Monday, February 9, 2009

The Fiery Furnaces, "Widow City"

The RO Report, "Sleep" Edition

We were locked in a low volume 100 point range today as the world awaits The Big Plan To Save The World.

It's funny, but reading "the Fly" last night and how he spoke about Reagan and deficit spending blended nicely with my reading of the Richard Dennis interview in Market Wizards, which I'll be discussing here tomorrow. In the interview, Dennis says that deficit spending is going to ruin the country.

Perhaps, 20 years later he will be proven right.

Anyway, more on that tomorrow. Not much to discuss. Everyone traded light and the RO did an exceptional job of preserving capital.

Out of 27 traders today, 21 finished gross positive, or 78%. While that sounds great on the surface, there were many sub $200 gains today. No one did much. The RO was rangebound. I placed very few trades and was flat, minus a small overnight from Friday that gave me a loss on the day. I was #24 of 27, which seems almost unfair on a day I did absolutely nothing...

Trader B pulls off another "doubledong" as he and his swing account gain the top two spots.

"Lucky Pierre" - Trader H*, $3,045 on 12,000 shares traded.

2. Trader B, $2,624 on 82,000 shares traded.
3. Trader D, $2,418 on 100k shares traded.
4. Trader C, $1,869 on 60,200 shares traded.
5. Trader N, $1,329 on 76,600 shares traded.

"Chambermaid" - Trader A, -$1,571 on 187k shares traded.

2. Trader 9*, -$621 on 3200 shares traded.
3. Trader M*, -$606 on 0 shares traded.
4. Trader S, -$104 on 4,571 shares traded.
5. Trader V, -$72 on 41,000 shares traded.

Brief Thoughts On A Bad Week (or two)

So each Monday I post and explain a good trade from the previous week.  Unfortunately, after de-balling myself last week, I find I don't have much to work with.

Instead, I will say the following.  I had a real war going on with myself, trying to decide whether I was pushing myself out of some "comfort zone" as far as my position sizing or if I was really fucking myself up, psychologically. Ultimately, I believe I will look back on the last two weeks as a positive.  It is always good to push yourself in this occupation and I learned a few things about myself regarding discipline and focus.  Namely, discipline isn't my strong suit and it's better for me not to "focus lightly" when trading.

While having somewhat precise rules is comforting to a certain extent and makes the job less stressful on many levels, I found that they stripped me somewhat of my instinct.  Instead of getting out of winning positions, or at least "lightening" them, I found myself holding for larger rules, as long as I wasn't getting stopped out per my rules.

In short, I had a hard time balancing my rules versus my instinct.

However, and this is really what caused my massive losses, when positions went against me, I often didn't exit fast enough, because I began believing in my positions too much.  So I was using the rules to keep me in positions, but not using them properly to exit positions... a rather deadly combination...

I will leave you with two final thoughts that I heard last week.

First, from my father, who knows that when I start thinking about money, I cripple my ability to trade.  He said, "If you are thinking about the money, then you are not focusing on the right thing which is the trade.  Instead, you are trying to make back the money you lost and this is irrelevant to the trades you are making today."  I thought this was pretty insightful from a man who has never read a book on trading and who still doesn't truly understand what I do each day.

Second, "Trader P" related a thought from the Charles Longstreet book (which, incidentally, will be the third book in the Dinosaur Trader book club).  Longstreet said he'd rather be right 60% of the time and execute his plan 90% of the time, than be right 90% of the time and execute properly 60% of the time.

We'll see how this week goes.  I'm going to work hard on keeping a positive mindset and starting each day with a blank slate.

I sometimes think of myself in graphical form.  If I looked at myself on a 10 year chart, this would be a minor pullback.  Last week I made a huge red candle with a tiny wick off the bottom.  This week let's hope for a big green one closing at the highs.

(Tomorrow I will have a post on "Market Wizard," Richard Dennis.  He also offers a few insights on trading slumps.)