Thursday, March 08, 2007

Quality, Trading and Bruce Lee

My dad used to tell me never to do anything "half-assed." Bruce Lee put it more eloquently:

I have found, after much soul searching, that deep down what I honestly value more than anything else is quality; doing one's best in the manner of the responsibility and craftsmanship of a number one.

The reason I bring up this quote is because of the "half-assed" nature of my recent VLO trade. I spotted the divergences, resistance levels and low risk entry, so I decided to jump right in. While it was low risk, and I still feel the stock is going to fall, I don't consider it a quality trade because there were a plethora of better setups out there that I ignored. Furthermore, when stalking divergence trades, one of my rules is that I always wait for confirmation of the divergence. So the small loss isn't what bugs me, it's the fact that it was a crummy trade.


bp said...

"So the small loss isn't what bugs me, it's the fact that it was a crummy trade." that so hits home... NO CRUUMMY TRADES!!!!! I am going to tape that to my desk and read it each time I go to enter a trade. Thanks

Anonymous said...

I think you’ve done well; you’ve had a stop loss in place that has protected you from a larger loss. What if the trade went you’re way will you still call it “crummy trade”? My point is when you’ve made the decision to short VLO that was your feeling at the time. The most important thing is you know how to manage your trade when wrong.


The Market Speculator said...

bp: your welcome!

Rich: I agree about how important managing risk is. My point here is that I used risk management as a crutch, and did not follow my rules for trading divergence, which is to wait for confirmation of the diverence.

So I'd say the trade was a good example of risk management, but not a quality trade, in that I did not follow my tested rules.