Tuesday, February 24, 2009

Tuesday Notes - "Kick Me"


Dear Diary,

I made more mistakes today than Jim Cramer in a stock picking contest, including hesitating several times instead of trusting my instinct in both the Europe and U.S. sessions (resulting in less than optimal wholesale entries) and not recognizing the PM squeeze as quickly as I would have liked. Fortunately, the market provided its typical -- repeat after me -- high probability oscillations on this morning-after-trend day, which when combined with some "getting ticked off" perseverance and finally adjusting to the PM move got me on the right side often enough to scratch out a decent, albeit not spectacular +$8K day.

And here's the irony: Based on the day after trend setup, the chip gain should have been much higher, yet based on my self-graded performance, it should have been far lower. Yet I suppose if it means anything, it's a reinforcement that this business is not about perfection ... far from it ... it's simply a matter of never giving up and making do with your B or C game, which I've had for two days in a row now. Call it winning ugly.

And here's my continuing dilemna ... I still feel I'm just a step off my 2008 game, yet that single step is clearly showing itself in the P&L in the form of a reduced net compared to similar markets in '08, although the performance has been incredibly consistent in terms of 36/37 days now + on the year -- the one day brain cramp notwithstanding. The lower net income pace will be apparent in the month-end and year-to-date #s we'll see at the end of this week. And it's starting to bug me big-time, as I'd much rather have a lower % (I'm usually around 78%-80% ... not 97%) with a higher bottom line, which tells me I may still be trading on eggshells for some stupid reason.

As always, the finger points one way ... backward at me. Yet one thing is clear ... I need some kind of kick in the a$$ to get me out of this funk, and I'd prefer that it not be a real loss which usually forms the foundation for the next run. And yes, the reduced profitability IS a funk and unacceptable to me as it reflects suboptimal performance. As I've said before, I care about one statistic only which is all telling to me ... bottom line.

For many, this year's results thus far would be more than acceptable ... and I recognize that. Yet for me, it's not, and I've got a lot of work to do to fix it.

Maybe I need to walk around with one of those "Kick Me" signs on my back.

P.S. Check out today's Trader Tax Update post below if you missed it.


Unknown said...

I missed out on the day. Set the wrong entry point for the morning bottom (need to get out in front of the bus more). Took one extreme TICK trade ('cause I thought the oscillation would continue back down) and of course that went wrong. Then I was too afraid to pull the trigger with all the extreme TICKs for the rest of the day.

Oh well, I'm still learning.

BTW: Don, The book on The Psychology of Trading by Steenbarger is great! I've only read the first few chapters and I'm laughing my head off at how much all the problems people are having sounds just like me. It already has put me in a different frame of mind. I believe there may be a light at the end of the tunnel.


Don Miller said...

BK -

Yea, it's a great book.

btw, I'm still learning as well ... it never stops until we're six feet under.


Severino said...

Hello Don,

I’m curious, if you were only allowed to trade from 9:30 EST to 11:45 EST how much impact would it have on your overall daily take?

Do you think your focus would increase considerably knowing you only have a short time to perform?

Do you like trading or view it more as your job?

Would you have enough to do with the rest of the day to be fulfilled?

What percentage of your non trading account do you have in the market now?

Do you use a set strategy for your long term funds such as allocation amongst several asset classes, or do have use simple timing strategies with these funds?

May you always have the time that matters,


Don Miller said...

Sev -

In order of your ?s:

1. Probably very little as that's when I most frequently trade and am the most profitable.

2. Not sure ... although I think it could increase the stress trying to compact trading into such a small timeframe though. Certainly limits opportunity, despite my response to #1.

3. I thoroughly enjoy it [keep in mind I have a non-market income to pay the bills, yet make far more from trading].

4. Yes.

5. A very small % ... i.e. I could trade several hundred contracts and only trade a fraction of that to decrease risk as the account grows.

6. No ... most of my capital is in cash every night. For this trader, I can't mentally "manage" on both a short- and long-term basis, so I just stick to short-term for income purposes and am 100% comfortable being in cash at the end of each day. Any funds "in the market" on a long-term basis would affect my focus on trading. It's just how I'm wired.


Unknown said...


I must be your East European reflection -as you call it "winning ugly". I call it "the hard money" -as I grinded up to positive also.

I have a real talent for choosing all the most difficult trades and missing the easy ones. It's like folding 9-j in middle position cause im too lazy to play:(

Talk about performing badly... but your soooo right: its about the bottom line!

Just know your a great inspiration to me Don!

Thanks for sharing,


MACDOW said...

Hi Don
You seem to be bothered by your great results from last year.
Maybe it would be an idea if you used a moving average of your results over a longer time frame to see how well you are doing.
By adding the new month and dropping the oldest of say twelve or twenty four months you would be able to see a bigger, clearer picture of your average. This would also stop you from focusing exclusively on the yearly results.
Just an idea :)


Don Miller said...

Hi David -

I agree which is why at the end of Jan looked at 12-month and 3-month (anualized) run rates, as well as YTD.

I agree a MA is a good way to go.