Saturday, December 7, 2013

What happen to this Trader?

On the 6th January last year, I briefly shared about this Trader who reviewed to me that he made 3000% return in 2011.  I was impressed by his performance, from S$20k to S$600k, an amazing feat that is only common for floor traders in the past.  Of course I still do hear of the occasional trader that make those type of money now, but it's rare.

I came to know this trader through an AFACT event, exchanges phone number and he would call me regularly to seek my opinion of the market.  I told him that I am a very short term trader, my view of the market is short sighted and I am not good in forecasting, don't let what I said affect him.  He would then let me know about reports, figures that might affect the market and then his one sided view of where the market is going.

He made his money shorting the market, and probably because of that, his opinion is skewed towards having short positions.  As I probe into how he managed to make his money, I realized that he averages on good and bad positions and ride them. Luck was with him that he survived one that nearly stopped him out and later made a killing.  He focused and only traded one contract, Simsci and revealed that his biggest position was holding more than a 100 contracts.  I have never done that in my entire life.

I warned him about the perils of overtrading, money and risk management as I have been through it before, losing big time.  He assured me that he traded smaller position and attended various courses on trading, trying to find the holy grail.  Whenever he was caught with a position, he would call me for my opinion and tried to convince me with reports and figures that the market should go the way of his position.  Of course, they were mostly short positions.   As time went by, I find it rather annoying as it affect my short time view as well.

After knowing the benefits of being an Sgx member, he joined as a member to get preferential rate and enjoyed much lower commission.  His trading time frame started to get shorter as he got closer to the market and began executing his own orders, spending long hours till the market closes at 2.00 am.  I warned him that short term trading is getting very tough with the Algos dominating it with their speed and very much cheaper commission to flip the market, confusing all the click traders.

I warned him about taking care of his health too as he should be around my age, the way he traded is definitely stressful to me.  While I am getting out of short term trading, this guy jumped into a pool infested by crocodiles!

Despite all the warnings from me, he continued trading and would called me about making some money here and there.  I was never envious of his exploits and would congratulate him for his good work always with a warning to be careful as I can hardly make a living scalping.

I don't know this trader well, met him a few times during some AFACT events whereby he would chat me up.  He kept to a very low profile.

I was relieved when he stopped calling me and I noticed that he didn't attend any more events. I thought maybe he might have been caught short when the Simsci started shooting up, probably he might be shy to admit his mistakes.  I left him alone.  I messaged him and wished him a Happy New Year but there was no reply, I called him recently and his phone was out of service.