Campaign #1 Ends

The siege of Chang An has been lifted. In a most unfavourable manner.

My 36k positions got stopped out 2 nights ago whilst I was sleeping (and snoring really loudly, as Mrs RetailTrader claims). I woke up at 6am in the morning, checked my phone for the market movements first thing, and heaved a sigh of relief because while the market had gone down, it rebounded later in the trading session, and my stop loss did not appear to have been hit.

But it did... Because of enlarged spreads. Lesson learnt - when setting stop losses, if you have brokers who somehow very mysteriously like to widen spreads to hit your stop losses, please account for larger spreads. Thought of disputing this with my broker actually, but don't think I will get anything out of them except for some stock response that spreads can widen like Madonna the virgin in times of volatility yada yada scooby dooby..

So my positions which I have pyramided over some time are lost. But fault is mine alone, because my stop loss levels were also set based on Elliot wave levels that had, at least one day before my positions got closed out, shifted to a lower level. If I am trading rightly in a disciplined way, what I should have done was to shift my stop loss lower in accordance with the new levels, and close out the required number of positions in order to maintain the same amount of risk capital I want to take on for this trade, which was 8k.

So I'm left with 8k realised losses, and lost unrealised gains on these positions of over 20k. Ouch. That's what you get for bad trading. Less than disciplined risk management. Don't blame the broker! Don't hate the markets!

But last night I have opened 5k+ new long positions with another 8k of capital at risk, so here we go again.

Bullish till the 2467 low on SPX is broken.

Northern Campaigns #1 - The Siege of Chang An

Those walls, they will not fall..

The siege of Chang An continues. Unrealised profits are up to 10k, with drawdowns from peak profits for these positions in FAZ about 11k. Am I a fool not to have protected profits? But setting a tight stop loss and pulling out would mean that I will not be able to open the same number of positions again without busting my maximum allocated risk capital amount. The 36k positions in FAZ has taken time to accumulated with the shifting of my stop losses on the way so as to never bust the maximum allocated risk capital. It is akin to slowly training up your troops, and moving your troops and supplies from the capital (Cheng Du) to the border city (Han Zhong) over time to embark on the northern campaigns to take Chang An. Will I be forced to pull back the troops or will I manage to make ground and perhaps take some of the battlefields around Chang An, and even manage to seize the city? The campaign continues.

Bear Market Probability Grows, Elliot Wave Starter Kit

1. Bears Coming Out to Party?

Rawwwwwr... went the bear last night as the S&P 500 encouragingly broke the first support level that needs to be broken to indicate that the market has topped. I continue to monitor the situation. Earlier on in the week the market chugged up but its movements were laboured and insignificant. Then at the end of the week a nice, big red day.

Behold my fangs

Portfolio wise, I sustained small drawdowns as the markets chugged higher early in the week, before ending the week positive with a gain of US$1k+ thanks to the movements on Friday (as you know, I have cautiously gone net short since last week). If the markets continue to fall, I will gradually be adding to my positions as the bear market grows in probability. As I mentioned last week, I am hardly using leverage for now and hence the returns I have (even though I may be correct in my directional call) may be somewhat muted.

2. The 5 Waves in Elliot Wave

Perhaps it is time to talk a bit about Elliot Wave. In Elliot Wave theory, putting it extremely simply, waves in the trending direction (can be up or down) move in 5 waves. 

The first wave is the "first mover wave", where for instance, after a long bear market between 2007 to 2009, nobody really believed the bulls anymore when the market bottomed in March 2009 and we saw the markets start to rally initially. People were still so fearful to re-enter the markets back then that the rally was heavily doubted and there was no widespread participation.

Then comes the second wave. It is the "wave of doubt" because the second wave actually retraces the movement of the first wave. This means it wipes out most of the first wave and creates doubt in the markets about the viability of the first wave. This is the role the second wave is meant to play. In a bull market, it would get people thinking "cheh, the rally in the markets last week (i.e. the first wave up) was just a smokescreen. Better don't enter the markets first!!" 

Then we come to the famous third wave of Elliot Wave theory. It is the "wave of recognition". It is the wave that finally reveals to the mass markets (and leaves no doubt in everyone's minds) as to what the true trend in the markets is. Third waves are usually forceful and ferocious and in bear markets they can be very sudden, leaving investors with little or no chances to exit. Remember the days in 2008 when AIG and Citi ran into problems and the markets were tanking 3% on some days? That's the heart of a bear market wave 3 for you. In a bull market wave 3s tend to be more serene events. In a bull market wave 3 you tend to see the markets going up steadily by 0.5% for many, many days in a row. Then a correction once in a while to keep the bears hopeful, before more up days. Nice and steady.

Wave 4 is the wave of consolidation. It is the period where the mass market have, seduced or awed by the force of the wave 3, are thoroughly convinced about the market trend and have entered the market because they want their share of the pie now (but sadly they are usually too late)! But in Wave 4s, the markets keep ding-donging without any net movement, and can frustrate many investors. Wave 4 is usually seen as the worst period to be in the markets. Even traders can get blue-black from all the whipsaws that wave 4s can throw at them and there are quite plenty who choose to sit wave 4s out. 

Wave 5 is the final wave where all the "stupid money" comes in. This is where you see your shoeshine boys and "ah-gong ah mah" investors come out to play in the markets because they have very belatedly heard about the market movements and want to make some money. Sometime in the wave 5 the smart money would have exited with profits in the bag, leaving most of the retail market to hold the fort. And while there are returns to be had, wave 5s are usually for suckers. While wave 5s are typically never as forceful as wave 3s and are usually of the same scale as wave 1s, there is still money that can be made out of them (getting long during the 2000 NASDAQ rally where the markets went parabolic would have bagged you a ton of money, provided you exited in time) but one must tread cautiously because at the end of a wave 5 is a trend change. 

The classic application of Elliot Wave is to wait for a wave 1 to clearly pan out in order to confirm the beginning of a trend. Then enter at the end of wave 2, and ride wave 3 for maximum profits at minimal risk. Sit out wave 4, and ride wave 5 cautiously with a tight stop. 

Also, the beauty of Elliot Wave is that it is fractal in nature. Which means for instance, within a wave 1, there are actually 5 mini-waves within that wave 1. And within each of the 5 mini-waves, there are actually 5 micro-waves inside. You get the idea. It's something like SIM cards, you have mini, micro and nano. Just that in Elliot Wave we call them Cycle waves, Primary waves, Major waves, Minor waves, and so on. In addition, if you look at the insides of every wave 2 and wave 4, they very generally tend to correct in 3 waves, i.e. a wave A, wave B and wave C. And to complicate things, wave As and Cs themselves consist of 5 smaller waves, while wave B consists of 3 smaller waves.

An illustration of the fractal nature of the waves. You see how a wave [1] is actually made up of 5 smaller waves? And how there are ABCs within waves 2 and 5 of the smaller waves, and for wave [2] as well?

Ok this is all a bit "jelat" already so we end off here!

Gone Short!

1. Finally gone short

After talking and talking about it, I have finally gone short in my portfolio. This is in line with the view that: 1) if we are still in an uptrend, we are in a final leg whereby the upside is capped about about SPX 2170 and 2) there is a decent chance that the bear market has already begun (although the rally later in the week shows the bulls still want to give it a good go).

Not too much change in the portfolio. Total year-to-date profits went down by a few hundred dollars from last week. If you think about it, this can be accounted to the commission charges when I exited some of my positions. The size of the portfolio has also been scaled down (to using almost zero leverage currently) pending confirmation of the trend change. Once we are very clear that we are in the bear market. I will upsize my positions again.

Not what I meant when I told you to go short.

2. Using IG Markets

Progress continues in my plans to integrate a second broker in my trading, for counterparty risk purposes. My eventual plan is to park all my bearish positions with one broker, and all the bullish positions with another. What I have done viz-a-vis IG Markets so far is that I have parked a thousand dollars into their account and will start executing a few small trades to test out their interface. When I have suffiicent liquidity in my savings account to put up full trading positions, I will migrate half of my positions to IG Markets. This is of course assuming that I am happy with their trading platform.

3. Penang

This post comes a little late as I am actually away on a business trip in Penang. Back in Singapore tomorrow. Updating this blog had to take a step back behind other matters I had to attend to. Well the weather here is either very hot or rainy so I'm very happy to hole myself up in the hotel when I have free time to chip away at my long to-do-list, nap, get some exercise done and listen to TED talks and Eckhart Tolle whilst other colleagues are out golfing, drinking or having Penang char kway teow and Penang laksa. In the face of limited time, life is about choices huh?

Ding Donging Markets, the Quest for a New Broker and More LKYisms

Happy Good Easter long weekend to everyone!

1. Markets still in limbo

The markets tried to rally early this week but did not manage to break any significant levels. Then it slumped on Tuesday and Wednesday before bouncing somewhat on Thursday, closing just 9 points higher than where we ended last week. Which means we are kinda in no-man's land with regard to whether we are still on the bull bus or if the bear party has already started. Essentially we are in a trading range between 2120 and 2040 on S&P 500. Break to the upside and the bull continues, break to the downside and we can start getting acquainted with Mr Bear (who has become somewhat a stranger after 6 long years of not meeting him).

Hi, do I know you?

The portfolio has bounced up US$4,061.94 and recovered some of the losses I was talking about last week. But the portfolio continues to be geared bullishly until 2040 is taken out on the S&P 500. If the markets do break 2040, there is a risk of large losses being sustained. But that's what we have to live with when we have a major trend change.

2. A New Broker, At Last?

The most astute readers will recall that way way way back in end January 2015 I mentioned that I was on the lookout for a new CFD broker that I could use in conjunction with my existing broker (City Index). This is to mitigate any concentration risk in a single broker, given that currently all of my trading capital is parked with just one broker (and we all know what happened to MF Global). Well after 3 long months of done-nothingness I got off my ass on Monday to start making some calls, and given that most brokers do not allow short trading to be done for the specific instruments that I trade, I was pretty much only left with one broker to "choose" from, and that being IG Markets. I had looked at Oanda, CMC, Saxo, Kim Eng Maybank and Philip but none of them were suitable. 

The IG Markets platform (note this is not a screengrab of my account!)

I've gotten the account open and what remains to be done is to inject funds into the account, which I will be doing over the weekend. I will then play around with the platform and execute a few trades to test the interface. If all things work out, my grand plan is to open new positions with IG Markets until there is parity between the size of my positions with City Index and IG Markets. The downside to this is twofold. First, when I want to change positions, I will now need to execute both with City Index and IG Markets separately. This would be a drag on how quickly I can switch positions. Second, my paperwork involved in doing up my trading records will effectively double as I need to calculate costs incurred under 2 trading platforms now. I'm damn lazy all about efficiency and so will need to think about how best to make use of the IG Markets account. 

3. LKY Redux

I found it very poetic that it rained during LKY's funeral. You can choose to think that the heavens teared for him, or that perhaps LKY wanted to give Singaporeans a final test of their resolve and dedication to see him off in the less than comfortable conditions. 

The rain led me to think of an election rally of his in 1980 at Fullerton, where at some point it began to rain and he shrugged the raindrops off his head like a bad-ass with nary a concern. He then had some tough words to say to the SIA pilots who tried to go on a strike back then. Very potent stuff. But despite our propensity to complain about how the ruling party can do a better job here and a better job there, and sometimes we even like to use our votes to give them a kick up the backside, LKY did say something in that rally that I can't really disagree with at all. I'm paraphrasing like crazy but in effect what he said was that: Yes we screw up sometimes. E.g. in this incident and in that incident. But at the end of the day, we get 80% of our decisions right. 

Screengrab of the rally on CNA. "And I'm prepared to start all over again!" says the man, in response to SIA pilots who thought he did not dare to disband SIA and start another airline if needed. 

And I think the man has a point. You can look at it from the perspective of how often a striker in football converts his goalscoring chances. An above-50% rate is world-class, and an average EPL striker probably has a chance-conversion rate of 20 to 30%. If LKY's "conversion" rate (i.e. proportion of "right" policy decisions made) has been 80%, I think we will one day look back and think, hey, 80% was a pretty darn good rate. And I'm saying this as someone who has not exactly been the biggest PAP fan in the past.

The Bear Market May Have Begun, Thoughts on LKY and My Final Reservist

1. Bear Market May Have Begun

The probability that the bear market has begun has increased, looking at the movements of the past week. We may not reach another new high on the S&P 500, as expected previously.

Unfortunately, my portfolio remains positioned long for now. That means this week I sustained five consecutive days of losses as the US financial markets were down for five days in a row. The portfolio is now down US$6,876.83 from last week, which means the previous week's gains have been wiped out, and then some. That is the nature of a major trend change. 

If the bear market is on now, where are we headed? I am looking for the S&P 500 to take a significant haircut to the 1200 to 1400+ levels before the bull market can resume. That is quite a spiral down so I've been telling my friends to be careful with their finances and to avoid changing jobs in the months ahead.

What are my next moves trading-wise? As my portfolio is still positioned to be bullish, I am looking for an exit point for me to rebalance my positions to take up a bearish stance. I am hoping that in the very short term, we have found a bottom and the S&P can rebound up a bit more before I do a rebalancing, so that I can reduce the US$6k+ drawdown somewhat. Yes I'm being greedy because the start of the bear can be very vicious, and may not give the bulls many chances to exit. I'm pushing my luck and Monday will be a day of tenterhooks watching how the futures pan out. Yep that's the "beauty" of a trend change.

2. LKY

I don't think I have any more to add to the numerous discussions and the endless broadcasts on TV and other media on him. All I shall do is to share what I wrote in the tribute book to LKY when I went down to one of the tribute centres earlier today, where I wrote this: 

"Dear Mr Lee

Thank you for devoting all of your life to build a Singapore that we can enjoy and live in today. I will not forget your efforts and will take inspiration from what you have done. Please go in peace."

I heard from friends that a typical workday for LKY would end at 2 to 3am, and the man would work on weekends as well. Such was his dedication and his grasping onto every second on the day to fulfil his mission makes me a little ashamed of how I have been making use of my time (erm have been playing SimCity a bit too much on my phone and trying to be an LKY in building my own utopian city). That was what I was thinking about when I said I would take inspiration from LKY.

Thank you, Sir. Singapore has lost a great man.

3. Reservist

When the news of LKY's demise broke, I was about to head to camp for the first day of my final reservist stint. How ironic because National Service was a baby of LKY and his cabinet (notably Goh Keng Swee). It's been 14 years since I first stepped into Pulau Tekong and then my unit, where we have completed 10 NS cycles together and are now placed on the military reserve. While I am happy that I have fulfilled my liabilities (bye bye mobilisations, in-camp trainings, IPPT and standing broad jump!), I will miss my army friends. Despite our pledges to stay in touch, I hope we do not break contact and never ever see one another again. Looking at pictures of ourselves when we were active NSmen, we were much scrawnier, naive, but smiling with bright-eyed optimism and wonderment. Time has doused some of our fire but most of us have turned out wiser, more contented and generally become better persons. It is beautiful to see how we have grown as individuals (even though most of us have also grown sideways). I look back in awe at the shit we managed to endure when we were so much younger and sigh. It is a bittersweet feeling. This, coupled with what happened to LKY, means it has been a week for reflection for me.

Trading Update: 21 March 2015

True Profits Earned in 2015 to date: US$18,270.90

All-time maximum profit earned since 2011: US$150,971.78 (new high water mark!)

Current drawdown from all-time maximum true profit earned: US$0

Change from last update: Up US$6,194.73

Directional stance: Portfolio is 56.03% bullish

A good week that ends with a nice figure for a new high water mark and no drawdown. Market is heading towards new highs again. The route to the top is currently plotted to be by way of three legs - S&P 500 will go on to 2120+, then down to 2070/2080+, then final top at 2170+. But market loves to surprise and will let us know if it decides to deviate - we just need to observe her very carefully and adjust our route as appropriate. It's all about trading the most highly probable scenario and not thinking too much, like Simon Mignolet.

Trading Update: 14 March 2015

True Profits Earned in 2015 to date: US$12,076.17

All-time maximum profit earned since 2011: US$146,572.34 (new high water mark!)

Current drawdown from all-time maximum true profit earned: US$1,795.29

Change from last update: Up US$3,656.98

Directional stance: Portfolio is 59.06% bullish

An up week with a new high water mark. That's always nice as the P&L for the year is slowly chugging up. 

But there have been some volatile down days this week which clue us in to weakness in the market. Hence, it may not be viable to expect the S&P 500 to hit 2200+ any longer. Instead, my primary target is for the S&P 500 to top below 2200+, or more precisely below 2180. Thereafter, the S&P 500 will retrace probably 50% to 62% of the upmove from the bottom set in 2009 (at 666 - what a number!) to whatever level it the S&P 500 is going to top at soon, within the next few months. Yeah do the math and you will find that S&P 500 will be going down to 1200+ to 1400+ territory sometime in 2016. 

There is always a chance the bull market can still be sustained and can go to 2200+ as planned, or even higher to 2500+. But for now these scenarios do not look as likely. We will need to watch the behaviour of the market carefully, like how a patient doctor observes a patient's health statistics.

Ridiculous? Well, about two years ago some people laughed in my face when I told them S&P was going to hit 1600, then 2000. Let's see.

The typical reaction when I shared my market views.

A lot of shit can happen in a bear market. But bear markets are necessary to knock complacency off our population, and drive us to get lean and resilient, in order to build a better base to shoot for the next new high. Markets (and humans) progress in cycles and not straight lines up. Such is the way of life.

Markets move up in cycles.

But I am getting ahead of myself. Let's enjoy the remainder of the bull run and bank as much profits as possible first. I will be sure to ring the bell when the bear market is here. In the meantime, I will be deliberating on how to tweak my tactics like Brendan Rodgers for profiting in a bear environment.

Trading Update: 7 March 2015

True Profits Earned in 2015 to date: US$8,419.19

All-time maximum profit earned since 2011: US$144,512.84 (new high water mark!)

Current drawdown from all-time maximum true profit earned: US$3,392.77

Change from last update: Down US$1,127.27

Directional stance: Portfolio is 59.65% bullish

We were humming along nicely this week and new highs were made again at the start of this week. Until the markets decided the daily grind up is a bit boring and the S&P 500 threw a curveball last night to fall 29 points to close at 2071, after spending the majority of the past two weeks nicely nestled in the 2100+ region. Hence we incur losses this week. Well you have to respect the markets and enjoy a little action if the markets are up to it. What this means is the markets want to see a little correction, and last night's action may already have been all of that correction, if not we will see some more early next week. But already the divergences are building up to indicate a decent move up is going to happen after this little jaunt is over. 

While I am still looking for a target of 2200+ which is about 100 points of upside left, it isn't too much to be honest and this bull market will be coming to an end by probably in the next 3 to 6 months. What this means is I have to be prepared to put away my bull horns and start looking in the storeroom for where I put my bear paws. I think I last wore them in 2009. The strategies that have served me well in the past 2-3 years which I've had to tweak for the bull environment will need to be adjusted for the bear market.

Hey Mom, do you remember where I put my bear suit?

As we enter into the topping process, we can expect to see the market heave and ho to eke out a few more points for a new high, then correct, then heave and ho again to make marginal new highs, then correct. Rinse and repeat until all the bulls in the market have already joined the tug-of-war against the bears. When there is no fresh meat to join the bull team, the balance turns and the bears slowly will grow in numbers as more bears from the sidelines join Team Bear, and eventually the bears will outnumber the bulls. And then you put on the bear paws.

Are you Team Bull or Team Bear?

Trading Capital Update for February 2015

The above charts sets out my trading capital since February 2009 to present. There was a slowdown in capital accumulation last year due to the acquisition of Mrs RetailTrader and our matrimonial home. Hopefully the bull market can resume and we can hit new highs on RetailTrader's Trading Capital Index™! 

There's not too much to say in terms of asset allocation. Apart from allocating $5k in a bank deposit that is 100% liquid for emergency purposes, all of my cash is allocated as trading capital and fully deployed all the time. I have not included CPF, property assets or any assets of any other individual in my computation of trading capital.

Trading Update: 28 February 2015

True Profits Earned in 2015 to date: US$9,546.46
All-time maximum profit earned since 2011: US$143,604.36 (new high water mark!)
Current drawdown from all-time maximum true profit earned: US$1,357.02
Change from last update: Down US$1,215.98
Directional stance: Portfolio is 58.84% bullish

You have been warned!

Not too much action at all this week. It looks like even the US markets are going through some CNY sluggishness. The largest movement this week in the 3x leveraged ETF that I am using to trade was a paltry 1.18%, indicating very little volatility this week. But that's what it is in the heart of a bull leg. You don't see crazy up days, but more of slow grinds up, and after a slow grind up the markets will stall and dip a little bit, ruffle a few feathers, rebuild momentum before resuming the move up. And that's where we seem to be for now, in the stalling part. We take a $1k+ drawdown this week despite hitting new highs earlier in the week, and can only wait patiently for the market to take its own sweet time decide when the bull (or goat?) is to continue. It is telling that I hardly looked at the markets over the course of this week because there was simply no action. So I have to look for action elsewhere ;)

RetailTrader Tries His Hand At Gambling

I just need one good hand.. to wipe the table clean!

During the Chinese New Year festivities, I was playing a card game "In Between" with my friends. For the more inquisitive folks, you can check out the rules here. Very simply, each person will take turns to be dealt with a pair of poker cards. And you decide how much money you want to bet that the next poker card you draw will be a number that is "in between" the first two cards. If you win the bet, the money is yours and if you lose, you have to cough up money into a pot. You lose double your bet if the third card you draw is the same number as any one of the first two cards.

I didn't actually know the game was also called Acey Deucey (what kind of name is that?).

As a retail trader I gamble with a plan in mind just like I approach trading. I do enjoy gambling sessions because some games can actually be good practice for trading. In the case of In Between, it teaches you how to size your positions accordingly with the probability of your hand of cards you receive. In other words, if you get a good pair of cards, you can calculate what your odds of winning money are, and then decide how much you want to bet accordingly. For a set of cards that gave the absolute best odds, I would decide what was the maximum loss I could stomach (in the event of a freak accident) and work backwards in determining what my wager was. The trading equivalent would simply be committing to a larger position for a higher probability trade, and sizing accordingly to your risk management rules.

I also enjoy In Between because I had never lost money playing the game before. Is it down to luck or my amazing system? ;)

Interestingly as the pot of money began to grow larger and larger, the stakes got higher and my friends began to get emotional. Even I began to adjust the maximum loss I was willing to take to take into account the "inflation" of the money pot. Bets began getting bigger and bigger. Even though we started with a minimum bet of just 50 cents, it was not long before the first 2 dollar note appeared in the pot, followed by 10 dollars, then 50 dollars. Some of my friends even started betting in hands that gave less than 50% probability, and even in such cases bet beyond the 50 cent minimum bet. Some of my friends bet based largely on feel and won money. I lost 28 dollars but I had a lot of fun in the process. You should have seen my face for one bet where I plonked 64 dollars for a very high probability hand, and ended up losing double (i.e. 128 dollars)! I will simply view this as a good bonding session and the equivalent of paying to watch a very entertaining movie that was at the same time educational!

What was the moral of the story? Sometimes you can go into a trade or game with best laid plans and execute them to perfection, but still lose money even though you have done your homework and calculated the probabilities, etc. This is because while we can create a system that gives us a positive expectancy (i.e. over a infinite number of games, you will expect to win), the problem with gambling is we don't end up actually playing an infinite of games, and it takes time for the positive expectancy to materialise. And in the meantime, a freak/accidental heavy loss can set you back by a lot. Sounds a bit like trading huh? You can have a best laid plan and execute it to perfection, but still lose money. No choice, you just have to suck it up, play good defence and ensure you are never wiped out in terms of capital, and play the next trade well again. Think like a casino. Casinos win money in some games, and lose money in some games. But they know that they will always win over an infinite number of games and don't lose sleep over losses. That's how it should be for trading (and gambling) as well.

Trading Update: 21 February 2015

True Profits Earned in 2015 to date: US$10,762.44
All-time maximum profit earned since 2011: US$143,463.32 (new high water mark!)
Current drawdown from all-time maximum true profit earned: US$0
Change from last update: Up US$822.06
Directional stance: Portfolio is 57.95% bullish

The Chinese New Year rally appears to be in swing as the S&P 500 and the portfolio hit new highs together. As promised, it has proven to be a slow grinding journey up with the S&P 500 putting in a modest little green candlestick this week. In a bull market, the market tends to grind higher in a boring way, and that's exactly what we are getting now. And when the market gets too boring, we'll get a pullback once in a while to spice things up a bit. When the markets are not really moving much, there's nothing much a Singaporean retail trader can do, except eat, drink, and be merry during CNY!

Just one more kueh bangkit, please. I promise I'll go for a run tonight.

I did mention last week that a reset of the portfolio may be necessary if the bullishness level of the portfolio drops below 55%. This is what I expect to happen when the market carries on rising. Well apparently it's risen so slowly that a reset has not been necessary. So we continue to wait.

Stay healthy, stay foolish!

Trading Update: 14 February 2015

True Profits Earned in 2015 to date: US$9,940.38
All-time maximum profit earned since 2011: US$142,641.26 (new high water mark!)
Current drawdown from all-time maximum true profit earned: US$0
Change from last update: Up US$5,303.08
Directional stance: Portfolio is 58.45% bullish

Happy V day to everyone! V also stands for, amongst other things, victory in light of more green shoots! and a nice new green candlestick on our weekly candlestick chart to the right of this blog.

The prognosis is that unless the markets decide to go batshit crazy on us, we are seated on cabin 2015 of the bull train with the ticket saying our destination is this place called "S&P 2200+". We can expect a fairly steady "slow-grind" journey with a few small bumps along the way, without too much scenery to see. But please keep your seatbelts on at all times, just in case.

A bull locomotive train, powered by S&P bull power™, circa 2015.

I hope to bank more coin from this bull leg for what it's worth up to 2200+, but as I bank more profits the portfolio stance (which is currently 58.45% bullish) eventually becomes less and less bullish as the bull and bear components of the portfolio adjust by themselves. This in turn reduces the extent to which the portfolio is able to profit in a bullish market. Hence, the short-term plan is to do a reset of the portfolio when the bullishness of the portfolio drops below 55%, to raise the bullishness levels to about 60+%, and that may happen sometime next week. That means calling up the broker again to scream names of countries down their throat - precisely my idea of fun late on a weeknight. 

You may ask why don't I just set the bullishness stance of the portfolio higher at the outset? That's because there is no free lunch in this world - when the bullishness stance is set too high, I run drawing a large loss in case the market goes bearish. So it's all about getting the risk-reward balance right.

For the folks celebrating V day and/or Chinese New Year, I wish you a fun and enjoyable time and hopefully there has not been too much stress in preparing for these occasions!

Trading Update: 7 February 2015

True Profits Earned in 2015 to date: US$4,637.30
All-time maximum profit earned since 2011: US$137338.18
Current drawdown from all-time maximum true profit earned: US$0
Change from last update: Up US$21,897.78
Directional stance: Portfolio is 60.42% bullish

Lei ho ah! Mo men tai! Hai ya hai ya! Mrs RetailTrader and I are spending a long weekend in Hongkie Land where our plan is to eat and eat and eat, and sleep. Sounds like a plan?

Can't spend too much time on blogging when this awaits you.

What a difference a week makes, and it's good to see some green figures on the weekly update again. As things stand, the downtrend that seemed to go on and on and on finally appears to have ended. The chances are the S&P 500 has finally bottomed in the 1970s and it actually hit the 2070s in the course of last night before correcting to the 2050s. Hopefully, we are finally on the bull train that takes us to the 2200s for good now. 

The drawdown in the markets has been a drawdown for my emotions as well. I have to admit in the course of the correction I have spent some moments at night (away from Mrs RetailTrader) staring at charts and trader sites wondering when the correction would end, staring at trendline after trendline and support level after support level being broken, Fibonnaci retracements to precarious levels, and drawing up exit plans in case the worst happens. Who said money was easy to earn? 

One positive takeaway that has proven itself to be true (empirically) is the way this strategy seems to work out is that each and every time my emotions get tested, it is a sign and clue to me that the markets will be turning around soon. Well while this may be true, it's still important to prepare for the worst, because in trading one blow up is all you need for the game to end. Rule # 1: NEVER BLOW UP.

On another positive note, the markets appeared to have bottomed out together with the recession of my flu (again, at long, long last!). Hmmm am I some kind of market harbinger? Like the World Cup octopus? Perhaps markets will correct whenever I sneeze or cough?

Ok enough from me. I'm out of here now because I have a lot to do in Hongkie Land. I'll see you again when I'm back in Singapore!

Trading Update: 31 January 2015

True Profits Earned in 2015 to date: -US$17,260.48
All-time maximum profit earned since 2011: US$135,976.98
Current drawdown from all-time maximum true profit earned: US$20,536.58
Change from last update: Down US$12,672.32
Directional stance: Portfolio is 66.33% bullish

Holy moly! What a dreadful week. Look at those red figures!

Markets: Last week, I mentioned that there was a good chance the S&P 500 has bottomed, and an outside chance that we will hit the low 1900s before bottoming up for the next move up.

You can see what happened by looking at the new weekly candlestick chart of the S&P 500 I have put up on the sidebar. A big fat red candle formed this week taking the S&P to a low of 1989 for the week, and closing at 1994 for the week. The S&P 500 keeps getting drawn to the 1990s pivot like a magnet. Pivots can usually be strong support but if tested too many times they become likelier to give way and if they do, it means there is plenty of room to move down. Certainly, we are currently only 5 points away from seeing fresh short-term lows. The odds that we are going lower have increased so we need to brace ourselves for a rough ride down before we see sunshine.

Portfolio: What I said last week holds: If we see a further correction down to the low 1900s, that would mean for short term pain for the next two weeks or so before we see "green shoots" in the portfolio. 

Currently it's red, red wine. Like SMOL pointed out, CNY is coming and red is appropriate ;) And during CNY last year, I was experiencing a drawdown of a similar quantum. History rhyming again?

Flu: The worst of the flu is thankfully over, but I am just left with some lingering mucus in the nose from time to time, and a propensity to cough when speaking from time to time. A friend said he could "smell my flu" last night (to clarify, we were only speaking across a table and doing nothing else). Erm, ok. The flu is certainly taking its own sweet time to get out of my life but I will give it the time it wants. Maybe my body is trying to time my full recovery with that of the markets?

Primed for new highs?

Weight: Seeing that it's been a bad time in the markets, I have decided to look at another kind of chart. What's that? Certainly looks more bullish than the S&P 500 currently. But that's actually a chart showing my weight for the past year. Despite my best efforts to trim down on the fats, my weight seems to have "bottomed" (lol) and rebounded to near the "previous highs". While I can choose to blame the latest upswing on the stupid flu, whatever, it's time to shake it off!

Brokers: A friend highlighted to me that I have excess concentration risk in a single broker. Duly noted given that the portfolio size has grown and a broker wipeout would set me back many years in savings. As I use CFD brokers (currently City Index), I am going to give the big boys in the Singapore CFD space (i.e. Oanda, CMC, IG Markets, Saxo and if I'm really desperate, Philip because their really antiquated platform haunts me till today) a call to see if they permit shorting of the leveraged ETFs that I use. If so, I am going to park future funds in each new broker I can find until I have an even distribution amongst all of the brokers. If anyone has any experiences on Singapore CFD brokers to share, please let me know!

Romney: I'm a fan of Mitt Romney because the man speaks so smooth like a seasoned used car salesman and gets things done. Isn't that all you need to succeed in life? While he came from a comfortable background, he took his wealth to greater levels in his days at Bain Capital. Unlike other politicians in the picture today, some of whom were previous law lecturers without executive experience, Romney was a guvnor and had to organise the Winter Olympics 2012 under difficult circumstances (as it was held shortly after the September 11 attacks on World Trade Centre). A self-made man and a hero for me.

Best man never to make President?

So it's sad when I read that Romney has announced that he will not be running for President in 2016. In my book, one of the greatest men never to have taken the highest office. I suspect at the back of his mind though, a third failed campaign might have broken some part of him. I would have thought that part of the reason why he decided not to run was because after meeting Jeb Bush last week, he thought that Jeb, the other front-runner at the time, could get the job done, but it doesn't help that people have pointed out that Romney has in his statement announcing that he is not running, made some jabs at Jeb. Some say Romney is going to align himself with Chris Christie (another ex-lawyer!).