Friday, July 31, 2009

Getting Back Up

Those successful in the market will often say that it is not because they are right all the time, they are just better at accepting and fixing their mistakes. I'm still working on those two aspects of trading, but I have improved so much from when I began.

The market is always right.

You'll hear that said, too. It is a basic truism, albeit, somewhat anthropomorphic. I guess it should be, "The market just is." But, of course, it is not going to change because you push it to.

Accept that you were wrong and try to make the best of it. Which leads me to something called "outs." This is a concept that you will hear about frequently in the poker world, but not quite so directly in the trading world--which makes sense. In poker, the "outs" (that is, the number of ways you can make a solid, if not winning, hand) are much more tangible. We know exactly how many cards are in a deck, how many of each suit, and how many of each rank per suit. It's all easily summed up in an entry level probability formula.

The markets, however, are not so easily quantified. Whereas you know there are 52 cards in a standard deck, in the markets there is no upper bound on stock price, and the lower bound gets hit only when rock bottom, zero, is reached. Volume and earnings, volatility and news releases, make trading a much more complex game.

Take '08 and the beginning of '09, for instance. Records were broken, both positive and negative. But, even so, you must leave yourself an "out." Essentially, in the trading world this means: do not over utilize leverage, know your support and resistance levels, diversify (cash is diversification! as are short positions), and never ever place all your eggs in one basket (i.e. the opposite of diversification).

There are other rules, too, that will provide you with extra "outs." Those take time and experience to develop.

I will write some more about these topics, as they are extremely important, but would like to say that my three trades in EUR/USD are closed. Two with +25 pips each, and the third with a loss of ~10pips. I am up to $113, or about a 10.5% gain from beginning. My poker account is currently at $45, which puts me at a $60 gain for the month of July. In both cases, I'm pleased--more work ahead!

Thank you for reading.

Wednesday, July 29, 2009

Learn From Your Mistakes

I probably should've looked at the news in a little more depth. Oh well, I've been in worse situations. I'm down quite a bit, although I didn't take my initial long position as stated below. I entered around 1.419 and then again around 1.41 (which would have been a good entry if I hadn't neglected entering a limit exit). I'm in again at currently breakeven. But I am still down quite a hefty amount, most of which could have been hedged or taken care of if I had given it all a bit more care.

So I am digging myself out of a hole.

Which is something you really do not want to have to do in any business where money is the foundation (maybe that implies all businesses? I don't know). But, in trading, in poker too, you will find building your account (i.e. your bankroll) is a lot harder than losing it. And if you lose it, you will have a much more difficult time earning it back. Small mistakes can make your job much more difficult. Might as well take a rest when you're tired so that you don't screw up and have to put in more time later.

You can check the current price on the EURUSD to see how much I am up or down =) Haha. I haven't closed the positions, yet, and am working on some damage control. I took out $25 from my poker account when I started to get frustrated and make stupid decisions. That left me with $1 or so. My brother owed me $10 in poker money (from a while back) which he sent me. From ~$11 I am up to $29. I stopped playing tourneys and lower limit/NL tables and moved on to the higher micro limits and lower low limits (.1/.2, .25/.50, and .50/1). Doing well playing nearly all solid pocket hands. It's not a straight ascent, as not only my luck fluctuates (e.g. I lost kings full of aces to aces full of kings on the river, BLAH!) my emotions also fluctuate. But not as much as at the .02/.04 because I am making more than I was at those tables, meaning less frustration.

That will lead into an article on expectations sometimes soon.

Sunday, July 26, 2009

EURUSD Charts Reading Breakout Potential

Personally, I want to side with those who think the market is going to collapse further. If that were to happen, many people would run into the dollar (a relatively safe haven) pushing the EURUSD pair downward. It really doesn't matter what I feel, though, especially with the above chart. It appears that price action is building up right below 1.4250. I've seen this before, and given the current "less-than-terrible earnings," I wouldn't be surprised to see a breakout. (FYI: I haven't added any longs yet, albeit I also have no shorts.)

Here's an hourly chart. As you can see there's been quite a bit of upward clashing into the 1.4250 boundary. The one major pullback didn't hold at all, and actually took place on largely limited volume (off hours). Looks like a sweet (they tend to work, especially in this environment) bull flag forming. I don't know when we will break up, or if we even will. But I do think that with some care, such perspective can give you an edge, especially with some of the continued strong short interest expressed by the permabears. They could definitely add some fuel to this fire.

PS: I'm going to try to vary emphasis among topics a little more than I have been recently. My interest in poker is strong right now since I have just begun, and learning new things is so easy (i.e. it's much easier to learn things when you don't know much; the basics).

Take care--more to come.


I was away for the last week, but I did get in some poker and a little bit of forex. I limited my forex trading to a couple of positions in my nano account and ended up with a ~2% gain.

Poker was another matter altogether. The day before I left I decided I would try to up my game using a variety of Pokerstar legal tools, which included a HUD and an odds calculator. I really wanted to up my game. Well, it didn't pan out. I kept changing my strategy trying to figure out what was wrong while I lost tournament after tournament. I had purchased a couple books as well, and tried out their various (albeit simplistic) strategies and couldn't find anything that worked.

Luckily, I came across one line in The Mathematics of Poker that really struck me. Essentially, it said that on a long enough timescale being too passive will hurt you, while shifting towards aggressive play leads to a higher chip count.

I took that in, because it was basically how I won my first set of tournaments. I didn't need an odds calculator or a program telling me how many times an opponent bet preflop or voluntarily added chips. I just needed to work on appropriately putting pressure on the opponent.

Anyway, after losing around $20-24 over the last six or so days, I placed first in a dollar tournament yesterday. I utilized a very aggressive, yet tuned, strategy. And it worked.

Monday, July 20, 2009

Tables vs Tournaments

I'm terrible at the cash tables. It's an entirely different game from tournaments. As is obvious, every hand you play comes from real money. In a tournament you have already put up the money that you are willing to risk. Not only that, but you know the amount that everyone else is willing to risk, and you all start with the same chip power. I tend to feel it gives me more breathing room than the cash games.

I'll be staying away from the cash games until I make a good chunk of cash, and, even then, I may want to just stay with tourneys. Better risk to reward, for the most part.

Plugging some leaks.

PS: I need to write something about discipline. Hell, I need to work on my discipline.

Friday, July 17, 2009

Status Update

Ten days ago I opened a poker account. Since beginning with an initial stake of $25, I have increased its value to $61.61 ($36.61 in gains or a ~146% profit). I feel that my game has improved dramatically over the last week and a half, although it isn't so hard to improve when you have so much to learn.

After losing a micro account and basically busting another micro account, I have managed to slowly build a nano account ~26.5% and another micro account ~6.3%. I have yet to recoup the two previous losses, but feel I am on my way to understanding the markets well enough to eventually do so.

I'll be writing more over the weekend. Take care, and play safe!


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