As we approach that time of year where we adjust our clocks I take the opportunity to tie several other “to do’s” to this event. I change the batteries in the smoke alarms in my house. I change the water filter in my fridge. And, most importantly, I take inventory of what’s influencing me. Not only am I looking at what occupies my time but what has been occupying my thoughts and actions. I have four kids and a wonderful wife that tolerates me and my BS so there’s plenty of potential influences that need to be accounted for in that part of my life. I won’t take the time to address those but rather share the process I go through twice a year to assess what’s influencing my market participation.
For those that don’t know, I’m a premium seller and that’s a trading style that fits perfectly with my life style and accounts for a majority of my market participation. I’m constantly monitoring this strategy and tweaking it to adapt in the ever changing market conditions. For the remainder of my time and capital I take a much more discretionary approach and consider this trading as an educational journey of sorts. I’m looking for the next trend, trading breakouts, selling volatility pre-earnings, etc. Here are a few things that have influenced how I participated in the market over the past 6 months.
- Weekly options. I’ve come to the realization that I can increase my returns significantly through the use of weeklys. It’s a beautiful thing.
- StockTwits. I continue to meet incredible people through this awesome network of like-minded individuals. Definite positive influence on my trading but that doesn’t come without careful moderation.
- Television. Haven’t watched CNBC, Bloomberg, FBN or any other ilk during the trading day. I used to have the TV on but muted and found that it was still distracting. Today, I don’t even turn the TV on in my office unless I’m watching a sporting event.
- Think Or Swim’s “OnDemand” Simply amazing! I can pull up any day and trade it again. Every tick, bid/ask spread, and chart are replayed.
To simply list the influences is only the beginning of my biannual inventory. I now take a long hard look at whether or not the influence is having a positive impact on my trading. I comb through each position I’ve taken (via my trading journal) to see if there is a theme. I’m also looking for any dependencies that may arise which would suggest a powerful influence. Such dependencies may be found in an indicator, a statistic, an individual, etc.
As an example, weekly options are rather new but I can see the impact they are having on my equity curve which is one of the most powerful ways to influence a trader’s participation. The influence has become so powerful that I’ve opened a separate account and trading journal just for weekly options. I’ve found over the years that if I separate different strategies into different accounts it’s easier to ferret out the influences. This is just one example of how spending a few hours processing something as simple as influence can pay off.
The markets are dynamic and I believe that to be successful my trading must be dynamic as well. I am constantly looking to improve my market participation and defining those things that influence my trading is one of my favorite ways to do so. By focusing on those things which are having a positive influence on me and removing those that contribute to the noise and confusion I adapt and survive to trade another day.