. A system that provides for times when I don't react quickly enough, or worsen an initial poor decision.

Based on comments to the blog, many new seem fascinated by the 2008 Bamboo year and the early 2009 winning streak. And to some, it may seem incredibly easy and pain-free. Well, here's one of the main reasons I chose to go public last year with my trading diary: It's not. As I've said ad infinitum, I make suboptimal decisions every hour of every day. And from time to time -- nine over the last five years to be exact -- my "system" broke in a major way. Nine times, I've been socked in the gut in ways that challenged my very soul. And yes, earlier in my career I was in tears a few times and all but quit.

I find it interesting that the final 2008 "Night to Dance" post is running #2 in terms of ongoing visits even to this day. The #1 accessed archive post? The October 2008 personal meltdown. And I think that is a very good thing, as it tells me that onlookers are indeed balancing the good with the bad, perhaps placing even more emphasis on the bad. And if that is indeed true, then the blog may be accomplishing its intended purpose of trying to help lift the veil of an industry that is hyped and marketed to death. btw, I suggest you also read the subsequent posts of that October week to put everything in its proper perspective as the week ironically ended with a gain. You have to pick yourself up ... no matter how much it hurts.

Simply put, you can't experience the joy of the dance without going through the inevitable initial and occasional ongoing pain. For no one has ever reached significant performance levels in this or any other skill-based industry without first incurring a helluva lot of personal pain and self-reflection, and then revisiting the neighborhood from time to time.

Such is why this deeply personal diary is public and non-commercial.

Sometimes we even need nine lives.

More to come over the weekend, including a likely video and update on the Boston Area Trader Group.