“Blood” by Trader K
I love the smell of blood in the morning. To wake at dawn and find your order filled, a steady stream of red staining your screen, and as the day progresses to the inevitable climax, when at five in the afternoon your first targets are filled, and you witness the dying dreams of the bull felled by your skill, kneeling, panting, looking dolefully into his killer’s eyes.
OK, let’s not get too poetic here, but what better way to start the week than with a three hundred point fall in the Dow, with a position that took no heat even as I slept? Short overnight from the break of Friday’s low, I have had a good day. I got a nice entry, got out of half, and got to move my stop to break even, so I’m not going to get gored in the groin, even if the bull does lumber to its feet again.
Yet still it is not enough. The pleasure of a clean, well-executed kill, of dispatching an animal that behaved perfectly, is always tempered by regret. I am not just speaking about the tragedy of exits: the sadness of scaling out when it goes still further, the sorrow of the trailing stop that gives back so much. All this is the necessary regret that every winning trade must bring; no, it is worse than that. For once again, I am in mourning for the Euro, for the one that got away.
How did I miss thee? Let me count the ways - I should have been short on Friday morning, from early in the European session. My setup was coming together in multiple time frames, I was relaxed and confident, and had a little extra time on my hands. I thought I would watch the market review offered by a well-known and likeable commentator who was cheerfully bullish on the Euro. A shadow passed over me. I don’t listen to others when I trade, I know that I have often found myself in conflict with this other trader’s analysis and come out on top, and yet it is curious how little it takes to sow the seeds of doubt in your subconscious when you let your guard down. Once the intellect and the rational arguments of others had started to interfere with my judgment, my resolve weakened without me realising it.
I should have left my orders in place and gone about my business. Instead I scratched my chin, looked at a couple of e-mails, and decided to make a nice cup of tea and to shave. Perhaps my pattern was not as clear as I thought. Why not leave it for a little bit to mature like a nice Camembert (it was a Euro trade after all)? Nothing would happen in the next 20 minutes, and I could be back at my desk before whatever dull news announcement there might be at half past.
Of course, what with one thing and another, it was more like 40 minutes before I was back, the Euro had rolled over along with the other currencies, and my entry was gone. The pain is doubled by the fact that this is the second big Euro trade I’ve messed up in the last few weeks.
So how did it really happen? Was I unconsciously repeating the previous experience in order to relive the pain of the unrequited trader? Was I afraid of the trade, and looking for other reasons to be elsewhere? Did I let the fellow who wanted to be long get under my skin? Well, I haven’t had a chance to talk to Denise at length about it yet, but I suspect all of these, and probably something else too. Whatever it was, it bugs me far more than today’s success. And to make things worse, I cut myself shaving while I should have been trading. So there really was blood that morning too.
Trader K
Tags: trading psychology
From an email exchange, few years back…:
Mark Serafini wrote:
Give me process, or give me death. Process is synthesis. Master the process and result is inevitable. The TRUTH is in process. The art of surfing lies in the process of merging with the waves dynamics. The end is only the natural progression of the process– its time has come and gone. While I’m involved in the process, I can have an altering effect(reflexive) on the same process–I can make it break faster or slower. The same applies to markets. We look at prices and fundamentals as seperate entities — we analyze them. Instad, we should be looking at how each aspect affects the other as well as any feedback mechanisms. Now we are synthesizing. Since the majority of mkt participants are analyzing, we will see huge divergences btween the prevailing bias and the underlying trend. These initially self-creating, and ultimately self-defeating processes are a paradox. Analysis will not help to resolve them. Their resolution can only be infered at some uncertain time in the future. I hope the world continues to analyze, as it will ensure that my future will be profitable. Too many equation-solvers and not enough epistemologists in the markets — thank God. The resolutions begin right where the mathematics fail. Cheers,Mark
Patrick Henry reincarnates as the Silver Surfer –
…brings Paul Revere along as the board (the analysts are coming! the analysts are coming! rally ye epistemologists!). Joe Satriani is the soundtrack (“Surfing With the Alien”). I like it. And the ultimate ‘synthesis’ (perhaps not quite correct because of the tripartite requisite: thesis, antithesis, synthesis implying that a doer ‘constructed’ it, as opposed to simple ‘recognition’…) is when the surfer becomes one with the board, the wave, the air…me/thee/it categories dissolving away. Such moments of unity reclarify the concept of mastery because its no longer about controlling externalities – there aren’t any – but about merging, blending, recognizing the undifferentiated-ness of reality. We learn technique so that we may transcend it…(yes, easier said than done); therein lies art. How about ‘revel’ in the process?
mt
Seafini’s motto was “”Absolute safety exists at that definitive point where the conscious mind perceives the greatest measure of danger”, which he said he realized dropping into a wave (off Barbados ?).
Yeah…surfing is a good metaphor, too….
Nice to hear from you Josie! and great metaphor. great! (and not just cuz i am a girl too
For me, the best metaphor is surfing. I spent hours in the waters of the southern California coast as teenager. With clear intent in the market (the wave), you time your entry, turn the board around and wait until you feel it (meets my trade criteria). The water where you sit on your board begins to suck back into the the face of the oncoming wave (pullback). Then when you feel the power of the wave under you, you dig in and paddle (entry). The wave pulls you up and you take the ride. As the power of the wave ebbs, you kick out (take profit), and paddle back out for the next wave (next trade set up).
Blood? Horns? The kill? No battle for me, just harmony with what is. But then I’m a girl and I probably see it differently than you guys.
Hi Denise. Just read the latest Tips & Tricks.
Trader K’s entry here fits what I thought about when you wrote, “the answer is B”….
Buddhism & Stoicism have long interested me, so am just finishing a book that does a bit of comparing/contrasting between the ancient wisdoms & ‘positive psychology’ (did you know that John Templeton made some hefty donations to Seligman & crew to help get that project aloft?).
From the book (The Happiness Hypothesis: Finding Modern Truth in Ancient Wisdom, by Jonathan Haidt):
“Our life is the creation of our minds, & we do much of that creating with metaphor. We see new things in terms of things we already understand: Life is a journey, an argument is a war, the mind is a rider on an elephant. With the wrong metaphor we are deluded; with no metaphor we are blind.”
Not for the first time I question the overall efficacy of the trading-as-war metaphors. Trader K’s depiction is explicit, football is a stylized version of it.
The metaphor I like best so far is also a combat form, but with an important twist. Unlike any other martial art I am aware of, Aikido’s fulcrum, believe it or not, is love, rather than death & destruction of the adversary.
I think that fulcrum could possibly go a long way toward obviating another relevant bit of wisdom, “He who lives by the sword shall die by the sword”…just a thought.
Did we make money???
Jeff,
I’m delighted it helped. Well done on a great trade and on cooling off too. Doing nothing is what we should do most of the time, but it’s so very hard. I was stuck in a car all day, so was lucky, as today was a do-nothing day for me with the YM, and I get to stay short as a result, while the poor old bull has fallen over again just as its horns were getting uncomfortably close to my trousers. Would I have managed that if I’d been at my desk ‘working’? Dunno. Depends on how loud my children were squealing and what I’d had for lunch I expect. Denise is 100% right about all this ‘emotional stuff’, and when we can use it to inform our trading, it makes for a far more interesting and rewarding life than pretending to be Mr Spock.
Love it. Thanks for sharing. So very true. I have to say, I actually thought of your post and a euro trade yesterday. Helped me to stay in.
I am sitting here after having an unbelievable trade, that seriously increased my account…. all in less than 12 hours. But you know what? I find myself analyzing things, and asking myself why I closed it when I did? As if 165 pips wasn’t enough. Why didn’t I stay in a bit longer, audjpy could go so much higher… Of course I want to jump back into something, anything…
So I told myself, I must get support. Quickly found Denise’s blog, and surprise… there is “Trader K” posting words that totally help me. Now, I am insisting to myself to go and “cool off”. Shut the computer down, and get out of the house.
Thanks Denise, thanks TraderK. Appreciate the support here…