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.


Charles A Pennison said...

"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"

One data set that I have collected for the ESU08 contract since 5/27/08 is the difference between Yesterday's Close and Today's close for the 0930 ET to 1600 ET timeframe. Ten times since 5/27/08, the difference was greater than (-20). Nine times of those ten, the next day's close was higher than the previous day. On the one time that the market did not close higher, the difference was (-38), and the next day's close was lower by 3.75 points.


Don Miller said...

Hi Charles.

Interesting statistic ... thanks. Certainly goes to show no market moves in one direction forever, and the more extreme the initial move, the stronger and more sustaining the ultimate temporary retracement toward the trend mean.

Looking back, Thurs and Fri were days where traders looking for the trend turn -- on both the down and up moves -- got hurt. Like many, I was looking for a stronger bounce late Thurs and some stronger selling late Fri ... both of which were early and wrong given the extreme conditions.

I always find it interesting how such emotions form the basis for the objective charts and statistics that measure thge collective actions of traders.

Thanks for sharing the info.