Sunday, January 4, 2009

The Weekend Trader - Sunday Edition

I continue to think about my goals for 2009, both as they relate to trading and life in general. And following up on my recent "Crossroads" theme, I'm indeed reaching a point in my life where a few key non-trading priorities will outweigh any immediate trading objectives I may have.

For example, 2009 will be the last full year before my wife and I enter the early stages of our "empty nest" years, as our youngest daughter will be off to college in 2010. Someday, I'll share that full and inspiring story which some of you know. Suffice it to say several years ago, she was experiencing a major health crisis and diagnosed with insulin-dependent Type 1 diabetes for life. She's now blossomed into a beautiful young woman, and is a scholar-athlete-musician with a strong chance to graduate at the top of her class. She's already embodied the Bamboo concept far better than I ever will. One of the blessings coming out of the 2008 journey was that she won't need to worry about funding for her college education, especially if scholarships dry up in the declining economy. Yet for 2009, she deserves my time before it's too late.

I also want to devote more time in 2009 to my non-market business (completely unrelated to trading or the markets) which I've referenced in the past, and which provides that ideal annuity income stream that I've always encouraged others to pursue if they choose to take us this crazy business called trading. And since that might also be a mini-Bamboo in the making that hasn't yet broken ground, I need to remain patient and diligent with it. Diversification is of course typically a good thing.

In the big picture, if I viewed 2008 as an intense "all-out" race to test my trading abilities and fund the future, I initially view 2009 simply as a "keep your head in the game" year. And to do that, I've decided to initially start off by trading a small capital balance of about $60,000 and seeing what I can do with it.

Doing so will accomplish a couple of things. First, it will ensure 2008's funds are safely tucked away (lessons from Archie Karas). Second, it will force the "fictitious drawdown" concept into my brain ... a concept which may have lost its mental effect as last year's race drew to a close and the real dollars were tallied. Third, several of you thought it might be interesting to see how I might do with a smaller balance. And while that's not why I'm doing it, we may be able to learn several lessons along the way. Who knows, it could be a complete bust ... but we'll find out.

I'm also working on a "grading" matrix to better track and evaluate my personal performance instead of the daily chip count gain or loss references. For as the year begins, much like a new trading day, I don't even want to think about $$ until the year gets well underway. And while like last year, the dollars will at some point become important, they won't for a while. I'll share whatever I come up with when it's finalized.

Life is of course full of changing seasons. The beauty of this business is that we can set our own goals and shift gears at any time as we so choose. We aren't bound by traditional thinking and restrictions, and we're certainly not bound by what others "pressure" us into doing. This industry has an uncanny way of trying to force us to do things, whether it be tempting us to take the emotional and unprofitable part of a trade, rely on others instead of ourselves, or peers wanting us to fit "their" mold or approach. I'll take "Stand Apart From the Crowd" for $200 Alex. At this end, the more heat I take, the more I figure I may be on the right track.

I've long said that trading income & losses do one thing ... buy or sell "time". Yet they also buy or sell flexibility and freedom.

I too often lose sight of the second part of that, and am going to work on correcting that in 2009. I can also always ramp trading back up to full tilt at any time.

Have a great trading week.


Ziad said...

Hi Don,

I think a key idea that you may want to entertain is that your trading can be "full tilt" and highly profitable while also being relaxing and not so time demanding. And excellent discussion of this recently appeared in Dr. Steenbarger's blog. Here is the URL:

This article discusses the same principles as the book "The Art of Learning" that I told you about earlier. Basically much scientific research has shown that by aligning the physical, emotional, mental and spiritual, we can achieve great things with less time spent and much more enjoyment.

It may be that you don't have to take it easy in trading to take it easy in life and have an enjoyable year with more on your plate. You may be able to achieve as much or more than you did last year while not burning yourself out and still having time to do many other things and enjoying yourself. It's really worth a look into.

All the best,


Don Miller said...

Thanks Ziad.

I've printed it and will give it a good read tonight.