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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Volatility Is Back and Question About Home Run
2015 Aug 21 Fri 13:58:35 | by
As I explained weeks ago, volatility would be back. And here we are, the volatility index (VIX) has printed a new high for the year today. People were laughing back then questioning my sanity. It does not prove me right and that they are wrong. Instead, it simply shows human ignorance is everywhere.
As a principle, anything that has a cycle will go through expansion and compression phases. The longer the compression, the longer the expansion that follows. Since we have experienced one of the longest compression phases in recent history, the expansion phase is likely to be spectacular in terms of range expansion and intraday volatilities.
Many people associate volatility in the stock market with market crashes. That can happen, of course. But volatility is not a one-way street. A trader may be correct with a longer term directional opinion but such opinion is not good for the bottom line if not outright deadly.
In high volatility environment, the extreme swings we get on intraday basis will test the resolve for even the best traders around. Prudent risk management is key to survival in such chaotic environment. For those less experienced traders, reducing trading size and staying on the sideline are good alternatives to brave this trading environment because of the real threat of being wiped out.
Trading Goal For The Year
As of yesterday, thanks to the higher volatility, I have reached my trading goal for the year. This year is a new record for me in reaching my year end target so early. It is something to celebrate indeed. I will take it easy on my regular trading and focus more on other tasks on hand until the end of this year.
Frankly, I am not the aggressive type in terms of trading with leverage. Otherwise I would be trading at several times the leverage I am using. That being said, I prefer consistency and stability in performance. Getting my year end goal and stop / reduce trading is another control I put on myself.
Time spent researching and studying the markets are as important as spending time to trade. Since the stock markets are evolving all the time, we have to upgrade ourselves consistently too so that we are aware of the changes in the trading environment. As I said often, traders ultimate edge is themselves.
For traders, investing in themselves to gain more knowledge about the markets they trade will be reflected in the performance gradually. Those who fall behind in terms of keeping up with the current market conditions will suffer more setbacks and instability with their trading results.
About Home Run Targets
I received a question about my real-time commentary:
I am sure I am not alone among subscribers to DaytradingBias who marvel at LC’s home run targets. IMO, these are the most valuable biases in the commentaries.
Today’s ES target of R1, reached in the 3:00 PM hour is typical of what I mean.
LC, can you give a primer, by the numbers, on how you arrive at these probables?
In short, I have 3 separate and independent methods to measure potential important price levels. First, it is the price clusters based on STOPD which is already implemented in the real-time price level tool. Second, is a swing pattern driven price targeting tool that dynamically update on my charts. Third, I have real-time statistical bias information generated giving me which price levels are likely to be tagged within the day as the day develops.
When at least 2 of these price level methods coincide at the same price zone, I know immediately there is a high probability that the particular target is of great interest to the dominating players.
As I explained in STOPD, it is not the entry that matters. It is knowing where you exit that makes you a winner.
Opinions Are Bad For Your Trading
2015 Aug 14 Fri 13:50:51 | by
The Lack of Good 2-in-1 Laptops for Trading, Research and Note-Taking
2015 Aug 7 Fri 11:41:39 | by
New Book, New Home and a New Life
2015 Jul 30 Thu 17:58:18 | by
The Art of Chart Reading book is still in the capable hands of my editor, Amy. Her inputs has led to many changes to the charts and overall organization. All of these changes are aiming at making the book more readable and easier to understand some of the more abstract concepts. The editing is probably half way through but there are also issues like cover design and other logistic things to take care of. I will not be surprised if the book can be released by the end of August. Since it is out of my control, don’t take my word for it.
You can read the online version of Art of Chart Reading on my site.
I’ve found a new place to move to. I decided to do it the week before. I booked appointments with 20 places to check them out within 2 days this week. I then decided the first, second and third choices quickly. Offers submitted – not my first or second choice was accepted but it is now done.
Pretty efficient, eh?
I am taking advantage of the Canadian long weekend (August 3rd Civil Holiday) to get all the things related to my moving organized so that it will not take up much of my time going forward. I will likely not be available next Monday if the struggle with the people who handle my renovation matters stretching all weekend. I will keep you all posted on the situation by Sunday night.
I see more scaling back in my trading size this year as volatility is going to pick up significantly into September and October seasonally. My modest trading goal for the year is mostly completed hence it is not time for me to go aggressive at this point. It is especially important because I have so many things I am trying to do at the same time, my mind may not be as focus as I like it to be. As we all know, day trading takes our full attention to reduce mistakes. Unforced errors are costly to the bottom line.
I have not decided yet what I will be doing in year 2016. One thing I know for sure is that I will travel more in a year or two, my friend Michal from Czech has moved to Monaco for years. The nice pictures he took give me incentives to visit him soon. Personally, I prefer cooler weather than the very hot ones though.
New Approach To Publish Trading Systems
2015 Jul 24 Fri 8:37:50 | by
Many members have been asking for more details with the trading systems that are published on the site. The requirements varies but all centre around the idea that more analysis should be provided so that they can make better decisions on whether to incorporate the concepts into their own trading. I have time to think over this during my 2 days new home hunting and I think I find a way to satisfy this need.
Instead of changing the current format of the trading systems to be published on the site, I will produce specialized reports on the existing and upcoming systems with the historical trades taken, detailed analysis like parameter sensitivity and drawdown behaviour, etc. It is similar to some of my work done for my institutional clients. These reports will be made available in the store so anyone can purchase them.
This solution will also take care of a long term issue with basic members that they are interested in specific trading systems I published but then they are not ready to commit to premium membership yet. The specialized reports will make it worthwhile for the basic members to purchase them knowing that they are getting more than just the premium articles.
Deep discount will be offered to premium members while regular members will get a discount too to encourage more people sign up with our website.
Post your comments here or send me emails to help me refine the idea further.
Over the past few months, family and friends have been very nice and insisted to get me our of my pad to enjoy some sunlight instead of working days and nights. I understand why they are doing that and I greatly appreciate their kindness. Some even g …
I just started mentoring a few small business owners on pro bono basis who have been growing their businesses steadily but stuck without growth in last couple of years. Piling on top, they have endless amount of work that they have to handle themselv …
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 consi …
I 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 …
I 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 r …
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