Loving the Real Cheryl Lynn

Added on by C. Maoxian.

Thrilled they have a live version of this great song on YouTube ... an amazing voice ... and I think that's one of the songwriters on the piano:

Music

My Life, My Love, and My Lady

Added on by C. Maoxian.

A Billboard #1 when I was two ... I remember it well. 

Looking Glass: Buy/Listen - https://lnk.to/LookingGlass!ytbrandy For Looking Glass and other hits from the 70s, listen here on Spotify - https://lnk.to/70sSH!ytbrandy Follow the Official Looking Glass Accounts: Spotify - https://lnk.to/LookingGlassSI!ytbrandy Facebook - https://lnk.to/LookingGlassFI!ytbrandy

Notes for Chat with Traders, Episode 96

Added on by C. Maoxian.

Episode 96 ... "Nico" (71:07)

  • Has two 43" screens, Dell multi-clients, 12 usable virtual screens, 4K resolution
  • Previously four 24" screens and one vertical 28"
  • Ikea desk
  • Aug 2016 best month to date [podcast recorded in Sep 2016]
  • Worked for software development firm out of high school
  • Wanted to make more money
  • He didn't want to take core college courses, just computer science, dropped out
  • Built his own software development business from nothing
  • First client he had was a successful stock trader
  • Discovered that microcap stocks moved 20, 30, 40% in a day
  • Lived paycheck to paycheck in the beginning, had no savings
  • Had to save up money for a year to build trading stake
  • [Blipped out some bad habit?]
  • Do not quit your day job! Try something on the side first
  • First trade in early 2007, bought AAPL, no time horizon, sold dame day for $100 gain
  • "Easiest $100 he ever made"
  • Didn't want to work in a cube and make $100
  • Used Telechart by Worden Brothers in 2007, had built-in chat window, that was cool!
  • Charting appealed to him, fundamentals "too much work"
  • Timing the market using charts -- instant gratification
  • Did not know about shorting at first, just went long
  • Microcap market of 2007, he made $20K just getting long microcap runners
  • He thought, "this is easy" -- worst thing that could happen
  • First account was $5,000 with Fidelity
  • Either the market changed or his luck ran out, but he kept "pulling the handle" (slot machine reference)
  • Second year lost all his profits, cold reality slammed him in the face
  • Now he understood why trading is "damn near impossible," 90%+ fail 
  • Lost consistently for the next seven! years
  • Easy to lose trading profits, hard to lose "legitimately" earned income
  • Started to put his size in check, started trading small, $5,000 positions, maybe $10K
  • He would hit periods of profitability during those seven years, but then give it all back
  • He was making a good living as a software developer, trading losses didn't really matter, "slow bleed"
  • Three steps forward and five steps back
  • At one point he had over $25K, not shackled by Pattern Day Trader rule
  • Wished he didn't exceed PDT rule, wasted a lot of time and money
  • PDT rule exists because of degenerate gamblers (like he was)
  • Loves solving problems and puzzles, thought he could figure out the market
  • This shit is tough, I'm getting my ass handed to me, small size kept him from blowing up
  • As the years passed, self-doubt crept in, but people supported him despite his failures
  • Periods of profitability gave him hope
  • Can't be luck alone, because he's losing more than he's making [made me laugh]
  • Reached end of his rope, had a serious sit-down talk with himself, sick of adding money to trading accounts and losing it
  • Went full-time, stopped growing his software biz, focused solely on the market
  • Never had Facebook, MySpace, Instagram, Snapchat
  • Traded in isolation for those eight years, floated around, went nowhere
  • Discovering Twitter changed everything for him, every trader is on there [even good ones ;-)] 
  • Discovered shorting, those first eight years were long only
  • Investors Underground gave him a connection to good traders
  • His software biz big enough, successful enough, he can make his own hours, and has savings
  • He loves shorting, 90% short, 10% long
  • "Flying Pigs" ... short the microcap junk companies doing dirty stuff to boost stock price
  • Fluffy PRs, huge gaps up, presents good opportunity to short
  • Look at pre-market movers and gappers
  • Look at pre-market unusual volume
  • Has a watch list called "Pigs" ... every pig encountered is added to the list
  • Has 200 pigs on his list 
  • Pig list sorted by net % change, former runners appear once again, no homework needed
  • Top of the net % change list become his candidates for shorts
  • Wait for the backside, "crack VWAP," or "high of day rejection"
  • Shorting the frontside is stepping in front of a train, have to make an educated guess where the top is
  • Controlling your size is everything, don't be a gunslinger
  • He isn't comfortable sizing up because he still has lots to learn
  • One bullet shooting only necessary if you can't scale in
  • You can't improve what you don't measure [smart]
  • Account balance alone isn't a truly useful measure
  • Start plotting your equity curve
  • Puts everything on Twitter to curb his degenerate gambler impulses
  • Stopped overtrading, being impatient
  • He's the rare guy who thinks you should post your P&L publicly [I say: bad idea]
  • All about accountability, kept him from being reckless
  • Aaron mentions that you must have measures other than P&L to measure success [from "HF71"]
  • Track your daily P&L in great detail
  • Take a scientific approach and measure what you're doing
  • Develop good habits ... he had bad habits for eight years
  • Identify what you struggle with: Are you impatient? Are you a degenerate gambler?
  • Don't trade in solitude, surround yourself with better traders who are like-minded
  • One wolf hunting for food isn't going to eat as well as a member of a pack
  • Boy Scout system, try to keep each other out of trouble
  • Has developed spreadsheet for trade tracking, willing to give it away from free
  • Lots of people pay for TraderVue, but can just use his spreadsheet
  • Twitter: @inefficientmrkt

Looking at the Short Squeeze in DryShips

Added on by C. Maoxian.

The notorious $DRYS did yet another reverse split on Friday, July 21 (this one 1:7). I've been avoiding shorting this stock because I've been fearing a squeeze, which would happen the moment I got short, thinks Mr. Paranoid. I hadn't thrown in the towel and finally shorted it, but there was a wicked short squeeze last Friday. I didn't make a dime off of this expected squeeze, mainly because I was too busy tweeting about it instead of playing it.

My Twitter addiction costs me so many opportunities, and I have to work on curbing my need to be publicly "right." I really need to force myself to shut off Twitter during market hours ... I just have to go cold turkey. Catching this one trade could have made my week / month / year!

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Notes for Chat with Traders, Episode 98

Added on by C. Maoxian.

Episode 98 ... Peter To (80:04)

  • 2004 started playing online poker, 15 years old
  • Inspired by Chris Moneymaker winning WSOP in 2003
  • Wasn't athletic, all intellectual power, poker a good fit
  • Deceived Mom to fund his PayPal account to fund poker account
  • Started with $20 and lost it all, devastated
  • Second $20 he tried to make it work playing 10 cent blinds
  • Did hand analysis on 2+2 forums
  • He was playing tight, but too passively, not getting enough money into the pot
  • First became profitable limit player, then profitable no-limit player
  • Turned $20 into $20,000 over two and a half years
  • No innate talent for poker 
  • Never plays poker anymore, edge is too small now
  • Lives in New York City, comes from Southern California
  • Poker has advanced so much, so sophisticated today, very hard to win now
  • "Game Theory Optimal" -- everyone knows the correct line now, everyone knows the math
  • Poker has become an efficient market now [smart comment, he's right]
  • Lost the passion for poker ... no fun chasing bad players online [even worse to do it offline when face to face]
  • Variance in poker also very high
  • Knew nothing about the stock market until college
  • Best friend talked about trading and investing, interest piqued
  • Natural transition from poker to trading
  • Got interested in 2008 2009, Great Financial Crisis
  • Started out as a gold bug, feared hyperinflation
  • Bought physical gold coins with his $20K, paid 8% spread [I'm chuckling, but it's good to be suckered at first, I believe]
  • Still a big libertarian
  • He's able to debunk himself quickly, fortunately
  • Sold his gold coins for breakeven
  • Second stage he was a value investor -- read Ben Graham, Peter Lynch
  • Bought Apple, Wells Fargo, Baidu, Dow Chemical all at the lows during the crash
  • Realized he didn't have the patience to hold all this stuff
  • Turned $20K into $30K, got account over the pattern day trader rule
  • Third stage: day trader using technical analysis
  • Mom's friend taught him how to read charts and structure trades
  • Read a lot of blogs, sourced his learning from all over
  • Discovered the ARCA pre-market cross in OTC junk stocks
  • Stock closed at $1, offered in pre-market on ARCA at $0.85
  • Would pick off all those $0.85 offers pre-open then sell for $1 at the open
  • This happened from time to time over two years, a few times a month
  • OTC market making is manual ... quotes not honored ... shady stuff
  • Moved to NYC and started prop trading
  • Doesn't want to name prop firm
  • Had been trading every day for two years while in college
  • Started trading club in college
  • Good things and bad things about being in prop firm, but experience invaluable
  • Many prop firms are about "burn and churn" ... get a guy in, get commissions, until he blows up
  • Prop firms would "fine" people ... e.g., couldn't trade odd lots
  • Prop firms can offer capital to scale stategy, proprietary technology to enhance strategy
  • Started meeting seven-figure traders, their strategies not do-able on a retail platform, needed capital and technology of prop firm
  • Compares a good prop firm to a good farm team in baseball [nice analogy]
  • Read Glassdoor about every prop firm you're considering, lots of shady practices
  • Big red flag is if prop firm requires a deposit
  • Careful of groupthink in a prop firm, herd mentality, tunnel vision
  • There's lots of ways to make money trading, not just momentum
  • Wants to catch all-day runners
  • Unusual volume, unusual volatility, unusual attention being paid to it
  • Not intellectually deep, just using intraday chart, price and volume
  • Shorting parabolic microcap stocks, thesis is overextended junk will eventually collapse
  • Trick is timing the turn precisely, how to minimize damage when your timing is off
  • Takes years to hone this skill
  • Follow the order flow, can't just rely on your shorting-microcap-parabolics-play, they dry up
  • Chapter on Jimmy Balodimas in Schwager book made big impression on him
  • "Stepping in Front of Freight Trains" -- fight trend, add to losers, fades huge moves, gave self huge leeway, took quick profits, in short Jimmy did everything "wrong" based on conventional wisdom
  • Peter has developed "trading nihilism" -- process doesn't matter [another smart comment]
  • His firm bought the Flash Crash, risked the firm, risked everything, best day ever. Skill or luck? Was it wrong? 
  • No mathematical framework in trading that you have in poker
  • The market never repeats itself like a poker or blackjack hand does [yes, exactly]
  • Throwing the book out from time to time, not following your rules, it's all guts and intuition
  • Some people just have conviction, don't care about price action
  • He was consistently profitable at first, but made no money [just like "winning" with tight, passive poker play]
  • He's a very emotional person, but makes emotion work for him
  • Feels the fire and allows his greed to take over -- results in best or worst days
  • Fannie Mae his biggest loss ever, most popular blog post
  • Shorted AVXL, one of his best trades ever
  • When he loses money, he wants to sleep in the next day
  • When the wheels fall off, self-doubt creeps in, needs to take a break
  • Has had worries that he'll never trade again
  • October 2016 the worst month in an otherwise good year
  • Can't get out in these microcap stocks, you get stuck, 1x loss become 3x loss
  • Built muscle memory for trading certain stocks, which betrayed him when trading OTC stocks
  • Lived in NYC for four years, 26 yo now
  • Used to keep detailed journal, made detailed plans, did detailed trading reviews -- now he's relaxed, doesn't do any of this, just wings it [sounds familiar]
  • Try less hard, take the pressure off yourself
  • Trading is not easy, markets constantly changing
  • Thoughts on trading BitCoin: insane volume and volatility, psychology same as crazy stocks
  • Exchange security is everything, you get hacked and lose everything, you're just not safe
  • Multiple exchanges with multiple rules, none of them have good infrastructure and security and no oversight, don't get involved with this, way too risky
  • peterkto.blogspot.com
  • Twitter: @peterkto

Notes for Chat with Traders, Episode 101

Added on by C. Maoxian.

Episode 101 ... Siam Kidd (113:27)

  • "Sitting in my Tesla"
  • "I love Elon Musk"
  • 0-60 in 2.8 seconds, he says
  • British
  • 30 years old now, stone broke at age 25
  • Was pilot in Air Force, station commander can earn 80-90K GBP after 20 years in, realized he had to get out
  • Joined Air Force at age 18
  • Had been trading for seven years (since 18), first four years of trading a horror story
  • "Billy Big Balls Syndrome" -- he'd go on a streak, get overconfident
  • Online gambling and trading the only ways he could figure how to make "easy" money
  • Martingale strategy using online roulette, thought he had cracked the system [funny]
  • Revenge gambled his maxed-out Virgin credit card on online roulette, lost it all
  • Moved on to trading where he "did considerably worse" [he has a sense of humor]
  • Opened 2,000 GBP account, lost it within one day
  • Blew his 2,000 GBP Air Force income every month for four years, all off one minute chart  
  • Girlfriend was supportive of his leaving the Air Force, trusted him to dig himself out [she must be an angel]
  • Left Air Force with no safety net, ten grand in savings, started trading full time
  • Made 30% per month for the first few months, then lost half his capital in one month
  • Shopping in Lidl, could choose cheese or mayo, couldn't have both, rock bottom
  • Got 16K admin role at some staffing company, had to pay the bills, completely demoralizing
  • Still trading his 2,000 account, went back to the drawing board
  • Risk management finally clicked after year seven, went back to the daily charts
  • "Triple R" ... risk reward ratio must be 1 to 3 and preferably 1 to 8
  • Van Tharp book a huge help
  • Wish he had had a mentor who knew what he/she was doing, something more than just googling for answers
  • Made every mistake he could: strategy hopping, buying black boxes, scalping, day trading
  • No good or bad forms of trading, all about risk management
  • New traders should never day trade
  • "Boring trading is good trading"
  • Second guessing yourself with every new five minute candlestick
  • Making more decisions than you need to when intraday trading
  • Be super selective, don't take many trades
  • Only 100K traders in the UK, 95% of them losing money hand over fist
  • Smart traders know how retail traders think and take advantage of them
  • Stop running is rampant among pro traders and institutions, they seek out the retail orders
  • Scouring the internet for "systems" ... that's a real rat race
  • Markets only trend 15% of the time, chop the rest
  • Trades currencies now, looks at 20 different pairs
  • He's flat almost all the time, small wins, small losses, and a very occasional huge win
  • Tries to catch reversals, so he gets stopped out a lot
  • He will put orders out into space at "support or resistance" and hopes to get hit
  • Get the best Triple R from this kind of entry 
  • His win rate is 32%
  • Didn't want to stare at charts all day long
  • Max risk for him is 0.25% per trade
  • When trade goes in his favor, he scales in, adds .75% and then between .25% and .50%
  • Thought Trump would win and markets would tumble, he didn't anticipate rebound and rally
  • He looks for "coiling" ... volatility drops dramatically, range contracts ... "market compression"
  • Places "fishing nets" above and below
  • Gets shorts in during stop runs above [and I presume longs in during stop runs below]
  • "It's just a numbers game."  All about managing risk-reward
  • Catch a thousand+ pip trade once or twice is year, you're set
  • Has a lot of physical gold and silver as a hedge
  • Make things mechanical, don't scare yourself out
  • Uses two moving averages to manage his stop losses (8 EMA 21 EMA), keeps it simple
  • Uses round numbers and .50 levels, trails below 8 EMA and these levels
  • 21 EMA gives you enough space to catch the trends
  • Spends less than five minutes a day trading, adjusting stop losses using 21 EMA
  • You can do 10,000 hours of chart time and "still be shit at it" ... will take a lot longer time than that if you're not focused
  • Read everything that Van Tharp has ever written
  • People quit trading because it just takes too much time to do (screen time)
  • Uses three screens
  • If he has to think about it longer than three seconds, he won't take the trade
  • Once you're back from holiday, trade very small until you get your market sense back
  • Business is the best "asset class" there is ... best risk/reward there is
  • Has a stake in 15 different businesses now (says he's down to seven now)
  • You need a lot of capital to make money trading ... making 30% on a 10 grand account, even every month, doesn't mean anything
  • You don't want to be rich through compounding because you'll be too old to enjoy it
  • If you run a business, get out of the weeds (don't get bogged down in the details)
  • His first two or three businesses failed miserably
  • Bought silver in bulk, made under 20 grand profit on 1.4MM in turnover ... horrible time-adjusted return
  • Took M&A course for 7,000 GBP in Mallorca ... shockingly it wasn't a scam
  • "All business owners are mugs." 
  • BIMBO ... buy in management buy out
  • Has a very negative outlook on the world
  • HFT now seeping into the currency markets, already licked the equity markets
  • Don't try to make money trading unless you already have a large amount of money to trade
  • Never think trading will get you out of the financial hole you're in
  • Get your trading record audited so it's "proper legit" ... then easier to raise capital
  • Find 3,000 people who pay you seven quid a month regularly (with a product or service), then sell it for 2MM 
  • "Never deliver shit"
  • Dollar shave club dot com a great example
  • Passionate views on schooling system, did a TedX Talk on topic
  • Kids being killed mentally by schools
  • Work 40 hours a week for 40 years and get a pension at 40% of what you made
  • Kids now have "bugger-all skills"
  • Has five-month-old child, doesn't want creativity beaten out of him
  • Wants to create just one school that adopts his philosophy
  • Wants kids playing with robotics, 3D printing, augmented reality from Day One
  • He's not a fan of trigonometry [I'm chuckling]
  • Long summer holidays from school all about the Harvest (not relevant anymore)
  • Will need 10MM quid to build his school, doesn't want any external funding
  • "I'm a simple bloke with average qualities from Norwich"
  • Sir Ken Robinson, big fan of him
  • He's not naturally a Big Thinker
  • Do Review Apply ... Air Force saying [reminds me of Netto]
  • Goal setting is silly, focus on your habits instead
  • Think and Grow Rich, by Napoleon Hill ... big fan of the book
  • Everyone thinks small, you should think big
  • You're swimming in an ocean of opportunity
  • Always think bigger, not "I have to buy a house," but "I have to buy a village"
  • Humans always adapt, always "up-skill"
  • But rate of technological change has increased so much, will create future shock for humans
  • Recommends the book, Abundance by Peter Diamandis
  • "Sorry for rambling on"
  • Says some nice things to Aaron in parting
  • Has YouTube videos
  • Twitter: @SiamKidd

Reasons Not To Use a Real-Time Market Scanner

Added on by C. Maoxian.

This section from @tagrtrades recent blog post caught my eye:

I’m slowly trying to move from a scalper to a bigger picture trader. The biggest catalyst to this change was letting the subscription to my intraday scanning service lapse and focus on my pre selected watch list. Sure I miss trades, but I know the trigger points I’m looking for and don’t find myself shooting from the hip nearly as much as I have in the past. I’m also trying to look at charts outside of just the 1-5min timeframe I’ve done for years. Pulling back and getting a clear hourly view has helped me look for areas where I can target for more than just a few cents and get more % out of each trade.

I've had a few thoughts about the pitfalls of using a real-time market scanner:

  • Information Overload

Even when you really fine-tune your scanner, it's still spitting out dozens of things to look at every day. There's just too much to look at. I have what I consider to be an incredibly rigorous set of criteria that has to be met to qualify as an "Unusual Suspect," and still I get at least a dozen candidates every day (today I got 18). If you're looking at everything, you're looking at nothing. The human brain can only focus on a few things.

  • Pavlovian Response

Every time the scanner dings, you get excited and think about making a trade. If you're looking at an intraday time frame like the three minute chart, you're going to start overtrading. You'll be generating a lot of commissions and very little profit, if any.

  • Liquidity Issues

I use the scanner to find "Unusual Suspects" in real time. They are generally low float, micro-cap junk stocks that are on a tear, (or they are bigger stocks that have been hit with news, good or bad (earnings, FDA decisions, etc.)).

The trouble with the low float, micro-cap junk is that after the initial burst of activity, volume dries up and there's no way to exit your position in a graceful way, even if you're on the right side of the market. You get stuck. And I mean stuck at a profit. It isn't as simple as crossing the spread and getting out. If you have 10,000 shares of a dollar stock, or more likely tens of thousands of shares, you just can't exit without tipping your hand, and they'll move the market away from you fast. It's frustrating. 

  • Dependency Issues

It's possible that you may shape your whole trading strategy around the scanner and grow overly dependent on it. I like to think that everyone should strive to be able to trade profitably while still using an old 14" cracked laptop on a dial-up connection from the Australian Outback.

  • Unnecessary Expense

I've always thought that your broker should supply you with a first-rate market scanner, gratis. My broker, IB, does have a pretty good market scanner, but it's nothing like Trade-Ideas, not even in the same league. Schwab probably uses the old CyberTrader technology for their scanner, but I really don't know. Fido, Schwab, TD, IB, etc. should all license the Trade Ideas technology and offer it to their "pro" users for free.

I might think of some more things later and update the post, but that's it for now.