Saturday, May 29, 2010
The Weekend Trader - The Big Picture
The Big Picture - First, one of the things that drives me crazy in this often overly-hyped business is the focus on the short term. The immediate. The last trade. The "I called the market right!" syndrome".
And we've discussed the concept of "time" many times in this journal, including the often quoted and syndicated Svithjod Rock post, as well as recently in great detail in my May 1 post on Delayed Gratification.
In the Jellie Webinars (which if you're new to this trek chronicle in painstaking 16-Hour detail the eight weeks of the beta Jellie Team's experience -- with a portion going to the American Diabetes Association), the first of the eight sessions references that trading is essentially the "long-term accumulation of short-term decisions".
I remember when we launched the Jellie program, that one observer commented something along the lines of, "well, just wait until he has his first blunder ... that will be the quick end of it". Yet, I knew that years of trading and teaching experience had taught me quite the opposite. In fact, I couldn't wait to make, discuss, and analyze that first "blunder" with the team, and that "blunders" are simply result of lesser probability outcomes -- whether it be the lesser probability of a high % chart setup, or the lesser probability that you've misread something or are simply off your game when you're on it the vast majority of the time.
And from my earliest days of mentoring traders to current efforts, realizing that trading is all about imperfection remains one of the #1 "light bulbs" for every participant ... which often immediately puts them at ease.
When I taught traders in the late 90s and early 00's, it didn't take but a few days to quickly realize that the industry -- which at the time was in its "rah-rah no one ever has a loss, but don't hold the chatroom auction caller responsible when he does" hey day -- had substantially left the terribly misguided impression that successful trading didn't include the losses, or the occasional -- yet highly necessary -- pain. Because it wasn't discussed. And frankly, in many cases, it wasn't allowed lest you be banned.
The result was that many people entering trading in this new era where markets became more accessible via the Internet were missing perhaps the most important piece of the puzzle. Or in other words, they were being told all about the lock -- how it looked, its composition, its role, and how great the locksmith who made it was -- but not handed the key. Frankly, it was sometimes because the locksmith didn't even have the key. He just had a fancy lock.
Now some may argue that I've overcompensated by discussing and venting about my occasional struggles more than my successes. Or that I'm a "downer". To that, you can ask any of the Jellies on Thursday morning when I was literally screaming my personal sequence ala Lewis Winthorpe on the early bear trap -- buying every dip-- before unloading it all on the 3rd and final push to 1094. It was fun, and I thoroughly enjoyed and briefly celebrated it for a few minutes before closing up shop for the day.
Yet it's still all about the long term. And such is why the live Jellie program and Webinars span multiple weeks. Because they have to. Do they replace the years of experience that must be developed and nurtured? Of course not. Yet if one is going to get formal instruction, you have to start with something that begins to emphasize that trading is far more than a trade, day, hour, or week.
But it's not break-even at all.
Now, look again at the graph. Note that the vast majority of dots are clustered just above the red line. The outliers to the north and south? They essentially offset. It's called grinding out a living hour by hour, and day by day.
Further, as I've always said, I consider the dots below the line to simply reflect business expenses -- which is how I book them. Necessary expenses which allow the "revenues" to the north to be generated.
And when we begin again on Tuesday? Well for me, one fun part of this business is never caring about knowing where that next "dot" will land -- while knowing full well what the long-term outcome will be.
Now, on to my second thought.
And frankly, it is the only variable of which I have direct control, and will likely remain my main trading challenge so long as I choose to "lace 'em up".
So how bad do I want it right now?
More importantly, how bad do you want it right now?
Are we willing to make the sacrifices?
Are we willing to dive for loose balls?
Are we willing to buy hard after the selling has stopped and sell hard after the buying has stopped?
Are we willing to fight for those fricken "Missing Inches"??? (You HAVE to read that post of one year ago to the day and watch the video if you haven't before. My guess is that you're leaving several yards of missing inches on the table.)
For our answer will largely determine where all future dots will land on our graph.
Over time, of course.
Have a wonderful and restful weekend.
Posted by Don Miller at 10:10 AM