Archive for Key Former Blog Posts

Please note the following epilogue marks an end to the current phase of this journal, as well as a new yet-to-be-defined beginning as I take an indefinite hiatus from public journaling to simply trade my private fund and consider the future.  Stay tuned via both the blog and twitter.

As traders, we search.

We first search for knowledge.  An in-depth knowledge of our craft so we can provide a market service, extracting profits to sustain ourselves in the process.

Along the way, once the knowledge is obtained, the search often shifts to that of heart and courage as we face constant challenges — both internal and external — that are thrust upon us on a daily basis.

Yet we’re all searching for that elusive, magical place.  That place that can instantly provide the knowledge, heart, and courage which we lack.  That place where all of the market challenges have been overcome and are finally behind us once and for all.  That place where our career dreams are fully realized, and pain is no more.

And during our search, we stumble across an abundance of ”wizards” who we’re told can provide everything for which we’re searching.

Yet with due respect to Jack Schwager, there’s no such thing as a wizard (guides, yes … wizards, no), just as there aren’t any instant cures for those who lack knowledge, heart, or courage. 

For time after time, we realize that such people are — at best, simply on the same journey we are – and at worst, hiding behind a curtain pulling levers and pushing buttons that merely results in a grand illusion.

Then we realize — usually to our surprise — that the journey never ends.  Instead, the road (yellow perhaps) simply winds and twists as we encounter new places and challenges.

# # #

Over the last two years, I felt called to essentially remind those on a similar journey to mine — through this diary and the more formal Jellie education – that we’re all on the same journey, and that the true answers lie within each of us.

You have the power within you.

You always have.

I simply reminded you in as many ways as I could think of — through personal experiences, videos, sports and movie anologies, parables, formal education, and personal interaction.
 
726 times.
 
May the classic words of L. Frank Baum (please click on the link as I couldn’t embed the video due to copyright restrictions … and particularly take note of seconds 30-50), and all the words of this journal over the last two years guide all who venture upon these pages … now and forevermore.
 
And may God grant us all the strength on our respective inner journeys.
 
‘Til we meet again.

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As this journal reaches its second birthday, and both traffic (+20% in last month per Alexa.com) and twitter (twitter.com/millerdon   followers at 600+) are once again spiking, I thought it would be helpful to provide a snapshot of the top onlooker visited posts as ranked by Google Analytics (which excludes my personal visits).
All-Time:

#1 – Cornerstone – The 7/4/08  ”fictitious drawdown” light bulb post that was one of the main reasons I launched the blog, and which became a central theme of my trading during the record 08-09 runs.  By far, this is the most often referenced link, outpacing #2 by about 4-1.

#2 – Chinese Bamboo Tree – One of the most powerful concepts I’ve been exposed to in my 49 years, which has had a profound impact on me in recent years.  It’s also incredibly listed #5 in the world if you Google “Chinese Bamboo Tree”.
 
#3 – A Night to Dance – The 2008 Year-End post which was always designed more to motivate others than tout my personal victory.  And yes, I visit it on occasion when I need that confidence boost.

#4 – CME Pricing Thoughts – An analysis restating 2008 results for non-CME member rates.  See below for a better and more up-to-date analysis.

#5 – 2008 Statistics – A rare in-depth look into a professional trader’s detailed trading stats for a full year.  Likely the only time you’ll see such a public analysis due to confidentiality and industry mis-use.

Top 2010 (If Not Included Above):

#1 - MoneyShow Interviews – Links for the four MoneyShow.com interviews I gave just before speaking at this year’s NY Trader Expo.

#2 – E-Mini Commission Analysis – An in-depth analysis I did to compare various trader commission alternatives verified by MF Global and the CME.  To my knowledge, the only place you’ll find such an analysis on the web, so take advantage of my legwork to avoid having to do your own.

#3 – Replay of 2010 NY Expo Presentation – A Livestream replay of pertinent portions of the Feb 2010 presentation to a packed house in NY.

#4 – There’s No Crying in Trading – Personal perspectives and bruises immediately after the 5/6 flash crash.  Also the #1 ranked video and most accessed day of the year.

#5 – Keys to the Castle – Critical lessons from the inaugural Jellie team participantsA must-read due to (1) my personal conviction, and (2) as stated by the flood of emails I received.

And a reminder that a list of key posts which I believe should be of particular note for all traders can be found in the lower left-hand margin.

If you’re new to this site, welcome.

If you’ve been with us since we started, remember that repetition can be a good thing.

Enjoy the rest of your weekend.

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Please note this is an imported key post from the initial Don Miller Journal.  You can find the initial post here.

His record as a coach was unmatched. 

His record as a human being may be as well.

- A 99 year life.
- An 88 game winning streak.
- 10 national championships in 12 years.
-  A 38 game NCAA Tournament winning streak
- The best coaching record in the history of basketball.
- A Christian and a gentleman who took the Midwest, one-room schoolhouse values to a west coast campus in disarray and moral decline in the 60′s and changed its world.

With this weekend’s passing of basketball coaching legend John Wooden, let’s look back at some of his memorable quotes — which aptly apply to the world of traders and their coaches — with my thoughts in italics:

Be quick but don’t hurry. Wholesale (a.k.a “profitable”) trading is all about timing.  Wait for the wholesale price positioning and only then grab it quickly with both hands.

A coach is someone who can give correction without causing resentment.  I can do better here.

Adversity is the state in which man mostly easily becomes acquainted with himself, being especially free of admirers then.  Can you say October 6, 2008 or May 6, 2010?

Be more concerned with your character than your reputation, because your character is what you really are, while your reputation is merely what others think you are Amen.

Do not let what you cannot do interfere with what you can do.  Suck at DAX trading?  Stick with ES!

Don’t measure yourself by what you have accomplished, but by what you should have accomplished with your ability.  As I’ve said before, it’s not greed … it’s maximizing talent.

If you’re not making mistakes, then you’re not doing anything.  I’ll simply add that if you’re not making mistakes, then you’re six feet under.

It’s what you learn after you know it all that counts.  Been there … and frequent the neighborhood often.

Never mistake activity for achievement.  If you think you’re a good hyperactive scalper, does your bottom line concur?

Success is never final, failure is never fatal. It’s courage that counts. Again, been there and expect to visit often.

Winning takes talent, to repeat takes character.  Personal lesson learned in 2009.

You can’t let praise or criticism get to you. It’s a weakness to get caught up in either one.  Another personal lesson learned from years of public exposure.

Success is peace of mind which is a direct result of self-satisfaction in knowing you did your best to become the best you are capable of becoming.  Never let anyone else define your success or peace of mind.

And my personal favorite:

You cannot attain and maintain physical condition unless you are morally and mentally conditioned. And it is impossible to be in moral condition unless you are spiritually conditioned. I always told my players that our team condition depended on two factors — how hard they worked on the floor during practice and how well they behaved between practices.  This last quote shows me just how much more work I have to do at this end — on the trading floor and in life.

Please save a seat on the heavenly bench for the rest of us John, as we continue our practice in this pre-season called life.

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Prompted by a combination of various email & Twitter responses to my recent post on CME member commission rates (feedback greatly appreciated btw), as well as lots of confusion and lack of clarity (some purposeful) on the various rate structures involving non-members, lessees, and Electronic Corporate Memberships (ECMs) — I haven’t come across a single current comprehensive comparison — I’ve put together what I believe is an accurate and detailed cost comparison of choices for traders seeing to reduce their expenses via the CME member route:

Snapshot Photo
Excel Version

Essentially, I lay out the four common choices: non-member, Lessee, ECM-H, and ECM-M.  (I chose to omit the fifth option of purchasing an Exchange seat which is out of reach for most and would introduce a host of other cost/benefit issues beyond this scope.)

For those not familiar with ECMs, the term refers to Electronic Corporate Memberships which are available to Prop Firms and whose commissions are priced in-between non-member and Lessee rates.  As noted on the CME ECM Q&A, an ECM-H still requires the purchase of a lease (two in fact) while an ECM-W (a temporary category) allows for a waiver of the lease so long as average daily volume is at least 50 contracts.

A few notes and observations from this end:

- I’ve highlighted the lowest total monthly cost given various volume levels in green.

- The analysis only reflects the CME rates.  FCM or Prop Firm commission setting & bundling is firm-specific and could have as many flavors as Baskins Robbins.  So consider the prefacing phrase “all things being equal …” critical as you review the data.

- Given the lower commission rates — and especially the substantial discount structure that kicks in for lessees after the 1st 150 avg daily contracts (which is not applicable for either ECM) – the lessee option remains the most viable option for a single trader trading more than 150.  Below 150, trading with a Prop Firm (yours or somebody’s) that doesn’t have to pay for a lease under the current waiver based on volume has the slight edge since there’s no trader lease payment.

- The slight advantage for a low volume ECM-W trader would quickly disappear should (1) the Firm impose a substitute fee or cost (profit sharing aside as mentioned below), or (2) the trader experience even some modest growth in volume following initial success beyond 150/day.

- The ECM portion of the analysis essentially reflects considering establishing a one- or two-person Prop Firm (vs. Leasing) just to realize the discounts, versus am existing larger firm that could spread the lease cost over a larger group of traders.

- The analysis also of course reflects a pure financial exercise and doesn’t consider Prop Firm benefits such as access to capital, shared infrastructure, risk controls, education, etc. or drawbacks such as having to share profits with the firm.  Our good friend Dr. Brett has done some solid posts on Prop Firms pros and cons … just do a search on his site for “Prop Firms”.

I encourage discussion via comments, including any corrections to the data which I culled from the CME’s rate schedules and their ECM Q&A.

I hope you find the analysis useful.

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Feb
03

CME Lease Rate Analysis

Posted by: Don Miller | Comments (0)

Here’s a video summary of today’s TV session on the topic of CME lease price trends, along with related links. 

While the session wasn’t recorded (I fired the operator — me — who only hit the record button once instead of twice), this should pretty much cover it, and future sessions WILL be recorded for later On-Demand play.

Referenced Links:
CME IOM Seat Lease Price Trend
CME BreakEven Analysis

Please note I didn’t discuss ECM (Electronic Corporate Membership) scenarios which involve discounted commissions for prop firm traders.  Here’s a link overview.

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Aug
22

Guest Jellie Writer #2

Posted by: Don Miller | Comments (0)

As I mentioned in Friday’s video, and as was the case in Wednesday’s post, the following was authored by one of the Team of 21 Jellies. Enjoy.

“Teamwork & Simplicity”

The great discovery of the 50’s: “You cannot understand the system by the analysis of its parts.” What does this mean? And, what does it have to do with trading?

The idea here is that you can not and will not know what an engine capability is by analyzing the pistons, the rods, the crankshaft … you get the idea. I would go as far as saying that you would not know what the car can do until you put it all together and run it. You see, a system is all of the parts together, and the system performance only shows up when they all work as designed. “As designed,” means they all work well together, we can pick the best parts from every car in the world, and with the best parts of all the cars in the world we cannot make the best car in the world. Why? Because the best parts from each car in the world are not designed to “work together,” they are designed to work for a particular car.

So what does this have to do with trading? I think everything. As traders we are always looking for the latest and greatest indicator that will “tell us” what to do “at this moment,” or interpret the news event that will shake the market. Since 99% of all indicators are lagging indicators, they are always late in telling us this and we keep searching; in addition, by the time you interpret the news, the market is gone. Indicators are like the “parts” in a car, none of them can tell you what the car can do for mainly one reason, the car is you and fuel for this car is a price chart.

The essence of the Jellies training is exactly that, “what kind of trader am I and what can I do?” Don Miller’s daily drill has been “feel the market,” “feel the pace,” based on this, “have a bias,” then “sense, trust, and act.” I have known this fact, the discovery of the 50’s, for almost my entire previous career, but it hit me like a ton of bricks yesterday. It took Don’s 2 weeks of drilling for me to go through this paradigm shift. I integrate all the data, “garbage in-garbage out.” The more I put in my head the slower I perform. This kind of learning only comes through deep immersion, lots of deprogramming and reprogramming going on. It is intense with moments of emotion only felt because there is commitment all around. I told Don at the beginning, I was committed to this effort and told him the story of the chicken and the pig for breakfast, the chicken contributes, the pig is committed.

Enter Don, as transparent a trader I will ever meet – “what you see is what you get”. If he is having a good day or a bad day, we all know it, because he tells us. He is his worst critic; he makes self-observations that are valuable to me as a trader. I learn from these examples and they help me create a baseline for myself. Don drills, what I mean by “drills”, there is lots of repetition and correction, everyday. For example, “have a bias, but make sure to trade what you see, not what you think;” “the ups and downs, manage them, but stay in the game, you have to be present to win;” “the minute the sequence ends, look for the next one, mentally delete old sequences, only look forward.” The team loves it, because we all know where the bottleneck of the system is – US! So, I am the limiting factor to become a self sufficient trader. I can only get better if I am “coachable,” open minded and receptive to new ways of thinking, AND, if I have enough repetition.

Don is a great believer of simplicity. “Give me a price chart and a TICK chart and I can make money.” I love simplicity, but it is very difficult to achieve, you know why? You have to burn all your crutches, and this makes us insecure. In a 1998 Harvard Business Review interview, Jack Welch said: “For a large organization to be effective, it must be simple. For a large organization to be simple, its people must have self-confidence and intellectual self-assurance. Insecure managers create complexity. You can’t believe how hard it is for people to be simple, how much they fear being simple. The worry that if they are simple, people will think they are simple minded. In reality, of course, it’s just the reverse.” This works for traders as well, just switch the words “large organization” and “Managers” with “trader’ and you have it.

So, as I hit that brick wall yesterday, Don picked me up, shook the dust off and asked me If I was “Okay” – true care by the leader. All the Jellies checked in, “I am not alone.” It allowed me to get past it and think, and through thinking went through a paradigm shift.

What an awesome responsibility, I looked for the keys to the kingdom all over the place, and come to find out, in the trading world, that key is me and my fuel is a price chart. The only way to achieve self-sufficiency is to find the right people to help you; use your intuition about the people you choose and work only with the best.

What an awesome team concept.

Guest Jellie Writer

Aug
19

Guest Jellie Writer #1

Posted by: Don Miller | Comments (0)

I awoke this morning to find this unsolicited offer from one of the Jellies to pen a journal post for today. Here it is, completely unedited.

“No Country For Old Men”

I enjoyed the Coen brother’s critically acclaimed movie “No Country for Old Men” for its realistic depiction of human life and experience. If you are familiar with the Coens, they are not known for warm and fuzzy happy endings. They like to present to you in various forms what we go to the movies to forget…that life is hard. Toward the end of this twisted crime drama sheriff Tom Bell (played by Tommy Lee Jones) visits a former colleague’s isolated home on a plain somewhere in Texas. After greeting each other and forcing a couple of pleasantries, the colleague looks up from his wheelchair and says “this country’s hard on people”.

Trading is hard. This is part of the appeal, part of the joy at reaching a milestone, and part of the challenge. Like the first line in “7 Habits of Highly Successful People” by Stephen Covey which simply states “Life is Difficult”. Covey goes on to say that the sooner we recognize and accept this, the sooner we are able to deal with things much more effectively. This is true for trading as well. After 12 days in the Jellie Tank I can tell you that there are no magic set-ups, no Don Miller secrets that have not been revealed in the blog, and no easy profits (though, there have been profits!). However, 21 people signed up for this effort and 21 people remain. We could have left during the first week and gotten most of our money back. Nobody did.

This is a testament to Don Miller and a testament to my brothers in the tank. I’ll just go ahead and say it and he might edit it out, but these last few weeks have been hard on Don. First let me say that I personally trade 2-4 ES contracts at a time and do 5-10 trades in a day. That’s anywhere from 10-40 contracts per day. Don traded 550 contracts yesterday which was a light day for him. He’s done this everyday with 21 of us questioning him about entries, telling him what we are thinking, and doing stupid things that he has to correct. This is all in addition to the Webinar preparations, questions at night from the Jellies, and blog updates. At dinner last night, my wife said to me “how does he trade that much and deal with everybody at the same time?”. I told her I didn’t know.

I think a lot of the Jellies wonder what Don will do after these 8 weeks. Deep down, we all hope he continues to keep the trading room open and even possibly trades with us “for the rest of our lives” as he says on a recent blog video. I have my own opinion which I’ll keep to myself for now (hint hint: it doesn’t include trader education). I accidentally came across a blog discussion on a Google search last night where a guy was saying that Don was a “sell-out” for doing trader education. I chuckled to myself thinking how foolish people can be. 21 guys could have gotten most of their money back after a week and nobody did. That’s my only response to any questions about Don’s integrity or the quality of his efforts.

“No Country for Old Men” ends with Sheriff Bell and his wife at the breakfast table on his first day of retirement. He recounts a dream he had the night before and there has been much discussion on what this final scene meant (see clip below). I think Bell is just tired, he doesn’t want to go into those “dark woods” up ahead that he speaks of in the dream which are surely symbolic of the escalating violence he has witnessed in his formerly quiet town. He’s “20 years older than his father ever was” and he’s tired. Hence the title of the movie.

Don’s young by most yardsticks, but maybe “old” in trading years. He’s certainly and admittedly tired from his miraculous journey in 2008. Trading’s hard on people. But in the end, as much as he loves his wife I just don’t see Don Miller ever having that “first day of retirement morning breakfast” with his wife.

Make of that what you will.

Guest Jellie Writer

Jan
26

The Chinese Bamboo Tree

Posted by: Don Miller | Comments (0)

Please Note: The following is a reprint of a post by Eric Aronson from www. dashlive.com, whose website domain apparently expired on 1/1/09. The content reflects one of most powerful concepts I’ve been exposed to in my 47 years, and had a profound impact on me throughout 2008. All credit for the material goes to Eric.

Keep Watering Your Bamboo TreeEric Aronson

In the Far East, there is a tree called the Chinese bamboo tree. This remarkable tree is different from most trees in that it doesn’t grow in the usual fashion. While most trees grow steadily over a period of years, the Chinese bamboo tree doesn’t break through the ground for the first four years. Then, in the fifth year, an amazing thing happens – the tree begins to grow at an astonishing rate. In fact, in a period of just five weeks, a Chinese bamboo tree can grow to a height of 90 feet. It’s almost as if you can actually see the tree growing before your very eyes.

Well, I’m convinced that life often works in a similar way. You can work for weeks, months and even years on your dream with no visible signs of progress and then, all of the sudden, things take off. Your business becomes profitable beyond your wildest dreams. Your marriage becomes more vibrant and passionate than you ever thought it could be. Your contribution to your church, social organization and community becomes more significant than you have ever imagined.

Yet, all of this requires one thing – faith. The growers of the Chinese bamboo tree have faith that if they keep watering and fertilizing the ground, the tree will break through. Well, you must have the same kind of faith in your bamboo tree, whether it is to run a successful business, win a Pulitzer Prize, raise well-adjusted children, or what have you. You must have faith that if you keep making the calls, honing your craft, reading to your children, reaching out to your spouse or asking for donations, that you too will see rapid growth in the future.

This is the hard part for most of us. We get so excited about the idea that’s been planted inside of us that we simply can’t wait for it to blossom. Therefore, within days or weeks of the initial planting, we become discouraged and begin to second guess ourselves.

Sometimes, in our doubt, we dig up our seed and plant it elsewhere, in hopes that it will quickly rise in more fertile ground. We see this very often in people who change jobs every year or so. We also see it in people who change churches, organizations and even spouses in the pursuit of greener pastures. More often than not, these people are greatly disappointed when their tree doesn’t grow any faster in the new location.

Other times, people will water the ground for a time but then, quickly become discouraged. They start to wonder if it’s worth all of the effort. This is particularly true when they see their neighbors having success with other trees. They start to think, “What am I doing trying to grow a bamboo tree? If I had planted a lemon tree, I’d have a few lemons by now.” These are the people who return to their old jobs and their old ways. They walk away from their dream in exchange for a “sure thing.”

Sadly, what they fail to realize is that pursuing your dream is a sure thing if you just don’t give up. So long as you keep watering and fertilizing your dream, it will come to fruition. It may take weeks. It may take months. It may even take years, but eventually, the roots will take hold and your tree will grow. And when it does, it will grow in remarkable ways.

We’ve seen this happen so many times. Henry Ford had to water his bamboo tree through five business failures before he finally succeeded with the Ford Motor Company. Richard Hooker had to water his bamboo tree for seven years and through 21 rejections by publishers until his humorous war novel, M*A*S*H became a runaway bestseller, spawning a movie and one of the longest-running television series of all-time. Another great bamboo grower was the legendary jockey Eddie Arcaro. Arcaro lost his first 250 races as a jockey before going on to win 17 Triple Crown races and 554 stakes races for total purse earnings of more than $30 million.

Well, you have a bamboo tree inside of you just waiting to break through. So keep watering and believing and you too will be flying high before you know it.

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