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.


Anonymous said...

Don - Glad to hear you did well yesterday, considering the abnormal circumstances.

I think things may get messier this week as a lot of the people that sold options are using the futures to hedge off their delta risk.

Were you on the floor for the crash of 87? If so, how did the action yesterday compare to that or any of the other major news days that you have worked through?


Don Miller said...

Hi Eric -

Actually, I wasn't trading at that time in my life. With respect to yesterday and today, I think it's pretty typical of highly volatile, emotionally charged markets ... it's just a matter of the extent of the emotion behind the moves and resulting price swings.

People are people as reflected in the charts :-).