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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.

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

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Ebola Has Been Spreading … So Are Email Virus

2014 Oct 15 Wed 19:20:18 | by Lawrence Chan | No comments yet

Today at the Toronto General Hospital there was this sudden alert sound went off. I thought to myself what kind of emergency that they need to catch everyone’s attention like that. Then a very serious voice came through the PA system.

I cannot remember the message exactly but it went like this:

“This is an emergency broadcast … all staff with outlook access … do not open the email with the invoice file. I repeat. Do not open the invoice file … this is an emergency …”

I could not help smiling. Definitely brighten my day.

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Major Surge In Traffic to DaytradingBias.com

2014 Oct 9 Thu 16:14:00 | by Lawrence Chan | No comments yet

I was told we’ve got significant inflow of traffic hitting DaytradingBias.com since S&P turned lower from September.

It is not just some more people. I am talking about a lot more people. Many times more people than we used to see on a daily basis several months ago.

No one care to check out our daily forecast on forex and daily forecast on stock markets before. Now these pages are viewed by thousands everyday.

Isn’t this a perfect proof that stock market is in fact driven by fear and greed?

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The other day I wrote about Google and its complicated relationship with its adwords clients and adsense partners. That was just the start of our effort to revise and streamline the website. Simply put, I have hired a team to update the website so that several goals I have in mind can be reached. One of the few things that has to be taken care of is streamlining the ad placement on the site. And I’ve learned something  very interesting about this money making frontier.

Lessons Learned About Ad Placement On The Net

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First thing I’ve learned is that we’ve been doing the ad placement on the site completely wrong. Obviously we may have a pretty good looking design but it is not friendly towards ad placement on the site. So, that part is changing behind the scene almost everyday.

Second thing I’ve learned is that there are quite a number of ad networks out there like Google Adsense. We’ve been told to sign up with many of them and place all their ads on the site to see which ones will pay us better. Hence, all the ads you see on every page now. Hopefully, within a month or two, we have some statistics on hand so that we will choose the ones that pay best and go from there.

Third thing I’ve learned is that none of the ad networks has been upfront on how they pay for the ad placements. All of them are vague on how they count the number of ads shown and if there are certain number of clicks on the ads have happened. From what I gather, this non-black and white approach seriously marginalized the publishers of content on the net. Only those with very high volume website traffic can have a more equal ground to communicate with these ad networks including Adsense.

What Is Real

The ad networks are guarding their formulas because they have to deal with something the old-time ad agencies do not need to – fraud. In old days, ad agencies can tell from the number of copies a publication has printed will be the number of ads placed there. Even though many copies may be going straight to the trash can, the number is still a piece of hard evidence. Fast forward to the internet age, there is no such thing as hard evidence. There is really no good way to tell if the ad was really shown to a human. A click may not be a real click at all. If the ad networks fail to identify the fake ones from the real ones, they suffer the consequence.

This is where the reputable high volume websites get their leverage as they are trusted by the ad networks while all the small time bloggers are treated as suspects regardless. There is no such thing as innocent until proven guilty. There is no balance of power between the ad networks and the individuals who want to make a living through blogging or whatever content they choose to create.

This is why we have not seen that many new super star bloggers like before. The feedback loop is now mostly broken. Majority of new bloggers who are not ad placement savvy will not be able to make enough money to drive them to push harder into the next level. The pay rate is so low comparing to several years ago that someone has to have 5 to 10 times the traffic to generate similar amount of money from ad placement on their blog or website.

In short, another money making frontier normalized into regular business eco system again.

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Day Traders: The Heroes In Crumbling Financial Systems

2014 Sep 30 Tue 12:41:04 | by Lawrence Chan | No comments yet

Bloomberg published a story about CIS, a successful day trader in Japan. You can follow the link at the end of the post to read his story. It reminded me of another famous Japanese day trader BNF who was made famous back in 2005. You can read about his story too following the link on him at the end of the post. They are good examples that day trading can be a great career.

Japan is the poster child of f$#ked government with corrupted politicians and failing financial system. As the country crumbles slowly, the way out is not higher education for decades now. It is becoming super stars in entertainment, sports and other infinitely scalable money making jobs like day trading which offer individuals the necessary financial freedom.

But the work done by individual day traders who successfully extract money from the corrupted financial system means a lot more. They are, in a way, the check and balance that democracy promised but failed to deliver. Day traders who beat the system fair and square are real heroes of the society in the current environment.

The success story of these two Japanese traders are not exceptions. In Asian countries, traders who make a lot of money, especially those with decades of trading expertise, know how to stay low profile. As you can see from the story of CIS and BNF, they also figured out themselves that protecting their identities is very important. The freedom you can enjoy for being anonymous is priceless.

For Western societies, the past generations of traders making it big almost always go for fame and fortune. That may not be the best way going forward for majority of traders who achieve success in trading in the future. After all, beating a rigged casino is a very cool accomplishment but the expected revenge from the casino bosses can be deadly.

 

Story on CIS:

http://www.bloomberg.com/news/2014-09-25/mystery-man-moving-japan-made-more-than-1-million-trades.html

Story on BNF:

http://www.japanprobe.com/2008/05/20/takashi-kotegawa-bnf-super-day-trader/

http://caps.fool.com/Blogs/check-out-this-japanese/129372

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As reported by many major websites including Bloomberg and ZeroHedge, the explosive information of these tapes told us one thing – the system is broken. There is no resolution to this problem. You cannot fix something that is completely broken.

This is exactly what I wrote for years – the system is corrupted and that retail investors should focus on profiting from this environment and be defensive with their assets. There is really no point to waste time or energy to discuss how bad the system is. The only way to fix it is to completely destroy it. For now, that is not an option.

This is called end game scenario. It can take many years until the system is completely broken down. Good examples of end game scenarios we’ve witnessed include USSR and Japan.

In a messed up environment like that, people who focus all their energy on their own prosperity will do way better than those who drift with no such goal.

Old style thinking of creating generic businesses with long term objectives will not work in this environment because the system as a whole is now hostile against small business creation. The 5-year failure rate for new businesses was used to be 90%. In this environment, we are looking at near 100% failure. Micro businesses with unique niche and businesses with big money backing are probably the two remaining options with chance of success.

Focus on making money from trading in this environment is probably better than many other long term ideas.

 

Resources

http://www.propublica.org/site/author/jake_bernstein

http://www.thisamericanlife.org/sites/default/files/TAL_536_transcript.pdf

http://www.bloombergview.com/articles/2014-09-26/the-secret-goldman-sachs-tapes

http://www.zerohedge.com/news/2014-09-26/how-goldman-controls-new-york-fed-475-hours-secret-goldman-sachs-tapes-explain

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Lately, the company iStockphoto we’ve chosen for photos and art works to pair with our articles, has made fundamental changes to their pricing structure.

At this point, we can no longer justify using their service for our purpose.

Worse part of this change to their pricing plan is due to their operation based on pre-deposit credit. As a customer, we often pre-deposit money to them for credits to be applied to our purchases of stockphotos in the future. They have made a sudden increase in price once last year that essentially doubled the cost of getting a license for each photo from them. It is similar to a country devaluate their currency by 50% overnight knowing that their citizens will be badly burnt. It was bad but I can understand the need to restructure.

Now iStockphoto has done it again. This time they raised the price 10 times. Overnight, our remaining credits with them are turned into ashes.

To say the least, we are not very happy with the way we are treated. Their actions are no difference from outright theft. The amount of money we’ve deposited with them is not that much. It is a small loss but it shows that iStockphoto is no longer a company that can be trusted nor partnered with.

I wonder how many VC supported dot bomb 2.0 companies are doing this to keep their businesses going.

If iStockphoto is not an exception but the norm, the tech scene is definitely not as rosy as it seems.

Note: I’ve told my web staff to take iStockphoto out of our list of tools we use to build this site.

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More Changes to the Site

2014 Sep 16 Tue 23:36:47 | by Lawrence Chan | No comments yet

I’ve decided to add two sections to the site. One for emini and one for forex.

This should make it easier for our members and visitors in navigating the site easier as many find that the current organization of premium section with categories of items not very easy to use.

The premium section will still be there. The new sections are created so that there is another way to access the articles, trading tools and daily reports based on the markets they are related to.

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I am still waiting for BMO on my cell phone here to see what is going on with one of my credit cards. It was declined earlier today but it was working fine yesterday. 2 hours 45 minutes into the call and I am still stuck in the queue.

Could this be BMO Bank of Montreal major f-up again like what happened back in May?

http://globalnews.ca/news/1316638/bmo-mastercard-customers-fume-over-service-glitch-no-explanation/

Being a cautious person, I cannot just give up on the call and assume everything is fine. It is better be safe than sorry if something bad actually happen to my credit card.

It is interesting that Canadian companies, especially the big ones, rarely (well, never is the better word) acknowledge their problems.

Could this be the reason why they are losing customers to their international competitions all the time?

Update: 3 hours plus I was finally connected to BMO’s customer rep. Yep, their computer system has f-up again. I was told to “try” using the card later in the day to see if service is restored. The customer rep is helpful and tell me right the way the problem is at their end. Good customer service right there. It is the management that should seriously think about better communication and fixing their damn system!

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Next Project: Emini Specific Trading Tips and Tricks

2014 Sep 4 Thu 12:53:14 | by Lawrence Chan | 2 comments so far

I have a long list of questions and requests that are specifically about Emini day trading. Many of them are very much recurring questions like “I am interested in day trading. What is this Emini you are talking about? Please tell me more about it.” It is quite difficult to keep up with all the questions so I promised to write about them.

So far I have written a few articles on the subject covering the general questions people have in mind:

Is day trading Emini better than day trading stocks?

How much money is needed to day trading Emini?

Is day trading income sufficient for someone with not much capital?

How do I get started day trading Emini?

All these questions have answers on the net already. I guess my readers just like to get the answers from me to reassure them that what they have gathered elsewhere is true. I am very flattered that my readers have put so much trust in my opinions. It feels heavy too because putting out the answers to these questions means they will be depended upon for the beginners in making their decisions in giving day trading a try.

I did my best to provide the most thorough answers I can come up with. It is definitely better than answering these questions individually which often ended without the more in-depth discussion of these subjects.

Since I have now answered the general questions about Emini trading, it is time to deal with the specific technical questions raised all the time. These articles are actually easier to write because I have answered many of them in real-time commentaries. All I have to do is gather the information and expand the answers.

I am sure these tips and tricks on emini trading will be very useful for many traders.

If you want to remind me to write about certain things on Emini, comment here or email me.

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Daily Cheatsheets for Crude Oil and Other Markets

2014 Aug 29 Fri 14:45:13 | by Lawrence Chan | 6 comments so far

To answer the requests for daily cheatsheets on crude oil and other markets, I need more input from those who are interested in them.

The main issue with crude is that the front month / most active contract do not always stay the same from year to year. It is the very natural of commodities that have strong seasonal effects. It is very often that people are trading both contracts at the same time (i.e. spreads). That means I need some time to think of a way to produce a version of the daily cheatsheet to handle the commodity markets properly.

There should also be specific tools made for these markets too because there are unique trading opportunities related to them that are not available in the index markets.

Input on this idea will help me sort out what is more important and what is not.

Thanks!

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