Caught

LONDON (CNN Money)- By Mark Thompson

High speed trader fined $3 million for commodity manipulation


Panther Energy 'spoofed' oil and commodity markets traded on CME exchanges.

Regulators have fined a U.S. high speed trading firm more than $3 million
for manipulating international markets in agricultural commodities and oil.

New Jersey-based Panther Energy Trading and its principal, Michael Coscia,
were fined a total of $3.1 million, and also ordered to hand over at least
$1.4 million in trading profits, for "spoofing" markets in crude oil,
natural gas and other commodities, such as wheat, soybean and corn.

Coscia was accused of using an algorithm to illegally place and quickly
cancel orders to buy and sell futures contracts traded on CME Group (CME)
exchanges and London's ICE during a two-month period, the regulators said.

Regulators said Coscia and his firm would place small sell orders they
wanted to execute, followed by several large buy orders at successively
higher prices that they intended to cancel, with the aim of artificially
inflating the price at which they could sell by creating an impression of
strong demand.

Once the sell order was filled by another market participant, Coscia would
cancel the buy orders and then reverse the process, racking up a profit
from the executions of small orders many times over between August and
October 2011.

"While forms of algorithmic trading are of course lawful, using a computer
program that is written to spoof the market is illegal and will not be
tolerated," said David Meister, enforcement director at the U.S. Commodity
Futures Trading Commission.

Panther and Coscia have been banned from trading on any CTFC-registered
entity for a year, and from CME markets for six months.

The CFTC said this was the first case pursued under Dodd-Frank rules that
explicitly prohibit placing buy or sell orders with the intent to cancel
before executing the trade.

The total financial penalty includes a CFTC penalty of $1.4 million, a CME
fine of $800,000, along with a fine of about $900,000 imposed by the U.K.
Financial Conduct Authority for Coscia's deliberate manipulation of Brent
crude, gas oil and West Texas Intermediate futures contracts on the ICE.

Break Your Own Rules

Looking for some inspiration on this First day of 2013 and came across this docmentary posted by another blogger ASSI. Warren Buffett made his Billions without a computer nor a calculator, sit in his office reading whole day, yet make consistent returns of 20% since 1965.



Is it easy to make 20% a year?  It's possible.  How many can be consistent year after year?  Probably only the top 1% of the traders can do it. What make Warren great?   It's the size of the funds he managed.

Warren is a investor, not a speculator or a trader like what most of us call ourselves, and admit it, for those 90% who are losing money, you are simply just a gambler!

What's the risk to make that 20% return a year?  Warren buy into a bussiness and own part of the businness with no leveraging and tell us not to get into debt.  He hold onto his investments for years.  He considers Derivatives trading as weapons of mass destruction.  He buys into value and his risk is low compared to traders like us.

We may not be able to follow what he is doing because we don't have the resources, we can't compare ourselves to Warren but we can learn from him. He want us to think independently, to allocate Capital efficiently and sometimes just have to break our own rules.

For that, I am going to try for 20% return this year, but I must admit my risk is definitely very much higher.

 

Happy New Year !

Wish all a Happy and Prosperous New Year !

Acc 8030, 23/12/2012

 

Took profit on the  CN A50 contract on the 17th December with a profit of USD 885.00, a kind of a surprise windfall. Lucky? No, in fact I have missed the bullish move in all the equity futures market with my conservative approach.

With no position, it's back to waiting game again.

 

Account 8030, 16/12/2012

The Nikkei 8500 Dec put option expired on the 14/12/2012.

The Shanghai A50 CN December contract  has a unrealised profit of USD 830.

I have adopted a very conservative approach for this account so far without taking much risk, in fact under utilising my margin. It must be a joke to most of my fellow traders. I am experimenting with this account with a longer term view to achieve my objective of 10% return per annum. I am still in a learning phase, maybe too slow for most to stomach, don't forget I am in semi retirement.  Probably I will take a more aggressive approach once I have build up enough confidence and foreign capital for this account.

So, anyone want to employ me as a consultant for a 10% return?

I don't believe in losing money, that's my major weakness, kiasu and kiasi now. I have taken too much risk in the past, now I am questioning myself how could I have taken those reckless risk.

Maybe I am just a good and skilful gambler With a Little Luck and dedicate this song (one of my favourite) to those who need it. http://www.youtube.com/watch?v=nFqKN8yhA54

Account 8030, 7/12/2012

Add on one SGX A50 contract for the account on the 4th December. This contract is a basket of 50 blue chip Chinese stocks listed on SGX for overseas traders, since non Chinese individual traders are not allowed to participate in the Chinese Futures market.

This is a damn bloody small futures contract (mini) worth only about USD 7,000 at the time of entry. I hated all these mini contracts because it's meant more for gamblers and not investors. A decent size futures contract should be worth at least USD 30,000 to USD 50,000. Exchanges are introducing more mini contracts so that they can generate more volume thus earning more comm. To hold USD 50,000 worth of stocks,  a trader would need to buy 7 contracts paying a much higher comm amounting to USD 5.60. For the retail trader the comm would probably be 5 times more.

A CME Euro currency contract is worth USD 125,000 and the comm that I am paying is only USD 2.30, obviously trading the CME contract cost very much less in comm. These old contracts were introduced more than 20 years ago and contracted quaterly, March, June, September and December. The investor can hold the contract for 3 months then roll over to the next future month if they want to continue holding on to their view. But contracts introduced now are all monthly, reason being Exchanges make more money from long term investors rolling over their positions.

Futures contracts were first introduced in 1864 for the main purpose of hedging. In order to grow this industry, thousands of contracts were since being introduced by the various Exchanges with contract size getting smaller and smaller.

The cost of trading is a very  important factor to the success of a trader, if the comm and spillage is too high, most likely the short term trader will not succeed.

100% Risk for 12% Return

I have been invited by a friend to attend a seminar on investment in German Heritage Building offering mouth watering 12% return in 12 months guaranteed by the developer.

One thing good about the advance in technology is that one can simply google search and get all the information about almost anything under the sun. Of course, some are hidden under the shade.

The developer, Dolphin Capital GmbH with its partners has more than 20 years experience, completing more then 12,000 units successfully, but employed only 40 employees and tie up with over 500 sales agencies. They have recently set up Dolphin Capital Asia to launch German property investments in Asia.

It's a short term investment tenure of 12 months with Principal and Profits Assured in a "Buy-Back" clause by the developer. It's just providing funding for their acquired listed buildings for redevelopment, the property is not owned by investors but by Dolphin. It's more like Ah Long San legally lending money to them.

Why don't they borrow from the bank at a much cheaper interest rate?

Why they don't issue bonds?

What's the risk?

Is this another Ponzi scheme?

The return is high, so is the risk.