Market And Body Rhythms

And speaking of focus, I’d like to share a recent trading experience at this
end. About this time late last week, and for the first time in many years, I
picked up a virile flu-like bug that’s currently rampant in the Northeast. (Reflected
to some extent in the relatively brief columns as of late.) Last
Thursday, I played it smart. After all, it was the last day of the quarter, and
I was wrapping up one of my stronger trading runs where I could do little wrong
trading-wise. (Interestingly enough, the beginning of the run coincided with
the Patriots Super Bowl win … perhaps there was something to replaying that
final drive every Sunday.) Anyway, I traded lightly, booked some nice early
profits, closed up shop early and headed to bed — where I would stay the entire
holiday weekend. You name the symptom, and I had it, and you could have fried
multiple eggs on my forehead. (Thank goodness for "This Old House"
reruns, but that’s another topic.)

Anyway, come Monday and even though I had moved up from a one to only about a
four on a scale of 1-10 health-wise, did I do the smart thing and simply stay in
bed? Nooooooo. (Lesson #1: Even Norm Abram wouldn’t use a power router with a
case of the blahs, even with safety goggles.) After all, I was more
vertical than horizontal, and besides, what’s a little lack of mental focus when
you know you can do this? Wrong! Fast forward to Tuesday evening and two
consecutive draws which could easily be traced to one simple but critical cause:
an inability to act decisively on market signals and an absence of mental
flexibility.

So why do I share these experiences, especially in an industry where ego is
rampant and you usually only hear about successes? A couple of reasons, one
reflecting a bit of a selfish motive to maintain a degree of humility. Call it
columnist’s prerogative as it’s amazing what bearing your soul to thousands of
readers can do. You see, the moment I lose humility, I’ll lose the ability to
generate trading income — pure and simple. I thought Larry Connors really hit
the nail on the head last weekend in his column
on ego and won’t even try to improve on his outstanding observations. If you
missed it, I encourage you to review it and stick the column in your trading
bible — it’s a classic.

Yet my more important motive in discussing the mishaps, though, is to encourage
all of us to engage in a reality check in a business depicted in some places
with smoke and mirrors. While it should be so clear that no one in this business
makes money every day, and that this is a business of income accumulation over
time — time which averages out the fantastic, modest, draw, and occasional
bonehead days, a bell curve hopefully skewed to the left — I’ve often found
many newcomers are first stunned, and then relieved to learn that one doesn’t
need to pursue perfection to succeed at this game in the long run. And we’re
reminded that while much of the industry talk addresses methods and processes,
all of which are designed to tilt probability in one’s favor, most people handed
these methods fail, some miserably. Why? Ahhh, the human factor. And that’s the
very reason roughly one-third of the QQQ
video and school
addresses these non-technical areas — not simply from a theoretical
perspective, rather from living the trading life day after day, month after
month.

In my case, lightening up on size and stepping up the mental focus and
flexibility was also key, as was continuing to keep my bottom-line focus on
monthly and quarterly results vs. daily and trade minutiae which will be
performed strictly at month and quarter-end. (Draws early in the quarter don’t
bug me, but they’ll drive me absolutely nuts on the last day.) As an added
insurance policy, I also ran myself through a few of my own QQQ trading school
simulations as part of the exercise. Sound corny? Results? Back to profits and a
strong frame of mind heading into the weekend and second week of the quarter.
And on Sunday, I’ll replay that winning Super Bowl drive just one more time.