Monday Notes - Stalking the Outlier

From my perspective, it should come as no surprise that the September '09 "Keys to the Castle" post -- which summarized the major take-aways of the beta Jellie effort as told by the traders themselves -- ranks as one of the top posts of the last two years in terms of onlooker feedback and trader career-changing content.

This is because in my view, stalking and effectively managing positive outliers is one of the most critical aspects of trading that pattern gurus fail to address.

What do I mean by positive outliers?  Those one or two trade "sequences" over the course of a day, week, month, year, or career ... that skews the P&L to the "P" side, while buying you (1) bait for subsequent "fishing" trades and (2) time to stalk the next trade.  You can do a blog search in the top left corner to find several posts addressing outliers.

And it's key on both a micro and macro perspective.

For example, on the macro front, we need look back no further than between late 2007 and early 2009 where I essentially bought over twenty years of six-digit income in about 15 months. 

And on the micro front, today provided another solid example, when as is usually the case for me, it took a while to get my Monday motor running before essentially earning today's entire net on the single trade sequence on fading yet another noon push as noted on the attached time-based P&L chart (click to enlarge) -- which btw I've really found often best illustrates my trading day.

So whether it be one highly dedicated period of time during a career, or one trade sequence over the course of the day, it's all and only about stalking the positive outlier.

Of course, negative outliers will occur -- including the ultra-rare recent black swan which is quickly becoming a distant memory for this trader -- but good traders work their tail off to ensure they're few and far between.

Oh, I could have traded better today, including both increasing the results of the noon outlier and taking a few other trades which I read well as the new week's engine was getting cranked up.

Yet as the Celtics will tell you, I'll take today's somewhat sloppy win to continue the "in-tank" trading streak, and simply come back on the court again for the next game.

The only difference is that in trading, the cumulative scores of each game do count in the standings.

In fact, the cumulative scores are the standings.