Thursday, April 30, 2009

Thursday Notes - Put Up or Shut Up

4:00pm Well, time will tell if my backing off over the last few weeks will work the same magic as 2008, when I also backed off in April to take a breather and prepare for the next push. And surprisingly (at least to me) despite the brief mental break, today's +$6K chip gain (the result of some nice emotional fades as we got some decent unsustainable extensions), has me ending the month on my equity high and puts me ahead of where I was at the same time last year ... keeping in mind the ultimate $+1.6M 2008 gain was aided by the volatile and highly profitable fall.

So despite the flu, pinched nerve, declining volatility, and general breath-catching, I remain on track for the '09 $1M goal ... but only if I decide to get my head back in the game in a sustainable fashion and pick up the pace.

And so we bid a not-so-fond farewell to April vacation in terms of less than stellar stats:

April 2009

Daily Gains: $93,937
Daily Losses: ($24,399)
Commissions: ($23,023)
Overheads: ($3,231)
Net Profit: $43,284
Win/Loss Ratios
- Days: 15-7 (73-10 Year-to-Date)
- Daily Gains/Losses: 4-1

And for the only #s that matter:

Net Profit Pace (vs. Continuing Annual Goal of $1,000,000)
- Last twelve months: $1,641,377
- Jan-Apr annualized: $1,178,610

For reference and comparison purposes, here are links to the previous 2009 monthly recaps:

And so it's time to turn off the cruise control and see if the recent refueling can get me through the next few laps with some momentum. The target remains crystal clear: the rare industry feat of back-to-back Million dollar years ... and with all public eyes watching.

Last year, we of course topped the industry's top CTAs. This year, I want the back-to-back $1M. I want to dance that dance one more time.

Last year, many said it was impossible. This year, I'm starting to hear similar grumblings, including suggestions that my recent backing off means the market is getting the best of me, I've gone soft, or that I can't make money in a less-than-volatile market. (Ironically, some are the exact same folks that said no one could make money last fall ... you gotta love critical spectators.)

I say bring on the skeptics.

At this end, it's time once again to put up or shut up.

Let's see if we can shut them up one more time.

Poker night tonight. And tomorrow will be the final spring mulligan ... the real work starts on Monday.

Wednesday, April 29, 2009

Wednesday Notes - Flagrant Foul

3:30pm First, let's dispense with the obvious ... (1) yes, Rondo's foul last night should have been ruled a fragrant foul, (2) I've nicked my finger harder than Ray Allen "fouled" six times, and (3) how could Kendrick Perkins go an entire game without officially hacking someone. And these are NBA refs?? Yes, the officiating has been atrocious both ways, and is taking away from a great series.

btw, my guess is if the Bulls go on and lose, that they'll be like the Pistons of the late 80s where they'll finally get over the hump and win it all next year ... or at least give Lebron a go. They're very close. And young. And good. And this is from a Boston fan.

Back to trading, and to clarify recent posts, I remain on a mental break of sorts and will likely stay that way until May kicks in which isn't that unusual for me over the years. And for those who may not understand, a reminder that I don't normally take pre-planned vacations (I think I've taken two full days off in the last two years, and haven't taken a consecutive two-day shutdown in more than five), instead letting the market dictate mental breaks which usually occur after a strong run.

Usually when I slow down, it's not expected, and this April -- just like April '08 and the last part of December -- certainly weren't planned. Yet, I suppose that's the beauty of this business ... you can floor the accelerator or hit the brakes at any time and for any length of time. You and you alone dictate it, and what works for you likely won't work for others ... a topic which we've of course beat to death over the last few years.

Last night, one commenter tried to get me off my game with what appeared to be a flagrant foul. Yet I chose to simply walk to the line and sink today's free throws (typical pre-FOMC late morning climb) for +$3K before going back to the bench to continue to prepare for the next game.

You can get hit -- and it may not be fair -- but you still have to play your own game and make the free throws. Yes, Brad Miller, that's you.

Game 6 should be interesting.

So should May.

Tuesday, April 28, 2009

Tuesday Notes - A Waiting Game


The waiting is the hardest part;
Every day you see one more card;
You take it on faith, you take it to the heart;
The waiting is the hardest part.

-- Tom Petty "The Waiting"

Waiting for more than one intraday setup;
Waiting for one intraday breakout to hold;
Waiting for higher ADXs;
Waiting for market emotion (a.k.a. "pace") to return;
Waiting to trade heavier sizes again;
Waiting to "feel" the market again;
Waiting for my pinched nerve to heal (began some PT yesterday);
Waiting for the Bruins to start playing again (that's Boston ... not UCLA);
Waiting to set a FIRM date for the first Boston Bamboo get-together (I'm getting close ... would prefer to have two working arms first though);
Waiting for warmer weather;
Waiting for April to be over.

And so call it another toothpick day with a +$3K chip gain on a teeny 500 contracts that likely has my broker calling 911 to check on me. (For newbies, that's buys and sells.) The net gain -- if we even call it that as it's basically a scratch -- was due largely to the 2:20pm mini-bear trap sequence. And I do mean "Mini"!

And so we continue to wait.

Let's hear it ...

The waiting is the hardest part;
Every day you get one more yard;
You take it on faith, you take it to the heart;
The waiting is the hardest part.

Monday, April 27, 2009

Monday Notes - Toothpick Day

4:00pm Well, I thought I might be able to "sneak up" on a few solid setups by scaling back the volume and telling the market (and my brain) I was on vacation this week, but it worked only minimally due to getting stopped on two sequences I felt fairly strong about: the 10:20am ET climb which quickly blew past prior resistance and the 2:50pm attempted turn south, both of which were pullback entries supported by interim downtrends.

Fortunately, the afternoon turn gave traders a chance to re-short for a brief downtrend continuation which I took, yet the stop and tricky turn cost some insurance dollars. As a result, I only grew the chip stack by a very modest +$3K to start this last week of a month that seems to be taking forever to end. Why couldn't last October feel like that??

And so ES continues to play a 850-870 range game as the hourly ADX continues to drop faster than Yankee pitchers.

Let's hope we'll start seeing some emotion in the markets before the All-Star break so we can bring out the heavy lumber.

Right now, this feels like batting with a toothpick.

Saturday, April 25, 2009

The Weekend Trader - How Bad Do I Want It?

Well, I'm beginning today's weekend edition just before 6am on a Saturday, partly because I didn't sleep all that well on a night where I typically make up for all of the lost sleep for the week.

Yet this week was a bit different, with a number of distractions that included the flu, a continued battle with an increasingly troublesome pinched nerve that's now constant and has prompted visits to four doctors (including a neurosurgeon), non-market related business issues I've had to deal with (yes, don't forget I do have another income stream to pay the bills that requires daily attention), and my wife and youngest daughter completing a weeklong tour of several colleges in the Northeast while having van trouble on the way home on Friday.

btw, she's so far looked at Dartmouth, Marist, Vassar, and Yale ... with William & Mary and Boston University coming up on the summer tour if you have any feedback. She'll likely graduate as valedictorian unless she completely falls apart next year, and is looking to the sciences. This is our daughter who six years ago was struggling for survival before being diagnosed with Type 1 diabetes.

And if you want an article of true inspiration and a rare peek into my family life, check this one out which appeared on the front page of our local paper a year ago and was nationally syndicated, as she's already faced more from a life-challenging perspective than I'll ever face.

And speaking of family, a major tip of the hat to my wife Debra who is continuing on her journey to once again get healthy and fit after having spent the last two decades devoting her life to our kids and fighting her own health battles as she too was struggling for life just a few years ago with a massive appendix rupture and serious infection that required multiple surgeries. She's lost 55 pounds since December (she's allowed me to say this!) in Valerie Bertinelli fashion, and is finally seeing her own Bamboo Tree sprout this year. She is and will always be the love of my life.

And so what does any of this have to do with trading? Well, nothing ... and everything.

For trading and life will always remain forever intertwined. Recall this excerpt from last year's final post ...

"And if you haven't figured it out by now, this blog goes far beyond my trading race. It's about life's race. Trading is a game ... nothing more. It pales in comparison to life's true priorities, and simply provides us with the analogy of all analogies, and parable of all parables. It provides us with a unique practice field on which we can learn and then try to apply the principles to life. The better we trade, the better we live, and the better we live, the better we seem to trade. For me, the $1.6M score will mean nothing unless I can now apply the learned principles going forward, especially to life."

And so right now, aside from dealing with this dang pinched nerve which has undoubtedly affected my focus (I may have to start trading left-handed!), life is very good and comfortable for me ... which is the death knell for success in any sport, whether it be physical or mental. And yes, competitive trading is a mental sport. Forget the debates, it is and always will be.

And so the question for me right now is the same question I've asked to thousands of traders in public speeches over the years: How bad do I want it? Am I willing to continue to make the life sacrifices necessary to retain the around-the-clock sharp focus and skill required to continue a journey of profit maximization? Right now, it's pretty obvious I don't want it that bad ... for the moment anyway.

Most know that I could walk away from this and/or my other business at any moment, at any time, and never have to worry about working so long as I live. Thirty years of business toil topped off with a hard-earned $2 Million trading reward over the last five quarters will do that. As always, I share this not to boast ... simply to state reality. And if you're new to this journey or don't believe that, just do a blog search for "suck", "stupid", or "hell". As always, this blog remains a very open look into this trader's journey. The good, the bad, the successes, the losses, the days of disgust, the days of rejoice, the prolonged time in the zone, the flat periods ... they're all there and are all of course a part of the trading life cycle.

Last year, the cornerstone fictitious drawdown concept and this blog - with all the corny analogies to sports and movies - were new motivational tools that helped fuel the competitive fire. This year, I added the daily performance scorecard to continue to try to fan the flames. They all worked far beyond my expectations ... for a while.

Yet right now, the fire is dim and I have as much ambition as the driver in the photo to the right.

In a few days, despite a horrendous month for me in terms of earnings growth that will rank the lowest in a few years, our brief month-end check will likely show I'm still on pace for another $1M year (albeit barely) which of course remains my current annual goal. Yet another month of ambivalence and lackluster interest & performance will quickly end any hope of doing what few traders have ever accomplished in terms of back-to-back million dollar performances.

There's no doubt I'm seeing firsthand how difficult it is to sustain the mental fortitude that's required for sustained peak performance over the long run. It's why as I mentioned a few months ago that the top annual CTAs as published by Futures Magazine rarely repeat or do well is successive years. It's also why sports dynasties are so rare and characterized by continued rejuvenation with new players mixed with veterans. Even John Henry has had some recent terrible years.

Someone suggested last night that I'm not doing well this month because I've mentally conditioned myself to believe I usually do poorly in April. And while I can see how that conclusion can easily be drawn, it's not the case at all. It's certainly true that I have particular months where I've done well over the years (March, October, & November), yet data simply is what it is, and subsequent months usually simply reflect a mental "exhaling" that's natural after peak performance. For this is a business where a bulk of one's annual income is often made during a short period of time as was the case in 2008 where about 50% of the income was made over a 3-month stretch. You push when it's there, and back off when it's not. One day can make a month, one month a year, and one year a career. The goal of course remains to profit from every trade and every day, just as the goal of shooting baskets is to make them all. News to newbies ... they don't all go in.

No, the root of the current issue is lack of interest, focus, and motivation as I've fallen into a spell of preserving earnings as I did in late December.

In December of course, slowing down was clearly one of the best decisions I've ever made in my trading career. Time will tell if the same will be true for the last few weeks and whether I somehow find the stamina to complete the 2009 race which I may decide will be my last ... at least from a competitive perspective. I'll always trade for fun and part-time income probably until the day I die.

Right now, life is good. Perhaps too good.

And so perhaps it's best to look to a better writer, as we did on December 19 when we locked up last year's race:

... the race is not to the swift, nor the battle to the strong, nor does food come to the wise or wealth to the brilliant or favor to the learned, but time and chance happen to them all. -- Ecclesiastes 9:12

Time will tell how long I'll be blessed with this phase of life's race before it's someone else's turn.

Yet right now, I'm still holding the baton and am not ready to pass it.

Frankly, you'd have to rip it out of my hands ... so perhaps that's a good sign.

Have a great weekend.

Friday, April 24, 2009

Friday Notes - Disinterested

4:00pm I was as disinterested in trading today as the Bulls appeared to be in last night's JV attempt at playing the very beatable Celtics (what was up with that??).

I'll be frank as always ... I'm simply not motivated much right now -- flu or no flu from which I'm pretty much recovered -- as the P&L treaded water again today and for the week.

I certainly see some sloppiness creeping into my trading, which I believe largely reflects a lack of motivation and interest, and have fallen into a bit of a newbie track of having a few damn good trades offset by losses, and not pushing hard enough on solid setups as I had several good entry points today, only to scratch on the day. I'm also having a tough time staying sharp during those few high % opportunities while the rest of the day is simply non-tradable (from a speculative side anyway) slop. I know I'm not alone on this last one, but that doesn't help as you have to be better than the rest.

I've certainly tried to keep my head in the game by providing breakeven liquidity, which has always helped in prior years, and perhaps I need to simply keep plodding along until the swing is back in the groove.

Nevertheless, I'm going to think long and hard about how to approach May and the rest of the year over the next week, and again wonder if some subconscious governor has kicked in after having banked a couple of million over the last 15 months.

Fortunately, treading water is NOT losing money, and all of the hard earned capital over recent years remains 100% in tact. And for now, I have to simply look at the last few weeks as an unexpected and extended vacation. Time will tell if I decide to make it permanent.

Look for the Weekend Trader as always.

Thursday, April 23, 2009

Thursday Notes - Survivor: April

4:00pm Well, today was better, but still not spectacular both in terms of my recovery from the flu and results as I banked an acceptable +$7K gain on very light personal volume.

In general I felt my reads were strong and would have gone heavier if not for a personally uncomfortable stop and start market pace that was prevalent throughout much of the day. Specifically, my best read occurred at the end of the day where I felt it highly unlikely ES would continue its minor late-day sell-off, as the market seldom does the same thing on two consecutive days. I didn't trade it, but it was a conscious decision to sit out and that's an action nevertheless.

And you can just see and feel whipsawed traders in the charts who thought they'd finally "figured things out" ... of course you have to constantly "figure things out" on a moment by moment basis. Also must mean the flu fog is beginning to lift as I didn't fall for that sucker play.

And so this edition of Survivor: April continues, and for the moment, I found myself back on the wholesale (a.k.a "right" or "profitable") side of the trade.

One of these days I'm going to start throwing around 100+ contract sizes again. Been a long time ... last fall I believe.

But not until both the market and I are doing the dance to the same beat.

Until then, it remains grinding mode.

Wednesday, April 22, 2009

Wednesday Notes - See-Saw Day

4:00pm Today was a fairly unusual see-saw day for me in that I had a surprisingly strong morning, which I'd grade an A (+$10K), a horrendous midday session that I'd grade an F (-$18K), followed by a decent afternoon comeback (+$5K) on again heavy volume to end with a slight nick -- due primarily again to the trade volume.

I pretty much followed yesterday's logic in providing heavy liquidity without doing much on the speculative side until my head clears. The midday hit was largely the result of my beginning to provide long liquidity on the drop a smidge too soon. And before any newbies ask why I provide liquidity, someone has to and the losses when they do occur due to mistiming simply go with making a market so others can trade. Those losses never bother me, and are more than offset by net speculative wins over time.

As I mentioned a few days ago, I'm essentially just looking to survive April with capital in tact as I continue to hammer my way through a flat earnings period and recover from the flu. At this point, any earnings will be a bonus.

I actually felt pretty good about my reads today, and feel I'm starting to get back on my game.

Again, the daily net is pretty meaningless as always.

Tuesday, April 21, 2009

Tuesday Notes - Old Man Flu

4:00pm OK, where's that chapter in Trading for Dummies that addresses trading with the flu?

Yup, for the first time in a couple of years, old man flu hit me which put my head (and other not-to-be-named parts) in a mental funk not unlike the Bulls at the end of last night's give-away loss to the Celtics.

So despite a debatable "Morning after Trend Day" (we have to be careful with the term "trend" describing yesterday as ES pretty much gapped, dribbled, and was stagnant for 3 hours ... not really a trend), I never could find my morning speculative game as I slept through most of the Eurex oscillations which again provided a much more consistent and readable oscillation flow (for this trader anyway) than the U.S. session as it traded down, then up, then down hard.

The U.S. session on the other hand didn't react back down in response to the late morning climb, apparently having exhausted resistance sellers in the overnight trade (plus, the daily trend is of course still up), which combined with my mental & physical state that couldn't interpret moment-by-moment signals as quickly as usual, left me scampering the rest of the day to instead provide liquidity ... and not all that cleanly at times. Ironically, had I traded the same way in the overnight session, I probably would have cleaned up. But as they say, "you have to be present to win".

And while the scorecard shows light green and thus still keeps me out of the dreaded two-day funk in '09, it took a lot of work (& ginger ale) and right up until 3:40pm ET to tip the scale green by a whopping $636. I suppose I could be pi$$ed at a less than optimal day, yet it's frankly hard to get too bothered as the gain was limited due to commissions on heavy volume and I worked my way back from an earlier draw. (Yup, I purposely overtraded a bit trying to work out the cobwebs ... always has been and will be my style as I will never lose for lack of trying. I suppose if I had a coach, he'd have taken me out of the game, but I actually found "some" rhythm late in the day and executed a couple of decent sequences. Sort of like Ray Allen going bonkers in the 4th quarter last night after being dreadful for the previous seven.)

btw, someone asked me in yesterday's comments how I keep from getting frustrated on given days. I reminded him of the Svithjod Rock post, and want to be really clear about my response in reinforcing the fact that I really don't care about a given day ... it's so damn tiny in the scheme of things. And while I could get all upset about not being able to mentally deliver today within the context of my favorite market backdrop (again though, the backdrop was debatable), you just have to realize there will be times like this completely out of your control.

Digressing for a moment, have the chatrooms and gurus really brainwashed people into thinking winning traders don't have losing trades, days, weeks, etc??? Arrrrrgggg! I'll say it again ... it's about the long run, period. And if you ever needed to reinforce that notion, never forget last October's single day -$90K loss which was a speed bump in what turned out to be a profitable week and subsequent $700K 3-month run. (btw, I only reference this part of the past for shock value ... some need the shock.)

And while some still ask why I share my thoughts, bumps, successes, etc. outside of my private little world via this ridiculous constant babbling, consider this Exhibit A. Kill the smoke and mirrors gang ... you gotta look behind the curtain.
As I tried to preach throughout early '09 when my win/loss was unrealistically high at close to 100%, you have to expect to get slammed or run dry occasionally. Doesn't mean we have to like it ... I sure don't as evidenced by last week's virtual fist through the wall ... just don't let it phase you after the venting. The alternative is to bag groceries at Stop & Shop.

There ... I feel better. Well not really.

Back to today, I suppose I could cower and whine over the morning, yet last I checked that doesn't work.

Hand me the orange juice.

And would someone pleeeeeeze stop the room from spinning??

Don't worry, I covered my face while typing this.

Monday, April 20, 2009

Monday Notes - Ante Up

4:30pm Today reminded me of a cash poker game where you throw some low-cost chips on the table hoping to see some cheap flops, and then simply ditch hand after hand if you don't hit. And such was the case today as the market never dealt me a hand better than K-9, so I'll chalk up today's very modest -$3K chip ding to the cost of antes.

As most know, Mondays aren't my strength -- ranking as the worst performing day year-in and year-out -- and this Monday which lacked my preferred setups and pace, while teasing traders with a number of false 1-minute turns, had all of the ingredients of a recipe for disaster.

So all in all, I'm fairly pleased with my chip management today as reflected in several green scores on today's scorecard. I also ended on my PM equity high as the result of shorting the last-hour approach to 15-min resistance. Again, the daily bottom line is irrelevant except in aggregation on 12/31.

There will be time to push the chips.

For me, it wasn't today.

Saturday, April 18, 2009

The Weekend Trader - I Dreamed a Dream

Some tidbits on a Saturday morning, and I'll save the best for last.

Trader Tax Legislation Feedback - Many thanks to one of our readers for forwarding me a response from Barney Frank to his letter opposing crazy-man Defazio's tax idea. Included in Mr. Frank's response was, "As Chairman of the Financial Services Committee and one who is aware of which banking-related bills have the likelihood of becoming law, I can tell you that I see no chance of this legislation passing the House."

I guess we can call that a "frank" response. Thanks Mark.

Newbie Primer - For new onlookers to this intensely personal journal, here are my recommendations for best approaching what is now a 337 electronic page diary.

1. Read the FAQ link, which will explain what this diary is and isn't about.

2. Read each of the key posts in the lower left hand margin. And while it's tough to distinguish which are my favorites, my top five - in no specific order - are:

- That "One Thing" From City Slickers (includes the famous movie clip with Curly)
- Perfecting Imperfection (a self-interview later syndicated)
- The Svithjod Rock (also syndicated and printed in the New York Trader Expo Catalog)
- The Jazz Trader (again later syndicated)
- The Chinese Bamboo Tree

3. Upon entering the blog each day, stare at the countdown clock for at least five seconds before reading the current post to put this brief moment on the planet in perspective. Unless you're really bored, then you can forget the five second cap. And yes, I do personally look at it each day.

4. Remind yourself daily that trading is a perpetual journey of self-expression and self-discovery. My good days may be other's bad days and vice versa. Essentially, each daily post reflects a single brick whose relevance by itself is meaningless except when combined with other to form the building. And remember all bricks have imperfections.

Transcript of presentation to Linda Raschke's Team - I've now posted a permanent link in the left margin linking to the transcript from my talk on April 8. Looking back at it, it's a decent summary of my perspective on this business and personal journey over the last decade, and I encourage those interested to check it out. There are also other good guest lectures there, and it's all free.

I Dreamed a Dream- And I would be remissed if I didn't link to the incredible inspirational video of Susan Boyle who shocked the world recently on Britain's Got Talent with her rendition of I Dreamed a Dream from Les Miserables.

It needs no introduction, aside from saying how great a feeling it is to work your ass off for years in private, take a very public risk with all your imperfections that few would ever dare to, achieve your dream, and prove a world of naysayers wrong. Sound familiar?

If this doesn't give you chills, please have someone check your pulse.

Sort of makes you want to trade your heart out next week.

Oh, and she's 47.

Have a wonderful and inspiring weekend.

Friday, April 17, 2009

Friday Notes - Wake Me on Monday

4:00pm 'Twas a bit of a market snoozer today in terms of speculative patterns and market pace which left me providing some very light liquidity on a day where - continuing yesterday's analogy - I largely played defense (+$2K) and wanted to make darn sure I didn't crash any planes before returning to the deck for the weekend.

And so the chip stack growth slowed a bit this week to a unusually low +$12K due largely to Wednesday's speed bump and plummeting volatility, as I continue to try to deal with a market rhythm that is often more suited to traders who prefer range trading or having their capital in the market for extended intraday timeframes for slow grinds (neither is my game or preference.) Of course the moment traders become "comfortable" with this, the game will change once again. It never ends.

And so the time-proven strategy continues to be to push the chips hard when both market and trader are in strong rhythm (btw, "preferred" rhythms will always remain highly individualistic and varies by trader), while grinding out modest wins when such isn't the case.

The latter is of course more difficult and thus isn't discussed much by fee-based "advisory services" (I'm being nice) who never slow down their one-size fits all recommendations, or action junkie traders who burn through capital faster than Bernard Madoff.

For the rest of us, the profitable journey remains long. And this one has 258 days left as we remain in the early stages of the second of four laps (quarters).

Everything in the meantime is just noise. Even if the noise is an occasional jet engine and you momentarily get caught in the jetwash.

Goose will always be there.

Look for "The Weekend Trader" as always.

btw, for some reason traffic spiked to another all-time high on this site earlier in the week and we're now around 700 consistent daily onlookers and well over 1,000 daily visits. Who'd have thunk. New visitors - please be sure to check out the FAQ link and the key posts in the lower left hand margin. Doing so will help put this diary in perspective.

Thursday, April 16, 2009

Thursday Notes - Talk to Me Goose!

4:00pm Who can forget this great exchange from Top Gun, which is hitting home big-time with me right now.

Early in movie during training:
Jester (speaking to Maverick): That was some of the best flying I've seen to date ... right up to the part where you got killed. You never, never leave your wingman.

Goose: It's not your flying, it's your attitude. The enemy's dangerous, but right now you're worse. Dangerous and foolish. Whose side are you on?
Maverick: That was stupid, I know better than that. That will never happen again.

Later ... in real combat action:
Merlin: A MiG's coming round on our tail.
Maverick: I can't leave Ice.
Merlin: He's gonna get behind us!
Maverick: I'm not leaving my wingman! I'm on his tail. I'm going for the shot right now. Roger, engaged! I've got radar lock. I'm taking the shot. Fire! Bingo!

Trading translation?

After Wednesday's trade:
Jester (speaking to Trader Don): That was some of the best trading I've seen to date (describing the last 15 months) ... right up to the part where you got complacent and soft. You never, never rest on your laurels.
Goose: It's not your trading, it's your attitude. The enemy's dangerous, but right now you're worse. Dangerous and foolish. Whose side are you on?
Don: That was stupid, I know better than that. That will never happen again.

Thursday ... in real trading action:
Merlin: Another scary trading pace day is before us.
Don: I'm ready.
Merlin: It's gonna be tricky ... might as well sleep in.
Don: I'm not sleeping in. I'm waking at 3:30am ET to watch the Europe and U.S. session for a few clean shots. I'm on the retail trader's tail. I'm going for the shot right now. Roger, engaged! I've got radar lock. I'm taking the shot.
Fire! Bingo!

Yea, it's corny as hell. However it's entirely accurate.

It's accurate because today wasn't easy for me. Despite the expected morning oscillations after yesterday's strong closing trend and my strong comfort with the likely overnight and opening setups, I was mentally fighting it given my recent lackluster attitude and failure to adapt to the new market pace. (btw, remember the hard time I initially had adapting to the 2008 "VIX over 50" pace?? Took me a few days if I recall.)

And I had to motivate myself to wake for the Globex session (which in my view had the best volatile pace and high % setup of the day with ES ever-so-briefly touching down near yesterday's support around 40), and then -- most importantly -- take the damn shots when called for ... and not before.

And while I did so far from cleanly and sub-obtimized some of the early Globex sequences, today was a "must have" day to avoid the first consecutive two-day losing streak in more than four months which would be a mini-crisis for me.

The good news is even after a +$14K comeback day with a solid +$17K gross on ES, I'm still mad.

This is Maverick requesting a fly-by.

btw, if you have't figured it out yet, I've obviously chosen solution option #1 (for now) noted in last night's "venting" post. Thanks for respecting my privacy for one night.

Poker night tonight. After that, I do need some sleep!

Wednesday, April 15, 2009

Wednesday Notes - Watch Out

4:00pm Warning: Those that are new to trading or who haven't quite yet "gotten" the overall concept of this business will likely not be able to relate to today's post. I say that because many still think this business is only about charts and patterns, which were pretty evident today.

Dear Diary -

Suffice it to say that I'm in a major battle with myself right now as I'm having a significant challenge staying motivated and rediscovering the tenacity that's needed every day in this biz. Today's sloppy/late/early (choose one) execution and -$12K double bogey was the result of one thing and one thing only ... a complacent/sloppy/sleeping in/hesitating/ambivalent (again choose one or more ... they all apply) attitude that affected two sequences.

Sure the market's rhythm has changed and I do best when trader emotion is prevalent in the pace of the action ... which it isn't ... and suck in sardine can trading ranges, yet the rhythm always changes and our ongoing job is to recognize it on a daily basis and simply react. As I've said before, the finger always points one way -- inward.

The good news is I closed with a strong trade and the loss can be offset by a single solid trade sequence ... today of course ranks as the second real loss of the year, although it could have been far worse. Remember the only score I care about is that on 12/31.

The bad news and reality is that I'm fighting the fight of my trading life right now, essentially treading water with gains offsetting losses, and for the moment too often trading like a rookie on the retail side of the trade.

And I'm frankly beginning to wonder -- despite the ongoing fictitious draw chart that's posted all over my office -- if the reality of hundreds of thousands of trades and millions of dollars in results are beginning to mentally overpower that and other motivational tools I've surrounded myself with.

Clearly, the drive isn't there right now. I'm sleeping far too well and don't like it.

So I have a few options:

- Continue to plow ahead and just "get through this";
- Take a real vacation for the first time in years and don't even think about trading for a month (my fear of course is restarting the engine again afterwards ... and you know how I feel about that!);
- Go into even deeper isolation mode and let the diary go black for a short while (yes, I'm considering it, although it still remains one of the key motivational tools, so let's not toss the baby out with the bath water Don);
Resurrect the "trade for charity" idea ala Barry Greenstein to try to find a reason to increase the "cause" factor (Lord knows I don't need the money).

The option I don't want, is a -$90K chip hit such as last fall's that I apparently needed to wake me up into the subsequent $700K 3-month run.

Please, no "advice" gang ... btw, I'm not allowing comments on today's diary entry as I'm going into isolation chamber mode ... as with everything in trading, there's no one-size-fits-all answer and every successful trader on this planet has to discover his/her own way and work things like this out from time to time. Again, newer or unsuccessful traders likely won't "get" this and think making significant sums is a smooth road. And "gurus" of course who never disclose their results never have losses.

Mike Matasow would say, "I've lost my heart".

He might be right ... at least for the moment.

Yup, I'm finally pi$$ed again and won't sleep well tonight.

And if history is a guide, you won't want to be in my path tonight ... or on the other side of my upcoming trades.

Tuesday, April 14, 2009

Tuesday Notes - Bogey-Free Round

4:00pm Continuing yesterday's theme of simply trying to make "par" trades until volatility picks back up on a consistent basis, I was fairly pleased with today's round of +$7K on a highly efficient 632 contracts. For new onlookers, keep in mind the light, medium, and dark green bottom line color codes on the daily scorecard correspond with < +$7.5K, < +$15K, and > +$15K respectively, so today's score remained light green, albeit in the upper end of the range.

Most of the day's chip gain came from fading unsustainable extremes, first from the morning DAX trade which had gone parabolic upon return of Europe traders from the four-day weekend, and then from the ES mini-barf shortly after noon on price vs. TICK divergences (each price low had a higher TICK reading -- see chart -- and given the chop of late and time of day where runs typically don't extend, served up a low-risk, high-return opportunity).

And so the current game remains staying away from the sand and water until we hit those Par 5s where I can air it out a bit.

I suspect we'll see a pick-up in volatility soon, as the market never does the same thing for very long, yet I'll continue to try to stay away from the prediction business and focus on making shots.

See you at the tee in the morning.

Monday, April 13, 2009

Monday Notes - Par For the Course

5:40pm From a trading perspective, the only thing I dislike more than weekends are long weekends to try to get back into rhythm. And so it was today where I played the early session as poorly as Tiger putted this weekend, before ironically making a few decent trades on the 1:20pm break while waiting for my afternoon doctor appointment to turn in a very modest green scorecard barely good enough to buy lunch.

How's it go ... "Neither rain nor snow nor pinched nerve nor neurologist appointment ..." If you think you can make consistent keep by limiting your market exposure, think again. The market ain't gonna wait for your plans to change, and that Sony Vaio w/wireless access remains invaluable to me.

And so we remain in suspect territory with tricky green reads given the continued lack of volume, pace, and now earnings season. The current plan? Well, using an analogy from this weekend's Masters, I have one very simple goal to get me through April's current lackluster chopfest, and that's to par out the next several sessions.

That's right, just as all Kenny Perry had to do was to par one of his last two holes to win yesterday (what happened Kenny??), I'm just looking to play a few bogey-free trading rounds to keep my head in the market until I feel the momentum -- both mine and the market's -- have swung back to my advantage.

Until then, I have to simply avoid the sand and accept pars.

If only Kenny could have done the same thing.

A reminder you can access last week's presentation to Linda Raschke's team here. If you're new to the blog, it's a good overview of where my head's been at over the last few years.

Also, catch Saturday's video if you missed it.

Sunday, April 12, 2009

Special Post - Transcript of LBR Presentation

For those interested, you can access the trasnscript of my April 8, 2009 online presentation to Linda Raschke's team here.

Please note access is free, although you may need to sign the guest book.

The Weekend Trader - A Trader's Easter

Just a few thoughts before we head into the coming week.

April Showers - Looking back at my monthly performance over the past decade, March has usually been my best performing month of the first half of each year, while April has usually been my poorest performing month of the entire year. There's also a similar trend with the November-December timeframes as November (and sometimes October) is often strong, followed by a lackluster December.

I'm not sure what conclusions to draw from that aside from certainly acknowledging that significant market-slowing holiday weeks come into play in both April & December, and that it's also rare that one has back-to-back monster months (or days, weeks, years, etc ... pick a timeframe).

And from a personal performance perspective, it looks like the March-April trend will continue this year ... although it will be back to work on Monday without reference to the name of the current calendar month. For results are what they are, and we don't try to manage to them.

Pinched Nerve Update - No progress yet on the pinched nerve predicament despite pursuing multiple conservative stretching, posture, anti-inflammatory and chiropractor solutions, so it's off to the neurosurgeon early Monday afternoon for a full evaluation and recommendation. So no funny business Mr. Market between 1:00pm and 2:30pm please. I appreciate the thoughts and will keep you posted.

The Greatest Comeback of All - And so today we celebrate the greatest comeback of all time today. btw, if you're looking for me to be "politically correct" by ignoring the incredible importance of this Easter day on the blog, it ain't gonna happen as this is my diary where I spill all that makes me tick.

And just as the well-documented fictitious draw methodology formed the incredibly strong cornerstone for the last few years of results, the real devastation that took place on that one Good Friday and the resulting comeback on Easter morning combine to provide the true cornerstone for the entire Christian world and this trader's life.

It was indeed the greatest comeback of them all.

Certainly puts a nuisance pinched nerve and lackluster April performance in proper perspective.

Have a great and inspiring trading week.

Saturday, April 11, 2009

** VIDEO ** The Weekend Trader

Please note before you watch this that my reference to "Thursday and Friday" were really to "Wednesday and Thursday" as I was simply recalling the last two trading days which -- of course -- are usually Thurs and Fri. Duh.

Anyway, today I follow up on Wednesday's talk to Linda Raschke's team as I expand on and clarify a few of my responses with respect to stops and trading system setup. I also touch on the harmful concept of a daily or weekly goal, as well as the irrelevance of short-term results from any system or methodology.

Enjoy the video and weekend.

Friday, April 10, 2009

Good Friday

Taking a break today -- as are the markets -- to put priorities into perspective.

Have a reflective Good Friday, and look for "The Weekend Trader" as usual.

Thursday, April 9, 2009

Thursday Notes - "Clear!"

3:50pm Well, I'm chalking the week up to vacation from a P&L perspective as I'm still not quite in sync with the current market rhythm, including dealing with often non-existent volatility and making the effective transition today from Europe to the U.S. market after the earnings news began to hit the wires this morning.

As far as today's trade goes, I at least managed to cut an early five digit loss (the result of some early aggressive U.S. shorting) to an acceptable -$6K chip scratch once I finally figured out sellers had begun their long weekend early.

And while I admit I'm pressing more than I can remember in quite a while, the good news is I seem to be minimizing the cost of blinds and antes. Let me put it this way: Considering (1) the market's poor intraday rhythms this week, and (2) my week's overall performance that I'd frankly grade a C at best, I'm rather shocked my chip stack didn't take a hit more than the actual -$5K on the week. It should be down -$20Kish easily all things considered. So perhaps some some subconscious chip preservation mode has kicked in ... who knows.

As I said in my talk last night, I tend to best feel the market's pace when it's volatile and emotion is rampant (sort of like playing Poker with a table full of players on emotional "tilt"). And for now, I'm not feeling the other market players emotions, which is ultimately what drives confidence, price movement, and creates those funny lines we call charts and indicators.

My only current concern is I'm not mad at my week's performance (or perhaps I should say my "weak" performance). That in itself raises a red flag to me as frustration is usually what fuels the next hard run. That or a hard smack which hasn't happened since the infamous February 10th.

Maybe I need to be mad at not being mad.

Anything to fuel motivation and jump start the trading heart's current rhythm.

Hand me the defibrillator paddles.


Wednesday, April 8, 2009

Wednesday Notes - Continued Slop

First, a thanks to Linda Raschke and her team for inviting me to speak in her forum this afternoon. I hope all found it worthwhile. There's nothing like talking shop after hours to keep one's head in the game.

As for today's trade, today's scorecard reflects a decent turnaround from a rough start to end the day with at least some confidence as we continue to deal with horrendous market pace ... at least for those of us that don't prefer the range game.

For a while, it looked like I'd have the first consecutive losing day stretch of the year as I'd officially call my trading over the last session and a half a "slump", until deja vu struck shortly after noon with almost the identical setup to yesterday's stopped trade opportunity presenting itself (see chart, click to enlarge ... and no, that's not the same chart as yesterday ... it just looks that way) which I again jumped on which promptly turned a frustrating and unprofitable morning around.

And if it had turned out again today that it didn't pay, I'd do it again the next time ... and the next ... and the next. They're just shots at the basket gang ... they don't all go in.

Anyway, I continue to grade the current market pace red (there's no color for "puke") until such time I can either get in better rhythm with the current start and stop pace on little volume, or until the band stops taking breaks so we can dance.

Until then, capital preservation and maintaining confidence remain key as I wait for the game to open up.

Tuesday, April 7, 2009

Tuesday Notes - Market Is as Market Does

3:30pm There are times to press the accelerator, and time to apply the brakes. For me, last fall the accelarator was all out floored, vs. the last two days where I've used both the foot brake (light size with probe attempts only) and emergency brake (a stopped sequence).

And so it was that the pi$$ poor pace from yesterday spilled into today where I was quite satisfied with a -$3K chip ante on trade success that had to be 25% at best today. Thankfully, I'll grade my size management fairly high today, with the one exception noted on the attached charts (click to enlarge) when I positioned fairly heavily for an expected mini-squeeze to the north which was supported by the price, TICK, and VIX charts ... along with a time of day that is well known for one last morning push.

Yet as Forrest Gump would say, "market is as market does" regardless of how many indicators skew probability in one's favor, and I felt I did well to recongize the trade premise had gone bust and took a rare full stop on the speculative sequence when the market broke back to the south as noted on the chart. And as I look back at the setup, I still like it despite some of the longer term intraday charts providing resistance on a further pop. Just goes to show nothing is 100% in this business of probability.

And so we await a pickup in volatility and pace, while trying to minimize the cost of blinds and antes as the market deals us a range game for the time being.

Yet the worst thing I can do is leave the table.

That's when pocket Aces usually get dealt.

Monday, April 6, 2009

Monday Notes - Trade Canceled Due to Indifference

3:30pm Well, today's Red Sox opener was postponed due to rain, and so similarly I'm canceling the rest of today's trade due to indifference as I didn't care much for today's pace and want to hang onto today's modest +$4K chip gain before doing something stupid.

Most of the net gains were provided in the morning session by trading a couple of 5-minute pullbacks short, along with some teeny 1-min trend setups where I stuck around as much as Dennis Rodman at a black-tie formal ball.

And with many intraday charts screaming indifference heading into the last 45 minutes, I've decided to simply let the market break without me if it decides to, and if it does, simply focus on the morning setup.

Hopefully, the sun will be out tomorrow.

Sunday, April 5, 2009

The Weekend Trader - "Guest" Poster

I've said before that some of the greatest insight on this site is provided by traders and other onlookers subsequently commenting in response to my initial post, and I continue to encourage readers to scroll back through recent posts to catch some of the dialogue.

In today's case, I'll let James' comment to yesterday's "Life After 40" post serve as some final weekend inspirational thoughts.



I’m 61, so I’m on the back nine of life approaching, let’s say, the eleventh green. My front nine was pretty good, but if I’m going to keep it together coming in, I’ve got to pay attention to what’s working for me now. The odds are this will be different from what was working for me going out.

First, know the difference between what’s important and what is not. Then don’t waste time on the latter. After all, we’re not as fresh as we were earlier in the game and our resources are more limited to cope with its ongoing challenges.

Second, if you hit it into the tall grass and have to improvise to get back into play, remember what you did to recover and do it again. Then do it again and again until maybe you’re confident enough to try something new for the fun of it. Remember, though, the game is ending, not beginning, so never lose sight of the simple shots, the ones saving you to begin with.

Third, accept the fact you don’t have the same skills you used to. For sure you can’t hit the ball as far. But you still can be terrific around the greens. KISS. It’s a whole different game when you’re playing off the short grass not swinging for the bleachers hitting it out all the time. You might even win net.

That’s how it is at my stage, still interested and still playing within my abilities as I head for the clubhouse, the big trading room in the sky.


Well said.

Enjoy a restful Sunday.

Saturday, April 4, 2009

The Weekend Trader - Life After 40

This one's for those onlookers in their 20s and 30s, as well as to those beyond 40 who I suspect will quietly nod and grin.

I was watching clips from the current PGA tour stop yesterday when I heard a commentator mention that Tommy Armour III was a model of tour perseverance in that he finally broke through the $1 Million annual winning mark last year, shattering his former glass ceiling by earning $1.5 Million. His age? 48.

Of course that struck an immediate chord with this 48 year old trader, given a eerily similar situation with my 2008 trading results. And while Armour turned pro at the age of twenty, versus my beginning serious pursuit of trading in my late 30s, the analogy remains valid.

Napoleon Hill writes the following in the often-controversial book "Think And Grow Rich":

"Seldom does in individual enter upon highly creative effort in any field of endeavor before the age of forty. The average man reaches the period of his greatest capacity to create between forty and sixty. These statements are based upon analysis of thousands of men and women who have been carefully observed. They should be encouraging to those who fail to arrive before the age of forty, and to those who become frightened at the approach of "old age", around the forty-year mark. The years between forty and fifty, are as a rule, the most fruitful. Man should approach this age, not with fear and trembling, but with hope and eager anticipation."

Say what you will about other portions of the book, Hill nailed this concept and then goes on to cite many famous individual that hit their stride well after forty.

As many know, last year was my personal Bamboo year, which we all saw grow quite publicly before our eyes as momentum begat momentum which begat even more momentum. Frankly, when I look back at last fall, I don't know how I did it, just as I don't quite know what to make of this year thus far where I'm waiting for the inevitable multi-day slump to set in, or when I again momentarily let down my guard in Feburary 10th fashion. Oh, it will happen ... and when it does, all energies will be directed at minimizing its damage.

By the way, for those new to the blog, please understand any reference to my results when I step away from personal diary mode such as I'm doing here, are meant solely for motivation to others. For in a world and industry where smoke and mirrors prevail, and we all begin to question what is real, or more importantly, what is possible, I hope that sharing the reality of this stage in my life helps reinforce to others that all things are possible. For as I said at the end of the final 2008 "Night to Dance" post:

"I encourage you to consider printing this and putting it someplace safe that you can reference if you ever get down, or if someone ever tells you "you can't". Because they're dead wrong. If you're breathing, you can and you will. Regardless of what the pundits say or how much the temporary pain may sting, don't ever let anyone take away your spirit and joy for life. Who knows, 2009 may very well be your personal Bamboo year.

So for those onlookers under 40, I say with conviction that the best is yet to come. For those in their 50s and 60s, I suspect you'll probably tell me it gets even better. Talk to me on that one gang, if it's not, I'll be extremely bummed.

At this end, I find myself at a very interesting point in my life, as I contemplate how to spend the next decade while in the midst of what will arguably be the most productive 10-20 years in one's life. One example is that after next year, our youngest daughter will be off to college and we'll be in our official empty nest years.

And while I won't bore you with the questions I'm asking myself at this point in my life, they include where trading and blogging fit in as I move ahead. Frankly, as it relates to portions of this blog, I'm not sure how much more I can say that hasn't already been said.

Yet for now, this ongoing glimpse into what is traditionally an intensely private world of a trader continues, and I suppose as with most things in life, time will provide the ultimate road sign.

I just hope the sign looks like a futures chart so I can try to interpret it.

Enjoy the weekend.

Friday, April 3, 2009

Friday Notes - Increasing Sample Size

4:00pm Someone asked me the other day why I started trading Europe again after having backed off substantially for the first part of the year, and my response referenced the fact that I'm just waking up earlier naturally and trade it if I see anything.

I also mentioned that I'm simply wired such that I trade best and get more aggressive (in a good way) after getting knocked around, which is why (1) most of my best days ever start off with losses or missed opportunities, and (2) I created the fictitious drawdown concept last year which has become the cornerstone of my psyche as noted in the chart to the left and the ongoing "fictitious prior-day" column of the daily scorecard.

Yet there's another reason I prefer to trade Europe if I'm alert, and that's because it simply increases the daily sample size from which to derive trading opportunities for a trader who purposely limits his trading to one market (ES) for focus purposes ... along with either the DAX or FESX which has ES-like rhythms and follow-throughs from the prior day trade.

Let's put it this way, if I can't end the day positive by finding enough opportunities during what are essentially two complete sessions over the course of a single day, then I shouldn't be doing this.

And the DAX provided Exhibit A today as it clearly provided the better of the opening trade opportunities with a follow-through to yesterday's supports, where it first continued the existing uptrend before overextending and snapping back hard (keep in mind fading overextensions at the barf point reflect my favorite and most profitable sequences). The only problem was I slept until 6am after everything had already occurred.

Compare that to the ES general session open where pace, volume, and pattern setups were all pi$$ poor by comparison. I've provided both early session charts for comparison (click to enlarge).

And while I sometimes don't make an effective transition from the Europe "day" to the U.S. "day", like our ongoing poker analogy, you can't beat increased sample size, and I don't recall a day in recent memory where BOTH markets didn't present at least one solid opportunity.

So that left me trying to piece together a few trades in the U.S. session where I made about enough to pay for a +$2K bologna sandwich on extremely light volume and lack of interest, and simply protected the week's +$43K chip gain on what I largely considered a mental day off after missing the higher probabilty Europe open.

Oh, and get this ... I came in 3rd last night to kick off the local Q2 Poker tourney leg, and here's how I lost. While down to a three-handed game, I had 6-7 in the small blind against the big blind, and the flop came 6, 8, K. I was first to act and went all-in, having a solid read on the other guy who I'd later find out was holding A-2. He thought about it and called me, thinking I was bluffing. So I'm clearly ahead ... until the turn & river came 8-K which counterfeited my pair of 6's and gave him Kings and Eights with an Ace kicker. Sick. The good news is I played it as well as I could have. Yet like trading, probability is the ultimate judge, and this time it sided against me.

Thinking of a Foxwoods trip this weekend. Got a local cash game going tonight and then we'll see what Saturday brings.

Thursday, April 2, 2009

Thursday Notes - Tip the Dealer

3:45pm Today reminded me of much of 2008 in that I was pretty awful trading Europe overnight, but learned a few lessons for the day and got ticked enough to both wipe out the entire Eurex loss by the U.S. open, while staying extremely focused throughout the U.S. session to clock in a highly efficient +$17K day by 2:30pm ET, after which I traded very lightly.

Most of the gains were by being long biased on several price & TICK pullbacks in the morning and early afternoon sessions given the tremendous TICK strength, and not getting wiggled in the slop.

Of course the fact that the market was trading along today's 5- and 15-minute channels in perfect trend & oscillation fashion (see charts; click to enlarge) helped today, which is like dealing me pocket Kings a few times, so I'll pass a few chips the market's way today.

Such movement and pace conditions are simply ideal for me, and you can see how the 5-minute trend played out, got stretched as noted on the higher 15-min chart, and then retraced back to the 15-minute support where the game began anew. My only regret was not holding a midday short and 2:25pm long longer (don't get me wrong, I got solid pieces), yet missing the larger swings were more than made up by scalping earlier sequences where it seemed I got every bottom and top of the moves.

Of course you don't get Kings every day, and many traders make the mistake of trying to trade day 2 like day 1 ... so keep in mind the 5 & 15 minute rhythms will likely be meaningless on Friday.

And while I gave a small amount back in the late session, I did well to recognize I was losing focus and ended only 5% off my equity high for the day (yea, I should have nailed the 3:02pm lower high, but my reflexes and brain were toast by then). Frankly, the last hour reminded me of one of "The Tao of Poker" rules that reminds us to back off when the game goes bad, whether it be a change in cards (patterns) or players (traders behind the patterns).

Of course, last Wednesday also came to mind where I wasn't particularly disciplined in the last hour.

And yes, I'm still dealing with the pinched nerve and am seeing doctor #3 tomorrow. At least days like today help take my mind off it for a bit. Don't worry, I'm a trader and won't rest until I find away around, over, or under that obstacle. As with trading patterns that don't suit our personal preference, this too shall pass.

Lastly, a reminder to reread "The Jazz Trader" post anytime we think about being critical of another trader's style or approach. Some recent commenters might do well to remind themselves there's no right or wrong in this business.

Only profits.

Don't forget jobs data comes out tomorrow morning.

Also, poker night tonight at this end as we kick off Q2. btw, I never could make up the final ground last quarter as I went all in with Pockets Kings last week and got two callers with A-K and A-Q. Yea, I know I had them crushed ... except a damn Ace came on the turn. One of only two outs in the deck ... go figure.