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.


ES_Addict said...

Hi Don,
Being a transplanted Chicagoan and one who also enjoys sports, I can appreciate the commentary on the Bulls and their young team. Although a self admitted fair-weather fan when it comes to NBA and the Bulls, they do remind me of the Jordan era and how their path to the Championship had to go through Motown. They should be fun to watch and they are certainly giving the Celts a workout.
When it comes to sports, I am passionate about MLB and the Chicago Cubs (no jokes please, its been a tough life but "ya gotta love baseball before ya like the Cubs").

Now for the trading question. Being new to your blog, I am in the process of reading the archives and favorites and this question may have already been answered...

One of your trade set-ups is the breakout and your entry is on the first pullback. I too like that set-up but uncertain at what level in that first pullback to participate.

Can you explain your thought process on what you look for and measure in determining what your entry level/price will be on that first pullback? Is it a certain # of points, a support area, R/R ratio or...?

An example today in the ES would be around 0945-1000 area when price pierced yesterday high (861.5)and overnight high (863.25). It pulled back about 2.25 pts before taking the next leg up and continued to stair step upwards.

My apologies for the lengthy post and hope I did not break any rules but your insights would be appreciated.

Steve K.
Williamsburg, VA

Lord Tedders said...


Talk to me about how you are keeping your head in the game during this slow period.

I am experiencing the same phenomenon with my trading right now. I know that after the doledrums comes the storm from an intellectual standpoint. But how do I make that emotional connection to stay driven?


Don Miller said...

Steve -

At this point in my trading, it's pretty much feel. Prior resistance becoming support or a moving average sight line can of course help, which of course isn't rocket science.

Be careful of over thinking ... which chart vendors and gurus want you to do. Just ask yourself "who's stuck" in the market upon a given move, and that will usually be your guide.


Don Miller said...

LT -

No good answer here, just as I struggled with re-starting the engine again in January after hitting the brakes in December after the 11 1/2 non-stop 2008 run.

Oh, I'm still trading ... just very lightly ... and that helps keep me from trigger lock. Yet I'm obviously going to have to "get off the bench" when it's time if I'm to make another serious run at back-to-back $1M years.

Right now, that's the current carrot keeping me motivated ... following up last year's record performance with another 7 digit gain ... which in the long run, may end up being more difficult than last years $1.6M for a number of reasons I've referenced lately.

Yet since I don't like to lose or give in to those who say something is impossible ... or at least highly unlikely ... that keeps the blood going and the feet moving.


B.S.trader said...


No blood, no foul right, blacktop rules. Don't know if you were referring to me or not.

Taking exception with my post is incongruous. Why accept posts at all if it is a personal diary? I was simply calling it like I was reading it.

I refrained from reading your blog for a few weeks due to the loathing and whinning, when I tuned in last night to more of the same, my impulses got the best of me.

And I am stictly referring to your outlook on present market conditions, your personal life and medical conditions are understandable rants. BTW, try inversion for your pinced nerves.

Good luck Don. The market of 08 and parts of 07 are gone for awhile. Well have our days here and there, but nothing like 3rd and 4th quarter 08.

Alex said...


You've mentioned that one of your favorite setups is the first pullback of a new trend. Once a trend is established, what are some good things to look for in determining the entry point? A pullback to support of some form makes sense, but this can really vary and make the differnce between a winner or a loser. I've been trying a tick pullback to 0 after a thrust where Tick has been firing 1000 or >. Are there some other thoughts, as the depth of the pullback can be pretty tricky at times.

Thanks for your input and all the good effort put into your website.


Don Miller said...

Best wishes Star.

Agree on the market changes which were expected ... thus the peronal decision to take a break and cut back on the volumes.

For all, a reminder to re-read the diary FAQ and change the channel as needed ... as this will remain a personal diary full of opinion and venting which is highly therapeutic at this end.

Let's also keep the respect for all traders, as there's no such thing as right or wrong in this biz, and differences of opinion are what makes a market ...and a very lucrutative career for those few that "get it".


Don Miller said...

Alex -

I think the best answer is there's no good answer. How deep a pullback, how far the extension (if any), etc., are all unknown variables.

I just tend to leave lots of room for error by scaling in as the market "inhales" toward wholesale price points and scaling out as it "exhales" toward retail price points. Odds are that you'll often pick up "something" over the long run.

Yet it's just one tool in the toolbox, often providing modest keep in rangebound markets, and of course you can't build a house with just a hammer.


E-Mini Player said...

"I just tend to leave lots of room for error by scaling in as the market "inhales" toward wholesale price points and scaling out as it "exhales" toward retail price points."

Don - by that, do you mean you average into a position as price goes against your first entry?

Madison said...

Thanks Don, reading your blog is a daily return to honesty and sanity for me - rare in this crazy world we live in.

Many good wishes for your health and happiness.


Don Miller said...

E-Mini -

Sometimes it's a better price, other times it's a worse price ... so long as the premise for the trade is still relevant AND I'm not fully committed, yes.

Keep in mind though that I may lighten size during the scaling in process as well depending on how I feel as the trade progresses.

Also, keep in mind this is NOT "averaging down" in the newbie sense in that I'm initially managing risk with size (I rarely ever get my definition of a full lot on) and the trade sequence premise remains in tact.

As always, one person's style only as trading remains highly individual.


E-Mini Player said...

Don, totally get it. Not "averaging in" for the sake of averaging in (newbie style); just building the position as long as the "setup" and the trade premise is still valid. Exit/add/scratch/re-enter as needed :)

Proverbs3six said...

Good Evening Sir,

The end of this month ushers in a new beginning for everyone. Like you, many of us have experienced some fairly bleak days recently. And as the old adage goes, “It is always darkest before dawn.”

Not that I need to remind you, but you continue to be an inspiration to many. Sharing your thoughts on a daily basis with hundreds of traders requires not only perseverance but creativity as well. I for one look forward to reading your writings and, if nothing else, feel encouraged by what you experience and are kind enough to share. As a psychologist, I realize that those trained in the left-brained arenas of finance/accountancy are usually not as gifted in the right-brained strengths of writing/journalism. Yet you have handily risen to that challenge.

A number of comments posted by others on your site in response to your writings reflect a true concern for you. Count me in as one of those. I would like to add that as a fellow Believer, I recognize that hardships we experience are often a result of our faith…what better way to weaken our commitment to the Lord than to attempt to defeat His followers? You were bold enough to post the real Reason for Easter--a true expression of your beliefs! Nonetheless, such statements are a classic target for the Enemy, one who has come to steal, kill, and destroy. So I am not at all surprised by your currently confronting such a challenging environment. In any event, what the Enemy means for harm, the Lord can turn to good (Genesis 50:20).

Thank you for your boldness and confidence. Blessings to you as you continue to bless others.

“For I know the plans I have for you," declares the LORD, "plans to prosper you and not to harm you, plans to give you hope and a future.” Jeremiah 29:11

traderboy said...

Awesome post Proverbs3. Thank you for sharing.

Trader Kevin said...

Proverbs3six: "As the old adage goes, 'It is always darkest before dawn.'"

There's another old adage: "It's always darkest right before everything goes completely black."


BTW, I dig you handle. Friday's here...but Sunday's coming!