On the 1st of november I booked a flight to Hong Kong to fly out 2 days later, I wanted to tell a girl that she means the world to me and just put a smile on her face, we are not really together we only recently met when she was on business in Germany. She asked me to come so I did and we spent a whole weekend together. Anyway I went to Hong Kong and unforuntately she had just flown out to the states and I got very ill and turned out I had glandular fever which gave me tonsilitus and has damaged my liver and spleen. I am recovering now but had to delay my flight, so I haven't been trading this month because I have been abroad and too ill to fly back. I hope to trade the last couple of days in November and hope December is a good month and I can't wait to trade gas oil heating oil still, infact I miss trading so much, all I wanna do is trade lol!
I just checked the stats for the traffic to this site and it seems even though it hasn't been updated in a while it's still got similar levels as before so it's nice to know people keep visiting it. Is there anything I miss out in my posts, leave a comment. I do plan to keep this blog and I never plan on quitting trading and I do push hard to succeed and I am not someone who will be content to just take a reasonable salary from trading and stop pushing to achieve so hoping this blog will tell an interesting story.
Well hopefully not long till I am back in the action :)
EDIT: I was meant to move out my flat in London, but because I am abroad I got a friend to organise cleaners and my mum to pick my stuff up. But I just found out because the shared flat where I live was a mess the landlord trashed all my things, took my computer, cash, watch, all my belongings in London.
Thursday, 18 November 2010
Friday, 29 October 2010
October Trading
This completes my 6th month as a trader! It has gone so fast and next month I will be trading gas oil - heating oil which will occupy me when fixed income is a little dead, and it's very much an action trade. I cannot wait!!! Maybe I will end up trading it as my main trade but for now I will be trading it on the side.
My month below, before costs:
My month below, before costs:
Saturday, 23 October 2010
My job explained
You know if your competing for the top place as a trader you can't afford to sit back and take it easy all the time because then the guys who are not as good at trading but were aggressive and avoided bad luck will be over taking you. Enough of those guys will just lose it all but risk taking will always be a big factor of your success.
Risk taking does quite interest me, like when you pay insurance you are paying a premium for them to cover the extreme situation but on average you would be better of paying no insurance, obviously, it's just taking a losing bet but one you are often willing to take because you want to avoid the extreme situations. Even the insurance companies insure themselves with other insurance companies who do the same back to avoid going bust in an extreme situation!
I like risk because taking risk makes money, that's how the insurance companies profit and that's how I profit as a trader. Many people in the market are willing to pay the spread between the bid and the offer to obtain a price right now, I am trying to profit from this and get in and out quickly, but I don't trade outright much, I hedge myself and wait for the two products to revert whilst trying to work the bid and offer spread on each individual market to my advantage. The spread often reverts especially if nothing fundamentally is changing. The bid is just the highest people are willing to buy now and the offer is the lowest people are willing to sell if you want to sell lower you can do it instantly by selling it to the people on the bid and vice versa.
So my job is to scalp the market, so I am getting in and out quickly, it's offering a service to others and providing liquidity in the market place, it's useful for some others but let's face it it's not something to be proud of to do as a job although I love doing it. But it doesn't just make money so easily because money is being drained out of the market by the exchange and essentially the middle man and fundamentals are ripping spreads apart even on a hourly basis at times, news comes out during the day and sometimes it can be unexpected news like a downgrade on a countries rating. So money is being taken out by people allowing you to trade and the actual traders are fighting for the rest of the money but if your good the rewards are fantastic. In my job I am essentially selling something to buy it back at the next price down because I scalp and don't position trade, so I don't necessarily need to know the direction the market is going, it's kinda arbitraging. Interestingly people make money just by queuing on bids and offers, if your first in line you have a big chance to get back out at the same price and sell or buy it off/from the people behind you otherwise you have a free shot at queuing the other side to get out for a profit. Although getting first in line means taking the risk initially, your price could become hard to get back but once everyone has piled in behind you, its generally profitable as long as bids and offers aren't getting smashed so fast. You can always que for a price miles away from the action and be fastest to do so, then if it ever comes to that price you have a great chance to make money. I would assume you fight against fast computers to do that as when the market opens the prices all the way up and down are filled instantly. As prices move sometimes lifting (buying) the offer is the only way to get a good price, if you know it's likely to become bid then queueing the current bid is near useless!
What I do is trade similar products that move generally together, the markets make there moves on fundamentals but everything else is cause by panic, emotions and people reacting in different ways. In spread trading (where you buy one thing and sell something else closely related) you make money by the volatility in the market on a short term basis, the markets move independently but with some kind of correlation and you just get in and out. Also the spread has meaning because the difference between the two products say the 2 year and the 5 year German bond means something because lending money at different points in the future will give different returns and this changes therefore the futures curve shows if the economy is going to strengthen or weaken for example. So anyway most days the spread prices are just bouncing around a range, it's great because you just wait for it to hit the top and you sell the spread, it bounces back and you get out it goes a little further and you buy it and you work a good price by queing. Unfortunately there are many things going on in the world and the curve on interest rates on bonds is getting flattened and then being smashed back to an upward sloping curve constantly and queing can actually mess you about as the markets can move fast unexpectedly. So spread prices are being whacked around often but things have been pretty manageable and I heard there was a period of 6 months where nothing moved together in what I trade and it just took out loads of traders like me, unfortunately. Also when selling a spread you have to sell more when it goes higher having already sold unless you know something is changing and there's reason why it could continue to go up, because otherwise this spread moves a little further than you think all too often and all too often it comes back and by averaging it means you can cope when the spread trends, it normally trends with dips so it's okay and you would be paying up far too often without averaging. Although as you average your position quickly increases and it can get ugly.
Recently the markets are coming perhaps more efficient, say the bobl moves up, the schatz instantly flips, so the guy on the offer who is say 3/4 of it now buys at this price level making the offer now the bid and you didn't have time to sell the bobl on the offer and que the bid on the schatz or even take the offer on the schatz which would seem okay if the bobl already moved and you got filled on the new offer. That is what has changed in the last 2 weeks and apparently it's what happened "in the old days" it's okay you can still do your job as a spreader just it's a little frustrating.
Risk taking does quite interest me, like when you pay insurance you are paying a premium for them to cover the extreme situation but on average you would be better of paying no insurance, obviously, it's just taking a losing bet but one you are often willing to take because you want to avoid the extreme situations. Even the insurance companies insure themselves with other insurance companies who do the same back to avoid going bust in an extreme situation!
I like risk because taking risk makes money, that's how the insurance companies profit and that's how I profit as a trader. Many people in the market are willing to pay the spread between the bid and the offer to obtain a price right now, I am trying to profit from this and get in and out quickly, but I don't trade outright much, I hedge myself and wait for the two products to revert whilst trying to work the bid and offer spread on each individual market to my advantage. The spread often reverts especially if nothing fundamentally is changing. The bid is just the highest people are willing to buy now and the offer is the lowest people are willing to sell if you want to sell lower you can do it instantly by selling it to the people on the bid and vice versa.
So my job is to scalp the market, so I am getting in and out quickly, it's offering a service to others and providing liquidity in the market place, it's useful for some others but let's face it it's not something to be proud of to do as a job although I love doing it. But it doesn't just make money so easily because money is being drained out of the market by the exchange and essentially the middle man and fundamentals are ripping spreads apart even on a hourly basis at times, news comes out during the day and sometimes it can be unexpected news like a downgrade on a countries rating. So money is being taken out by people allowing you to trade and the actual traders are fighting for the rest of the money but if your good the rewards are fantastic. In my job I am essentially selling something to buy it back at the next price down because I scalp and don't position trade, so I don't necessarily need to know the direction the market is going, it's kinda arbitraging. Interestingly people make money just by queuing on bids and offers, if your first in line you have a big chance to get back out at the same price and sell or buy it off/from the people behind you otherwise you have a free shot at queuing the other side to get out for a profit. Although getting first in line means taking the risk initially, your price could become hard to get back but once everyone has piled in behind you, its generally profitable as long as bids and offers aren't getting smashed so fast. You can always que for a price miles away from the action and be fastest to do so, then if it ever comes to that price you have a great chance to make money. I would assume you fight against fast computers to do that as when the market opens the prices all the way up and down are filled instantly. As prices move sometimes lifting (buying) the offer is the only way to get a good price, if you know it's likely to become bid then queueing the current bid is near useless!
What I do is trade similar products that move generally together, the markets make there moves on fundamentals but everything else is cause by panic, emotions and people reacting in different ways. In spread trading (where you buy one thing and sell something else closely related) you make money by the volatility in the market on a short term basis, the markets move independently but with some kind of correlation and you just get in and out. Also the spread has meaning because the difference between the two products say the 2 year and the 5 year German bond means something because lending money at different points in the future will give different returns and this changes therefore the futures curve shows if the economy is going to strengthen or weaken for example. So anyway most days the spread prices are just bouncing around a range, it's great because you just wait for it to hit the top and you sell the spread, it bounces back and you get out it goes a little further and you buy it and you work a good price by queing. Unfortunately there are many things going on in the world and the curve on interest rates on bonds is getting flattened and then being smashed back to an upward sloping curve constantly and queing can actually mess you about as the markets can move fast unexpectedly. So spread prices are being whacked around often but things have been pretty manageable and I heard there was a period of 6 months where nothing moved together in what I trade and it just took out loads of traders like me, unfortunately. Also when selling a spread you have to sell more when it goes higher having already sold unless you know something is changing and there's reason why it could continue to go up, because otherwise this spread moves a little further than you think all too often and all too often it comes back and by averaging it means you can cope when the spread trends, it normally trends with dips so it's okay and you would be paying up far too often without averaging. Although as you average your position quickly increases and it can get ugly.
Recently the markets are coming perhaps more efficient, say the bobl moves up, the schatz instantly flips, so the guy on the offer who is say 3/4 of it now buys at this price level making the offer now the bid and you didn't have time to sell the bobl on the offer and que the bid on the schatz or even take the offer on the schatz which would seem okay if the bobl already moved and you got filled on the new offer. That is what has changed in the last 2 weeks and apparently it's what happened "in the old days" it's okay you can still do your job as a spreader just it's a little frustrating.
Wednesday, 20 October 2010
Update on the month
Yesterday I was up 500 euros before the TED went down, I bought it and it kept going I had 48 by 60 on my largest position ever (600 euros a tick) I was on the verge of stopping out and by 9pm I reduced my position to 40% so I could hold it overnight and I was down around 800 euros. I also held 4 flys overnight and in the morning I came in and was shocked on the netting to see the fly which I had sold was printing up quite high, my PnL showed -2000 but that was based on settlements which don't mean too much, so I was really printing -1400 which was disastrous. Luckily the fly opened up at the same price and I got out for 100 euros profit on it. The TED came down lower and I got in and jobbed my position slightly. I had a chance to get out at a good price but only took a small amount off, as I always get out too soon, but it turned out to be the high of the day, sigh. It came down again and I couldn't really buy more so I felt pretty limited in what I could do. I was down 400 euros on the day and still had a loss of about 800 from yesterday and had all my costs to cover too.. I was short the fly now and basically took a loss of 300 euros on it, I couldn't see how it was going to break down as it seemed to have found a new range. I got flat with no positions on bringing yesterdays loss to a little over 500 euros and was up 130 for today. Even though it was approaching 4pm which isn't a great time to put a position on I decided I was going to stay. I made some great entry and exits on the TED and made 375 euros in about 20 minutes bringing my total gross profit to -39 euros for the two days which was good enough for me. After costs -£700 which is alot, but I could have been down a couple of thousand. The markets have been far from easy the schatz is impossible to lean, the price you are waiting to take gets taken by 1 person, and sometimes the next price gets taken all by one guy and your sitting there wondering if he will do it again, it's so hard to get in and out when it's like that. The good thing is it looks like I will make the target for eurex rebates which will be 2000 euros back for the month. Then there are some liffe rebates so I will cover my £1500 desk fee plus have extra left over and I am up £500 net for the month and I feel like it's been really tough for this week and last.
Saturday, 16 October 2010
A long week
Thursday night and I was long the bund bobl schatz fly and I was improving my position and just as I bought some bobl there was a bobl stop downwards, it did 9 ticks in about 5 seconds and I clicked sell bobl as a reflex and was able to get back in the bobl only 2 ticks lower. It was frustrating and I held the fly overnight, it opened at the same place and came down more so I bought more and before I could get the bund on there was a bund stop which screwed me over big time. I was sooo frustrated I lost money in the TED trying to get out just because I was so offside in the fly and my positions were too big. I lost 500 euros just because of bund stops and not getting fills, for example I would be queing to buy the schatz and the bid would go down to the last few, people next to me were queing it and got filled but I didn't. The fly kept tanking and I was down at worst case 1200 euros, I felt sooo low. I felt like I couldn't click buy or sell because it would immediately do something crazy to screw me over. I carried on to improve my position during some news which caused the liquidity to go fast and did a great job. I kept improving my position even though the fly kept falling and soon was only down a few hundred on the day. I stayed till 6pm and got in and out the fly countless times making money buying it as it slowly drifted lower but obviously not in a straight line. I felt happy to know I had the skills to do this, which helped me relax and forget about the bund and bobl stops that had cost me money.
The fly made a small bounce back from the low and I got out, it was near 6pm and I couldn't see how it was going to go much more unless I stayed till 8 or 9pm. I wanted to leave the office so I decided to get out. 20 minutes later as I was updating some things on my PC the markets all tanked massively and the fly rocketed up giving amazing prices I felt sooo gutted. I hesitated to sell it which was a mistake as it would have given some profit instantly but I took advantage of the situation in the TED. The euribor was slow to catch up as it's likely very few people are watching the markets so I sold the euribor and bought the schatz which had fallen considerably, I got out for a tick within about 2 minutes which was cool. I finished up 257 euros, once again an amazing come back, considering the fly didn't bounce back whilst I was in it. I am breakeven for the week after costs but at least I should have covered my desk fee. Everyone has said how crap the market was for spreading this week so I am just content to have made about 1300 euros for the week, unfortunately I just traded a huge amount so costs were high.
The fly made a small bounce back from the low and I got out, it was near 6pm and I couldn't see how it was going to go much more unless I stayed till 8 or 9pm. I wanted to leave the office so I decided to get out. 20 minutes later as I was updating some things on my PC the markets all tanked massively and the fly rocketed up giving amazing prices I felt sooo gutted. I hesitated to sell it which was a mistake as it would have given some profit instantly but I took advantage of the situation in the TED. The euribor was slow to catch up as it's likely very few people are watching the markets so I sold the euribor and bought the schatz which had fallen considerably, I got out for a tick within about 2 minutes which was cool. I finished up 257 euros, once again an amazing come back, considering the fly didn't bounce back whilst I was in it. I am breakeven for the week after costs but at least I should have covered my desk fee. Everyone has said how crap the market was for spreading this week so I am just content to have made about 1300 euros for the week, unfortunately I just traded a huge amount so costs were high.
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