2018 Incident Report (Part 2)

I left off reviewing my 2018 trading performance (originally written June 2019). This is part of my year-long quest to get more organized by converting incomplete drafts into finished blog posts.

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Part 1 concluded with three goals for the coming year.

#1 addresses the observation that I really don’t like looking at the market. My style of trading has generally been “no news is good news” even though news has so little to do with any of it (see paragraph below excerpt here). When I get around to checking the market (and subsequently trading), I sometimes notice holding my breath before the visuals display on the screen with a subsequent sigh of relief when I realize things are under control.

Filled with trepidation is not exactly the way I want to approach my job on an everyday basis. I think the worst sales pitch ever has something to do with that concern. I would much rather look at the market with anticipation, calm assurance, collectedness and confidence, peace, security, contentment, and serenity: choose a synonym.

Goal #2 addresses the fact that I typically check the market once daily. I should look more often especially if I get into more frequent trading like Weeklys (I have seen both positive and negative reviews).

Goal #3 pertains to a feeling that I usually end up getting bad fills. A bad fill is when I pay $3.00 for something only to see it cost $2.60 a few seconds later. Reasons exist for this sort of thing to happen (e.g. displayed bid/ask shrinking when someone actually places an order, market makers wanting to transact toward their side of the natural to realize bigger margins, etc.). The only way I can ensure this does not happen is to place an order for an advantageous price and then wait for a fill.

Goal #3 is related to #2 because I can’t always accomplish this by popping in and out once to check the market. I may have to sit with the market, watch the chart, perhaps work the trade, etc.

I have a couple ideas as to how to achieve #3. One possibility is to create trading strategies that give me leeway to pick up my bat and ball and come back another day when conditions are more advantageous. Another possibility is to only enter trades that would be down money right now if placed on a previous day (or bar). If the backtest as a whole looks good, then I would think being more selective and getting more advantageous entries should be added benefit. The drawback would be a [small?] percentage of trades that would have posted zero MAE. Missing out on these trades may lower my overall average profit.

I will continue next time.