This Is What Trading Is Really All About

Intraday trading patterns were fairly solid during most of the week, especially
on the Nasdaq, although the daily backdrop appears to be a bit clouded. 
Translation? Pocketing profits when appearing may be the trick until the longer
term dust settles.

I’ll let the charts do most of the taking so I can focus a bit more on the good
old Friday soapbox.

Moving Avg
Legend: 15MA
Larger Timeframe 15MA

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

Charts © 2003 Tradestation

I had a modest draw today. That’s right, a draw. I’ll even take it a step
further and say that one of my trade sequences sucked (I wanted to see if
that one made it past the editor) and was away from my bread and butter. It
happens. Now before we go further, those who have been following me over the
last several years know I strongly recommend traders make it a hard rule not to
discuss personal trading … period … exclamation point. I won’t dive into the
reasons once again, except to say that doing so is one of the biggest cancers
that can adversely affect one’s trading.

As I’ve said before, whether you had the best day of your trading life, the
worst day, are in a slump, or a zone, keeping one’s focus on the next trade,
accepting today — good or bad — graciously, and avoiding discussion with
everyone including your pet fish will give you the best chance of staying humble
and balanced. Without either, you might as well mail a check to the traders on
the other side of all future trades.

OK, so why am I breaking my own rule just a tad here?  And why (you may ask)
does Don talk more about his losing trades and days?  Two reasons: to
continue our ongoing discussion of business reality and perspective. 
Those that have visited some of the more humorous trading venues (boasts,
posts, and egos, oh my!) over the past decade may think that decent traders
never have a losing trade, and such is the only way to run a profitable trading
business. And A-Rod will be suiting up for the Sox in tonight’s clash with
the pinstripes.

Traders who trade systems can likely easily relate, as systems are all about
probability which includes losses. Yet I find that discretionary traders often
have a hard time accepting losses, even though they too are actually trading a
system … a system of probability based on their ability to effectively combine
solid market reads and executions each day.

Yet let’s go back to that perspective thing. Think back to first grade math
where we were taught sets and subsets.  Remember those bracket thingies?  And
you thought they wouldn’t come in handy?  Specifically, let’s think
subsets in terms of profitability timeframes.  Here’s the range of possible
P&L perspective: trade entry, completed trade, trade sequence, AM/PM, day, week,
month, quarter, year, decade, career.  Of course we can split it further, but
let’s stop there.  The simple point is that the relevance of each subset before
“career” decreases in importance exponentially as one moves toward “trade
entry”.  Yet ironically, those who talk most about their trading seem to have
the order in reverse!

Now of course, profitable quarters and careers don’t occur unless attention is
paid at the micro level, just as one can’t shoot under par unless the swing is
essentially sound hole after hole.  Yet today is a solid reminder of the
importance of balancing micro and macro financial perspectives — just as
one should balance micro and macro timeframes when trading.

I once mentioned that I once began a new mental fiscal year after one rather
poor outing.  Why?  Why not??  It was my way of cleaning the slate in a way that
felt fresh and new, and who cares how silly it seems.  Remember, you’re only
accountable to yourself in this business … you don’t have to “perform” for
anyone else.

The other reason I brought up my own trading today was because it reinforces the
reality of this business where too often folks are made to feel that if
they don’t nail every day, that something is wrong.  Contrary, if you don’t nail
every day, it says you’re still taking shots.  Last I checked, a .400 baseball
hitter “fails” 60% of the time.

We’ll talk about this concept in much greater detail during the

Virtual Pit  experience in a little over a week from now where we’ll
collectively talk — and more importantly — walk the road of
perspectives. Trade by trade, pattern by pattern, day by day.  For I believe
this business — and it is indeed a business — is far more about
balancing perspectives than anything else. Certainly, aspects such as technical
pattern recognition, seeing trader emotions in the charts, and the ability to
perform confidently under pressure are key. Yet without proper perspective,
skill and profits will never accumulate.

In two weeks, we’ll do a lot of waiting, preying (that’s with an “e”), and
effectively balancing the micro with the macro. That’s the reality of this
business which is too often clouded by smoke, mirrors, and hype.  And while even
a single week is far from a long-term timeframe, it’s a step several have chosen
to take.

Today represents 0.4% of the trading year, and there aren’t enough decimal
places to quantify a single trade sequence as a total of all trade sequences. 
Yet regardless of the numbers, today as always has no relevance on Monday.  And
by the time this column’s virtual ink is dry, I’ll have forgotten about whatever
it is that started me on today’s soapbox.

P.S. My next seminar is just around the corner.
Spend a full week in the Virtual Trading Pit tracking and trading
e-minis with me. This event is live only. NO ARCHIVE WILL BE AVAILABLE! Last
year’s event sold out immediately, so please don’t delay.

Click here to reserve your space.