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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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iStock_000016397279XSmallTo answer a number of questions all along similar line of thoughts, here are my answers. My current spam to actual email ratio is about 15 to 1. My spam filter could only catch 50% of the spam mail. The actual number of emails that I need to response to personally is now about 50 to 70 per day. I am sorry I cannot address all of you individually but I am sure you can understand. Here are the three most popular questions you’ve sent me lately and my detail answers to each of them.

What’s Next for DaytradingBias.com?

I have big plans in place in the beginning of the year but many things have been side-tracked and others just not working out as expected. However, the core objectives have not changed. Namely, I will continue to improve the real-time trading assistant tools with my proprietary trading setups so that it can do a good job in assisting traders to make sound trading decisions in the markets supported.

The introduction of combined trading models is in the card. These models are based on the combination of various statistical biases that lead to stability in performance. Rules will be fully disclosed in special reports to those interested in in-depth understanding the models.

Thus, lately my writing effort is all focused in the delivery of these more advanced research reports on my trading models. I will resume writing more on the site when my workload is reduced after the releases of some of these reports.

Can You Manage My Money?

The short answer to your kind requests for me to manage your money is no.

Long answer has to be done from several angles. First, legally I am not allowed to solicited for money management business because I am not likely being licensed as a financial advisor in your country’s jurisdiction. Second, you do not really know me on a personal basis to trust me with your money. After all, even though I am quite transparent with my work on day trading, I have not disclosed much about my role as advisor to my clients who trust me with their money. Third, these family offices with large portfolio of assets, for which I am responsible for just a small portion of their speculative capitals (even though the amount involved is still very significant), have confidentiality clauses binding me not to discuss my work under any circumstances. This means I cannot show you my trading performance which is unfair to any potential investor.

Realistically, by investing your time and effort into learning more about trading and the underlying structure of price discovery, majority of retail traders can derive their own solid trading strategies that fit their needs to grow their capital steadily. It can take years before one can get this accomplished. The path to success can be brutal but it is doable. The main obstacle that affects most of the retail traders is not that they have not acquired the secret trading techniques they think that is necessary. It is their unwillingness to give up their egos for which blocking them from being able to properly manage their risk with trading.

What’s Happening Personally?

Thank you everyone who wrote me personally after I blogged about my birthday week this year. I am doing much better now comparing to almost two years ago when my significant other passed away, both physically and mentally. I have restructured my life so that I can stick to certain schedule every day. I now limit the amount of time I spend on trading, research and writing. I am planning to take vacations from time to time (finally) although that has not happened yet.

My trading will become even more mechanical than ever. That’s due to a very good reason. As we age, our ability to response to very fast market conditions can slow down significantly. I know I can still handle fast markets very well but the time will come that I will no longer be able to catch up with the bots. Going all mechanical with at least some of the trading models will eliminate the human factors affecting performance. For the time being, the human factors are working in my favour as I can outperform my own models most of the time. Five years from now, I am not too sure that will still be the case.

Some of my clients actually suggested that I should create a benchmark entity for which I can showcase the performance. I am seriously considering to do that if I can resolve the logistic issues. This can help more people seeing what can be accomplished with a disciplined approach to trading. It is also a bold step for me since I am not used to put myself under the microscope for public examinations.

 

I think that’s all I have to say this week. Later.

2 comments


From Flying Fighter Jet to Trading as Life Long Career

2016 Aug 19 Fri 11:39:24 | by Lawrence

imageI have been exchanging email with Ron, an old friend from Netherland, lately and here is a short story of his path to establish his trading career.

Ron was part of the Dutch Air Force. Since then his career had been revolving around airplanes until he tried his hands on silver and gold contracts. That was year 1983. He never look back.

From that point onward, his main interest has been trading with his career in flight industry turning into his part time pursuit.

His approach to the markets may have changed over time but he sticks with simple principles that work all these years. Being able to control his risk in trading and gunning for slow and steady return, he is doing fine. This is perfectly in line with his experience in flying planes as being able to follow specific protocols is a must to ensure safety of everyone on board.

Sometimes a beginner’s urge to look for these superior edges in trading can be really harmful to their path to trading success. After all, having one working strategy in trading is better than trying to integrate many strategies that you have not mastered yet. At the end of the day, the ability to respect market risk, your trading capital and your obligation to perform can set one apart from the struggling traders.

Maybe one day I can convince Ron to tell some of his trading related stories.

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How Strong Is Strong Enough

2016 Aug 12 Fri 14:01:33 | by Lawrence

iStock_000014335215XSmallLast year when I was training my son on some classic exercise routines, the topic of how strong one has to become so that it is sufficient for normal and unusual situations was raised. I responded with an interesting set of answers. I am sure many people who exercise regularly would love to know about it.

Several classic martial art text actually explained very well what kind of ability one should achieve and maintain so that our bodies are ready for regular activities and also for unusual situations that are not necessary about fighting. The concepts presented in these ancient text are actually quite scientific from our modern point of view. I think we can call this another case of common sense approach to fitness.

Strength Requirement

Following are three examples of the many strength requirements mentioned in these martial arts scripts.

First, being able to pull yourself up with one arm for at least 5 to 6 times is one of the standard for meeting the requirement of being able to handle unusual situations. The reason is that should you need to, you can effective climb out of danger quickly. A good example is that when you are trapped in a building which is on fire or an enclosed environment, being able to pull yourself up with one arm means all the difference of having the extended reach that can decide your chance of escaping the dangerous place.

Second, being able to do one arm push up for at least 5 to 6 times is another standard requirement. The reason is the same as the first one. The combination of both push and pull strength gives you the ability to carry yourself out of many difficult situations with your arms only. This makes sense because we may not be able to use our legs for support or leverage.

Third, being able to jump on one foot to leap the distance of your body height is another interesting requirement mentioned in these ancient text. This one is quite simple to understand because it allows you to reach further than what your arms can do, making it possible to further open up more options to deal with complicated terrain.

Notice all these physical requirements are relative requirements. They are measured with your ability to support your own body weight and to overcome the distance based on your own height. In short, it is all about being able to optimize your ability in handling yourself.

What I Made My Son Do Last Year

Originally, my son could only do about 5 pull-ups with both arms. He was quite discouraged that it may take a long time before he can get to the point where he can do one arm pull-up. I told him muscle strengthening require the growing and toning of the muscle cells which takes time but we can speed it up.

So instead of my son doing just a few sets of pull-ups, we played a marathon pull-ups game to see how many pull-ups he could actually do in the next 3 hours and I would match him every time. The game ended up with more than a 100 pull-ups done by each of us.

This is a great example how our minds tricked us – my son thought that 3 sets of pull-ups was all he could do. But that is not true at all. By motivating him to take on me, he managed to do many times over his perceived limit. Of course his arms were toasted the very next day. This training, however, doubled his number of pull-ups per set once he has recovered in couple of days. Such drastic improvement was not possible before because his mentality did not include giving everything he has with physical training.

Now that he has the experience, his perception changed and this way of thinking also becomes part of his considerations in solving other problems. Namely, many things we thought are too difficult to deal with, may not be true, because we often underestimate our true ability to take on the task. By giving a goal with everything we’ve got and the mentality of keep trying until we have absolutely nothing left, we can often achieve something that seems impossible.

Wonder what kind of physical challenge we should try this year?

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iStock_000013538097XSmallI started taking blackstrap molasses as a dietary supplement about five years ago. I did that not because of me reading some information from random sources on the net about the benefits of blackstrap molasses. I did it to show my support for my late girlfriend who started taking it back then as recommended by other cancer patients. If you are thinking about blackstrap molasses being a miracle drug for curing cancer, sorry you guess it wrong. My girlfriend did it because she wanted to counter one of the side effects of the cancer medications she was taking – turning her hair all white.

Ever since then, many people around me started taking blackstrap molasses as well when they learnt about the wonderful benefits I am getting. Here are some of the benefits of blackstrap molasses from my personal experience and also the effects as reported to me over the years.

  • I do not have much grey or white hair at all even though my father does when he was my age
  • I still have a lot of hair comparing to my father or older brother when they were at my age
  • one male friend has not only hair growing back, he eats less, no longer needs his morning coffee and his belly fat is now mostly gone
  • one male friend does not show hair growing after taking blackstrap molasses for several months, but his life long difficulties with bowel movement has been completely corrected
  • one female friend getting better sleep after taking blackstrap molasses for a few months and her dependency on sleep pills has ended
  • one female friend having some of her white hair growing back into its original colour after taking blackstrap molasses for like half a year

I am not saying blackstrap molasses is a cure all answer for everyone. There is one female friend who took blackstrap molasses for about two weeks and she started having bleeding on her lips due to easy cracking of the skin in that area. Once she stopped taking blackstrap molasses, within days the cracking stopped. Obviously not everyone gets the benefits from taking blackstrap molasses.

Another interesting fact about blackstrap molasses is that no one can agree on the taste. Some people like me find it tastes sweet. Some told me that they find it tastes salty. Some others told me they have this tinkling feeling on their tongues when they take blackstrap molasses.

All these people including me take just one spoonful of blackstrap molasses in the morning. Blackstrap molasses is not something expensive and you can find it easily at supermarkets or places that sell baking ingredients. Blackstrap molasses is something I highly recommend everyone to try.

2 comments


Tough Trading In Coming Few Months

2016 Jul 29 Fri 12:20:52 | by Lawrence

iStock_000009869846XSmallUS election is early November. Olympic occupies pretty much all August. Although they are completely independent events, yet their schedules are set to happen together every four years. This combination creates a very interesting trading environment that happens only once every four years.

From August to October during US Election year, we usually experience exceptionally low trading volume. It is not a surprise because many people will tune in to watch the Olympic games. I still remember the floor traders and market makers watching the games on the trading floor instead of monitoring their positions, if they have any at all.

Very low trading volume makes it difficult to read the intraday charts effectively. It is especially true for the lower timeframes like 1-minute charts. In such low volume environment, the price movements become choppy and erratic. A sudden jump in one direction does not imply that we are going to get a move in that direction. Instead price may snap back to where it was moments later.

There is no good solution in dealing with this kind of situation. Some professional traders choose to take a long vacation in August during US Election year to avoid the mess all together. Some will switch to higher timeframes to look for better trading setups while others slow down their trading to just a few trades a day or none at all if they do not see any good opportunity.

Many beginner traders pick up their bad trading habits during this period of time. As they are so focus on reading the charts, their brains are trained to read the bad signals as if they mean something. This in turn will make it very difficult for them to learn the better trading setups in a normal trading environment.

Hence the awareness of the type of environment we are dealing with is actually very important. By knowing when to stop reading too much from the charts, we protect our minds from corruption by the meaningless noises in the markets. In turn, we save ourselves from making trading mistakes that we know they are totally avoidable.

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2016 Jul 22
My Disturbing Birthday Week

Posted on Wednesday on what happened to my friend. Am still handling her matters until early next week when her brother comes back. The words “being affected” cannot fully describe how I feel. I guess “deeply disturbed” better explain the sta …

2 comments


2016 Jul 15
Looking at Trading Income from an Entrepreneur’s Point of View

Most people who are not interested in trading (or day trading) think of it as some kind of gambling. Many who work in the financial industry worship traders as some of them legendarily making millions every year. Yet, some others who are more familia …

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2016 Jul 8
Allergy Hell, Lapse of Judgement and Value of Time

I have not had a food allergy episode for many years. These things are bounded to happen though and I have lived through one this week. It is a good reminder than I need to be much more careful when I dine out. More importantly, I have relearned my l …

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2016 Jul 1
Post Brexit World

As of this time on Friday, S&P500 has repaired all its losses after Brexit. Yet, British Pound is trading near the post Brexit low which is some 12% lower while Euro has repaired half of its losses. The volatility index (VIX) has its steepest dec …

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2016 Jun 24
Brexit and Its Immediate Impacts

So much buzz on Brexit yet majority of people are not even aware of what it is. Seriously, many people I talked to this week do not even know about it. Maybe it is due to lack of interest of current events (i.e. record low viewership on news programs …

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