Tuesday, September 30, 2008

Tuesday Notes - Now It Gets Harder

4:15pm Now it gets harder. One lap to go and I can see the finish line. Today officially closes the books on the 3rd Quarter and now all focus must turn to a strong finishing kick over the final quarter of this incredible 2008 journey. What's past is past and now has to be forgotten, including and especially a September for the ages.

Yet we'll first take one last look at today, which I played pretty tight to the vest ... not trading much at all in the afternoon and letting the afternoon "too early" shorts battle it out with the "too late" longs and the quarter-end window dressing fund managers. Essentially, I didn't want to give away any chips at this end for lack of clarity or tiring focus. I actually felt better pace in the Globex session (vs. the U.S. day session), where most of the day's $14K chip gain occurred on buying pullbacks.

So I'd grade today an A for discipline & market reads, and B- for performance. We'll grade the quarter a B++ (OK, I'm a tough grader, but there were two bonehead moves and some income suboptimization at times, so despite the equity spike, the grade will serve as a reminder).

And so the final leg begins. The bar has been raised and we start digging out of another hole tomorrow. 9 holes dug and 3 remain. 75% complete. But 75% is not 100%.

92 days left. The bogey is now $1.25 Million.

If I succeed, drinks will be on me on New Years' Eve and you're all invited. I'm thinking Foxwoods.


Yet now it's time to reset the mind. I've just experienced the largest draw of my life and I'm sick to my stomach. It's comeback time.

Ouch. Hand me the shovel.

Monday, September 29, 2008

** VIDEO ** Crash Reflections

Here are a few thoughts on today's historic events, including why today's crash magnified my strong views on managing risk with size and the importance of self-reliance.

Stay safe.

Monday Notes - Market Crash

4:31pm I'll keep today's entry short and sweet. First, I'm fine ... although I'm sure many traders got hammered and obviously millions of investors are hurting bad. I just spoke with my broker who indicated many position traders and newbie daytraders got washed out -- both for obvious reasons.

Here's the quick and dirty recap at this end.

The day started off poorly with Tradestation again freezing at the open (might have something to do with the new version I loaded recently ... that's two days in a row), so I had to switch to ESignal as a backup while at the same time manage a stop when I bought the early excessive TICK reading.

Fortunately, I'd been watching the market since it opened last night and was cautious on the long side in terms of sizing today since ES couldn't pop last night even with news that the bailout deal was imminent. I know ... I traded minimally from the long side and stopped out on buying the last Sunday PM dip toward Friday's support.

As a result, I spent most of the morning nursing a very modest draw as the result of the early stop until all hell broke loose when the Nay vote came in at which point I bought the first spike down (scaling in small beginning in the 1130s ... best price 1117.25!) and then sold on the reflex spike toward 1150 (first sale after the final 1117.25 buy was 1134). I only wish I had greater size on it ... but the market was absolutely frantic and it was all I could do to make sure I was managing risk with size.

Important note: This was NOT averaging down ... rather it was scaling into a partial position and I was managing risk with size and was never fully committed ... heck I wasn't even 33% committed. This is a very important point as traders "averaging down" would have gotten wiped out today. See some of the early September responses to comments. I truly believe years of experience and getting hammered myself led to decent trade management and discipline today.

That sequence brought me back to positive and I simply traded very lightly for the rest of the day with many probing small long positions each time the market fell in case the market decided not to close on its lows ... which obviously it did. The net result was a modest $9K chip gain at this end with one day left before formally closing the quarter.

More importantly, all September's gains remain in tact and available for trading tomorrow and beyond.

I imagine many aren't quite as fortunate and I feel for them.

I may post a follow up to this later tonight -- perhaps in a video.

Saturday, September 27, 2008

The Weekend Trader - Saturday Edition

Well, Grace is indeed having her checkup today and I'm sitting in the BMW dealer's waiting room with lots of time to kill. So let's start the old random thought generator.

Post Blog vs. Pre-Blog Performance - I continue to be curious about the impact the blog has had on my trading performance --which was one of the initial premises for starting this in the first place, and perhaps one area where this unique experiment could provide objective data and results helpful to all. Unfortunately, it still may be too early as 2008 results include about 6 months of pre-blog data and only slightly less than 3 months of post-blog data, so the sample size is pretty limited. Plus, I'm not sure how related September's strong equity spike is to the blog as much as it relates to the general market craziness.

Yet preliminary data shows that results during the first two months of blogging were about the same as the pre-blog results. Keep in mind I had my annual brain cramp right after starting this ... otherwise post-blog results would have been stronger. This third month (September's performance) then skews the results significantly to the blogging side, but again linking that solely to the blog is a pretty large and likely unrealistic leap.

I do feel, however, that the blog has contributed positively at least in some manner, due to (a) using this as a true diary and causing me to objectively think out loud (thanks Dr. Brett), and -- in my case -- (b) purposely feeling just a bit of public performance pressure which I really think has helped me stay focused and motivated.

It's interesting how different people are affected by pressure. Early in my trading teaching and writing career, there was clearly self-imposed pressure that affected my performance negatively. Yet at this point in my life, I find the exposure invigorating and helpful. I'm not sure why or when that switch flipped, but it clearly did.

Crazy? - I'm sure some following even just part of this blog & journey wonder if I've lost my marbles -- meaning all the talk about Olympics, races, laps, that French guy to my right, a silly countdown clock, etc. etc. And while I'm sure at the age of 47 that I don't have all of the marbles I had in my 20s, I think I've actually kept -- and even found -- a few pearly ones.

Stating the obvious, it's all about motivation. I remember when I was very young throwing a tennis ball against our garage, pretending I was pitching in the World Series. A strike was inside of the middle four garage door panels, and a ball was outside (the imaginary batter of course never swung or simply missed). And if I walked a batter, gave up a run, or lost the game, I'd simply clear the mind and start over. Who knew it was a future trader in training?

Or maybe I'm just crazy :-).

Aftermarket Trader Lounge - After checking the latest conferencing options, I've set up a PalTalk (which I've used in the past) video & text room for when we decide to go ahead with the idea. I'm still looking into options that allow for some security -- maybe via one-time email registration ... not sure yet -- without making it overly complex. Unfortunately there are some crazies in this business that I won't put up with for a second. I'll keep you posted on where the effort stands.

Consistent with your input, I'd keep it small and in a true "lounge" format to shoot the bull (meaning it's not a Don lecture on how to trade!) I'm thinking once a week on a Friday or Sunday night. If you're interested, you can sign up for a free PalTalk account and check out the software. You won't see the room appear until the designated time, but it will appear in the Business/Trading section at the scheduled time. If you have a preference in terms of day, that would be helpful as well.

Poll - I'm admittedly curious as to the general level of experience of folks "looking over my shoulder", and have added a poll in the left hand margin. There's no hidden agenda at all ... I'm just curious if you'd like to take a few seconds and let me know.

Rut Ro - Just got the news on Grace ... she needs new brakes, coil springs, and axle rods to the tune of $3K+. Getting old sucks ... but as I've said before, it beats the alternative.

Enjoy the rest of your weekend.

Friday, September 26, 2008

Friday Notes - Closing the "Trade"

11:39am I've continued to keep the powder dry for the most part today, although I did go long on the post-open barf TICK reading (see chart), taking it out on the move back toward zero. That's typically a pretty strong play, and I took one quick risk-protection scratch before immediately re-entering. The sequence was a bit trickier than normal as Bush was about to speak, so you had to be nimble as immediately after ES made its 8 point climb off the TICK low, it gave it all back in a heartbeat before making another push. If Bush hadn't been speaking, I may have gone heavier.

Other than that, I haven't been too interested as the market has simply been chopping back in forth reacting to any bailout news traders can get their hands on. I'll take normal non-news supply & demand patterns, thank you.

The VIX remains on the rise heading into mid-day and who knows what will happen in the PM as folks cover positions ahead of the weekend. Gaps of 20-30 ES points have been the rule lately (boy is it nice to be in cash every night), and it would seem we're lining up for another one -- either way -- on Monday if less-than-stellar news breaks over the weekend. As an aside, it would be nice -- from a trading perspective only -- if we eventually see one more bona fide capitulation as we did on the 18th, but that's just bar talk as I have no clue and just care about the next high-probability short-term pattern.

1:34p Pretty decent scalp rhythm and pace on the 12:30pm - 1:30pm climb. Been nibbling on the long side with the 1- and 5-minute trends in play. Looking for one more sharp pullback to entry for scalp if ES pulls in toward 1203 (now trading at 1206). Certainly don't want to get too aggressive on a Friday afternoon though -- you know how I despise Friday draws.

1:42pm ES climbing that wall of worry without me. Took the early scalps, but passed on the higher-risk ones. My price or nothing, and I can live with nothing. Now interested in ES near 1206.

1:59pm OK, took 1206.50 to 1207.50

2:04pm Long 1204.75 for a couple; will take it out fairly quickly.

2:05pm Took it out 1206-07.

2:25pm Underestimated that run, but keeping it close to the vest on a Friday PM.

2:30pm Geesh ... not looking as dumb now.

3:02pm Interesting afternoon in that it's a pretty fertile scalping market, but I'm keeping things tight in terms of sure profits and not trading every move. i.e. taking .50-1.00 when there are often quick 2 pt moves. The chart shows the nice 5-minute trend pullback around 2pm.

3:47pm Quite the whip-o-matic into close as it looks like shorts definitely afraid to hold over the weekend. Did some light scalping, but nothing significant. Definitely sacrificed some gains today, and wouldn't mind having a mulligan on the 3pm temporary barf again. (Get over it Don.) On the positive side, I didn't get caught in the end-of-day short cover stampede ... that really would have ruined the weekend.

OK, on Monday I said my goal was to get back in stride after consecutive draws on Friday & Monday, even if I ended the week with a modest draw, and we'd look at the week as a single trade. Turns out the "trade" was still able to increase the chip stack by $28K -- with the five "hands" playing out as -11, +12, 0, +17, +10 -- which all things considered including Monday's draw and deciding to scale back heading into the final days of the quarter, is an acceptable -- albeit not stellar -- result.

Which leaves us with two trading days left in the quarter and 96 calendar days to the finish line.

Snow will be here before you know it.

Let's hope the Bamboo can withstand the cooler weather. I'm bringing it indoors on December 31.

I'll post again over the weekend. On Saturday morning, I bring Grace in for her 60,000 3-hour check-up and will have some time to kill.

Thursday, September 25, 2008

** VIDEO ** September Perspectives

To help me stay away from Globex trading during tonight's bailout/no bailout news, I've gone to the camera to discuss perspectives on this September to remember.

Thursday Notes - Better Market Pace

1:48pm Nice to see the market get off yesterday's whip-o-matic and provide a bit better pace today. At this end, I waited for the market to tip its hand, and once it began extending from the open, focused on buying pullbacks and shorting extensions which have both done well for 1-2 points, although my VIX chart hasn't been providing data all day so I've had to focus more on the TICK and some feel ... which has certainly felt less volatile.

I've still been staying largely in protection mode in terms of size and trade frequency, which I think has helped me simply let the market come to me on unsustainable extensions (up or down), and have put in a fairly solid day.

2:33pm Nice drop to the 15 min support for a long scalp for 1-2 pts. Intraday timeframe trends very much in play today as is often the case after yesterday's chop-filled session. True to its form, the market rarely does the same thing twice in a row.

3:13pm Calling it a day. Any run into the close will set up Friday's open.

Generally, a solid performance at this end although I seemed to sleepwalk through it a bit in terms of energy and probably could have stepped up the size once the market found its pace. I'm definitely going to have to ramp up the energy level when Q4 begins next week.

Staying true to my Monday comment, we'll pass on the daily chip gain comment and simply score it at the end of the week.

Wednesday, September 24, 2008

Wednesday Notes - Guns in Holster

4:00pm Was the market open today? (Only kidding.) Talk about a consolidation day. I guess you know Someone is looking out for you when on the day you decide to scale back, the market presents an absolute chopfest with light volume and liquidity, as well as essentially no trend on any timeframe in play (note the plunging ADX readings on most intraday timeframes). Is that an eerie coincidence or not?? I'm seriously wondering if other traders have also "hit the wall" and decided to pull back.

True to my word, I "slept in" today and only traded 764 contracts ... keeping contract sizes on trade sequences small to tiny (we're talking 5 to 15 most of the day!). The best sequence came on the 1pm break out of tight consolidation which took ES toward its hourly resistance. Other than that, I nibbled on a few 5-min consolidation breakdown attempts, but the market simply had little interest in extending itself either way today.

So today's result essentially reflects minimal transaction costs only, and I'm pretty pleased with the scratch day -- and more importantly, sticking to my guns on keeping things light. I can see where many could have been tossed around like a rag doll in a pit bull's mouth today.

To that point, I think today was a great example of the need to vary one's trading size, as well as taking the foot off the accelerator given conditions presented. In my case, I admit I was a bit lucky with respect to timing my backing off.

As they say, it's sometimes better to be lucky than good.

I'll take lucky today.

Tuesday, September 23, 2008

Special Post - Raising the Bar for the Final Lap

11:16pm - With one week to go in the quarter, I've done some deep soul searching and decided to do two things as I prepare for the fourth and final leg of this year's race. The soul-searching was prompted by some exhaustion setting in at this end, as well as a preview update of the attached daily equity chart (click to enlarge) that I first posted at the end of August. And yes, the last parabolic line truly reflects September's performance to date.

First, and for the first time in nine months, I'm going to shift gears and play a bit of extended defense over the final five trading days of this third quarter -- essentially putting myself in major income preservation mode for the final days of the quarter. The reason is simple ... performance over the last few days -- despite getting back on track today -- tells me I'm lacking some focus and am extremely drained right now (not a good combo with a volatile market!) after what's been a record push this month. So I want to lock up what's been a strong third leg and get mentally refreshed for the final push to year-end. I'm also not typically a strong end-of-month player.

So for all of my old and new friends who have been screaming at me to slow it down, kill the DAX trading, switch to the rubber hammer, etc., this stubborn Type A person is finally listening. Yes, I'm tired. The blog posts show it, your comments show it, and the diminishing returns of the last few days show it. Keep talking to me as we work to strengthen one another.

In doing so, I do have one major concern, which is losing the aggression that's brought me this far -- which brings up my second adjustment, which is raising the annual bar another notch by setting a "stretch" net income target of $1.25 Million so I keep motivated right up until the final score is tallied on December 31. "Stretch" meaning my initial goal still stands and remains my objective, but I'm viewing the "stretch" as a bonus carrot and am considering donating a portion to charity and giving back to this industry even more in some way if attained.

Three laps almost complete and then one final 3-month push to the finish line. The counter shows under 100 days to go, so the race isn't close to being over yet and a lot more work remains.

I'm just momentarily coming up for air before holding my breath for the final swim.

Tuesday Notes - Sigh of Relief

11:52am I'll be frank as always ... I was growing extremely concerned about my trading heading into today, and viewed this morning's performance as absolutely critical to get the confidence back and stop the consecutive days of draws at two. As I've said before, 3 days in a row simply shouldn't ever happen and would be a huge warning signal in terms of a possible performance slump. I think it's only happened once this year, and even 2 days has been extremely rare.

Thankfully, the market served up its infamous day-after-trend morning meal, and we're also now three days removed from the crazy events of last Thursday -- time which has restored a more normal market pace. While I didn't load the boat on the early oscillations as I did on Thursday, I'm on my way to accomplishing my intended goals of stopping the draw and essentially putting in a decent performance. (As I mentioned on Monday, this week's P&L gets scored at the end of the week).

On the continual improvement front, I'm giving serious thought to backing off the DAX trading altogether which again was negative this morning. Maybe I'm finally listening to some of the comments, my P&L, and/or my body, all of which are telling me it's likely affecting my focus and ES performance. It's definitely been an effort of diminishing returns ... as it's not added much to the bottom line this year. I do use it to get the daily motor running though, so there's still been an intangible benefit for me that's impossible to quantify.

4:00pm Quite the afternoon ride ... wowzer. Had to scamper a bit on a few sequences and gave back some of the AM gains, but didn't trade the last hour and the schnide indeed stops at 2 days.

The important thing for me today was to just keep on keeping on.

Time should take care of the rest.

Monday, September 22, 2008

Monday Notes - Stepping Up the Focus

4:00pm Simple and short post tonight. I think I've put my finger on why I've been in a two-day funk (modest draw today ... not overly significant, but definitely a nuisance), and that's lack of focus given the increased volatility. It finally dawned on me when I (a) left my station and (b) was reading a magazine exactly when the two high-probability trade setups occurred. The same thing occured on Friday which I had forgotten. And for the first time in a looooong time, I felt like throwing a chair through the window Bobby Knight style. Of course, the rest of today was a low-liquidity chopfest.

So I have one simple goal this week ... to step up the focus and get the find my inner rhythm once again. In doing so, I'm also going to do what I've sometimes done in the past when I wanted to take any perceived daily pressure off (maybe Rex is right), and that's to look at this entire week a single trading sequence and book the P&L on Friday. One year, I remember actually closing my internal books and starting a new year in mid-August to clear the head! I'm also subconsciously too much aware of where I stand for the year, and need to shake that and get back to the cornerstone chart. Now is certainly no time to put a ceiling in place ... that's still 3+ months away Donald!!

So, forget the long- and short-term P&L ... focus and execution is all I want this week ... and I'll accept a small draw at the end of the week from transaction costs and feeler bets if it means I get it back to start Q4. We'll look at the score on Friday and see if the change in mindset helped.

Hopefully, tomorrow will be provide for some natural morning-after-trend oscillations to help restore both the market and my natural rhythms.

At least that's my song request for the band director.

Sunday, September 21, 2008

The Weekend Trader (Sunday Edition)

I indeed spent most of Saturday playing cash no-limit hold 'em for about 7 hours at Foxwoods before playing in a friend's home game last night until 2am. My goal of fully immersing myself in a non-market endeavor after this past roller-coaster week was "partially" achieved (more on that in a bit), and I actually played pretty well throughout the combined twelve-hour session, making decent decisions and netting about $525 at Foxwoods in their $1/$2 game. In the process, I had four hours of drive time and countless opportunities at the table to reflect on this past week, and here are some thoughts.

Timing, Patience, & Betting Size - My timing and patience in the market were less than stellar much of this week (I'm being extremely generous with that comment) which I wanted to work on yesterday, and I seemed to have done something right on Saturday. The day's net profit was essentially the result of betting two key hands strong over the seven hour session ... quad Kings when there were Kings full of Queens on the board, and trip Jacks that held up after I got three callers to think I had nothing. The rest of the time, I felt I effectively managed the game to allow for modest occasional gains to offset the necessary cost of blinds and feeler bets.

Rewind to last week where the week's $70K net gain was essentially result of a single morning session over the entire course of the week -- and looking under the mircoscope more deeply -- two single trade sequences within that session where I was as close to all-in as I can be with a few hundred contracts on. The rest of the week, occasional gains offset the cost of liquidity-providing transaction costs (blinds) and speculative probe entries (feeler bets). Needless to say, the similarity between Saturday's session at the table and last week's efforts is a strong as Bill Belichick's wardrobe is to a home yard sale inventory. My biggest error was the sizing of some of my feeler bets, which I plan to remedy this week until volatility dies down a bit more.

Information is King - I can pin Friday's draw down to a single item -- losing track of the CME's current overnight price limit. It had been so long since this circuit breaker had been activated, it wasn't even a remote thought in my mind and thus completely caught me off guard. Shame on me.

Critical Period - I firmly view my performance over the next two weeks as being THE most critical stretch of this year's journey, as I need to finish the 3rd leg of this year's relay race strong over the coming days and get off to a strong start to the fourth and final leg when October begins. And as I enter this stretch, I'm extremely concerned about complacency setting in.

If I have a motto for the rest of the year, it's "Don't Coast". Coasting only results in losses or untapped potential ... just ask the number of swimmers in this year's Olympics who coasted to the finish line and lost to a Phelps machine that never quit until the board was touched ... even in the final milliseconds.

Remaining Mission - I've made no bones about my $1 Million goal for this year. And I'm not after bronze or silver ... I'm after gold and an unprecedented achievement. In doing so, I want to give back to an industry -- both during and after this journey -- in some way that cuts through all of the smoke and mirrors that have been hyped by the Jim Cramers, broker boiler rooms, chatroom gurus who don't trade or won't share their trades, and "buy my advisory service" chameleons that have done so much harm over the last decade to put money in their own pockets and not promote self-reliance.

As we enter the final stretch of 2008, this personal diary will remain open to all those who care to follow along with me -- without advertising, cost, or any motive other than to push myself and hopefully motivate others to accomplish even greater goals, whether it be in trading or perhaps more importantly, in life.

The journey will continue to have bumps and bruises, and there will be misplayed hands and suck-outs at the river. But this game doesn't end until December 31.

And life's game never ends.

Friday, September 19, 2008

** VIDEO ** Thoughts on a Historical Week

Here are some thoughts on this week's market ... one that we'll likely never see again in our lifetimes.

Enjoy the weekend.

Friday Notes - A Forgettable Week

3:40pm Well, I expected to learn something about myself after yesterday, and I indeed learned that I don't trade well after a windfall, as I delayed making my first trade for far too long and then hesitated on almost every sequence after that ... essentially not feeling that focused fire. Actually, I had the "gimmie" pre-market short all locked up heavy in the 1260s -- positioning to ride it down 10-15 points -- until more news broke which shot ES into a locked limit rendering stops and re-entries useless. And I wasn't sharp enough to short the DAX (while ES was locked) which was still trading and topping. That left me scampering with the goal of minimizing damage after the open ... a far cry from the solid profit I'd have booked if not for the limit. Amazing how one rarely used market circuit breaker can turn +$30K into -$30K in a heartbeat.

This is a week that will not soon be forgotten by many of us who put ourselves and our capital on the line day in and day out. At this end, I could probably sell the blog rights to some movie studio. I'm also thinking about printing up some buttons that say "I survived the week of 9/15/08". Many traders were wiped out, and despite the net week plus at this end, I have a few bruises that will require healing.

On 12/31/08, this week will be a distant memory. The weekly equity curve will show a decent net chip gain of essentially Thursday's trade on the week, but it simply won't show the wild swings and bruises that are unfortunately a mandatory element of this business. There's simply no playing it safe in this business by being a bystander.

I know I trade better after pain, and today reinforced that notion. For the first time this year, I couldn't fool myself into believing the "coming back from draw" mindset that has been the cornerstone for this year's incredible journey into an unknown land. And the results showed badly as the the crispness of focus and execution simply wasn't there. Yesterday should have been energizing, but it wasn't, and two draws of > $20K in one week is simply unacceptable. Taking a vacation day today was also not option as that's what weekends are for traders, and I knew "sitting on gains" is absolutely no way to continue to grow the chip stack. Plus, the morning opportunity was there in spades.

I'm not pleased with this week. Just look to that quote on the left of this page. He knew what he was talking about.

I need to forget the week. Fully and completely.

I'll post a video with more thoughts on the week shortly.

Thursday, September 18, 2008

Thursday Notes - A Market Blessing

4:00pm I'll be frank up front ... this is going to be my toughest post ever. I'm not even sure where to start, but I'll try.

Normally, specific days don't phase me. I've said for years that each day is fairly insignificant over the course of a year or career except in aggregation with all the others. Once the trade or day is done, it has to be forgotten as tomorrow is indeed the only day that matters. And yes, that silly counter to the left is the only earnings timeframe that means anything to me.

Yet today I find myself deeply moved as I've been blessed with a career trading day. Yes, a career day that was pretty much over by noon. And since I've been candid writing about my losses and bonehead moves, I suppose I should be candid on the upside as well.

It started out innocently -- and actually on the frustrated side -- as I was thinking about going long last night after the market closed on the panic, and also planned on getting up with the Eurex open at 3am. Well, I remained flat overnight (that's me ... I simply can't sleep with a position on) and didn't wake up until around 5am where I saw I'd missed a couple of prime opportunities. I wasn't too pleased. Yet something told me to just sit tight and the opportunity would be there.

Perhaps it was the frustration of missing out early that sharpened the focus, but from that point on everything fell into place. And I mean everything. Once ES starting pulling in around 9:45am, and with my eye on the TICK expecting a much higher initial low than yesterday (remember those comments and the TICK chart re: yesterday's extremes), I started buying and buying heavy. From then, the next few hours were frankly an unconscious dance with the market. Size, entries and exits seemed within ticks of perfection and there was no hesitation. None. It was like that scene near the end of Trading Places where Louis and Billy Ray were taking down the Dukes. Perfect afternoon earnings protection (minimal trading) while adding a small icing. It was like all of the experience of the last decade flooded into the moment. And I mean flooded. I just can't describe how I felt much more than that.

When all was said and done, $70K+ net (after transaction costs as always and including a teeny DAX loss) was in the bank on an absurd $77K ES gross. 7% of my annual earnings target in one day. I still can't believe it and have captured the gross figures from TT so I know it's real.

Oh sure, I didn't do some things well including passing on the afternoon long (got some nice short extension clips though) and losing on the DAX in the morning (I know, I know). And that will give me motivation for tomorrow. But that would be like saying you didn't like Manny's hair when the Sox finally won it in 2004.

Those that have worked with me over the years know I have a deep faith. I don't talk about it purposely as I try to live by example (often not doing a good job of it) rather than rant, but it's there. Today was a blessing which is frankly hard for me to comprehend right now. Other than that, I'm at a loss for words until this sinks in.

In the meantime, I know I have to forget about it and move on. Time has shown I can come back from draws ... Tuesday and Wednesday are recent cases in point ... and believing I'm always coming back from the abyss has become my cornerstone. Now I need to find out if I can keep that same even keel and believe the day of all days was really the draw of all draws.

There's another day left in the week, and 104 days left until this means anything.

The journey must continue.

Wednesday, September 17, 2008

Wednesday Notes - TICK leads the way

12:54pm Geesh, talk about trying to grab that sucker for some half-decent size. There's a reason this is my first post of the day since it took my hand-eye coordination the bulk of the morning (and 2740 x 2 contracts) to get in rhythm. My broker's definitely loving me these days ... so long as it's a win/win, that's more than fine with me.

Take a look at this morning's 1-minute TICK chart (click to enlarge) and the extent of (a) the extreme sub -1000 readings (note my chart is purposely scaled from 1000 to -1000, so the sub -1000 are the bottom flatlines) and (b) the few + readings above the blue line. One thing is certain ... this is EXTREME and likely won't continue for much longer, and while shorting has been the name of the trend game lately, we'll need to watch for a change in this pattern. In the meantime, buying the extreme low TICKS and shorting the approaches to zero is heaven for a scalper. (Again, that game will change soon enough.)

1:10pm Trading has been very thin on the DOME, and this is where my DAX and Globex trading ... listen up Steve :-) ... helps in this volatility. 3 Line Break, TICK and the VIX have also been helpful to set the market bias when prices are lurching up and down. Look how thin this intraday DOME is ... this is about as thick as it's been all day, and often the inside spread is only double digits!

I'll be tightening up the trading for the afternoon as it's important for confidence purposes that I continue yesterday's day session success into a booked P&L gain today. Plus, my brain is a bit fried and my hands a bit greasy from wrestling with this pig of a market.

2:30pm Yup ... tides are changing. Caught ES off 7275 after letting the fake and shake take out the early traders ... best exit 7975 (tiny size for fun) and scalp short off 8525 for 1.5.

2:35pm Ditto short off 8850 for +2. Definitely in rhythm and feeling it. Shorting for scalps only as the tide has shifted ... it also allowed me to reload after the first one.

Here's what I was seeing while managing the long sequence. Note the increasing TICK bottoms! We also never made new ES lows and 3LB had been long off the 1:50pm climb.

2:48pm That may do it for me ... interim 30 min resistance here but frankly tired and may let others have a shot at it. Quite a longer-term line in the sand at 1164ish as the market refused to cut through it on several attempts today. We also got an INTRADAY reversal for once ... it's been a while since the reversal didn't come right at open or in the overnight session!

Might get some 5-min (long) vs. 30-min (short) ES ping-pong here, and any sustained run into close will set up the morning.

A solid $24K ... this time with no offsetting overnight faux pau.

I hear there's another game tomorrow.

Tuesday, September 16, 2008

Tuesday Notes - Buck Naked

5:34am - Dear diary ... remember that Driver's Ed video discussion over the weekend? Well, after being properly cautious throughout yesterday's session, last night was Exhibit A, as ... well ... ummm (stalling) ... an accidental order entry error resulting in a significant sizing error compounded an overnight loss. (I'll spare the diary the details ... we'll simply cover up the corpse and route traffic around the accident. Kudos to my broker though for helping me through it.) Talk about being accidentally aggressive at the wrong time. Ouch. Nothing I can do about it now as it's history and back to work over the coming sessions to grind it out. Sometimes, it really sucks being human ... but I suppose it beats the alternative.

btw, for those new to looking over my shoulder -- and the numbers peaked yesterday (must be the market) -- please remember that yes, these are my personal notes and will include the good, the bad, and the ugly that surrounds this particular trading journey. And yes, there is an ugly component to this business that can't ever be fully escaped that requires a strong stomach, short memory and faith in oneself over the long-run. Wish as we may, we can't have the good without the bad and ugly ... which I suppose allows the good to feel ... well, "good". The way I look at gains and losses, they simply allow one to either buy or give away time. Soooo, I've grown a few days younger and get to play the last few sessions over again one trade at a time.

11:56am OK, as gawd-awful as the overnight miscue was, today's monster of all day-after-barf sessions has been almost a mirror opposite. I was going to say like "night and day" ... then again, I guess I just did. Outstanding reads, executions, size management, and holding time at this end including buying the open strong taking it out on the first pop, and re-loading on the pullback (TICK hadn't yet bottomed) and taking the second one out on the TICK approach to zero. (Note to self: For once, I didn't hesitate at the open ... take notice!! Of course I was pissed as all get-out and you know what happens to my focus when I get mad.) Also a good read in shorting the unsustainable 11am AIG bailout-related spike into the resistance brick wall.

1:56pm FOMC news coming up. I might trade the initial overreaction, but that will probably be it. Nothing like throwing fuel on the fire in terms of volatility.

2:20pm Interesting no extreme TICK on the first move ... price extreme only. Passed.

2:36pm TICK can't hold above zero ...

2:38pm ... but AIG news and the mother of all whips as shorts got caught bad. 25 pt ES spike.

2:59pm VIX 15-min turning down (shorts beware). Just watching ... too many cross-currents, no solid triggers, and no way to manage risk. Late-day shorts may get toasted like late-day longs yesterday.

3:14pm Finally took a scalp long ... if it ain't going down ...

3:17pm Yup, shorts are stuck.

3:20pm One more thrust and I may short ... want a TICK extreme and final panic cover move ... might not get it, but 1220+ would be a gift.

3:22pm Oh well ... wanted the more controllable exhaustion spike. Maybe it's a one and done?

3:51pm Traded lightly to keep my head in the game toward the end, but nothing with size and pretty much watching most of it. Essentially, I played defense much of the PM.

OK, today should have been a doubleheader sweep. Instead, I got beaned in the first inning of the first game by a fastball by stepping in front of the plate. Fortunately, it was a glancing blow that just missed my eye and I was able to play in the second game. The single worst and best sessions of the year in the same day ... too funny.

I could look at today as a draw, which it was ... but again, any day's results + or - are only relevant when added with the other 249. At this end, I'll count it as two sessions with a strong performance in the second game. And believe it or not, I'm still positive for the week ... almost impossible to believe after the night session ... I had to check twice. So the streak begins anew at one. Mind games?? You bet. You think Tiger thinks about his last hole when he hooked it badly into the woods and took a triple bogey? And no, I don't think I'm the Tiger of trading ... let's not go there.

I imagine Steve's probably wondering why I continue to trade the DAX and Globex ES if for some reason that's my weak link?? So I'll save him a comment and ask myself, "Can't you see a trend in this blog???" Point taken. And yes, I can be a stubborn SOB sometimes. Trading last night wasn't the mistake though. My fat fingers were. I will say this, the error -- and it was ssiizzaabbllee -- really didn't faze me other than piss me off. You do this long enough, and nothing fazes you.

Someone asked me the other day how people could tell if my postings were "for real". If only today's wasn't. You can't make this stuff up.

Said another way, you see me buck naked ... and sometimes it ain't pretty ... just ask my mirror :-).

Monday, September 15, 2008

Monday Notes - Greased Pig

5:30am It's been quite the overnight fertile market and I've been alternating trading and napping during the night ... both lightly. As they say, when you want to hunt deer, go where the deer are ... and deer have been feeding tonight. I did manage to catch a solid 1:00am to 4:30am shut-eye, which is about as good as it gets, and I didn't seem to miss much as the market was consolidating during that time.

I actually started trading on the LEH barf last night, and didn't catch my rhythm until about 9pm, as I was early on a few initial entries and (again) found myself down early. Yet as has often been the case lately, I worked through the initial bumps and finally caught some rhythm.

I'm admittedly struggling with size and holding times though on solid entries given how thin the market has been overnight, and have opted for very modest sizes and holding times, which may have suboptimized my results thus far ... tough to say though, since it's also been limiting the cost of premature foot-in-the-water entries and there have been several of those.

7:21am Wild market. Definitely a defensive trading day thus far. Just noticed news that the SEC is looking to tighten up short-selling rules for equities. Nice to be a futures trader where downticks are meaningless. Should be an interesting day.

11:12am OK, finally have time to make a few notes as I'm slowing it down here. I'm frankly not particularly pleased with my trading as ES has felt like a greased pig all morning. I've purposely sacrificed profit potential at times to very carefully manage risk in this rumor-driven buzz saw, so I've chosen to play more defense than offense on this Monday by keeping sizes extremely light (<30). Definitely shaping up to be one of those "when something looks extreme, wait for the final push" days before going for the wholesale fade. TICK very helpful.

12:10pm ES now in a nice, fluid pace (I again can't stress "pace" enough ... critically important!!) ... only took it all morning! Still, I definitely prefer getting back to cash quickly ... easier on the heart and the Fed could release tomorrow's news early at any given moment to stabilize the market (or Bob Kraft could announce he's buying LEH & AIG ... heck, why not, and he'd still be able to beat the J-E-T-S, Jets, Jets, Jets.)

12:42pm Passed on the 12:15-12:30 whip. Got OK day going for a Monday and while I love my broker (best in the business), I don't want to pay for his kid's college all in one day.

1:57pm ES trading like the DAX in this volatility ... need a keen eye as the DOME is thin as wax paper. Light scalping on the 5-min breakdown.

2:06pm I may back off trading the PM altogether ... very, very thin market making it difficult to manage risk.

4:15pm Wow ... hand me the Dramamine. I'd hate to be the one cleaning the Merc floor and restrooms (could be the same room for some) tonight!! Talk about trying to grab a greased pig amidst pure panic ... Dow -505; S&P -62 VIX at 32 ... can you say "margin calls"?? Sell Mortimer, sell!!! I passed on so many flippin' entries (given the volatility) that I thought about taking -- three in particular (including the 8:05am and 3:30pm longs) -- it wasn't funny and STILL traded 2229 x 2 for +$25K. And frankly, it should have been higher as I'm not pleased with those missed executions. That's the thought that will stick with me all night ... and it's not greed ... simply a very candid view of two moments when I hesitated. Hopefully, that will motivate me tomorrow.

Let's see if they try to put lipstick on this pig tomorrow, when we could see the mother of all day-after-trend days.

Focus will be critical, and it starts now.

Sunday, September 14, 2008

The Weekend Trader (Sunday Edition)

Some random thoughts on this Sunday morning.

Still Searching - I thought I'd check out other traders' blogs this morning, specifically looking for traders posting recaps of their daily thought processes, trading results, or similar info. (A brief experiment of curiosity only as I can't ever let others influence how I trade.) So I Google'd several variations of "S&P Trader Blogs", scrolled through a few search screens, and found zilch. What I did find was a mix of sites containing (1) analysis paralysis, (2) "buy my service and pay me money", and (3) outdated/dead material ... one with the last post from 2005! As I said in yesterday's video ... lots of picks and shovels (some with a stone tied to a stick), but no gold.

So where are all of the real traders? The obvious answer is well-hidden (this site didn't even come up unless you added my name) and purposely unpublicized. The market may be a zero-sum game, but it's still the tiny silent minority who build their chip stacks from the large majority. And it's silence that remains golden. btw, I've received several requests from vendors to add advertising to this blog ... I remain steadfast that I'm not going there. Some don't get it that this is a diary!!

Next time you're at a trading convention, find that quiet unassuming person grinning in the corner and ask to buy him dinner. You may find it the best $50 you ever invested.

Early Writings - At the request of some, I've posted a few direct links to interviews and publishings from my earlier years in the lower left hand corner. Keep in mind some of the very early material reflects my pre-S&P trading days when I traded stocks and ETFs. The S&C feature interview link only contains an excerpt from the article due to copyright rules. As I've mentioned, I purposely remained off the grid for a few years and have shied away from interviews to maintain my privacy, sanity, and -- most importantly -- my humility.

2009 Plans - Some have asked me what my 2009 plans are. Huh?? I don't even know what Monday morning's plans are. I really have no clue as my only focus is on the 2008 race, I still need to catch the French guy splashing water in my face to the right, and time is ticking down.

Short Stacked - Retooling the site this weekend has been fun, but it's back to work on Monday with shovel in hand. I again start in a massive hole and need to scratch, claw, and dig my way out. At least the shovel may be good for one thing! By tomorrow morning, I need to have that sickening pit in my stomach that follows a huge draw. I'm short stacked, the pressure is on, and I can't fall any further behind.

Quote for the Day - "It's not that I'm just smart, I just stay with problems longer." Albert Einstein (1879-1955)

Enjoy the rest of your weekend.

Saturday, September 13, 2008

** VIDEO ** Blog Changes & Self-Sufficiency

Yup, I've changed the blog's appearance a bit. I share some thoughts on why -- as well as perspectives on self-sufficiency -- in today's video.

The Weekend Trader (Blog Under Constr.)

I'm toying with a few site changes this morning. I'll post a full update later today.

Friday, September 12, 2008

Friday Notes - All Good Things ...

10:52am Well, I sensed it was coming (see yesterday afternoon's comments). Being in lockstep with the market never lasts forever and I find myself this morning definitely off my game and unable to match the market's pace as the choppy rhythm of Thursday afternoon has bled into today ... due in part to traders transitioning to the December contract. And unlike other days this week, I'm not expecting to make up much ground on this Friday.

The early morning bounce off Thursday's 15-min support did eventually occur, but was choppy as hell (I was positioning long at the open with fairly good size which is usually a strong % play and got spit out by the meat grinder). I've said before that market "pace" is incredibly important to me -- more so than any other market aspect -- and there's been little of that since noon yesterday. Looking at the charts, you can see both longs and shorts getting frustrated in a pace very similar to July and August where it looks like an interim top or bottom has been put in right before a surge out of nowhere that triggers stops. Longer-term, the climbs certainly feel like salmon swimming upstream.

So, I may simply lick my wounds today (-$10K) and call it a week. -$10K is somewhat of a warning signal for me ... and since I view each day as a singe trade, it's my way of trying to "minimize losers".

So the 13-day streak comes to an end and I get to start a new one on Monday. While I despise Friday draws, I supposed I can draw on several positives this week including a strong week overall and the fact that, even today, my DAX trading was + .

12:03pm Hmmm ... I may have spoken too soon as ES finally finding some pace. Got a couple of good rhythm scalps on over-extensions and let's see if I can at least whittle this draw down.

12:20pm Not trusting this climb much ... VIX on the rise. Maybe we finally put in a right shoulder top??

12:48pm ES Breaking south on volume.

1:05pm Shorting this pullback 44.25-44.75 (December contract) modest size.

1:09pm Took partials and free-riding rest looking for 40.50.

1:24pm Did OK ... best cover 41.75. Resistance now at lower end of last break at 1248 and will reload if we get close.

1:33pm Shorted up to 47.25 ... covered down to 45.75 and free-riding small again.

1:37pm Closed at 44.00 (helluva wholesale fill) and closing down!

Incredible ... now green on the day by just under $1K ... flippin' ridiculous. These occasional days of piss-poor early AM performance have got to stop.

Here's the chart for that last couple of sequences (click to enlarge) ... page #1 in Trading 101.

By the way, I titled today's post before the afternoon session, but thought I'd leave it. Perhaps all good things indeed come to an end ... apparently today wasn't the day. Still shaking my head ... sort of like catching the gut-shot straight on the river.

A good week, but plenty to work on as always.

I'll do a couple of text and video posts over the weekend.

Thursday, September 11, 2008

** VIDEO ** Chatrooms & Trade Sizing

Thought I'd expand a bit on trade management concepts tonight as a follow-up to recent comments and today's blog entries.

Thursday Notes - AM Offense; PM Defense

11:25am After dreadfully suboptimizing early morning Globex trading (profitable, but not nearly enough despite a full night's sleep) -- including botching the DAX's textbook retracement to 15-min resistance (how the hell can my DAX net be negative on that sequence setup???) -- I seem to have again found my mid- to late-morning rhythm. And despite a cruel ES stop-triggering 11:04 spike into its own 15-min resistance -- which I managed around pretty well after learning my lesson with the DAX! -- the results have been OK.

11:34am ES going for a possible short squeeze here ... shorts may need to be careful over the coming sessions as shorting has been way too easy on pullbacks lately. My last cover off the 15-min resistance short was 1223 ... ES now trading at 1230!

I'll be frank here ... the minute trading seems too easy, watch out ... and that's how I feel right now (chunks of the last two weeks in a ridiculous zone with the exception of Tuesday's early struggles. Even when execution has been sub-par, the reads have been there). HUGE WARNING SIGNAL. And for that reason, I may back off the afternoon trading altogether unless there's some setup that's damn close to a royal straight flush.

Planning on taking a long lunch today.

11:52am Shorts getting squeezed for lunch ... ES at 1233 and going for Globex high. Triple checking to make sure I'm not short. Could see 60-min resistance here but personally passing and will reevaluate conditions after lunch. Naz outperforming ES ... interesting and maybe another reason to be cautious with shorts. 3LB has also been long since the turn off 1223.

12:34pm 60-min resistance holding for now. Did trade a couple of small scalps, but watching most of this. Heading to lunch.

1:56pm Back from lunch ... doesn't look like I missed much aside from chop. Dow +0.41 S&P +0.00. All intraday ES timeframes and VIX on the fence. Teeny volume bars last few hours. Will it be a quiet PM??

2:11pm Lots of little spurts on no volume. Got some of that 2pm pop long, but keeping PM sizes very light. VIX suggests up but volume pathetic. You can see shorts getting in some trouble trying to time a turn on the 1-min chart ... not going to make that mistake.

2:25pm What's interesting is I'm biased long for the moment but not really trading it much ... more just staying out of short trouble. Not real good at trading afternoons anyway. Will only consider shorting a spike or clear turn from here. This is where the blog is definitely helping my trading as I think out loud about what I'm seeing.

2:58pm Not in sync with late day rhythms here ... doing light "keep head in the game" scalping yet slightly net negative. BUT, only trading teeny sizes (5-10 contracts vs. 30-60 earlier today) and retaining most of the morning gains. Tricky rhythms continue on almost no volume.

3:14pm Getting a few paper cuts ... but looking back at recent responses to comments, my win/loss today is good illustration ... likely only around 50% (my guess 80%+ in the AM; 20% PM ... feel only) but the size difference on the winners has been significant as I've been barely trading any size at all this afternoon. Thus, I've held on to most of the AM gains. Many years ago, I'd have given it all back.

Market definitely frustrated PM shorts. Nasty turn sequence with few solid short triggers.

4:00pm Late Lehman Brothers buyout rumors as ES runs 20 points into the close ... more frustration for PM shorts.

Intriguing day recap ... traded 2 of the 3 sessions "poorly" by my definition (underperformed in Globex session, nice AM on good size, poor PM but on small size) but chip count up another $16K and held onto 95% of AM win. Got a bit sloppy in the PM but managed sizes well. Definitely one of my better days in terms of size management.

If you traded the PM well, congrats. I chose to play defense instead.

Wednesday, September 10, 2008

Wednesday Notes - Solid Performance

3:50am Decided to scramble the brain a bit (old trick from Robin Dayne) to try and step up performance by trading a couple of NQ sequences for the first time in over a year, as well as work out yesterday's "getting going" kinks in the Globex session ... especially in case ES traded back toward Tuesday's rock solid resistance overnight. And lo and behold the market presented the above action (click charts to enlarge) as Europe's open -- and even its pre-open positioning -- took the DAX and ES right to the brick wall for three subsequent smackdowns.

Caught the DAX opening short and got a good chunk of its drop, although I purposely had better size and holding time on ES and caught a few of its convulsions. Toughest thing frankly was trading it on no sleep (haven't been to bed yet) ... but the read, execution, and conviction -- the "c" word has been missing as of late -- were all there and got the "day" off on a better foot.

Heading for a nap now.

6:57am Two hour nap ... which means I'll be toast by 2pm. As I look at the charts -- and while it was good to be around for the Globex session (which falls into the "90% of success is often just simply showing up" and "you have to be willing to do what others won't do" categories) -- I'm a bit concerned about the predictability of the normal session as ES has had no less than four solid short approaches to the 1240 area with the expected smackdowns overnight. Usually, such overnight action lessens the probability of similar action in the normal session ... although it can of course still happen if the resistance and underlying trend is strong enough and so I'll trust it this morning until broken.

10:42am ES indeed provided another opportunity for those sleeping through the night as we're in classic morning-after-trend mode. Ironically, the Globex pace seemed easier to trade, but I did catch a piece of the 15-min resistance short. Still have to work on that 9:30-9:45 crispness though. On sidelines here waiting for the dealer to deal the next quality hand. Long-term, seems down is the way to go, but short-term a coin flip.

11:48am Did some bottom fishing on the 11:30am price vs. TICK divergence, although the oversold snapback profits compensated for some foot-in-the-water long testing stops. Slowing down here and lack of sleep catching up with me. Nice extreme scalping market ... textbook day-after-trend action with strong volatility. Noticing I'm not as "early" as I was yesterday on fade entries ... critical in this market and likely reflects my conviction of the expected market pace.

ES on the fence heading into the lunch hour. Little interest here.

I mentioned earlier I traded NQ to scramble the brain a bit. Just seemed I needed to trade another market to clear my head a bit and think it helped. Netted a whopping $25 (that's dollars) ... but the task served its purpose.

12:48pm No trades. Been looking for an extreme to fade, but tight range for the most part.

1:17pm Teeny liquidity-providing $0.75 scalp on tiny range break. Just don't see anything though and not interested in playing ping pong in a phone booth.

1:39pm Taking this range break attempt long. Long from 34.75, took 1 already, and will add on pullback if we get it. Free-riding rest. VIX poised to pop ES.

1:43pm Added 34.75. This can pop toward 40 if shorts get scampering. Stop at 32.00 (about where 1-min 3LB would turn down).

1:47pm Scratched 33.00/33.25 for loss; Didn't move quickly enough. May reload if it breaks last high, but that attempt was pathetic.

1:51pm Good decision to scratch Don. Nice read. Will only take a break of 36.00 long now.

1:58pm Nibbling on scalp short now 32.75 (If it ain't going up ............) Think we have stuck longs on that last pop. Small size though and in income preservation mode for the PM.

2:02pm Flat; best cover 31.00. Let's see which way they take this now ... 5 min trend flat as a pancake ... NOT fertile conditions and a total coin flip. Seem to be getting second wind now (me ... not the market), but don't think it will last. Need to see more cards now. Don't guess Don!

2:13pm Long from 35.50 & 36.00. Took 1 pt and free-riding rest Should see approach to 40 now.

2:15pm Pared 38.00; Sitting at 39.75 & 40.75 on rest.

2:16pm 39.75 hit. Nice. Keeping PM sizes modest. Not sure how I'm still on my game ... been a looooong day. Don't question it Don; just react.

2:18pm 40.75 hit. Sweeeeet. That may be it unless we get a short-covering capitulation spike to short. Resistance in mid 40s, but won't touch short unless it spikes toward 1250. Nice profits in hand today and not handing over my chips to anyone.

2:25pm Focus fading big-time now ... bordering on exhaustion. Who says trading isn't a sport?? Where's the relief pitcher?? Just don't bring in Papelbon. Getting some water.

2:36pm Resistance zone here, but mind not clear enough to trade it ... reflexes poor ... watching only. 1236-1244 clear range for now. How about a Globex-type 15 point spike to short???

2:54pm Shorted breakdown of 41 for a point.

2:58pm Long off 37-38 for a point.

3:02pm Clearing hitting diminishing returns on my trades. Also very tentative. Where's my blankie?

3:23pm I'm officially toast now.

A solid $27K net.

111 days to go. I might just make it.

Someone please hand me a towel.

Tuesday, September 9, 2008

Tuesday Notes - Dreadful Start; Positive Close

10:19am ES was a tough read this A.M. as despite the strong net climb yesterday, today wasn't a clear "day after trend" day since ES essentially traded net flat yesterday. Still not in rhythm this week and liquidity-providing trades are clearly unprofitable for the morning (-$11K). On top of that, I've had connection speed issues for the first time in about a year. Sooooo, the early part of the week is now net negative and I now get to trade a 3 1/2 day work week. Joy.

These recent and surprising early morning trading problems are starting to piss the heck out of me since for years, it's been my strongest performance time and I can't put my finger on why I'm hesitating in this "be quick or be dead " market pace.

Will chalk the day up to a draw and simply focus on executing with small sizes going forward. Tightening up the focus and bootstraps.

10:44am OK, got a point on a nice 5-min pullback ... 15 teeny contracts. Good read and execution. P&L completely immaterial now. Day's goal is to get back in rhythm and restore some confidence. Call it mini EESM mode until I get it back.

10:51 Two in a row, this time with 30 contracts buying the TICK extreme.

10:54 Three. Maybe market (or me) finding its footing & rhythm after Sunday's "throw a wrench into last weeks smooth-running BMW engine" news and Monday's bogus market bounce. That's it Don, get mad. Get the blood flowing.

11:00am TICK can't sustain + readings. Monday' pathetic uptrend broken & 5 min in interim downtrend for first time this week. Looking to short any strong retracement and step up size slightly. Want anything near 1255; will start scaling small sizes on approach.

11:14am Four (shorted minor pullback; out on extension)

11:17am Five (bought extreme TICK; out on snapback) Small sizes still.

11:45am Six, seven, eight ... scalped against deeper pullback toward 55 and took sure profits.

12:00pm Wowzer ... wiped out the entire morning draw ... that's frankly hard to believe given the atrocious start. No clue why my mid-to-late morning trading is now better than my open. Interesting looking back at the early morning chart, it was erratic, yet tradable, but like Monday, I was still early suffering from early-entryitis and couldn't get in step. Just need to get my head out of my a$$ I guess.

1:05pm No trades.

1:20pm One teeny liquidity-providing trade for $0.50. Not planning on making any others unless its Kings or Aces. VIX and sub-1260 ES suggests more room on downside though.

1:30pm Purdy ... nailed the pullback to 50.25 ... covers 49.50 to 48.50. If we lose low-of-day, look out. Might get the barf some of us were looking for yesterday (the one I stopped on the final lots around 2pm).

1:34pm Shorted 1248 ... VIX says ES going down. Keeping PM sizes small. Best cover 46.50 and trying yesterday's free-ride again for a low-of-day break.

1:44pm Added high 47s. VIX looking to pop. May need to wait for 2pm volume. Who the heck would buy this market??? Charts looking sick. Need some ACME dynamite for the Coyote.

1:48pm Kaboom ... got 42.50 on some ... sitting at 41.25 for final. Still keeping sizes light ... I just want to stay in rhythm. Gotta love it though when you can't see your average entry price on the DOME.

1:59pm Practicing some patience on a single ES contract ... still holding out for 41.25. More principle than anything. Who says you can't revenge trade??? (Overrated trading myth # 2879 ... more later as we define "revenge".)

2:05pm Be vewwy, vewwy qwwiet.

2:08pm Missed it by two ticks. Good example to recent questions on use of stops -- including trailing stops ... as in it's only one contract! Stop is largely irrelevant to me ... size matters.

2:12pm Market such a tease, came within one tick. Took it out at 43 after it didn't break further. Learned from yesterday's 2pm lesson.

2:17pm Too cruel ... now she blows :-). That was a nasty tease and fake-out. Still, a good read and sequence overall ... was having fun more than anything on that last nugget. Still think we'll get the drop.

Slowing down now ... ES on the fence and clear as mud down here ... overextended short-term but bounce fakes frustrating many dip buyers.

3:34pm Been watching most of this to see if we get a closing trend to set up a truer morning-after-trend open. Couple of small ++ scalps to keep my head in the game but not going to bookend the day with poor sessions. Tomorrow's another day.

4:00pm Cowabunga ... mini-capitulation with volume into the close. Huge futures activity down here.

OK ... Helluva personal intraday $17K turnaround to +$6K. (For newer readers, all $$ quoted on this blog are net of transaction costs ... actual gross gain is higher.) Never thought I'd be so pleased with a such a pittance. Early morning grades: Reads C Executions D-; Rest of day grades: Reads A+ Executions A+ with a bonus for not trying to get cute buying late dips.

Hopefully back in rhythm for the only day that matters ... tomorrow.

Looking forward to it.

Sunday, September 7, 2008

Monday Notes - Less Than Peak Performance

11:32pm (Sunday Night) Wow. As I write this, ES is up 37 points from Friday's close and hammering swing traders shorting the market at Friday's close worse than those with Tom Brady and the Patriots on their fantasy teams this year (after what looks like a season ending knee injury to Tom).

And while there are times I wonder if multi-day swing trading would result in less stress and fit into my toolbox as a supplemental strategy, tonight's action reinforces my personal preference to never hold a position overnight to limit exposure to potential catastrophic overnight events when the market isn't open. In this case of course it was the federal bailout of Freddie Mac and Fannie Mae announced Sunday morning.

Ironically, I was out most of today celebrating my 23rd wedding anniversary with my wife, was unaware of the news, and was thinking during the day about establishing a modest short position when Globex opened earlier tonight should the market open around Friday's closing 60-min resistance. When I checked to see how trades were lining up around 5:45pm today just before Globex opened for trading, imagine my surprise when I saw bids being posted in the 1260s!

So again, the game plan changes. Monday should be interesting and it won't surprise me if I don't trade much at all until the dust settles. The smooth-running natural market rhythms of Thursday and Friday have clearly been disturbed, and it may take the market a while to regain its footing and find its new rhythm. Perhaps much like the Patriots' next 15 games.

10:47am Grrr ... I have to pay more attention to my own blog (see Friday's comment about not hesitating at the open). Again, I should have been more aggressive in fading the first post-open move up AND adding on the 1 minute turn south on an unsustainable TICK ++ reading. I saw it and read it right, but it was tough being too aggressive right out of the shoot on a Monday. No excuse though ... just like being dealt Kings on the first hand of the game and slow playing them!

11:11am Jittery and rumor-driven market. UAL "files/didn't file/thought about it a few years ago" bankruptcy rumors helping whip ES around. 15 point plunge and recovery. Reminds me of many years ago when a former vacuum cleaner salesman turned analyst came out and gave a price target on an Internet stock ... and forgot to take into consideration the the stock had previously split (my best trade ever). At this rate, ES could bounce around when Tom Brady's MRI results are revealed! Like the Pats on Sunday ... looking for my trading defense to now rule the day and expecting a low scoring game. My immediate goal is to have both knees in tact for tomorrow as I see a lot of traders buckled over. Definitely have to stay out of the woulda-shoulda business big-time today Don. Yea, and if Tom had just stepped to his right.

11:37am Been trusting the 15-min uptrend and trading small sizes with that bias despite the chop, but the first high % bounce already occurred on the UAL fake-out and I don't trust another test without a clear 1-min turn. A few more milliseconds on that 11:00am rumor drop & a pause would have been sweet though. Get over it Don ... move on.

11:55am NQ -25 pts ... not good for stuck longs.

12:02pm 3ES 3LB 1-min turns up; 15-min holding; Not trusting longs a whole lot though given NQ tank and VIX turning north. If ES loses 1250, look out.

12:07pm 1-min 3LB turns down; shorted 51.75 small size ... this should plummet.

12:11pm Covering on the drop ... sitting at 46.25 on final ... still looking for a final Wile E Coyote drop.

12:13pm Took 47.50 on final on TICK barf. Finally finding "some" rhythm. Then again, even Matt Cassell can throw "one" touchdown. Still not at my sharpest though.

12:44pm Providing some tight-range liquidity but still not adapting well to the larger swings as I should ... initial scalp sequence entries always 0.50-0.75 too soon and trading not feeling natural. Intraday chip count check +$6K but working way too hard.

12:59pm 1260 seems again pivotal.

1:05pm Short biased against the 1260 level and will use that as stop on any shorts.

1:14pm Good read and sequence but backing away big-time and going into income preservation mode. Today's win thus far as ugly as the Pats/Chiefs game. Some good decisions, some poor decisions (including inaction). Good outweighing the bad, but the bad providing huge warning signals performancewise. Need to get my #$%& together.

Here's what I was looking at on that 1260 biased short sequence. Caught some, but not all of it.

1:25pm Market somewhat on the fence now although 1260 still looks good as short pivot, 3LB still short, and VIX trying to push back up. Long-term long button taped over for now.

1:54pm Shorting the next pullback.

1:56pm Short 50.50, target new intraday low with VIX on the rise.

1:59pm Free-riding now with partial profit taken and stop at entry.

2:04pm Very sloppy on final cover 53+. Best cover 48.25 but gave some back on final. Re-read your last post Don ... "stop at entry". Small contract size, but doesn't matter. Again, sloppy.

2:08pm That's a wrap. Not happy with performance at all. +$9K chip count meaningless ... A on reads; C on execution and crispness.

P.S. Thanks to all providing input on this weekend's beta video blog ... all feedback was very positive and I'll definitely do more ... probably every weekend along with some occasional weekday evening stuff. Maybe next time, I'll even shave.

Saturday, September 6, 2008

** VIDEO ** The Weekend Trader Beta Video

OK, call me crazy but I'm going a bit high tech and have dusted off the old webcam to personalize this blog a bit more. Take a look and let me know what you think.

I start this weekend's "beta" edition by briefly discussing The Psychology of Trading and The Tao of Poker books and their impacts on my trading.

Also, you may find an interesting exchange in the comments section of today's earlier post. (An excellent question addressing my tendency to not focus on statistics and my response.)

The Weekend Trader (Saturday Edition)

I did get some decent sleep last night, although as my body is still slightly aligned with Eurex hours, I find my self awake earlier than I'd like this morning. So it's time to post a few thoughts triggered by this week.

Blog Perspectives - I do continue to peek at the blog stats every now and then to get a feel for whether there's sustained interest in my constant babbling, and if data means anything, the interest level continues to grow at a rate similar to Friday's PM ES climb -- and merely from word of mouth which is how I'm going to keep this. If you've recently chosen to look over my shoulder in this manner, I strongly encourage you to check out my July 25 post, which addresses why I choose to narrate to actual dollar results, especially since doing so goes against the grain of what I've done in other forums and has seldom been done on the web.

Over the past decade, I've looked for ways to break new ground in this industry, whether it be developing trader teaching simulation tools, filming my trading live unedited for multiple days, or simply posting candid commentary in daily or monthly industry publications ... some of which made the editors apprehensive and for which I had to fight to get published without edits.

Yet those are past lives. This effort is simply another attempt to further strengthen and perhaps bond a group of interested traders where I (and you) can share anything and everything at any moment ... with the exception that my trading focus is dedicated 100% to just that -- trading -- during the day.

Comments remain highly welcome and encouraged.

Integrity & Accountability - At this end, I've discovered that the blog helps push me and keep me accountable to someone other than myself ... for we can easily deceive ourselves (been there). And speaking of accountability, a reader recently asked me if I'd be willing to have this year's narrated results validated by an independent party. This was my response:

No problem on verification. My books have always been open to my past publishers, and once the race is over and the books closed on 12/31, we’ll find the best way to make that happen. Industry and broker integrity references will also never be a problem which I can email upon request.

In the meantime, I HAVE to keep believing every day that the fund is down substantially and trade accordingly -- else all is for naught -- and won’t personally view the balance again until 12/31 [see the July 4 “
Cornerstone” post]. At that point, we'll all find out whether the tree is a Chinese Bamboo or Elm.

Simply put, I feel strongly this business should be 100% about integrity and accountability, and that those with a public voice -- even with a personal trading diary such as this -- should carry a much higher standard than others. Anyone can hide in a chatroom or blog behind a fictitious name and share only partial -- or even worse -- false information. I've seen those perils firsthand -- including highly destructive battles of egos as people who think they can read a chart or two attempt to self-promote themselves to "guru" status -- and the damage they've inflicted on thousands of traders has been unfortunate and distasteful. There's of course some good stuff out there, but it remains in the tiny minority.

As I said when I started this new journey, I'm not looking to sell anything or try to elevate myself to any status other than simply one who is aiming for personal peak performance. Ultimately, I will some day be fully accountable for my actions when life's journey is over. Talk about the good, bad, and ugly! Then, there will be nowhere to run, and no chatroom nickname to hide behind.

I've made more than my share of mistakes in this life and will continue to. Even in this business, I make at least one or two poor decisions every day and did so on Friday. One of my greatest pleasures is when a former student would say to me "I didn't realize I could make so many mistakes and still do well." Such is the danger where "chatroom speak" makes people believe no one has a loss, and that every trade is appropriate for every participant.

Maybe we need to change the overused "Make your winners run and cut your losses" to "Maximize the good, minimize the bad, and continually forgive yourself."

To err is human. In a business where results are based on probability, it's also a requirement.

Enjoy the weekend.

Friday, September 5, 2008

The Weekend Trader (Early Edition)

First things first to complete today's earlier post. After taking that midday break, I did nibble on a couple of afternoon short attempts looking for turns south, yet scratched/stopped on them which slid today's final chip gain to +$25K. I was actually surprised that that market didn't do more of a P.M. about-face after the initial squeeze and figuring traders were unlikely to hold longs over the weekend, yet then again we were indeed stretched on the hourly charts, and the market still closed in an hourly downtrend despite the oversold bounce.

A few reflections on the last couple of days, and I don't have to reach very far to find a few things I didn't like about my trading. First, twice early today I passed on two-point gains in hand looking for larger reversals which turned into scratches and re-entries. I also -- and this is incredibly rare for me -- didn't even pare down as the trades moved to 2 point profit potential. I suppose those were more than made up for my nailing a couple of the ultimate solid moves, but it reminded me that my optimal objective is 1-2 point moves with decent size. And while conditions over the last two days let me get away with it, I'll definitely need to tighten that up as the markets begin to consolidate over the next few days.

Another thing I didn't like was my initial reluctance to trade the first move of the day, as I seemed to hesitate despite reading the market open very well both days. I'll need to nip that hesitation in the bud going forward.

And I'm well aware that the weekend interruption will break me out of this three-day "zone" I've been in. In fact, the teeny afternoon giveback may have been just what the doctor ordered to remind me that trading never remains easy for long. My comment earlier today about "almost laughing" should have been a HUGE warning signal. Fortunately, I scaled my size back drastically on the afternoon attempts which allowed me to maintain the vast majority of the morning gains.

Yet there's no doubt I was in the zone. Market reads, entries, exits, and size management were all aligned nicely from Wednesday through Friday, and it was quite a dance. As I think back now, the eerie feeling reminds me of those times when you catch yourself not remembering making the last few turns on your drive home ... i.e. on complete auto pilot and frankly scary. That's truly how I feel right now as the last few days are a complete blur in my mind.

I also didn't sleep very well last night ... like a kid on Christmas eve ... as I kept playing possible morning scenarios over and over again in my mind. I think I got two 90-minute naps, but that was it. Maybe sleep indeed is overrated ... at least for one night.

And yet it was just three days out of roughly 250 trading days a year ... or a tiny 1.2% sample size. Irrelevant (except for aggregation with all the other days) in the scheme of things.

My wife will tell you my memory is terrible when it comes to certain things. That's not a bad attribute for a trader.

I'll post more thoughts over the weekend.