True Profits Earned in 2014 to date: US$39,384.88
Current drawdown from maximum true profit earned in 2014: US$325.96
Change from last week: US$1,344.91
Directional stance: Portfolio is 57.38% bullish.
The year-end is near. It's been a short week with markets closed for the Christmas holidays. The markets are continuing to hit new highs but without the ferocity of the rally we witnessed last week. Truly a Santa rally. The rally appears to be winding down in anticipation of the next pullback. I did some old-school phone trading again to rejig the portfolio, given the rally earlier this week. So now, the portfolio is primed to make more should the rally wish to continue. Should the pullback come, then it's hold-on-to-your seats time until the rally resumes again. There are 2.5 trading days left in the calendar. All I want now is for the portfolio to cross the target threshold I have set for this year. Then all would be well! I expect to update again sometime in the first days of January 2015 to do a major yearly update.
Saturday 27 December 2014
Saturday 20 December 2014
Trading Update: 20 December 2014
True Profits Earned in 2014 to date: US$38,039.97
Current drawdown from maximum true profit earned in 2014: US$1319.10
Change from last week: US$1,030.71
Directional stance: Portfolio is 55.56% bullish.
It's been a good week on paper, and most importantly besides locking in some modest gains, the portfolio is finally (at long last, way way overdue, you get the point) aligned with the intermediate trend, which is 2100+ to 2500+ as the next top for S&P 500.
The pullback that I was waiting for certainly did not renege on its promises. It came with a flourish and the markets dived fiercely for a few trading days, hitting sub-2000 lows. It was certainly no wimpy pullback. However, the markets bounced off from the bottom with such a ferocity that by the time we had to concede that the pullback had ended for good (i.e. no more "one more leg down" to squeeze more short profits out of the pullback), quite a good bit of the profits I had gotten from being short during the pullback had been eroded. I did however make some gains from the move up after switching to a bullish stance, hence the drawdown amount is looking pretty docile this week.
On hindsight, I should have booked my profits much earlier on in the week, but as Gordon Gekko said in Wall Street: "Greed is good." I guess not, this time! I'm motivated by greed (to extend profits) until fear (of losing money) overrides the greed (actually like 99.69% of us probably are).
Speaking of Gordon Gekko and trading in the 80s.. interestingly enough the specific counter I trade requires my trades to be placed by phone for some reason. Yup, even in20152014. Even if my broker claims to offer its clients a state-of-the-art trading platform, with colourful charts, the ability to place complicated trade orders, cutting edge news updates, etc. but at the end of the day yes I have to call in to talk to fumbly traders and scream the names of countries like "SELL 999 UNITS OF ARGENTINA BRAZIL CHINA LIKE NOW!!!!" and wait and prance around my room holding my phone as they take their own sweet time to place the trade while the markets move against me. Really old-school but it makes me feel like one of Gordon Gekko's disciples in the "good old days".
All this talk about Gordon Gekko makes me want to re-watch my favourite trading movie, which very aptly is set during Christmas in the good old 80s - Trading Places! For everyone reading this, please have a good Christmas! and I will see you again next week.
Current drawdown from maximum true profit earned in 2014: US$1319.10
Change from last week: US$1,030.71
Directional stance: Portfolio is 55.56% bullish.
It's been a good week on paper, and most importantly besides locking in some modest gains, the portfolio is finally (at long last, way way overdue, you get the point) aligned with the intermediate trend, which is 2100+ to 2500+ as the next top for S&P 500.
The pullback that I was waiting for certainly did not renege on its promises. It came with a flourish and the markets dived fiercely for a few trading days, hitting sub-2000 lows. It was certainly no wimpy pullback. However, the markets bounced off from the bottom with such a ferocity that by the time we had to concede that the pullback had ended for good (i.e. no more "one more leg down" to squeeze more short profits out of the pullback), quite a good bit of the profits I had gotten from being short during the pullback had been eroded. I did however make some gains from the move up after switching to a bullish stance, hence the drawdown amount is looking pretty docile this week.
On hindsight, I should have booked my profits much earlier on in the week, but as Gordon Gekko said in Wall Street: "Greed is good." I guess not, this time! I'm motivated by greed (to extend profits) until fear (of losing money) overrides the greed (actually like 99.69% of us probably are).
Speaking of Gordon Gekko and trading in the 80s.. interestingly enough the specific counter I trade requires my trades to be placed by phone for some reason. Yup, even in
All this talk about Gordon Gekko makes me want to re-watch my favourite trading movie, which very aptly is set during Christmas in the good old 80s - Trading Places! For everyone reading this, please have a good Christmas! and I will see you again next week.
Saturday 13 December 2014
Trading Update: 13 December 2014
True Profits Earned in 2014 to date: US$37,009.26
Current drawdown from maximum true profit earned in 2014: US$0
Change from last week: US$7,477.30
Directional stance: Portfolio is 54.69% bearish.
Current drawdown from maximum true profit earned in 2014: US$0
Change from last week: US$7,477.30
Directional stance: Portfolio is 54.69% bearish.
What a difference a week makes. The US financials continued to rally on Monday and the drawdown hit a high of US$8k+ before the long awaited pullback arrived. Thanks to the dip last night and the large move down on Wednesday, the drawdown has been wiped out and a new high for the portfolio was achieved.
Do I deserve a pat on the back for this? No, one reason being that my portfolio is still bearish-leaning and would need the pullback to continue in order to make money. The thing is that the expected pullback has met its minimum size requirements and a bottom could occur anytime. I would not want to sit through what should be a fierce rally with a 55% bearish stance and will need to find a chance to rebalance the portfolio to a bullish stance during the next market hours. This is because the current indications are that the next move for the S&P 500 (after it bottoms after this pullback is over) is likely to be a move to 2100+ at least, with potential to hit even 2500+. So the deed is done only when the profits are booked by resetting the portfolio to a bullish stance in anticipation of the rally. I would have loved to have booked the profits last night but it doesn't make sense to wake up at 5am to close out positions so I'm hoping the futures on Monday do not throw up any upsets. There is also a bonus that the pullback would continue. That would be nice. Ah the tussle between greed and fear. It doesn't help that it's close to the year end and there are some targets I would like to hit for the portfolio for this year. And I am within smelling distance of those targets.
But even if I booked profits for this pullback leg, it has been bad trading on my part in the past few weeks. Why is it so? That's because the outlook of the markets had changed such that moves to 2100+ to 2500+ are likely. In light of this, continuing to maintain that bearish directional stance and waiting for the pullback to happen was trading against the trend. In my view, I should never trade against the mid-term trend (i.e. trend for next 6 to 1 year), especially for the trading strategy I am employing. Waiting for a move against the intermediate trend in order to make money can get hairy and takes out some of the emotional capital out of you. Make no mistake, it's bad trading on my part and I need to sort out the positioning of the portfolio before the rally begins. Making money this way is like picking pennies in front of a massive road roller nearby - one day you are going to get crushed by it. What I should have done as per my trading rules was to take the drawdown on the chest (when it was about the US$2k to US$3k range) and start over with a bullish tendency.
Regarding my bad trading point above, an analogy would be like in football - would you rather play badly and win, or would you rather play well and lose? In my case, assuming I book the profits, it would be like playing badly and winning. Scrappy play but somehow the opponent makes a mistake and gifts your striker the ball in the penalty area, your striker trips and his foot happens to touch the ball as he stumbles and falls on his butt and.. GOOOALLLL wtf! In football, it's all about the 3 points - but in trading, while it's all about the money, the methodology is sacred. Trade in the right way, and given an infinite amounts of trades, you are going to make money - even if you may at times lose money despite trading the right way. Learn to see yourself as a casino - once you have that 0.000x% edge, you are going to make money eventually, given an infinite number of trades. That's the gist of my favourite book on trading psychology - Mark Douglas' Trading In The Zone.
Saturday 6 December 2014
Trading Update: 6 December 2014
True Profits Earned
in 2014 to date: US$29,531.96
Current drawdown from maximum true profit earned in 2014: US$6925.88
Change from last week: -US$4941.82
Directional stance: (Still) awaiting a pullback.
Current drawdown from maximum true profit earned in 2014: US$6925.88
Change from last week: -US$4941.82
Directional stance: (Still) awaiting a pullback.
The bull market is relentless? But like a spring, the further it is stretched, the more violently it is going to coil back. Sell signals are starting to appear. Hopefully it will be a more fruitful year-end.
Saturday 29 November 2014
Trading Update: 29 November 2014
True Profits Earned in 2014 to date: US$32,469.28
Current drawdown from maximum true profit earned in 2014: US$3988.56
Change from last week: -US$2004.50
Directional stance: (Still) awaiting a pullback.
Current drawdown from maximum true profit earned in 2014: US$3988.56
Change from last week: -US$2004.50
Directional stance: (Still) awaiting a pullback.
It's been a quiet week due to the Thanksgiving holidays in the US and many traders in the US presumably going AWOL. The markets have crept up, resulting in more drawdowns for the portfolio. The range of movement in the week has been really limited. This typically precedes a large move (either upwards or downwards). Again, as mentioned last week, it is not fun to trade against the trend but the pullback is going to come (eventually..)
The situation now is akin to fishing for prawns. You keep throwing in bait but catch nothing, and your bait is being depleted. Except that the bait is the premium kind that costs more than a bit of money every week. Oh well, all part and parcel of retail trading haha.
Monday 24 November 2014
Trading Update: 24 November 2014
True Profits Earned in 2014 to date: US$34,473.78
Current drawdown from maximum true profit earned in 2014: US$1984.06
Change from last week: -US$1039.24
Directional stance: (Still) awaiting a pullback.
Markets hitting new highs in the past week. Still sitting tight but as the portfolio is currently geared towards profitting from a pullback, there will be increased drawdowns as the markets continue to climb for now. It is still a long-term bull unless otherwise proven and it is always a little hairy to be trading against the trend. It might have been prudent to have reset the portfolio to a neutral stance at some point previously. Let's see how high the markets can climb before we see a pullback of significance.
Current drawdown from maximum true profit earned in 2014: US$1984.06
Change from last week: -US$1039.24
Directional stance: (Still) awaiting a pullback.
Markets hitting new highs in the past week. Still sitting tight but as the portfolio is currently geared towards profitting from a pullback, there will be increased drawdowns as the markets continue to climb for now. It is still a long-term bull unless otherwise proven and it is always a little hairy to be trading against the trend. It might have been prudent to have reset the portfolio to a neutral stance at some point previously. Let's see how high the markets can climb before we see a pullback of significance.
Sunday 16 November 2014
Trading Update: 16 November 2014
True Profits Earned in 2014 to date: US$35,513.02
Current drawdown from maximum true profit earned in 2014: US$944.82
Change from last week: N.A.
Directional stance: Awaiting a correction.
It's been a boring week in the US markets. Waiting for markets to give an indication as to when an anticipated correction will commence. We shall wait and see. Patience is the name of the game and akin to fishing at times. Just saying.. I don't fish and can't even catch prawns.
Current drawdown from maximum true profit earned in 2014: US$944.82
Change from last week: N.A.
Directional stance: Awaiting a correction.
It's been a boring week in the US markets. Waiting for markets to give an indication as to when an anticipated correction will commence. We shall wait and see. Patience is the name of the game and akin to fishing at times. Just saying.. I don't fish and can't even catch prawns.
Saturday 15 November 2014
Trading: Past Performance (Part 2)
If you have not read Part 1 of my past performance, you may wish to check it out here first.
The story continues. After November 2009, I began to apply Elliot Wave, but devoid of the bearish bias that caused me dear previously. There were some wins and some losses, but the results spoke for themselves. As of July 2010, I had made a sizeable number of trades but still ended with a net loss of US$2000+. Not going anywhere. Back to the drawing board.
It was then that I realised that there were brokers in Singapore that would allow me to effect a strategy I had thought about sometime in 2008/9, and had discussed this in some detail with a friend. It essentially involved shorting leveraged ETF pairs (a simple google for those terms would bring up a host of sites that explain what this involves, for those keen to know more). I originally did not think the strategy would be viable because I could not think of any instruments available to a Singapore retail investor that could allow me to short US leveraged ETFs without excessive hassle or financing costs. I also experimented with a "too simple to be true" moving average system at the same time.
The moving average system was binned after less than a year of experimentation. Essentially while the system in itself could have given a positive expectancy, there were slippage costs involved that would have been fatal. As the system involved trading in the 5 to 15-min timeframe, it was not viable from a lifestyle perspective to be monitoring the US markets late every night. I have no regrets having tried and given up on this.
Which leaves us to the other strategy, which has stuck and since evolved to an extent that it is no longer a cookie cutter methodology that other websites (that a google search may throw up) may describe. I have come to realise that the strategy works very well in bear markets, and not so much in bull markets (where volatility is low). Hence, tweaks have been made to give the shorting of the ETF pairs a directional bent as well, such that my own methodology is currently no longer market neutral (which people would say is the main point of the strategy in the first place). But if you ask me, as long as the cat catches the mice..
Below is a snapshot of what the methodology has been throwing up:
True profits (i.e. with all expenses accounted for) between July 2010 to Dec 2010: US$843.35
True profits earned in 2011: US$30,678.21
True profits earned in 2012: US$8,249.15
True profits earned in 2013: US$55,987.10
It was a slow starter in 2010 and was a real wild horse to handle in the early days of 2011, where I was still learning and trying to control the horse in what was a relatively volatile year. The methodology only got going really in August 2011, where I had a 5 digit drawdown that was erased overnight in a massive rally that left me 5 digits in the green. I could never forgot the feeling of victory in the morning of 10 August 2011. For those of you who are fans of Apocalypse Now, I smelt the taste of napalm in the morning.
2012 was a headache in itself. The markets moved up like a slow escalator in orderly step-by-step fashion. Translation for the methodology? These are the worst conditions possible for the strategy, which thrives on market volatility. I gritted my teeth and roughed the year out but it was a frustratingly dry (and boring) year. 2013 began in very much the same fashion again (on hindsight this is what you get when you are in a large scale wave 3 in Elliot Wave terms) and I knew tweaks had to be made. This was when I decided that at least for bull markets, a directional element has to be added to the system to make it work. Hence now I have a methodology that taps on the leveraged ETF decay that shorting leveraged ETF pairs is all about, but also makes bets to a certain extent on market direction. It's not really rocket science at all but much of the methodology involves making decisions on one's total position size and the ratio of position size between your long leveraged ETF and short leveraged ETF. This is something you can only arrive at after trial and error in various market conditions. So far I have seen forceful corrections followed by recoveries (methodology works well in these conditions) and boring bull markets (works badly and needs tweaking). Unfortunately I have not had the chance to test the methodology in large scale bear markets (such as the one from 2007 to 2009). While in theory the methodology should work spectacularly in conditions of great volatility, it is a wild horse and there is every chance the trader will be thrown off the horse - as this strategy is largely premised on "reversion to the norm", an extended averse movement in the markets can potentially wipe someone (who does not take any timely remedial action) out. So there is every chance this strategy would fail in the future and a search for a new methodology would begin.
So there we have it for past performance, although I am sure I will be delving more into some other aspects in the future. As our minds are ever so susceptible to fallacies and "mind-f*ks" I think it would be a good idea for my clarity of thought to document my thought process and progress with the methology going forward in this blog. Would be fun too. Enjoy the ride if you wanna come along!
The story continues. After November 2009, I began to apply Elliot Wave, but devoid of the bearish bias that caused me dear previously. There were some wins and some losses, but the results spoke for themselves. As of July 2010, I had made a sizeable number of trades but still ended with a net loss of US$2000+. Not going anywhere. Back to the drawing board.
It was then that I realised that there were brokers in Singapore that would allow me to effect a strategy I had thought about sometime in 2008/9, and had discussed this in some detail with a friend. It essentially involved shorting leveraged ETF pairs (a simple google for those terms would bring up a host of sites that explain what this involves, for those keen to know more). I originally did not think the strategy would be viable because I could not think of any instruments available to a Singapore retail investor that could allow me to short US leveraged ETFs without excessive hassle or financing costs. I also experimented with a "too simple to be true" moving average system at the same time.
The moving average system was binned after less than a year of experimentation. Essentially while the system in itself could have given a positive expectancy, there were slippage costs involved that would have been fatal. As the system involved trading in the 5 to 15-min timeframe, it was not viable from a lifestyle perspective to be monitoring the US markets late every night. I have no regrets having tried and given up on this.
Which leaves us to the other strategy, which has stuck and since evolved to an extent that it is no longer a cookie cutter methodology that other websites (that a google search may throw up) may describe. I have come to realise that the strategy works very well in bear markets, and not so much in bull markets (where volatility is low). Hence, tweaks have been made to give the shorting of the ETF pairs a directional bent as well, such that my own methodology is currently no longer market neutral (which people would say is the main point of the strategy in the first place). But if you ask me, as long as the cat catches the mice..
Below is a snapshot of what the methodology has been throwing up:
True profits (i.e. with all expenses accounted for) between July 2010 to Dec 2010: US$843.35
True profits earned in 2011: US$30,678.21
True profits earned in 2012: US$8,249.15
True profits earned in 2013: US$55,987.10
It was a slow starter in 2010 and was a real wild horse to handle in the early days of 2011, where I was still learning and trying to control the horse in what was a relatively volatile year. The methodology only got going really in August 2011, where I had a 5 digit drawdown that was erased overnight in a massive rally that left me 5 digits in the green. I could never forgot the feeling of victory in the morning of 10 August 2011. For those of you who are fans of Apocalypse Now, I smelt the taste of napalm in the morning.
2012 was a headache in itself. The markets moved up like a slow escalator in orderly step-by-step fashion. Translation for the methodology? These are the worst conditions possible for the strategy, which thrives on market volatility. I gritted my teeth and roughed the year out but it was a frustratingly dry (and boring) year. 2013 began in very much the same fashion again (on hindsight this is what you get when you are in a large scale wave 3 in Elliot Wave terms) and I knew tweaks had to be made. This was when I decided that at least for bull markets, a directional element has to be added to the system to make it work. Hence now I have a methodology that taps on the leveraged ETF decay that shorting leveraged ETF pairs is all about, but also makes bets to a certain extent on market direction. It's not really rocket science at all but much of the methodology involves making decisions on one's total position size and the ratio of position size between your long leveraged ETF and short leveraged ETF. This is something you can only arrive at after trial and error in various market conditions. So far I have seen forceful corrections followed by recoveries (methodology works well in these conditions) and boring bull markets (works badly and needs tweaking). Unfortunately I have not had the chance to test the methodology in large scale bear markets (such as the one from 2007 to 2009). While in theory the methodology should work spectacularly in conditions of great volatility, it is a wild horse and there is every chance the trader will be thrown off the horse - as this strategy is largely premised on "reversion to the norm", an extended averse movement in the markets can potentially wipe someone (who does not take any timely remedial action) out. So there is every chance this strategy would fail in the future and a search for a new methodology would begin.
So there we have it for past performance, although I am sure I will be delving more into some other aspects in the future. As our minds are ever so susceptible to fallacies and "mind-f*ks" I think it would be a good idea for my clarity of thought to document my thought process and progress with the methology going forward in this blog. Would be fun too. Enjoy the ride if you wanna come along!
Friday 14 November 2014
Trading: Past Performance (Part 1)
A post on my investment/trading history. I had intended for it to be a quick one but unfortunately it has grown rather lengthy, so I will present this in a number of parts instead.
It began in 2007, when on the cusp of graduating it dawned on me that income from my job is not going to suffice if I wanted an early retirement; I had to make my money work for me. I began to equip myself with knowledge of the investment world and my first dip in the markets was via a unit trust offered by POEMS that invested in the S&P 500. Back in early 2007, on hindsight the markets had reached the heights of "irrational exuberance" - any dip in the markets was cheered by investors who simply bought the f-ing dip. I was happy to join the party as well and was pleased to see my account (fueled by my first paychecks) going up steadily. I made money and began to make plans for my ascension as "Master of the (Trading) Universe".
But a little knowledge is a dangerous thing. As we know the music ended and everyone began scrambling for chairs. I was without one as I saw my account reducing in size even though I tried to prop it up every month with savings from my paycheck. It was rather gutting and the only consolation that the paycheck was not large. To cope emotionally, I picked up the concept of "averaging down" and consoled myself that I had a plan - I was averaging down.
And then I picked up on another concept that has served and burnt me - Elliot Wave. Applying the methodology, I began shorting the market in the last quarter of 2008. Take note this was just after the days of AIG's collapse and days where the market could dip by 5% in a single day - emotionally it was easy to make the "right trade" by shorting along with the other bears, who roared like a tribe hungry for more food. Then came March 2009 (which was the bottom for the S&P 500) and I carried on shorting the markets and the markets rose like a phoenix from the grave each day. It was a slow bleed as I lost money everyday, comforted by violent corrections that gave me hope but each downswing was overridden by even fiercer rallies. Like trying to put out a fire in vain, I would toss my savings from the paycheck at the trading account but the size of the account went down every month. I would listen to and sing "Bleeding Love" by Leona Lewis and "Down" by Jay Sean during those dark days.
It was only on 16 November 2009 that I finally gave up my short bias and admitted that a new low in the S&P 500 was no longer likely. By then, I had lost in excess of S$50k. I guess to get good tuition, you gotta pay the fees.
Part 2 continues here.
It began in 2007, when on the cusp of graduating it dawned on me that income from my job is not going to suffice if I wanted an early retirement; I had to make my money work for me. I began to equip myself with knowledge of the investment world and my first dip in the markets was via a unit trust offered by POEMS that invested in the S&P 500. Back in early 2007, on hindsight the markets had reached the heights of "irrational exuberance" - any dip in the markets was cheered by investors who simply bought the f-ing dip. I was happy to join the party as well and was pleased to see my account (fueled by my first paychecks) going up steadily. I made money and began to make plans for my ascension as "Master of the (Trading) Universe".
But a little knowledge is a dangerous thing. As we know the music ended and everyone began scrambling for chairs. I was without one as I saw my account reducing in size even though I tried to prop it up every month with savings from my paycheck. It was rather gutting and the only consolation that the paycheck was not large. To cope emotionally, I picked up the concept of "averaging down" and consoled myself that I had a plan - I was averaging down.
And then I picked up on another concept that has served and burnt me - Elliot Wave. Applying the methodology, I began shorting the market in the last quarter of 2008. Take note this was just after the days of AIG's collapse and days where the market could dip by 5% in a single day - emotionally it was easy to make the "right trade" by shorting along with the other bears, who roared like a tribe hungry for more food. Then came March 2009 (which was the bottom for the S&P 500) and I carried on shorting the markets and the markets rose like a phoenix from the grave each day. It was a slow bleed as I lost money everyday, comforted by violent corrections that gave me hope but each downswing was overridden by even fiercer rallies. Like trying to put out a fire in vain, I would toss my savings from the paycheck at the trading account but the size of the account went down every month. I would listen to and sing "Bleeding Love" by Leona Lewis and "Down" by Jay Sean during those dark days.
It was only on 16 November 2009 that I finally gave up my short bias and admitted that a new low in the S&P 500 was no longer likely. By then, I had lost in excess of S$50k. I guess to get good tuition, you gotta pay the fees.
Part 2 continues here.
About Me
I'm 32 years old, a salaried employee in Singapore who has run my own trading methodology on the side since 2011*, with a dream (like any aspiring retail trader) to quit the rat race one day. I have belatedly decided to create a blog to track the performance of the methodology; this is largely for the benefit of persons who may want to know more about what I have been doing, although I expect to also post occasionally on any other non-trading matters that may pique my interest; hence, please ignore the posts that do not contain "Trading" in the title if you do not want to look at those.
*To term what I do as a trading system may cause offence to those out there who trade with a much more sophisticated system than I do.
For more information on my trading history, you may see a writeup I did in two parts, Part 1 and Part 2.
I try to post weekly updates on my trading. If you hit the main page of this site, you should be able to find the latest weekly update.
I also write about personal finance matters, including expenses updates and trading capital updates, and matters relating to psychology and motivation. The more popular posts on this site can also be accessed by the sidebar on the right of the page.
*To term what I do as a trading system may cause offence to those out there who trade with a much more sophisticated system than I do.
For more information on my trading history, you may see a writeup I did in two parts, Part 1 and Part 2.
I try to post weekly updates on my trading. If you hit the main page of this site, you should be able to find the latest weekly update.
I also write about personal finance matters, including expenses updates and trading capital updates, and matters relating to psychology and motivation. The more popular posts on this site can also be accessed by the sidebar on the right of the page.
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