Thursday, September 27, 2012

FAT 8023, week 5 and 6

Trader took small profit for most of his trades and also cut losses smaller, probably due to the smaller volatility. I wonder why he didn't trade the Euros.

The Euros moved 1000 ticks up from the low and have retraced 300 ticks, that's good volatility, retracement to sell.


coconut said...

well come back fat.

very funny, every time you are away for whatever reason, i took a hit! some stock took me to a wild ride and i keep covered (losses) and put out my shorts again.

not scary but kind of piss, completely going the opposite direction. now everything is under control and this month will be safe.

coconut said...

and on the subject of "big boys" (haha), i just want to clearify again that it is not that i don't see them up. i respect everyone who participate in the market place.

when trading at home, and with my trading style, i have no access to who are the market participants and where they comes from. all i see is price and volume.

i guess traders who comes from the good old days on the floor, they know exactly who are the traders and who are the big boys, those dealers of big institutions, just standing next beside one another.

the very moment i start trading, i trade "blindly", and i had been trading blindly ever since haha.

Fat88Trader said...

Well done Coconut, you are one of those "blind" traders that have done well, you found your niche, keep it up! We floor traders opened our eyes big big, yet can't see what's ahead.

You are still able to make good money probably from paying lower comm for your trades now.

coconut said...

lower comms does not really means higher returns incidentally believe it or not.

in my case, it allows me to tighten the spread (lower profit) and hedging more compactly. in another words, more comms to pay. bottom line, not much increase in overall performance.

but it does provide more safty and less flutuation in equity and thats a big plus.

coconut said...

oh, and also more work (trading) to do!

KAW said...

Hi coconut, just to let you know that afact forum has recovered from a recent food poisoning episode. We would like to invite you to join our guest list by re-registering at

I am sure the community would welcome your kind inputs and selfless sharing.

coconut said...

and just to indicate what i'm talking about, today until 2 pm, my traded amount is 1.1 million (both buy and sell amount in stocks) and its pretty quiet market.

and my position size is probably less then half compare to a year ago, and yet volume traded stay the same, tells a lot of a story.

coconut said...

thanks KAW, food posioning? here fat don't provide food haha. i'm safe!

i'll consider, but i must say that i always have problem in groups discussion, i really don't know why, i feel very uncomfortable and i just "walk" away or stay out.

and to tell you the truth, i didn't relised i'm sharing, i'm not that generous and i'm self centre, really but somehow what i'm writing here is really just an expression to satisfy my inner needs, gods knows what.

but i'll try.

coconut said...

oh the story is

my profitability reduce (due to position size), my volume increase corespondinly to position size, my comms increases corespondinly to position size, but

my odds (of winning) increase as well. it will take a year to double sure about the odd stay as it is before i increase my position size.

coconut said...

can't believe fat had not heard of all thee good songs, what was he doing when he was young haha,

don't tell me this one also?

coconut said...

the most important thing about how to increase the odds in your favour is "numbers"!

the above example, it will take probably, i don't know, 1,000 (?) trades before one knows the odds?

but one thing for sure, if you have the trades statistic/history knowing the odds is with you, you have to increase your trading volume (not necessary increase position size but optimium size), to cover as much market as you can, to further increases your odds of winning, the more the better, within your control or tolarent.

Fat88Trader said...

Have you ever seen the rain? I have been drenched all over many many times, haha.

Let me tell you, we were poor when I was young, only one radio at home that my parent tune to listen on those dialect channel.

We didn't even have a cassette player till I was in Pre U. So pardon me for not knowing those good English Classics.

There was this Cantonese version of "Can't Buy Me Love" that I heard during my Primary school days, I didn't even know it was by The Beattles until much later in my life. I still can remember some of the Cantonese lyrics till now, it was so catchy.

My favourite during my younger days was The Carpenters, then Tracy Huang and Teresa Carpio, then Bee Gees, still love them. I love Sentimental Pop music, not too loud, just soothing.

One particular group that I like very much was The Smokie, which was played nightly by my platoon mate during my SISL course. At first I felt it was very noisy, but after being forced to listen to it again and again, I fell in love with them, and it always remind me of my army days.

KAW said...

Hi coconut, noted with thanks.

coconut said...

ya, my love of music all influence by my brothers, as poor as we were, we bought every records there is, and a expensive hi-fi too.

i remember i met a guy who was a guitarist, he like me a lot and persuade me to joint his band, i went to his house and start learning drums, in exchange i teach him billiard (snooker). he becomes quite a good player and for me, i give up drums after a few try.

can't sing, can't play but still love music.

coconut said...

but as seen here, i'm crazy over trading, believe me or not, i can talk trading until my last breath. and when i met up with friends, we talk almost nothing but trading and gambling.

i can also relate my everyday life with trading and their similarity. the more one see the similarity, the more we can simplify it, and the more simplify it is, the easier one can design (trading system) and execute it.

thats why (i say) trading is never just about making money, it's a way of life and the understanding of the whole complex system (actualy is about ourself) made simple.

coconut said...

and every damn thing in this universe which exit must have a structure, and the basic structure, the frame work, must be the same. when the structure is interupted by an external factor which distort the original structure, that thing will collapes and disappear or die.

the trading system, which is supposingly also a structure, must have the same basic design or otherwise it will soon disappear from the trading universe.

even trader in this example are following a system, whether he is aware of it or not i don't know. but rather to overly concern about the P/L, he should spend more time trying to understand his own system, which is very individual, and ask why his system will continue to exit and most importantly, how to improve to become more robust.

and a structure does not necessary have to have an element of prediction incorporate into it like so many traders do!

nothing can last, so as trading systems, nothing is perfect, so as trading system, it has to be constantly improve and evolve, and to do that, one has to have a basic understanding of that system he is using.

coconut said...

learning now to trade is unlike learning any other thing, like golf where you can take your own sweet time and practice as much as you can.

trader must have a very steep learning curve, must catch it very fast cos life expectency is very short (unless one has unlimited capital). mentally understanding of the trading system is crucial and can save a lot of unwelcome losses and time.

coconut said...

oh one thing about the odds in gambling can actually be calculate using maths. no need to see the actual results.

but in trading where there is no fix input, output will always be an uncertainty. the only way to be sure of one odds is to base on our own trading results.

in another words, the more you trade, the more you will know your odds, provided you understood the system you are using and the valiation (make changes and the effect) you incorporate into it.

Fat88Trader said...

Yes, "Nothing can last", we need to constantly adapt to the ever changing environment and the advance in technology or be left behind, obsolete.

To succeed in trading, you definitely need to have the passion like Coconut, I think when he is sleeping, he still dream about trading.

With passion, one will put in all effort in persuing the knowledge and skill in trading. It's not an easy task, without perserverance, many fail halfway and give up, contributing to the profit of Coconut, haha.

coconut said...

yes yes yes, i think of trading everyday! sometime i just sit alone in a quiet place just to think, even if is the same thing over and over again. sometime i drove around s'pore with no destination but to think. don't try this cos its dangerous, i'm a very good driver aham.

no body can immagin the amount of time i spent thinking about trading and its related subject.

one time i remember a friend stood up and shouted at me, " stop talking about your market, market, market!", and he just walk away. haha. i was stant!

coconut said...

dreams, i had a few but i didn't wrote it here cos its so unreal. right now i can't remember them except one that i was playing jeckpot as though i was trading, and the speed and the amount keep going up and up until an old man shouted, that machines is a cheat! i woke up.

coconut said...

the first thing when i read a post, i striaght away put myself into your position. and that put me on the way to my thinking journey.

what would i do, whats wrong with me and my trading, what are the solutions...

in no time, i can come out with a pretty good idea! i can learn about trading and myself and not actually go through the negative experience myself.

and all the suggestion or critic are actually pointing directly at myself, no hard feeling.

coconut said...

and passion cannot be force, especially in trading. you either have it or you don't.

it comes so easy for me, in fact if i don't trade or think of trading, i feel so lost. i think i am still willing to lose every thing for trading.

and one thing i learn recently is don't let the pass success or failure hindle the present moment. the market has no memory, he doesn't care who you are and who you were. he only watching closely what the hell are you doing right now! i got to think like the market, i'll try.

Fat88Trader said...

My passion for trading has faded because my edge has been taken away with the advance in technology. There are too many good hunters like Coconut that I could hardly find a rabbit, instead I became a sitting duck.

I am too distracted from many things happening in my life, I am unable to focus, there is no more fire in my belly. I am no longer hungry and taking things easy as life is short.

I don't mind taking a ride from Coconut and have a spin around Singapore, that would be fun.

GNY said...

Haha, me too would be happy to be in the passenger seat so Coconut, if you don't mind sharing your thoughts aloud, you can consider bringing us along in your next car/thinking ride.

In the past, weekends and public holidays used to bore me. I would feel lost when there is no market. Now I am learning to balance work, play and rest.

KAW said...

Hey guys and gal, for the safety of all three of you, I shall offer to be the driver because I love to drive! I used to do 'adventure' drive in West M'sia, especially those that got lost and navigating my way back to main stream. Pardon me, I digressed...
Back to trading, FAT, you may have 'lost' your fire but I believe you have not lose your passion for trading: Once a trader, always a trader. Every dark cloud has a silver lining.
I come to realize that the dynamic and landscape of the market are constantly changing and evolving for the past decade when online trading were made available. "My goal on Wall Street was never to get rich but to stay in business. There's a big difference. If you're out of the business, you can never get rich. That's why you have to be especially cautious when you're trading a larger position size." - Wall Street trader.
"That which does not kill us makes us stronger" - Friedrich Nietzsche.
Hang in there, may the force be with you!

Fat88Trader said...

Coconut, you have plenty of company.

coconut said...

wow, many like minded guys. yes there were plenty of "sharks" along w m'sia roads if you know what i mean.

coconut said...

yes, i think the most important part, as long as strategy is concern, is to be able to do both ways, so that one can handle most of the situation market can throw at you.

the idea is pretty simple, immagin market as a table tennis player playing with both hands with both bats, and you are holding only one bats on your right, how to win or get even with the market? the market will always catch you wrong footed.

this is the frame work or basic structure i'm talking about, and your strategy will have to (in my opinion) build upon this frame work especially when position trading is concern.

coconut said...

sorry, borrow from fat trading examples, after you had square off your position, what did you do? nothing right?

the strategy should allow you either to re-enter your positions or reverse your position, but never to be out of it unless say you reach a cut loss or draw down point.

coconut said...

and the strategy should be largely mechanical based, you can ofcos incorporate your own descritionary trading decision into it.

but in my opinion, the higher the % of it as mechanical, the better the long term results. so i try not to be too smart most of the time.

coconut said...

but still it is damn difficult to trade mechanically all the time, even you know that it most likely will affect your long term results.

coconut said...

hows the ride so far, are you guys lost?

coconut said...

fat, just my own opinion, i think you should start developing your own trading system so that you can rely on when trading electronically.

i know speed is critical on the floor where system trading only make you more confuse, i don't think you even think of trading system before.

but i can assure you that for most active traders, they are largely system based traders, they have to.

coconut said...

ofcos unless they are those very sharp and very short term traders.

Fat88Trader said...

Yes, I agree with you, developing your own trading system is the way to go for those active traders.

KAW said...

I am still enjoying the ride so far...
As for "sharks", do you mean those that comes around Hari Raya period?

coconut said...

haha, no, there are on the road everyday!

i haven't recall i haven't met one during long trip to m'sia, so i usually will prepare "ang pow" to wear off these sharks.

coconut said...

i know, many will say we must stand up for justice! don't let these sharks frighten you off. many of our heros driving in m'sia as thought they are in s'pore.

i just think differently, i know where i'm, and i usually following their rules or should i say "ruleless" haha.

coconut said...

market place is like a vast ocean where there are no boundary, and no rules (except exchanges rules).

we might carrying our own rule book, our bible, our system, our principle but when we are in the water, we must always open our eyes, always look out for changing conditions much like changing of market rulelessness.

a robust system should covered as much, and be flexible enough to cater for all these changes. you can't cover all but thats should not be an excuess not to look into it.

at least in life, there is a border drawn where we instantly know that, ah! now we are in m'sia!

coconut said...

and right now the (stock) market is cum (haha please help me with my spelling) and orderly, it has been this way for a while.

i knew instantly i'm at home back in s'pore, i'm carrying my "bible" with me.

KAW said...

I couldn't agree with you more. As the saying goes, when in Rome, do as the Romans do.

KAW said...

Ohh, as per your request, the spelling is 'calm'...

coconut said...

thanks, this song for you (just happen i'm listening now, no special meaning except its tuesday!

coconut said...

must play more songs for fat

maybe can kick start his creation mind (again).

song was written by bob dylan a talented song writer but it is manfred mann who put it to top of the chart.

in trading terms, i'm more bob than manfred mann. a rather poor performer.

Fat88Trader said...

Wow, this is the first time I hear all these songs! thanks Coconut.

Technology is fantastic, with the help of YouTube I can now listen to so many old songs free of charge. Yum Yum trade!

coconut said...

technology, as far as quality of life is concern, we are all winners. our fore father would not know what they were missing. stop for a while and you can immagin how far and how fast we had been.

with the world at its most peaceful time in history, what more can one ask and expect.

if one do not enjoy his/her present now, when and where will that be?

Fat88Trader said...

Cococnut, recomend me 5 good stocks to look at.

coconut said...

this is risky business to recommend any stocks, i need to know first whats your intention (don't tell me you want to make money hahaha), investment? short term swing trade? arbitrate (spread) trade?

and also can your short the stocks or any stocks? (you can't short, i would probably woun't recommend any)

coconut said...

no offends fat, i think you didn't get exactly what i'm putting forward here, what i'm doing precisely.

i'll open my "book", its arbitrate (long short) trading. its a variation between spread trading and directional trade through position management.

all stocks involve must be able to long and short and they comes in pairs or triple.

but if you ask me which stocks to invest, i have no answer and i'm not doing it.

coconut said...

so in my portfolio, currently there are stocks that are long and there are stocks that are shorted.

the net position is half a million short, meaning i have a direct exposure of net short to the down side.

currently, i'm covering 12 counters of stocks, i used to have 16.

but for obvious reason, i can't reveal my stocks names.

coconut said...

oh i forgot, once in a while, i'll use index futures to hedge if it becomes neccessary.

coconut said...

and please, no more treat me like a go go (uncle and antie) trader haha.

coconut said...

the most important aspect of this strategy is that its provide me a wide degree of freedom to perform a variety of role in the market, depends on the market conditions.

market maker

scaple, yes thats right, scapling though quite unconciously.

counter trend

trend following




and many are done simultaneously and unconciously.

as far as i'm concerned, its a robust system that put one person to its limit trading manually!

coconut said...

picking cherry, which i did most of the time, though sound simple but behind it, its a complicated system if you ask me.

coconut said...

so back to the question, which 5 stocks to watch?

i'll tell you what i can offer.

i use to trade sintel, starhub and M1. they are 1 grouping. why not you start to arbitrate between them, it will be fun.

i no more trading them cos of (lack of) volatility.

coconut said...

and (so many and) make sure one can short all that stocks. if you can't short, you can't abitrate.

i use MF global (haha), not too sure other houses can provide the shorts, check them out before jumping in.

coconut said...

i had strip almost naked, i'm no more willing to strip any further haha!

coconut said...

don't misunderstand me, my strategy though design all by myself, is deffinately not unique, is just how one combine them to becomes yours.

i believe it had been widely use with different combinations.

coconut said...

to jump start, go and create a spreed sheet that calculate the spread varience between the counters becos they represent different price.

if 3 is difficult, just do 2. you need to know precisely the spread varience when all prices are moving, and where to hit or place orders.

you need to determine the mininium and maxinium position size based on capital and risk tolerent.

need a lot of practice, but be proficient in spread trading first before venturing into directional trade.

coconut said...

good luck!

coconut said...

one must prepare to average losses when the spread is widening, and make use of any narrowing to cut losses fast before reaching maximium position size.

if one cannot stomach averaging, one should not even try.

coconut said...

this one i'm very sure you heard before

how? did you move your body when listening? (haha)

sometime i just pull my wife over to dance, if she is not around, my cat.

Fat88Trader said...

Yes, this one I heard it before, but didn't know it's from the group The Archies.

For the stock market, I am just a long term Investor, getting passive income from the dividends of the stocks I am holding.

That's why I am looking into dividend yield stocks, not for speculation. Singtel is one that I am looking at, a friend just told me this afternoon that the PE is 12 and reasonable dividend yield.

coconut said...

pew! i'm glade you understand.

but trust me, you can speculate stocks as well, in fact its easier to trade stocks than futures, once i get my hands on after the crises, i can't let go.

just treat individual stock counter as individual futures counter with no expiration! given today a lot of stocks can easily go short (and ofcos long).

you never know until you do it, its your call.

PE 12? i think i can get quite a lot which is under 12, i think ? but don't ask me, i never really study them haha.

Fat88Trader said...

Yes, I agree that it's easier to trade stocks than futures because it's the professionals that are trading futures while the aunties and uncles (rabbits) are in the stock market. I will look into this area since it's difficult to squeeze blood out from the futures market at the moment.

Thanks for the reminder.

coconut said...

my opinion on traders vs investors.

i think i can never be a good investor. my best investment was a gold account i open in 2000 for only $20k (gold price was 290/oz i think) and i sold when gold hit 850/oz @%#$#. i hold that long just becos i was lazy to close it haha, others i don't even want to mention.

to me is like choosing between "fish and bear craw", can only choose one.

the decision is easy for me, fish (trading) ofcos, unless someone voluantaly stuff bear craws in my month.

coconut said...

my worst investment? 2 m'sia properties i bought in 1992 (i think), they supose to be my retirement home haha.

sold at a lost for both, luckily there were rental incomes to cover sale losses and exchange losses.

i hope i didn't miss anything haha.

coconut said...

unlike trading, my music appreciation had stuck in the 60's n 70's and some 80's. never change never advance.

they are not just brilient song writer, great performer but above all, john and paul were competing against each other when they were creating. absolute perfect combinations!