Here’s a rambling, somewhat more personal blog post than most:
Tom and I were going through some old trading documents last week when I stumbled across this pdf: the first writing for which I was ever paid, and the first piece I ever had in print–an article for the now-defunct SFO Magazine on trading flags, written in 2003.
Reading this was an interesting blast from the past, and a few things jumped out at me.
This was 14 years ago and there’s been a lot of water under the bridge since then: business school, prop firm, the Nymex, learning to trade a few more asset classes… on and on and on… but I’m still doing essentially the same thing I was then. Yes, I’ve changed in some respects, but my trading is still centered around these retracement patterns or flags–after trading through at least three major financial crises, trading every major asset class, and migrating from 1 minute all the way out to weekly bars (and ending up somewhere in between.) Through all of that, these patterns have worked for me.
I also cringe at my amateur and flawed backtesting in the article, but I was driven to find the probability behind the patterns. I can’t even imagine how I arrived at those numbers, and the selection of markets leads a little to be desired, but I was crunching numbers and trying to understand how the market moved.
Another thing that made me smile was that I felt so bad about my first two years trading that I didn’t even admit to it in the bio line! At that time, I assumed my trading life started with the success I had in the Asian Financial Crisis of 1997, but I now know that those first two years before that (which, by the way, had some moments of decent profitability, interspersed with complete account blowouts) were invaluable. I was wandering around in darkness and bumping into things. I didn’t understand leverage or risk. But I was learning what didn’t work, and learning very efficiently… and, more than anything, learning that I really, really, really, really loved the game.
Also, many of you know that Tom and I just launched Talon Advisors a few months ago… but the article also refers to my early work and my first published research, under the URL talontradinggroup.com. (There’s another moment of serendipity behind the name, but I’ll leave that for later. If we ever get a beer together somewhere, ask me!)
Last, and perhaps most important, I was right. I was very fortunate to have stumbled on a robust pattern that worked in all timeframes early in my career. This is still what I do today. Does this sound like something I could have written yesterday?
Simple Can Be Better
In trading, simple is often better. Retracements are simple patterns that work…. Retracement patterns offer excellent trading opportunities. In fact, it is possible to build a profitable trading program based on these patterns alone.
Yes it is. It is, indeed.
