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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My Blog Has Moved
2016 Nov 18 Fri 13:59:29 | by
My blog posts will now be hosted at my new site, TheLawrenceChan.com
My first new blog post is there already.
Older posts will be migrated to the new site over time. Direct links to the older posts will be arranged.
Self Reflect to Success
2016 Nov 11 Fri 13:26:04 | by
I love listening to others, especially young adults, about their dreams. Not that I am a crazy guy trying to mess with their minds, but my sarcastic nature (I prefer calling that dark humour) often drives these young people (and grown ups too) through the roof. What I find out is the lack of self reflection in general among many people today. In fact, it looks like a trend that the ability of self reflect has been in decline for many years already.
You can Accomplish Anything
This motto, “you can accomplish anything”, is promoted in primary school in Canada and United States for years. It is hardwired into so many people that many middle age people still talking about this themselves and pass the same message to their kids. The harm of this belief is so great that I often wonder if the first person who promoted the concept is an extremely evil person who wished the world to collapse.
Young adults who think big often bullshit themselves into believing that they can accomplish anything. The problem, however, is that they never really tally up what they are capable of and focus on developing skills and expertise in the field they think they will achieve success. The very idea of them dominating the world already gives them the high they wanted so no actions are really taken to get them to where they think they can be.
So when I ask the simple question, “How do you think you are going to get there?”, most of these young adults fail to give me a concrete game plan. I will say less than 10% among those whom I asked this question has a plan. And only 10% within this group has a reasonable game plan. Hence, my follow up explanations on why they will never get what they want often results in very negative responses. The response I hear most often is that they are not going to be judged by me and my being not believing in them tells them I am a bad person.
Notice that I am not giving them advice. All I am doing is helping them to clarify their thought process. Of course everyone would have blind spots and unrealistic assumptions with their beliefs. That is not a problem. The problem is whether the person has the ability to accept the fact their they may not have all the answers to what they are trying to pursuit.
In short, inability to self reflect is the primary reason why many people fails to achieve greater success in life.
Self Reflection is Against Human Nature
Majority of the time, when we have met with massive failures, the natural response is to blame the others and the circumstances instead of accepting the failure being our own creation. Western psychology gives this many fancy descriptions like the self defense mechanism of our ego. Eastern philosophy, however, pinpoint this down to one simple thing, pride. In Asian culture, educated people traditionally are often made aware of this tendency so that they do not make decisions without proper self checking. This approach to life is also common in Western culture centuries ago. Nowadays, however, it is rarely seen that people make this a priority in their lives. The modern education system pretty much completely wiped out the teaching of the importance of many virtues that matters most.
So how do we develop practical self reflection that works for us?
First, you have to understand that it is a training of our minds. It takes time to rewire our brains to accept the fact that we do not understand everything and we are not going to make the best decisions all the time. Such beliefs can only be accepted completely when we no longer exaggerate our importance within the world. I dare to say even the best meditators or trained monks cannot always keep themselves from making mistakes due to lack of self reflection. Hence, it is a life long process to keep ourselves in check.
Second, the more we pay attention to the need of the others, the more likely we are able to see our own shortcomings. The term self reflect has the hidden meaning of being able to measure our behaviour objectively. If we never pay attention on what others do and the outcomes from their decisions, we will have a hard time to find the proper yardstick to measure the quality of our own decisions and behaviours.
Third, seeing things as they are, not overly optimistic or pessimistic, is hard unless you are very knowledgeable on the subject you are dealing with. Hence, developing expertise on the particular subjects that affect our lives most is very important in shaping our ability to self reflect.
The more challenging the career one wants to pursuit, the more important the self reflection skill is needed. I call it a skill because it is something that takes time to develop and practices to sharpen it into a state that is useful. For those interested in creating their own businesses or getting into professional trading, I would say self reflection is of equal if not more important than self discipline.
After all, we are all competing for limited resources in the society. Our ability to excel in our field depends on the skill sets we have. Obviously, those who can see their own weaknesses and learn to correct mistakes before they become costly will have a shorten path to success.
I have the luck to meet with many very successful entrepreneurs and professionals in their fields. One thing that stands out among these people is their ability to limit the mistakes they make in their careers. Their paths to success is not what most people think how they get there. The romantic idea of making huge bets and taking huge risk does not apply to them. My conjecture is that majority of people who achieve greater success than the others come from their ability to self improve through consistent self reflection. Over time, they optimize themselves into winning machines comparing to the others in the same field.
Splitting Up the Site
2016 Nov 4 Fri 12:14:20 | by
First thing that is going to happen to the restructuring of DaytradingBias.com is moving my blog to its own domain. The time has come that it is actually better to have a separate site because of several reasons. And these reasons are not necessary purely functional or business driven.
The primary reason for splitting up the blog to its own site is that I do not write just about trading in my blog. There are many topics I like to cover but I was also warned by many pros that it will send a mixed message to not just my readers at DaytradingBias.com, but the search engines as well. For those seeking for trading related materials, my blog sometimes can make them feel like my site is about health and fitness, or even politics. For search engines, based on the mix of contents, they are often misled to classify DaytradingBias.com as a portal. This one is a business decision.
Another reason for splitting up the blog is that I like to write about many things outside of trading. I do think there are certain things I know can be interesting and useful to others. As a separate platform, I get the freedom to write what I want without the hidden boundaries I have to impose on myself. This one is a personal decision.
One other important reason why splitting up the site can be a good idea is that it will allow my team to revamp everything within the site into one that focus on the SaaS (Software as a Service) aspect of the site. After all, DaytradingBias.com is now evolving into a full function service for the premium members. It is natural to take it to the next level offering better usage experience for the premium members.
The last reason mentioned leads to a big issue. Namely, such level of total reconstruction of the site can easily break the existing services in place. I have my team carefully planning out the steps to do the modifications but I am not sure if it is going to workout smoothly. Last time, the server migration was such a disaster I am still terrified by the experience. Hopefully, we do not mess things up too much and get things done quickly in coming months.
Have a nice weekend all!
US Election, French Election and German Election
2016 Oct 28 Fri 12:20:32 | by
US election in countdown mode now. Most people including traders cannot help but focus on the potential outcomes of this election. But this election is just the first messed up election among G8. Whatever happens now and after the US election in the United States will likely be mirrored if not exceeded in terms of lunacy when the time comes for the France election by April to May in 2017. Both of these elections are just prelude though, as the most important election that will determine the fate of the European Union will be the Germany election later next year.
How is all these elections going to impact us all worldwide?
A Bad Example Is Now Set
I’ll just sum it up with a few words on the US presidential election so far – how low can both camps go?
Given the way the US election is handled, we can pretty much foreseen that the upcoming French election will probably go for similar tactics to win votes. Of course, rigging the counting process is a given. It will be no better with the German election as well. The truth is that all three countries have more than half of the population not happy with their governments.
In the past, the beautified elections led to short term peace of mind among the voters and bought these countries several years of political calmness. This time around, there is no more room for just beautification as lies were caught red handed in these countries. Crazy political agenda and corruptions also hurting people too much. Those people who has no political influence, meaning those not important in affecting the election outcomes, are abandoned for more than a decade now so no sweet talking or empty promises will make them happy.
Hence, whatever the outcomes are for these elections, the endgame is the same – civil unrest and start of the breakdown of the system.
Government Bonds Will Be In Big Trouble
One of the biggest issues among these governments are their spending sprees. Given the fact that these governments will likely be paralyzed thanks to impossibility for the opposite camps to cooperate, the fiscal budgets for these countries will be a mess. In other words, shaking the confidence of the investors as these governments no longer functioning in a way that a reasonable government entity should.
There is really no reason for any saint person to buy any government bonds given the interest rates for these instruments have been near zero. The only reason for people still buying them is that one can still argue that they are safer instruments in comparison to other vehicles. But we have seen how fast this can change. Last time Russian bond crisis in year 1998 pretty much wiped out all investors who put money there.
Majority of government bond buyers are the crowd who seek for safety. This means that many people who bought these bonds could be buying them just because of others saying so. Like pension plan fund allocations often automatically put part of the money into these bond funds. As the breakdown begins, the wipe out process will be swift with no mercy.
In short, once any one of these countries having trouble with their bond market, the rest will be affected and the selloff will not stop until majority of the holders are losing more than half of their money.
Destruction of Money
When these government bonds melt down, there is a ripple effect into all fabric of the economy. Bonds are usually used as collateral for financing all kinds of market activities and investments in businesses. The devaluation of these government bonds will affect the ability to borrow for many businesses. The destruction of money has its consequence. It is called deflation.
The spiral down effect of deflation will have to unfold slowly and painfully for many years to come.
Various central banks and governments will do all kinds of stupid things to stop deflation although they would simply adding fuel to the fire.
Here is a simple metaphor on the reason why interventions by the officials won’t work. When a cinema with one exit is on fire, chaos is ensured. And that holding guns at the people inside the cinema telling them not to panic will not stop them from doing what they are going to do. The likely outcome will just be killing those people because “they are not obeying the law”.
If you have retirement savings that you do not even know what kind of funds you have bought, maybe it is time to find out.
If you know that you have significant amount of savings put into various derivatives based on these government bonds, it is time to think about better diversification.
If you are seriously worry about the future of these bond markets, you may consider keeping cash around.
The more difficult question with this situation is where to park the money cashed out from bonds and bond funds. That is going to be a good topic for a separate article.
The Usual Disclaimer
I am not your financial advisor. This is my blog for which I am writing what I think and that is not financial advice of any kind. I am not responsible for your own trading or investing decisions.
Major Changes to DaytradingBias.com
2016 Oct 21 Fri 11:27:42 | by
After lengthy discussions with my team on various aspects of DaytradingBias.com, I have arrived at the conclusion that we are going to streamline the overall design of the website. Instead of keeping it more portal like with various areas accessible from the home page, we are going to revise it so that it delivers a clear message in terms of the type of services and products that are offered. The changes will be graduate as there are a lot of content to be reorganized.
For the weekly commentaries, I may not keep it in the same format as the way it is done now. On the upside, I am considering adding more markets to Market Bias Observer newsletter for my premium members with weekly or bi-weekly updates so that premium members can follow my swing plays more closely. I am looking into adding US bonds, crude oil, ETFs, stocks and probably other markets as time permits.
These changes are necessary as my role in managing my fund can take up much of my time. Naturally, if I write about what I trade for the fund, it will be much easier even though the comments I make on the individual markets can be quite brief. The goal stays the same though, I like to make this site educational for retail traders so that they can become proficient in trading by observing a professional trader in action.
One thing that will affect my daily routine most is likely the amount of time I have for day trading. Day trading a number of markets will still be the core part of my investment strategy but it will be more automated than ever. I will keep up with the real-time commentaries at least for now. I see that going forward, however, spending more time to summarize my day trading techniques into something well organized will probably help more traders to breakthrough their trading obstacles.
Many changes are coming and I welcome all suggestions as usual.
Have a nice weekend all!
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