Sunday, April 18, 2010

The Weekend Trader - Focusing on the Comma

Here's an excerpt from today's Boston Globe following the Bruins' 5-3 victory over Buffalo in the first round of the Stanley Cup Playoffs last night:

Did the Bruins make mistakes yesterday? Plenty, including the kind that end up in the back of your net. But you know what? Mistakes happen. All the time, even to the best teams. It’s how a team responds that determines its fate.  “Hockey’s about mistakes,’’ David Krejci said. “There’s always going to be mistakes. If there’s no mistakes, then hockey would be 0-0.’’
   --  Fluto Shinzawa of the
Boston Globe on 4-18-10

It's so true in hockey ... and trading.

So let's change a few words and apply it to trading.

Did I make mistakes on Friday? Plenty, including the kind that end up cutting into your equity. But you know what? Mistakes happen. All the time, even to the best traders. It’s how a trader responds that determines his/her fate. “Trading is about mistakes,’’ Trader Don said. “There are always going to be mistakes. If there were no mistakes, then the market would never move.’’

Frankly, if I had to summarize my beliefs about trading in a single word, it would be "perseverance".

As I've often said, I make mistakes every day (here's a classic blast from the past on that topic). Lots. Mistakes of judgment; Mistakes of omission; Mistakes of suboptimal sizing; Mistakes of entering or exiting too soon; Mistakes of being a perfectionist; Mistakes of allowed distractions; Mistakes of self-doubt; and the list goes on.

As I mentioned on Friday, I had a strong day -- and by P&L standards, it was the best of the year.  btw, as is normally the case in an emotional market which I tend to trade well, I made most of my money on the long side during the GS barf by buying several blood-on-the-floor points hard.  Yet I awoke Saturday with a pit in my stomach knowing there was one particular trade sequence after the final capitulation that I should have pressed as hard as I've ever pressed a trade.

It was one of my favorites, and should have made the month right then and there.  Yet I lost focus for a single moment, didn't have the Tom Cruise / A Few Good Men / "Going for the Jack Nicholson Code Red Admission Kill" feeling, and by the time I realized I'd missed the prime spot, price rebounded so quickly that I couldn't chase the entry.

And while not real financial loss, it was a costly opportunity loss ... amounting in the tens of thousands.

So I decided to clear the mind via a 12-hour poker marathon yesterday which started in Foxwoods among strangers and finished with a small local game until about 2am this morning amidst friends who regularly play together.

And wouldn't you know it, I made several mistakes at the table yesterday, including letting up and folding pre-flop after winning a big hand (I had pot odds & would have flopped a straight even with a sick 10-8), simply not going with my instincts a few times, as well as ever so slightly suboptimizing a straight flush in which I couldn't induce a call from my opponent.

On the plus side, I correctly played pocket aces in one particular hand both pre- and post-flop, and took down the largest pot of the night just after midnight by going all in and getting called post flop ... after which time it held up.  And by the end of the day, I came out ahead.

And the net result is all that matters.

I've often said that if I ever wrote a book (and to those who keep asking, I still feel the blog is more beneficial as I can keep the content up-to-date), that it would be titled "How to Make a Million by Making a Million Mistakes".

For feedback from the 2009-10 Jellie training efforts -- as well as direct involvement in a decade of trader educational efforts at this end  -- would clearly show that one of the greatest "light bulb" moments for participants is when they see the amount of mistakes I make as I share trades and thoughts on a moment-by-moment basis -- and the subsequent actions taken to overcome them.

As I've stated dozens of times in this journal, I'll never understand why so many in this business refuse to acknowledge their -- no, make that "our" -- humanity ... instead of embracing it.

For hockey, trading, poker, and life are ALL about making mistakes.

And from a trading perspective, as I stated above, “There are always going to be trading mistakes. If there were no mistakes, then the market would never move.’’

You just have to make fewer than the other guy, as well as make sure the mistake ends with a comma -- instead of a period.
At this end, I don't believe in periods.

For it's the comma that allows us to continue.

And profit.

Enjoy the rest of your weekend ,

P.S. Life continues on Monday.


Unknown said...

If you write a book, it should be titled "The DOW of Poker"!

Charles said...

Howdy Don,

I still check in every now and then and just wanted to tell you how much I appreciate the positive, uplifting tone of your writing. It really is a pleasure to read.

I just watched the Jimmy V. video again from the "blue wall" post...awesome stuff(yours and Jimmy's). Gotta bookmark that one and put it in the regular rotation.

May you do better tomorrow than you did today my friend!

Be well and keep up the great work,

Andrew said...


"I'm an idiot and I make lots of mistakes. My advantage comes from knowing this". George Soros