Wednesday, February 18, 2009

Wednesday Notes - Using the Full Dashboard

5:00pm Like the New England weather, if you don't like the current pace, just wait. And today was such the case as we indeed got the high-probability morning-after-trend oscillations with Tuesday's trend resistance providing a helpful guide to the north. As I've said before, there's nothing wrong with chop if you know it's likely coming. I encourage new folks to do a blog search in the top left for "morning after trend" or day after trend" ... you should find a bounty of posts on the topic.

And following up on many of the comments regarding the usefulness (or not) of the TICK, I thought today was a great example of the TICK providing a rock solid guide for entries as fades were the name of the game, as they often are after a monster day.

However, here's my take on its overall usefulness. As was mentioned by some providing comments last night, I find the TICK to be incredibly helpful ... provided you take the whole picture into consideration. And such is exactly why you don't drive a car by staring at the speedometer and forgetting to look out the windshield!

I've seen many studies and articles over the years disputing the relevance of every technical indicator out there ... specific examples include Moving Averages and stochastics. Yet the problem with most of those studies is that they isolate the specific indicators and don't include their accompanying brethren. Put another way, would I trade solely based on MAs? Stochastics?? TICK??? VIX???? Time of Day????? My answer is I wouldn't trade solely based on any of them. But I'll damn well trade based on the overall picture they collectively portray, and such is the judgment that all too frequently can't be built into programs or those "random walk" market theories.

One area I could have improved today was sizing, as I was probably just a bit gun shy after yesterday and was also keeping initial size down unless we got close to 800 again early in the morning, which we didn't get. As a result, I often traded partial positions. Yet partial is better than nothing and I'll take the day's five figure chip gain, which has now all but buried last Tuesday's brain cramp.

Now I just need to keep the motor running as I look for the right time to step on the accelerator.

19 comments:

E-Mini Player said...

TICK definitely provided great entries today! I've made several posts regarding the TICK on my blog, and it has proven to be extremely helpful.

Rsforex13 said...

I really admire you.
Writing the blog everyday and trying to get better everyday in your trading.

I feel you're a great exemple toevery trader.

Working at you bad sides and improving the good ones is to me the key to be a profitable trader.

No matter what your style of trading is.

When i have a difficult period i think about the bambo try.
As long i do everything to grow, one day i'll succeed.

thx for being a source of inspiration for me.

peter

apprazzr said...

This pulling the trigger thing continues to elude me.

You were right about today. The TICKs worked at the support levels I drew out on my chart. Unfortunately, I watched most of it unfold without reacting.

The after-lunch hours got very choppy (almost as though the market-makers fell asleep on their keyboards). So I stayed out of the way. Unfortunately that looked like the best time to trade as the support levels held up.

Oh well, I guess one of these days I grow a pair.

Severino said...

So I said to myself, self, if -1400 is rare, how about 2 days in a row?

I am glad you expounded on the importance of using all your instruments to guide your path. Even though you do drive shotgun, you have others following close behind, and my comments were just meant to be a cautionary flag.

Thanks,

Severino

Charles said...

hey Donnie(ever get called that?)... i guess i am still young(30) and naive, thinking i can actually build a profitable "blackbox"...but u don't think it's possible to program your strategy into easyLanguge(or any other platform)?

also, since your reply to my 2/2/09 comment about "how to exit", i've been really trying to embrace the idea of scaling out, which is something that i've always thought about but never actually applied...but hearing it from you has put it on my "to try out" list...and it is a good alternative to what i have been doing(not scaling out)...so just wanted to say thanks man.

-charleS

Get In Get Out said...

Don,

I couldn't agree anymore about using the indicators as a quick view or glance to aid in the conviction of a potential move or pattern trend. I find that being too analytical into these indicators could mess with your market psychology and could be hazardous & deadly to your account & thinking too much before making moves. In addition to Dr. Steenbarger, this guy is known for getting in detailed technical depth into indicators & trading psychology & gets way too "einstein" with his technical analytics which makes one think they need a quantum physics Ivy Leauge education to trade. Dont want to make this guy sound bad but he could definetly mess with your trading psych, but has many good pointers to briefly think about as sticky notes to add to one's dashboard...

Get In Get Out said...

Don Thanks for keeping things simple & easy...

Charles said...

uh oh...just noticed...Don's flyin' up the Alexa rankings(rightly so)...could be trouble : )

-charleS

Don Miller said...

E-Mini - Yea, it took the indicator of the day here.

Peter - Never underestimate your true potential ... it's likely far greater than you may think. Strong roots take time.

apprazzr - Yea, after the morning oscillations, it's often a crap shoot, and I didn't see much in the PM.

Severino - And it was good caution flag. Yea, I saw it approaching -1400 again. [btw, ever hear the George Carlin one about Vu Deja?? It's the eerie feeling that none of this has ever happened before ... classic]

Charlie (couldn't resist) - Yea, I was called Donnie until I told my mom to stop it when I turned a ripe 15. In terms of scaling out, there are many schools of thought, but I personally find it a good way to keep away from the perfectionist syndrome.

GIGO - I'm a huge believer in K.I.S.S. You CAN build a house with just an handful of tools if you know how to use them properly. On the other hand, Dr. Brett is responsible for planting many seeds in my brain, as I mentioned when I locked in the '08 #s.

Ultimately, we of course have to leave the Pit and drive around the track. The problem is many don't want to leave Pit Row.

Don

Don Miller said...

Yike Charles ... just looked at the #s. +80% ?? Too funny.

Get In Get Out said...

Don,

In addition to using the indicators as a guide in your dashboard, wanted to ask if you listen to cnbc in the background as you trade? I have noticed sometimes that once in a while no matter what the indicators say cnbc makes an announcement that moves the markets which can quickly disrupt a trading sequance, but this has occured once in a while not usually an everyday thing...

Don Miller said...

GIGO -

I haven't had the TV on during trading in years. Just me, the charts, a very occasional peek at Briefing.com, and a cave.

Don

E said...

Dead Battery...

Trading computer: (Ninja)Looks Good, I have a feel for this set up...

Back up computer #1: battery dead on wireless mouse..., "Norton Expired"...

Back up computer #2:"Spyware Protect 2009" (virus and Pop-ups all over monitor 1; 2 and 3 tradestation charts sluggish and unresponsive)...

Hon, can I borrow your laptop?

Great...No rush, when your done.

Sometimes cars don't start and rainouts happen even at Fenway...

Just one of those days, the only "tick" I heard was time passing as I was sidelined.

E.

Winace said...

Apprazzer,
May I suggest a much smaller position to help you pull the trigger? I've run across this many times, it is the cash amount people percieve as "a lot" of cash for them (this is in the perspective of the trader, 10K may be a lot to me, but it may be within Don's comfort zone (pure example only)). Unless, your account is small and your at the smallest denomination for lot size (been there, done that!). If that is the case, try something with less leverage, such as playing the SPY as opposed to the ES. Just trying to throw some ideas at ya!

Charles,
Scaling out is a good idea, it locks in profits. I, personally only scale out of larger positions, thus hiding volume. I will also scale out to "de-leverage a position if it becomes too large. For instance, say I am holding a 20 lot size position, the trade just went green, I may sell 10 straight up and scale out the other 10 on my way to target, but if it moves against me, I'll scale back in the 10 I sold, thus, when 20 total lots have been re-accumulated, I am in a much better cost average position and retain a higher potential profit margin. Just ideas guys, hope something helps!

Charles said...

@ Winace: thanks for sharing your experience my good man.

@ Don, LOL...right about 15 was when i had them stop calling me "Chuck"...bleeeechhh...BTW, has anyone noticed Tiger Woods named his son "Charlie"...???...that's a NICKNAME...oh well, i probably was just wishin' my idol would use "Charles"...OK, getting off topic here, but i just had to say it...

good trading one and all,
charleS

(Don might not post this silly comment...we'll see)

EK said...

Don,

Great 5-figure job today !

I learn a lot from each of your diary entries.

Flag and Wedge said...

Hi Don,

A newbie question....what would constitute a tick extreme? A reading above 1000 and below - 1000 or a reading at the highest / lowest level of the trading day so far.

Thank you,
J

EK said...

Hi Don,

Here's an important website for all traders. Congress trying to put us out of biz.

http://www.rallycongress.com/no2tradertax/1536/

Don Miller said...

F&W -

Like anything in this biz, it's all relative and depends on the overall environment.

Generally speaking + or - 1000 (or preferably more) is considered strong, although like any indicator, it means little to nothing by itself.

Don