Does that make cents?

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.