A cheap date

The 80-degree weather yesterday just begged for an outdoor activity. So my girlfriend and I decided to head to PNC Park for the nightcap between the Pirates and Dodgers. Now, sporting events can get rather expensive, which is a turnoff when you're unemployed. But after 17 losing seasons, the Pirates marketing staff devised a way to keep people coming back. And "Buc Night" worked liked a charm to attract me and Tiffany.

Usually, the cheapest seats available at a game are $9. Throw in a hotdog and coke that each cost about $4.50 and your date night is getting expensive. But not on Wednesday night. The cheap seats, hot dogs, soft drinks and popcorn were all a dollar. With that said, I didn't expect Buc Night and the nice weather to push more than 31,000 people to the ballpark. We stood at the end of the line for several minutes before an older gentleman threw up five tickets and said he was selling them... for a dollar. He had already purchased the tickets online before several people backed out at the last minute. Were they counterfeit tickets, we wondered for a minute? But there really was no reason why he would have taken so much time to manufacture them for a dollar a piece.

So we purchased a couple and zoomed to the gates to beat the crowd waiting in the snaking ticket lines. Then we immediately bought four hot dogs and four (child sized) drinks. Unfortunately, they ran out of hot dogs when we went for a splash-n-go near the end of the game.

The cost for the night was astounding: Parking, two tickets, four hot dogs, eight small cokes and a bag of Cracker Jacks ran us to $22.50. You can't get out of the movies or dinner for that price. Regardless of what people say about the Pirates and owner Bob Nutting, a trip to the ballpark is a steal, especially for the breadliners.

Oh yeah, and the Pirates also won 4-3 in extra innings.

Trade once a day, drive a Porsche

We all want to work less but earn more. I got to thinking about a guy I ran into over 25 years ago in LA (Los Angeles). My best friend and I met there - he came from Oz - to eat at a deli and chew not only the pastrami and chopped liver, but the fat as well. We grew up together, our mothers who were also friends being pregnant at the same time.

Anyway, I was a member of a technical analysis group, CompuTrac, and was introduced to a trader there. He lived not far from Sunset Strip when that address was cool. In those days, Richard Sandor had just invented financial futures and the T-Bonds were the big thing to trade. Their volume was over 300,000 contracts a day which was huge in those days. To trade, you telephoned your broker and gave him your order. He repeated it back to you and then passed it on to another desk, right on the trading floor if you were a big enough client, who then hand signaled into the pit. If you were a big enough client then you could telephone the floor direct. You then had to wait for your fill. By now the market had moved so you didn't know if you were filled or not. Often you got your fill and your stop fill at the same time. There were lots of arguments and people changed brokers like they changed their socks.

So, this guy (I'll call him Bill) in LA had it all worked out. He hated to trade as it was so stressful, but he loved the money. He usually only traded once a day, near the open when the market was finding balance. In those days there was no 24 hour markets so when a market opened, it reacted to all the news since its previous close. Bill would put on his trade with a target of 8 ticks profit. He had a specific amount he wanted to earn every day and put on enough contracts to make that amount in one trade. trade over, he hopped into his Porsche and went to the beach. His work day was about 30 minutes.

How did this work? Well, not all trades are equal. Some trades are surer than others. Some times of the day are better than others due to either volatility or liquidity or both. Bill identified that and built his trading plan around it. In Chicago, in the S&P pit, there are locals who only trade the first and last hour, times when the liquidity and volatility are highest.

Where does this take us? Maybe our trading plan should be to look for the highest probability trades only, at times when the volatility and liquidity are highest. If you trade currency futures you have these times at least three times a day in different time zones, at least 2  for the ES ( opening hour and the last hour) and 3 times if you are in Europe and trade the Dow Euro 50 or DAX. This may be a good strategy in times of lower volatility. Each time I trade I take on risk. I want to maximise my reward.

Today's chart is the FTSE, the British stock index future. I could never make money trading this in the pit. I made my donations here to guys who could really move this market around. Electronically, their edge is gone and its a good market on lots of days.

 Click to enlarge

All Milk no Cream

I came across an interesting study here that looks at emini ES volatility historically and then compares it to trading the Euro FX future (6E).

You can only make as much money as the market allows. I trade the ES because of its deep liquidity. I have spoken about using FloBot to enter trades and then managing the trade manually. This is one of the reasons why. Often, a trader can recognise the context that he is in and see that the market is not going far so he goes all in and all out rather than scaling out.

There is an argument that the real liquidity of the Euro FX future is even greater than that of the ES because the arbs are in the 6E market and will keep it in line with the cash FX market which trades trillions.

Another plus of this market is that it has three "hot" zones as the world turns, so traders in all the time zones have an active period.

If the real liquidity of the 6E is still an issue for you, have you thought about trading the cash Euro/$US market but using the 6E charts, where you have proper volume reported, for your analysis?

Today's ES trading was quite boring again. FloBot tried to get some trades going but I took profits quite early, mostly smallish profits, as there was no follow through and momentum died. Barely milk from the cow today and definitely no cream.

 

The second smoothed CVD

Herman the First, Not Henry the 8th

I bought my first Herman Miller Aeron chair on Sunday. It's the first one I have owned but certainly won't be the last.

Having sat in the chair all day, I can report that I am at least 50% less tired and my performance today was better due to the increased concentration. Funny how things like this can help. I got it for about 70% off as it was a re-sale coming from one of the large bank mergers we have seen due to the apocalypse of the last few years. Seems that this bank had over $2,000,000 worth of just these chairs.

I first experienced one of these chairs in 2001 when I was working out of Chicago. The firm there had 60 of them and I really loved it. The price was the thing that stopped me buying one until now. I guess that I didn't really need the extra comfort until now - old farthood is getting closer. But as it approaches with it's downsides, I realize I wouldn't swap the downsides for all the benefits I have from the experience I have accumulated. Which brings me to trading in a round about way as things usually do.  Kiki and I were talking about screen time and I was saying there is nothing you can do trading wise to replace its value.  Screen time, be it live or SIM, will give you that "muscle memory" you need to react to all the situations you encounter and recognise what is happening.  So I did a rough estimate of the amount of hours I've spent watching, studying, sitting in front of a screen or being on the floor and the low estimate number I've come up with is about 100,000 hours.

The morning in London was like watching paint dry, white paint at that. After lunch, after a false start there was finally a reasonable trade around 3pm London time which gave about a 4 handle run to the Keltner upper limit. As you can see, I'm displaying the smoothed CVD as a histogram. It looks clearer to me.

C

Click to enlarge

A bleak morning

West Virginians should be bursting at the seams with pride just a few days after their WVU Mountaineers made it to the Final Four in the college basketball tournament. Instead, the state is surrounded in a cloak of sadness today following another coal mining disaster that has most of us dumbfounded by the magnitude of the tragedy.

Nearing the end of the day shift yesterday, a blast ripped through the Big Branch Mine that snakes beneath rural Boone and Raleigh counties. The force of the blast killed seven miners riding on a mantrip as they finished their workday. In total, 25 miners have died and four are missing as of this morning. Rescuers plan to continue searching for survivors later today when methane levels decrease.

There should be no doubt that mining is a dangerous business. Anyone who travels miles into the earth probably understands the inherent risks, but they take pride in their work due to family ties and livable wages. But it should not be acceptable for a country as advanced as ours to endure such a tragedy. A disaster like this usually is reserved for countries with governments -- such as China -- that treat their workers like toy soldiers.

Instead, we have a mine and a company with numerous safety violations and past fatalities. There are few characters in the mining industry with such a poor reputation as Don Blankenship, who owns Massey Energy. You might remember his name from a few years ago when he whisked one of West Virginia's supreme court justices away on an all-inclusive vacation to Monte Carlo. Not long after the trip, the state supreme court ruled to overturn a $75 million decision that Blankenship was originally ordered to pay to a competitor.

That's sleazy, but it's still just money. What happened at 3 p.m. Monday has destroyed lives and families. In a country like ours, I don't understand why it's so readily accepted that people might die while trying to earn a paycheck.

UPDATE: 7:19 p.m. -- I thought ABC News did an excellent job covering this story tonight. Diane Sawyer spoke to a miner who was heading into Big Branch as the explosion happened. He described what it was like to watch his friend being carried out of the mine, which illustrated the heartbreak even for those who survived.

They also interviewed the wife of a miner killed in the blast and spoke to her son, who had just left his shift in the mine minutes before. He teared up as he talked about how badly he wished his father was standing on the porch with them. ABC did not sensationalize these stories, but merely let these people speak for themselves.

At the end, Sawyer interviewed Blankenship and she refused to let him off the hook. He looked contrite as though he realized that the magnitude of this storm might destroy his company. The anchorwoman finished the newscast with a story about why people in West Virginia do such dangerous work. The answer: It's in their blood.

Raise the Jolly Roger!

Even 17 consecutive losing seasons couldn't ruin today. Opening Day in baseball is like a national holiday, and that certainly is the case even in Pittsburgh where a winning season -- let alone a playoff appearance -- seems more elusive than finding a job in this economy.

After enumerating four people in Findlay Township this morning, I returned to my house to polish off some paperwork and sit down in front of the television to watch the game. Expectations couldn't be lower coming out of spring training, but it was exciting nonetheless. Then Garrett "The Legend" Jones crushed a couple of homers to lead a 11-5 rout against the Los Angeles Dodgers.

The Pittsburgh Pirates are now a game above .500 and lead their division. It probably won't last longer than the end of the week, but we can dream, right? That's what makes Opening Day special.

Thar's the Picture

These days I spend some of my weekend reading a few blogs, as do many of you. Occasionally I chime in and add my two cents worth if I think I can add some insight. Sadly, less occasionally, I come across something quite worthwhile. I'd like to share one of these worthwhile posts with you today.

I was up at 4am on Sunday, jet lagged after coming back from Oz, catching up with Dr Brett Steenbarger's blog and read this. He talks about successful traders looking at "themes" - the thing I call the picture that I look for at the end of a bar. His "themes" also encompass my idea of envisioning the possibilities in the market.

Both these ideas are the opposite of how most unsuccessful traders operate, focusing on what indicators are doing at any particular moment, rather than focusing on what the market - price - is doing and what it is telling them in the context that exists at that time.

I think my process makes the trader part of the market rather than an external observer. It seems that it is this integration that provides the feel, insight or recognition that makes the difference.