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Hi,
Recently I have had my eyes opened by a client.
He had contacted me as part of his once a quarter review of how he could
further improve his reward to risk ratios and to discuss his successes and
failures and how best to learn from them.
This is the best kind of client - most only contact a coach when they feel
they have a problem or have 'hit a wall'.
It turned out we were both nursing losing long S & P 500 - short DOW spreads.
He, like me had market-made the spread, repeated buying the spread as the
DOW out-performed the S & P and so we both had multiple losing spread
positions.
I had additionally faded the continuing out-performance of the DOW using
market making techniques and had made more realised profit doing this than
I had running losses on the spreads.
He had missed this opportunity, but had made much more money than I
had. He had repeatedly switched his long S & P into long DAX and back
again, making more switching profits than running losses on the spreads.
We had both missed opportunities to provide service.
I have not spoken to him since, so I do not know if he has learnt from my
ploys, but I have certainly leant from his ploys. I have switched my
short DOW to short DAX when it made a huge run-up recently and back to DOW
when it caught up - again making more in switching profits than losing on
the spreads.
I also incrementally switched the long side from the S & P to the Nasdaq,
and back again, picking up a few S & P points on the way. It all helps.
Hopefully we now both have more weapons in our armory - recognising more
opportunities to provide service where it is most demanded. Profits
follow providing service rendered like night follows day, but sometimes it
takes a little longer than 12 hours.
Hopefully you have learned a trick or two and you will want to share your
idea(s).
But maybe you want a shorter email or to waste time discussing individual
trades or have some other way of avoiding the process of sharing and
learning useful ideas and techniques.
Unconditional regards, Ric.
www.traderscalm.com
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