Thursday, August 28, 2008

The Weekend Trader (Pre-Labor Day Edition)

I'm going to "try" to take a good long mental break this weekend to gear up for the final four-month push of this 2008 journey into the unknown. Before then though, here are a few random thoughts before I completely clear my head.

Fall Trading - If history tells us anything, September and October should be two of the better months for trading volume and pace. As such, I expect we'll see a marked shift in trading patterns and opportunities in a market that moves more like a slithering snake and less like a jitterbug. That's not to say we won't see volatility at times ... but it should still be more fluid with the added volume.

Keeping Score (Not!) - Over the last couple of months, I've often stressed the mental image of the fictitious draw in terms of my needing to feel that's where I stand equity-wise before every week, day, trade, etc. If you've been looking over my shoulder for much of the past few months, you know by now that it's how I have to perceive where I stand on my equity curve, so that I trade in a very comfortable and natural place for me ... and that's after a debilitating punch-in-the-gut draw. It took me only a decade to figure that out.

Yet I haven't spent much time discussing item #2 of that "cornerstone" post, which is not to view my equity balance except for June 30 and December 31. And this remains one of the hardest things for me to do ... especially as I approach another month-end. But I kid you not ... I do not know what my balance is right now. And while I often quote daily chip gains/draws, show weekly equity curve results (note those charts are without figures though), and ballpark monthly tallies, I view such comments as simply (choose one of the following) legs in a relay race, hands in a Hold 'Em tournament, individual holes in a golf championship, etc. etc.

And yes, I know "about" where it likely is, and if I wanted to add up all of the individual results, I could get pretty close. Hell, I could also simply glance at the bottom of my daily statement and see the exact figure. But I can't go there. Not yet. I've done everything possible at this end to not focus on where I really am -- including booking an actual killer draw at the beginning of each month so that my QuickBooks results (which reflect all of the detailed daily results and of course has a running balance) include that " draw" that constantly moves to the beginning of the current month and grows larger each month so that my real records replicate the now infamous motivational equity chart:

Doing so has still not been easy for me, especially for someone who keeps extremely detailed records, has a MBA, and has overseen books for major corporations. And while trading "in the dark" did seem to get easier as the first six months wore on, once I took the mid-year peek I found it difficult to get back "on the wagon" and not look at it.

As this second six-month session approaches its 1/3 mark, it does seem to be getting easier again ... yet that gnawing desire to view the complete scorecard never completely goes away. I think what keeps me going is that I know if I look at it, it will kill my belief that (1) I deserve more, and (2) that the profits should flow easily ... both feelings of which are constantly reinforced by the above chart! Try visualizing that chart as an intraday ES chart ... where is it most likely to go at that point?? Especially after a little bit of a momentum bounce?

I can't overstate these concepts enough, as they've been the fertilizer for the roots of this year's experimental Chinese Bamboo Tree, which will be fully measured and evaluated on December 31. That is a day I look forward to. Yes, it might very well end up a Maple or Elm ... but I'm reading up on Chinese gardening for a reason.

I've said before that this year isn't about greed. It's also not about "Look at what I did" B.S. -- for the market will knock that person down faster than a Michael Phelps reach for the finish line. This is simply a journey in the life of one trader who won't settle for Silver this year. And I'll say this if you're looking over my shoulder ... if I can do this with all my faults and shortcomings (and there are plenty) ... there's room for others to do so much more.

And if this year's tree indeed ends up being a version of the Chinese Bamboo, I'd better deflect all credit to its proper Source. If I've done anything, it was simply getting out of my own way.

Four laps to go after tomorrow and I'm feeling energized.

Have a restful and peaceful weekend.


nocved said...

Hi Don

Perfect post for me to read today.

Thanks for Sharing

Don Miller said...

Anytime Tom.

Enjoy the weekend.