Monday Notes – Correcting Trading “Myopia”

Nearsightedness, or myopia, as it is medically termed, is a vision condition in which close objects are seen clearly, but objects farther away appear blurred. - American Optometric Association

Every now and then, it’s appropriate to regain some perspective in life.

And based on some recent mail, it’s time to once again try to put my ongoing babbling into perspective … using my favorite concept of “time”.

Throughout the last decade, I’ve likely preached more about the concept of “time” more than any other single topic.

Two prime examples include the famous January 2009 “Svithjod Rock” post (which was subsequently asked to be syndicated and appeared on the inside cover of the 2009 International Trader Expo Directory among other places), and one of the first slides of the Jellie Training series which states, “Trading is all about a Long-Term Accumulation of Short-Term decisions”.

The main reason I tend to get “soapboxy” about this concept is that the vast majority of people on this planet – and traders-in-training and losing traders in particular - continue to miss the point as they remain interested primarily in short-term, microwave-type results.

Such is why (1) I revised the tone of this diary some time ago from immediate data/results intensive to more substantive intensive, (2) I’ll only offer live trader training over an extended four-week period which MUST include my live trading, and (3) I’ve been so cautious with the Trading After Dark (TM) launch so as not to provide even a single hint or inference that results over a single day, week, month, year, (insert other microscopic time period), etc. matter … because they don’t EXCEPT in accumulation over a very long period of time.

I was reminded of this again twice over the weekend when (1) I was getting ready for a Webinar that I’ll be giving Linda Raschke’s team next Wednesday, and (2) I received requests over the weekend asking for some detailed statistics and the posting of daily results.

The latter of which falls in the “give a mouse a cookie and he’ll ask for a glass of milk” category since I’ve sliced & diced both micro and macro results via an array of published statistics, tank transcripts, diary entries, 38 weeks of live team trade narration in 2009-10, and actual trade plots ad infinitum over the years.  And I’m STILL looking for someone else to publicly share their horror days. But I digress.

You see, short-term numbers – whether good, bad, ugly, or indifferent – mean absolutely nothing. 

Zero.  Nada.

Let me try the following analogy.

Many outside of New England don’t care for Bill Belichick.  His press conferences are dull, he wears the infamous “hoodie” instead of fancy sideline garb, is almost robotic in nature, and his tone never waivers whether they won, lost, played well, or stunk up the joint.

He’s not fancy or flamboyant, and his players follow suit.

Oh, and over the long-term, he wins.  Boy does he win.

Yet most in this world would apparently rather see the “pizzazz” and “excitement” of  a Rex Ryan.  Or dwell on current-day results. Or simply see how their “fantasy” team is doing.

And such is true with trading as many traders continue to care about the “glamour” of trading, especially in the context of the immediate trade, day, week, month, year, (again, insert microscopic time period), etc. of both their results and the results of their “fantasy” team.

And while I’ve tried to say it before a thousand different ways, I’m going to try yet one more time.

ANY of these more than 800 diary posts by themselves means nothing. 

Each extended streak during 2001, 2002, 2005, the self-imposed “challenge” year of 2008, and parts of 2009-10 by themselves means nothing. (btw, note the gaps gang!)

The July 7, 2008, October 6, 2008, and May 6, 2010 Days From Hell (among others) – while published with clear intent – by themselves mean nothing.

My burnout during 2006, mid-2009 and lack of trading interest/passion during parts of 2010 by themselves mean nothing.

Yet I share each of these micro-instances with the hope that it’s the ENTIRETY that onlookers “get”, and therein lies the ONLY value of this ongoing babbling.

And yes, even I must be reminded of this during times when I’m staring at the “performance” tree and not the forest … or more appropriately, the world.

Which in fact happened this weekend when we were doing some longer-term fund comparisons to the Barclay benchmarks, when I was reminded that through all of the micro-timeframe snippets noted above, my main fund has generated a Total Return to date (as defined by Barclay) of over 800% over the last several years (including pre-blog years).

btw, the worst peak to trough drawdown (again, as defined by Barclay) over the last five years?  5.26% … a figure that probably means more to me than anything as “defense wins championships”.

I debated long and hard about sharing these figures.

And while I’m sure they’ll get twisted, distorted, doubted, misinterpreted, etc. by a few who again just “don’t get it”, it’s the best way I know to properly “bind” each of the 800+ pages of this electronic book with emphasis.

And perhaps improve our collective “vision” in the process.

Let’s keep our eye on the ball as we enter 2011 gang.

It’s the only way we’ll ever hit one out of the park.