One Step Forward ... Twelve Steps Back

With the exception of the week my father passed away, this may have been the most difficult week of my life mentally and emotionally.

Just when I thought I was starting to get "it" at work, I turned in my worst performing week since I have been there. I did not have a single positive day, including yesterday, when there were seriously only 5 traders (out of 80) that were negative on the day. I can't help but doubt that I will ever be successful doing this for a living. It seemed that everything I tried went against me as soon as I got into it. There were some trades yesterday I took for 30 and 40 cent losers, and I never do that.
It is true that all traders are going to have rough times and they have to fight through it. I know I need to do it. But there is this little voice in the back of my head saying, "This job was just a bad "trade", cut your loss early, get out of there, and look for something else."

So, where do I go from here? Well, I am not going to quit ... at least not right now. I didn't quit my decent-paying tech job to give up after three months.I am at least going to give this job until the end of September. That would be roughly 6 months of trading with real money. If I am still feeling and performing the way I do, I will have to leave to perserve my psyche. I write all of this and I am so upset with myself. I always called myself a "realist", but if there is one thing I have learned from this job, it is that I am a "pessimist". And you can't be a "pessimist" and a "trader". My natural tendency is to always think something is wrong, so I let my losers run (to prove a point to myself), and cut my winners short (because I don't think my decision will be the right one in the future). It sucks, but I really think subconsciously that is what I am thinking throughout the day. So, change it, right? Yeah ... it is that easy (sarcasm off). In the words of Sammy Chua, author and master trader, "The trade begins and ends in the mind." And right now, I got some funk going on up there.

I come home after work and talk to Kim about my trading day, and she continues to say basically the same thing:
1) What have you tried to do differently if you know something is not working for you?, and
2) What have you done to learn from other people who are successful?
I think those are great questions to ask myself, but unfortunately, I just don't remember them during the trading day. I think I need to slow down a little bit and really start shadowing one or more of the better traders. I have done that a little bit, but definitely not enough. I do think I am thrashing between different entry techniques though, changing too much. As a result, I am not really getting a good feel for any technique. I need to stick with something that works and run it into the ground. Lastly, I am going to start trading maybe 3 or 4 stocks exclusively. I have been thrashing around between different stocks and really don't get a feel for how a particular stock moves. Best example of success doing this is a guy on my team who came in Friday afternoon for 2 hours, traded in and out of one particular stock during that time, and made $1,500. If you know one stock well, that is really all you need.

Unfortunately, my natural response to something when I encounter difficulty is to "log more hours" -- work hard, long, and smart to figure this thing out and be successful. I don't know whether that will really help me in this case, but I do feel that I haven't been doing everything I possibly can to get better when I am away from the trading office. Sure, I have been reading a lot of books and been dinking around with the Amibroker program, but I haven't been doing the one thing that will absolutely help me and that is reviewing my trades. Until I start spending more time learning from my mistakes, I feel I am going to be destined to repeat them. This is definitely gonig to require more time and focus in the evenings, but until I give this a try, I don't feel like I will be doing everything I possibly can to get better.

What this eventually boils down to is, sacrifice. I feel, at least in the short term, I am going to have to sacrifice some "family" time to get my business off the ground. I love the analogy my coach gave me - that I am trying to build my own business there. It is so true. And what do small business owners do ... they work their asses off, until their business gets off the ground. So, if my business is going to have a shot of making it, I got work hard, long, yet smart in the coming weeks. I know I will still need to have a "work/life" balance, but I think for the next 3-4 weeks, the name of the game for me and Kim will be "sacrifice". It kind of sucks that it has come to this, but I think it has to be done. No regrets.

So, the hopes and dreams of a five figure paycheck after 5 months are most likely out the door. I am struggling to survive. But as the saying goes, "the harder the battle, the sweeter the victory." I have to find a way to be successful and hope that one day, even if it is a year or two from now, I will be able to taste that victory.

Wish me luck this next week ....

Week 10 Summary (and 9)

Yeah .. I know ... you can't go from 8 to 10 without a "9" in there somewhere. So, I am going to include a Week 9 summary in here as well.

The past two weeks have been encouraging ... except for this past Wednesday. I am starting to see the market much better. I am making better decisions about entering and exiting trades. In fact, I have turned a profit 7 out of the last 10 days. Not too bad, except for the trainwreck this past Wednesday.

I probably should have left at noon, but decided to trade the FOMC rate hike announcement that day. Let's just say I won't be doing that again anytime soon. I got in a couple of trades that went against me hard and ended up losing the most I have ever lost in one day ... $180. Actually, it could have been much worse and am thankful I was able to get out when I did.

I think I am actually about even the last two weeks, maybe down a little. I know I looked at my cumulative deficit on Friday and saw that so far, within the past 10 weeks, I am down about $1300 (not including other expenses). So, if I do the math that comes out to losing right around $35/day for the 8 weeks I have been trading with real money. I guess if I look at it that way, things aren't too bad. If I can average making $35/day for the next 2 months, I will be even. But $1300 every 8 weeks is not going to replace the income from my old job.

Regardless, I need to stop worrying about making money, and keep learning. I have been reading a VERY good book called "Trading for a Living" by Alexander Elder. I highly suggest anyone interested in trading to read this book. There are tons of books and reading materials about trading out there, but I have to believe this is absolutely one of the best. Anyway, he talks about the right mindset to have when trading. He says a person cannot get focused on the monetary aspect of trading. This is the same way that any doctor. lawyer, or engineer doesn't ponder how much he/she made the past 10 minutes, 2 hours, etc. It is so true. I believe I will really see the big picture when I quit focusing on my P&L screen, and start judging each trade solely by my entry and exit criteria. However, this is a personal struggle, which no one can ever really teach you, but yourself! It is absolutely amazing how much of a personal challenge this has become.

I am still only trading 100 shares at a time, but really starting to trade more times each day. I think the past couple of days I have traded between 7k and 8k shares (which comes out to 35-40 trades per day). I am a lot happier about this and really not becoming too concerned about my losses. Hopefully, I can continue this.

So, for everyone who is wondering if I am making the big bucks yet, the answer is "Not Even". However, I feel like I am continuing to make progress, albeit a little bit slower than I had hoped. I need to continue to be patient with myself and keep learning. If I had to make a prediction, it will probably be another 3-4 months before I break even, but that all depends on me.

A couple of notable events the past couple of weeks:
1. Our office is now using eSignal. At first, I wasn't too fired up about the additional $100/month charge, but I have really started to like what it offers. Plus, this tool is available to anyone/anywhere so I could even go out on my own one day if that is my primary trading idea platform. Not to mention it ties in great with my backtesting program, Amibroker. I have really been doing a lot of work in the evenings trying to enhance my trading strategies. I think continuing to learn eSignal will be a great skill to have down the road.
2. Thursday was a brutal day for some of the office's best traders. Most of these guys are scalpers who try to take advantage of the NYSE and AMEX specialists and their inefficiencies. On Thursday, it was the other way around. A couple of the guys traded ERS and got slapped around pretty good. In fact, 2 of the traders lost as much as $35K/each in one day. These same traders probably average $6K to $7K profit each day, so this set them back a week or so. But you know what? They took it in stride, came back on Friday, and each made back $10K. Unbelievable.
3. I met with a former colleague of mine to sign some patent paperwork for the old company I used to work for. We had submitted a patent a couple of years ago that is just now being filed. So, what does this mean? Well, since I don't work for the company anymore, I am not entitled to the patent award money. That kind of sucks, as I could definitely use it. However, I will have my name on a patent if it is awarded to us. Oh well, I guess that is what happens in a big corporation. In all honesty, this patent should have been submitted over a year ago, but there was a delay in some of the patent proceedings within the company. Big bummer. Nonetheless, I will see what becomes of all this, and a big "Thank you" to the colleague for helping me out!

Well, that about does it for me this week. As always, I will try to post during the week, but I get so focused on trading plans, etc. that I honestly forget to do it. I can definitely do it on the weekends, though, as long as I don't have a volleyball tournament. I hope everyone is doing well, and I will post again soon!

To be continued ...

Man ... I really need to blog more. I have said it every post. I just looked and it has been well over a week. And I am going to have to extend it another day or so.

Last week was extremely busy for me. First, it was the last week of volleyball. We had an extra practice and travelled to Houston this past weekend. Also, I have been spending a lot of time in the evenings (to my wife's dismay), learning the ins and outs of the Amibroker software I purchased. It is really a powerful piece of trading/investing software. It has its own scripting language and a great open source community. I think I am actually going to install it on my workstation at the trading place. I have a feeling it is going to help me out more in the long run than a lot of the technology they have available there.

Well, I promise I will be back with more soon. Just hang in there.