Tuesday, April 7, 2009

Tuesday Notes - Market Is as Market Does

3:30pm There are times to press the accelerator, and time to apply the brakes. For me, last fall the accelarator was all out floored, vs. the last two days where I've used both the foot brake (light size with probe attempts only) and emergency brake (a stopped sequence).

And so it was that the pi$$ poor pace from yesterday spilled into today where I was quite satisfied with a -$3K chip ante on trade success that had to be 25% at best today. Thankfully, I'll grade my size management fairly high today, with the one exception noted on the attached charts (click to enlarge) when I positioned fairly heavily for an expected mini-squeeze to the north which was supported by the price, TICK, and VIX charts ... along with a time of day that is well known for one last morning push.

Yet as Forrest Gump would say, "market is as market does" regardless of how many indicators skew probability in one's favor, and I felt I did well to recongize the trade premise had gone bust and took a rare full stop on the speculative sequence when the market broke back to the south as noted on the chart. And as I look back at the setup, I still like it despite some of the longer term intraday charts providing resistance on a further pop. Just goes to show nothing is 100% in this business of probability.

And so we await a pickup in volatility and pace, while trying to minimize the cost of blinds and antes as the market deals us a range game for the time being.

Yet the worst thing I can do is leave the table.

That's when pocket Aces usually get dealt.


mtcx2009 said...

My system had a 2 point long into that top, but strangely my indicators just missed confirming that short out of that level. It was an odd drop for sure. Onward and upward.

E said...

For what it's worth, I have found that we need to account for the globex range as well as the normal market hours since the emini has evolved into 24 hour trading.

I viewed that sequence as running into 24 hr symmetry, and in need of a small pb at least(profit taking from the am long).

Indicators are secondary to actual price action, in my opinion.

Kevin said...

Some very interesting internals...

* SPY had its third day in a row of lowest volume since February 9th. (At this rate they'll be delisted for lack of interest by the end of the month!)

* S&P 500 Index down 2.39% and VIX down as well (1.32%). Extremely rare for VIX to fall on a large down day.

JNM said...

how long did it take you to make it in trading and make money consistantly?

also do you use level 2 in ur trading?

thank you sir

gregluganis said...

I am having difficulty taking a loss and trying to get it all back on the next trade.

Do you have a daily loss limit and after you reach this limit , stop trading?

How do you deal with a losing trade and how did you and do you not worry about the losing trade and move on, and not have it impact your next trade.

thank you sir and I appreciate you taking time to answer the comment

Don Miller said...

Kevin - Yes, lots of ironic action yesterday with mixed signals.

JNM - I do see the ES DOM (depth of market) via my order screen, but don't pay much attention to it as it's simply how I enter orders.

With respect to your other question, I began trading about a decade ago and did well early on with stocks before decimalization ruined that game, and then migrated to ETFs and finally the futures market. Each had its own unique learning curve and cost of "tuition" capital, and while I tended to do well in each fairly quickly, it has taken me much of the decade to fully evolve to current performance levels.

gregluganis (Love that nickname!) -

I have no daily loss threshold, just as I have no daily gain figure, as all trade or daily #s are completely irrelevant except in aggregation on 12/31.

Since this biz is all about probability, and each trade sequence stands on its own and has no bearing on the next sequence, gains, losses and scratches are all expected and natural in combination. i.e. You can't have one without the other.

I just simply get back in the water quickly, even if just to feel the current.


tippet said...

Interesting it was that push back up into the 15min ma's along with the tick spike ( and other confluence indicators that i use - 1.5x ibh and a gann line ) that got me short ..the following move down although contained by the upper channel (15min ma's again ) seemed "corrective" in nature with alot of overlap... so wasnt expecting this to continue its move down eventually falling out of bed... price action certainly seems to have entered "holiday" mode. when vol dries up like this i try to find safe haven in the higher timeframes 9 / 15min.... todays another day ..

Ric said...


Don's answer is, as usual, spot on. This subject is covered brillantly in the Mark Douglas book, "Trading In The Zone". It's a must read for any trader and deals with the "mental analysis" of trading.


Pete said...

regarding you style don -

curious to what rough percent are your 'provide liquidity(fade)' vs. trend/expansion rides?

amazing consecutive win streak you had there- very impressive. you're a printing press

Don Miller said...

Pete -

Hard to quantify as they tend to blend into each other.

The "Providing Liquidity vs. Speculating" Key post in the lower left margin may help put it in perspective.


Kevin said...


do you use level 2 in ur trading?

ES futures only show five deep and it's pretty meaningless. The arbitrageurs enter a lot of CIC (cancel if close) orders against other products. They're willing to offer 67.50 if it's 66.75 bid at 67.00. If someone wants to sweep the screen for three or four ticks, great, they'll provide liquidity. But once it gets to 67.25 bid at 67.50, they are at 68.00.