Interview with Andy Beyer

Check out the recent interview of Andy Beyer via TradingMarkets. A truly insightful interview with a gambling legend. Some of my favorite quotes in the interview:

It was a tremendous edge to have the figures at a time when most people didn’t use them or even believe in them. I can only draw an analogy to the stock market – if the concept of the P/E ratio were unknown to, or its importance was disbelieved by the majority of people buying stocks, and you were about the only guy who knew what the P/E of different stocks was, it would be a tremendous advantage and I had that advantage for many years.

So a lot of my emphasis now is on watching races and taking notes on all the horses and you’re trying to see things and spot subtleties that other horseplayers may not see -- to try to get an edge that way.

I think that most horseplayers will tell you they’ve had a successful year, it’s not because they have been brilliant at grinding day-in and day-out profits, but because during the course of that year, they have made a certain number of big scores that more than compensate for all the inevitable losses along the way.

Read more of this great interview here.

Later Trades,

MT

Link Fest!

Very sorry about this folks...but I'll be light on posting this week and next. I have 3 major projects that just landed on my desk that will require almost all my time. Like I said in a prior post...August is my busiest time of year...and this year is proving to be no exception. So, please be patient with the lack of my usual content.

To keep it light and to give my aching brain a break from all the programming I'm doing...let's have a link fest post. Here are some posts that caught my eye recently. Enjoy!

Take a dig through Niederhoffer's Daily Speculation site. Pay particular attention to the following articles:

Relativity, by Dr. Mike Ott - I found the discussion on whether things considered popular at the time would have been popular regardless of the time most interesting. Examples given are Einstein and music. This little post hits right to the core in my overall view on life: Don't pay so much attention to the person and their abilities...the key is the application of an idea or philosophy that fits the surrounding environment. Would Jim Rogers have been so wealthy if he hadn't caught the commodity bull of the 60's and 70's? How about John Henry? Would he own the Red Sox if he implemented his simple little trend following system with a rather scary drawdown money management formula in the 90's versus the commodity bull of the 60's & 70's? Better yet...dig deeply through the Market Wizards books and you'll notice a very common theme. Most of the wizards found success at a critical point in the trading landscape. Marty Schwartz and the trading of the financial futures is just one example. So much attention is focused on the greatness of a person when much of their success came about due to being able to take advantage of the landscape. Of course, the other side of the coin is that's the greatness of the person...having the insight/luck/guts to recognize and take advantage of the changing landscape and opportunities it brings. Ha!

Also check out Lobster and Trading Gangs, by Victor Niederhoffer. Interesting insights into the protection of territory whether it be lobster spots, the trading floor, or the general public.

And finally, read The DailySpec Dept of Education Continues, With a Second Market Tutorial, by Phillip J. McDonnell. Gives away an interesting little way to determine the optimal trade size. Don't miss this one...especially if you're a believer in the Kelly Formula for trade size.

TraderMike has a great article on his Thoughts on Day Trading.

One of the best parts of his post is the discussion on commissions. Mike mentions this was one of his biggest changes and I definitely agree. Failure to focus on commission costs in regard to your trading is just asking for trouble. And more importantly asking to be sent to the poor house. What most people out there don't realize is you can take an extremely profitable trading system and apply a small increase in commission costs and go broke trading it. Trading capital is also an extremely important but often neglected topic. Most traders will fail simply because they're trading capital is too small. Or let's put it another way...you pretty much have to be perfect in order to profitably trade with a small amount of capital and high commission costs to boot. And to show you just how neglected trading capital is...look no further than Trader Eyal's Weekly Poll. And yes, I'm the only person who voted that Trading Capital was the most important success factor in Trading.

And that's it from the TaylorTree...where my brain hurts...I'm tired...need rest...but I must go on like a good soldier and knock this code out! Do I feel a vacation coming on after all this is over? Hmmmm....

Later Trades,

MT

The Rising Tide

I'm busy to say the least. One of those times where your mind is on a million things and you can't rest. Even when you're resting...you're working. Thinking scenarios out in your mind. And I'm getting hit on all fronts. My day job has just entered the scary busy season. You know, the time when you do whatever it takes to get the job done...even if that means no sleep, no lunches, nothing. Just get it done. Hopefully, in after a few more weeks I'll go into the scary support season. That's when you sit on pins and needles hoping and praying all of what you've done works! Ha!

I've also been plenty busy implementing all the new technology changes I've introduced into my trading environment. I've got so many things to do now each night...I can barely keep up. First there's my data source updates via TC2005. Then Wealth-Lab Multi-Scans. Then R batch jobs. Then loading symbols lists into Trade-Ideas Pro. Then wake up the next day and submit orders and quickly configure Medved QuoteTracker's Trade-Ideas integrated window. Whew! That's enough to confuse even a full-time trader, I'd think.

I don't really have much to comment on this week...mainly because time is of the essence. But, I wanted to give a quick update on how MB Trading, QuoteTracker, and Trade-Ideas are working together. One word, AWESOME! I'm serious. I cannot believe how seamless the whole process is. With QuoteTracker you can create several different Trade-Ideas windows to choose from. And you can configure these windows to submit Trade-Ideas alerts into a portfolio you created in QuoteTracker. From there you can right-click or Ctrl-T on the symbol and trade it. That's where the built-in MB Trading stuff works like a charm. You can submit your orders, watch the order log, and check on your fills and positions all from within QuoteTracker. Not too shabby.

So, so far...so good.

Also, I haven't really posted much about my R work. I've been planning too...but until then you really should check out The Learning Blog's R post. Dan is much more advanced than me in R. Heck, cracking open the badboy and tweaking it to your liking is definitely beyond my skill levels. So, if you have any R questions...especially in regards to econometrics...check him out.

My use of R? Mostly just creating methods to analyze my trades and ascertaining patterns in the data. Kinda like Mark Cook's use of trading journals in the Market Wizards interview. I especially liked the part where he helped one trader become profitable simply by eliminating Fridays from his trading regimen. So, instead of writing my trades down on paper...I enter them into comma-delimited files via Excel and load into R and perform various analysis. I will also take my backtests from Wealth-Lab and analyze via R. The great thing about R is that you can run it interactively and batch. The batch mode is what I use the most. Again, hopefully I'll write a post about some useful R commands and scripts that help analyze trades. Until then check out this baseball article to get you started. Heck, that's what got me started.

Side Note:
I recently purchased a Dewalt 10" Heavy-Duty Compound Miter Saw from Home Depot. No, I'm not spending more money. I received a $200 gift card for my John Deere L111 purchase. And there's nothing better than getting a gift card to Home Depot!!! The grown man's candy store! :) Now, my next project is building a miter stand. Oh yes...there's always something at the TaylorTree. Ha! And yes, then I'll have to spend more money. :)

Last and certainly not least...this is something for you parents out there. My daughter is having a little trouble with her letters. So, I created a game tonight that was a lot of fun and hit on various aspects of learning. I cut up 7 pieces of construction paper into 4 squares each. Then I grabbed a marker and wrote the letters A, B, C, and D on the squares of paper. In the end, I had 7 A's, 7 B's, 7 C's, and 7 D's that totalled 28 squares of paper.

Now, for the fun stuff. I told her this was the ABC game. And she has to hide in her room...then I'd hide all the pieces of paper in the living room for her to find. The key to the game is she can only find the letter I said. So, when she first came out I told her she could only get the letter B. But, before she could get the papers...she had to tell me something that started with the letter B. Of course, this was the hardest part...so I ended up telling her and then she raced like a rabbit hunting the letter B. Then after she found all the B's....I told her she had to lay out all the papers she found and count them so we'd know if she got them all. If she found them all then we'd proceed to the next letter I chose. As you can see...she ended up learning letters, meanings, counting, and the best of all...treasure hunting. :) A pretty fun and inexpensive game to play with your little toddler.

Later Trades,

MT

Too Busy to Post

Sorry everyone. No post this week. I've got a major project on my hands and doing everything I can to finish it.

Hope everyone has a great weekend. See you next week.

MT