Tuesday, 31 July 2007

The coming of August

Here's the significance of this month is multifold. But of course it's mainly financial.

The first being that I decided to go back onto the tedious but rewarding and informative process of noting my exact expenditure again. I abandoned this project quite a few months back. February to be exact, if I'm not wrong. I did it for a full 2 months and found I spend some 700 bucks each month. And about two to three hundred goes to food. Haha. So here's an experiment to see how true is it that one tends to spend less in varsity. And it'll help in planning my expenditure in future. Well, to be honest, it's not quite in my policy to budget and to stick to one. I rather expand my means.

The second event, as I've been mentioning countless times, is that I'm starting my varsity life proper. And this is truly and exciting new phase. I just realised, today, that there is an investment club in NUS. But the people at the booth, two of them, weren't quite that active in getting people to know about the club. Nevertheless, my conversation with the two gentlemen led me to a shocking discovery that one of them is a fund manager. He said he deals with Forex too. Well, I'll definitely be going for their seminars to learn about whatever they have to offer and to network with some people with similar interests. Wonder how many in NUS is interested in their financial future though.

The third is to give a booster-start to my Forex trading. I, still, am keeping in mind that I intend to go live in Forex trading coming January 2008. Clarence's course would tell me what to do, but finally I need to understand myself and what style I want to trade, and best trade, the market. Reading "Trading your way to Financial Freedom," I understand that the Holy Grail in trading is really an internal search to understand oneself and how one reacts to the market than a perfect system which would gain constant and unfailable rewards. It really mirrors Kiyosaki's comment that investments AREN'T risky, only investors are. So the challenge is not so much to get this perfect system that uses loads of indicators that proves, according to historical data, that one can gain from the market, but to discover how our emotions and mindset limit and make our trading riskier.

And of course it means we have to deal with some of the assumptions and false beliefs and psychological barriers that we, and especially, I, hold about trading and the markets we are involved in. And the discipline to withstand loses, that's one tough nut to crack. But it will become a source of victory in due time as I progress along this path.

The future's exciting and pregnant with countless possibilities.

May we all have a great time ahead!

Saturday, 28 July 2007

Stagnation... and my 21st BIRTHDAY!

Things are going just as they do usually. Not quite. Anyway, I've just returned from a trip to Redang Island off the Eastern coast of Malaysia. Really nice beaches and water there! Imagine snorkelling and seeing fishes just some 20 to 30 metres off the beach. And you can feed them by hand. Had to be careful to avoid the bigger fishes though, cos fishes tend to bite and try and grab a piece of whatever food one has in your hands. The small fishes "bites" feel more like suckles, but the big fishes really bite with their teeth!



Haha. So much for my trip. Next up...my birthday! My 21st birthday was spent in a quiet meaningful session with Miranda on East Coast beach. And I was given some 21 gifts! I guess she didn't get the "guilty look" that she so wanted to see that day, but I was totally moved! (quite close to tears...but...) There was just this warmth my heart seeing all the effort in making and the beauty of her gifts for me. Which reminds me of how poor my gifts are. Nevermind...I have her 21st birthday to redeem myself!

And down to the more serious topic. About becoming stagnant. In financial matters in general and Forex in particular. I mean...I'm really getting nowhere. I'm not actively demo trading. Not posting or conversing on the forum. Not talking to my forex buddies. Not quite reading. (Though I finally got down to reading one of the many ebooks uploaded by Clarence).

It's the phase after all the excitement. In technical terms, it's consolidation. If that is so, I sure hope my long term moving average is still trending upwards and the trend hasn't reversed. I seriously see Forex and trading, in general, as a viable means of survival, and investing would be the longer-term way of accumulating wealth. A job is far off my mind now. Even teaching (tutoring rather) is because I really love telling people about the subject. Well, I fail at telling people how to speak and write and communicate in proper English though.

Upcoming events should give me a boost. Will be at Clarence's Forex course in August. And varsity will be starting for me too. In fact I'll be collecting my matriculation card tomorrow from NUS! Many activities will be filling my life. And I wonder if I can cope. End of the day, or year, or my university life, I hope I have gone thru a ride of my life and not have to depend on my bachelor or honours degree. (or even Masters and Doctorate!)

Well. Hopefully it's a good start then!

Friday, 20 July 2007

A major loss

Yesterday I was on my computer and I visited a thread on this forum which has gone very quiet for the past 2 weeks or so. It belongs to a team of 2 admins who started this program to invest people's money through the method of scientific/mathematical/logical betting.

The basic idea was to increase one's bet after losing the previous round. The increase would be sufficient to provide for the profit of the current and all previous rounds of failed betting. Well, I must say I ever heard of this approach used in other gambling or chance games like poker and blackjack. If I am not mistaken, Firman and I also thought of applying it to Forex, applying double of the previous trade in the opposing direction. I don't quite know why we chose to abandon that method. Maybe because it simply was too risky compared to putting in a Stoploss level. And the trade amount might get really huge given a few earlier losses. To give you an idea, we could start with 1% of our trade capital, loss it for the subsequent few rounds and use up to 2, 4, 8, 16 and even 32% if our capital. And that still doesn't guarantee one can have a successful trade.

Rather, why not invest time and maybe money to find and design a system which can historically prove its effectiveness? Well, pretty tough and quite a hassle. Which is why I'm meddling with the idea of hiring a researcher to get me some info.

Maybe I could get some help during my uni days.

Anyway, a few of my friends are coming up with interesting, albeit not so fresh, ideas. One is to set up a Forex brokerage firm. The key selling idea is to make it local, approved by MAS with low pips spread to benefit short term traders.

The other comes from Louis and gang. I met him during my NS stint in Nee Soon Camp. Currently doing a accounting programme, Louis has hopes of establishing an investment firm to save on taxes on capital gains from equities trading. Currently our team's just Louis, Aloysius and me. But we're still looking to pool the expertise and financial ability of a few more investors to make a winning team.

Well, my basic proposal is to send at least one of us for a good course for a few thousand bucks so that we can better manage our funds which should hit some 30-50k. But then again, I really wonder what's going to happen from here on. I don't even suppose I can afford the initial that they hope to get from each investor. But probably that's no problem because I would be involved in live Forex trading the start of 2008.

Which only means I have to work harder now to find my preferred (and preferably winning) approach. Ok, time to do more studies. Next up would be to document the potential of using indicators to decide on trades. I realised from my experiment with parabolic SAR dots that they respond fast enough to reversals at the entry level, but lag when telling one of when to take profit. And it seems stachostics will help.

Have a great trading week ahead, mates!

Wednesday, 18 July 2007

Why financial freedom?

I really wanted to do this post a few days back when the issue was still fresh in my mind but somehow never found the time to do so. But, well, here I am to explore why we want to get rich...

My desire to do this post is triggered by Firman, who in http://intelnova.net/forum/index.php?showtopic=3507&pid=68486&st=0&#entry68486 exclaimed that we were not enjoying life like some of our other friends who are partying and having "fun". And Firman also reflected on the possibility that being too involved in forex to the point of obession would destroy us eventually.

And I share his concerns. After all, that "fun" is fun, otherwise I wouldn't have had the desire to drink, get high, and party. But...that fun is really short-lived. It leaves one with a headache, maybe some vomitting, and maybe a night of regrettable actions. (haha, I learn that the hard way) Not that I wouldn't do it, but it's good to know and be involved sometimes. But not too often. And as for the obsession part...I think this obsession is pretty good for the time being. While we might lose friends along the way, but that is just natural as one comes into active contact and relationship-building with other friends and associates along the same path.

Remember? The five closest people around you today will define your context and reality in the next 5 to 10 years.

Anyway, becoming rich is very exciting, because that means your standard of living goes up, you get to enjoy more material goods, you have the opportunity to quit you job in the middle of a career, you've no worries about your bills and many other superficial stuff.

But more importantly, the question "But have you ever wondered once we become financially free, what are we going to do?" is, to me, an answer in itself. No, that doesn't mean, just because I have time on my hands, I would laze around and waste time. In fact it is such that now the control over time and financials is returned to your hands, one can do what is most beneficial and important for oneself, loved ones, friends and many others. And if you didn't see charity, read again.

I HAVE A DREAM! That line was made famous by Martin Luther. His dream sparked and motivated the change in attitudes and constitution of America towards the "not-so-equal" people of his racial origin. Today things are alot better but still our brothers have more to do to prove their worth. The dream brought the people through amazing journeys and tough times.

In the same way, dreams will carry us through the toughest parts. Not that we won't get wet or slip or shot on this dangerous journey, but the dream would support us. And what's my dream? I hope to see, above all, that I can do what matters most. Be it to spend time with my gf (and wife-to-be), or possibly being there for my kids' special events, or to meet with my friends to always stay in touch, or to go on humanitarian trips to countries in need (and learn much more at the same time), or simply to sit down and learn to be at peace with myself. For all these reasons and more, I would like to be financial independent. Not of parents, but of a routine which would kill brain cells, stifle creativity, and make you lose what you love most.

So there you have it, Firman, and all, it is not going on this path towards financial freedom or passive income that will make you lose important stuff. But not going down this path would eventually get to you and you would lose even more.

In closing I would like to quote a motto of some ancient army (Greeks I think, or Roman, well, whichever).

ALL MAN HAVE FEARS,
BUT THE BRAVE PUT DOWN THEIR FEARS
TO GO FORWARD,
SOMETIMES TO DEATH,
BUT ALWAYS TO VICTORY!

Monday, 9 July 2007

Developments...

Ok, another long (-awaited, I hope) post. Oh, I mean it's been a long time since I last said anything. My girlfriend also found that she's increasing lazy to post anything.

Haha. So much for that. No intention of closing the blog yet though, not like it would matter to anyone. Ok, that's random ramblings.

Recently re-read Robert Kiyosaki's "Retire Young Retire Rich" and found it so refreshing! I was honestly looking out for the section on getting insurance on trading thru options and hedging but I realised the book's about a lot more!

For one, I hope this was not repeated earlier in my entries, is this idea of content vs context. The basic question from Robert to people is this: "What level of income do you want to retire at?" And according to him, most people would be comfortable if they get 25k to 100k a year in retirement. But rarely do people reply that they want to make millions a year, or even just the 100k to 1 million a year range.

And that's an issue of context! If you can't see yourself doing it or achieving something, there are good chances you won't. I heard this somewhere before, so let me quote this. "If you think you can't, then you really can't." And that is not some far-fetched mind-altering theory. It's very logical. You see, the only time we make an effort towards something is when we believe in it. It's called "faith" by some. I have to have faith that, by working hard, I can do well academically before I'll even put effort into studying right?

Doubtlessly, we can be forced or coerced into making an effort to accomplish stuff. But that's sluggish. Motivated efforts arise effortlessly when one has the passion and belief! It's sometimes known as "fun" by some.

So faith gives you an impetus for action...and coupled with the chances of winning a certain percentage of the time, you increase you opportunities where you can succeed! Now, that's not quite far-fetched a theory is it?

Haha. Just a minor reflection on my end. Recently I had some events in my life that made me aware of the importance of choices. Cos if we always chase after stuff that we think are new and fresh and exciting, we would find ourselves never in equilibrium. It'll honestly be an endless chase. And someone told me I am a show-off. And I admit that. I admit I feel good when I can do something relatively well. I'll also admit that I love getting praised for those efforts. And I don't intend to change that. What, instead, should be my focus would be to follow principle NO. 1 in Dale Carnegie's "How to Win Friends and Influence People"...that is to lavish sincere praise on and give due appreciation to people around me. Dale said it well that people often can't go hungry for more than 60 hours, but yet can be so deprived of appreciation, hearfelt praise, and affection for 6 days, 6 weeks, 6 months and even 60 years!

Well, I suppose it's a really good time to work on that since I'm entering a new phase in my life.

And darn! I missed Clarence's forex course after waiting so long for it. Cheers to him for letting me go back for the August intake. These months I've been really blessed with many people's guidance and forgiveness.

I hope sincerely that all of us can progress towards financial capability, autonomy, and then freedom.

Tuesday, 3 July 2007

Forex strategy testing

Ok, so after reading "Adventures of a Currency Trader" at Times Bookshop, I started to do some tests to see what's the effectiveness of strategies purely using indicators.

For a start I've completed the Average True Range of GBP/USD for the period of 1st Jan to 9th Jun, 2007, and found that the daily average is around 119 pips and, the weekly is 290 pips.

So that leaves me some sort of way to know how to position my stop losses.

I begin my strategy testing with using the Parabolic SAR dots reversals as signals as my trading strategy, buying on day 1 of reversal and selling on the 1st day of next reversal. SL levels are placed at the level of the dots and are unchanged for the course of the trade.

Data was collected for approximately a year on the daily chart from May 2005 to Jun 2006. Parabolic settings at Acceleration = 0.020 and maximum = 0.20. And guess what I found? This indicator works superbly well only in a strong trending market, otherwise the signals could just result in whipsaws.

Over the period there were 20 trades averaging 17 days each. The best gain was a 1081 pips gain in a 44 days trade and the worst trade resulted in a loss of 422 pips that lasted 17 days.

On average, there were loses of 44.2 pips per trade. And the reward to risk ratio, calculated by taking the quotient of dividing the pips gained by the potential pips loss as dictated by the SL level, found that the potential gain is rarely even 100% of the potential loss. The sole exception is the strong upward trend resulting in the 1081 pips gained. That one has a reward to risk ratio of 2.92 : 1.

So I realised that the Parabolic dots are only useful in strong trending markets which present themselves more frequently towards year 2007. Still they cannot be standalones in deciding trading decisions. And a trailing SL level at each day should be set as indicated by the new period's Parabolic SAR dot.

I've also to device a way to find a better time to exit trades, since I realised that the indicator is good in telling direction but quitting the trade only by the next reversal signal would mean there would already be some downside to the earlier gains.

My next study will be on Stachostics alone to see if they work as reversal signals.

I'm also attending a course by Clarence and I should be able to gain much from there. Did see in an email from him that some of his students are still quite lost though, hope I'll be a good trader who can pick up the right signals as his TNT system dictates.

Hope you guys are doing great trading and having fun yeah!

Monday, 2 July 2007

Updates

Now what's coming up man?

Of course, I had my orientation. And now I'm wondering if I should go ahead and do another one to know more people and have more fun! Haha, still on this "high" wave since Arts Camp...

So if I'm considering another one, it would be the sociology camp, which is packaged and advertised as a camp for socialites...

Haha, that's not what I am but I think I can turn to be a little more sociable. So far my networks are pretty limited and I don't quite know how to broaden its depth or breadth.

Or more like I don't know how to use my network extensively.

Well...in any case, I'll see if I should do the camp. Having another consideration, though. Gonna be overseas with my secondary school guys from 24th to 27th July. Destination: Redang. KC had to give up his notion of a historical/cultural trip. He told me why, but I can't remember.

So if I do go for both events...that's 2 whole weeks away from my gf! Which is really the opposite of the aim of quitting my job.

Sigh, I'll try to decide.