Friday, April 13, 2007

Another Casualty in the Futures Trading ?

Someone wants to call it quits.

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I've never met Boogster. I don't really know too much about him. I only know him through avidly following his posts on his futures trades. And now, I read that Boogster wants to quit futures trading.
At first I felt a bit angry upon reading this. Why would someone who put so much time and effort into becoming a futures trader want to throw that all away?
But when I think about it more, the fundamental issue isn't about how futures trading is really hard (which it is), it isn't about how losing money damages the pysche (even though it does). In my opinion, the real, root issue that we're dealing with here is about the revelation of one's own weaknesses. I've said it before, trading will tell you exactly what your personality shortcomings are.
I'm not saying that Boogster fits into this category, but I've seen it too many times, where people do not want to face their own weaknesses. Many people would much rather prefer to sweep their weaknesses under the carpet, and forget about it in hopes that it will go away. The sad part about this is that they are trading some short term gain for some long term pain down the road. Eventually, left alone and unchecked, these weaknesses will at some point rear their ugly heads when they least expect it. I can say this with conviction because it's happened to me before.

For me, swing trading allowed me to sweep my lack of patience and discipline under the carpet, because I was better able to hide behind my winners, and winning trades more often. With futures trading, there is nowhere to run, nowhere to hide. You weaknesses are handed to you almost every day, and you are forced to deal with them or quit.
I've also said this before, but I am beginning to be able to view things more from the perspective of patience. Every now and then, I still have relapses (which leads to my inconsistency), but when I am patient, it always leads to me feeling good about my trading performance (regardless of whether I made a profitable or losing trade). When I do not stick to my plan, or forget about being patience, it inevitably leads me to feel bad about my trading performance (even though those bad feelings are better suppressed when I manage to wind up with a profitable trade).

What would the Highly Effective Trader do if he were in this situation? Well, he certainly would not quit. He would find what it takes to work on improving the habits of patience and discipline, even if it means being away from the markets for a short time.

Boogster says it better than me:
"If I can trade futures, then I can trade any instrument."
Don't quit trading futures, Boogster. You will just be running away from your problems instead of finding a way to deal with them.
Besides, who will help me now to make the call on YM's intraday bottom ?


Tyro said...

I wouldn't read too much into Boogster's announcement. If you've read Boogster's blog, he's a classic gambler. He is constantly taking trades because he's bored or wants a bit of a thrill. He has patient days but once or twice a week he'll pull his stops and double, quadruple down and take a huge loss. Even without these blowups, he's barely trading flat as his profit targets are only about as far away as his stoploss.

I really feel for him, but he's a broken record. He knows what he has to do, but he won't do it because he likes the rush of his current style.

You make some good points about how different styles of trading bring out different qualities in us. Over the last few years, Boogster has made pretty good money swing trading but made squat trading the futures. I can empathize with his desire to master futures trading, but that's no excuse.

I think you have a good take on the Highly Effective Trader. What would the HET do after a year of blowups in the futures but success in swing trading?

(BTW: I found a way around your JavaScript post block - just click on the 'Permalink' link! Don't take that away from me too :) )

Phileo said...

Hi Tyro,

In my opinion, trading futures is harder than swing trading, probably because the added leverage that comes with futures just doesn't leave much room for mistakes.
Yeah, I hear what you're saying - the HET would not allow blowups to continue to happen for a whole year, because he would be working on the other habits to prevent such a thing from happening.

Believe me, I am not intentionally trying to block anyone from reading my posts. If there is some sort of javascript code block your RSS reader, it was NOT put there by me.
Maybe you can email me to provide a more technical description of the problem you're having, and I'll see if there's anything I can do to blogger to rectify the situation.