Persistence and Resistence

7 09 2009

I’ve read before that, for an active trader, in a given 52 week year, there are only a few weeks that “make” the year. It’s like the old saying about how life comes down to a series of moments. The trouble is, you never know when those moments are going to come.

I haven’t had a “moment” in the market for a while. In other words, this market has been pretty much a big fat drag for me for most of the year. And I find myself – like yesterday – staring at the screen as the market drew to a close saying, out loud (for the umpteenth time), “I hate this {colorful gerund} market.”

Now, if you had asked me in, oh, early October of 2008 or February of 2009, I’d tell you the only thing I didn’t like about the market was that I hadn’t poured more money into it. Because it was like an ATM machine for me. So it was easy to make money, and my only failing was not pushing more aggressively. Whereas, these days, I am fighting like hell just to keep on an even keel. I have never worked so hard for so little.

Let me illustrate with a couple of equity curves. The first (whose dollar figures I’ve eliminated, but it’s the “big one”) is like this:

0905-trust

See that green tinted area? That represents the six-week period where I made virtually all of my profits in 2008. That’s key for me: all the other times, represented in the leftmost yellow, represented day after day after day of a total slog, boredom, and frustration. I was working like mad for nothing. And them – voom! – my equity curve absolutely exploded higher. Times like that is what makes people thinking trading is “fun”, but the “fun” it outweighed by the “sucks” by a pretty huge ratio. You just have to be able to tolerate the sucky part more than, oh, just about everyone else.

My 401-k account makes a similar point:

0905-ira

Make no mistake, not a day goes by that I’m not trying my best to make money. But it only works a portion – sometimes a minority – of the time. The first green zone was great for me since I was trading ultra-ETFs (which, as we all know, are verbotten by our deal Principal Brokerage friends now). The yellow that follows was a pretty big draw-down due to the market’s brief resurgence. And then the next green zone was the lift I enjoyed from lottery plays. And now I’m back in the yellow zone, just grinding away.

The point I’m making – which is just as much for me as for you – is that these graphs remind me to be patient. I am a very, very, very frustrated trader right now. And I’ve been equally frustrated before. But, every morning, I amble downstairs to my trading system, fire it up, and try to do the very best I can. Because those green zones are worth the wait.

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