Thursday, September 20, 2012

ZERO = progress

The month of September has been groundbreaking in that my propensity to overtrade seems to have slowed considerably, almost overnight.  It reminds me of the time when my son was almost 3 years old.  He constantly sucked his thumb and no matter what we tried, we couldn't stop him.  So we eventually gave up. 

But then not too long after we backed off, we realized that he had stopped, cold turkey, kaput.  I had fears of a relapse, a fakeout phase, but no, he never sucked his thumb ever again. 

I can only hope that I have the same experience with my history of rogue/revenge/over-trading, but I'm pretty sure it'll be something that I'll need to work on for as long as I trade.  But as of now, here is how I'm doing from the perspective of number of trades per day:

DATE   # TRADES
====   ========
5/5       5
5/6       1
5/7       7    <- 4 rogue trades, narrow range day
5/10      1
5/11      3
5/12      3
5/13     ZERO  <- Big trend day, but no trades     
5/14      9    <- Went overboard after ZERO day

5/17     ZERO 
5/18     ZERO      
5/19     ZERO      
5/20      3   

AVG/DAY = 2.7 trades   <- Big success, last month was 7.3!
GROSS P&L = +7.75      <- Big underperformance, but this metric 

                          is currently irrelevant

I started the month of September back from vacation with some of my old habits in place.  But on a good note, the trend in the number of trades per day has continued to decline steadily.  I'm quite surprised how many ZERO trade days I've had.

After sitting out of the big trend day on May 13th, I probably felt like I missed out and ended up going a bit overboard the following day on May 14th.  Shame on me.  But then I stepped up, and there were 3 ZERO days in a row -- I don' t think that's ever happened before.  Patience is working.

Interestingly, I haven't experienced withdrawal symptoms from reducing the number of trades.  I'm sure the chatroom I've joined as of this month has been a big factor.  I'll write more about it at another time, but the key has been the similar outlook and style that the moderators and many of the members have with my own.

I've also tried my best to increase the level of awareness regarding how I am feeling, and more importantly, removing myself from trading when I get those feelings of revenge or from bored twitchy fingers.  Constantly being aware of my overall psychological and physical state is something I've been working on for the past few months.  But it seems as though I am now better able to take action.  That's a big step.

One internal dialog I've started is to ask myself "How will I feel if I get stopped out of this trade?" before entering a trade.  If I know I'll be completely at peace with the outcome if I get stopped out, then I know it's a decent setup.  Otherwise, I'll pass up on the trade.  And if I impulsively entered a trade, I will exit it immediately.  I haven't counted the number of times I've avoided an entry this month, but it's significant.  That's good sign of progress.

All in all, this focus on considerably reducing the number of trades and becoming much more selective with my trade selection feels good.  As least to me, those days of ZERO trades indicate big progress.  I'm know I haven't been behaving this way long enough to turn it into a habit, so I'll continue to focus on: 1) minimizing number of trades, 2) maximizing trade selection quality, and 3) minimizing attention to P&L.

So ZERO = progress.  My behavior is changing for the better.  But I still have a lot more work to do...

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