I’m working on some mind exercises to get myself mentally prepared to do some trading. I’ver been running three computers doing some tick by tick number crunching. I’m trying to figure out what the hell is going on in these markets. I used to be confused about equities, now I’m confused about the entire market. I hope I get one of those light bulbs that go off in my head and I can shout from the street, “Eureka.”
Earlier today, I grabbed a chair, my fishing pole, and some frozen shrimp, and set up on the beach. I was fishing for three or four hours and only managed to catch a small grunt. That didn’t matter, as I got to listen to some good music on my i-Pod, and caught up on some reading. My reading has suffered as of late. Normally, I have 4-5 books that I’m reading at the same time. The past three weeks, I haven’t read a single book, which is some kind of world record for me. I’m planningf on revisiting Cervantes as soon as I can dig him out of one of the million boxes of books we have. I think I can relate to Cervantes.
Jeff
The book that struck a deep, deep chord with me when I was younger was “The Egyptian”, by Mika Waltari. It a about the Pharaoh’s court physician, how he was buffeted by history and circumstance, and how his life was one of constant impermanence, his destiny never to be attached to one place.
It’s a great book. I’ll have to read it again. His book “The Roman” was pretty good as well, “The Etruscan” not so much, but “The Egyptian” is a masterpiece.
Cheers,
George
Comment by allocator — March 31, 2008 @ 12:56 am
Jeff, me again.
I decided to also record in my master spreadsheet each one of my REAP trades since I re-established the system. It’s actually a very interesting and immensely useful thing going through your trading records line by line. I picked up all kinds on new information and perspective. One thing I know already is that this system is going to work - and big time. This was my first real look at how each stock/ETF contributed and also the distribution of stocks participating in the re-allocations. It is actually much better balanced than I thought.
I think the commodity ETFs are going to be amazing (because of their volatility). Just the short gold ETF in the past 4 months was involved in 7 switches, and 4 of them were sell side (delivering profits) - even though this position was against the trend! It looks like the acceleration of the compounding of the overall portfolio may actually be in the order of about 3 times faster than the previous schedule on which I based my calculations and testing (that’s the accelerated rate right now at which I’m getting signals). I also realized 2 out of 3 accounts are OK, they’re only down slightly in absolute terms in this down market over the measured period. I managed to concentrate most of my mistakes in the third. The two stronger accounts are also the ones with the more frequent re-allocations, and therefore share compounding.
It’s also good to see the footprint of the discretionary activity and mistakes. I know I over-traded because I fiddled quite a bit (swapped out positions for others), but on balance most the switches were an improvement and the effect wasn’t as bad as I thought it might be.
I know I’m on the right track.
Cheers,
George
Comment by allocator — March 31, 2008 @ 1:24 am
George, Good for you. You might be on to something, especially with all the volatility. I sometimes use techniques when I leg out of spreads, comparing the markets to stretched rubber bands. I get out of the side that’s stretched longer, assume a little market risk(or cover with options), then leg out of the other side of the trade.
As for all of this volatility, my models and systems for the grains are telling me to buy both puts and calls and hold them. I’m a bit more biased towards buying just calls, but…..who knows. I know I won’t be jumping into a trade tomorrow just to trade.
Your analysis of your trades is a great thing and a good habit to keep up. I’ve been doing the same thing for many years. Years ago, I found a trend in my trading that I lost money between 11AM-11:45AM, 8 out of 10 sessions. I stopped trading between that time and noticed an immediate improvement in my P&L. Your logs contain a wealth of information. I sometimes like to go read my journals from 1981 just for the hell of it. The information I logged back then sometimes helps me today. In fact, I noticed an option pattern that precedes a huge move in a stock 62% of the time. I tested this pattern over 300 stocks that had huge 1 week moves, and the results proved the 62%. I’ll take that kind of edge. Sadly, this pattern doesn’t work for commodities, at least in the last 20 years.
Jeff
Comment by masteroftheuniverse — March 31, 2008 @ 1:42 am
Good advice about the journals. I log so many stats I have to be careful and place lots of comments in my spreadsheets otherwise I can go back later and wonder what the numbers are supposed to actually mean
I only have a few years of experience, and even less with making any type of money consistently. I can say that as someone who is green in terms of experience I really enjoy reading about your insights into market conditions, the fact that the present markets are confusing for you as well is reassuring in a certain kind of way.
Why not take an extended break? Say.. something that pushes you outside of your normal routine and comfort zones? Perhaps just grabbing a backpack and visiting a country you have never been to as a tourist before for 2 months.. or something like that. Or go skydiving or learn to fly a plane.
Best of luck with everything.
Andrew.
Comment by Andrew — April 1, 2008 @ 11:48 am
Jeff -
I found Anthony Trollope to be of great help; don’t laugh. Both my parents (now gone) were diagnosed within 2 weeks of each other, and the next 3 years were tough as you unfortunately know.
Started with “The Warden” (the first and shortest of the Barsetshire/Palliser combined series of 12): humane, thoughtful, dry smiles, warm. Soon I had entered a different world, all 8K pages of it - I read them in chron order, and characters (old friends in time) appeared, disappeared, and returned over 25 years (1855-1879).
If you’ve ever read or seen Austen, the “world” changes are marvelous - by the time Trollope wrote, the coming of the trains, etc., had transformed England, and time moved at a different rate - think planes vs. ships as well as Fax/Net vs USPS.
I hope this helps.
Comment by fatbear — April 1, 2008 @ 5:19 pm