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It ain’t called catching, its called fishing


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It ainít called catching, its called fishing

  #1 (permalink)
Market Wizard
Kyoto, Japan
 
Experience: Intermediate
Platform: TW TOS LiveVol
Broker: TD, TW, IB, Saxo
Trading: VXX, VIX, SPY
 
suko's Avatar
 
Posts: 1,282 since Oct 2013
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It ainít called catching, its called fishing

The motto for the journal of my new trading venture

I am not an active fisherman, but I do have that "fishing gene" so to speak. I love fishing, when I get the chance.

Anyway, I live in Japan. So, some years back, a friend of mine took me for a day of "tank fishing." This is where you've got a big, square, concrete hole in the ground filled with muddy water and stocked with zillions of "herafuna" carp fish, with orderly ranks fisherman positioned around the edges intently fishing away all day, pretty much motionless, under umbrellas and sitting on little stools.

Most outsiders think the very idea of this is laughable. "That's not really fishing," one might say. And I felt that way too. I used to tease my friend about it before he finally cajoled me into coming along to try it.

"Nah, it's really interesting. It's very technical. Pure fishing. Very pure. It's a numbers game."

Anyway, so we get to the fishing hole, and, as typical for Japan, there are a lot of arcane rules posted everywhere. You have to use a particular kind of pole, a particular kind of bait, etc. etc. It's all very formalized and standardized. Everybody has on a regulation fishing outfit.

Anyway, so my friend had the regulation attire and a lot of very beautiful hand crafted rods and gear. Some of it he had made himself. Like nothing I had ever seen. Obviously he's very freaking serious about fishing.

"I'm not as good as the other guys, but some days I do OK," he says.

So we start fishing, and immediately we are pulling them in like crazy. These are little carp on a hook with no barb, catch and release with little harm to the fish. By noontime the both of us have brought in about 20 or so. Yeehaw, what a blast.

While we are eating lunch some guy comes over and mumbles something to my friend, who then curses and digs into his tackle box and gets out some new gear and different bait, udon noodles. "Goshdarneditall, I didn't read the sign right, we've been bottom fishing when this is a mid-depth fishing place. No wonder we have been catching a lot more than anybody else. I knew there was something wrong."

So then we changed our setup and fished mid-depth for the rest of the day and caught just a few fish, not nearly as many as the other guys. I mean it was pretty clear, you could sit there and see them pulling in fish twice as fast, no three times, four times as fast as we were. Same poles. Same bait. Same fishing spot. Same rules. Some of those guys must have brought in 80 or 100 fish or more.

"Actually," my friend says, "When you attend the monthly competitions at these places, you will see that there is a very definite ranking of who is the best fisherman here. That same guy over there always catches the most fish."

It turned out to be a downright humiliating experience and I never went back.

It kind of reminds me of my earlier forays into trading stocks.

I have thought about that experience a lot over the years. There's a lot more to fishing than just dipping a line in the water, a lot more than just luck, although that is also a factor. To do it well, you really have to go all out.

It strikes me that if you really focus on getting the fishing right, the catching will take care of itself.

This time around, I have decided to really focus on learning how to fish.

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  #3 (permalink)
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@suko:

First of all, welcome to futures.io (formerly BMT) !

Very nice analogy and comparison to trading as a serious business.

I wish you best of luck with your trading and I'm looking forward to your Journal !

"If you don't design your own life plan, chances are you'll fall into someone else's plan. And guess what they have planned for you? Not much." - Jim Rohn
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  #4 (permalink)
Market Wizard
Kyoto, Japan
 
Experience: Intermediate
Platform: TW TOS LiveVol
Broker: TD, TW, IB, Saxo
Trading: VXX, VIX, SPY
 
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Posts: 1,282 since Oct 2013
Thanks: 816 given, 1,318 received

Thanks for the warm welcome! Not sure if I shouldn't get right into the nitty gritty of my trades in this journal, rather than talking about fishing. But somehow it seems to be more important to focus the big picture, the behavioral finance aspects of my story.

I do also hope that I have good luck in trading -- at the same time I intend to focus on how to influence the probability of successful trading.

I don't regard myself as a "lucky" type of guy. Very fortunate, yes, in having had all the initial advantages, a brain, good health, family, and so on. But "lucky" as in hitting on the lottery, no. Not that I am the sort of person to ever buy a lottery ticket, I don't think I have ever won anything in a game of chance. I don't gamble, and have never been to the racetrack.

Reminded of a friend, a "fishing crazy" girl who always posts exciting stories and photos of fishing trips and fish caught. So she goes to the racetrack for the first time, and on the very first race she picks the winner and wins $3000. Amazing.

So she immediately takes that $3000 to the fishing gear shop and blows it all on fancy new rods and reels. I'd probably have added that money to my trading capital or given it to my wife to spend on the kids. But come to think of it, maybe I should plan to blow some of the money I am going to make trading just like. To motivate me.

The idea of spending all this time and energy learning to become a good trader just so that I can build up retirement money -- not very exciting motivation. I need a more near term motivation, more concrete.

I think I will take some off the table and blow it on a fancy German car, like the one in your avatar. Maybe an Audi A4 cabriolet?


Last edited by suko; October 26th, 2013 at 07:54 PM. Reason: typos
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The following 2 users say Thank You to suko for this post:
 
  #5 (permalink)
Market Wizard
Kyoto, Japan
 
Experience: Intermediate
Platform: TW TOS LiveVol
Broker: TD, TW, IB, Saxo
Trading: VXX, VIX, SPY
 
suko's Avatar
 
Posts: 1,282 since Oct 2013
Thanks: 816 given, 1,318 received

Know thyself

Self knowledge gained by the age of 54

Good at innovative big picture insight

Good at big project vision

Skilling up is mediocre

Good at following advice and instruction with humility

Capable of radical change in my habits and thinking -- even into my 50's

Unstoppable once I get riding that wave of enthusiasm -- can become highly motivated

I push the limits and boundaries, but I always try to keep my eye on risk/reward

I seek arbitrages everywhere

I seek value over price

I switch hit between angry and cynical and goofy optimism

I don't want what I can't have

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  #6 (permalink)
Market Wizard
Kyoto, Japan
 
Experience: Intermediate
Platform: TW TOS LiveVol
Broker: TD, TW, IB, Saxo
Trading: VXX, VIX, SPY
 
suko's Avatar
 
Posts: 1,282 since Oct 2013
Thanks: 816 given, 1,318 received

My trading orientation in 25 words

Bearing that self knowledge in mind

NO DAY TRADING for me.

I'll do a mix of swing trading and position trading.

At heart though, I really do buy into the Buffett kool-aid, and where I want to be five or ten years down the road is with the bulk of my assets in next-Berkshire-type investments targeting 30+% YOY, and a smaller portion will be committed to swing and position trading in aggressive growth small cap equities and ultra ETFs with trades of a week to three months.

Sectorwise, biotech and technology

25 words: biotech and biopharma small CAP and Ultra ETF swing trader

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  #7 (permalink)
Market Wizard
Kyoto, Japan
 
Experience: Intermediate
Platform: TW TOS LiveVol
Broker: TD, TW, IB, Saxo
Trading: VXX, VIX, SPY
 
suko's Avatar
 
Posts: 1,282 since Oct 2013
Thanks: 816 given, 1,318 received

Q4 game plan

I'm going to follow the trend in Q4 with focus on small cap biotech names, algo swing trading
with an entry zone, stop, and exit targets. I am going to stay disciplined, paint by the numbers
and keep the journal updated till the end of the year.

I am going to strictly avoid monkey trading like attempting to catch breakout stocks, moving
my stops around, and generally breaking my rules. I am not going to lose money.


If the trend reversal occurs before the end of the year, then I may modify my stops. In the
meantime I an going to figure out a bear market strategy using inverse and volatility ETFs,
since my rules say no short selling, futures or options. I am really looking forward to a bear
market, because that really suits my temperament better than this bull.

At the end of the year I am going to take some money off the table and buy a nice present for someone.

If we get a Lehman type crash, then I am going to start looking for some cheap long term positions in
next-Berks such as Leucadia, Markel and Alleghany or maybe even some AAPL. heh


Last edited by suko; October 27th, 2013 at 01:07 AM. Reason: typos
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  #8 (permalink)
Market Wizard
Kyoto, Japan
 
Experience: Intermediate
Platform: TW TOS LiveVol
Broker: TD, TW, IB, Saxo
Trading: VXX, VIX, SPY
 
suko's Avatar
 
Posts: 1,282 since Oct 2013
Thanks: 816 given, 1,318 received

Trading rules Oct 28 2013 ver.

Latest version of my trading rules, not the newly-added #12, which is sure to lead to success.

Comments, suggestions? What am I leaving out?

Trading Rules version Oct 28, 2003

1. No daytrading
2. All positions have stops at all times
3. No shorting
4. No futures
5. No options
6. No Forex
7. No penny stocks
8. No trading the first 30 minutes of session
10. Trading plan with defined entry, stop and targets
11. Journal with analysis of trade numbers and behavior/psychology
12. No CNBC

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  #9 (permalink)
Market Wizard
Kyoto, Japan
 
Experience: Intermediate
Platform: TW TOS LiveVol
Broker: TD, TW, IB, Saxo
Trading: VXX, VIX, SPY
 
suko's Avatar
 
Posts: 1,282 since Oct 2013
Thanks: 816 given, 1,318 received

The desired effect

This online journal is already having the desired effect in changing my attitudes to trading.

It's not just the fact that it's a journal, but the fact that it's public. I am starting to feel a sense
of accountability, to keep my game tight, at least so that what I post here won't be so darned
embarrassing.

Last night I went through the target numbers on my holdings and, for the first time, tested
my exit strategy. When I woke up this morning I decided to go ahead and set some targets for
exiting my grossly underwater position in USLV (which was a very stupid momo trade that I
haven't wanted to even think about until now, other than "it'll go up, eventually."

The second aspect of this is that now that I feel like somebody is watching, I am going to follow
the plan, rather than just wildly buying on some random bit of news with only a fuzzy reasoning
behind my trade, as in the past ("That looks good.")

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  #10 (permalink)
Market Wizard
Kyoto, Japan
 
Experience: Intermediate
Platform: TW TOS LiveVol
Broker: TD, TW, IB, Saxo
Trading: VXX, VIX, SPY
 
suko's Avatar
 
Posts: 1,282 since Oct 2013
Thanks: 816 given, 1,318 received

Poor Execution


I should have added to my self-knowledge list above:

"mediocre-to-poor at vigilance activities"

In this case, a stop was not set, and one of my algo positions, ARWR, did not
stop out as it should have. So now I have a position that is orphaned, outside
the algo parameters, slightly. I went in just now and set a new stop for it.

This is not the first time this has happened. Part of it I could fault on being on a
lousy trading platform that does not allow me to set a stop together with the original
buy order. I need to remedy that. But basically I need to be religious about constantly
double checking on the stops.

I am happy to report though, that another of my small cap bio positions, GERN,
stopped out. That trade is the last one that I made during my newbie chase-a-breakout
era as a trader. That era is now officially over.

A very lousy day in the market as all my positions were down, and I booked a nasty loss
on GERN, but I feel calm about it, because now, for the first time I've got some discipline
and methodology in place. I am not going to keep making that GERN mistake.

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