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.


Charles said...

Don, about yesterday's comment you wrote to the "doubters"...seems quite silly and, frankly, rather pointless for anyone to to even go there.

I already have my own bottom line to worry about. It's your excellent market commentary, keen insight on the psychological side of this biz, and the interesting chit chat that takes place right here in the comments section that I look forward to each and every day...not how much $ you're making.

with gratitude,

pinebilly said...

nice job today Don. Way to be "unbiased" even after being biased on the direction. Something a few of us are working on right now.

1yearTrader said...

Hello Don, thanks for sharing your trading diary.

You use the term scratch a lot and I was wondering if by scratch you are truly scratching even or are you loosely using the term to mean 1, 2 or 3 tick losses?

For me I find that these small hits that I take to control risk on top of fees create a steep hill to climb over time. Very frustrating for me.

Don Miller said...

1yearTrader -

I essentially mean I'm getting flat. It could for for a small win, loss, or flat ... the point being I want to get back in cash for the moment.

As you allude to, it's a risk management strategy that works well when transaction costs are low, which is the case for seat owners or lessees.

It's a technique I use from time to time depending on the circumstances.


Unknown said...

Great blog. Keep up the good work !

For those blog readers who may be interested, here is link to a guest lecture from another novice trader Mark Cook

E said...


"It's about what you do when you are wrong."


"It's about what you do when you are wrong."

Master Traders do think differently...

So do great coaches... Wakefield given the hook before more damage is done...

Truly great post and insight

Thanks Don

procol said...

If assume that most pure scalpers are taking the offer and hitting the bid, plus paying $5 a round trip, thats 17.50 in vig/per contract.

so 1yearTrader, you're not imagining things.

Now if you can finesse in and out and beat (or even MAKE) the spread, well its cheaper. But that means you must pick levels and 'guess' which stop to get off, and not wait to see where the train is really headed.

That 17.50 is a lot of noise to overcome for scalping. Even with free trades, if you always pay the spread, its 12.50 a pop. Of course, some will say they buy the bid, etc, but they don't tell you how many times they 1) get run over, 2) miss a good trade waiting for a fill.

E-Mini Player said...

I went Long in the same area, but couldn't exit fast enough, and was taken out by my stop-loss (6-ticks). I honestly couldn't believe the extent of the sell off, and was too trigger shy to play on the short side. I know price can always go lower, but I really didn't wanna be the sucker shorting the low of day and there were so many support levels below 939 :-/ Trading is a very tough way to make $

Unknown said...

oops,correction to my earlier post -

novice should read as Maverick

Aequitas said...


Always enjoy and appreciate your blog entries.

Wanted to share a link for any aspiring traders out there grappling with doubt about your results [and in turn missing the whole point of what you're trying to share]

Hope it helps


Charles said...

re: "left some $ on the table"

Don, that hits me right smack in my gut, which is exactly what I need. My tape-reading has been spectacular lately, but I am exiting WAY too soon. Such a rookie mistake...and I am NOT a rookie anymore! Yes, I'm mad as heck at myself right now, and I intend on using this forum you so graciously provide to "throw myself out there".

If anything, I need accountability.
I hope you and the 'onlookers' don't mind me using this forum as a way to force accountability upon myself.

So Don, et al, from here on out, I intend on submitting a comment on a regular basis that hopefully:

(1)provides something of value to the Don Miller Trading Journal readers and

(2)...well, I think you all know where I'm going with this :-)

good executions to one and all,

RexVulgaris said...

The world and his wife were buying the dip at ytds open.. I know I was. 46-47 'should' have held and a quick stop run to 45 was all that was possible or somethin else was going on. I got out on the bounce to 46. Once that was gone peeps were def stuck.. Look at the sell vol spikes on each new lows.... a great picture of puke on the floor.. didnt start to ease till 36-37's

Got the 3pm ss 34.75 ans was prolly best setup iof day.

Nice going

Anonymous said...

I usually do not care if we spike up or down as long as I have pulled the trigger and watch my stops but it is obvious that the mkt. is coiling for a big move..... the calm before the storm .... enjoy the price osc. as long as it lasts because we will get some serious vol. back into the spouse.

Crash Davis said...

what would you say was the biggest turning point in your career when u started seeing success?

great post!

Don Miller said...

Crash -

Not sure there was one ... it's been an evolution over time, and there's not a day that goes my where I don't learn a bit more about myself.

Probably not a great answer, but likely an accurate one.