Monday, January 18, 2010
A couple baseball players have been in the news lately. Mark Mcgwire finally admitted to using steroids for the bulk of his career. This news overshadowed the Cubs signing long time pitcher Greg Maddux as an assistant to the GM.
Greg Maddux will surely go down as one of the greatest pitchers of all time. But he did not have over powering speed (like Nolan Ryan or Randy Johnson), a wicked curve ball or the physical attributes of many great pitchers. What he did have was great control and a great mental game.
Greg Maddux recently had this to say of pitching in the "steroid" era:
"If the guy was skinnier in the on deck circle, you realized you had to talk your chances with him."
Maddux was not a macho guy who had to prove himself against everyone. He put himself in situations with the best odds. If the guy on deck presented a better opportunity for an out than Mark Mcgwire, then Maddux pitched around Mcgwire.
Often in my daily and weekly goals I write to my self "be ready for the next best trade."
- A trader can not worry about a past loss
- A trader can not worry about a "missed" winner
- A trader can not worry about last week, month, year
BUT, a trader can worry about the next best trade. Is it in the batter's box right now? On deck? What does it look like? What characteristics does it have? Will I know it when I see it?
Thursday, December 10, 2009
When trading is tough we (I) like to say put on the oven mitts. One can not punch too many keys with oven mitts on. In other words, sometimes the best trade is the trade not done at all.
The market lately sure has the feel of holiday lull. I am mentally prepared to do less size, less decisions, and less risk. When the market pays me to increase these variables I will.
Check out our last two plays of the day from the Trading RM twitter feed:
1) On Wednesday December 9th pre open we said:
"Trade off open: Short $MW only on a bounce and hold under the 19 level. Shorts have been tough lately. entry and exits are key"
Check out the MW chart and we see that it could not hold below $19 (light blue line) and thus our trade off the open was a no trade:
2) Today, Thursday December 10th our we sent out via twitter this play of the day:
"Play off the open: Wait. we are seeing nothing. very quiet $$"
Again, sometimes the best trade is no trade at all.
Recall our post on maximizing "1 star days." If I can eliminate just one $500 loser every day I save $125,000 a year. Recognizing early that it is a 1 star day can help us. Today did not feel like a day to push our chips in.
Saturday, November 28, 2009
A great goalie will wait until the shooter makes his move and then react quickly. Likewise, a great goal scorer will wait until he sees the goalie make a move, lean in one direction, poke check the puck, etc... I am reminded of all the great 1980s Wayne Gretzky highlights when the goalie somehow ends up on his side way out of the net and Gretzky has an easy goal into a seemingly empty net.
What does this have to do with trading?
- When is there opportunity for a short term trader? Answer: when there is market movement.
- When does a short term trader get chopped up? Answer: when the market does not move.
Sometimes a trader has to be like the NHL shooter on a breakaway and let the market make a move first. When I looked at the calendar for November I had Wednesday November 25th and Friday November 27th circled as days to most likely do less. Wednesday I barely traded and scratched the day. Friday I made money and had a couple larger positions on.
What was the difference between the full day before Thanksgiving and the half day after Thanksgiving? Thanks to Dubai's debt/ real estate crisis, we saw movement on Friday. That does not mean there was free money to be had. But it does mean that a short term trader is more likely to make money because the markets are moving. I.e. like in poker, the odds favored putting more chips on the table. Had I traded the same size and # of decisions on Wednesday as I did on Friday, I would have lost more on Wednesday that I was able to capture on Friday.
Check out Edmonton Oiler's 2007 4th round draft pick Linus Omark playing for Sweden in this shootout. He waits for the goalie to make a move and then makes him look silly. As a trader I will wait for the market to show its hand and then make the market look silly.
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