Better Luck in 2007?

Man ... it's been a long time since I've blogged. I suppose as a reader you could view that one of two ways:
1. No news is good news, or
2. If you don't have anything good to say, don't say it at all

As much as I wish I could say it was #1, I am pretty sure you could guess it is #2. Quite frankly, I am tired of chronicling my failures on a regular basis. The past 3 weeks of work have been nothing but disappointment. Add the holidays into the mix and another minor health scare, and the holidays have been emotionally draining. As optimistic as I was at the beginning of this year, I have to say that I am at the complete opposite end of the spectrum now that the year has come to an end.

I wrote several posts ago that I had pretty much realized that I wasn't going to make it in the trading game. I said I was starting to look for other jobs. However, being the stubborn German I am, I haven't given up that easily. I have kept "fighting" and trying to find something that will make me successful. However, my biggest enemy is myself and it's a battle I continuously lose. For 9 months now, I basically know what my problem has been, but I have not been able to change. I get into a trade where I know I need to change the way I normally think, but my "panic" instincts take over, I exit the trade too early and leave hundreds of dollars on the table. Day in and day out with pretty much no exceptions. Everyday I spend going over my botched trades swearing that tomorrow will be different. But the next day is just like the last. There are instincts as a trader that you need to have and no matter how hard I have worked to develop those instincts, I just don't seem to be able to. I have really started to believe a lot of the trading articles I have read concerning the innate ability to trade. Just like someone has the innate ability to play a professional sport or understand what it takes to be a software programmer, there is also that innate trader ability. I know what it is, I just can't seem to get it. You wanna know what it is? OK, here it is.

The innate trader ability is to remain convicted in your beliefs and follow your system, even ... no, especially, in the face of apparent failure. Having grown up playing and coaching sports for many years, I have really learned to hate losing, but it is something that you have to deal with. As a coach, I have coached different caliber of teams. I have coached ones that are athletically gifted and driven and believe they will always find a way to win. I have coached some that are athletic and successful, but when their backs are against the wall, it is easier to accept failure rather than put their heart out on the line and believe they can win. I have also coached teams that aren't athletic, that play for the fun of it, andd believe they never have a chance at winning anything. They give up easily and expect failure.

I believe my trading falls somewhere between the second and third teams I mentioned above. I don't think I have the best mind for trading, but I think I do see patterns and tendencies in charts that other people don't. In fact, I helped a very successful and experienced trader make about $3k on Thursday when I pointed out a chart pattern that was forming. He agreed, got into the position, and made money. I sat on my hands and afterwards berated myself for not believing in my abilities. So, problem number 1: I see opportunities, but fail to act. Why do I fail to act? Probably because I don't want to lose or fail. But, dealing with losing is part of this game. Which leads to problem number 2, and the biggest reason I haven't been successful. As soon I get into a position, I look for a reason to get out. At the first sign of failure, I typically give up and don't stay in the position and fight -- I am like the second team I mentioned. In volleyball, a game is played to 25. The way I trade is equivalent to a team in volleyball being down 5 to 0 and saying, "You know what, we can't come back. Let's just quit." So the team walks off the court. However, everyone knows there is a lot more game to be played and anything can happen until the score reaches 25. Similarly, when I am actually profitable in a trade, it's like I am up 5 to 0 and say, "OK, I've won", and I walk off the court. So why do I "walk off the court" in my trades? That is pretty simple. I monitor the "Level 2" window way too much. The "Level 2" windows show all the market participants and their interest in a particular stock. This window is like the fans at a sporting event. Basically, I let the fans dictate whether I stay in or leave the game. How stupid is that? I should only let the score (or actual trades being made) determine whether I remain in the game or not.

This all sounds pretty simple, but putting it into practice has been very difficult for me. It is so easy in trading to get caught up in things that have nothing to do with the system you are trading. The good traders maintain focus and in the face of "unruly fans" stay convicted and believe in what they are doing. Here is hoping that the light bulb will come on for me in the next few weeks.

So, how much longer am I giving myself? Well, the savings are running out quickly. As I see it, I have about 2 to 3 more months before I am really pushed into dire straights. I am receiving some income from coaching volleyball and that will help, but it will definitely not be enough. I have said this before, but what would really keep me in the game is finding some type of part-time job. I just don't know what I would want to do. Then, there is the inevitable fact that I may need to find a real job in 2 to 3 months. I have NO idea what I want to do. Trust me ... I have thought about this a lot, and have no idea. Maybe I need to spend more time thinking about this than I do. But the second I do that, I will most certainly seal my fate.

So, 2006 .... not necessarily a "dream year" for me. There have been a lot of difficulties, but I have enjoyed the job and all the challenges it presents. I am just disappointed I am not more successful in it than what I am.

I hope everyone had a great Holiday Season. Have a Happy New Year and I will be back in 2007. New Year ... New Luck ... let's hope.