Wednesday, April 20, 2005

Keep It Simple Stupid!

Listen to the what the market is saying about others, not what others are saying about the market. - Richard Wyckoff

Sorry everyone for the lateness in posting. Some big things have been going on here at the TaylorTree. One, my 34th birthday was this weekend and my wife and daughter gave me a wonderful birthday. Just wonderful.

Secondly, some real interesting and a bit troubling news came this weekend. I have briefly mentioned my recent evolution in systems trading and promised I would share. So, here's the deal...

After you develop and trade a few systems, pop your cherry so to speak, you then begin to experience the battle to keep up with the market. You think developing more systems will do the trick but in some ways only worsens the problem. Why? Because many of the systems you trade share similar characteristics and begin to overlap with each other. That leaves a whole world out there in the market that you can't trade or have yet to capture in system logic.

For some system traders that is okay. They did not come from trading backgrounds. Their love is in finding logic to the market and exploiting it via their systems. Then you have rascals like myself that evolved from daytrading into system trading. It's very very hard to turn off the trader in me and sit back and let my systems do the work. Luckily, I have fought the battle and won for the past 4 years. But, these past few months have been extremely hard.

My systems continue to do well (some have had their problems like the Penny Weekly system) but for the most part they have performed very well. In fact, I've even had a revelation or two with the Penny Weekly system and some of my older private systems that have made them even better than ever. But, as I mentioned above, the trader in me yearns to trade.

So, I've embarked on a journey recently in my trading. Instead of using the sheer audacity of intuition/gut to trade the market like my President Election fiasco...I have decided to combine my intution/gut, analysis, and programming experience together and you have followed the transformation in the recent blog postings. I have to admit, it sounded great! Heck, I go back and read the posts and I'm like, man...that's good. You're a smart cookie. And you do not even know the half of it. The amount of data crunching, chart analysis, correllation analysis, historical studies, etc. performed was mind boggling. All to hit the big trade. And when it all fell into place in my Moment of Clarity...I felt good. Relieved! I knew I hit the mark and just had to take action and I did. After that...wait.

Waiting is what I've been doing. No doubt the market has been like a bucking bronco ever since I initiated my position. Well, let's be honest...a dying horse is more like it. But, I've been holding strong...proud of the fact I'm trading a portion of the market that I have yet to capture in 100% system logic. A bit of my gut...a bit of my in this trade. Something to be really proud of. And then low and behold what happens this past weekend?

A system trigger to go long the Nasdaq! Can you believe it? All that work, struggle, keeping up with everything and anything. Using every last ounce of myself and one of my systems not only picks up the trade but actually enters at a much much better price. And you wanna know the most frustrating part? This system truly follows the KISS dogma...

Keep It Simple Stupid. Let me say that again so I won't forget. Keep It Simple Stupid!

Yes, it's true. I'm not afraid to admit it. A very simple system that I created almost 3 years ago most likely in a few days time has beat me. So, after a defeat of this magnitude, what did I do?

I quietly took the Nasdaq trade with my tail between my legs. Yes, I'm massively long the market. Both in the Dow and now the Nasdaq. And I have no doubt the Nasdaq system trade will indeed perform better than my Dow trade. Heck, it already has.

Just wanted to give you the spill. Let you know what's going on. And let you know that even more changes are brewing down at the TaylorTree. I'll share more with you in coming posts.

Later Trades,


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