Friday, October 24, 2008

Friday Notes - A Defensive Win

12:19pm I've chosen to play defense much of the morning, and have only traded a paltry 303 x 2 thus far for a $6.5K chip gain -- with about half coming from the DAX. I actually woke up briefly around 3:30am, traded a couple of DAX shorts, and went back to sleep while Europe took ES right now to its locked limit of -60 which absolutely crippled buy-the-Thursday-close longs.

I actually got a very restful sleep last night, versus Wednesday night's toss-and-turn marathon. When I awoke and saw the lock, I decided to play it slow today -- and simply keep moving forward by limiting any trading to high-probability spike fades in this thin market.

Possible 5-min head and shoulders here that might take us down yet again. Nibbling on short.

12:29pm Nice. Got +4.5 on best cover (73.25 to 66.75). Only had 10 on. Not sure I'll trade much for the rest of the day as I'm now in major week chip preservation mode. Day chip count now slightly over $8K.

1:13pm zzzzz. I'm actually glad to see the market not moving. I imagine I'm not alone as recent daily charts are screaming trader exhaustion. 5 min ADX under 9 though on no volume, and we might still get an afternoon push.

1:20pm Here we go ... market trying to break upwards.

1:32pm Well, that didn't last, nibbled on pullback but scratched when no further thrust. Might be a fake and elevator drop to continue the hourly downtrend. Frankly, it will shock me after that if ES closes on its highs.

1:39pm Caught short scalp using the "If it ain't going up" theory.

1:50pm And again (65.50 on pullback to 61.00). Keeping sizes extremely light (5-10 contracts) to balance protecting gains with taking advantage of opportunity. Plus, this market remains as thin as wax paper.

1:55pm And again (65.00 to 62.75). Shorting every pullback and taking it out on the drops. Chip gain up to +11K on only 356 x 2 contracts. Efficient.

2:02pm Trend remains down, but the trade remains very thin. Going back into watch mode.

2:18pm OK, the market is officially chopping and I'm not going to do anything stupid, so that's an official wrap on the day and week.

All in all, pretty decent judgement over the last two days, and the week's daily chip counts end up -1K, +10K, -8K, +45K, +11K for a respectable +57K. Yet there remains plenty of room for improvement, especially when you drill down into Wednesday's box score of sloppiness and frustration. That still doesn't sit well with me, and as long as it doesn't, that's a good thing for my trading. To beat a dead horse, complacency is the killer in this business, whether it sneaks in during a trade, day, week, or month. And the killer must be avoided at all costs.

This leaves one week to go in October, then two short months (especially considering the Holidays) to the finish line which is beginning to come into view. The Q4 bonus tally to the left will be updated to reflect 97% shortly, which depending on where that stands next Friday, could set up the final two months of digging as free-roll on top of free-roll. It also means I may have again underestimated the extent of this year's Bamboo growth, and may have to raise the bar yet again.

But let's not get ahead of ourselves. Five more days of digging and a lot of work remain before we can close the month and head for the final two turns. And there will likely be more earnings landmines to dodge next week.

And so another two days off before the journey continues. This amazing, indescribable, frustrating, wonderful, get-punched-in-the-face, get-back-up, tiring, rejuvenating race of the century.

What's done cannot be undone, and all eyes are on the road ahead.

The dealer returns on Monday, and the chips had better be ready.

I'll post a video later tonight along with the Weekend Trader posts as usual.


YM-Trader said...

Hi Don,
What do you mean by "303 x 2" etc. Must be something about your trading size.

Don Miller said...

Chuck -

# of contracts x round trip (buy + sell or 2 transaction).

So in that example, it would be 303 cumulative contracts, each bought and sold once for 606 transactions.


Steve0617 said...


If I did the math correctly, you're averaging less than three tics per contract gross profit today?

11 000 / (356 * 50) = 0.617977528

It's always interesting for me to see a scalper's numbers and realize that one doesn't HAVE to make multiple points per contract in order to make money trading.


Derek said...

Hi Don -

great week of posts; plenty of struggle within the wins you shared with us. i couldn't seem to get crap going this week and spent an inordinate amount of time fuming about it. onward and upward :-)

thanks, as always, for including us in the journey.

have a great weekend :-D

take care -


Don Miller said...

Hi Steve -

While the math may come out that way, in my view, it doesn't tell the whole story as there are scratch trades, quick stops and re-entries, varying sizes, and DAX trades all included.

So the average to me is a completely irrelevant statistic and doesn't tell much of a story either way.

Having said that, there's no doubt I certainly kept things tight to the vest today.


Don Miller said...

Derek -

You're correct ... onward is the ONLY direction that matters.

I'll talk about that more in the video post later tonight.

Stay well.