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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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Trading Signal Service

2015 Jul 3 Fri 21:42:12 | by Lawrence

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 considering offering the signals through one or more third party services that will allow you to directly trade these systems automatically.

Which of these services are good in terms of speed, reliability and convenience?

Anyone who have experience using these services please drop me a line.

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Not Everyone Trades the Same Way

2015 Jun 26 Fri 14:03:33 | by Lawrence

Concept of strong competitorI 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 from you on various aspects in your life. Most of the time, difficulties in trading is a combination of many factors affecting your ability to make better judgments. Hence, knowing you better gives me the chance to identify what areas in your life are affecting your trading.

Sometimes your perception on your trading problems may not be the complete picture. By communicating openly with me and discussing your concerns, usually better insights into the problems will emerge. In a way, questions I raised about you is a doorway to make you think more clearly about yourself.

Most important of all, I have worked with many traders. The extensive experience alone allows me to be able to see if your problems have happened to other traders. By identifying the issues, I can tell you how to overcome them.

I Need To Know Your Past Trading Patterns

I ask for detail trading records from you if possible. If not, I would like to take a look at the daily trading account balance.  From the data you have given me, I will organize the information and see if certain patterns exist in your trading. For example, you could be better at trading certain kind of market environment. In that case, learning to avoid the ones you do not perform would be the single best thing to do to improve your performance.

Sometimes it is not that easy because your past trading records may tell me you have no strategy at all with your trading. In that case, I need to figure out what kind of strategy fits you best and teach you one to build on. Not everyone trades the same way hence I do not stuff the same trading methodology to everyone.

Some people are reactionary to the markets. They tend to have less patience but faster reactions to quick moving market environments. If you are like that, your preferred trading style will have to focus on trading the follow through moves and low risk counter-trend plays.

Some other people are strategist. They cannot pull the trigger unless they can see the bigger picture clearly. They need reasons before they can commit to a trade. If you are like this, your day trading game plan is better to be based on strategic price levels and known targets.

I Need Your Commitment

If you are not ready to take the bold step in making drastic changes, I really cannot help you much. I can tell you all I learned about you and what has to be done to turn things around, but you have to commit to yourself that you will make the necessary changes.

A common problem I have seen are traders who suffered significant drawdown for several months because of using average down all the time to stay profitable. When the market volatility surged, these traders were literally hit by the freight train. My advice to these traders is to start over without using the average down method they have relied on for years. I often help them building new trading plans based on what they are good at in the first place with trading.

Some traders would find it difficult to deal with the change of the game plan because they refused to go trading in simulation first to retrain themselves. As many of you know from my writings, it takes training to allow our minds to accept a new trading style. If you use real money to trade a new method immediately, your trained responses from your old trading style will always take over. Usually, after suffering from further losses, my voice of reasoning will finally get to these traders.

Practice and Evaluation

For beginner traders, they need guidance not because they know they have certain problems with trading. Instead, it is the searching for a method that fits them making it very difficult as they do not have anyone to talk to. My advice for the beginners is to read and learn as much as you can. There are good trading books you can learn from which I have listed in my website. I have written many articles myself on trading techniques and various aspects of trading. You can absorb the knowledge first and then get a simulation account to practice trading. Through casual engagement with trading, you will pick up the basic skills quickly. The practice you have done on simulation can provide you valuable information about yourself.

Working with beginners, I find that it is more an assignment and evaluation approach that can produce results quickly. Lots of reading assignment with questions from me to help you understand the materials better. Dialog on specific trading related concepts and techniques enable you to think deeper into these subjects. Through the correspondence, you will get to your goal faster as my job is to guide you directly towards the goal by avoiding the unnecessary detours like learning the wrong approach to the market that does not fit your personality.

For some very young traders, they often have the unrealistic expectations that they can learn to trade very quickly. Yes, I have seen naturally talented traders who can just do their thing and making money within a month or two after they learned all the basics. If you ask them how they do it, they cannot give you an answer. The key factor making them able to do what they do is their minds are wired differently. For those not having this advantage, it takes time to develop the mental strength in this area. Usually it takes 3 to 5 years to become a proficient Emini trader. Coaching can help accelerate the process if you are willing to learn.

End Notes

Trading is such a diverse business that there are rooms for anyone who want it bad enough to establish a successful trading career. The main obstacle to trading success is not a secret trading method or some incredible trading edge you discover. It is you being able to figure out who you are, what you are good at and how to best utilize yourself in trading that can lead you to trading success.

My goal in coaching traders is to help them to breakthrough their personal limitations so that they can build on what they have learned and continue to grow from there. As I explained before, I am doing this for a short period of time and likely move on to pursuit other things. I am passionate about this coaching service but I also know myself well enough that I cannot do this continuously. When I have another big project idea on what I like to do next, I will let you all know.

 

 

Resources

Trading Books I Recommend

How to Shortcut the Emini Trading Learning Curve by 3 Years or More

Coaching / Mentoring Service for Retail Traders

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Once a Trader Always a Trader

2015 Jun 19 Fri 9:10:25 | by Lawrence

iStock_000021577716XSmallI met one of my mentors this week at his lawyer’s office. He’s getting old and wanted to make sure things are taken care of smoothly should he pass away. He asked me to be his executor of his will and other related legal matters. I accepted the responsibility with honour as he is putting his trust on me to take care of the well beings of his wife and daughters whom I know since I was fresh out of university. We went through the paperwork and then left the office for a drink at a nearby restaurant. I am going to share a story about my mentor.

The Thought of Preparing For the Inevitable

My mentor is old. He will be 81 years old soon. He is fit and active. Most people will think that he is just at his 60s. He, like many others coming from a different era, hates to take about setting up trust, preparing the will and the ultimate unlucky word, death.

Yet, he saw the mess his trading partner left behind when his untimely death caused both his family and business partners lots of troubles. Then he got the news from me about my significant other passed away last year. He finally made up his mind to put a will in place to handle things in orderly fashion should anything happen.

That’s how I come into the picture. My mentor called me and asked for a big favour. He could not believe I accepted the responsible immediately, no questions asked. After what I went through, I understand the concern he has and feel for him. Most important of all, how can I refuse the very person who shaped me into a good trader?

Trading Accounts Turn Out To Be A Very Sticky Issue

Trading accounts with margin is a very sensitive thing in a will. The problem is that the person who will inherit your assets are not supposed to inherit your liabilities. But a margin trading account, which include all futures trading accounts, with open positions can be facing risk that is over the total value of the account itself.

Hence a brokerage often insists to close out all the open positions when it is notified that the account holder has passed away. The brokerage needs to protect itself from the possibilities that the person who will take over the account cannot sue them for money that may not be there as the open positions may turn into losses more than the account balance can cover.

I learned about this when I setup my will many years ago. There are several solutions.

First, you can setup your trading account under a corporation, meaning that you need to create a corporation in the first place. This will give your heir the flexibility to hold onto trading positions that are using margin because your heir is taking over the corporation, not a trading account. The account stays the way it is.

Second, you can setup the trading account to be joint account. It can be complicated to do so because of taxation issues including your trading profits being treated as a split between you and your heir. Hence it is important to consult an accountant who understand the implications.

Third, you can assign someone with trading decision power to the account. This arrangement depends heavily on the country you reside in. There can be many complicated issues associated with the arrangement. If your brokerage allows that, it makes the transition much easier.

My Mentor Still Trades And He Rocks

My mentor retired from trading commodities professionally many years ago. Since then he has been playing with the stock market to keep himself busy. His favour play is to “short the sh*t” out of the highflying story stocks. This strategy works very well even though we have the Nasdaq Composite making new all time high yesterday.

Take his latest favourite, Twitter, as an example. He has been having fun riding it down 3 times over the past few years. Simple technical is enough to engage the stock with great risk reward control. He told me trading like this feels like taking money from the kids. Well, I am very sure most of the stock holders of Twitter are much younger than he is.

He has no plan to stop trading.

“Stop? No way!” is his reply when I asked if he is going to take it easy.

Now that he knows I will take care of the account for him if anything happens, he has the peace of mind to continue trading the way he likes it.

Once a trader, always a trader.

Longevity of a Trading Career

My mentor is a great example how a professional trader can keep on trading by switching to different markets to fit his lifestyle.

The key to long term success in a trading career often lies in the fact that the trader has a pretty flexible mindset and willingness to adapt to a different environment with fresh new perspectives.

Take my mentor as an example. When he first switch to trade stock he did not know what he wanted to do. He tested out various ideas with very small size until he found out what he is most comfortable with. The theme he chose to trade enables him to have the necessary conviction and focus. It serves him well for sure over the past 15 years.

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Why The Need To Run A Donation Drive

2015 Jun 12 Fri 9:02:05 | by Lawrence

iStock_000011883865XSmallI received quite a number of messages from various sources questioning the need to raise funds for daytradingbias.com. Some people even questioned my ability as a trader. It is amusing to see how people react to a simple donation drive. So here it is, my longer than usual talk about DaytradingBias.com.

Operates Like A Community Service

Members who joined since the beginning, like 6 years ago, know that the site was free. It was free for a long time.

As the site grows, members asked for trading tools like daily reports to assist them. I had to contract programmers to make that happen and hire people to maintain the servers. That was the start of premium membership. I keep the monthly fees at an extremely low price point at the time. My plan was to recover the cost slowly.

Those who became premium members since the beginning are still enjoying their low monthly fees. They support the development of the site, I am very grateful to them all. Let them keeping their monthly subscription at the original rate is my way to show my appreciation of their trust in me.

In short, it never was, and it never is my intention to make money from Daytradingbias.com. I have been happily supporting the site, organize and publish my years of research and of course, helping out member traders. If the goal is profit seeking, it would be operated in a very different way and premium membership will not be priced like the way it is now.

Financed Mainly By Trading Profit

Since DaytradingBias.com has so much work to be done in offering its trading tools and services to its premium members, yet I do not operate it with a for profit objective, so how do I finance the project?

Well, I am a professional trader for 25 years now. I also have consulting /advisor work done for hedge funds and financial institutions. The markets are treating me well so I can afford to finance a project like DaytradingBias.com and run it the way I like it.

The advantage of such approach is that the growth of the site will be more natural and has a stronger foundation. It makes the site less commercial and more community driven.

The disadvantages are lack of focus, slower roll out of new trading tools and reduced chance to breaking even. Since actual work has to be done to make things happen, the improvements to the site is limited by the resources I have access to.

An Expensive Personal Mission

I am willing to put in the money and effort to make DaytradingBias.com useful to beginner and struggling traders. Doing it at a small scale level is fine as I do not mind parting with a hundred grand a year from my trading profit to support the site. But now as the goals become bigger and the projects to be completed becoming more expensive, it becomes a real business decision issue.

I am a trader pretty much all my life and I watch my bottom line seriously. As a very discipline person, I have to draw a line on how much money to be committed to the site. After all, there are proper ways to finance and operate an operation like DaytradingBias.com.

After taking advices from other people who operate non-profit organizations, I have learned to produce a business plan for the site. I will have to watch its bottom line carefully. Projects have to be done on a priority basis so that I do not spend more than the amount I am committing to support the operation. The ultimate goal is to ensure DaytradingBias.com will grow properly into a force on its own.

For now, DaytradingBias.com is my personal statement. It is a personal mission with no monetary rewards. My reward is the gratification coming from emails and messages sent to me by traders who benefited from my work.

In a way, you can think of DaytradingBias.com operates like Wikipedia. When more and more people are using it, yet not many people are paying for it, Wikipedia has to seek for sponsorship and donation from the users. DaytradingBias.com is facing a similar issue now.

The Grand Vision

Eventually I hope that other well established traders are willing to share their expertise in trading at Daytradingbias.com. I am not talking about famous hedge fund managers or legendary traders. I am talking about traders who successfully profit from the financial markets consistently yet staying extremely low profile. It is these individuals that I like to gain contact with and have their practical trading approaches introduced to more retail traders.

To allow my vision to happen, I have to act by example to encourage others to come out and contribute to the site. I am showing by example that sharing my trading techniques and research results has not affected my trading performance. It actually improved my trading abilities because the reflection process allows me to improve clarity in my own trading methodology.

I see myself to play a smaller role in the future as Daytradingbias.com grow into something bigger and more diverse in terms of the markets it supports and the number of good traders joining me to make it better.

Support Us

There are several ways to support us.

Direct donation is one way if you find what we have done has helped you in improving your trading or giving you great trading ideas. Use the button below to support our fund raising effort.

 

Support us by becoming our premium member shows us your token of appreciation and you know that we are working towards better trading tools and services for you all the time. Join us!

If you do not need our services for now but you see our sincere effort can really make a difference, please spread the words for us. Your effort in getting more people to know what we are doing here will help us build a great trading community.

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Educational Videos on Day Trading

2015 Jun 5 Fri 10:59:50 | by Lawrence

Spent my spare time learning and testing various screen capturing software for weeks now. As I explained back in February, I was clueless on what it takes to produce videos. After working on it here and there a few hours a week, I am slowly getting better with the tools and the production process. I am now comfortable with making videos.

The big question now is what kind of videos I should produce for daytradingbias.com?

I have seen many trading related videos. Not that many, however, I find useful. I’ll rather do something meaningful than making boring comments. I guess it all boils down to quality vs. quantity.

So what do you think?

What kind of video you like to see?

Drop me a line to help me decide.

4 comments


2015 May 29
Launching GoFundMe Campaign for DaytradingBias.com

I was talking to a friend the other day. He has made an interesting point that I find very amusing. He thinks that in the pursuit of a trading career, there are two main groups of people. One that will stick with free resources and the other will see …

3 comments


2015 May 22
Memorial Weekend on Productivity

I was quite productive over the past two weeks – I implemented the DIY Financial News Feed and completed my draft version of Art of Chart Reading. This was made possible when I no longer have to split my time over too many things within the day. If …

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2015 May 15
Finally One Book Completed In Years

Art of Chart Reading is finally completed this week after six long years. The original idea was just a quick reference for site members on the basic chart patterns that works very well across many markets. A simple project turned into a mission when …

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2015 May 8
To Complete the Art of Chart Reading Project

I promised myself I would complete the book Art of Chart Reading last year. That did not happen. Upon reviewing the materials I have prepared, I actually can complete it soon if I focus on the project more. I guess it is time to stop procrastinating …

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2015 May 6
Changes To Ask a Trading Question

I was pretty much overwhelmed by the amount of time I spent on working on various projects. To solve this problem, I have reviewed my work schedule in details and consulted a few friends about scheduling work that involves attention to many things. I …

2 comments


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