Monday, February 16, 2009

** VIDEO ** Keeping a Level Head

Today, I follow up on this weekend's posts and discuss a few excerpts from the book, "When Supertraders Meet Kryptonite" by Art Collins.


George "Winace" Swanson said...

Great video commentary. I love your careful and thought out approach to increasing position size (the approach is great, how it is actually implemented I guess time will tell). A very common error I find amongst traders is the attempted compounding of realized gains. Those that are successful have great results, but eventually it catches up and they give it all back. This is a great downfall of many historically great traders also. The account size almost displays a sense of invulnerability. When working the numbers, on a percentage basis, compiling gains, then experiencing one drawdown (or realized loss for a better term), the loss will always be a greater percentage when comparing apples to apples as the previous gain. The use of a consistent lot size, or consistent buying power level (depending on implemented technique), in the long run proves to be a much better approach to keeping realized gains. For those speculative traders (I am no longer trading that technique, but many of you do, I am sure) may I recommend you start each day with the same buying power as the previous day. Hold, in reserve, a "draw-down" amount, which will replace funds lost so you can then trade with the same buying power as the previous day. Do not attempt compounding, set a goal to be achieved first. Once that goal is achieved, then you can revisit position sizing, whether that be lot size, or total capital allocation size.

Luke said...

Interesting article in the NYT:

A finanancial transactions tax of 0.25 % would mean that you have to pay about 200 dollars per ES roundturn. That would be the end of liquidity and daytrading...

The government expects to raise at least 100 billion dollars annually with these fees, but isn´t it obvious that in reality short term trading would simply vanish, resulting in lower tax revenues?

Don Miller said...

Luke -

Yes, very intriguing. The idea has been promulgated by Dean Baker [co-Director of the Center for Economic and Policy Research in Washington, DC.], and you can find a complete copy of Mr. Baker's paper at:

I found it interesting in that even Mr. Baker's paper itself debates whether or not market volatility would increase as a result of implementing the tax and decreasing liquidity.

I guess time will tell if it gets implemented. Years ago, many in this business were harmed by the change in stock spreads from 1/8 or 1/16 to a penny, and those who were able to adapt survived.

I guess the rules will always change from time to time, and if this comes to pass in some form, those in the business will have to take a close look at its impact.


Don Miller said...

Here's another good link from Robert Green from Green & Company discussing the recent history behind the Trader Transactions Tax (FTT) and the impact it could have on the trading industry:


Don Miller said...


Please note in responding to your post that I've omitted the portion of your question related to Expo speakers, as it's not my intent to discuss the particular merits of various presenters or exhbitors.

Here was the rest of your question:

"I notice the sony vaio TX laptop, I have the same one I am surprised you picked such a tiny 11.1" screen as a mobile trading pc? DO you use the wireless WAN installed via the built in antenna or an aircard/usb for connecting to the internet. I guess it is the geographical location on which mobile service is the best to use regarding signal quality."

Actually, the Vaio has been perfect for me in a pinch and I indeed use the internal WAN capability linked directly to Sprint PCS. In addition to it being my mobile PC, it's also my backup in case my landline network goes down.

It's a great PC, and I can always connect it to a monitor if I'm at a hotel or somewhere for any length of time.


Get In Get Out said...


Last question of the night that I asked you a few days ago. I was reading one of your 2002 articles and you noted that you used to have a live radio circuit blog that you would talk while trading and everyone would listen into where you discuss chart patterns & certain possible intra-day breakouts e.t.c..... I wanted to know how long ago you did this and if you are still active doing this during the day hence the professional head set you still have, and if you did stop why? and if you plan on setting up this practice into the future where either everyone types in questions via Instant messenger while you have a general dialogue talking session of ES set-ups and charting discussions live while you trade? Thanx Don. My name is Matt by the way but gigo is still works..

Don Miller said...

GIGO (Matt) -

Yes, several years ago I did experiment with using live narration as one of my supplemental trading tools. It semed to work very well, although one drawback was that some used it as a longer-term crutch which conflicted with my strong belief that the best trader education is that which promotes self-sufficiency.

Yet as I mentioned in Sunday's post, a few years back I chose to shift my market focus away from instruction to focus on my own journey, and as such don't currently teach and have no plans at this time to do so.


Denarii said...

Dud - you got a great blog going here - do not think too hard about it nad how cares if you get 1 hit or 2 million hits - its your blog and I thank you for it.

The Denarii Trader

Don Miller said...

Denarii -

I actually could care less if I get zero hits ... as it remains primiarily my trading diary that for now is open to interested onlookers.