Thursday, September 21, 2006

Discipline, Patience & TIMING!

Hi all. Yes, it's been a while since I've had my regular postings. It's because life outside the markets has been taking up so much of my time. No regrets on this and truthfully it's been a learning experience. I was just getting reasonably good with reading the markets and opening & managing positions. I was beginning to see some consistency and feel far less clueless than when I began paper trading over a month ago. I began to devote less time to analysis of the markets and my watchlists started to go stale. Even though there are plenty of stocks out there that had setups, I just didn't have them in my watchlists and it left me a little frustrated and impatient.

My impatience has cost me more than the previous gains when I was trading well. The difference? All three of the words in the subject line of this posting: Discipline, Patience & Timing! Yeah, it sucks, and it makes my track record look worse than I feel my skills & knowledge should reflect. Unlike my earlier bad trades, I definitely had the direction read correct, but my timing was bad. I got impatient because I wanted to have some open positions to talk about with coach Rob. Instead of being able to be proud of my trading prowess Rob immediately questioned why on earth I'd enter the trade when I did. Actually he said that with a bit more care... something more like "So you just wanted to tie a noose around your neck and hang yourself, eh?" ... ok, maybe that wasn't that gentle ;-).

Fortunately these are Paper Trades! My ego may be bruised a little, but at least my pocket book is not harmed. The natural question, at least for my analytical mind, is: How did I get here? Several factors play into these bad trades:
  1. I haven't had my regular ~2 hours a day in front of the market. I have been watching the S&P, DJIA, COMPQ, and have only been quickly going through my watchlist.
  2. I haven't been keeping up with the news.
  3. I didn't follow my own trading rules.
  4. My watchlists became stale and I missed opportunities on a number of stocks that are now in my watchlists that would likely have been there before, had I been more vigilant in maintaining them. The time investment in improving my watchlists beginning with the end of last week has resulted in me having better trading opportunities this week.
  5. I postponed my weekly coaching call with Rob because I wasn't prepared on Wednesday, and quite honestly have not been getting quite enough sleep.
  6. I got impatient and wanted to have a few open positions to discuss with Rob, which only turned out to be an embarrassment.
Basically it comes down to time budgeting. Life just got real interesting and unfortunately my pursuits as a Professional Trader got tabled for a brief bit. What I've learned from the experience: If I'm away from actively studying the market for a couple weeks, I can expect that I'll need some ramp-up time to get back in. This ramp-up time may eventually be reduced as my knowledge and experience increase, but it's something to treat with caution, either way.

The silver lining that has me optimistic: I nailed entry on HOG on 9/8 for ~$58.60, but had my limit too tight to my stop trigger (I put in a 5 cent window, which should have been 10 cents on a stock of that price range) and didn't get filled. I'd still be in HOG today with an adjustment to my exit stop set to $60.43 (two days ago's low) as of close of market today. I also mentally nailed CSCO with an entry on 9/11 for ~$21.95, but didn't have the time to do the further in-depth analysis that I'd like to have before entering a trade. I stayed out of it rather than haphazardly entering. I would have been kicked out on 9/19 for ~$22.55, but that is ~2.7% gain in 7 trading days, and you know what: I'll take that every time.

Beyond those specific mental-only trades I have been getting better reads on the broad market indexes and haven't really been surprised by the general market movement. As a matter of fact, I've been quite keen on general market direction recently and am getting better at applying that knowledge to help weight individual positions. I'm currently long on T (AT&T), with an aggressive entry of $31.60 on 9/21. One of my bad trades was an entry on Friday for LNC (bad timing, but it still has the potential of closing positive for me). I made a nice swing trade entry by shorting ROK on 9/18 for $57.57 which is shaping up nicely and I expect will spend tomorrow below it's close today at $55; in the meantime I'll adjust my stop to $57.06 (two days ago's low) which, barring any crazy up-gaping, should lock in a small profit at the very least.

I've made my share of mistakes recently, but am learning from them. I'll be back-dating posts to cover my weekly coaching calls, so look for them below. Thanks for checking up on me and I'll be keeping the content fresh as my life reaches a more sane pace!

1 comment:

drcollier said...

I enjoyed reading your experiences and will be checking in often. I am planning on becoming a successful trader in time. Just got back from my mentor session. I am brand new and i still have more losers than winners (read that 'all loses so far'). I am presently in LNC (which you mentioned in your blog) as a LEAPS, and am hopeful.
Thanks for taking the time to keep us updated on your progress.