Mastery of Craft

• Posted by Derek
• on November 19th, 2011

I discussed this week how this environment is unlike anything I’ve experienced since I really started keeping notes in 1996.  Traders have 2 alternatives to dealing with an odd environment…adapt to it, or wait for an environment that matches our temperament and strategy.  After shortening my time frame to adapt to what were becoming faster moves, I remembered why I had invested so many hours into stretching my outlook from hours and days to weeks and months; it better suits my personality to focus on depth of preparation rather than speed.

By reverting back to my desired timeframe, I essentially made the decision not to adapt to the present environment.  This is at odds with a market that is Darwinian by nature and makes fools of those unresponsive to change.  But I have adapted; to my own compass and not the market’s.  During this process of restoring a longer-term focus, I stumbled upon an old paper from our good friend Peter Brandt.  Take a look at the following and tell me this couldn’t have been written by him this morning, simply in a prettier font:

This paper was written in 1989…think Peter has reached his 10000 hours yet?  This is a guy who has walked the walk and engaged in constant, deliberate practice for decades, and has spent the past year including us in a real-time tutorial on how to interpret classic chart patterns.  Dig through his posts, and you’ll find hidden gold in the comments section of most as he responds in detail to relevant inquiries.

I’ve gained insight from his sharing in topics from position sizing to win% to longer-term trading.  But the overriding lesson is that he is doing the exact same thing now as he explained in 1989, other than trading less by being even more strict with his pattern-seeking.  If we constantly change timeframe, how can we be ready to be aggressive when our real “fat pitch” comes along?

I’ve traded for 15 years, but spent the first half of those years dabbling in every strategy imaginable.  In the past few years, I’ve settled into the ones that work for me, with my biggest mistakes happening when I sacrificed my principles for the sake of adapting to a faster market.  It’s never been worth it; for every good stretch at fast trading there was a bad one.  I do work on process every day, but in an effort to see and/or measure things more efficiently; more noise filtering than indicator-seeking.  I hope I can look back on these posts years down the road and know that the only significant changes I’ve made have been to fewer, better trades.

The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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