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.


Charles said...

Solid post Don, I sense your engines are starting to warm up. Good luck at your tourney.

Also wanted to say thanks to commenter Chris for the link yesterday.

Some thoughts:

Step #34: "we get a little overconfident and the mkt humbles us"... stumbled over that one a few times.

#36 caught my attention: "We stop thinking and allow our rules to trade for us. Trading becomes boring, but successful."

I don't know that "not thinking" is precisely what happens, but when I'm trading well, it can seem boring. It's much better to be near the end of that list than the beginning though.

Right now I'm focused on fighting off that sense of boredom so I don't try to force any trades. After last year's pedal to the metal pace, that's been difficult to do at times. But the pain of impulsively taking a weak trade has to be greater than the pain of boredom, and waiting for the price action to unfold into a higher probability setup.


Hay Farmer said...

Don, you always talk about the "pace". How do you judge the "pace"?

Don Miller said...

Hay Farmer -

It's largely feel, and I personally prefer a continual market rhythm vs. a "start/pause/die/restart" & repeat mode which we had much of today (the latter can often shoot hard in either direction).

Said another way, it's tough to match the music's heartbeat when the band keeps taking breaks.


Charles said...

Don, knowing you trade the DAX, I was just wondering if you ever factor in the price action of the European indexes in your daily approach to ES trade?

I have just been casually observing it and it seems the ES doesn't really give a hoot what Europe does most of the time.


Don Miller said...

Charles -

I view them as separate markets, and would gauge expected opening ES moves based more on what ES did the prior day (i.e. trend = oscillations) than what Europe did or didn't do.

And while I realize I said yesterday that I thought Europe's strength would carry over to the U.S., it was only because the U.S. was also primed for a breakout and opened above its supports.


Crash Davis said...


Do you typically sit on the sidelines in range markets and just wait for trends to develop?

Also what do you on avg. risk per trade?


Don Miller said...

Crash -

Depends on how large the range is ... i.e. there could be mini-trends within a larger range.

If it's really tight, I'd be smart to sit out.

Re: risk, there's no standard figure. I typically trade from 15 to 90 contracts ... sometimes heavier, and manage risk primarily by scaling in and out.

Overall, I always risk a very small amount of my tradable capital.


Unknown said...

Hey Don,

Thank you... thank you... thank you...

The proverbial "light bulb" or "epiphany" moment happened after visiting your blog. I am a member of and came across a couple of threads that mentioned your name and trading strategy. I've been trying to master the e-mini S&P for sometime now. Most of my intense study over the last 2 years have been in the spot forex market. I've tried every imaginable trading strategy with minimal success at best(i.e. fundamentals, technical analysis[parabolic, boilinger, ema, macd, support & resistance, etc], & even martingale). I've considered position trades, swing trades, & intraday trades.

The simplicity of continuous scalps came into focus after reading about Jim Simons and you. Combining the attributes of both strategies, I've stumbled upon a strategy that is so simple that it's almost embarrassing. It simply requires discipline, which is why it's critical to integratge the automation aspect of Jim Simons in an attempt to consistently scalp the market each day - for my "daily manna" (an anology I received from, as this is a bona fide map to trading success.

I'm glad that I've found your blog. I live in Atlanta. Ufortunately, my wife & I won't be able to make your cook-out. Hopefully, you'll do it again next year. I look forward to this journey with your blog. Perhaps next year I'll be able to give a "transparent" testimony of how I made it--- by God's Grace...


Anonymous said...

Hi Don,

if you have time and are in the mood
I would like to see a chart of your trade entries from a day like today.

Don Miller said...

Walt -

Nice going. It's of course likely more your work than mine. If I helped plant a seed, may it become your personal Bamboo tree.

K.I.S.S. is so underrrated!

Max -

I've toyed with the idea from time to time, yet don't have an automatic trade chart plotter and the effort would be extremely tedious and counter productive from my personal energy perspective, which comes first.


Anonymous said...

What charting time frames do you typically use and how do you use each.

Thanks for another great entry