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Stress-Free Trader (The Lawrence Chan Blog)


Full time index & forex trader, occasional consultant to hedge funds / institutions, my work leads to my not so normal view of the financial markets. My blog mostly talks about trading, market behaviours and other musings.

Originally this blog is supposed to be organized in a separate website like what most authors do but I don’t think I will maintain it properly that way. So here it is as part of this website.

Schedule – Regular blog post every Friday with occasional additional posts when I feel like ranting.

In case you are curious of what I do outside of blogging here:

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Busy Month Ahead

2015 Aug 27 Thu 16:24:19 | by Lawrence

iStock_000001137458XSmallDisruption to Regular Schedule

This coming month I have to move to my new place. I need to schedule movers, pack things and throw away a lot of things. I thought it would be easy to do but it turns out there are hiccups that I did not anticipate.

I tried doing the throwing things part last weekend and it did not work out well. My son and I sorted out the clothing from my late girlfriend and packed them into huge plastic bags. First bag I was okay. Second bag it got difficult and the third one pretty much sent me into emotional breakdown. Took me deep breathing, a long walk and meditate for hours to recover.

So, it seems that I need help with this part of the moving. Luckily one of my friends, who went through something similar (her father passed away) last year, warned me about the emotional issue with cleaning up loved one’s belongings and offered to help. Now I have recruited my late girlfriend’s female buddies to deal with her belongings for me. Hopefully it will not turn into many party nights for them.

So this coming month I may not be able to produce as many articles as I want. I will still try to monitor and live comment on the markets as often as I can. I will also squeeze some time to do daily comments to help everyone out on key price levels and things to watch out for.

If all things go smoothly, I will be more productive by end of September.

About Point of No Return

Several members asked about the concept Point of No Return. I have not written the follow up articles yet but I have all the models built around it for Emini S&P. I was trying to organize the information so that the presentation is more in line with the gap trading techniques presented in Master Emini S&P Gap Trading Technique.

Given my schedule in the coming month being a mess, rushing to produce the complete manual may not be a good idea but I can sure try to post some of the trading models first.

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Volatility Is Back and Question About Home Run

2015 Aug 21 Fri 13:58:35 | by Lawrence

3d small people - rest on a chaise lounge

As I explained weeks ago, volatility would be back. And here we are, the volatility index (VIX) has printed a new high for the year today. People were laughing back then questioning my sanity. It does not prove me right and that they are wrong. Instead, it simply shows human ignorance is everywhere.

As a principle, anything that has a cycle will go through expansion and compression phases. The longer the compression, the longer the expansion that follows. Since we have experienced one of the longest compression phases in recent history, the expansion phase is likely to be spectacular in terms of range expansion and intraday volatilities.

Many people associate volatility in the stock market with market crashes. That can happen, of course. But volatility is not a one-way street. A trader may be correct with a longer term directional opinion but such opinion is not good for the bottom line if not outright deadly.

In high volatility environment, the extreme swings we get on intraday basis will test the resolve for even the best traders around. Prudent risk management is key to survival in such chaotic environment. For those less experienced traders, reducing trading size and staying on the sideline are good alternatives to brave this trading environment because of the real threat of being wiped out.

Trading Goal For The Year

As of yesterday, thanks to the higher volatility, I have reached my trading goal for the year. This year is a new record for me in reaching my year end target so early. It is something to celebrate indeed. I will take it easy on my regular trading and focus more on other tasks on hand until the end of this year.

Frankly, I am not the aggressive type in terms of trading with leverage. Otherwise I would be trading at several times the leverage I am using. That being said, I prefer consistency and stability in performance. Getting my year end goal and stop / reduce trading is another control I put on myself.

Time spent researching and studying the markets are as important as spending time to trade. Since the stock markets are evolving all the time, we have to upgrade ourselves consistently too so that we are aware of the changes in the trading environment. As I said often, traders ultimate edge is themselves.

For traders, investing in themselves to gain more knowledge about the markets they trade will be reflected in the performance gradually. Those who fall behind in terms of keeping up with the current market conditions will suffer more setbacks and instability with their trading results.

About Home Run Targets

I received a question about my real-time commentary:

I am sure I am not alone among subscribers to DaytradingBias who marvel at LC’s home run targets. IMO, these are the most valuable biases in the commentaries.

Today’s ES target of R1, reached in the 3:00 PM hour is typical of what I mean.

LC, can you give a primer, by the numbers, on how you arrive at these probables?

In short, I have 3 separate and independent methods to measure potential important price levels. First, it is the price clusters based on STOPD which is already implemented in the real-time price level tool. Second, is a swing pattern driven price targeting tool that dynamically update on my charts. Third, I have real-time statistical bias information generated giving me which price levels are likely to be tagged within the day as the day develops.

When at least 2 of these price level methods coincide at the same price zone, I know immediately there is a high probability that the particular target is of great interest to the dominating players.

As I explained in STOPD, it is not the entry that matters. It is knowing where you exit that makes you a winner.

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Opinions Are Bad For Your Trading

2015 Aug 14 Fri 13:50:51 | by Lawrence

Several members have been exchanging emails with me discussing the potential of a major market shock in near future. One thing that stands out among the group is the way how this discussion has affected the traders involved. I think it is worth talking about here so that more beginner traders are aware of this interesting phenomenon. In short, the discussion we had does not impact the established traders at all while the beginner traders are affected negatively. The good experienced traders involved in the discussion simply keep the idea of a potential top as one of the possible scenarios. The beginner traders, however, could not help but seeing every rally being a top in the making over the past two weeks. What the beginner traders suffer from is forming an opinion about the market. The moment they develop a conviction of the opinion, they can no longer see the market objectively. In other words, they switch from probabilistic mindset into fixation on one single outcome. From there, they see only what they wanted to see. One reason that this kind of opinions can affect a trader so much is because of the potential windfall possibility. Beginner traders do not have enough experience and confidence in themsevles that the idea of one sure winner is too sexy to give up. They are effectively wanting to win the lottery. To shake oneself out of this kind of opinion driven problem, there are several ways to do so: 1. if you are a day trader, tell yourself that what you are thinking of on longer term horizon does not matter to your trading at this moment. 2. review your trading plan often so that you execute your plan, not your opinion. 3. remind yourself there is no such thing as a sure winner Hope this helps!

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lenovo_thinkpad_tabletI have been waiting for a good 2-in-1 laptop for a long time now. My primary requirements are simple – high resolution for charts and order entry, can work well as a tablet for note-taking, and most important of all, long battery life. It turns out such thing does not exist yet. For most people, shopping for a new laptop for trading is quite simple – higher resolutions with at least 1920×1080 screen space and medium horse power will do the job. For me, however, I also do my research work and taking notes all the time on my laptop. It is quite troublesome to carry 2 laptops instead of one when I am travelling. Hence I need a laptop that fits the need for trading and my other usages. My Lenovo X220T that I bought many years ago is still kicking. With Microsoft OneNote, this 2-in-1 laptop served me very well for years as I have converted into computer note-taking for both the convenience and the power to access all notes without carrying many notebooks around. You may not believe me but it can run NeoTicker, NinjaTrader and X-Trader at the same time smoothly. Of course, there is a problem with screen space because it is an older laptop, the screen resolution is low. Carrying around an extra portable LCD monitor can solve the problem but not ideal. The Microsoft Surface Pro 3 so far is the closest thing to a perfect laptop for both trading and research. It has excellent screen resolution and that it is also a good tablet for note-taking. The only draw back though is the screen size is quite small for the very good graphic resolution it provides. It really puts a lot of stress on my eyes when the whole screen is utilized for quite a number of charts and order entry windows. Hopefully, one day, a computer manufacturer will produce a decent sized 2-in-1 laptop for people like me. I am not asking for much – 15 inch screen size, HD resolution and the support of note-taking will do the job. Until then, I guess I am stuck with my old convertible tablet / laptop.

One comment


New Book, New Home and a New Life

2015 Jul 30 Thu 17:58:18 | by Lawrence

3d small people - rest on a chaise loungeNew Book

The Art of Chart Reading book is still in the capable hands of my editor, Amy. Her inputs has led to many changes to the charts and overall organization. All of these changes are aiming at making the book more readable and easier to understand some of the more abstract concepts. The editing is probably half way through but there are also issues like cover design and other logistic things to take care of. I will not be surprised if the book can be released by the end of August. Since it is out of my control, don’t take my word for it.

You can read the online version of Art of Chart Reading on my site.

New Home

I’ve found a new place to move to. I decided to do it the week before. I booked appointments with 20 places to check them out within 2 days this week. I then decided the first, second and third choices quickly. Offers submitted – not my first or second choice was accepted but it is now done.

Pretty efficient, eh?

I am taking advantage of the Canadian long weekend (August 3rd Civil Holiday) to get all the things related to my moving organized so that it will not take up much of my time going forward. I will likely not be available next Monday if the struggle with the people who handle my renovation matters stretching all weekend. I will keep you all posted on the situation by Sunday night.

New Life

I see more scaling back in my trading size this year as volatility is going to pick up significantly into September and October seasonally. My modest trading goal for the year is mostly completed hence it is not time for me to go aggressive at this point. It is especially important because I have so many things I am trying to do at the same time, my mind may not be as focus as I like it to be. As we all know, day trading takes our full attention to reduce mistakes. Unforced errors are costly to the bottom line.

I have not decided yet what I will be doing in year 2016. One thing I know for sure is that I will travel more in a year or two, my friend Michal from Czech has moved to Monaco for years. The nice pictures he took give me incentives to visit him soon. Personally, I prefer cooler weather than the very hot ones though.

10 comments


2015 Jul 24
New Approach To Publish Trading Systems

Many members have been asking for more details with the trading systems that are published on the site. The requirements varies but all centre around the idea that more analysis should be provided so that they can make better decisions on whether to …

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2015 Jul 17
Letting Go Is Easier Said Than Done

Over the past few months, family and friends have been very nice and insisted to get me our of my pad to enjoy some sunlight instead of working days and nights. I understand why they are doing that and I greatly appreciate their kindness. Some even g …

3 comments


2015 Jul 10
What I Learned From Mentoring Young Entrepreneurs

I just started mentoring a few small business owners on pro bono basis who have been growing their businesses steadily but stuck without growth in last couple of years. Piling on top, they have endless amount of work that they have to handle themselv …

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2015 Jul 3
Trading Signal Service

I have mentioned this before but never get the chance to really look into the available options to offer the trading signals through a third party company. For those traders interested in following some of the trading systems I post here, I am consi …

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2015 Jun 26
Not Everyone Trades the Same Way

I was asked many times what I do when I am coaching traders. It is an interesting question because there are many answers. I think laying out some of the things I do will provide a better picture. I Need To Know You I usually need a lot of details …

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