Five Things That Don’t Matter To A Trader

  • February 13, 2004
  • Don Miller

Both major markets took hits to
close the week on a pre-Holiday Friday
trade that had both longs and early vacationers heading for the morning
exits. Overall, both major markets pretty much marked time for the week with
the S&P gaining six and the continual laggard Nasdaq giving back seven.

Yet the overall weekly move doesn’t do the trading week justice as intraday
traders had a bounty of setups and trends to consider. And while multiple-day
trend traders may be getting a bit frustrated waiting for the next significant
move, some weeks you’re the bug and some days the windshield, and pace heavily
favored the intraday folks throughout this past week.

Inverse cups and first pullbacks on the 13-minute chart reflected the textbook
trade opportunities on Friday as sellers quickly gained the upper hand after an
initial low-momentum fake to the upside following the Michigan Sentiment
report. Continued relative weakness in the techs was led by the SOX.X, whose
early attempt at a rally felt like spitting into a 100 mph wind.

Let’s hit the charts and then talk about a few items that may be bogging you
down in your trading. At least they’ve bogged me down
from time to time, and this column continues to be about reality vs. theory.

S&P 500



Nasdaq


Moving Avg
Legend: 15MA
Larger Timeframe 15MA

See https://www.donmillertrading.com
for Setups and Methodologies

Charts © 2003 Tradestation

It Doesn’t Matter

Is your trading bogged down by frustration? Here are five areas that, while
offering potential benefits, can be harmful if used inappropriately as you
manage your trades.

  1. Results from your last
    trade, last week’s trading, last year’s trading, etc. etc.
    OK, they may provide valuable information as to your
    trading rhythm and can help confirm your market “feel” (who better to determine
    a weak market than a “stuck” long), yet the issue here should be mental closure,
    closure, and more closure. Similar to “sunk costs” in the business world,
    results of any past actions aside from learned experience mean nothing in terms
    of guiding future action. As we discussed

    last week    , victorious athletes only look ahead. Said another way, it
    doesn’t matter.

  2. A strong market move where
    you’re not aboard.     This one stands out
    due largely to recent market rhythms that have provided for periods of intraday
    consolidation and little volume, followed by frantic dogpile in/out moves.
    Frankly, it used to bug me to death. Yet realizing that strong moves are
    typically precursors to at least one solid pullback entry or alternatively, an
    exhaustion bungee if and when triggered, should help turn the frustration
    into a heads-up. And since most breakouts fail and markets typically chop more
    than they trend, I’ll take a high-probability first pullback scalp any day over
    a breakout that has far lesser probability and occurrence. Not being on board
    doesn’t matter.

  3. Trading room leader.
    First, many don’t trade and some are simply
    “entertainers.” Second, assuming he/she possesses trading skill and does trade,
    if you think his/her capital balance, preferred risk/reward ratio, preferred
    setup, order entry skill, physical and mental stop ability, and traded timeframe
    match yours, you may find it easier to match snowflakes. Having said that, the
    stronger venues can provide helpful guidance in the context of another set of
    eyes and some objectivity which isn’t tied to your position in the
    market. Just make sure you have a mental filter in place to put any information
    in perspective when choosing your own action. Otherwise you’re simply trading
    someone else’s plan — or as I said in the

    E-Mini video and course     — asking your caddy to hit your shots. It doesn’t
    matter.

  4. Intraday or Evening Market
    “News”.     Again, most “analysts” — let’s
    make that “reporters” — don’t trade and are paid to simply come up with some
    reason for the market’s action, perhaps because “Market Falls Due to Stronger
    Sellers” doesn’t justify the MBA or sell many papers. If you’re getting hung up
    on trying to interpret “why” the market did something, your focus is severely
    misplaced. It doesn’t matter.

  5. Goals, plans, trades,
    results, and perceptions of the trading business
    of anyone other than you. It doesn’t matter
    … enough said.

Don’t forget Monday is a trading holiday … that does matter.

Good Trading and Have a
Great Long Weekend!

Good Trading!


Don Miller