Trading is a lot like athletics. All good traders and all good athletes are constantly trying to improve and perfect their game. If you are not working on getting better than by default you are either getting worse or stagnating at best. And if you stagnate long enough eventually the game will surpass you.
"In the confrontation between the stream and the rock, the stream always wins - not through strength but by perseverance" - H. Jackson Brown
Sports change. Athletes change. The game gets faster and harder, players get younger and stronger. Markets and participants change in the same way.
Jerry Rice was arguably the greatest receiver of all time and his off season workout routines were the stuff of legend. Nobody worked harder than Jerry at becoming better. Michael Jordan is the greatest basketball player of all time thanks in large part to his "Breakfast Club" workouts. All great players know that it takes hard work to become great.
"Everybody has talent, but ability takes hard work" - Michael Jordan
Lately I have been working on a complete overhaul in my trading. The reason I am doing this is not because what I have been doing my entire career suddenly stopped working. It is because I think I can become better. It is the constant quest for improvement.
"The principle is competing against yourself. It's about
self-improvement, about being better than you were the day before" -
For my entire career I have been a fader. Either fading what I perceive to be an extreme or fading a pullback in the direction of the dominant trend. I have become adapt at identifying potential turning points in the market. It is not uncommon for one of the TS #'s to be the high or low of a move. So while I can consistently get the turns I am missing out on a lot of the "middle" of the market. The part that a lot of traders like to call the sweet spot of the trade.
You often hear traders say "I don't care about picking the top or the bottom - I just want to capture the meat of the move" or something to that effect. Often times with my style of trading I miss out on a lot of the meat of the move.
So I have been working on incorporating momentum into my trading.
So far I am not seeing the results I expect. That's okay. I am going to
keep working on it. Eventually it will pay off. Change doesn't happen
over night. Rome wasn't built in a day. In the long run I am confident that these changes I am incorporating will only make me a better trader.
"If you do the work you get rewarded. There are no shortcuts in life" - Michael Jordan
Why did Tiger Woods change his swing after he had just won the 1997 Masters
by a record 12 shots? To get better of course. But what happened first was he
got "worse" or so it seemed. He only won a single tournament in 1998 and appeared to
be in a serious slump. Change, however, takes time.
In 1999 Tiger won 8 tournaments including the PGA Championship. He ended 1999
winning the last 4 tournaments of the season. Then in 2000 he won his first two
starts making it six wins in a row. In 2000 he went on to dominate the sport
winning three Majors: the U.S. Open, the British Open, and the PGA Championship.
And he placed 5th in the Masters. He also won the Canadian Open (something the
great Jack Nicklaus never did). He ended the 2000 season with 9 PGA Tour wins
including 3 of the 4 Majors.
The swing changes appeared to be paying off!
In 2001 the dominance continued. He won the Masters, effectively completing
what is now known as the "Tiger Slam". He finished the 2001 season with 5 PGA
Tour wins. In 2002 he won 5 PGA Tour events including two Majors: The Masters and the U.S.
But then in 2003 he "only" won 5 PGA Tour events but no Majors. In 2004 he only won 1 PGA
Tour event but no Majors. What was the problem and why was Woods "slumping"
It just so happened he was in the middle of another swing overhaul!
What happened next? Tiger went on to dominate the sport once again. In 2005 he won 6 PGA Tour events including 2 Majors. In 2006 he won 8 PGA
Tour events including 2 Majors. In 2007 he won 7 PGA Tour events including 1
Major and then in 2008 he won 4 PGA Tour events including 1 Major. In 2009 he
won 6 PGA Tour events but no Majors then in late 2009 we all know what happened.
In 2010 he didn't win a single tournament and is win-less in 2011 as well missing tournaments and not playing in Major championships for the first time. Apparently he is injured and is
undergoing more swing changes. He has always said his goal was to beat Jack
Nicklaus' 18 career Majors. Tiger has 5 wins to go. We'll see what happens.
"The will to win is important, but the will to prepare is vital" - Joe Paterno
When Tiger was in the middle of one of his major swing overhauls he
didn't expect the results to be immediate. The media constantly questioned him
as to what was "wrong" but he knew what he was doing. In fact most
people thought he was crazy for changing up a swing that had won the
Masters by 12 strokes. When he started his second swing overhaul there were even more naysayers.
Tiger however had formulated a plan and
was working through it. He could see the bit by bit progress he was making when the results to the outside world appeared to be negative.
When he was sucking balls in tournament play he would say things like
"Well I'm really happy with the way I'm swinging the club". Some people
in the media accused him of being delusional. Tiger had a vision for the
end result before anybody else could see it. He knew that positive
change would surely come with time and perseverance.
I feel the same way with the overhaul I am making in my trading.
Yoig Berra once said: "Slump? I ain't in no slump. I just ain't hitting!"
That's the way I feel.
Adapt or die!