Thursday, November 08, 2007



Read Full Post.....
Work is work. I am finding that after working in the same industry for over a decade, the duties and responsibilities of the position is more or less the same where ever you go, only the people and the corporate culture is different. In other words, what I did at my previous company, and the 3 or 4 companies before that, is more or less the same type of work that I am doing now, just the company and the people have changed. I am actually demonstrating this self-revelation by writing pretty much the exact same code that I wrote at my previous companies.

This is one of the reasons that I wanted to change careers, and take a crack at trading for a living as a vocation. My current job just doesn't offer me new and different challenges anymore. On the other hand, the vocation of trading for a living offered a ton of challenges, probably more than I was able to handle. And yet, I still come back to the same conclusion that I do want to take another crack at this vocation, and have started planning for it (though I don't know the time frame for this quite yet). Regardless, I would like to be better prepared the second time around.

Anyways, they say that all paths lead to Rome. In terms of trading, what this means to me is that you can try as many different approaches and trading styles as you want, but sooner or later, you will find that there is only one or two paths towards success. I've noticed in recent weeks that when I am looking at a chart during the trading session, I start falling into the habit of "I think it will do this." That is the wrong approach, because trading should involve no guess work.
What I think the right mentality is to look at the chart and ask myself, "is it currently displaying any pattern that I recognize?" Is it currently trading inside a box? Is it stalling out near a previous swing high/low? Is it currently 7am ? Is the current pullback shallow after the first thrust?
In other words, I need to start training myself to think only in terms of pattern recognition. Notice that the above questions imply a simple and clear cut binary decision. If the market is currently matching up to a pattern that I recognize, then I take the trade, otherwise, I do not take the trade. That is the path to my edge.
This conclusion seems so obvious that I wonder why I even need to talk about it. But I have to record it into my journal, because throughout the trading session, there's a lot of self-talking going on in my head, and this leads to distractions, and even worse, second guessing. So, going forward, I will work on trading only off the patterns in my pattern catalog. What this really means, is that I will train myself to reduce all that distracting and perhaps even negative self-talk, and replace it with a binary decision making process - at least when it comes to trading.

UPDATE: Jason from Leavitt Brothers says the same thing I am saying, but probably much more effectively.

1 comment:

Anonymous said...

I like reading your blog and charts, and trying to put myself in your shoes as you describe your thought process. It seems like quite the roller coaster ride. I notice that a lot of your self-critique is related to emotions, and making decisions while trades are open, so this post kind of has me scratching my head.

You mention that you want to train yourself to make trading decisions in a more mechanical manner... And that you're a programmer by trade, so what I'm wondering is- Why bother making realtime decisions yourself? Why not code up a fully mechanical system to react exactly as you want? Thanks for the good reads,