FKLI Performance Summary: Sep13 contract

ST01 only managed to eked out tiny gain after FKLI staged a volatile month.

Position Update 20130930

When you are feeling pain, instead of being focused on what the market is communicating to you, you will be focussing on the information that will ease your pain.

FKLI
S1766.0 (30/09), C1773.0 (30/09)

FCPO
Nil

Position Update 20130927

If you can't define the market conditions or the decision making process that how you will trade, obviously you have no idea what you are doing.

FKLI
S1785.5 (25/09), C1771.5 (27/09)

FCPO
S2301 (24/09), C2268 (27/09)

Position Update 20130926

Stop scanning for news, opinions, or any other form of statements that support your position.

FKLI
S1785.5 (25/09), Open position

FCPO
S2301 (24/09), Open position

Position Update 20130925

If your trading strategy is not in line with your mental framework, it is almost impossible to employ your mental discipline to make flawless execution a habit.

FKLI
L1791.0 (23/09), C1787.5 (25/09)
S1785.5 (25/09), Open position

FCPO
S2301 (24/09), Open position

Position Update 20130924

As a trader, it is more important to know that you will always follow your rules than to make money, because no matter how much money you make, you will definitely give back to the market if you can't follow your rules.

FKLI
L1797.5 (20/09), Open position <==Wrong
L1791.0 (23/09), Open position <==Correction 

FCPO
L2298 (23/09), C2324 (24/09)
S2301 (24/09), Open position

Position Update 20130923

The wrong bull has stopped.

FKLI
L1797.5 (20/09), C1785.0 (23/09)
L1791.0 (23/09), Open position

FCPO
S2313 (19/09), C2285 (23/09)
L2298 (23/09), Open position

Crude Oil Performance Summary: Oct 2013 Contract (CL-V13)

外国的月亮比较圆， 还是外国的石油比较甜？
Crude Oil Contract (CL) trading in CME also know as Light Sweet Crude Oil (WTI). The word "sweet" refers to low sulphur content.
ST01 rides a roller coaster month for CLV13 contract. At the end, it achieved another profit month. If you ask me what is the dominant trend for the crude oil market, basically I have no idea. (Some experienced traders once said you don't need to know where the market is heading in order to make money. All you have to do is just follow.)

Position Update 20130920

Getting rich quick only lead to a great deal of anxiety and frustration if you don't have the skills to keep it.

FKLI
L1797.5 (20/09), Open position

FCPO
S2313 (19/09), Open position

Position Update 20130919

但愿TREND长久, 大家赚大钱。

FKLI
S1786.5 (19/09), C1790.0 (19/09)

FCPO
L2350 (17/09), C2320 (19/09)
S2313 (19/09), Open position

Position Update 20130918

The greater the expectation traders have about something happening, the less tolerance they have for disappointment.

FKLI
S1773.0 (17/09), C1770.0 (18/09)

FCPO
L2350 (17/09), Open position

Position Update 20130917

Retail traders do not have the resources to move prices in the direction they desired, therefore the best thing they can do is learn to identify and align themselves with the side that has established dominance in the market until the dominance disappears.

FKLI
S1773.0 (17/09), Open position

FCPO
L2350 (17/09), Open position

Short Term Trading (STT) vs Long Term Trend Following (LTTF)

In this post I want to answer a good question from Zac Lim, regarding short term trading and long term trend following. I will share with you my experience in developing and trading these two completely different strategies. Before I discuss about the difference between short term trading (STT) and long term trend following (LTTF), let me define each trading strategy in short. In my definition, I refer short term trading (STT) as trading decision made based on intraday data such as minutes chart, whereas long term trend trading (LTTF) uses end of day (EOD) or weekly data to generate trading signal. Below are the summaries…

Win Rate

I emphasize a high win rate when designing STT because short term market movements are more “random” as compare to LTTF. STT need to capture profit in a relatively “random” market movement. Once profit is there, I will lock it before it disappears. Therefore, most trades end in profits. LTTF is different.  It wins 3-4 out of 10 trades made, however winner’s magnitude is far greater than loser one, making it still profitable to trade.

Trading Philosophy

As the name suggests, LTTF’s idea is quite simple that is following trend. It follows market only after prices start to show trending characteristic. STT on the other hand employs both trend following and counter trend ideas in its practice. Sometimes it tries to "predict" when the trend will end, thus initiate position in the opposite trend direction.

Money Management

I use completely different kind of money management systems to trade STT and LTTF due to their significant parity in Win Rate just described above. Besides that, profit per trade from LTTF is significant higher than of STT.

Cost

STT generates around 150 trading signals a year compare to LTTF 20-30 trades (including contract roll over). STT trade more frequently compare to LTTF, thereby paying a lot more in commissions and slippages.

Mindset

I have to establish different mindsets for each trading strategy. When I trade STT, my energy level is higher and I am more reflexive. I need to change my market perspective fast because system may generate completely opposite signals in the short period of time. In some instance, I will need to stay in front of screen to “wait” for system to issue trend change signal. In LTTF, I am more relaxed, and often forgot that I still hold long term position in LTTF. Since I use EOD data for LTTF, I spend less than 5 minutes a day to complete my “job” trading LTTF.

Data

I use end of day (EOD) data when designing LTTF. While STT uses both EOD and minutes data to generate trading signals. One can obtain EOD free of charge from exchange website or from brokers. Minutes, intraday, or tick data can be quite expensive and hard to find, unless you are diligently enough to collect it every day.

Drawdown

Drawdown in STT tends to be shallow and short as compare to LTTF. To trade LTTF, one needs to have the patience. I once experienced drawdown period of more than 1 year before account broke new equity high. Besides that, the quantum of drawdown in LTTF is huge. A 50% drawdown is considered normal in many LTTF programs.

Diversification

STT need active management somewhere close to intraday level. It is very stressful and difficult to diversify among many markets. When certain markets open nearly 24 hours a day, I would say it is impossible to do it alone. Trading LTTF can be done in 5 minutes a day, usually after market hours, making it a good candidate for one to diversify among many futures markets.

Conclusion

STT and LTTF clashed occasionally, meaning I hold both long and short positions in the same market. It happens probably when a particular market is doing sideways movements. Personally, I prefer LTTF over STT due to my slow and steady personality. I still trade both in order to capture different market niches in both long and short term timeframe. 

FCPO Performance Summary: 16 Aug - 13 Sep

FCPO attempted 2500 but failed. Price moved back into boring range of 2150-2500. Sigh... Consider ST01 still lucky to achieve profit of 100++ points this month.

Position Update 20130913

The best place to find a helping hand is at the end of your own arm.

FKLI
S1769.0 (12/09), C1768.0 (13/09)

FCPO
S2344 (13/09), C2345 (13/09)

Position Update 20130912

Adapt is to identify and actively change something that is already inside of us so there is a higher degree of correspondence between the inside and outside.

FKLI
S1769.0 (12/09), Open position

FCPO
S2353 (10/09), C2337 (12/09)

Position Update 20130911

To learn a skill, we usually have to break the skill down into a series of small steps and concentrate on each individual step until we can put all steps together into a series of effective movements.

FKLI
Nil

FCPO
S2353 (10/09), Open position

Position Update 20130910

Profitable traders need only a slight advantage over the market to make a living.

FKLI
L1724.0 (09/09), C1762.0 (10/09)

FCPO
S2423 (09/09), C2380 (10/09)
S2353 (10/09), Open position

Position Update 20130909

We can put our best efforts and intentions out there but we can't control the outcome.

FKLI
L1708.0 (06/09), C1716.0 (09/09)
L1724.0 (09/09), Open position

FCPO
L2415 (04/09), C2434 (09/09)
S2423 (09/09), Open position

Position Update 20130906

A thought is like a photo flash. It lightens the situation for a short moment, but it is not enough to illuminate the environment permanently.

FKLI
L1708.0 (06/09), Open position

FCPO
L2415 (04/09), Open position

Position Update 20130905

Why trading is so difficult? Because nothing in life is more difficult than to change your personality.

FKLI
S1703.0 (03/09), C1708.0 (05/09)

FCPO
L2415 (04/09), Open position

Position Update 20130904

No one like to buy more and more apples that rot away just because they are getting cheaper. But in the investment world, people like to buy into downtrend.

FKLI
S1703.0 (03/09), Open position

FCPO
S2415 (03/09), C2402 (04/09)
L2415 (04/09), Open position

Position Update 20130903

We are not able to do something that is not part of our thought.

FKLI
S1700.0 (02/09), C1715.5 (03/09)
S1703.0 (03/09), Open position

FCPO
S2415 (03/09), Open position

Position Update 20130902

Don't take anything for granted. Nothing is constant except change.

FKLI
S1700.0 (02/09), Open position

FCPO
Nil