Tuesday, October 7, 2008

Tuesday Notes - Back to Work

2:00pm Well, as much out of step I was with the market in yesterday's debacle, today's been pretty much error free and I'm going to keep it that way by shutting down for the day here with the release of the FOMC minutes.

With respect to going back to work after yesterday, I must say that while I normally have no problems going back to work after a Driver's Ed Video day -- which has been my strength over the years and formed the foundation for this year's cornerstone concept -- I tossed and turned a great deal last night thinking over the day. Fortunately the Sox won and helped my mood a bit, and I'd also like to thank Ronin for his pick-me up comments last night -- that's what this evolving forum is all about as we work to strengthen each other.

So I had the following checklist coming into today:

Reduce size - Check
Don't force anything - Check
Get into EESM mode - Check
End the morning green - Check
End the day green - Check

I said recently the market seldom does the same thing on Day 2, and that certainly held true today where liquidity-providing fades were very high probability and all worked out well.

What did surprise me frankly was that by 2pm, I ended up recovering a whopping 30% of Monday's draw and have now come back almost 70% from my low point on Monday. Even I'm having a hard time believing that.

Thankfully, life is full of tomorrows ... and we have another one, well, tomorrow.

And speaking of tomorrow, a reminder that the PalTalk Lounge will be open for a beta test Wednesday evening at 7pm ET. Virtual drinks are on me.


Anonymous said...

Your Welcome Don. Today was a strange day though... lots of "Phantom" orders..... nothing, then BLAM, size, then nothing,and then BLAM the other way. It was hard to surf these waters. Celebrate your performance today. I ended up a couple hundred after trading 140 X2..... oh well.

See you tommoraw at the lounge.



MK said...

Hi Don,

I am pleased to hear that you are making a strong recovery from Mondays trade. I am curious why you trade differently (EESM mode) when in a draw to your more normal trading. It sounds like you believe that you are at less risk and/or can make more money when in EESM mode, otherwise I can't quite see why you would switch to it when in a draw. Why not trade the one style all the time regardless of in draw or not?

My apologies for not understanding your rationale here.

With all my best,

Don Miller said...

Ronin - Yea, the DOME was thin as wax paper. I "only" traded 740 x 2 which racked up gains quickly in that environment. I think I only had a 60 lot on once.

MK - Good ?. I think there's two aspects. First my psyche and confidence are more important than anything. If I had a choice or losing all my capital of all my confidence, I'd choose the former (OK, not all my capital, but you get the point). So EESM in part is about restoring confidence quickly by signifcantly limiting any further damage and locking in gains.

Second, I think it's also an issue of simply ramping up focus another notch or three by giving it a unique label.

Yet I can't underestimate the confidence factor. For someone trading solely and robotically on charts, metrics, etc and using the same size every time. [not a negative, just different], it might not be an issue for them as they do the same thing day in and day out. Yet judgment and discretion are a significant part of my arsenal especially in varying sizes, and once I feel I'm back on board, I'll get back to business as usual.

Sometimes that might take a week, a day, or even 1/2 a session depending on a number of factors.

Perhaps most importantly, it limits the possibility of additional damage and is a self-imposed penalty of sorts by being sized inappropriately (i.e. when in doubt, get small). And yes, it might very well reduce gains during that time as well, which I fully realize and accept.

The markets will always be here for me to ramp up size, and the key is to get back to "normal" as quickly as possible. What used to take me an extended period of recovery time in the beginning (weeks or more), now typically takes days as witnesed by the July comeback.

I know and accept some will disagree. I just know how I'm wired and how best to restore the confidence at my end.

One of many ways I'm sure.


Anonymous said...


Varying bet sizes, in my opinion is a huge mathematical edge. Similar to a blakjack counter that varies his bet size when the deck is rich... one can say that when you are insync and flowing well you gear up insize and when you are not, you gear down. Works for me. Especially for damage control. Making money, get bigger, losing money get way smaller or cut off.


MK said...

Thanks for the reply Don. I hadn't been thinking about the psychological reasons behind EESM. I guess mainly because I've seen when you go into EESM - you have outstanding results! That led me to believe that perhaps EESM was more profitable for you with your active trading style. I find your ability to bounce back from draws so fast pretty amazing.

Just as an aside...some books I'm reading right now are:
Bounce - Failure, Resiliency, and Confidence To Achieve Your Next Great Success. By Barry J Moltz. This book is really all about failure and suggests some alternate ways of thinking about failure.


The Joy of Living - unlocking the secret of happiness. By Yongey Mingyur Rinpoche. This book is a combination of Buddhism, neuroscience, and quantum physics about directing our minds.

Thanks for sharing your rationale, I appreciate it.

With kind regards,

Don Miller said...

Agree on the vaying bet sizes. Having said that, the downside is of course that days like yesterday do happen where I'm sized heavy and things go awry. It's rare, but sort of like going all in with a full house and getting beat with quads :-).

Anonymous said...


Have that hand b4.. and there ain't nothing you could do about it...

How are the games at Foxwoods anyways? Here in Chicago, we have the new Horshoe opened up in July with an all new poker room, but I have nto yet had the time to go.. ( I generally stay away form the casinos here..). I have played in tournaments in Vegas and loved it and also cash games here in Chicago.. Is there much dead money at Foxwoods or are there the sharks waiting to eat a weekend warrior poker guy like myself?