December

Thin volume trading is making the markets extremely volatile and manipulated by market players much bigger in size than myself. It's so hard to predict the pattern until I feel like just tossing a coin and setting a stop loss next to what I am trading. But discipline tells me I do not have to be in a trade all the time and I can just sit around and watch. Hell boring.. Been watching for the entire week of xmas and made 1 losing entry due to tight SL. well... no choice. got hit by one upswing then one downswing. catch the wrong momentum backwards.

This is pretty sick. Think my account is just too small to make any significant impact on my life. Should I start to move in like the big fishes and move towards the ocean? with a better broker with less spreads and a higher lot size than what I am now. This is never going to change my unemployment woes even if i carry on another 3 months. Maybe I am just now cut out for trading. No one calls me back for any trading position as of now.

My first month

I am pretty much happy with my results this month but disgusted at the way I get them. I made exactly the same mistakes I made at the start of the month that cost me dearly. The most fundamental of them all.
1. overtrading
2. lack of willingness to take loss
3. discipline.
Lack of confidence in my own set up was another key point. I was on the right path but did not believe in myself due to the suddenly swing in spikes.
There goes today profit because of all these points. I made exactly the same mistakes I made at the start of the month that was so costly I almost collapsed. I got to stop doing this to myself and believe in myself more. I tried finding excuses for myself like December is a bad month because the volatility is created by small volume and caused a lot of distortions. Hopefully I learn from all these mistakes and put them into some discipline. Really needs to start discipline myself.

Reflection

Today marks the darkest day in my trading life. Although I have not lost everything, but it as good as everything. Lack of money management, discipline and extreme eagerness to make a come back was the combination of all factors that lead to a loss of 500usd.
Time to sit back n reflect on myself today. A series of bad mistakes result in this.
BY not setting a stop loss, I let my losses run on me.
I did not set a take profit either constantly removing it even when I did, show the other lack of discipline.
mistakes after mistake. then finally taking loss at the maximum point. I must be out of my mind. I think once i exceed that threshold of trading, I cannot think well. I am thankful for the fact I am still in the green. But I have been taking way too much risk and should and need to lower my level of risk taking.
If i need to do this full time, It is time to start learning things the hard way.

Start of a new job

I beginning to treat my forex trading as my job, as of the moment. At least I will not be saying I am unemployed. I have something to do, to monitor. I am my own boss and I can control my P&L. Today is Sunday and it is time to prepare for another day in office tomorrow. There are still plenty of selling off in hedge funds and mutual funds worldwide. There has been reports that the USD appreciating is because of the heavy sell off. As ROW rush to cover their losses in USD, they have to buy USD to cover their margins, and their losses in USD, which results in a increase in demand for USD since the market collapse. The heavy sell off will probably carry on until end of the year and probably see a huge shift in patterns from December onwards.

China and Japan is expected to liquidate their USD reserves as they need to try to stimulate their own economy and there hasnt been a better time to do it than now since USD is at a high. Once the 4 trillion stimulus package in China starts, and the Fed starts to release their newly "counterfeited" notes into the market, the huge increase in money supply should see a huge rise in interest rates in US and also a heavy sell off in USD. Well... this is all by the fundamentals of the economics. But apparently we have to see how Geithner will react to the situation when he steps into the office. Anyway, no one can do a worse job than Paulson. I remember a quote "they might as well put my 6 year old in office. At least he will not destroy the economy, he will just play with his toys."

Greed

Be Greedy when others are fearful. Be Fearful when others are greedy. Apparently I am greedy at both times when I observe myself trading. Even though I know this profit I am making is insanely attractive to anyone but I think this is really partly luck. I have sat out a lot of volatility and lost on a few bad trades. I would have been hit badly if my picks were much worse. But control of my account was much better than previously when I was trading.
I just hope this winning steak can carry on until the time I find a job

Glad I am poor

Pretty glad I am poor even though I will remain that way for some time. Pretty upset that my futures account not ready yet. That is really quite upsetting. Because my prediction that all the support level would not hold would come true. Someone told me that it will not go below the 53% lvl after studying all the past crisis. He told me 2 weeks ago using a calculator and predict that DJI will remain above 8567. I carefully noted his level and see strong support there. However, the fear and recently momentum do not take into consideration the support. Ya just look at the VIX you know how much fear is in the market.

I have learnt my lesson during forex that you cannot beat the trend. If you cannot short the market then don't play. This market if you are thinking of buying, it is better to just sit and watch. Right now is just plain madness. There is a lot of value in so many stocks I could pick off the market. However, is for the long term. Right now I really need a job to get over this difficult period and then start putting my money in.

Minibond issue

I think this whole matter has got to today where it should be addressed. I am glad at least there is some looking into this matter by MAS by appointing that 3 independent members to form an investigating body. It is seriously a misrepresentation by all the PFCs, IFAs and FAs. How many of them truly know what they are selling? How many of them even know the difference between derivatives and fixed deposits and investments? I would never ever believe in investing in derivatives. I do not think this phrase is even right in the first place.

http://www.hsbc.com.sg/1/2/miscellaneous/minibond-notes-frequently-asked-questions

Just take a look at the most recent faq created by HSBC on queries for minibonds. I bet they faced so many questions that they got damn pissed answering them, that they structured it into faq. This is extracted from this link above.

How minibond works is that "swap counterparty Lehman Brothers Special Financing Inc entered into interest rate, currency and credit default swaps with Minibond Limited. Under the interest rate and currency leg of the swaps Minibond Limited would have agreed to pay to Lehman amounts received from the underlying securities acquired with the proceeds of the notes in return for payments from Lehman of amounts necessary to generate the returns on the notes. Under the credit default swap Minibond Limited would have provided Lehman Brothers Special Financing Inc with credit default protection in respect of the reference entities for the relevant notes. Lehman Brothers Holdings Inc guaranteed the obligations of the Lehman swap counterparty to Minibond Limited under the swap.

As market agent, Lehman Brothers International (Europe) was able to make a secondary market in the notes to allow investors to buy and sell the notes although they would not have been under any obligation to do this."

So this means Minibond Limited buys the CDOs, MBS from Lehman then subsequently pay Lehman the i/r that the CDOs, MBS pays Minibond. It is like some sort of "refinancing arrangement". The worst thing is that Minibond is the party providing credit default protection where they do not have the finances at all. Imagine a SPV being set up for holding off balance sheet debt, how much cash and BV would you put in a SPV like that knowing that it would collapse in any time soon?

Important facts
1. It is called minibond because the company is called minibond and not because it is a bond.
2. Minibond Limited is set up in Cayman islands with LIMITED LIABILITY (which means you will never be able to sue it from Singapore, you probably can only sue the party which sells you the minibonds)
3. the shares of Minibond is held under a trust (where shares/money goes in and out without anyone knowing)
4. Lehman is a swap guarantor, swap counterparty, arranger, market agent for minibond in name (but in actual fact, minibond is a special purpose vehicle set up by Lehman to hold off balance sheet securities and debt)
5. In the event of a default on i/r payments on the notes, HSBC will take action to sell the securities. (with no liquid market, not knowing where they can sell to)
6. the notes are not capital guaranteed at all and is extremely risky, probably more so than any investments which any investors can get their hands on.

These are just some of the most important facts which I have extracted and what have been related wrongly to the investors out there. The most important thing is capital guarantee. guaranteed by a company that is empty. Where is the rating agencies? A bonds? it is not even a bond. It seems like every 10 years we get such shit happening and wipe the hardworking people out and reward the assholes.

Black Friday

You will probably find many bodies lying on Wall Street, Shenton Way, London Stock Exchange or people jumping off Hang Seng Stock Exchange building. This is madness. There is no floor, no fundamentals, no use for what support in technicals. Whatever support level is nothing when people fear. Dumping at every instance, throwing everything they have. Nothing is going to save this situation now. What should have been done 1 year ago is being done now. What is the point really? Central banks are really called CB for a reason. Slow to react will kill the markets as shown today. look at the Nikkei index, I spotted this too late. The head and shoulders pattern that was breached at 11600 points. 11600 points to current 8000 pts is a fricking 3600 points almost equivalent to a 3 months pay for a mini contract for the futures short. Time to do my futures account. THis is the time.

Turmoil

I think describing it using this word is quite mild. I should probably be using chaotic or disaster. My year end prediction of 2300 was breached like nobody business in a 110 point freefall this morning after the bailout failure to convince majority of the congress. It was quite expected actually. Quoted Aldric, "at least there are more sober guys in the room". It was not going to be a consensus thing definitely, especially with the elections round the corner. Putting 700b in a pile of mess which might not reap any rewards is insane. The plan has to be more detailed, this is way too brief and risky. The returns which the Fed foresee might not materialize at all. This is by far the worst crisis I have seen on the global level after being through Asian currency crisis and the technology bubble burst

Lets be a little more realistic about things. 700b is not going to save the economy for sure. It is more of a prolonging a terminal cancer patient life through chemotherapy. You are just dumping money to prolong a certain death. I see lots of downside risk and many companies going bust because of this economic downturn. Financial firms that have not disclose the full impact of the SPM, like mutual funds that heavily invest in FI will be one to look out for. Prudential and other insurance firms will follow AIG with many bonds being defaulted. Hedge funds will collapse after the required disclosure on the short selling, exposing their strategy. IBs will collapse because of the change in structure of over leveraging. So what is left? We go back to the basics of consumer banking, giving out loans, pure consumer banking days.

Nationalization of banks is another big thing recently as European banks try to rescue their financial systems. Do not try seriously. Let those fundamentally weak firms just die off. This economy is about the survival of the fittest. You do not deserve to live on if you not worth it. Die off and let the fundamentally strong firms live on for those are the firms worth investing for. Do not keep the rotten apples in a basket of good apples, the worms will crawl over and rot the other apples. I cannot believe the extent of help that the CBs are giving to the banks. Thats why they are CBs i guess..

Insane markets

I bet everyone these days are just holding back and watching how the markets are being manipulated by speculators. Its an irony to see George Sorros to come out and ask for some initiatives to prevent speculators from speculating further. I suppose these speculators have hurt his pocket in one way or another. The biggest speculator asking speculation to be stopped tells you something about how strong the market movements are now against him and he can do little to prevent his portfolio from dipping in value.

Oil at 146 and increasing inflation is some of the worries which everyone is having these days recently. It is amazing how the price is sustainable with the current economic activity where demand has definitely slowed down and the only thing that is not slowing down is inflation. I cannot imagine myself living in this world where my meals get inflated by more than 25% and the reports only suggested a 7.5% inflation. Wonder where the rest of the % goes to.

The recent interviews I had this week really got me thinking about how some people got into some positions for reasons which I cannot understand. Look at this ironic situation where some guy who went into a company doing a position that is so accounting base where his accounting is totally disastrous. Wonder what the firm saw in him that made them decide that he was suitable for the position. Was it that willingness to remain humble and happy in a position for a long period of time? I will not understand. Others go into a back office job hoping that the back office operations position can give them valuable experience to bring into front office when they want to make the switch. Guys, can you all please wake up? Just look at the number of people that made the switch from front to back and from back to front. Just look at the numbers tell you the story of the possibility.

There are still others that try to take a job just for pay sacrificing their life in return. Losing a life in return for a job in my opinion is totally not worth it no matter what the price is. I believed in my opinion why so many Singaporeans are not exactly the happiest people on the earth is because many of us are being forced into doing or working for the sake of money and not for the sake of self satisfaction. How many of you are doing your job because you love what you are doing? Have you gain anything out of it besides money and experience you can use further to develop a career? Is it really just because of the peer pressure and the fact when people ask about your job status and it is embarrassing to say I am still jobless?

Gold 1000, Oil 110

Oh well, I did tell my friends that this will come by end march. Never expect it to be tat soon. Can see a heavy drop on USD for the next week with bad news still lurking and the unpredictable i/r cuts. If the i/r cut hits more than 75 bp, thats it for USD. can see a 1.58 EUR/USD. other predictions include the <100 JPY (came true) and also a <100 CHF soon to come.

Vision

I have always envision myself relaxing in a home with my family away from the stressful life of this world in the suburban area of some relaxed city, possibly Rouen. In my prime age when relationship are important aspect of my life. my only source of income from trading. Options, commodities futures, forex. Whichever the source may be. That is a dream. I am still trying to equip myself with the skills enough to reach that destination