Tuesday, November 4, 2008

Tuesday Notes - A New Game?

1:47pm Just as we expected, there's a new game in town for the moment in terms of rhythm, pace, and price action. It's admittedly taking my eye some getting used to as the days of minute-by-minute emotional price spikes have subsided for the time being. Yet the VIX continues to provide a strong backdrop in terms of rhythm expectations, and I've done fairly well in seeing it and adapting -- although I need to keep an eye on my sizes which I haven't adjusted much from the past few months which is resulting in some profit suboptimization.

Many of the best patterns and pace came in the Europe session in terms of breaking Monday's logjam to the north, with several tradable pullbacks along the way. I found the U.S. gap up a bit tougher to trade, and as a result, about 1/2 of the day's +$12K chip gain has come from the DAX and FESX.

I again stress to myself and those looking over my shoulder that so long as volatility is subdued, I do not expect the $30K-$50K days of the past few months, simply because my trading style is more suited to volatile markets where trader emotions are at their peak. And while sizes can be adjusted to accomodate the changing winds, I'll be perfectly content with performance of the earlier months of 2008.

I've posted the 3am-6am (U.S. Eastern Time) DAX chart, which I suppose could be entitled "Anatomy of a U.S. Gap", or "While You Were Sleeping. Fortunately, we trade in a 24 by 5 global marketplace where there's no such thing as a "gap up or down". At this end, I was up around 4:30am and traded the patterns OK, although I left more on the table than I would have liked.

2:04pm VIX trying to cross up on the 15-min, and we're also stretched on the 60-min chart, so anything goes heading into the afternoon and there's the possibility this respite was short-lived, but time will tell.

2:19pm That's a bit more like it in terms of my preferred rhythm. Gotta love it when that 15-min VIX crosses to the north. Picked up a few extreme emotional scalps. (If only I could read other poker players as well.) Chip count now approaching +$13K.

Approaching my witching hour in terms of less-than-stellar results (much like my late night poker performance), so going into major gain preservation mode for the rest of the day.

2:29pm 992ish holding as interim support ... scalped a few longs off that. Got some "ping-pong" trade patterns here as short-term trends (1 & 5) are down and long-term trends (30 & 60) are up, so anything other than scalps questionable. Chip count now over $15K, and given the trend conflicts, that may be it for me.

3:00pm Calling it a day. I don't care to flip a coin heading into the last hour. Any run should set up the morning trade.

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