Wednesday, March 31, 2010

Wednesday Notes - Shut Up & Trade

I've been doing too much yakking during and after market hours lately, so I'm trying to talk less and trade more.

I'll elaborate over the weekend.

Tuesday, March 30, 2010

Tuesday Notes - Personal Trading Retreat

After exchanging some notes with Linda Raschke the other day addressing the challenge of staying motivated, I decided to move forward with an idea of getting out of my office and trading remotely for a week or so to keep the mind fresh.

So I've booked an oceanfront townhouse for the last week in May, which for four days will become my trading office after an initial weekend with my family.

The ironic thing is it's only six miles from my home & office (seriously), but will hopefully feel like a world away.  Yes, we live on Cape Cod, but not right on the ocean.  This will be ON the ocean (the arrow is my unit) ... although if it doesn't stop raining soon, it may end up IN the ocean.

Why the last week in May?  Well, I can't book it sooner (it's closed off-season), and rates will still be low that week before the tourists begin to arrive after Memorial Day.  Hell, I'm a trader. 

And the per-night rate??  A ridiculously low $130!  Talk about buying wholesale ... we're talking ocean-facing, newly renovated, two-story, central A/C & heat, a full kitchen, living room, dining area, private deck, high speed wireless Internet access, twenty steps to the beach and twenty-five to a 85 degree heated pool.

Quick note to Jellies - Other units remain available that week if you're so inclined.  I'll also be checking out the facilities for a potential fall get-together when the rates -- you guessed it -- go back down before they close for the season.

I of course won't have my full setup, yet as I've often said, give me one screen, two charts, an order entry system, and Internet access, and I should be fine.

My biggest challenge and possible distraction may be the fact that there's a strong wi-fi connection
on the beach.

Hopefully, the weath
er won't be too nice.

.S. And a very happy birthday to my dad who turns 83 today.  Thanks for all you've done over the years.  I just hope I can stay out of my own way long enough to become just half the person you became.

Monday, March 29, 2010

Monday Notes - Traveling

Posts will resume on Tuesday.

Sunday, March 28, 2010

The Weekend Trader - It's OK to Get Mad

On this Palm Sunday, I discuss why it's OK -- and perhaps even essential -- to get downright mad at poor personal performance.  I also follow up on Friday's post concerning the firing of my head trader.

Enjoy the rest of your weekend.

P.S. Here's a great Easter season link reminding us how fortunate we are to have received the gift of color.

Saturday, March 27, 2010

The Weekend Trader - Out of Town

I'll be out of town much of the weekend attending to some personal issues, returning late on Monday.

I'll try to squeeze in a post on Sunday as I work through a key psychological mindset shift, and will let Friday's post echo in the meantime.

I did play my best poker in a long time last night in a cash game though, laying down a pre-flop pair to a better hand five times.

Jellies - I expect to rejoin you on Tuesday.

Friday, March 26, 2010

Friday Notes - It's Never Easy

As this journal evolves back into, well, a personal journal, I'm going to try to again bring to light many aspects of this business that those who don't trade continue to fail to address, and that those who do truly trade often refuse to acknowledge publicly.

Before proceeding, please again keep in mind this is a diary which -- since mid-2008 and for now -- remains open to the public.  And as I've often said, if you don't care for venting, beating up on myself, the rare celebration, etc., then simply change the channel.  I'm sure the thousands of fictional personal accounts and hyped services on the 'net will provide you the easy dreamy stories that you're likely seeking.

Yes, it's true I've made millions in the market and performed amidst the top of my industry peers during a recent stretch.  Yet don't think it's ever been easy ... or ever becomes easy even for those of us who have been fortunate to attain a certain level of success.

It's not.  We have to work at it every moment of every day.  And if we don't, we join the masses of trading population who donate their capital to those that do.

As I've often said, chart patterns can be learned in a day.  Maybe less.  Oh sure, reinforcement over time can help, yet -- to use a poker analogy -- does one really have to play months of poker to understand that a straight is a series of five cards in sequential order???? 

Oh I'm sure you can spend thousands upon thousands to learn about fancy names for the straight.  And perhaps more for someone to point out on a moment-by-moment basis that you're indeed holding a straight.  And if you're the type of person who needs someone to tell them the WALK sign at the intersection means they should cross the street, perhaps that's why the industry is full of "I can't walk but will tell you when to walk" sites and chatrooms.  But I digress.

Yet trading really is all about the other stuff.  The stuff that no one talks about.  The stuff that most will never understand.  The stuff that most are afraid to discuss, lest it show that they're ... gasp ... human.

Most seasoned blog onlookers and all Jellies know that I'm a venter.  When I'm not trading well or lacking motivation and/or focus, most know it instantly -- primarily because I wear my emotions on my sleeve and tend to be more public with my screw-ups than my successes.  There are two reasons for this: (1) I remain sick and tired of the lack of such transparency in this overly-hyped industry, and (2) it's personally very therapeutic for me.

btw, does that make me a saint or martyr?  Ummm, maybe I wasn't blatant enough, so let me try this.  At times, I simply suck.

I know my personal demons well.  And most are the same in both my poker and trading games: motivation, focus, and energy level.  For those are the ONLY three elements of both businesses (btw, yes I do view poker playing as a business ... albeit a fun one) that will ever prevent me from being successful hour by hour, day by day, and month by month.

I also have one weakness that is especially apparent in my trading game, and one that continues to eat at me and my capital at times.  And that's my Eurex DAX trading.  And wouldn't you know it, Don1's stupid sequence the other day before I fired him?  He was short 60 DAX contracts as the market was moving hard against him.

So why do I trade the DAX?  Mainly because I've gotten "bored" with ES.  At the risk of sounding cocky, I know I can make money off ES any hour of any day.  So I continue to be drawn to the DAX and its "jitterbug" rhythm and far less liquidity which continue to challenge me.  Yet trading the DAX requires tremendous focus and increased hand/eye coordination, and if the energy level and focus are even slightly off ... well, ask Don1 what the effect can be.  And it only takes one poor DAX sequence to undo weeks of inner rhythm with one's primary bread and butter ... in my case, ES.

So these are my own personal battles.  Battles that I must fight daily.

And speaking of battles, I was again angry this morning.  For I saw Don1 and Don2 having breakfast together ... and while I don't know what they were discussing, the end result was that Don2 was late to work this morning and left a $50K MATD trade on the table.  All he had to do was show up and pick up the check.


It never gets easy.

Thursday, March 25, 2010

Thursday Notes - You're Fired

It's back.  All of it. 

Charter blog onlookers will know them well: The countdown clock, the fictitious drawdawn, the scorecard, and yes, even the anger ... everything that kept me focused and motivated during the 1/08-3/09 $2 Million run.  I'd even wear my old socks if my wife hadn't thrown them out.  Remember, I'm a tightwad.

Why?  Simple. After sleepwalking through two days of market action, searching for a post-Jellie reason to trade, looking for every excuse in the book why not to make a trade, and simply not caring about trading just enough to cause me to loan some funds to the market with two stupid a$$ unfocused and undisciplined sequences right after I reached a key equity mark, at 10:15AM EDT, I decided I'd had enough. 

Case in point, I was doing my taxes during market action the other day, and then chose to sleep in during today's anticipated Europe breakout.

So I'm mad.  And we're talking door-slamming, pi$$ed off mad (just ask my trading partner).

And at 10:15AM, I fired Don1 (of the last session and a half) and replaced him with Don2 (head trader during 2008-09).  Don2 was of course a bit reluctant at first as he wanted to know what happened to his predecessor.  But he said OK only after I agreed to provide him with his old tools ... thus the countdown clock, etc.

And wouldn't you know it, Don2 immediately sat down and fired off twelve consecutive profitable trades that more than made up for Don1's morning mess.

So here's Don2's charter:  He has until April 1 to work his tail off to get back above that key equity mark, at which point prior equity resistance will have to equal support.  And then from 4/1 until my 50th birthday on 3/10/11, Don2 is going to manage my last official self-imposed race with a single carrot at the end:  To give myself the option to retire comfortably on my 50th.  Note I said "option" ... most Type A's don't ever retire until they're six feet under.

No dollar targets.  Instead, the extent of my quality of life after 50 will be completely based on whatever Don2 can contribute over the next year.  And I plan on pushing him ... hard.

Word of caution - You don't want to be on the other side of Don2's trades over the coming weeks.

My only question is whether he's any good at fixing doors.

P.S. Poker and massage night tonight.  But only for Don2.  And if Don1 asks for a trading job, don't even bother.

Wednesday, March 24, 2010

Wednesday Notes - Blog Break

Posts will resume on Thursday.

Tuesday, March 23, 2010

Tuesday Notes - True Riches

During my recent mountaintop get-away, I had the chance to again read The Millionaire Next Door, which I found on the nightstand of my weekend abode. 

As many know, this best-seller was published in the late 1990s, and describes how our perspective of those who we believe are "wealthy" is often so very distorted.

Specifically, the book goes into great detail explaining how many people incorrectly associate millionaires with luxury cars, expensive houses, watches, etc., while the vast majority of the truly wealthy typically did so under the radar by living unlavish lifestyles. 

Essentially, authors Stanley and Danko provided a roadmap of sorts for accumulation of financial wealth far different than that which most try to follow.

It was an interesting read as I mentally compared personal demographics to the book's "prototypical American millionaire", and did quite a bit of chuckling and head-nodding. More for fun than any significant analysis.

Here were some of the more comical comparisons:

Benchmark: 57 Year-Old Male with 3 children
Self-Check: 49 with 2 kids ... maybe we should have had that third one!

Benchmark: Many businesses they're in could be classified as "dullnormal"
Self-Check: About fell off the chair laughing on that one.

Benchmark: They have a "go-to-hell" fund, meaning one could live without working for ten years.
Self-Check: Check.  And yes, I've used it in that manner!

Benchmark: They are tightwads.
Self-Check: Let's see. The last new car we purchased was an off-the-lot Corolla without power steering or power windows in 1986.  Even Grace is now almost eight years old, and she already had 46K miles when I got her used.  I typically wear T-shirts and jeans, and had to buy a new sports jacket and pair of trousers before the NY presentation.  We live in a house built in the 1960s that needs paint in a modest neighborhood, and my favorite dessert is a Dairy Queen Oreo Blizzard ... small and preferably with a coupon.  I guess that's a check.

Benchmark: They hold 20% of household wealth in financial instruments.
Self-Check: Well, this one "depends".  Are we talking about at any given time during the day or end of day? And if I'm 300% invested for 15 minutes, and 0% the rest of the time, can I use my average??  OK, I fail that one... keeping in mind that the main reason there were more millionaires created over the last two years than in the past was that they started as billionaires.

As I said, it was a fun exercise, yet I wouldn't mind seeing the true portfolio of those on the covers of those "get rich quick" flyers that still find their way to my mailbox.  And yes, I got one today describing "the shortest way to turn $10,000 into $175,000".  Even funnier, the next line read, "It can almost guarantee ..." and then listed several incredible results.  Is that like being almost pregnant???

Diabetes Follow-Up - EMails continue to pour in response to recent posts, including notes from many Type 1 diabetic traders.  And yes, that was a real picture of Chelsea on the tennis court as her body was breaking down before beginning treatment.

Thanks to David who provided a link to a good interview with NY Jets owner Woody Johnson who unfortunately recently lost his daughter Casey at the age of 30 to complications from diabetes.  The interview also features Dr. Aaron Kowalski who does a great job of explaining the depths of the disease to lay people, and I encourage you to take a few minutes to view it.

Simply put, Type 1 is an hour by hour tightrope walk for those whose bodies can't produce any insulin to continually provide the body with just the right amount.  Too little and you die.  Too much and you die.  And prior to 1930 and subsequent advances in research and medicine, Type 1 resulted in unstoppable death within two years.

As Woody references in the interview, one of his diabetic business associates once described that he'd give up his millions to live just one day without the disease.

I'd do the same for my daughter.

And I'd be among the "richest" men on the planet.

P.S. Looks like yet another trading M.A.T.D. in the morning.  After today's classic open, it may feel like playing a doubleheader!

Monday, March 22, 2010

Monday Notes - Early Week Thoughts

Tonight's video touches on why I'm not pleased with a 9-for-10 day, why this journal discusses life as much as it does trading, plans for an upcoming "Vaio-less" personal retreat, an update on the Jellie Webinar ADA tally (closing in on $16K), and my perspectives on not replenishing trading accounts following a draw.

And on the heels of this weekend's inspirational piece on overcoming adversity, I revisit a very kind gesture from Larry Connors of Street Smarts and TradingMarkets some eight years ago (see photo montage to right; click to enlarge).

For trading will always remain a business of people.

Saturday, March 20, 2010

The Weekend Trader - Falling Gracefully

Some post-Jellie thoughts as I now once again transition to full-time trader and continue my journey toward block sizes.

Thank You - On behalf of my family, thank you for the overwhelming response via comment -- and especially heartfelt email -- to Friday's newspaper article on Chelsea's journey. I did some quick math last night, and including her 4x daily mandatory blood tests, she's been stuck with needles now over 14,000 times over the last eight years ... and has never complained once.

At this end, the closing quote says it all, "We have, for some reason, been given a gift that transcends a lot of what I think any of us will ever understand." Let's hope today's youth can help make a difference in a world too often filled with negativity, fighting, and misdirected priorities ... while helping us adults regain our own perspective.

Jellie 2010 Team Wrap-Up - It is done. We had a great group of eight this time around, with representation from Australia, Dubai, Denmark, and both U.S. coasts.  My thanks to all participating, and especially for putting up with my "unique" style of teaching for twenty days and four additional evenings.  What do I mean by "unique"?  Think the coach in the Facing the Giants video.  Simply put, I believe in pushing participants hard -- especially psychologically.  I do so because I believe if traders can't stand up to me in a safe team environment, they'll never be able to stand up to the market with conviction.

And while I imagine such a style turns some folks off, it's nice to continue to receive feedback like the letter I received last night that indicates such an approach remains on the right track. Will everyone tap their full potential? Of course not. Can they? Absolutely, especially as evidence continues to grow.

As for the future, it will be back to full-time trading for me after shutting down completely for the next 44 hours.  And while I won't rule out another effort in the fall or in 2011 if interest remains (a reminder it's not for the faint of heart), it's time for me to ramp up my game yet again.  In the meantime, the Jellie recordings will remain available.

Two Questions - This morning, I spoke with a trader who emailed me recently explaining how he has struggled for ten years while spending a ton on every seminar in the biz.  After chatting with him for only a few minutes, I asked him two simple questions -- already knowing the answers ahead of time.  The first was, "Do you ever think about the person on the other side of your trade?" (Real trader & poker player cardinal rule #1).  The second was, "Do you ever add to your position when the market proves you right, even if by just a tick or two?" (Real trader & poker player cardinal rule #2). His responses to both were no.

Ten years.  Tens of thousands in seminars. Hundreds of patterns and their silly names.  All missing the fundamental essence of real trading. Where have we in this industry gone so wrong??

Falling Gracefully - Several times this week I was reminded of the need to "fall gracefully" when wrong about the immediate market bias -- including in my own trading. 

In my view, grasping and implementing this concept -- as is the case with skiing or cycling -- is one of the toughest aspects of trading to learn (especially when one trades at an extremely high probability clip where you're used to being right most of the time), and one that took me years to get close to right.  And yes, I still botch it from time to time.

For example, twice this week I was very wrong and everything was setting up for possible disaster.  In one sequence, I took a 2.5 point ES stop -- a hit that large is extremely rare -- after being momentarily distracted as I was chatting with a student.  In another, I misgauged the extent of "air" on the larger timeframes as the market was opening and pulling back.

In the case of the first sequence, two things saved me from disaster.  First, I only had 1/4 position on as it was one of my "probe" trades (adding only upon price confirmation of the bias).  And second, once my trade premise broke and I was "stuck" on the retail/losing side of the trade, I waited for a slight price correction after those in a similar position had barfed the trade out at the lows before gracefully exiting -- which saved me 1.25 points.  In hindsight, I should have reversed into a short position, yet my focus was a bit of an issue that morning.

Could waiting for a retrace had it not occurred have cost me dearly if it ran against me further?  Not really, as I chose to manage initial risk with size.  For a four point hit with 1/4 size is the same as a 1 point hit with full size.

In the second instance, I was sized larger and simply escaped after a modest hit to cash until the market provided more data either validating my initial premise (which would have necessitated a re-entry, even if at a worse price), or further invalidating it and requiring a complete change of my initial morning plan.  The latter result ended up being true.

So this week, I was very wrong twice.  The sort of wrong where the band was ready to strike up the classic ABC World Wide of Sports "Agony of Defeat" theme.

Yet I was fortunate to make it down the mountain with another run under my belt, and will be able to again hit the "slopes" on Monday ... with both legs in tact.

Have a peaceful weekend.

I'll be in the lodge asleep by the fire.

Friday, March 19, 2010

Friday Notes - This Trader's Inspiration

Often in this business, we ask lots of how's and why's.

How is it possible to repeatedly pick ourselves up after getting knocked down?

How can we not only succeed, but excel in a business that has among the highest failure rates of any profession?

Why are charitable causes such as our Jellie work with the American Diabetes Association so important to some of us?

How can we put life in perspective in the heat of the trading battle?

Why will I never hang around or respond to negative people?

Suffice it to say that for this trader, today's feature article in the Cape Cod Times says it all.

Some people view life as a continuing burden and choose to complain about it.

At my end, I've been blessed with a daily example of why I simply can't ever go there.

Congratulations Chelsea.

You'd make one helluva trader.

Thursday, March 18, 2010

Thursday Notes - Massage & Poker Night

Posts will resume on Friday.

Wednesday, March 17, 2010

Wednesday Notes - St. Patrick's Day Edition

On this St. Patrick's Day, I follow up on recent posts addressing trader self-sufficiency, group dynamics, and why you don't need a shamrock to trade as we wind down the 2010 Jellie training effort this week.

Tuesday, March 16, 2010

Tuesday Notes - MoneyShow Interviews

All four of the MoneyShow interviews filmed at the New York Expo are now available on the site. 

Each interview is 4-5 minutes long and provides my perspectives on key trading topics.

My thanks to Tim Bourquin and his team for the strong production work.

Here are the direct inks.

How Commissions Affect Your Trading Results
What Does It Take to Be a Successful Trader? (Previously posted)
A Full-Time Trader Describes His "Ideal Trade" (Yes, I talk about MATD!)
Can Poker Improve Your Trading Skills?

Monday, March 15, 2010

Monday Notes - In Session

Tonight marks the final evening session for the 2010 Jellie participants, so normal posts will resume on Tuesday.

Saturday, March 13, 2010

The Weekend Trader - "Trading Buddy" Update

As I've mentioned recently, I'm currently trading in an environment where another trader -- one of the Jellie students from 2009 -- and I are constantly connected during the trading day via an audio/video conferencing link.  This is in addition to the ongoing Jellie networking room, and until the end of next week, students of the 2010 training effort.

Like many aspects of my trading career -- including the launch of this public diary in 2008 and launch of the Jellie trader training program & subsequent networking room in 2009 -- this virtual two-person effort began as an experiment, after which my intent was to look back at the results on a "before and after" basis to determine whether my trading results were aided or hindered.  For like anything in this business, results are the only opinion that ever matters.

Frankly, I wasn't sure whether either of the "group" efforts -- the two-person effort and ongoing networking room that has about 15-20 traders in it at any given time -- would help or hurt personal performance at my end.  And I say "hurt", because I am too keenly aware of the downside of group trading dynamics, many of which manifest themselves at the subconscious level.  I also believe in promoting, teaching, and walking the talk of self-sufficient trading.  To be blunt, many people -- inlcuding myself in past years -- simply trade in a more focused and aggressive manner alone in a cave.

So, have my views changed as the result of these recent experiments?  Yes, albeit only slightly.

First, let me say that I believe the second quarter of 2010 will provide the ultimate and definitive evidence.  This is because we still have one more week remaining in the four-week 2010 training effort which has consumed my focus and resulted in an interim reduction in personal trading size.  Not frequency of trading as I believe actual trading must remain an intergral part of any bona-fide effort ... rather contract sizes given the required allocation of personal focus and energy to both mentoring and trading.

Having said that, it's becoming clear -- and frankly a bit ironic to this trader -- that my trading results have been better since we began the two-person "trading buddy" effort, with my gain/loss dollar ratio hovering around a very intriguing 7-1 ratio, which compares favorably to my career 2.6-1 tally, and even to my 2008 4-1 figure.  For another perspective, we're trading at a 5-1 clip through the first three weeks of the current Jellie effort.

btw, here's some needed clarity in terms of what I mean when I mention gain/loss ratios since I get quite a bit of mail on this topic.  At the end of each day, I book my net profit or loss by product -- regardless of whether I executed one or a hundred trade sequences ("sequence" = going flat to flat after scaling in and out).  This is because I view the entire day as a single trade could care less about a single trade or trade sequence -- only the ending tally.  Again, the bottom line is the only score that matters. 

Add to this the fact that I simply greatly enjoy this trader's company as we navigate the stormy seas together -- and yes, we cuss the waves splashing into the boat on occasion -- and it's made for an improved trading experience for this trader.

Yet why given these results do I say that my views on group trading have only "slightly" changed ... even if just for a group of two?

Because I believe there remains an extremely thin line between (1) adding incremental value and (2) eroding it.  For there remain many dangers in group trading, including what is typically a subconscious avoidance of accepting personal responsibility, accountability, and -- most of all -- conviction that one must have when executing their skill.  Ever see what happens when a batter makes a half-hearted swing??  Such is frankly why I choose not to run chatrooms, despite the continuing requests for me to do so.

And while the early results are favorable, there are areas that require marked improvement at my end -- with improved trade aggression (sizing and adding) on those outlier trade sequences that make your week and/or month -- such as Friday's opening short on the Wile E. Coyote cliff drop -- at the top of the list.

As always, time will provide the ultimate answer.

Yet suffice it to say that the term "experiment" or "beta" no longer applies to this aspect of my trading career.

Perhaps that's why a rope is stronger when made of multiple strands.

So long as -- like everything in life -- it's used for the good and not as a noose.

Have a relaxing and peaceful weekend.

Friday, March 12, 2010

Friday Notes - MoneyShow Interview

I'll do a full post over the weekend.

In the meantime, the first of four brief interview segments filmed at the NY Expo has been loaded on the MoneyShow site.

Simply search the drop-down speaker box for Don Miller.

Look for three others coming soon addressing other trader issues including poker and winning.

Thursday, March 11, 2010

Thursday Notes - Massage & Poker Night

And thanks for all the birthday comments and emails. 

Back at it on Friday.

Tuesday, March 9, 2010

Tuesday Notes - The Best is Yet To Come

In a few hours, the clock will strike midnight and this trader will enter the final year where my age won't be preceded by a "5".

For on March 10, 1961, my mother gave birth to Donald Frederick Miller.  Yet as I've said in the past, the event almost didn't happen as my mother had survived an absolutely devastating stillbirth just two years earlier.

She could have given up.  She could have said, "why bother trying again?"  She could have taken the easy way out.  Instead, she took a leap of faith, for which I of course will be forever grateful.

There's no doubt that I inherited much from my mother, including a steadfast will that refuses to give up and seems to strengthen whenever confronted with setbacks, challenges, or critics.  Translation: one stubborn S.O.B.

It's also a will I see in both of my daughters, including my high school senior who hasn't let her daily challenge of diabetes stand in her way of accomplishing more in her seventeen years than many do in their entire life.  A proud papa comment?  Damn right.

I admit I've thoroughly enjoyed my late 40s, and have learned firsthand why many don't reach their stride until well after 40, including the fact that much of our 20s and 30s are spent sowing our oats and/or raising a family.

Consider the following: 

"I discovered, from the analysis of over 25,000 people, that men who succeed in an outstanding way, seldom do so before the age of forty, and more often they do not strike their real pace until they are well beyond the age of fifty." Napoleon Hill, Think & Grow Rich

History is full of noted examples of such.  Sam Walton was 43 years old when he started Wal-Mart.  Teddy Roosevelt was 43 when he took office. Vince Lombardi was 45 when he took the head coaching job with the Green Bay Packers.  Leonardo da Vinci was in his forties when he did the Last Supper and his fifties when he completed the Mona Lisa.  Ronald Reagan was in his fifties when he started his real career as a politician. George Patton was 60 when he took over command of the 2nd Armored Division, and all of his noted work came after that.

Some say trading is a young person's game, including someone a few years ago who was convinced that this discretionary trader & educator in his late 40s couldn't compete with young guns and black boxes.  Essentially, he "dared" me to put my money where my mouth was and make a million dollars in less than a year.

Turned out he was right.

He undershot the target by about 60%.

Apparently, he didn't know my mother.

No posts tomorrow ... just trading, training, and a quiet dinner with my wife.

Monday, March 8, 2010

Monday Notes - MATD, KISS, & More

Yes, I'm back from the mountaintop with renewed energy, conviction, and a bit of an "edge".

Tonight, I reinforce some deep-seated convictions on NOT changing what works or overcomplicating this business. 

In doing so, I'll refer to the attached slide which appeared in my 2/15 NY Expo presentation (click to enlarge).

A reminder that a replay of key sections of the NY Expo presentation is available on the Livestream site (top left on-demand video) for those not able to attend.

Saturday, March 6, 2010

The Weekend Trader - Reflections from the Mountaintop

Dear Diary.

5:30AM - I thought I would have slept in this morning.  For after a week of intense trading, training, and on the heels of a five-hour drive from the ocean to the mountains -- including an extra hour to get through Boston's Friday rush hour traffic (next time, take 495 around the city Don) -- I thought I'd be lying down for what might be a record sleep for me.

But I didn't.  I didn't because last night I felt like a ten-year old on Christmas Eve, and now that morning has begun to break in these early hours, today indeed feels like December 25th.

The gift? Think Currier & Ives in HD on a infinitely-sized Plasma screen.  And the above sunrise pic I snapped this morning -- from the deck! -- doesn't come remotely close to capturing the incredible view.

In a way it's a bit ironic.  For if I'd slept in, I would have missed an hour of one of the greatest sights I've ever seen ... watching the mountains come to light second by second as the sun opened its eyes and slowly revealed Mount Washington.  And every minute I thought it couldn't get prettier, the gift got even more beautiful.

So why am I here?  And what "road" -- aside from the obvious paved mountain road -- brought me here?

Those were the questions I was asking as I drove the twisting mountain roads in the dark last night.

All I can say is that there are times when you're simply "moved" to do something, despite obstacles ... obstacles which are likely more perceived than real.  It happens at times in all of our lives, and I can look back at several episodes of my life in the last 20 years when "something" just told me to stop thinking and do it.  Sort of like trading.  For as I told the team this week, there's nothing worse than a smart trader.

And last night I got that feeling to just throw some clothes in a duffle bag and escape for a few days.  And I mean really escape.  Yea I know, despite the blogging.  But after 8am today, you won't hear from me again until Monday.

There's only one nagging feeling I have.  And it's a feeling very similar to that I had a few years ago as I explained in the 2008 "Story of Grace" post. And yes, that's "Grace" in the lower pic.  It's the feeling that I simply don't deserve this gift.  For despite being literally at the top of the mountain this morning, the overwhelming feeling I have is one of humility as I use these days in private to recharge the body and soul.

You see, despite the early days of this private-gone-public diary where I literally chronicled every trading day's wins, losses, highs, lows -- or as I've said before, the 100% non-fiction good, bad, and ugly -- it's been difficult at best to publicly discuss the "good".  And you should have seen the horrified look on my face in NY when MF Global introduced me to a packed house as the best non-institutional trader they'd ever seen.  I truly thought my trading was over right then and there.

I of course don't publicly discuss my personal trading much these days as this trek has evolved into more of a motvational tool, although I continue sprinkling it in from time to time.  btw, for a microscopic minority, it's a no-win scenario.  Discuss the good and you're chest pumping.  Discuss the bad and you're whining.  Stop discussing anything and the assumption is your trading has tanked (believe me, it hasn't!).  Yet I suppose such is the case with non-fiction personal diaries.

The only comment I'll make with respect to recent performance is that I'm trading as consistently as I ever have been -- including 2008 and early '09. Yet as any decent trader knows, future wins will ONLY be possible if remaining on bended knee while surrending both ego and will ... so I choose not to discuss it.

And current peformance has been further strenghthened in part by a continuing experiment-turning-permanent I'm having with another trader (a recent student actually) where we're connected moment by moment and are pushing each other ... hard.  This is in addition to the larger trading team and the current evolving Jellies who are 50% through their month-long journey.

And I suppose therein lies one of the truths of life ... that people are indeed stronger as two versus one ... whether it be two like-minded traders without ego who aren't afraid to push each other, or a father-son bond that is literally performing daily miracles.

Or one trader who without ever having physically met the other, opens up his house from across the country, and has his neighbor unlock the door, put the key on the desk, and turn on all the outside lights so a tired traveler can spot the welcoming beacon late at night in the pitch black wilderness.

And that's the best part about this business.  The people.

The hardest part?

Going home on Sunday.

Oh, and the trader offering the shirt (house) off his back?  It's indeed Bob.

Have a very pleasant and relaxing weekend.

Friday, March 5, 2010

Friday Notes - Top of the World

At the last minute and just before today's market close, I decided to accept a team member's invitation and make the four-hour trek from Heaven #1 (Cape Cod) to Heaven #2 (his incredible home at top of the White Mountains in New Hampshire) for some spiritual solitude and physical renewal.

So for the next two days, it will be me, the mountains, and my Sony Vaio.

Hopefully, it won't upset recent personal trading rhythms as I'm apparently again in the midst of one of those crazy extended zones that I'd rather not discuss.

Look for pics and a full post over the weekend.

Thursday, March 4, 2010

Thursday Notes - Massage & Poker Night

It's that time of the week where I do something for myself.

Back at it tomorrow.

Wednesday, March 3, 2010

Wednesday Notes - The Black Box

As has happened from time to time over the years, I received an email from a guy the other day wanting me to consider buying his "black box" system for a six figure sum -- to which I responded with one word ... "cute". 

We then exchanged a few more notes, including one which described a specific entry and exit that the box triggered -- to which I responded along the lines of "already took it ... and at a better price".

Now before I comment further, I respect both the man sending the email, as well as the notion that mechanical systems are one option to consider when pursuing this business, and thus have a place in the industry.  So my following comments should in no way be interpreted as a "diss" to either.

Having said that, here's why I'll never go that route.

1. I enjoy trading.  To me, trading will always be a mental sport not unlike chess, poker, or any strategic game.  And yes, it's a game -- a game that despite my occasional moaning and groaning, I will always love with a very deep inner passion.  Larry Bird was once asked how he could "work" so hard every day by getting up at 5 or 6am and shooting a few hundred baskets before most of the world was even up.  He responded along the lines of, "This has never been work for me.  It's a game and my passion."  Same goes at this end.

2. I enjoy the daily strategic challenge. Trading for me is like doing a double-sided jigsaw puzzle on a daily basis.  As I've said in the past, I love puzzles.  And I also happen to be fairly good at them.  Same goes for poker, which continues to make trading seem far "easier" in comparison. 

Case in point, during my trek to Foxwoods over the weekend, I got beat three times in a moderate-stakes cash game on the river after holding very high-probability hands ... some well over 90% heading to the final card.  Contrast that with this week's trading sequences on similar probability which as I write this at noon on Wednesday as the class and I take a break during the deadzone, stands at 29 wins and 5 losses ... with no river suck-outs plus the option to take money out of the pot if it goes against me.

3. Adaptability. Most systems require that no "tinkering" be done to them, and some prohibit the use of any discretion.  For doing so would alter the probability that was established based on a specific set of constants.  Yet, to use an airline industry analogy, there are key times when not only would I prefer a human pilot vs. auto-pilot, I'd mandate it.  For when the "geese hit the engines", I want that pilot with all his experience and judgment to assess the situation, find the safe way out, and land successfully. 

btw, congrats to "Sully" Sullenberger who announced his official retirement today.  And here's a great simulation of the Hudson River landing, complete with the real air traffic conversations.

Add to this the fact that some systems are outdated the moment they hit the marketing shelf (the old, "once you find the key, the market changes the lock" trader adage), and the game quickly becomes one of musical chairs.

4. Similar Results. In the end, I firmly believe that the results of a successful discretionary trader and one who relies on a system should be at worst similar, which only provides incremental upside for the trader incorporating human judgment on a moment by moment basis.  And while there will undoubtedly be times when a system has its advantages and will outperform even the best trader, the opposite will also be true.  And in each case, they both simply put probability on your side.


Again, systems or "boxes" -- whether they're black, brown, pink, or chartreuse -- have a place in this business.  They can circumvent trader emotion and eliminate the need for on-the-spot decision making, while often decreasing the time needed to monitor markets.  And if properly programmed, they'll provide an edge for a trader who doesn't have an edge, and/or who doesn't have the time or desire to become a successful discretionary trader.

Yet I'll take "Trader Self-Sufficiency for $1,000,000" Alex.

For as one trader told me sometime last year, "I think I finally figured out your edge.  Your edge is 'you' ".

I suppose in a way, he's right.

For despite all the imperfections that discretionary traders have -- and this trader has too many to list -- ultimately the bottom line defines whether an edge truly exixts.  And to that, there can be no dispute.

Plus, I love shooting baskets.

Tuesday, March 2, 2010

Tuesday Notes - Blog Break

Due to trader training.

Posts will resume on Wednesday.

Please note there will also be no Wednesday afternoon Livestream TV session, again due to the March trader training effort currently in progress.

Monday, March 1, 2010

Monday Notes - Using Risk to Your Advantage

Tonight's post discusses a few key excerpts from a great speech that Charles Sanford, Jr. gave at the University of Georgia, which I found highly relevant to trading and life in general.  Kudos to Ziad who provided the link. 

The speech is entitled "Life Value and the Paradoxes of Risk", and I highly encourage you to print it out and read at your leisure, especially if you have any trading demons that may be risk related.

I also do some personal benchmarking to a list of stress reducing principles that was provided to me several years ago.  btw my reference to #8 should have said unattractive ... which should be apparent from the context.