Gimme the funk!

I wont make any bones about it: I have been in a funk for the last week or so. Those who follow my blog or my comments or Twitter or Facebook will know that I have not been very present for a good few days. A whole host of reasons are behind that, but it’s a little like my first grader said this afternoon: “I liked the heat in Barbados because it was always hot there. Here in Washington, it’s warm, then cold, then hot, then raining, then snowing, and it can all happen in one day. I don’t like that.”

I am very glad that Spring has arrived. I am not glad that I now have to work in an area that does not allow me to see the sunlight as readily as I would like. The basement where I am supposed to work is not conducive to being very productive or energetic. I will dig myself out of there in a few days and revert to working in the sunlight, maybe back in the kitchen, which I quite like for the ambiance and ability to look out at my garden and its pond. During the winter months, there was precious little gleeful about the outdoors. One of my major regrets about leaving Barbados was that I had to give up an ‘office’ that was on a deck overlooking a lovely set of tropical trees and plants.

I have also been in a funk about the work I do. Trading is very hard work and it can take up a lot of time. Markets do not respect schedules, so if you have open positions they need to be managed, and that means being there to see what is going on with the trade and if you want or need to change aspects of it. A lot of the time, trading is not active but passive and observational. During the past two weeks, I have begun to work with a community of traders, who contact each other by Skype (in writing). They are a good group of men and women, one of whom I met in New York at the traders show: she is a good techincal analyst and a nimble trader, taking 10+ pips readily during the day as she gains her ‘at least 30 pips a day’ (1 pip is 1 dollar or 10 dollars, depending on the type of account you have). They share trade set ups, files, charts, and ideas, and also have a bit of interchange about world events. I have found them helpful, not least because they have helped me find some profitable trades, or stopped me getting in a probably losing trade.

I have spent a good amount of the past few weeks watching markets, and that has been partly by design but also the result of a period when personal conditions for trading were not right. I should have perhaps closed up my platform for a while and just forgotten about the markets. Other things were on my mind, and if you are not focused, you will not trade well. The design part was that I wanted to try to understand a bit more about what is going on in the fixing of prices: you can see a lot by watching the price movements on a chart. The wrestling match between buyers (bulls) and sellers (bears) is often intense, but sometimes very one-sided. However, in the process, I have found myself watching while good trade set-ups pass me by. I then looked back and wondered where I was when the moves happened.

Some things about trading are blindly obvious, and when they smack you in the eye you do feel like a jackass. One thing, is that trading is really very simple, but we try to complicate it. The best trade is the one that has the higher probability of being right. If markets are moving in a particular direction, then ‘the trend is your friend’ and you should join them. If you want to go the other way, then you need to do so when the trend is really about to turn, or if the movement has paused, and then makes a move in another direction. You can see that on a chart, and can then decide that the trade. If you do not do that you will be run over by an elephant called the momentum of the trend. Price movements have expected turning points, but they are no guarantee that turns will occur. Likewise, prices have a way of settling at particular numerical points or a positions where the market has accumulated memory (some of which may be in the form of moving average lines). As I was managing a trade over the past few days, I was looking at price movement without the benefit of some of the lines that show averages, Fibonnaci lines, trend lines, and other indicators. I could see the pauses and reversals, but I needed to look at indicators to see what was the reason for the hold-up. You can understand what is going on as the transactors try to duke it out with each other as these points. I had honestly lost sight of the value of those indicators in managing a trade.

It is easy to grab 10 pips because that often involves no ‘road blocks’. Nabbing 30+ pips means you have to see the navigation, and also decide if you need to guard against see the gains drip away or the losing position accelerate away. I had that with one frustrating trade this week, when I had ‘money in the bank’ but was looking for more and had not yet protected the gains. When I moved my exit position to a little over break even, I was trying to be patient, and did not expect to see my nice pips become 1 as prices reversed. Sniff! But, when you look at a chart of price movements after you exit a trade and try to understand what was going on, it can be very clear. Likewise, when you look at a chart that shows big moves, it seems easy to have traded, but the reality is often otherwise.

I was also funky after I read a story about a retired person turned trader who was making US$ 10,000 (1,000 pips) a day. Now, that is something. The market giveth and taketh, but I want to be there for those days. Most of us are content trying to make 50 pips a day.

But, the funk has also to do with the fact that trading is hard work. The good thing is that I decided that I enjoy trading and that the hard work is not really an issue. Each trading session brings opportunities. No need to worry about what you can trade: you see what the market is putting on the table. True, things may be quiet and slow, but other times, they move really fast and furious. Today, I had one trade that just went up and down all the time for gain-loss-gain-loss… Every time it showed gains, I thought here we go. Then, down we went and losing position again.

Lent has had its effect and left me funky after lots of reflection. Easter is around the corner, and with the approach of Holy Week, the tunnel of inner consider is near its end.

I have also been funky because of what seems like a never-ending saga with teeth and gums. Part of that relates to some bone grafting that was very expensive and then had to be redone by another surgeon. I felt the pain of the extracted teeth before the grafting. I felt the pain of the sutures. I felt the pain of being on antibiotics for two weeks and eating great food such as mashed potatoes and jello (not together). I felt the pain of my dentist wondering what had gone wrong, and referring me to another surgeon. I felt the pain-literally-of having another bone graft: I do not take general anisthetic and the local stuff meant that I was fully conscious of all the cutting, scraping, hammering, and screwing. Perhaps that was not right this time. I felt the pain of yet another period on antibiotics and blue mouth wash, rinsing my mouth with salty water, and feeling the strands of sutures in my mouth. Now that the lighter days are here, I feel brighter too. I’m sitting on my front porch as I write this, and hearing the rippling sound of my neighbour’s pond. Blossoms are on the trees. Doves are cooing. Buzz saws are cutting trees. Bees are buzzing. The grass is green and lush. Life seems good.

Tonight, I am having a glass of wine for the first time in over a week, as I write. I feel good 🙂