Thursday, September 24, 2015

I suck at trading and lost some money recently.

I'm posting this short little note to try to make sure I actually follow through in finishign a new post today.

Long story short
I'm bleeding money like a dum-dum the past 3 trading days--a total loss of 9% of my year's net profits so far and the largest drawdown my personal account has ever endured. 

It sucks.

A big sum of the loss was from 2 weeks ago before I went on vacation. Then I came back and spewed some more 2 days ago. That was the "breakout day" for me, a new personal record for  "largest drawdown" point. I shut all my platforms off and decided to write to occupy the time and take my mind away from all the losing. I have a 5 paragraph draft in my folder just sitting there that I decided not to post because it's too angsty and melodramatic--I get uncomfortable when the tone of my writing gets too emotional.*
*We all feel like shit at one point or another when we trade. It's not that interesting in and of itself. Fucking a, even in a placeholder note that I'm going to delete anyway has a fucking footnote, I'm gonna stop

After I taking Wednesday off, I decided to donate more today. Apparently, I've forgotten how to trade and lost the ability to make to money or something like that. 

It really sucks. This is me right now.


Okay, now I have to attend a non-profit event for the next couple hours, smile, turn on the charm, and pretend I'm a professional in the field of finance who keeps his calm and knows what he's doing. Will finish the post when I'm back.

CONTINUATION OF BLOG POST


I don't know what to think. Trading is not cutting for me at the moment... wasn't "one that got away from me" but millions of small mistakes magnified by trading size.

If I have one key trait, it's that I can cut loose quickly. Not a trait honed out of any greater discipline, but mostly born out of my neurotic personality that dislikes pain. But the past few days, I couldn't give up trading my worst tickers and I couldn't give up trading size in an effort to make back the prior loss. Heck, I still haven't learned my lesson. I'm overnighting a position on a losing ticker with a lot more size than I usually take.

I haven't reached that "this isn't worth it and I'm not ready for this" moment yet--that yearning for relief and subsequent unbundling of stress. That moment where I decide to scale down, re-dedicate to consistency, avoid tilt, and grind.

In the heat of battle, sometimes I do get away with it. I'd be up 2k, suddenly fuck up and be down 2k in minutes, then "guide it back" to 1-2k. Whew no more of that... That's probably why these impulsive trading moments keep happening.

I ask myself, right now, what I'm trying to do

Profits and Losses
So remember I wrote this post

I started increasing position size since that post even though I went on this long spiel about how much I hate looking at the other traders' pnl and how I sometimes respond to it by ramping up my risk across the board. Every play, every lot executed--more size. This is such an intense topic for me that I'm actually jealous of those "dreamer" types who feel inspired by looking at the profits of others. It's given me so many negative experiences.... yet I did it again.

Well, here we are, more than a month later... and I'm trading worse than ever. Maybe it's related, maybe it's not.

The Edge
Sometimes I feel like I'm on the edge after losing. I still believe I'm a profitable trader but at *that moment*, I don't feel can't trust myself to access that part of myself... which will lead to a lot of broken promises and broken trading plans. So I contemplate taking a break.

Take a hiatus. 
Stop for the rest of the week/month/year. 
Why keep doing this thing that causes so much pain and discomfort?

Not that it necessarily helps, because I took a 10 day vacation in Vietnam and donated $8k on Tuesday...

I want to and I don't want to take breaks. There's 2 reasons why I feel so much reluctance.

1) Losing an essential part of my life: I'm not doing my job. I'm not doing what I'm supposed to be good at. I'm not fulfilling my destiny. I might lose my self-respect. What will I do to fill the void? Yeah I could write more, work out more, read more, but do I have the discipline? Or will I just wallow in self-pity, sit on the couch, and watch TV all day like a loser? That has happened all too often.

2) Financial worries: This one is kinda silly. 

At the beginning of the year, I was plush with excess cash--cash I didn't need to maintain sufficient trading capital. So I decided to expand my horizons and find alternative investments--like angel investing and VC. I invested some seed capital in a couple startups. Then an unforseen opportunity come along. I got to invest in AirBnB through employee stock sale at a 15b valuation (now valued at 25b on its latest round). That deserves its own post. I poured so much money into it that I actually needed to ask someone for a loan to cover my taxes so I didn't have a shortfall in trading capital. I haven't been the best trader since that point though. I got bills, next year's taxes, and that loan to cover. So I'm worried I'll only make X amount which would leave me with Y trading capital and I don't know if that's enough for me to take max positions in all 3 of my accounts...

Yeah that's my worry. Silly.

Gratitude
I mean, I guess I need to be grateful that that is what drives me to worry financially. Not kids, not making rent... but making sure I meet this arbitrary (probably conservatively high) threshold of cash for my business at a future date.

I have all these silly anxieties that get in the way of appreciating the fortunate life I've been given. I know it too and I don't know how to fix this defunct part of my brain. This is why spend so much money on a therapist.

He tells me the antidote to all the jealousy and anxiety is gratitude. I made a list of the most important things to be grateful for, like friends and family. I also try to find a small thing to be grateful for each day; it can be as minor as nice weather in a winter month. It kinda helps...

German words
For...

The compulsive act of calculating how much deeper you're in the hole if you take the next stop out
That desire to not take any profit until you reach a break even (or some other key PnL point in your head)
That feeling of getting back into a trade at a much worse price and not knowing whether it's a good instinct call or overtrading...
That feeling of withdrawing money from an account to to pay for life but not having made anything recently to cover the debit.

I can't take much more of this. I'm too tired to even edit my all-over-the-place writing, I'll do it tomorrow...

Sunday, August 30, 2015

Weekend Ramblings: Confidence, Mispricings, and Trying Too Hard

I need to to free-write. Write without worrying about creating a narrative, drawing, editing, or simplifying in-the-know concepts to outsiders. I need to let myself spew words and create a habit of updating this blog, otherwise I'll go on radio silence for another half-year. Maybe this becomes a weekly thing.

The Value of Confidence
One intangible value to being at a (good) prop firm is being able to tailgate on the confidence of other skilled traders. On the surface, this goes against the conventional wisdom in trading that you can't blindly follow the trades of another pro trader or guru, but it's a gray area. I think 2 things need to be true before one can benefit from the conviction of others.

1) You're already a consistently profitable trader
2) You believe in the trade idea and intuitively/intellectually understand the edge (ask yourself: would you make the trade yourself if you were trading all alone?)

And perhaps the only shortcoming is a lack of real-time situational experience. Corrections greater than 5% don't happen all too often. There's a very tight window to put on the risk, you can't just sit there doing mental calculations and then all of a sudden you reach the tipping point for your decision. Okay, now I will finally decide exactly what to do and how to do it. It doesn't work like that.

A few of my friends (with 4-5 years of trading experience, like myself) who had their career days had never aggressively traded a steep market pullback (or "crash", however you want to define it). But they were able to follow the lead of some of the older guys of 10+ years of experience, several of whom had traded the flash crash. Seeing those guys execute in real-time can take the pressure off. There's also other trades to express the same big picture trade, like buying the most beaten down NYSE large caps on the open (CVS in the low 80's??? low hanging fruit there). I think it's more psychologically daunting to try to take on the "bounce trade" by only trying to time the big ETF's like buying 20k SPY and shorting 50k VXX--at least it would be for me.

I gotta say, as much as I pride myself in being an independent thinker who hates getting into risk just because everyone else is doing it, I really could have used that spark on Monday. That sense of that there was unusual opportunity for the day and it was time to lay out serious rope.

On the flip side, there are drawbacks... like group think and highly correlated/concentrated risk. It's not all happy endings.

Mispricings
I think the stock is mispriced so I bought it.

"Mispriced" -- I love hearing that word. To me, it makes you sound like you know what you're doing. Replace that word with other words in the trading lexicon or just think of the many common reasons people buy stocks.

I think the stock is oversold so I bought it.
I think the stock is undervalued so I bought it.
I think the stock had good news so I bought it.
I think the stock is a good company so I bought it.
I think the stock is technically strong so I bought it.
I think the stock is poised for a breakout so I bought it.

Now, I'm not saying I make snap judgments off people who tweet stuff like that but there's good chance they're just some dilettante trading off what they hear on CNBC's Fast Money.

After listening to stories from a dozen veteran prop/institutional guys about all the strange, esoteric ways* they've made money, I always interpret mispriced as "something I don't know" or "the market is very, obviously wrong here." 
*like, really weird shit. shit nobody ever touches, BRK.A shares or thinly traded warrants/preferred stock

What does it mean to buy a stock that's down a lot and you sense that it shouldn't be? Is it catching a fall knife or buying a mispriced stock? The only honest answer is "it depends". I think a key component is why the stock is down and how quickly the market can correct itself. Here are 2 different situations--just a thought exercise.

A) ABCD is former high flying tech stock. The sector has fallen out of favor. The stock is down 50% from 6-month highs and closing red for the fifth day in a row. 

B) WXYZ is a large cap down 9% intraday and trading well below the 6-month trading range. It is one of a handful of stocks, all uncorrelated in sector/industry, trading erratically for the day, with wide spreads and peculiar price jumps that have no rhyme or reason to them. There is no news on the stock and the broad market indices are near unchanged. 

Situation A is likely a momentum situation--one side is getting beaten and their pain drives the stock lower. It can keep going. We see that all the time; it's too common to be an anomaly. The second situation... could be different. Nobody is going to write a book or record a DVD about it.

Just something to think about.

Trying Too Hard
I tried way too hard this week. I traded 4-5x the volume this week that I had the previous 2 weeks. I pressed it.

End result: I made less money (roughly the same ballpark, but less when counting to the penny). Figures.

It takes a toll mentally too. I spend every the next 2 hours after the close in zombie mode, just sitting on my computer chair doing nothing.

Motivation can come from the wrong place. I think that's exactly what's happening to me right now. 

Monday, August 24, 2015

Two Mornings in August

I have to write about today... have to get something off my chest.

August 8th, 2011

I remember the first month of live trading at my prop firm. We (myself plus 11 others) were all trainees pikering around with a few hundred shares, risking no more than $150 for the entire day. We spent our morning prep sessions going over stocks gapping up/down on news. Nobody really considered trading market indices like SPY, QQQ, VXX, or anything like that.

The market, two and a half years removed from the dead lows of early 2009, had spent most of the summer in a frustrating, non-volatile grind for most of the summer.  Traders were laboring for 10-cent scalps just to put food on the table and pay the rent. Some of the older guys were talking about leaving for another job or for grad school. 

Then shit hit the fan. There was some bullshit happening in Europe. America had a debt ceiling crisis. Momentum came back into the market and fun times were upon us.


I remember one of my managers buying the SPY's for a bounce and erupting with this weird, almost-like-a-tantrum, super-intense call-out to the market.

for the next 6 months, anytime anyone bought anything, they would shout out "BE REAL!!!"

I also remember another fellow trainee who would keep calling out useless alerts while the market got taken to the slaughterhouse. 

everyone's looking at SPY already... what's the point?!

You know that guy in your local trading chatroom that has nothing useful to provide beyond ticker spam like "ABC hod" or "XYZ lod"--as if there's ever any actionable information to be made from observing new highs and lows? Yeah, this was him. 

Let's call him Clockwork, for reasons that will become more apparent later*.
*he's also an avid DotA player and I think he'd like that

It turns out Clockwork was the only trainee trading the SPY. He made $600 trading the SPY on a 200 share maximum his first day, which impressed everyone other than me because 1) I thought I was the shit and 2) I thought trading the market had no real edge otherwise we'd all be futures traders making bajillions pushing around the E-Mini's. 

When we were moved from the trainee section to be re-seated with the junior/senior traders, Clockwork was assigned to sit to my direct left. 

He asked a lot of annoying questions. 

He copied nearly everything I did and then just did it faster.

He had the most irritating trading style if you were in the same play. Tell him about a stock and he would just jump into it without thought, sell 100% into a short-term top then buy it all back on the pullback while you took all the heat on the trade and made less. Sometimes he would accidentally short by trying to sell long and even make money on that too.

He would take the biggest piker trades (low-margin, commission-heavy trades) and squeeze a dime out of a nickel. Then he'd get others into the same stock (not to front run, but because he didn't know any better) and crowd the trade. When the market makers ran the stops, he'd get out fastest while everyone else usually ate the slippage.

But Clockwork had consistency down quickly. One reason is because his execution was nearly flawless. Not only was he the fastest in terms of pure reflex, but he didn't seem to suffer from any mental lapses, like from greed (to take a profit) or stubbornness (to take a small loss). He would get out when it was time to get out. It created a habit of steady-hands trading. If anything, his problem was the reluctance to stay in and take (normal, expected) drawdown, even if profit was locked in. He didn't make big money but he closed profitable nearly every day--like clock work.

"I just try not to lose money." -- that's how Clockwork would explain how he's so consistent. He's said that to me and other traders so many times, he might as well trademark it.

I sat next to Clockwork for the rest of the time I was at the firm--almost 3 years as a tandem*. We were the only two trainees from that class, out of a dozen, that "made it" as professional traders.
*Clockwork also sat next to me during my day of reckoning, getting run over by the same long position on FNMA. He also got stuck but he didn't trade as large as I had. He rallied from down roughly $50,000 to break-even. 

August 24th, 2015

Today, I wake up at 8:45. I check a text message that Clockwork sent me at 7:07.

"Black Monday!!!!"

I boot up the screens.



Oh shit, the SPY is down a ton already...

I over-slept my alarm by almost an hour. I didn't bother to prepare over the weekend even though the market just had the first significant trend day in several months. I've been trading with an on/off switch for almost a good half year now. I don't have goals anymore. I don't push or challenge myself to trade bigger or learn new plays. I just try to make something ("something is better than nothing", I sheepishly tell myself) and then leave without stress. That little voice inside whispering "you're wasting your potential"? Eh, I'll just drown him out by watching porn or browsing Reddit.

I consider myself a novice when it comes to market plays--the type of trading setups, be it indices or a basket of high-beta market stocks, that depend on unusual market conditions. My income is usually from niche areas in the market like trash stocks, growth IPOs, and biotech. Needless to say, I didn't have a lot of confidence in my ability to take money from these big market movements. What was I going to buy? Or would I short VXX? Where would I buy it? What's the most efficient and safe way to scale in? What's my thesis? What's my expectation? I wonder if it could have a huge panic on the open? I wasn't really sure. I barely thought about it. Coffee wasn't hitting the spot yet. I wasn't ready at all. I cut my size down to almost nothing.

I shorted 200 shares of UVXY around 70, covered somewhere between 5-20 points too early, and made a profit. Nothing crazy--the type of money I make on a daily basis on most profitable trades. Not trying to be a hero or anything, but just finding effortless money and taking what I could get.

Well... the market bounced 10 points. That doesn't happen every day. I wonder what Clockwork is up to?

I sent him a gchat. We talk almost every trading day.


I looked at the number--what he just told me he was up in the first 30 minutes of trading was already more than I ever made on my personal best day. I was stunned. I kept staring at it. I didn't know what to think.

After a short pause to comprehend what just happened, my inner monologue gathered itself to speak. My face started to wince. My toes curled and my hands balled into fists.

IT WAS RIGHT FUCKING THERE YOU IDIOT! A HUGE FUCKING TRADE! YOU CAN GO YEARS WITHOUT THAT TYPE OF PRICE ACTION ON THE SPY. WHAT THE FUCK IS WRONG WITH YOU, THIS IS YOUR JOB!

It had hit me: I just blew a monster opportunity.

This is the type of day to make your entire week/month/year/life*. And I went into it half-assed like any other day. 
*if you are a certain type of trader. I am well-aware how easy it is to also lose everything if you don't know what you're doing or if you have overnight portfolio risk or whatever... that perspective doesn't matter to me.

The guilt and regret sank in. Hard.

Was it worth staying up til' 2am last night?
Was it worth it dicking around on the internet instead of paying attention?
Was it worth it to nap and watch TV all weekend?
All these unproductive lifestyle choices you've made the past 6 months, was it WORTH IT?

Why did he have to tell me how much everyone made? Doesn't he know it crushes my self-esteem? I never want to look at what other traders make. It bothers me way too much. All you twats on Twitter who respond to PnL screenshots and say it's inspiring... fuck you guys! Do you all piss rainbows and unicorns too? Where do you get your goddamn positive attitude from? I look at that stuff and I just feel small and insecure. I feel so low that I contemplating quitting forever and then maybe live in some cheap asian country. You know that quote about how people hate seeing in others what they don't see in themselves? It's one of those bullshit pictures on Facebook that people post... it's kinda true about me. That's me when I see results I can't reach. I hate myself. I hate how afraid and gutless I am. 

Deep breath

OK, I'm calm now. Needless to say, it was a long 5 minutes inside my brain from 10:05 to 10:10. I was a little upset.

I grinded the rest of the day to make some money... a sum that would be 2nd best daily PnL for this month but still a paltry sum all things considering. Emotionally, it feels like a loss. Maybe the worst I have felt about trading since that day.

I guess a lot of this seems like petty hindsight and I should be better than that... especially after prefacing it by saying I'm not the best at market plays. But I know I can trade anything. I know panic when I see it. I know what happens after panic. I know that if I focus and that if I prepared myself emotionally to take on risk, I can do so much better. I just need to be involved and then confidence will build afterwards. Force the issue if I have to, which goes against all conventional trading wisdom, but unusual action today warrants exceptions. Get involved, figure it out, you're a big boy with near 6 years of experience and a real bankroll behind you. That's the point. Am I making 1mil or even 100k today, no chance, but I'll surprise myself. I guess the question now is whether I have the character to commit to doing that every day from this point forward. 

But enough about my angst... because the only way I can cope with being such a selfish prick with a fragile ego (believe me, I hate that I have these thoughts too) is to be happy for my friends. After all, they have families to feed and rent to pay--after today, maybe some nice watches and cars to buy too.

Back to Clockwork. 
This was the same guy who sat next to me for 3 years. The same guy who only wanted to scalp 10 cent trades and make $100. Same guy who frontran his stops and never gave any position the correct room because he hated losing money. Same guy who hated giving back profits so he never held winners for long.

4 years later in the present, he's now a conviction trader buying into the market bottom and taking home an annual salary in a day.

I feel like the older brother who just got beat by the younger one in a game of pick-up hoops for the first time ever. Taken aback at first but now proud.

Here's to you, my good friend. Your profits inspired me pissed me off to the point where I had to do some much needed reflection. Please tell me next time you're laying out that kind of rope on a trade!

And to a few of my other good friends who posted career numbers today, if perchance you're reading this, congratulations. Y'all earned it. Remember when none of us made real money and we were all somewhat cynical about a long-term career in trading? Well, shit's real now.

Now I'm going to run myself (literally, like on a treadmill) into the ground and do some much needed homework. Oh look, the Shanghai Composite just gapped down 6% on open...

Saturday, August 22, 2015

$20: Going bust.

Changing Up

Maybe limit just wasn't my game, or so I reasoned. I had a cynical outlook--it was all just a fucking crapshoot. Playing solid tight-aggressive poker pre-flop wasn't sufficient enough for anything more than a small edge. There was zero nuance or creativity in post-flop play* because nobody paid attention--they just played their hand and smashed the call button if they had a non-0% chance of winning. I didn't want to be patient anymore. It had been a month of going nowhere. It wasn't validating my talent or intelligence.
*I would later learn how wrong I was to think that... which I will detail in the next part.


Back to my Roots

I re-directed my focus to the $5 Sit'N'Go tournaments (SNG's). It felt right.

It's the style of play most similar to home games, where I first honed my game.
It's the game I had most practice in on the play money tables.
I can finally play creatively and make moves.
I can protect my hands and not worry about 6 different players sucking out on the river.

My tournament game didn't have a lot of sophistication but I understood certain principles unique to tournament-style poker. I had the right fundamental habits.

  • I adjusted my play to how expensive the blinds were getting relative to the chips on the table.
  • I'd avoid over-committing without a big hand and only probe with small bets to steal small-medium pots in early stages.
  • I wasn't going to 3-barrel my entire stack to some random dude I've never seen play just to be a hero.
  • I would steal blinds in late position and be aware of others who were doing it to me (and counter attack by expanding my range to 3-bet, if necessary)
  • I was cognizant of the gap theory: If the hand is raised when it gets to you, you need a better hand to call than you would need if you were the one making the raise.
  • I avoided sub-optimal late game/short-stack decisions, like calling for a flop when pot committed or limping pre-flop when short-handed.

Mini-rambling on poker strategy, feel free to skip
Now, all of this is super basic to any experienced tournament player, but at the absolute lowest stakes, most players don't have a clue and commit ultra simple mistakes that give up a huge chunk of value each hand. This is not the same "mistake" as misreading someone's hand on a big decision in a huge pot like whoops, he did have the flush, guess I lose. It takes talent, skill, and experience to develop hand-reading ability--and even the best will get it wrong (or make the correct decision and still be "wrong") because it's inevitable when acting upon imperfect information. Navigating these decisions is what separates decent from good, and good from great. But there are decisions in poker, especially online poker where there's no element of reading physical tells, that are just axiomatic and require zero talent to make. An absurd example would be folding pocket aces pre-flop in a cash game--that is clearly always the wrong decision and it's self-evident if your objective is to make money. A more practical example would be a late-stage tournament raise/fold situation, where calling is never correct. For example, take a heads up tournament situation where both stacks are shallow (low multiple of big blinds, pot-commitment is 1-2 bets away), the button raises, and the big blind holds a low pocket pair. It's never correct to call instead of re-raising (even folding would make more sense than calling) because there are just about zero advantages to seeing a flop, whereas a re-raise has 2 primary advantages -- 1) committing when you're more certain you have the edge (as opposed to having to make a tougher decision to bet out of position when 3 high overcards flop) and 2) your opponent might fold and give up his equity in a coinflip situation ( assuming he likely has 2 overcards). There's a clear cut right and wrong decision, situational context doesn't matter, and there's no real debate. 

Anyway, enough rambling. My point is, I didn't do stupid shit while my opponents often would. So I had that going for me.

Day 1

My account was pretty much right back at $20. I had enough for 4 buy-in's. I waited until school finished to play so I could devote all my attention towards building my account for the weekend.

I placed in my first one (either 2nd or 3rd). That was a good sign. 

I played for the entire day--just one table at a time, so I could maintain scrupulous attention to every player's betting action. Every edge counts.



I finished slightly up that first day and felt encouraged.

Day 2

And then Sunday came around.

And so did Mr. Variance.



I kept playing.

I kept bubbling out in 4th.

It was like I was playing a recording of the same SNG over and over and over again. Early on, I'd get some playable hands pre-flop that didn't hit. By the middle stage when the blinds start to mean something, my stack would bleed away while I endure several rounds without a pot. Then I get to the bubble and somehow, the other short stack improbably manages to survive multiple all-in's. Then I'd have to flip for my entire stack and Pokerstars gives me the one-sided coin--heads they win, tails I lose.

I go through a string of SNG's without finishing in the money, all the way down to my very last buy-in. My last chance to prove that I am worthy.

I busted out on that one too. 

5 weeks and just like that, I burned through my initial deposit. I painfully checked the cashier to confirm.


I wish I could remember losing in dramatic fashion. And that because there was no justice in the world and because online poker is obviously fucking rigged, a miracle runner-runner royal flush sucked out against my straight flush and busted me out in 4th while having the exact equal amount of chips to the chip leader. That would be the story I'm telling to my kids, my grandkids, and any poor, unsuspecting stranger at a casino while I pontificate on the horrors of gambling and the abyss of total bullshit that was online poker. 

But the reality was, it was just another tournament. 10 years later, in the present, while writing this story, I don't remember anything about how I busted out. They were all the same tournament to me. I was just some punk kid trying to grind SNG's with a shoestring bankroll and I went on a bad run.

Seeing that zero in my account... it was all I could think about. It was a mark of failure.

I'm broke.

Ugh, now it's time for school. Goddamnit.


Wait no, I'm not.

I still had the remaining $25 on PayPal.


Reload it baby.

Sunday, August 9, 2015

$20: Nickels and Dimes

Starting From The Bottom

I had read about all these stories of college students making money on Party Poker and Stars--18-23 year old turning $100 deposits into $1000, $10,000, $100,000, and live WPT/WSOP appearances. Some would rise from micro-stakes all the way to the nosebleed stakes, from $5 pots to 5 figure pots. I didn't see any reason why I couldn't do the exact same thing. I had a mission in life now. Why study for a biology exam or make friends at school, when I could make money? Yeah, you do your homework, I'm going to make a few hundred bucks in an hour. It was more than a financial opportunity or a hobby, it became an identity--my path to subvert the traditional, expected route of accumulating good grades to get into a good college, then attending grad school and/or taking some boring job. I convinced myself I was so cool because I was playing a card game.

That $20 had a real meaning to it and perhaps became too important. It was everything. I had to make sure I never go broke. I had a plan to survive.

I am going to grind it. 
I am not going to play too high. 
I am not going to be stupid and risk it all at once.
I am not going to risk even half my bankroll in any situation. 
I am going to feast on the easiest, fishiest tables.
If I just get to maybe $100, that should be my safe never-look-back point.
I am going to grind it. 
I am going to be a goddamn turtle!


Fish in a Barrel

Even though I first learned and had primarily played no limit tournament style, I decided to play limit hold 'em to grow my bankroll instead. Why?
  1. I wanted to stick to conservative, responsible bankroll management. At the time, the lowest limit stakes were .05/.10, meaning I would have 200 big bets to work with. 200x BB was a simple rule of thumb for determining how much one needed to survive variance at any particular game. The alternative was to play no-limit cash games, where $20 was full buy-in, or $5 SNG's (Sit'N'Go, a single table tournaments with 9 players)--after doing the math, I felt my bankroll would be too vulnerable to an unlucky run.
  2. All the good books at the time were for limit hold 'em games--in particular Hold 'em for Advanced Players by 2+2's David Sklansky. Harrington On Hold 'Em (the first great book for tournament play) wasn't out yet. There was almost nothing out there for no-limit cash games besides Doyle Brunson's lone chapter in the ancient Super System--which didn't provide a whole lot of amazing insight beyond "play aggressively".
  3. My observation of online micro-stakes limit  play: everyone calls pre-flop. How hard could this game be? Was it going to be fun, creative, "makin' moves" type of poker? Heck no, but I'll have fun making money.

Variance giveth...

The players at these tables were trash. You might as well donate your money away if you're calling 4-bets pre-flop with any hand. Regulars from higher stakes would routinely stop by and raise every single turn just to let off steam. $.05/.10 LHE was the absolute gutter of Pokerstars--who gives a fuck about nickels and dimes?

I didn't even need any actual skill like hand reading or bluffing, I just had to be patient. I played rock tight--I'd commit money on only 12-15% of my hands (this excludes blinded hands where money is already committed) pre-flop. I memorized a cheat sheet for hand selection based on position and prior action (based on how many players in and how many bets to call). I thought this alone would be enough for a substantial edge.  The fish would drop their money on the ground and all I have to do is just wait there, with my aces and kings, and pick it up.

I opened a couple .05/.10 tables and committed myself to textbook, vanilla ABC poker. It worked right away.

Within my first week, I got my account up to $30. Not too shabby, I thought. At this rate, I'd move up to .25/.50 in no time.



...and taketh away...

But after peaking around $40ish, things kinda slowed down. I wasn't able to sustain the win rate I had during that first encouraging week. In fact, it seemed like I would end every day's session as a slight loser. I was taking more than my fair share of bad beats and tough pots.

The fishies always catching their draw on the river.
My pocket aces and pocket kings getting cracked.
Losing capped pots where I had to cry-call my 2nd best hand down to showdown.

My account melted right back down to where I started, $20. That didn't feel very good. That sense of "progress lost" ate at me. Hmm... this doesn't feel as easy as it should be.



But hey, it's poker. That's the game!

This was expected. No big deal. A sophisticated, savvy, experienced online player understood how nasty short-term variance could get, and while I wasn't exactly a grizzled veteran or anything, I had learned about the trials and travails of others who had been successful. Great players experienced weeks long or even months long downswings. They remained patient and fought through it. 

I'm just running bad. Getting unlucky. When everyone calls pre-flop against your pocket aces, your expected value actually goes up even if your win probability for that particular hand goes down. In the long run, I still had an edge as long as I play with the probabilities on my side. I'm still smarter than all of these idiots. I'll beat this game. My turn to have the good run is just around the corner.

This was the happy face I was trying to put on.

...and now making me his punk

Thousands of hands later...


...more of the same. It's as if my account had a magnet to always revert back to $20. 

Variance toyed with me. Is it normal to be *this* unlucky? Am I special? My attitude towards the game started to change. My beliefs started to change. I was not having fun. Each bad beat would have a cumulative impact on eroding my patience and cold rationality. No more happy face for me.  On each showdown with a non-nut hand, I would be waiting for the other shoe to drop. Let's see who sucked out on me with a 2-outer this time...



Instead of thinking situationally and mathematically for each given hand, I would draw hasty conclusions based on my emotions--cynical, fear-driven emotions influenced by a string of tough beats or a recent downswing. Of course I'm beat. I knew my hand wouldn't hold up.






I had enough. 

It was time to play real poker where I could bet more than one unit, take players out of the pots, and protect my made hands. 

Thursday, August 6, 2015

$20

How I Turned $20 into... the subheading for my future E-Book title

Sometimes when I'm indulging my ego and I want to feel good about myself, I like to think of how I would want to be described in a book or on an introduction on TV.



That's what I do. I crop together specific life moments to create a narrative that shines on the best aspects of my life, and then I craft an entire identity around it. It validates me. It overcompensates for the other not-so-cool aspects of my life, like the social anxiety, the total abyss of a personal life, and the dulling pangs of inadequacy. I stop paying attention to that stuff because I'm money baby.

The story I like to tell at bars to make myself look cool and special is the story of how I learned how to make money--and that story starts with $20 dollars.*

*BTW you know what's great about that number? It's just so small and always will be. One day I might get lucky in a random angel investment or venture capital deal and bink a 50-bagger, and move my net worth past 8 or even 9 figures--the real, "I'm important and I matter" kind of wealth. Maybe lightning strikes twice and I become a billionaire. Regardless, as long as I don't go broke and keep my personal equity growth continuous, I still get to say I started with only twenty fucking dollars.

Special Snowflake

This is me.


I'm 14 and starting high school. I like to watch sports and play video games. I don't have any friends. I'm roughly average at everything I do. I'm not particularly interesting.

Despite constantly being told "your education is the most important thing in the world!" while growing up, I had stopped caring about good grades and academic achievements. In 2nd grade, I once beamed with pride after my teacher referred to me as "Speedy Gonzalez" after I was the first to finish the multiplication tables classwork. In 7th grade, I received a D in algebra and my dad wanted to disown me. I'm not really sure what happened to derail me off that track. In an alternate universe, maybe everything hums along from K to 12 and I'd have been an archetypal high-achieving prep student who ends up being a doctor or lawyer. I righted the ship enough to avoid pissing off my parents but deep down, I thought being too attached to high grades was a sucker's game.

But it's not like I was good at the stuff that did capture most of my time and attention--take gaming for instance. I spent years of my life playing Starcraft... and I would still get my ass kicked by a simple zergling rush. The zergling rush (aka the '4pool rush') is the Starcraft equivalent of the 4-move checkmate--if you seriously can't figure it out, then quit early because the game is just not for you. 

needless to say, I stopped playing ladder matches and stuck to friendly, cooperative custom games instead

You know those "millennials are too entitled and always think they're special" articles that run on the New York Times or Vox or HuffPo every month or so? Yeah, that was me around that age. I saw peers score higher on tests, achieve more in sports and extracurricular activities, receive all kinds of awards and praise, and develop rich, fulfilling social lives while I sat on my ass and did nothing--and I still thought I was better than everyone else.

I just needed to be good at something--something that proves just how special I am. Then I would show 'em all and everyone would be begging to be my best friend.

Kiddie Pool Games

It was the summer of 2003 and I was staying up until 2am flipping around TV channels to cure my boredom. Something new caught my interest on ESPN2.


They show poker on ESPN now? This is... kinda cool.

How come I can see the hands they're playing on the screen?
What does "check" mean?
There's poker on the internet now?
Is Moneymaker his actual birth name?
Why do I have a hunch that I could be good  at this game?


I had all kinds of questions. I had to know more. Poker became a deep obsession. I had to play as much as possible. I had to study it and hone my game. I had to win.

I'd read through almost all the book in the Barnes and Nobles gambling section. Super System, The Theory of Poker, Caro's Book of Tells, Phil Hellmuth and Ken Warren's shitty books... eventually I sorted through all the noise and focused only on the TwoPlusTwo books--the highest quality publications.*
*not as true now as it was in 2004 due to massive growth in the poker education biz



I started off playing online play money tables. It was addicting at first (and helpful for internalizing the rules and getting "up to speed") but my enthusiasm tapered off quickly when I realized none of the complex, high level post-flop play I had relentlessly studied was applicable to play money tournaments--a table style best described as a pack of degenerate jackals spam clicking the "all-in" button.

Full Tilt Poker had these massive freeroll tournaments (no entry fees) that paid out peanuts to the top-3 finishers. I think first place was $10. I must have played hundreds of them. My pinnacle achievement was finishing 3rd place to win a grand total of THREE WHOLE DOLLARS! 

That $3 was going to be the start--the start of my dream to become a millionaire professional poker pro. It was going to be destiny. That $3 was everything. My dreams. My entire life's hope.


I also played in home games organized by my older sister's friends.

It was here when I started observing how the every-man thinks while playing the game. My sister was an honors student enrolled in majority AP classes and applying for top-tier universities, and naturally, most of her friends and classmates were in the same boat--smart, capable, overachieving, and at least decent at math. Higher level poker concepts were easily within their grasp. Yet of maybe the 15-20 different guys from that circle, I remember only a couple that made any attempt to study the game's more advanced concepts. Maybe a few more had cursory knowledge of super basic stuff like hand probabilities (four-flushes, straight draws, etc) and pot odds through TV segments or cheat sheets, but that was it. The first step towards vastly improving one's game was to simply fold total garbage hands pre-flop, which is kinda just common sense if you think about it, and they wouldn't even do that.

I found it interesting how many players were willing to put their money at stake without even the slightest clue (interest?) that they had an edge in the game. Did they think they knew enough already? Were they not aware of this greater universe of knowledge out there?  Did they care?

well if they don't want their money, I'll gladly take it...

This went on for about a year or so, but I got tired of taking $5 buy-in's from broke high school students and playing "all-in or fold" lottery poker on those time-consuming Full-Tilt freerolls. I had something to prove and I wanted to play for keeps.

I just needed a bankroll.

.002 Stacks of High Society

Being only 15, I was ineligible to make online deposits under my name. I guess I'll just ask my parents--they see how much I love playing poker every day, I'm hopeful they'll think it's a good idea.

I approached my dad. Here's how that went:


His response was "No". Welp, I tried.

I needed another plan--and I didn't quite know what that plan was going to be, but my sixth sense for hidden opportunities and exploiting loopholes took over and slowly pieced it together.

Lucky for me, poker sites had pretty lax money movement protocols back then. Pokerstars had a player-to-player cash transfer feature that would essentially bypass any bank or merchant processor. There was also no identity verification process (at least until you wanted to cash out). They didn't care to know anything about who was putting money on the table--"money on the table" was all that mattered. You just had to confirm you were of legal age by checking a box, no different than a porn site basically.

Now I only had to find my guy on the other side to transfer the money. I didn't know anyone but somebody out there had to be already exploiting this. There's just no way I'm the first to think of all the possibilities. After several weeks perusing the sketchiest corners of online gambling forums and googling phrases like "underage poker deposit method" I found exactly what I was looking for:

An E-Bay listing for a $25 "poker hat"*.

*I never got that hat...

The details were inside: "Will also transfer $20 in Pokerstars real money credit, along with hat".

Bingo! That was my ticket in. I still had to ask my parents to deposit money on PayPal but that would be a much more innocent request than asking for a direct deposit to an online gambling site. I've bought baseball cards and Pokemon cards off E-Bay before too--I mean, that's what you think of when E-Bay is mentioned, isn't it? Collectible items. Weird tokens and souvenirs. Fan memorabilia. Haha, I'm just a geeky kid with geeky interests looking to buy some stuff, nothing to see here.

I asked my mom for $20 on PayPal to "buy some stuff on EBay".. I was prepared to say "sports stuff"* if further interrogated, but I did not have to. She gave me $50, no questions asked.
*poker's a sport, right?

Crossing both fingers that I wasn't being scammed, I confirmed my $25 PayPal transfer. One time, please let this be real. I need this $20, it's my destiny, otherwise I'll be a loser forever! My transaction partner told me he sent his $20 and that I should receive it shortly.

5 minutes after, I started holding my breath. I kept checking my account balance.

$0.00.

Hm, okay, no big deal. I paced around. I ate some peanut butter. I sat back down and checked again.

Still $0.00.

What if he tricked me? No, he definitely tricked me. He's laughing at me all the way to the bank with all his stupid scammer buddies. He's probably the same asshole who scammed me with all those duped items in Diablo II. Do I call PayPal for a reimbursement? What if I they find out I'm doing something illegal? Will PayPal call the FBI on me? Am I old enough to be charged for a felony? Is it true what they say about what happens in the showers in federal penitentiary? Fuck, check again!

 $0.00. fuckfuckfuck.

I sent one of those annoying panicky e-mails that accomplishes nothing except confirm to the recipient that you're a panicky little loser who panics too much--it's been 11 minutes, where's my money? y u scam me? He promptly replied that Stars customer support has to approve every transaction. Well he wouldn't even reply if he outright scammed me right? I took comfort in that.  My logic is sound. He is a good person. He clearly and obviously did not scam me.

On what was probably around the 274th click, another number replaced $0.00.


 My life changed.

(will write the rest of this in installments... which assumes that I don't stop blogging for months at a time again)

Part II: Nickel and Dimes
Part III: Going Bust

Thursday, July 30, 2015

An Update

It's been a somewhat disappointing year thus far. I've made an executive's salary and I would be fine even without trading for the rest of the year, but the figure is underwhelming when compared to my numbers from last year. I guess anything can happen in 5 months but knowing who I am and how my results have trended, I am skeptical. I'm dealing with burnout right now--struggling to maintain the same level of passion and fire that I once had for trading.

When I first felt this way around late February, it was just a matter of not wanting to push my risk tolerance or spend too much time studying the market. I would settle for "comfortable" position sizes, consistent profits, low-stress trades, and maybe a day off here and there. This is a normal cycle and often a way to cope with the stress of pushing oneself as a trader--increasing risk and having to endure more volatile swings. I also stopped caring about tweeting/blogging and interacting with others in the trading community. What's different now is that I barely even want to show up and make my usual low-stress 1-2k a day. At the moment, it's just not that gratifying to tune myself into the process. 

A good day used to be that spark plug that would get the motor running again after a stretch when I was feeling a bit low. It's not working out that way anymore. I've had 2 +$4k days in the past 2 weeks (I don't even know how I managed to make that much, I made impulsive decisions for size and it worked out) since returning from a 10 day vacation and I've followed up both days with underwhelming, sluggish, low volume, low intensity, low profit, end-early trading days. Today, I placed a couple trades in the first 15 minutes, closed them out for about $100, then crawled back into bed.

Right now I'm just trading "part time". I come and go as I please. If it "doesn't feel right" when I wake up, I take the day off. When I do manage to wake up before 8am, I fritter my time away reading r/nba and watching youtube videos rather than doing my homework to develop trade ideas. I end a lot of days early, regardless of meeting any profit benchmark. It's not exactly what you would call "professional" and hardly a recipe for success.

I'm not a hedonist by any means. I don't see my life as one where I live moment to moment, only seeking to do what is comfortable and gratifying in the short-term without any long-term vision. I don't see myself as a daytrader who gets out of bed 15 minutes before the bell, scalps $1000 on the open, and then leaves to go to the beach for the rest of the day. I have a sense of responsibility to be the best that I can be--or at least I used to. I have greater ambitions--or at least I thought I did. I feel guilty that this is happening--that I'm letting this happen. I'm too fortunate to have found a calling and developed a real skill so early in my adult life, without even having to endure much adversity (in a business known for treacherous ups and downs at the getgo) and here I am, maybe, kinda/sorta pissing the opportunity away. It's not like I'm doing anything better with my time. There's no greater calling that I'm yearning to reach out for. I should just do my fucking job.

I guess it's better than losing money.

Saturday, July 18, 2015

Shorter posts.

I need to write shorter posts.

I have so many unpublished saved drafts. Goddamnit.

Friday, February 6, 2015

Idiotic Trades

There are trades where you lose.

And there are trades where you're just an idiot.

You know what I'm talking about.

I don't have any huge outlier losers to talk about outside of that FNMA trade, but I have a plethora of remarkably idiotic losses that are large within my normal mark-to-market PnL range. I made one today on YELP. I can't look at quotes right now without feeling like the biggest moron in the world so I shut everything off.

So let's talk idiotic trades. You've heard the expression that trading is more art than science--well, there's a special art to losing money in the dumbest way possible. You go into the market to discover a very creative solution to lose money and you achieve it with perfect execution. Congratulations--you just flushed your hard-earned money down the toilet.

Style points
not paying for this image so there's  a watermark. deal with it.
So what is it that can make a bad trade truly breathtaking?

Your ego should act as a feedback mechanism. The way it responds to your worst trades may resemble the way it responds to suddenly remembering a repressed high school memory. You're walking along, having a nice day eating your ice cream, and your stupid brain suddenly decides to remember one of the many awkward and embarrassing moments of your life, like the time you tried to talk to a pretty girl and failed abysmally to utter a single coherent thought. That's you today, after getting stopped out yet again.

Here's a loose set of guidelines to determine that cringe factor that makes me you question just how much you've failed.
  1. Top ticking and bottom ticking the wrong way (buy high, sell low). Uh oh, here comes the panic monster! He's looking for his bitch.
  2. Overreacting to level II due to too much size--a cousin of #1 but reacting to noise rather than larger swings. 
  3. Churn losses. Rotating your position for negative spreads. -.10, -.15, -.05, -.02! It's when you're scared you might accomplish task #1, so you have to get your position back so  you don't feel like a chump! Hey at least you're keeping your losses small, right? I'm sure your broker thinks you're a fantastic trader.
  4. Churn losses in a tight range. The stock is stuck in a 25c range but you're the genius who's managed to lose more than that, effectively bumping down your break even cost basis to a price well below the range. 
  5. Chasing. The higher that little execution buy arrow (your execution) is on the 1-min green candle, the better. Those are exuberance points. Don't worry about the drawdown, just hold it until price target (da moon) is achieved.
  6. Adding against a runaway trend. We've all been there.
  7. Jamming. The type of add where you scale in too tightly i.e. a stock with multi-point range and you're knocking the buy button every dime and quarter. It's usually a symptom of too much buying power for your own good and a good case of tunnel vision--it's like your subconscious is trying to block the move on the stock like a market maker with infinite funds. The delusion is that strong.
  8. Flipping. Losing money on long and short. Bonus points the more often you flip because now the market makers are just laughing at you.
    scumbag mm's
  9. Losing when the play actually worked in a reasonable timeframe--this is the stroke of a sheer genius because it demonstrates the ability to lose money even when you source good trading ideas. Might be the case of #9.
  10. Shakeouts. LOL nice try thinking you could trade for a living. They should call you Weakhand Joe!
    weakhand Joe talking to his wife, who will divorce him because he's barely a MAN
  11. Bagholding. It's a piece of shit and you have no idea what to do except wait (pray) for break even. You go on twitter to look up the symbol and all the evil shorts are holding their bash party and LOL-ing at you. Usually a signature of the blissfully unaware retail "investor" rather than degen scalp-happy day trader.
  12. Randomness factor. Somehow you got stuck with 10x your average position size on this random play that started off as a feeler. Thoughts after you stop out: Why? What was the point of that? I gave back my entire week on a that!? 

Contestant #1:

Lost $5,000 long and short ZQK as it traded in a 10c range. 

Style points: #2, #3, #4, #7, #10


I don't want to explain this one because I already feel overwhelmed with shame. Just click on the link and look at my executions. Then shake your head with disdain, take my blog out of the "trading" folder bookmarks and then re-label it under "comedy" or wherever you place funny links.

Because my trading is a joke.

I'll post a few more after I get my lunch.