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!


Brian said...

Funny, my only trade today was a short soon after the Cash open at 904ish. The long opportunities just kept setting up just above my ideal entry targets all morning long, and then the afternoon was a joke...

Enjoying the blog...insane how many contracts you trade in a day

Severino said...

Hello Don,

May I ask about what time you started your sequence for “buying anything approaching Monday's rock solid supporting consolidation range”
It did not reach that level until around 9:48.

Did you trade the first 15 minutes?

Thanks as always.


E-Mini Player said...

Pretty minor retracement today. I wanted to buy the 890s, but price never got that low, and then the afternoon action was a choppy grind back up to 900+. Ended with a snmall gain today (6 pts or so); I'm just I glad I managed to stay out of trouble.

Don Miller said...

Sev -

Beginning after 7am ET during the overnight session (after having slept through the earlier 3am-4am ET sequence), and I was still long some when the day session opened.

Once those played out, it was a waiting game until we got the deeper retracement on the higher timeframe around 11am ET.

Pretty textbook morning after trend stuff, even with the crappy pace.


mp said...

" interested in supporting each other and staying away from the industry B.S."

right on!

Graham Thomson said...

Thanks Don,

I have been trading ES for 2 years now and success is coming.

Been following your diary silently for some months now. Inspirational stuff - keep it up.


TheRumpledOne said...


I like your approach of "trading one market".

I usually only trade one instrument and one method at a time.

If trading stocks, I make AAPL juice using my Buy Zone method. It is the same trade, day after day. Just trading the statistics.

If trading FOREX, I'll trade one of the majors during the London and NY sessions and EURJPY during the Asian session.

To me, trading is simple. But there is a vested interest in keeping traders thinking they need a bunch of SQUIGGLY LINES on their charts to make money. How else do they sell books, software and seminars?

Keep speaking out. NEVER GIVE IN. NEVER BACK DOWN. I sure don't!!

RexVulgaris said...

Like a battleship? .. man I would say more like an oil tanker... grind grind grind.. slowly turn.. grind grind

This market takes a lot more patience waiting for setups and my returns have shrunk quite a lot recently

It's not quite the pickpocket market of 2004 as the daily ranges are still decent.. but the tone sure is tricky to adjust to