There are a number of elements that I talk about throughout this blog.
Among them are:
- My personal development away from the markets
- Its connection to the quality my emotional stability that impacts my performance
- The consistency & stability of my decision making
- The strategies I deploy and refine each day
- The heuristics I develop to adjust my strategies
They are largely grouped into hard and soft skill categories. I’ve spent a lot of time reflecting on my struggles (and successes!) in the soft skill category.
Today I’m going to talk about my hard skills. I’m really happy!
Every day I am getting closer to the trader that I envision.
When I was a grandmaster starcraft player, which is kind of like mixing a chess master with a concert pianist, I had to split my concentration across many different areas of the game tree simultaneously while tapping my keyboard and mouse at over two hundred actions per minute. That’s a constant flurry of clicking.
The same can be said for when I would play 8-12 tables of online poker, duking it out with 50 other people and keeping track of how they each think, their idiosyncrasies, their broader strategy, and how I’d exploit them!
So I reference these to say that I am no stranger to implementing a broad variety of strategies concurrently while having my attention divided across many channels of information processing and decision making.
The trading software that my partner and I have put together is really quite incredible. It allows me to be cued to analyze the exact areas of the equities markets that I need to see, as it relates to our playbook and bigger picture strategy, and to quickly click in with situationally aware entry positioning and risk, and then manage that position according to the heuristics i’ve developed for reading time & sales and order flow to adjust my size or exit the position appropriately, while monitoring other spots I am cued to address.
Put simply, it’s a lot of audio notifications, a lot of flashing lights, a lot of windows loading charts, calling out particularly fruitful setups and responding to callouts, and checking a combination of news sources to know how to respond to each situation as quickly as possible.
Ideally I know within seconds when something major has happened and within 30 seconds or a minute what its cause is. And then I weigh my context for that type of catalyst and the stock’s market cap & sector, relative volume before and after the catalyst, informative price action and order flow signals, price history, QQQ correlation or other biases, and then enter and manage a position.
To be honest, I’ve come a long way. It’s funny that in my best trade today I didn’t even trade one share!
I implemented a complex strategy to queue a stop between offers following a halt resuming in a nanocap where the floor could fall out but there was a bifurcation of outcomes at this nascent stage post catalyst- this thing was either going to go limit up or limit down within the next 10, maybe 20 seconds, and you didn’t want to be on the wrong side of it as whichever side capitulated would get swept offsides without much chance of getting a fill. Well, within that timeframe I identified and cued up via my hotkeys to set up that specific strategy and while I didn’t get my stop filled this time, the potential yield when I do get filled is enormous and the downside is negligible. A completely asymmetric spot with a chance at 5-20% upside on your size. It took a lot of my learning to come together to initiate that trade and I’m proud of it.
Another trade today that I’m proud of is how I traded the headline that Spirit Airlines is preparing to shut down. Whether that will actually happen or not, I simply don’t care. What I do care about is that I was in Jetblue within seconds and Frontier shortly after, and was able to manage my risk within JBLU and pull off a quality set of executions, aided by the fact that I knew the headline moving price within 30 seconds and had recognition for the go/no-go criteria we apply to this particular pattern of reaction to news, and then I held the trade for as long as I ought to, which is something I have been particularly struggling with over the past few months if you’ve been following along.
The first red triangle is me taking half my size off as it looked likely to retrace within the apex of its initial move, but then I added back to full size and caught somewhere north of a 5% move on my full position, holding through being onsides ~8-9% at some points and holding out for more, then taking half and finally my full size off when the tape indicated price would continue turning and wasn’t going to reach higher highs.
So yeah, while I’ve been blowing my bald head smooth off out of frustration knife fighting in nanocaps recently (which itself is improving!), the overall system that we are using is the best it has been. The awareness and multitasking I am present with each day is really making great strides. Sometimes I am in 3 or 4 or 5 trades at one time, assuming a majority of those are longer holds. Oh and yeah – I’m using longer timeframe trades as well, emphasizing longer holds which has been my biggest strategic weakness to date.
I also have implemented a lower cap for position sizes in sub $1B market cap companies and slightly raised my cap in larger companies, which is an attempt to address a particularly pernicious loop that I was falling into when stuck a large amount on the day. Since some of my trades would have 1/20th the P&L impact of my small cap trades, I would hunt for spots in small caps and prioritize them over improving my process and implementing trades in larger tickers. Well the adjustment I made today worked great! I wasn’t hunting for small cap opportunities at a disproportionate rate, instead I was monitoring them alongside the other symbols requiring my attention.
I really want to be process oriented and iron out as many of my leaks as possible, and implementing software-side position limitations by market cap is one of the crutches I am now leaning on.
Ironically it will smooth out my variance by letting me trade both larger and smaller.
So yeah, I lost money today. I lost money this week. But I am as optimistic as ever that I am going to get where I need to go. All of my anxiety and stress is in my head and it’s up to me to live like I lived today.
I woke up at 3am so I could get my morning routine in before being present for valuable premarket hours, took an AA meeting halfway through the day, traded through the close and then unplugged, went for a run, talked to friends and did some laundry. I am balancing my physical and mental health. I am making sure I am at peace away from the markets. I am bringing my best version of myself to work each day. I cannot wait to continue this journey next Monday and have much prep to do before then!
Onwards and upwards, enjoy the weekend. OTN