Discipline

Discipline comes in all forms.  I just had a chat with one of the traders here who advocates pairs trading.   The sum total of this conversation was that a trader who has discipline and follows the rules will do well. the guys who do well in pairs trading are the discipline guys.  These are the guy who get out of a trade when the signs tell him to and doesn't rethink it (i.e. i made $.50 a share but perhaps if I just let the position ride I could have made $1.00 a share).  Well, dummy, you plan was to make $.50/share.  If your plan is to make $1.00 then make a plan that way. Otherwise sell at $.50 and make another plane for $.50 more cents. The disciplined guy will take $.50 and go home happy
Next time your discipline quotient runs a little thin, take a look at a violin section in an orchestra.  In the picture take a look at the position of the violin bows....mostly about half way with one exception (upper left).  I will guarantee that all bows are going in the same direction and, as they are all playing the same thing, no one is making very many fingering mistakes if any.  Violin sections in orchestras are the height of discipline.  No "straying" allowed.  16+ persons doing exactly the same thing, at lightning speed, and on a tightwire.

Sitting down and doing pairs trading is a lot like that.  Scratch that. Being a successful pairs trader has to demonstrate the same grit and tenacity (that's John Wayne speak for disclipine) as our violinists. 

An electifying compliment to a violinist is that he/she is a very disciplined section player.  Then to have a trading floor full of disciplined traders who "know their instrument"....yet another sight to behold.

HR 1068 The Robin Hood with a wedgie bill

I admit freely to being the only flaming liberal in the area aside from our economist who is fairly off the charts. I believe that taxes are what we pay to have a civilization that functions.  That we pay taxes now and we are becoming more disfunctional is a worry.  Taxes like HR 1068 advocates however, crosses a line, not so much because I work indirectly with traders who move stock all day long but because the "whereas and wherefores" of the bill as it stands   The stupid thing makes no sense.

I suppose that congress just thinks the money is insignificant in part because so many people just buy and hold stocks that this transaction tax will seem like a minor bee sting.  So I watched a trader buy 100 shares of a big name stock today on the premise of a big move in the stock after a public announcement.  Now he is risking maybe $20,000 and if he did his homework he might take $300 or $400 out of it. If he guesses wrong he will take a loss.  With the tax of 0.1% he will take a $200 loss when he buys and another $200 when he sells it.  If he worked hard, followed his trade, had great timing, he might break even for the day..or he is going to loose with the tax and the loss maybe 1% of his cash.

What possible incentive would I have to do this?  I'm trying to figure if the price is prorated if it would make any difference.  What I mean is would traders want to trade only penny stocks?

The entire thing makes my skin hurt. And by the way, the banks went belly up because of stupid management and a whole lot of loans that were ill advised. and this has to do with stocks how?

Even on Holiday Weekends there are Traders

I came back from Florida a day early to meet a genius in the production of advertising on television and then had the chance to take the 401p cannonball (see post below) and get home in time to take my granddaughter to the beach.

Unlike Florida with loads of public access, the towns out on the east end (the Hamptons) have very few ways to get on the beach.  There are huge public park beaches here and there but its $10 per.  If you live in my village you can get a beach pass and parking sticker otherwis you mostly have to stay in a place that has some passes otherwise no go.

When the storm of the century went through here in the early 90s (that huge nor'easter that they made the movie about) the ocean was up to where this picture was taken and all the barrier grass and dunes were gone. This is 17 years of reclamation.

Anyway, the beach was fairly crowded...maybe 300 people total over the mile of frontage (that's crowded for here....I'm not talking Florida) and who can afford such luxury?  Little know secret is that the Hamptons are supported by the financial markets - not by investments althoughmost people do - but by Wall Street Bonus.  It hits out here about the time it is issued as real estate agents have countless open houses and the Inns, Motels, resorts and restaurants all jack their prices.

Anyway, its labor day today and I'd personally like to thank all those who work so I can work.

Poker

We sponsored an event in Jupiter Florida last saturday. Thankfully it was only about 110 in shade and the thundershowers were moderately severe. What a break.

I play some card games very well as advertising and marketing are all deception and tomfollery but poker seems very different. It appears to have something to do with risk management; e.g. not betting too much, understanding what is going on around you, that type of thing. The traders tell me there is a lot alike in both groups.

What I found really intriguing is when you ask a real deal poker player if he is a gambler he will deny it (not the denial type either) and retort that he only bets as much as prudent to realistically maximize his upside (or words to that effect) and gets out immediately if things turn against him. Hmmmm. The traders say pretty much the same thing.

For the time being I'll stay with advertising where I can lie/cheat/steal.

Nice people to be around

There is a certain magic space created by 4 viewing screens. You should try it sometime. After 4, you feel like a piker with just your laptop.

I suppose that you can learn anything over time. I'm smart and I think I can do this. I'm not ruthless and I also think I can do this. The common belief is that if one person wins big in the trading room then one person will loose bigtime to compensate...the butterfly effect in the money pits...but not true. Are there bad guys out there? Hey, this is Boca Raton and memories of Bernie M. abound so yes there are some really ratty people. Not so here which makes it very pleasant to be around. Nice makes nice.

Gotta concentrate on that.

The OPUS ONE post

I come from a world of advertising and marketing where it takes forever to get things right and even then "right" is in the eye of the beholder. I'm surrounded daily by 40+ traders (the number grows all the time) and the culture and environment changes significantly in a very contrary way.

More people doing the same thing for me is chaos. More traders following risk management rules and their own varying degrees of discipline and concentration just bring order to an otherwise troubled universe.

There is something very satisfying about concentration.