Author: Lawrence Chan

Posted on

TLC Weekly Update March 27, 2020

image

Another week of lockdown here in Toronto. Retail stores like Home Depot here are now restricting the number of customers allowed in the store to enforce the social distancing rule. Majority of the restaurants are closed and just a few out there, including McDonald’s of course, are open for take-out and delivery. People still go out to walk though as weather here has finally rise to about 10C.

I watched this fascinating video about dynamic systems by Veritasium on YouTube. By using visualization, the video explained clearly how that one equation turns out to be so important in almost everything around us. I like the video a lot because my discovery on price behaviour also lead to the same Feigenbaum constant 4.669 in price patterns. If you are a trader, pay attention to the way how linear stability exists inside the seemingly chaotic patterns.

I have been catching up with a lot of reading and writing lately as meetings are not scheduled anywhere. Even if there is the need to meet, we now use video chat or conference instead. All universities here now conduct the courses online. I wonder if the world will really go back to the old way of schooling at all since all these technologies are now being used, and that they work so well, physical locations no longer matter for these higher education institutions.

Schedule is still extremely packed as I like to get more things done yet it is hard to coordinate people getting projects completed. Everyone has to struggle with the restrictions imposed on us from kids staying home to long line up to buy essentials. Given the situation I guess my best bet is to work on a number of the projects all by myself until the lockdown is over.

Stay safe and Have a great weekend!

Posted on

TLC Weekly Update March 20, 2020

image

Another week of extreme market conditions with the world under siege by the pandemic, when will things getting back to normal?

I was out doing some banking. Yes, there are still things that has to be done at a branch. The bank staff are all wearing masks with signs telling us to stay at least a meter away given the government’s instruction of social distancing.

Majority of the restaurants are closed. Some small shops are open doing take-out and delivery orders. McDonalds and other fast food chains are open doing the same without dine-in. Life still goes on. People are adapting to the situation.

For chess lovers, I watched this video of Josh Waitzkin playing chess at 11-year old. It is an incredible game where the sacrifice looks like a mistake which led to Josh’s opponent did not think deeply what the move implies. It is a great lesson to anyone whose line of work has a strategic component that the ultimate purpose of your project, business or trading matters more than the perceived notion of material need.

Since many of us are staying home, may I suggest reading books instead of binge watching movies and TV shows online? If you are a trader, you can check out The Obstacle Is The Way by Ryan Holiday. For atheists and those who feel uncomfortable reading books about religion, I think you should checkout Awareness: The Perils and Opportunities of Reality by Anthony De Mello.

I am getting close to produce several video lessons for DaytradingBias. Originally my intention was to do it in a lecture hall or presentation room setting. Well, I guess those options are now no longer available. So, I will do it at home instead. Whatever it takes to bring these useful learning materials online.

Have a great weekend all and stay safe!

Posted on

TLC Weekly Update March 13, 2020

image

People everywhere I bump into asked if I am doing alright when the stock markets worldwide falling apart. Obviously they are not traders. And depending on their tone,I can tell some of them have this schadenfreude high. Schadenfreude means pleasure derived from another person’s misfortune. I think you get the point. There are always people like that.

In order to avoid a lengthy discussion of the topic, I would just say, “Oh, really? I am busy with other things lately.”

It is already difficult to tell a beginner trader about the current trading environment. It is even more difficult to get the point across with someone who has all kinds of incorrect beliefs about trading and investing in general. And if any part of the explanation includes me making a handsome profit during this time, it will open a big can of worms …

So I kept my mouth shut to have some peace.

Interesting read on fasting that may help you to get better sleep. Some of my friends always have to eat something round the clock. I just sent them this article. I will follow up to see if any of them would give it a try. I am eager to see what the results are.

Will take a break this weekend after a week long hectic trading. In high volatility environment, when the stock market is swing hundreds of points in the Dow Jones Industrial Average every few minutes, lots of concentration is needed to do things right. And that takes a toll on the brain. It is important to keep a clear head if you choose to trade in this environment. You can make a lot of money quickly, but you can also lose as much money, if not more, in even shorter period of time.

Good news is that I am finally wrapping up one project this week. Although there are many more to go, I can see a few more will be done in coming two months. Very happy with the progress I made.

Talking about progress, I managed to double my pull-ups but it really hurts. At my age, it is much harder to recover from injuries. I guess I have to take it slow. Train smarter, not harder.

Have a great weekend all!

Posted on

Mercury Retrograde: Blessing in Disguise

image

Everyone talks about Mercury retrograde as if it is a time of trouble. This year (2020) Mercury retrograde from February 16 to March 9, then in June 18 to July 12 and once more in October 13 to November 3. We are about to see the end of the first retrograde period. Let’s sum up my experience so far with this retrograde.

The famous electronic device failing issue:

  • my cell phone used up all its battery once
  • one of my UPS (uninterruptable power supply) battery suddenly died
  • my laptop suddenly dropped its speed to 0.4G
  • my remote trading server works fine, but Tradestation crashed like an hour before market close

The famous communication issue:

  • I ask for one document, people give me something else all together, several times
  • Some deals just stuck on unimportant points

Is it a time that we are supposed to experience more hiccups? Sure.

But should we be afraid of it? Hell no.

Learn to make use of the positive side of Mercury retrograde is what matter most.

Instead of pushing hard on getting deals done, I know it is a time to take things slow and review documents carefully. So things may not progress as fast as I like, at the same time I get to hammer out all the details with time to spare.

This is also the best time to push hard on conducting research projects. As someone who spend a lot of time studying the financial markets. This is the best time for me to review what I have done in the past and see if I can improve on what I have accomplished before. Even past research that ended up not useful can become inspiration of a new research direction.

During this retrograde, I found one significant flaw in one of my trading models that leads to the large drawdown that I do not feel comfortable trading. This particular problem is there for 12 long years since I started trading the model. Some of you may recognize that 12 years is also an important cycle.

The breakthrough to this issue helps me drop the drawdown on this model by half. And in turn, the new research helps me applying similar ideas to a number of other models to improve their trading stability. I never thought I can improve these trading models any further until now.

I am very happy with the results.

The key to utilize Mercury retrograde is to first dive deep into research / study something important to you before the retrograde at least several weeks prior. Then revisit the subject again during the retrograde to see if you can gain new insights. Incorporate the new insights to further your understanding of the subject. It’s effectively a hack to gain expertise quickly.

I am looking forward to the next Mercury retrograde already.

Mercury retrograde is really a blessing in disguise for traders and anyone who conduct serious research.

Posted on

TLC Weekly Update March 6, 2020

image

I spent significantly more time with the market this week due to the wild moves all week. My automated trading models all have built-in filter to avoid trading in such high volatility environment so nothing much happened there. Engage in manual trading was fun riding all these 50 to 100 points moves.

I came across this video on How to Control Your Negative Thoughts. If you want to achieve anything in life but you are stuck right now, watch it. I can’t explain the subject and the concepts better than this guy.

If you have not watch Tim Ferriss on Mastery: Start with End Game and Make Space for Creativity before, do it. You may not get the message first time around though, perhaps it is not the right time for you yet. In that case bookmark the video and watch it again in the future when you need to shake things up in your life.

Workload still on the high side due to sudden need to assist my friends on several business deals. In turbulent time like this, looking out for friends and family is of high priority.

Have a great weekend all!

Posted on

TLC Weekly Update February 28, 2020

image

I saw so many articles and news media quoting brokers that “they have never seen anything like that”, referring to the 500 points drop in Dow over last 45 minutes trading on Thursday. That is just absurd. I remember that it was no big deal back in 2008-2009. It was also nothing comparing to year 2000 dotcom bubble burst. People really have a short memory of these things …

Here is an interesting read about Magnus Carlsen, the best chess player alive, who groove around internet chess websites for fun and excitement.

A good video summing up the COVID-19 situation, watch it so that you are properly informed.

The CORVID-19 is spreading all over the globe. If your community is a high risk area, make sure you keep up with your personal hygiene routines so that you can minimize your chance of contracting the diseases. I was asked by some friends wondering if there is any Chinese herbal medicine can help in terms of prevention. There is really no magic solution so don’t fall for any scam out there.

I am experimenting with making videos myself instead of having someone else handle that. Sometimes the idea is so simple, like I am just trying to show a clip of my trading strategies working in real-time, it is much easier to assemble the video quickly and have it uploaded.

Stay safe and have a great weekend everyone!

Posted on

TLC Weekly Update February 21, 2020

image

Took me long enough to gather the daily trading records on the reference account to produce the updated monthly performance on Big-Game Hunter ES. Some people messaged me that I must be afraid of disclosing the losses. Some even think that the model must have lost everything. Well, BGH has been doing fine.

I do not pay much attention to the daily activities of BGH and downloading the daily statements is something I don’t like to do. Hence I batch process it once in a while. Until I find a way to automate the process, I will limit the updates to the monthly performance only.

I came across this video made by Nassim Taleb on some major misunderstanding of risk by the economist Richard Thaler. It is a must watch for all traders and investors. I have been advocating defensive money management for decades now. Nothing changed. People everywhere still not able to grasp the risk they are taking can actually put them out of any speculative game.

This week I finally get back on track with my exercise regime. My goal is to up my game this year from normal pull ups to single arm pull ups. It is a big challenge – I recall I was able to do that when I was a teenage. Wonder if I can train myself to do that at this age.

Given the virus outbreak, people are getting more cautious everywhere. Restaurants used to have long line up now have empty tables at peak hours. Fewer people going out to the malls. Personally, I am thankful to the technology we have now that I can video conference with people pretty much everywhere.

I guess it will be a long fight against the outbreak so stay safe and keep up with the hygiene routine!

Posted on

My Journey to Fully Automate My Trading: How Did It All Begin

image

In this internet age, people always question the authority of anyone who tries to make a point. That’s especially true when the point of view one has is completely different from what the mainstream beliefs are. Since my beliefs are at odds with the mainstream trading education community, I guess it is time to set the record strict so that you can decide for yourself why you should listen to me on things related to trading.

Interviewing Myself

I have a habit of interviewing traders (if they allow me to) and collecting answers from them if they prefer the questionnaire format. That adds up to several boxes of records over the years. Many of these traders are good traders whose life long trading experience are extremely useful to newcomers. However, my trader friends also prefer not being put in the limelight, so to speak. I can only use the information myself as oppose to publishing volumes of trader interviews.

One of the questions I always ask these traders is, “How it all begin?”

I am going to answer that myself. Right here, right now.

How It All Began

Many people get into trading because they learn about it from a friend or saw on TV how traders are making big money. If you are interested in making money quickly, you will give trading a try. That’s not what happened to me at all.

When I was young, I have no interest in money making. I did not have what they call entrepreneur spirit. I was not interested in the financial markets. My hobbies were reading books, playing chess and making my own electronic devices.

My older brother was completely opposite. He liked creating his own businesses. He had a keen sense about the financial markets since he was young. He was the person who, at the first opportunity he found, became a floor trader in the Toronto Stock Exchange.

As a young trader, being Asian no less, in a place dominated by very aggressive western people, who would have imagine that he can last six months?

He went on to set a record there – as a first time newcomer, he not only survived the game for a full year but also made 4 times his trading capital by the end of the year. He was the hottest new guy.

From there the direction of my life took a sharp turn. My mother believed that my brother’s new found prosperity was the way to go. My brother thought that my intention to become a full time academic was stupid. Without any other option, I had to give trading a try.

So I followed my brother’s footstep to became a floor trader at the Toronto Stock Exchange.

I also set a record there – I was the youngest floor trader they have accepted thanks partly to my brother’s star power and partly for my perfect score in their exam which never happened before. I had an advantage over others in taking the exam – the hardest part of the exam was related to option pricing and strategies which was damn easy for someone who spent most of his life studying math and science.

That’s why I do not think like others who try to beat this game.

I did not even want to play this game, for God’s sake.

That’s how my trading career started some thirty years ago.

Posted on

TLC Weekly Update February 14, 2020

image

I am busy working with my team to port the trading strategies from my training courses to support NinjaTrader. To my horror, we’ve found significant discrepancies among the data which in turn making the performance results not consistent. I will write more about this on DaytradingBias after we have completed our investigation.

I did not know that there has been no complete explanation explaining how planes can stay in the air. Interesting read for those interested in science and engineering stuff.

The coronavirus outbreak has serious implication to the global economy. At this point we do not have enough information to understand its full impact yet. One thing I know for sure is that retail stores and restaurants are in terrible shape everywhere where the virus has landed. The damage is done and it will show in first quarter economic data worldwide.

Earlier this week I uploaded a new video to Youtube to mock those people who brag about their day trading. From time to time, my readers will send me links to these videos and ask what I think about them, whether they are legit, etc. It is really a mindset issue – I think I explained very well in my Smarter Way to Trade series but who wants to be told that “they are not the chosen one”?

Just like to take this opportunity to wish you all a very happy Valentine’s Day!

Posted on

TLC Weekly Update February 7, 2020

image

Another totally messed up week with scheduling issues, stuck in traffic thanks to crazy weather here and heat to my place stopped working. Sometimes technologies really test our nerve. Looking at the bright side though, I managed to finish reading another book when my internet was fucked up all evening …

Yes, plain old printed books still rock!

I was working hard to come up with all kinds of ideas for my teaching videos on trading. I ended up with like 20 ideas, each I wrote like 10 pages of script and stopped. It is hard indeed to create something that is both educational and functional. Serious, if I go too negative, people walkaway without learning the lessons they need. If I go real gun ho and downplaying the difficulties of trading, people gets too excited and forget about the main points. Striking a balance is not easy.

I was a good lecturer way back then. I was a good mentor to hundreds if not more pro traders working for firms. But this goal of helping the retail traders is super challenging. How to disrupt people from fantasizing trading as something more than what it is? It is fun taking on a challenge like this.

For some interesting reason, I have to retell how I first get started in trading to quite a number of people this week. Maybe people need to know me better so that they are not that intimidated. I am sure I have written about this way back when somewhere. Maybe it is time to do it once more in one of my new article series for easy reference.

So many random thoughts this week. Next week should be better, I hope.

Have a great weekend all!