Friday Notes - Increasing Sample Size

4:00pm Someone asked me the other day why I started trading Europe again after having backed off substantially for the first part of the year, and my response referenced the fact that I'm just waking up earlier naturally and trade it if I see anything.

I also mentioned that I'm simply wired such that I trade best and get more aggressive (in a good way) after getting knocked around, which is why (1) most of my best days ever start off with losses or missed opportunities, and (2) I created the fictitious drawdown concept last year which has become the cornerstone of my psyche as noted in the chart to the left and the ongoing "fictitious prior-day" column of the daily scorecard.

Yet there's another reason I prefer to trade Europe if I'm alert, and that's because it simply increases the daily sample size from which to derive trading opportunities for a trader who purposely limits his trading to one market (ES) for focus purposes ... along with either the DAX or FESX which has ES-like rhythms and follow-throughs from the prior day trade.

Let's put it this way, if I can't end the day positive by finding enough opportunities during what are essentially two complete sessions over the course of a single day, then I shouldn't be doing this.

And the DAX provided Exhibit A today as it clearly provided the better of the opening trade opportunities with a follow-through to yesterday's supports, where it first continued the existing uptrend before overextending and snapping back hard (keep in mind fading overextensions at the barf point reflect my favorite and most profitable sequences). The only problem was I slept until 6am after everything had already occurred.

Compare that to the ES general session open where pace, volume, and pattern setups were all pi$$ poor by comparison. I've provided both early session charts for comparison (click to enlarge).

And while I sometimes don't make an effective transition from the Europe "day" to the U.S. "day", like our ongoing poker analogy, you can't beat increased sample size, and I don't recall a day in recent memory where BOTH markets didn't present at least one solid opportunity.

So that left me trying to piece together a few trades in the U.S. session where I made about enough to pay for a +$2K bologna sandwich on extremely light volume and lack of interest, and simply protected the week's +$43K chip gain on what I largely considered a mental day off after missing the higher probabilty Europe open.

Oh, and get this ... I came in 3rd last night to kick off the local Q2 Poker tourney leg, and here's how I lost. While down to a three-handed game, I had 6-7 in the small blind against the big blind, and the flop came 6, 8, K. I was first to act and went all-in, having a solid read on the other guy who I'd later find out was holding A-2. He thought about it and called me, thinking I was bluffing. So I'm clearly ahead ... until the turn & river came 8-K which counterfeited my pair of 6's and gave him Kings and Eights with an Ace kicker. Sick. The good news is I played it as well as I could have. Yet like trading, probability is the ultimate judge, and this time it sided against me.

Thinking of a Foxwoods trip this weekend. Got a local cash game going tonight and then we'll see what Saturday brings.