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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Packing the Trading Office into One Laptop
2015 Oct 30 Fri 13:11:52 | by
I posted back in early August about the difficulties I have to deal with in finding the perfect laptop for my need. I have now found a laptop that can fulfill most of the requirements with some issues still not resolved. Hence my hunt for the perfect laptop continues. Here is what I found that works for me.
Lenovo Flex 3 with UHD
The laptop I bought is a Lenovo Flex 3. It is a 2-in-1 laptop meaning that it can turn into a tablet by flipping the screen all the way to the back of the keyboard. The version I got features a 14 inch touch screen with very impressive high density display offering 3200×1800 resolution. The computer manufacturers call this ultra high definition (UHD). This allows me to display all the charts, quotes, browser windows and order placement applications that I used to display on 2 monitors with my desktop computer.
Notice that this laptop is not a top of the line model. In fact, it is a relatively cheap model. I get this laptop mainly for the screen resolution it offers. The CPU is an i7 so it is more than enough for trading purposes.
The Mess of Dynamic Scaling by Windows 8
Setting up the laptop for trading took more than a week as I have to install many programs. After installation, I have encountered a weird problem for which the charts displayed by NinjaTrader, Multicharts, etc. are all messed up. I figured out a solution to disable the Windows 8 dynamic scaling and have it posted last week. Overall I am impressed with the performance of the laptop although the battery life should be longer.
What does not work out is the use of stylus (i.e. pen for writing on the screen) to take notes on the Flex 3. It seems to me the touch screen Flex 3 has is not built for notes taking at all. I tried a few touch screen stylus but none of them offers a satisfactory experience when working with Microsoft OneNote. It is quite disappointing since the Flex 3 can do a pretty good job in everything else so far. May be I will find a pen that works in the near future. If so I will update this post.
Microsoft Office and Windows 10
One important thing about buying a new laptop these days is the consideration of using Microsoft Office. If you plan to install the prior versions of Office onto your laptop like I do, do not opt for Windows 10 and do not upgrade to Windows 10. Windows 10 has built in detection to refuse to launch the older versions of Microsoft Office.
This move by Microsoft is to force people to “upgrade” to their latest subscription based Office. I am a very old fashion computer user who prefer the ability to open and edit my files any time, including 10 years later should I choose to, even though by then I may no longer use Office at all.
It is getting near the point that I would say with just one laptop, I can carry my trading operation everywhere. That is what I intended to do in the future. For now, more field testing is needed to fine tune the idea.
My time is still split between unpacking boxes and catching up with my projects for the website. Organizing things from the boxes is a boring and time consuming task but has to be done. I am limiting myself to a box or two every week now since the projects and writings for the website has to take priority. With this in mind, I am hopeful that sometime after New Year my place will be nice and comfy.
Surprise Savings From Rogers Cable Internet
2015 Oct 23 Fri 14:56:00 | by
I used to subscribe to Rogers with their most expensive cable internet plan. It used to cost near $200 Canadian a month. Even with that subscription plan, I still have upper bound to my bandwidth usage. It is so pathetic that from time to time I would exceed the limit and had to pay extra.
My internet access is mainly for my trading need for which I have to download tons of tick data every night for thousands of stocks and commodities. The amount of data I am getting depends on the market environment. It is something out of my control.
Since I have to setup various internet based access in my new home before actually moving in, I chose to start a new subscription of cable internet with Rogers in parallel to my original one that was still in use at my old place. It turns out, their new streamlined plans have changed significantly. Due to market pressure, the most expensive plan offered by Rogers now is just $100 Canadian a month. On top of that, this new plan has unlimited bandwidth.
Bye bye extra charges and hidden fees.
If I have chosen to move my service from my old place to the new one, my subscription plan would stay the same. And I would have make a big mistake. A $100 saving a month is very significant.
I encourage fellow Canadians to review their existing cable internet subscriptions with Rogers to see if they can take advantage of their new subscription plans.
Money Is Just Money, They Are Not Evil
2015 Oct 16 Fri 13:46:20 | by
Interesting conversation with some friends earlier this week who somehow have this perception that some money is evil. In particular, money made from investing, trading and even making a loan to others for interest is bad money. Very glad to hear the different point of view from them. It may be a surprise to many that why I have friends who think that way since I am kind of working in the financial industry. Well, many of friends are academics including these ones. Welcome to my world of academia mixed with financial industry professionals.
Odd Reasons Why Some Money Is Evil
My friends argue that money made from trading and extending all the way to the profits made in the banking industry as a whole is evil. The point of view is that since money made from these means are easy and does not contribute to the society, people involved in making money this way are doing more harm to the society than what they contribute. It is a very strong accusation against many people. It is also very judgmental without thinking deeply.
People who invest their money in businesses and those who actively trade all kinds of financial instruments have the same goal – to make a profit. The reality is that profiting from trading or investing in businesses is very hard. It takes a lot of skills and expertise to be able to make money through financial speculations. If it were that easy, everyone would be doing it, isn’t it?
Modern society is built on specialization of its workforce. Everyone contribute to the society by paying their share of the taxes. As long as the person is following the rules of the game set by the society to earn a living, no one has the right to judge how this person lives.
If success in trading is branded as evil, the same can be called out on the amount of money made by basketball stars or famous criminal lawyers.
If people working in the financial industry is branded as not contributing to the society, novelists and actors are some careers that have attracted similar judgmental comments.
Judgment Against Money and Success
The conversation brought back memories about some of the firm traders I worked with. They often struggle yet stay profitable most of the time. They are not star performers as they could not take their games to the next level. One of the reasons why they cannot achieve better performance is that they have these ideas like the money made by the famous traders are obscene and their peers in the firm who are consistently profitable are just lucky.
As oppose to focus on the reasons why someone else is doing better with their trading and pay the respect that these people deserve, these non-performing traders have very strong judgmental feelings against the more successful traders. They also have this mental picture of making a lot of money is the equivalent of being obnoxious. Combining the two judgmental thoughts, they have already hardwired their brains to not perform in trading.
You cannot hate or feel disgust of what you want to become. Your mind will simply do all kinds of funny (and not so funny) things to sabotage your conscious efforts.
Some people can teach themselves to slowly thinking otherwise once they are told that their judgmental perspective is wrong. Others, however, need training to drop their prejudice against other people in general before they can learn to separate the emotions they have associated with the more successful traders. In short, one can learn to admire and respect the trading skill of a great trader and separate the disapproval of their lifestyles or behaviours outside of trading.
To be successful in trading, you have to want to become successful in the first place. And to do that, you cannot hold the view that money is somehow evil. You must also learn to admire those who make it as successful traders because only then will you be able to pay enough attention to learn the secrets of their success.
Catch Up, Orderly Mess and Alternative Investments
2015 Oct 9 Fri 13:03:14 | by
First, failing to clean up inbox for more than a week means many hours of work. Just identifying and deleting the spams already took hours. I did not know I depend on email so much these days. All utility bills, credit card statements, etc. are now all electronic.
As somebody who always think of the disaster scenario, this question pops up in my mind. What if the internet is disrupted permanently? What will happen to all those people, including me, who depend on the net so heavily for everyday tasks?
Second, I have quite a number of articles that were half done before September. I have trouble picking up from where I left off hence the delay of publishing new ones. I am sure the writer’s block is temporary. For my readers, there is nothing to worry about for now.
Third, the ongoing project of upgrading the real-time trading assistants has been progressing very well without my interference. Obviously my consistent requests to twist things here and there were very counter productive for my programmer. I must say it is a very good lesson for me.
My place is still in an orderly mess. I mean, I managed to organize some of the stuff in the right place and sorted the rest of the boxes but I am nowhere near completing the task. Just looking at the 20 boxes of books with one glance I already procrastinate. Damn those books are heavy!
This coming week I have several business meetings (or virtual meetings) to attend to. The talk of alternative investments has generated quite a lot of interest. Some business associates from my past are asking if I could structure the fixed income approach of backing proprietary trading into something formal so that it can be run as a fund. It is easy for me to do it myself for friends and family (well, am still doing it) but structuring this into a business will have quite a number of hurdles to overcome.
This alternative approach to investing can be big going into the future as banks and central banks are no longer providing the necessary guarantee on fund safety with their bonds and short term notes. Thus a void is left behind and there could be a huge market to monetize this idea. Will keep you all informed on this interesting development.
Fellow Canadians, Happy Thanksgiving!
Global Top in Real Estate Markets
2015 Oct 2 Fri 11:18:34 | by
Many people who invest in real estates including majority of the people in the industry think that they can see the trend. In other words, they think they know where the price for certain region of properties will go in coming 6 to 9 months. In reality, research shows such belief is not true at all. At best, investors in real estates are just lemmings surviving in the macro trend of the global economy.
I am talking about this because a conversation happened among several friends who are thinking of buying houses. The reason for doing so is very interesting – they will not be able to afford it if the realty market continue to rise at the current rate. Interestingly, they are all thinking about the same thing with the same twisted logic in their minds.
For seasoned traders, they would be thinking about the same thing like me – isn’t this exactly how emotional traders rushing in to buy the top and sell the bottom? Their minds are thinking of the potential that they may not be able to participate in the move if they do not act immediately. What they failed to pay attention to is the fact that the trend may not last.
The real estate market I am talking about is Toronto, Canada. The conversation is interesting enough that it drove me to make several calls and send a bunch of emails to see if similar thing is happening in other major cities. Well, it turns out to be true in quite a number of major cities all over the world. In fact, it has been the driving force on higher end real estates for quite some time already.
In general, bull run in realty markets do not last for more than 7 to 10 years. Not every bull run in real estate ends in a crash like what happened to Canada back in year 1989 or what happened globally back in year 2000. There are times for which realty markets can simply go sideway to absorb the excess due to low demand. The problem, however, is that for realty markets to stay strong, we need an expanding global economy. Right now, the risk of global economic slow down is too high to be optimistic about the future.
To make the situation worse, governments will not be able to collect enough tax from corporate profits and personal income as both will suffer significant setback during bad times. The only thing the governments around the world can turn to is to tax those people who are trapped. What is better than realty tax and related special fees on the real estate within a country? As no one can move the property somewhere else, there is no way to avoid paying up the taxes. Tax hikes will put price pressure on the realty market as investors will look for alternatives instead.
Robert Shiller warned for months that unlike the year 1929, everything is overvalued since the beginning of this year. Everything means government bonds, real estate and lately the stock markets are all in overvalue territory. Since Dr. Shiller is usually early with his warning like what he did in pointing out the dot com era was a bubble, it means that we are stepping into the real dangerous time period for which if global economic down turn starts, all these asset classes will suffer.
As a day trader, I couldn’t care less about the real estate markets. Using data provided by various real estate associations here, I would say that the realty market of Toronto dropping only 30% across the board should be considered lucky over a 7 to 15 years slump. Since I am no expert in realty markets, I am making this projection purely based on STOPD. Let’s see if my theory can perform on realty markets like what it does on financial markets.
While dealing with my chaotic quest of relocation, I got the chance to talk to several ex-clients turning into personal friends from my hedge fund days. It is interesting that many of these seasoned investors are quite worrisome about the future outl …
Finally, the pre-arranged day to move has arrived this week and the movers were on-time. Everything went smoothly as long as I do not care about the hiccups in-between. 70 some boxes were unloaded into my new place with furnitures and other stuff. I …
My brother-in-law came by yesterday helping me to clean out the kitchen. A task I thought supposed to be a simple exercise to throw the unnecessary things away turned into an all day fun. Little did I know that over the years we have acquired so many …
Three days into the month, I think I threw away at least some 20 lateral boxes of items. Unpacking boxes that moved with me from one place to another over the past 20 years yet never opened feels like opening time capsules. What a way to start the mo …
Disruption to Regular Schedule This coming month I have to move to my new place. I need to schedule movers, pack things and throw away a lot of things. I thought it would be easy to do but it turns out there are hiccups that I did not anticipate. I …
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