Friday, February 13, 2009

Friday Notes - Small Wins

6:00pm Well, while this week will go down as a very rare -$17K chip loss due to Tuesday's brain malfunction, I seemed to have steadied the ship somewhat by avoiding the beginning of a potential downward spiral. And as is often said in sports, if you know you've lost the game at halftime, at least try to win the next quarter or two, and that's essentially how the week ended as I held my own to recover more than half of the brain cramp by week's end. Yea, it shouldn't have happened, but it did and there's certainly no sense in stewing as the season has still just begun.

In terms of today's action, I found it a bit "chippy" in terms of market pace and opportunity, with ES doing its best to frustrate early pullback buyers with the old shake-and-bake (see attached chart; click to enlarge), which resulted in some scratches and re-entries at this end and limited the day's P&L to a very modest gain. I did pick up a piece of the attached pullback, along with a similar entry during the early PM session, but wasn't too interested in much else ... and apparently not too many others were either.

Nevertheless, all eyes remain on the road ahead as I plan to follow through on the sizing adjustments I referenced yesterday.

So a short post today to close the week, and I'll follow up with more thoughts as usual over the weekend. I'll also likely post a video.


RexVulgaris said...

I missed ytds blog

Delighted that you are planning to attack the size issue.

Its the last and hardest hurdle and exactly where I am at.

Will be watching with great interest your approach and would welcome the ongoing dialogue

Has your decison been tainted by you BAD day this week> ie haunted at all by ' how bad could it have been with real size on?'

It's all between the ears


Unknown said...


I've only been at this for a little over a year now. I managed in my first year to eek out a 3% gain (mostly by luck). However, ever since then it has been a series of paper cuts over and over again. The main reason for the paper cuts is my stops keep getting hit only for the market to go in my direction. Starting next week I plan to increase my stops by 10 points (I trade the DIA for now until a feel good enough to trade the YM and eventually the ES) since that seems to be part of my problem.

The other problem is the mental aspect. It seems that when my stops are hit, but I was right all along, instead of buying back in I sit there like a deer in the headlights.

Have you ever experienced this? If so, how did you overcome it?



Get In Get Out said...


I agree the morning open was extremely choppy. As a new ES trader I am still trying to fine tune my trading strategy. I wanted to ask you according to the chart you posted. What you saw on the chart that made you go long at the 828 level where you circled the 826 dip area on the chart as a fake out for your long position. Wanted to know your thought process on going long at that specific time & if it was due to the overnight high of 840, that on opening you thought the chart had to come within 1 or 2 points of the overnight high, or that the opening was not trending but choppy and after a choppy drop from 834 to 826 you decided to go long from the choppiness? Sorry for the detailed question, just trying to learn... Have a great weekend Don

nursebee said...

This week your gif chart suggests that trading more contracts yields less returns. Is this your general pattern and if so does it make sense to go larger as you have mentioned this week?

steve said...

I'm still trying to make sense out of the action at the close, and after the close. We got a preview at 3pm but there was a sell off in ES after 16:00 the retail side may not notice.

Don Miller said...

Rex -

It may have been tainted, but I've got the weekend to fine-tune the decision. And yes, it is indeed all between the ears as Tuesday's amateur hour (for me) showed.

apprazzr -

I've never actually had a problem pulling the trigger. If anything, I've undoubtedly overtraded at times.


I typically fade the first move on the day after a strong trend -- preferably with the trend on a pullback, so I was definitely looking long and recall scratching and re-entering a few times.

Joe -

Sometimes, but not always ... meaning that sometimes I just scalp like hell to try to re-establish some rhythm which drives up volume on poor days.

Just got back from a long night poker game (it's 2am here) so will post more on Saturday.


Frankie Gamwell said...


you mention in many posts about many of your trades you 'provide liquidity' or essentially serve as a market maker. i'm not sure exactly how these trades differ from your 'speculative positions'. do you make commissions on these trades and/or bank the difference between the bid/ask? is there a post that details this process? i'm not familiar with how being an exchange member differs from trading without a seat.


Don Miller said...

Hi Frankie -

Essentially, while almost all of my trades help provide liquidity to some degree ... meaning selling on or above the ask or buying at or below the bid to both establish and exit positions (being "hit" by other traders vs. "hitting" the retail market price), speculative trades tend to be based on a chart pattern that I think has greater potential for movement given an expected direction in price.

As such, I'm more apt to enter at the retail market price to establish the position based on the expected movement. In other words, I'm not looking to simply gain the spread and/or catch a few price ticks.

It has no bearing on being an exchange member, aside from the lower commissions ... it merely references whether I'm simply scalping for ticks by repeatedly buying the bid and selling the ask with a few ticks or whether I'm "speculating" on a movement in the market.

Hope that helps.


Severino said...

Hello Don,

I know when in a series you always have some on the offer if long and visa versa. Do you ladder as well when you are providing liquidity?

What would you say your win rate is on the liquidity trades, 90%?

Thanks as always,


Don Miller said...

driven -

I don't measure based on points ... never have and never will. I only care about bottom line.

In my view, a good trader is defined as one who meets his/her profit objectives.

Severino -

No idea on the trade win rate as I don't track it and it's irrelevant to me at this point in my career. I scale in and out almost 100% of the time, regardless of trade style.

Anything less is assuming one times entries perfectly in a highly imperfect world and would lead to early entry into the funny farm in my view.

As always, one person's opinion only as there's no right answer.