Well, another week passes with most of our trading in the equities…really interesting how the bonds/notes continue to have no response to the recent SP moves.
I’ve heard the term “catalyst” used…as in what will finally cause the bonds to move….and I don’t really know. I mean, as scalpers, that’s not really something to waste energy on – we should just trade the market that’s in front of us. But I’d have to guess either something really unexpected out of Washington or perhaps the meeting with North Korea later on this summer…
In my 18 years on the trading floor I heard a lot of “Good luck” in trader conversations…it was almost used in place of “have a good day”. I used to say to myself “There’s no luck in this. This is a skill” …and I also avoided ever using the term because I didn’t want to imply to myself that luck was involved.
But between the changes in the markets from those long-ago days and my maturation as a market participant I realize I’ve been wrong. In a recent Sports Illustrated, trainer Bob Baffert, a 5-time Kentucky Derby winner says “You need racing luck” as he answered a pre-race question about his horse’s (Justify) chances to win the Derby.
Compare his sport to our profession: a horse can cost millions of dollars ….it gets the best handling…the best diet…the best care….thousands upon thousands of dollars are spent on its comfort and development…everyone around the horse – the jockeys, the grooms, and of course the trainer have been around racehorses their entire lives…but yet to win a race they still need racing luck.
As traders, we have invested heavily in our career thru our original education (and likely some early losses) and our “stake” – the risk capital in our account. We use the fastest computers….we’ve got a lot of experience….but yet we’re “unable” on a trade that would have made our week …we’re filled just as unexpected news hits the wires…. we step away to refill our coffee mug and miss a trade we’ve been waiting for. Yes, I think there’s an element of luck there.
Reading on in SI…
Mike D’Antoni, coach of the Houston Rockets went thru a terrible shooting slump in his playing days in Europe. He was ready to quit but then a new coach took over and recognized D’Antoni’s problem was not his shooting stroke, it was his psyche. The coach told D’Antoni “You’re my point guard” and to “shoot at least 12 shots a game”. The coach cured D’Antoni’s shooting woes by changing his perspective:”Think about taking, not making.”
Great advice for traders. We’ve said in this blog in the past: if the money is on your mind when you’re trading you’re in for a very hard time. Trade the process and let the money take care of itself. Think about taking the trade…not making the money.
D’Antoni went on to win 7 championships in 13 years while playing in Europe – and scored more than 5000 points. He wanted to come back to America to show the teams that cut him what he had learned: confidence is the most potent performance enhancer of all.
That’s the dilemma traders deal with. Many new traders “learn” from a failed trader (or someone who never traded) who wrote some books and put together a nice set of cds …but when the new trader start to trade they have loser after loser after loser….so of course they have no confidence. But there are also traders out there who despite being privy to some solid techniques and real-time information still screw up their own psyche because they choose to cherry pick the trades….and inevitably (or is it lady luck?) pick the losers and pass on the winners. Think about taking…not making….
Houston won 65 games this season and is playing in their conference championship. Houston GM Daryl Morey says D’Antoni has a minimalist approach (D’Antoni says “I like when there’s no thinking’) that reminds him of an Albert Einstein quote: “Everything should be made as simple as possible, but not simpler.”
We’ve talked about the latter point too in this blog: many struggling traders are doing too much: too many screens…too many markets….too many indicators. I get a lot of comments from new visitors to my trading room when all they see are 5 5-minute charts with a few lines drawn on them. Everything should be made as simple as possible.
The Chicago Blackhawks have a goalie leading their farm team thru the AHL playoffs. A few passages from an article in May 11th’s Chicago Tribune brings us back to trading:
On statistics he says: “[they] really only tell half the story. You lose track of what’s important in the game when you’re obsessing about numbers and wins and losses. …free [your] mind from the end result and be a little more present.”
Don’t worry about wins and losses….play the game.
Don’t worry about your end-of-day P&L. Trade the market.
And finally: “I was a little too absorbed with myself (at the beginning of the season). I realized…if I’m going to do something I love I’d rather be happy doing it than stressed out about it.”
Perfect note to end on. The newspapers just got delivered…the coffee is ready….time to post this and move into the fun part of the day.
Thanks for reading.