Saturday, November 17, 2012

Account 8030, 17/11/2012



This is the only trade done so far for the account. The option still have 3 weeks to go before expiry. The margin utilised is S$2,364.87 out of the capital of S$44,328.03, so I am actually using a small portion of the margin in a futures account. It's a very conservative approach to trading, that's why I can sleep soundly to attain a 10% return for this account.

This trade only cost me S$1.24 in comm, very cheap. The broker will be charging me interest for the negative Yen account, probably around 3% in a almost zero interest rate environment in Yen borrowing. That's where the Exchanges and brokers make extra money out from the traders, and they pay peanuts for my positive S$ account. And of course, they don't pay interest on any credit balances in the Yen account.

Some readers may feel the risk I am taking is too high for only a limited return but I felt otherwise. I will show my trades but not going to explain the reasons behind taking such trades. We shall see whether how I perform in a year's time. It's challenging for me firstly to show the account and secondly, for trades that are longer term which is not my forte. So, please don't follow what I am doing as my cut lost level is quite far away.

I will be looking out for more trades to add on whenever the opportunity arises, it might be a roller coaster ride that I have been used to all these years.

76 comments:

coconut said...

come across this article, very useful if you want to learn more about position trading.

http://www.traderslog.com/how-much-should-you-trade-when-you-trade/

coconut said...

all i will add to this is in position trading, position sizing and re-positioning, with hedging or spreading combination, will gives you an edge in your betting system.

i use yours becos it is not about the market but your own predetermined trading (betting) system with boundary drawn.

however, chosing the correct market and degree of leverage is also very important.

coconut said...

once you have predetermined your boundary and position (sizing) and set the floor as the author mentioned, anything that falls within the boundary is theoritically, there for your taking!

coconut said...

"There are two basic components to the formula: win probability and win/loss ratio. Your win probability is calculated by dividing the number of winning trades by your number of total trades. The win/loss ratio is found by dividing the average gain of winning trades by the average loss of negative trades. After finding these numbers, the Kelly Formula is:

K% = W – [(1 – W) / R]

where W is your winning probability and R is your win/loss ratio. This formula will give you how much you should appropriate per trade. One must remember that this formula takes the trader and the market as a constant, which doesn’t really happen. Many traders will retest their trading on a monthly, quarterly, annual basis to make sure they are using the correct position size"

coconut said...

how true!

as we design our system based on constant or static or non moving, as well as our boundary and position size, we have to constantly review our parameter and position size and the market in which we trade.

i call it "chasing the market". where i constantly review and adjust to keep up with the market movement.

coconut said...

"Another important facet of effective position sizing is your belief in a trade. Many successful traders have different grades or rankings for each trade."

in this aspect, i defer, i trade with the same confident in every trades and i use the same position size in every trade until the market tells me other wise.

if i use various position size i always have something to regret later haha.

coconut said...

the position size i'm talking about is the scale or degree of which i'm increasing or decreasing an opening position.

the parameter or boundary is the maximium position size for an open position and or the maximium porfolio size.

Fat88Trader said...

Thank you Coconut, yes, position sizing is very important, it really depend on the risk a trader is willing to take.

In your previous comments, you don't leverage in your stock trading account, that makes you a very conservative trader in the eyes of a futures trader. That's good, maybe you compensate your performance with the accuracy and frequency of your trades.

KAW said...

FAT & Coconut, appreciate all your respective sharing as always, huat ahh!

coconut said...

thats true, pretty conservative. but the strategy is basically the same as in futures trading except that the spread (between enter and exit) is much wider.

currently i have a 300k CFD account trading about average 2-3 times that amount (depends on market) each day and position size about 5-10 times (long and short combine), thats a lot of leverage if you ask me.

ofcos, that account is meant for margin only which i kept the minimium after MF global crises haha (knn).

you know fat, you can't trade the way you trade on the floor where you leverage your position to the max, you can't run most of the time when you trade off the floor.



coconut said...

many traders trade based on what they expected to make on a single trade and 1 day taking, i was one like that also, like everyday must bring back $500 then be happy.

and they cater their trade and leverage up according to that expectation, thats very dangerous.

one should trade according to first their equity size, then from there draw out their parameter, position size, spread....

olam started trading!!

coconut said...

damn never gives warning!!

coconut said...

haha, i can't put in limit order cos it is expected to open gap down, spread was too wide.

after seeing it only down by 10%, i should wait and go for the others.

coconut said...

and thats how the market works most of the time, i got the alert not becos i saw olam started trading, it was some of my other orders start to get hit, a suddent increase in market movement and activities. thats where i spotted olam is moving.

coconut said...

so equity first, meaning one has to put all his money on the table and not trying to hide them as though they are not related. its not about showing off, showing who i also don't know, but in his mind, this is what he got and this is what he is going to fight with.

is like fighting a war, bring all your weapon along and use them if neccessary, don't go there and only then you discovered you had not bring enough weapon or army with you.

coconut said...

and if you like to mind thinking and dreaming about trading strategies, the construction of it, you will realised that the more equity you are willing to use, not neccessary taking more risk, the more variantion your strategy is going have or equiped with.

you can say that i used a lot of my equity but actually, my risk is very low and tight or can be low and tight depends on me haha.

Fat88Trader said...

ok, so you have some leverage probably using the CFD to hedge against your position or to turn short.

I really admire you for doing that despite the much higher comm you are paying. No wonder your broker laugh all the way to the bank.

I don't know how short term you are but I have a feel that you are doing some short term hedging. This is not meant for any ordinary trader.

coconut said...

haha true true, i can feel that my broker are laughing at me. but as long as i can make money, i'm alright, i don't feel stupid.

yes, usually short term but i prefer to call it price hedge. meaning it all depends on price movement, sometime in a day, i can hedge and unhedge and hedge again, sometime it may stay unhedge for weeks.

oh definately not for the ordinary trader.

coconut said...

i think i mean hedged for weeks but thats not a good sign to hedge so long.

i love to trade, i can;t tell you how much, i see it as a game, a strategy game, my broker are not blood sacker, they are like my caddy, my partner.

thats how i really feel.

Fat88Trader said...

That's why you can make money, so much passion in you.

coconut said...

i had been trading futures and FX for more than 12,13,14,15 (i lost count) years but never in stocks. i didn't make a lot of money like you did on the floor but enough to survive, lots of up and down and rest. it is indeed very difficult to trade with you guys blocking the way.

few years ago i started trading (or should i say trying to invest) stocks in a big way and i relised i can make money easier using a modify trading system. then came the DMA CFD where you can short stocks as easy as going long, i'm like a "fish found the water".

i'm almost certain i can make money every month provided i stick to my trading system, and ofcos thats another story.

the stock market is vast, i can covered only that little bit and watch the other passing by.

trading is a strategy game, it does not matter where you want to play it, as long as they function so that the price can moves freely, its all the same, leveraging or not is still up to individual.

coconut said...

a week or 2 ago i was still short olam but unfortunately i covered, i'm so happy to covered cos i had a bad previous month. i can't go long enough cos i'm still holding some other long, its unfortunate.

but today, there is another joker who anounce a private placement at a discount, i happen to have a short position on it, i covered and went long.

coconut said...

with a bigger than expected price gap ofcos.

coconut said...

i had come out ahead (again) recovered from last month bigger than expected losses.

the lesson learned is that you don't leave your open position unattanded for a prolong period of time or of any time!

even with the majority of the market going south, it does not meant that your short position is also doing the same thing.

coconut said...

please do not mistaken that i long for all these news event, they all comes unexpectedly, i wasn't aware of them at all.

especially in olam case, you don't want to stand in the middle with 2 giant fighting one another to their death.

rbt said...

Yesterdays drop in the Taiwan market had a huge impact on the Algos....after the drop the market went back to what it looked like a few years back..made me cry and money :) Today back to normal.

coconut said...

USD/JPY is now 82.40, will this be another false alarm again?

if i'm free from stock trading, i'll definately want to be long and will try to get in.

singtel is trading at 3.12, EPS is what? 12x? looks very cheap with very good dividend payout as well.

but not for me, i'm not going for growth stocks, i don't see any growth in the horizon.

hows my market commentary? haha

Fat88Trader said...

Good, your market commentary is something to look forward to. A good friend asked me to buy some Singtel. Waiting for a level to get in.

coconut said...

meaning you are bearish on singtel, price wise. the problem is which level? 2.00 or 1.80 or 1.50?

obsvously no one knows, but someone can tell me roughly where!

any guess?


coconut said...

forget it, i'll tell,

M1 or starhub. i'll go short either one of them and they will eventually tell me roughly where to get long on singtel.

this is not exactly how i trade but the idea is the same cos i'm not in for investment.

Fat88Trader said...

I am in for the investment, or I should be accumulating slowly.

coconut said...

yes, i too wanted to invest, too much cash on the side line doing nothing.

i lost my entire portfolio last year, i'm waiting patiently but at the mean time, shorting and trading while waiting for a big break.

at this moment, i just want to stay net short or at most even.

coconut said...

i mean really big break!

coconut said...

fat, i'm not good in investing but somehow i feel that the only way one can really make big bucks (in investing) is when the market is in a panic, real panic, either a very sharp drop or something like 08/09 crises.

other than that, one should not even touch (or at least i'm not touching) the stock market even if its a 20, 30% correction. in another words, we should look for 80% above correction for individual share?

however one can trade stocks any time haha.

coconut said...

the reason i say that is becos as an investor, you need to sit through all the market bull and bear cycle.

KAW said...

Hey guys, how about considering Bank of China Ltd (HK - stock code 3988). Current close 3.18HKD (near IPO of HKD2.95). Yield ~6% (highest among China's bank) P/E 5.44. Likely heading towards all time high of 5.27HKD or more within the next 2-3yrs - My view.

Fat88Trader said...

Good recomendation, Kaw, did you buy any? Will definitely look into it, only worry about the bad loans swept under the carpet and the exposure to the property sector.

Coconut, holding cash is also my main worry as our money depreciate so fast and governments still keep printing money as a business.

Need to be very patient to wait for that big break and when is it going to happen again? I didn't expect the S&P to shoot up so high, have been shorting until I threw in the tower, and then it came all the way down.

I am waiting on the sideline just like you, 20% to 30% correction would be a good time to go in.

coconut said...

i agree kAW, but i don't know what share to look for, i mean the china stocks.

i know a few of my friends are stuck with china shares for quite a while now and their pain and hopeless tells me a lot.

thanks for your advise, i really don't know how to evaluate stocks (beside their price). so if i want to invest, i look at the entire market (haha).

coconut said...

but to invest, i still got to wait, waiting for that shock to come.

meantime i just eat my bread with butter.

coconut said...

haha, today i can "catch the fly". almost nothing is moving, i mean nothing, but i still have to keep my eyes open.

i treat invest in stocks is like putting money for other people to run a business, with my nature of dis-trust others, i hardly invest in them, in fact never did.

to get me into invest in stocks, they have to be very cheap. on the other hand, i have no problem shorting stocks (now that i can do it) and long stocks as part of a trading position.

coconut said...

talking about market movement, they moves in the same way every time.

but we have the delusion of wow market moves so huge or volatile or such a big drop or whatever names we want to use to justify that moves.

the market moves the same way, but they moves in different speed all the time and thats create the wrong perception we have.

today market action is the same as yesterday and the day before, but at a ultra slow speed, whole day trading movement (let assume) is only ten minutes of yesterday movement.

and with the kind of trading i employed, it really feel this way. like i'm trading (same trading, same strategy, everything the same) in ultra slow motion.

and at other times, i can't keep up with it, too fast.



coconut said...

having said that, it is important that we do not and should not have an objective or destination or target in our trading (haha easier say than done) activities.

imagine you have to be at point A in 30 minutes drive and the traffic speed is fast, slow, stop, fast then stop then fast, slow...you will end up very frastrated.

but if you like me driving without destination and time limit, the drive would be very pleasent and you can do all sort of thing inside the car too haha.

please don't tell me the petrol (commission haha) is expensive, i pretty don't care.

coconut said...

no no no, i mean its expensive and form a large part of my returns, ofcos i try to reduce it but there is also a limit what i and my broker can do.

Fat88Trader said...

When you still have that edge and able to make money, comm is not a big problem, it's part of your cost of doing this business.

GNY said...

Thanks coconut, your comments are very insightful. Lots of experience and wisdom talking. Never fail to set me thinking after every read.

coconut said...

you are scarying me, but i think my edge will stay unless i did something foolish which is quite possible.

http://financiallyfreenow.wordpress.com/2012/11/22/how-companies-go-from-great-to-zero/

although its about company that fall but i think it applies to successful traders as well.

getting broke or busted my account is always on my mind though especially when you are position traders and you always thinking how the market is going to get you and your positions.

coconut said...

hey no problem GNY, i have a lot of time day dreaming while trading, especially days like today, i have only 8 orders done which is not too bad consider a market moves like a Spiral galaxies (they don't seems to move at all but mind you they rotate at speed thousand times faster than the hurrican in US).

coconut said...

better explain, 8 orders are the minimum position sizing done and not 8 new positions.

they are part and pacel of scaling existing open positions.

coconut said...

determining position sizing is much easier in stocks than in future and some FX counter.

for stocks, simply use the predetermine amount divided by the unit price of that stock draw it to the nearest thousand.

but for the others, becos of contract size is different and larger (stocks are in a thousand share), one has to calculate based on total contract amount and that for most of us, 1 or 2 lots haha.

mind you i'm talking about minimum position sizing for you to scale your position.

why is it important you ask, for 1 you don't commit your bet in 1 go but most important, it is a must know if you are arbitrating or spreading and scaling at the same time.

coconut said...

and that is the main reason why i find stock trading a lot easier becos i'm able to draw the line in more precise manner and more certain where my trading is heading.

oh, by the way, i still feel that pound for pound, the stock market are the most volatile market there is, not the futures market or FX.

GNY said...

I too like to day dream, when the market is slow. It relieves my mind somehow. Been trading stocks for over 3 years now, and I enjoy what I do. Still fine tuning and working on my psychology which screws me up from time to time.

coconut said...

a more precise or fine tune trading system is the answer to over come the psychology problem, hey i also have psychology problem, in fact many haha, but rely more on that machanically design system helps big big time.

coconut said...

at least when you lost that day blame it on the system and the computers and when you win or win big time, credited to your brain!

coconut said...

the primary function, er i don't know how to call it but let say function is to gives you (i presume in position trading) signal when something happen to your exiting positions.

for example, let say one of your buy order is hit, it should spill out a signal where to exit and another signal where to cut loss (assuming you are not arbitrate). and when your exit hit it will again spill out a signal where to enter and so on and so for.

so it becomes a lop or a never ending signal of orders as you progress through the market movement.

for arbitrate or spread or hedging (why they use so many terms but same meaning), you just simply add on another layer to your existing system and cancel out all the overlapping signals.

infact, if i have a computer program, i can put many layers if i so wish to, right now i can go as far as 3 layers, that the best i can do manually.

coconut said...

and finally, if like me, you want to be a directional trader and also hedger at the same time, you leaves a space between them, meaning a time or price varience between the signals for both systems.

in another words, you don't overlap the 2 systems precisely.

coconut said...

knn, write so many already, i better go for a nap.

KAW said...

@FAT, yes I have just started nibbling now. Shanghai has been on a slow bleed to death for the past three years (coconut, thats why we all have heard of many who got caught in China shares). It is currently at an inflection point with limited downside.

coconut said...

what i heard from my friend is that even though the stocks are down but the property market is still holding quite well.

i feel that we are in a deflationary enviroment and this down side, including our own market will not recover any time soon.

the asset based are still holding its ground cos of artificial inflation pressure, its a difficult call.

KAW said...

I prefer financial as they are usually the advance party when market turns for obvious reason since they are the one 'managing' money...
The limited downside (even upto a thousand points drop from current level) if any are global disruption because domestically the old administration have prepared the stage for the new guards to show results in the very first year ie GDP back up to 8% "sustainable level".

coconut said...

i'm not saying the market is going to collapes or crash but it is going to stay somewhere here for a while i suspect, usually deflationary enviroment takes a long long time to recover, 10, 20 years or more, this is what i had read.

KAW said...

The best of communist capitalism is in the making...they have adopted good practices and shunt the bad from everyone else. They were known as manufacturer of the world in the last decade. Looking forward in the next decade, they have and will YUM the world with all the bullets they have amassed.

coconut said...

maybe, there wouldn't be any recovery any more, not in my life time, maybe we are in middle of self destruction, a fall of a civilisation.

the probability is always there though slim.

KAW said...

Shanghai possibly the only index in a L shape recovery from the 08 crisis. I agree with coconut, it may take a while more before this phoenix rises again.
No doubt there is an oversupply of property, my gut feel says they are getting the infrastructure ready before they open the flood gate for immigration to tackle their aging and irreplacable population of their own.
Guess thats also the reason why our local listed companies (including many non property related) are pumping money into the property market in last couple of years.

coconut said...

haha KAW, you eat water mallon and say water mallon are sweet?

its ok to enjoy but not all water mallon are sweet you know.

KAW said...

Hohoho...my apologies for disrupting your nap coconut...I shall take my leave for now...have a good afternoon to all!

KAW said...

I hear you coconut, many thanks for the enlightenment!

coconut said...

no no, what i mean is just that when investing or trading, you have to look both ways.

you have a good point i agree but you have to look the other side as well, what if you are wrong, what are you (or me) going to do bla bla bla.

you sound too confident in your analyst thats worry me.

coconut said...

like for example, what if we are destroying ourself economic wise, how? we are heavily invested, how?

so if every body is going down, so be it, lets go down together, then you justify your trade or investment.

KAW said...

Hey coconut, please keep that coming! No offence taken and I appreciate it sincerely. It is exactly what the video you shared was referring to as well!

KAW said...

It is very kind of you to highlight...just to avoid casualties especially those who came, read and jump into it. I have learned not to take other people's fish and eat it. As traders, we must always do our own homework before making a judgement call. Learning how to fish with guidance will shorten the learning curve. Cheers!

coconut said...

yes, we always say what we think is correct, i'm no exception.

i think i do carry a little mirror, like the one in our car rear mirror, to see whats behind us.

i just feel that the little mirror is very important just like the car, the more you engage or use it, the better will be your driving skill haha.

Singapore Man Of Leisure said...

Coconut,

You very the observant!

Check blindspot :)

coconut said...

no ah SMOL, not just blind spot.

check all the moving traffic behind your car. in that case you can anticipate or know in advance what you going to do.

thats advance driving skill you know haha, like you don't look only when you want to overtake, even when you are not overtaking, you know at anytime at that very moment you can do it if you want, got it?

what blind spot!

coconut said...

hey you are talking to a person almost at one point in time in his life wanted to be a driving instructor!

hahaha.

Singapore Man Of Leisure said...

coconut,

When taking my class 2B, idiot instructors made me check blindspot!

Moving off check blindspot; turning check blindspot; freaking slowing down also check blindspot!

Well, I get hurt more by what I didn't see.

So I check blindspot lor!

Especially when I am riding scooter in trading :)

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