My Daily Checkup

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  • on March 1st, 2010

I’m not sure why, but a few years ago I added a new twist to my morning routine.  I gave myself a grade each day based on my comfort level, before the day’s events kicked in.  Have I been in tune with the market?  How well have I executed my plan in recent days?  Are any recent events anchored in my brain causing me to act in an unusually conservative or aggressive way?

I’ve talked to others who do this informally, but don’t take the formal step of recording a number.  What benefit could there be to recording a specific daily figure?  The obvious benefit is forcing yourself into a regular checkup each day before battles begin.  But I use it in a quantitative way to adjust my position sizing…here’s a graphic showing how I apply it:

Daily Comfort

We hear advice to trade smaller in a slump, but also to make sure we don’t get cocky.  I use this table as an objective filter to let me know when I’m straying from a healthy level of confidence.  Patting myself on the back for being so smart?  Cut back on all positions as I’m probably about to be humbled.  Questioning the methods that have worked for a decade?  Step away to focus on more important things, and gain some perspective in the process.  This just adds a little formality to the process, making it more likely that I have light exposure when vulnerable but loaded up when at my best.

It’s up to each of us to be aware of our emotions, and figure out how they might help or hurt us.  I’m not a daytrader, but the fact that I pay attention to the tape makes me constantly vulnerable to impulse actions.  This is my way of acknowledging the truth before market action begins to have an effect on my psyche.  I’m then free to execute my strategies knowing that I’ve addressed any emotional blind spots.

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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