Thursday, October 25, 2012

Waiting Game


This is the account that I will start my quest for a 10% return over one year. It has remain dormant for the past few months after I quit from the trading arcade. My fast TT trading platform plus stable Internet lease line is still very very slow compared to the co-location of the Algo machines beside the Exchanges. No more calender spread trading, arbitrating and scalping, the machines have replaced these manual specialist traders.

This account bring back fond memories of my glorious days as a floor trader, it's not uncommon for floor traders to make 100% return a month as the brokers offered us up to 4 times the Exchange margin for short term trading like scalping or spreading. The machines have taken over these roles, they are so fast that sometimes I had my trade filled without even realizing it. It's time for me to move on. I have lost my edge in short term trading.

I have not put on any trade so far, training my patience, no hurry, I have got a year to do so which in the past, it would have taken me just a day for a 10% return. Now I am back to earth, learning again how to trade longer term. It won't be easy even for such a miserable return, what a joke! Where is the confidence? Where is the passion? It has faded away.

The account is mostly in Sing dollar, thus trading other currency contracts would incur interest on margin holding them. The most appropriate contract would then be the Simsci which is in Sing dollar. At the price of 3470 currently trading, one Simsci nominal contract value would be S$69,400 giving me some leverage over the roughly S$45,000 capital base.

It's unfortunate that the Simsci options contract failed to take off, or else it would be good to write the call option to get some passive income hedging against a long position.

34 comments:

Anonymous said...

10% p.a. on S$44,000 ? That's only S$4k+ a year. You don't need a year, may be 1-2 months or slightly longer.

Other Afact commitee members cannot help you ? So many superstar millionaire traders. Can't be all of them are scalpers.

Indeed, it is my belief that it is a dog-eat-dog world. No one will teach you how to make money. Everyone is left to your own devices to fan for themselves.


Change and adaptation are always painful.

Fat88Trader said...

I am looking at a different angle of return using a small account, not as a full time trader. I don't trade for a living now, in semi retirement, taking life easy and catch up with my friends for coffee and dinner more often. Trading need time, focus and concentration.

Who will teach you how to make money? Who is so sure they can make money all the time?

I am happy with a 10% return for a non active account, better than 80% of the Fund Managers and Unit Trust that losses money.

Fat88Trader said...

I welcome ideas on how to achieve this 10% return on this capital. It can then be duplicated on a $1 or $5 million account.

Bala C said...

Not sure what to say...you are really re-starting...My best wishes :)

coconut said...

ya, misalable month for me too. i leave my position open while busy on other things, now i had to cut even deeper losses.

market suppose to be consolidating but those shorts i have keep going up without retracement, god dammit. i had given up the gains i made for the last 2 months.

every time you have a good run it always end up in frastration. this cycle of repeatition seems unavoidable.

coconut said...

but as long as i'm willing to take the losses, i'll still be in the game.

and fat, you know what? i had always wanted to tell you this but i worry you will get offended. this is a good timing to do so.

you can't trade not becos you don't know how, its becos you are afraid to lose, plain and simple.

coconut said...

i hope i didn't go too far haha, it is not personal, and there is nothing wrong to be afraid. in life, i have lots of afraid too.

and if one is afraid of doing certain thing, the best is not to do it until one can conquar his fear, other wise, things will only getting worst.

coconut said...

can you trade a 50k account the same way you trade 5 million account?

absolutely not, never, ever.

unless that 5 million is not belongs to you haha.

for one, 50k account one is force to use lots of leverage while 5 mil you don't.

secound, 50k you can't really deploy to many or mulitple strategy as compare to 5 mil, where you can spread your risk wide open rather than concerntrated making risk management a lot more easier.

Fat88Trader said...
This comment has been removed by the author.
Fat88Trader said...

Actually it's wait for market correction. You are right, coconut, managing 50K and 5 million is a vast difference. I have a friend who consistently make 10% to 40% return every year on such a big account that he manages for his family members and close friends. He took a very conservative approach.
Only one word to describe him, GOOD.

coconut said...

oh no, thats not what i expect to hear from you haha.

i deliberately talk hard expecting you to throw some punches, sometime i really need to be punch, can't expect to do it on myself.

i believe your achievement, i feel i can do it but always i take too much risk, especially when i'm in a run. i just can't help it.

Fat88Trader said...

You are speaking the truth, Coconut, this is what I want to hear, "I am afraid to lose". No doubt about it, my mind has been tuned for the past 25 years to win, apart from the 1st year, I have never lose a single year as a floor trader, in fact only 1 losing month in 19 years. It's an achievement that I am proud of.

As an electronic trader, there are years whereby I am flat or make a little. As the Algos come into full force, short term scalpers like us find it very tough to compete without the edge. The cost of trading went up, Arcade fees, Exchange fees, Data feed fees, Trading platform fees and after working so hard, our earnings goes to these fees and comm. I find that it's not worth my time anymore. I have to find new longer term strategies, cut down all these cost and meanwhile wait for opportunities.

I am enjoying my life now by casting my pride aside and letting go, trade as and when I feel like tading without the pressure. Sold some of my assets and wait for the market to correct.

coconut said...

thats algo right here, giving my reply before you even posted your comment haha.

10 to 40% thats over a million a year.

i did it in 09/10 but give a big junck back to the market in 11. my hands are still shaking when i think of it.

now i'm trading much smaller, i think i can't handle such big money going in and out, its my own money and no one else you know.

coconut said...

its regretable that you feel you work so hard, very much like thoes days when i had to go to work everyday.

if i had this feeling, i definately won't trade anymore, i quit instantly even i can still make some money. in fact i rather work than trading cos its guarantee winning.

no, no, its definately not work, never.

Fat88Trader said...

As we age, our perception of life change, we become more risk adverse. I am not quiting as yet, the passion in trading is still there, just taking things easy at the moment and plan to do more travelling next year.

KAW said...

FAT, the force will be with you!

coconut said...

how "constras" life can be. we constantly have to "fight" against the nature forces at work.

when we were green, we got eat up. when we grow and mature and time to eat, we becomes afraid to eat.

did we forgotten that being eaten is how we grown up? what so bad about being eaten up?

i'm not pointing at anyone, i'm asking myself the same question.

coconut said...

remember the friend who shouted "stop talking about your market" and walk out? haha, he is actually a funny guy, as with most of my friend.

while i always talk about "market", his motor is always "comfort". he feels that we do what we did is becos thats a "comfort" place to be. we will always stay in that comfort zone. he is not that far of.

but my arguement to him is, if that is what we do in the market place, not necessary trading, we will be in trouble very soon.

if you want a comfort and easy peaceful life, market place is not where you want to be.

coconut said...

on the contrary, if one is talking about trading in its extreme, the trader is not only not looking for comfort, he is looking into things that is on the extreme end on the opposite side of the scale of comfort.

as far as i'm concern, the more i engage in that extreme discomfort, the better result is my trading.

p.s. i use the word extreme cos i'm not a rule abiding guy haha.

coconut said...

the forgotten one hit wonder

http://www.youtube.com/watch?v=cG6a4X2SVxE

if you can't let go, you can't be free.

and if you are not free, you can't make money trading.

coconut said...

i'm not referring to girls or any person, believe it or not, i'm talking about money.

and i like to change from "
and if you are not free, you can't make money trading" to "and if you are not free, its difficult to make money trading".

coconut said...

i never worry about parking fines, never worry about electrical appliance break down immediately after i buy, i never care about what warranty, for how long. i never care about what discount out there, i don't have time to worry about all these stupid things!

but i do have one in my family who really care. its hard to immagine that we can get along so well haha.

coconut said...

i know how people view money, i can see in their eyes and their actions. its like a peace of flash on their body, and they will do anything for just that little bit.

but i also learn that if i'm not careful or careless or try to be generous, my money will disappear pretty fast. it is what it is, i don't blame others for being greedy.

as far as money and as long as i'm still trading, ,money only means one thing to me, and thats is tools or baits or what ever you want to call it, to exchange for more money, through trading and not ends up on the dinner table.

so yes, money brings freedom to trading too as in life but not the same ways people think it is.

in life, money brings happiess but in trading, money means more baits and tools and should stop right there.




coconut said...

and for those people who had work hard in their life to be comfortable where every cents count, how on earth are they going to trade for a living? i don't know!

coconut said...

and for those people who had work hard in their lives to be comfortable where every cents count, how on earth are they going to make a living trading, i don't bloody know!

Fat88Trader said...

Nice song, at least I heard this one before, but such a long time ago, how time flies.

One thing for sure is that I believe all traders are working very hard to succeed in trading, but unfortunately the reality is cruel, in order to make money, they have to take from other traders.

coconut said...

you mean you never re-visit all these songs you heard before?

in trading, i know very well we need to change our system and mind set to adopt the situation, in fact i did it almost too fast.

but in life, i hate changes, i miss the pass, i really enjoy it. we have a man in the house that never grown up haha. even my teenage daughter is taking care of me,

"when are you going to see the dentist? forget it, you are coming with me this time!"

coconut said...

in the fore front of science (quantum mechanic), they are now questioning the "reality" of being and existing.

just look at our so call normal lives, its that normal? do we ever question about it?

just take a look on the road, the weak (driver) are being protected by the law and regulations, thats right! in a "real world", if you hog the road, you will be crash into pieces, right? why don't everyone keep to the left anymore?

there are millions of example but i'm not going to waste time doing it. its endless.

reality in life and the reality in market place is totally totally different.

coconut said...

we are tune to working hard right from the begining, is it correct?
its depends,

if you work hard in the wrong direction, at the wring place, at the wrong time, in a wrong enviroment, using the wrong methods, having the wrong mindset is only going to destroy you faster.

it is nothing more true in the market place.

Fat88Trader said...

I didn't revisit those old songs because I don't even know their title, anyway I listen to mostly Mandarin songs in my younger days.

The reality in the market place is merciless and the only place in this world where working hard might lead you to nowhere for the majority of the traders.

Who are the real winners in this game? Exchanges? Brokers? or Service Providers? Go to their books and see how much they make per annum. Where their revenue came from in this zero sum game? Where they get the money to pay their multi million dollar CEO and staffs? From traders like us though I am fortunate to be in the 10% that make it.

I understood this when I was still in the securities department of the bank where 199 clients out of 200 in my hand lost their pants!

coconut said...

yes i understood it but i can't share your "dissatisfaction". we can always joint them or invest in them if we want to.

the logic is the same as you walk into a casino where your starting edge is below 50% (highest i guess would be 45/46%?).

if you keep on trading using this edge you are guarantee to lose the more you trade.

you somehow have to change this edge to above 50%, my guess is between 51-55%) and trade consistently, you will come out winner the more you trade, is that simple maths.

oh come on, let them (the operator and the brokers) make their money, if we can't make ours, joint them haha.

Fat88Trader said...

Yes the operator and brokers need to make their money, no doubt about it, but the Exchanges should be more transparent in their comm structure and incentives offered to all traders and also provide fair trading platform to all.

What I am trying to highlight to most of these new traders (mostly losers) is the cost of trading, be aware and conscious about it so as to keep it low unless they can make money by trading high volume. Or else, they will be digging their own grave.

coconut said...

thats not possible, would i agree to accept the same comm as the low volume trader, absolutely not.

when you were at the floor, would you accept a $50 per round turn for a single contract? just like we do?

these institution are trading thousands time more, they are the real market maker, without them, the whole market will dry up!

i think traders should look for an edge in trading first, get a good trading system, get confident and show himself at least he can survive in this market, should he than look for ways to cut cost.

no point wasting time looking for bargans and at the end, it is our own trading that causes our downfall.

i'm not too sure thought this is what i think. i might be a big sucker that these operator and brokers are taking advantage of but i don't really care, i feel it is a price i have to pay to play the game.

coconut said...

and frankly, i think in todays market, the retail trader are in a much better position.

what $50?, we are paying much lesser now, we have all the advance trading platform with 1 clik executions. all comms are dropping like stone. it is the institutions that are having a hard time, i'm afraid many of them are going to wind up. investment banking are also under fire.

its the rise of the retail market, every body gonna do their own trading/investing, we are going to have a good time haha.