Friday, October 31, 2008

The Weekend Trader (October Wrap)

Before I begin, I have to stress for myself and those looking over my shoulder that the moment I click post, this all has to be forgotten. I actually wish the blog had a Mission Impossible "this will self-destruct in five seconds" ability. It's history ... and that's all it is. There's a reason I have the "complacency" comment prominently displayed in the top left margin, as that's what prevents the vast majority of traders, poker players, and others -- including me in prior years -- from achieving greatness in terms of sustained equity growth.

I also expect the market's conditions will revert back to more traditional rhythms, which will lessen the opportunity for monster moves and P&L impacts -- especially for those of us who fade emotional moves -- but that of course remains to be seen.


For those new to the charts to the right (click to enlarge), the top one tracks each month's worth of trading. The dots on each segment reflect equity points at the end of each day. The chart purposely shows me "digging to the surface" each month to emphasize that each month stands alone.

The second one provides gross trading gains, draws, expenses, and net profit for each month in the form of chip stacks. You can find a more detailed explanation of each "stack" in my October 4th post.

I really don't know where to begin to describe this month. Yet it's probably safe to say that I'll never see another month like this so long as I live. Never.

It was a career record month in many respects, including my largest single-day draw (before I got used to the "new market"), most number of days > +$20K (nine), and largest total net after expenses of $315K. I had to change the scale of my "digging to the surface" chart yet again. There's also probably a record in there somewhere for the most hours of sleep lost, but I don't track that.

And the truth is, I made a lot of mistakes -- two significant ones come to mind -- and those errors are the only elements of October that I'm going to take with me into November. btw, if you're looking over my shoulder, there can't be stronger evidence that this business and life is about overcoming mistakes. Make a mistake? Get over it and keep moving (yes, I'm shouting). There's a reason we've been given a world of tomorrows. For despite the "pristine" chatroom and advisory subscription hype, profitable traders make plenty of mistakes, and if making that point is the only purpose this blog serves, it will have been worth the effort.

Aside from that, I'm not sure what else to say. All I know is October is officially history, no longer matters, and the new game starts on Monday. The 2008 final table.

Two more months of tunneling to the surface before this year's game ends, and countless opportunities for continual self-improvement. (btw, the self-improvement game will never stop ... even after December 31.)

So we're back to square one with the only chart that matters on the lower right.

My "coach" tells me October was an awful, gut-wrenching, sick-to-my-stomach draw and I need to get back to focused recovery mode. He says I have two days off before I have to get back to work.

I think I'll need a new shovel though ... the one in my hands is so worn it looks like a spoon.

Have a peaceful weekend.


MK said...

Hi Don,

Congratulations on another record month. If I remember correctly, you said SEPT was a career month and you were unlikely to see that again in your career. Now with OCT behind us, you have kept up the pace and stacked career months back to back. The nice thing about all time records, is that they get broken ;) I have confidence you will have many more career months ahead of you as you continue to put in the hard yards to improve. It is inevitable IMHO. Hopefully you can figure out a way to achieve that without the sleep deprivation experiment running in concert with your trading experiment ;)

Have fun at the poker tables this weekend.

With kind regards,

Don Miller said...

Thanks MK.

I suspect the extreme market volatility greatly aided both month's results, especially given how I trade in terms of fading market extremes. And there was a heckuva lot of "extreme".

I guess time will tell.


Anonymous said...

Hi Don,

Great trading, and great blog! I'm really enjoying your blog, and the living lesson you're providing in discipline and focus has been a big inspiration. I bought your Trading the Eminis DVD a few years ago and it's become a cornerstone of my technical methodology. Are you still using basically the same indicators and techniques, or is there a spot on the blog where you've said?

All the best and continued good success,


Don Miller said...

Hi BLE and thanks for the kind feedback.

The technical stuff is much the same, although I've also incorporated the VIX and TICK as a short term scalper and liquidity-providing member of the Merc.

The psychological perspectives certainly remain the same ... only magnified with more years of trading under my belt.

It's probably best to scan the blog to see how I've continued to evolve.

Now if only I could get my poker game under control.

Good to hear from you and we'll see you "around the blog".


Bob said...

Hi Don,

I enjoy reading your blog.
Do you think TICK is a more comprehensive/reliable indicator than advancers/decliners and up/down volume ?


Don Miller said...

Hi Bob.

I don't know as I've never done much work with A/D and Up/Down.

But I use the TICK every day and it has some clear relationships to price trend pullbacks and emotional extremes, so as a wholesale short-term trader, I find it particularly useful.


Bob said...


Is the information on TICK available on a particular website or is it a paid service only ?


Don Miller said...

Hi Bob -

Any decent charting platform should provide a live TICK reading.

In terms of its use, I imagine there's plenty of TICK stuff on the web. You could probably do a search of this site or Brett Steenbarger's site for TICK references to get some of our perspectives.

At my end, I consider TICK retracements to zero as possible trend pullback entries if the price trend is in agreement, and also consider anything over +/- 1K as extreme market emotion which might provide wholesale entry and exit opportunities.

Yet with anything, it's just one of many tools to help provide a barometer for market emotion at any point in time, and I imagine other traders may use it somewhat differently.