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.


Unknown said...

Hi Don, have you ever thought about recording a sequence or 2 of live trading and posting it here on the blog or millertv? Just think that would pretty fascinating to see.. I'd pay for it.

123 said...

Hi Don,

All this "networking room" stuff isn't as common in Australia....I think we are a bit slow on the technology would you mind letting me (and other readers) what providers you are using?
thanks! Adam.....P.S. as always - enjoying the diversity of your the blog

Don Miller said...

Homer - Yes, it's been on my list when I find some time to figure out an optimal way to record it.

Trading Edge - We use Omnovia.


steve said...

You're definitely hitting one of the nails of good performance on head by talking about the affects of others on the subconscious. I mentioned that in a comment a few days ago and have come to realize that's one of my biggest challenges in taking good trades and being on the 'right' side. Thinking about what others are doing creates such mental conflict it's really profound.