Trading: A Game of Inches

 

“You know, when you get old in life things get taken from you. I mean that’s…part of life. But, you only learn that when you start losing stuff. You find out life’s this game of inches. So is football. Because in either game, life or football, the margin for error is so small — I mean one-half a step too late, or too early, and you don’t quite make it. One-half second too slow, too fast, you don’t quite catch it. 

The inches we need are everywhere around us.

They’re in every break of the game, every minute, every second.

On this team, we fight for that inch. On this team, we tear ourselves and everyone else around us to pieces for that inch. We claw with our fingernails for that inch, because we know when we add up all those inches that’s gonna make the fuckin’ difference between winning and losing! Between livin’ and dyin’!

About two weeks ago I re-watched Any Given Sunday. Al Pacino’s speech to to the team real hit home and I think draws a solid parallel to trading and what we go through on our respective Journeys. Trading, like life, is another game* of inches. “The margin for error is so small, — I mean onehalf-step too late or too early and you don/t quite make it. One half-second too slow, or too fast and you don’t quite catch it”..——Ring any bells? This is what we go through on a daily basis.

I believe the most common trades I hear about are actually people’s missed trades. One’s they didn’t take. This train of thought is ONLY negative, it can only hurt you. To ruminate on what could have been, that huge idea that you didn’t execute. How can you possibly expect to gain ground in this business if you’re dwelling on the past already, while opportunities(inches) to gain ground are right in front of your face, happening all the time, every second, day after day, week after week…etc. What must be done, is the deconstruction of the trades that you actually did take, and then finding nuances of that particular setup that either did or did not work out in your favor. Then you can figure out how to gain ground, trade by trade.

This market we are in is relentless, so you have to be willing to work for your edge. Many people think that once you found your edge, boom your all set! WRONG WRONG WRONG, the market is forever changing, so your edge will be tweaked as well. Establishing an edge isn’t a one and done process, it is a perpetual development of strategy. It is a variable, not a constant. This is where people go wrong, thinking oh man I’m so good at this strategy, my work is done here. This is a way to lose ground fast, to the guy or girl that is putting in the work and constantly tweaking their approach.  For example an edge that I thought was set in stone was continuation on earnings winners, looking for that next day gap down, washout red to green play. It worked great for a time. Until earnings got slaughtered and the market completely changed direction. That edge needed to be scrapped and replaced, instead of the earnings continuation that we saw for so long, we are now seeing selling massive earnings selling. Want a few examples, take a look at NVDA SQ and AMZN for starters. I had to re calibrate and understand that instead of buying on the second day of the report, I had to take the opposite side of the trade and be shorting into rips. I had to modify my approach and find a new edge in the current state of the market.

You need to find that edge, a way to gain ground, because that is going to make the difference between becoming a successful trader or wishing you were a successful trader.

NOW, WHAT ARE YOU DOING TO DO?