At about 1am last night my account was live! I got it ready for the open at 5.30am. I tried sleeping at about 2.30am but got about 1 hour...
At 5.30am I was ready, I soon realized the software wasn't updating the 3 year Australian Bond so I had to keep moving the ladder continuously which seemed to update it without fail, but I have someone looking into it for me already. I saw a large formation of inverse H&S on the 10 year chart last night and decided it's worth sitting back and watching rather than instantly putting a trade on on the open. As the spread was low on the week, I had a good reason to buy the open, but I watched the momentum build and a big move is 5 ticks on this spread, it moved 4 and then I got in, it went another and came back a little and I took less than a tick profit. I worked the spread buying it lower and lower throughout at the day, in total it moved just over 6 ticks. 5 ticks is enough to stop me out for a huge loss as I will continue to buy more when it goes against me most of the time and today was the biggest move in over 3 weeks. But I had managed to buy it throughout the day and still profit, but not only that my account has grown by ~2%! wooooo, a great start! Now the spread seems to be going all the way back to where it opened, but I won't be selling it this low because of software problems plus lack of sleep plus Friday afternoons aren't a great time to spread trade means I am calling it a day.
It's great to see everything I researched and calculated coming together and the markets moving in a way I had hoped. I admit the markets are quite boring compared to German Bonds but still a lot of fun. But this spread is not really such a spread, so I won't pile into it with more size blindly because it's weighted towards the 10 year, but look for good times to enter the 10 year relative to the spread, i.e relative to my hedge and use a mixture of the two, so it's just trading the 10 year with a small hedge. The hedge allows me to keep from having to get out my position too often and gives me the chance to scalp the 10 year and also work the bid and offer on my hedge (the 3 year). Today I was often able to leg the 3 year both sides and scratch it whilst taking profit on the 10 year. I never intended to basically trade outright but the daily range on the 10 year is pretty small compared to what I am used too and using the hedge allows me to work bids and offers and reduce my exposure to sudden moves in the markets. It seems pretty solid, let's see though :) I pretty much read the 10 year correctly all day, and will have to see how much of that was luck, but I felt it was much more readable than the bund or bobl! it seemed far less spoofed and manipulated which shouldn't be a shock to be honest.
Friday 27 January 2012
Wednesday 25 January 2012
Some thoughts about the "spread" before trading
Right now I am waiting for my account to be funded, so in the mean time I have been looking at the charts and thinking about which ratios to use.
Typically the 3 year moves a little more than the 10 year, but the tick value is ~$28 a tick on the 3 year and ~$80 a on the 10 year. Which means I need to trade more 3 year contracts to hedge myself well, but the 3 year moves more and the tick values are different so it's tough to know the best ratio to use. If I used a ridiculous amount of contracts to get the best ratio, my costs as a scalper will be too big to make it a viable to scalp intra-day so I have a choice of 1:1 2:1 and 3:1. So, 3:1 (or three 3 year contracts vs one 10 year contract) is pretty expensive to trade, 8 contracts are traded to get in and out and in fact it gives slightly more weighting towards the 3 year which moves more than the 10 year anyway, and so straight away I ruled it out. Plus the 3 and 10 year on a daily chart pretty much stay together, so there are very few opportunities with such a good hedge to get in and out as a scalper. Therefore I plan to trade a 2:1 and a 1:1 ratio, which in terms of tick value, weights the 3 year with a tick value of 70% and 35% the size of the tick value in the 10 year.
1:1 weights the 3 year with a tick value of 35% the size of the 10 years tick value and is therefore very dependent on the 10 year bond. The spread looks similar to the 10 year bond just with a tighter range. It still holds in pretty well and with the tight range on the individual products it creates more opportunities. Trading with a 2:1 ratio and the spread is pretty decent! unfortunately sometimes the intra-day range is incredibly tight, slightly larger than the spread between the bid and the ask of the spread.
I will try and trade the tighter spread at first, and will probably adopt the strategy of if the spread isn't moving much early on in the day trade the looser one. I will see how easy it is to work bids and offers, but nonetheless it will give me a way to scalp the 10 year and hopefully one day I can just scalp it outright.
Below are the two spreads over the last 2 and a bit days (the difference between the horizontal lines is 1 tick, the spread between the bid and the ask on the two spreads is ~0.85 ticks and 1.2 ticks). Although a good last 2 days (from the perspective of the charts) it never does anything too extreme. Almost every day it bounces around a 3-6 tick range, even though the spreads can trend up or down for days, the intra-day charts seem almost always pretty good. I wish I could get a spread which gives profit on the 3 year as much as the 10 year, but it's not really viable, instead I'll keep in mind the 3 year is just some kind of a hedge and see if I can work bids and offers and see if I can find some good opportunities to lean on the 3 year and scalp the 10 year outright.
Below is the last 2.5 weeks, with the 10 year plotted as an area graph, all plotted within scale with each other. The sharp quick moves almost always have occurred between the close and the open when I will be flat.
Typically the 3 year moves a little more than the 10 year, but the tick value is ~$28 a tick on the 3 year and ~$80 a on the 10 year. Which means I need to trade more 3 year contracts to hedge myself well, but the 3 year moves more and the tick values are different so it's tough to know the best ratio to use. If I used a ridiculous amount of contracts to get the best ratio, my costs as a scalper will be too big to make it a viable to scalp intra-day so I have a choice of 1:1 2:1 and 3:1. So, 3:1 (or three 3 year contracts vs one 10 year contract) is pretty expensive to trade, 8 contracts are traded to get in and out and in fact it gives slightly more weighting towards the 3 year which moves more than the 10 year anyway, and so straight away I ruled it out. Plus the 3 and 10 year on a daily chart pretty much stay together, so there are very few opportunities with such a good hedge to get in and out as a scalper. Therefore I plan to trade a 2:1 and a 1:1 ratio, which in terms of tick value, weights the 3 year with a tick value of 70% and 35% the size of the tick value in the 10 year.
1:1 weights the 3 year with a tick value of 35% the size of the 10 years tick value and is therefore very dependent on the 10 year bond. The spread looks similar to the 10 year bond just with a tighter range. It still holds in pretty well and with the tight range on the individual products it creates more opportunities. Trading with a 2:1 ratio and the spread is pretty decent! unfortunately sometimes the intra-day range is incredibly tight, slightly larger than the spread between the bid and the ask of the spread.
I will try and trade the tighter spread at first, and will probably adopt the strategy of if the spread isn't moving much early on in the day trade the looser one. I will see how easy it is to work bids and offers, but nonetheless it will give me a way to scalp the 10 year and hopefully one day I can just scalp it outright.
Below are the two spreads over the last 2 and a bit days (the difference between the horizontal lines is 1 tick, the spread between the bid and the ask on the two spreads is ~0.85 ticks and 1.2 ticks). Although a good last 2 days (from the perspective of the charts) it never does anything too extreme. Almost every day it bounces around a 3-6 tick range, even though the spreads can trend up or down for days, the intra-day charts seem almost always pretty good. I wish I could get a spread which gives profit on the 3 year as much as the 10 year, but it's not really viable, instead I'll keep in mind the 3 year is just some kind of a hedge and see if I can work bids and offers and see if I can find some good opportunities to lean on the 3 year and scalp the 10 year outright.
Below is the last 2.5 weeks, with the 10 year plotted as an area graph, all plotted within scale with each other. The sharp quick moves almost always have occurred between the close and the open when I will be flat.
Tuesday 17 January 2012
First 5 months in Hong Kong
I am now entering my 6th month in Hong Kong. Finally, it looks like I will be trading by next week! Spread trading Australian bonds, day trading.
The last 5 months have been incredible, both mentally challenging and a lot of fun. I tried to give a realistic picture but left out a lot of details from the fun times at things like Disneyland, sightseeing, meeting people etc, so in between working hard it has also been an incredible time, but you can read my journey leading to becoming a trader below, which is mostly about teaching and struggling to survive both physically and financially ^^
I booked my flight at the end of July to fly out mid August, I had maybe 1 months living expenses and no job lined up in Hong Kong. In fact family had helped me clear a small bank overdraft so I could use it in Hong Kong, I also used that overdraft to book the flight, so funds were limited. Just before flying out I secured a job in teaching, low pay and long hours. I was just so excited to have a way to support myself that I accepted. I was desperate to be in Hong Kong, I couldn't see anything else when I closed my eyes. A friend of mine in Hong Kong viewed a shared flat on my behalf and I told him if it looks at least okay just secure it for me. I arrived full of energy and keen to meet everyone.
I had a few days before I started working and without even realizing it I had rented a room in a shared flat just next to Lan Kwai Fong, the best place to party. A 3 minute walk, probably too short, as I partied most nights, my phone contact list almost doubled in a week, in fact I pulled within 3 hours of landing in Hong Kong, can you imagine. I was meeting people during the day who I had met in Lan Kwai Fong, meeting up with friends of mine who were in Hong Kong. During that time I had started working, but I was still going out after work and getting little sleep. The job was terrible, I couldn't adapt myself to teaching kids, although luckily I was just watching others teach, but I was put on the spot enough to know I was far too rigid. I couldn't let go and smile, sing, change my voice, act surprised on demand and entertain. I would be holding a picture of a tree and would say. Yea.. so it's a tree *look at the teacher* see a disappointed look and think hmm... how much longer left of this.
8 days into the job and I quit, I had started to realize the pay was on the low side, but full time pay for teachers in Hong Kong who don't have experience isn't great, unless you work for the government. The important thing for me was I didn't want to be in a contract I couldn't get out of for 1 year, 50 hour weeks in a job I hated. The hourly rate for part time is much better but comes with another set of disadvantages. I was low on money and regardless of quitting or not I had to ask for money from family. Nights out hadn't cost me much, I could drink at 7-11 and spend less than £10 in a night, I just didn't have enough money to support a life in Hong Kong and had overspent on my salary, although I still quit.
I sent out job applications and decided to remain in Central, which was expensive but I was near the things I needed. I wanted to be able to network and job hunt and find a job in trading or possibly software even though I only want to trade, I didn't feel I had the luxury of choice. I had a phone interview with a software company I had lined up before arriving in Hong Kong. I normally ace interviews, even when I am not suitable for the job, I dunno what it is but I completely relax and my mind clears and I can articulate myself well. I answered the call which was unexpected and said it's okay to talk now. I remember him saying something like you know you have to be passionate about this etc and said would you be? This was after he had told me about a job that was boring me just listening to him. Instead of answering, I said hmm... and gave it a lot of thought, I was too honest and obviously didn't get the job. I went to an interview as an English teacher and ended up getting the job. 80 minutes in and I quit, I couldn't paint picture and colour things and sing (almost a phobia of mine) with 2 to 3 year old's whilst parents/nannies watch. Ah I felt terrible just watching this guy sing, I couldn't overcome my fear of guys singing and left the room and went to see the guy who had just hired me. I apologized and expected an awkward moment I would want to forget but instead I was offered another job teaching slightly older children. I somehow managed to spend 30 minutes negotiating the salary, it was just 4 hours a day, 8.30 to 12.30 (90 minutes travel each way) Mon-Fri with the exception of Monday (2-5pm as well). The salary was almost enough to live off and the same agency gave me work on weekends for about £22 an hour. I eventually started to overcome my fear of singing, and slowly was able to let go. 3 weeks later and I found myself able to project some of my internal energy to the real world as it were, being an INFP it's not easy.
During this time I was feeling out of energy and a friend who I studied with in the UK invited me out for a quick drink, I reluctantly decided too, even though I wanted to I was just pretty tired. We went to 7 11 for a drink and bumped into a friend of his, who said we should join him at this bar which has free drink and food. A business card was needed to get in and I had just one left in my wallet from when I was a trader. I was the only person not wearing a suit, a common site. Me and my friend joined a group of his friends and we kept downing vodka red bull, maybe 7 or 8 before we decided to leave. We stumbled into club 97, my favorite, as the music is just always so good. My friend went to the loo at the back of the dance floor and I lent against a table at the back and my eye caught a girls eye as she walked in with two friends and sat down near the bar. I walked over and said hi etc. We got on so well, and my friend soon left and I joined the girl and her friends to another club. Now we have been together almost 4 months. <3 you :)
Then I started to become really ill, I suffered from dizziness, my glands were swollen, I saw a doctor and was told I had tonsillitis, my 1 year medical insurance didn't cover me past 45 days (due to small print..) and I had to spend a fair amount on seeing specialists. I had an interview with BNY Mellon, an amazing opportunity to become a trader with a really decent salary. I answered all but the first (and easiest question with ease) I was told I was the first to be able to do this, but later told I was overshadowed by traders with up to 5 years experience. Getting a job outside of teaching in Hong Kong is tough, that's for sure. I finally got low on funds and I had to wait about 20 days until my HK ID came through so I could go to the public hospital to see a doctor cheaply. I took antibiotics on and off for 5 weeks before I recovered, at times I could barely walk without feeling like I was going to pass out. I dragged myself to work each day and weekends and continued to job hunt in trading. I eventually was fired from the job and the same agency I had quit on still continued to help me by placing me in part time work, at one point I was just working 11 hours a week as I couldn't keep replenishing my work fast enough (for about £1.3k a month, incredible hourly rate), but I was eventually fired from that too. My teaching had improved massively and I felt confident in my ability unfortunately I was suffering from dizziness and generally felt terrible. I did numerous part time work also with other agencies and lost one job by trying to negotiate a higher hourly rate. I eventually recovered and worked over Christmas, taking kids out to parks, supermarkets, arcade type places and back inside colouring and cutting out, singing etc and secured part time work in private tutoring.
Every month has been a struggle to replace work and without money I would surely have to leave Hong Kong, my mum has short term money problems and the money I received from family (not from my mum) I couldn't really have asked for anything more. Everyday I was busy doing something, moving out of Central to save money and be nearer my girlfriend, just sorting trading has taken 100 hours or so, staying up late till 4am to talk to people in the US by phone and email. When I had free time I spent it with my girlfriend, every moment outside struggling to making a living has been incredible. Eating out and eating amazing food which is also so cheap and I have picked up the language reasonably fast, with a lot of dedication towards it. I absolutely love Hong Kong although my stress levels in the last couple months have gone through the roof, although now I am starting to feel a little more relaxed.
I also made friends with a guy who does very well for himself in interior design, catering, selling tiles. I started teaching his son English, who is 4 years old in a relaxed environment with my new friend and his wife. I attended business meetings with him and he explained his business, he wanted to become business partners. I provided his business with English, communicating with Europe, setting up meetings and still today I continue to do work for him, including teaching his son English on Sundays.
I spent the last 1.5 months trying to get access to Australian Bonds Futures markets after a friend decided to back me and this has given me a great chance to get back into trading, thank you! I finally got rejected from what seemed the only broker willing to come towards my needs, until recently when I got a similar deal with another broker. I am using the same strategy as before but on more stable markets, the spread looks good and the overall costs will be a lot cheaper than previously.
I am just waiting for my account to be opened and then finally I will be a trader in Hong Kong, which is what I set out to be 5 months ago! With just 1 month of living expenses in a Hong Kong bank account and enough pay from working as a teacher on Sundays (which covers rent) it should be okay.
I am ready for the next challenge of being a profitable self employed trader in Hong Kong!
The last 5 months have been incredible, both mentally challenging and a lot of fun. I tried to give a realistic picture but left out a lot of details from the fun times at things like Disneyland, sightseeing, meeting people etc, so in between working hard it has also been an incredible time, but you can read my journey leading to becoming a trader below, which is mostly about teaching and struggling to survive both physically and financially ^^
I booked my flight at the end of July to fly out mid August, I had maybe 1 months living expenses and no job lined up in Hong Kong. In fact family had helped me clear a small bank overdraft so I could use it in Hong Kong, I also used that overdraft to book the flight, so funds were limited. Just before flying out I secured a job in teaching, low pay and long hours. I was just so excited to have a way to support myself that I accepted. I was desperate to be in Hong Kong, I couldn't see anything else when I closed my eyes. A friend of mine in Hong Kong viewed a shared flat on my behalf and I told him if it looks at least okay just secure it for me. I arrived full of energy and keen to meet everyone.
I had a few days before I started working and without even realizing it I had rented a room in a shared flat just next to Lan Kwai Fong, the best place to party. A 3 minute walk, probably too short, as I partied most nights, my phone contact list almost doubled in a week, in fact I pulled within 3 hours of landing in Hong Kong, can you imagine. I was meeting people during the day who I had met in Lan Kwai Fong, meeting up with friends of mine who were in Hong Kong. During that time I had started working, but I was still going out after work and getting little sleep. The job was terrible, I couldn't adapt myself to teaching kids, although luckily I was just watching others teach, but I was put on the spot enough to know I was far too rigid. I couldn't let go and smile, sing, change my voice, act surprised on demand and entertain. I would be holding a picture of a tree and would say. Yea.. so it's a tree *look at the teacher* see a disappointed look and think hmm... how much longer left of this.
8 days into the job and I quit, I had started to realize the pay was on the low side, but full time pay for teachers in Hong Kong who don't have experience isn't great, unless you work for the government. The important thing for me was I didn't want to be in a contract I couldn't get out of for 1 year, 50 hour weeks in a job I hated. The hourly rate for part time is much better but comes with another set of disadvantages. I was low on money and regardless of quitting or not I had to ask for money from family. Nights out hadn't cost me much, I could drink at 7-11 and spend less than £10 in a night, I just didn't have enough money to support a life in Hong Kong and had overspent on my salary, although I still quit.
I sent out job applications and decided to remain in Central, which was expensive but I was near the things I needed. I wanted to be able to network and job hunt and find a job in trading or possibly software even though I only want to trade, I didn't feel I had the luxury of choice. I had a phone interview with a software company I had lined up before arriving in Hong Kong. I normally ace interviews, even when I am not suitable for the job, I dunno what it is but I completely relax and my mind clears and I can articulate myself well. I answered the call which was unexpected and said it's okay to talk now. I remember him saying something like you know you have to be passionate about this etc and said would you be? This was after he had told me about a job that was boring me just listening to him. Instead of answering, I said hmm... and gave it a lot of thought, I was too honest and obviously didn't get the job. I went to an interview as an English teacher and ended up getting the job. 80 minutes in and I quit, I couldn't paint picture and colour things and sing (almost a phobia of mine) with 2 to 3 year old's whilst parents/nannies watch. Ah I felt terrible just watching this guy sing, I couldn't overcome my fear of guys singing and left the room and went to see the guy who had just hired me. I apologized and expected an awkward moment I would want to forget but instead I was offered another job teaching slightly older children. I somehow managed to spend 30 minutes negotiating the salary, it was just 4 hours a day, 8.30 to 12.30 (90 minutes travel each way) Mon-Fri with the exception of Monday (2-5pm as well). The salary was almost enough to live off and the same agency gave me work on weekends for about £22 an hour. I eventually started to overcome my fear of singing, and slowly was able to let go. 3 weeks later and I found myself able to project some of my internal energy to the real world as it were, being an INFP it's not easy.
During this time I was feeling out of energy and a friend who I studied with in the UK invited me out for a quick drink, I reluctantly decided too, even though I wanted to I was just pretty tired. We went to 7 11 for a drink and bumped into a friend of his, who said we should join him at this bar which has free drink and food. A business card was needed to get in and I had just one left in my wallet from when I was a trader. I was the only person not wearing a suit, a common site. Me and my friend joined a group of his friends and we kept downing vodka red bull, maybe 7 or 8 before we decided to leave. We stumbled into club 97, my favorite, as the music is just always so good. My friend went to the loo at the back of the dance floor and I lent against a table at the back and my eye caught a girls eye as she walked in with two friends and sat down near the bar. I walked over and said hi etc. We got on so well, and my friend soon left and I joined the girl and her friends to another club. Now we have been together almost 4 months. <3 you :)
Then I started to become really ill, I suffered from dizziness, my glands were swollen, I saw a doctor and was told I had tonsillitis, my 1 year medical insurance didn't cover me past 45 days (due to small print..) and I had to spend a fair amount on seeing specialists. I had an interview with BNY Mellon, an amazing opportunity to become a trader with a really decent salary. I answered all but the first (and easiest question with ease) I was told I was the first to be able to do this, but later told I was overshadowed by traders with up to 5 years experience. Getting a job outside of teaching in Hong Kong is tough, that's for sure. I finally got low on funds and I had to wait about 20 days until my HK ID came through so I could go to the public hospital to see a doctor cheaply. I took antibiotics on and off for 5 weeks before I recovered, at times I could barely walk without feeling like I was going to pass out. I dragged myself to work each day and weekends and continued to job hunt in trading. I eventually was fired from the job and the same agency I had quit on still continued to help me by placing me in part time work, at one point I was just working 11 hours a week as I couldn't keep replenishing my work fast enough (for about £1.3k a month, incredible hourly rate), but I was eventually fired from that too. My teaching had improved massively and I felt confident in my ability unfortunately I was suffering from dizziness and generally felt terrible. I did numerous part time work also with other agencies and lost one job by trying to negotiate a higher hourly rate. I eventually recovered and worked over Christmas, taking kids out to parks, supermarkets, arcade type places and back inside colouring and cutting out, singing etc and secured part time work in private tutoring.
Every month has been a struggle to replace work and without money I would surely have to leave Hong Kong, my mum has short term money problems and the money I received from family (not from my mum) I couldn't really have asked for anything more. Everyday I was busy doing something, moving out of Central to save money and be nearer my girlfriend, just sorting trading has taken 100 hours or so, staying up late till 4am to talk to people in the US by phone and email. When I had free time I spent it with my girlfriend, every moment outside struggling to making a living has been incredible. Eating out and eating amazing food which is also so cheap and I have picked up the language reasonably fast, with a lot of dedication towards it. I absolutely love Hong Kong although my stress levels in the last couple months have gone through the roof, although now I am starting to feel a little more relaxed.
I also made friends with a guy who does very well for himself in interior design, catering, selling tiles. I started teaching his son English, who is 4 years old in a relaxed environment with my new friend and his wife. I attended business meetings with him and he explained his business, he wanted to become business partners. I provided his business with English, communicating with Europe, setting up meetings and still today I continue to do work for him, including teaching his son English on Sundays.
I spent the last 1.5 months trying to get access to Australian Bonds Futures markets after a friend decided to back me and this has given me a great chance to get back into trading, thank you! I finally got rejected from what seemed the only broker willing to come towards my needs, until recently when I got a similar deal with another broker. I am using the same strategy as before but on more stable markets, the spread looks good and the overall costs will be a lot cheaper than previously.
I am just waiting for my account to be opened and then finally I will be a trader in Hong Kong, which is what I set out to be 5 months ago! With just 1 month of living expenses in a Hong Kong bank account and enough pay from working as a teacher on Sundays (which covers rent) it should be okay.
I am ready for the next challenge of being a profitable self employed trader in Hong Kong!
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