Week 6 FX trading results

I surprised myself with a return of 29.4% this week. I am happy to continue on this path, but as soon as my results start to sour I must significantly cut back on risk.

My score for following the road map is 7 out of 10. It is slightly lower than in the previous two weeks because I felt a strange sense of helplessness and foreboding on Thursday night. It seemed to come out of nowhere. I tried to ‘work through’ why I was feeling in this state (I didn’t find any answers), and contemplated the implications of letting this sense of despondency taking control of my trading. In the end, I resolved to trade in very small size the following day. As Friday progressed this negative feeling started to dissipate, and it had entirely lifted after I went to the gym in the evening. While this can be counted as a success of sorts, I am also conscious that I didn’t keep the messages of my road map at the very forefront of my mind through the week. At this moment in time, I firmly believe there is nothing more important for me to focus on, so I have resolved to use these meditation rooms every morning to focus on what is important and to hone my intentions. On this note, the following quotes from a recent piece by Brett Steenbarger really hit home:

“Philosopher and mystic G. I. Gurdjieff also emphasized the role of lies in human psychology. The greatest of lies that we tell ourselves, Gurdjieff asserted, was that we have free will. In reality, most of our actions are mechanical, tossed here and there by moods, whims, needs, and the impact of external events.

“We take solace in New Year’s resolutions and earnest plans for self-improvement that, like last year’s exercise equipment, eventually become part of our forgotten mental furniture.”

“Quite simply, people lack intentionality: the ability to sustain directed activity. They cannot do.”

“Gurdjieff’s insight was that we lack intentionality because we fail to remember ourselves. In a state of self-awareness, we vow to do the right things. Once we exit that self-awareness, the right things vanish with it.”

“Zen masters spend years cultivating the capacity to remember themselves: to remain self-aware.”

It is so very easy to forget ourselves.

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6 responses to “Week 6 FX trading results

  1. It’s good to see you reaping large returns. What are some of the major differences discipline wise, between your trading in the past 6 weeks, compared to times before this blog commenced?

  2. That’s an interesting question Rocko. I suppose the biggest difference is that I now have the ‘road map’ (I know, I know…’always with this dashed road map!’), which serves as a kind of framework or mode of operation. Before I started writing here I was suffering from a host of problems, including a serious addiction to trading, the desire for instant gratification, and I was seeking validation from trading the markets, asking more of trading than it can rightly offer. And, I definitely lacked focus.

    Why has my discipline seemingly improved and why do I keep emphasising the importance of the road map? Firstly, the very process of writing this blog has been useful, forcing me to contemplate important issues, to reflect on past and present performance and behaviours. But I believe it is the comments that have really aided me, directly and indirectly providing the bulk of the content for the road map. I view the road map as a culmination of well-meaning advice from people who offered it out of the goodness of hearts, not expecting anything in return. Importantly, the people who have offered their comments seem to speak from direct experience, increasing the credibility of the advice. They also made me realise I was not alone in my struggle. In made the choice to take a very prescriptive view of this collective advice, and have tried hard to follow it, partly because there was very little downside in doing so.*

    Specifically, I am trying to practice discipline and patience outside of trading. I have improved my diet, significantly reduced my caffeine intake, tried to find more balance by taking breaks and re-appreciating other aspects of life, and I am regularly going to the gym (even when I don’t feel like going, I always feel better for the exercise afterwards). A positive reinforcing circle seems to have ensued. Thanks to everyone and everything that has happened, I can see things a lot clearer than I could before. I believe I am gaining a greater perspective, and because it is working, I want to keep doing it. Of course, I cannot confirm whether this change is permanent, and I realise life works in cycles, but I will try to make it last.

    * It’s interesting that most of the advice from people’s comments is, in many respects, relatively straight forward, rational common sense. The question becomes whether was I lacking this sense in the first place? In some ways, I think the answer is yes, but in some ways the answer is no. With addictions for example, I believe it’s easy to know and say what the right thing to do is, but actually doing it is a very different kettle of fish. Also, over and above the addiction problem, before I started this blog, part of didn’t want to really hear the advice of others because I thought that would be admitting a kind of defeat, admitting that I couldn’t find my own way out. Well, as soon as the first comments started coming in, my perspective flipped. People wanted to help and share their experiences. I realised I was not alone and I became ‘accepting’. I realised that I was in need of help, that this was advice I could really follow, and, again, that there was little downside in trying to enact these changes. If anything, these changes would improve other aspects of my life, if not trading itself. People were offering advice out of kindness, not expecting anything in return, but they have got something – my responsibility to them. If I fail now, I haven’t just failed myself, I have failed everyone who tried to help (failure in this sense, doesn’t refer to financial failure, but its about whether I followed the advice along the way.) The road map has become my consigliere.

    Is it all an illusion?
    Of course, I realise six weeks is not that very long in the grand scheme of things, and I am fully aware that everything could be little more than an illusion of false strength/discipline. It is when I have had to face losses in the past that things have really spiralled out of control. In these six weeks I have not had to face this hurdle, but the time will come, and it will be revealing.

  3. Good luck with the trading!

    I think it’s difficult to hide with trading results, you can hit home runs for a while but in the end the markets will find you out, they definitely have in my case 🙂

    Based on my experience which is limited you will be struggling with your account size to remain a full time trader in the short term unless you have other income sources, but with any sort of consistent winning returns I’m not aware of any vehicle that scales better than FX, so the sky is the limit. At least thats what I believe.

    Following this blog with interest.

    Cheers,
    Andrew.

  4. I remember reading about the Kelly Formula for supposed optimal position sizing here, http://www.seykota.com/tribe/risk/index.htm
    What is your opinion of it?

  5. Andrew, you have really hit the nail on the head with your comment. I know I have been ‘pushing’ my luck in my approach. If I continue to try and punch above my weight, probability will eventually catch up and strike me with a big loss. Because of this, I going to try and reduce the riskiness of my trades. This will likely have a big impact on the size of my profits/losses, but it is time to face the reality of my situation.

    Your comments regarding the problem of my small account size also cannot be ignored. I have given myself until April 2007 to continue trading full time. After April, I will most probably have to return to life at the office, so to speak, perhaps relegating trading to a spare time activity.

  6. Hi Rocko. I think the Kelly formula is pretty cool as because unlike say a fixed 1-2% approach, the Kelly formula uses performance statistics to spit out a suggested position size. I don’t think it’s necessarily ‘optimal’, because you could end up betting too large and getting hit with a very large drawdown, but the overall philosophy makes a lot of sense.

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