Friday, February 6, 2009

** VIDEO ** Time and Math

Tonight I share a few thoughts on using "time and math" to drive substantial results, two references from the great book, "Think and Grow Rich" by Napolean Hill, the recent win streak, Friday's trading action, and more thoughts about getting something going in the Boston area.

Enjoy the weekend.


Unknown said...

And YES Don,

The way you described the definition of a chart was right on ! I just didn’t take the final conclusion all the way, like you did, so I was one of those sidelined “waiting” for 1-2 min more of all those pullbacks-that never happened.

Fridays action-for sure- was ANOTHER learning experience to be filed away…hopefully in the correct place in my brain!

Being said...

Hi Don,

A friend recently revealed your site, and I've been devouring it. Especially helpful is your trade-by-trade chart on 9 January. Lots of work, as you note, but hope you feel inspired to repeat, as it certainly shows how you do what you've done better than a thousand words.

I've also adopted your weekly performance color matrix. Very complete and measures important metrics. Ed Seykota once told me "whatever you measure tends to improve".

I wonder if you would define "pattern conviction" and "pace conviction" in more detail.

Thank you for writing.


Don Miller said...

PK -

There's no doubt the pullback could have been sharper ... which it typically is ... but it was a judgement call at the time to begin scaling into a pullback long much more quickly than I'd usually do.

At the time, I recall peaking at the VIX, seeing it plummet at the open, which helped make the decision.

Yet I think it's safe to say that such a pattern is HIGHLY unusual and not the norm, and usually I'd wait for a much stronger pullback.

And as with any sequence, I could have been dead wrong which would have exacerbated the early chip loss.


Don Miller said...

Hi EK and welcome to the blog.

Good quote by Ed.

In terms of what I mean by "Pace Conviction", here's a repost of my response to a similar question on Feb 1:

Ahh ... pace.

More important to me than any other aspect of trading.

It's actually hard to describe except suffice it to say that it's a smooth rhythm or "dance" that remains fairly sustained over the course of the day.

It may actually be better to describe what it's NOT: It's not a market that has significant periods of lull and pause. It's not a market that feels like one is alternating flooring the accelerator with slamming on the brakes. It's not a market remains incredibly rangebound over long periods of time. It's not what the market has been as of late.

Again, these are all my definitions which may be completely meaningless to most. Yet I consider pace THE most important aspect of the market that influences my ability to dance cheek-to-cheek as "we" did last fall.

Tough to dance when the music keeps stopping.


In terms of pattern conviction, it relates to seeing some of my preferred patterns which include a morning after a strong prior-day closing trend, a strong trend emergence or consoliation break where a 1st pullback is a possibility, and overly emotional action where retail chart "overshoots" provide wholesale opportunities on the other side.


And if both the pace AND patterns feel strong, I'd sure as hell better be increasing my size, otherwise the "size management" line will get coded yellow or worse.

Hope that helps.


Unknown said...


I ended with a small chip loss today, but was pleased to see that I traded almost exactly like you did Friday morning. I also got trapped at 850, but quickly reversed course in the PM to make back most of the loss. I probably would have gone plus on the day but was trading at 1/2 size (out of fear from earlier loss perhaps--this is something I have to look at).
My trading has acvhieved some real improvments since I have been following your blog. I have been chipping away at it for some time, but you have shown me a few things that have fallen right into place.

Thanks Don, and count me in for the Boston group.


Don Miller said...

Nice going Mike.

It's not me ... it's you. If anything, I maybe just helped provide an indirect push.

I wouldn't be concered about not being + on the day, and I actually didn't expect to be at this end and was more than willing to settle for a modest loss after that open.

Go ahead and send me your contact info for the Boston group (see Saturday's post).

Keep it up.


Being said...

Thank you for the definitions, Don. So a dark green for "pace conviction" means the market is dancing well on a particular day for your style, whereas a red would mean lots of musical starts and stops. So the ranking in this category has more to do with what the market is doing, rather than grading some psychological component over which you have some control. Am I close?