Monthly Archives: March 2012

There’s always an answer

I firmly believe there’s always an answer available to any problem that you might face. However the challenge lies in actually asking the right question or being able to see the problem correctly. You can spend an awful lot of time pursuing what you think is the answer to a problem only to find out the question which first arose was the wrong one. That’s slightly opaque so I’ll try to use a (short) real world example to illustrate what this post is about.

I’ve recently found huge problems going to the gym during the week.

Frankly the last thing I want to do at 7-8pm is drag my ass to the gym. I’m just too knackered and the whole experience wakes me right up so my body doesn’t calm down till midnight by which time I’m a corpse 8 hours later when I should have already been up at 7 a.m. to go to work… Ugh…

I’ve spent two months beating myself up for only going to the gym once or twice on the weekends and given what I’m trying to achieve physically that’s not enough. What happens is you go in on the weekends and destroy yourself (too much weight) and are a wreck the rest of the week… it’s no fun.

I thought this failure was related to self-discipline/laziness and so on but taking a bit of a step back from the problem recently I figured out that if I joined a gym close to work I could spend 40 minutes in there each lunchtime, save money (on Costa lunches) and be more productive in the afternoons also. Bonus!

The problem wasn’t ‘not going to the gym in the evenings’ but actually I should have been asking ‘How can I train every day?’ If you ask the right question then the answer seems easy.

With respect to trading (yes we got on topic eventually) I’ve been looking at the problem which is that since I’m working full time it’s very challenging to gain trading experience that is useful and which I can learn from.

What I mean by this is to learn a new skill you need to be able to repeat it over and over under the same/similar conditions before you can internalize it, before it becomes truly ‘yours’. However if your exposure to the market is haphazard/piecemeal and under pressure that’s nothing like how you should be trading. Also given the fact I miss opportunities to learn/set-ups intra-day the actual number of potential learning experiences I’m exposed to is actually very small…

Now I began approaching this problem by looking at radically changing my work life (not currently possible) then at the hours/markets I could trade (yes, to a certain extent) or simply mothballing the whole topic till I’ve gotten myself into a position where I can trade full time. This last sentence is hugely ironic and contradicts all my reasons for learning to trade.

It hit me that, since there are no shortcuts, what I’m looking for is chart time. The right question to ask is actually ‘How do I get more experience in front of the market?’

Happily I stumbled across this program which allows you to ‘trade’ from historical (live recorded) data at an accelerated pace. Since I’m not back testing a robot but learning to trade ‘price action’ in a discretionary way (that suits my psychology) I can now do this evenings and weekends to improve my competence in a structured way. The alternative being attempting to ‘read’ the market and place a trade having glanced at a chart in between doing actual work…

You can hopefully see how what I was doing before simply led to frustration, losses and a very haphazard learning experience!

Back way off topic again but to wrap up properly… If there’s an issue you see in your life then you need to check yourself.

  1. Are you trying to solve the right problem?
  2. Are you asking the right question about what you’re trying to fix?
  3. Are you simply scared of making the change you know you need to?

So my friends, onwards and upwards!

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STILL Trading like a bloody tourist

Yes, this post contains a certain amount of self recrimination, invective and is possibly a bit ‘ranty’… but you’ll be quite safe since it’s directed inwards at the bit of my brain that does actually know better.

Quite often in life there can be a wide gap between ‘knowing’ a thing and doing said thing.

Do you know how to eat right? Yes. Do you do it? Nope!

Yesterday evening and this afternoon contain lovely examples of what might be the retail traders greatest fault and his ultimate downfall. Enter the NEMESIS..!!!

Trying to pick the top/bottom of a move

Another way to think of this (and you’ve done it too so don’t laugh) is when you spend a DAY looking at a falling market trying to figure out when it’s going to STOP falling for you to go long. And it keeps falling, falling, falling till you can’t stand it any more. You finally get to the point where your brain is going ‘surely, surely it can’t fall any more’ and sure as eggs are eggs it consolidates a little before taking you right out.

There are only two things that saved me from a complete balls up on this trade…

  1. From having been looking at this topic for a while I now have a pretty finely tuned sense of when I have made a stupid mistake.
  2. So having realised I’ve made an error I know enough not to get out in a panic and can usually bail for evens or close to it…

Indeed I was lucky this time and got out for minus 1 point. As I was typing an email about this shoddy experience to a mate the price took out what would have been my stop. So a victory of sorts but that brings ‘looking for the silver lining’ to a whole new level…

So here’s possibly the most embarrassing chart on my blog to date.

I tried to go long at the top of the lowest range when the market’s been dropping like a brick all day long… Oh dear… I simply wasn’t patient enough and was trying to ‘forecast’ (using not much more than wishful thinking) the end of the down move.

The point is that I actually do really know better than this. If all you (and I) learn from this is to buy the bottom of a channel and sell at the top I’m sure we should all be able to do fairly well. My psychology killed me all day because ‘I thought I knew better’ rather than just looking clearly at what was right in front of my nose…

Even Leonardo's struggling with this simple idea