What's More Important Than Patterns, And Other Thoughts

Moving Avg Legend: 15MA Larger Timeframe 15MA
See http://www.donmillertrading.com for Setups and Methodologies
Charts © 2003 Tradestation

Random Thoughts

I thought I'd break things up this weekend and share a few random, yet hopefully relevant musings -- in Andy Rooney style:

Ever wonder why some traders and "journalists" get so "excited" about large daily market runs? Dow +300 means nothing folks; Your account being up based on your style is the only thing that matters. Some of my best performance days have been where the market has moved a net total of +/- 10 points, yet I'd probably be thrown into a padded room if I ran around screaming that the market had a great day. Turn off the hyperventilating media and "trading" journalists.

And speaking of hyperventilating media, have you noticed the increasing number of excessive "gaps and traps" on positive opens lately? We should all once again thank our friendly bull market sirens for luring the flock into buying the opens. Hmmm, doesn't it feel a tad like 1999 where many traders made their daily, weekly, and monthly keep by fading the gap (with appropriate triggers and stops of course) and leaving work after 10:00 AM ET. Gee, I wonder what phase comes after this one.

Do you ever why some folks who narrate to bar chart patterns never mention the "ability to fill" issue? (It's a rhetorical question of course, as most don't trade.) In my view, order execution ability is as important, if not more, than the patterns, which is one of the reasons why I'll never provide educational material without including unedited live trading, warts and all. Gee, did one contract tick on that pullback bar or 1,000? Do you bid/offer wholesale or enter/exit retail? What order routing did you use? For a longer-term swing trader, these issues may seem to be irrelevant, yet for a short-term trader -- especially an E-Mini trader -- ability to fill and the corresponding strategy is as critical as power to your PC.

Do you ever give morning profits back in the afternoon? (Been there.) You may want to see if you locked yourself into doing the same thing that worked in the morning -- when the passage of time has resulted in different trend supports and afternoon triangles given the loss of momentum.

Did you know you can trade the E-Minis (long and short) with an IRA account? It's not only possible, but I've recently begun doing it at this end. At the risk of flooding this weekend's mailbag -- and with the heavy caveat that I DON'T advocate newer or unproven traders learn to trade with their retirement dollars -- check with your futures broker to see if they provide an option where you can allocate funds from an IRA account to trade the E-Minis. Some brokers work with third party companies that house the account and allocate a designated amount to the broker for futures trading purposes, while others actually house the account. For skilled traders that are tired of the "no-short, no-margin" IRA handcuffs aside from bear mutual funds (on the short side), it may be an option worth checking.