The story so far. Fri Jan 8

This is the second year of my trading blog although not yet the anniversary as I started in February 2009. I've been treating it as education or, more accurately, re-education because I was well aware that I had got into bad habits and needed to do the hard yards to change them. Most experienced traders would admit that although they know what they should do in certain situations, they will often do exactly the opposite to their own detriment.
If you assume the trader is a rational man or woman then this makes no sense. However, unless you're a classical economist, I think that you would understand that many of our responses are habitual and emotion driven. In the past and in common with most traders, my first line of attack would have been to try to tinker with my system but although I have done some playing about with my trading signals, I now see this as a secondary issue. Instead, given my existing set of tools, why was I not following my method. Did I not trust it? Was it psychologically too difficult to follow for me? Had I simply got slack with the normal disciplines of trading? These probably cover the main areas with lots of other questions following. For example, if I didn't trust my method was it because there were technical problems, practical ones or perhaps I had psychological issues with trust?
I've come to realise that the psychological issues are often the most powerful driving force. In general life terms I've been working on some things for a few years and mostly they fall outside the scope of this blog but in broad terms I suppose that building up my own confidence and sense of self worth has improved my health and happiness although not necessarily my wealth yet! That last part is not so hard to understand, if you're driven to achieve financially in order to compensate for something that's lacking then you might have to replace that drive with something more healthy if you no longer need to prove yourself - or change what you're doing.
I was slightly nervous about this last point - I have a family to support - but it turns out that I still love trading and I've been thoroughly enjoying the challenge of rebuilding myself as a trader.
Obviously, everyone's interest in and approach to their own psychology is different so that in trading terms the practical things which can be more universally useful are the sort of techniques found in any number of self help books about defining your goals, visualisation, active imagination and a positive approach. I tended to be sceptical about these tools, thinking of them as being like putting a band aid on a gaping wound if, for example, you had serious issues about money. Having given them more time in recent years, I realise that you can use these tools to help you to think about and to focus on what you do and don't want. They can help you to think through your ideas and ultimately to save a lot of time compared to the usual process of taking hasty action.
One of the other things I've realised (and Malcolm Gladwell is very good on this in books such as Outliers as is Norman Doidge in The Brain That Changes Itself) is that rote learning is valuable. So one of the things I've been doing is practising putting on my trades and taking them off in a disciplined way, without second guessing myself, so that the habits become bred in the bone.
Another good idea, which takes much of the stress out of trading, is to recast your idea of what is a successful trade. For example, as long as you follow your rules then a trade is a success. Whether it gave you a profit or loss is irrelevant. Obviously that's what a casino would do and thinking back, when I was an options market maker, I never looked back to see whether any one trade made or lost money, I just did the trades that had an edge.
And yes, at the end of it all, I've done lots of tinkering with my trading techniques. But I'm confident that it was for the right reason.

12.18 The market is up 30 points and I've sold the last 5000 Lgl at 337 (v 318) for a profit of 950, giving 2850 for the deal altogether less 31 costs. The last 15000 Mgr were sold at 166 (v 154.5) giving a profit of 1725 and 3100 for the total deal less 30 costs.
The only thing left, to sell out today before my holiday break, is Stockland Group. I was quite happy to buy these at a potential short term peak earlier this week as I quite forgot that I would have to tip them out by Friday. My entry price is 409 and they've been as high as 411 this morning although they're back to 406, up 6. I'm quite happy with the chart so I might keep this into next week after all.

4.13 The market had a muted afternoon, drifting off but holding a 13 point gain. I sold 3000 Sgp at 410 for a 30 dollar gain which covers costs. I've left the rest which I'll probably sell via a call to my broker next week. I'm off on holiday for a week. More to follow!