Saturday, December 20, 2008

The Weekend Trader - A Burden Lifted

Some thoughts now that I've put a padlock on this year's results.

Burden Lifted - A funny thing happened this morning ... I woke up feeling like a huge burden had been lifted. For the first time in probably a year, I felt no self-imposed pressure to perform. Yes, my mind remained pretty much on the market during each weekend this year. I didn't even feel the need to go to Foxwoods to sharpen my poker (and in return my trading) skills. I have a strange sense of peace with myself. And it's no coincidence that today is the latest I've posted the Weekend Trader piece. The beatiful six inch layer of new snow overnight was a nice added touch.

December Lessons - December has taught me several lessons (yes, the lessons won't stop until we're 6 feet under). The first is that you can't trade half-heartedly, which best describes my abysmal December trading. The only other way to describe it was that it sucked. It's validated my belief that one has to be fully immersed in the market at all times to be at the top of one's game. Many times this month, I felt like Randy Moss when he used to take half the plays off, and then tried to turn the focus back on but found myself playing "catch up", and as a result took lower probability second (vs. first) entries. It was like I was a rookie again ... but for a different reason. Which led me to thinking about ...

Sustained Consistency - Dr. Brett had a good post on Friday discussing another trader's December struggles. Seems there may be more than a few of us in the same boat. Then, after rechecking a few facts prompted by comments to last night's post re: performance benchmarking, I went back through monthly CTA stats over the last few years as published by Futures Magazine, and it reminded me how fund results for even the strongest performers vary significantly from month to month.

And such is the challenge. Adapting one's pulse to match the ever-changing market's pulse is all but impossible to do 100% in real time. And while I think discretionary traders can react more quickly than system traders, we're still often prone to losses -- or at best reduced wins -- as the market's pace changes until such time as we adapt ... hopefully before the pace changes yet again.

Benchmarking - If you've never checked out Futures Magazine (no vested interest), it provides some of the best industry benchmarking data if you're looking to compare yourself against professionally managed money. They publish the top performers monthly, segregated by funds over $10M and under $10M, and then at the end of the year provide very detailed stats on the top performers including annual return, worst drawdown during the year, sharpe ratios, best 12 months, 3-Year return, amount under management, and more. My broker -- who works with many CTAs - has often used the data for performance benchmarking.

For those interested, for funds of < $10M, New World Capital Management led the list for 2007 returns at just over 205% (4:35pm added comment: which allegedly may not be real ... see comments to this post), and DEC Futures Fund Ltd topped the 2006 list at 155%. And while I personally think it's best to simply strive for peak personal performance, the data can be useful for comparative purposes.

2009 Plans - No clue right now as the brain is pretty much shut down. But I'll keep you posted.

Enjoy the rest of your weekend.


Unknown said...

Dear Don-

You may be in more rarefied performance company than you think as John Hempton @ Bronte Capital has dissected New World's operations/performance diligently and found them to be a total fraud->

Anyway, thank you for providing a look on the trials and tribulations of an lone spec. The hurdles are much tougher than for a prop trader at an established organization and the camaraderie, however one sided, is much appreciated. Your successes are a great motivator to newer ES traders esp. of the independent kind. Best regards, Vince Fulco

Don Miller said...

Vince -

Thanks for the info. I've added a cautionary note to the main post as I was not aware.


Donn Carroll said...

Thanks so much for your Blog. It was more enlightening than most articles I have ever seen with the almost live action. One way you could bless even more of us is to put your live screen up with the DOM and charts so we could really see how a pro does it. I would love to see how you switch from scalp mode to trend mode and back.

This kind of success from a humble man who gives his Creator the Glory is refreshing. Giving God the glory He is due is man's chief end. You are a living example of it.

God bless you and your family with this new task of finding your higher calling next year. Donn Carroll

Don Miller said...

Thanks Donn -

It's incredible what can be done when we simply get out of our own way and stop tripping over ourselves. I'll always remain my biggest enemy.

I'll indeed post some screen shots in the near future.


Bob said...

Hi Don,
Since you have been involved with trading for a long time, do you know what it takes to get a professional job in trading ?
Do you know what kind of qualifications do Hedge fund look for when they hire someone ?
Does the individual trading record count for anything ?


Don Miller said...

Hi Bob -

I wish I could answer but really don't know. Since I've always been an independent trader trading my own capital, I've never personally pursued that area.