Thursday, October 16, 2008

Thursday Notes - This is Now Getting Silly

1:23pm This is now officially getting silly -- the market, the VIX which spiked above 80 (that's eight zero) today, the daily ranges, and one "trying like hell to remain humble" trader's equity curve.

Some day, this market dance will change. Monster trend days followed by monster morning-after-trend oscillations will slow down in frequency and intensity. Some day. In the meantime, we eat off the menu provided.

As is the case with most traders, I tend to trade certain patterns well -- and as everyone who's been following this journey knows by now, it's the morning after a trend day. And as I've also stated -- including in last night's PalTalk lounge -- I tend to trade well after having missed Globex opportunities. Both were the case this morning, and I'm frankly a bit reluctant to log the chip tally thus far which clocked in at +$52K. And given the morning take and my typical el-stinko afternoon performances, I've shut down trading for the day. I'm also tired.

I'm admittedly starting to get concerned about remaining humble right now. Then again, I suppose I only need to look back less than two weeks when I got hammered to the tune of -$94K before I finally figured out the "VIX over 50" market ... and that should keep me humble for the rest of my life. The key that day was survival and simply focusing on getting back to work. And now, for the third time since that happened, the day's "trade" will show a chip gain exceeding $50K.

I recognize the current rhythm is tricky and difficult for many. And while it has been for me at times as well, today's stage was again set for the typical morning-after-trend action, and it worked out well as I bought the first move down, shorted the first move up, bought the late morning range break to the south, bought almost every extreme -1000ish TICK, and shorted a couple of TICK retracements toward zero (when we were downtrending in the early AM) as well as a few extreme +1000 TICKs (when the market turned to its uptrend in the late AM).

I honestly don't know what I've done to deserve the blessings of this year -- especially when so many others are struggling. I spoke with Pat Lafferty at MF Global (my broker and THE best in the business without doubt) a few minutes ago, and we talked a bit about the rough road that many are having. He reminded me that I've paid over a decade of dues, and perhaps that indeed helped fertilize the unseen roots of the Bamboo.

Perhaps I'm not supposed to understand it. All I know is I'm just trying to do the best I can, improve day after day, and give back to the industry by being generous with my thoughts for those that are struggling.

I don't have all the answers and am no guru. Like life, there's no instruction manual.

I'm just trying to figure this out as I go along.

Please note I'll be at the Red Sox game tonight (for the funeral) so I'll post submitted comments later tonight or tomorrow morning.


Anonymous said...

Don - Good work on staying focused with the recent volatility recently.

I took some time off & went to drink wine at wineries & see the leaves change color for a nice long weekend.

I think everyone reading the blog would agree that you deserve all the success you have had recently, especially since you put such a focus on improving your results, even when they are very high. One of the challenges about this business is the fact that effort, hard work & financial success are not linear & at times do not come at the same time.

I find that volunteering & helping others keeps me humble. I usually step that up after a big winning streak as I find I don't get as cocky & money focused then. Thats part of the problem with the trading arena is that its so easy to get thrown off your game when you focus on the wrong things.


Anonymous said...


I'm glad I've found your blog recently. I've used to read all of your daily articles at TM and I was wondering if your methodology has changed since that time. Is there any post in your blog about your methodology or changes that you have implemented since the TM days? Thank you,


Anonymous said...

Good stuff Don! My train ride trading didn't go well this morning. Even though my reads on market direction were correct, the stops were too tight. Since I have limited screen space (laptop), I didn't have the VIX up or might have loosened the stops a bit. Live and learn.

Don Miller said...

Thanks Eric - Good stuff.

Hey Pablo - Welcome to the blog!

Not much has changed, although I do use VIX and TICK a bit to help paint the backdrop. I also scalp counter trend ES extremes as a liquidity providing CME member.

I suppose the major thing that's changed is how I approach the mental part of the business, including how I view my equity curve. [The early July "Cornerstone" post will help you understand that concept.]

Scrolling through the the rest of the blog should give you a pretty good feel for other perspectives from this end.

Oh, and I have a few more gray hairs now at 47 :-).

Hope that helps.

Awais - Hang in there :-).

Derek said...

i don't follow baseball, but it looks like the Red Sox are applying your draw mentality :-)

the crowd had to have been going nuts; not too shabby of a way to end a good trading day

take care -


Steve0617 said...

Wow helluva game! Might be 2004 team all over again!

cal_trader said...

Hey Don,

I was just wondering if you still use the 3-line break much anymore, and if so, where did you find some good material on how to apply it?

Thanks a bunch and I concur with the previous poster who said you deserve this year consider what you put into getting here!


Don Miller said...

Cleon -

Yes, I use the one-minute 3LB and always have it on my screen. Steve Nison talks about them in his book "Beyond Candlesticks", and you can Google the web to find some other stuff on it.

As I mentioned recently, keep in mind I often trade counter trend extremes as I mentioned in my 10/17 video, and as such will trade against the immediate 3LB at times.

3LB can also be irrelevant on chop days such as the morning-after-trend days when the market isn't trending.