A fine line. Thu Mar 25

Those of you who've seen the 80s mockumentary "This is Spinal Tap" will know that while it might be a close run thing between love and hate or pleasure and pain, it is definitely a fine line between clever and stupid.
In the course of writing this daily blog and also when I periodically go through my trades in detail, I've discovered that I quite regularly cross that line into stupid territory. In fact, I've sometimes crossed that line and set up home for weeks at a time.
For example, I've been working on my trading rules for some months now, trying to define what my set ups are, when I exit, how I execute my trades etc etc and I've realised that I'm quite haphazard. Given how long I've been trading, it's kind of scary although encouraging in some ways - there's plenty of room for improvement.
Part of the inspiration for going through my trades carefully has been the excellent blog electroniclocal which a friend put me onto. This is somebody who knows his method inside out and yet still feels he has an advantage as a discretionary rather than a mechanical trader. That last point is comforting for me, I don't want to lose the human, intuitive element from my trading.
I managed to drag myself away from the screen for half an hour or so and as I walked back through the city it occurred to me that my first 10 years or more of trading involved having to make very quick decisions and doing dozens, sometimes hundreds, of trades per day with negligible trading costs which meant that I could clean up messes fairly easily. Being a market maker, I was competing against other market makers whether on a trading floor or in a screen traded market, and since there is generally a spot of edge in the trades then speed becomes more accurate than fine tuning. By contrast, the type of trading I do nowadays often involves negative edge because I'll be paying across the price spread, as well as incurring higher costs.
I suspect this prior conditioning is a more generous explanation for why it has taken me so long to adjust my trading style but I'll certainly put my hand up to periodic bouts of silly trading.
I was going to admit to being lazy too but actually I've always worked hard at my trading, even if the work hasn't always been applied effectively. I feel like I'm on a very good track though as slowly but surely, I'm cutting out the errors from my trading and refining my approach.