Wasting a Good Life Trading

19Nov09

Random thought for today (after a few geeky posts, I’m due an esoteric one)…

I was off the grid for a couple of months doing some non-geeky things. There was the new puppy (now a 6 month old trail-running beast), a jiujitsu tournament and a lot of MMA training (my other obsession in life and someday the topic of a blog post), a bit of travelling back to the US (to maintain my status as the world’s greatest uncle), and soon a Korea adventure with the Other for skiing and kimchi.

     

And despite all of that time spent away from the quotes and the research and the noise, my trading wasn’t impacted one tiny bit.

Readers know I’m an end-of-day mechanical swing trader. That means I only execute trades at the close. I don’t day trade, and barring financial Armageddon, I don’t monitor positions intraday. I don’t bother with market pundits or message boards, and I don’t agonize over what or when to trade. I follow a very concise mathematical formula, and besides being effective, I require only one thing from my trading: that it not impact my quality of life.

Contrast that with most traders I meet who are so personally involved in the day-to-day business of making a profit: eyes glued to a monitor watching squiggly lines or poring over financial statements or combing message boards. And the sad truth is that the vast, vast majority of them will fail to outperform even simple buy and hold, much less a successful fire-and-forget approach like Faber’s asset-class rotation model, or Luby’s stock of the week, or our own humble trading strategies.

If you are part of the mythical exception who produces supersized returns watching squiggly lines, then good on you – I wouldn’t do what you do, but I understand why you do what you do.

But if you’re not, the point of this random thought is to take the path of least resistance. It pains me to think that anyone misses out on time spent with their nephews or their Others or doing what they love, when there are simpler less intrusive ways to produce outsized returns and meet our financial goals.

Happy Trading,
ms

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15 Responses to “Wasting a Good Life Trading”

  1. 1 Bryan

    Bravo!

  2. 2 semuren

    可爱的小狗是公的或母的?

    While I tend to second the bravo above, you did/do have to devote time to thinking up and testing these strategies. That might involve a bit crunching numbers, watching squiggly lines and such like.

    • 3 MarketSci

      RE to semuren: I don’t read/write zhongwen, only speak (and I don’t even do that particularly well), but I think you’re asking if she’s boy/girl. Girl (“mu de”)…much more well behaved I think.

      Good point on the above…here’s the difference in my mind: is the trader an artist or a cartoonist? The cartoonist has to slog day in and day out to pay the bills. The artist works when he’s inspired.

      I love the research and design part of what I do, but I never feel forced to do it. I might take weeks or months where I don’t touch that side of it and them suddenly decide not to sleep for a few days if I feel particularly inspired. Know what I mean?

      Thanks for the comment!
      michael

      • When you get in the zone and the ideas start flowing then sleep doesn’t appear all that important. I can definitely relate to this one.

        Derry

  3. 5 Tamas

    What sort of underperformance in yk,scotty or the original marketsci strategies would force you to come back and analyze the markets and work hard again to come up with new ideas and strategies?

    • 6 MarketSci

      RE to tamas: hello sir…long time no talk.

      None…I put new things out there when I feel inspired and have something new to say, not based on performance. I would like nothing more than to have 20 completely different successful strategies deployed.

      michael

  4. This is so inspirational!
    I wish I can get there some day soon (I’m personally trying to head that way with EOD trend following).

    PS: well done on the trading, the good life, the “great Uncle” title.. and the One ;-)

    • 8 MarketSci

      RE to Jez: thanks for the kind words – just added your site to my reader.

      P.S. she’s the “Other”, not the “One”…I don’t want it going to her head =)

  5. 9 Will

    Hi again M,

    Still follow you regularly, but comment rarely. Couldn’t resist here- wanted to say “So you wrote a nice post just to wrap around that picture and rub our noses in how truly hot She is, din’t ya? DIDN’T YA!!!” Hehe

    Best wishes and rock on,
    Will

    P.S. Does She have a sister who digs quantitative strategy developers as well???

    • 10 MarketSci

      RE to Will: you’re right, my dog is pretty cute.

      As for the rest, I like Shallow Hal only see inner beauty.

      =)

      michael

  6. I want to thank you for the post. I have been trading for about 2 years, and just like you – using mechnical signals, and only take actions at close. It’s just my trading style is more trend following than swing.
    I have to say, it is hard to find people with similar trading style. Due to all those trading forums, lots people think the only profitable trading style is day trading. I can’t prove them wrong, yet I cannot tell if my style is right (before I can prove myself by my result). The feeling is awkward.
    Anyway, thanks. It really inspires me.

  7. 12 Randy Harris

    Words to trade by.

  8. 13 Sven

    Michael: I have been following your blog for a long time, and I feel compelled to share a couple of thoughts:

    1. I believe that your influence in the quant community is an order of magnitude greater than it may appear if you judge your impact solely by looking at your blog traffic numbers.

    2. You have posted many thought-provoking ideas, but I dare say the following statement that you made above is possibly the single most profound concept you have shared:

    “here’s the difference in my mind: is the trader an artist or a cartoonist? The cartoonist has to slog day in and day out to pay the bills. The artist works when he’s inspired.”

    This perspective resonates so deeply with me that I have thought about it countless times in the days since I first read your post. Personally, it triggered an epiphany for me that I can best describe as equivalent to the first time an infant looks in a mirror and realizes they are seeing a reflection of themselves.

    You have given me yet another thing for which to be thankful this Thanksgiving: a kindred spirit.

    • 14 MarketSci

      RE to Sven: thank you for the kind words sir. Epiphanies are ALWAYS a good thing, and there’s nothing better than being told you helped to spark one. A very happy thanksgiving to you and yours. michael


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