Risk Management

Happy Lunar Dragon Year

2012-01-25T12:29:00.000+08:00

Wish All a Happy and Propserous Dragon Year!

I believe this will be a good year to be back into the stock market. All the Feng Shui Masters were so wrong last year predicting a rosy outlook, instead the Singapore market came off about 17%. Trust your own judgement and money manage your own portfolio, always stay with blue chip stocks with good dividend track record, they have not fail me so far.

A friend told me that my personal problem is like having a big bad position, I need time, effort and patience to slowly unwind and salvage the losses. Yes, I'm tired, very tired indeed, even finding the time to put my thoughts here, I simply can't concentrate.

Wish All A Happy New Year!

2012-01-06T15:44:00.000+08:00

It took me 6 days later to wish my friends here a Happy New Year, 2012. Sorry about it, rather disturb. I am facing some personal problems recently, unable to concentrate on anything I'm doing. Trying very hard to calm down, look for solutions and tread carefully to salvage the situation. Can't believe I'm facing a mid life crisis.

Coconut has been lonely here expressing his thoughts and honestly revealed his huge losses last year. That's the risk involved in trading, the ecstasy and happiness in winning versus the pain and sorrow in losing. I've been through the various stages of such emotions, experience that made us wise, sometimes full of regrets, wish I can turn back the clock.

Trading has been extremely tough last year with lower volatility and liquidity. In the past, I used to encourage anyone who is keen in trading not to hesitate, now, I would ask them to seriously consider it carefully before taking the plunge. It's simply not easy. Remember, it's a negative, negative sum game.

It take lots of courage to admit our mistakes, I really salute Coconut for doing that, cut all the losses and move on, not many can do it. How's the feeling? It must be real painful.Scalping for me is just too tiring now, trying to compete with the Algos for that small piece of cake in the local contracts without any edge. No longer young and alert, have to change strategies and go for longer term trading to reduce comm.

A trader I came to know recently revealed that he made a 3000% return on capital since November 2010. He has been trading as a retail client for the past 5 years and was about to give up trading with the remaining $20k. Miracles just happen, his big break came during the Japanese earthquake followed by the tsunami, the rest is history.So it's still possible to make the big money, futures is all about leverage. He spent 5 years learning. he has guts that's extra-ordinary, a very humble guy.

Is a Crash coming?

2011-10-02T21:26:00.001+08:00

http://www.youtube.com/watch?v=aC19fEqR5bA

How Algorithms Shape Our World

2011-07-29T12:10:00.001+08:00

You may not agree with him.

http://www.ted.com/talks/kevin_slavin_how_algorithms_shape_our_world.html

How to Make Money in Microseconds

2011-07-27T17:36:00.000+08:00

Interesting article on Algorithm Trading

http://www.lrb.co.uk/v33/n10/donald-mackenzie/how-to-make-money-in-microseconds

Thank You!

2011-07-17T09:59:00.005+08:00

Thank you for those "friends" who stand by me.

I'm fine, I'm Ok and not that foolish to be upset by a cowardly moron.

I have met up with my option trader friend and was told that he had employed two new traders who have good IT knowledge for this round of recruitment.

For those who have sent me resume and not selected, I'm sorry I couldn't help much except hopefully he look into the resume again in the next round.

There was another Proprietary trading firm that advertised for prop traders recently in the newspaper, it was shocking to many of us when we were told that there were more than 900 applicants.

Most prop firms look for young traders preferably below 25 years of age without trading experience so that there is no emotional baggage. Of course, those with IT and engineering background, with good analytical skill and able to crunch numbers will have the edge in the selection.

But, don't be despair, successful traders come from all walks of life as long as you have the passion.

"True success is not only about achieving success through sheer hard work. It is also about achieving stellar results in what one has a genuine passion and interest for." - Wong Chun Han, from the Sunday Times today.

Ask yourself whether this interest in trading is strong enough for you to dedicate your life to the pursuit of success in this particular field.

Every trader tried to look for the "Holy Grail" strategy, it's just about 2 simple rules that somehow is so difficult to follow.

CUT YOUR LOSSES

RIDE YOUR PROFITS

For every trade that you take, these 2 rules should always be in your mind, every time, without fail.

Yes, talking is easy, cheap, doing it is damn difficult. Where to cut? When to cut? How far to cut? These are some the most asked questions from traders. Only the individual trader through trial and error can determine his own risk profile and how he want to trade, short, medium or long term trading.

There is no choice but to quit the industry if a trader can't train himself repeatedly to "Just Do It"

Wish all a Successful Trading journey.

This Son of a Gun

2011-07-13T09:51:00.006+08:00

Some how or rather I have offended this Son of a Gun who is following my blog very closely and hammering me viciously in his blog. He has a personal grudge to run me down which I have tried to ignore.

It started when this "twkia" posted comments on the AFACT FORUM and attack all the trainers from SGX Academy. He is one of our fellow floor trader but we do not know who he is, what a shame. We tried to reconcile with him by inviting him to our AFACT gathering so as to settle any misunderstanding, he agreed but obviously chicken out at the last minute.

He is filled with so much hatred for SGX and especially me who called him to show face, step forward and don't be a coward. Why hide behind a skirt and keep attacking us? He dared not take up any of the challenges thrown at him despite giving him all the advantage. That obviously infuriated him and from then on he set up another blog to attack me.

From his earlier blog post, this Son of a Gun is not only vicious, but cruel, spearing penguins as his hobby. With such a wicked mind, I don't know why he still visit the temple to ask for blessings. Who is he praying to? If there is KARMA, then this coward would most probably be a penguin in his next life.

Despite being blessed with an intelligent mind and a healthy body, he chose to be a Big Bully on the Internet calling me all sort of names. Don't know who his father is, obviously never teach him how to be humble and respect others including animals. The Earth turns around, one of this day Heaven will punish him and make him learn how to be humble.

Dear readers, Have I mislead you here in my blog with regard to trading? Have I commented or attack this Son of a Gun in any of my post?

Though I despise this coward, I would like to thank him for polishing my head and to let him know I have another smoother head for him since he enjoyed it so much.

It's time for me to take a break from writing so as not to create more jealousy and hatred. I'm not here to gain fame or to sell anything to my readers but just to share some of my trading experiences.

I would like to thank those who have shown appreciation and Coconut for being so kind to add in his thoughts.

There is still HOPE!

2011-07-09T16:22:00.004+08:00

Met up with many traders during our AFACT second anniversary dinner few days ago and as usual we ended up discussing about trading and the market condition. Most traders are finding it tough to make good money due to the various reasons I have written recently.

Met a trader from another arcade yesterday and was told that he had resigned as a trading member, closed account with his clearing firm and pondering what to do next with whatever money left he withdrew. Probably in his 50s, he would take a break for the next 6 months. I felt sad for him, trading is so uncertain, it's only meant for those who are willing to change and adapt according to market condition and against the better players coming on board.

Spreaders and Scalpers blamed the Algos, they are most affected by the advance in computer technology, losing their most important edge, "speed". Short term traders are increasingly finding it difficult to survive, the Algos distort the market. I believe it's still the big boys who are able to control the market and very efficiently with their speed and size to pulverise the small time traders.

In order to survive, trade small, follow the trend and go with the waves, trading should not be stressful once you have a plan.

For those following my other blog on trading performance between 2 veteran traders would know that there are some traders who are still able to survive. 8038 has been trading SGX products from Australia for the past 2 weeks and still able to be profitable consistently despite the lack of speed a few thousand km away.

Why? Because he don't do high frequency scalping, his comm is just a fraction of his profit unlike 8022. To be successful like 8038, a trader need to be patient to wait for a trading set up and the nerves to ride the profit. 8038 losses are small on his losing days, I admire the type of discipline he has.

Looking at the account of 8022, he didn't lose money trading over the last eight months, his losses are in the comm. Despite repeatedly reminding him to be conscious of the trading cost he insisted on his way of trading. These are some of the traders that I have honestly told them not to waste their time. It's not about perseverance, it's about being stubborn.

For those who are not making money, their characteristics are similar to 8022. for those who are willing to change, there is HOPE, 8038 is a very good example for all to learn.

Reality

2011-07-02T15:22:00.004+08:00

My cousin broke the news to me yesterday that he's quitting trading and going back to work soon, after a friend recommended him a job. I was a little surprised but supported his decision since he is not getting anywhere after being a trader for 2 years.

He broke even on his seventh month of trading, that was quite remarkable for a newbie who didn't know a thing about trading, confused even over bid and offer in the beginning. Last year was good and he improved tremendously with consistent profit every month though on the average, still below his last drawn salary. He enjoyed the freedom of being a trader.

The last six month was lousy, he got hit a few times shaking his confidence. Volatility shrank and scalping became very tough with the coming of the Algos, his profit came down, so was mine. After some serious consideration, he felt that it's better to go back for a more stable income, CPF, year end bonuses and medical benefits.

I'm glad that he made money trading, didn't burn a big hole in his pocket like others we heard so often. He took a 2 year break from his career, gained plenty of experience as a financial futures trader and most important he has given himself a chance, an opportunity to become a trader after hearing so many glamorous stories of successful traders. There is no regret.

8022 just told me that he is quitting too and looking for a job. I admire his perseverance to stay on for another 5 years as a electronic trader after the trading floor closed in 2005. I can imagine his suffering without income for 5 years and using up his savings on daily expenditures for the family.

The hardest part for a trader is when they get too old to get re-employed, when they are in their late 40s and the only thing they know best is trading and not making money.

Reality sets in, only the best traders make it and that's less than 10%.

Scalping is getting very tough, very tiring especially when many of your opponents are powerful machines with plenty of muscle to push the market in their favour. The machines distort the scalpers with their speed in putting and pulling out orders, sometimes huge orders to bully the small traders. Trading hours are long now, thus making the lives of short term traders more miserable. Volatility reduces as the Exchanges extend the trading hours and traders trade more incurring more comm.

I spoke to my brother about the challenges we are facing now as an electronic trader in a non level playing field, where Exchanges are embracing Algo traders with open arms giving them better comm rebates and speed. Change! that's what we need to do. The machines are now the scalpers, they are like the FT (Foreign Talent) in our country, it's difficult to compete with them, we are now left with the crumbs.

I have to change the strategy of trading, that's what I'm slowly adapting, trying to avoid heavy scalping to reduce the comm. It's hard for an old dog to learn new tricks after 25 years as a scalper, it's a challenge.

Busy Month

2011-06-26T21:01:00.003+08:00

It's been a busy June with the school holidays, friends visiting from China followed by friends from Thailand that I couldn't find the time to update my blog.

I just don't seems to have enough time, scalping is taking up too much of my energy especially against the machines. I'm getting tired, need a break, my mind is blank.

My home laptop is giving me problem, constant reminder that the harddisk is going to crash, I can't even publish my post, can only save now and publish them in the office.

I just wonder whether those previous lessons were too boring, sorry for not being able to express them well.

Lesson No. 9 - Emotions

2011-06-05T17:41:00.002+08:00

Read today's Sunday Times about an article on the Ups and Downs of Forex Trading, how a Mr. Wong made $600,000 with a initial capital of $100,000, fantastic, then up his trading size and lost all together with an additional $700,000 that he put up, amazing. Total loss of S$800,000 in just 4 months. I admire his guts. Would you call this trader a gambler?

He shared that 60% of your time, energy and attention should be focused on managing your emotions, 30% on money management and 10% on your strategy. (His opinion)

What are the emotions that affect our trading?

Fear

Greed

Hope

Anger

Worry

Ego

Stubbornness

Overconfidence

Being human, we are definitely emotional creatures and traders have to really make an effort to control his emotions in order to stay calm. The most effective way is to have a plan, knowing what action to take just in case the unexpected happens.

It's very simple to draw up a trading plan but extremely difficult for most traders to follow up, thus they become shorter and shorter term traders, weaving in and out of the market. It's perfectly fine if they are scalpers knowing what is their edge and able to consistently make money.

For Day Traders, make an effort to trade your plan.

Lesson No.8 - Cutting losses & Riding profits.

2011-05-29T20:59:00.002+08:00

Cutting losses and riding profits are equally important to the success of a trader. Both are difficult to master.

To cut the story short, in order to make money, profits must be more than the losses and must be enough to cover all the expenses for a trader to survive.

Sound stupid, who don't know about it, but why many are still losing money? The answer lies in the past few lessons, simply just unable to follow them.

In trading performance, notice the difference between the 2 traders?

8038 is very consistent, slow and steady, controlling his losses very well and riding his profits on low volume. I like to see traders making money on low volume trading from home, controlling the comm with patience instead of recklessly getting into a trade.

Remember, being a Day Trader don't try to scalp, when the volume increases you are just not trading right. Too much slippage. Compare the comm of 8022 and 8038, you will understand what I'm talking about. Despite advising 8022 on numerous occasion to reduce his volume, he just can't change the way he trades, thus going around in circles.

When you are not making money after some time, put in an effort to find out the reasons from your trading journal. Unfortunately, most don't keep one, that's why they are not learning.

Lesson No 7 - Trading Rules

2011-05-21T17:16:00.003+08:00

Formulate your own trading rules that suits your style of trading and follow them religiously. Examples below are some that you might want to adopt, adjust, change or add.

1. Check the overnight performance of the various markets.

2. Check the timing for announcement of economic data and the various figures.

3. Plan your Trades.

4. Justify your trade entry.

5. Put in a stop immediately.

6. Limit your losses per trade, 5 ticks, 10 ticks or 20 ticks.

7. Limit your losses per day, $500, $1,000 or $2,000.

8. Stop trading if being stop out 3, 4 or 5 times in a row.

9. Avoid getting in an out of the market too often unless you are a scalper.

10. Avoid Averaging on bad trades unless it's in your trading plan.

11. Avoid chasing the market if you miss it, the market is there everyday.

12. Don't ever allow a big winning trade to turn into a loser, move your stop to protect it.

13. Beware of the risk of trying to pick tops or bottoms, many stops are placed there.

14. Trade what you see not what you think.

15. Get out of a Trade immediately if you don't feel comfortable.

16. Stop trading if you are tired.

17. Never never carry a losing position overnight.

18. Do a post mortem of your trades at the end of the day.

19. Control your frustration, don't blame anybody for your losses and admit when you are wrong.

20. Learn from your losses, you paid for them.

Trading is simple but it's not easy.

Many traders are not making money because they can't even follow simple rules.

Lesson No 6 - How do you want to trade?

2011-05-14T17:40:00.006+08:00

Full Time or Part Time?

Scalper?
Day Trader?
Spreader?
Position Trader? or
Option Trader?

For someone who is new to trading, jumping in to be a full time trader is like on a suicide mission, the risk of losing your capital is extremely high. With 90% failure rate, what do you think your odds will be against all those veteran traders?

If you are having a decent paying job, think carefully before you embark on this treacherous mission straight away. There are so many things to learn about trading, it will probably take a few years, just like going to school and paying tuition fees.

Ask yourself honestly whether you are prepared go without income for a year or two, even losing your capital.

For someone new, I suggest starting out as a part time trader taking a few hours (3 would be ideal) at night to focus on trading. Anything more than that will be very tiring since you need to work the next day, don't burn yourself out, have a clear mind.

Open an account with Interactive Brokers as a retail customer to trade any International product.(they offer one of the lowest comm rate). When your daily trading volume goes up, consider joining any of the Exchanges as a member to enjoy even lower comm. Check out SGX website and membership department, the Exchange offer some incentives and clearing fee rebates for new members.

Read some good trading books.
Learn about Technical and Fundamental Analysis.
Learn to be proficient in the Trading Platform for execution of trades.
Learn the charting platform.

Visit websites like www.investopedia.com for financial terms and tutorials and www.elitetrader.com, a community for active traders.

Join AFACT (Association of Financial and commodity Traders) at www.afact.org.sg for support and events, participate in the Forum, read the past threads to learn more about the trading.

To shortcut the learning process, visit www.sgxacademy.com for the various courses offered. Singaporeans who are in the financial or related industry can apply for 50% funding for some of the courses.

Once you are ready, decide on what instrument to trade, choose a contract you are comfortable, with good daily volume and volatility.

For a newcomer, I suggest doing light scalping or day trading, square off the position at the end of the day to reduce overnight risk. Have a set of rules governing how you want to engage the market, follow them strictly with military discipline. There should not be "If" or "should" in your vocabulary as excuses for any mistake made, just learn from it and move forward.

Start out with only 1 contract, until you are consistently making money doing so before attempting to add an additional contract. Many traders start losing money by increasing their trading size because they are unable to adjust their mentality to the higher risk of trading. It's one of the many challenges facing even veteran traders like myself.

Be patient, selective and justify the entry before putting in a trade, then put in a stop order immediately (without fail). It's OK not to trade for the session if you don't have a set up for an entry, that will actually build up your patience. Limit yourself to not more than 3 entries and set a limit losses for the night (maximum $300 to $500 depending on your risk tolerance).

It's very important to justify a trade entry, reasons for taking that trade. WHY? You must be able to explain and be accountable for your action. It doesn't matter if you are wrong, your stop will protect you from disaster. Once you are doing the right thing, practice will make perfect, subconsciously, you are developing good trading habits.

Problems? See them as opportunities.

2011-05-12T08:26:00.000+08:00

For those who miss this well written article by - Pragya Mehta

The word "perception" comes from the Latin words perceptio and percipio, as is defined by the Oxford English Dictionary as "the process of becoming aware or conscious of a thing or things".

It means that one should not only look at things, but also comprehend them.

Let me illustrate this with a short story.

There was a boy who stammered while speaking, and his friends often teased him about it. One day, he asked his mother whether he was "physically challenged in speaking".

His mother replied: "No, son. It is just that your brain run faster than your tongue does." And with that, she turned his weakness into a strength.

There are many ways to look at a problem. Some people see it as a stumbling block, while others see it as a stepping stone. People often blame "circumstances" for their problems. But they may not realise that these circumstances are simply the result of decisions they have made.

There is nothing inherently good or bad in any situation, but our thinking makes it so.

All problems can be solved eventually. Tears and regret will not help. What is important is to accept the mistakes you have made, analyse what went wrong and be happy to have gained experience in life.

Commit yourself to do better in future and be thankful for the opportunity to grow stronger, become more understanding and have more confidence.

So, the next time you encounter a problem, tell yourself: An opportunity is knocking.

Change your perception.

Lesson No 5 - Passion

2011-05-08T09:35:00.003+08:00

"I'm in for the money"

That's the truth, money is the main motivating force for me to be in this trading business. Trading can be lonely, boring and tiring at times, testing our patience and stretching our tolerance to the limit. Who is trading for fun and not for the money?

So, we have to develop this passion for making money by being pro-active to understand and learn more about trading. The Internet offers free information for traders who are keen to learn. Do you know any of these websites?

What trading books have you read? What have you learn from them? Most read and forget, never apply what they have learnt.

Passion is when your mind is totally focus on trading and love doing so, when you eat, sleep and even dream about trading. You make constant effort to monitor the market closely, knowing what price it open, overnight closing price, what's the high, low, volume, open interest, etc, etc at the back of your mind.

There must be a desire to know what is happening in the market, reasons for certain price movement, factors affecting it and what action you should take. One will then have a good feel of the market, that's what separate the 10% from the 90%.

Lesson No 4 - Characteristic of Successful Traders

2011-04-29T23:01:00.002+08:00

Found it printed and pasted in front of a trader in our room. Are they relevant? Are you able to follow each and every one of them? Will you read them everyday before the start of trading as a reminder?

Important Characteristic of a Successful traders:

1. Successful traders do not blame. They accept the losses they have, and they don’t dwell on them, or blame other people or conditions. They learn from their mistakes and move on with their trading.

2. Successful traders have a system. They stick to their system of trading religiously.

3. Successful traders have patience. They know that most positions will not be profitable the minute they are opened.

4. Successful traders do not overtrade. They realize that overtrading puts their account at risk, and they know that not every day is a day for trading.
They wait for high probability opportunities.

5. Successful traders realize that nothing is 100% foolproof.
They trust in their indicators, but they are aware of other factors that may influence their trades.

6. Successful traders do not stay in a losing trade. They honor the stop losses that they set, and they do not hold their position in the hopes that the market will eventually “go their way.”

7. Successful traders do not rush into trades. They take their time while selecting trades and they are picky about which trades to jump on. They don’t place orders just for the sake of having a position in the market every second.

8. Successful traders stick to a successful strategy. They have one to three techniques that really work, and they use them over, and over, and over again.

9. Successful traders have the ability to adapt. They adjust their trading methods and decisions to changing market conditions.

Lesson No. 3 - Understand Yourself

2011-04-24T12:15:00.004+08:00

Below are some of questions an aspiring trader need to ask himself and answer them honestly. It's important to understand yourself as trading is in a big way a psychological warfare you are pitting against the opposite party holding a different view. It's going to be an ongoing war that will not end until you give up and hang up your weapons. You may lose some of the battles, injuring yourself sometimes badly, but as long as you still survive and determine to fight on, the war is not over.

Believe and have faith in yourself for the task you set out to achieve. In life, you have to give yourself that opportunity, a chance to prove that you too can make it. Another option is to go all out and sell your abilities to someone who appreciate it and offer you the opportunity.

Here are the questions:

1. What are the reasons you want to be a trader?

2. What motivates you to be a trader?

3. Are you passionate and hungry to succeed in Trading?

4. Do you consider yourself a pro-active person?

5. Do you take the initiative to make things happen or you just wait for things to happen?

6. What is your initial capital?

7. How much are you going to risk in this endeavour?

8. What is your expectation?

9. Do you have a time frame for calling it quits?

10. Have you spoken to your family members and discuss with them?

11. What is your risk tolerance level?

12. What type of trader you want to be?

13. What type of knowledge have you acquired to prepare yourself?

14. What are the strategies you already know?

15. If you are still not making money using them, what are the reasons?

16. What are your strengths?

17. What are your weaknesses?

18. Can you focus on doing a job well?

19. Are you prepared for the hardwork and the challenges ahead?

20. Do you have the courage to take this giant step?

I will continue to update them as and when more questions come to my mind and welcome contributions from the old birds.

Lesson No 2 - What Instrument to Trade?

2011-04-22T13:13:00.017+08:00

My focus on these lessons will be for aspiring new traders with limited capital of less than S$30k and how they can take small steps in trading and shorten their learning curve.

I will also showcase a trader with a small capital trading from home using the Pats system platform and monitoring his progress without any pressure for him to perform. His result will be posted on my other blog on Trading Performance. He has many years of experience in trading and now experimenting with different strategies in Forex Trading which he felt have better growth prospect. I'm surprised!

I have longer term investments in properties and shares but for short term trading, I have chosen to trade in futures for my bread and butter. The major reason is that the transaction cost is the cheapest, please let me know if there are any other instruments that are more competitive and secure, I will definitely look into it.

By joining as a member of SGX costing S$1,200 a year, I enjoyed preferential comm rate for all Exchanges given by my broker over a retail customer. But of course I have to pay taxes on my profit after cost while most retail customer even some full time, treat their profit as capital gain which they felt is tax free. (Grey Area)

The difference in comm is quite substantial, from the statement you will notice that the comm for trading Simsci is S$1.70 and US$0.65 for the Taiwan contract. While retail customer might be paying anything from S$8 to S$12 for the Simsci and for those who trade higher volume, they can bargain the comm down to maybe S$5 which is still more than double. Comm for trading the Nikkei is US$0.70, with a tick value of roughly US$30, making it one of the best contract to trade in term of costing.

I have chosen to specialise in the Simsci because of the scratch trade rebates given to members even though the comm is among the highest. For any trade at the same price in a given half hour time bracket (ex. 8 am to 8.30 am or 8.30 am to 9 am), SGX will refund me the clearing fees of S$1.50 per contract. Thus I only need to pay S$0.40 to my broker for a round turn of Simsci contract.

Another reason for choosing Simsci is that most of my funds are in Sing Dollars which I can use as margin to trade without incurring any interest for holding the Simsci position overnight. If I will to trade the Taiwan contract I will need US$ and I need Yen for Nikkei as margin for my overnight positions. Interest is charge by my broker for extending these foreign currency loans to be put up at the Exchange as margin while I receive a very small amount of interest for my credit balances.

For those who are non members, one of the most competitive broker is Interactive Brokers, check out their website, they offer very good rates for trading overseas contracts, free trading platform and some Exchange fees for charting services.

Many felt that trading futures is risky compared to other instrument because of the leverage. They are just ignorant. What can you do with S$30k in your account and wanted to trade for a living?

Any Fund Manager who can consistently return 10% nett per annum to their client is a damn bloody good manager because 90% of them failed to do so. A return of 10% for $30k is only $3k a year which is only $250 a month. Can you survive on it doing full time trading? So your goal will be to make at least $3k (10%)a month or 120% a year.

Those who are thinking of quitting their job for full time trading career need to consider it very carefully before taking the plunge because you will need to be a super trader making 10% a month less all cost in order to survive. Of course, there are many who made it, the journey is long and tough.

I will use Simsci as an example in my illustration, a basket of 27 blue chip stocks listed on SGX at the current price of 3770 x 20 per tick which has a value of S$75,400.00 for 1 contract.

Futures trading requires margin because of the high leverage of up to 20 times depending on the volatility and this margin will be adjusted accordingly by the Exchanges periodically, it's not fixed.

Paying a comm of only S$1.70 to trade a value of S$75,400 worth of blue chip stocks is extremely cheap and you need to put up a margin of less than $4k. Nikkei at the price of 9670 x 500 gives us a value of Yen 4,835,000 or around US$59,000 worth of 225 blue chip Japanese stocks. Buying 1 contract cost only US$.70 for the professional traders, this is the reason why I traded futures.

A retail trader paying S$10 for 1 contract of Simsci worth S$75,400 is still cheap compared to buying stocks, probably he need to pay around S$200 comm for that value of stocks. The only difference is that retail traders can choose individual stock to trade and pick those that he feels have better potential of upward price movement.

One big advantage of futures over stock trading is that you can go short the futures naked and hold that position until expiry. Another is you are investing in a diversified portfolio of blue chip stocks, no headache in stock picking.

Another fact that most are ignorant is that interest cost and dividends are being factored into futures pricing. Dividends are paid for those buying into futures when there are dividends to be paid out by some of the stocks in the basket. For example the price of the April Simsci contract is now trading at 3770 while the May contract is trading at a discount of about 28 ticks at 3742, implying a S$560 dividend to be paid out. Historically, investors holding and rolling over their long term positions are assured of returns over time due to inflation and dividends.

The April Simsci contract was also at a discount of 28 ticks over the previous March contract making a payout of S$1,120 over a 2 month period. So for the long term investors, when they roll over their position forward, their pricing will get cheaper and cheaper over time due to the dividends and low interest rate now. One exception is if one were to buy the Nikkei at the peak in 1990 at 39000, he will be losing his pants and still rolling his position at a loss after 20 years. Thus the importance of cutting losses.

So for a investor who used S$4k as margin to buy one contract in March and roll over to May contract, a period of 2 months, can reap a dividend of S$1,120 as long the the futures price remain the same till expiry. He will have additional capital gain if the price move further up while suffer losses if the price depreciate. For 1 Simsci contract value of $75k that yield 3% dividend, one would expect to get S$2,250 worth over a 1 year period with a margin investment of S$4k. That's 50% return if the price remain the same a year later.

Rolling over position from April to May is call calender spread which will be active towards the end of the expiry date for any futures contract. There is a spread quote which is heavily traded too by those who specialise in spread trading. April contract now is known as the near month while May, June, July the far month.

With a $30k account, a trader can easily day trade up to 20 Simsci contracts at one go, that is where the risk comes from. The leverage of up to S$1.5 million worth of stocks with just S$30k. If make use properly, that is where you can reach your million dollar dream.

For those who are not currently members of any Exchanges, find a good and cheap broker. There are many futures contracts that are very liquid with good volatility, it's one's preference, to name a few, mini S&P, Nasdaq, Dow, FTSE, DAX, Gold, Oil, Currency futures, etc. Traders now have plenty of choice. Understand the contract and monitor it closely for some time before you attempt to trade.

SMB Capital on Wall St. Warriors Part 4 of 4

2011-04-19T21:34:00.000+08:00

SMB Capital on Wall St. Warriors Part 3 of 4

2011-04-19T21:33:00.000+08:00

SMB Capital on Wall St. Warriors Part 2 of 4

2011-04-19T21:31:00.000+08:00

SMB Capital on Wall St. Warriors Part 1 of 4

2011-04-19T21:23:00.000+08:00

Lesson No 1 - Cost of Trading

2011-04-10T13:20:00.010+08:00

The reason why 90% of the traders are losing money is because trading is a NEGATIVE, NEGATIVE sum game.

With $100 on the table that 90% of these traders lose money, how much will the 10% make? I asked a fellow trader this question, and we both felt that probably only half the amount or just $50. (Just our opinion) The other $50 disappear into the black hole of the system known as cost of trading.

All form of trading involve cost to facilitate the transaction whether you make or lose money. Rightly so because we need to pay for the services provided to ensure that the transaction is in order, safe and legal.

Traders even need to pay the government tax upfront in the form of 7% GST on the comm, no running away. For professional traders, they have to declare their profits which is subjected to taxes while they can't claim a penny if they lose money the following year except carrying the losses forward. Thus, the negative negative sum game.

Some gains are considered capital gain if taken in as an investment under their personal name. It's a grey area whether one derive this income solely from trading or trading as a part timer. Best to check with the acccountant if one is making lots of money.

Understanding the cost of trading is important for a trader who should treat trading as a business.

Let's look at the transaction cost of the various instruments.

1. Property - Basically for long term investors, 1% comm for the agent, stamp duty, valuation fee and lawyer's fee making it one of the most expensive in term of transaction cost. With capital gain tax and additional stamp duty thrown in for profits made within a year, only very savvy property specuvestors having good connections with developers and inside information should flip and trade.

One major upside on property investment is the depreciating value of our money and the limited supply of land in major cities. Thus, it is one of the easiest form of long term investment, it will always go up in the long run, no worries about mismanagement compared to listed companies.

The downside of property investment is liquidity especially when the market is down with transaction taking months to complete. Sellers might be squeezed to get out if there is an urgent need for cash.

2. Stocks - Cost of trading stocks have come down tremendously over the years but still the comm from trading Singapore stocks range from 0.4% to 0.25% for retail customers. It's still quite hefty but very liquid with narrow spreads and most traders treating profits as capital gain. Professional stock traders are registered with the Stock Exchanges paying yearly membership fees with comm below 0.1% but paying taxes on their profits.

3. ETFs, CFDs and Warrants - I'm not too sure about the comm structure but I'm sure it won't be cheaper than stocks with plenty of hidden costs factor into the prices by the banks that issue them and kiss your investment goodbye if these banks fail like Lehman Brothers.

4. Forex - "No comm, the best instrument to trade", claimed a very ignorant trader brain washed by some Forex course that he had taken. In actual fact, the spread between the bid and ask price is the comm for the brokers. It's very much cheaper now to trade Forex as the Euro/US$ pair spread sometimes narrow down to 1 pip which is US$10 for a round turn of buying and selling US$100k worth of currency. While some not so liquid currency pairs have spread of more than 3 pips which is US$30 per round turn transaction.

But, in time of volatility, the spread may widen to 3 or 5 pips making the transaction rather expensive. Moreover, Forex brokers are like bucket shop where they trade against the client's order. With the advance in computer software, its easy for the brokers to take advantage of client's order without them knowing it.

Forex Brokers are not well regulated, if they collapsed, say bye bye to your money. Most firm offering Forex courses are also introducing brokers for recommending their students to the Forex Broker, earning a comm for every transaction done. Rather good recurring income.

Futures - It's the cheapest in term of transaction cost and Interactive Brokers offer the most competitive rates for retail customers.

Options - About the same comm as Futures but some strike price may not be liquid with rather wide spread from the market makers. This instrument is meant more for the professional traders.

In my next post, I shall discuss more on the cost of trading Futures compared to the other instruments.

So, you want to be a Trader?

2011-04-09T20:22:00.003+08:00

The definition of a trader is someone who buy a certain product and sell it later at a higher price to make a profit.

I have received an email from a reader asking me to share on my blog how someone can begin his career as a trader. After giving it some thought, I shall begin lessons on trading and readers decide whether they should take up trading as a career.

I would also appreciate readers to share their views and comments on the various subjects that I will touch on. I'm very thankful to Coconut for being my constant companion for the past one year and have contributed tremendously in sharing his experience. I look forward to sharing that little knowledge that I know.

Can traders be train? Is there such thing as Natural Born Traders?

The answer is Yes to both of the above.

Smart people learn fast and slow learner don't be despair, as long as one is passionate, hardworking and determine, it just take a little longer to accomplish your dream. It took me quite some time to realise my dream too.

Below are some common instruments for trading;

1. Properties
2. Stocks
3. Forex
4. Futures/Commodities
5. CFDs
6. Warrants
7. Options

Trading, speculation, investing and gambling, they are brothers and sisters in the same family trying to make money from each other.

Statistics have shown that up to 90% of the traders lose money, it is a cold hard fact. I have asked many what are the reasons for such a high percentage of losers versus only 10% who make money. Not many can give me a good answer, it's the usual, no discipline, no money management, cannot control their emotions, etc..

Similarly, the percentage of Equity Funds, Unit Trust, Hedge Funds, etc.. losing money or under performing their benchmark is around the same at 90% even though they are managed by professionals. Choosing one that give consistent return year after year is just as tough, might as well learn and do it yourself, losing money yourself is much better than paying someone else to lose money for you. (refer more to investors, because most are told to hold for the long long term)

Think about it and I shall discuss this topic in my next post. I will be away next week for a holiday to the Chinese Capital with my wife.

TIme for some correction?

2011-04-03T14:23:00.005+08:00

Two weeks ago, I felt the Simsci was a good level to buy at above 3460. Any more room for it to go further? Are the foreign funds back pushing the Index to close at a 2 weeks high? With the looming election approaching, can we short the market?

I will still buy on retracement.

My friend called on Wednesday to short the Nikkei above 9800, he felt that there should be some window dressing in Japan and the market whould correct down again in the next few days. Let's see.

My short term trading strategy will be to buy 2 Simsci and sell 1 Nikkei.

Some reistance for the S&P at 1334 level.

It has been a good week for traders because of the increase volatility, for those who missed it, just too bad, wait for the next opportunity.

US$130k commission!

2011-03-26T14:00:00.005+08:00

Overheard at the hawker centre during lunch break about a very big scalper incurring a comm of US$130k trading the Nikkei on Tuesday when the Nuclear reactor exploded in Japan after the earthquake and tsunami.

It was a hectic day for traders with good volatility across all markets, SGX Nikkei traded more than 4x the normal average daily volume at close to 400,000 with plenty of panic selling. If this trader was to trade the SGX Nikkei alone, he would have contributed about a quarter of the volume! Amazing, a human Algo!

It's rather unbelievable to incur such a high comm, probably this trader hedge against Osaka Nikkei, Minis and Topix. Heard that he made US$250k and lost it back, thus was not able to cover the comm incurred.

There are many big scalpers out there, one that I know traded an average daily volume of more than 5,000 lots in the Tw contract. His monthly volume rebates come up to US$20,000 to US$30,000 a month from the Exchange. His strategy is to trade as much as possible without losing money, the monthly rebates will be his income and profit being additional bonus.

These big traders have negotiating power to bargain for rebates or better comm, an edge that small traders don't have.

Averaging

2011-03-24T13:26:00.002+08:00

A reader have written to me:

"I see that a lot of former floor traders tend to average losing trades and therefore get stuck with huge paper losses during extended market moves. Is this a common strategy among floor traders?"

I believe this is a inherit human pyschology, inborn in us to react in such a manner that we are buying something cheaper now than what we have bought earlier, thus average to get a medium price.

Of course, the problem is when we buy cheaper and cheaper and even cheaper. Where is the bottom? How much more money we have to buy further? Futures trading is based on leverage, it even bankrupt Barring Bank when my fellow trader Nick Leeson average the Nikkei after the Kobe earthquake.

Most new traders adopt this strategy of averaging on bad trades basically because they don't know how to cut losses, unwilling to cut losses or cannot bear the pain of cutting losses until a level whereby it bust their account.

Most of the time when a trader averages on a bad trade, the market is kind enough to come back for them to take a small profit. They can do it for days or weeks but one hit will wipe them off for the past effort in accumulating the profit. How to make money in the long run when it's only small profits and huge losses?

Traders who adopt this strategy will not be able to make it because most of the time they will be back to square one from where they first started, it can be 3 months down the road or 2 years down the road, wasting their time, effort and money.

For those who failed as a trader, asked yourself honestly whether are you one of those who have adopted this strategy subconciously. Ask any trader who losses money on any particular day whether he averages on bad trades, most likely answer is yes.

Averaging on bad trades is a very bad habit meant only for those traders who have very very deep pocket and traders who have planned it together with strict money management rules. They might have to hold the rotten position for weeks or months suffering the agony of the paper losses and lost opportunities.

I do averaging at times when my discipline is down, most likely I'll lose money at the end of the day, strange? That's the fact. I have to justify why I average on a bad trade and ever ready to cut loss when the price move further against me because I'm damn bloody wrong for whatever reasons unknown to me.

My Favourite Breakfast Stall

2011-03-20T23:21:00.003+08:00

The Mei Ling Street Market in Queenstown is where my wife usually visit to buy dried foodstuff from her friend Joyce who help her father at the stall, Chua Yan Heng. It's always crowded on a Sunday morning compared to other stalls, I suppose they are friendly and price reasonable.

The chicken feet hor fun is my favourite on the occasional Sunday morning where I accompanied my wife to replenish her dried foodstuff. Stall Shi Hui Yuan is a Hor Fun specialist opening from Wednesday to Sunday located on the second floor, #02-33 at Mei Ling street market. Waiting time for the food is about 10 to 20 minutes with a constant crowd queuing for their order.

It's simply delicious! The price is reasonable at S$3.00 per plate and S$3.50 for a bigger portion. I enjoyed the food so much that I would like to share it with my readers here.

Where is the Simsci heading?

2011-03-20T18:30:00.002+08:00

Daily chart of the Simsci for 1 year.

Never see day light since the start of the Rabbit year and trading well below the start of year 2011.

Analysts and Feng Shui experts who have predicted a good year for our stock market went into hiding now and praying that the market will go back up again before the end of the year, or else, they have to close shop.

Being a professional Sismci trader, I have been caught too since I didn't liquidate any of my stock holdings. I'm not bearish, the Singapore economy is doing well, why the weakness?

The big funds are moving the markets. Our stock market had a good run for the past 2 years for them to lock in good profits and divert the money elsewhere. They will come back again when the market is cheap and valuation reasonable.

Simsci seems to have good support at 3460 levels, being a very short term trader, I will long above this level with small stop below it.

Expect the Unexpected

2011-03-19T18:25:00.006+08:00

Too often we heard traders commented "Didn't expect the market to drop down so low", "Strong support here, market should rebound" and "No reason for market to come down to such levels, it was so bullish yesterday"

Sound familiar?

Anyone caught in the Nikkei meltdown on Tuesday?

Some traders made millions in just a few days while many were asked to top up their margin or have their long positions liquidated automatically by their brokers. This type of wild movement hardly happen and most short term traders were caught, they just didn't know where to cut or how to cut or too painful to cut.

On Thursday, 10/3/2011, Nikkei was still trading around 10500 levels for most of the day, very strong, consolidating at these levels for the past month despite the sell down of most Asian stock market.

Nikkei came crashing down on Friday after a massive earthquake hit the North Eastern seabed of Japan and subsequent Tsunami that pulverised some coastal cities. Monday sell off continues with the Nikkei traded down to a low of 9130.

Panic sets in on Tuesday when one of the nuclear reactor in Fukushima exploded sending radioactive fumes into the atmosphere. The Nikkei was sold all the way down to a low of 7790, real devastating nightmare for those holding long positions.

A former floor trader revealed that his paper losses was more than US$200k at one point by averaging down on his bad positions. Well, that's the danger of this type of strategy unless you have deep deep pocket. He held on to his positions and cut his losses on the way up only losing below US$20k at the end of the day.

It was a blessing to him, he was happy and lucky to lose this smaller amount but if he had held on to his positions, he would at least be making US$100k now. So what's the moral of the story?

Another friend revealed that he made more than S$100k in just a few minutes on Tuesday during the opening, he managed to catch that big fat rabbit that got lost.

One of my student told me that his classmate from another course made more than a million shorting the Nikkei since Friday upon hearing of the Tsunami that wipe out some coastal cities in Japan. He added on to his short position on Monday and finally took his profit on Tuesday, just 3 days but he was prepared for it. This guy is a natural born trader, my respect to him, a very humble chap.

I suppose there are many great traders out there making tons of money, it happens only once every few years, yours if you have the guts to take the risk.

Cold Hard Truth

2011-03-13T10:45:00.002+08:00

In today's Straits Times were 2 big advertisement on the 3rd and 4th page;

"Learn When To Enter & Exit A Trade With Laser Accuracy - The Easy Way"

"YES! I Finally Found An Easy Way To Make Money Trading Forex"

I wonder why these marketers are sharing their easy money making secret, so stupid! should keep it to themselves and make plenty of money without anybody knowing it.

After being a professional trader for 25 years, I still find it very challenging making those big bucks in such an easy manner. 30 minutes a day? Who are they kidding?

Most of my fellow traders are putting in more than 10 hours of hard work, monitoring the market day and night. We must be cock! for not knowing such easy strategies exist to make easy money.

These marketers can easily put up their strategies on the computer to do auto trading for themselves and make the big bucks, why spent so much money advertising and time teaching others?

Or are they making the big buck for themselves just by teaching? Every second there is a Fool being born, I have been a Fool many times over too. Are they willing to show their daily transaction statements and monthly statements for just a couple of months to show proof?

I'm also a trainer as well as a professional trader with a impeccable track record to show. I'm still trading and I know how tough it is to trade for a living now, I'm not going to lie about it, that's the Cold Hard Truth.

Guts Vs Reckless

2011-03-06T13:01:00.006+08:00

Last week, I felt sad and painful for a fellow trader who suffered heavy losses. He joined us a few months back trading in the same room. A fantastic generous guy whom is not well like by some because of his naturally loud voice that disturb other traders unknowingly. He is a extremely nice chap, helpful and caring.

He traded the Simsci, Tw and Nikkei simultaneously with gusto, fearless and I always admire his guts in taking trades with size I feel uncomfortable. He goes to the maximum that his margin allows for him to day trade. When he is wrong, he averages then flip and turn, he can moves the Simsci a few ticks in a quiet market! And, I will be there to Yum him sometimes without knowing the trade belongs to him.

Is trading that simple?

This trader has been trading for more than a year and I heard he had already lost quite a fair sum of money since. Another quality that I admire is his perseverance, never say die attitude, a rare quality for a trader. But, he is also damn emotional and bloody stubborn, that's what make me feel that he will never make it as a trader if he don't change.

He simply does not practice money management even if he knows how important it is to any trader including those with plenty of experiences.

While relating how I admire this trader's guts, another senior trader laugh it off as an act of recklessness, GUTS, to him is having the courage to act and add on to a good position. I don't dispute that, the greatest traders on earth are those that dare to add on to their winning trades.

How about Warren Buffett? He was 6 months too earlier to get into the stock market during the Lehman Brother's collapse in 2008 accumulating cheaper and cheaper stocks on the way down. He was wrong for 6 months! Now, he is taking profit, it seems so simple when we look back in history.

Of course, Warren Buffett is a investor, we are traders, very short term.

Another Week of Selling

2011-02-27T17:29:00.002+08:00

Unbelievable, another week of ferocious selling in the Simsci especially on Thursday afternoon. Funds are getting out and events in the Middle East cause Oil prices to soar again above the US$100/- level. The shorts take this opportunity to squeeze those who are long, it's real painful to be holding long positions in equity, some even panic.

The market recovered half the losses for the week on Friday, Funds came in to cover their shorts and for those who have been shaken out of their long position the previous few days, will only stare and watch the market creeping up slowly without getting back into position.

Is such a correction good for us to enter into a short position? The trend is heading South and correction of 50% for the week. Who can predict where the market is going tomorrow? I need to be enlighten.

Still, being a scalper, just stick to what I'm doing best and try not to predict the market, don't try to be too smart. Let the market tell me how I should react to it's movement, whether it's Tango, Cha Cha or Waltz, just follow.

Why Still Losing Money?

2011-02-20T15:21:00.007+08:00

A former trader who joined me in December has performed like a roller coaster and now back to square one from where he started. I wrote an email to him in my earlier post but it doesn't seems to get into his head that something is wrong with the way he trades.

This trader has been struggling since the floor closed in 2005 but never give up losing quite a fair sum and digging deeply into his savings. I admire his stamina.

As usual, I asked him, "How much would you like to make a month?" He told me his objective is to make S$3k to S$5k a month. He would be happy and satisfied given that he has not been making money for so many years. I was surprised at the low target since this amount is what he can easily make in one day on the floor.

The floor days are over, many floor traders have given up trading, losing out the edge to the Algos, even many existing traders are finding it increasingly difficult to make a decent profit. New breed of traders are taking over, it's a renewal process, change is inevitable and when a trader don't adapt, losses will force him out of the game.

Why is it so difficult to make even S$3k/5k a month? Even for an old bird? Just $200 a day consistently, 10 Simsci ticks or 5 Nikkei ticks. This trader with 20 years of trading experiences, having made a small fortune from trading, knowing his technicals yet still unable to make it after 5 years.

Something must be wrong somewhere for a well educated overseas graduate who is hardworking and determined. He is not short of trading knowledge, so why?

Can I use the word STUBBORN? Nobody would be willing to admit having a stubborn personality, there would be all type of excuses and explanations to justify their actions.

This trader has chosen not to reply my email advice, too lazy to analyse what went wrong, believing that he is trading right and his strategies should work out. I tried to pull him out from falling into the drain but he chose to jump in instead.

He had 5 straight losing days last week and I can sense some desperation in him when he visited me at the arcade. He needed a break.

He lost in December, recovered the losses and made money in January, then blew them away in February. So, 3 months without income, that's the same story for most traders who are not making it. Expenses will kill them with anxiety setting in leading slowly to depression.

I told the trader to go back to basic, check his trading journal on his performace in January why he performed well for the month (he told me he kept one, hopefully, though I have my doubts). How is he able to record the journal with so many trades, he basically didn't even plan his trades.

Of course, looking at his daily trading statements, I have already sound the alarm bell to him before he slide down into losing territory, I knew something was not right with the way he trades.

His trading volume increases tremendously scalping form home without increasing his profitability. He trades a few different contracts including overseas contracts like DAX, S&P, Currency futures, Nikkei, Tw and the core Simsci. I didn't like the small profits that he makes with the increased comm, a recipe for disaster waiting to happen. He lost his focus.

It does not make sense for a trader trying to make S$200 while the comm adds up to more than $300 a day. It's totally not logical, obviously he's trying to make more, his impatience is his greatest weakness, he is just not ready yet to increase his size.

Scalping is not for someone trading from home, when a trader's profit per trade is small, he is definitely on the wrong track, success rate will be low in the long term.

This trader told me that he increases his trading size after the good performance in January, didn't average on bad trades but being stopped out most of the time. Explanations again that I find it hard to accept but nevertheless, he's trading his own money and only answerable to himself. It must be small profit target but big stop loss levels.

I have emphasie many times to go for good quality trades, just one or two trades a day to make that $200, be patient to wait for that rabbit, it's boring, it's tough but can be achievable. That's the objective for a beginner, accumulate and build up the base, the foundation neccesary before increasing the size.

5 Days of Selling in the Simsci

2011-02-13T22:23:00.004+08:00

I was too busy to update the blog for the past 2 weeks, so many things to do during the Chinese New Year, no wonder some Chinese hate the CNY. But it's our culture to celebrate with numerous feast, visiting relatives and friends that we may meet only once a year, as well as reciprocate by inviting them to our house.

There are plenty of preparation such as spring cleaning up the house and decorating it, making cookies, shopping for new clothes, stocking up the house with soft drinks and food.

The Simsci slide the whole week with market closing lower everyday despite the S&P surging up almost everyday hitting pre-crisis high before the Lehman collapse.

Many Simsci traders were caught by the relentless selling from Day 1 to Day 5 of the suppose prosperous Rabbit Year. Almost all analyst have predicted a roaring start for the Singapore stock market this year and they were so wrong.

The Big boys are still the one controlling the market with their funds withdrawing from Emerging markets and returning back to the Develop markets.

I was caught too for being not objective enough, our economy is sound, we have fantastic growth and the local companies are well managed with many reporting profits within expectation. I'm still puzzled by the selling for 5 days, couldn't believe it, that's why I lost money.

I was angry for not capitalizing on the downward move, good volatility and yet not able to make money. My trading volume increases tremendously, my losses are mostly commissions.

Wish All A Prosperous Rabbit Year!

2011-02-03T23:31:00.001+08:00

Looking for Good Traders

2011-02-02T11:42:00.002+08:00

During lunch, I met a fellow trader who is a pioneer in the Futures Trading industry, my senior who have dished out countless advices to newbies including me. He is one of the most successful floor trader as well as electronic trader and a very well respected options trader.

He is looking to recruit and groom a few traders who have some experience in Futures trading. So, I asked him, "what criteria are you looking for?"

Without hesitation, he replied, "Only one criteria, he must be a person of integrity with some trading experience."

Yes, floor traders like us are men of our words, we honour what we said.

He will personally train the new traders and probation will be for six months.

It's a rare opportunity to learn from one of the best trader in Singapore.

Members of AFACT and students of SGX Academy who are interested can let me know.

A tough month

2011-01-30T17:26:00.004+08:00

A trader from another arcade revealed that he had been losing money since the year started, everyday in a row for 3 weeks! It's unprecedented, he couldn't believe his ass luck, it has never happened in his entire trading career for such a long spell of money losing days.

Yes, few of my traders lost money this month too. What exactly happened to these seasoned traders?

We are now trading against better, more informed traders as well as our greatest enemies, the big Algos who uses their muscle power to push the market up and down sometimes for no apparent reason to squeeze the smaller traders.

I must admit that the operators behind these Algos are good, they are well capitalized to intimidate the smaller traders with their size. They have the speed, at least a 1000 times faster than any trader, using machines that have no emotion. These powerful machines can feel the pulse and the heart beat of the market to sense a certain market direction.

Machines don't need to rest while traders need to be alert at all times. With trading hours extending longer and longer to almost 24 hours trading, the volatility shrink making it even more difficult for a trader.

Another factor that heavily favours the Algos is the volume rebate given by the Exchanges for the high volume of trades churn out by the machines and big time traders. Their transaction cost is so much lower.

Scalpers and Calender spreaders are most affected by the Algos with their high cost of trading. Comm take up a big percentage of their profit which allow only a small margin of error for their trades.

I was told the " The Flipper" has set up shop in Singapore to take advantage of the smaller market to corner and the system here that favours the Algos. Just google and read more about this single largest and most successful individual futures trader on planet Earth. He can simply put anyone of us in his pocket.

I think there are many more smaller "Flipper" now in our market supported by big Prop firms, that's what make trading so tough.

Amazing Precision

2011-01-27T23:33:00.003+08:00

Perfect Shot that need plenty of practice. Just like trading, a lot of hard work is needed to train for making good trades. Focus and keep improving.

Trader's Symposium

2011-01-22T13:45:00.002+08:00

I have been invited again to be one of the speaker at the Trader's Symposium this year. It's kind of challenging to find a topic to share with aspiring traders and motivate them when they can learn it from books and magazines.

What can I share with them in just half an hour?

What would they like to know?

I still have a few months to think about a topic to share and to deliver it honestly on something I have been doing for the past 25 years.

Traders need to be very flexible to adapt as the market condition keep changing with new and better players. My brother, one of the most consistent trader, took a tumble recently and he realised that the strategy he has been using is not working. His cash register suddenly stopped and need servicing.

He need adjustment to tackle the market. That's what makes trading so challenging, change is needed constantly to stay in the game. He managed to keep his losses small, that's what make him a rather good trader, I have great respect for him.

When you are a small fish in a big ocean, survival skill is vital.

Trading Performance

2011-01-13T22:39:00.004+08:00

I have decided to post the results of account FAT8025 on my other blog under Trading Performance for those who like to know them. ->>

It's a second account for this trader, so I'm not expecting too much from him since he don't have much energy left for night trading. I'm curious to see how he handles a losing position and money management.

S&P - NIKKEI Spread

2011-01-12T22:22:00.003+08:00

This is one of the account that is using Inter-Market spread strategy to trade. I'm tracking this trader's performance with a base capital of S$27,104.00. He spend a few hours at night trading from home using the Pat's System.

No speed required for trading this strategy except looking for levels to get in and out. No pressure to perform, no charts required and 40/60 profit sharing.

Why Prince Charles is Afirican!!!

2011-01-11T22:56:00.001+08:00

Email to my Trader

2011-01-09T08:11:00.009+08:00

All my traders funded their own accounts because I believe that they are responsible for their own action. I merely facilitate and guide them, holding a small share in their account that they are comfortable with.

Here is a letter I have just written to a veteran trader of 20 years who have joined me 2 months ago, trading from home. He has been struggling with Electronic trading for the past few years.

Hi Bro,

You have done well in a quiet and very difficult December month for most traders. I have seen great improvement in your trades that comes mostly form the Simsci contract. Last week, you started to drift backward and seems to be struggling again.

From the recent statements, I observed that you are going back to arbitrage trading between CME NK and SGX NK to cover your losses in the Simsci. I'm surprised that you made money doing that with your slow trading platform and Internet speed. The risk/reward ration is about even but it's draining tremendous amount of your energy starring at the screens waiting for such opportunities.

We don't have the edge in arbitrage trading anymore, the Algos have taken over that role with their low latency, high frequency trading at a very much lower comm offered by the Exchanges. You are not going to grow and progress doing that at home, the stress will affect your health and in turn affect your concentration doing outright trading.

You are no longer young with the energy to compete with the Algos. Imagine yourself driving a old boneshaker along the express way at the speed of 50 km/hr while the rest are zooming past at double the speed or more. I definitely don't encourage such trading without the proper setup to compete on a level playing field. The reward for you effort is low. Focus instead on outright trading, losses is part of the game.

Refer to your trades last month and dissect them to understand why you have done well. But did you keep a trading journal?

Recently I challenged my brother too when he spoke about keeping a journal on his previous trades and strategies. I lost! He took the trouble reviewing his trades at the end of each day and record them for future reference so that he can improve on it. That's the biggest reason why he is now the most consistent trader and improving everyday. Can you still remember he was struggling together with you in the arcade through 2009?

95% of the traders do not keep a trading journal, my brother made that little extra effort.

Both of you are equally talented and intelligent, but he is now way ahead of you, why? I have great respect for you, a highly successful floor trader with plenty of guts. For traders who are not making it, I have only one word to describe their characteristic, "STUBBORN". They are all in denial with all sort of excuses, a drunkard will not admit that he is drunk.

Questions that I would like to ask you.

1. Do you keep a trading journal?
2. Can you justify your every trade? (Reasons for entering into a trade)
3. Do you have a stop loss before taking the trade?
4. Do you average on a bad trade?
5. Do you have a profit target?
6. Do you know the right time to trade?
7. Do you know which contract you are most comfortable with?

Being a veteran trader, you should have the answers to all of them, which is rather simple and straight forward. Keep repeating what you have done correctly. There is no compromise on discipline and following strict money management rules.

There is no option for you but to improve yourself, you must do it, you have to do it and I believe you can do it.

I hope change will take place in 2011 and I will come back to ask you the above questions again. Most important, challenge you to show me your journal.

Regards

Confidence

2011-01-03T09:43:00.003+08:00

Start the New Year with a Joke from the mail.

What is Confidence?

20 CEOs from different countries board an airplane and are told the flight that they are about to take is the first-ever to feature pilotless technology : It is an uncrewed aircraft.

19 of the CEOs promptly leave the aircraft, each offering some excuses. The Malaysian CEO alone remains on board the jet, seeming very calm indeed.

Asked why he is so confident in this first uncrewed flight, he replies:

"If the software is developed by my company's IT systems department, this plane won't even take off!"

NOW THAT'S CONFIDENCE!

HAPPY NEW YEAR!

2011-01-01T00:14:00.004+08:00

Life ends; when you stop Dreaming,
Hope ends; when you stop Believing,
Love ends; when you stop Caring,
And Friendship ends; when you stop Sharing.

WISH ALL MY FRIENDS A HAPPY AND PROSPEROUS NEW YEAR !!!

Stock Investor's Mentality

2010-12-31T22:39:00.002+08:00

Any similarity with what you are doing?

What is a Financial Bailout?

2010-12-31T10:47:00.003+08:00

"When it's a question of money, everybody is of the same religion." - Voltaire

Another one from the mail.

It's a slow day in a damp Irish Town. The rain is beating down harshly, and all the streets are deserted. Times are tough, everybody is in debt and everybody lives on credit.

...On this particular day, a rich German tourist is driving through the town, stops at the local hotel and lays a $100 note on the desk, telling the hotel owner he wants to inspect the rooms upstairs in order to pick one to spend the night.

The owner gives him some room-keys and, as soon as the visitor has walked upstairs, the hotelier grabs the $100 note and runs next door to pay his debt to the butcher.

The butcher takes the $100 note and rushes down the street to repay his debt to the pig farmer. The pig farmer takes the $100 note and heads off to pay his bill at the supplier of animal feed and fuel.

The guy at the Farmer's Co-op takes the $100 note and runs to pay his drink at the friendly neighbourhood pub. The pub owner slips the money along to the local prostitute drinking at the bar - who, is spite of facing hard times, has always gladly offered him her 'services' on credit.

The hooker then rushes over to the hotel and pays off her room bill to the hotel owner with the $100 note.

The hotel proprietor quietly replaces the $100 note back on the counter, so that the rich traveller will not supspect anything.

At that moment the traveller comes down the stairs, states that none of the rooms are satisfactory, picks up the $100 note, pockets it and leaves town.

...No one has produced anything. No one hs earned anything. However, the whole town is now out of debt and looking to the future with a lot more optimism.

And that, dear ladies and gentlemen, is how a basic financial bailout package works!

Singapore Peasant

2010-12-30T13:14:00.004+08:00

"It has been said that Democracy is the worst form of government except all the others that have been tried." - Winston Churchill

Just received this email joke, would like to dedicated to my dear friend Coconut in this quiet market.

A peasant was overseeing his herd of animals in the last family farm in Singapore when suddenly a brand new BMW advanced out of the dust cloud towards him.

The driver, a young man in a Armani Suit, Gucci Shoes, Ray Ban sunglasses and YSL tie, leans ou the window and asks the peasant, "If I tell you exactly how many sows and piglets you have in your herd, will you give me a piglet?".

The peasant looks at the man, obviously a Yuppie, then looks at his peacefully grazing herd and calmly answers, "Sure, why not?".

The Yuppie parks his car, whips out his Dell notebook computer, connects it to his RAZR V3 cell phone, and surfs to a NASA page on the Internet, where he calls up a GPS satellite to get an exact fix on his location which he then feeds to another NASA satellite that scans the area in an ultra-high-resolution photo.

The young man then opens the digital photo in Adobe Photoshop and exports it to an image processing facility in Hamburg, Germany. Within seconds, he receives an email on his Palm Pilot that the image has been processed and the data stored. He than accesses a MS-SQL database through an ODBC connected Excel spreadsheet with email on his Blackberry and, after a few minutes, receives a response.

Finally, he prints out a full colour, 150 page report on his hi-tech, miniaturized HP LaserJet printer and turns to the peasant, "You have exactly 986 pigs and piglets."

"That's right. Well, I guess you can take on of my piglets." replied the peasant.

He watches the young man select one of the animal and looks on amused as the young man stuffs it into the trunk of his car.

Then the peasant says to the young man, "Hey, if I can tell you exactly what your business is, will you give me back my piglet?"

The young man thinks about it for a second and then says, "Okay, why not?"

"You're a MP for the PAP", says the peasant

"Wow! That's correct," says the Yuppie, "but how did you guess that?"

"No guessing required." answered the peasant. "You showed up here even though nobody called you; you want to get paid inspite of the your million dollar salary for an answer I already knew, to a question I never asked. You tried o show me how much smarter than me you are; and you don't know a thing about pigs... this is a herd of goats... Now, give me back my dog."

Position Trading

2010-12-28T22:22:00.004+08:00

I have set up another account for one of my trader to do position trading beginning next year. It's another challenge again, not by me but an experience trader who is keen to test his trading skill on a part time basis, while continue doing his day trading.

He can trade any contract when the opportunity arises, no pressure to perform, I'm just curious to see how he will grow and how we can learn from him (if he makes money). He is a stake holder with 50% share in funding the account.

Position traders don't trade daily and might hold on to a position for days or weeks. Can these traders make money? Can he survive and make enough to feed his family? Are most position traders doing it part-time just for the extra money?

I think you have to be rich to do position trading. Stock traders are mostly position traders, can only buy and hold. And for those doing contra trading, most will be digging their own grave, because the comm will kill them over time. But, luckily the comm has now come down tremendously, so they can survive a little longer.

Most of the professional traders are all doing day trading, scalping or spreading to make a living. They are all hardworking, discipline and focus in what they are doing, every second, every minute. It's not a easy life, when you are in, you will realise how tough it is. The competitiion is stiff, it's a negative, negative sum game.

Merry Christmas!

2010-12-25T09:08:00.006+08:00

Merry Christmas to all.

I have decided to return here to post my blog.

It's been a long break from writing, what else can I share about trading?

"Top performers spend more hours rigorously praticing their craft" - David Brooks

I have visited Shanghai recently with my brother and brother-in-law to find out more about the potential of the Chinese Futures market. Though the market is closed to foreigners, many are using relatives or friends there to open account for trading the futures market. There are many loopholes for doing business in China, just find it.

There are some local traders who are already there after the launch of the Shanghai Index, CSI300 contract, it's a new frontier, new opportunities for those who are willing to take the risk.

For experienced traders like us, it's much easier for us to find the edge especially with no Algos present there as yet.

The margin for trading is extremely high compared to other Exchanges, I was told that minimum opening account is RMB 500,000/- and that allow only 2 open contracts of the CSI300. The comm is high too and these measures are to discourage excessive speculation.

There is a limit of putting 500 contract orders (need to verify) for any given day, so that fake orders will be eliminated, getting rid of those big bullies unless it's geniune order. I think this is very good so that traders cannot manipulate the market by creating a false impression of huge orders coming in but disappear immediately.

It's a much level playing field for all traders if everybody will to pay the same clearing fees unlike Exchanges that offer huge volume rebates to high frequency traders.

One of the challenges trading in China is obviously the language, the platforms are mostly in Mandarin and offer only 1 price level. The maximum is up to depth of 5 levels and need to pay extra for that feature. There is no ladder which we can click with the mouse to enter orders. The traders there use the keyboard to enter into a position which they demonstrate how fast they can execute an order. Still slow compared to our platform.

We met up with an investor who offered us capital to station in china to trade the various Chinese products. They expect high returns and are willing to take high risk as well. There are plenty of rich Chinese now who have made a lot of money in all sorts of speculation, especially property. They are talking about doubling their money every 2/3 years.

I told him I'm sorry, I can't promise him those type of returns, I'm in the business of risk management, not excessive speculation. He can find someone who can promise such high returns by just throwing a stone in Shanghai, plenty of them, but promise and actual performance is two different matter and how long can that trader last.

My brother is willing to take up the challenge if the fund is at least S$10 million to fully concentrate on trading or else it's not worth his effort. He is comfortable now, in fact one of the most consistently profitable trader, just a few losing days this year, a very good track record. What a change from a year ago when I was so worried for him not making it as a trader. He is a mature trader now but trading for someone else is a different ball game again.

Migration

2010-03-30T08:14:00.004+08:00

Attended a course on blogging over the weekend, spending 2 long days learning from an expert that's half my age. Just like trading, it won't be easy, there are so many new things to learn, the tricks and the shortcuts that's equivalent to the Yums in trading.

It's worth every cent if you are going into blogging for a living, shortening the learning curve, saving precious time. I'm still uncertain how to go forward from here especially with my busy schedule, being only just a weekend blogger.

In the past I have experienced my blog post being block for unknown reasons, probably over some sensitive issues I might have written. Whatever I have written in blogspot don't belongs to me, thus I have decided to migrate to www.fat88trader.com and pay a yearly hosting fee.

I would like to thank all my readers and please visit me at my new website.

Dreams

2010-03-20T13:40:00.002+08:00

"You know what, it doesn't matter if you're big or small, you've got to believe in yourself, believe you can do it and you've got to be able to dream the big dream." - Mr. Teo Ser Luck, Singapore's Senior Parliamentary Secretary for Community Development, Youth and Sports. Few thought it possible that tiny Singapore would win the rights to host the first Youth Olympic Games.

So, what's your dream?

Most traders have big dream when they first started out but somehow or rather, after a few months they ended up having nightmares instead. Dream is the driving force for anyone who aspire to achieve a goal that might seem impossible and full of obstacles.

I would suggest new traders to have smaller dreams instead in the beginning while working hard towards that big dream. Nothing comes easy and there's no free lunch.

Successful traders not only need to work hard, they need to work smart as well. They need to know when is the right time to trade and the right size to trade.

My new batch of students were very realistic when I asked them about their expectation, most had some experiences trading in stocks or Forex, having attended other courses and know how difficult it is to be a successful trader. They just wanted to learn how to survive and make a decent living.

It's an eye opener for them to see and learn how a real trader trades live in front of them. It's no doubt really stressful for me. I justify each of my trade with an explanation, the mistakes I made and the various emotions expressed especially the frustration when the trade goes against me. Most were stunt to see how I cut losses with such ease, something that is so difficult for them to do so.

I'm glad and happy to enlighten them on their new journey in life as most have quit their job to be full time traders. Their success will make my hard work worthwhile. I hope to guide them towards the big dream I have achieved long time ago.

Cutting losses and riding profits

2010-03-13T22:02:00.003+08:00

Which is easier to execute, cutting losses or riding profits?

A simple question that traders should ask themselves to determine the trading style that suits them. Long term position trader FSK revealed that it's difficult for him to cut losses but it's so easy for him to ride profits. He can hold a position for months and even years to ride the long term trend until there is a U-turn sign. There is almost no cut loss level for him, he invest in a few countries that offer the best returns through his proprietary formula.

As a scalper, it's the total opposite, it's so difficult for me to ride a profit and I won't be making money if I don't cut my losses fast. And for those who find it difficult to execute both, will find themselves struggling to survive in this very competitive game.

How long it take to learn?

2010-03-06T11:50:00.008+08:00

"Learning is not attained by chance, it must be sought for with ardor and attended to with diligence." - Abigail Adams

I have been asked frequently by the newbies how long will it take for them to learn how to trade and start making money. It's a question that is rather difficult to give a correct answer. It depends on the individual.

Everyone is born differently, some are fortunate enough to be bestowed with higher IQ, smarter and more intelligent while others are handsome and beautiful. I realised from young that God is never fair because I had to study very hard yet my academic performance was something I have never been proud of while one of my classmate breezed through so effortlessly with all the As. He was smart, the only one in our class that went to RI and studied overseas with government scholarship.

Nothing in life is fair, being average, I just have to work harder to catch up with those more intelligent who are miles ahead. I'm a slow learner, I take longer to learn anything, I try avoiding anything complicated and look for simple solutions. I know my limited ability and weaknesses, thus trading is the simplest business for me, just 2 decisions, either buy or sell, then take profit, scratch or cut loss.

There are so many things to learn in trading , I believe smart people will learn faster in using the trading platform, the different functionality in enhancing trading, charting, analysing the market and forecasting.

But, apart from learning the basic, trading involves emotions, focus, guts, hard work and passion, that's where the playing field becomes more level. There are many smart people who failed to trade successfully, they think too much and worry too much.

Those who are very successful and make tons of money in trading have a very common trait, they have guts. They dare to bet big once they believe the odds is in their favour. They take calculated risk which differentiate them from a gambler.

My father, a vehicle mechanic told me that he worked many years as a apprentice in a small workshop with no proper training, paid pittance and did all the dirty work. He learnt from stealing glances and assisting the mechanic in the repair job, pure hard work.

Trading is so much easier, there are so many books written on the subject and one can simply borrow them from the public library, learn from the Internet or attend the various courses available to shorten the learning curve.

So, how long it take to learn? A few months will do to learn the basic but to start making money, it might take longer to gain the experience, from constantly learning from the same mistakes repeated again and again daily.

No joke, this is what's happening to most newbies, they just freeze holding a bad position praying that it will come back to their level and get out once they have a small profit. One of my student just did that despite my repeated exhortation to cut the losses fast, he averaged further and happily told me later that he finally made a profit from turning the losses to profit. When will he learn?

After the trading floor closed in 2005, it took me more than 2 years to get back on my feet, to focus and concentrate on trading before finally seeing the light. Many of my fellow floor traders were making good money during this period of time because they were smart to stay in the trading arcade with fast trading platform and Internet speed.

Being a scalper and spreader my whole trading career, it took me just one month to realise my edge, "speed" when I went back to the arcade to trade. My brother-in-law who struggled trading from home joined me in the arcade later and was profitable immediately. He couldn't afford to lose. My younger brother, the smartest in the family and a former floor trader took a year to start making consistent money.

It's a matter of time that a passionate trader who persevere starts to mature by gaining the experiences through daily engaging the market, learning from past mistakes, understand the nature of the market and finally self discovery.

Financial Jargon

2010-02-28T07:48:00.004+08:00

The Financial Association of Singapore (FPAS) announced they are going to launch a online dictionary that aims to shed light on the notorious jargon that so annoys investors. It will give consumers a better understanding of financial products so they can make informed investment decisions. It seek to explain in clear, layman's language, what financial terms actually mean, in order to remove any ambiguity. Don't know when it will be ready.

I came across an interesting advice on decoding fund brochures by a reformed broker, Joshua M Brown at http://thereformedbroker.com/2009/12/14/decoding-fund-brochures/

Fund Brochure Says and What it really means ..

Ultra - Leverage to the Hilt

Global - We"ll chase stocks for you whichever country is most overheated right now.

Clean/Green - A basket of government-subsidized experiments and some shares of G.E.

Deep Value - We will invest in sewing machines and typewriter companies.

Premium - We Will pay up for high-multiple stocks/ you pay up in fees.

Socially Responsible - No such thing - all corporations are evil, sucker.

Diversified - We will basically buy the Index and go golfing.

Enhanced - Uses exotic derivatives you've never heard of.

Balanced - We will under perform both the bond and the stock market. You're welcome.

Aggressive Growth - Collection of Chinese online gaming stocks and New Jersey Bio tech start ups.

Lifecycle - We can see 20 years into the future only Putman knows when and how you will die.

Moderate Allocation - Gutless Fund Manager.

Quantitative - Manager will take credit for Up years, blame computers for Down years.

Endeavour/Opportunities - We will throw darts.

Core - No need to speed it out, send us everything you have.

Casino

2010-02-21T23:11:00.005+08:00

"If you must play, decide upon three things at the start: the rules of the game, the stakes, and the quitting time" - Chinese Proverb

Singapore's first Casino, Resort World Sentosa opened with a bang on the 14th February, the first day of the Lunar New Year. 149,000 visited the Casino in the first week, despite Singaporeans and permanent residents having to pay $100 a day (24 hours) entrance fee.

A fellow trader went there with his wife on the first 3 days of opening, being regulars on the cruise ship, they paid $2,000 per annum entrance fee each since they will be spending plenty of time at the casino. After 3 days of trying their luck, they were $1,000 poorer. They loved the atmosphere and the Casino loved them too!

He revealed that it's hard for anyone to make money from the Casino over time with the odds highly in favour of the house. It's just plain common sense to me. He like many other futures traders loses big time in the Casino. His wife picked up the gambling habit from him and is now seen frequently at the Casino while he needed to be there to keep an eye on her. He hardly gamble now unless it's between friends.

This trader friend is a very good gambler and he started young, he is good at any form of gambling. I knew him in the early 90s in the mess where a few fellow traders would be there almost everyday to have a game of "Majong" after the Nikkei closed at 2.15 pm. When we were short of a player, he would be invited to join us, always available, jobless. He gambled for a living after leaving the stock broking industry a few years back.

He joined us as a futures trader after we introduced him to our profession of having so much free time at our disposal. He started out trading the Nikkei and was losing money in the first few months. He would asked me to help him out by transferring money to his trading account before the end of the month to show his wife that he was making money while paying me back in cash.

Very sharp and alert, he learnt fast and within 6 months, he started to make money in futures trading. He succeeded partly because of the gambling blood in him. Unfortunately, he contributed back quite a fair sum over the years to the Casino.

I never like to gamble in the Casino because of the odds, why should I when there is a better edge in futures trading. I go there just to have some fun and entertainment.

Coming Back

2010-02-18T08:07:00.004+08:00

"If you don't like something, change it. If you can't change it, change your attitude" - Gail Sheehy

A friend called to wish me Happy New Year, a former floor trader, he quited trading after the floor closed in 2005. He is a good sportsman, coaches kids tennis and golf before joining a golf club as a manager.

I was relieved that he is doing OK and not asking me for a loan, I really have a phobia of casual friends calling me out of the blue.

The workload in his current job is killing him. He needs to ensure everything is alright before the first flight and run smoothly till end of the day. That's almost 12 to 15 hours everyday except for a weekday off. He is paid about S$5,000/- a month, a sum that a foreign worker will be more than willing to take up.

In his late 40s, he would like to spend more quality time with his family and with age catching up, he might not have the energy to put up with such hectic schedule.

Since he is spending so much time and energy in his current job, he felt instead, he should channel them back into trading for a living, something he had done before. The time is flexible.

He called 2 other friends who are currently trading and both advised him not to give up his current job as trading is very "tough" now. I wondered why these 2 traders didn't quit trading, of course, I believe they had good intention.

He asked how my second brother is doing now, they were once tennis buddies. I told him my brother struggled for 1 year before finding his niche trading in the afternoon session. That's how long it took him, a seasoned floor trader, it's definitely tough but he is currently very comfortable.

As usual, I asked him what was his expectation. He hoped to at least match his current income. I'm surprised that many of the former floor traders didn't have great expectation, they were realistic and aimed for something achievable, low risk.

I analysed his situation and finally asked him whether he can survived without income for a year with his wife being a homemaker. He pondered for a moment and told me he needed to do some calculation but expressed his intention to make a come back.

I guided him on the various procedures to become a member of SGX, trading platforms and charting providers. He requested to visit me at the arcade to see how I trade once he is ready. That's definitely not a problem, I'm willing to help.

Friends

2010-02-14T08:50:00.002+08:00

"A friend in need, is a friend indeed" - English proverb.

I learnt this proverb in my primary school days, we were taught to help our friends in need and those who help us are really the good friends we need to treasure.

A friend called me last week out of the blue to have lunch with me. We updated each other about our family members and finally he asked me for a favour in a very nice way, to borrow money from me.

He used to be my booth clerk and I have supported him in his career advancement in the past. He SMS me very year to wish me happy birthday as most in the service industries do. He is hardworking and did well in his career.

I sympathised with him when he started pouring out his recent problems and needed money to tight over for a year. Should I?

I have lent money to many friends in the past, from a few thousands to a few hundred thousands. More than 90% of these "friends" never return back the money to me, some disappeared from the radar, totally lost!

I have to sue a friend in High court not too long ago for the return of money loaned to him many years ago. He fought back and claimed that the money was loaned to his company instead. With all the evidence I won the case, he then declared bankrupt. He had transferred money to his wife, still driving a car, eating out at resturants, staying in a terrace house and travelling freely to Johor, Malaysia to conduct his businesses.

This guy had cheated me and a few friends in various business ventures, we lost big time. I can only curse and swear inside my heart and wonder why this guy is not being punish by GOD! or Buddha! or Allah! for his misdeeds. He is a con man and has cheated many.

I'm sick of calling those friends who owed me money, many can afford to pay me by instalments but most just give excuses.

I have many regrets in my life but I'm not going to let it ruin me, I just hope to share my experiences to understand what is "friends", "close friends" and "intimate friends" before extending that helping hand. It's a blessing to be able to help.

For the first day of the Lunar New Year, I shouldn't be writing about all these unhappy incidents.

I would like to wish all my readers a very Happy and Prosperous Tiger Year!

Algo Trading?

2010-02-07T21:12:00.002+08:00

Attended a one day course on Algo trading yesterday sponsored by SGX, the trainers from RTS were knowledgeable and proficient in their craft. We were introduced to the many strategies that can be written for Algo trading. I just wonder why don't they write some strategies to trade themselves?

"Things do not change, we change"

I have been using a simple standard spread Algo strategy with the TT trading platform for my Topix/Nikkei spread trading. I gave the Auto spreader a 1 tick discretion and many times I was filled just 1 tick away which cost me about S$70/- per lot which can be quite costly for bigger quantity traded. I suppose there are more powerful machines and faster platforms out there that squeezed me.

Should I go for the more powerful RTS Tango platform for Algo Trading? One big problem is Phillip Futures don't support the RTS platform because it's rather expensive, not many traders can afford a near US10,000 a month fee. AFACT and SGX are negotiating with RTS for a lower fee for members who are keen to try out the Algo strategies and subsidising part of the Tango platform fees.

To keep the cost down for this learning period, it would be good for like minded traders who are keen on Algo trading to team up. I'm all for it. I would also like to explore the possibility of using simple trading strategies for Algo trading on the TT trading platform.

Fear and Fearless

2010-01-30T12:01:00.004+08:00

"Nothing in life is to be feared. It is only to be understood" - Marie Curie.

The week has been good for most Equity futures traders with the increase in volume and volatility.

Had a chat with a fellow trader after the market closed yesterday and was sad to learn that he was not doing well since the close of the trading floor. That's almost 4 years ago and yet he is still very persistent. He confessed that fear have overtaken him now with his dismal performance despite being hardworking and trying his best.

Another trader who overheard our conversation, suggested that to overcome this demon "fear", he should try bungee jumping. Will it help in overcoming the fear in trading? I doubt so.

The definition of fear is a feeling of anxiety and agitation caused by presence or nearness of danger, evil, pain, etc. So, what's the danger and pain in trading? It's not life threatening and this feeling of pain is all about losing money.

I explained to him that fear existed in him because he is not sure about his strategies, he don't know his edge and he is simply gambling without the trading skill. This skill can be acquired through learning, that's best cure for fear of trading.

At the arcade, there is another trader who is fearless and he specialises in trading the Nikkei. This trader sometimes scalps up to 5,000 contracts a day holding position size from 20 to 50 lots, his P/L a day is my monthly target. I respect this guy for his guts though I'm not too sure whether he is such a good trader. His commission alone is close to S$10,000. Being an old bird, I certainly hope that he can survive in the long run.

I have my fear too, I trade small relative to my margin, I am now a Kiasi and Kiasu trader taking minimum risk now compared to my younger days. I just want to be consistent in my trading making small amount of money almost everyday with no stress, enjoy trading and the challenge of beating the market.

My cousin had the best performing week since joining me, it's really a great boost to his confidence though he still has a long way to go, he is still fragile. Being new to the industry, his performance is up to expectation, he is keen, willing to learn and most important, hard working.

I once told him that in order to succeed, he need to cast other things aside, just talk, think, read, focus and dream about trading everyday. He is getting better by the day with the constant drilling of having a strong and positive mental attitude.

I have a new trader who joined me this month, he approached me a few months back and after a short interview, I decided to take him in as my trader. He was a stock broker for a short period of time. Young and energetic, he is full of vigour and enthusiasm with a happy deposition. I figure it would be much easier to coach him with his financial background.

His performance for the first month is way beyond my expectation. He is a smart chap and learns very fast. With proper guidance and grooming, I believe he has the potential to be a great trader.

Correction?

2010-01-24T17:38:00.004+08:00

"The entire essence of America is the hope to first make money - then make money with money - then make lots of money with lots of money" - Paul Erdman. Hello! how about the risk?

Finally, a long overdue correction for the world's equity market. President Barack Obama is making the right decision in announcing a new plan to limit the bank's size in nipping the problem of "too big to fail" financial firms that might engage in reckless behaviour.

President Obama wants to limit the scope of risk-taking by barring banks with federally insured deposits from trading securities for their own accounts and from owning hedge funds and private equity funds.

I certainly hope that he can succeed in pushing through those reforms and curb the excessive bonuses paid to those greedy bankers that nearly cause the collapse of the global financial system.

How far will the market correct? 10 to 20 percent would be ideal which should offer traders like us more opportunities from the increase market volatility.

Unconcious Competency

2010-01-19T21:16:00.004+08:00

"...by stretching yourself beyond your perceived level of confidence you accelerate your development of competence" - Michael J.Gelb

I have been busy the last 2 days doing live trading showing my students how I scalped the SGX contracts, doing spread trading and hedging. My brother was shocked when I told him that I will be doing trading on just a laptop with wireless connection in the training room. Obviously it's very challenging for me to do live demonstration without my edge.

The wireless Internet connection was interrupted on many occasions on the first day and I was frustrated. Luckily I kept my cool and patiently traded with caution and managed to make a few hundred dollars on each day.

In the trading arcade, I traded with 6 screens on lease line for execution speed while I have to make do with just a 14 inch laptop to squeeze my charts and trading platform together during the training. Glad that I didn't disappoint my students, I certainly feel a sense of achievement for imparting the trading techniques to them.

One of my student called it unconscious competency in the way I executed my trades with ease despite the obstacles that I faced.

Discipline

2010-01-10T11:23:00.004+08:00

"Some people regard discipline as a chore. For me, it is a kind of order that sets me free to fly" - Julie Andrews

We had a very successful AFACT "Time for Tea" event yesterday for members to catch up with each other and share their trading strategies. Didn't expect such a huge turnout of nearly 80 members, luckily the restaurant was big enough to accommodate all of us. We only have indicated interest of around 60 members who signed up 3 days before the event.

Of course, there were many who signed up for the event and didn't turn up and many more who turned up without signing up. It's really a huge challenge for us, the organiser to estimate the turnout for the next event and to look for a suitable venue.

So is there a lack of discipline? Many of us take things for granted in life despite the good fortune that we have. As a trader, we need discipline and more discipline.

Our next event will be the traditional Chinese New Year Lunch on the 27th February, "Lo Hei" a Cantonese saying for tossing up good fortune for a better Year. We have around 300 members, how many will turn up, especially the old birds?

One of the pioneer trader IAN, in his sharing reminded aspiring traders to be discipline, trade within their limit and not to fall in love with a position that has gone wrong.

Yes, any trader know discipline is important, successful traders are mostly discipline and follow strictly to their rules of engagement.

So, what is the meaning of discipline? Checking the wikipedia, one that applies to a trader is "The ability to do the right thing even when no one is watching or suffer the consequences of guilt which produces pain in our bodies, through pain comes discipline"

I remember telling a group of new traders some time ago that if I will to carry a cane and sit beside them, they will definitely make it as a trader in a very short period of time. A whack every time they don't know how to cut their losses, how cruel!

Can we train our self to be discipline?

Start with being punctual, I'm hardly late for any appointment in my life, unless there is a very good reason.

I'm always at the Phillip trading arcade 15 minutes before the market open to prepare myself.

I have never get myself drunk, hardly entertain except during weekends and no matter how late, I will still crawl back home.

Always think about others and be responsible for our own action.

I am sure most of us can accomplish these simple tasks to change our behaviour and attitude. Then we can become better traders.

Wishing all a Prosperous 2010

2010-01-01T17:33:00.004+08:00

'Make Peace with the past so it won't screw up the present"

Almost everyday my cousin told me he learnt a new lesson at the end of the trading day, well, after 25 years of trading, I'm still learning. The market is so dynamic, no single day is the same and most tried in vain to spot a repeat of a past pattern for their perfect entry which is an illusion. The most common excuse, false signal!

2008 was a fantastic year for most traders while 2009 was for most, a lousy year despite the V shape recovery for most equity market and the economy. I wasn't happy with my performance last year, it's mediocre despite the hard work. I don't want to look for excuses, it's simply plain stubbornness and refusing to admit mistakes.

I look forward to doing some longer term day trading for the coming year, it will be challenging for a scalper who is so short sighted.

Star Hedge Fund Trader

2009-12-27T16:55:00.002+08:00

Mr David Tepper, Head of Appaloosa Management is set to collect a cool US$2.5 billion pay package for the year after staking huge bets that global banks would recover in 2009. That's about over a third of the US$7 billion profits generated by the firm in 2009.

The hedge fund said it made returns of over 120 per cent for the year to the beginning of December. He bought Bank of America when the shares were trading below US$3 a piece and Citigroup at US$1.

At the end of last year Appaloosa had a track record of generating an average of 30 per cent returns a year since it's inception in 1993. It's assets under management have tripled in just three years to US$12 billion. Pretty impressive.

Mr Tepper has built a reputation on judging value in panic situation.

My respect to him, he's got guts!

"Without courage, wisdom bears no fruit" - Baltasar Gracian

Asset Bubbles

2009-12-26T07:09:00.004+08:00

"The instinct of ownership is fundamental in man's nature" - William James

Many bankers and economists voiced concern about asset price distortions in an environment of plentiful liquidity which may be sowing the seeds of financial instability, especially in emerging markets.

China's property and stock markets are a "bubble" that will burst when inflation accelerates in 2011, former Morgan Stanley chief Asian economist Andy Xie said. China's residential prices rose last month at the fastest pace since July last year, spurred by the 4 trillion yuan stimulus package and record lending.

Inflation is a concern, so is the depreciating value of our money when governments keep printing money.

In Hong Kong, a shop just 1,212 sq ft in one of the city's busiest districts was reportedly sold for a record US$108 million which work out to about US900,000 per sq ft. The shop houses luxury retailer Emperor Watch and Jewellery. How many watches and jewelleries they need to sell to justify the return on investment? Money laundering?

Here in Singapore, prime good class freehold landed bungalows rose 18.6 per cent for the year, setting fresh record high of S$1,447 per sq ft. More wealthy buyers are willing to fork out more for such properties, 17 were sold for above 20 million each this year. The rich poor gap is widening everywhere, the rich getting richer and the poor suffers.

My parents bought a 3 room HDB flat at S$11,000/- 35 years ago which is now worth more than S$200,000/- . A friend bought a 15 year old 3 room HDB flat in Queenstown, near the MRT station 2 years ago at S$300,000/-, I thought he was crazy to pay such a high price for a 65 sqm old flat. He recently sold it for a 20k profit nett, free lodging for 2 years.

Will there be a asset bubble? With Gold price hitting above US$1,000/-, Oil price above US$70/-, a plate of mee siam costing S$3/- with only half an egg and costly taxi fare, I don't see property prices crashing down. A crash will be a good buy!

A friend complained recently after having lunch at a restaurant in ION Orchard, he asked for 3 glasses of plain water, 2 of the glasses were refilled later. He was shocked when he was billed S$5/- for plain tap water, S$1/- each for the paper tower and S$3/- for a small plate of peanuts,++ (7% GST and 10% service charge.

The properties in Orchard are expensive and with big developers bidding high prices for them, the rental for the shops and restaurants is not going to be cheap.

Who benefits most from such high property prices? Who else but the biggest land owner! The government of course, adding much to their coffers and higher property prices would also mean higher property taxes as well, the government is getting so rich. We the citizen, need to work very hard.

Many of my friends are concern whether their children can afford to buy a property when they grow up with prices increasing at such an alarming rate. One solution by the government is in building ever smaller HDB flats, a 5 room flat have shrunk from 125 sqm to as small as 105 sqm now. More 3 room flats are built to be affordable and not comfortable, live with it if you are poor.

We are one of the most densely populated country in the world yet our planners are still trying to squeeze more people into this tiny island. To be more competitive? Higher growth? Better living standard? I think it's more stressful for the ordinary citizen.

Competitive Edge

2009-12-19T22:26:00.009+08:00

"Challenges are what make life interesting; overcoming them is what makes life meaningful. - Joshua J. Marine

Is having an edge that important to a trader?

What's your edge in trading? A question I asked many traders.

Unfortunately, most traders don't even know or understand why having an edge is so important to their success. Those who make good money consistently obviously know subconsciously what their edge is even though they might not have given much thought about it.

As a scalper and spreader, speed in trade execution is one of the most important factor contribution to my success, I need fast reliable Internet speed and a good trading platform. It gives me the confidence, which is a very important psychological booster to any trader.

With the advance in technology, I'm losing this edge to the Algos and the big boys who can afford superfast supercomputer such as the "Roadrunner" by IBM introduced in 2008. It operates one petaflop per second or one thousand trillion calculations per second! Unbelievable!

How fast is a petaflop? That's roughly equivalent to the combined computing power of 100,000 of today's fastest laptop computers. You would need a stack of laptops 1.5 miles high to equal Roadrunner's performance.

It would take the entire population of the earth - about six billion - each of us working a handheld calculator at the rate of one second per calculation, more than 46 years to do what Roadrunner can do in one day.

I heard from those AFACT members who have recently attended the Algo course about the amazing speed in execution by the RTD Tango Algo platform, more than 600 lots executed within seconds with a default of only 1 lot. There's no way we human can compete with the machine, it's probably 100 times faster than what we can click with our mouse.

Does that mean that we traders especially the scalpers and spreaders cannot make a living from trading?

Of course I don't think so, we now know our competitors, we need to take steps to change our strategies, probably taking more risk and working harder for our money. There are still plenty of day traders and position traders putting in sitting duck orders for their trades to be filled.

We must be ready for the challenges ahead against the big boys who can afford the fastest machines and the best programmers. List the the various factors that together contribute to be our competitive edge and work on it.

For traders who don't know what is their edge, the trades they put in have only 50% chance of making money. It becomes a gamble. I suppose many are in this category of struggling to survive, can't make enough to cover expenses. Over time they become demoralise and throw in the tower, what a waste.

Feng Shui

2009-12-13T21:39:00.006+08:00

"The best luck of all is the luck you make for yourself" - Douglas MacArthur

I'm just a half believer, still sceptical about the motives of the so call "Shi Fu" or Master in able to change my luck, avoid disaster or helping to turn a failing business around, fees upfront.

Being a trader, I still believe in a certain element of luck, a small percentage, probably if I feel lucky, most certainly I would make money on that day. I love to buy stones, crystals, glassware, Idols, etc that I think would bring luck to me, place them around the house and my trading table. My wife think I am nuts.

On my recent holiday trip to Taiwan, the tour guide brought us to this Feng Shui Shop and of course the soft and hard sell to change luck for the better. I was told Singapore has very good Feng Shui, and our MM is a firm believer, many projects were made with the consultation of a very famous Taiwan Feng Shui "Shi Fu"

Having bless to live in a good Feng Shui country, we need to have good Feng Shui at home too and to have good personal Feng Shui, always have a smiling face because that's the shape of the Chinese gold nugget, luck will be with you!

"Everything in life is luck" - Donald Trump, he is a damn lucky fellow!

US$45,000.00 profit in ONE MINUTE

2009-12-03T08:12:00.003+08:00

"Obstacles are things a person sees when he takes his eyes off his goal" - E. Joseph Cossman

Met up with Super Scalper at a dinner reception on Monday night and since he specialised in the SGX Taiwan futures contract, I asked whether he managed to Yum the Friday opening trade.

Cool as a cucumber, he revealed that he made around 4,500 ticks in the Taiwan December contract on Friday in less than a minute. That's US$45,000.00!!!! Wow! Using the fastest trading platform, he uses the auto spreader to buy up to 280 lots of spread when the December was sold down. Risk Free! with heavy bid in the November.

Super scalper is one of the sharpest trader I knew on the floor, his brain works like a computer in crunching numbers between cash and futures prices against the spread at the end of the settlement month. Being a spreader myself for more than 20 years, I lose out to him miles away. He hardly hold a position for more than 5 seconds.

Super scalper trade without charts, wakes up at 6 am to read the news and check the US market to prepare for trading at 8.45 am. Very focus, concentrate only on one contract using the movement in the Taiex (Taiwan) as a guide and sometimes arbitrage against it when the opportunity arises.

Another Yum Trade!

2009-11-28T20:39:00.006+08:00

"Anger dwells only in the bossom of fools" - Albert Einstein

I missed the yum trade in the SGX December Taiwan contract on Friday, a Singapore holiday, Hari Raya Haji. I was concentrating on the Futures Yen contract that went crazy, up almost 300 ticks from overnight, and forgot about the Taiwan opening. I was frustrated for missing this Haji "ang pow", though it was not a contract that I focused on.

The December Taiwan was sold down almost 80 ticks after opening for no apparent reason before rising immediately up almost to the opening level. I didn't know what happened. I guessed the order filler must have keyed in the wrong big figure, a very costly mistake for the company. A few hundred lots traded down, can't imagine the losses!

This type of yum trade happens once in a blue moon, only for those who are alert, hardworking and know something about calendar spread. It was almost risk free trade with the November contract bidded heavily, of course most traders would not have expected this to happen.

There were a few in the trading arcade that managed to get "ang pows", two of them hardly trade the Taiwan contract but everyday just wait for the durian to drop especially during the opening of the various contracts and rollover period. One made more than 400 ticks and the other I was really surprised, never heard him trading the Taiwan and yet managed to Yum 140 ticks for just few minutes work. Really put me to shame.

The survival instinct of these traders are commendable, they deserved it because they are hardworking and know what is their edge. They are like the cheetahs waiting patiently for their prey. So, are you the hunter or the prey? Maybe just a spectator waiting for things to happen.

I was frustrated for missing the Yum trade and began to trade with anger, blaming myself for not being alert. This emotional behaviour is detrimental to the mental state of health for a trader. I tried very hard to control it but still ended up trading so many different contracts, Yen, S&P, Nikkei, Taiwan and later Simsci at the same time.

Did I make money for the day? NO! I was lucky to break even, but what a waste of time.

My good friend gave notice to pull out from the special account to invest in a Japanese restaurant since I have not been performing for the past 6 months. I feel bad about it for not able to reach my target and under performing the stock market. I have been too conservative to take risk.

Performance for the year since we started in December 2008 is S$30,809.00, a 6.8% return per annum, way below my target of 12% return.

From December, what is left will be my own fund of S$200,000.00 to trade, mostly outright position and spread trading. It will be interesting to see whether I can overcome the "FEAR" factor and have a more systematic approach to trading.

Trading from home

2009-11-21T11:50:00.007+08:00

My GPMG in the office versus my AR15 at home.

"When everything seems to be going against you, remember that the airplane takes off against the wind, not with it." - Henry Ford

Spent the last 5 days trading from home with just 3 screens and wireless Internet to test out whether I can be profitable trading from home losing out my most important edge, "SPEED".

No doubt, I can feel the difference in execution speed, especially on a wireless notebook, the ping is slow, a great disadvantage if I scalp in a fast moving market. With the TT trading platform, I would consider it relatively fast, probably I only traded the local SGX contracts.

It's more relaxed trading from home, saves on travelling cost and time without having to pay additional booth fees in the arcade. Cost saving is around $900/- a month. But, I will miss all my buddies in the arcade, the camaraderie and jokes.

Bottom line, can I make money?

I have failed to make money 4 years ago trading from home after the closure of the pit, though I didn't lose money, monthly expenses were draining my savings very rapidly like an open tap. I couldn't find my head (Hokkien phrase), went around in a circle getting more desperate by the day.

I went into some business venture and traded on a part time basis, thus no focus and concentration. I flopped in both losing more precious capital.

Being a scalper and spreader all my trading life, I am a very short term trader, hardly able to convert to a part time day trader in between meetings and overseas business travel. I didn't even know what's my edge in trading, didn't realise having an edge is so important.

After decisively cutting losses on my business venture, I went back to trading full time as a trader in the arcade. With the help of some of my close friends who enlightened me on the "tricks" of trading. I then look at trading in a different perspective.

Finally, I made a few thousand bucks for the week trading cautiously and conservatively despite losing my edge in speed. I have matured as a trader.

No trading for the special account.

Is Trading that Difficult?

2009-11-15T10:44:00.007+08:00

One of my good friend, a fellow trader posted in his facebook, "Trading is the most stressful occupation in the world". Whenever I meet him, he is full of smile and vitality, trades the market opening at the arcade for about 2 to 3 hours daily, whether win or lose, he disappears like David Copperfield.

I hardly see him in the afternoon, so what's so stressful? Probably after trading, he goes to the bank, withdraws his profits in cash and spent the rest of the time ironing the notes at home and worries about where to keep them (LOL).

He just bought a new apartment. Is he not making good money and laughing all the way to the bank? What he is doing is probably the dream of 99% of the traders including me.

I remembered during those early days on the floor, we were both trading the Nikkei contract. Whenever the market goes against him, he would turn around and start cutting his losses extremely fast and hard pushing the prices up or down. Sometimes having the same position as him can be really a pain in the neck.

In the beginning I would go against him to average further since he was selling or buying at prices that can be 5 to 20 ticks away in a not too liquid market. I lost more money going against him as I have to cut further away. He told me "I'm just relieving stress", and thanked me for carrying his baby.

I dared not trade against him after a few attempt to support the market once I knew he was cutting losses. It's kamikaze!

After converting to electronic trading, he revealed that it's common for him to lose a few months in a row before recovering and asked whether I can withstand the drawdown and the emotional roller coaster.

What's his secret?

He is a momentum trader averaging on his good trades without fear and square off all positions immediately once the market turn with just a click of the button, no questions asked or anything to regret. He leverages on his speed and plenty of guts, that's his edge, another of those super trader.

He spent lots of money in motivational programmes, attending seminars like Anthony Robins, Robert Kiyosaki etc and attending various courses every year.

He recently attended a series of courses where the total package comes up to about S$11,000/-. I'm really amazed by this guy. I asked why he spent so much money attending all these courses. "Many attended the course, from CEOs to salesmen, that's the shortcut to knowledge, by learning from those who are successful, time is money" he replied.

My friend deserved to be successful, and his thirst for knowledge is insatiable.

Profit to date for the special account is S$10,749.00

Traders are not born

2009-11-07T17:46:00.006+08:00

"You cannot teach a man anything; you can only help him find it within himself" - Galileo

I have yet to come across a trader who makes money straight away, so for those who are still struggling, don't be discouraged, keep on learning and applying what you have learnt with the discipline that is needed.

Cutting loss is difficult, riding profit is even worse because of our natural human emotions of hope and fear. Once a trader is able to overcome these two very simple emotional theory but extremely difficult in term of execution, he is half way there.

I remembered an incident many years ago, while I was still trading in the pit, a fellow trader came up and handed me a trading card to execute some trades on his behalf, "Cut for me", and walked away immediately without turning back.

I could see the sadness in his eyes and felt the pain he was going through. Just too painful for him to execute the trades himself. He had taken too long to admit his mistake and the pain threshold overshot his mental state of mind to handle the situation emotionally.

He needed time to cool down. I caught up with him later to console him and learnt that just one bad trade wiped off a few months of his profit.

That sounded familiar to me, it happened to me a few times when I first started out as a trader, I was very experienced in that kind of excruciating pain, a sense of hopelessness, dejection, self doubt and wondered whether I was suitable to be a trader.

What can I do? Being a frog in a well, I didn't have many options with my limited education. With perseverance and determination, it took me one painful year to break even, to learn how to trade and avoid costly mistakes. I finally graduated from the school of hard knock.

Unlike traders now, we had little choice in the contracts available for us to trade in those days. There wasn't any courses available that teach us how to trade, either swim or sink.

The cost of trading has gone up tremendously making it difficult for new traders to take up the challenge. Traders are now educated, competition is tough and worst of all, Algos muscling in for a piece of the cake. We now have to compete with emotionless machines! But, these machines are still operated by humans and so they still do make mistakes! That's where I will be waiting for them, some Ah Q positive mentality.

New traders are very lucky now with SGX taking pro-active steps in providing subsidised education in trading and showing more concern for their welfare. It's just a matter of time that they mature in their trading, how long will depend on the individual trader. I'm not so smart, that's why it took me one year and even longer when I convert to electronic trading.

Profit for our special account went back up to S$13,630.00, like a yo-yo up and down, I'm just not happy with it. Still holding 2 Topix/Nikkei spread.

Change

2009-10-31T21:07:00.006+08:00

"Life belongs to the living, and he who lives must be prepared for changes" - Johann Wolfgang Von Goethe

It's great to see my cousin making money for the past 3 consecutive days, controlling his losses well and great improvement in riding the profits. It's been really stressful for him since he started trading at the beginning of the month, losing almost daily. This scenario is quite common to a new trader.

Being totally new to futures trading, it's quite an uphill task for him to learn so many things in such a short period of time. I can sense his frustration, anger and the feeling of hopelessness in himself.

I need to do quite a lot of damage control to his emotional well being, encourage and instill a positive mental attitude in the face of adversity.

Mentoring someone new is much easier, they are keen to learn, willing to listen with no emotional baggage. Most important, they are willing to change.

Many old birds that came to see how I traded, I would say are rather stubborn if they are not making money. They still like the way they look at their charts, layout and strategies.

My questions to them "Are you making money looking at so many tiny charts with so many indicators?", "Why don't you change and test other trading platforms?", "If you are not making money, why are you still looking at the same charts?"

Their answer "I'm comfortable with my charts, I like to look at these indicators and TT trading platform is expensive.", "I'm not stubborn!"

"TT is giving 1 month free trial, why don't you try it out" was my reply. "Free! you don't have to pay."

It's so difficult to convince them to change.

Profit in the special account went back to S$10,230.00 while still holding the 4 Topix/Nikkei spread. Not able to focus on this account for the past few months. Trading has been tough.

Market Sense

2009-10-25T12:07:00.004+08:00

We have 5 senses and some claimed to have 6 senses but to be successful traders, we need Market Sense.

I have been trading on the floor for 20 years without charts, didn't know how to operate the Bloomberg or Reuters machines for news or charts. In fact, many of those successful floor traders were like me, blur like sotong when it comes to technicalities of trading.

What we have is Market Sense or a good gut feel of the market rhythm, the players and a deep understanding of the nature of the contract. There are only 2 directions for the market, it's either up or down, what's so difficult?

Being very self motivated, I read a number of books on charting and the various strategies, but I couldn't apply them successfully in my trading. I have problem remembering all those chart patterns, waves or numbers and felt price action is so random that I lost faith in them.

Converting to electronic trading has been really tough for some of the floor traders, many failed and leave the industry. I was forced again to revisit charting as a tool to my trading. I failed miserably and struggled for more than 2 years looking for the holy grail in chart patterns.

Price action is really random, as what Mark Douglas wrote in his book "Trading in the ZONE", the no. 1 principles of trading "ANYTHING CAN HAPPEN". Whenever a chart pattern fails, the technicians called it "false signal" or "false break" and it happens probably 50% of the time!

Charting is just a small part in the overall factor of a successful trader. Over emphasis in this area is what separates the amateurs from the professionals.

I tried trading the SIMSCI during the T+1 at home for the past few nights. I started tracking the market at about 8.15 pm before the data, news release and US market opening at 9.30 pm Singapore time.

I used a laptop with a wireless Internet connection to trade giving up the most important edge in my trading, speed in execution. Luckily for SGX contracts, I lose out only in milliseconds because the TT platform is still extremely fast.

I opened up the trading ladder for SIMSCI, Taiwan and the S&P as a guide with no room for any charts. I watched the movement of the S&P and put in my orders in SIMSCI hoping for some Yum trades, trading 1 contract at a time due to the thin volume.

I made a few hundred dollars each night for 2 to 3 hours work. No Charts! Was it luck or skill? I made money every night, will it last?

I don't normally trade at night so that I can have a good rest plus all my screens are in the trading arcade.

I think I have good market sense for the contract I am very familiar with.

How stubborn can you be?

2009-10-24T11:44:00.017+08:00

"Life is a gift of nature; but beautiful living is the gift of wisdom" - Greek Adage

I was away last weekend to KL, Malaysia to attend my wife's cousin's wedding dinner, and didn't have the time to update this weekly blog. I drove up with my wife's family in a 5 vehicle convoy and stayed in a hotel in Mid Valley before returning on Monday.

Can't imagine myself shopping and walking the whole Sunday inside such a huge shopping complex in Malaysia! I felt safe inside, that's my utmost concern for my family after hearing so much about daylight robberies and snatch theft on motorbikes.

The drive was smooth both ways without any police block for speeding, what a relief! Many times in the past, I needed to put 2 M$50/- bill in my passport for the traffic police to settle the case after some bargaining. Extra income for these law enforcers! I could see the greed in their eyes and the radiant smile on their faces when they returned the passport back to me and urged me to drive carefully.

My cousin joined me this month as a full time trader after more than 10 years in the electronic sector. He spoke to me in January about having not much prospect in his job, frustration and contemplating switching career to be a trader. As usual,I encouraged him to go for it, giving himself a chance, an opportunity in his life and to prove his critics wrong.

I lent him all my trading books so that he could prepare himself with some knowledge of the challenges ahead. I'm not sure whether he had completed them. He cleared some leave to watch and learn how I traded, so simple, so easy!

He planned and prepared himself mentally for 9 months. Full of confidence that he could make money from the word go. Of course, the result turned out the other way round, as what I would have expected.

My brother, a former floor trader joined me last July after my success in switching to electronic trading. The most intelligent in my family, I thought it would be easy meat for him as he traded the Forex after the floor closed.

Robert and I taught him our strategies in trading Index futures which I would say is rather different from the interest rate futures he traded on the floor. Nevertheless, with his background and knowledge, I didn't think it should be a big problem for him since we were there to guide him.

I was damn wrong as the months went, his account depreciated slowly, at least he knew some form of money management. In my opinion, he was not disciplined and a bit lazy. My parents were concerned and I was worried for him.

He did not lose money in trading, it's the expenses that were killing him, the booth fee and the trading platform fee. He couldn't make enough profit to cover those expenses. And, how about living expenses?

So, what went wrong?

Whenever I glanced and looked at his position, I knew whether he was making money or holding on to some bad position. He was surprised. I told him that with my experience and understanding of his trading style, looking at the number of position he was holding indicate he was in deep shit and fighting the market.

"I told you to cut your losses when wrong and don't average on bad trades, why are you doing it again and again, I told you a hundred times, a thousand times, yet you are still doing it.", seems a little bit harsh and exaggerated, painful for me but meant good for him.

"What can you to do if you can't make it as a trader? Taxi driver? Hawker?"

I thought he would not make it, but he really is a fighter, sold his house, cleared his debts, got more screens and continued to struggle on. I could see the will power and determination in him to succeed. He had not many choices.

How stubborn you want to be? Until it is very painful before we learn not to be stubborn, admit our mistakes, take the losses and move on, the market is there everyday for us!

After more than a year of trading, I can see my brother making a u-turn and start to have positive cash flow recently and very consistent profit everyday. He now speaks with confidence. He has finally overcome his own obstacle and finding his edge in trading. I am really happy for him.

Being stubborn does not pay. I am ashamed to admit my own stubbornness too, holding on to my Topix/Nikkei spread. I have been influenced by my Guru not to cut the losses, holding on to it together and fight on with bruises all over the body. This is not my normal trading style. Though I can afford the losses, it's just not worth it.

It's a wake up call.

I have a friend who once worked for a fund management firm, he told me there were 7 staff, 2 admins, 2 traders and 3 compliance officers to make sure the 2 traders toe the line for every trade. Stop losses will be executed without fail to ensure traders stick to the rules with eyes like a hawk, watching over their every move. I suppose they didn't want another Nick Leeson to appear here again in Singapore.

That's how discipline is being enforced, no room for complacency.

Did not trade much for the past 2 weeks for this special account. Still holding 4 Topix/Nikkei spread and losses to date is S$2,031.00. What a disaster! Need a lot of soul searching.

Algorithmic Trading

2009-10-10T17:18:00.009+08:00

"The difference between a successful person and others is not a lack of strength, not a lack of knowledge, but rather a lack in will" - Vince Lombardi.

Went to attend a talk on Algorithmic Trading organised by AFACT last night. I am glad that Mr. Alan Donoghue from Nyenburgh, an algorithmic trading firm is willing to share his expertise with us. Together with vendors RTS and TT, we were given a brief education on Algo trading and how we too can be Algo traders.

Since we can't beat them, join them!

Algos have been accused of wrecking havoc to the profitability of many scalpers recently as more firms are jumping on the bandwagon to have a piece of the cake. Many traders felt the Algos are a threat to their livelihood and responsible for their dismal performance.

These algos are in fact narrowing down the spreads whenever there is any inefficiency in the pricing taking away the yum trades from the scalpers. They are providing more liquidity into the market and a boom to retail customers.

Non trending market condition in a narrow range with dropping volume is always difficult for traders to make money. It has got nothing to do with algos. Traders need to keep changing their strategies to deal with the different market conditions.

Scalpers are losing their edge in term of execution speed to the algos but with more algos, they will be fighting each other too and I believe not all algos make money.
Education has made investors more savy and traders smarter thus making competition really tough.

There is no level playing field in this world, we just need to live with it, come to term with it, be more imaginative and more innovative in finding our edge.

"You cannot depend on your eyes when your imagination is out of focus" - Mark Twain.

I have many friends who are trading from home, definitely losing out in term of speed, yet some of them are making a comfortable living. I salute them.

"The secret of success is to know something noboby else knows" - Aristotle Onassis.

Profit for the special account to date is S$9,840.00.

Dare to live your dream

2009-10-04T07:38:00.003+08:00

"While there has been considerable investment in hardware, the key is still the individual - his training, courage and commitment" PM Lee Hsien Loong.

In a recent talk to some of the students during the review session of Tom's (YCK) class, I asked them "Who wants to be a professional trader?" Only two of the students timidly raised their hands shyly indicating their interest.

These students had taken the proactive step to go for training on the various charting strategies from one of the most knowledgeable trader on the subject. Are the students willing to put in the commitment? Do they have the courage to take up the challenge? Do they dare to live their dream and make it happen?

I like to read Dr Lee Wei Ling's articles on the Sunday Times and today she wrote about "Turning dreams into reality". "Singapore was built by a group of determined men who worked hard to realise their vision". I am extremely proud to be a Singaporean and very thankful to these "gentlemen".

"Fortune favours only those who grab the opportunities life offers. If the future has rough patches, we should simply accept that as a fact of life, and continue to make the best out of things."

Majority of the successful traders (old birds) I know don't come from well to do families, they struggled with determination and worked hard to realise their dream. There are also many new birds who are doing very well after a few years in trading, I was told some of them are now big size traders in the electronic platform.

What makes them so successful? How are they able to withstand the stress of having a few hundred outright position? Imagine the risk and think about their rewards. It's none other than having the COURAGE to trade what they believe in.

Still holding 3 long Topix/Nikkei spread in the special account, profit to date is S$8,814.00.

Forex Trading, easy money?

2009-09-27T11:19:00.008+08:00

"Look before you Leap" - English proverb.

I have received a SMS recently, "Want to make monthly passive income from Auto forex trading? We do not charge management fee and don't have to buy any software. Interested, please come to our talk". So, how they survive?

I don't know who this chap is, obviously trying to earn some comm. from soliciting funds to invest in some Auto Forex trading system that promise reasonable returns without highlighting the tremendous risk involved. BEWARE!

I have invested some money with fx:1 academy 3 years back to test out their so called Automated trading that promised good passive income with impressive back testing track record. I was conned into being their scapegoat and my account lost more than 50% before I decided to close it. Very ashamed to reveal it here, but just for my friends to be aware of the risk.

I have never seen a day of profit, it's downhill all the way right from the beginning. Since it was a small investment, I didn't pay particular attention to it until one of their trainers called to apologise about a huge sudden draw down due to some adverse news during the night. Of course all the bull shit explanations about missing stops in the Forex market, etc, etc.

The company made money from churning the account through an automated trading system deploying various strategies. The Forex Broker gave the company a cut from the spread between the bid and ask price every time a trade is done. It's a money tree for them, I don't mind if they are able to make money for me, but that's not the case, it's win win for them and losses only for me.

This company markets their courses and automated programme through some sort of MLM plan where most of the top money earners are in fact salesmen and not traders.

A friend visited me recently and revealed paying S$3,800/- to the same company for a course on Forex trading learning only one strategy, he emphasised. He did not trade after the course, as he was unsure of the charting and trading platform. Another victim of some sleek marketing on how easy to make money trading forex by just spending 2 hours a day. It suited him perfectly since he is working full time.

Profit for the special account again drop to S$5,821.00. Still holding long 3 Topix/Nikkei spread.

Yum Yum Trade

2009-09-19T06:58:00.016+08:00

"The coward calls the brave man rash, the rash man calls him a coward" - Aristotle

Many ask me what's a 'YUM' trade and to quote examples. Yum trades occur mostly in chaotic market when we don't know exactly what's happening, the price movement defies logic, big surge up and down for unknown reasons. I love this type of market movements, it create lots of opportunities for the brave.

Two very big Yum trades occurred this month on the SGX contracts, one on the 9/9/09 (Taiwan contract) and the other on 18/9/09 (Simsci contract).

On 9/9/09, the Taiwan contract opened at around 2692 and started moving upwards, another trader sitting besides me who specialise in the Tw contract told me the resistant was around 2715. I checked my charts and yes, it should be a strong resistant at that level.

I shorted 1 lot at 2720 and immediately cut loss 10 ticks away, market paused for a while at 2740 and I thought it's easing off, so shorted again at 2738 and again have to cut loss immediately 15 ticks away, really fast and furious.

What happened? The cash market has not open yet, what's the news in Taiwan that we don't know about? Why are they buying up the futures? Is Algo at work, pushing up the market to catch the shorties? Lots of questions float in my mind.

Market hit 2795 and started retracing down and fearing the market will come off, shorted 2 lots at 2786. Imagine my shock when it U-turn immediately upwards, what type of ass luck is that! Three losses in a row! I was angry, trying to justify holding the 2 lots and refusing to cut loss. Shit! big mistake, it broke big figure 2800 and another wave of senseless short covering came in.

I was speechless looking at the market and staring at my overall losses of 150 ticks in less than 10 minutes with only a very small position. The limit up is very close by, what should I do? I dared not average further fearing for the worst, with a small position, the damage would not hurt me, I consoled myself.

I had no guts! Fear overcame me.

Taiwan is far away from Singapore, I don't know what's happening on the ground there, what type of news will affect the market. But, I always have this feeling that the market is heavily manipulated by the KMT and their cronies. It's a great contract for speculators with good volume and daily range.

The market continues pushing up to a high of almost 2850 and started to descend furiously, not adding on any position just in case it pull back up again. Came back down to 2790 in less than a minute, undecided whether to cut the position with a small loss, no, hold it.

A bad move not to cut with a small loss, the market moved swiftly back up to 2820 again, holy shit! Then started coming off to 2780s and swung back up again to 2800. What the "f#@K"! I was frustrated not getting out of my position a second time.

The third time it came back down, I got out my position at 2783 with overall losses of around 20 ticks. I was happy, but it turn to frustration again when the market dive down to 2760. What a stupid idiot I am! In less than an hour the market crashed all the way back down to a low of 2680, below the opening price.

I had missed the 'YUM' trades because Anger and Fear had overtaken me. I was a coward not to take on bigger position and more risk. The market went up 160 ticks within 10 minutes and crashed all the way down 170 ticks later, so much opportunities yet I had not capitalise on it.

"Bravery is the capacity to perform properly even when scared half to death" - Omar Bradley

Met other traders during the break and learnt that most scalpers were badly caught on the way up. It's bloodbath even for the disciplined. Payback time!

Yesterday, the YUM trades occurred in the SIMSCI contract after the cash market closed. The market started selling off for no apparent reason, I bought some at 3189 and 3185 since most major markets were stable and holding well.

The market came off swiftly after hitting some stops. Bought further at 3163 and managed to cut only 1 lot at 3158 before the market dropped like a bomb, prices disappeared from my ladder. Some massive stops must have been triggered. Holding 5 lots and saw my losses at more than 600 ticks in just seconds.

Scrolled down and saw the prices trading down furiously, managed to buy 3 lots at 3024 and tried chasing the market at 3026 and 3052, all missed. Next level tried buying 3 lots at 3136 and managed to get hold of 2 lots, didn't even realise the big figure had changed again, holding total 10 lots.

It was so fast that I didn't even realise that I bought so low at 3024, my eyes and hand couldn't even cope with the wild swing because within seconds I was buying more than a 100 ticks up. There was no time to think, just clicking away at lightning speed trying to get some Yum trades. Managed to get all out at average price of 3163 seconds later, luckily still managed to make some good money.

I scalped the SIMSCI now and know the contract well enough to average on such a situation, though I missed buying more contracts at the bottom. I had traded conservatively in comparison to my margin thus able to stare at FEAR right in the face.

There will be a lot of speculation on why the market was sold down with few minutes left to closing. Any news will be too late even for us as the market crashed within seconds.

In the world of dirty finance, did any body leak out those massive stop orders? Was it a deliberate attempt to trigger those stops? Was it just normal market action with orders coming in to square off their positions ahead of the long weekend? Why didn't they do it before the cash market close? Was it Algo?

Phone calls started coming in after the market closed, mostly "Did you YUM the market?", "What happened?" I told them I was Yummed and got my hair all wet even though I'm almost bald.

Other traders started to talk about their fear such as assassination attempt on our leaders or some terrorist attack. Thus they froze and just starred at the screen without any action.

Recalling sometime in the early 1980s when PM Lee Kuan Yew was hospitalised, the news sent the STI crashing down. I was working in the bank and witnessed the massive sell down of the stock market, with clients in panic mode calling us to unload their stock holdings.

Another incident was during election time in Taiwan when the then president Chen Shui Bian was shot. It sent the TW contract spiralling down during the T+1 session to limit down. That was real scary if you were caught holding any long position.

The special account is in limbo, still holding 3 Topix/Nikkei spread when it crashed all the way down to a low of -1080. Unbelievable, that's why I underperformed. The profit to date is S$9,435.00

Greed - Big mouthfuls often choke

2009-09-13T10:19:00.002+08:00

"Greed is a bottomless pit which exhausts the person in an endless effort to satisfy the need without ever reaching satisfaction" - Fromm Erich

In today's Sunday Times front page "Help lawyers cope with changes" - Law Minister K. Shanmugam. These top dogs are too well protected over the years, are among the most talented of the population and yet they need help.

I try to avoid seeking the service of lawyers, I can see the greed in their eyes when they talk to me, "Yes, what can I do to help you, my fee is S$400/- an hour". If they know that you are rich and can be slaughtered, you are dead meat.

"The point is that you can't be too greedy" - Donald Trump

In trading, greed is also a much talk about subject, we have been told countless time not to be greedy. Greed leads to overtrading, bad discipline and poor money management. Greed can make a trader risk much more than he should in order to make more and more. Risking too much only leads to a quicker downfall.

Profit for the special account came back down to S$10,177.00. I have been struggling these 2 months with my poor performance, I have been wrong in my view, I have been stubborn to hold on to some lousy positions and most important I have not been focused. Still holding 3 Topix/Nikkei spread, waiting for a correction to get out.

Road to recovery

2009-09-06T10:01:00.004+08:00

"When we do the best that we can, we never know what miracle is wrought in our life, or in the life of another. - Francois Mauriac

Went to the Natas travel fair last Sunday to book a holiday for my family to Taiwan for a 8 days holiday in early December. I have wanted to visit Taiwan and contribute a little to their economy since I have made some good money in the Taiwan pit before the closing of the trading floor.

It's a long queue into the carpark and the hall was packed with people looking for a good bargain for their holidays. The economy doesn't seems to be affected that much by this financial crisis and the V shape recovery of the stock market around the world caught me by surprise. It's unbelievable that we can recover so fast in 6 months.

Early this year, we have been bombarded by all the bad news, figures, depression scenario and analyst forcasting how much further the world stock market will sink.

My wife have been hinting regularly that we haven't been to any place for a holiday during the past 2 years. Feeling much better after may second surgery, I agreed to bring them for a short holiday though I still have a slight headache everyday.

After booking the tour, we went to the Food Fest at the next exhibition hall. We came to a stall touting a Chinese herb from Taiwan that can cure sinusitis and can feel the result within 3 days of consuming it twice a day. The Taiwanese man showed me the main ingredient, a type of native ginger with red buds, not hot nor spicy, gave me some to taste it.

The man asked me to give it a try for at least a month and I should have my problem solved within a few months. I have been having this mucous problem even after my second surgery, I washed my nose 5 times a day with salt and every few days a lump of mucous would flow out of my nose. Despite taking a few doses of anti-biotic over the past few months, the "BUG" stubbornly refused to give up.

Having a personality of "Giving it a try" I decided to get a month supply, 5 boxes of 10 sachet each with a box free at a price of S$150.00. I have to abstain from Chili, Ice (cold drinks), Peanut and Chocolate while taking the herbs.

After the 2nd day, I felt so much better. On the 3rd morning, I felt something blocking my breathing and decided to blow it out, I was shocked to see 2 big pieces of dried blood clot that came out from my nose after some digging. There is another piece that I couldn't dig out, so I decided to suck in and out came a very big piece of blood clot from my mouth. I was stunt.

I was relieved and knew that I'm on the road to recovery. I continue to wash my nose with salt but no more lumps of mucous now and my headache is subsiding. Advance western medication failed me and probably weaken my immune system with all those anti-biotic.

Profit to date for the Special account is S$14,914.00. Still holding 1 long Topix/Nikkei spread position.

Can I make it as a trader?

2009-08-29T14:43:00.008+08:00

"You gain strength, courage, and confidence by every experience in which you really stop to look fear in the face. You must do the things which you think you cannot do. - Eleanor Roosevelt

A guest visited me few days ago and we chatted about topics regarding trading and his aspiration to become a trader. He revealed a lot about himself and finally, after offering those information, asked me "Can I make it as a trader?"

I told him that he is very pro-active, read a number of books on trading, acquired good knowledge and very keen to become a trader. I can't tell until I see how he trade at least for a few weeks, pinpointing his mistakes and whether he is able to learn from it.

He is risk adverse, very cautious, wish to make big money but don't want to take too much risk and seems reluctant to invest in the hardware. If you don't have the proper tools, it will be tough to compete with the rest out there. I have still yet to find an investment that is low risk, high returns.

I have in the past encouraged a number of booth clerks and order fillers to become a "Local" to trade on the floor. Most were cautious, afraid to take the plunge with many excuses why they can't, mostly financial. They were afraid to lose their job and comfortable income. To those quite close to me, I will show them my trading cards and how much I can make for the day. Their eyes popped out everytime they see the profits I make for the day, sometimes more than their entire month salary.

I told them "If you don't give yourself a chance, an opportunity to prove yourself, when you grow old, probably you will regret and "F" yourself, why? why? why? don't give it a try!", "If you can't make it, go back and look for a job, at least you have given it a good shot, tried your best and if you fail, there is no regret."

"So, what are you waiting for, Christmas?"

The money is good, the money is fantastic, if you can make it. Just learn the skill. It's so easy during those floor days, I told many of my visitors that the floor is full of diamonds and precious stones, it's whether they can see it and pick it up.

Those were the days, it's over.

It's a different ball game now in electronic trading, we are competing now with the best traders as well as banks and hedge funds with the muscle power. They can afford to pay for the best traders, programmers, high tech computers and speed of execution. Everybody is so knowledgeable in the Internet age.

But, there are still plenty of electronic traders who are making good money. The opportunity is still there.

Give yourself a chance. How many lives can you have?

"Only when we are no longer afraid do we begin to live." - Dorothy Thompson

Profit for the special account is S$13,703 after 5 months, well below expectation, I'm a bit disappointed with my own performance for the past 2 months.

Super Scalper

2009-08-22T13:01:00.003+08:00

"Face your past without regrets. Handle your present with confidence. And prepare for the future without fear"

I have the opportunity of visiting a friend who is trading from another arcade. He specialise in market opening and closing of the Taiwan contract, an SGX product. He is among one of the best scalper I know who can trade more than a 1,000 contract round turn in half an hour, rarely holding a position for more than 3 seconds. The speed that he executes his trades is amazing.

I observe that he don't have any chart except the ladders for the different contracts occupying 2 full screens. With the Taiex contract (Taiwan Exchange product) side by side, he monitor it closely, through observation and anticipation of the market players' behaviour, he will then execute his trades. Somtimes, he does hedge his position against the Taiex when he feel been squeeze by the big boys.

I saw many of the traders from the floor previously and are now big traders on the electronic platform. Most of them don't have any charts on their screen, and these traders are making money big time! Many of the traders in the Phillip arcade don't look at charts too and these traders are also making money!!!

I used to trade without chart on the floor, what we need is quick action and reaction to the market movement, mostly making money from the "YUM" trades or hijacking trades from the order fillers with our speed advantage. After going electronic, I have to learn how to read charts with so many markets to monitor, combining them with price action to execute my trades.

My friend showed me he made US$2,500/- for the morning less comm of US$1,500/-, his nett profit was about US$1,000/- for half and hour's work and he will be going home to sleep before coming back at 1 pm to trade the closing. He showed me last month's profit of about US$15,000/- nett and scratch trade rebates of about US$7,000/- from SGX (Extra Bonus).

This is one scapler who faces those "Algos" head on without fear and excuses. He told me "it's all in the mind", be "Fearless". How I wish I can manage this "Fear" factor a little better. Probably due to age, as we grow older, we tend to mellow down and becomes a bit more risk adverse.

Profit for the special account went back to S$13,217/- reducing the Topix/Nikkei spread to 1 contract.

SGX wades into "dark pools"

2009-08-15T20:13:00.004+08:00

"If you wait to do everything until you're sure it's right, you'll probably never do much of anything" - Win Borden

It's finally here with SGX being the first Asian exchange to back dark pool, though the platform is neutral and independent of any brokerage. It give more anonymity to investors who do not want details of their deals exposed to the marketplace until the deal is done.

I'm not sure how much impact it will have for traders like us though we are trading futures. Our main concern now is "algo" trading, those powerful super computer with servers sitting in SingTel to execute trades many times faster than you blink your eye. It cost around S$15,000 a month to have the server there with more than 20 already taken up.

High volume scalpers are the most affected by the "algos" with many finding it tough to compete in term of execution speed. Their profitability have been greatly affected, there is no more edge for them. Further more, with their financial muscle power together with the computer brain to calculate net long/short position in the market and digesting other important information, traders felt squeezed by the "algos".

Though being a scalper myself, I have reduced my trading volume tremendously in the past few months, partly due to poor health, AFACT and market conditions. No doubt my profitability have been affected as well.

The market keep changing with new players who are well informed and knowledgeable. Days of many "Yum" trades are getting lesser with these "algos" having the edge.

I don't feel pessimistic like some of my fellow traders, what we need is a change in our trading techniques, mindset and be flexible to adapt to the changing environment. I still find many trading opportunities the whole trading day, just need to be patient and wait for the durian to drop.

Profit to date for the special account is S$8,733.00, still holding long 4 Topix/Nikkei spread. It has been a tough 2 weeks for me as I recuperate from the operation, my worst performance so far since coming back to trade at the arcade. I feel sleepy everyday, unable to focus and concentrate, probably didn't sleep well at night.

National Day

2009-08-09T13:50:00.004+08:00

"And in the end, it's not the years in your life that count. It's the life in your years." - Abraham Lincoln

Today is Singapore's National Day and I am proud to be a Singaporean. I am indeed grateful to one great man, Mr Lee kuan Yew, our first Prime Minister and his team of capable, uncorrupted collegues with a genuine vision to improve the lives of the ordinary citizens. Mr. Lee has laid the foundation for good governance and meritocracy with no mercy for corruption.

I can't imagine what would life be if we were under Mahathir, Suharto or Marcos in a country like Singapore that have no natural resouces for them to plunder. Yes, we are paying hefty salary to our Prime Ministers and his cabinets which I feel justifable for the peace and prosperity that we are enjoying today. That's my personal opinion.

It's our good fortune to have good leaders compared to all our neighbouring countries who are rich in resources, but with leaders first taking care of themselves, families and their cronies.

Last Tuesday, I went for another nose surgery to correct the everflowing mucous blocking my nose, making it so difficult for me to breath and sleep. I have sufferred for almost six months since the first operation in February and subsequently taken a few round of antibiotics to get rid of the infection or some 'bug' without success.

The first operation cost more than S$20,000.00 and this 2nd surgery cost more than S$4,000.00, S$1,000 goes to the Anaesthetist and S$1,500 goes to the surgeon for less than an hours work and that's at a discount. Total cost to date is S$25,000.00 and hopefully stop at that. Our money devalues very quickly, so how is the property prices going to come down? My mother complained that taxi fare is so high now especially during peak period with all the surcharges.

It's the ordinary citizen that's feeling the pinch now, the elite is still having a good time with CEO's and higher management staff rewarded generously with huge bonuses for their past performance. But do they pay back those bonuses when the company goes into the red?

Didn't trade much for the week, resting at home to recuperate. Good health is important to a trader.

Not much changes to our profit/loss account.

Updates

2009-08-01T20:22:00.003+08:00

"When the banks did well, their employees were paid well. When the banks did poorly, their employees were paid well. And when the banks did very poorly, they were bailed out by taxpayers and their employees were paid well." - Andrew Cuomo form the Attorney-General's office.

United States banking giants paid nearly US$33 billion staff bonuses last year while at the same time getting US$175 billion from taxpayers. JP Morgan Chase had the biggest number of millionaires, paying more than 1,600 staff bonuses of over US$1 million each despite receiving US25 billion from the US Government.

Wow! with so many homeless and hungry in the US, these bankers really need some soul searching, it's daylight robbery!

"Never trust your bank" - Mr Peter Chan, a Hongkonger and his wife have been campaigning for investors who lost money on Lehman Brothers' Minibonds.

The interest on the mortgage of my house have not come down for more than 2 years since the financial crisis despite near zero interest paid out by banks on saving accounts. Banks are quick to revise interest rate upwards but unless you take action, they will "YUM" you, the rate will remain there, the spread is so wide that they are able to maintain good profits and pay good bonuses.

Our special account got hit last week with profit falling to S$8,127.00, stubbornly holding long 5 Topix/Nikkei spread position. The feeling is lousy, making money is so tough while losing it away is so easy.

Updates

2009-07-25T14:31:00.008+08:00

"Start small, dream big, build deep" Ng Tee How, President of AFACT

Yes, to all aspiring traders, that's sound advice.

"Small opportunities are often the beginning of great enterprises." - Demosthenes, Greek orator.

Met many traders during the launch of AFACT, Association of Financial and Commodity Traders (S) on the 23rd July 2009 and again the topic of "algo" trading seems to be the talk of the town. Here is the link to what "algo" is all about, http://nytimes.com/2009/07/24/business/24trading.html?ref=business.

These high frequency traders generated about US$21 billion in profit last year according to estimates by a research firm. These high-frequency specialists clearly have an edge over typical traders with their powerful computers housed right next to the Exchanges.

These systems are so fast they can outsmart or outrun other investors, humans and computers alike. A loophole in regulations allows market places like Nasdaq to show traders some orders ahead of everyone else in exchange for a fee. That's definitely unfair advantage for those who have deep pockets.

I don't see such high-frequency trading in most Asian exchanges at the moment and such edge shouldn't be given to those few who can afford to pay a price for it. Many traders complained about these "algo" traders in the futures market with their intelligent software to "catch and squeeze them". There is no doubt that trading is difficult in the last 2 months, with lower volume, summer holidays and a trending up market.

Most traders don't do well in a trending up market, as it tend to whipsaw on it's way up unlike a falling market that can be drastic. There is definitely manipulation by the big boys in the market with their financial muscle, and if they are smart, that's a huge advantage, but don't forget Nick Leeson causes the collapse of Baring Bank trying to support the Nikkei!

These big boys such as hedge funds, mutual funds, unit trusts and banks operate on behalf of their rich clients to take high risk trades so as to get a cut of the profits and commission. It doesn't hurt their pocket when they lose, just bye bye and close shop. Not many of them make money while their investors are the real suckers.

Many traders are clearly unhappy and frustrated with the "algo" chipping away their profits but as traders we need to be flexible to adjust to the ever changing trading environment. We can still make money with sound money management and the trading skill acquired over the years, just tune it a little bit here and there. I don't feel such a huge impact of these "algo" traders, if I don't make money on any given day, it's because I am stubborn and don't follow the rules, it's my own problem!

"You can't stop the waves, but can can learn to surf" - Jon Kabat-Zinn

Robert is leaving the trading arcade to trade from home by the end of the month. I feel sad that he is leaving as he is the one who has given me a lot of inspiration to make a come back to trade in the arcade. I still remember his words of encouragement "is making about S$1,000/- a day OK with you?" I went back thinking, if Robert can make it, why can't I do it?

Robert's style of trading don't require so much speed, he is a tactical trader waiting for the right entry level and an extra-ordinary patience in riding profits on his good trades. He is so easy going and relax, watching you-tube and movies while trading and monitoring the market. I really admire him and how he can do it yet still being highly profitable.

Profit for the special account took a hit from the widening of the Topix/Nikkei spread, down to S$14,937.00. Now holding long 4 spread, didn't expect it to widen that much. That's one of the major problem of a trader, so, always "expect the unexpected"

Updates

2009-07-18T15:13:00.004+08:00

"True religion is real living; living with all one's soul, with all one's goodness and righteousness" - Albert Einstein

"The world's most powerful investment bank is a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money" - Journalist Matt Taibbi on Goldman Sachs quarterly profits of US$3.44 billion.

Almost all the bank's earnings come from trading and they are not going to tell us how they do it. That money-making machine is running at US$38 million per day or US$1.58 million an hour. Wow! unbelievable, how Goldman can be so fast, opportunistic and canny in it's multi-billion dollar bets on the direction of the financial markets?

Goldman's Traders were known in New York as the Bandits of Broad Street and competitors comparing Goldman staff to bellicose "orcs" in the Lord of the Rings. With many of Goldman alumni in powerful government positions, that might have given Goldman a competitive edge in term of sensitive information.

The most objectionable aspect of Goldman's success is that it's earnings are shared by such a small number of already wealthy people since it distributes 49% of revenue to employees. These bankers are going back to enriching themselves through an elaborate, opaque form of casino trading which is semi-detached from the rest of the society.

It's no wonder traders are complaining about the difficult market trading condition. It's tough, we need to work harder, work smarter and taking more risk in order to survive in such a competitive environment with many more blood-sucking vampire squids.

Profit to date for the special account is S$16,056.00, at least this Jaw is still able to snatch some food from the vampire squids.

Updates

2009-07-11T09:59:00.008+08:00

"Freedom is not worth having if it does not include the freedom to make mistakes" - Mahatma Gandhi

In trading, we have the freedom to make mistakes everyday, but not many of us are willing to admit our mistakes resulting in burning holes in our pockets at the end of the day.

"One mistake and you will regret it forever" - a Chinese proverb

Many years ago, I had a lunch partner trading together with me in the Taiwan Pit. This friend was a medium sized trader who was well respected by most traders on the floor as a very successful trader. I was impressed by him too, especially his courage in executing the size that I deem too big for my own comfort.

He traded in other contracts like Nikkei as well as forex, I find it amazing that he could cope with a few contracts base on his gut feel. He would always tell me his exploits, those that he made a killing but I never hear about his losses. The impression that gave everyone, including myself, was that he was a damn good trader.

Once, we happened to collect our monthly statement from our own clearing member and decided to exchange notes on our profit for the month. He showed me proudly that he had made more than 40K but I noticed that his commission was close to 30K resulting in his nett profit of less than 20K. I was shocked and questioned him how he ended up with such huge commission.

He told me that was his style of trading especially calling the backroom to execute trades on his behalf. The execution fee was US$1.00 per contract and it was OK for him since he was able to make more profit to cover the expenses. I told him the profit ratio to commission was way out, he was giving away too much money to the clearing firm. Instead he should execute the trades himself and have more quality trades.

I showed him my statement of about the same profit, but my commission was less than 5K, my nett profit was more than double his. I advised him to seriously look into the cost, it didn't make sense to me. I told him to execute the trades himself, stop trading forex because of the slippage, instead trade on the futures platform. Unfortunately, all these advice fell on deaf ears.

We drifted apart as he stayed away from the pit and executed his trades from cafes away from the exchange floor. Whenever we met, I always asked him "how's trading?". Without fail, he will answer "good, surviving", very confident without a trace of trouble in his trading system.

I was shocked when he came to me for financial help again, I helped him once and he recovered. This time I knew that it was more serious and be prepared to write off the loan. He later confided in me that he was in deep shit, both he and his wife were sued by the banks. Many traders helped without knowing his problem, but it was not enough to pull him out of the quicksand.

I scolded him for not telling me the truth about his trading losses, in fact lying that he was doing OK. It was the pride that killed him, he was too shy to admit his mistakes, he wanted to upkeep his image as a successful trader. If he had been honest with me, I could have help pull him up from falling into the gutter.

He confessed losing a bomb in currency trading even though he put in very tight stop loss. With his size, I could imagine the amount of slippage, commission and worst, always hitting his stop since it was placed so close to his entry level. The market always test a trader's patience by taking their tight stop until they get frustrated. Once the trader take away the stop order they will be in deep shit one fine day.

He is now helping up in a ex-trader's antique shop at a pay that's only a fraction of the commission that he once paid monthly. He regretted his mistakes but at least he is happy to be at peace with himself and accepting the cruel fate that he can't blame anyone. It's a honest living and I am glad he has come down to earth though at a extremely high price, there's no turning back the clock.

Square off all position, profit to date is S$13,609.00 for the special account.

Reality Bites

2009-07-09T12:53:00.004+08:00

"Horse die, get down and walk" - Cantonese saying.

Read a report about more white collar Korean workers going into physically demanding work or traditional kind of manual labour, from farming and fishing to the professional back-scrubbers who clean patrons at the nation's numerous public bathhouses.

Their expectations hit the dark reality of this economy, where people have no choice but to go into the blue collar work force. "This work hurts my pride" and some say they feel guilty working such rough jobs after years of expensive cram schools and college.

Being paid S$2,500 as a crab farmer is considered one of the highest paying work in the current market, more than pouring lattes or busing tables in Seoul since the global downturn hammered this once fast growing export economy.

Most of my fellow traders are complaining but there are some who are still doing well and yet are also complaining. Luckily for me, I lead a simple lifestyle and have simple taste.

Updates

2009-07-04T21:40:00.010+08:00

"Imagination is more important than knowledge. For while knowledge defines all we currently know and understand, imagination points to all we might yet discover and create" - Albert Einstein

More Computer Science graduates are now employed as traders, to write trading software programmes for the increasingly powerful and fast machines. Can we beat the machines or black boxes in the futures trading game? These machines trade without emotion, they trade according to the rules and parameters set by their masters. More importantly, they are obedient and discipline.

I am using a simple programme, the auto spreading from the TT system to execute some of my trades, it save me plenty of time from the constant need to monitor the market, making me a bit lazy. The machine is not 100%, sometimes it fails too, giving a worst fill from my intended price level. I vomited blood using the Pat's System to do auto spreading, cursing and swearing many times when it fail to fill the other leg leaving me with some bad positions.

With more traders using black boxes, the competition is tough with razor thin margin, but which business is easy? Which business have no competition? Do we have a better choice? The learning process is often fill with disappointment, that's life! Be realistic about your expectation, work hard and learn from your failures.

It took me more than 2 years after the open outcry trading to be successful in converting to electronic trading. Despite my wealth of experience as a trader, it took me so long to learn, I survived with the savings from my past earnings, I felt terrible during those period. How I wish I have a mentor to guide me, that would have save me the 2 years that I have wasted.

One of the reasons it had taken me so long is the lack of focus in trading, doing it half heartily on a part time basis while trying to branch out to other businesses. Not being a shrewd businessman, I lost more precious capital, it's a new learning process again, why so stupid!

I realised my folly and return to full time trading at the arcade in February 2008.

"Knowing is not enough; we must apply" - Goethe

I negotiated with the manager for a free booth for a month in the arcade and a month free trial for using the best trading platform, the TT system. I gave myself one month to focus and concentrate only in trading, no room for failure, if I don't make it, I will be out of trading for good.

I worked very hard for the month and with some trading advice from a few fellow traders, I managed to make S$20,000.00 in February. My world brighten up again and I have not a single losing month since then. This is the best money I have seen since the trading pit closed in June 2005.

The profit for the special account is S$11,745.00 to date, very slow indeed. My good friend has given notice to withdraw his capital soon to invest in property as it is getting hot again in Singapore with many projects well received by investors and flippers. Total trading profit since December 2008 is S$29,607.00

Updates

2009-06-27T18:45:00.005+08:00

"If you think education is expensive, try ignorance" - Andy Mcintyre

A few days ago, I met 3 ex-floor traders near my office having their lunch. They were trading out of Ong First arcade specialising in US interest rate contracts. One of them is doing well and is a mentor/partner/employer to the other two traders. We exchanged greetings as usual and I asked the two students how have they been doing so far. They jokingly said that their mentor taught them only 80% of his skill and holding back 20% like some Chinese Kung Fu Masters. That's why they are still struggling.

I rebutted them instantly, as a stakeholder their mentor would be more than willing to transfer his knowledge and skill to them but unfortunately their absorption rate were only 50%. They should be grateful that their mentor is willing to put in time and effort to teach them. Their mentor would be proud of them if they can be successful traders and he would also benefit, it's a win win situation.

The fastest way to successful trading is to learn from those who are doing well in their trading, of course it's their trade secret and not many are willing to teach as their students might turn out to be their biggest competitor later on especially in a small and tight market. Personally, I feel the market is big and there are so many contracts available now, with Internet technology, we can trade in any major exchanges around the world.

Not all traders can be good mentors, some are only half past six. A good mentor should be one who is consistently profitable, having a good trading system and sound money management. Recently, a trader from the arcade told me she was busted after trading for nine months despite having a mentor. I felt sorry for her because she was not taught sound money management as the mentor himself consistently trade to the maximum position available for his trading margin.

What is the "Holy Grail " to successful trading? In fact every trader know the secret but just simply unable execute it consistently, that is "cut your losses fast and ride your profit", so simple, found in every trading book, yet so difficult to master.

Profit to date is S$11,419.00. Holding long 3 Topix/Nikkei spread position.

I have not perform up to expectation, much to catch up.

Updates

2009-06-20T11:24:00.010+08:00

"There are two ways to live your life. One is as though nothing is a miracle. The other is as though everything is a miracle" - Albert Einstein

Have been rather busy lately helping to set up an organisation, "Association of Financial and Commodity Traders" (AFACT), objective is to have a common goal of representing the interests of the members basically from the financial trading communities.

The 12 committee members including myself put in plenty of hard work, meetings, bargaining for benefits from SGX, planning social activities and rolling out mentor and educational programmes for the members. It's really a thankless job and I wish to emphasize that the committee members are not paid for taking time away from their trading and burning some weekends.

I would like to say a big thank you to my younger brother, Alastiar (AIM) who has put in tremendous amount of time in helping out with the creation of the website despite his busy schedule.

The committee members are happy and are prepared to sacrifice their time to work for the benefits of the trading communities. The biggest obstacle is funding and of course members need to pay to join the Association for the cost of running it, that's where the unhappiness and scepticism arises especially from traders who feels they do not benefit from joining.

"Whatever you do is none of my business, don't get me involve", sounds familiar, for those who feels they don't gain anything from joining and "why should they contribute?"

"We do not see things as they are; we see things as we are" - Talmud

We have to thank SGX for the support and seed capital to set up the Association. SGX has also send their staffs to help us in the planning and organising for the launching of AFACT. Besides that, after some tough negotiation, SGX has agreed to the scratch trade rebates for the Nikkei and Taiwan contracts for a minimum of 2 months without condition and monthly review after that. At least we get something from the goodwill with SGX.

I am glad the majority of traders are generous with their words of encouragement and appreciative of the hard work put in by the committee members. The world will be a much better place to live in with more of these gracious people around.

"The only ones among you will be really happy are those who will have sought and found how to serve" - Albert Schweitzer

We are still building the website at http://www.afact.org.sg/

More traders are feeling the heat as volume keep sliding with smaller trading range, many complained that trading is tough. So, when is trading not tough? It's just a market cycle, in order to survive, traders need to adapt to the ever changing environment.

Profit to date is S$11,218.00 with 1 long Topix/Nikkei spread position. Still very cautious with taking more risky trade.

Updates

2009-06-13T16:56:00.018+08:00

"Young men speak of the future because they have no past but old men speak of the past because they have no future" - from the cartoon Pickles in the Sunday Times.

"Just because you're an old guy, you don't have to sit around drooling in the corner. Get out and do something" - Bush senior turns skydiver again on 85th birthday.

Caught up with some ex-floor traders trading from home at the town hall meeting for traders last night. Many complained that trading has been very tough recently with falling volume and reduce interest. I agreed with them wholeheartedly and noted their frustration that echoes the similar sentiments of many traders at the trading arcade too.

Yes, the cake is getting smaller and the best survive. Traders are getting more sophisticated, investors getting more knowledgeable and fools losing their fortunes. Are old traders having no future? No!!! There is a old Chinese saying "ginger grow hotter with age", old men like us are more experienced, no doubt about it, so "try me".

I asked those traders who were still struggling very bluntly, "what is your monthly expectation?" Their expectation ranged from S$3,000/- to S$10,000/- a month and they would be very happy. For $10,000/- divided by 22 trading days is $455/- a day, that's about 13 Nikkei tics, 23 Simsci tics or 32 Taiwan tics. Is it difficult to achieve this target consistently on a daily basis?

Why not? I have been able to achieve the monthly target of S$10,000 consistently, of course with some days that I lose money while I make more on other days to cover up. The secret to my success is to trade small, very small to eliminate the fear of losing, with a small daily target, it is much easier to achieve on a consistent manner. That's money management.

For taking such small risk, I have to work much longer hours to wait patiently for the "YUM" trades such as market orders or stop loss orders. I can only do so with a fast, stable trading platform, good Internet speed and support which only the trading arcade can provide. That's my competitive edge that suits my trading strategies.

There are also many successful traders operating from home, they have also found their edge using strategies that suits their personality and risk tolerance.

We need to be flexible to be a successful trader, when the market condition does not allow us to trade bigger volume, reduce the size of the trading. Lower down the expectation, the market will roar again one day and be ready and prepared to seize the opportunity.

Profit to date is S$7,391, not much improvement from a month ago. Still holding long 4 Topix/Nikkei spread position, will accumulate more positions if it goes down further.

Updates

2009-06-07T10:51:00.008+08:00

"When you are young, you do a lot of stupid things you don't quite comprehend. It's fun, you do, you don't think about the outcome" - Edison Chen on his sex photo scandal.

Yes we have done many silly things in our younger days especially taking risk in doing things that we would frown on in our old age. We are out to prove our worthiness and courage ignoring the serious consequences of our action. "You can do anything, but don't get caught", this phrase is too familiar to the NS (National Service) men in the olden days.

When I first started out as a floor trader, there were numerous time that I nearly busted my account with the "big" positions that I traded relative to my capital outlay. As the Chinese saying goes "don't know how to write the word Die". I was reckless and have taken ridiculous risk in my young days. I have to thank my lucky star to have survive so many close call, or else I would have been out of this business long ago.

It took me a long and painful one year to break even as a floor trader. I have been told many times by other traders "pay to learn", ya, I understand, no lesson in life is free. But, how long do I have to endure? There were many times that I wanted to give up when my account was left with only 10% of the original capital outlay of S$30,000.00.

Where can I go with just a "A" level qualification? How can I compete with those Diploma and Degree holders?

I can't think of any job except being a trader at the Exchange floor that offer me equal opportunity to compete with the brightest. I am neither smart nor having a high IQ, with just average academic performance, I have been offered an opportunity to make it in life. I am really thankful for that.

It's the determination and hard work that pull me through. Learning the lessons of not doing too many "stupid things" in trading is vital to the success of a new trader. I always advise new traders to trade small so that they don't have to pay too much in their learning phase. Learn how to crawl, then walk before attempt to run.

Profit to date take a step back at S$6,426.00. I have added another Topix/Nikkei spread increasing to holding 4 open position. Auto legging using the Pats system platform is giving me some headache with it's unreliable fill, the slippage is frustrating.

"DARK" pools of liquidity

2009-06-06T06:41:00.006+08:00

"A prudent question is one-half of wisdom" - Francis Bacon

Came across an article in the ST about this "Dark" pools of liquidity now in Asia, this is something really new to me.

Anonymous or "dark" pools of liquidity have extended their operations beyond the United States, and are now operating in Asian markets, particularly in Singapore, Hong Kong and Japan.

Dark pools are private networks that operate away from traditional exchange houses, offering investors anonymity. They are used by institutional investors to trade large quantities of shares, without moving the market in a big way such block trades usually do.

Examples include Liquidnet, the largest independent operator of dark pools in the United States, which has operations in Asia; and BlocSec, which is part of CLSA Asia-Pacific markets.

One question that come to my mind is the source of funding from these "Anonymous" investors. Are they dirty money that "cannot see daylight"? How these investors acquired their wealth? Are they using "dark" pool for money laundering? How are they regulated? Their money muscle could be partially responsible for the recent stock market rally. I hope to be enlighten.

With the demise of many Hedge Funds, we are seeing something new now coming out from the United States. Americans are really ingenious in coming out with new ideas to beat the system.

Life Challenges

2009-06-04T16:27:00.002+08:00

Smooth roads never make good drivers;

Smooth sea never make good sailors;

Clear skies never make good pilots;

Hassle-free life never makes a person strong;

Be strong enough to accept the challenges of Life.

Don't ask Life "Why Me" Instead say "Try Me"