Friday, August 8, 2008

Friday - Fool Me Once ...

3:55am Thought I'd post this early chart combination of the DAX market which reflects one of my favorite entries that stopped.

The trade is an early-day pullback entry in the direction of the prior day's closing trend support or most recent signifcant range break, and I've seen this pay nicely more times than not over the years. In this case, I shorted around the 6570 level with decent size, albeit I was still somewhat cautious since the 1 min 3 Line Break trend on the left never turned down. At my end, I do fade the market without confirmation on the lesser timeframe at times, especially on the 15 min charts. Yet the smaller timeframe still provides a caution light.

Anyway, the trade sequence of course didn't work out this time ... I stopped the probing short sequences at 6577 at 3:34am and have been doing some light scalping since to adjust to try to adjust to the subsequent action. Recovered about 1/2 the stop cost thus far, but not yet in my best rhythm this early in the day.

A good reminder that we can try to skew probability in our favor, yet that's all it is -- probability -- and as Grace will tell you, nicks and dings are going to happen when taking the car out of the garage.

Depending on how the U.S. opens, I may try a similar sequence there on the approach toward 1275, but will be ultra cautious as Europe may provide a clue.

4:35am Nap time.

6:23am Pretty sloppy Globex session. ES traded to 1274, but no clean shot. I suspect there may be only one shot post-open on the first sharp move either way.

10:22am Yup ... monkey see, monkey do. Complete carbon copy. Altered strategy again on the fly, this time thanks to a dress rehearsal. Want the first hard pullback long. 1277 area would be a gift ... doubt we'll get it. One this is clear ... there are a ton of stuck shorts that will have to cover on the first move down.

11:13am Not bad. Did pretty well adjusting and going with the flow. Pullbacks up here have been shallow, so been nibbling only. Funny, looking back at my 6:23am comment ... talk about another stampede 5 mins after open. Very little reaction time. Yea, it would have been nice to load the boat and ride the moonshot all the way ... then again, I'd like to win a bracelet at the World Series of Poker. Just trying to grind away like Michael Mizrachi.

11:22am Back in the midday summer nothing doin' mode.

12:07pm One interesting observation is that both of the planned DAX and ES pullback shorts would have worked for decent gains, but in their respective pre-market sessions (2am-3am ET for the DAX). The normal session simply didn't pay.

1:53pm Finally felt like shorting on that last spike on strong 1 min TICK vs. price divergence at 1:42pm. Had been sitting on the sidelines. Averaged into short to 9475 and covered into the TICK drop to zero.

Got a decent bite on that one.

2:03pm OK; major day and week income preservation mode now. Considering the cost of early short probing and stops, I'm OK with today's performance +$7K. A bit more scrambling over the last two days than I'd like, and I'll need to take a look at that. Keeping sizes relatively small in these whipsaws has kept me out of major trouble even when wrong ... and I've been wrong a lot this week.

I'll share some more thoughts on that last point over the weekend in terms of dealing with being far less than perfect and often downright wrong during parts of every day. Duh, today was a good example.

Lots of work left and miles to go before we sleep. Target remains 12/31/08.


nocved said...

Hi Don

Frustrating day today. Was eyeing below yesterday's low for long. Got there but hesitated for nanosecond and missed trade. (Grrrr). Faded 1273 level and got mowed. Probably revenge trade I'm sure. Went into scalp mode in 1282to 1285 zone and recoup loses.

Although I was bullish for balance of day, I shut down operations for day and week. I was furious at myself for a miss buy at bottom. Felt I needed to walk away before I did real damage.

Down small for week, need to clear head during weekend. Back to drawing board alot to learn.


Don Miller said...

Hey Tom.

Been there. Yea, it was about a nanosecond opportunity on that turn which I also missed, and then it was tough to buy into the fast climb without much of a pullback.

Sounds like good discipline on your part though.

Hang in there.


traderboy said...

Don, when you were stopped out on the DAX trade this morning what did you us to trigger your stop? I know a lot of times you're paying close attention to the 1-min. three line break as confirmation on whether a trade is working or not however, in this instance it was going against you. I'm assuming the line in the sand was the moving avg. (ma) break on the 15 min. chart. However, I'm sure you're following other things closely as well such as ticks, flow of the market, momentum, etc. Am I on the right track here as properly stopping one's self out of a trade (money management) is one of the most important aspects of trading. Does close attention to the order dome (reading the tape) help you in this regards as well? Thank you for your time & consideration, traderboy

Don Miller said...

Hi Traderboy.

Yes, it was a combination of the 15-min downtrend premise getting busted on the push through. The fact that the 1-min just wouldn't give was a warning signal ... ideally I like that to turn and then I'll stop if it breaks back the other way. It just wasn't smelling right.

I think I tried 3 or 4 entries with tight stops and re-entries before realizing it just wasn't smelling right. Plus, I think the worst thing one can do is lose big on these fast summer spurts when wrong. Believe me, I've been there BIG TIME in my career. So despite it being one of my favs, I was trading defensively in both opening sessions, which probably saved me an awful weekend of hand-wringing. The result was no home-run nailing the bottom, but also no teeth mashing as I'm good with the very modest day gain. The ONLY thing that will keep me from my goal is a large loss, and I've already used up my one for the year!

I find the DOME pretty useless right now as they're spoofing left and right as I mentioned in yesterday's post when I shorted right into it.

Just thoughts from here. I'm careful not to tell people how to trade ... it's just how I paint my canvas as you know.

Take Care.