Hey Dom,
Do you happen to have a lightspeed keyboard cheatsheet? Or some exercise doc that SMB gave you?
If so can you please put it the shared Dropbox. Let me see about the "Outliers" mp3.
ThanX
Monday, September 14, 2009
A little action
I sold some naked puts today just trying to generate some revenue.
(5) Sep GG $40 @ .61 = $305
(10) Oct VLO $19 @ .85 = $850
(5) Oct UA $25 @ .75 = $375
Best case scenario is $1530 or a 2.97% one-month return on total risk of $51,500.
Sunday, September 13, 2009
Update
I'm not doing much right now with trading. I spend an hour a day seeing what happened and looking at a few option related opportunities, but that's about it. I've got 3 bull call spreads on the books and just kind of letting them go and see what happens. Between my last semester of school, job searching, and networking, I don't have a whole lot of free time. If I do I plan on starting the Level II CFA studies. My rough plan is still on track to finish in December and then be available to trade full time if I chose to. I don't see me having a job lined up by then as I don't even know what I want to do exactly just yet. I'm hoping that by the time January rolls around I'll have a lot more information from you two on your experiences that will help me decide what my next move will be.
Great "trading" related reading this morning
Most traders struggle when they first begin. The great news is the worst you will ever be as a trader will be when you first start. And you have to hang in there and focus on improving. GMan, one of the better intraday traders trading today, walked into my office to quit. He went from "I quit" to head trader. I was negative $36k, eight months in and am writing this book. My partner did not make money for his first six months. One of the best intraday traders on the street was absolutely one of the worst at my original firm. This trader was in the bottom ten percent of our firm and today he is in the top one percent of all day traders. Our most improved trader this year floundered for his first seven months and now is headed to becoming a star. It takes time to be good.
And I see this time and time again. Those that can give trading more time when they start have a better chance to succeed. 8 months is better than 6, and 12 is better than both. You need reps. Like Michael Jordan who did not make his varsity basketball team when he was a Sophomore in high school you must be patient. But your time will come.
At the start you should trade with small size and with one stock. You should not increase your tier size until you are positive 7/10 trading days. You should have a small max loss when you begin. You should be limited to the amount you can trade. For example when a new trader begins they should not write more than 10k shares in a day.
When you start you will need reps. You will not get better until you gain experience. Stay patient.
Let's visit a recent column "Genius: The Modern View" by David Brooks of the New York Times to offer clarity on a trader's need to be patient when they begin. Mr. Brooks wrote insightfully about the modern genius model in our society. He noted that it takes concerted practice to become great. Brooks wrote, “The key factor separating geniuses from the merely accomplished is not a divine spark. It’s not I.Q., a generally bad predictor of success, even in realms like chess. Instead, it’s deliberate practice. Top performers spend more hours (many more hours) rigorously practicing their craft." We are not born great at anything. You were not born a great trader.
Not convinced yet that you are not going to be a great trader on Day One? Let's check out Malcolm Gladwell's latest page turner "Outliers". Mr. Gladwell explores the commonalities amongst the uber-successful. Those that Mr. Gladwell studied all worked at their craft for at least 10,000 hours before they were great. Bill Gates, Tiger Woods, The Beatles, Bill Joy all had extraordinary opportunities to practice their craft, which was responsible for their greatness. Gladwell explains, "Working hard is what really successful people do."
Geoff Colvin in "Talent is Overrated: What Really Separates World-Class Performers from Everybody Else," wrote that deliberate practice, often with a continuous feedback is necessary to become great. Concentrated practice is the key.
Let's explore the world of tennis for further evidence that you must remain patient to become a solid trader. Russian women accounted for half of the top 10 ranked players in the world in 2007. Wow! Three of those players were produced by Spartak, a dumpy club where they felt lucky if the heat worked. Their secret? Deliberate practice on technique, constant critical feedback, and improving weaknesses. At Spartak passionate instructors focus on the brickwork of developing the skills of their students. Players start at 5, so they have practiced for at least 10 years before we ever meet them at Wimbledon or better yet the US Open in
Ok so you don't like sports, let's use an example from trading. After all this is a trading book. In "Reminiscences of a Stock Operator" we read, "Years of practice at the game, of constant study, of always remembering, enable the trader to act on the instant when the unexpected happens as well as when the expected comes to pass." So I guess you got to practice as a trader also. Sorry.
a) Be patientb) Start slowly
c) You need reps
d) It is hardest at the beginning
Friday, September 11, 2009
A few insightful posts from Dr. Steenbarger
Take some time to read the posts below. I will be answering the questions in the second post this weekend. My live account is now set up with OceanView Capital and I will begin trading live on Monday morning. I will prepare this weeked and button up the rest of my trading system. I feel the most prepared now more than ever. I feel like I have purpose when I go into the markets. that is not to say that I will not make any mistakes but if someone were to ask me what I trade, how, and why? I can come up with a more conclusive answer than a few months ago. I have a defined system that gets me in and out of stocks. Lets see what the markets will give me.
Continuous Quality Improvement in Trading: The Value of Elaborating Your Trading Process
If you look at successful manufacturing companies, such as Toyota and Honda, you'll find that they understand their production processes very well. They keep a close eye on quality and intervene quickly should they deviate from their own quality standards. That enables them to produce products, year after year, that are surprisingly free of defects.
Trading is far more fuzzy than manufacturing, but I think it still helps to view ourselves as profit factories. We take certain inputs--the data we collect on ourselves, the research we produce, the preparation for market days--and transform those into outputs measured in profits and losses. To the extent that we are consistent in our "best practices", we can maximize profitability and minimize our own defects.
I see it in my own trading as well as that of traders I work with: the process is too loose, too open to random, subjective inputs. We will be swayed by something we hear or read; we will become so locked in an idea that we miss important market data. Worst of all, we will produce defect after defect and continue the assembly line of trading.
You cannot double down on your processes and tighten them up if you don't know what they are. Only by reflecting on your best trading and dissecting your best decisions can you figure out how you do what you do when you are at your best.
In coming posts, I will be elaborating my own trading process, as much for my own development as to aid others. My goal in this is not to provide a template for how to trade; each trader must arrive at their own. Rather, the goal is to illustrate and stimulate how continuous quality improvement can apply to something as fuzzy and discretionary as trading.
Reflections on Trading Processes
What is your trading process?
* How do you generate your best trade ideas?
* How do you manage risk most effectively?
* How do you manage positions most effectively to get the most out of trade ideas?
* How do you most effectively manage yourself and your emotions during trading?
* How do you prepare for market days most effectively?
* How do you best review markets and trading performance for optimal learning?
What I find is that the traders who have been successful over the long haul know the answers to these questions and also have very distinctive answers.
Like Toyota or UPS, they have developed their own, unique processes that are both efficient and effective. Success is a function of refining processes over time and becoming ever more consistent in following those processes.
If you *know* your processes, you can more readily develop confidence in them. Many times that is the difference between making the good trade and not; avoiding the bad trade and not.
Half of the challenge of trading is finding your best practices; the other half is implementing them with fidelity and consistency.
Continuous Quality Improvement in Trading: The Value of Elaborating Your Trading Process
If you look at successful manufacturing companies, such as Toyota and Honda, you'll find that they understand their production processes very well. They keep a close eye on quality and intervene quickly should they deviate from their own quality standards. That enables them to produce products, year after year, that are surprisingly free of defects.
Trading is far more fuzzy than manufacturing, but I think it still helps to view ourselves as profit factories. We take certain inputs--the data we collect on ourselves, the research we produce, the preparation for market days--and transform those into outputs measured in profits and losses. To the extent that we are consistent in our "best practices", we can maximize profitability and minimize our own defects.
I see it in my own trading as well as that of traders I work with: the process is too loose, too open to random, subjective inputs. We will be swayed by something we hear or read; we will become so locked in an idea that we miss important market data. Worst of all, we will produce defect after defect and continue the assembly line of trading.
You cannot double down on your processes and tighten them up if you don't know what they are. Only by reflecting on your best trading and dissecting your best decisions can you figure out how you do what you do when you are at your best.
In coming posts, I will be elaborating my own trading process, as much for my own development as to aid others. My goal in this is not to provide a template for how to trade; each trader must arrive at their own. Rather, the goal is to illustrate and stimulate how continuous quality improvement can apply to something as fuzzy and discretionary as trading.
Reflections on Trading Processes
What is your trading process?
* How do you generate your best trade ideas?
* How do you manage risk most effectively?
* How do you manage positions most effectively to get the most out of trade ideas?
* How do you most effectively manage yourself and your emotions during trading?
* How do you prepare for market days most effectively?
* How do you best review markets and trading performance for optimal learning?
What I find is that the traders who have been successful over the long haul know the answers to these questions and also have very distinctive answers.
Like Toyota or UPS, they have developed their own, unique processes that are both efficient and effective. Success is a function of refining processes over time and becoming ever more consistent in following those processes.
If you *know* your processes, you can more readily develop confidence in them. Many times that is the difference between making the good trade and not; avoiding the bad trade and not.
Half of the challenge of trading is finding your best practices; the other half is implementing them with fidelity and consistency.
Thursday, September 10, 2009
Whitney on Rebuilding Credit Markets - CNBC.com
She's starting to sound like Dr. Doom, Roubini and Peter Schiff. Her thesis sounds solid from a fundamental standpoint:
Whitney on Rebuilding Credit Markets - CNBC.com
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Whitney on Rebuilding Credit Markets - CNBC.com
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