The Weekend Trader (Foxwoods Edition)

Some random musings as I nurse my Foxwoods poker wounds this evening at the Ground Round in Mystic, CT.

Achilles Heels - I have glaring weaknesses in both trading and poker. In trading, it's often establishing wholesale fade positions too soon, especially if I've been active providing liquidity and lose perspective for the moment.

In poker, it's having too much confidence in two pair after the flop. Take my last hand today for example, where I limped in with 4-5 and the flop came 2-4-5. There was a decent-sized pot which I wanted to take down right then, and felt I had to push strong to get other players off possible straight, flush, and trip draws. So I go all in for a few hundred, and everyone folds except for Mr. Ace-three to my right who hit his straight on the flop, and that was the end to a frustrating day as I hit my stop loss of -$500 and called it a day.

That was the second time today that I gave too much credit to an early two-pair and suffice it to say my poker game needs a lot of improvement.

I do find it a bit ironic that I get often get more frustrated losing $500 playing cards than I do losing thousands on a trade. I mean here I am coming off a $300K+ month and I'm pissed at losing $500. Perhaps it's some kind of useful circuit breaker though that keeps me from losing large sums in an endeavor where luck plays a much larger role ... at least on a short-term basis.

Perhaps even more ironic, is that my modest poker losses seem to fuel my positive trading even more ... perhaps making the "fictitious draw" feel real in a weird sort of way. As I've said before, poker makes trading feel "easy" by comparison. And we all know trading ain't easy! Yet the more I think about it, the more I feel it keeps me humble going into the trading week ... which is only way one can expect to succeed in trading.

The "Final Table" Post - For some reason, Thursday night's Final Table post now ranks as the mostly widely read post of the blog. It also ranks as one of my personal favorites.

Former Students - It seems like more and more former students and readers of my old work have found their way to the blog. And for those who have asked what's changed over the last few years, I'd say it's largely simply having a few more years of experience and hard knocks under my belt. That and the graying at the temples and in the moustache.

Blog Plans for 2009 - Frankly, I have no clue. I've poured my heart and soul into trading this year -- including documenting the journey real-time in this blog -- and I may need to take a break from trading, the blog, or both. I admit I'm running a bit on adrenalin and momentum right now, which isn't sustainable over the long run.

So long as it remains helpful, I'll consider continuing it ... yet that will depend on my overall plans and goals for the coming year. At some point, I suppose I should start enjoying the rewards the last year has brought -- as many of you keep reminding me. Then again, part of me wants to keep the momentum going until the well is dry, and it's hard to argue that the blog hasn't been helpful to my trading as it's keeping me accountable in a very public way.

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By the way, my other Achilles Heel is chocolate. And if you're ever at the Ground Round, get their "Chocolate Lovin' Spoon Cake". That and a cold Smirnoff Ice have taken the sting off today.

Enjoy the rest of the weekend.

The Weekend Trader (October Wrap)

Before I begin, I have to stress for myself and those looking over my shoulder that the moment I click post, this all has to be forgotten. I actually wish the blog had a Mission Impossible "this will self-destruct in five seconds" ability. It's history ... and that's all it is. There's a reason I have the "complacency" comment prominently displayed in the top left margin, as that's what prevents the vast majority of traders, poker players, and others -- including me in prior years -- from achieving greatness in terms of sustained equity growth.

I also expect the market's conditions will revert back to more traditional rhythms, which will lessen the opportunity for monster moves and P&L impacts -- especially for those of us who fade emotional moves -- but that of course remains to be seen.

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For those new to the charts to the right (click to enlarge), the top one tracks each month's worth of trading. The dots on each segment reflect equity points at the end of each day. The chart purposely shows me "digging to the surface" each month to emphasize that each month stands alone.

The second one provides gross trading gains, draws, expenses, and net profit for each month in the form of chip stacks. You can find a more detailed explanation of each "stack" in my October 4th post.

I really don't know where to begin to describe this month. Yet it's probably safe to say that I'll never see another month like this so long as I live. Never.

It was a career record month in many respects, including my largest single-day draw (before I got used to the "new market"), most number of days > +$20K (nine), and largest total net after expenses of $315K. I had to change the scale of my "digging to the surface" chart yet again. There's also probably a record in there somewhere for the most hours of sleep lost, but I don't track that.

And the truth is, I made a lot of mistakes -- two significant ones come to mind -- and those errors are the only elements of October that I'm going to take with me into November. btw, if you're looking over my shoulder, there can't be stronger evidence that this business and life is about overcoming mistakes. Make a mistake? Get over it and keep moving (yes, I'm shouting). There's a reason we've been given a world of tomorrows. For despite the "pristine" chatroom and advisory subscription hype, profitable traders make plenty of mistakes, and if making that point is the only purpose this blog serves, it will have been worth the effort.

Aside from that, I'm not sure what else to say. All I know is October is officially history, no longer matters, and the new game starts on Monday. The 2008 final table.

Two more months of tunneling to the surface before this year's game ends, and countless opportunities for continual self-improvement. (btw, the self-improvement game will never stop ... even after December 31.)

So we're back to square one with the only chart that matters on the lower right.

My "coach" tells me October was an awful, gut-wrenching, sick-to-my-stomach draw and I need to get back to focused recovery mode. He says I have two days off before I have to get back to work.

I think I'll need a new shovel though ... the one in my hands is so worn it looks like a spoon.

Have a peaceful weekend.

Friday Notes - Morning Strength

12:00pm - I almost forgot what it felt like to trade an uptrend. Yet with the TICK spending most of its time above zero this morning and the VIX downtrending, I've been biased to the long side in the U.S. session, buying pullbacks -- especially once 3LB (bottom chart) broke to the north and we broke the early morning range. The charts to the right tell the story (click to enlarge), along with the VIX which remains in a 15 minute downtrend as I type this, albeit stretched to the south a bit.

From here though, it's a crapshoot (thus the blog typing), as ES still hasn't broken its late Wednesday high just north of 970, and I've thus been exiting on each extension.

And while the decreased volatility should have be ramping the sizes upward, I'm keeping it light because (1) I need to get the feel of a less volatile market again, and (2) it's a Friday and last day of the month ... and I'm in major chip gain preservation mode today.

The brain cramp of the day so far was shorting the DAX too soon on its consolidation break, which has limited my net chip gain to only +$7K. It was stupid and cost me some tuition, yet I recognized it, quickly moved on, got some better wholesale shorts, and used those mental notes to be alert for a possible repeat in the U.S. session, which has been helpful.

1:21pm ES trying for the 970 break.

Been nibbling small sizes long on this last push, but keeping things very tight on a Friday. VIX remains in a downtrend and has extended from its late morning pullback.

1:25pm Ding, ding, ding ... think the whole world wasn't watching that? 7 point extension.

1:28pm Nice ... shorted 76.25 and exited/reversed on the pullback. Still keeping sizes small.

1:38pm Took FESX short on that last ES extension ... 2632 down to 2626 ... practicing for the future. Eric - I think I found a new toy. Surprised how thick FESX still is on what's now Friday evening over there. Emotion is emotion ... doesn't matter what country.

1:45pm Looking for an ES pullback toward 5 min support.

1:53pm Got it ... best entry 73.25 and exited on the pop. I'll let others go for the riskier further extension. Getting close to shutting it down here. Maybe one more long if we drop toward 70.00

1:56pm Nice ... best entry 72.00. and out on the pop. That was a gift.Going into major income preservation mode ... chip gain now + $12K (trailing stop +$10K), market depth thinning out, and I don't do Friday afternoons well. I'm also losing focus a bit, so that might be a wrap regardless of what the market does now.

2:17pm Passed on that last extension as the 15 minute chart got pretty stretched. Sellers hitting bids now.

2:22pm Nice read ... nibbled some long on the sub-70 emotional barf. You can just feel the emotional excesses in the trades. Sometimes I feel like tipping them ... especially since I'm sometimes on the wrong end as well!

So long as the VIX continues its downtrend, pullbacks remain buyable and shorts are scalps only on emotional price extensions for those nimble wholesalers. See the posted VIX chart for the "wind at your back" chart of the day.

2:47pm ES resistance at 980 for now. Only a ten point thrust so far ... hmmm. Path of least resistance still up though.

2:56pm Still doing light nibbling for long scalps on retracements. 980 resistance yet again. I might consider a small long on a trade at 981. Shorts must be getting tired as price keeps holding.

3:03pm Come on, giddy up.

3:04pm Sweet ... out. Actually chose entry from earlier pullback vs. the 981 in case the momentum died (second rangebreak of the day a lesser %). Best exit 983 and that's a wrap for today, the week, and the month before I do something stupid. Locking in slightly more than +$15K.

3:06pm Wow ... nine point Wyle E Coyote drop. Damn good decision.

I'll post the October #s shortly (warning: get out the motion sickness patch) for one final review before I head to Foxwoods and Mohegan Sun for a two-day poker marathon.

Keep the comments coming. I'll look at them and respond over the weekend ... there might just be some delay in posting and responding to them. We're also bagging the Sunday PM PalTalk lounge and going with Wednesdays for now.

Thursday Notes - My First FESX Trade

4:15pm Interesting day today in that the entire day session traded inside of the range set in the last 30 minutes of yesterday's trade. Of course that was a 50 point range given the false GE earnings rumor just before Wednesday's close.

'Twas essentially a choppy session, and I did a pretty decent job navigating it by trading the 1 minute chart (trends and contra trend extreme fades), although I got nicked a bit midday as I got cute going for one more extension on the 1:45pm drop. Made most of it back in the afternoon though.

On the plus side I stayed completely out of the final 45 minute whip-o-matic, kept sizes under control, and carved out an acceptable +$15K chip gain. I also made my first trade of the EuroStoxx 50 (FESX) for +640 Euros (thanks Eric ... we'd discussed this in the PalTalk lounge last night and I attached proof to the right!) and am going to begin keeping an eye on that, both in terms of trading it and using it as a confirming indicator for the DAX. It will likely take some time to fully understand how the two markets interact, and I look forward to some new learning in that area. So much to learn in this business, so little time in our lives.

I expect to trade Friday lightly to lock up and score the month's chips, before sitting down at the final table on Monday. For more on that, see today's earlier post below.

Have a pleasant evening.

Special Post - Welcome to My Final Table

OK, so the final table for the 2008 World Series of Poker is now set, which will take place on November 9 and which ESPN will telecast on November 11. All nine players are guaranteed $1 Million (OK, the first guy out gets "only" $900K, but that's splitting hairs as everyone else gets more than $1.2M with the winner getting $9M).

The battle has been grueling and minefields abundant as players have had to battle lost sleep and lapses in concentration resulting from the constant stress of having to make decision after decision as thousands of hands are played -- not to mention bad beats from 2% probability river drownings.

And yes, those left standing have also been lucky. They've escaped jams, sometimes as the result of their skill, but often as a result of simply being in the right place at the right time.

Sound familiar?

Those that have been following this blog know what's next, and I'll apologize up front for what may seem like an overdone analogy. Yet I can't help it as it's extremely relevant and timely as we get ready to enter the "final table" of November and December. Plus, this remains my diary so anything goes.

You see, for some reason I've been put in a position similar to those who will battle it out on November 9. On Monday, I'll be entering my version of this year's 2008 "final table" essentially playing with the house's money.

Yes, I've been on a mission this year. For the first time in my trading career, I decided to suck it up big-time for 366 days and make sacrifice after sacrifice to push myself harder than I ever had. In doing so, I sacrificed hundreds of hours of sleep, plenty of personal time, non-trading business income, and some of my sanity ... not to mention the 7th-9th innings of the second greatest baseball playoff comeback ever. The goal was simple -- personal peak performance.

If you're new to this blog, my July 26 post helps set the stage and discusses my initial $1 Million mission and goals. A later post on September 23 then raised the bar by another $250K. Both objectives have been accomplished and now it's on to the final table on a complete free-roll with house money. Yet like the WSOP, the game isn't over yet.

Of all the players at this year's WSOP final table, I can most relate to Dennis Phillips, who will be the oldest player at the table at 53 ... just six years older than me. And yes, I'm rooting for him to prove there's something to be said for decades of life experience. Yet my favorite player (not at the final table) remains Barry Greenstein, whose silent stealth play over his career has put him in a financial and psychological position to donate his time and funds to greater causes. And I can also relate to Michael Mizrachi ... a fellow "grinder", albeit in a different industry.

btw, I recognize that the poker-trading comparisons are better suited to cash poker games versus tournaments where one is "forced" to play due to increasing forced bets and luck plays a larger factor.

I'm well aware of the landmines. The story of Archie Karas will always serve as a reminder. And as this year's televised WSOP hands have again validated, it only takes a single mental slip to undue thousands of hands of a well-played game ... and to hand the entire chip stack over to someone else. I need to remain aware of both of those lessons before I can close the book on this year's tournament on December 31.

Tomorrow night, we'll take a final peek at October results -- which will of course mean nothing when the new dealer shows up in November. And I anticipate the next two months will be among the toughest trading months of my career, and will be on the defensive much of the time. One reason is that the rhythm of the last few months -- now that we've grown accustomed to it -- will likely change yet again.

So the goal at this end is now fairly simple -- incremental gains balanced with chip protection. I won't raise the bar again or risk ten months of sweat and hard work. For unlike the WSOP, I get to keep whatever chips I have on December 31.

But it should be fun.

Welcome to my final table.

Wednesday Notes - A Step Slow

1:48pm It has often been said that 99% of work is simply just showing up. Yet every so often, you have one of those days where you're simply not at your station during the prime entry times. Such has been the case for much of today at this end as sleep, restroom breaks, and non-market priorities kept me away at key turning moments ... especially during the pre-6AM gift of an ES pullback to sub-920 once the DAX finally lifted off a prolonged consolidation phase. And actually, most of the solid action came in the overnight session as the early post-US open oscillations were much shallower.

And as is often the case under such circumstances, I found myself scrambling and pressing a bit trying to capture pieces of the textbook morning-after-trend oscillations, and the result of missing the prime entries has resulted in a subpar +$5K performance heading into the FOMC decision.

I also think the month's efforts are catching up with me, as I continue to note a lack of keen focus and concentration over recent days, and a poor transition from defense to offense when needed. And we all know that trying to trade FOMC action with a lack of full concentration can be deadly.

3:37pm Not much better in the afternoon, although I stayed out of trouble and nudged the pathetic chip gain to just over +$6K by catching some of the post-3pm consolidation break and extension.

Clearly not one of my better days, but a win is a win and tomorrow is another day.

We'll open the PalTalk room again tonight at 6:30pm ET and I'll be there around 7pm. We'll keep it open so long as there's interest. If it's closed at 7:15pm, I'll take a nap instead :-).

** VIDEO ** Tuesday's Trade & Blog Intent

I thought I'd take a few minutes to supplement today's earlier post and discuss today's market, as well as reinforce the blog's intent to current and newer blog readers given the continued increase in traffic (now read in 67 countries). I'll also be referring to the VIX chart shown below.




















Have a pleasant evening.