Tuesday, August 5, 2008

Tuesday Notes - FOMC Day

1:17pm DAX trading recap so far: Got a full night's sleep and didn't trade. ES trading recap thus far: Fold, fold, fold, fold, small blind, big blind, fold, fold, fold. In other words, two toe-in-the pool trades today which I promptly folded after seeing the flop. Pretty lame day as we await FOMC data in about an hour. Day pretty much following standard pre-FOMC patterns in terms of little personal trading and pathetic volatility. Passed on the early gap and run off the open since Europe had already rocketed out of the gates in its session. Was looking for early pullback long entries, yet the hands all seemed marginal at best and the prime entry continuation entry was right around 10am when the ISM number was released. Sort of like making a bet while the waitress spills a few drinks on your shoulder.

Sooooo, it's back to the blog to stay out of boredom trades and plan the afternoon. #1 objective of the day remains staying out of trouble. There are 250 trading days in the year, with the next one being tomorrow! #2 objective is to fade any extreme FOMC move with small size on any absurd TICK & price spike combination and cover on the reversion toward the mean.

My general thought on FOMC days is that since I want opportunity balanced with low-to-moderate risk, I don't expect many entry opportunities, and that 10am continuation was too close to news for my liking. Yes, trends in place when non-employment data news is released "usually" continue -- and pocket 8s are "usually" a starting strong hand -- but I frankly was willing to pass and wanted to see more hands.

Note to self heading into the PM announcement ... I want a profitable P&L and not excitement. Take it if it's there, but pass if it isn't and come ready to lock and load on Wednesday with your capital in tact. Yea, it makes for a boring blog ... so be it.

2:oopm Would love to see a drop to the mid 1260s on announcement ... good support there for the moment.

2:08pm Changing my TT price ladder from a one-tick interval to a three-tick interval. Buy order sitting at 66.00 just in case and will manage risk with size.

2:15pm Missed fill on spike down by 1.00. TICK wasn't extreme enough. -541 Max ... that was it??? Such is life.

2:29pm No woulda's/shoulda's ... focus. What is next entry point? Tomorrow? Teeny volume. 15 min about the only trend in play and high % played out on that pop. If the market pops and few trade, does it make a noise? Likely move now? No clue. Better call the chatroom horse callers ... they'll have an answer. One thing is certain ... I won't trade the last hour.

2:36pm Still no personal conviction and no PM trades. Looking more like a day off with each passing minute.

2:47pm First trade ES long on holding TICK and supports. A whopping 75 basis points from 7.50 to 8.25. Tight scalp taken out on the short-covering TICK extreme.

2:50pm Frankly very satisfied with management today and closing shop. Missed a stellar sequence on the drop by "that much" ... big whoop. Two scratches and one scalp ... pretty funny. If we run into close either way, you know the drill for the morning. 3pm witching hour approacheth ... not time to force anything.

I'll post some additional thoughts tonight.


nocved said...

Hi Don

Back from vacation getting my bearings here.

Good post. Me scratched,couple scalps for lunch money,and missed by couple ticks on post fomc spike. Learned from last meeting, it was ugly but making baby steps here:)

So important 250 trading days must remember that.

Thanks as Always,

Steve0617 said...

but the box score (dow up 325ish) will prompts the unknowings to ask - "you made a ton today, didn't you!"

Don Miller said...

Ahhh Steve ... great point and I'll share my candid views on that tonight. Great observation and stay tuned.