Making the best use of my time

I pondered over this issue over the holiday as I'm finding myself juggling too many tasks. I was participating in two trading contests, developing an automated trading system with a team, managing an open-source project, actively trading, and writing this blog, all on top of a full time job. I got greedy in what I wanted to accomplish and it is negatively affecting my performance. The first symptom popped up in my trading, not surprisingly. I made a bad call and missed a long-awaited opportunity. This was a wakeup call as the performance statistics from my recent trades is showing statistically significant deviations (I will publish the data soon). So before anything gets out of hand, I've decided to manage my time more professionally rather than just do what needs to be done. Taking a page from my professional work, I will prioritize my trading and development work using the Eisenhower Method. Basically, I mentally stamp an importance and urgentness ranking to each of my tasks. Then I will work on the important and urgent tasks first and leave the rest til later in order of the ranking criteria. For example, the automated contest is important and urgent because I've won over USD\$10,000 in 2010 and there's a monthly deadline for it. So I work on it first if there's work to do, which isn't much. The manual trading contest, on the other hand, is urgent but not so important. If I were to participate in it seriously, I would need to allocate an hour or so each night to trade. This is time that I would rather spend working on other stuff. On the other end of the importance/urgentness spectrum is my equities trading. I am rating it as an unimportant and non-urgent task. Although I've written the most about it and that my account has been up 21% in 2010, it takes a lot of my time and the absoluate return is small. That is because my equities account is the smallest of my various trading accounts. So 21% profit of a small account is still very small. Thus, this account isn't worth devoting too much time for now. My plan is to use a beta strategy for my equities account. I already have some ideas on what to do with it. This will be discussed in another post. Ultimately, here's an excerpt of my priority list:

  1. trading system development
  2. automated trading contest
  3. quant research
  4. documentation and blog posting
  5. trading strategy R&D
  6. manual trading contest
  7. equities trading

What this means to you as a reader is that there will be fewer charts and more technical discussion. My goal for 2011 is to post something at least once a week. This is a good time to subscribe to my RSS feed to have new posts delivered to you rather than having to keep checking here for updates.

Not to lose focus by defining what I want from trading

I seem to have taken up too many tasks in recent weeks. I've spent a couple hours a day analysing, observing, and trading the [forex market][]. Another hour or so learning RapidMiner 5. And then yet another couple of hours catching up with the news and various blogs. All these on top of a full time job! It has come to my attention that I can't keep this up as I'll be too burned-out and never actually able to get things done. Such is the bane of choices. Coincidentally, I read this blog post today (via [TraderFeed][]) about the [paradox of choices][]. It is basically saying that having choices, per se, can have a diminishing rate of return (something which I've read elsewhere before but forgotten). More choices isn't always good and fewer can be better. And studies have found that the diminishing rate is apparently pretty low. Here's a good quote from the article: > "we need to redirect the energies we waste flitting from possibility > to possibility, into understanding what we really want in life and the > trade-offs we are willing to make." Particularly at this early stage of my amateur quant career, there are many trading tools (analyzer, forecaster, scanner) that I want to develop and software ([MatLab][], RapidMiner) that I want to learn. So what do I really want in trading by spending hours upon hours, day after day, studying, analysing, observing, and thinking? The answer for me is fortunately easy to find (the benefit of keeping a good written record, i.e. this blog). Referring to my own [trading objectives][] that I wrote last year, there is just 5 points. 1. Application of independent and objective thinking 2. [Understanding of capital markets][] 3. Prudent [risk management][] 4. Identification of [values][] 5. Study of [quantitative finance][] In practical terms, **my ultimate goal in trading is to develop a trading system which requires no more than 1 hour a day of management time**. That doesn't include research and development time, of course. I am not trying to develop a holy grail system. I am using the term system as in a set of processes for me to follow, not an algorithmic system. Although that would be a tool for my system for sure. Now that I've figure that out. My first mandate is to reduce my [paper trading][] in forex. But rather than eliminate it completely, I'm going to increase the timeframe from 4 hour to daily. Because trading the forex helps me understand the capital markets (\#2 of objective). Too much of it though would have been just for thrill and detract from my time for working in quantitative finance (\#5). If I'm to treat this as a part-time job, I need to have more discipline in this whole endeavour, not just in the trading itself.