11/19/2009 3:30 pm update: NQ

• what a mess...
• my discretionary swing trading tendency to always be long at least 1 contract, especially near the top of the daily upper trend channel is costing me too much money...
• earlier in the week i even considered buying some puts on the QQQQ's to hedge my exposure, but i didn't...
• i have worked my avg price in the NQZ09 down from 1809.00 to 1781.50, though it cost me too much to do so....
• as i mentioned earlier, i added a 2nd contract at 1791.50, and then during the day session i added a 3rd contract at 1770.25, bringing my avg cost to 1790.25...
• i was stopped out on the 3rd entry at 1763.75...
• this trade: -26.50 NQ points/contract...
• i added a new 3rd contract at 1764.00...this brings my avg cost to 1781.50...
• i sold this one at 1772.50...
• after the NQ rallied into the low 1770's, i placed an OCO with a target to 1776.50 and a stop at 1769.50...the stop was hit...
• this trade: -12.00 NQ points/contract...
• today: -15.83 NQ points/contract, 3 contracts closed...
• still long 1 NQZ09 at 1781.50...
• offering this out at 1807.50...
• no current bids...
• i think i have been overly influenced by the strong rallies of the summer and early fall...this has led to a fear of missing more of the up move...combined with an approach that has me getting bigger on moves down to work my avg cost lower, i am finding that this has led me to be overweighted the NQ during moves down, and relatively underweighted the NQ during moves up...
• i gave back a moderate amount of my summer and early fall discretionary swing trading profits, during the late october downdraft and during today's swoosh down...
• while i am still net profitable trading the NQ, i need to rethink my overall approach to swing trading the it on a discretionary basis...
• entering with some size when the swing begins, and then lightening up towards the top of the trendchannel and/or into resistance sounds like a much better plan...

Disclosure: Long NQZ09.

***remember this is an illustration of what i am trading and my thinking...my trading plan may change without notice...this is not a recommendation for you or anyone else, to buy or sell this or any other security...trade at your own risk**

11/19/2009 9:00 am update: NQ

• i added a NQZ09 contract at 1791.50 during the premarket selloff...
• long 2 NQZ09 @ avg 1800.25/contract...
• i am recognizing that i have a tendency to nearly always have some long exposure to the NQ...i think this stems from a 'fear of missing' pyschological mindset that gets applied to my NQ discretionary swing trading...i also think its related to my belief that i can work my avg price down sufficiently enough to weather an averaged size downdraft...
• but what if the downdraft is not average sized, or suggests that intermediate term trend is changing from up to sideways or even down?
• i believe i need to re-evaluate how i trade the NQ discretionary swing position when the NQ is trading near its upper trendline/resistance...
• i am open to the possibility of an end of year melt up in the NQ and the ES...
• i am also aware of the bullish thanksgiving seasonality for the NDX from the close of next tuesday thru the open of the following monday...i even have a systemic trading model (Turkey Long) that will get me long the NQ for that time frame...
• however, i am becoming increasingly concerned that we may see a selloff in the NQ over the next days or after the thanksgiving bullish seasonality passess...
• if the NQ does head lower into tuesday of next week, i think the 1750 area is a reasonable target...ES may test the 1070 area...
• the 1700-1725 area on the NQ may be a reasonable target if there is a post thanksgiving selloff...
• i am going to be reducing my risk by my lowering my avg price and looking to add more of the NQZ09 at lower levels...
• offering out 1 contract at 1798.50 and 1811.50...
• no bids at this time, but i will be watching and waiting for a good long setup...

Disclosure: Long NQZ09.

***remember this is an illustration of what i am trading and my thinking...my trading plan may change without notice...this is not a recommendation for you or anyone else, to buy or sell this or any other security...trade at your own risk**

10/23/2009 11:20 am update: NQ

• the pre-market exit at 1775.50 is looking good right now...
• the market has pulled in a bit more than i anticipated, and i got a bit too aggressive with my 2 additions...
• the first addition was made at 1768.50, though i originally targeted 1766.50...
• the second adittion was at 1760.25, though i originally targeted 1753.50! the current low of this move down is 1751.00...
• the bump from 1753.50 to 1760.25 is a pretty big increase...i was afraid of missing the potential bounce back up...my bid crept up from 53.50 to 57.50 to 58.50 to 60.25...
• so my avg entry for these 2 contracts is 1764.38...
• i am trying to be a bit more aggressive on the offers: 1772.50 and 1777.50...i will see how long i will let these offer levels stand...
• bidding for a 3rd contract at 1741.50...

Disclosure: Long NQZ09.

***remember this is an illustration of what i am trading and my thinking...it is not a recommendation for you or anyone else to buy or sell this or any other security...trade at your own risk ***

10/20/2009 3 pm update: NQ, ES

• NQ and ES bouncing up off lunch time low...
• after closing two profitable swing trades during the overnight and pre-day session, my entries for the next swing have not been good...
• i was averaged in at 1756.63 with 2 contracts...
• around 2:30 pm, i sold 1 contract at 1753.00 to reduce my size and free up some capital...
• this trade: -3.63 NQ points/contract, 1 contract closed...
• today's trades: +3.88 NQ points/contract, 3 contracts closed...
• i can envision a further move down over the next few days...if this comes to pass, then i will add more NQ lower...
• currently bidding for 1 contract at 1741.50 (just above the rising 200ma on the 15M chart), and at 1727.50, which is just above the 1725ish pivot...
• offering out the current contract at 1766.50...
• though i am long 1 NQZ09, i want the NQ to selloff some more....

• this topping tail on the daily NQZ09 chart may get the bears all hot and bothered...i welcome it as an opportunity to get longer for the next swing high...
• if the NQ were to sell off hard, i would expect its next swing low to form in the 1690-1710 area...the longer the NQ bases, the higher i would expect the swing low to form....

• the ES broke broke above its upper trendline last wednesday...on thursday i suggested the ES was possibly putting in a short term top...
• since then the ES has been basing above the breakout level of 1075ish and below the whole number 1100...
• if the ES were to break below 1075ish and sell off hard, i would expect a swing low to be put in around the lower uptrend line, currently at 1035 and rising a few points each day...
• in my view, a critical number of portfolio managers are underinvested...the pm's underperformance relative to their benchmark (S&P 500), is putting a pretty good bid under the market...the 'fear of missing' psychology is very strong right now...

Disclosure: Long NQZ09.

***remember this is an illustration of what i am trading and my thinking...it is not a recommendation for you or anyone else to buy or sell this or any other security...trade at your own risk ***

Trader Psyches' 'Psychological Capital Tips and Tricks', 10/18/2009 issue, highlights the 'fear of missing' concept.

The following is taken from Trader Psyches' 'Psychological Capital Tips and Tricks', 10/18/2009 Issue (i can't find a link to this issue or where to sign up for the free distribution of it....if you are interested, then email them at info@traderpsyches.com ):

"...Behavioral and neuroscientific evidence has shown in multiple studies that the fear of missing out is more motivating than the fear of losing money or the the knowledge that you have a better chance of making money if you wait.(Weber & Johnson, Columbia)

What can you do? You know this happens and after-wards you say "how stupid" and promise not to do it again. But then...

The key lies in developing an awareness level of your own feelings, urges and motivations that equals or even surpasses that of your awareness of what the markets are doing.

Using that valuable knowledge of your own biases, impulses and feelings can literally be the very best risk management tool you have!..."

10/15/2009 3 pm update: NQ

• lowered my original offer (1749.00) and was filled at 1747.75...
• this trade: 4.50 NQ/points/contract, 1 contract closed...
• lets see, the original entry was supposed to be 1741.50 and the original exit was supposed to be 1749.00...both of these levels were eventually hit...if i didn't mess with the targets, then this trade would have booked 7.50 NQ points/contract...big difference...same old story for me...
• can i get better at leaving my targets alone? good question....
• perhaps i don't need to...perhaps my general entry and general exit targets are good enough and i just need to accept that i will exercise some discretion (generally influenced by the 'fear of missing'), that will shave a few points off my performance...i will have to think on this...
• today: +4.25 NQ points/contract, 2 contracts closed...
• flat the NQ, no offers, bidding at 1741.50 and 1731.50...

Disclosure: Long NQZ09.

***remember this is an illustration of what i am trading and my thinking...it is not a recommendation for you or anyone else to buy or sell this or any other security...trade at your own risk ***

10/15/2009 11 am update: NQ

• got too antsy, and lifted my bid to the market and was filled at 1743.25...
• offering this contract at 1749.00...
• lifted the bid on the 2nd contract to 1731.50...
• historical trades are being displayed accurately...

Disclosure: Long NQZ09.

***remember this is an illustration of what i am trading and my thinking...it is not a recommendation for you or anyone else to buy or sell this or any other security...trade at your own risk ***

10/13/2009 9:45 am update: NQ

• changed my offer on the NQZ09 from 1746.50 to 1738.50...
• if the NQ did not break down yesterday afternoon, i would have kept that offer level...
• NQ showing some rs to the ES this am...
• INTC earnings post close...this catalyst could keep the markets range bound today...
• bidding at 1713.50 and at 1693.50 for the NQZ09...
• yesterdays decision to not place a stop below the 1730ish pivot for the 1731.50 entry did not work out well...i could have taken the stop, and then re-entered in the low 1720's...i would probably have sold it in the high 1720's, and have looked to buy it back in the low 1720's during the overnight session...opportunity lost...
• perhaps i was too impatient, too fearful of missing a potential move up...something for me to keep in mind, especially the next time the NQ gets to a level that has me flat, with no offers and no bids...

Disclosure: Long NQZ09.

***remember this is an illustration of what i am trading and my thinking...it is not a recommendation for you or anyone else to buy or sell this or any other security...trade at your own risk**

10/9/2009 4:45 pm update

• at 3:08 pm, i lowered the NQZ09 offer from 1727.50 to market and was filled at 1726.50...the high remained at 1726.75 for a few minutes, then was breached and newly marked at 1727.75 for the remainder of the day...the ES marked a high for the day around 3:12, but then went on to make a new high on the close of the day...the NQ did not make a new high at the close...SMH showed tremendous strength, but the some heavy hitters (MSFT, RIMM, GOOG) were flat or red for the day...the NQ rs compared to the ES faded a bit towards the close...
• this trade: +8.87 NQ points/contract, 1 contract closed...
• for the day: +6.62 NQ points/contract, 2 contracts closed...
• 1st closed trade original exit target of 1723.50 would have been hit, but i changed my order and was filled at 1722.00 (-1.50 points below original target)
• 2nd closed trade original exit target of 1727.50 would have been hit, but i changed my order and was filled at 1726.50 (-1.00 points below original target)...
• i left 1.25 NQ points/contract, 2 contracts closed, on the table because i was afraid that my original target would not be hit...
• re-entered the NQZ09 at 1722.00...my original entry target was 1721.00, but i was afraid my target would not be reached, so i got back in at the market and was filled at 1722.00...the low of the swing was in fact 1721.00, but i don't know how much demand there was at 1721, so i don't know if i would have been filled....
• currently long 1 NQZ09 at 1722.00...
• currently offering this contract at 1733.50 for the sunday overnight session...if this order is filled, i will be bidding at 1726.50...
• currently bidding for 1 contract at 1712.50...
• ES is approaching resistance at 1076.00...it is currently trading at 1068, about 0.80% below its swing high, while the NQ is about 1.80% below its swing high (1753)...both the ES and the NQ are up 5 days in a row...a pause in this rally around these swing high levels would be expected...i will have to manage the size of my long NQ position a bit more, and perhaps be a little less aggressive on the addition levels...
• if during the overnight session, the offer fills at 1733.50 and then the bid fills at 1726.50, i will look to offer out that entry in the mid to high 1730's....i am not sure how aggressive i will be with adding another contract in the high 1720's to the low 1730's...i will have to see how things play out...
• the historical trades on the above NQZ09 15M chart appear correct (though some of the earlier trades are still not being accounted for correctly by tradestation....someday this will be worked out)....
• i hope everyone has a good weekend...

Disclosure: Long NQZ09.

***remember this is an illustration of what i am trading and my thinking...it is not a recommendation for you or anyone else to buy or sell this or any other security...trade at your own risk**

10/8/2009 11:00 am update: NQ

• sold one NQZ09 at 1716.50 during the overnight session...
• this trade: +10.75 NQ points/contract, 1 contract closed...
• this exit made me flat the NQ...
• big gap up this am...i was looking for a gap fill and was bidding 1712.50 for 1 contract...changed the entry price and was filled at 1713.50...
• offered this contract out at 1722.50...when the bounce back up got stuck under 1720, 1 got nervous that the 1722.50 target would not be reached this am, so i exited at market, 1718.50....
• this trade: +5 NQ points/contract, 1 contract closed...
• today: +7.88 NQ points/contract, 2 contracts closed...
• the above NQZ09 15M chart is not showing the correct historical fills again...it is showing two contracts exited on today's first 15M bar, but only 1 should be displayed there...yesterday's exit at 1702.25 is not being shown...
• this is an ongoing issue with tradestation's platform, and hopefully will rectify itself soon...it is usually associated with some bad/missing historical data in the TCache folder... i removed the TCache folder (to no avail) and am currently using the latest version (8.6 build 2674 beta)...
• still a bit off my game today...2 of the 3 fills today were not at my original targets, primarily because of fear...
• at the highs today, NQ was trading about 2% below its last swing high (1753), while the ES was trading about 1% below its last swing high (1076)...ES still showing some rs compared to the NQ, primarily due to XLF out performance and SMH under performance...i prefer rallies that are led by the NQ, however the financials led this market down and are now leading it back up, so periodic out performance by the ES compared to the NQ is less of an issue during this market cycle in my view...
• i am still bullish longer term on both the ES and the NQ, though would not be surprised and would actually welcome, a whoosh down during earnings season...
• currently flat the NQZ09 and bidding for 1 contract at 1712.50...

Disclosure: no positions in the securities mentioned.

***remember this is an illustration of what i am trading and my thinking...it is not a recommendation for you or anyone else to buy or sell this or any other security...trade at your own risk**

'NDX 1st DOM' stops out on the Open.

• 'NDX 1st DOM' got stopped out right at the open, primarily related to a worse than expected payrolls report that was treated negatively by the market (NDX)...
• the modeled position (NDX), took a 0.58% loss, slightly more than the theoretical 0.50% stop...this can happen when the vehicle gaps below the stop level...
• the trading position (NQZ09), took a 0.71% loss, moderately bigger than the modeled position...
• this is the fourth stop in a row for this model...the model is built on the premise that if the NDX is in an uptrend, and its the 1st calendar day of the month (not the first trading day of the month), then buy the NDX on the close of the 1st calendar day of the month and then sell it on the close of the following trading day...the tight stop assures that if the underlying uptrend does not kick in, then the loss is small...as can be seen from the equity curve above, this concept has proven to be robust since 1986...the key is defining the uptrend and using a tight stop...
• yesterday i was concerned that with current bearish short term sentiment, and the possibility of a worse than expected payrolls report being released pre-market, that the NDX could gap down much more than the 0.50% modeled stop loss...so instead of entering with a full size position (6 NQZ09), i only went in with a 50% position (3 NQZ09)...an analysis of market sentiment and the fear of losing more than the theoretical stop, led to reducing my position size...my concerns did play out, and i wound up losing less than the model, not because i got better fills but because my position size was smaller...
• the NQZ09 based stop was at 1657.00...the NQZ09 opened below that level, and i was filled at 1653.75...it quickly ran up and traded over 1657.00...i considered entering the second half the full position just above the stop of 1657.00...i did get back in around 1658.00 and used a tight stop of 1657...unfortunately the stop was hit, but the NQ went right back up and is now trading around 1665.00...
  

Disclosure: Long NQZ09 (via 'BTD Index' and a discretionary swing trade).

***remember this is an illustration of what i am trading and my thinking...my trading plan may change without notice...this is not a recommendation for you or anyone else, to buy or sell this or any other security...trade at your own risk***

'NDX 1st DOM' generated a Long Entry Signal for Thursday's Close, 10/1/2009

'NDX 1st DOM' generated a Long Entry Signal for Thursday's Close, 10/1/2009. This model is based on the behavior of the NDX on the 1st calendar Day of the Month (DOM). It is due to be exited at Friday's Close unless its Money Management Stop is hit intraday.

As can be seen from the Equity Curve shown above, the model is currently trading a few ticks below its all time high. However the three most recent trades were stops.The model uses a very tight Money Management Stop, currently 0.50% below the Entry Price. I only took a 50% position (3 NQZ09 @ 1665.50) instead of a full position (6 NQZ09) for this model tonight. I am already long some NQ based on tonight's 'BTD Index' (1 NQZ09 at 1665.00) long entry signal, as well as a re-initiated NQ discretionary swing trade (2 NQZ09 at 1695.38). Additionally, with all of the volatility this week and the Payroll report due pre-market, I don't want to take the chance of getting stopped out for more than the model theoretically calls for (0.50%). Again, like many times this week, I am being influenced somewhat by fear. So far, I say this influence has benefited me this week. However this can't continue, I will under perform one of the systemic models sometime soon.

Here are some of the model's Performance Statistics:

• Model Tracking Vehicle=NDX
• Start Date=11/1/1985
• Number of Trades=116
• Average Trade Return=0.39%
• Average Winning Trade Return=1.24%
• Average Losing Trade Return=-0.47%
• Win Rate=50%
• Ratio of Average Win/Average Loss (RAWAL)=2.63
• Profit Factor=2.68

The win rate is only 50%, but the average winning trade (+1.24%) is 2.63 times as big as the average losing trade (-0.47%).

Disclosure: Long NQZ09.

Disclosure: The performance results shown above are for Model analysis purposes and do not include commission or slippage. The model is built on data from the NDX, but I trade the model with the NQ e-mini. Actual trading results from the NQ usually differ from the model results of the NDX, with the NQ showing somewhat weaker performance data. Nonetheless, I still trade this model with the NQ and when executed according to the plan, it has generated consistent profitability for me.

***remember this is an illustration of what i am trading and my thinking...it is not a recommendation for you or anyone else to buy or sell this or any other security...trade at your own risk***

'SPY Gopher' generated an Exit Signal for Thursday's Close, 10/1/2009

• 'SPY Gopher' got caught in today's bear raid...while up nearly 2.00% earlier in the week, it closed out down 1.91% (modeled position: SPY) and down a theoretical 2.01% on the trading position (ESZ09)...
• i say theoretical, because i did not follow the exit rules...as i mentioned yesterday, though bullish longer term on the ES and the NQ, the trading action was increasing my concern that the 1035-1065 base may not hold today....i was long 4 ESZ09 contracts, and sold 1 yesterday at 1056.50 and three more today around 3:40 pm at an average of 1032, making my average exit for the 4 contracts 1038.13 (only 3 contracts are shown on the chart because the 4th contract is traded in another account) :

• so while the theoretical trading position exit should have been at 1025.25 (4:00:00 pm price), the actual trading exit was at 1038.13...this exit, leads to a 0.78% trading loss (with commission) instead of the theoretical trading loss of 2.01%...in this case, acting on a reanalysis of the technicals and on fear saved me 1.23% on 4 ESZ09....
• the model loss of 1.91% is slightly more than 1.77% average loss...

Disclosure: Long NQZ09.

***remember this is an illustration of what i am trading and my thinking...my trading plan may change without notice...this is not a recommendation for you or anyone else, to buy or sell this or any other security...trade at your own risk***

systemic trading for the discretionary trader: can it work?

• now this is where things are starting to get tricky for me...
• my systemic swing trading system 'SPY Gopher', which was opened on last thursday's close at 1046.00, is due to be exited at tomorrow's close, if its money management stop is not hit...the stop is currently around 1019.00...
• all of the volatility over the past few days, especially today is making me nervous...i hate to see a position that is nicely green, move back to breakeven...yesterday's move in the ESZ09 to 1066ish, had the position up 2%, only to see it go to breakeven and then to red this am...
• i am now finding myself wanting to lock in some of the ESZ09 gains even though the systemic model is not due to be closed until 4 pm tomorrow...
• fear is leading me to change my plan...
• though today's rebound from the early morning selling appears bullish, i am afraid that this is just eom, eoq window dressing and the rug will be pulled out from the market tomorrow...i feel this way, even though i am bullish on the ES in the longer term...it seems a bit conflicted, but this is what i am feeling...
• i am long 4 ESZ09, and have put offers out at 1056.50, 1063.50, 1067.50 and 1072.50...the thing is, i am not supposed to be offering anything out until 4 pm thursday when my market orders are released...right now i almost can't help myself...the desire to lock in some gains is very strong....as i am writing this, my offer at 1056.50 has been hit...
• i am being driven by fear, by the need to be safe...
• i am also driven by the need to book some gains and pay my bills...
• good traders might seek to lock in gains...
• but great traders can deal with the uncertainty and let the market or the model tell them when its time to get out...
• sometimes i will give myself credit and say i am a good trader...
• i have never considered myself a great trader...i want to be a great trader...
• great trading will require even more emotional fortitude than i currently have...trading with real money is not an academic exercise...it is full bodied and emotional...i can only handle so much uncertainty...
• so exiting one ESZ09 contract at 1056.50 feels good, because i have booked some gains and have less exposure...however, i did not follow my systemic trading plan for this model, and this feels bad...
• like i said, this is the tricky part...
• at heart, i am a discretionary trader who trades a lot of systemic models...is this in sync? probably not...am i trying to grow? definitely...
• perhaps the next step is to really recognize that i need to generate enough money every month to pay my bills and if i have to lock in some gains on my systemic trading models to accomplish this, then so be it...
• if the emotional uncertainty of an open position is too much for me, then i have to continue to trade even smaller or lock in some gains on systemic trading models that are in the money and are getting close to being exited, until i can build my emotional fortitude back up, and then trade the systemic trading models 100% the way they are supposed to be traded...
• right now, i would say that i trade the systemic trading models the right way about 95% of the time...this is a big improvement from a few years ago, when it was perhaps 70% of the time...
• hmmm, this is a lot of obsessing regarding 5% of my behavior...

Disclosure: Long ESZ09.

***remember this is an illustration of what i am trading and my thinking...my trading plan may change without notice...this is not a recommendation for you or anyone else, to buy or sell this or any other security...trade at your own risk***

9/30/2009 12:45 pm update

• just sold the last NQZ09 lot at 1716.50...
• for the swing trade: +14.25 NQ points/contract, 1 contract closed (1702.25 avg entry price)...
• for the day: +9.81 NQ points/contract, 3 contracts closed: +29.42 NQ points for the day...
• flat the NQ...
• NQ now green on the day, ES slightly red...
• MeVsWallstreet commented in an earlier post that he believes this move down may be a shakeout...i believe this as well...a close above the 1053ish pivot in the ES will increase my confidence in the shakeout concept...
• my original sell level for the first contract picked up during the chicago pmi based swoon, was at 1713.50...i changed it and was filled at 1709.50...
• my original sell level for the second contract picked up during the chicago pmi based swoon, was 1723.50...i changed it and was filled at 1716.50...
• both of these levels would have been hit, but my decision making process was being influenced by fear, and i lowered my exits...
• i cut my profit short by 4.00 NQ points on the first contract and 7.00 NQ points on the second contract...11.00 NQ points left on the table, for this series of trades...

Disclosure: Long ESZ09.

***remember this is an illustration of what i am trading and my thinking...my trading plan may change without notice...this is not a recommendation for you or anyone else, to buy or sell this or any other security...trade at your own risk***

9/30/2009 noon update

• lowered my offer on the NQZ09 from 1713.50 to 1709.50 and was filled at 1709.50...
• for the swing trade: +7.25 NQ points/contract, 1 contract closed (based on an average entry price of 1702.25)...
• for the day: +7.59 NQ points/contract, 2 contracts closed: 15.18 total NQ points booked...
• bidding 1702.50 for 1 NQZ09...
• changed the offer from 1723.50 to 1716.50 on the remaining NQZ09 contract...
• i am happy to have booked some gains today...
• however, this is the third time today i have changed the level of the entry or the exit order...part of it is based on analytics, another part is based on fear...
• i was afraid of not getting out: 1) 1726.50 to market (1722.00); 2) 1713.50 to 1709.50...
• i was afraid of not getting in: 3) 1693.50 to market (1696.00)...
• 1) worked out well: the exit was at 8:45 am...the NQ then traded as high as 1725.50 shortly after the open of the day session, then dropped nearly 2% to 1688.75...holding this contract, would have led to another drawdown, and i would not have added the contract at 1708.50...
• 2) did not work out...1693.50 was hit less than 1 minute after 1696 was hit...
• 3) remains to be seen...the high for the move up was 1710.25...
• on another note, the NQ appears to be showing a bit of rs compared to the ES...of the few sectors that i monitor, only the SMH is in the green...this also suggests NQ leadership...i prefer rallies where the NQ shows rs to the ES...rallies that are led by the SMH are even better, in my view...

Disclosure: Long NQZ09, Long ESZ09.

***remember this is an illustration of what i am trading and my thinking...my trading plan may change without notice...this is not a recommendation for you or anyone else, to buy or sell this or any other security...trade at your own risk***

9/30/2009 10:15 am update

• wow, lots of volatility...chicago pmi spooking the market...economic recovery fears are back...
• last day of the month and the quarter...maybe some long based portfolio managers are getting scared and booting some inventory...
• we shall see if the ES and the NQ can fight this selloff and close green on the day...
• glad i sold that NQ lot at 1722.00
• got back into the NQZ09 at 1708.50 and at 1696.00...avg entry price is now 1702.25...
• not happy to see a nice unrealized gain in the ES go back to breakeven and even red...still lots of time before end of day thursday...
• no plans to add to the NQZ09 discretionary swing trade position at this time...
• currently offering 1 NQZ09 contract at 1713.50 and at 1723.50...

Disclosure: Long NQZ09, Long ESZ09.

***remember this is an illustration of what i am trading and my thinking...my trading plan may change without notice...this is not a recommendation for you or anyone else, to buy or sell this or any other security...trade at your own risk***

9/28/2009 11:30 update: NQ

• wow, the bulls are back in town...i am heavily position for their return, though i did not think they would bound back in so adamantly...
• in response to their quick return, i started monkeying around with my first sell level of 1726.50...i started looking a bit closer at the 15M chart and saw a minor pivot around 1725, so changed my offer from 1726.50 to a market order when the NQ was trading in 1722/23s around 10:08 am and got filled at 1722.25...
• +8.17 NQ points/contract, 1 contract closed...
• the impetus for the order change was fear...since the run up occurred so quickly, i was afraid it could drop back down just as quick...i am also long a full position in the ES via the 'SPY Gopher' model...i guess i wanted to reduce some exposure and take advantage of the quick run up...
• it is this type of dynamic which continues to effect my game...on many occasions, i lower my offer or raise my bid because i am afraid the NQ will not move to the level that i originally targeted...sometimes it works in my favor, and sometimes it doesn't...i don't have enough stats on this to determine if this order level change, mostly influenced by fear and somewhat influenced by re-analysis, is helping or hurting my discretionary performance...
• i am not sure if i even want to commit to finding out...i feel as if i have so many trading related things to attend to, that i just don't have the time to get some stats on whether discretionary swing trading plan changes are helping or hurting my performance...maybe i am just making excuses...this is something for me to think about...
• i am currently offering 1 NQZ09 at 1736.50 and 1 at 1746.50...
• i am currently bidding for 1 NQZ09 at 1713.50...if this fills, it won't bring my avg cost immeasurably down (1714.08), it will just get me bigger for in my view, the probable move back up to new swing highs...
• both the NQ and the ES are in my view, behaving quite bullishly...both found support at the previous mentioned levels of 1690 and 1035, and have now broken above friday's high (1709 and 1049.50), firmly putting in higher highs on the 15M intraday charts...the trend up today has been so strong, i can not find any meaningful pivots or lows on the 5M or the 15M charts of the NQ or the ES!!
• this move up is also occuring on essentially no news...yeah, there is some M&A this morning, but there is no economic data and no major earnings news...the upside move in the market in the absence of any major news catalyst is quite bullish in my opinion...
• how probable is it that both the NQ and the ES will see new swing highs by the end of this week? i don't know, but today's powertrend reversal to the upside after last weeks downdraft, increases the odds...
• i can't find any freely available links to reference this, but from the research i have followed over the years, the last few days of the current month, and the first few days of the new month, tend to be the best performing days of the month...i am not sure why this is the case...perhaps it has something to do with end-of-month money manager window dressing, or mutual fund inflows being quickly put to work, or something else...
• in any case, i have noticed this end of month and begining of month bullish tendency...it factors into my discretionary swing trading as well as some of my systemic trading models...
• this end of month and begining of the month bullish tendency, combined with the upside reversal of last weeks downdraft has me allowing for the increased possibility that we will at least test last weeks swing highs, and perhaps generate new swing highs by the end of this week...
• my 'SPY Gopher' model is due to be exited at the thursday's close...if new swing highs are generated this week and can stick, this model will generate some nice performance for me...

Disclosure: Long NQZ09, Long ESZ09.

***remember this is an illustration of what i am trading and my thinking...my trading plan may change without notice...this is not a recommendation for you or anyone else, to buy or sell this or any other security...trade at your own risk***

9/24/2009 1130 am update: NQ, emotions influencing the decision making process, emotions as information

• NQZ09 traded down to 1696, and then bounced back to 1700...
• it then started trading to 1701, 1702, 1702.75, then back down to 1702, 1701, 1700.50...
• i began to think that the low for the morning may be in, and began to get just a bit anxious that my 3rd entry order at limit 1693.50, which missed getting filled by 2.50 points, was not going to get filled this morning...
• i canceled my previous bid at 1693.50 and place a buy stop at 1703.00...
• i got filled a few minutes later...
• currently long 3 NQZ09 at an average of 1714.08...
• the last two additions (1711.75, 1703.00) occurred at higher levels than i initially planned (1708.50, 1693.50)...
• part of the change in the trading plan is related to fear of missing an opportunity to increase my size because my limit order may not get filled...part of the change is also a re-analysis of the trading environment...i am not sure how much of the change in my plan is related to emotion and how much is related to cognition...
• if the change is more related to emotion, i have to pay more attention to how my emotions factor into my decision making process...the problem is, i don't know how to determine or measure how much the emotion played into the trading plan change...
• if anyone has any suggestions on how to do this, please let me know...
• i hear and read a lot on how traders are supposed to remove as much emotion as possible from the decision making process...this is part of the reason why a large part of my overall trading plan includes systemic trading models...
• i wonder if a further goal of trading is to not remove emotion from our decision making process, but to use what we are feeling and what the market as a whole is feeling, as part of the decision making process: emotion as information...
• perhaps we are not supposed to immediately react to an emotion that happens to pass through our being on any given moment (sad, glad, mad, scared), but rather recognize what we are feeling, and then cognitively decide if this is something that we need to respond to on a trading basis...what do you think?

Disclosure: Long NQZ09.

***remember this is an illustration of what i am trading and my thinking...my trading plan may change without notice...this is not a recommendation for you or anyone else, to buy or sell this or any other security...trade at your own risk***

finding a relaxation response in my belly

• when i got sick earlier this month, i had to find a way to relax my mind and my body when the headaches and the dizziness got too intense...
• one of the things i discovered was that i could relax my mind and my body by extending my breath exhalation by about 2-3 seconds...i was able to accomplish this by noticing when the breath exhalation was about to finish, and then use my diaphragm to push more air out of my lungs...
• since last wednesday, i have been intentionally practicing this new breathing technique while i am at my desk and at random times throughout the day...
• when i do this, i notice i am able to become more aware of my thoughts and feelings, especially if i am getting stuck on a particular thought or a particular feeling...the increased awareness of getting stuck and then remembering to breathe with the extended exhalation has been helpful in getting 'unstuck'...
• this breathing technique has been extremely helpful in reducing the amount of anxiety i experience, including when i have a trade open...
• i plan on practicing this breathing technique more and more during the course of the trading day and when i am away from my desk...
• this technique has definitely helped me relax...while it's not the relaxation response per se developed by herbert benson, it has helped me reduce my level of anxiety in both my professional and personal life...