Some days ain't built for trading, but the problem is we do not know in advance which days. Today turned out to be a crap day (I suspect for the vast majority of us), reminiscent of those choppy, rangebound Summer days. The main thing is to be consistent, and that you are. Take a deep breath and think of Monday.
The week may be over but it is hard for me to rest in peace after I blew what was my best Monday/Tuesday start in a long time. Pulled out 1K this week and November is shaping up to be a tough month. I have to make sure I go to bed no later than midnight on weekday's, because this morning my brain was just a little slow and I didn't put an iron grip on defense in time. The PPG trade I should have covered half for flat before futures made a move up when there was no offer. The EMR trade I shouldn't have took to begin with as I didn't like the tape action yet I tried to throw 300-500 shares at it and took unneccessary damage. Worst of all, energy which has been one of my strongest sectors to trade destroyed me today. Normally when the news is too good and creates a big gap-up, I go for the super laggers that don't gap much, today I tried to be fancy and went for a fill-the-gap play and it just did not work. Then that EPG trade, I couldn't imagine him fall on me like that when the XNG was ripping, but I know from past experience that he has a tendency to sell some massive shares off the open then go up the direction XNG is going, I should have jumped back in as soon as tape action became healthier. All in all, just really bad execution, not going to blame the market, not going to make the excuse about insufficient sleep, as a professional you must be ready to play every single game, and it is your duty to keep yourself sharp as a razor blade when the opening bell goes off everyday. I have experimented with quite a few things lately, Tony's filters, Pair Trading, in an attempt to expand my game. The problem is, if the market is not choppy, my game works anyway, the style that is most independent of market direction is news trading, and I am going to see what I can dig from the news trader. I may be able to finish archiving all of my journals to a personal web site this weekend, it will have everything from the interview to my initial losing streaks, fun to read and I will post the link later.
Hitman, Two questions, if you don't mind. How much pressure do you feel to stick it out on a day like today, which looked to be pretty crappy from the get-go? Would it be a bad move just to bag it and go to the gym if you felt the day was likely to be a grinder? Of course, everytime I do that, a big sustained move takes off. Second, don't you find the energy stocks a little hard to trade? I see you're trading them a lot now and have made money, but they seem to have a lot of erratic moves to me.
The problem was that I was smoked for 1K almost right off the open, a period which I typically feel very confident to trade in. I honestly planned on make a few hundred then hit the gym today, that plan was thrown out of the window as soon as my first three trades were done. Put it this way, I haven't took so much damage so quickly in a long time, I didn't really remember what it felt like, a very painful reminder for sure. And it wasn't obvious that it was going to be a choppy day or I am sure a lot of people would have took off. The market closed on its low yesterday and was short term overbought, hence so many people loaded up bullets today expecting a big sell-off, and you can imagine the pain on their faces when futures made that stunning move to the upside . . . The single greatest advantage of energy trading is that it is a separate index, and one of the few indexes that doesn't follow futures. This basically gives you almost a second market to trade in, so when the future is choppy this will usually be easier to trade than say, SOX, XBD, or even CEX . . . Unlike other defensive sectors such as utilities and drugs, this sector has excellent trading range, and all of its components follow the index extremely well, almost on a tick for tick basis. My game is all laggers, getting into stocks that are just about to move on a index move, so I react to moves instead of anticipating them, I do have biases but I am always ready to flip.
BTW, this is a brutal environment and a lot of traders are facing some really dire situations. The HR department may as well install a revolving door as people are coming and going. In September one of the big trading desk managers blew up as he lost 145K on one trade, a bottompick play that just kept on falling and he kept on buying (and we are talking 5000 share increment here). He has been around for four years hence he had some serious leverage, and the risk management could not make him get out of his position, to the point he had to be escorted out of the building in front of all of his traders. Needless to say he didn't come back and left behind a group without a leader. It doesn't matter who you are, you CAN lose it. No one from Mrs D's group was able to collect a check this past pay period (second half of October), glad I made my decision to bail. I convinced Mr. M to bail on her group, she got so desperate that she spend a whole hour takling to him (and she never ever talked to him about trades even as a group leader who gets a cut of his commissions). It was so fake because she never gave a damn about him until he said he wanted out, and she was literally in tears, even asked for a hug and held his hand! Grow up! She has a family afterall! Then again I always thought she was a candidate for golden globe award for best actress, so the tears could have just came off naturally like it was water. Mr. M held his ground and said he felt like he broke up with his girl friend Speak of a woman's tears, it really is one of the most powerful weapons in this universe. I remember I was watching Mel Gibson's "The Patriot" with the princess, and there was that scene when Mel's little boy got shot in the back when he tried to fight off the English soldiers who were pounding on his brother, he died in a puddle of his own blood and had that innocent look in his eyes. I almost laughed because I thought the kid was stupid but all of a sudden I realized she was crying, and every drop of tear felt like priceless pearls as right there I would have gave my life to comfort her and make her stop crying, it really hit the soft spot in my heart (and I just had a $4000 down day not very long ago) more than anything else. I didn't witness it, me and Mrs F were out to lunch, somehow we were still cracking jokes and laughing when both of us had our worst day in a month, I guess it is because it came after a winning streak, had I been smoked left and right to begin with I am sure I would have been in any good spirit. That's what a winning streak gives you, endurance to go through bad games with reduced mental pressure. Still, I doubt it would have had the same impact on me. When I told Mrs. D I wanted out a month or two ago she gave me a "heart warming" lecture, and she never talked to me since I said no despite of the fact that we share the same office. Had she pulled a watery eye on me the most I would have done was giving her a piece of tissue. Mr M and I often trade the same stocks and we share a lot of plays, and we hang out a lot. Mrs D tried to tell him that I am a small potato trader that if he wants to make real money he has to move on, what a joke. It just made me crack up when she told him around the closing time that "too many day traders are in the market now and they really mess things up for "us", market doesn't trend anymore, hello? Who do you think you are? You are a day trader, thank you. She was so desperate she even tried to talk a old trader (she asked my opinion on him before when I was still in her group, and at the time she thought he was unprofitable and does little size and she wanted nothing to do with him so she didn't even make an offer) in our office to join her group. Hopefully, soon her group will move to the new office and I will be done with the distractions, until then, I am keeping my mouth shut but I need a place to vent. I have seen trading desk managers putting together morning meetings, afterhour research, and real time real money calls on news plays, they work from 7 to 7 every day and they are always there for their traders. She never did anything to help Mr M and me, why should she get a cut of our commissions (even if it doesn't come out of our pocket, we could at least join news trader's group and get a great secondary game going as he trades completely different stocks than we do) .
Hitman, Regarding your comment about developing a secondary game. Do many traders you know do this? Have their bread and butter trades, but have totally different plays that they'll make depending on the market? Or do most just execute their same plan day after day, knowing that if it's not working now, it will probably come back? This is what I want to work on over the next year, developing a 'play book' of totally different trading styles that you implement depending on the market conditions. I would think you'd have to spend considerable time focusing on one strategy at a time until you're good at it and can add it to the play book, possibly forfeiting profits to do so. How would you go about developing a 'secondary game'?
Hitman- Good post...I think I mentioned this before, but what you wrote about is one of the reasons I think I might prefer the remote trading ...you can avoid the office dynamic and bs politics that occurs at every office. On the other hand, you get the bad with the good...so for as many people who are distracting you, you may have just as many who are helping. Peace
As your former mentor Terry Bedford eloquently put it, implementing new strategies is very expensive for traders. You have a good, consistent game that's even profitable off the open (relatively few traders consistently make money in the first 15-30 minutes of the day). Why fix it if it ain't broke? I know, I know, we have to be open to new ideas, new strategies, blah blah blah. Or do we? If we have a game that works, that has proven itself over time in a variety of markets, then why not stick with it, refine it, get any remaining bugs out of it, increase size, maintain discipline, tight defense, and rock 'n roll...
Great posts hitman. Your office is like a trading soap opera! About the energy stocks...How do you feel about an upturn in the short term for energy stocks? Do you watch what OPEC is doing or do you just stick to watching intraday movements? Just an idea but the Enron/Dynegy merger might be a good pair trading opportunity.