Monday, November 17, 2008

Monday Notes - "Considering ..."

3:50pm Well, considering that ...

- Today was a Monday (have I mentioned I hate them?); and

- This was one of the choppier sessions in recent memory (with an afternoon 5-min ADX that bottomed around 8!); and

- I got caught fading the ONLY move of the day which didn't immediately turn (the 11:30am - noon run) with size; and

- I went for the post-2pm breakout attempt (which of course didn't last) hard; and

- The only real afternoon breakout didn't occur until after 3:30pm ET; and

- I was at one point down well over -$20K; and

- I never felt particularly focused or alert today ...

I suppose I should be extremely thankful that my draw was only -$6K. In fact, I'm really not sure why it wasn't a helluva lot larger, so I guess I must have done something right ... although I'm having a hard time determining what that was.

I'm also not sure who was lacking rhythm and pace more ... me or the market. And when neither is in good rhythm, that can be the recipe for utter disaster, which I actually sensed starting to happen midday when I got caught chopping wood and the tree landed on me.

Momma said there would be days like this.

Hopefully, the market and/or I will be in better rhythm tomorrow.

Best news of today is that it's over.


Steve0617 said...

Here's a GREAT indicator to consider, straight from Larry Connors. (this is the RSI 4/25 system).

RSI set to a 4 period on close. Set the oversold at 25 and the overbought at 65. Add the indicator to the 1 and 3 minute charts.

Using traditional MA's (5/15/50/200 SMA), price action bouncing off those MA's AND the peaking RSI (for a short) or the bottoming RSI (for a long), it can give you a TERRIFIC entry point decision maker even in choppy markets.

I've been using it for months with NQ and it's amazing how well it works. A true scalp entry. Don't marry the trade as it won't last long but check it out and back test it. You might be very happy with what you see.

Don Miller said...

Thanks Steve ...

I posted your comment as info for other traders. I imagine I'd see a similar light bulb in a different way with what I use, as I don't use RSI and pretty much keep with the same tools day after day.


Anonymous said...

Hi Don:

I feel ya.
The 12 min charts were congested from 12:30 to 2:00..... I got more chopped than liver.... this was the hardest day in months as volume was there but sporadically. Down about $12k.. gonna relax and regroup here. This is not a "woe is me" post. gonna debrief and prepare for tommorrow.


Niraj Prasad said...

Many traders have a draw down limit for the day and after that they quit for the day. You said at one point you were down as much as 20k but ended the day with a much smaller loss. Do you have any such limit? What is your mantra, try to win it back the same day, or you actually cut down on sizes or..I guess what I am asking is how do you ensure your 20k loss does not convert into a god-forbid 40k loss and you actually come out ahead. Usually after a steep intraday loss, for a lot of us the psychology gets whacked/ emotions take over and it becomes harder to dig out of the hole, what is your strategy here. May be you have already addressed this issue in a separate post, in that case I apologize!

Don Miller said...

Hi Niraj -

Good question.

I don't personally use a dollar threshold (up or down) to determine whether to stop trading, although I occasionally use a trailing stop on a strong plus day to manage the afternoon. The only reason I'd ever stop trading for a day is if I felt I wasn't reading the market clearly, felt emotion was taking over, had other non-market priorities, it was getting late in the day, or I was ill.

In the case of Monday, it was really only one of dozens of sequences that caught me ... my misreading of the midday climb. And that's what it was -- a very sloppy misread -- so there was no reason for me to stop trading just because of one misstep.

Keep in mind that I also tend to trade better when I'm down -- or when I "think" I'm down as mentioned in the numerous references to the fictitious draw -- as it ramps my focus up more. So while being down might cause some traders to "press" and dig a deeper hold, it tends to have the exact opposite effect for me at this point in my career.

As I've also mentioned at times in the blog, I place very little importance on a daily amount -- plus or minus -- as I simply view the entire day as a single "trade" (one of 250 in a year), and really only care about the "financial score" for higher timeframes such as monthly, etc. Other than that, I simply try to execute moment by moment based on what I see.

In the end, it may depend on how we're wired individually.

Hope that helps.


Niraj Prasad said...

Thanks Don!!!This was a very thoughtful reply, I appreciate it!!