Sunday, January 30, 2011

A tough month

A trader from another arcade revealed that he had been losing money since the year started, everyday in a row for 3 weeks! It's unprecedented, he couldn't believe his ass luck, it has never happened in his entire trading career for such a long spell of money losing days.

Yes, few of my traders lost money this month too. What exactly happened to these seasoned traders?

We are now trading against better, more informed traders as well as our greatest enemies, the big Algos who uses their muscle power to push the market up and down sometimes for no apparent reason to squeeze the smaller traders.

I must admit that the operators behind these Algos are good, they are well capitalized to intimidate the smaller traders with their size. They have the speed, at least a 1000 times faster than any trader, using machines that have no emotion. These powerful machines can feel the pulse and the heart beat of the market to sense a certain market direction.

Machines don't need to rest while traders need to be alert at all times. With trading hours extending longer and longer to almost 24 hours trading, the volatility shrink making it even more difficult for a trader.

Another factor that heavily favours the Algos is the volume rebate given by the Exchanges for the high volume of trades churn out by the machines and big time traders. Their transaction cost is so much lower.

Scalpers and Calender spreaders are most affected by the Algos with their high cost of trading. Comm take up a big percentage of their profit which allow only a small margin of error for their trades.

I was told the " The Flipper" has set up shop in Singapore to take advantage of the smaller market to corner and the system here that favours the Algos. Just google and read more about this single largest and most successful individual futures trader on planet Earth. He can simply put anyone of us in his pocket.

I think there are many more smaller "Flipper" now in our market supported by big Prop firms, that's what make trading so tough.

Thursday, January 27, 2011

Amazing Precision

Perfect Shot that need plenty of practice. Just like trading, a lot of hard work is needed to train for making good trades. Focus and keep improving.

Saturday, January 22, 2011

Trader's Symposium

I have been invited again to be one of the speaker at the Trader's Symposium this year. It's kind of challenging to find a topic to share with aspiring traders and motivate them when they can learn it from books and magazines.

What can I share with them in just half an hour?

What would they like to know?

I still have a few months to think about a topic to share and to deliver it honestly on something I have been doing for the past 25 years.

Traders need to be very flexible to adapt as the market condition keep changing with new and better players. My brother, one of the most consistent trader, took a tumble recently and he realised that the strategy he has been using is not working. His cash register suddenly stopped and need servicing.

He need adjustment to tackle the market. That's what makes trading so challenging, change is needed constantly to stay in the game. He managed to keep his losses small, that's what make him a rather good trader, I have great respect for him.

When you are a small fish in a big ocean, survival skill is vital.

Thursday, January 13, 2011

Trading Performance

I have decided to post the results of account FAT8025 on my other blog under Trading Performance for those who like to know them. ->>

It's a second account for this trader, so I'm not expecting too much from him since he don't have much energy left for night trading. I'm curious to see how he handles a losing position and money management.

Wednesday, January 12, 2011

S&P - NIKKEI Spread

This is one of the account that is using Inter-Market spread strategy to trade. I'm tracking this trader's performance with a base capital of S$27,104.00. He spend a few hours at night trading from home using the Pat's System.

No speed required for trading this strategy except looking for levels to get in and out. No pressure to perform, no charts required and 40/60 profit sharing.




Tuesday, January 11, 2011

Sunday, January 9, 2011

Email to my Trader

All my traders funded their own accounts because I believe that they are responsible for their own action. I merely facilitate and guide them, holding a small share in their account that they are comfortable with.

Here is a letter I have just written to a veteran trader of 20 years who have joined me 2 months ago, trading from home. He has been struggling with Electronic trading for the past few years.

Hi Bro,

You have done well in a quiet and very difficult December month for most traders. I have seen great improvement in your trades that comes mostly form the Simsci contract. Last week, you started to drift backward and seems to be struggling again.

From the recent statements, I observed that you are going back to arbitrage trading between CME NK and SGX NK to cover your losses in the Simsci. I'm surprised that you made money doing that with your slow trading platform and Internet speed. The risk/reward ration is about even but it's draining tremendous amount of your energy starring at the screens waiting for such opportunities.

We don't have the edge in arbitrage trading anymore, the Algos have taken over that role with their low latency, high frequency trading at a very much lower comm offered by the Exchanges. You are not going to grow and progress doing that at home, the stress will affect your health and in turn affect your concentration doing outright trading.

You are no longer young with the energy to compete with the Algos. Imagine yourself driving a old boneshaker along the express way at the speed of 50 km/hr while the rest are zooming past at double the speed or more. I definitely don't encourage such trading without the proper setup to compete on a level playing field. The reward for you effort is low. Focus instead on outright trading, losses is part of the game.

Refer to your trades last month and dissect them to understand why you have done well. But did you keep a trading journal?

Recently I challenged my brother too when he spoke about keeping a journal on his previous trades and strategies. I lost! He took the trouble reviewing his trades at the end of each day and record them for future reference so that he can improve on it. That's the biggest reason why he is now the most consistent trader and improving everyday. Can you still remember he was struggling together with you in the arcade through 2009?

95% of the traders do not keep a trading journal, my brother made that little extra effort.

Both of you are equally talented and intelligent, but he is now way ahead of you, why? I have great respect for you, a highly successful floor trader with plenty of guts. For traders who are not making it, I have only one word to describe their characteristic, "STUBBORN". They are all in denial with all sort of excuses, a drunkard will not admit that he is drunk.

Questions that I would like to ask you.

1. Do you keep a trading journal?
2. Can you justify your every trade? (Reasons for entering into a trade)
3. Do you have a stop loss before taking the trade?
4. Do you average on a bad trade?
5. Do you have a profit target?
6. Do you know the right time to trade?
7. Do you know which contract you are most comfortable with?

Being a veteran trader, you should have the answers to all of them, which is rather simple and straight forward. Keep repeating what you have done correctly. There is no compromise on discipline and following strict money management rules.

There is no option for you but to improve yourself, you must do it, you have to do it and I believe you can do it.

I hope change will take place in 2011 and I will come back to ask you the above questions again. Most important, challenge you to show me your journal.

Regards

Monday, January 3, 2011

Confidence




Start the New Year with a Joke from the mail.

What is Confidence?

20 CEOs from different countries board an airplane and are told the flight that they are about to take is the first-ever to feature pilotless technology : It is an uncrewed aircraft.

19 of the CEOs promptly leave the aircraft, each offering some excuses. The Malaysian CEO alone remains on board the jet, seeming very calm indeed.

Asked why he is so confident in this first uncrewed flight, he replies:

"If the software is developed by my company's IT systems department, this plane won't even take off!"


NOW THAT'S CONFIDENCE!

Saturday, January 1, 2011

HAPPY NEW YEAR!

Life ends; when you stop Dreaming,
Hope ends; when you stop Believing,
Love ends; when you stop Caring,
And Friendship ends; when you stop Sharing.




WISH ALL MY FRIENDS A HAPPY AND PROSPEROUS NEW YEAR !!!