We are now just over 2 weeks into the 2012 season and so time for an update with how my trading is going. On the whole, I'm content. After a shaky first few days (where the month without trading had left me decidedly rusty) I am now really settling into a groove. This year was always going to be about cementing the new approach that I'd been working on towards the end of last year. I knew that I had to fully ingrain the aggressive, value-seeking, discretionary style of trading which I feel suits me best and will reap long term profit. So far, this has been going very well. In those first few days, I did slip back into old habits (such as trying to play the match rather than the market) but now I feel as though a switch has occurred somewhere deep in my subconscious, and the new approach is becoming steadily an automatic process.
Probably my main New Year's resolution was to improve my patience. This still appears to be the biggest struggle but I am improving. Despite saying (yet again) that I would not rush into a Grand Slam like a bull in a china shop, I did just that on day 1 of the Australian Open. It wasn't like last year though, where I was all over the place and losing large reds. This week was much calmer and the reds much smaller but I just need to follow my gut a little more and keep my powder dry for longer.
I've been noting whenever I've gone against my gut instinct, to see whether it's something I need to rely on more often and results show that I would have made significantly more money if I'd trusted my intuition. The problem is, sometimes I see a good value price and so take it, even though my gut is saying 'yes, it's value but I've a nagging feeling this is gonna bite you on the ass'. That gut feeling is normally based on an assessment of the players - what they are doing on the court and what I know of them from the past. I guess this is something I'm now grappling with as a trader - should you ALWAYS take a value price? I've come to the conclusion that the answer is 'no'.
A 'system' trader should probably always take that price as it falls within the rules and trigger points of their strategy but a 'discretionary' trade such as myself, relies much more on their instinct and reading of games in-play. I feel that if something is screaming at you to stay away, then you should listen to that inner voice - as long as you are experienced enough to have been in that situation hundreds or thousands of times. Without experience, you don't really have a well-tuned instinct that you can rely on and that 'gut' feeling is probably nothing more than fear or greed. Besides, my notes back up this idea so far because when I've ignored my gut and just taken the value, I've been burnt on almost every occasion.
But this then begs another question; if your gut is saying 'don't take the price!', does that mean that the price ISN'T actually value? Do we factor in that gut feeling into our assessment of the price? From a pure, cold, unemotional 'systems' perspective, that same price would be considered value but when incorporating instinct and feel at that very moment, from a 'discretionary' perspective, I guess I am saying that it isn't value. I'd like to know what others think.
I guess the lesson for me is that perhaps I should just stay away if it doesn't feel right. After all, you can't lose any money if you don't get involved. For now, I'm going to stick with what my P&L is screaming at me, which is 'TRUST YOURSELF MORE OFTEN, YOU NUMBSKULL!'
OFF-COURT BEAUTY - world number 59, Romania's Sorana Cirstea: