October 20 2009 Overlay, Trades. and Commentary

I was going to be brief tonight but ended up talking myself through this post. There is a lot here.

Tough grind today. Small loss in ugly action. Initial read and first visualization has been powerful. Almost have to consider speculating on this unconditionally.

I have noticed in the past week and a half or so that the premium trade of the morning has happened closer to 11:00 AM.

This is a major change in action from what we have been seeing for the past 6 months.

As I have said before, time of day has little relevance in my overall analysis but I can not ignore the fact that prior to the past couple weeks, the most premium trades have occurred prior to 10:00 AM EST USA.

Like poker, Trading To Me Is All About Position:

I have commented about this before. It is my opinion that my first read and premise should be executed. Even with minimal confirmation.

This is because if the trade is skipped and my premise turns out to be correct (it usually is), that any subsequent entries attempting to capture the initial premise will be at a worse relative price, with higher risk, later in sequence, and have a lower probability of a positive outcome.

Thus, it is a better bet to get your money in when you have position and the maximum expectancy of your premise.

When you skip a trade or miss due to hesitation, you are put into a reactionary mode which can often effect execution.

Late Morning Moves:

Things have changed recently and an adjustment needs to be made.

The market has tended to washout once, began the expected move, and then have a secondary washout prior to the actual move.

This makes me feel like I am out of position and my stats for the past 2 weeks are showing it.

I have either stood aside or been stopped out of the initial move and not properly engaged the secondary which has turned out to the the natural move.

I will not model my trading based on time of day.

However, I need to be aware of this recent behavior and ready to adapt.

Adjustments:

This may not be understood by most reading but what I am going to do is require significant washout and confirmation on inside zones when prior pivots are used to clearly establish the zone.

I will hit a "blind" zone with minimal or no confirmation.

Also, I need to start fading certain highs just after the open with no confirmation. I do not like fading in an uptrend but that was really the only trade for today and I think we will see a big downside move soon.

I will do this with appropriate structure as long as I can get the stop well above the high. This may require smaller position size and ad in upon a breakout.

The market tempo and behavior has changed. It may be temporary but minor adjustments need to be made.

My Performance:

The past 2 weeks have not been good.

There have been a couple rare mistakes, a couple over aggressive trades, and a lack of an adequate sample to get off tilt.

Mistakes happen and are the cost of doing business.

The lack of trades is an issue. I can not really even root out the problem with my PNL for the past 2 weeks because there are not enough trades.

My trading has slipped into random territory and this is worse than a couple bad decisions because you can not control the outcome of a random sample.

You never get lucky in random trading either. The market is efficient at punishing randomness.

I can not just increase trades for the sake of increasing either. This situation needs to be handled with care.

The solution is to focus and take the entries as they come. This tends to lead to a couple more losers prior to a reversal.

It is important to keep executing when things get tough.

In trading, randomness almost always leads to losses and losses can lead to more randomness.

I Am Not Broken:

I have thought about this a lot today.

My trading recently has not come close to the level that I know it can be at.

I am not holding and pushing through equity highs. I have learned that if your account does not go up consistently, it will go down.

I immediately start to question my capability when I do not get the intended result. This is an amateur habit that remains.

Im not going to win everyday or every week and need to stay focused.

My analysis continues to be accurate. It seems to almost always work out but I am not executing it efficiently enough. It may not always take the path I project but the end result hits constantly.

It is confidence and persistence that is lacking. The skill is there. I know it is without a doubt.

I would not have taken this path as far as I have if I thought or felt otherwise.

I have to acknowledge to myself that I can do this at the highest levels and that I can not let the noise in the market or the Goldman Sachs bullies make me think otherwise when I am contemplating a hand.

A trader's month is often made in 3 or 4 days. We have 8 trading days left this month.

I can not be certain everything will work out in my favor in that short period of time even if I do everything right.

I am certain that if just trust my reads and execute what I feel based on my preparation, I will accomplish my goals.