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:
|subscribe to blog rss|
|View Lawrence Chan’s profile||Google+|
Happy Chinese New Year
2016 Feb 5 Fri 14:07:26 | by
This coming week is Chinese New Year. Many Asian markets will be closed. This in general leads to light volume trading in other markets as well, making it a good time to take a break to reflect on what happened in the past lunar year and decide what to do this coming one.
I posted a chart that forecast what may happen this year of the monkey. It is based on the 19-year lunar cycle and has shown interesting properties in the past. Wonder if it will give us useful clues like the past few years.
I mentioned that I need to figure out my priorities this year and have it finalized before mid February. Well, I exceeded all my trading goals for the first half of the year this week. Both trading for my clients and for myself have done exceptionally well thanks to the extreme volatility. To put it in perspective, instead of the normal 1 to 3 good intraday plays, we have been having 5 to 10 great swings within a trading session. This amplifies my trading performance significantly. However, this is not a good sign because well structured market environments do not last. The market environment can become even more chaotic than now and I can foresee my winning rate may drop drastically if sudden change happens in coming weeks.
Given the favourable situation, I am choosing to take a break from trading or just trading lightly the rest of this month. This way I can spend more time cleaning up the piles of incomplete projects I have on hand. Highest priority right now is to complete the several real-time tools related projects and articles. Next in line are the long awaited comprehensive trading model reports that many have been asking for.
I have decided to end the mentoring / coaching service for good by the end of this year or early next year. The time I have scheduled for mentoring has filled up quickly for this year. I will at most being able to accommodate one or two more traders in coming months and then I will close the program. For those who have worked with me already, I will always leave the door open when they need me because I know the current market environment is getting more challenging. The decision to close the program is a difficult one but as I said before I prefer a more personal approach which makes it difficult to accommodate too many people.
I was asked many times why I spend so much effort in developing the site. I used to have many answers to the question depending on my mood at the time. After many years being questioned on the same issue and reflected on my own, I actually have a very simple answer now. In short, somewhere deep down, I find that I love to explain things to others. Teaching others to learn complex ideas using concepts they can understand is something I am very good at. In this sense, I find satisfaction from my interactions with other traders and from helping out traders to breakthrough their trading obstacles.
There is also this pay it forward factor. We all know it takes perseverance in order to achieve trading success. If I gave up trading when I had my setbacks early in my trading career my life would not be the same. But I did not make it by myself. There were many good people who helped me through my difficult times. I hope I can do the same for others.
This coming week I will have quite a number of family gatherings to attend to. I will be in holiday mode all week and back to normal schedule after. Will kick back and relax a bit before throwing myself back to intense site development and research writing.
Happy Chinese New Year!
The Hidden Inflation and the Coming Titanic Event
2016 Jan 29 Fri 12:34:04 | by
Talking to a friend the other day, he mentioned that vegetables have doubled or even several times higher in price in just half a year. We are not talking about exotic food here. His observations include basic vegetables like celery and carrots. We can partly blame this development on the weak Canadian dollar and that Canada is a net importer of US vegetables. But the problem goes much deeper than that.
As the world economy turning down, it does not imply that everything will drop in price. Deflation from such economic slow down gives us lower labour cost (i.e. lower wages) due to overall shrinking business activities. But as production of necessities decreased and that quality necessities becoming scare resources, their price goes up. In other words, food cost goes up, essential healthcare service price increases and people with lower income suffers.
Originally, these past 10 years the hidden inflation was on the income front only for which majority of people are stuck with no income improvement. That makes everything costs more relative to the staled income level. Now that economies worldwide are doing poorly, the hidden inflation is hitting home on the cost of the necessities. At this stage, even middle class income families will be pressured which further reduce their ability to spend money on non-essential items.
The implication from this points to further spiral down effect on the overall economies as businesses offering products and services that are not essential will see huge impact on their business soon. The obvious businesses affected includes middle end luxury like clothing, jewelleries and restaurants. From what I see, there is nothing these businesses can do to handle this situation at all.
The reason is simple – the hands of these business operators are tied. They cannot reduce the scale of their operations easily. They cannot sell their operations to someone else as anyone who has done their proper due diligence will not be interested in acquiring these businesses at the current high evaluation level.
On the real estate front, there is also very interesting development here in Canada. My friends who deal with commercial properties have seen a wave of buying from foreigners. They are mainly coming from China and Middle East. This type of buying is in line with the past few times for which foreigners going into a buying spree on Canadian commercial properties. And for the past few times, these buying sprees all lead to major top in the real estate markets for many years.
We can tell that bad things are about to happen soon. Yet, there is really nothing we can do to stop the inevitable outcome. As a trader, all I can do is raising cash, reduce exposure in real estate and cutting down on long term investment in the stock market. Until this economic Titanic event is over, I guess we will not be able to assess the potential impact on us all.
One Good Idea Turns Into Reality. What’s Next?
2016 Jan 22 Fri 9:22:16 | by
Earlier this week I prototype an idea called Emini S&P500 Battleplan as suggested by many premium members. It has been very well received. The idea is to post what I see from my charts instead of just describing it in the real-time commentaries before market open. Although it is still very simplistic so far, feedbacks from my members is telling me that they love the idea and it is very helpful for them. Very glad I took the plunge and just made it happen first without worrying about how difficult or how time consuming it can be.
Emini S&P Daily Battleplan
This experience has taught me two things.
First, I need to test out new ideas without worrying too much. I hesitated to do this for months just because I worried too much – like it would take up too much time and that my charts could be too messy to show people. Now that I took a leap of faith to start the project first and see if it can work out, the obstacles are not as big as I first thought. The key is to actually doing it first so that I learn from the process on what the actual requirements are.
Second, listen to my members is very important. They may not know exactly what they need for their trading but when many of them telling me something similar the pattern emerges. My role is to find a way to fulfill what they need and paying attention to what they are asking for is key to achieve this goal.
Having a chart or two makes it much easier to explain what I have in mind. Yes it is actually difficult to post the charts because some of the charts I use actually reside in remote servers. It took some coding magic to allow me to take screenshot from them and now it is as easy as working with charts on my desktop computer.
There are various drawbacks of posting my morning summary before market open in real-time commentaries. For example, people who login after market open may not be able to see my morning summary once many messages have been added.
Now both issues are resolved with the battleplan idea, I have setup a home page for the battleplan posts so that premium members can refer to them when they study the historical charts themselves. This should be very useful in helping traders to understand and develop the thought process in formulating their own plan before the start of a trading day.
Real-Time Custom Market Breadth Chart
Thank you everyone who emailed me to sign up for the alpha testing of the real-time custom market breadth chart. Once it is ready I will email you all with the access information. We are still working out some technical glitches before the alpha release. I will keep you all posted on the progress.
In the meantime, I will write up several articles explaining what these custom market breadth indices can do.
I have already revised the titles to two of my older articles and included them into the Trading with Tick Index series. The two articles, S&P 500 Tick16 and Tick1K and Its Divergence Signals were written long before I started the series hence I never thought of them being part of the series. Now that I am making the custom breadth indices available to our members, it is a good time to add them to the series so that everyone will get a proper introduction on custom tick indices.
Hopefully the real-time custom market breadth chart will be another good idea turning into reality.
New Real-Time Trading Tools Going Alpha Soon
2016 Jan 15 Fri 12:52:09 | by
One of the new real-time tools showing the custom breadth charts will go alpha soon. It’s been requested for a long time for which I could not make it happen last year. Once field testing is okay this coming two weeks I will release the charts to limited number of alpha testers.
So, I am asking for members interested in testing the new breadth chart tool to contact me directly to sign up for alpha testing. Email me at firstname.lastname@example.org for more details.
If you are not familiar with the concept of real-time custom market breadth, you can read more about it here.
I will provide more details when they become available.
Is 2016 Year of Surprises
2016 Jan 8 Fri 12:57:01 | by
What a way for the year to start. In Asia, China acted decisively to devalue its currency and then speculators panic selling stocks in response. In Europe, EU looking to establish its own army while talks of Britain leaving EU getting a lot of attention. In America, US dollar continues to strengthen and Canadian dollar just made decade long new low against the US dollar. As if the world has chosen this year to make drastic changes in everything.
Is it all unexpected though that we are getting all these so-called news shocks within a week? I don’t think so.
All the events mentioned above have been developing since last quarter of 2015 if not earlier. The holiday season simply delayed them all and aligned them to happen right after New Year. Some people already blaming this year for being an unlucky year. Well, I am not sure if luck has anything to do with this. But I know for sure that looking at things this way does not help in resolving the matters on hand.
Case in point – the stock market selloff happening this week. Subscribers to my newsletter all know that I am looking for a selloff and that the target price level is now reached today after Non-Farm Payroll report. It is not that difficult to tell a correction is going to happen. It is the timing and magnitude of the drop that caught people by surprise but they shouldn’t be. All signs are on the wall.
Similar things can be said about Canadian dollar. The crushing of crude oil has killed the economy of the oil producing provinces within the country. That in turn affecting the other provinces. The Canadian dollar getting weaker is just a matter of time.
Media, however, cannot tell people that everything is expected. The need of ever increasing readership means exaggeration is part of their job. No wonder we got all these headlines that this week is the worst ever first week for the US stock market in history.
Keep calm and carry on.
This is the time of the year to set goals for the rest of the year. Upon reflection, last year was a transition year for me in searching for a more balanced life. I looked into many areas of interest to see what fit me best. I do not have all the ans …
I was talking to several beginner traders at my friend’s trading firm the other day. The topic of high probability trades came up several times as these young traders like to get some trading tips from their boss and me. We both told them high prob …
I have been thinking of what kinds of real-time trading tools will help the Emini day traders. I came up with several concepts last year but was stuck with technology issues. Here are the ideas I came up with and I am looking for feedbacks. Real-tim …
I wrote about the topping of the real estate markets around the world back in October. I received quite a number of emails from readers confirming their concerns of price drop in the near future. Some even scared of a crash in their local housing mar …
Thanksgiving has been a confusing holiday for me for many years because there is the Canadian Thanksgiving in October and then there is Thanksgiving in November for the United States. For an Asian who first moved to Canada some 30 years ago as a kid, …
|blog link partners|
Investing Blog Directory