Sunday, May 31, 2009

The Weekend Trader - Perspective Shift

OK, after a long weekend of intense private reflection which included eight hours at the Foxwoods cash games today, I think I've regained at least some perspective on life and the last month thanks in part to E's comments, along with several heartfelt discussions with some very close industry peers.

Here are the highlights of both the external and internal discussions:

- In 17 months, you've slowed down at times, but never taken an extended break;
- You've earned in 17 months what it would take many at least four decades to earn;
- December's slowdown aside, you've finally hit an extended performance wall ... recognize it;
- Above all, protect what you've accomplished ... you're at a point in life where preservation may be more important than growth;
- Lessen focus on the 12/09 target ... simply take what the market and your performance give you and allow yourself time to address your back issue and enjoy some of the summer.
- Damn it Don ... relax, put some fun back in your trading, and take some real time off, will ya? You've more than earned the right to do anything you darn well want now, and can choose when to "play the game" ... if at all.

OK, this bull-headed trader is listening. And while I'm not going to shut down, I am going to implement the following change in mindset which will hopefully sync with my highly-driven personality (which ain't gonna change).

- View the last year and a half as a continuous game that remains in progress until ended.
- Decrease emphasis on the time element in my trading targets and simply let the protective stop and any future gains do the work and tell me when it's time to stop. The stop (which is a month-end stop) remains as I suggested on Saturday ... $2.0M. The game ends when the stop is hit.
- So long as the game remains in progress, replace the specific 2009 earnings target with a realistic accumulated earnings (beginning 1/08) target range. And that range will initially be $2,500,000 - $2,700,000.

All of these changes are reflected in the new chart to the left. And if you can figure out why I've chosen to show the chart upside down -- which is intentional -- drop me a comment!

Please understand my intent since restarting the engine in January 2008 was always to continue on full speed until -- and not before -- peformance told me otherwise. And now that seems to be happening.

So the great game continues, albeit with some slight shifts in perspective.

I know this ... it can't get any worse than May's tepid profit.

If it does, the protective stop will ensure it doesn't get any worse than $2 Million.

I can see the heads nodding. Just don't hurt your neck "E" :-).

Saturday, May 30, 2009

The Weekend Trader - The Unwritten Chapter

If someone told me that I had to throw away all of my trading books except one, and that one would have to last me the rest of my life, it would be The Tao of Poker by Larry Phillips, which I've referenced many times over the last year.

Not a trading book you say? Then you've missed what trading is all about, for that $9.95 was the best money I've ever spent on any trading product, and has in return made me millions.

And so after not sleeping well last night after a pi$$ poor weekly performance, I rifled through the well-worn highlighted pages once again to try to reset my personal trading heartbeat, and am again leaning on the following realities:

Rule 180: Be prepared for long cold spells. Given the recent 17-month run, I'd almost forgotten it could occur.

Rule 182: Three or four times a year, you are going to have a poker session that is simply and utterly horrendous. Some years, you may have half a dozen of these sessions. Know ahead of time that they will occur, and try to get through them as cheaply as possible. Over the course of a career, I'll define "session" as a trading day, week, or even month, with May's tepid performance -- especially the last two weeks -- falling into that category.

Rule 187: Avoid taking yourself too seriously. I'll likely always have trouble with this one.

And most importantly (which I've referenced in the past) ...

Rule 222: It's possible to drift away from our roots ... after an initial burst of enthusiasm in the early days of your poker career - an intensity and excitement fueled by the newness of the activity - you reached another stage where you seemed to pull back a little and get too comfortable. The truth is, it takes a lot of energy to stay on the cutting edge of anything (not just to get there, but to stay there), and this is true whether we're talking about poker, athletic achievements, business, entertainment, art -- anything. It can be draining to be on top, so eventually we fall back a little. We're comfortable with letting somebody else take the lead for a while. It is sometimes helpful to "return to our roots" - in the sense of reaching back to this best sharpest self. We should try to resurrect once again that time where we were playing at our best. We need to get that edge back, not just lay back in a warm cocoon of complacency.

Yup ... Rule 222 is again screaming at me. And here's why.

While I've only been sharing the public diary for 11 months now, we need to go back to pre-blog days where I'd lost much of my motivation for trading at peak performance for a number of reasons that I've referenced in the past. Then I began the 2008 personal commitment challenge, created the fictitious draw concept, and then a few months later launched a public blow-by-blow diary which was a way for me to personally refresh the "intensity and excitement" that Mr. Phillips so keenly references above.

And it worked -- oh did it work! -- as the performance momentum began slowly but steadily before snowballing as fully chonicled day-by-day in this rare glimpse into a trader's real life. And since that decision was made some 17 months ago on December 31, 2007, the self-driven "intensity and excitement" has earned me $2,048,072 after expenses.

Yet as I mentioned in Thursday post and Friday's video, there now a huge "but" on the horizon (no jokes please as there's only one "t" in the "but" we're talking about here), as the intensity remains absent and waning, as evidenced by the poorest monthly showing in a loooong time. I'm not crisp or sharp, am simply spinning my earnings wheels, and have been sloppier, less focused and more easily distracted than I can remember in the last several years.

Like many, I need to be highly motivated to perform well. It's been that way since I was a child, and at the age of 48 isn't likely going to change. It's just who I am.

And so as I turn the next page on the monthly trading calendar, I need to either find a new spark, lower my goals to simply making an "average" keep (man, I hate that word), or perhaps come to the realization that the Big Bell Ringer in the sky has told me enough is enough, you've climbed your Mount Everest, the blog has served its purpose, and it's time to focus on other parts of life. Perhaps I'm being tested at a level I don't quite understand. (OK, drop the "perhaps".)

Frankly, I don't have an answer. However, while I search for it, I'm going to implement the protective earnings stop I referenced in yesterday's video. Not on total trading capital, but on the cumulative earnings figure from January '08 that I mentioned above. And that stop will be an even $2.0M. For as long as I stay above that water mark for the rest of the year, I will have averaged the $1.0M annual figure for two years which was my initial goal in the first place.

Giving up on making $1.0M this year? Not really. It's simply called protection to avoid an Archie Karas type road to ruin. btw, threre's always been very strong speculation that Edwin Lefevre of the classic "Reminiscences of a Stock Operator" also ultimately lost all that he had gained. And history has shown that the downward momentum spiral can be even swifter than the upside momentum.

As for the blog, I'll continue to think about its future continuation and public viewing. As I've said before, ironically, I tend to be an extremely private person. Most half-decent real traders are. And frankly, sharing every turn of my journey hasn't always been easy, as people can so easily misinterpret the thinking out loud, including the momentary year-end '08 celebration, this year's repeated references to trying to again find and sustain that motivational "spark", and everything in between.

One change I'm implementing immediately is I've ditched the experimental performance scorecard, which simply hasn't done the job for me this year.

To my onlooking friends, I wish I could "make up" a better current chapter of my trading career which would make for better reading. It's certainly more fun to read about the good times (unless you like NASCAR car crashes). Yet it is what it is, and both the current and future chapters of this unusual live non-fiction "book" are both unwritten and unknown by this author.

With apologies to Steve Carrell, if this "book" had a title, it would probably be "Don in Real Life". For you can rest assured that every letter, word, and sentence in these 375 "pages" has been the 100% God's honest truth.

I eagerly await a new chapter, as the last one has clearly run its course.

June 27 Cookout Reminder!

Friday, May 29, 2009

** VIDEO ** Friday & May Perspectives

Today I discuss the upcoming June 27 Boston Bamboo cookout, my recent performance (or lack thereof), and reflections on the blog in general.

Please note in the video I referenced "2008" as the last time I had such a poor monthly performance at +$30K. I actually meant "2007".

Enjoy the weekend.

Thursday, May 28, 2009

Special Post - The Missing Inches

3:45pm I need to step out of the moment and pause the life and trading DVD currently playing before all of us to do some serious reflection as we get ready to wrap up May and approach the one- year mark of this public diary and the 17-month mark of this incredible +$2.0M run. And in doing so, I'm going to follow up on yesterday's inspirational video (thanks again Barbara) and first hand the mike to Al Pacino for some words of wisdom.

You find out life is a game of inches.
And so is football.
Because in either game, life or football,
the margin for error is SO small,
I mean one half a step too late or too early, and you don't quite make it.
One half second too slow, too fast, you don't quite catch it.
The inches we need are EVERYWHERE around us.
They're in every break of the game, every minute, every second.
On this team, we fight for that inch.
On this team, we tear ourselves and everyone else around us to pieces for that inch.
We CLAW with our fingernails for that inch.
Because we KNOW when we add up all those inches, that's gonna make the *$%#& difference between WINNING and LOSING ...
between LIVING and DYING.
I'll tell ya this ... in any fight, it's the guy willing to die who's gonna win that inch.
And I know if I'm going to have any life any more,
it's because I'm still willing to FIGHT and DIE for that inch.
Because that's what LIVING is.
The six inches in front of your face.

-- Al Pacino, "Any Given Sunday"

After tomorrow, five months of this 2009 journey will be in the books. And it remains clear that in 2009 and my worst monthly performance in quite a while at only +$40K after today, I haven't been willing to fight for the inches. And if you read between the lines of yesterday's blog post, it was evident as there was money (inches) lying all over the place in the classic morning, and I was simply willing to settle for a very modest day after sleeping past the Europe open, and then leaving some money on the table early in the U.S. session before getting a bit sloppy in the afternoon. Today's trade also didn't go particularly well until the afternoon session, but as always, it's not about the day ... it's about the year and the overall monthly earnings curve that's beginning to flatten.

And without dwelling on the past, it's clear that in 2008 I fought for every inch. 365 days less the late December pause. Many nights with less than 4 hours sleep ... a few with none. Trading Europe and the U.S. sessions. Fighting not only for every inch, but every 1/16th.

There's a reason for the record run that seems to be losing steam. And that has been the living, sleeping, and breathing the market 24x7, journaling moment by moment thoughts, and essentially putting myself in a zombie-like zone for much of 2008 and parts of 2009 while riding the confidence and performance momentum and trading day after day, week after week, until it finally dried up.

Last year, I clawed for every inch. And at the end of the year, the fingernails were stubs and bleeding. That's simply what champions do. They do what others can't or won't. They do what I'm not doing this year (not by design certainly) -- and I won't list excuses - as many of my sequences have been off by an inch. Too many. And the missing inches have clearly added up.

In the big picture, despite a poor May, I shouldn't complain about sleepwalking to a Year-To-Date $400K+ income on top of last year's bounty. (btw, that's not a boast, rather a significant criticism). And regardless of what I decide to do from this point forward -- and it's all up for grabs including whether I simply bank the earnings and/or go back into seclusion to once again enjoy my private life after this one-year public diary experiment ends -- it's been one helluva run for this 48 year-old who wanted to find his true potential while trying to do something to help cut through the trading industry smoke & mirrors by openly sharing trading realities -- not myths or psycho-babble crap -- via the blog.

The real question is who's willing to go after the missing inches??

This year, I seem to be sitting on the yardstick. Now that's a great visual.

Take it away Al ...

And here's the daily Boston Bamboo picnic reminder. For those who have asked, spouses, family, and friends are indeed welcome. Just be sure to RSVP. I'm also open to ideas for Saturday morning for those in town for the weekend.

Poker night tonight ... and I plan on working on my patience.

Wednesday, May 27, 2009

Wednesday Notes - Mid-Range

7:00pm Well, the market's version of an ATM was in full force in the Europe and early U.S. sessions as we were blessed with another textbook oscillating morning after trend day (gotta love 'em) where I had my "B+" game on, before tiring later in the day and being less sharp on the afternoon breakdown sequences.

All in all about what we'd expect after yesterday's action, with a bit of surprise at this end in terms of the afternoon breakout heading south vs. north. Then again, we do remain in a longer-term range and closed smack dab in the middle.

And so we'll break out longer-term 120-minute range chart for once to maintain some sort of perspective on the forest as we hack at the daily trees.

In general, I feel my market reads remain strong with my execution still lagging behind a bit. June will be focused on merging the two.

btw, thanks to Barbara who sent me this incredible inspirational video which is a compilation of some of the greatest movie motivational snippets. Seems like I'm not the only one using corny movie analogies to get the blood pumping.

I might begin playing the video every morning ... especially after a loss.

And yes, you've got to get mad!

Reminder: 1 Month countdown to the Boston Bamboo Cookout. Please be sure to RSVP if you plan on attending.

Tuesday, May 26, 2009

Tuesday Notes - Avoiding the Stroller

5:30pm Let me start by saying that I've begun writing today's entry at least four times searching for the right words, so this one had better stick.

Today should have been a disaster for me, and here's at least six reasons why. First, with the Monday U.S. Holiday, it was arguably the first opening day of the week. And you know my record on Mondays. Second, I'll almost always readily take a wholesale fade entry on a significant emotional spike in one direction, before ultimately attempting to align with the immediate trend if market action suggests it's lasting. Such high probability back-to-back sequences have been bread and butter sequences for me over the years. Of course high % price retracements didn't come for hours after the morning moonshot.

Third, like many scalpers, I usually draw down on low-probability monster trend days. Fourth, I've been off my game lately. Fifth, after fretting much of the weekend, I was planning on swinging hard to break out of it today. And finally, the non-trading distractions keep coming as my new night guard (yes, I'm a teeth grinder in my sleep) was ordered wrong, last week's MRI results came in, I learned today I'll need a crown and likely root canal, and to top it off, Grace's engine warning light went on while returning from the dentist.

Umm, God - please remind me to ask you about today when we meet down the road. Is this another test or have I forgotten that keen sense of humor of Yours?

And so as happens from time to time (think Driver's Ed simulation where the baby stroller darts out), it seemed that everything was lined up to make me fail miserably today. Frankly, it should have been one of those days from hell that we'll throw into the fire pit on June 27.

Yet for some reason, an inner circuit breaker kept me even on the day on very light trading.

For it just didn't feel right. Oh, I definitely had a long bias at open, and there will be stories of traders buying and holding the open and making their monthly keep on a single trade which may happen twice a year. And I remained long biased throughout much of the day looking for decent retracements, yet there were few optimal wholesale long entries once the surge began. And I neither chase nor "buy and hold".

I imagine new onlookers to this diary reading only the last few posts are wondering "how the hell has this guy made millions?" Perhaps the answer is sometimes it's avoiding the potential nightmare by staying out of your own way.

So for one day, I guess I did a pretty good job not tripping over myself.

I also avoided the stroller.

A reminder of the upcoming June 27 cookout for all interested.

Monday, May 25, 2009

Special Invitation - Boston Bamboo Cookout

At long last, the date has been set:

Date: Saturday June 27, 2009
4:00pm 'til whenever the fire pit dies out under the stars
Note the morning and early afternoon will be open for those interested in local golfing, fishing, beaching, etc. You'll need to make your own arrangements, although I might join in.
Place: My home in South Yarmouth on Beautiful Cape Cod, Massachusetts
RSVP: Required. Please provide name, email, and phone # by June 20 to me via email. I'll provide the address and detailed directions via email.
Cost: Zippo (We may pass a hat to cover some of the food if the group gets large enough though.)

While I expect most of those attending will be those in the "Boston Bamboo" group within driving distance, the cookout is open to all who have walked alongside me on the virtual path over the last year to:

- Establish or renew in-person friendships
- Share war stories around the fire pit
- Toss day-from-hell statements into the fire (I'll certainly bring mine)
- Mark the 1st Anniversary of silly blog sports and movie analogies
- Celebrate (belatedly) 2008's CTA-besting Bamboo year
- Celebrate (in advance) onlooker Bamboos in progress
- Then again, do we really need a reason to simply eat and have a good time?

A few notes:

I'll provide the food, "basic" drinks (unless you prefer to bring your own which is fine), venue, etc. Just bring yourself. Spouses & friends are certainly welcome.

I don't know if we'll have five or fifty ... my guess is we'll have a modest-sized group. But then again I didn't think the blog would take on an industry life of its own, so I've given up trying to forecast. I'm pretty sure I won't need traffic control though.

Lastly, please note this is not a trading or "listen to Don babble" event. It's simply to have a good time and get to know each other. Also, cookout crashers with any other agenda will be hog-tied by the group and forced to listen to Suzie Orman and Jim Cramer tapes before being cast into the lobster tank. Seriously, I'll be opening my home to all and won't tolerate any funny business.

See you then!

Saturday, May 23, 2009

The Weekend Trader - View From the Bench

Plesae note I'll be travleing and offline much of Saturday and Sunday, and will simply let Friday's post and comments suffice for now as the steam continues to exit my ears.

Plus, my inner coach has told me to simply shut up and sit.

Enjoy the weekend.

Friday, May 22, 2009

Friday Notes - Benched 'til Tuesday

11:50am (Note the early timestamp as I benched myself at 11:48am.) OK, for the first time since I began blogging almost a year ago, I'm going to use the dreaded "S" word which I typically avoid like non-trading analysts. I'm in a slump. I'm fouling off more pitches and am leaving more runners on base than Big Papi.

I'm reading the market exceptionally, yet my executions and trade management are off and I'm clearly pressing as indicated by finding myself entering wholesale sequences far too early, and thus ending up on the retail (losing) side of the trade far too often. Note the two consecutive red scores for patience ... it's extremely rare to see even one. And lack of patience was also highly evident in my poker game last night!

I won't even address today, except to say that despite a strong read, I had an atrocious trade management transition from the Europe session to the U.S. session -- which has been a strength as of late -- and will simply let the scorecard speak for itself. It should be dark green. It wasn't. Although my aggression was there again -- a clear positive despite the score -- and I did cut the score from red, to orange, and finally to yellow.

btw, for newer onlookers, it's not about the daily score ... it never is. It's about the single 2009 trade which ends on December 31. Period. And yes, my goals are admittedly high.

The week ended positive at +$17K thanks to Tuesday, but off equity highs. The month remains positive, yet clearly sub-optimized. I remain on the $1 Million annual target pace, but without much room for error on this 5th of 12 laps. I still haven't had three consecutive losses in 15+ months, but there's been far too much slop and scrambling lately. When I win, I'm winning uglier than the Celtics in their first round against the Bulls. My executions are about as weak as the current feel in my right hand. And so on and so on. And forget the positive talk psycho-babble crap ... it is what it is and I'm not going to sugarcoat it.

Yea, the unresolved health issue and interruptions are there and at times affecting focus and continuity of market monitoring, but big whoop. We all have our pains to deal with ... it's called life!

btw, to those who don't like blog "whining", tough teabags as this remains my diary and mechanism for venting. (Of course I suppose you've never been in a rut.) Remember despite the growing popularity of this site, I'm not seeking increased traffic ... I'm simply a trader working toward a single goal and this site is my daily travel log! As always, if you don't like what you read, please change the channel.

The only good news is I'm angry at my trading. I'm talking throw-the-laptop-through-the-window angry. And as most know, that's usually the trigger to spark a pick-up in focus and often precedes the next extended hard run.

After 150 at bats, Big Papi finally hit one out the other night, after being benched last weekend.

I'm using this afternoon and long weekend to regroup & reevaluate, and view next week as a huge pivot point in this trader's 2009 journey. Frankly, as long as I have feeling in my right hand, I'm planning on coming out swinging on Tuesday.

I will come out of this and step up the pace.

Have an outstanding and safe Memorial Day weekend.

Thursday, May 21, 2009

Thursday Notes - Rainbow Day

4:30pm Today's multi-colored scorecard pretty much summarizes today's trade at this end as I felt a step slow much of the day, including fading into a wholesale short position on the the noon climb a bit too soon which left me scrambling more than I'd like. That, coupled with another MRI that took me out of action from 2-3pm ET, resulted in only a modest take of +$2K, which is pretty poor considering the day's range and opportunities.

Yet again, I couldn't quite align with the morning crawl pace despite the patterns that provided both extremes and trend pullbacks, and "pace" remains so very important for me to "feel" the market flow. In hindsight, I was likely forcing things a bit in the morning knowing I'd be out for much of the afternoon ... thus the red score for patience.

One positive aspect of today's trade was that I ramped up the sizes a bit on the few sequences I did trade, which despite the mistimed midday sequence, may bode well for the coming weeks ... especially if volatility begins to climb.

So we'll throw today in the trash pretty quickly, and I'll look for the pot of gold under the next rainbow.

Wednesday, May 20, 2009

Wednesday Notes - Flexible Day

4:00pm An OK +$6K chip gain on the day to keep the recent mo going, although I got a bit sloppy probing the ultimate late-day down move after the FOMC minutes were released, which capped the gains more than I'd like. I admittedly got a bit cute trying to get a head start, although I did manage to keep the probe sizes appropriate.

The morning gap and bear trap, which ultimately turned into a bull trap once the squeezed shorts stopped covering (remember despite the two-day climb heading into today, ES is still in a longer term range capped around 925), certainly required a flexible mind to stay in the black.

And while not a home run day at this end, I suppose I was nimble enough to avoid being among the squeezed in either session.

Tuesday, May 19, 2009

Tuesday Notes - Inspired Peformance

5:00pm Well, it was far from perfect (it always is) ... yet I'll accept the end result after waking at 3am ET to nail the Europe morning-after-trend open, catching a nap, and then repeating the effort upon the the U.S. session open.

The backdrop for the day was of course the textbook morning-after-trend scenario, coupled with a very inspiring post and link from Vic last night that I watched just as Europe was opening (more on that below), which combined to help me put in one of my better performances in a while with a +$19K chip gain, including a solid DAX contribution.

The only major regret I have is not holding one of my 30 lots on the early ES retracement to 905 for one final push toward the overnight Globex high, yet I suppose that's like a Laker fan saying they beat Houston in seven games instead of six.

As for Vic's link, while the story of D.J. Gregory (pictured above) has been around for a while, I hadn't seen it and it quickly helped me to put my current health struggles (increasingly painful pinched nerves that have persisted despite various treatments and approaches) in perspective, be thankful for the health I do have, and momentarily put any pain out of my mind to simply focus on hitting the softball the market was likely to toss this morning. And therein lies the power of connecting via the blog as Vic unknowingly helped ramp up my aggression upon rising today.

And while I haven't talked about it much lately (purposely), it became clear to me after this morning's efforts that my focus over the last two months has undoubtedly been affected in part by the now two-month old nerve problem, which is really starting to pi$$ the heck out of me. Not an excuse by any stretch ... simply a clear fact.

And so today yet again reinforces the notions that (1) it's not how much the market moves, it's how much your P&L moves, and (2) as Herb Brooks would say "Play your game". I would add, "Know your strengths and weaknesses -- not the other guy's -- and play to your strengths. I have no problem whatever watching a monster trend move as it simply increases the probability of the day two setups. Some may disagree (swing traders of course have to ride the occasional trends to offset all of the frustrating chop losses), yet I know my strengths which include focusing on high-probability short-term sequences which fit my criteria, and am very comfortable in my own skin. OK, poor metaphor right now, but you get the point.

I imagine new onlookers -- and perhaps even some veterans of this blog -- viewing yesterday's post were thinking that I've completely gone soft and have lost all motivation to put in another million dollar performance. Yet like last year, time and time alone will again be the judge, and there's a reason that silly countdown clock to the left and the Svithjod Rock post exist, which is to remind all of us that a single day, week, or month means little in the larger picture. Most newer traders continue to lose sight of the power of P&L "time". The year is a loooong time and interim scores mean little except in aggregation. Don't focus on the P&L bricks ... visualize the building.

Steady as she goes everyone, even if it's with a limp.

Monday, May 18, 2009

Monday Notes - Reality Day

4:00pm Before I get to today's trade, I knew the moment I wrote Friday's post that I should have passed on the comment about the market not going up on good news and possible implications on volatility, as it bordered on trying to read tea leaves like most of the industry pundits do (and they're usually wrong anyway). Simply put, we're traders and attempt to react to the true action directly in front of us ... not possible action around the corner. Plus, the "why" never matters. So going forward, I'll leave tea leaf reading to those who are much better at opening mouth and inserting foot.

In terms of today's trade, I wasn't particularly focused or sharp early in the day due partly to a couple of personal interruptions at inopportune times, and as a result chose to stay on the sidelines for parts of the day. And while doing so admittedly continued the pattern over the last decade of putting in a rather placid Monday performance (in today's case, a scratch as the result of an early morning loss as I was feeling things out, offset by a later gain once it was clear the bias was to buy pullbacks) -- and I've never had a clear answer as to why Mondays and I don't seem to get along -- the day ended with some solid reads, and I'm not too concerned about it.

Sounds like a lazy excuse or self-fulfilling prophecy Don! OK, perhaps for today, as I fully admit I just wasn't that "into it" as is the case on many Mondays as I restart the week's engine. Reminder to diary onlookers, this is simply my diary ... not a magical recipe book which I'll leave to the non-trading vendors who have 365 perfect days a year with all the answers.

As I've said before to onlookers, you see me "buck naked" here ... with all the blemishes, scratches, and imperfections. Today's post clearly won't go on Page 1 of any Million Dollar trading book. But maybe on Page 61 under "Reality Day". This is after all, a non-fiction account.

Back at it tomorrow. Hint, post-trend day!

Saturday, May 16, 2009

The Weekend Trader - Where It All Began

Today, I'm visiting my Mom & Dad and home "where it all began" for me ... a small town in southeastern Massachusetts a couple of hours from where I live now.

What's a bit surprising, is for a guy who hates to "look back" (again, you can't drive forward by looking at the rear view mirror), some interesting memories always accompany me when I return, including the garage door against which I hurled the tennis ball at the age of ten, pretending to pitch that perfect game of called strikes using the middle four panels of the door, before "starting over" after any ball or wild pitch with a clean slate and trying again. Hmmm ... where I have heard that "do over" concept before?

I seldom talk about trading with my parents or my close friends, after learning years ago that most people will never understand the concept due to mass media inaccuracies, personal opinion, and/or lack of full understanding of the topic. So I've instead purposely chosen to create a clear mental wall between my trading and personal lives. Frankly, aside from my wife, my family is unaware of the degree of my early heartaches and later success over the years, including the '08 CTA-besting performance. I simply don't talk about it, much like a plumber probably doesn't talk about the copper pipes he solders together hour after hour, day after day, or the bumps his knuckles receive by crawling around basements and managing around joists and rafters.

You see, for me, this is a job ... a serious one along with my other non-market business that also requires attention to provide that solid bill-paying foundation that frees the soul to dance with the market. And as I've preached to trader wannabes for years, if you can find that bill-paying income (spousal income, second job, another business, etc.), it's worth its weight in stress-reducing gold as trading profits become 100% incremental. And since we know how boring it is to hear about someone else's job, I don't talk about it.

Oh, except for this diary of course ... lol. Yet most of my family and friends don't even know this exists, which is ironic as it inadvertently continues to climb the ladder of top-visited trading websites while completely (and purposely) devoid of advertising, and linked only as the result of a handful of rare (again, purposely) interviews.

To my family, I'm like that plumber toiling away in a field they're not quite familiar with. So we instead talk about old times, grandkids (theirs, not mine), sports, home improvement, health, and other non-market topics. For me, it's a very healthy mental separation and helps keep me grounded.

Yet I am going to try to find a tennis ball today to throw one last pitch for old ... and new times sake. And if I miss, I'll chase it down and hurl it again. btw, that's the actual garage pic (new door of course after 40 years), along with my car Grace which many of you have heard about but likely never seen, which is a trading story in itself for new onlookers.

The next trading "do-over" will have to wait until Monday.

Have a restful and peaceful weekend.

Friday, May 15, 2009

Friday Notes - Hints of Momentum

3:30pm Well, considering I got to bed around 2:00am this morning after attending last night's overtime thriller (or as they say in Bahstan, "thrilla" as the entire Gahden crowd was on its feet for the third period and overtime), and was physically & mentally very sluggish this morning, I felt I read the market and managed the trade fairly well today.

Essentially the game plan was to take sure clips in the early going, before stepping aside and letting the market tip its hand which it did nicely once the morning 5-minute bull trap snagged the longs and the VIX crossed into a textbook uptrend. The result was biasing to the short side on the noon climb and feeble afternoon upticks to bank another +$8K chip gain on what continues to be rather modest trading of 1,346 contracts. And while the week's +$18K take clearly lags where I need to be, it won't cause me to lose too much sleep over the weekend considering a decent performance over the last two and half days.

Which for those who know me via the blog, isn't necessarily a good thing from an intensity perspective as I need to feel that crack of the whip to aggressively trade at peak performance. Yet I'll worry about that on Monday when the game is back on.

By the way, while I trade predominantly based on technicals, have you noticed that the market has now stopped going up on good news?? Potential good news for future volatility.

And so the Bruins are history, the Celtics will soon be as well (either Sunday or after getting demolished by the Cavs), and Big Papi has lost his mojo. I guess that leaves trading to keep this trader's competitive juices flowing.

Fortunately, our trading season only ends at a time of our choosing.

For me, that remains December 31, and I still need to pick up the pace else I'll be like the Bruins who after earning the #1 seed, sleptwalk through too many games and couldn't overcome it in the end. Or like Big Papi who for some strange reason (dare I say age or roids?) went from the league's greatest clutch hitter to an unconfident hitter who's monentarily lost all sense of timing.

I need to build on the modest current momentum.

The work resumes on Monday.

Please note that I'll be out of town for part of Saturday, but will still find time to squeeze in the Weekend Trader update.

Thursday, May 14, 2009

Thursday Notes - OK, Where Were We?

3:30pm OK, where were we before we were rudely interrupted by yesterday morning's events? Oh yea, walking along the 2009 trading path before stepping on that banana peel yesterday morning before regaining solid footing to end the day.

And so it was back to work today to continue yesterday's late-day momentum and trade the infamous "morning after trend day" which is what this trader did to clock in a tidy +$8K on only 928 contracts on a couple of high % oscillation sequences.

And with that, I called it an early day to get ready to head to Boston for Game 7 of the Bruins-Hurricanes series tonight. Yup, corporate suite again. But like last year's Sox-Rays game, it's expected to be a late night so will probably take it slow Friday A.M. (And I'm not leaving early this time, no matter the score.)

Wednesday, May 13, 2009

Wednesday Epilogue - No Regrets

In light of some of today's comments, I thought I'd reinforce my last response, especially for those new to this diary.

All -

I have zero regrets on the entries, which as I referenced in the post I'd do again in a heartbeat ... and with the same size.

No pain, no gain.
No risk, no reward. It was a judgment position that normally would be correct, and would have scored big ... and I know in the oft chance I'm wrong, that I can adjust and come back.

No regrets at all -- even if the day's hit would have been hard. Frankly, if anything, it shows perhaps my aggression is showing signs of returning which has been dormant for a while.


That last sentence is key to me. Also, a reminder to onlookers that I do take calculated risks over and over and over again -- including discretion sizing -- knowing full well I will hit one into the woods from time to time. And it's not gambling ... it's probability trading, and in the long run we're on the house side of the casino.

And I only care about the long run.

This ain't tiddly winks.

P.S. Keep the comments and dialogue coming ... all good stuff. Just wanted to reinforce my comments.

Wednesday Notes - It Could Have Been Worse

3:30pm Yes, it could have been worse. A lot worse. And for a time, it was as I got caught leveraging hard overnight using the ES 900 area as support in positioning both ES and the DAX before the pre-U.S. open multiple cliff dives. It's frankly a trade that I'd take again in a heartbeat, yet the entries turned out to be like Tiger's driving on Sunday ... hard into the woods and behind a tree.

So step one was to minimize the early damage by managing the exits (taking the hit and chipping back into the fairway), before trying to make some sense of what would likely happen when the general session opened. Remember Saturday's post about falling gracefully and regrouping? I just didn't expect to present another example so soon.

And while it's been a long time since I've been in EESM (Emergency & Extended Scalp Mode), it kicked in big time upon the U.S. session open as I tried to scrap and scrape my way to align with the expected market rhythm, knowing that based on yesterday's action, many traders still stuck holding longs would likely have to bail hard on any decent upticks in the morning session.

And so slowly, trade by trade and shorting the hell out of any feeble upticks, the P&L tide indeed slowly turned, and by the time I covered my final short from the 2pm "it ain't going anywhere" spike, I closed my final trade and was somehow able to cut nasty early losses significantly to a end with a -$4K ham sandwich scratch.

And so today again proves the trading road remains a zig-zag and not a straight line.

We just have to make sure on 12/31 that there are more zigs than zags.

Shower time ... helluva day.

Tuesday, May 12, 2009

Tuesday Notes - Important Day

4:00pm From time to time over the course of a year, there are subtle "important days" to me. And while I normally pay little attention to daily results, today was key to me in terms of (1) not stretching the current slow chip leak beyond two days, while (2) sustaining SOME kind of momentum in my longer-term results. And so it was today that I simply had one goal of executing a couple of strong sequence amidst the day's opportunities. Yea, I see it coming ... "Isn't that what you should do EVERY day??". Point taken.

And while the Friday-Monday two-day drip wasn't a huge concern (hell, it's less than half a decent trade for me) the fact that I haven't had 3 consecutive trade losses in 15 months is a significant grounding mechanism to me in terms of helping to avoid any hint of a potential prolonged chip decline. Remember, I view each day's events as a single "trade".

And so I ramped up both the patience and focus meters a notch today, banking an acceptable +$8K day helped partly by some nice afternoon market emotion that provided several opportunities for high % overstretched trade clips once stuck shorts stopped panicking. The only regret I have was a late-day 3:30pm ET dentist appointment that caused me to keep sizes and holding times of the final 911+ wholesale short entries tighter than I would have liked. I'd previously covered the 909+ shorts for a strong sequence and yes, the Vaio once again paid for itself and more as it continues to prove that on-the-move mobility is a necessary ingredient for any decent chance of long-term trader success. The market's certainly not going to wait for your schedule.

And so while it took ES almost twelve full hours to repeat today's opening DAX squeeze which I'd slept through, good things continue to come to those who wait, and it was nice to see some solid intraday emotion for a change.

The day certainly wasn't a home run, but it was a solid double as this 15-month "inning" continues to roll on based on my rules that it won't end until there are three consecutive outs.

Some day, this inning will end and I'll have to take a closer look at possible hitches in the swing.

But not today.

Monday, May 11, 2009

Monday Notes - No Lipstick

4:15pm I could dress up today's notes somewhat, but thought why bother putting lipstick on a pig. Essentially, the P&L at this end was as flat as the market as the few micro-pullback profits were offset by some blinds and antes incurred in probing range breaks and extensions, which of course never really materialized.

So call it a scratch at this end for -$2K and we'll tip our hat to the low-volume range traders. Not my game, and never will be.

Sunday, May 10, 2009

The Weekend Trader - Silent Confidence

While I wasn't going to initially post a follow-up to yesterday's Weekend Trader edition that elicited a number of reader emotions, I changed my mind after some further reflection, especially since as I mentioned in my follow-up comments that I know firsthand that some of the world's top traders follow and can clearly relate to our journey.

For perhaps with all the diary blogging over the past year emphasizing the constant need for humility, the comeback mentality, purposely focusing on my bad days more than my good, general psychological venting (sometimes interpreted as whining), etc., the ingredient of silent confidence hasn't gotten enough attention. And the reason you probably don't see me touch on it much is I'm always careful not to cross the razor-thin line that separates the powerful (and profitable) concept of silent confidence and that of its evil twin, equally powerful (and losing) cockiness. For once crossed, one can't easily go back.

And so it's for that reason that I must mentally step out of the room for a moment to allow my inner-caddy to say a few words on this topic, before I return to close.


Hi all.

Today, I want to touch on something Don purposely doesn't talk about, yet something that you should all know. For despite his intentional blog downplaying of his abilities and results (remember, this is his motivational diary and venting tool ... sort of like talking to me, his internal caddy), he's actually one of the most confident traders I've ever seen.

And it's not a false "fake-it-until-you-make-it" confidence that's sometimes needed early in one's career, rather it's a feeling that he's more than earned based on factual data and discussions with his broker who houses accounts for many of the world's top traders. Frankly, I know that when Don is motivated and focused on the markets that he could stand toe to toe (and has) with any trader in the world, sometimes besting them.

Yet Don will never let you see that side of him. In fact, for those that stumble across this diary for the first time somewhere in the future, they'll probably never know it exists unless they read this particular post. To them, he may seem like a constantly frustrated trader balancing trading with life, and who's never satisfied with his performance. And such is what keep him on the "other side of the line" he mentioned.

Perhaps the best analogy I can provide is that of the now-overly hyped, yet forever-powerful Susan Boyle video. For if you view it closely one last time, you'll find two crystal clear moments (right before she began singing at the 1:54 mark and again later during a brief pause at the 3:48 mark when she glanced at Amanda) where her facial expression silently beamed an inner confidence scream of, "I know I'm a helluva lot better than Elaine Paige and I'm now going to show you." Of course, she had to feel that way to stir the performance she gave ... and the results proved she was right. Yet if you didn't catch those two brief moments, or simply see her off the stage, you'd see a rather ordinary person who "seems" to be lacking confidence.

And so it is with the tiny minority of consistently successful traders -- many of whom are purposely intensely private -- as you'll never "see" them perform or hear them saying how great they think they are. Especially when someone steps out on an extremely public limb with an intensely private motivational diary.

I know Don better than anyone, along with other top traders, who despite their constant post-market venting and self-flogging, are indeed the most confident traders I've even known when they're toiling away in private during the day ... a justified confidence and inner belief that is absolutely necessary for any level of sustained peak performance.

In Don's case, you'll just have squint really hard and pause the tape to see those few moments where he shows it.

Yet it's there. And watch out when he grins quietly.


Is he done? Good. I hope he behaved himself, as sometimes he says things I don't quite agree with ... sort of like a Biden/Obama moment.

I'm sure I'll hear it if he didn't.

ck to work on another comeback on Monday and improve on last week's lackluster performance. And pehaps not so ironically, that's exactly what Tiger is trying to do today at the TPC.

Enjoy the rest of your weekend.

Saturday, May 9, 2009

The Weekend Trader - Three Little Words

There are three little words that continue to be sorely lacking in this world, words that I've never been able to understand why some refuse to utter them. I see it in all walks of life, in my past corporate life and current non-trading business, and especially in the trading industry.

And the words are, "I was wrong".

The absence of this phrase was especially true in the mostly-defunct 1995-2005 trading guru/fraud era where false gods would make "calls" and then conveniently hide or remain silent when the market didn't comply, or where even today, analysts will search for any excuse to -- as Desi would say -- 'splain their way out of it. Ego? In most cases, yes. Plus, I suppose admitting one is wrong is a lousy way to market an "advisory" service or sell books to lazy traders.

Well, I was wrong a lot on Friday. And last week. And last year ... including on one occasion being more wrong than a Ramirez/A-Rod/Clemens/McGuire panel on athlete innocence. Dead wrong. I'm wrong every trading day of every month of every year.

Not a great attribute for a trader you say? Well, I respectully disagree. Strongly.

Because so long as being wrong is followed by adaptation and recovery, being wrong can be a trader's best tool. And one of the main differences betwen the tiny few that survive long-term and the habitual wannabes is that the minority have an uncanny ability to adapt and recover.

Personally, I have a few blind spots in my trading that will likely always be there to some extent. Yet with all due humility, there's no doubt that for some reason I've been blessed with a strong ability to adapt and recover.

Skim the virtual pages of this almost-year long "live book" and you'll see it everywhere. Most of my decent days start off poorly, as do many weeks and even months. Last year's stats proved I generally suck on Mondays. Yet perhaps the best example is last October where on a Monday early in the month I had the largest loss of my career at -$94K, before ending the week positive by +$40K, and the month positive by +$315K. I mean look at the October portion of last year's daily performance by month, which will forever be a testament to the power of the comeback.

Yet I know many people who will likely never utter those three words so long as they're blessed with a breath on this planet. Never. And after pondering this concept for years -- including prodding a few close friends to simply say the damn words -- the only conclusion I've been able to reach is that they'd likely view such an admission as a weakness or character flaw which would expose their humanity. Amazing, admitting one isn't perfect. And I won't even go near the marriage pride arguments ... although I guess I just did.

Wrong in a trade? Like a biker about to hit the pavement, learn to fall gracefully. Then use the result as powerful knowledge that most won't gain because they're too stubborn to admit "they were wrong". And yes, even I can be a stubborn S.O.B. at times. I guess I'm wrong then, too.

Some things in life I'll never understand. Not being able to utter those words easily ranks in my top five pet peeves of all time.

It's not about being right. Umm ... there's a reason bikers wear helmets.

It is however about recovery. Fast and immediate recovery. And the faster, the better.

The temporary bruises will eventually fade, while callousing over to help soften the next fall ... cuz it's gonna happen again.

Personally, those three words are worth millions to me. Literally.

Have a great weekend.

Friday, May 8, 2009

Friday Notes - Next Hole

4:00pm Short post today as I'm already mentally moving on to Monday with a rather sloppy -$3K chip stack nick largely due to transaction costs as my timing was slightly off from the day's outset.

Much of the ding came from a poor sequence on the noon climb as I (and many others by the look of the charts) leveraged off the 920 approach for a short sequence that I hit into the trap and had to scamper as I was a bit slow in aligning myself with a reverse long on the pullbacks once it was apparent shorts were stuck. And who's to know better than a "stuck short" ... thus the desire to often feel the market's current by swimming in it vs. watching from the shore.

I was also a bit early on buying the morning pullback as it was highly likely that (1) the market wouldn't do the same thing twice in a row in terms of completing giving it up, and (2) stuck shorts from yesterday had to buy any decent retracement, both of which turned out to be correct ... just later in the day.

And so we go from a day where I wasn't too pleased with a decent gain to one where I'm actually "accepting" (there's that word again) of today's slight nick since I made a couple of decent afternoon liquidity trades to cut the day's loss by about 70%. Yet for the week, there's still plenty of room for improvement after a rather placid +$23K performance.

As always, the day's or week's score means squat except in aggregation in 237 days.

There simply continue to be far too many holes left on the '09 course to focus on any one.

We just have to keep swinging.

Look for The Weekend Trader as always.

Thursday, May 7, 2009

Thursday Notes - Birdie Putt

5:30pm Continuing yesterday's golf theme, suffice it to say that I had the eagle putt lined up, but pulled up just a smidge and had to settle for a +$14K birdie on the day. Oh, the eagle was there for the taking all right, and I had the day's green read better than I have in a while, yet I hesitated just enough on two "backswings" (undersized a bit on the early gap range break and then got very sloppy on the gimmee short sequence around 2:08pm ET as I seemed to momentarily lose focus) to need the extra putt which capped the day's score.

In both cases, the ultimate move's gains were also capped by the cost of interim insurance scratches and reentries, which reflected a lack of confidence on my part which was likely unwarranted given the powerful high % setups. Sort of like implied odds when making a poker decision.

So overall, I'd grade my reads on the day an A, yet I'd mark my executions and trade management a B-, and would like to have that 2pm sequence back again (thus the yellow mark under "No Regrets").

Which brings me to an excellent dialogue in last night's comments. And while I don't normally repeat comments and responses in the main posts (no sense wasting virtual ink), I thought this particular question (thanks Sam) and my response might help reinforce how I try to approach this biz day in and day out.

Comment: Been reading your blog since early '09, so I know your trading style. Here's what I don't get: No matter how motivated you are, how do you expect to hit home runs when the market doesn't support your style of trading? You look for pullbacks and emotional extremes but we have quietened down since last year (look at the VIX!) and the market seems weird and sluggish and not at all conducive. So no matter how much you will yourself or berate your trading, the market doesn't seem to support it. Do you not see this? P.S All of the above was not meant to be criticism, just some feedback. I have nothing but respect for your trading.

My Response (excerpts): Great comments (you know me via the blog all too well) ... and yes, I undoubtedly see the changes you describe as was the case in many prior years. Yet while I don't expect home runs, I do expect doubles and an occasional triple regardless of action (we're traders and have to adapt), and feel the difference between the singles I'm hitting and the absent extra-base hits is largely a function of complacency.

Having said all that, a good part of the "berating" is frankly an intentional psychological ploy at this end to try to maintain an edge. It's simply who I am and my way of trying to stay driven to achieve peak performance. Great dialogue and it got me thinking.

It's the last paragraph I want to emphasize. For regardless of a day's outcome, I'll never be completely satisfied with my performance. Never. Ever. Accepting? At times, yes, which is why I often use the "acceptable gain" or "acceptable loss" reference. But satisfied? It simply ain't gonna happen, as there's always room for improvement and is what attracts me to this crazy business where imperfection will always reign.

Remember I attempt to trade every day as if yesterday was a horror show and I'm on the comeback trail. As I said last night, it's simply how I'm wired, is what drives me, and usually (not always) keeps me out of big trouble. Simply put, I play best when really pi$$ed off. And the better the day, the more I try to get really angry over one aspect that didn't go well.

As I've said before, most of my embedded memories of last year's bonanza are the missed shots, broken clubs, and shanks into the woods. And aside from two days (when we set the '08 trailing stop and then danced on 12/31), it was all and only about improving performance and completing the race.

Similarly, the two mistakes today were two too many and need to be corrected.

We're not playing tiddly winks out there, and we're not looking to be average -- or even above average.

We're after extraordinary. We're after what most won't or can't do.

We're after the Million.


Poker night tonight and I've moved up to second place in the Q2 tourney as the result of last week's win. Got more work to do there as well as I'm not after second.

Wednesday, May 6, 2009

Wednesday Notes - Par For the Course

4:00pm While we still have a looooooong way to go in this 2009 race, suffice it to say should I indeed achieve the feat of back-to-back $1M years, I may personally rank such an accomplishment this year higher than last year's +$1.6M in terms of challenge for a number of reasons I've hinted at this year in terms of motivation & drive, reduction of hours staring at the screen (all but cutting out 3am-7am Europe), etc.

And today was a repeat theme of recent weeks in terms of sub-optimizing opportunities a bit (despite a decent pace and range) and banking another sub-five figure day ... +$6K in today's case ... which is really starting to gnaw at me as I need to start sprinkling in a few decent darker green scores soon. Sort of like shooting par after par on the course where you have to sprinkle in birdies and eagles to more than offset the occasional expected bogeys and double-bogeys.

And so despite the April mental respite, we enter May thus far with more of the same uninspiring "sleepwalking" performances that have typified far too much of '09 at this end.

Note to onlookers: If you think you're tired of hearing this, think about how I feel writing and living it!

So I have to continue to decide whether I want to be the pre-2009 Tiger or 2009 version who's still working the kinks out.

Pars won't cut it.

Tuesday, May 5, 2009

Tuesday Notes - Catch of the Day

5:30pm One of the aspects of this year's market I'm still adjusting to is the pace that provides (in my view) fewer high probability trade sequence opportunities. It's not that they're not there ... they are ... it's just that the lower volatility has decreased the amount of in-out sequences as the trade is much "thicker" in current times than in the past, while also spending a great deal of time in midday consolidation. Remember when we didn't dare leave our station last year and skipped lunch 90% of the time?

Perhaps the best analogy is the market is acting more as a battleship in terms of frequency and pace of turns vs. a speedboat. So for those of us who like to "surf" multiple intraday waves, the ocean is simply calmer and you have to nail those few that decide to show up.

Such was the case today as we had our typical morning-after-trend setups that chalked up a respectable +$7K chip gain at this end by buying anything approaching Monday's rock solid supporting consolidation range (either in the overnight or early AM session), yet once those sequences played out, there was little else. I say that because I can't remember the last time we had the morning-after-trend backdrop where I didn't take a single trade on the contra-trend side. Usually on days like this, it goes something like "trend sequence, contra-trend sequence, repeat". Yet today, my only trade entries were longs as I was waiting for at least some extension beyond Monday's late day high to short, and we never got it. I don't believe that's happened in a few years.

Today also reminded me of how 2009 is different from 2008 in terms of my personal commitment and desire to live a more "normal" life. Specifically, last year I would have gotten about 2-4 hours sleep as I positioned for the first ES retracement around the Europe open at 3am ET, which would have been good for a few $K. This year, I've decided to sleep more normal hours and thus had to settle for the later Europe and U.S. pullbacks.

And so as always, we continue to eat off the menu provided while trying not to complain too much about the food offered. Those that trade multiple markets can of course "change restaurants" by shifting focus during times like this to currencies, commodities, and other markets. Those like me who choose to specialize in one market have to adapt to conditions and simply "eat" the catch of the day.

Yet even if the tide is low, there's usually some good crab lying around.

We'll see what the surf brings tomorrow.

btw, a continued welcome to new onlookers. Based on recent comments and emails, it's clear we're continuing to build a community of professional traders interested in supporting each other and staying away from the industry B.S. Let's keep on keeping on!

Monday, May 4, 2009

Monday Notes - Sniper Market

5:30pm I'll call today's trade a sniper market as in hindsight I see only four clear shots to get in on the uptrend at high probability wholesale prices, with two coming during times when I don't care to be in the market (10am economic news & at the very end of the session). And while I traded the other two midday pullbacks to supports well, I was a bit undersized given my conviction and also got nicked some in the PM session probing continuations earlier than 3:50pm ET (that was cruel).

The result was a very modest +$3K gain on a day that reflected more good than bad, but enough bad to significantly cap the day's take. Like many, I was looking to load up on a deeper early PM pullback that never materialized beyond the lunchtime chop.

Not the best start to the month to say the least, but I'm quickly putting it behind me and moving on.

And I hope the Bruins can do the same. Great game last night and an outstanding luxury suite box, but the Bs forgot to show up.