Friday, April 25, 2008

My 35%

Something is really bothering me lately. In fact, it's bothering me so much to a point where I can't trade anymore. It's my payout split. It's driving me bonkers, bananas, nuts, whatever. It's messing w/ my head so much that it's affecting my performance. There's a lot going on right now so I have a feeling this post might be a little long and sounds like just me rambling.

Look, honestly at this point in my trading career it's a lot more to do with the psychological factors than about say... learning technical analysis. It's more about growing more comfortable about taking more size and blocking out distractions. My payout is at 35% right now with the opportunity to move up as high as 50%. When I signed on, honestly I didn't feel it was a big deal b/c I thought I'll get to a point where I quickly makes back my initial losses and with the superial technology Kershner has that's not going to be a problem at all.

I started talking to my friend that trades at one of our competitors back in January, who, as a retail trader gets I think about 75% but once they take their necessary license exams they are classified as prop traders and they get 100% of their profit. Biggest difference though is that they have to put up their own capital first. We were just chatting when we first met up, but it planted a seed in my mind. Once I started consistently make money I think "I can get 75% or even 100% somewhere else." It's gotten so bad at times that when I look at my P&L I don't see the real number, I immediately discount that number by 35% but if I have a loss for the day I still look at it as 100%. Literally, yesterday morning I was doing pretty well, up about $550, $600 just after two trades, except I didn't see $550, $600... I saw like $150, maybe $200 at most in my account. I can consistently make money or manage my down days but looking back, when I have my big down days where I have some mini blow-ups it's all b/c I have been in contact w/ John maybe the previous day or I start thinking about making some serious money and either expose myself to more risk than I should or not thinking clearly and making rookie mistakes.

If you ever want to be feel negative all your life, just keep comparing yourself to other people. This is no different than the feeling people get when they try to keep up w/ the Jones' and compare themselves to their neighbors. "Oh, his lawn is greener, his TV is bigger, he drives a better car than me and gets better mileage." It used to that I would only compare myself to other traders in the company or other people that started w/ me, but now that I'm comparing to people trading at other prop firms, or at Goldman Sachs, UBS.

I've already spoken to my manager about it. I know that I might be base my thinking or decision on what I see and know, but he's been around longer and there are probably things he can explain better. I'm not trying to turn this into a big fight between me and management, have me approaching it as giving out an ultimatum: "give me higher payout or I'm gone" b/c it's not as simple as that I don't think. Also, it's just not my style... that's not how to get things done and I'm sure I'll lose that fight 12 out of 10 times. I'm trying to figure out a solution to this, maybe even creatively. I'm willing to even go as far as put up my own capital AT Kershner in order to get a higher payout. Even if that's a viable solution, I don't see the company going out of their way to say, come up w/a brand new compensation structure just for me.

Personally, I don't fully understand Kershner's business model b/c I'm not the first one that have thought about leaving to go somewhere else for a higher payout. People coming in, they don't have to put up a dime and if they end up blowing up or just turn out to be a complete failure you're eating the loss. But if they become a good trader, they jump ship and you wasted your time developing them. I understand we have a lot more technical and trading support than Ascent. Ascent doesn't have the Pit, or software developers or IBD data or people on the Quant team to work w/ us on ticker, autotrading, or analyze trading data. And maybe that's where our pay went to, is that the company needs the 65% of our gains to support these guys. But is that really necessary? These guys are getting paid and we haven't been able to print a decent chart in Gr8Trade for two years and we can't furthur customize our Time & Sales prints?

It just messes with your head...

Maybe I can do hypnosis so I wouldn't think about it. Lawrence and Jane have both told me not to think about it. But I just can't....

Personally, I have two decisions to make. Do I still want to trade? If the answer is yes to that question, it becomes a matter or where. Honestly, I still have the passion for trading. I can't see myself going back to do accounting (YUCK!). I would die. I would either die or boredom, job disatisfaction or I would kill myself.

Now, comparing Kershner to Ascent... it's not that straightforward. They're not that different where it's like comparing apples and oranges, maybe more like granny smith apple and fuji apple or comparing different kind of cheese or wine. Here are some of the things that matter to me that I would consider if I was to go trade somewhere else.

People/Traders: eh, I don't really like the guys trading at Ascent... especially the higher up guys just seems to lack a certain air of professionalism. Like their guy that's in charge of accounting who's sporting a long wavy hair as if he's just out of high school.

Technology: Ascent has Whisper as well but they can't write their own tickers and not a whole lot of people there seems to be playing the crosses like we do. Maybe it's simple b/c they can't.

Payout - you tell me, 35% or 100%? If it's simply about the fact of risk management, fine, I'll put up my own capital at Kershner.

Commission - Ascent is slightly higher, depending on your deposit it's as high as $5 per 1,000 or you can get it lower to like $4, which is only a fraction higher than Kershner.

Variables - It's about equal here if you want to think about our variables more or less as a way to diguise the even lower payout split Kershner has. I was complaining a bit about the health insurance and cost for a monitor but it's just the same at Ascent as well.

Sunday, April 20, 2008

Randy Pausch's Time Management Tricks

It's pretty long, but it's full of little tricks to free you up for the important things in your life... meaning not your email inbox.

Thursday, April 17, 2008

My Renew Sense of Purpose

Pretty decent week of trading so far. Let's finish Friday strong into the week. Good trades on Monday with HES and PBR. PBR was shooting up as rumor/news of them finding the biggest reserve in the world and all the other oil/gas/energy guys are going up as well. But then news came out, supposedly that they didn't and it sold off quick. Both were for about 2 points profit. For slow days like we have had, that's really good. Tuesday, gave back about half of my gains on V and WM (after hour)... it wasn't that bad, it was just that I were in 500 shares so the loss were pretty big. Wednesday I was chasing USO after the oil numbers came out and my stop didn't trigger for some reason and I think was in 1,000 shares that time. Today got some sweet prints repeatedly... should've taken 1,000 instead of 500, but I did lose quite a bit on STP when SPWR earnings and conference call came out. I should've waited for the bounces to get short instead of chasing it...

I started bringing my laptop to work and hook onto our wireless internet so I can bring Briefing and Trade The News up and not take up space on my own monitor. It's cool too b/c now I can listen to Rhapsody or podcast on iTune in the middle of the day when it's slow.

Honestly, I was pretty frustrated last weekend but I started reading some of the blogs I've added to my Google Reader and finished Stock Market Wizards and got some ideas to watch this week. I started doing a spreadsheet of earnings just to observe the price change and try to get ideas in the future. I also started watching stocks that gapped up or down in the morning, wait to see what kind of range they establish the first 30 minute to an hour and then either trade the break out or buying/shorting in between the range. The tricky thing is how to define the break out/down, i.e. if it's near the low of the range, do you buy thinking it's the floor and how much room do you give it and vice versa? I've also been trying to trade along the trend more, not just SPY or EEM but other stocks as well.

After watching earnings play for a couple of days, I think if there's a big name coming out w/ report, I need to not just be on top of that stock, but also companies in related industry and the sector's ETF if there is one b/c they tend to move together.

On a more personal level... I've been having trouble sleeping again, maybe it's b/c all these trading ideas floating around in my head but b/c of that I've been going to bed late and sleeping through my alarm and getting to the office late. I need to stop this before it becomes a habit...

After some of the good earnings reported by INTC, GOOG and IBM, feels like a rally mode. Although volume has been lower than usual, right now I think we're going to test that resistance level after two failed attempts. The market in general is making like an ascending triangle move w/ higher lows. Once SPY gets back in the 139 level things will get very interesting. Will be break out to the up or reverse? Either way I think a lot of people are just waiting that's why the volume is low and we might get an explosive move soon.

Tuesday, April 15, 2008

Market Wizards and Their Firms

Maybe put money in their funds or get a job there??

Stevn Cohen - SAC Capital Advisor, LLC
David Shaw - D.E. Shaw & Co
Michael Masters - Masters Capital Management
Mark Minervini - Quantech Fund, LP & Quantech Research Group
Ahmet Okumus - Okumus Opportunity Fund
Alphonse "Buddy" Fletcher Jr - Fletch Asset Management
Dana Galante - Miramar Asset Management
Steve Watson - ??? I found it once before... can't find it now

Market Wizards: Ari Kiev

The objective of setting a target is not necessarily to reach it, but rather to establish a standard against which to measure your performance. It you are not reaching your target, it forces you to focus on what you are doing wrong or what you may not be doing that you should. The target holds you to a higher standard of performance.

Being preoccupied with not losing interferes with winning. Trading not to lose is not a good strategy. You need to trade to win.

When a trader is on a winning streak, he is fearless, intuitive, and makes the right choices. When he is on a losing streak, he needs to visualize, remember, and feel those same positive traits so that when he comes into the office, he has the same attitude toward his trading as when he is in the middle of a winning streak.

You shouldn't think about making the loss back---that's too burdensome. You have to start where you are. OK, you're down, but what can you do this week, this month, and for the rest of the year? You have to try to regain a sense of control.

Market Wizards: Steve Cohen

Most traders make money only in the 50 to 55 percent range. That means you're going to be wrong a lot. If that's the case, you better make sure your losses are as small as they can be, and that your winners are bigger.

I always tell my traders, "If you think you're wrong, of it the market is moving against you and you don't know why, take in half. You can always put it on again." If you do that twice, you've taken in three-quarters of your position. then what's left is no longer a big deal. I find that too many traders just stand there and let the truck roll over them. A common mistake traders make in shorting is that they take on too big of a position relative to their portfolio. Then when the stock moves against them, the pain becomes too great to handle and they end up panicking or freezing.

[Another mistake people make is that] They make trades without a good reason. They step in front of freight trains. They short stocks because they are up, as if that were a reason. They'll say, "I can't believe the stock is so high," and that's their total research. That makes no sense to me. My response is: "You have to do better than that." I have friends who get emotional about the market. They fight it. Why put yourself in that position.

You trade your theory and then let the market tell you whether you are right.

I felt that the inability of some traders to achieve success was usually due to personal flaws rather than a consequence of bad ideas versus good ideas. All traders have something holding them back.

Market Wizards: John Bender

There are a lot of similarities between gambling and trading, although gambling is a bad term because it implies that your results depend on luck. The people that I'm talking about look at poker or backgammon as a business, not a game of chance. There are a few things that are essential to success in both trading as well as playing gambling games as a business. First, you have to understand edge and maximize your edge. Second, you have to be able to deal with losing. Third, you have to understand gambler's ruin---not playing too big for your bankroll. As a professional gambler or as a trader, you are constantly walking the line between maximizing edge and minimizing your risk of tapping out.

ACL Official Lineup

The lineup is... well, up. I have to say, I'm a little disappointed. Don't get me wrong, there are plenty of bands that I would love to see, it's just that after seeing the Lollapalooza lineup where they have Radiohead, Kanye West, Rage Against the Machine, Nine Inch Nails, the best ACL can do is.... Foo Fighters?

Let's focus on the positive. Here are some bad ass bands that will be coming that I'm excited about... if I don't end up selling my 3-day wristband and go to Oktoberfest instead.

Foo Fighters, Beck, The Mars Volta, Gnarls Barkley, N.E.R.D., Erykah Badu, Tegan & Sara, Iron & Wine, G.Love & The Special Sauce, Band of Horses, Silversun Pickups, Okkervil River, Hot Chip, Vampire Weekend, Duff, Ingrid Michaelson, CSS, MGMT, What Made Milwaukee Famous, Jenny Lewis (whoo... not as Rilo Kiley this time!), Mason Jennings, Yeasayer, The Octopus Project, White Denim... and South Austin Jug Band (they've been playing at ACL ever since I started going... so that's like what, 6 yrs now?).

I'm slightly happier about the fact Vampire Weekend and White Denim is on the lineup b/c I missed them during SXSW. Who knows, given how ACL does their scheduling, I'll probably end up seeing only about 1/3 of the bands that I want to see.

Saturday, April 12, 2008

Austin City Limits Mash-Up

I've pretty much made the decision NOT to go to Lollapalooza this year since I've already bought tickets to ACL and sometimes they're kind of similiar... Lollapalooza has already announced their lineup and ACL will as well on April 15th.

To tease us, ACL has posted this mash-up, of some of the artists that will be performing. So far, here's some of the best guesses:

Hot Chip
Okkervil River
The Raconteurs
Silversun Pickups
Gnarls Barkely
N.E.R.D.
Ingrid Michaelson
Asleep at the Wheel
Man Man
CSS
Jamie Lidell
Eli Reed
Neko Case
Kate Nash
The Octopus Project
Del the Funky Homosapien
Heartless Bastards
Robert Earl Keen
Sharon Jones
MGMT

Looks pretty good so far... I'm particular excited about MGMT, CSS, and Hot Chip. I've been in crave for electronic music lately. If you haven't heard of MGMT, you will very soon. Their music was recently used for the movie 21's soundtrack. MGMT as the next Ghostland??

Friday, April 11, 2008

My Watching the Paint Dry

I came across this phrase somewhere this week in my reading... it's a fair assessment. It's so slow this week, relative volume is barely over half sometimes. Maybe it's the calm before the storm, at least I hope so. I didn't go into work on Friday b/c I was still kind of sick (I've been sick almost the entire week. I got this tickle in my throat since I came back from DC and the tickle turned into what feels like steel wool. It was not sexy) but apparently GE had missed their earnings estimate by quite a bit and the market was quite active, oh well...

I had set a goal to super yahtzee by the end of April and now I'm starting to lose faith, not just the goal to super but at time this entire trading career. I'll man up and admit that I have been complacent. I haven't been reading as much and working on new ideas to get better. Because of that I started reading the book I checked out from Billy and dug up some of the blogs that I've added to my Google Reader. Some of them are not relevant at all and I'm going to remove them but some like Trader Mike is quite good. I've also gone through my old entries to add labels to them so that I can review old trading insight and ideas that I've came across. I also want to start talking to some HP's again, or even just people that I've met that are better than me. I want to talk to Jon, Nish, Mark, Jon, and Mike and probably have a little pow wow w/ Lawrence as well.

A lot of traders have found what works for them and I haven't found it quite yet. I was doing really well in January with EEM but now it's not really working. I was trading SLV heavily at one point but that's not really working consistently for me now.

I also want to have a weekly game plan... instead of coming in and looking at who's reporting or what economic data is coming out that day, I want to know at the beginning of the week already, not the day of.

Earning season is here, I think I want to take the Series 55 again. I don't want to limit myself to the universe of stocks that I can trade. There's money to be made in Nasdaq stocks.

Tuesday, April 8, 2008

My Slow Start in April

sigh... first of all, let's hope that April doesn't turn out like February, which it shouldn't since earning season is kicking off. I was going to keep all the goals I had for March and use them for April but I had one day that I slightly overslept last week and broke almost every one of them. I didn't get into the office on time and hit my daily loss limit (maybe it was raised since I didn't get one of those "are you ok?" phone calls but still, I'd like to keep daily losses under a certain level). I can't say if the company tournament had any effect on my P&L... that one bad day I just kept adding to a loser and that was just dumb.

I've been trying to trade the trend, where if the market is going strong I'll buy on retracement and if it's week I'll short the bounces. I'm still trying to refine my entry points and I need to know when to get out when the trend it breaking. It's been working ok, that sometimes if I take 200 or 500 shares and I have very good risk reward. The times that have burned me is when I keep adding to a loser. I think I'll keep my rule of not trading a stock more than 5 times and that way when I get in a trade the signal is usually stronger so I'll take slightly bigger size and add to them slightly up to a certain point.

April is what I call "control the controllables" month, here are my goals:

miss no more than 2 days
in by 8am everyday
never hit daily loss limit
no down weeks (I seen to be able to work towards my goals if it's weekly instead of monthly)

Thursday, April 3, 2008

DC Recap

DC was delightful. I got to meet up with quite a few friends, the only one that I missed was Johanna whom I went to high school and college with. She lives far north east of the District in Maryland so it was harder for her to come out.

I stayed with Dan, my old tennis doubles partner who lives in Crystal City, which is just one metro stop away from the airport. I got up at 4am and had a bowl of soup but other than that I didn't have anything to eat all day. The reason being that when my plane landed in Denver, the one to DC was already boarding. We actually arrive in DC about 10 minutes early at about 1:05 but the luggage carousel didn't start until about 1:45... what the frick, seriously. And I waited for my bag to come out. And waited. And waited. Finally the little bell went off and the belt stopped. Oh Lord, you did not just lose my bag with the all my warm clothing in it. I started walking towards the Frontier office to let them know but turn my head to give it one hopeful look, the way they do it in the movies where the character looks back to see if their lover ran out to stop their departure, and voila! It was there, sitting lonely on the belt as probably the 2nd to last piece of luggage to come out.

Dan and I went out to Pentagon but security was super tight and you can go in w/ a scheduled tour but you have to book it THREE WEEKS in advance! Three weeks? I joked with the security guard if he meant three days or hours. They don't really appreciate humor when it comes to matter of national security... So yeah, it was pretty boring and you can't take any pictures at all. The most you're gonna get is one of the five sides anyway... it's not like I had access to a helicopter. We then went over to Arlington cemetery, which was creepy, yet beautiful at the same time. That was followed by a hike across the Potomac to Lincoln Memorial and bunch of other memorial this, memorial that before we hopped on the Metro over to Rosslyn to watch the Texas-Stanford game where I met up with Paul, his fiance, and Chantal. I don't know why it didn't register in my head before, but all three of us b-school kids were all in the very first LeaderShape our freshman year. I also met up with Hilda after the Texas game at Dupont Circle for the KU game. Hilda has to take the MCAT the following Saturday so I figured this might be my only chance to see her while I'm in town.



Saturday was mostly just the cherry blossom festival stuff. Dan and I went up to the National Building Museum (I didn't know there was a museum for buildings...) where the opening ceremony was and saw some performances and arts & craft kind of stuff for family and kids. We saw the White House, the Old Postal Pavilion, the Capitol and walked over to Jefferson Memorial before getting to Arlington Cemetery again for our metro stop. It felt like everybody in DC and their grandmothers were out... it was so crowded. We walked maybe 5 miles that day? I should've brought my pedometer, that would've been a fun little fact. My feet definitely felt the impact of all five all those miles as it was very thin on the bottom, no cushion to soften the impact of the road at all.

Sydney got us some tickets to a contemporary dance performance at Sydney Harmon Hall that night. Honestly, I don't know much about dance. I've been to ballets and stuff and I'm pretty familiar w/ art and music but just never been exposed to much dance, not to mention contemporary. I didn't really understand the first performance. I usually try to find the message the artist is trying to convey through different clues or context when it comes to art or music but this performance was very messy, disorganized even... maybe that was the point. The 2nd performance was cool. There was a man who was in a yellow tight, which I think symbolizes the sun or the light because all the other performers were in the shade of the rainbow. The third and final piece didn't have music at all and you could check out an iPod shuffle for it. I brought my own. I think it was intended for us to listen to music on shuffle to get a random song but given the variety of songs I have on my iPod was going from Black Eyed Peas to say Jack Johnson... it didn't make sense at all. I eventually decided to put on something futuristic or electronic like Ghostland Observatory, Hot Chip and settled on Holy Fuck. I thought it worked magnificently. They would play sounds of New York like the subway, the PA announcement or cars. It felt like I was just listening to my iPod and people watching as I commute. The title was called "eyepiece" so I thought that was a fitting interpretation.

Dan let me borrowed one of his tennis shoes on Sunday when we head to the zoo. I wear about size 11 shoes and he had one that's 11 1/2. Paul and Chantal both mentioned the zoo when we were watching the game on Friday plus I really wanted to see the pandas. Headed back to Rosslyn for Rhodeside Grill to watch the game w/ Ryan... we lost, it was pretty miserable. I was going to Kennedy Center to meet up w/ Paul as they were going to do some engagement photos there w/ Katy, whom I've heard both Paul and Sarah talk about her but I've never met her... but the weather turn really gray and it looked like it was going to rain so I just stopped by Paul's place as they were taking their dog Duke out for a walk by the Iwo Jima Memorial (yes, I know, another memorial...). I was dead tired. I think I fell asleep watching The Soup on E! by 9pm. Dan said I was snoring, whatever dude....

Since the weather forecast for Monday was rain, I had planned to hit up the museum that day instead before my 6pm flight to stay indoors and dry. I went to the Air & Space, the Art, and the Natural History Museum while fitting a trip to Hard Rock Cafe, H&M, and Zara in there somewhere. I didn't really find anything I like at H&M and Zara, fairly disappointed I must say... I got home at like 1:30am and I went straight to bed.

I liked DC a lot, I hope the weather is better than what I've seen the 4 days I was there. It does seems kind of boring with all the museums and national monuments, but I know there's a lot of partying going on as well, I was just too tired to part take in any of that this weekend. On top of that I can't say I'm too into politics... it annoys me, so I don't know how well I'd fit in here. I'm actually thinking about going back for 4th of July (lots of people again...) or maybe even go to Georgetown for my MBA.

My Favorite Online Photo Editor

I just heard about this new program called Photoshop Express before I left for DC and I gave it a try after I came back since some of my photos definitely could use some cropping at least. Personally, I don't like to do too much photo editing. 1) It takes up too much time, time that I don't have. 2) My personal theory is that it's not really true photography if you digitally enhanced it. 3) I want to be known for my photography skills, not Photoshop skills.

Photoshop Express is almost like the real Photoshop, except you don't have layering functions and a lot of the advance tools but it has just about everything else. Definitely enough for me to play around with. What I'm most pleased with is its ability to sync with Facebook and your blog if you have one. You can also edit old pictures you've already posted.

One thing I fear though, as w/ any other photo editing software is the lost of quality. I usually use shutterfly to print my pictures, so if I edited some pictures on PX and then downloaded back into my computer it's a compressed JPEG file but what happens if I want to print a big picture out? That is still to be answered. Also PX runs on Flash 9 and sometimes it just sucks all the RAM and computing power out of my laptop. They also leave this little caption w/ a link to PX when you upload your pics to Facebook through it. Some minor annoyance but overall I still love it; better than using the ghetto Paint program that comes with Windows.

Go to http://www.photoshop.com/express to check it out for yourself!