Thursday, November 13, 2008

Thursday Notes - Jack Be Nimble ...

2:16pm - 3:10pm (Various posts while not trading) Where do I start? First, I got a good night's sleep [after a bad poker beat last night ... more on that later] and woke up naturally around 5:30am completely forgetting today should be setting up as "morning after trend day". Nevertheless, both the market and I got immediately in decent oscillation mode rhythm, and I started off the day in the plus trading FESX well.

Then the U.S. market picked up where Europe left off and had its own series of textbook oscillations with some beautiful wide price swings. Shorting the first spike up and buying the first spike down -- exiting on the snapbacks -- both worked well. After the first oscillations play out, it's then typically a wait and see mode as all bets are off, and I stayed out of trouble once the ripples stopped.

Fast-forward to lunchtime when I almost made the mistake of leaving my station, but thought we might get a break one way or the other so I hung around with some hunger pangs. And of course just before 1pm, the ES bottom fell out and smashed through its October and multi-year lows. I caught a couple of barf entries, including buying 818.25 -819.50 hard on the pause which turned out to be the trade of the day which I took out into the climb.

Then it got really tricky as after ES had its initial post-panic strong reaction back up, it had minimal action back down before blowing back up north catching a lot of shorts. I definitely gave up some of the earlier profits shorting downtrend retracement moves, but thankfully I realized what was going on, took the stops, and then shorted the next post-short-covering exhaustion spike after the pass back though the 1pm break line and covered on the snapback.

From then, I scaled sizes back drastically and simply faded a few more emotional extremes into about 3:10pm with very modest success at which point I shut down for the day.

The charts clearly show stuck longs on the way down and shorts on the way back up, with both stuck groups getting hurt hard. I can see where one could easily misgauge both, and it took an extremely clear head to be nimble enough to adjust and not be one of the "squeezees". Fortunately at this end, the head stayed clear enough to grow today's chip stack by +$47K. There's no doubt the day-after-trend day continues to be my favorite ... the key of course is executing. As with golf, the weather on the course can be great, but you have to hit the shots.

3:56pm Wowzer. Shorts getting absolutely crucified on the climb. You have to be flexible in this business ... those that aren't won't only not thrive, they'll get slaugtered. Jack be nimble or Jack be dead. You also have to always be aware of multiple timeframes, as look how stretched the attached 120 minute chart was on the early afternoon drop.

And back to the comment about last night's bad beat, I came in 4th in a tournament despite having played my best poker in some time -- but taking a bad beat on the river. Here's how it played out: I had pocket Qs, and the flop came 4-5-9. I successfully trapped the guy holding Ace-9, got him to bet strong (putting me all-in which of course I didn't mind one bit), called him, and then lost to an Ace on the river. The good news was that it cut my night short, allowed me get a "full" six hours sleep (yes, in this business, that's "full"), and allowed me to stay focused much of today.

Got to grab some food now ... seems I missed lunch.


Anonymous said...

Nice job today, Don. You definitely remain an inspiration to my trading.

Well, I had an A on reads today and a D+ on execution. Read the washout (although the move started a little earlier in the day than I expected) and got caught in the mud on getting long the snapback. Made money today but pi$$ed that I left a bundle on the table. I normally love to play snapback rallies. Just missed a good chunk of this one (least I didn't short I guess).

Again, thanks so much for documenting this journey. Your situation is definitely something to aspire to.


E-Mini Player said...

Awesome performance Don, way to go!

Don Miller said...

Hang in there Sean ... if the reads continue to be A's, then execution often follows.

Made some mistakes at this end too ... it's just that the good stuff overcame them.


Rob Hobson said...

Hi Don,

I really happy to have found your blog. Thanks for sharing your trading insights.

I can relate to the post by Sean too as my reads are good but execution is lacking somewhat!
It all comes with time and disciplined work eh!

Could you explain your "morning after the trend day" please?

Thanks Don,

Look forward to your next post.


Don Miller said...

Hi Rob.

Thanks for the comments. I discuss the day (or morning) after trend concept many times throughout the blog, so you might want to use the search feature in the top bar of the blog. The link in last weekend's "index" post may also help.

Essentially, it's expecting oscillations after a large move as market participants digest the prior day (exacerbated by incorrect emotional traders trying to trade day 2 the same as day 1), and often the major trend in play the prior day will provide support for one final exhuastion thrust.