Tuesday, June 30, 2009

Tuesday Notes - The Future is Bright

4:00pm And so we finally lower the curtain on June and Q2 and get on to, well, getting on. And while I managed to steady the ship enough to eke out a small monthly gain (which was looking doubtful last week) with a third straight modest day of tight, conservative play, it's essentially an irrelevant scratch month as I look to the future.

And since the only thing trading income or losses ever provide is a purchase or use of time, it's essentially as if June never happened. And given the events of the past month, I can more than live with that. Now can we somehow undo that knock on the head??

I've certainly beat the topic of my personal Q2 to death over recent weeks, and so I won't dwell on it further except to reinforce that it was NOT simply a matter of declining volatility and change in market pace. For If I had to apportion the cause for the Q2 blip, I'd allocate 50% to indifference/burnout/sloppiness, 30% to health & scheduling conflicts with one of the most expensive tooth fillings one has probably ever had, and only 20% to reduced volatility. As I've long said, good traders make money in all markets ... they just happen to make more in those which favor their pace. The first one is 100% my fault, which will be remedied, and I'm diligently working on the second one.

Which brings us full circle to last week's video on "outliers". Naysayers will continue to shout that Q408 per the attached chart (click to enlarge) was an "outlier" and Q209 is "realism". On the other end of the spectrum, eternal optimists will say Q209 was an outlier. The truth, of course, is they're both outliers. Ummm ... that's why Olympic judges often throw out the high and low scores.

And isn't it interesting that the average of the two outliers (green line) comes oh so close to the average of the last six quarters (red line), which makes complete sense when looking at the "non-market" attributes of both quarters: Q408 intense focus, committed, zoned in, healthy vs. Q209 often indifferent, lazy, sloppy, mega-schedule conflicts, etc.

Note I didn't mention market factors at all in the above paragraph. Again, decent traders make money in all markets, while poor traders blame changes in the market for changes in their performance. In my view, the primary separating line between the two is commitment and focus.

I of course know with 100% certainly that Q209 is no more indicative of sustainable performance than Q408 was. For they both are what they are, composite sample reflections of life and choices ... with some market seasoning sprinkled in.

And now we look ahead. Tomorrow morning, I visit Boston's Beth Israel Spine Center to give another expert team a crack (pun intended) at solving my nagging back problem. After that, it will be back to work to focus on solving my nagging trading indifference problem.

Both will be fully resolved. After all, I'm a trader ... I don't give up ... ever.

The calendar of course gives us a chance to memorialize the past, benchmark against ourselves and others, while turning the page for a fresh start.

Yet do we really need an arbitrary piece of paper to tell us it's OK to renew? Hell, we're traders and we profit taking the other side of popular opinion. We can turn the page any damn day or moment we please.

The past is history.

The current moment has already passed ... think about that one for a second.

The future is all that matters.

And the future is very, very bright.

This time, I think we'll need eye black.

Monday, June 29, 2009

Monday Notes - Me, Myself, & Bob

4:00pm First things first as I traded very lightly today with high % and tight scalp liquidity clips after first letting the market tip its hand to the upside this morning. Frankly, the patience meter was in high gear today as I slowed the heart rate waaaay down and only traded about five modest sequences, executing them all well, not trading after 3pm ET, and thus positioning June and Q2 to end on a positive note.

Yet as I've referenced in the blog lately, as well as mentioning to the cookout group over the weekend, I'm currently in MAJOR "look-ahead" roadmap mode, similar to late 2007 when I hit an indifference & sloppy trading stretch which was clearly reflected in my P&L.

And it was around that time in the fall of '07 where I decided to look ahead and gear up for a hard run at 2008 using the cornerstone "come from behind" fictitious draw and year-long race/countdown concepts, which served their purpose extremely well since then as documented throughout this journal, yet whose usefulness at this particular stage in my personal trading career has likely been exhausted for this trader. And here's why.

I firmly believe that when something works in trading, you don't question it and instead ride it for all it's worth. Keep in mind that initially, it was simply an experiment based on almost a decade of personal performance statistics that showed I traded best "from behind". Some experiment, huh?? Of course the one downfall to such an intense strategy -- as some have smartly commented throughout the last year -- is that it's likely impossible to maintain such an intense level of focus and belief of the imaginary draw for an extended period of time, especially as the true equity begins to grow and eventually snowball.

And while it may have taken 18 months, it seemed that I ultimately became completely numb to both concepts in May and June, and one could argue they actually became detrimental as I tried to run hard (1) on an empty fuel tank and (2) during limited market openings due primarily to my schedule, yet also by the natural changes in market pace.

So as noted in the blog margin to the left, I've dumped the countdown clock and mentally closed the last 18 months "race". Essentially, I'm getting up from the table to look around and get a new change of scenery and source of motivation before settling in for a new game. I've also added a new "snippet" section near the top left to highlight key current perspectives not worthy of a full blog rant.

Looking back ever so briefly, I suppose we can consider the last 18 months a case study as we learned a lesson about the motivational tools' usefulness and longevity (of course it's nice when lessons make vs. cost you money!), and I've put both concepts aside for now ... with the option of resurrecting them from time to time or in some modified format whenever I feel they would help provide me a boost.

Which leaves me right now looking ahead to the future with bold, eager eyes, firmly believing there's another untapped horizon to once again unleash the deep passion I have for this business in a way that's far greater than simply personal financial gain -- a belief that was reinforced in spades at the cookout. As I said Saturday night, could it be the world is ready for a new breed of turtles?

Over the weekend, we kicked around a few ideas, and I've been giving almost non-stop thought to the age-old "what now?" and "where do I/we go from here?" questions. For under the ground on which I'm currently standing, I'm sensing the definite vibrations of a new and different Bamboo trying to break through that I'm supposed to water and fertilize. Something that's rarely, or perhaps even never been done in this dog-eat-dog industry.

Over the last year and a half, we inadvertently took this industry by storm, tearing up hidden curtains, destroying some long-held myths and quieting doubters (most anyway) along the way in terms of the hard realities of this biz, including what it takes to truly be successful, and more importantly accountable -- both to oneself and to one another. A virtual no-spin zone.

Perhaps the last two months of frustrating schedule conflicts and lackluster performance is screaming at me to simply lay low and rest for the moment so I can listen for the signs and muster the energy for something even greater. Maybe in sick sort of way, that weekend bang on the head was to further get my attention so I'd truly listen to those traveling hundreds of miles to share their perspectives and insights.

All I know is it's hard to read the road map while driving. So I'm sitting on the shoulder right now ... looking for that route that leads to an even more invigorating trading journey ahead.

And at the urging of my college-age daughter, I've also begun to read "Me, Myself, & Bob", which is the story of Phil Vischer's (creator of Veggie Tales) similar journey to the top of his field, and the eventual brick wall he faced in terms of challenges, disappointments, and motivation for the new road ahead.

Perhaps part of my answer will come from a tomato named Bob.

One day left in the quarter. I don't plan on screwing it up.

Sunday, June 28, 2009

The Weekend Trader - Bamboo Shoots

Where do I even begin to describe yesterday?

I guess I'll start by saying that there are a few days that stand out at the end of the year, and perhaps even in one's life. Yesterday was clearly one of them. Said another way, and revisiting the term we referenced in Wednesday's video, it was a positive life "outlier".

Some thought we were crazy in terms of hosting a party -- at our home -- for people we'd never met aside from virtual emails, blog comments, and tiny photos. Especially in this day where the words "Internet" and "danger" seem forever linked. Yet I was never worried, as a funny thing happens when you open your home to a couple of dozen genuine, like-minded people with a common purpose and ethic who have developed a mutual "feel" for each other after a year's worth of diary onlooking and conversation: For one night, the dangers and fears of the world completely disappear.

Yet like many worthwhile events, it wasn't easy at times to get to this moment. I wasn't sure where to host it or gauge the number of people. The weather has been atrocious and unpredictable. Many emailed saying they wanted to be here, yet couldn't as 'tis the season of graduations, weddings, and family vacations. And usually when my trading -- not to mention life -- goes through a flat period, the last thing I want to do is talk to other traders.

And then the coup de grace hit (literally) at noon -- just four hours before our home would be opened to an unknown world -- where I hit my head coming out of our shed and was rushed to the hospital via ambulance to close a two and a half inch gash on my head. You just can't make this stuff up.

Frankly, for a few minutes on the way to the hospital, all I was thinking was "what the hell is going on here? ... I've got a nagging back issue where they're trying some steroid treatment where I need to AVOID infection, and now this?? And how long is this going to take on a summer Saturday in a resort area where the E.R. will likely be packed? Was this event a huge mistake and will my wife end up greeting complete strangers (to her) and trying to host this on her own? Is this another test? Does Someone (capital "S") not want this event to happen? And what happened to all the Peace I had on Friday??

Yet oh ye of little faith, and after a tetanus shot, eight staples in my scalp, and simply tremendous action by life's true heroes -- EMTs and E.R. personnel -- I was back home by 2:00pm (which has to be some sort of Cape Cod Hospital summer weekend record) to help finish getting ready.

And when the first couple arrived -- which included a former student from years ago -- any remaining qualms I had about hosting the event or recent personal challenges completely disappeared, and the rest of the night was one of the best evenings I've enjoyed in a long time as we had the privilege of being surrounded by as classy a group as you'll ever see.

We ate, drank, and ate some more, and when the rains finally came later in the evening, we simply kept chatting undeterred under the canopies before escaping indoors, even visiting the trading "bat cave" for a short time to talk some shop.

To those who made the journey (some from as far away as Calgary, Florida, and Texas), we will forever be linked by a night where world problems and career challenges faded away, and our home and hearts will always be open to you. To those who brought small gifts, Debra and I thank you, yet it was our pleasure just to serve you.

For those who couldn't join us because of distance or conflicts, you were here in spirit.

And for Anthony (son of one of the attending couples) ... best wishes as you begin your new journey, listen to your Dad, and leverage off his knowledge and experience. You have as good a start as anyone could ask for, and the rest will be up to you.

Godspeed to all on your respective journeys.

P.S. Don't forget that sometimes in trading and life, it's simply best to duck.

Saturday, June 27, 2009

The Weekend Trader - A Day in Paradise

What a day and evening ... one that will be remembered for a long, long time.

More to follow on Sunday. And yes, that's a small Bamboo tree next to the table.

Friday, June 26, 2009

Friday Notes - At Peace

3:30pm First, a heads up that this is likely my most emotional journal entry since the final 2008 "A Night to Dance" post, as I felt a magical kind of release as I finished writing this, which will hopefully become self-evident by the time you reach the end of the post.

Well, I think I'm finally at peace with my recent results, as when I look back at May and June, I was very often a "part-time" trader out of both choice and circumstance (at least compared to 2008), and part-time trading = part-time results ... especially when trying to improperly over-compensate. For the records will show that at times I had very solid trading results ... offset by some simply attrocious sequences that don't belong within 100 miles of me.

I also feel I'm finally at peace with taking the concept of the continuing "race" and "Back-to-Back" $1M goal down a few notches -- at least psychologically -- for as Mark so aptly put it in yesterday's comments, "you sound a little burned out to me", which has probably been true since last fall, yet only finally showed in results in the 17th and 18th month of my self-resurrected journey as I began trading like a little league rookie by showing up late for games, and then swinging at too many pitches outside the strike zone. Perhaps I was a bit premature in eliminating the daily scorecard!

So today it was back to tight, solid, conservative play on a very light volume market day where I ended the week calmly on a positive note taking some nuggets out of the classic oscillation morning after a trend day, although I kept sizes smaller than normal so as simply to establish some rhythm.

I also know this. I can't approach this business or trade any worse than I've done in May or June. And somehow, I'm still standing with slightly more capital than I had at the end of April, and now it looks like even June might pay for a ham sandwich. Frankly, it's a minor miracle and I guess it says something about some sort of inner circuit breaker that's kept me from slipping beyond reach. And just think what it will look like with my head screwed on straight.


And so here we are, almost a full year since this journal was made open to the public, and 18 months since this 48-year old got the crazy idea to give this industry a very public run for the record books -- ironically timed in part with the most violent market in history -- until life got in the way this year.

Please understand that despite my highly visible industry profile, my pursuit was never intended to prove anything to anyone ... except to myself. And I've done just that. I know with 100% certainty what I can take out of the markets, and what it takes to do it. The only question is how much time and effort do I want to devote to it, because the effort and reward will always be permanently linked. 2008 and 2009 to date have taught us that in spades.

Which brings me to a special note to onlookers considering pursuing this business:

Yes, Virginia, you can make money trading ... big money ... and in any market. Don't let anyone else tell you otherwise. Yet here's the qualifier: It comes with pain, sacrifice, and dedication as fully chronicled over the past year in this public sharing of a private diary for all to see. Sacrifice that most won't or can't make, or as this year has proven to me, simply isn't sustainable on a 24x7x52 manner for an infinite period of time without time for rest and renewal (which I suck at). btw, please keep in mind that like many of you, I also have a family and another non-market business that require attention ... so it's been one helluva balancing act.

I can't express the above words strongly enough. The failure rate of prospective traders -- and even some experienced traders -- is incredibly high. Then again, the failure rate of all business start-ups is high.

It's simply my hope of hopes that anyone considering pursuing this business will stumble across these virtual pages of the last twelve months, and if it helps just one person truly understand "what it takes", it will have been worth every ounce of energy poured into it.

Yet it can be done, and I can give you over 2 Million pieces of evidence.

Events of the last few days, with the passing of Ed McMahon, Farrah Fawcett, and Michael Jackson have been a wake-up call for many of us, reminding us in a very public way that life is precious and can be taken away at any time. And the last thing I want on my tombstone, is "He was one helluva trader ... dead at 48 with a bad back and a full position still on".

And so it's another time for reflection, renewal, and life rebalancing similar to the the end of last year. More on that later.

In the meantime, I'd like to personally thank all who have commented and supported me -- and one another -- in this virtual trading place over the last twelve months. For in less than one short year, it's become clear that there's a place for this sort of thing. A place without hype, ego, advertising, selling, bad-mouthing, etc. A place where we can share inner feelings in this close-knit, little-known-in-the-outside-world profession without recourse. A place where old relationships were renewed and new ones begun.

I'm hungry.

Let's party.

Click Here for Cookout Details (RSVPs Required)

Thursday, June 25, 2009

Thursday Notes - How I'll Spend My Summer Vacation

5:00pm This one should appease all of those onlookers who have just been looking for an opportunity to pile on, so let me just put it out there.

Headline: This decade-long trader and 5+ Year Member of the Merc who joined those who have breached the single-year million dollar mark last year will likely not make any money in June 2009.

So let me get this right, +$1.6M in 2008 including nine months over $100K and one over $300K, and net zippo over an entire four week stretch?? Yup ... true statement.

A bit shocking? Yup. Planned? Hell, no. Yet as they say, it is what it is.

So this has caused me to take great pause to consider what the heck has been going on over the last month -- in fact last two months as May was pretty poor -- to see if I've "lost it" ... and here's my list of take-aways as we get ready to welcome traders to the table on Saturday.

Key Negatives:

- Have often missed prime opportunities due either to non-market commitments (especially back and neck tests) or my own indifference ... which led to:
- Forced opportunities during marginal "hands" and a bit of "trying to make up for lost time" by pressing at the wrong/worst time.
- Diminished "feel" for the market as the result of missing key times and trying to start the engine midstream, as well as lower volatility (although it's still "me" ... not the market)
- My confidence is an issue.

Key Positives:

- I'm still swinging the bat.
- I had a number of solid trades (they were simply offset by the other crap and transaction costs)
- As of now, the June P&L after costs is still positive (albeit barely)
- I'll still bank +$400K for the 1st six months (of course most of it was earned in Q1!)

I could go on, but those are the highlights.

Yup, I bleed red just like everyone else. Reminds me again of that scene in Rocky IV when Ivan Drago finally gets cut and the announcers scream "The Russian is bleeding" and then Duke turns to Rocky and says, "He's worried! You cut him! You hurt him! You see? You see? He's not a machine, he's a man!"

As most should know my now, I view trading as a competitive mental sport, where performance momentum begats momentum. We saw that in spades last year with an avalanche of profit day after day and month after month. And right now, I'm trying like hell to hold back the rolling snowball so it doesn't become an avalanche in the other direction.

Which brings us to Rule #244 in The Tao of Poker that reminds us that such extended periods happen for professional athletes, and that there's not "something wrong with the universe" when it happens. A reminder this is why I floored it 24x7x52 last year ... lest we forget yesterday's key video about the need for "outliers".

OK, so what am I going to do about it??

Essentially nothing. I'm the same person I was in 2008, and am simply going to keep breathing and swinging, knowing that at some point the performance momentum will again turn in my favor, at which point I plan to again floor the accelerator. I also look at May and June as bit of a "Perfect Storm" in terms of my being tested in both the market and in my personal life.

So that's going to be how I spend my summer vacation ... one step at a time.

Until then, I'm preparing to welcome traders to our table on Saturday and very much look forward to personalizing the virtual relationships we've created in this community.

The table is almost set.

Wednesday, June 24, 2009

** VIDEO ** Trading "Outliers"

9:00pm OK, the video's a bit dark and not as usual quality, but I went directly to YouTube's direct capture to re-record it and bypass my own software to get this damn thing up.

Essentially, I follow up to Tuesday night's post & comments regarding the critical role "outliers" play in trading and poker, as well as an update on my pursuing trade-capture charts.

The point I wanted to emphasize, is that if someone tells you one trade, day, week, month, year, etc. was an "outlier" (Lord knows why they're focused on your results in the first place ... but that's another story), I suggest you accept it as one of the nicest compliments anyone could ever make about your trading. And when they then give you that puzzled look, you can grin and respectfully say "that's why I trade and you don't".

For while good traders strive for consistent keep over time, the better ones recognize that while doing so day in & day out, year-in & year-out, they're simultaneously always searching for those "outlier" conditions and results where it's time to push the chips hard and go after the outlier that can make that day, week, month, year, or career.

So here's to your future "outlier" results!

And here's the all-important weather forecast for the cookout:

You Tube Issues

Arrrgggg ... all my video upload attempts are getting cut from 9+ minutes to 34 seconds. Any ideas??? I've tried two recordings now and multiple file versions in case one was corrupt. I also wonder if there's a cumulative storage limit.

Tuesday, June 23, 2009

Tuesday Notes - No Place Like Home?

3:30pm First, thanks to all commenting on yesterday's post, the content of which I believe continues to reflect very favorably on the professionalism of those following this ongoing journey.

Second, yes, I did trade lightly today on the morning-after-trend oscillation setup ... after all, when they're handing out free doughnuts, you might as well grab some, and any overnight or early morning approach toward 895 was shortable given Monday afternoon's brick wall resistance.

Last year, I would have been up at 3am to go after that first approach on the Europe open (for sometimes that first approach is the only approach). Yet as has been my choice this year -- and especially during this week of semi-rest -- I settled for a good night's sleep and instead took the latter opportunities, although that 10:00am - 10:05am whipsaw made it tough to both establish and hold a heavy position to catch more than a scalp.

Yet back to yesterday's comments, I thought one of the more interesting suggestions was from Kareem, who said, "Sometimes the best and biggest thing to do is nothing!" ... which got me thinking and prompted today's diary entry title and photo. I also like the one about resetting the clock ... which btw I've done at times in previous years when my trading has lagged both expectations and capabilities.

Could it be that I should be comfortable in Kansas and that I'm searching for a non-existent Oz?

As an aside, I find it incredibly interesting that both my poker and trading games have been in almost perfect lockstep with each other in terms of (1) both rocking and rolling in 2008 and (2) both similarly affected by the "OK, what now?" syndrome recently that has invited the beasts of complacency and that oh-so-damaging drop in mental focus. The result in both games has been pursuing several marginal "cutesy" forced plays at inopportune times on marginal market hands which has kept me in "make some, lose some" mode, as well as wiping out a great deal of solid play with a single stupid decision. So whatever I do, from a trading perspective I've got to get back to waiting for Jacks or better, and then playing them hard ... every time.

Case in point: During last week's tourney and last gasp at retaking 1st place, I was on my A game and had a great shot to close the gap until I made a huge mistake when I was the big blind with pocket Q's by not raising pre-flop. My thought was that there were five limpers already in ahead of me, and I figured the chances that at least one would call with something like A-K were strong (shouldn't have mattered holding Qs though ... that's why we push), and if I raised, it would have to have been all-in for my tourney life to stop some from simply calling because they were getting pot odds. Frankly, I had no kahunas and there was zero reason not to push. Yet I hesitated.

The flop then came 10-6-4 at which point I tried to immediately correct my first error by taking that time to push all-in, when I got called by someone who was playing his "lucky" 10-6 hand. I'm still pi$$ed at that ... especially my decision not to raise pre-flop.

Come to find out, Mr. 10-6 said later he would have called my all-in (yup ... there are several donkeys in our local tourney games), yet if he did, at least I'd be cursing him and not me.

It's very similar to my trading where my lack of aggression has resulted in taking the second -- and lower probability -- entry that has often gotten "out-flopped" or simply poorly played.

When I'm on my game, I'd bet the Queens ... hard.

When I'm on my game, I'd be up at 3am on the morning after a trend expecting to see Queens.

What's it going to be Don ... how bad do you want to play??

Monday, June 22, 2009

Monday Notes - Going Big or Going Home

6:00pm Those that know me well know I don't do well unless highly challenged, motivated, and focused ... all three of which have been a challenge for me during recent times. And so as I enter day one of this seven day mid-year break, I'm giving some extensive thought to the rest of 2009 and beyond in terms of doing something big. Really big.

As many know, I love breaking new ground, challenging the industry status quo, and doing things that most refuse to. It's simply in my nature. And if it's not incredibly obvious by now, I'm bored with trading right now.

It reminds me of the 1990s when I gave up a highly lucrative and successful career as a corporate executive after also becoming bored -- in only my 30s -- and finding a new challenge in trading. Now, over a decade later and after the last year and a half's climax, I've met about every trading goal I set for myself (except the back-to-back $1M which is admittedly becoming less of a motivating force than I was hoping it would be), and am left looking for more.

Don't get me wrong ... not more money. But more "something".

There's certainly no lack of onlooker suggestions ... writing a book, ramping up size substantially, sharing live trade sequences, creating a private "turtle-like" group, starting a live contra-CNBC trading TV/Internet channel, climbing Mount Everest (ummm ... with my back???), and on and on. You name it ... it's been suggested.

One thing is clear. Whatever I do, I'll have to be true to myself and everything I've stood for in this industry over the last decade, and money can't be the driving force. It would also have to be something that no one else is doing ... in a similar spirit to this daily bare-it-all diary. And I just might kick around some ideas around the fire pit next Saturday.

My MBA prof at the University of Wisconsin loved the line ... "Go big or go home."

It's nearing time to do one or the other.

Sunday, June 21, 2009

The Weekend Trader - Father's Day Prayer

Dear God,

I imagine today's post may turn off some onlookers to this deeply personal diary, and if true, so be it as this has never been about the pursuit of fame or recognition in the form of website hits or pats on the back.

Yet for those who continue to read on, I hope this blog continues to reflect more on You than me, especially on this Father's Day as I search for continued meaning and immediate purpose in the life You've bestowed upon me.

As You know, it was almost one year ago where I was deeply stirred one night to begin sharing a personal journal with those who might find their way here. A journal without advertising, tools to sell, or books to promote. And while I may never know the real reason, I'm hopeful at least part of the true cause of this effort has been served in Your eyes.

You've taken me on quite a journey over this last year. For as we look back at this one-year window focused largely on the trading portion of my life, we see a microcosm of life in spades -- with all its ebbs and flows in terms of glory, challenges, triumphs, humility, and more.

For example, I keenly remember the day, immediately after the blog began, where I took one of my largest two-day hits in some time, as if to kick in a necessary foundation of humility before this shared trek was even a week old. In the context of the new diary, it seemed like a just-born spank to force us to begin to fully breathe. Perhaps it was an immediate test to see if I'd be willing to share the mistakes right off the bat ... as You always did have a keen sense of humor.

Then, a strange thing began to happen as summer turned to fall and You guided me into a prolonged multi-month focused zone to reap a harvest to end all harvests, complete with that momentary stubbed toe and return to humility along the way. Then, after a brief year-end rest, You piled on even more blessings on with a perfect January and almost-perfect February -- again with that one day humility injection sprinkled in.

And now of course, I'm struggling with both focus and purpose, due in part to a now three-month old health neck/back/nerve (choose one) issue that has taken away market opportunities and has forced me to reference the term "MRI" more than "VIX" over recent times.

Yet this is life. A wonderful, imperfect life.

And like life, I'm fully aware this blog hasn't been perfect. For while the intent was always to provide motivation to others, I imagine there were times when this blog inadvertently became more a testament to me than to You, and for that I ask Your forgiveness.

As we move forward, I thank You for lighting my path over the last 48 years, and for my own father who is in the final years of his temporary life on this planet. And while I ask for Your personal healing and a renewed sense of purpose as we turn another calendar page, more importantly, I ask for your Bamboo-type blessings on all who have found their way to this site in the form of true life fulfillment.

For that has always been the true purpose of this effort.

Repeating those final words of 2008,

"... 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." Don Miller, "A Night to Dance" December 31, 2008

Happy Father's Day.

Saturday, June 20, 2009

The Weekend Trader - Relaxing

Relaxing with the family today. Happy Father's day to all.

And so far, the weather for next weekend's Bamboo cookout is looking mighty fine:

Sort of like the VIX in the 60s. Now don't get all misty-eyed Don.

Then again, this is New England on the coast, so all bets are off until we see the flop at 4pm next Saturday.

Friday, June 19, 2009

Friday Notes - Locking Up Q2

3:45pm Well, the cost of this week's blinds and antes, along with my inability to effectively adapt to the current market pace, wiped out a good portion of last week's gain, and so -- just as we did in the memorable December 19, 2008 post -- it's time to lock in the first six months of '09 with a hard +$400K chip gain stop, to supplement the longer-term +$2 Million protective stop on the cumulative 2008-09 gains put in place a few weeks ago.

Why? Well, if it isn't startlingly obvious by now, I'm at the same point I was on that magical date in December in terms of not being able to keep the early month personal momentum going heading into the all important quarter close (June '09 looking a lot like Dec '08), including this week's first consecutive three-day draw in sixteen months (well, we knew it wouldn't go on forever ... not a huge hit by any stretch, but nonetheless a huge warning sign.)

The primary reasons include not being a good range trader, not liking my capital in the market for very long -- preferring to scratch if the market doesn't move in my favor quickly -- and hour-long two point moves & VIX in the 20s that are akin to trying to play chess-by-mail with checkers without an opponent on the other side of the board. The action has also temporarily numbed my tape reading feel much like my dentist Steve numbed half my face on Wednesday morning.

And it's not that I'm not making good trades ... they're certainly there ... they're just offset by lack of patience on both entries and holds in this time when you need a sun dial to time the egg boiling and there are really only one or two solid opportunities a day. Plus, too many of my days have been starting off rough and then spent trying to scalp like hell to earn the keep. Case in point today, some solid short trades in the afternoon which didn't quite offset the morning slop.

And so this game of push-push-push-rest reaches another resting point for me, and I'll simply repeat the following words from
December's post:

"My only disappointment has been the last two weeks of sub-par performance. Yet I clearly realize that's like saying the Celtics beat the Lakers in six games last year instead of four. Fatigue finally took its toll in December via lack of focus and interest, as if to keep my humility in check for the future." Don Miller, December 19, 2008

Replace "Celtics", "Lakers", & "December" with "Lakers", "Magic", & "June", and the rest is 100% deja vu.

In terms of recent comparisons, it's somewhat interesting that I'm running at about 77% of last year's Jan-June pace when I was +$555K on the way to the +$1.6M. And I suppose considering the personal issues I've had to deal with this year, it's far from awful. Yet the main point to me is that it's clearly below my capabilities, and I'll have to make some hard choices if I'm to take another serious run at the +$1M.

If you know me, I simply despise slowing down, as it's one of the hardest things I have to do in this business. I hate it with a passion. Yet doing so is arguably one of the main reasons why most fail miserably at this (lack of self control). My approach has always been push hard until the P&L tells you to stop ... and not before. Last year, it took eleven and a half months for the market to finally scream "STOP & PROTECT" to me. This year, it's told me a bit sooner than I expected -- although like a trade stop, this is a quarter-end pause and not a cease and desist -- yet as we know, the market always wins and you can't argue with it.

Everything has its seasons ... seasons to sow and seasons to reap.

Over the coming seven trading days, I'm going to work on sowing some seeds for the December 31 harvest in the context of some rest and reflection (and some light trading within the confines of the protective stop).

Until then, this farmer is going to lay in the hay.

My wife says I've earned it.

I really hate it when she's right.

Thursday, June 18, 2009

Thursday Notes - Pea Shooter Day

3:45pm I'll keep tonight's post brief with a simple math equation:

Continued low volume + erratic pace + summer trading (close 'nuff) + many trends in conflict with one another + still trying to lock in a consistent "A" game = pea shooter ammo. And that's all I was willing to risk today on essentially a scratch day as I decided to wait for the market to tip its hand and thus sat out the early (and only) serious action of the day.

Not much else to add except I was pleased that I didn't try to force things after yesterday's expensive filling, and I'll let the video posted earlier this morning stand for the rest of today's thoughts (an important message in my view).

Poker night tonight ... two weeks to go for the quarter and I need at least one win to have a shot at taking over first from my current third position. We'll see if today's market patience carries over to tonight's session.

** VIDEO ** Important Message

I felt compelled tonight (actually, I guess 1am is technically morning) to share some heartfelt thoughts and perspectives about trading, especially to new onlookers as diary traffic is once again surging.

Have a great Thursday.

Wednesday, June 17, 2009

Wednesday Notes - Why We Floss

4:00pm OK, I know I've stretched the limit on crazy trading analogies since this trek began last year, yet be forewarned that this may be the most extreme.

OK, here's the setup: A classic oscillation morning expected given two down days in a bull market, right? You know the drill, fade TICK extremes expecting oscillations, cover, repeat, etc. etc., right? It's my favorite setup (like a comfortable slipper) which often accounts for more than half my monthly profits, right?

Only one problem today ... I'm terrible about flossing and thus paid dearly today as I spent the early morning in the dentist's chair which ruined any chance I had to dance cheek-to-cheek (pun intended) with the market's expected morning gyrations.

And so the too-often 2009 personal theme continues, which at this rate I'm about to title "life interruptus" given this year's many personal nuiscences.

As many know, last year I postponed about every personal obligation for 365 days to see what the result would be. And we learned the answer in the form of a record bounty. This year, I've decided to live a more "normal" life, which time has been telling us can be very costly from a trading perspective when the market dictates the opportunity ... not your schedule.

And so for the first time since I can remember, I had a surprising draw on my favorite kind of day which experience has shown would normally been a very-high probability 5 figure gain. Oh, I thought about canceling at the last moment and rescheduling last night when it became clear this morning would be the high percentage play. Yet I didn't, out of respect for my dentist friend who also needs to make a living. Plus it's tough as hell to schedule dentist appointments.

And while not canceling was the right thing to do from an ethical perspective, it was admittedly a very costly appointment in terms of modest draw and -- more importantly -- opportunity cost as I provided liquidity for much of the rest of the day with my B-minus game on.

Yet as letting it get to me won't do any good, the only way to forget it is to stay focused on the road ahead, and one date and result only ... December 31. That's why traders must have a non-existent short-term memory, and why I probably won't even respond to comments on the topic since it's already in the past. My wife continues to say a poor short-term memory is one of my strengths.

Nevertheless, if today doesn't teach our kids (and me!) to floss, nothing will.

Just another day of thousands in the career.

Let's move on.

Tuesday, June 16, 2009

Tuesday Notes - Making a Choice

4:00pm This is one of those days for me where the charts simply don't tell the story of a trader's daily life. Specifically, I'm sure some traders cleaned up holding a mid-day short entry and/or pressing the morning range breakdown for a home run (if you did, nice going!). Yet I chose a different path as I didn't feel particularly focused or in sync with the market's rhythm, and so I purposely accepted a modest day's take on the early oscillations while choosing to play defense in the afternoon given to preserve the ammo for a time when I felt more alert and ready to press things.

Some may wonder what the hell I was thinking in light of the afternoon chart action. Yet given there are approximately 250 trading days in a year, of which I may take two or three off (OK, last year I don't think I officially took any off, but let's not go there), there are going to be days when you simply "feel off" and have two choices -- take the sure gain early and play it tight to the vest to live for another day, or press things and risk giving back a week's or month's chip gain. Been there, done that.

So I made a different kind of choice today, one that usually doesn't appear in all those cottage industry "Trading for Dummies" textbooks.

On that topic, I find it interesting that someone has been asking me for all sorts of statistics lately and criticizing my style. Yet to reinforce, I care about one person's single statistic and one stat only: Personal (not someone else's) net annual income (not average profit per trade or any of the other thousands of irrelevant statistics) on December 31. Everything else is noise and meaningless. And yes, there remains a significant reason for that silly countdown clock to the left.

As always, it's not about popular convention or what others do. It never is.

It's what you do.

btw, the CME just announced a change in its fee structure today that is "supposed to" help high volume traders and which takes effect on September 1. Suffice it to say that I'll believe it when I see it, and will be spending some time mulling over the change.

Monday, June 15, 2009

Monday Notes - The Sideways Shuffle

6:15pm I'll call today "The Sideways Shuffle" -- which is a dance I don't do very well -- so I made like a wallflower during much of today's session looking for deeper retracements to short, as well as a possible late day squeeze north which has been the norm of late yet never materialized today.

Oh, I caught a couple of TICK extreme fades and initial pullbacks to short, yet purposely kept a very tight leash on positions (even tighter than normal for me!) until the dance tune decided to change ... and I'm still waiting ... which resulted in a very modest day barely worth acknowledging. And we'll stay with our recent theme of only checking the P&L weekly.

One event I had to fight through for the first time since I can remember was a slight order entry slip in stopping a probing long position after the post-open barf tried to turn north (1-minute had turned up). Specifically, I manually hit the bid (a reminder all my trades are manual) and thought I'd exited my 30 lot once the trade premise broke down, before briefly glancing away from the screen and then back again only to notice I was still long 30 contracts. Fortunately, I didn't walk away from the screen ... duh. I still don't know what happened unless I clicked on the DOM line between two bid levels which thus resulted in no action, which is almost impossible to do, but the only explanation I could come up with. It certainly won't affect my entry or exit mechanics as it was simply an anomaly.

That took me out of rhythm a bit, as well as costing me a point or so on the exit as I worked to scale out as quickly as possible to regroup without joining the panicking retail longs who were waving the early white flag.

And while I'd normally be looking to tomorrow morning with great "morning after trend" anticipation, I wouldn't exactly call today's action a "trend", as it was more sideways after the first hour than anything.

And so this never-ending double-sided 3D puzzle we call the market continues.

I guess it's a good thing I like puzzles ... except when it comes to doing the sky, which is what today felt like for me.

btw, great back and forth discussion in the comments to yesterday's post. For whatever reason, this crazy little diary is beginning to feel more and more like that dust speck in "Horton Hears a Who" in terms of a community that is taking on an industry life of its own while defying popular convention. Maybe we won't kill it after the upcoming one year mark of the experiment is over.

Sunday, June 14, 2009

** VIDEO ** The Weekend Trader

Today, I respond to recent comments asking about my strategies and methodologies (my response should not surprise most veteran onlookers), as well as discuss a conversation I had with one individual who was adamant that "no one" makes money from trading.

Please note with respect to my comment on chart plotting (time was winding down), I'm essentially looking for front-end order entry software that will automatically plot trade executions on a chart for later review or publication, and which would work with an existing clearing firm ... MF Global in my case. I know TradeMaven does which I've used in the past -- so I know it's possible -- yet to use TM you now have to clear with their firm, and I have strong loyalty to the team at MF Global.

Thus far, I've put a few inquiries out there, but to no avail.

Lastly, here's the "Miller vs. Barrons & Cramer" link I reference in the video, and there's also some good follow-up discussion in the comments section, in case you want to check it out.

Enjoy the rest of your weekend.

Saturday, June 13, 2009

The Weekend Trader - Grace In Shop

I'll post the video later this weekend as Grace is in the shop this morning, and so I have to stick around the Boston area today longer than I expected.

Friday, June 12, 2009

Friday Notes - Emerging Performance Trend

4:00pm As I mentioned yesterday, today was expected to be "stay out of trouble" mode for me, and I managed to pretty much accomplish that while adding a small daily chip to the stack (the result of a few range fades along with taking the 2:38pm bear trap extension long) to close the week at +$26K on 5/5 trading (that's # of days + for newbies). And while still not up to my standards, the 5/5 was important for my psyche, as was the doubling of the prior week's results which allowed me to continue to put some distance between the current stack and the protective $2.0M trailing stop implemented a few weeks ago (chart updated on lower left).

It's still clearly not where I want to be, yet while the market remains rangebound with limited emotion, at least the personal hints of stabilization and momentum remain in place as another performance uptrend tries to take hold.

I wish I could say the same for my poker game last night, as I thought I had it in the bag after flopping a Queen high flush (against the #1 ranking player just slightly ahead of me). She went all-in on the flop, I called expecting to take the bounty points right then (she won last week) and knock her out of first place, before she revealed she also flopped the flush ... with Ace high. Argh.

Lastly, a reminder the Boston Bamboo Trader cookout is only two weeks away, and I wanted to remind all who are planning to attend to please RSVP per the link so we can get an accurate count. By then, I highly doubt there will be any rain left on the planet as we've been getting deluged for two straight weeks now. No worries though, as I've ordered an ark.

Over the weekend, I'll share a phone conversation I had with an individual last night who refused to believe it was possible to make money from trading. I think you'll find our discussion and my comments quite interesting, so look for another Weekend Trader video.

Until then, have a great Friday evening.

Thursday, June 11, 2009

Thursday Notes - Crack That Whip

3:45pm Well, it was deja vu in terms of early setups today as once ES traded back north of 945, this time it held and we got a few mini-bear trap extensions a day later than initially planned. Having said that, I expected the early afternoon push through 950 to surge faster and farther than it did (it barely grazed above recent Globex highs), which tells us that many shorts may have already had most of the juice squeezed out of them in prior days, as well as new longs not loving the market even at breakout prices.

In terms of trade at this end, I felt I had a strong read on the market most of the day with the vast majority of sequences -- aside from shorting the opening surge and the afternoon break south of 950 -- on the long side given the chart bias, and the only thing holding me back from loading up on size (which I was looking to do in earnest) was an absolutely putrid pace and volume throughout most of the session, complicated in part by some traders moving to the September contract today. And you know how important pace is to me! Let me put it this way: Any better pace and today would have allowed me to comfortably trade size and capture the best day's chip gain of the year -- which I still feel is just around the corner.

Still, I made several strong trades and managed well, often adding small sizes on top of solid initial fade entries on turns north. And while it wasn't a filet day, it was a very solid three-course meal to set up Friday where I plan to be in "stay out of trouble" mode for much of the day.

Tomorrow, we'll score the week as we approach the half-way turn of this year's journey, which is now only 13 trading days away. And while I remain behind Alain Bernard in the '09 race (new onlookers may want to scroll through the late '08 posts or do a blog search in the top left for "Bernard" ... essentially, he's the guy I'm always trying to mentally catch), I've at least stopped splashing water in my own face and have straightened the goggles as I approach the mid-year turn.

Right now, after a lackluster first five and a half months -- including a putrid May, I'm behind where I want to be (the $1M target pace). Yet as someone pointed out to me the other day, considering (1) how atrocious I feel I've traded at times, (2) the trouble I had getting the post-2008 engine re-started, (3) this year's health distractions, and (4) declining volatility [no excuses ... simply facts], the fact that I'm even still talking about back-to-back million dollar years may be a more significant accomplishment than at mid-year '08.

I know this. The momentum seems to be turning, the "fun" is returning, the focus is there, the blood is pumping, I don't like to lose, and some are again questioning my legitimacy (providing instant bulletin board material).

Yes, I'm behind.

Yet if I recall, so was Mine That Bird in the Kentucky Derby, so maybe there's still life in this old horse.

Time to crack the whip.

Time to finish the comeback and get more serious about going back-to-back.

Did I say I don't like to lose?

Poker tourney night tonight, and I'm in second place by only 20 points with three sessions to go. I'm planning to bring my A game to the table.

Wednesday, June 10, 2009

Wednesday Notes - Wrong Way

4:00pm Remember that post a short time ago about being "wrong"? Well, after trading Europe fairly well this morning and seeing its strength, I expected ES to -- at a minimum -- hold its initial supports near the top of yesterday's range on any post-open 1 minute turn north, especially after the market attempted a bounce after 10am where several indicators including three line break turned long for a possible bear trap squeeze.

All the ingredients seemed to be there (ES actually traded 955 overnight), and so I took a long entry on decent size not expecting ES to lose 944 ... not to mention 930 later in the day. In fact even as I look back at the charts now I still feel it "should have" held. Well, I was wrong. Very wrong.

The good news is I didn't wait for ES to lose 944 and cut the trade off at 944.75 when TICK and my gut (a non-technical indicator most books don't address) told me it didn't look right. Frankly, it was one of those times when I thought, "hoo boy, another scratch to manage risk before I go right back in at a higher price if it holds ... which it probably will." Obviously the re-entry never happened, and I spent the rest of the day trading short sequences as it was clear that if I felt that strongly about it, that others did as well and were likely stuck.

The only regret I have is not holding a 3pm short entry (double resistance at 935 with prior range low which was busted along with 15 minute resistance) as long as I would have liked, and I definitely left some green on the table on that one.

Yet all in all, I'm satisfied with most of the decisions I made today and was able to scratch, claw, and align with the market long enough to carve out some daily bread after the opening bump. And continued good decisions are all I can ask for as I await for the P&L to ramp up.

Today was a good reminder that it's not about being right. It never is.

It's about what you do when you're wrong.

And for one day, I guess I was able to turn the car around before getting slammed by oncoming traffic.

P.S. Note I moved the fictitious draw chart to the left back near the top and the chip stack down where I can't readily see it. As I mentioned in last night's comments, I'm working on getting back to the mental basics to re-establish that scratch & claw, aggressive "coming back from a draw" mindset. There's still too much complacency and slop in my trading despite the recent stabilization, and every bit helps.

Tuesday, June 9, 2009

Tuesday Notes - Lunch Meat Day

5:00pm Today was one of those days where I felt execution precision was mandatory from a scalping perspective, and I had my B game on most of the day to keep my head above water, albeit barely.

My bias was generally long on pullbacks and short on extension attempts to the north, and I thought the best opportunity came in the Globex session where a weak DAX couldn't push ES down below yesterday's breakout support, and once Europe began to strengthen slightly, ES caught a bid for a few points. The noontime bear trap extension also provided a decent opportunity, although the pace throughout the day was farily sloppy which required strong focus and precision. I caught some of both on light size, which was partially offset by the cost of fishing lures on other sequences.

So today contributed a ham sandwich to the weekly meal at this end, and tomorrow we'll go after something more than lunch meat.

Monday, June 8, 2009

Monday Notes - Tidy Day

4:00pm There's no doubt I've been forcing things of late, so just as I finally cleaned my office on Saturday, I'm also working on "tidying" up my trading to eliminate some marginal sequences that I feel I've been taking as of late which have been due to a combination of sloppiness, boredom, and/or forcing things if I've had to miss preceding "prime time" activity.

And so today I seemed to do a decent job of picking my spots by trading very lightly during the Monday intraday chop, before picking it up in the last hour as the market finally showed some emotion. And while I missed the breakout entry (instead preferring to let the market tip its hand as I suck at breakouts and have been forcing a few lately), I did time the 946 short nicely as the last dog was jumping on the dogpile -- when volume died and TICK was losing it -- for a strong wholesale sequence to end the day.

We'll continue last week's change to report net chip gain at the end of the week, yet considering I don't normally trade well on (1) Mondays and (2) after 3pm ET, it's a bit ironic that much of today's green came during that time.

And perhaps it's another small sign that the personal momentum tide is indeed turning.

Saturday, June 6, 2009

** VIDEO ** The Weekend Trader

Today I talk about general trading and motivational perspectives, respond to recent dialogue on the EliteTrader thread, and touch on the upcoming picnic on June 27 (RSVPs required).

And yes, I finally got around to cleaning the desk behind me and getting a haircut!

Friday, June 5, 2009

Friday Notes - A Stabilizing Week

3:55pm Whew.

Let the record show that I had a far from spectacular performance this week, yet I accomplished what I absolutely had to do in order to stabilize the recent situation and turn momentum back in my favor which I felt was slipping away from me for the first time in a few years as May drew to a close.

And so the changes implemented last weekend, including taking all focus off the daily P&L, ditching the scorecard, and adding the longer-term perspective "game in progress" chart on the left (updated through today) all helped to put in a very modest, yet enormously stabilizing week.

For me, this week wasn't about earnings, and performance was far from perfect, the take is well below "usual" gains, and well below the $1M annual pace at only +$12K on 4/5 trading. Yet in my view it's huge, for as powerful as the 2008 and early 2009 performance momentum was, a downward spiral can be even more powerful (ask Archie Karas, 99% of traders, and every Internet bubble paper millionaire-gone-broke) ... and the current waning momentum had to be stopped in its tracks.

As with the market, the personal P&L can't begin going back up strongly until it stops going down -- and yes, I view a flat or slightly delining equity curve an emergency -- and this week was all about solidifying the footing ... period. Interestingly, last year it was that one-day October -$90K hit that was the "test of the year", yet which became the ultimate kick-in-the-a$$ and springboard for the record fall. Time will tell if surviving the last few weeks will have a similar effect.

Last weekend, I didn't sleep well at all, and Monday couldn't get here fast enough. Ask my wife ... I wasn't particularly pleasant and she was probably more than happy to see me spend all of Sunday at Foxwoods.

This weekend should go better.

And yes, the longer the coil, the harder the eventual move.


btw, I captured 3rd place in the poker tourney last night, but lost my grip on first place for the more important quarter (winner gets a buy-in to Foxwoods) by the slimmest of margins as the final three were all 1-2-3 in ranking and one got additional bounty points for taking out last week's winner. The good news is I played extremely well after someone tried to put me on tilt, and was able to come back from a single chip with ten players remaining to take the 3rd and stay in the overall hunt. The parallels to trading continue to be strong.

Also, a continuing reminder that all are invited to the upcoming June 27 cookout here on beautiful Cape Cod. Just please be sure to RSVP so I can gauge food. Remember, I'm buying!

Thursday, June 4, 2009

Thursday Notes - Coiled

4:00pm Despite the scratch day (a bit early on some wholesale entries, a midday fourth opinion on my back, and one regret on sleepwalking through the 10:22am 1-min continuation north trigger), I feel my trading is coiled big time and poised for a breakout that's been building over the last few weeks ... if not months.

I say that in part because I began to ramp up size a bit, feel the swagger returning, and while I fouled off some pitches today on the precision timing, I got the solid part of the bat on several balls and I'm getting that feeling that it may just be a matter of days before I'm back to my old trading self and start putting together a string of five-figure days with some bounties thrown in.

It's a feeling that's hard to describe, yet one that I've sensed before with high probability.

It may not be tomorrow (after all, it's a Friday and I don't expect to push it), but I'll bet a Filet Mignon at the upcoming cookout that by next Friday, I'll have banked my best day of the year.

I can taste it.

The breakout ... not the Filet.

Wednesday, June 3, 2009

Wednesday Notes - Crisp Day

4:00pm ‘Twas an interesting day at this end in that I – like many – came into the U.S. session looking for early wholesale buying opportunities as we had hourly support around the opening range, before the market did its own thing and carved out a trend day down before the last half hour pop.

And while the day wasn’t a home run at this end, I did well to recognize the emerging intraday pattern and adjusted to carve out a modest profit on the day which wrapped up around 3:30pm after covering the final short.

Of particular note for me was my sharpness in adjusting to the action, as well as execution crispness … most notably on the 9:48am and 2:54pm price vs. TICK strength divergence pops and 3:05pm weak divergence drop which was synchronized with 15-minute price resistance ... all three scenarios leading to profitable sequences that more than offset the cost of antes. And it’s been quite a while since I’ve used the word “crisp” in describing my executions, as the crispness has been sorely lacking as of late.

Today likely frustrated a great many traders looking to go long.

At this end, it was another step and sign of possible emergence from the recent mental cocoon as mental flexibilty and execution combined to keep me in the green.

If it continues, we'll start ramping up the size and work on putting some real distance between the current balance and the recently enacted stop.

June 27 Cookout Reminder!