Wednesday, March 25, 2009

Wednesday Notes - Royal Flushed

4:00pm There's a reason I don't normally trade the last hour. Tired, lack of focus, lower % plays ... you name it, and today was Exhibit A as I went for one trade sequence too many ... hard ... and finished substantially off my intraday equity highs for a +$10K gain.

Essentially I was in rhythm all day right up until the last 40 minutes, including nailing the early morning 5-minute pullback long and then catching some nice shorts on the early PM breakdown, when I then got a bit cocky given the groove I was in and established a strong short position on the last hour pullback toward 800 -- a short that was supported by both the earlier breakdown and the 15-minute trend.

And while I'd take the trade again in a heartbeat, I should have protected the earlier hard-earned gains a helluva lot better than I did with better size management. And of course that made scoring today's scorecard tough, and I purposely replaced mostly solid green in the lower section with lesser scores to teach myself a lesson.

On the positive side, I suppose there's a major silver lining in that I eventually stopped the sequence which I could have very easily not done given my conviction in the pattern, and at least still salvaged a 5-digit green day, rather than barf-covering my triple digit sized short at 812 like some did for what could have been a monster P&L hit. Obviously based on the squeeze, I wasn't alone in leveraging off the round 800 figure. Show of hands please.

Ironically, the first 3/4 of the day I felt was the best I'd traded all year, and thus I pressed it right into close ... which this time was costly.

Nevertheless, today was a good reminder that patterns and performance are all about probability, and nothing is ever 100%.

Even a pattern with two simultaneous supports and a trader who was in the zone for most of the day. Sort of like losing Aces full of Kings to a Royal Flush ... but you still have to bet the the full house every time.

Trading and poker ... they can both be cruel games at times.

The next hand gets dealt tomorrow.


Charles said...

Interesting recap of your day Don, I had a very similar one...very sharp early on, then around 2:30ish I felt my focus hit the proverbial wall(family drama will do that to you...(sigh).

So I reluctantly decided to go into what I call 'observation mode', and did not make a single trade the rest of the day, which I think was good for 2 reasons:
1- I finished on my equity high and

2- Considering that I just couldn't "feel" the mkt's pulse or rhythm, then was able to actually admit that to myself and stop trading, I greatly strengthened my all-important self-discipline mucle.

So that was my day...hope there was something useful in it.


BTW, Don, loved yesterday's "self Q+A"

Unknown said...

i too did the same - traded tight and right all day and had a nice pnl i thought in the bag, started fading around 3:30, add some more, add some more, wtf, wtf, there goes my day, wtf, cover after hours for a scratch. seems alot of crazy last 30-45min end of days over the last few months.

RAL said...

Hello Don.

I appreciate the site, thank you for the effort.

I visit to compare daily results, so I can gauge my performance.

I was compelled to change from "lurker" to "comment" so I could raise my hand on the p.m. short at 800. It sure looked like a tried and true set-up !

Again, thank you for the site.

Unknown said...

Not sure what’s worse Don, the bad beat in poker vs. having the strong read in trading and not betting it … as they both feel very bad :(

I too had a pretty good day-until the end. Unlike you, I had the read of the rally and the read of 20 min to go & the sellers failing for the next leg up-but SAT THEIR and did nothing!

Therefore, I wait patiently for the 3 books…what a day…


Unknown said...

For me Don, it was like 3-7 in small blind and folding-then flop comes 4-5-6.

Full of heartache-but chip stack still growing. Keep up the great work Don!

TST said...

""There's a reason I don't normally trade the last hour""

Me too. I can focus only about first 3 hour. More difficult to me becoz I'm in Malaysia -- trading hour is from 10.00pm -to 4AM Malaysian time GMT+8. The best move usually when I cant open my eyes anymore..ZZZZ

Eric said...

Don, I'm a new trader with a question. Why do you think the market took off like that for the big run up from 790 to 810 with a huge spike in volume during the last 1/2 hr of trading yesterday? As a new trader it doesn't make any sense to me. Some people talk about a plunge protection team (PPT) where the major institutional players sometimes work together to pump up the market when it gets too low. Other traders say there is no such thing. What do you think about the PPT theory Don? Do you think the PPT could have been a factor, or do you think it was some other event that caused the huge spike up at 3:30 yesterday,---I'm just trying to get a better understanding of what moves the market so any input from an experienced trader like yourself would be helpful. Thanks

Don Miller said...

Hi Eric -

If the market has taught me anything over the last decade, it's that the "why" behind a move is irrelevant 99.9% of time time, and as a trader, I mentally moved on the minute I closed the sequence.

Having said that, keep in mind that long-term, the market is still oversold and some intermediate term timeframe trends are actually in uptrends, such as the 120 minute. We've also been seeing patterns of frequent hammer bars that reflect underlying market strength on a number of timeframes.

All we can do is react and use that information for the next trade entry.