Archive for September, 2010
Tonight’s rather emphatic video gets to the crux of why we created such an intensive and painstaking twenty-day trader training effort.
As I state in the video, seeing the culmination of one trader’s metamorphosis as evidenced by this afternoon’s trading sequence is priceless.
For those unable to participate, I try my best to share the insights of his evolution, including describing what true futures trading is all about, while also summarizing today’s trading action including the two-stage PMI data release and intraday reversal.
On Sunday, 60 Minutes ran an extraordinary piece on Super Bowl champion Drew Brees.
Toward the end of the segment, the following exchange took place between Steve Kroft and Brees:
We asked Brees if he would give us a demonstration of his passing accuracy for our cameras. And he accepted the offer.
The challenge was to see how many times he could hit the eight-inch goal post crossbar which is ten feet off the ground from a distance of 30 yards.
On this day, Brees wasn’t perfect – he hit the crossbar a number of times and his misses weren’t very far off. But he failed to live up to his own expectations and he wasn’t happy about it.
“Low. Not my day,” Brees said. “Nah. That was terrible. You got me on a bad day.”
“I wouldn’t lose any sleep over it,” Kroft said.
“Yeah, Brees said. After a long pause, he added, “I will.”
Last night, we had a very similar exchange during our final evening Jellie training session together when I explained that I was beyond upset that I’d gotten into one particular sequence much later than I should have given a momentary distraction, which ended up being very costly.
Not costly in terms of lost capital .. rather it was costly in the context of a missed opportunity which required I enter the trade later than I would have preferred, giving up 2 points in the process.
And while some in the room told me to take it easy on myself, I vehemently disagreed, stating that it was completely unacceptable.
I went on to say that I expected to lose quite a bit of sleep over it … which I did as I played the sequence over and over again in my mind.
Fast foward to today where one of the Jellies took exception to another comment that I was planning to do everything possible to avoid “missing out” once again.
“Isn’t ‘missing out’ a bad motivator?” he asked.
To some, perhaps.
Yet, you see … I know myself.
More importanly, I also know my enemies … of which there are only two: complacency and satisfaction.
For these two foes reflect the only barriers that will ever cap my income.
So I have to find ways to make myself constantly uncomfortable … especially during sick streaks such as the one I find myself dealing with right now.
The common rule of thumb is that fear, anger, revenge, and extreme disatisfaction with one’s performance are counter-productive. Not to mention the self-cursing.
Yet I’ve never marched to the “common” beat … nor do I plan to.
For me, they’re all powerful motivators.
And in terms of today’s trade, I simply wasn’t going to let it happen again.
Three hours of sleep and 11 full hours of trading later, the result was a personal record 27 for 30 (sequences) day, including two with identical setups to the one I’d suboptimized on Monday, and five long exits within two ticks of oscillating highs including the final late-day exit at 1145.75.
The record will show that over the past many weeks, I’ve been trading at an even stronger consistency clip than the mega-zones in 2001, 2004-05, and 2008-09, and I’m as dialed-in as ever.
Yet from my perspective, it will make my work in the coming weeks to retain the current edge all that much harder.
To review those three sequences to determine what went wrong.
And to believe that today was the worst day of my trading career.
Tonight’s video addresses my perspectives on the new Wall Street movie, including reinforcing the need to continue our decade-long attempt at increasing industry transparency.
Nothing lasts forever, whether it be Cal Ripken’s ironman streak, New England’s perfect 2007 NFL season that was only interrupted at the very end by that famous non-holding call and Hail Mary Helmet-Catch in the Super Bowl, my prior extended trading “zones” including 2003-05 & 2007-09, or now … this recent dance I’ve been doing with the S&Ps that is getting downright ridiculous.
Yet for now, I remain in one of those scary Johnny Chan or Phil Galfond grooves where personal focus, reads, executions, and market action are all teaming together to put me in what has essentially become an ongoing trance.
By now, the current Jellie team is probably wondering if I ever lose since we’re still awaiting the first losing session in three weeks.
And while I assure you I keep telling them I’m not always on my game (as was evident a bit yesterday morning when I simply stood aside and didn’t “feel” it until the afternoon session), for some reason I’m simply in one of those extended zones … even while narrating to them live while trading.
Probe with pre-flop bets and add with post-flop confirmation? The market cooperates.
Force the action by raising bets aggressively? The market cooperates.
Scalp 2-3 tick moves? The market cooperates.
Back off because I’m tired? The market tires.
When I stare at today’s actual trade plot chart (attached), it almost looks as if the results were rigged. Of course, since it’s a TT platform auto-capture and I narrate my actions live to my coach and 14 other traders, we know that’s not the case.
My only current challenges are to (1) convince the current team it’s not always like this, and (2) continue to maintain the confidence and rhythm while keeping the ego in check.
Oh, it will end.
Just not today.
And yes, we’re still waiting for our first losing session … so let me get that out once and for all as (1) it’s not abnormal, and (2) I don’t believe in jinxes.
As I told the team, when you’ve figured out this business … I mean really figured out this business in the context of being the casino and not the speculator … you should expect to win the vast majority of the time.
Yet that’s not the purpose of this post.
Rather, the purpose is to continue to remind all traders who are no-nonsense, buckle-down serious about this business, that you have to continually work harder and sacrifice more than those against whom you’re constantly competing.
Today was probably as good as an example as I can provide. And since it’s the end of a VERY long day, I’ll skip right to the shorthand in the context of a time-stamped recap.
Monday 9:15pm ET – Wrapped the evening team session reminding everyone that we’d be looking at a monster MATD (Morning after Trend Day) on Tuesday morning, and that it was possible the best setup would be in the Europe session given how the day closed.
Monday 11:00pm ET – Had to decide whether to sacrifice a good night’s sleep for the 3am Europe open. Decided given the significance of the close to set my alarm for 2:30am.
Tuesday 2:30am ET – First thought: Damn … is it 2:30am already? Second thought: Check the charts. If Europe opens on or near late day supports, trade. If not, go back to bed.
2:35am ET – After taking care of business (find that in any trading book … yea, I know, TMI), checked the charts and realized the market was kind enough to set the golf ball on the tee … with the golf ball appearing as large as a watermelon.
Cleared the eyes and mind and figured I’d have enough energy for about 90 minutes of trading … which would hopefully be just enough to catch the first move up.
2:45am -4:00am ET – Traded Europe’s opening MATD sequence by probing on support prior to open and adding upon Europe’s confirmation of the up move.
4:05am ET – Back to bed for a few hours of shut-eye before the Jellies would gather at 8:15am.
7:30am ET – Tossed and turned and only got about an hour’s sleep. First thought: Damn … is it 7:30am already? Second thought: Make sure you’re at least coherent until noon when you can take a pre-FOMC nap.
8:30am ET – Took the pre-housing news move to support long, taking it out on the pop.
9:30am -10:30am ET – Traded the early tight MATD U.S. session oscillations (the mega oscillations had already come in the Europe session as is often the case), nailing dang near each bottom and top.
11:00am ET – Faded the MATD first hour range break back into the range.
Noon ET – Nap time … whew. Alarm set for 12:45PM ET.
1:00pm ET – First thought: You guessed it. Damn … is it 1:00pm already? Second thought: Prepare for the team’s FOMC session, but don’t plan to trade it given that (a) I specialize in morning rhythms and usually stink in the afternoons, and (b) I’ll likely be running on fumes by then … UNLESS the trades just “show up” and you get into a rhythm.
2:15pm - 3:00pm ET – As scary a 45 minute zone as I’ve ever been in, as the trades just started showing up – including the initial fade buy at 1131 (3 ticks off the low) a final long exit above 1142 (not the same trade but another one that I’d entered at 1137 and added at 38), a reversal short at 1143.25 (3 ticks off the high) and a final cover on the approach toward 1140 before exhaustion simply set in.
Apparently, I narrated to the team the whole time via audio as I do throughout the effort, but frankly don’t remember much about what I said. Although I do remember constantly thinking in terms of the traders on the other side of my trades as is always my focus when I trade alone.
3:30pm ET – Closed up shop and peeked at the P&L for the first time. Remember that scene in Trading Places where Lewis & Billy Ray glance at the final score when the bell rings and their jaws drop? Yea.
4:30pm ET – Hit the office sofa and didn’t wake up for 3 hours.
8:30pm ET – Didn’t plan on posting today, especially since I prefer to avoid discussing outlier wins. They happen, are expected, and as I keep telling the team … you have to act like you’ve been there before and will keep going there.
Yet after thinking it over, I decided to post anyway to continue to try to tell the full story about the journey of professional trading. Yes, there’s May 6. But there’s also September 21 and others like it … much of which remains purposely unspoken.
For as I’ve said from Day 1 of this public blog, this post and entire blog is not about me.
It never has been and never will be.
It’s about you.
And when you think about it, it’s actually rather simple:
When I (and you) sacrifice and work my (your) tail off, I (and you) win. Consistently and in abundance.
When I (and you) don’t, I (and you) lose.
It’s your choice.
Often, once you figure out the game, 95% of the effort is simply showing up.
As I told the team today, I have zero problems sharing every iota of my strategy with every trader on this planet … with zero fear that doing so will ever affect my ability to trade or profit. I imagine that comment will go viral on the Internet trading boards quickly. Good.
For as I said in New York in February, it is a fact that the vast majority simply won’t make that extra effort to adapt to the market’s schedule or rhythm.
And that will be true as long as trading exists.
If you’re looking for long-term success, I’d suggest checking “Sacrifice Blvd”.
But you likely won’t find anyone home.
For they’ll be out working their tail off.
Even if you call at 3am.
Have a pleasant evening.
Today, I take advantage of YouTube’s increased 15 minute video allotment at the end of the post to discuss key perspectives and take-aways on the current training effort – including adding to winners in a tight market – as well as some trading platform enhancement planning at this end.
Here’s the link to the 2009 beta effort take-away post I referenced in the post.
I also share my thoughts on trading education in general in the context of a recent email exchange with one initially critical onlooker, acknowledging that even the best intended individuals and efforts will always be subject to scrutiny given the high level of skepticsm in this industry, and that such efforts will never be perfect.
Yet I truly wonder where this industry would be if we didn’t have names like Raschke, Steenbarger, Douglas, Connors, Dayne, Nison, Cashin, and others who have passed the test of time and have done so much over the years.
And if I haven’t said this before, let me say it now to both those named above as well as those unnamed.
For you have spent countless hours – both “behind-the-scenes” charitable that no one will ever know about and rightfully compensated for more formal efforts - and at great personal risk trying to provide fertile ground for traders to increase their chances of success in a survival-of-the-fittest industry where there’s typically more desert sand than oasis.
As I’ve said before, experience will likely always remain the best teacher. Yet my guess is that absent the above list, there would be far more traders aimlessly wandering the desert, not to mention fewer Bamboo trees.
In responding to this onlooker, here’s an excerpt of my best attempt at trying to put my thoughts into words:
I appreciate the heartfelt and thoughtful response. Ultimately, I suppose the true intentions in our heart are only known by oneself and one’s God, and the rest is always subject to human perception
I actually applaud your industry skepticism which I too have publicly shared for 12 years, and by being a highly public figure, have to accept criticism and the fact that some will lump me in with others like the baseball steroids era.
With respect to returning to providing formal education among other efforts, one ongoing key factor is that the industry continues to sorely lack it — that much is clear — and so the perpetual question is “who” provides it. Most of the options seem to be non-trading salesmen, washed up traders or those who weren’t able to adapt to current markets, non-trading educators, and bonafide traders who are willing to occasionally carve out some time – usually at a net loss despite participant tuition — to give back to an industry that has treated them well in an effort to “pay it forward”.
Striking a balance between making people “aware” of something good vs. excessively marketing it is always a fine line, and has admittedly been a difficult balance both in the 90s/early 00s when I taught and again over the last two years.
Perhaps ironically, I actually wish more traders would find time to step back and do this sort of thing over an intensive multi-week period of full immersion – despite the risk of being judged by those not involved in the effort – as I think they’d find it personally rewarding. The problem is that most either won’t (again it’s a net loss over the training period as focus and trading sizes are reduced) or can’t (they’d be discovered as a fraud within ten minutes of a four-week effort). And while the time is physically and mentally exhausting, it’s actually a bit exhilarating.
Yet I understand and respect your perspective, especially in an era where there’s more than good reason for skepticism.
At this end, I’ve chosen to take the risk of being judged by some … yet know based on the overwhelming feedback that we’re on the right track as we try to make some kind of a difference.
Again, all my best and thanks for the healthy dialogue.
In two weeks, it will be back to focusing on fund management.
Yet in the meantime, much work remains.
Have a relaxing and peaceful weekend.
Now that I have a few minutes outside the Tank to gather my thoughts, here are some weekend perspectives.
9/11 Anniversary - Today is of course a day to put life in proper perspective. May we never forget the events from nine years ago, and may we use the scars to seek to improve life as long as we have breath.
Week 1 Training Perspectives - It’s been another pleasure and honor to work alongside a new team of 15 traders.
In terms of demographics, the average age of the current group is 42 – down slightly from previous groups which had averaged in the upper 40s – and trading experience ranges from 1 to 20 years with an average of 11. California is the most heavily represented state, and we have participants from Australia, Canada, and the U.S.
This month’s effort has of course been enhanced by the addition of world class top trader coach Robin Dayne, who is working alongside the team as a participating trader while providing key psychological coaching insights each day. Her involvement has further solidified my respect for her as a coach, trader, and person who has also done a great deal on the charity side.
Primary emphasis of the effort remains on having participants identify, recognize, and trade (or SOOT) the particular market “current” in play at all times, with emphasis on identifying those critical wholesale market inefficiencies and PJO “outliers” to carve out profit opportunity, using my own actual trading as live examples.
And while we’re only a quarter of way through the month-long effort, it’s no surprise that many of the early participant take-aways mirror that which we discussed in last year’s Keys to the Castle post, which remains among the most accessed page of the blog.
One rather interesting common challenge shared by some of the incoming participants was that they’d been trying to trade various “methods” or “systems” in the past which only work in certain market environments (can you say “Turtles”?).
Think of the “Jellie” concept as you may, the term remains an intentional and purposeful reminder that the job of a daily trader - like a good poker player – is to continually adapt to current conditions and feed off the environment in which we’re thrust on a daily basis.
Frankly, I remain amazed at all of the industry B.S. that emphasizes single methods that only work in specific environments. And while there’s of course solid instruction out there if you take the effort to seek it out and separate the wheat from the chaff, the fact that one participant had been “taught” by someone who hadn’t traded for months because market conditions had changed and his method stopped working, simply made me shudder.
Like life, I suppose we have two fundamental choices in this business: (1) work our tail off to constantly adapt to conditions and live life abundantly or (2) let ignorance, ego, laziness, stubbornness, and/or stupidity allow us to remain inflexible, resulting in trading paupers who barely get by – if at all.
And while it seems like a pretty easy choice to me, it amazes me how many intentionally choose #2 because it’s far less work, as evidenced by their barking at the market or at successful traders at cocktail parties or on various internet threads – the latter of which can be described as trading’s version of purgatory … but I digress.
And while our efforts will never be perfect, our mission remains clear: To further develop self-sufficient traders by providing the technical and mental tools to help recognize and effectively trade any market.
25% ADA Donation – A reminder for those unable to participate in the September training because of a group size that I purposely limit or personal choice at your end that the series of eight videos (16 hours) chronicling the formal evening training and weekly recap sessions of the 2009 beta team remain available. These also reflect the prerequisite material for the current team.
Over the remaining three weeks of the current effort, I’ll be increasing the ongoing donation to 25% of all proceeds to the American Diabetes Association. If you’d rather make a straight donation, you can of course always simply donate directly to the ADA or sponsor a bike rider such as friend Steve Berube in the upcoming JDRF Ride to Cure Diabetes in Death Valley, CA.
Mailbag – I’ve received a great deal over the past week, much of it in response to Monday’s High Stakes Trading post.
My thought of course was to continue to stimulate ways to increase the transparency of a business that continues to operate behind curtains and in shadows.
And while I agree it might make for rather boring TV, I remain emphatic in responding to those who suggest that magicians shouldn’t give away their secrets, or who use poker as an example where sharing insights will change market dynamics and reduce personal opportunity.
For as I stated in one of my responses to Monday’s post, someone has to teach the magicians, and poker players who can’t adapt to evolving conditions simply aren’t true poker players.
As Art Cashin has often said, “Stay nimble”.
Those who don’t will end up in another type of trader purgatory … the ingredients of Turtle Soup.
Have a peaceful weekend.
It’s everywhere and continues to multiply like rabbits.
Pick your sport … whether a traditional athletic sport, or the new age made-for-TV ”sports” of poker, dating, dancing, and cooking.
Heck, even cooking has multiple competitive shows including Top Chef, The Next Iron Chef, The Next Food Network Star, and Chopped … just to name a few.
So here’s my question. Why are there no reality trading shows? And by reality, I’m saying forget the CNBC junk or chatroom fiction where real trading actions and results are hidden by more smoke than a Mt. St. Helens eruption. I’m talking real, bona fide, live trading with REAL money & trading’s version of poker hole cams.
It’s an interesting question, especially considering that trading has arguably been one of the oldest true competitions on the planet. Yet the full range of industry media – from the traditional TV to ever-evolving ‘Net efforts – continue to focus on “analysis” and “entertainment”.
Oh I’m aware there are occasional broker-sponsored “cute” competitions … yet most of those are done with fake money.
Now some of you may be asking what any of this has to do with trading education.
In my view, everything … just as reality shows in other areas have fostered both awareness and education by having the best compete and show their methods for the world to see.
At this end, I’d welcome trading’s version of the highly-acclaimed High Stakes Poker televised cash game where real money (typically $200K to $1 Million of each participant’s own funds), strategies, and execution are all laid on the line for everyone to see … and here’s the kicker … to emulate.
Imagine 5-10 top traders all trading the same liquid market with a substantial bankroll over the course of a full week with total transparency, and with real results.
Many might run from such an endeavor or invite – some using the lame excuse guise of “it will render my strategy ineffective” (give me a break).
Yet I’ll go on record to say that I’d be among the first to participate in the interest of continuing to promote reality education by further tearing down the mystery and B.S. so prevalent in this industry.
Plus, it would be a world of fun.