It is fitting that I end my last week of trading in December with my best week ever at +18.3% and also fitting that it marks the first time I have doubled an account.
I guess what’s odd is how normal it feels. There is no feeling of “finally I did it” or “I never thought I would make it this far”. It really just feels like I opened up a cake box, followed the instructions and baked a cake.
Mmmm… cake.
“I’ve always believed the greater danger is not aiming too high, but too low, settling for a bogey rather than shooting for an eagle.”
- Peter Scott
Since it’s raining, there will be no golf for me today. But the above quote is apt for all of our lives. Settling is no way to succeed.
A postmortem of yesterday’s trading performance revealed that not only had I bought the market 3 ticks off the low, but also sold the market 8 ticks from the high on the day. One of my favorite books on trading, The Art of Trading by Alan Jankovsky, defines the actual art of trading as being a participant in both the traded high and low for the day. However, what he assumes but fails to mention is that you actually have to hold the trade between those two points. In my belief, that is the true art of trading… it’s the sitting, the waiting, the patience in the face of what others perceive as tremendous risk. Yesterday also revealed that I was unable to hold long enough between those two points even though I was able to spot them effectively.
Today was a day for me to forgive myself for such “errors”. I missed two major market moves in the crude oil market and was almost resolved to believe that today was going to be another Wednesday crude oil inventory day where I would come up short. Wednesday is possibly the most actively traded oil day of any week. However, it has been one of the most difficult for me to trade.
Despite missing the first two moves of the day, the initial stop run and the entire run off the stops (I actually shorted it with a tight stop for a loss), I hit the top within 5 ticks and sold into it to finish my morning up 6.5%. Once again though, I didn’t hold for distance. I was scaling out of the position too early getting stopped out of half my position at the midway point of the move. My initial target on the trade was hit within 2 ticks, but I wasn’t there to trade it. It’s tough to complain about success, so I won’t, but I will say that settling for bogey when par or eagle is available will become your life’s story if it’s repeatedly performed with the simple refrain of “that’s good enough”.
What is good enough? I don’t know. And while I consistently complain about others telling me it’s good enough, the real voice with which I need to contend is the one within me that tells me it’s good enough.
If good is the enemy of great, good enough is their bastard child… never mention it in the company of greatness.
Sometimes it’s necessary to have a losing day in order to clean the slate and remind yourself that not everyday is an up day and that following rules is critical to success. But I got a little encouragement from Dalanza who told me to stick with it and not simply write off today as a loser.
“Remain patient. Your trade will come. You just have to wait for it.”
It’s a great life lesson all wrapped up in 20 minutes of trading. I was down less than 1% and was considering walking away because I was trading poorly - in too early and out too soon. But my trade came, I took it, added to it with confidence and caught the ride to finish up just under 2% for the day.
It’s another case of surrendering the ego to the market. Yes, the market takes a little bit of blood sometimes and those cuts can hurt, but ultimately I am fostering a belief that the market is here to teach me about myself and I must trust it to show me the lessons. If I am stop the game in the middle of the match, the lesson ends and I learn nothing.
Each day I remind myself of my willingness to risk who I am for what I can become.
I read a book this weekend that reinforced a concept that came in handy this morning: do you have a profit motive or a prophet motive? In other words, would you rather be right than make money?
Despite the clever name of this blog, I have no intent of entering a market merely to prove myself right, nor hold a questionable position simply because I have conviction. The market is right, I am just a participant. What it does, I do. What it doesn’t, I don’t. (Or at least, that’s what I intend to do most days.)
I have a model of the market in my mind, but I must constantly remind myself that the map is not the territory. My market map is not the actual market, it is merely a representation of the market that I use to simplify an overwhelming amount of data.
This morning, the oil market opened up… actually, everything opened way up… and I sat watching a market that looked poised to climb. Yet despite a falling dollar and rising Euro, the dollar-denominated oil market refused to make any new highs. So I started shorting. That’s what the market told me to do. It didn’t make sense to me but making sense and making cents are two entirely different concepts. I used to do the former almost exclusively.
The oil market appeared incredulous to me. Its volatility made my uneasy and I had serious doubts about the position. Yet it continued to confirm itself so I added to it. This is the conflict of a trader. We must have the courage to do the thing that doesn’t make sense. We must be willing to surrender our egos to follow the will of the market. I have been humbled far too many times to argue with a force more powerful than any of us.
I ended the day up 3.7%, a good start to what may be my last week of trading this month. We’ll see.
Until then, I am going snowboarding today.
“The reason people find it so hard to be happy is that they always see the past better than it was, the present worse than it is, and the future less resolved than it will be."
- Marcel Pangol
Markets were volatile today and rangebound. It’s like depriving an animal of food, chaining it and then putting a steak just beyond its reach on both ends. That makes for a very mean animal.
Knowing this, I kept it small today and avoided temptation until the market had moved to its extremes. I would guess that 95% of traders lose money on days like these and that includes many professionals. It’s no joke and the best strategy is often just to sit these sessions out and wait for a better day.
The sailor can plan and plan, but when he exits the harbor he cedes control to the elements and relies only on his own capabilities. I was glad to have my heart rate monitor on today because I noticed that it was significantly higher than in days past. I hadn’t noticed this before but now I have an objective measurement of my physiological state. No more guessing about how I “feel” or trying to convince myself that if my exhalations are 50% longer than my inhalations that I “should” be more relaxed. Now I know. It’s like a life raft in my tempest.
I finished the day with a modest 2% gain and shut it down. Going golfing. No need to monitor the heart rate out there. That’s dry land for me.
For the person who has too much of everything, yet nothing that they love, what do you get them for Christmas?
If you have run out of ideas, give someone ELSE a gift that they actually DO need and WOULD love on their behalf. Give a goat. Or a chicken, or a water buffalo or a heifer. Whatever. Just give them something that they can’t argue with.
Heifer.org is a site that allows you to purchase necessary farm and stock animals for families that depend on them for milk, eggs, cheese, fur or farm work. You can choose from an array of animals and even purchase just a share of certain animals if you can’t afford a whole one. Regardless, you’ll be helping someone in need instead of giving something to someone who really doesn’t need anything.
Besides, no one can say a single cross word about a gift that helps others. Especially when the donation was made in their name. So buy a little karma for yourself or for others.
As for me. I need nothing. The market just keeps on giving. Up another 2% today.
1. I had no internet access yesterday so I didn’t trade. The odd thing about this is that it didn’t upset me at all. Instead of focusing on what I couldn’t do, I just focused on what I could do… go back to my warm bed and sleep in for once! It was luxurious.
2. I have now paid off all of my credit card debt. It feels pretty amazing to be out of debt after carrying an increasing load for the last 2 years. Now I am back to taking a 30 day interest-free loan from my credit card companies and racking up some miles!
3. I am now measuring my heart rate while trading thanks to a very timely birthday present of a heart rate monitor watch and chest strap from my brother. Immediately after I paid down my credit card, the reading dropped to 42 beats per minute… sweet relief. Then it jumped up to 96 after I placed a trade, then settled around 60 while I was in the trade which is quite good. I will be monitoring this more and more to have a more objective measurement of my physiological state, rather than just guessing how I feel.
4. Missed an oil short this morning (actually got caught long and was scrambling to exit because I missed 3 exits as the market dropped and I didn’t have a stop in place…dumb).
5. Still finished the day up over 8% by catching some more of the oil short, some Russell short and the turn in the oil market after the stop run off yesterday’s low.
6. On Friday I filed with the CA Secretary of State to form my first corporation to handle all of my trading. I decided against an LLC and will instead be using an S Corporation as my trading entity. This will allow separate reporting for tax purposes, yet still allow for profits to flow through. I will also be able to write off my health insurance and create a 401(k) plan and start saving again.
7. I turned 34 this weekend and bought all my snowboarding equipment for this season. I will be feverishly devoting my free time to snowboarding on the weekends, stand-up paddleboarding, surfing, tennis, reading and golf. Quite the patrician athletic lifestyle!
8. I bought a 3 month unlimited golf membership at Malibu Country Club. I will be playing there this afternoon… and any other day I am profitable for the next three months!
9. I am grateful for everything in my life, even the suffering and the trying times, because they all contributed to bringing me to this moment. Now that the credit cards are not an issue, my risk capital is no longer leveraged… as much.
10. Resting heart rate right now: 55. Done for the day.
