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.


Sam said...

Each day I read your blog, I grow a little wiser!

One question: You mention that you sold into the PM squeeze. When you pick a short entry (using the TICK, I assume), how do you manage your position? Do you enter in fixed small increments, like 5 contacts/tick or does the size of your position depend on your "conviction" level?

Don Miller said...

Hi Sam -

At this point in my career, it's largely feel based on the conditions. I don't normally trade heavily late in the day, and today was exacerbated by knowing I'd have to be flat by shortly after 3:30pm.

As I normally do, I took sure clean contra-spike clips on the first two thrusts, and under different circumstances would have entered the final thrust with greater size and held AT LEAST a 15-lot until we got a full retracement back into the channel ... and preferably a 30-lot by adding once the momentum turned the other way.

I also ALWAYS scale out as the market comes back in, as I prefer singles and doubles vs. home runs and strikeouts.


Stone said...

Hello Don,

Nice to see you keeping yourself focused after the 2-day "vacation" from strong profits.

Perhaps you have covered this elsewhere, but I wanted to confirm that the "wholesale" entries you discuss frequently are properly defined as moments of extreme stopouts of one side- e.g., unsustainable short covering "volume spikes" as seen in the late afternoon.

Put another way, some kind of buying or selling climax from the group that was stuck in a bad position.

I view those opportunities as the time to get out & take profits and possibly look to reverse.

All the best,


Pat said...

Hi Don,

Longtime reader, first comment.

There are so many wise things I have learned from your blog, that it only makes me ask for one more - do you have any recommendations for a trading journal/log that is versatile to include charts and images etc? I would prefer one that web-based. I know this can be a very unique choice for each person, but I just can't find something out there thats easy and good enough.

And thanks a lot for sharing so much. It helps people like me who look forward to being a CTA in the future.

Sniper Trader said...

Hi Don,

How do you manage your stop loss whenever it's a wrong entry? I always have the problem of exiting too early when I am right and too late when I am wrong..?

Don Miller said...

Henry -

Ideally, those would indeed be the prime entry points ... yet easier said than done as it's not usually that clean or apparent.

It's simply one kind of a wholesale-retail price swing opportunitiy, the key of course being not being among those caught, going too early when you SHOULD be on the other side, and knowing it's contra-trend only and best to ultimately cover and align with the dang trend.

Pat -

Not sure I can help aside from simply using a blogger such as this site. After all, this is my journal and provides a decent platform.

Sniper -

No magic answer aside from stating that I manage risk primarily with size and thus it's rare at this end to be wrong AND fully sized (although ironically it happened this morning!). Many techniques out there ... just have to find one that "fits". For me, scaling in and out works well under most conditions, with size management taking care of maximizing profits over time.


Trader Kevin said...

"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."

You need to give the person who does your scheduling strict instructions to not schedule anything between 9AM and 5PM, Monday through Friday.