The Weekend Trader

I've thought a lot about Friday's trade before shutting that side of the brain down for the weekend, which triggered the following reflections:

Morning Spike - It's interesting that I didn't mention anything about news when discussing Friday's early morning spike. And yes, I did peek quickly at Briefing.com during the chaos and learned of the Lehman Brothers talk ... which I suppose reinforced my decision to short the next spike hard which cut my initial losses drastically. Yet while the news may have been a catalyst, the fact remains that the market went up because the buyers -- including short coverers -- were stronger than the sellers. Period. And the next move was likely to have a lot less momentum. Period. It really didn't matter what the news was or whether my last trade was a large win or large loss. For I run a store whose objective is to buy wholesale and sell retail ... in either order and without regard to what the last customer did.

There's no doubt that what I did on that recovery trade wasn't for the faint of heart or newbies. Yet it came down to survival instinct ... and that is one attribute that is a must for anyone who's serious about this business.

Lackluster Fund Returns - Dr. Brett has some great links on his blog today that discuss poor 2008 returns across a great many investment and hedge fund sectors. For the next few moments, I'm going to ask my "trader" -- who needs to remain completely unaware of his 2008 performance -- to leave the room.

This got me thinking about what is working this year, especially for someone overseeing a seven-figure private fund that grew 86% in the first six months alone this year. Perhaps the answer in part is the growing need to be able to react extremely quickly -- as in "on the proverbial dime" -- to changing conditions.

This week was a good example where the only funds generating net income for the week would have been those able to maximize profit from a market that went nowhere ... yet everywhere. Our fund stumbled a bit in the early hours today, yet the ability to react quickly allowed us to limit any daily damage to a tiny scratch, and resulted in adding another $22K in chips to the stack for the week. Of course that means nothing the minute the virtual ink on those words is dry.

OK, tell Don he can come back in now.

Mirror Image - Did you pick up on the fact that last evening's "fun" chart looks a helluva lot like today's ES 5-minute chart?? Now that's downright scary.

And the best news of the day? The game starts anew on Monday.

Enjoy the weekend.