TLC Weekly Update July 10, 2020


Another extremely busy week has passed. For some mysterious reasons, all kinds of equipment failure has happened. From power outage to internet outage and Tradestation going crazy in last hour of trading … I can really use a break.

One good news though is that the deployment of my trading models on MultiCharts has been a success. It is working better than I anticipated. No complications at all and the automated trading works as expected. I will write about it once I gather more data.

Due to the hectic schedule I could not really sit down to do the recording for the video lessons I planned to do. Have to squeeze some time out to get that done.

I am often attracted to read all about lefty since I was young. Here is an interest read about lefty. In traditional Chinese culture, it is a bad omen to be a lefty. So, when I was young, I was persuaded (by violence, of course) to not use my left hand to hold chopsticks or to write. Well, it worked, sort of. I ended up using right hand to write and eat most of the time but then when my right hand is busy, like using the mouse on a computer, I would switch to left hand to write things down or eat.

While I am going through many meetings to raise funding for my new prop trading venture, I often came across this belief that generating north of 50% a year is too good to be true. And when I try to explain how it is possible, it often leads to rejection at once. People don’t like being lectured on what is possible because to some, it implies that you are challenging their ignorance and no one likes that. However, after I include an introduction about Renaissance Tech, it makes the meetings much more pleasant.

Here is an article about Renaissance Tech for those of you never heard of James Simons or his legendary Medallion Fund.

The stock market indices, mainly the Nasdaq 100, continue to push higher has caused quite a lot of debate in the media and on the internet. Expert opinions are all over the place. Personally, I think the broader stock market will be range bounded in the near future as Fed and other central banks reduce their presence in the markets. Without more stimulus, there will be limited upside. And the game is to wait for the US election result. I have no idea what to expect from there so no comment on that.

For those of you interested in applying AI to trading, check out this video of NVidia’s team using AI to create the PacMan game from just watching the game. Look at how far AI has improved over the past 20 years. The current iteration of AI platforms that auto create trading strategies are still very primitive in comparison. And none of that has the correct framework of price discovery built-in hence the trading strategies created are mostly useless at best.

My bet is that we will never see such a platform becoming available to the retail traders because, for a functional tool like this, the creators will work with big money instead. Serving retail traders does not make sense because retail traders are not equipped with the knowledge to appreciate the power of such tools. The theme is an echo of what I experienced with my fund raising effort.

Got to go.

Have a great weekend all!

TLC Weekly Update July 3, 2020


Today is a US market holiday making this a long weekend for me. Many of my friends in Toronto find it odd that I rarely take a break on Canada Day (July 1st) while enjoying my time the weekend after. Well, they are not aware of my trading mainly deal with US markets so my holiday schedule is really the American one.

Just heard the latest podcast Tim Ferriss Show with Hugh Jackman this time. A very interesting podcast packed with a lot of details that is never disclosed before. Tim Ferriss did an amazing job getting his guest to spill his guts. Enjoy the show if you have 2 hours to kill. And in case you prefer to listen to it on Youtube, here is the link for that.

A short clip with Ray Dalio summing up perfectly the kind of financial markets we are dealing with. It is difficult environment to navigate if you do not have a big picture understanding of what is going on. Mr. Dalio summary can help you pay attention to what matters most at this point in the economic cycle.

Long weekend is often a good time to reflect and contemplate what to do next. Many people tend to imagine too much and try too hard to develop a plan that they can never follow. I am a true believer in the accumulation of results. Or as Steve Jobs’ famous speech put it, “You can’t connect the dots looking forward; you can only connect them looking backwards. So you have to trust that the dots will somehow connect in your future.”

Dive deep into one subject or topic at a time and do your best to learn as much as you can is a very empowering experience. Don’t tell yourself you are “trying to learn as much as you can”. That framing of “to try on something” already put you in a state of not learning, or, in a state of rejecting whatever coming out of the experience. Words have power and programming yourself with the wrong words have consequence.

For those of you struggling with trading over the past few months, maybe it is time to dig deep and refine your skills related to trading. 10% better in one area within a month may not do much. But after getting better by 10% (or more) in several areas of your trading can be a game changer to your overall performance. There is always room for more improvement in our line of business, and in life too.

Have a great long weekend all!

My Journey to Fully Automate My Trading: The Extreme Volatility Challenge is Blessing in Disguise


It is the end of second quarter of year 2020, I am so busy with so many things I could not really sit down to write something for this series for months. Since this series is a documentary, I guess I should write something so that looking back, I have what happened on record. After contemplating on several ideas, I decided to talk about the impact of extreme volatility on my trading strategies.

There it was, March 2020, the fastest and steepest decline in S&P500 in its history. And then even more amazing, was the miracle rally from that swing low pushing S&P500 back up to almost unchanged for the year. Nasdaq 100 has even made new all time high now.

So many of you have asked whether my trading models are doing fine? I can detect the undertone even though English is not my native language. My guess is that they are wondering if I lost a lot of money during this time.

In short, I am doing fine. If I were trading mostly discretionarily, I will not be. The automated trading strategies saved me from making major trading mistakes many times during this period. I am so glad that I managed to convert about 50% of my trading method to fully mechanical trading models right before the start the extreme trading environment.

What Went Right

The strategies managed to avoid most of the trading days that has extreme swings. Some of you may wonder why avoiding those days. Isn’t it the purpose of day trading to capture the intraday movements?

Yes, day trading strategies are designed to capture the intraday price movements based on the microstructure for which price would move a certain way given certain pre-conditions are met. However, when the volatility is way too high, even if you are on the right side of a move, the strategy will still be stopped out easily thanks to the extreme swings every few minutes.

Of course you can increase the size of the stop losses to participate in the game. But my research shows that is absolutely counter-productive. First, increasing the overall risk taken per contract means you need to reduce the total size of each trade to protect the trading capital from an overall risk management perspective. Second, the equity swings can be nerve wrecking which can disable you from take care of your everyday tasks. In other words, you see extreme swings in your equity and likely ended up doing almost nothing.

One very good thing that stands out is the data and order server stability with all these firms I work with. Comparing to the financial crisis back in year 2008 and 2009, the experience is so much better. Back then we have so many outages making trading nearly impossible. Just the fear of being trapped in an open position was bad enough. Again, the advancement and maturity in technology and infrastructure with these firms are something I greatly appreciated.

What Went Wrong

I was caught off-guard several times when the brokerages made sudden announcement to change the margin requirements. There was once that the change was made in the middle of a trading session. These sudden changes caused me to miss several trades due to the orders being rejected by the brokerage system.

Not happy with these incidents mainly because the missed trades are all winners. LOL

And I learned from this experience that the brokerages are reacting to the situation very differently. For example, Interactive Brokers and Tradestation at times raising their day trading margin requirement to full exchange overnight maintenance margin while some pro shops just double up their promised day trading margin requirement. What the brokerage firms do is not to protect their clients. What they are doing is protecting themselves. This shows that the pro firms understand their clients are professionals so there is no need to exercise extreme caution.

The worst part of the experience so far is the next to none support from many firms as the lock-down due to COVID19 forced many to operate remotely with very limited access to their staff. So anything that requires human intervention or help becomes not available or that the waiting queue is so long that you just have to give up. Can’t complain about that since this will probably become the new normal if the outbreak continues for a prolonged period of time.

What Could Be Improved

Technically, highest priority is the integration of position size into some of my trading strategies so that they can change the order size should there be a sudden margin change. This is not difficult but takes time to develop and test the code. Just one more project on the table that jumped my long queue of other things I need to get done.

I already have remote control of everything setup so that is not a problem. The remaining disaster scenario is that we have some form of global internet outage while I have an open position. For this scenario, I am still working on a way to minimize its impact.

What’s Next

The time I saved from manual trading gave me the freedom over the past few months in completing a few business deals. The main benefit, however, is that I have more time to spend on automating even more of my trading strategies. It is just fun watching these bots going live and doing their things.

It feels like playing Legos when I was very young or playing SimCity as a teenager. The satisfaction coming from the accomplishment is very hard to describe.

As I mentioned in my weekly blog, the success I have achieved so far with the conversion process has given me the confidence to keep going until everything is automated. One fund manager who is a long time friend sum it up nicely – once you have converted to automated trading, you will never go back.

TLC Weekly Update June 26, 2020


Time flies when you are having fun, or, when you keep working and lost track of time. I literally forgotten it is Friday already until this morning. Thanks to a member who pointed out an issue with, my team realized that the server upgrade indeed has broken something important. It took several days to get it fixed … hopefully this is the last glitch from the upgrade.

Many people email me wondering the status of my automation project. It is going great. Many more of my algos are converted and tested on Tradestation. If they all function as expected, I will deploy more of them.

Interesting read of someone’s attempt to create an insurance product protecting the world from the economic devastations resulted from global pandemics more than 10 years ago.

For those of you too young to know much about the financial crisis back in year 2008, and those of you who have only heard the story from mainstream media, here is an article telling us another side of the story. It has a lot of inconvenient truth there.

On the lighter side of things, watch this video on drawing Homer by an algorithm.

Another busy weekend ahead … will see how much I can get done.

Have a great weekend all!

TLC Weekly Update June 19, 2020


This week is the quarterly option expiration week. So much emotions from both bulls and bears calling where the market will close by the end of today (Friday). Well, this is just another typical op-ex week. In case you are wondering what I mean, just pay attention to the range established over these past few weeks. Where would the option market makers want the price to settle at?

Of course it is somewhere in the middle of that range! Option market makers are just like bookies on football games. They make money from both bulls and bears. They do not make money by being right. They make money by being not that wrong.

I found this interesting channel on YouTube about watch collection. I found this video particularly disturbing because the fake watch looks really close to the real one. For amateur collectors, it spells trouble because you have no way in verifying the watch you are going to buy is a real one. How can you trust the dealer? And if you are buying a second hand one online, the risk is even higher. This definitely makes me think twice before buying another watch.

An article on the hidden cost of these tech disruptors that changed our way of life. It is a good reminder about all these latest tech companies of their destructive forces. And it is nothing new either. Paypal before it cleans up its acts, it has all kinds of problems including money being stolen. How do we justify allowing a particular type of tech disrupting the society with no check and balance?

For aspiring trader, here is a good video on decision-making by Liv Boeree, a poker champion.

I have so much things going on lately I don’t know how to sum it up here. One of the most interesting ideas I am playing with is to start a proprietary algorithmic trading firm with several like-minded friends. I know we can make it happen but there are many details that we have to fill in first. I like the idea very much. I will go out to see if we can get enough funding to kick start the project. Feel free to contact me for more details. Maybe you can help us out too!

Have a great weekend all!

TLC Weekly Update June 12, 2020


This week I finally got the chance to check out my cottage since last October. Over the past few years, it was so eventful that I can’t imagine what may have happened to the property. Several years ago, ice from the lake pushed into the shore line caused serious damages. Well, it was a really memorable moment seeing that 12 feet tall wall of ice …

This year I am happy to report that no major disaster happened to my place. Took couple of days to clean up and figure out what kind of work has to be done. The lock-down here in Ontario has not been lifted yet. Hence, no one is allowed to talk to the neighbours on the island. Everyone is just busy fixing things up. Hopefully, we will have a good summer to enjoy the place.

Another interesting read on how this world has failed itself as far as the outbreak is concerned.

For those of you who are aspired to trade for a living, understanding the human brain can help you understand why I advocate the need to minimize human decisions during trading.

Lately it seems like Youtube is showing way too many ads from questionable stock picking and trading education services. Some of these ads even feature “client testimonies” with headshots that are just clips from stock photos (just use Google image search). This is a very serious problem as two generations of young adults really do not know anything about the markets yet believing they do because they read some bullshit from the net. I don’t know if it is a sign or not but it is definitely unhealthy development.

I am supervising the wrap up of several projects that will be rolled out as part of the DaytradingBias SaaS. These trading tools are never made available to retail traders just like the other tools I have created. These tools can help retail investors to do better in all kinds of market environment. So, for those of you who are interested in market timing but do not have the time to engage the markets actively, stay tune for the announcements.

Have a great weekend all!

TLC Weekly Update June 5, 2020


It looks like I still cannot escape to my cottage this weekend. So instead of preparing for the trip, I try to be more productive and wrote two articles on trading technologies. First one comparing different hardware of their trading strategy optimization speed. And the other one about Windows 10, whether it is time to trust it for trading.

I was talking to several fund manager friends this week. They are all sitting ducks at the moment because of the uncertainty going forward. Yet they do not have a way to explain to their clients why the stock market is behaving the way it does. The part that Nasdaq 100 printing new all time high is especially funny because they are questioned by their clients why they failed to take advantage of the crash.

Lucky that I don’t need to handle calls and emails like this.

One thing I know for sure is that this is a unique event that we have experienced like nothing else in human history. After the fact everyone is a genius. However, the indices are not telling the truth of what is happening in the real economy. I know from my contacts that many companies that are not well capitalized enough or that they do not operate defensively before the outbreak lock-down are gone already.

People are in distress. Yet the stock market is back to near all time high can really poke the nerve of many. If we see revolutions in many western countries within next 12 months, it will go down in history that the central banks are at fault in causing the world real chaos.

Mark Manson has an old article on Why You Can’t Trust Yourself, it is a good reminder why we need routines and process to improve our performance in almost anything. The central bankers obviously lack both as they have been making bad decisions all the time.

On the lighter side, check out this old video clip from The Late Show with Stephen Colbert. I am not a political person. I hate politics and hate to talk about politics even more as people gets too emotional on these things. I think if Stephen Colbert is more neutral with his stance, he can create same routine for every single politicians in US.

Have a great weekend all!

TLC Weekly Update May 29, 2020


My team has been working all week troubleshooting a very odd glitch affecting our real-time trading tools. We still could not identify why it happens occasionally. Very annoying but we have to get to the bottom of it.

After a long hiatus from posting new technical stuff at DaytradingBias, I finally get the chance to post a new article on a fully mechanical swing trading strategy on Emini S&P using VIX as the only input. It is designed to illustrate several useful concepts in utilizing VIX as part of the trading decision process. For those of you who want to see how it works just read the article. It is part of the Market Breadth Primer series that I intended to add more articles regularly from now on.

Read a very disturbing article where a region of US having an alarming rate of amputations among the black populations. This is one of many reasons why many other countries no longer respect US. It will take a lot of political willpower to change this.

Video of Howard Marks discuss Fed Support and the impact on everything. As a pioneer in the hedge fund industry, Howard Marks is well respected and well known for his long term insights. His newsletter, Memo from Howard Marks, is considered a must read by famous investors like Warren Buffett. Obviously, I read it regularly.

The island where my cottage is located, was under lock-down. I could not get it ready for the summer season so far. One thing good about this is that the fish population in the lake will get a better chance to grow bigger. Hopefully, I will be able to go there for a break soon!

Have a great weekend all!

TLC Weekly Update May 22, 2020


I just reviewed my online ordering pattern and I found a very disturbing trend that Amazon slowly but surely taken over almost all of my online orders. I used to order items of specific categories from specialty shops. Amazon is my default option to order computer related items only, like a replacement hard drive or a special cable. Now I order almost everything from them including my coffee supply. This tells you how much I depend on Amazon. Damn, should have bought more Amazon stocks several years ago …

Here is a great advice video from Tim Ferriss for the younger readers seeking a direction in developing their careers.

Now that daytradingbias server upgrade project is completed, and after some post upgrade fine-tuning it is working perfectly all week, I can move onto other projects that were held up.

First, there are a number of interesting experiments I have done on various trading platforms to compare their performances, specifically on trading strategy development, backtesting and optimization. I will summarize the results and post them up soon.

And the long awaited video lessons that I have planned for Trading Success Blueprint and Emini S&P Day Trading Course, will be released. I am working on the voice recording now. I find that I am still not very comfortable hearing my own voice. There is definitely a learning curve I need to overcome.

And the webinars on trading can finally resume. I have a number of ideas written down. It is just a matter of picking which one to proceed first. For those of you who want to ask me specific questions about trading, just drop me a line.

Have a great long weekend!

TLC Weekly Update May 15, 2020


Another roller-coaster ride with the stock market when the world is trying to re-open from lockdown. It is very interesting from an observer point of view. For many traders, however, it is a difficult week to deal with.

I will be busy this weekend upgrading to support SSL connection. Significant changes to everything within the site must be done to make it fully support SSL. I am keeping my fingers crossed hoping that everything will work out smoothly.

Interesting read on the way how the antique books were made. I never thought of the implications.

Tom Bilyeu conducted an interesting talk with Ray Dalio. It is long and packed with information. If you are concerned about the near term future what’s in store like the economy and outlook of job openings, check this video out.

One important theme Ray Dalio explained in the video is that coming 3 to 5 years will be very difficult time for many. It is important to figure things out and upgrade yourself with more knowledge so that you are flexible enough to take on the future challenges.