Tuesday, July 08, 2008

At a Crossroads?

I feel today like I'm getting close to giving up on trading. There are periods when I trade well, but this isn't one of them. I'm trading terribly. It's very possible, that I am just not mentally and emotionally suited to being a trader. The market is going relentlessly down - no crash and no bounces. Like the slowly boiling proverbial frog. Eventually, of course, it will turn around. If the market doesn't turnaround substantially in the next couple of days, I may well just call a halt there and then before I lose too much money. If the market does turn, then once the immediate crisis is over, I'll likely take a break from trading for a little while and get more organized in the other areas of my life. If I decide to give up, then there is the question of what I will do next. I don't want to go back to the kind of academic job I had before, in the unlikely event that one was available here in Canberra. One reason I decided to make the move here is because I was not happy with my career path in academia. After a couple of decades I had gotten bored with the material and was not keeping up with changes in the field to the degree I would have liked. But I don't know what else I might do apart from academia and trading. Unless I come up with a radical idea soon, I guess it's going to be in the area of energy, environmental, and resource economics, which is of course becoming more and more prominent. I guess I'd be in a research oriented position, but I don't want to be in a position where I need to provide leadership at this stage. Given my apparent seniority, that might be a hard sell, though I've had suggestions a few months ago for positions that might fit that description and so similar jobs might be likely to be forthcoming.

Of course, whatever I do, I will still try to manage our finances in a reasonably sophisticated manner including monitoring performance and reporting in this blog.

On the other hand, maybe I am just exhausted by these market conditions.


Chris said...

If you are intereted in a job in a company focussed on empirical based analysis of energy and greenhouse and pragmatic solutions, the company I work for is currently recruiting. We employ mainly engineers, physics, maths and stats backgrounds. Have a look at www.xgl.com.au, and flick me a CV. Sorry for the shameless plug on your blog.



Anonymous said...

Bluntly, first of all you probably don't have enough capital. If you are "trading for a living", you are constantly needing to withdraw funds to meet living expenses. Of course, this continues when you are in drawdown, as you inevitably will be. Your previous post is witness to this reality. This makes the trading much more stressful because you are always concerned about running your capital down so low that the required return to recover becomes nearly impossible.

Secondly, being an economist is a handicap. You are used to seeing the world through neat little models. Vinnie with the loud voice and thick neck on the exchange floor doesn't use those models, and he makes money. The reason is the models don't work long enough to make them useful.

Thirdly, by daytrading, you are taking on not only Vinnie, but all the black-box quants. Ask yourself which of them or you is the sucker at the table.

Sorry to be blunt, but I think the markets are extremely dangerous right now and from what you have published, your risk is very high. I would not like to see you get hurt.

mOOm said...

Chris 0 thanks for the info - will check out your site and keep in mind.

Anon - I don't need to withdraw money from trading accounts for living expenses. So that is one source of stress I don't have. On the other hand, the other stuff you mention could well be right. My advantage analytically etc. is more in trades over several days, but I have a hard time psychologically doing them. And that's why I'm at this crossroads. I don't think I had any delusions here, but wanted to take the opportunity I do have to find out if I can make it work.

Anonymous said...

Yet you don't seem to have any psychological trouble with holding trades in your "investment" portfolio, where, if I read you right, you are leveraged(geared) long.

Sounds like it is a question of conviction. If you don't believe in your "trading" methodology, you will have trouble pulling the trigger. Perhaps you need to focus on longer term trades. Think of yourself as a macro hedge fund, where economic forces are driving your trades. Use options so that your risk of loss is limited.

finance girl said...

hey moom what an honest post; I don't think anyone is having fun right now with this market(guess I stated the obvious).

On the other hand, it's moments like these (e.g. "what should I do with my life?") that make the old, boring rule of "living below one's means" resonate and hold truth.

It'll come to you (what to do next), maybe just need some time! :-)

mOOm said...

Anon 12:25am - very good point. It is mindset and likely leverage - previous Anon comment - not enough capital in trading relative to the positions I'm taking. I have limited my trading leverage but apparently not enough for psychological comfort. On the investment side, I looked at valuations in the Australian market in March and said: "I'm willing to be early and for the market to fall say 10% below here". I went through the 2000-02 bear market and it was worse. But on the trading side I want quicker results and am using too large positions even now, after downsizing them.

Finance Girl: Thanks for the support!