Friday Notes - The Elephant in the Room

4:00pm OK, first things first in case you missed my Thursday PM comment. Despite yesterday's post about sometimes needing to fold a strong pair, I didn't fold A-Q on an all-in bet at last night's final table, and even though I read it right and had my opponent crushed (he had A-10), lost the tourney when a 10 hit on the flop. So the night ended with me going out in 7th, and temporarily losing the grip on the #1 seed for the quarter.

Now, fast forward to today where I held what I also believed was a strong hand (shorting the early approach to 850 for one last short sequence) when the market rocketed north without stopping for a breath. Yet once again, I was able to overcome the early deficit -- this time a five figure initial chip loss as I was heavy and the market provided little opportunity to nimbly scale out -- by nailing the first subsequent pullback along with a similar afternoon sequence to again end the day positive. See chart; Click to enlarge.

All I can say about the morning is that was one helluva thrust that caught a lot of shorts -- including me -- which left us with two clear choices: (1) cower and whimper about how unfair life is, or (2) cash the tuition investment in quickly knowing that the harder the unexpected move, the higher the probability that there's a ton of traders needing to buy any initial pullback which should drive the price back up. btw, I've tried cowering ... it doesn't work.

And by shortly after noon, I was back in the black before trading lightly in the afternoon to end the week with a chip gain of just under +$28K. And yes, I think it's safe to begin talking about weekly gains now that we're five weeks into the 2009 journey. Daily math still means little though except in aggregation.

Which brings me to the "Elephant in the Room" that I've tried extremely hard not to dwell on ... although I've referenced it as of late. And that's the fact that there seems to be another Bamboo growing this year, which while it won't likely be nearly as tall as 2008's as I try to have a life this year, seems to be emerging from the ground with a thicker trunk. And that "trunk" now symbolizes 29 consecutive days of gross chip gains (I double-checked my records and had actually miscounted earlier), with only two in the red after commissions by a combined -$600. The streak is by far the longest of my career.

Even scarier, since the very day I locked up 2008 and set the earnings trailing stop (after a modest draw), daily chip gains have outpaced losses by a "sick" 140 to 2 ratio.

As I've mentioned in recent posts, I normally could care less about these sorts of things -- and to a large extent I still do as the bottom line remains the only number I care about. Yet something is going on here that is worth documenting in this personal diary as I've made a few changes over the last few months that may be having a greater impact than I first thought.

Think about the blog over last few months. What's different?

Well, first, I started the color-coded scorecard concept in the left hand margin to begin the year. And since then, I've not had a poor late afternoon bonehead sequence. Coincidence? Second, I've signifcantly reduced Europe and overnight U.S. trading and am sleeping more normal hours. Third, I've taken a great deal of the 2008 "race" pressure off myself, although the feeling is beginning to stir again as I'm stepping up sizes slightly and finally got around to setting a bona fide target for 2009. Fourth, and this isn't necessarily a positive, my trading volumes are down about 15%-20% from last year.

As was the case last year, I never expected this. Never. Hell, I was taking a "break" in January. As I mentioned in my '08 stats, I normally trade at a 78% daily success rate. And my 2008 daily win/loss ratio ended at 4-1. Not virtually 100% and 70 to 1.

Now of course this is only over a relatively short period of time and may look completely different when the full 2009 stats are reviewed at year-end. In fact I expect the final ratios to look very similar to last year's when all is said and done. And the bottom line again is trailing last year's record year. Yet the data tells me I now have a major decision to make: Do I step up size now that my head seems more into trading now than on January 1, or do I simply continue as is with no tweaks??

I don't have an answer ... yet.

All I know is there's a large gray animal in my office that I may not be able to ignore for much longer.

And oh yes, Monday begins by believing this week, and today in particular, was a terrible disaster. It will be a rough weekend as I prepare to heal.

I'll check and respond to comments tonight and post again Saturday morning before heading to Boston Saturday afternoon and Sunday for a weekend getaway. So keep the comments coming and I'll post and respond as I can.