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Saturday, November 24, 2012

Blindfolded

I have so many comments on my previous post thanks to Coconut and others who shared their thoughts and experiences, of course, I am still trying to figure out what make him tick with such confidence in his trading. Yes, look at the rear mirror, always be cautious of what's behind you and side mirror too, for the blind spot, be prepared just in case.

So, I would like to share further on this topic, looking at the rear mirror after an accident.

The father of my son's classmate is a private banker with a foreign bank. At one of the function, I had a chance to chat with this very successful banker. That was sometime in 2009 after the Lehman crisis where the whole world stock market crashed, very gloomy everywhere and possible collapse of the world financial system. Of course, I dare not tell him it's all because of some greedy bankers.

He told me the crisis whack many of his clients, many lost up to 90% of their capital, from $10 million worth to just $1 million, and all these clients are knowledgeable and smart, obviously or else they won't be so rich.

One of the reason why they lost so much money is because they are too smart, using a very simple investment strategy, by just following what our best fund managers in the two biggest sovereign wealth funds here are doing. How wrong can the best fund managers in the industry be? It's easy to make money, no brainer. They blindfolded themselves and drive along.

So they bought into the 2 biggest, best well managed Banks in the World, Citibank and Merrill Lynch with decades of enviable track record. Any objection at that time before Lehman crisis? These are among the best stocks you can have in your investment portfolio, safe and sound. They loaded up on these 2 stocks by following big brothers.

When there was a cash call in the mist of the Lehman crisis, they followed too by borrowing more from the bank to leverage, no choice or else they would be diluted. They forgotten all about risk and money management. These 2 banks are too big to fail, the US government will bail them out, but the question is when? The crisis deepened and the share prices tank with short sellers taking advantage and those who are long on margin, forced to cut their positions.

The rest is history.

Don't drive blindfolded.

At this point, I would like to introduce www.robertchuablog.com, written by a fellow floor trader, a very consistent trader who taught me about market correlationship when I went back to the arcade in 2008. He was magnanimous in willing to share that strategy at a time when I was lost in the wilderness. It was a very simple strategy but somehow or rather, it was a spark that brighten me up with confidence for the next few years. Though it doesn't work all the time now because the HFTs would be right in front of us with their speed, I am grateful to him for giving me that little lift.

He can express pretty well and do follow his journey in Forex trading.

131 comments:

Singapore Man Of Leisure said...

Fat,

Thanks for the story on the "too smart" wealthy clients of the private banker.

It's humbling and good reminder that riding on the coat-tails of others appears to be "free"; it could be most costly!

And thanks for the link to Robert Chua's blog. I prefer reading from REAL professional traders like you and coconut.

Now I have a 3rd perspective viewpoint :)

coconut said...

please don't mistaken i am successful and wealthy, i'm not, just manage to feed my family with a roof and a little spare. like many s'porean, an average guy or may be just a little better with no retirement worry (i'd long since retired haha)

coconut said...

ok, no hidding, just my frank opinion on what i do with confident.

1, inteligent and 2, fun.

please don't tell me inteligent is not important, i'm not stupid haha. this is a sensitive subject i know, it is either you do or you don't, no other way.

fun is something personal, more of a character of a person, if its no fun (like working 9 to 5), i would have stop trading long ago.

coconut said...

something is missing here right? where is your (my) hard work? everybody knows to be successful you need hard word, extremely hard work and i agreed.

thats why i never use successful to describe myself, i'm lazy as hell, especially things that i don't like to do. even a simple tusk to negotiate a lower comms with my brokers take months or years.

relatively speaking, with what i got, i'm more than a failure. if i'm a hard worker with money sense and no handicap with interaction, i would be somebody more successful.

the only hard work if you want to call it is i think a lot, always looking for a shorter and easier way to trade and to live.

Fat88Trader said...

I think trading everyday is consider as working hard, it's your job and you get to enjoy it, that's the difference. You treat it as a challenge and get satisfaction out of it, I am sure 90% of the traders envy what you are doing! That includes me, hahaha.

coconut said...

fear is what makes a loser a loser (like my fear of interaction).

greed is what make a successful guy a loser.

if you are able to make money day in and day out with a simple idea, why not double it up and make double?

its so human nature, nobody to blame, i too are like that and that is why i lost big time last year.

will it happen again? definately, will i do it again, may be but less possibility than before.

coconut said...

yes, i can sit here for hours after hours looking at price movement but i try to limit to s'pore trading hours since i'm trading stocks now. but my cnbc never stop broadcast even over night while i sleep, really!

the most enjoying part in my trading, since i'm a position trader now, is the orders been hit! the more the merrier, its a bit like selling your goods if you are a salesman.

and ofcos now that i can scream through the internet with my thoughts, its fun too. what i wrote is what you get, nothing more nothing less, no other motives what so ever, just a "scream".

coconut said...

fat, i really agreed with the guy you mentioned about market correlationship (if i'm not mistaken what he mean)

in fact, its the basic structure or building blocks to my entire trading system and i believe, the universe as well.

i call it "relativity" (i don't read many trading books but i read a lot on cosmology haha) and it is a big big word for me and my trading.

the 2 big words for me are flexibility and relativity.

coconut said...

and relative not just means the different or spread between 2 or more object but most important the changes (distant movement of the gap between the objects).

in generally, the further the 2 object, the less influence they have with each other, the closer they are the more influence but nontheless, they all influence each other and interwine.

all these can be identify through price movement and charts to determine and make assumption to their relationship, remember, assumption and not believes cos it changes all the time.

Fat88Trader said...

Yes, you are right!

coconut said...

http://robertchuablog.com/make-more-money-from-trading-smaller/

i agree! only, and i think the guy on the video said so, if we have a winning trading method.

if i had a winning edge of just 50.5% (assume only) after all cost based on minimum trading size, i'll trade a million times over if possible and that will bring my edge (of 50.5%) up exponatially!

the key words is number, lots of numbers and to be more safely up the number is to reduce the position size and trade more.

ofcos it is not so simple as there are other consideration too especially on knowing where is our positions and spread boundary in relation to our equity and risk exposure.

coconut said...

so having that extreme example, one has to find the optimium point (position size not too big not too small) to gives you the best results and still can sleep quiet well after considering the risk you are holding through open positions (usually these can be quiet nutral if you hedge or even unhedge under normal condition), the comms, the profit, the market condition, your speed of execution and monitoring....

the more you can up your edge (yes you can change them through trading activities), the better your results be consistant.

you have to have a very high confident that your trading edge is above 50%, otherwise, the more you trade, the more down side there is.

coconut said...

and that is why i'm so excited about the number of order hits.

i have confident my edge is above 50%, no real proof, just confident, 51%? 52, 53, 54, 55, 56, 57% i don't know, but if i up my trading volume based on what i think the optimum size is, i know my edge will go up as well.

coconut said...

bare in mind that the % above are just assumption based on win/loss ratio of 1 to 1. in actual trading, unless you so design it, can never be fix.

in my case of win/loss ration, becos i employed both counter trend and trend following, the win/loss ratio is never fix, it range from positive to negatives but most of the time, i let the market decide where is the "optimum" ratio or should i say, the ratio will only be know after each individual trades depends on which trade you offset with.

Fat88Trader said...

I am too used to having an edge of 70% and above and now we have the human Algos like Coconut who is willing to take a bet even if he has a 0.5% edge, no wonder scalpers find it so difficult to make money, it's just too competitive.

Maybe I should just go scalp the stock market, hahaha. Just joking, there is no more meat left for the short term traders.

coconut said...

haha, when i first blog i actually use HFT for myself cos i didn't know what it refer to haha, now i know.

0.5% is too low, just for illustration, it has to be higher or else not worth the effort.

there is no way to determine the exact edge (or ratio) cos there is no cross reference to each trade and their quantity could be different, may be there is but i just see the equity movement (up and down) and the number of trades to guage and i have a very rough idea.

still think of scalping haha, i don't quite get the meaning of "no more meat left", if the market moves, there will be meat what? isn't it not even for the short term traders? if the market don't move, my position stay as it is, no harm done.? i only worry the market moves too fast for me to react.

but i do have some trades that you call scretch trade where you enter and exit the same price level (or very close to), they are all neccessary trades usually happen during a wile swing price movement in an attempt to hedge or unhedge.

but as long as you think you have a slight edge, all you have to work out is the numbers (just like the casinos), 70% is just too high and unachievable in electronic trading. no way!


coconut said...

listen everybody! (haha)

casino has an edge becos they fix the rules, the more you "trade" with them, the more they win! as their edge went up with numbers.

same principle applies to trading, you fix your rules and if it has an edge, the more you trade, the more chances you will win as your edge go up.

you have to gain the edge and not the ratio or % of win for each trade.

coconut said...

its fun to read your friend blog, i think he is a little crazy like me haha, every thing also must write down.

Fat88Trader said...

Great that you enjoyed what he wrote, you guys are not crazy, good for the record.

coconut said...

what not crazy? he say he is sorry cos he forgot to post a trade in advance after he took it haha.

like as though he owe us everything, kind of like me hahaha.

coconut said...

everyone has a problem, my problem pertaining to trading is consistency, and i always like to try new things, new ways even though i have a pretty good trading system.

and that cause a lot of problem in my trading at the present moment especially i'm more towards machanical trading, in fact very machanical.

this is not a new problem, a problem since i'm born, not just trading, everything i like to do like snooker too.

the urge is far too great for me to resist, if i were to continue to pursure my table tennis or snooker, i would have been a far better player but i choose to quit at the high.

it happen in trading too, ofcos not quiting but every now and then i like to change the way of doing it. i like to tweek with my system to see if its work better. i just can't stay as it is.

ofcos with every mistake with my tweeking with the system, i learn or resist not to do it but its very hard on me.

its not a phycology problem i know, its born within, i just like to maddle things around even if they work perfactly.

coconut said...

i'm not quitting, i'm just wondering is it a inherited something something within trading itself or is it partly me partly trading.

i hear many times in trading communitee "we must change to adapt or face being kick out", but if its work, why change?

if you don't change, how would we know can we do a better job or not? (like if i don't trade stocks during the crash, i wouldn't have come to know of shorting stocks is possible)

both are correct and both are wrong also, what should i do to be sure i'm on the right side?

coconut said...

up until now i'm sticking to my system , may be 90, 95% of the time.

hey don't blame me for not taking the other 5,10% of the signals, sometime, with guts feel and the market movement, you just simply know that the market is going to move in a certain direction and why not wait for a better fill?

it just 10% only and usually no harm done haha.

coconut said...

i still feel sorry for fat that i write on his blog as though its mine.

a few had ask me to write my own blog but i'm afraid to do so, really!

i'm afraid to be lonely where no one is reading it, then i becomes a madman. i know, its a phycology problem.

here, at least i feel that if nobody bother to read, its not my fault, its fat's fault.

coconut said...

look, its not childish, it has to do with me.

ask a childhood friend of mine (who is now living in shanghai) and he will tell you "this bloody coconut practically invaded my room, no, he own my room and perhaps my house too" (haha).

Fat88Trader said...

Hahaha, nobody bother to read it's my fault? Cannot agree more with you, probably I have written badly. It's ok, I am reading your post and I enjoyed chatting with you.

Writing need inspiration, I have lost it after suffering some emotional upheaval recently. Still trying to get over it, sleep over it and forget it. Let go, that's what I am doing now.

coconut said...

you know i'm just kidding, to justify what i'm doing.

like i punch someone and he bleeds but to feel better myself, i will say "hey sorry man, but why you react so slow!" like as though it is his fault.


coconut said...

i know its difficult to make money trading, depends on many factor of that individual but as far as trading system/method is concerned, is it difficult to draw it out based on certain understanding or believes?

trust me, all the methods there is are all available and widely used, there are many very smart people who are currently using and trading them, especially the big institutions.

i'm not afraid of them as you rightly said, they are too greedy and use too much leverage probably due to they are not trading their own money or only partially.

so what is the understanding and believes?

in a nut shell, you have to be able to do what the market does, at least most of the time, to cover as much as you could and not what you can do.

when the market is ranging, you have to (try) have a system to capture it, when its trending you have to (try) capture it as well. in another words, you have to be able to perform in both market condition and any other unforeseen surprises, no heshitation (most of the time)

you can't profit both at the same time cos they are the opposite and not compatable but when you draw the best and the worst out of it, the result can be net gain.

ofcos unless you don't believes both method can work.

and you know what, after you had done this basic strcuture, what follows are simply to add new things onto it which ever you think more benefitial, you evolve from that system and you can easily change it to suit current market condition without major changes to the basic structure.

this basic structure i know will stay throughout my trading lives.


coconut said...

i know many people are curious to know what numbers are we talking about, you say you trade for a living, so whats the number? whats the return?

currently i trade (stocks) a lot smaller then before, cutting my position size less then half and my net open positions (net exposure) is even smaller (i used to have a larger long position).

i'm not trying to boost but gives a rough guide line as to a 300+k margin accounts, how would the returns be. compare to others. remember this account is for margin only and i used it almost to the max, i have other accounts where currently not active.

since i re-start my trading in april, the total profit (equity is at the highest point now) is around 90,000. that works out to be around 10k/month, its not a great number but thats how it is currently. (i had a 18k lost in october which should be able to avoid it)

usually when i trade i really don't look at that equity number display going up and down in real time, i don't care, i know where it should be. i just focus on my trades.

i'm contented with my current trading even though my profit is smaller but i wanted to keep my funds dry for unexpected event, you never know when its going to come.

coconut said...

one thing do note for those who not sure about margin in CFD, they are around 10-15%, slighly higher than futures accounts.

coconut said...

so fat you were right, just that small little edge i got and i have to trade like mad to get what i want.

is like gold mind, dick 1 ton of earth just to get 0.1 gram of gold, very "tough".

but what i gain is consistency, more important then the P/L.

coconut said...

in another words, i can manage my equity flucuation much better and keep it to the minimum then the days when i have a larger position size.

Fat88Trader said...

Just continue with your winning formula, consistency is more important, in the end it's still the bottom line that counts.

What you are doing takes a lot of hardwork, how I wish I have a brother like you, just open my pocket and the money keep flowing in, minimal risk.

My friend was so happy that you commented on his post, now you have another alternative, hahaha.

coconut said...

oh, i woundn't be surprise if my broker earns more than me if i take into consideration the financing and stock borrowing cost, although i don't think so.

Fat88Trader said...

He might not be making more than you, but it's sort of easy money while you undertake all the risk and hardwork. Anyway he is your brother, so it's ok.

coconut said...

don't "celebrate" too soon haha, i had been quite discipline, almost like an "algo" machine comes to executions haha. almost never look at the current price when i entered, i feel quiet dumb sometimes.

wait til i think i'm smart again then thing will start to be different, most likely will get worst.

coconut said...

no you mistaken, i refer to my broker not my brother.

now most of my trading is done in my CFD account, not my cash account (whom my brother is my remiser haha), now he got to eat bread for lunch.

coconut said...

but if one think that i'm very happy, you are wrong.

ofcos i'm not sad or frastrated or something, as mentioned, everyone has weakness and my weakness is exactly what i needed most, consistency.

as someone had mentioned correctly, trade small and only increase your position size relatively (again this word) to your equity size, not double up blindly.

i say the number out loud so that i can keep on doing what i did, "do not fail me this time" as i mumbering to myself, its not easy my friend.

Fat88Trader said...

Certainly it's not easy, nothing is unless you are born with a golden spoon. Looking for consistency in trading is not a weakness, it's tough as we are all humans and make mistakes.

You lost money last year, what are the reasons? With your discipline in cutting, I guess your loss is not big and probably able to recover it this year. I think most of your losses are in comm.

coconut said...

after reading robert chua's blog about risking 2% on each trade which make sense if you are not a "HFT" trader, i'm contemplating whats the risk i'm taking on each of my trades based on minimum position size?

the answer is 0.07%!!! (based on margin account not total amount i have), ofcos, i use a spread that is the norm which largely signals are generated.

thats how small it is and i still think its a little too big haha (just kidding).

that also allows me to average losses without fear as long as the market is cum. if not, i still can hedge it, no problem.

if my system wants me to trade a hundred times over in a day, i will do it with many thanks.

trade small my friend, until you have no feel in each individual trade.

coconut said...

haha reminds me of the comms again. the losses was 600k measure of the top!

under current trading, it will take years and years to recover!

but don't feel bad for me, i did make a lot from 08/09 crash.

Fat88Trader said...

With your ideas and strategies, I think you should get a software guy to write the programme for you, let the machines trade for you. You are a mini human Algo.

May I ask you, what's your targeted return on your capital?

Fat88Trader said...

600k is a pretty huge sum to lose, plus the time and effort, probably you can afford because you made big in 08/09, that's definitely not for me, no way and imagine to take years to recover under current condition.

coconut said...

in 09/09/10, i was thinking like 25-30%? that will make me a multi-m in a few years and that is what i told my wife we were heading haha (knn).

now, no target, not yet i guess. or never will be i don't know.

i got to get back my trading first, having a target actually heart me more, i try not to think of it, really.

with my worksheet i still can handle, don't really trust computers and can be very dangerous when system breaks down. after all it more fun to do it manually especially when you think you know something new. the worst thing is to shut my brain down haha.

coconut said...

you know ah fat, i had been active trading stocks for what 3/4 years now, and i can tell you 90% are institution traders. many are doing what i did or i'm doing what they do.

the only different is mine is in tens and their's is in hundreds or thousands, but i can feel that we are swimming in the same pool using the same stroke (method), its not new.

there is no phycology involve, plain system trading, the only one that are emotional are the retail traders.

coconut said...

my mistake, i'm saying 90% in volume/amount term are institutional trades, not the number of traders.

come, come to the pool and you will find, in rather short period of time, that you are at home (same old place).

KAW said...

Wow coconut...it would be nice if we can compile your sharing from all the posts, it will be a good trading book!

rbt said...

Wah Fatkor you make me shy lah. I have to say that you are the one who catch on fast. I keep telling the rest that you auto pilot after 1day :) nia. Also not forgetting you helped sponsor me when I started off as a 'local'. That cannot thanks you enough.

coconut said...

trading book KAW, are you kidding? with so many dirty words in it? mind you i had censor a lot on my side already haha.

ya, right from the begining, i knew fat is a very helpful person.

coconut said...

ok, this post for you KAW, kind of conclusion about trading or my learning about my trading.

the different between the man and the boys (farmer).

first look at my trading record this year, assuming its true, looking from an experience trader point of view, what's so special?

its really nothing! mind you again that its a 300k account and i fully utilise the margin, maybe half for open position and half for entry for new positions. do the maths and you will know that to double the account size in a year is not uncommon in professional trading. i'm far from it.

i'm just a farmer (the boy) going about farming and manage just to survive, my bread and butter.

coconut said...

the man!

when i first saw fat posting his little small account (i think was about 30k) and his performance every single day, i say to myself, what? a professional trader?

but from the way he speaks i knew he knew a lot but why so small?

and times go by, little by little his account go up, nothing special, enough to drink a cup of coffee.

and 1 fine ordinary day, something extraordinary happen, something happen and the future drop by 10 big point, the one lot trader suddently was trying to place an order 20/30 lots in one go and only managed to get like 12 or 15 lots, he almost double his money and he is still feeling soar.

after that incident, my respect double as well. and this is really what differeniate between the man from the boys.

regardless of how big one is trading, the ability to see the opportunity and most of all, have the guts to step up and go for the kill, thats professional trading.

Fat88Trader said...

Well that's history.

Basically I traded a few accounts and just an ordinary trader, nothing compared to some of the big boys.

There are many young traders now employed by Prop firms and these are the future stars while mine has faded.

May I ask you how much % you have return so far this year?

coconut said...

based on margin account, 25%!

based on my, how should i put it? liquid asset? er less then 4% haha.

and 4% is really the real figure that i'm accounted for actual performance! not 25% cos the rest of the money is just idealling around.

if i put it in the stock market, i can have better returns for doing nothing.

coconut said...

sorry sorry too fast, based on margin is 35%

coconut said...

i restart my account by putting 150, then i realise not enough, i add another 100 in the process, thats 250k as base.

so the based figure is 250 not 350.

coconut said...

and to my dear friend SMOL,

if 2 margin account by 2 traders who can double their accounts, one with 5k and the other is 500k, using the same leverage within the same time frame, they are both either a fool or a good trader.

Fat88Trader said...

Well 35% return, that's good for a trader with a base of 250k, probably would have made more if not the comm.

So, how much is your comm so far? It must be a huge amount from the volume you trade.

The mentality of the same trader would be different if given 5k, 500k or 5 million. It's easy to double 5k but it gets tougher when it come to 500k and almost impossible if it is 5 million.

So based on your liquid asset idling around, your overall performance comes down to around 4% which is not fantastic, probably underperforming.

This money should go to bonds for better yield.

coconut said...

well, its below 0.1% currently, only after they volentarily reduced it for me haha. remember its DMA which equalabrium to shares trading.

its a very huge amount, i couldn't bring myself to see the total amount, fortunately their statement does not show me the total lumb sum.

based on a 500k trading day it will be close to $400, that makes it almost the same amount as my return currently.

which bonds, corporate? please advise and whats the yield?

KAW said...

Hi coconut, there is always a possibility of another higher mountain in the horizon...actually this business is not about the big winners, its about the survival of the fittest

KAW said...

There is a saying: "There are bold traders and there are old traders, but very unlikely there will be an old and bold traders..."

coconut said...

ya lor, my view is block by all these high mountains, quite anoing haha.

KAW said...

Johnnie Walker would says: keep walking, cheers! :)

GNY said...

Don't worry. The market is always there for the taking, as long as we first manage the risk. It's the long term survival that matters.

coconut said...

fat! the other day we were talking about buying singtel for investing and i went to buy 40lots at average of 3.14 with my cash account(it came down to as low as 3.11). i was planning to buy more.

now its 3.28, what should i do? when i bought i wasn't thinking of selling them but now sitting on a few thousand profit, my trading instinct is to sell them right now right here which i just did.

(with this profit i can use it to offset some of my losses in those short positions for today.)

that is as good as i can get when i invest, in this case not even a week.

Singapore Man Of Leisure said...

coconut,

You really are different. Or maybe I've not managed to overcome by psychological barrier yet.

With a $5,000 futures account, I can take greater risks by swinging for the fences to take a American baseball analogy.

I don't think I have the psychological and mental strength to trade the same way if I had a $500,000 futures account... I'll steal 1 base at a time?

Most probably I will move $450,000 into my equities margin account and use max 2 to 1 leverage; and leave $50,000 in the futures account using 10 to 1 leverage.

My survival instinct is stronger than to become the alpha male?

Fat88Trader said...

Yes, that's a good move to put 450k in equities.

I too bought 10 lots of Singtel at $3.14 on Monday and placed to buy 10 lots every cent down, unfortunately only managed to get 10 lots and the market started moving up.

coconut said...

haha SMOL, wake up already? read this one,

http://robertchuablog.com/how-much-funds-you-should-put-with-a-broker/

all i conclude is that you are no good in numbers and psychologically it create havor in you.

coconut said...

haha fat you you you!!!

coconut said...

i though you were waiting for better fill???

#%&$#@$ haha

coconut said...

really must be more careful when i read especially come from fat!

begining of the year i was holding 150 lots (if i'm not mistaken) of singtel and some others like SPH and SMRT (250 lots?), then i sold them out, reason, i'm starting my active trading again.

so no regrets.

Fat88Trader said...

If you have hold those stocks until now, would you have made more money? Plus the dividends?

Yes I was waiting for better fill, that's why I got only 10 lots of Singtel, what a mistake!

coconut said...

no, my holding period was just 2 or 3 months, i think i got only i time dividend but i really forgotten.

let me see, singet at 3.0x, SPH at 3.8x or 3.9x, SMRT wow this one i know i lost, 1.7x.

overall i think i get nothing. i can just forget about investing and focus on trading for now.

coconut said...

oh by the way, these shares was using my cash account and the comms was a bomb! like few thousands or something. this is the real killer.

Fat88Trader said...

Because you still have plenty of cash idling, so should put some effort into investing, less stressful, less comm.

Many of the stocks I am holding are more than 10 years, never get out at the high nor add on even in the Lehman crisis, feel that I have neglected this part of the investment. My mind just can't multi-task while trading short term in the futures, this is part of my failure.

coconut said...

well i agree fully, as far as investing is concern, i'm just as bad as the guy on the street. and that is why i'm so freker minded almost like a lost sheep.

after "regain" my confident and work out the numbers, i decided not to invest in a big way, just forcus on my trading, doing what i do best.

the idle cash, someday, somewhere i knew they will be very useful again.

GNY said...

Hi coconut, may I ask what instrument are you using to hedge against your stock positions?

Fat88Trader said...

Cash is King but unfortunately it also depreciate damn bloody fast.

coconut said...

GNY, stocks using (DMA) CFD account.

actually all my current stocks position, long and short are in the CFD account.

i use short position to hedge against the long and the long against the short, i also trade around these positions.


Singapore Man Of Leisure said...

coconut,

In warfare, it's always good to have reserves.

Useful for exploiting a weakness in the enemy for attack and/or living to fight another day for defense!

Hey! You the one who say don't mix trading and investing...

I am having the same transition pains too. For me it's the reverse.

I am adjusting from my 6-18 months equity time frame to the future's 1 to 3 months time frame.

coconut said...

SMOL, did i say i'm good at what i say hahaha.

coconut said...

see what happen to my singtel, twice this year already, oh my poor singtel!

coconut said...

didn't you earn a free trip to shanghai?

i can't even go to sentosa.

but look at fat, he had a free very wild roller coster ride during 08/09! must be quite "enjoying".

coconut said...

ok lets be serious here,

in trading, you don't want to have emotion attached to your position and able to jump in or out.

in investing, (is not that i'm good at it), you must love what you buy as though you want to keep them permenently.

how to mix?

GNY said...

Ahh I see, thanks for enlightening! I too am using CFD DMA.

Fat88Trader said...

Is the comm cheaper by using CFD DMA?

coconut said...

some houses can go as low as 0.1 to 0.15. others around 0.2 or higher, you can get better rate if you trade larger quantity.

its margin account so there is financing and stock borrowing cost and some other cost as well but they all differ from houses to houses.

so far the best is IG market.

Fat88Trader said...

Thanks, no margin financing for me or stock borrowing, just do futures and much cheaper comm.

Fat88Trader said...

Sold the 10 Singtel at $3.28, following the trading instinct of Mr. Coconut. This is one of the shortest holding of my stock.

Fat88Trader said...

Please do share more of your trading instinct here when you buy stocks.

coconut said...

ok let go short from here, i'm in 5 lots at 3.28, 5 waiting at 3.29!



coconut said...

oh i forgot! you can't short!

coconut said...

you you you!

Fat88Trader said...

Yes I can't short Singtel except Simsci which I have already shorted.

coconut said...

by the way, today the trading volume is very high and the general market is very strong, even though i did put out shorts but i keep my spread/ hedge tide, meaning will cover my shorts faster given a slight chance.

its not the time to be hero.

coconut said...

and toward the end and at the market closing, there will be much movement and hopfully they swing wildly, it is also my best chance to recover some "damage" or yum some trade.

i need full concerntration from now on!

coconut said...

sorry man, i covered my singtel (5 lots)as well, anyway its a damn trade after all. i put at 3.32 just to be more sure i get out, it close at 3.17.

i have too many other shorts to worry.

coconut said...

and i think i'm more tire of chatting than trading even a heavy volume day.

anyway a good way to end the day.

damn trade (again).

Fat88Trader said...

You managed to cover at $3.17? that's real Yum!

KAW said...

SGX says no to High Frequency Trading
By Patrick Fok | Posted: 29 November 2012 2343 hrs
"The Singapore Exchange has said that it will not introduce High Frequency Trading (HFT) for equities until adequate system controls are in-place."
So we can still enjoy the ride while it last...

coconut said...

oh dear, i covered at 3.27 at market close not 3.17! when does singtel trade at 3.17?

it was a short covering.

Fat88Trader said...

That's the price you have written earlier.

So SGX delay introducing HFT for the equitites market but comm still damn high for short term scalping unless you are a prop trader with a brokering house where there is no comm except SGX clearing fee and don't know what the hell trading fee plus 7% GST.

I paid S$66.37 all in for the buy transaction of my Singtel.

coconut said...

sorry for the mistake, its so common for me to write wrongly the price, in actually trading too!

10 lots right? wow thats 0.1% for cash market transaction, really good deal. (i hope you covered your simsci contract).

my is 0.25% for cash transaction.

Fat88Trader said...

My comm is 0.15% for cash and 0.1% for intra day trading, still expensive compared to futures.

Of course there are many individual shares that you can trade and some can go up a few % in a day.

I got clobbered by the Simsci, painful cut.

Fat88Trader said...

Some active traders can bargain the comm to .08% for cash.

coconut said...

ya, my comms for CFD is around there too.

why bother so much about comms (i know i know)? you rightly say the movement in % terms more or less can offset/justify the higher comms.

as long as you don't trade tic my tic, and have a wider spread, i think it still ok from what you are getting.

now stop giving excuses and get on with it!

KAW said...

FAT, wonder why Phillip always seem to charge u higher? If I am not wrong, their futures account should gets to enjoy 0.1% comm for stocks. Anyway, u r still lower than retail at 0.18 - 0.25 (CFD) & 0.285 (cash) before taxes.

Fat88Trader said...

Hahaha, yes definitely, that's the best you can have already.

You are right, as long as you don't trade tic by tic, it's ok.

I am not giving excuses, just want to maximise my profit and paid for my effort.

coconut said...

another one (thats KAW) always look for bargains haha. KAW, if you want cheap CFDs go to IG market.

may be or most likely its me that is having problem. i never like to bargain, very unlike a trader who always want a good deal. ofcos i want a good deal, but i just don't like the bargaining (and the sourcing) part.

if i want to buy something in a shopping center, 5 to 10 minutes is all i need whereas my wife will take 5 hours.

is it good or bad for trading? my answer is a definately yes.

KAW said...

Haha coconut...u got me wrong this time. I was only referring to FAT being kind of unfairly treated as he has decades of relationship with the house.
I am a small fry in comparison and I am still working within the retail rates, I just price it in.

KAW said...

Silly as it may sound to some but I treasure relationship. Current rates is in support of a course mate who loss his job and starting out as remisier.

KAW said...

Thanks for the heads up in IG Market, coconut. Fortunately or unfortunately I have another remisier also a member of AFACT waiting to sign me up despite me telling him I am a small timer. :( But I have to tell him to be patience till my other friend is up and running or throw in the towel...guess its a rather competitive world for them too just like everywhere else.

coconut said...

very thoughtful KAW

wow, this must be a record, century break!

coconut said...

i thing i can have the honor of being call HFB. high freqency blogger!

Fat88Trader said...

This comm rate from my broker date back many years ago, at that time it was a good rate because I hardly trade stocks due to the higher comm compared to futures.

I am calculative when it come to cost, maybe it's time to negotiate again.

Fat88Trader said...

Indeed you are, hahaha, but on other people's blog.

coconut said...

hahaha, in a flash i thought you wanted say things like "I am calculative when it come to cost, its times to get it off my back" or something.

yap, for that i feel bad about it but its too fun to give up just yet, blogging is almost identical to trading for me.

i feel i'm back in childhood times and as free as and do as what i like/please.

coconut said...

on this blog i got like 4 to 5 hits.

my trading, believe it or not, i got well over 30 hits already for today!

but quite a few are cutting losses unfortunately.

KAW said...

Yea, lets drink to the century break!
Microsoft 'adopted' this song for their Window 8 launch.
Let the child in us come out to play...enjoy!
http://www.youtube.com/watch?v=Gj1YuTYxvLQ

coconut said...

during my childhood, i couldn't understand why i can't go to neighbor or friends house to take their food to eat or even sleep there.

why can't i? i ask. they can come to my house and do like wise what.
so i did what i did back then and they never comes. and i have to learn the hard way of knowing what not to do.

so fat, should you feel you need to do so, please signal me. i'll understand.

coconut said...

i know there is a limit but i just don't know where.

but if you ask me whats the limit one can get in a row (we call it one cue) in snooker, thats 147 points.

Fat88Trader said...

You can blog as much as you want here, it doesn't cost me a cent! Calculative right? But when I don't reply that mean that I am out of the house having coffee with some of my friends. So you might feel a bit lonely.

coconut said...

i hear a lot of time this term "yum" trade, i know fat use it a lot.

but what exactly those it means, where got yum trade before the fact?

but i do know what i call yum trades are, they are given, like you want to get out at certain price but they gives you a better fills, thats yum trade!

a lot of these yum trades actually happen during market open and especially closing period, ofcos provided that you are not in a desperation of getting out (like my singtel shares yesterday).

and i swear again, the misterious xxx trades (i suspect algo which just happen seconds ago) that i got hit without price moving at all! thats another kind of yum.

Fat88Trader said...

As long as it's a profitable trade straight away after being hit, that's a Yum trade. Like yesterday if you managed to get Singtel at 3.17, that's damn bloody Yum.

coconut said...

no no, it was a writing error, its 3.27!

i actually wanted to get out at 3.32, for others to yum me! fortunately close at 3.27.

that was a damb decision to short at the first place.

Fat88Trader said...

yup, I know it's a writing error, but if it's done, than it's Yum.

Ya, market was so bullish, but you have the guts, you the can! You should join as a prop trader with one of the broking firm, but have to share 50% of your profit with them, while the losses are all yours. But no comm. so you can trade even more.

coconut said...

today i got another extra around 100k net short (after offsetting the longs). so very the can?

actually its nothing cos overall its still within my range (i call it boundary as in cosmology).

hey thanks for the advise, but if i can joint others (not necessary the broking house) i would have done it long ago.

50/50? or 75/25? if its 50/50, thats about the same % my broker is getting out from me. if its 75/25, thats a good deal.

but wait! who want an old man like me? i think i better step one side and let the youngster have a chance haha.

and also i don't want to get exited and thinking about prop trading and make it big and get my head over the top. i know my limit and most important my character.

but i still thinking about it though and left the option open, many thanks for the encouragement.

coconut said...

i think algo is not correct either, i'm very sure the price didn't moves at all!

price was trading say at 1.350 (200 lots)/1.355(150 lots), i had a sell order at 1.365 for 20 lots.

so suddently my order is fill (ofcos my alert ring) and when i see the bid and offer, its still stay at 1.350 (200 lots)/1.355(150 lots)!!! never change!

why? nobody seems to know but what the hack, i just went in and buy 20 lots at the market ofcos. (by the way thats really yum trade haha)

may be i should call it quantum tunnelling as thought it can go through the price without touching it.

Fat88Trader said...

ok, so you are net short 100k that's less than 2 lots of Simsci.

Your old knife still sharp, mine already blunt, so it's going to be different way of trading.

I had a friend who did very well as a prop trader, but unfortunately he did something against the law and now out of the financial line. He did what some of the Algos are doing now which the regulators are unable to nap.

coconut said...

and one more thing to confirm my suspicious, i look at he order book and check the fills of all the trades, ya, it says xxx (quantity) with no buyer or seller.

to be honest, i know little about the financial ruling, i just use common sense to tell me right or wrong. mine is pure system trading and i know i never cheat, how can i?

Fat88Trader said...

Of course you are not cheating, you are too small to do it, hahaha and you have no idea how to do it.

No buyer or seller? It's computerised now, so your naked eye can't see it, it's nano seconds. And probably some of the houses cross the trades.

coconut said...

you are probably right and i have much to learn the inner workings of the houses.

i, and i guess as well as the other retail traders, just take what is given to us.

even if there is discripency among us (me and the house), i will just take it as it is, rarely go and argue who's right and who's wrong as long as the amount is small and its usually is.