Friday, February 15, 2008

Trading Strengths

A Good post from Dr. Steenbarger Trading Logic and Trading Edge: Accuracy, Execution, and Position Sizing

I would say my greatest strength is picking trades correctly in the short term and my biggest weakness is position sizing.

Since the Fed cut interest rates on Jan 22, the market has been going sideways and things have been choppy. Hopefully next week we can get some direction.

It's interesting to note the trend in bond futures. The spread on the 2 and 30 yr bond was widening quite a bit, but there was some narrowing of that spread today, with the 30 yr bond moving up a little.

ZB vs ZF (30yr vs 2yr)

30yr bond ZB

2yr note ZF

30yr Bond


Ben Dare-Dundat on 8:26 PM said...

You give yourself too much credit. From the blowup vid that introduced you to me, it was clear that 1) you weren't that good on picking short term direction, and 2) you were even worse in picking exits.

Granted that may have been the mother of all aberrations in your short trading career, but that's what ultimately defines you to this point since it's the bomb that's knocked you out of the game for the time being.

I know you'll be back though. You have a lot of trading strengths as well. Number one being you're not afraid to pull the trigger on any trade. You'd be surprised at how many supposed daytraders show up day after day to step in the batters box and never take the bat off their shoulders. I played that mind game for over 6 months once. I called it "paralysis by analysis" as I spent my time tinkering with my charts, convincing myself that I needed to perfect the holiest of grails before venturing into the deep end again. I envied your ability to trade immediately after the blowup. You'll definitely be back trading again.

Just simplify your game when you return. That's what trading index futures is all about. It's got liquidity, heavy volume, nice fills, great leverage, nice daily ranges, etc all in one package. I don't know why you even bother with other distracting games like trying to make heads and tails of the bond spreads or wanting to suddenly trade AAPL or bother trying to fill your screens with so many extraneous charts, unless you're purposely trying to sabotage yourself. Yeah, you're trying to understand the whole picture and get a heads up on what's going to happen, but ideally, the chart you're trading should be your tell.

Pick your futures vehicle, stick with that, stick to one contract with a stop loss in place, and cut out the other noise. I'd also advise you to go to cash at every close. Bank your money and sleep well at night, ready to pounce on the next fresh opportunity, instead of having an existing bias you're praying on with zero control on how any overseas mkt action, early skew government reports, and any and all other world political/business news might be affecting the next open.

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