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    Thursday, October 9, 2008

    What has been working


    The shorter hold times have served well the last few weeks. I didn't have time to update my position page yesterday, as I was in and out many times throughout the day. The only items traded are the same I've mentioned repeatedly, being ES and NQ futures, ZB (bond futures), and very few individual names such as Potash (POT), which I am still long from yesterday (with a positive "mark"). Note that I will continue to play only those vehicles with deep liquidity, as even they are flighty at the moment.

    There is lots of talk that we've now seen the bottom. That might turn out to be true, but moves are so large intraday (5x the usual), that I do not need to predict more than a few hours out. We'll have opportunities each day, long and short, so it's critical not to get buried by opinions. Leave the bull and bear labels for people more concerned about looking like heroes, than truly making money consistently. Portfolio volatility (as a % of capital) should remain fixed, regardless of how crazy the moves become. Knowing you have fixed risk allows you to step into positions with confidence, and to see a winner through the entire trade.

    The cash position in yen has also worked as I'd hoped. In case readers missed the "Twitter ticker" update, I'm 50% $USD and 50% yen, and will most likely be this way for quite awhile. I am also seeing some of the agriculture commodities popping up on my screens for purchase. I'm weary of getting back in the water where the hedge funds are liquidating, but I remind myself that it can still work in my timeframes. If I buy Corn futures, it'll be necessary to have a longer hold time, so that is another drawback. No matter what decision is made, it will not be perfect, so I'll make the decision and get on with it. Better to be decisive and wrong, than to flip flop at every turn.

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