The Official Kicking Myself Thread

[grems8544]

I actually think that this thread will be successful, provided people feel "comfortable" with an entry which has their name attached. Here's the rationale:

Many of us, myself included, despite years of "doing this", still are learning/following/adapting. This game constantly changes, and that theme is the only constant that I think I can acknowledge. I think we all can learn from each other's mistakes, and to this end, it will identify common areas that need to be discussed and rationalized away so that we can become better surfers ...

For me, with a system that is not of my creation (e.g. the Robots), I always am suspect at

1) back tests that I did not run myself,
2) analysis that the authors performed but which has not been acknowledged openly (not because of hiding anything, but simply because of the desire to present clear, concise data and sometimes other analysis detracts from the main message),
3) how much capital should be committed

#1 arises because I am a voracious backtester; I have my own methods, and I know my methods are the best <you're supposed to grin here>. This is a terrible bias that must be overcome within my head, and it isn't easy.
#2 arises out of pure communication -- teaching requires conciseness and clarity, and a thorough understanding of the subject matter. This means far more information is processed before it is communicated, and this is a natural step in dissemination. Again, "playing catch up" always leaves me feeling exposed, and when it's my capital at risk, it's hard to cross this particular chasm.
#3 is an ongoing battle for me -- all I can say is that I'm starting with a few hundred shares and I'll increase the amount as my confidence goes upward.

So, with this latest round, I had multiple positions on with IWM in multiple accounts. If you recall, we had several days where the signal was strong, and correspondingly, I picked up 100-sh block entries each day (6/10, 6/11, 6/15) using a combination of the levels recommended as well as my own discretion. On 6/22 I decided to sell for modest gains @ 80.46, leaving only 100sh each in my various accounts. There was no "reason" to sell, I simply had been hit hard with other mean-reverting strategies in the plummet from 6/1 to 6/13 and I needed to recover (fractions) of those losses.

Of course, with hindsight being 20/20, had I *strictly* followed the Robot trades, I would have made back a good portion of my 6/1 - 6/13 losses.

The lesson learned for me: Follow the Robot signals mechanically. The monies allocated within my Robot trades stand alone, and they cannot be influenced by the entire portfolio positions. So, for a $100K account, if 50K is allocated to the Robots, then the other 50K stands alone. I know this, I've practiced this, but in reality, it has been a hard rule to internalize.

[ozash]

It's quotes like this below that make this site pure gold ... honesty by the people leading that pull no punches.
Ash

I actually think that this thread will be successful, provided people feel "comfortable" with an entry which has their name attached. Here's the rationale:

Many of us, myself included, despite years of "doing this", still are learning/following/adapting. This game constantly changes, and that theme is the only constant that I think I can acknowledge. I think we all can learn from each other's mistakes, and to this end, it will identify common areas that need to be discussed and rationalized away so that we can become better surfers ...

For me, with a system that is not of my creation (e.g. the Robots), I always am suspect at

1) back tests that I did not run myself,
2) analysis that the authors performed but which has not been acknowledged openly (not because of hiding anything, but simply because of the desire to present clear, concise data and sometimes other analysis detracts from the main message),
3) how much capital should be committed

#1 arises because I am a voracious backtester; I have my own methods, and I know my methods are the best <you're supposed to grin here>. This is a terrible bias that must be overcome within my head, and it isn't easy.
#2 arises out of pure communication -- teaching requires conciseness and clarity, and a thorough understanding of the subject matter. This means far more information is processed before it is communicated, and this is a natural step in dissemination. Again, "playing catch up" always leaves me feeling exposed, and when it's my capital at risk, it's hard to cross this particular chasm.
#3 is an ongoing battle for me -- all I can say is that I'm starting with a few hundred shares and I'll increase the amount as my confidence goes upward.

So, with this latest round, I had multiple positions on with IWM in multiple accounts. If you recall, we had several days where the signal was strong, and correspondingly, I picked up 100-sh block entries each day (6/10, 6/11, 6/15) using a combination of the levels recommended as well as my own discretion. On 6/22 I decided to sell for modest gains @ 80.46, leaving only 100sh each in my various accounts. There was no "reason" to sell, I simply had been hit hard with other mean-reverting strategies in the plummet from 6/1 to 6/13 and I needed to recover (fractions) of those losses.

Of course, with hindsight being 20/20, had I *strictly* followed the Robot trades, I would have made back a good portion of my 6/1 - 6/13 losses.

The lesson learned for me: Follow the Robot signals mechanically. The monies allocated within my Robot trades stand alone, and they cannot be influenced by the entire portfolio positions. So, for a $100K account, if 50K is allocated to the Robots, then the other 50K stands alone. I know this, I've practiced this, but in reality, it has been a hard rule to internalize.

[ericoleman]

Sometimes the hardest part is "letting go."

I sometimes fall prey to "wishing behavior"

By wishing, you try to decrease your discomfort by escaping into a fantasy. This is a dreadful waste of power. Not only do you have power going into passive behavior, but you also cloud reality, impairing your ability to problem solve. Remember that learning is the warrior's goal - Arno Ilgner in The Rock Warrior's Way

I owned GMCR and BIDU in the summer of 2009, both of which were sold far too early. Sometimes it was hard to look at these charts knowing that those two trades were the "big stocks" that I dumped too soon, wishing I had just held on! My good Doctor friend owned 1600 shares of Apple at split-adjusted price of $4, and has lamented selling in the 2009 bottom even with several thousand percent gain. I almost sense an inherent dissatisfaction in whatever outcomes we experience - either we sell to late or too early. More and more, I realize that the important element of all these experiences is to slowly improve upon our chosen methods. Clarify one's timeframe. Understand the cycle. And keep an open mind with a willingness to learn, accept the choices we make, and apply those lessons going forward.

Thanks for sharing everyone . . .

Best,
Eric

[Rembert]

More and more, I realize that the important element of all these experiences is to slowly improve upon our chosen methods. Clarify one's timeframe. Understand the cycle. And keep an open mind with a willingness to learn, accept the choices we make, and apply those lessons going forward.

That's also what many others (like Minervini, Fahmy, etc) have been saying ... define yourself as a trader. Define what timeframes to trade, when to take a loss, when to take a profit, define a re-entry strategy etc. You'll trade much more relaxed this way. I used to watch my stocks way too often ... for me it was often a distraction as I often reacted to intraday noise. So I stopped doing that with much better trades as a result. For all my disc trades I put profit targets and stops in as orders so I don't have to worry about them, once I buy them the positions take care of themselves basically.

Don't feel bad if you trade within your rules and make a loss or if you get stopped out and the stock then goes on to do what you tought in the first place without you on board. Instead adapt so that next time for example you have a re-entry strategy in place.

Trading with rules in place allows the trader to observe over time how to improve. But if one doesn't have rules or guidelines even, how can one know what to improve ?

[nickola.pazderic]

grems8544 wrote:

"playing catch up" always leaves me feeling exposed, and when it's my capital at risk, it's hard to cross this particular chasm.


I think there is a profound reflection here, and I recall research I did for a book project on photography in East Asia.


While looking through photographs of various eras, it was obvious that poses were crucial. Everything in a frame needed to be in place. In all early photographs that I've ever seen, including those of Europeans and Chinese, photography evoked or provoked a cold, hard stare into the device. Perhaps we might say this is only because exposure took some time in those days. But looking at contemporary pictures, critical poses can still be detected. Talking with elderly people who had lived through the camera's first extensive deployment through the Chinese countryside, I learned that people were fearful the device would suck one of one's life energy. At its beginning until today, exposure literally evokes anxiety. Nowadays, people carry cameras in their phones everywhere, and everything is always potentially exposed. I think it reasonable to say the device provokes constant attention to one's pose. To be exposed is to have one's pose or lack thereof photo-graphed into the permanent record.

When I started this post after an exchange with Billy, I felt anxiety of exposing myself, of putting my 15 letter name into the record as regretful and incompetent and, literally, powerless in the presence of the device, called IWM Robot.

Perhaps my willingness to expose myself as a dunce can itself be anxiety producing to readers. To me, it shows our comic incompetence. It is comic and not pathetic or tragic, I think, because we're still in a position to profit. To laugh is, thus, easy. It is to crack up, as we say in English-- that is, lose our composure or pose.

It is interesting for me to read bromides to self improvement and trading excellence in this thread. Bromides are literally tranquilizers; they reduce our anxiety.

But here is the problem: like the camera's influence on our lives, algos now structure trading. Any failing I experience as a trader is fundamentally my failure to conform to the demands of the devices. To not conform is folly. And while I might expose myself as a self-flagellating fool, my money is much more serious; it knows I must conform to the new patterns established by the devices.

[dsmcdougal]

On the Mechanical Investing Forum, Fool.com, today, KBGlenn said: "Can't remember where I read it but some guy actually tried to quantify how much investors lose to simple human error in executing what they are doing. It was pretty high, something like around ~3-5% per year difference. That's a chunk of change if you add it up over time. Somewhere I'm sure my face is on the poster for this type of error."

Mine too.

Dave