Evolution of a Trader

I’ve been negligent about posting for the last couple weeks.  Mostly because I shut down trading operations Dec. 11 due to travel and end of year work and personal business. 

I’ve been trying to wrap up a software project release for my non-trading business.  I hope to have everything completed today, then my mind can get back to the trading business for 2010.

My big-picture goals for the upcoming year are:

• Be a profitable short-term trader
• Keep professional records of my trading operation
• Continue to learn and develop new skills that improve my trades
• Meet other traders
• Have fun

This time of year, I also start thinking about taxes.  I’ve been doing my own for many years, and feel pretty comfortable with that, and will probably do them this year.  That said, as with any new business venture, it’s probably prudent to consult someone who specializes in taxation specific to that type of business.  So, in early 2010, I’ll be looking for that specialist.  As a start, I’ve found these resources to be quite helpful:

• http://diebrokeblog.com/2009/12/27/trader-taxation-part-1-a-quick-definition-of-what-a-trading-business-is-to-the-irs-and-to-you/
• http://www.smartmoney.com/personal-finance/taxes/more-tax-tips-for-day-traders-9536/
• http://www.themoneyblogs.com/personal-finance/greentradertaxcom/forex-and-tax-treatment.html
• http://www.greencompany.com/

For the week ahead, I have several books I want to finish up.   Mostly I want to get a better understanding of Market/Volume Profile and determine how best to integrate the concepts into my trading style.  I’ve also been reading books like “Entries and Exits,” and “The New Market Wizards.”  I’d like to finish those up and put them on the shelf for a while.  I’m going to finish up my trading plan (it’s almost done (really)), and get my recordkeeping system in place for the year ahead.

Oh well, back to the software business for now….

I was fortunate enough to find Futurestrader71′s blog the other day.  I sat through a webinar that I though was quite interesting.  You can find it here:

http://www.futurestrader71.com/2009/11/components-of-dom-depth-of-market.html

He’s got a fairly straightforward method of trading, and it appears to work for him.  I was particularly interested in the statistical wizardry performed with Excel.

I’ve added his blog to my blogroll and my RSS reader, so I can learn more.

Happy Thanksgiving!

I’ve just started reading “Traders – Risks, Decisions, and Management in Financial Markets“.  I’m not too far into it, but came across this joke about efficient market theory and though it summed things up quite well.

Two efficient market theorists pass a $50 bill lying on the street.  They leave it untouched and congratulate each other on realizing that if it presented an opportunity for profit, someone would have already picked it up.

My cues are:

1. TICKS consistently above/below 0
2. Breakout and extended trading outside opening range
3. Failure of gap fill or gap > 70 YM points
4. Blowing through pivots, near-term support/resistance levels 

Here are some good posts from TraderFeed on trend days:

• Signs of a Trend Day to the Downside
• Signs of a Trend Day to the Upside

This is a very good explanation of the $TICK indicator from Bret Steenbarger at TraderFeed.  I’ve been watching the TICK quite a bit and find it useful for timing entries and exits. 

I’ve been reading “New Market Wizards” in a rotation with about 4 other books.  I basically pick off a couple pages here and there, then shift to one of the others.  I found the following exchange in the interview with Bill Lipschutz really interesting.  I’m always interested in how the really big players think:

Schwager:  “How does your current trading for your own management firm differ from your trading at Salomon?”

Lipschutz: “He doesn’t have to get out of the position all at once.  Foreign exchange is a very psychological market.  You’re assuming that the market is going to move back to equilibrium very quickly — more quickly than he can cover his position.  That’s not necessarily the case.  If you move the market 4 percent, for example, you’re probably going to change the market psychology for the next few days.”

I’m guessing that most market participants don’t think this way.  It just gives us a glimpse of who we’re trading alongside…

I currently have 3 monitors on my desk, and have been looking at stands for quite some time.  The one that keeps getting me excited is the Atdec Visidec Freestanding Quad.  I’ve seen them for about $300, but I just ordered one from buy.com for about $200 with tax + shipping.  Link: http://www.buy.com/retail/product.asp?sku=208042785&listingid=25123821

Ah, to have free desk space again.  The only downside is that I would also like to get 4 of the same monitors and currently none of them are the same.  I have an apple 23″ display, a benq 24″, and an acer 22″.  The benq is nice, but has a weird frame around it.  Though it has VESA mounts, I don’t think it will go on the stand very well.

I’m looking at the Asus VW246H (reasonable price, really thin bezel, front controls), but if anyone has suggestions on a sub-$300 24″ monitor, I’m listening.  I would really like 1920×1200, but that’s about the only negative I have right now on the Asus (1920×1080).  I’ll probably order one from AMZN next week to give it a run.  Worst case it ends up replacing the junky Acer 22″.