Wednesday, July 29, 2009

Wednesday Notes - Bait Afternoon

5:00pm I recall Lou Borsellino mentioning that he had a rare losing month one summer years ago when there were "no extensions" in a relatively placid range-bound market. And while July will be profitable at this end, it will only be modestly so (although better than June!) as I fully admit I'm not the best summer or range trader, and instead take the opportunity to slow down and reduce trading sizes & number of sequences while casting an occasional line in the water and incurring the cost of bait if necessary.

And this afternoon resulted in a "bait" day as I positioned short on what appeared to be a bull trap shortly before 3pm on a fifth test of recent range lows -- which would have paid extremely handsomely if the bottom fell out in Wile E. Coyote fashion -- before the market held and turned north triggering my scratching the sequence.

Which may beg the question, "Why don't you simply trade the ranges Don?" Simply put, I'm very comfortable in my own skin ... but more on that in a bit.

One of the reasons I chose the "Jellyfish" term to define the current team is that Jellies have to adapt the current in order to survive. Yet as I'll mention Sunday night, I've learned over the many years that adapting often means as much "not trading what isn't your strength" (sorry for the double negative) as is does "adjusting your trading style and trading". Sure, one could try to "master" all markets ... yet can or should a kickoff returner learn to kick? I mean kick well?? We should remind ourselves that sitting out or scaling back is a decision ... and often a correct one. For many, backing off last year's market was the right decision. For me, it would have been the worst as I was like a kicker with a gale force wind at my back ... day after day and month after month.

So we have two choices: Be Jacks of all trades but masters of none, or master the hell out of certain conditions. At this end, I choose the latter and am very comfortable in my skin knowing I'll typically do extremely well in momentum markets with strong pace, order flow, and intraday trends & emotion, as well as post-trend M.A.T.D. exhaustion days, and simply "OK" during other times. And despite the Jan '08 - June '09 "pedal to the floor" self-imposed race when conditions warranted, over the longer term I can more than live with monthly P&Ls that look like Good, Great, Great, OK, OK, Good, etc. etc.

Remember, it's always about the outliers! Or as the 2009 WSOP reminded me again, it's not how many hands you win ... it's how many chips you gain when you do win. If I were to have to sum up a decade worth of trading experience in ten words or less, it would be, "Know thy strengths, and press when you have the advantage."

And along those lines, I'm again seeing more "after the fact" analysis in some sites that seems to make it "so clear" at the end of the day what the market did ... when there's not a soul on this planet that can predict the future and everything remains probability. And while some of these sites mean well, they can actually do some harm by making the readers believe that "they should have known all along"!! I call it the "I Told You So" syndrome, and yes, I'd like to see their trading results ... yet once again, I digress.

Since this diary went public a little over a year ago -- I'm told still one of the few that discuss actual results including losses both small and large -- I've taken some occasional heat from a few uneducated for everything from my trading style to my faith to my current desire to try to improve the current trading education landscape via an unprecedented eight-week non-stop think tank (pun intended).

Yet simply put, one has to be comfortable in his/her own skin. And I'm both extremely comfortable and confident with every decision or "risk" that I take ... whether it be via a specific trade entry, exposing my daily results and deep-seated trading convictions to the public over the last few years, or launching an innovative educational journey.

And on the topic of trading, one of the reasons the Jellie effort will last eight weeks is that some will need that much time to "find" their skin. For while we'll be pounding in market bias and tape reading hour after hour & day after day to guide performance, every trader on this planet has to find his/her own rhythm -- or skin -- and be comfortable in it. The Jellie effort has never been about cloning Don Millers (yea, I know, can the world even stand one?) Rather it's been about providing an intensely focused environment -- shut off from the world -- where both team and individuals can be focused on a common market and a common goal.

My only question is do Jellies have skin??

btw, my many thanks for the tremendous outpouring of support from the industry -- from those at the Merc to Tim Bourquin -- as we get ready to swim in the tank on Sunday. The world is indeed watching. Again.