Judging Performance in Unprecedented Markets
Last week the markets, as measured by the e-mini S&P contract, moved in ways (and for reasons) that we have not seen in our lifetimes. When you judge your performance for the week, judge it against that backdrop – good or bad. Or, should I say, bad or good?
It is easy in such environments to make lots of money – or to make lots of mistakes. If perchance the latter is where you think your performance falls, go back to the first mistake that you can remember and ask yourself, what did you do about/with/for the psychological capital side of the equation?
If the answer is you didn’t really take that into account then in reality you made only one mistake – not the series you think you made.
Hey Kev – good question. I am in Park City at the Society for Neuroeconomics mtg. Could it have been the impending BK of WaMu?
Personally my trading strategy is untested with respect to the way the market was moving last week. This means only one thing. Stay clear. It is OK to NOT be in a price move. There will be another one. I think I remember learning that in someone’s course, somewhere . . .
what was with the SP cash, futures relationship today, FV like 1.00 and we traded 4-5 dollars over all day? An index change?, Some program shop go out of business, strange short term funding problem?
Steve, It is a funny thing when the newsbeat is all about confidence in the markets and confidence is a feeling. Yet somehow traders or investors aren’t supposed to pay any attention to their feelings or emotions. Doesn’t that strike you as ironic?
F&E (short for feelings and emotions) are fluid. They can change in a nanosecond. Maybe the change is market related maybe it is outside the market.
The clue however is to track them as carefully as you track your markets. By being as in-tune if you will with the ever changing nature of your sense of confidence or determination you give yourself the opportunity to interrupt at least some of the unconscious bias we all bring to risk decisions. This is one key ingredient to improving your decision-making.
Which archived article btw?
DKS
What about the imprecise and fluid elements of confidence or determination? (from archived article)
I love this question! got my curiosity up.
Steve
I did well with that volatility… but then made a critical mistake. After being up huge gains… I couldn’t walk away from it. I did one trade, and lost… and a little voice inside said “stop now, walk away”. Long story short, I gave all the gains back and then some, when I wouldn’t stop trading…
I don’t know how to measure that, but the first mistake was not listening to that little voice…
Jeff
I recently came accross your blog and have been reading along. I thought I would leave my first comment. I dont know what to say except that I have enjoyed reading. Nice blog.
Tim Ramsey