Sunday, December 27, 2009
The hedge fund said it made returns of over 120 per cent for the year to the beginning of December. He bought Bank of America when the shares were trading below US$3 a piece and Citigroup at US$1.
At the end of last year Appaloosa had a track record of generating an average of 30 per cent returns a year since it's inception in 1993. It's assets under management have tripled in just three years to US$12 billion. Pretty impressive.
Mr Tepper has built a reputation on judging value in panic situation.
My respect to him, he's got guts!
"Without courage, wisdom bears no fruit" - Baltasar Gracian
Saturday, December 26, 2009
Many bankers and economists voiced concern about asset price distortions in an environment of plentiful liquidity which may be sowing the seeds of financial instability, especially in emerging markets.
China's property and stock markets are a "bubble" that will burst when inflation accelerates in 2011, former Morgan Stanley chief Asian economist Andy Xie said. China's residential prices rose last month at the fastest pace since July last year, spurred by the 4 trillion yuan stimulus package and record lending.
Inflation is a concern, so is the depreciating value of our money when governments keep printing money.
In Hong Kong, a shop just 1,212 sq ft in one of the city's busiest districts was reportedly sold for a record US$108 million which work out to about US900,000 per sq ft. The shop houses luxury retailer Emperor Watch and Jewellery. How many watches and jewelleries they need to sell to justify the return on investment? Money laundering?
Here in Singapore, prime good class freehold landed bungalows rose 18.6 per cent for the year, setting fresh record high of S$1,447 per sq ft. More wealthy buyers are willing to fork out more for such properties, 17 were sold for above 20 million each this year. The rich poor gap is widening everywhere, the rich getting richer and the poor suffers.
My parents bought a 3 room HDB flat at S$11,000/- 35 years ago which is now worth more than S$200,000/- . A friend bought a 15 year old 3 room HDB flat in Queenstown, near the MRT station 2 years ago at S$300,000/-, I thought he was crazy to pay such a high price for a 65 sqm old flat. He recently sold it for a 20k profit nett, free lodging for 2 years.
Will there be a asset bubble? With Gold price hitting above US$1,000/-, Oil price above US$70/-, a plate of mee siam costing S$3/- with only half an egg and costly taxi fare, I don't see property prices crashing down. A crash will be a good buy!
A friend complained recently after having lunch at a restaurant in ION Orchard, he asked for 3 glasses of plain water, 2 of the glasses were refilled later. He was shocked when he was billed S$5/- for plain tap water, S$1/- each for the paper tower and S$3/- for a small plate of peanuts,++ (7% GST and 10% service charge.
The properties in Orchard are expensive and with big developers bidding high prices for them, the rental for the shops and restaurants is not going to be cheap.
Who benefits most from such high property prices? Who else but the biggest land owner! The government of course, adding much to their coffers and higher property prices would also mean higher property taxes as well, the government is getting so rich. We the citizen, need to work very hard.
Many of my friends are concern whether their children can afford to buy a property when they grow up with prices increasing at such an alarming rate. One solution by the government is in building ever smaller HDB flats, a 5 room flat have shrunk from 125 sqm to as small as 105 sqm now. More 3 room flats are built to be affordable and not comfortable, live with it if you are poor.
We are one of the most densely populated country in the world yet our planners are still trying to squeeze more people into this tiny island. To be more competitive? Higher growth? Better living standard? I think it's more stressful for the ordinary citizen.
Saturday, December 19, 2009
Is having an edge that important to a trader?
What's your edge in trading? A question I asked many traders.
Unfortunately, most traders don't even know or understand why having an edge is so important to their success. Those who make good money consistently obviously know subconsciously what their edge is even though they might not have given much thought about it.
As a scalper and spreader, speed in trade execution is one of the most important factor contribution to my success, I need fast reliable Internet speed and a good trading platform. It gives me the confidence, which is a very important psychological booster to any trader.
With the advance in technology, I'm losing this edge to the Algos and the big boys who can afford superfast supercomputer such as the "Roadrunner" by IBM introduced in 2008. It operates one petaflop per second or one thousand trillion calculations per second! Unbelievable!
How fast is a petaflop? That's roughly equivalent to the combined computing power of 100,000 of today's fastest laptop computers. You would need a stack of laptops 1.5 miles high to equal Roadrunner's performance.
It would take the entire population of the earth - about six billion - each of us working a handheld calculator at the rate of one second per calculation, more than 46 years to do what Roadrunner can do in one day.
I heard from those AFACT members who have recently attended the Algo course about the amazing speed in execution by the RTD Tango Algo platform, more than 600 lots executed within seconds with a default of only 1 lot. There's no way we human can compete with the machine, it's probably 100 times faster than what we can click with our mouse.
Does that mean that we traders especially the scalpers and spreaders cannot make a living from trading?
Of course I don't think so, we now know our competitors, we need to take steps to change our strategies, probably taking more risk and working harder for our money. There are still plenty of day traders and position traders putting in sitting duck orders for their trades to be filled.
We must be ready for the challenges ahead against the big boys who can afford the fastest machines and the best programmers. List the the various factors that together contribute to be our competitive edge and work on it.
For traders who don't know what is their edge, the trades they put in have only 50% chance of making money. It becomes a gamble. I suppose many are in this category of struggling to survive, can't make enough to cover expenses. Over time they become demoralise and throw in the tower, what a waste.
Sunday, December 13, 2009
I'm just a half believer, still sceptical about the motives of the so call "Shi Fu" or Master in able to change my luck, avoid disaster or helping to turn a failing business around, fees upfront.
Being a trader, I still believe in a certain element of luck, a small percentage, probably if I feel lucky, most certainly I would make money on that day. I love to buy stones, crystals, glassware, Idols, etc that I think would bring luck to me, place them around the house and my trading table. My wife think I am nuts.
On my recent holiday trip to Taiwan, the tour guide brought us to this Feng Shui Shop and of course the soft and hard sell to change luck for the better. I was told Singapore has very good Feng Shui, and our MM is a firm believer, many projects were made with the consultation of a very famous Taiwan Feng Shui "Shi Fu"
Having bless to live in a good Feng Shui country, we need to have good Feng Shui at home too and to have good personal Feng Shui, always have a smiling face because that's the shape of the Chinese gold nugget, luck will be with you!
"Everything in life is luck" - Donald Trump, he is a damn lucky fellow!
Thursday, December 3, 2009
Met up with Super Scalper at a dinner reception on Monday night and since he specialised in the SGX Taiwan futures contract, I asked whether he managed to Yum the Friday opening trade.
Cool as a cucumber, he revealed that he made around 4,500 ticks in the Taiwan December contract on Friday in less than a minute. That's US$45,000.00!!!! Wow! Using the fastest trading platform, he uses the auto spreader to buy up to 280 lots of spread when the December was sold down. Risk Free! with heavy bid in the November.
Super scalper is one of the sharpest trader I knew on the floor, his brain works like a computer in crunching numbers between cash and futures prices against the spread at the end of the settlement month. Being a spreader myself for more than 20 years, I lose out to him miles away. He hardly hold a position for more than 5 seconds.
Super scalper trade without charts, wakes up at 6 am to read the news and check the US market to prepare for trading at 8.45 am. Very focus, concentrate only on one contract using the movement in the Taiex (Taiwan) as a guide and sometimes arbitrage against it when the opportunity arises.
Saturday, November 28, 2009
I missed the yum trade in the SGX December Taiwan contract on Friday, a Singapore holiday, Hari Raya Haji. I was concentrating on the Futures Yen contract that went crazy, up almost 300 ticks from overnight, and forgot about the Taiwan opening. I was frustrated for missing this Haji "ang pow", though it was not a contract that I focused on.
The December Taiwan was sold down almost 80 ticks after opening for no apparent reason before rising immediately up almost to the opening level. I didn't know what happened. I guessed the order filler must have keyed in the wrong big figure, a very costly mistake for the company. A few hundred lots traded down, can't imagine the losses!
This type of yum trade happens once in a blue moon, only for those who are alert, hardworking and know something about calendar spread. It was almost risk free trade with the November contract bidded heavily, of course most traders would not have expected this to happen.
There were a few in the trading arcade that managed to get "ang pows", two of them hardly trade the Taiwan contract but everyday just wait for the durian to drop especially during the opening of the various contracts and rollover period. One made more than 400 ticks and the other I was really surprised, never heard him trading the Taiwan and yet managed to Yum 140 ticks for just few minutes work. Really put me to shame.
The survival instinct of these traders are commendable, they deserved it because they are hardworking and know what is their edge. They are like the cheetahs waiting patiently for their prey. So, are you the hunter or the prey? Maybe just a spectator waiting for things to happen.
I was frustrated for missing the Yum trade and began to trade with anger, blaming myself for not being alert. This emotional behaviour is detrimental to the mental state of health for a trader. I tried very hard to control it but still ended up trading so many different contracts, Yen, S&P, Nikkei, Taiwan and later Simsci at the same time.
Did I make money for the day? NO! I was lucky to break even, but what a waste of time.
My good friend gave notice to pull out from the special account to invest in a Japanese restaurant since I have not been performing for the past 6 months. I feel bad about it for not able to reach my target and under performing the stock market. I have been too conservative to take risk.
Performance for the year since we started in December 2008 is S$30,809.00, a 6.8% return per annum, way below my target of 12% return.
From December, what is left will be my own fund of S$200,000.00 to trade, mostly outright position and spread trading. It will be interesting to see whether I can overcome the "FEAR" factor and have a more systematic approach to trading.
Saturday, November 21, 2009
My GPMG in the office versus my AR15 at home.
"When everything seems to be going against you, remember that the airplane takes off against the wind, not with it." - Henry Ford
Spent the last 5 days trading from home with just 3 screens and wireless Internet to test out whether I can be profitable trading from home losing out my most important edge, "SPEED".
No doubt, I can feel the difference in execution speed, especially on a wireless notebook, the ping is slow, a great disadvantage if I scalp in a fast moving market. With the TT trading platform, I would consider it relatively fast, probably I only traded the local SGX contracts.
It's more relaxed trading from home, saves on travelling cost and time without having to pay additional booth fees in the arcade. Cost saving is around $900/- a month. But, I will miss all my buddies in the arcade, the camaraderie and jokes.
Bottom line, can I make money?
I have failed to make money 4 years ago trading from home after the closure of the pit, though I didn't lose money, monthly expenses were draining my savings very rapidly like an open tap. I couldn't find my head (Hokkien phrase), went around in a circle getting more desperate by the day.
I went into some business venture and traded on a part time basis, thus no focus and concentration. I flopped in both losing more precious capital.
Being a scalper and spreader all my trading life, I am a very short term trader, hardly able to convert to a part time day trader in between meetings and overseas business travel. I didn't even know what's my edge in trading, didn't realise having an edge is so important.
After decisively cutting losses on my business venture, I went back to trading full time as a trader in the arcade. With the help of some of my close friends who enlightened me on the "tricks" of trading. I then look at trading in a different perspective.
Finally, I made a few thousand bucks for the week trading cautiously and conservatively despite losing my edge in speed. I have matured as a trader.
No trading for the special account.
Sunday, November 15, 2009
I hardly see him in the afternoon, so what's so stressful? Probably after trading, he goes to the bank, withdraws his profits in cash and spent the rest of the time ironing the notes at home and worries about where to keep them (LOL).
He just bought a new apartment. Is he not making good money and laughing all the way to the bank? What he is doing is probably the dream of 99% of the traders including me.
I remembered during those early days on the floor, we were both trading the Nikkei contract. Whenever the market goes against him, he would turn around and start cutting his losses extremely fast and hard pushing the prices up or down. Sometimes having the same position as him can be really a pain in the neck.
In the beginning I would go against him to average further since he was selling or buying at prices that can be 5 to 20 ticks away in a not too liquid market. I lost more money going against him as I have to cut further away. He told me "I'm just relieving stress", and thanked me for carrying his baby.
I dared not trade against him after a few attempt to support the market once I knew he was cutting losses. It's kamikaze!
After converting to electronic trading, he revealed that it's common for him to lose a few months in a row before recovering and asked whether I can withstand the drawdown and the emotional roller coaster.
What's his secret?
He is a momentum trader averaging on his good trades without fear and square off all positions immediately once the market turn with just a click of the button, no questions asked or anything to regret. He leverages on his speed and plenty of guts, that's his edge, another of those super trader.
He spent lots of money in motivational programmes, attending seminars like Anthony Robins, Robert Kiyosaki etc and attending various courses every year.
He recently attended a series of courses where the total package comes up to about S$11,000/-. I'm really amazed by this guy. I asked why he spent so much money attending all these courses. "Many attended the course, from CEOs to salesmen, that's the shortcut to knowledge, by learning from those who are successful, time is money" he replied.
My friend deserved to be successful, and his thirst for knowledge is insatiable.
Profit to date for the special account is S$10,749.00
Saturday, November 7, 2009
I have yet to come across a trader who makes money straight away, so for those who are still struggling, don't be discouraged, keep on learning and applying what you have learnt with the discipline that is needed.
Cutting loss is difficult, riding profit is even worse because of our natural human emotions of hope and fear. Once a trader is able to overcome these two very simple emotional theory but extremely difficult in term of execution, he is half way there.
I remembered an incident many years ago, while I was still trading in the pit, a fellow trader came up and handed me a trading card to execute some trades on his behalf, "Cut for me", and walked away immediately without turning back.
I could see the sadness in his eyes and felt the pain he was going through. Just too painful for him to execute the trades himself. He had taken too long to admit his mistake and the pain threshold overshot his mental state of mind to handle the situation emotionally.
He needed time to cool down. I caught up with him later to console him and learnt that just one bad trade wiped off a few months of his profit.
That sounded familiar to me, it happened to me a few times when I first started out as a trader, I was very experienced in that kind of excruciating pain, a sense of hopelessness, dejection, self doubt and wondered whether I was suitable to be a trader.
What can I do? Being a frog in a well, I didn't have many options with my limited education. With perseverance and determination, it took me one painful year to break even, to learn how to trade and avoid costly mistakes. I finally graduated from the school of hard knock.
Unlike traders now, we had little choice in the contracts available for us to trade in those days. There wasn't any courses available that teach us how to trade, either swim or sink.
The cost of trading has gone up tremendously making it difficult for new traders to take up the challenge. Traders are now educated, competition is tough and worst of all, Algos muscling in for a piece of the cake. We now have to compete with emotionless machines! But, these machines are still operated by humans and so they still do make mistakes! That's where I will be waiting for them, some Ah Q positive mentality.
New traders are very lucky now with SGX taking pro-active steps in providing subsidised education in trading and showing more concern for their welfare. It's just a matter of time that they mature in their trading, how long will depend on the individual trader. I'm not so smart, that's why it took me one year and even longer when I convert to electronic trading.
Profit for our special account went back up to S$13,630.00, like a yo-yo up and down, I'm just not happy with it. Still holding 2 Topix/Nikkei spread.
Saturday, October 31, 2009
It's great to see my cousin making money for the past 3 consecutive days, controlling his losses well and great improvement in riding the profits. It's been really stressful for him since he started trading at the beginning of the month, losing almost daily. This scenario is quite common to a new trader.
Being totally new to futures trading, it's quite an uphill task for him to learn so many things in such a short period of time. I can sense his frustration, anger and the feeling of hopelessness in himself.
I need to do quite a lot of damage control to his emotional well being, encourage and instill a positive mental attitude in the face of adversity.
Mentoring someone new is much easier, they are keen to learn, willing to listen with no emotional baggage. Most important, they are willing to change.
Many old birds that came to see how I traded, I would say are rather stubborn if they are not making money. They still like the way they look at their charts, layout and strategies.
My questions to them "Are you making money looking at so many tiny charts with so many indicators?", "Why don't you change and test other trading platforms?", "If you are not making money, why are you still looking at the same charts?"
Their answer "I'm comfortable with my charts, I like to look at these indicators and TT trading platform is expensive.", "I'm not stubborn!"
"TT is giving 1 month free trial, why don't you try it out" was my reply. "Free! you don't have to pay."
It's so difficult to convince them to change.
Profit in the special account went back to S$10,230.00 while still holding the 4 Topix/Nikkei spread. Not able to focus on this account for the past few months. Trading has been tough.
Sunday, October 25, 2009
I have been trading on the floor for 20 years without charts, didn't know how to operate the Bloomberg or Reuters machines for news or charts. In fact, many of those successful floor traders were like me, blur like sotong when it comes to technicalities of trading.
What we have is Market Sense or a good gut feel of the market rhythm, the players and a deep understanding of the nature of the contract. There are only 2 directions for the market, it's either up or down, what's so difficult?
Being very self motivated, I read a number of books on charting and the various strategies, but I couldn't apply them successfully in my trading. I have problem remembering all those chart patterns, waves or numbers and felt price action is so random that I lost faith in them.
Converting to electronic trading has been really tough for some of the floor traders, many failed and leave the industry. I was forced again to revisit charting as a tool to my trading. I failed miserably and struggled for more than 2 years looking for the holy grail in chart patterns.
Price action is really random, as what Mark Douglas wrote in his book "Trading in the ZONE", the no. 1 principles of trading "ANYTHING CAN HAPPEN". Whenever a chart pattern fails, the technicians called it "false signal" or "false break" and it happens probably 50% of the time!
Charting is just a small part in the overall factor of a successful trader. Over emphasis in this area is what separates the amateurs from the professionals.
I tried trading the SIMSCI during the T+1 at home for the past few nights. I started tracking the market at about 8.15 pm before the data, news release and US market opening at 9.30 pm Singapore time.
I used a laptop with a wireless Internet connection to trade giving up the most important edge in my trading, speed in execution. Luckily for SGX contracts, I lose out only in milliseconds because the TT platform is still extremely fast.
I opened up the trading ladder for SIMSCI, Taiwan and the S&P as a guide with no room for any charts. I watched the movement of the S&P and put in my orders in SIMSCI hoping for some Yum trades, trading 1 contract at a time due to the thin volume.
I made a few hundred dollars each night for 2 to 3 hours work. No Charts! Was it luck or skill? I made money every night, will it last?
I don't normally trade at night so that I can have a good rest plus all my screens are in the trading arcade.
I think I have good market sense for the contract I am very familiar with.
Saturday, October 24, 2009
I was away last weekend to KL, Malaysia to attend my wife's cousin's wedding dinner, and didn't have the time to update this weekly blog. I drove up with my wife's family in a 5 vehicle convoy and stayed in a hotel in Mid Valley before returning on Monday.
Can't imagine myself shopping and walking the whole Sunday inside such a huge shopping complex in Malaysia! I felt safe inside, that's my utmost concern for my family after hearing so much about daylight robberies and snatch theft on motorbikes.
The drive was smooth both ways without any police block for speeding, what a relief! Many times in the past, I needed to put 2 M$50/- bill in my passport for the traffic police to settle the case after some bargaining. Extra income for these law enforcers! I could see the greed in their eyes and the radiant smile on their faces when they returned the passport back to me and urged me to drive carefully.
My cousin joined me this month as a full time trader after more than 10 years in the electronic sector. He spoke to me in January about having not much prospect in his job, frustration and contemplating switching career to be a trader. As usual,I encouraged him to go for it, giving himself a chance, an opportunity in his life and to prove his critics wrong.
I lent him all my trading books so that he could prepare himself with some knowledge of the challenges ahead. I'm not sure whether he had completed them. He cleared some leave to watch and learn how I traded, so simple, so easy!
He planned and prepared himself mentally for 9 months. Full of confidence that he could make money from the word go. Of course, the result turned out the other way round, as what I would have expected.
My brother, a former floor trader joined me last July after my success in switching to electronic trading. The most intelligent in my family, I thought it would be easy meat for him as he traded the Forex after the floor closed.
Robert and I taught him our strategies in trading Index futures which I would say is rather different from the interest rate futures he traded on the floor. Nevertheless, with his background and knowledge, I didn't think it should be a big problem for him since we were there to guide him.
I was damn wrong as the months went, his account depreciated slowly, at least he knew some form of money management. In my opinion, he was not disciplined and a bit lazy. My parents were concerned and I was worried for him.
He did not lose money in trading, it's the expenses that were killing him, the booth fee and the trading platform fee. He couldn't make enough profit to cover those expenses. And, how about living expenses?
So, what went wrong?
Whenever I glanced and looked at his position, I knew whether he was making money or holding on to some bad position. He was surprised. I told him that with my experience and understanding of his trading style, looking at the number of position he was holding indicate he was in deep shit and fighting the market.
"I told you to cut your losses when wrong and don't average on bad trades, why are you doing it again and again, I told you a hundred times, a thousand times, yet you are still doing it.", seems a little bit harsh and exaggerated, painful for me but meant good for him.
"What can you to do if you can't make it as a trader? Taxi driver? Hawker?"
I thought he would not make it, but he really is a fighter, sold his house, cleared his debts, got more screens and continued to struggle on. I could see the will power and determination in him to succeed. He had not many choices.
How stubborn you want to be? Until it is very painful before we learn not to be stubborn, admit our mistakes, take the losses and move on, the market is there everyday for us!
After more than a year of trading, I can see my brother making a u-turn and start to have positive cash flow recently and very consistent profit everyday. He now speaks with confidence. He has finally overcome his own obstacle and finding his edge in trading. I am really happy for him.
Being stubborn does not pay. I am ashamed to admit my own stubbornness too, holding on to my Topix/Nikkei spread. I have been influenced by my Guru not to cut the losses, holding on to it together and fight on with bruises all over the body. This is not my normal trading style. Though I can afford the losses, it's just not worth it.
It's a wake up call.
I have a friend who once worked for a fund management firm, he told me there were 7 staff, 2 admins, 2 traders and 3 compliance officers to make sure the 2 traders toe the line for every trade. Stop losses will be executed without fail to ensure traders stick to the rules with eyes like a hawk, watching over their every move. I suppose they didn't want another Nick Leeson to appear here again in Singapore.
That's how discipline is being enforced, no room for complacency.
Did not trade much for the past 2 weeks for this special account. Still holding 4 Topix/Nikkei spread and losses to date is S$2,031.00. What a disaster! Need a lot of soul searching.
Saturday, October 10, 2009
Went to attend a talk on Algorithmic Trading organised by AFACT last night. I am glad that Mr. Alan Donoghue from Nyenburgh, an algorithmic trading firm is willing to share his expertise with us. Together with vendors RTS and TT, we were given a brief education on Algo trading and how we too can be Algo traders.
Since we can't beat them, join them!
Algos have been accused of wrecking havoc to the profitability of many scalpers recently as more firms are jumping on the bandwagon to have a piece of the cake. Many traders felt the Algos are a threat to their livelihood and responsible for their dismal performance.
These algos are in fact narrowing down the spreads whenever there is any inefficiency in the pricing taking away the yum trades from the scalpers. They are providing more liquidity into the market and a boom to retail customers.
Non trending market condition in a narrow range with dropping volume is always difficult for traders to make money. It has got nothing to do with algos. Traders need to keep changing their strategies to deal with the different market conditions.
Scalpers are losing their edge in term of execution speed to the algos but with more algos, they will be fighting each other too and I believe not all algos make money.
Education has made investors more savy and traders smarter thus making competition really tough.
There is no level playing field in this world, we just need to live with it, come to term with it, be more imaginative and more innovative in finding our edge.
"You cannot depend on your eyes when your imagination is out of focus" - Mark Twain.
I have many friends who are trading from home, definitely losing out in term of speed, yet some of them are making a comfortable living. I salute them.
"The secret of success is to know something noboby else knows" - Aristotle Onassis.
Profit for the special account to date is S$9,840.00.
Sunday, October 4, 2009
In a recent talk to some of the students during the review session of Tom's (YCK) class, I asked them "Who wants to be a professional trader?" Only two of the students timidly raised their hands shyly indicating their interest.
These students had taken the proactive step to go for training on the various charting strategies from one of the most knowledgeable trader on the subject. Are the students willing to put in the commitment? Do they have the courage to take up the challenge? Do they dare to live their dream and make it happen?
I like to read Dr Lee Wei Ling's articles on the Sunday Times and today she wrote about "Turning dreams into reality". "Singapore was built by a group of determined men who worked hard to realise their vision". I am extremely proud to be a Singaporean and very thankful to these "gentlemen".
"Fortune favours only those who grab the opportunities life offers. If the future has rough patches, we should simply accept that as a fact of life, and continue to make the best out of things."
Majority of the successful traders (old birds) I know don't come from well to do families, they struggled with determination and worked hard to realise their dream. There are also many new birds who are doing very well after a few years in trading, I was told some of them are now big size traders in the electronic platform.
What makes them so successful? How are they able to withstand the stress of having a few hundred outright position? Imagine the risk and think about their rewards. It's none other than having the COURAGE to trade what they believe in.
Still holding 3 long Topix/Nikkei spread in the special account, profit to date is S$8,814.00.
Sunday, September 27, 2009
I have received a SMS recently, "Want to make monthly passive income from Auto forex trading? We do not charge management fee and don't have to buy any software. Interested, please come to our talk". So, how they survive?
I don't know who this chap is, obviously trying to earn some comm. from soliciting funds to invest in some Auto Forex trading system that promise reasonable returns without highlighting the tremendous risk involved. BEWARE!
I have invested some money with fx:1 academy 3 years back to test out their so called Automated trading that promised good passive income with impressive back testing track record. I was conned into being their scapegoat and my account lost more than 50% before I decided to close it. Very ashamed to reveal it here, but just for my friends to be aware of the risk.
I have never seen a day of profit, it's downhill all the way right from the beginning. Since it was a small investment, I didn't pay particular attention to it until one of their trainers called to apologise about a huge sudden draw down due to some adverse news during the night. Of course all the bull shit explanations about missing stops in the Forex market, etc, etc.
The company made money from churning the account through an automated trading system deploying various strategies. The Forex Broker gave the company a cut from the spread between the bid and ask price every time a trade is done. It's a money tree for them, I don't mind if they are able to make money for me, but that's not the case, it's win win for them and losses only for me.
This company markets their courses and automated programme through some sort of MLM plan where most of the top money earners are in fact salesmen and not traders.
A friend visited me recently and revealed paying S$3,800/- to the same company for a course on Forex trading learning only one strategy, he emphasised. He did not trade after the course, as he was unsure of the charting and trading platform. Another victim of some sleek marketing on how easy to make money trading forex by just spending 2 hours a day. It suited him perfectly since he is working full time.
Profit for the special account again drop to S$5,821.00. Still holding long 3 Topix/Nikkei spread.
Saturday, September 19, 2009
Many ask me what's a 'YUM' trade and to quote examples. Yum trades occur mostly in chaotic market when we don't know exactly what's happening, the price movement defies logic, big surge up and down for unknown reasons. I love this type of market movements, it create lots of opportunities for the brave.
Two very big Yum trades occurred this month on the SGX contracts, one on the 9/9/09 (Taiwan contract) and the other on 18/9/09 (Simsci contract).
On 9/9/09, the Taiwan contract opened at around 2692 and started moving upwards, another trader sitting besides me who specialise in the Tw contract told me the resistant was around 2715. I checked my charts and yes, it should be a strong resistant at that level.
I shorted 1 lot at 2720 and immediately cut loss 10 ticks away, market paused for a while at 2740 and I thought it's easing off, so shorted again at 2738 and again have to cut loss immediately 15 ticks away, really fast and furious.
What happened? The cash market has not open yet, what's the news in Taiwan that we don't know about? Why are they buying up the futures? Is Algo at work, pushing up the market to catch the shorties? Lots of questions float in my mind.
Market hit 2795 and started retracing down and fearing the market will come off, shorted 2 lots at 2786. Imagine my shock when it U-turn immediately upwards, what type of ass luck is that! Three losses in a row! I was angry, trying to justify holding the 2 lots and refusing to cut loss. Shit! big mistake, it broke big figure 2800 and another wave of senseless short covering came in.
I was speechless looking at the market and staring at my overall losses of 150 ticks in less than 10 minutes with only a very small position. The limit up is very close by, what should I do? I dared not average further fearing for the worst, with a small position, the damage would not hurt me, I consoled myself.
I had no guts! Fear overcame me.
Taiwan is far away from Singapore, I don't know what's happening on the ground there, what type of news will affect the market. But, I always have this feeling that the market is heavily manipulated by the KMT and their cronies. It's a great contract for speculators with good volume and daily range.
The market continues pushing up to a high of almost 2850 and started to descend furiously, not adding on any position just in case it pull back up again. Came back down to 2790 in less than a minute, undecided whether to cut the position with a small loss, no, hold it.
A bad move not to cut with a small loss, the market moved swiftly back up to 2820 again, holy shit! Then started coming off to 2780s and swung back up again to 2800. What the "f#@K"! I was frustrated not getting out of my position a second time.
The third time it came back down, I got out my position at 2783 with overall losses of around 20 ticks. I was happy, but it turn to frustration again when the market dive down to 2760. What a stupid idiot I am! In less than an hour the market crashed all the way back down to a low of 2680, below the opening price.
I had missed the 'YUM' trades because Anger and Fear had overtaken me. I was a coward not to take on bigger position and more risk. The market went up 160 ticks within 10 minutes and crashed all the way down 170 ticks later, so much opportunities yet I had not capitalise on it.
"Bravery is the capacity to perform properly even when scared half to death" - Omar Bradley
Met other traders during the break and learnt that most scalpers were badly caught on the way up. It's bloodbath even for the disciplined. Payback time!
Yesterday, the YUM trades occurred in the SIMSCI contract after the cash market closed. The market started selling off for no apparent reason, I bought some at 3189 and 3185 since most major markets were stable and holding well.
The market came off swiftly after hitting some stops. Bought further at 3163 and managed to cut only 1 lot at 3158 before the market dropped like a bomb, prices disappeared from my ladder. Some massive stops must have been triggered. Holding 5 lots and saw my losses at more than 600 ticks in just seconds.
Scrolled down and saw the prices trading down furiously, managed to buy 3 lots at 3024 and tried chasing the market at 3026 and 3052, all missed. Next level tried buying 3 lots at 3136 and managed to get hold of 2 lots, didn't even realise the big figure had changed again, holding total 10 lots.
It was so fast that I didn't even realise that I bought so low at 3024, my eyes and hand couldn't even cope with the wild swing because within seconds I was buying more than a 100 ticks up. There was no time to think, just clicking away at lightning speed trying to get some Yum trades. Managed to get all out at average price of 3163 seconds later, luckily still managed to make some good money.
I scalped the SIMSCI now and know the contract well enough to average on such a situation, though I missed buying more contracts at the bottom. I had traded conservatively in comparison to my margin thus able to stare at FEAR right in the face.
There will be a lot of speculation on why the market was sold down with few minutes left to closing. Any news will be too late even for us as the market crashed within seconds.
In the world of dirty finance, did any body leak out those massive stop orders? Was it a deliberate attempt to trigger those stops? Was it just normal market action with orders coming in to square off their positions ahead of the long weekend? Why didn't they do it before the cash market close? Was it Algo?
Phone calls started coming in after the market closed, mostly "Did you YUM the market?", "What happened?" I told them I was Yummed and got my hair all wet even though I'm almost bald.
Other traders started to talk about their fear such as assassination attempt on our leaders or some terrorist attack. Thus they froze and just starred at the screen without any action.
Recalling sometime in the early 1980s when PM Lee Kuan Yew was hospitalised, the news sent the STI crashing down. I was working in the bank and witnessed the massive sell down of the stock market, with clients in panic mode calling us to unload their stock holdings.
Another incident was during election time in Taiwan when the then president Chen Shui Bian was shot. It sent the TW contract spiralling down during the T+1 session to limit down. That was real scary if you were caught holding any long position.
The special account is in limbo, still holding 3 Topix/Nikkei spread when it crashed all the way down to a low of -1080. Unbelievable, that's why I underperformed. The profit to date is S$9,435.00
Sunday, September 13, 2009
In today's Sunday Times front page "Help lawyers cope with changes" - Law Minister K. Shanmugam. These top dogs are too well protected over the years, are among the most talented of the population and yet they need help.
I try to avoid seeking the service of lawyers, I can see the greed in their eyes when they talk to me, "Yes, what can I do to help you, my fee is S$400/- an hour". If they know that you are rich and can be slaughtered, you are dead meat.
"The point is that you can't be too greedy" - Donald Trump
In trading, greed is also a much talk about subject, we have been told countless time not to be greedy. Greed leads to overtrading, bad discipline and poor money management. Greed can make a trader risk much more than he should in order to make more and more. Risking too much only leads to a quicker downfall.
Profit for the special account came back down to S$10,177.00. I have been struggling these 2 months with my poor performance, I have been wrong in my view, I have been stubborn to hold on to some lousy positions and most important I have not been focused. Still holding 3 Topix/Nikkei spread, waiting for a correction to get out.
Sunday, September 6, 2009
Went to the Natas travel fair last Sunday to book a holiday for my family to Taiwan for a 8 days holiday in early December. I have wanted to visit Taiwan and contribute a little to their economy since I have made some good money in the Taiwan pit before the closing of the trading floor.
It's a long queue into the carpark and the hall was packed with people looking for a good bargain for their holidays. The economy doesn't seems to be affected that much by this financial crisis and the V shape recovery of the stock market around the world caught me by surprise. It's unbelievable that we can recover so fast in 6 months.
Early this year, we have been bombarded by all the bad news, figures, depression scenario and analyst forcasting how much further the world stock market will sink.
My wife have been hinting regularly that we haven't been to any place for a holiday during the past 2 years. Feeling much better after may second surgery, I agreed to bring them for a short holiday though I still have a slight headache everyday.
After booking the tour, we went to the Food Fest at the next exhibition hall. We came to a stall touting a Chinese herb from Taiwan that can cure sinusitis and can feel the result within 3 days of consuming it twice a day. The Taiwanese man showed me the main ingredient, a type of native ginger with red buds, not hot nor spicy, gave me some to taste it.
The man asked me to give it a try for at least a month and I should have my problem solved within a few months. I have been having this mucous problem even after my second surgery, I washed my nose 5 times a day with salt and every few days a lump of mucous would flow out of my nose. Despite taking a few doses of anti-biotic over the past few months, the "BUG" stubbornly refused to give up.
Having a personality of "Giving it a try" I decided to get a month supply, 5 boxes of 10 sachet each with a box free at a price of S$150.00. I have to abstain from Chili, Ice (cold drinks), Peanut and Chocolate while taking the herbs.
After the 2nd day, I felt so much better. On the 3rd morning, I felt something blocking my breathing and decided to blow it out, I was shocked to see 2 big pieces of dried blood clot that came out from my nose after some digging. There is another piece that I couldn't dig out, so I decided to suck in and out came a very big piece of blood clot from my mouth. I was stunt.
I was relieved and knew that I'm on the road to recovery. I continue to wash my nose with salt but no more lumps of mucous now and my headache is subsiding. Advance western medication failed me and probably weaken my immune system with all those anti-biotic.
Profit to date for the Special account is S$14,914.00. Still holding 1 long Topix/Nikkei spread position.
Saturday, August 29, 2009
A guest visited me few days ago and we chatted about topics regarding trading and his aspiration to become a trader. He revealed a lot about himself and finally, after offering those information, asked me "Can I make it as a trader?"
I told him that he is very pro-active, read a number of books on trading, acquired good knowledge and very keen to become a trader. I can't tell until I see how he trade at least for a few weeks, pinpointing his mistakes and whether he is able to learn from it.
He is risk adverse, very cautious, wish to make big money but don't want to take too much risk and seems reluctant to invest in the hardware. If you don't have the proper tools, it will be tough to compete with the rest out there. I have still yet to find an investment that is low risk, high returns.
I have in the past encouraged a number of booth clerks and order fillers to become a "Local" to trade on the floor. Most were cautious, afraid to take the plunge with many excuses why they can't, mostly financial. They were afraid to lose their job and comfortable income. To those quite close to me, I will show them my trading cards and how much I can make for the day. Their eyes popped out everytime they see the profits I make for the day, sometimes more than their entire month salary.
I told them "If you don't give yourself a chance, an opportunity to prove yourself, when you grow old, probably you will regret and "F" yourself, why? why? why? don't give it a try!", "If you can't make it, go back and look for a job, at least you have given it a good shot, tried your best and if you fail, there is no regret."
"So, what are you waiting for, Christmas?"
The money is good, the money is fantastic, if you can make it. Just learn the skill. It's so easy during those floor days, I told many of my visitors that the floor is full of diamonds and precious stones, it's whether they can see it and pick it up.
Those were the days, it's over.
It's a different ball game now in electronic trading, we are competing now with the best traders as well as banks and hedge funds with the muscle power. They can afford to pay for the best traders, programmers, high tech computers and speed of execution. Everybody is so knowledgeable in the Internet age.
But, there are still plenty of electronic traders who are making good money. The opportunity is still there.
Give yourself a chance. How many lives can you have?
"Only when we are no longer afraid do we begin to live." - Dorothy Thompson
Profit for the special account is S$13,703 after 5 months, well below expectation, I'm a bit disappointed with my own performance for the past 2 months.
Saturday, August 22, 2009
I have the opportunity of visiting a friend who is trading from another arcade. He specialise in market opening and closing of the Taiwan contract, an SGX product. He is among one of the best scalper I know who can trade more than a 1,000 contract round turn in half an hour, rarely holding a position for more than 3 seconds. The speed that he executes his trades is amazing.
I observe that he don't have any chart except the ladders for the different contracts occupying 2 full screens. With the Taiex contract (Taiwan Exchange product) side by side, he monitor it closely, through observation and anticipation of the market players' behaviour, he will then execute his trades. Somtimes, he does hedge his position against the Taiex when he feel been squeeze by the big boys.
I saw many of the traders from the floor previously and are now big traders on the electronic platform. Most of them don't have any charts on their screen, and these traders are making money big time! Many of the traders in the Phillip arcade don't look at charts too and these traders are also making money!!!
I used to trade without chart on the floor, what we need is quick action and reaction to the market movement, mostly making money from the "YUM" trades or hijacking trades from the order fillers with our speed advantage. After going electronic, I have to learn how to read charts with so many markets to monitor, combining them with price action to execute my trades.
My friend showed me he made US$2,500/- for the morning less comm of US$1,500/-, his nett profit was about US$1,000/- for half and hour's work and he will be going home to sleep before coming back at 1 pm to trade the closing. He showed me last month's profit of about US$15,000/- nett and scratch trade rebates of about US$7,000/- from SGX (Extra Bonus).
This is one scapler who faces those "Algos" head on without fear and excuses. He told me "it's all in the mind", be "Fearless". How I wish I can manage this "Fear" factor a little better. Probably due to age, as we grow older, we tend to mellow down and becomes a bit more risk adverse.
Profit for the special account went back to S$13,217/- reducing the Topix/Nikkei spread to 1 contract.
Saturday, August 15, 2009
It's finally here with SGX being the first Asian exchange to back dark pool, though the platform is neutral and independent of any brokerage. It give more anonymity to investors who do not want details of their deals exposed to the marketplace until the deal is done.
I'm not sure how much impact it will have for traders like us though we are trading futures. Our main concern now is "algo" trading, those powerful super computer with servers sitting in SingTel to execute trades many times faster than you blink your eye. It cost around S$15,000 a month to have the server there with more than 20 already taken up.
High volume scalpers are the most affected by the "algos" with many finding it tough to compete in term of execution speed. Their profitability have been greatly affected, there is no more edge for them. Further more, with their financial muscle power together with the computer brain to calculate net long/short position in the market and digesting other important information, traders felt squeezed by the "algos".
Though being a scalper myself, I have reduced my trading volume tremendously in the past few months, partly due to poor health, AFACT and market conditions. No doubt my profitability have been affected as well.
The market keep changing with new players who are well informed and knowledgeable. Days of many "Yum" trades are getting lesser with these "algos" having the edge.
I don't feel pessimistic like some of my fellow traders, what we need is a change in our trading techniques, mindset and be flexible to adapt to the changing environment. I still find many trading opportunities the whole trading day, just need to be patient and wait for the durian to drop.
Profit to date for the special account is S$8,733.00, still holding long 4 Topix/Nikkei spread. It has been a tough 2 weeks for me as I recuperate from the operation, my worst performance so far since coming back to trade at the arcade. I feel sleepy everyday, unable to focus and concentrate, probably didn't sleep well at night.
Sunday, August 9, 2009
Today is Singapore's National Day and I am proud to be a Singaporean. I am indeed grateful to one great man, Mr Lee kuan Yew, our first Prime Minister and his team of capable, uncorrupted collegues with a genuine vision to improve the lives of the ordinary citizens. Mr. Lee has laid the foundation for good governance and meritocracy with no mercy for corruption.
I can't imagine what would life be if we were under Mahathir, Suharto or Marcos in a country like Singapore that have no natural resouces for them to plunder. Yes, we are paying hefty salary to our Prime Ministers and his cabinets which I feel justifable for the peace and prosperity that we are enjoying today. That's my personal opinion.
It's our good fortune to have good leaders compared to all our neighbouring countries who are rich in resources, but with leaders first taking care of themselves, families and their cronies.
Last Tuesday, I went for another nose surgery to correct the everflowing mucous blocking my nose, making it so difficult for me to breath and sleep. I have sufferred for almost six months since the first operation in February and subsequently taken a few round of antibiotics to get rid of the infection or some 'bug' without success.
The first operation cost more than S$20,000.00 and this 2nd surgery cost more than S$4,000.00, S$1,000 goes to the Anaesthetist and S$1,500 goes to the surgeon for less than an hours work and that's at a discount. Total cost to date is S$25,000.00 and hopefully stop at that. Our money devalues very quickly, so how is the property prices going to come down? My mother complained that taxi fare is so high now especially during peak period with all the surcharges.
It's the ordinary citizen that's feeling the pinch now, the elite is still having a good time with CEO's and higher management staff rewarded generously with huge bonuses for their past performance. But do they pay back those bonuses when the company goes into the red?
Didn't trade much for the week, resting at home to recuperate. Good health is important to a trader.
Not much changes to our profit/loss account.
Saturday, August 1, 2009
United States banking giants paid nearly US$33 billion staff bonuses last year while at the same time getting US$175 billion from taxpayers. JP Morgan Chase had the biggest number of millionaires, paying more than 1,600 staff bonuses of over US$1 million each despite receiving US25 billion from the US Government.
Wow! with so many homeless and hungry in the US, these bankers really need some soul searching, it's daylight robbery!
"Never trust your bank" - Mr Peter Chan, a Hongkonger and his wife have been campaigning for investors who lost money on Lehman Brothers' Minibonds.
The interest on the mortgage of my house have not come down for more than 2 years since the financial crisis despite near zero interest paid out by banks on saving accounts. Banks are quick to revise interest rate upwards but unless you take action, they will "YUM" you, the rate will remain there, the spread is so wide that they are able to maintain good profits and pay good bonuses.
Our special account got hit last week with profit falling to S$8,127.00, stubbornly holding long 5 Topix/Nikkei spread position. The feeling is lousy, making money is so tough while losing it away is so easy.
Saturday, July 25, 2009
Yes, to all aspiring traders, that's sound advice.
"Small opportunities are often the beginning of great enterprises." - Demosthenes, Greek orator.
Met many traders during the launch of AFACT, Association of Financial and Commodity Traders (S) on the 23rd July 2009 and again the topic of "algo" trading seems to be the talk of the town. Here is the link to what "algo" is all about, http://nytimes.com/2009/07/24/business/24trading.html?ref=business.
These high frequency traders generated about US$21 billion in profit last year according to estimates by a research firm. These high-frequency specialists clearly have an edge over typical traders with their powerful computers housed right next to the Exchanges.
These systems are so fast they can outsmart or outrun other investors, humans and computers alike. A loophole in regulations allows market places like Nasdaq to show traders some orders ahead of everyone else in exchange for a fee. That's definitely unfair advantage for those who have deep pockets.
I don't see such high-frequency trading in most Asian exchanges at the moment and such edge shouldn't be given to those few who can afford to pay a price for it. Many traders complained about these "algo" traders in the futures market with their intelligent software to "catch and squeeze them". There is no doubt that trading is difficult in the last 2 months, with lower volume, summer holidays and a trending up market.
Most traders don't do well in a trending up market, as it tend to whipsaw on it's way up unlike a falling market that can be drastic. There is definitely manipulation by the big boys in the market with their financial muscle, and if they are smart, that's a huge advantage, but don't forget Nick Leeson causes the collapse of Baring Bank trying to support the Nikkei!
These big boys such as hedge funds, mutual funds, unit trusts and banks operate on behalf of their rich clients to take high risk trades so as to get a cut of the profits and commission. It doesn't hurt their pocket when they lose, just bye bye and close shop. Not many of them make money while their investors are the real suckers.
Many traders are clearly unhappy and frustrated with the "algo" chipping away their profits but as traders we need to be flexible to adjust to the ever changing trading environment. We can still make money with sound money management and the trading skill acquired over the years, just tune it a little bit here and there. I don't feel such a huge impact of these "algo" traders, if I don't make money on any given day, it's because I am stubborn and don't follow the rules, it's my own problem!
"You can't stop the waves, but can can learn to surf" - Jon Kabat-Zinn
Robert is leaving the trading arcade to trade from home by the end of the month. I feel sad that he is leaving as he is the one who has given me a lot of inspiration to make a come back to trade in the arcade. I still remember his words of encouragement "is making about S$1,000/- a day OK with you?" I went back thinking, if Robert can make it, why can't I do it?
Robert's style of trading don't require so much speed, he is a tactical trader waiting for the right entry level and an extra-ordinary patience in riding profits on his good trades. He is so easy going and relax, watching you-tube and movies while trading and monitoring the market. I really admire him and how he can do it yet still being highly profitable.
Profit for the special account took a hit from the widening of the Topix/Nikkei spread, down to S$14,937.00. Now holding long 4 spread, didn't expect it to widen that much. That's one of the major problem of a trader, so, always "expect the unexpected"
Saturday, July 18, 2009
"The world's most powerful investment bank is a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money" - Journalist Matt Taibbi on Goldman Sachs quarterly profits of US$3.44 billion.
Almost all the bank's earnings come from trading and they are not going to tell us how they do it. That money-making machine is running at US$38 million per day or US$1.58 million an hour. Wow! unbelievable, how Goldman can be so fast, opportunistic and canny in it's multi-billion dollar bets on the direction of the financial markets?
Goldman's Traders were known in New York as the Bandits of Broad Street and competitors comparing Goldman staff to bellicose "orcs" in the Lord of the Rings. With many of Goldman alumni in powerful government positions, that might have given Goldman a competitive edge in term of sensitive information.
The most objectionable aspect of Goldman's success is that it's earnings are shared by such a small number of already wealthy people since it distributes 49% of revenue to employees. These bankers are going back to enriching themselves through an elaborate, opaque form of casino trading which is semi-detached from the rest of the society.
It's no wonder traders are complaining about the difficult market trading condition. It's tough, we need to work harder, work smarter and taking more risk in order to survive in such a competitive environment with many more blood-sucking vampire squids.
Profit to date for the special account is S$16,056.00, at least this Jaw is still able to snatch some food from the vampire squids.
Saturday, July 11, 2009
In trading, we have the freedom to make mistakes everyday, but not many of us are willing to admit our mistakes resulting in burning holes in our pockets at the end of the day.
"One mistake and you will regret it forever" - a Chinese proverb
Many years ago, I had a lunch partner trading together with me in the Taiwan Pit. This friend was a medium sized trader who was well respected by most traders on the floor as a very successful trader. I was impressed by him too, especially his courage in executing the size that I deem too big for my own comfort.
He traded in other contracts like Nikkei as well as forex, I find it amazing that he could cope with a few contracts base on his gut feel. He would always tell me his exploits, those that he made a killing but I never hear about his losses. The impression that gave everyone, including myself, was that he was a damn good trader.
Once, we happened to collect our monthly statement from our own clearing member and decided to exchange notes on our profit for the month. He showed me proudly that he had made more than 40K but I noticed that his commission was close to 30K resulting in his nett profit of less than 20K. I was shocked and questioned him how he ended up with such huge commission.
He told me that was his style of trading especially calling the backroom to execute trades on his behalf. The execution fee was US$1.00 per contract and it was OK for him since he was able to make more profit to cover the expenses. I told him the profit ratio to commission was way out, he was giving away too much money to the clearing firm. Instead he should execute the trades himself and have more quality trades.
I showed him my statement of about the same profit, but my commission was less than 5K, my nett profit was more than double his. I advised him to seriously look into the cost, it didn't make sense to me. I told him to execute the trades himself, stop trading forex because of the slippage, instead trade on the futures platform. Unfortunately, all these advice fell on deaf ears.
We drifted apart as he stayed away from the pit and executed his trades from cafes away from the exchange floor. Whenever we met, I always asked him "how's trading?". Without fail, he will answer "good, surviving", very confident without a trace of trouble in his trading system.
I was shocked when he came to me for financial help again, I helped him once and he recovered. This time I knew that it was more serious and be prepared to write off the loan. He later confided in me that he was in deep shit, both he and his wife were sued by the banks. Many traders helped without knowing his problem, but it was not enough to pull him out of the quicksand.
I scolded him for not telling me the truth about his trading losses, in fact lying that he was doing OK. It was the pride that killed him, he was too shy to admit his mistakes, he wanted to upkeep his image as a successful trader. If he had been honest with me, I could have help pull him up from falling into the gutter.
He confessed losing a bomb in currency trading even though he put in very tight stop loss. With his size, I could imagine the amount of slippage, commission and worst, always hitting his stop since it was placed so close to his entry level. The market always test a trader's patience by taking their tight stop until they get frustrated. Once the trader take away the stop order they will be in deep shit one fine day.
He is now helping up in a ex-trader's antique shop at a pay that's only a fraction of the commission that he once paid monthly. He regretted his mistakes but at least he is happy to be at peace with himself and accepting the cruel fate that he can't blame anyone. It's a honest living and I am glad he has come down to earth though at a extremely high price, there's no turning back the clock.
Square off all position, profit to date is S$13,609.00 for the special account.
Thursday, July 9, 2009
Read a report about more white collar Korean workers going into physically demanding work or traditional kind of manual labour, from farming and fishing to the professional back-scrubbers who clean patrons at the nation's numerous public bathhouses.
Their expectations hit the dark reality of this economy, where people have no choice but to go into the blue collar work force. "This work hurts my pride" and some say they feel guilty working such rough jobs after years of expensive cram schools and college.
Being paid S$2,500 as a crab farmer is considered one of the highest paying work in the current market, more than pouring lattes or busing tables in Seoul since the global downturn hammered this once fast growing export economy.
Most of my fellow traders are complaining but there are some who are still doing well and yet are also complaining. Luckily for me, I lead a simple lifestyle and have simple taste.
Saturday, July 4, 2009
More Computer Science graduates are now employed as traders, to write trading software programmes for the increasingly powerful and fast machines. Can we beat the machines or black boxes in the futures trading game? These machines trade without emotion, they trade according to the rules and parameters set by their masters. More importantly, they are obedient and discipline.
I am using a simple programme, the auto spreading from the TT system to execute some of my trades, it save me plenty of time from the constant need to monitor the market, making me a bit lazy. The machine is not 100%, sometimes it fails too, giving a worst fill from my intended price level. I vomited blood using the Pat's System to do auto spreading, cursing and swearing many times when it fail to fill the other leg leaving me with some bad positions.
With more traders using black boxes, the competition is tough with razor thin margin, but which business is easy? Which business have no competition? Do we have a better choice? The learning process is often fill with disappointment, that's life! Be realistic about your expectation, work hard and learn from your failures.
It took me more than 2 years after the open outcry trading to be successful in converting to electronic trading. Despite my wealth of experience as a trader, it took me so long to learn, I survived with the savings from my past earnings, I felt terrible during those period. How I wish I have a mentor to guide me, that would have save me the 2 years that I have wasted.
One of the reasons it had taken me so long is the lack of focus in trading, doing it half heartily on a part time basis while trying to branch out to other businesses. Not being a shrewd businessman, I lost more precious capital, it's a new learning process again, why so stupid!
I realised my folly and return to full time trading at the arcade in February 2008.
"Knowing is not enough; we must apply" - Goethe
I negotiated with the manager for a free booth for a month in the arcade and a month free trial for using the best trading platform, the TT system. I gave myself one month to focus and concentrate only in trading, no room for failure, if I don't make it, I will be out of trading for good.
I worked very hard for the month and with some trading advice from a few fellow traders, I managed to make S$20,000.00 in February. My world brighten up again and I have not a single losing month since then. This is the best money I have seen since the trading pit closed in June 2005.
The profit for the special account is S$11,745.00 to date, very slow indeed. My good friend has given notice to withdraw his capital soon to invest in property as it is getting hot again in Singapore with many projects well received by investors and flippers. Total trading profit since December 2008 is S$29,607.00
Saturday, June 27, 2009
A few days ago, I met 3 ex-floor traders near my office having their lunch. They were trading out of Ong First arcade specialising in US interest rate contracts. One of them is doing well and is a mentor/partner/employer to the other two traders. We exchanged greetings as usual and I asked the two students how have they been doing so far. They jokingly said that their mentor taught them only 80% of his skill and holding back 20% like some Chinese Kung Fu Masters. That's why they are still struggling.
I rebutted them instantly, as a stakeholder their mentor would be more than willing to transfer his knowledge and skill to them but unfortunately their absorption rate were only 50%. They should be grateful that their mentor is willing to put in time and effort to teach them. Their mentor would be proud of them if they can be successful traders and he would also benefit, it's a win win situation.
The fastest way to successful trading is to learn from those who are doing well in their trading, of course it's their trade secret and not many are willing to teach as their students might turn out to be their biggest competitor later on especially in a small and tight market. Personally, I feel the market is big and there are so many contracts available now, with Internet technology, we can trade in any major exchanges around the world.
Not all traders can be good mentors, some are only half past six. A good mentor should be one who is consistently profitable, having a good trading system and sound money management. Recently, a trader from the arcade told me she was busted after trading for nine months despite having a mentor. I felt sorry for her because she was not taught sound money management as the mentor himself consistently trade to the maximum position available for his trading margin.
What is the "Holy Grail " to successful trading? In fact every trader know the secret but just simply unable execute it consistently, that is "cut your losses fast and ride your profit", so simple, found in every trading book, yet so difficult to master.
Profit to date is S$11,419.00. Holding long 3 Topix/Nikkei spread position.
I have not perform up to expectation, much to catch up.
Saturday, June 20, 2009
Have been rather busy lately helping to set up an organisation, "Association of Financial and Commodity Traders" (AFACT), objective is to have a common goal of representing the interests of the members basically from the financial trading communities.
The 12 committee members including myself put in plenty of hard work, meetings, bargaining for benefits from SGX, planning social activities and rolling out mentor and educational programmes for the members. It's really a thankless job and I wish to emphasize that the committee members are not paid for taking time away from their trading and burning some weekends.
I would like to say a big thank you to my younger brother, Alastiar (AIM) who has put in tremendous amount of time in helping out with the creation of the website despite his busy schedule.
The committee members are happy and are prepared to sacrifice their time to work for the benefits of the trading communities. The biggest obstacle is funding and of course members need to pay to join the Association for the cost of running it, that's where the unhappiness and scepticism arises especially from traders who feels they do not benefit from joining.
"Whatever you do is none of my business, don't get me involve", sounds familiar, for those who feels they don't gain anything from joining and "why should they contribute?"
"We do not see things as they are; we see things as we are" - Talmud
We have to thank SGX for the support and seed capital to set up the Association. SGX has also send their staffs to help us in the planning and organising for the launching of AFACT. Besides that, after some tough negotiation, SGX has agreed to the scratch trade rebates for the Nikkei and Taiwan contracts for a minimum of 2 months without condition and monthly review after that. At least we get something from the goodwill with SGX.
I am glad the majority of traders are generous with their words of encouragement and appreciative of the hard work put in by the committee members. The world will be a much better place to live in with more of these gracious people around.
"The only ones among you will be really happy are those who will have sought and found how to serve" - Albert Schweitzer
We are still building the website at http://www.afact.org.sg/
More traders are feeling the heat as volume keep sliding with smaller trading range, many complained that trading is tough. So, when is trading not tough? It's just a market cycle, in order to survive, traders need to adapt to the ever changing environment.
Profit to date is S$11,218.00 with 1 long Topix/Nikkei spread position. Still very cautious with taking more risky trade.
Saturday, June 13, 2009
"Just because you're an old guy, you don't have to sit around drooling in the corner. Get out and do something" - Bush senior turns skydiver again on 85th birthday.
Caught up with some ex-floor traders trading from home at the town hall meeting for traders last night. Many complained that trading has been very tough recently with falling volume and reduce interest. I agreed with them wholeheartedly and noted their frustration that echoes the similar sentiments of many traders at the trading arcade too.
Yes, the cake is getting smaller and the best survive. Traders are getting more sophisticated, investors getting more knowledgeable and fools losing their fortunes. Are old traders having no future? No!!! There is a old Chinese saying "ginger grow hotter with age", old men like us are more experienced, no doubt about it, so "try me".
I asked those traders who were still struggling very bluntly, "what is your monthly expectation?" Their expectation ranged from S$3,000/- to S$10,000/- a month and they would be very happy. For $10,000/- divided by 22 trading days is $455/- a day, that's about 13 Nikkei tics, 23 Simsci tics or 32 Taiwan tics. Is it difficult to achieve this target consistently on a daily basis?
Why not? I have been able to achieve the monthly target of S$10,000 consistently, of course with some days that I lose money while I make more on other days to cover up. The secret to my success is to trade small, very small to eliminate the fear of losing, with a small daily target, it is much easier to achieve on a consistent manner. That's money management.
For taking such small risk, I have to work much longer hours to wait patiently for the "YUM" trades such as market orders or stop loss orders. I can only do so with a fast, stable trading platform, good Internet speed and support which only the trading arcade can provide. That's my competitive edge that suits my trading strategies.
There are also many successful traders operating from home, they have also found their edge using strategies that suits their personality and risk tolerance.
We need to be flexible to be a successful trader, when the market condition does not allow us to trade bigger volume, reduce the size of the trading. Lower down the expectation, the market will roar again one day and be ready and prepared to seize the opportunity.
Profit to date is S$7,391, not much improvement from a month ago. Still holding long 4 Topix/Nikkei spread position, will accumulate more positions if it goes down further.
Sunday, June 7, 2009
Yes we have done many silly things in our younger days especially taking risk in doing things that we would frown on in our old age. We are out to prove our worthiness and courage ignoring the serious consequences of our action. "You can do anything, but don't get caught", this phrase is too familiar to the NS (National Service) men in the olden days.
When I first started out as a floor trader, there were numerous time that I nearly busted my account with the "big" positions that I traded relative to my capital outlay. As the Chinese saying goes "don't know how to write the word Die". I was reckless and have taken ridiculous risk in my young days. I have to thank my lucky star to have survive so many close call, or else I would have been out of this business long ago.
It took me a long and painful one year to break even as a floor trader. I have been told many times by other traders "pay to learn", ya, I understand, no lesson in life is free. But, how long do I have to endure? There were many times that I wanted to give up when my account was left with only 10% of the original capital outlay of S$30,000.00.
Where can I go with just a "A" level qualification? How can I compete with those Diploma and Degree holders?
I can't think of any job except being a trader at the Exchange floor that offer me equal opportunity to compete with the brightest. I am neither smart nor having a high IQ, with just average academic performance, I have been offered an opportunity to make it in life. I am really thankful for that.
It's the determination and hard work that pull me through. Learning the lessons of not doing too many "stupid things" in trading is vital to the success of a new trader. I always advise new traders to trade small so that they don't have to pay too much in their learning phase. Learn how to crawl, then walk before attempt to run.
Profit to date take a step back at S$6,426.00. I have added another Topix/Nikkei spread increasing to holding 4 open position. Auto legging using the Pats system platform is giving me some headache with it's unreliable fill, the slippage is frustrating.
Saturday, June 6, 2009
Came across an article in the ST about this "Dark" pools of liquidity now in Asia, this is something really new to me.
Anonymous or "dark" pools of liquidity have extended their operations beyond the United States, and are now operating in Asian markets, particularly in Singapore, Hong Kong and Japan.
Dark pools are private networks that operate away from traditional exchange houses, offering investors anonymity. They are used by institutional investors to trade large quantities of shares, without moving the market in a big way such block trades usually do.
Examples include Liquidnet, the largest independent operator of dark pools in the United States, which has operations in Asia; and BlocSec, which is part of CLSA Asia-Pacific markets.
One question that come to my mind is the source of funding from these "Anonymous" investors. Are they dirty money that "cannot see daylight"? How these investors acquired their wealth? Are they using "dark" pool for money laundering? How are they regulated? Their money muscle could be partially responsible for the recent stock market rally. I hope to be enlighten.
With the demise of many Hedge Funds, we are seeing something new now coming out from the United States. Americans are really ingenious in coming out with new ideas to beat the system.
Thursday, June 4, 2009
Smooth sea never make good sailors;
Clear skies never make good pilots;
Hassle-free life never makes a person strong;
Be strong enough to accept the challenges of Life.
Don't ask Life "Why Me" Instead say "Try Me"
Saturday, May 30, 2009
Skills, Knowledge, abilities and experiences are only useful if you are at the right place!
Finance Minister Tharman Shanmugaratnam defended the overall track record of Temasek Holdings, which grew S$56 billion from March 2003 to November last year even after taking recent sharp declines into account.
Temasek had made "large investment gains" of S$114 billion over the preceding five years. I am really curious how they have done it. With good government connections and huge resources available to them, they have the privilege to cherry pick the best local companies to invest in at a discounted price.
It would be interesting to know how much Temasek actually gained from their overseas investments till now, because the huge losses we know are mostly from overseas. That will be a good way of evaluating Temasek's performance where the playing field is slightly level.
I have spoken to Robert about my decision to close account 1 since he has not traded for quite some time. It has been stressful for him and he felt sorry about it. There is no hard feeling, just sound business decision, Robert is still among the most respected trader I know. He is just not ready now, I still look forward to working with him in the future.
I will be transferring the balance into account 2 by end of next week. My strategy for account 2 is basically taking up hedging position in the Topix/Nikkei contract which I am very comfortable with. I hope to build up some foreign capital before going into some outright position trading.
Profit to date is S$7,731.00 and have long 3 Topix/Nikkei spread position.
Tuesday, May 26, 2009
If this is the first time looking at this picture, and after 30 seconds you still didn't realise that there is a shark at the back, then you probably need to improve on your Adversity Quotient.
It is the same as making investment. You always get attracted to those supposedly BIG returns, and often miss the lurking risks that may occur.
A good one, emailed by a friend.
Saturday, May 23, 2009
It's been a very tough trading week. There is not much volatility in the Topix/Nikkei spread recently, so not much of an opportunity to make money. I still don't have much appetite for risk and trying to stick closely to my objective for the account.
It's being an internal struggle for me over the past weeks whether to take on higher risk. Robert is having the same problem, the fear of losing money for the account has kept him inactive for almost 2 months. As we can't spend too much time with the account during our own trading, I guess we have to be very patient and wait for the Durian (king of tropical fruits) to drop before going into position.
Profit to date since March 2009 is S$7,386. Though I am not exactly satisfied with the performance, I guess we shouldn't be too greedy in this tough environment where fixed deposit in the bank hardly earn any interest. Futures trading is risky, thus the reward should be higher or else it's not worth the risk.
Thursday, May 21, 2009
What a remarkable feat by our Singapore girls, Lee Li Hui, Jane Li and Esther Tan to conquer Mount Everest. I feel proud for their achivements. I admire their passion, determination and never say die spirit despite the initial lack of funding. "They spent years of their lives planning,raising funds and training for this" Congratulations!
If traders have the same attitude, I don't see why they cannot make it in trading.
Tuesday, May 19, 2009
"If you want a guarantee, buy a toaster" - Hollywood actor Clint Eastwood on stock trading strategies.
Local businessman Oei Hong Leong - dubbed the "man with the Midas touch" - lost a whopping $1 billion on foreign exchange and US Treasury bond transaction last year. He is now suing Citigroup's private banking arm for negligence and misrepresentation.
I respected this man tremendously for his savy investments as well as his generous gifts to charity. I am sadden to learn of this huge losses. He disclosed that he had earmarked $1 billion last year to worthy charitable causes.
It will be a interesting court case even though I doubt he is able to claim much damages. As a trader, we need to know our own positions and exposure, I paid a price for that in November last year. Obviously Mr Oei has taken very huge positions, over exposing himself to the huge swing in the currency and treasury market.
Where is the risk and money management? It seems that Mr Oei is handling his investments personally and without doubt he has performed very well in the past. I hope that he can recover from this setback.
Saturday, May 16, 2009
What a shock to learn that Temasek Holdings sold all its Bank of America shares in the first three months of this year, resulting in estimated losses of between US$2.3 billion and US$4.6 billion. After all, outgoing CEO Ho Ching reiterated that the investment fund takes a long term view, at least 10 years and up to 50 years.
The Fear factor of BoA being nationalised which might cause the value of it's shares plunging to near zero might have the decision makers in Temasek biting the bullet. The selling of such a huge stake might have caused the share price of BoA to plunge from US$14.81 to a low of US$2.53 in just two months.
The timing of the purchase and sale of the investment is really bad despite Temasek having the brightest, well paid analysts and fund managers. What they lack is experience and foresight, they have stick out their hand to catch a falling knife.
There is a thin and blur line between gambling and investment, we hate to call ourselves gamblers because it's such a derogatory word to describe a profession, we would rather call ourselves investors/traders taking calculated risk.
We have liquidated all our positions and profit to date for the account is S$6,704.00
Saturday, May 9, 2009
Cutting losses is one of the most difficult decision for a trader to make and once you hesitate, it might burn a big hole in your pocket one fine day.
The recent rally in the Asian stock market led by Taiwan caught many traders by surprise. It's the magnitude, speed and force of the buying that is the killer that caught most short term traders. World market has recovered quite a fair bit, inching up for more than a month with the occasional profit taking. The herd mentality of missing out the market rally by regional Fund managers pushed the market up strongly with their buy orders.
Traders who refused to believe and stubbornly held on to their short positions got themselves burnt badly. I was told 2 traders lost more than S$300,000 in 2 days of trading and overall losses of more than a million from others in the trading arcade.
I asked one of the trader how long it would take him to recover from busting his account and probably start anew with a small trading capital of maybe S$30,000. He said it might take him more than a year or two to recover. Surprisingly, he is still very optimistic despite the setback.
Though I was not caught, I did not make a killing in such a big move, on hind sight, what a waste. Being very close to the market and a micro trader, I did not capitalise on this move.
The cleaner in our arcade told a friend that she was sad for not buying enough stocks and missed out on such a furious up market. I was a bit surprised and shocked to hear that and probably she might even make a better trader, who knows.
For account 2, I have liquidated the Tw/Simsci spread at a small loss and reduced the Topix/Nikkei spread to 4 lots. Profit to date is S$2,045. The unreliable pat's system automated trading makes me very cautious in my execution of trades, it can be rather costly if I am caught with a one sided execution.
Saturday, May 2, 2009
Account 2 suffered some heavy paper losses, the equity balance as at 1st May is S$262,553.00. I am now holding long 2 Simsci/short 3 Tw and long 5 topix/short 10 Nikkei spread. Losses to date is S$4,315.00. The equity has dropped almost S$10,000 from last week since holding the positions. It's a good stress test for the account as we go for higher returns with higher risk following closely behind.
With Japan having the Golden Week holidays, the Japanese market will be closed for 3 days from Monday till Wednesday.
The automated Pat's system trading platform for the Topix/Nikkei spread failed twice last week resulting in some additional losses for the account. It's a cheap platform, we are paying peanuts and so getting monkeys. Since the account is not that active, we will have to bear with it, be extra careful and vigilant after putting in the orders.
The Taiwan market surged more than 10% last week on news that Chinese companies can now invest on the island. The big move came on Wednesday night when the Tw Futures Index was pushed all the way to 1st limit up of 7% which caught most traders off guard as major world markets were only up slightly. Investors started pouring in on Thursday on the bullish news and shorties start covering their positions pushing the Index much higher.
As I have written earlier, the Taiwan market is a gangster market that defies all logic with good daily volatility and loved by most traders. I watched the news about the signing ceremony on cross straits ties between China and Taiwan on Sunday evening. I was rather bullish on Monday with the news and traded mostly on the long side but was caught when the market was sold down due to the swine flu.
I was told by Robert that there was a big sell order on Wednesday evening of about 600 contracts before the big move up leading to most traders believing that the market is going to go down. When the buying started slowly, most were caught off guard and started selling on the way up as the rest of the world market remains in a tight range. Robert was caught and he told me there was no news he is aware of. It's a great deception to catch the shorties.
Once the buyers accumulated enough sizable positions, they started to buy aggressively leading to stop losses and higher prices. Stubborn sellers who averaged up their positions faces huge losses. With the buyers in control, they can play the game by occasionally selling down the market to take profit to mislead those who think that the market is correcting before buying up again to hit the 2nd limit up. It's a dirty game and I can only speculate that the Taiwanese government might be the operator behind it.
A trader in our arcade was caught badly on Wednesday night and average up on Thursday morning, he could have taken a small profit when the market corrected after the opening. Unfortunately, he did not cover his position and the market went up again furiously even as most of us thought that it's already been more than overdone. This trader busted his account with more than S$200,000.00 losses on that day as he was forced to cover his position. I felt sorry for him.
I suffered similar losses as a floor trader in 1998, as I average shorting the Nikkei until it went limit up. It was the biggest loss in my trading career. It's really painful and I didn't sleep well for the next 3 nights asking myself, WHY? Even after more than 10 years as a floor trader, I still make such stupid mistake and got carried away. Being human, I am are still vulnerable to make mistakes, the only thing is minimising the damage and having faith in my ability to recover it back.
Lesson here is never average on bad trades and admit that we do make wrong call, just cut the losses early. It's easier said than done, sometimes even for experience traders.