try 2 MA and 5 MA
How to manage my time effectively ?
Train myself to accept discipline, simple life, peace at heart, hard work, focus and perseverance.
Sleep by 10.45pm.
Focus - no distraction
control GERD
Memorise One Bible verse per day.
Diet
Exercise
Pumping
Dumbbell curl
Reverse Dips
Free Squat
Leg Raises
patient is the most overlook
christian book on calm and expect less
Qigong breathing exercise all the times
No Gossip, No meddle on other people business
做一个心平气和的人 - Live in Peace, not excitement
More choices
Positive self talk
gamblers lost money due to increasing the betting amount, because the probability is always the same, so cannot have poor money management, money management is most vital, don't suddenly up the bet, no logic.
learn from Uncle Lim more, but don't follow blindly, use my creativity to create new method.
value, what value you can offer, what value people see in you, what value people attract to you. to avoid disappointment, don't expect too much from others.
I am doing very important task now, Forex !
How to find a motivation factor ?????
Faith:
want perfection ? stupid, no perfection in this world, looking for stress and trouble, open the heart and accept anythings, be kind to yourself and others, be open don't sad and angry, take it easy.
love come from heart, feeling, don't come from talk, feel the love.
Emotion must use heart to feel not by speech
don't expect too much from others, lower your expectation on others. but have to set very high standard for myself. then I will strive hard to achieve it. because I can't control others, but I can control myself.
Finance:
in Forex when a sharp trend stop, careful and run.
“Control Your Own Destiny or Someone Else Will”
forgot about magic numbers or trend or streak, it is totally randomly independent, if you believe in it, it will destroy you.
in Roulette, if the luck is bad, stop after one loss, then try again, if lose again, stop again, try third times if lose again, stop again. don't force.
Discipline & Self Control
One block
my strategy is (stop after any lose)
bet $10 each on Roulette, if win (65% winning chance) +10
bet $10 each on Roulette, if win (44% winning chance) +10
bet $20 on baccarat if win (50% winning chance) +20
bet $20 on baccarat if win (25% winning chance) +20
when win $100, stop.
then start another block again, this time the target is lower to $50. If have time (weekend, Holiday), third target is $30.
Lessons:
not worth to hang on the contract for short term scalping trade, have profits must run.
no profits must hold.
must find money magt method for casino and forex, examples:
$10 x 2 = $20, then roulette bet $10 x2 and baccarat bet $20 per bet,
if roulette bet $20 x 2 = $40, then baccarat bet $40 per bet
for forex must find a trading amount, per how many contracts for every trade , what amount to take profits ???? when to run ???? must decide with strategy.
don't assume, just follow the chart.
follow long term plan better.
forex, don't rush in with additional contracts, wait for the right time, must study and learn and find out the timing to enter ????? don't rush in ????
for scalping, don't greedy.
which one is better, baccarat or roulette ????base on odds ?
baccarat, study the the money mgt and betting amount and betting frequency ????
draw lines for top middle and bottom, then bet accordingly. high range sell, middle trade, bottom buy.
Soros renamed his fund...Quantum Fund, in tribute to Heisenberg's uncertainty principle in quantum mechanics. That principle asserts that it is impossible to predict the behavior of subatomic particples in quantum mechanics, an idea that meshed with Soros's conviction that markets were always in a state of uncertainty and flux that it was possible to make money by discounting the obvious, and betting on the unexpected.
Health:
Attachments:
The following is part of a series that I’ll be creating on trading strategies of well-known traders and investors. Today, we’ll look at the keys to the the investment and trading strategies of trend trader John W. Henry.
Unless your a Red Sox fan, you might not have heard of John W. Henry. When it comes to the lexicon of great traders, John W. Henry doesn’t hold a candlestick chart to guys like Warren Buffettand Richard Dennis. But he should be there.
One thing you notice about great traders is there’s no such thing as a “pedigree.” They don’t all come from Ivy League schools. They don’t all start investing early. A lot of traders don’t even have a financial background.
Henry was from a farm family. He went to Victor Valley College and spent a stint at the University of California. What was his major? Finance? Economics? Nope. Philosophy. He didn’t graduate, by the way.
Despite this unconventional background, in the late 1970s, Henry began to trade. First, he traded something he was familiar with–soybeans and corn futures. But, Henry eventually created and tested a systematic trend trading strategy for multiple assets, mostly commodities.
The tests proved successful. That’s an understatement.
If you could reduce Henry’s trading strategy to its core principals, the two most significant would be:
1. Always be in the market.
Hold a basket of assets and either be in short or long positions, depending on the trend. (That last bit is key. You have to develop a systematic measure for determining the trend.)
Hold a basket of assets and either be in short or long positions, depending on the trend. (That last bit is key. You have to develop a systematic measure for determining the trend.)
2. No emotions.
This is a mechanical system It’s not based on hunches. Or intuition. Or gut feel. Etc.
This is a mechanical system It’s not based on hunches. Or intuition. Or gut feel. Etc.
3. Fundamentals are not fundamental.
It may seem counter intuitive, but the analysis of fundamentals can be subjective. Like a child seeing shapes of cartoon figures in the clouds, a trader can see patterns in fundamentals that simply don’t exist. He or she is imprinting emotions on the numbers. All analysis must be objective and devoid of emotions.
It may seem counter intuitive, but the analysis of fundamentals can be subjective. Like a child seeing shapes of cartoon figures in the clouds, a trader can see patterns in fundamentals that simply don’t exist. He or she is imprinting emotions on the numbers. All analysis must be objective and devoid of emotions.
We believe that an investment strategy can only be as successful as the discipline of the manager to adhere to its requirements in the face of market adversity. Unlike discretionary traders, whose decisions may be subject to behavioral biases, our traders apply a disciplined investment process. By quantifying the circumstances under which key investment decisions are made, our methodology offers investors a rational approach to markets, unswayed by judgmental bias–from John W. Henry & Company website.
A more thorough summary of Henry’s methodology is available at his company’swebsite.
The system works apparently. If you remember the Barings bank debacle when Nick Leeson, a supposed rogue trader, made ridiculous bets on the Nikkei, Henry was on the winning side of that trade. The key was finding the trend.
“There are trends that tend to exist, whether they are capital flows or interest rates. So you can call trend following a blackbox, I guess, because some people refer to disciplined, mechanical-type trading as blackbox. But if you have enough discipline, or you only trade a few markets, you don’t need a computer to trade this way. It just makes it much, much more convenient for us.” – John W. Henry, Future’s Industry Association.
Henry fluctuates between billionaire and multi-millionaire status. (His net worth is currently estimated at $840 million.) A lifelong baseball fan, he owns the Boston Red Sox. He also owns the Liverpool Football Club.
Did you know that a $1,000 investment with George Soros in 1969, would have been worth about $4 million by the year 2000? For more than three decades, this maverick hedge fund manager generated 30.5% average annual returns, after management fees. His flagship Quantum Fund is revered by investors. Despite the animosity generated by his trading tactics and the controversy surrounding his investment philosophy, George Soros spent decades at the head of the class among the world's elite investors. In 1981, Institutional Investor magazine named him "the world's greatest money manager."
Soros' PhilosophyGeorge Soros is a short-term speculator. He makes massive, highly-leveraged bets on the direction of the financial markets. His famous hedge fund is known for its global macro strategy, a philosophy centered around making massive, one-way bets on the movements of currency rates, commodity prices, stocks, bonds, derivatives and other assets based on macroeconomic analysis.
Simply put, Soros bets that the value of these investments will either rise or fall. This is "seat of the pants" trading, based on research and executed on instinct. Soros studies his targets, letting the movements of the various financial markets and their participants dictate his trades. He refers to the philosophy behind his trading strategy asreflexivity. The theory eschews traditional ideas of an equilibrium-based market environment where all information is known to all market participants and thereby factored into prices. Instead, Soros believes that market participants themselves directly influence market fundamentals, and that their irrational behavior leads to booms and busts that present investment opportunities.
Soros' PhilosophyGeorge Soros is a short-term speculator. He makes massive, highly-leveraged bets on the direction of the financial markets. His famous hedge fund is known for its global macro strategy, a philosophy centered around making massive, one-way bets on the movements of currency rates, commodity prices, stocks, bonds, derivatives and other assets based on macroeconomic analysis.
Simply put, Soros bets that the value of these investments will either rise or fall. This is "seat of the pants" trading, based on research and executed on instinct. Soros studies his targets, letting the movements of the various financial markets and their participants dictate his trades. He refers to the philosophy behind his trading strategy asreflexivity. The theory eschews traditional ideas of an equilibrium-based market environment where all information is known to all market participants and thereby factored into prices. Instead, Soros believes that market participants themselves directly influence market fundamentals, and that their irrational behavior leads to booms and busts that present investment opportunities.
Housing prices provide an interesting example of his theory in action. When lenders make it easy to get loans, more people borrow money. With money in hand, these people buy homes, which results in a rise in demand for homes. Rising demand results in rising prices. Higher prices encourage lenders to lend more money. More money in the hands of borrowers results in rising demand for homes, and an upward spiraling cycle that results in housing prices that have been bid up way past where economic fundamentals would suggest is reasonable. The actions of the lenders and buyers have had a direct influence on the price of the commodity.
An investment based on the idea that the housing market will crash would reflect a classic Soros bet. Short-selling the shares of luxury home builders or shorting the shares of major housing lenders would be two potential investments seeking to profit when the housing boom goes bust. (For more insight into housing bubbles, read Why Housing Bubbles Pop.)
Major TradesGeorge Soros will always be remembered as "the man who broke the Bank of England." A well-known currency speculator, Soros does not limit his efforts to a particular geographic area, instead considering the entire world when seeking opportunities. In September of 1992, he borrowed billions of dollars worth of British pounds and converted them to German marks.
When the pound crashed, Soros repaid his lenders based on the new, lower value of the pound, pocketing in excess of $1 billion in the difference between the value of the pound and the value of the mark during a single day's trading. He made nearly $2 billion in total after unwinding his position.
He made a similar move with Asian currencies during the 1997 Asian Financial Crisis, participating in a speculative frenzy that resulted in the collapse of the baht (Thailand's currency). These trades were so effective because the national currencies the speculators bet against were pegged to other currencies, meaning that agreements were in place to "prop up" the currencies in order to make sure that they traded in a specific ratio against the currency to which they were pegged.
An investment based on the idea that the housing market will crash would reflect a classic Soros bet. Short-selling the shares of luxury home builders or shorting the shares of major housing lenders would be two potential investments seeking to profit when the housing boom goes bust. (For more insight into housing bubbles, read Why Housing Bubbles Pop.)
Major TradesGeorge Soros will always be remembered as "the man who broke the Bank of England." A well-known currency speculator, Soros does not limit his efforts to a particular geographic area, instead considering the entire world when seeking opportunities. In September of 1992, he borrowed billions of dollars worth of British pounds and converted them to German marks.
When the pound crashed, Soros repaid his lenders based on the new, lower value of the pound, pocketing in excess of $1 billion in the difference between the value of the pound and the value of the mark during a single day's trading. He made nearly $2 billion in total after unwinding his position.
He made a similar move with Asian currencies during the 1997 Asian Financial Crisis, participating in a speculative frenzy that resulted in the collapse of the baht (Thailand's currency). These trades were so effective because the national currencies the speculators bet against were pegged to other currencies, meaning that agreements were in place to "prop up" the currencies in order to make sure that they traded in a specific ratio against the currency to which they were pegged.
When the speculators placed their bets, the currency issuers were forced to attempt to maintain the ratios by buying their currencies on the open market. When the governments ran out of money and were forced to abandon that effort, the currency values plummeted. (Learn about the catalysts of a currency crisis in What Causes A Currency Crisis?)
Governments lived in fear that Soros would take an interest in their currencies. When he did, other speculators joined the fray in what's been described as a pack of wolves descending on a herd of elk. The massive amounts of money the speculators could borrow and leverage made it impossible for the governments to withstand the assault.
Despite his masterful successes, not every bet George Soros made worked in his favor. In 1987, he predicted that the U.S. markets would continue to rise. His fund lost $300 million during the crash, although it still delivered low double-digit returns for the year.
He also took a $2 billion hit during the Russian debt crisis in 1998 and lost $700 million in 1999 during the tech bubble when he bet on a decline. Stung by the loss, he bought big in anticipation of a rise. He lost nearly $3 billion when the market finally crashed.
ConclusionTrading like George Soros is not for the faint of heart or the light of wallet. The downside of betting big and winning big is betting big and losing big. If you can't afford to take the loss, you can't afford to bet like Soros. While most global macro hedge fund traders are relatively quiet types, avoiding the spotlight while they earn their fortunes, Soros has taken very public stances on a host of economic and political issues.
His public stance and spectacular success put Soros largely in a class by himself. Over the course of more than three decades, he made the right moves nearly every time, generating legions of fans among traders and investors, and legions of detractors among those on the losing end of his speculative activities.
Governments lived in fear that Soros would take an interest in their currencies. When he did, other speculators joined the fray in what's been described as a pack of wolves descending on a herd of elk. The massive amounts of money the speculators could borrow and leverage made it impossible for the governments to withstand the assault.
Despite his masterful successes, not every bet George Soros made worked in his favor. In 1987, he predicted that the U.S. markets would continue to rise. His fund lost $300 million during the crash, although it still delivered low double-digit returns for the year.
He also took a $2 billion hit during the Russian debt crisis in 1998 and lost $700 million in 1999 during the tech bubble when he bet on a decline. Stung by the loss, he bought big in anticipation of a rise. He lost nearly $3 billion when the market finally crashed.
ConclusionTrading like George Soros is not for the faint of heart or the light of wallet. The downside of betting big and winning big is betting big and losing big. If you can't afford to take the loss, you can't afford to bet like Soros. While most global macro hedge fund traders are relatively quiet types, avoiding the spotlight while they earn their fortunes, Soros has taken very public stances on a host of economic and political issues.
His public stance and spectacular success put Soros largely in a class by himself. Over the course of more than three decades, he made the right moves nearly every time, generating legions of fans among traders and investors, and legions of detractors among those on the losing end of his speculative activities.
“A trader should have no opinion. The stronger your opinion, the harder it is to get out of a losing position.”
-Paul Rotter
“The key to trading success is emotional discipline. If intelligence were the key, there would be a lot more people making money trading… I know this will sound like a cliche, but the single most important reason that people lose money in the financial markets is that they don’t cut their losses short.”
-Victor ‘Trader Vic’ Sperandeo
“I think investment psychology is by far the more important element, followed by risk control, with the least important consideration being the question of where you buy and sell.”
-Tom Basso
“I know of a few multimillionaires who started trading with inherited wealth. In each case, they lost it all because they didn’t feel the pain when they were losing. In those formative first few years of trading, they felt they could afford to lose. You’re much better off going into the market on a shoestring, feeling that you can’t afford to lose. I’d rather bet on somebody starting out with a few thousand dollars than on somebody who came in with millions.”
-William Eckhardt
“Trading provides one of the last great frontiers of opportunity in our economy. It is one of the very few ways in which an individual can start with a relatively small bankroll and actually become a multimillionaire.”
-Jack D Schwager
“The elements of good trading are: 1. Cutting losses, 2. Cutting losses, and 3. Cutting losses. If you can follow these three rules, you may have a chance.”
-Ed Seykota
“I have two basic rules about winning in trading as well as in life: 1. If you don’t bet, you can’t win. 2. If you lose all your chips, you can’t bet.”
-Larry Hite
“The single most important advice I can give anybody is: Learn from your mistakes. That is the only way to become a successful trader.”
-David Ryan
“The best advice I can give to the ordinary guy trying to become a better trader is Learn to take losses. The most important thing in making money is not letting your losses get out of hand.”
-Marty Schwartz
“Price is what you pay. Value is what you get.”
-Warren Buffett
George Soros in the News:
This web site offers news and information regarding George Soros. His political views are controversial, but his mostly up (and sometimes down) trading life is worth investigating.
Some basic Soros' trading principles:
- Some people spend all day talking to their brokers. Soros “prefers to talk to a select few people who can be really helpful ….” Then you need to think and read and reflect.
- To be successful, you need leisure. You need time hanging heavily on your hands [to talk to people, read, and think].
- If you have an investment thesis you like, run it by people who support the other side of the argument. See if you still like the thesis afterward.
- Basically, the way Soros operates is to have a thesis and then he tests it in the market. If the market goes against his position and he feels uneasy (e.g. gets a backache), he cuts his losses.
- What he took was basic information from various sources and kind of mulched it in his mind. Then he would come up with a thesis that most of the time was valid.
- When Soros believed he was right … no investment position was too large. Holding back was for wimps. The worst error in Soros’ book was not being too bold.
- The key to investing is knowing how to survive. That means at times playing conservatively, cutting losses when necessary and keeping a large portion of one’s portfolio out of play.
- If you are doing poorly, retrench. Don’t try to recoup. And when you start again, start small.
- To be in the game, you have to be willing to endure the pain.
- Perhaps Soros’ most distinctive feature, the trait that explained his investment talents the best, was his ability to gain membership in a very ‘exclusive ‘ club that included the leadership of the international community…. Such encounters clearly gave Soros an advantage over other investors.
- Invest first and then investigate … form a hypothesis, take a toehold position to test the hypothesis, and wait for the market to prove you are right or wrong.
"It's not whether you're right or wrong that's important, but how much money you make when you're right and how much you lose when you're wrong."
In quantum mechanics, the uncertainty principle is any of a variety of mathematical inequalities asserting a fundamental limit to the precision with which certain pairs of physical properties of a particle, such as position x and momentum p, can be known simultaneously.
Paul Rotter - aka "the Eurex Flipper"
Paul is arguably the single largest and most successful individual futures trader on planet Earth, executing trades on the Eurex exchange primarily in the Bund, but also in the Bobl and Schatz interest rate futures. He trades between 200-300,000 round turns daily using the X_Trader platform, and clearing through GNI Touch.
Every trader can aspire to imitate Paul's success as he is proof that it IS possible for a small trader to build on his success and grow into the biggest most active speculator around.
Interview introduction (translated from German language interview with Traders Magazine):
Paul Rotter has made it - he belongs to the best traders in the world and counts as a real big player. he usually does 150,000 rt/d, sometimes up to 250,000 mostly in BUND/BOBL/SCHATZ futures. in the hall of fame of celeb EUREX players he's top notch end even leaves Tom Baldwin (bonds) or Lewis Borsellino (S&P) behind. he had to work hard to make it. he blew up in the beginning of his career, which was painful but also educational - he learned his lesson and with lots of research, seeking improvement all the time, he became the man. q: was there any key event that brought you into the game? a: no, no key event like 'buying my first stock'. took part in some trading contest while at school. q: how did you get to professional trading? a: when I was apprentice in a German bank I had to work on the DTB (now EUREX) execution desk for several weeks. this attracted me a lot. during that time I was doing gamble trades on my private account, losing pretty much all of it. when it was deeply in the red, I had to leave the bank but shortly after, I was allowed to start trading in a Japanese bank. I was very lucky here, since I was allowed to gain knowledge through learning by doing. q: did the bank give you any mentor? a: not, I didn't have one. in the beginning I was exchanging ideas with the chief trader Ajiasaka, who was constantly profitable. he sometimes even hedged the positions of his boss, when he thought that his boss was wrong. I had many conversations about market psychology, which proved to be very helpful, especially after bad losing days. q: how was your trading back then? have you been constantly profitable from the very beginning? a: I was doing 100 - 150 round turns a day after a short time... I had no losing month with the first 3 years of my trading. later on with bigger position sizes i took occasional hits, especially after EUREX allowed terminals in the US and big players like Harris Brumfield / Chicago were entering the field. q: there is a saying that every trader has to completely blow up his account at least once before he can become successful. what did you learn out of it? a: like I earlier said, my private account saw some bad times during my apprentice in the bank, although I must admit, that back then I had absolutely no idea that there was something like 'risk-management'. later on I found 7-digit losses to be cumbering. on day I had a blackout and after losing 2,5 million � I was seriously thinking about stopping. I still had enough capital left to live without having to worry about financial issues and i just wouldn't want to take those psychological hits anymore. after taking 4 weeks off, I regained my motivation and returned in the ring. I was able to make up the loss in a relatively short period of time, so that I came out stronger than before. q: has this changed the views of the market in a way? a: with the experience of bigger losing days coupled with good phases right afterwards, I'm not so sensible for losing days anymore. I know that I can make it back. this has lead to being able to switch off the screens on a day with medium/small losses more easily, instead of forcing the way back into positive territory. q: what are your strengths as a world-class trader and where are the differences between you and other traders? a: it's the ability to get more aggressive in winning phases, taking bigger risks, and scaling back in losing times. this is against human nature. the best thing is to have somebody around who is neutral to trading, that switches the terminals off, when a certain loss level has been reached for the day. q: you are known as a order book-scalper, could you please explaining to our readers what you are doing and what your strategies look like? what is your tactic? a: it's some kind of market making where you place buy and sell orders simultaneously, making very short-term trading decisions b/c of certain events in the order book (level2). for example, I usually have lots of orders in different markets at the same time, pretty close to the last traded price. the resulting trades are usually a zero sum game, but I get a pretty good feeling for what is going on and then ultimately can make a decision for a larger trade. q: how long are you usually in a position? a: since I do trend plays very seldom and actually scalp the market, i constantly get fills in different markets on both sides which can cause constantly changing positions for hours. sometimes i change my opinion several times within a couple of minutes, which is not pretty hard for me, since I'm only looking for the next 3-5 ticks.
q: during your professional career, have you always been a scalper or did you try other strategies (momentum/swing) as well?
a: yes, I have always been a scalper, but I am adjusting my strategies to different market situations all the time. on volatile days I of course have less orders in the market and do more 'single trades', although I usually hold them only for a couple of seconds. q: your strategies only work on electronic exchanges? a: yes, b/c you cannot handle that much orders in a pit, looking for counterparties and so on. computer exchanges grant fast order flow and are not as easy to manipulate. q: as a scalper, are you trying to run stops? a: well, yes, but because of the increase of liquidity in the last couple of years, the fast spikes caused by stops are not happening that often anymore. apart from that, that stops often are not where you would suppose them to be, because the other market participants are not silly either or learned their lesson in the past. q: what role plays risk-management in your trading? a: i set daily goals for my p&l, whereas the most important thing is the stopping limit, the maximum loss I take, before I switch off the screens. my biggest positions are 5 digit number of contracts. I don't use any specific money-management rules. q: what are you doing when a position goes against you? are you using stop-loss orders? a: I strictly close my position when they start going against me. with bigger positions this is not that easy, because I move the market against me, which could cause other traders to get in the same situation like me, which could accelerate the move. however, most of the time I am able to make some of the losses up, b/c I know what caused that move and therefore take the opposite position. q: why don't you have any problems with closing out the position and even taking the opposite direction? shouldn't a trader stick to his opinion? a: no, definitely not. an analyst or some kind of guru has to stick to it, but as a trader you should have no opinion. the more opinion you have, the harder gets it to get out of a losing position. q: what role plays market psychology? a: I constantly try to read the psychology of the market and base my decisions on it. q: how do you handle distracting thoughts and emotions? a: when it gets really bad - taking a cold shower or jumping in a cold swimming pool. q: how do you prepare for the trading day? do you follow any routines or do you take it as it comes? a: before the open I check all the economic reports that are about to be released, speeches of central bankers - simply anything that could move the market. then I try to define important levels in the markets I trade. I do this through my own analysis and through reading analyst commentaries. that's how I get a picture of the market and its important levels. I am not interested in opinions of other market participants as this would influence my own opinion. q: any kind of mental preparation? a: nothing specific. actually I am motivated all the time...I see trading more as a sporting challenge and try to erase the thought of the money. q: how many hours do you spend in front of your screens? a: usually 5 hours, that's when i trade actively...in case of special events i can be up to 11 hours q: isn't it hard to spend that much time in front of your pc's? how do you stay concentrated for such a long time? a: that is what my Japanese colleagues asked themselves as well...well I take it as some kind of game where i forget the time. therefore the real troubles are more physical (eyes) than psychological. q: what do you do to calm down / relax? a: i do lots of sports and take lots of vacations. q: what equipment do you use? a: MD-trader from TT, Reuters, Bloomberg, CQG and a USD-squawkbox. q: why a USD-squawk box? a: i use it because �/$ had some effects on the interest rates over the last couple of months. those effects change, right now it influences oil prices and the DAX. q: what timeframes are you using on your charts? a: usually 5- - 30-min charts for trendlines and indicators. I prefer p&f charts because they give me a clearer view on patterns (triple tops). for indicators I like the CCI because it also shows the volatility of the markets. q: do you think is it possible for a single player to manipulate the market? a: no, in my opinion a single player cannot influence the market around the clock. there are always several big players in the market. take the BUND for example - there are one million contracts traded a day. when a trend starts out of the blue with only slight pullbacks, I could trade against it, but with no effect. I couldn't stop the market from going up, because there would be more money needed that I could bring in. apart from that, so-called 'Analytics' computerized scalpers have made it tougher for me lately. as far as I know they are analyzing the behavior in the order book and create a fully automated system. since they act in several markets at the same time, I think these computer freak come from the fully automated arbitrage- and spread-trading. q: what has one to do if he wants to become a scalper? a: he has to watch the order book for a very long time. when asked for advice for the readers, Rotter says that everything can happen all the time, so you better have your toilet close to your trading desk. |
...another Interview
source unknown
|
| Q: What are your strengths as a world-class trader and what are the differences between you and other traders? A: I have the ability to get more aggressive in winning phases, to take bigger risks, and to scale back during losing times. This is contrary to human nature. The best thing is to have somebody around who is neutral to trading, who switches the screens off when a certain level of loss has been reached for the day. Q: What role does risk management play in your trading? A: I set a daily goal for my profit and loss, with the most important thing being the stopping limit, the maximum loss I take, before I switch off the screens. Q: Shouldn't a trader stick to his opinion? A: No, definitely not. An analyst or some kind of guru has to stick to it, but a trader should have no opinion. The stronger your opinion, the harder it is to get out of a losing position. Q: Do you do any kind of daily mental preparation? A: Nothing specific. Actually I am motivated all the time... I see trading more as a sporting challenge and try to eliminate thoughts of money. Q: How many hours do you spend in front of your screens? A: Usually 5 hours, when I trade actively... in case of special events it can be up to 11 hours. Q: Isn't it hard to spend that much time in front of your PC? How do you maintain your concentration for such a long time? A: That is something my Japanese colleagues asked themselves as well. I think of it as a kind of game and I forget the time, so the real trouble is more physical (eye strain) than psychological. Q: What does one have to do to become a scalper? A: He has to watch the order book for a very long time.
One great prize has so far eluded futures managers. But Oliver Conway looks at a firm that believes it is set to win a place in the institutional market. The managed futures industry has long been trying to tap the huge pools of money held by pension and insurance funds, but has failed to make significant progress because it is perceived to be too risky, expensive and volatile. However, one of the worlds largest futures managers is now targeting the institutional market with a series of funds aimed at overcoming these concerns.
Connecticut-based John W. Henry, which has around $1.4 billion under management, launched JWH Risk Management to bridge the gap between managed futures and mainstream fund management. Company chairman John Henry says the launch "marks the beginning of a new era for JWH". Institutions will eventually become the firms major business, he says.
Although JWH already manages money for some institutions, the new firm has been created to try to gain a long-term presence in the US institutional market. JWH Risk Management will initially offer three types of fund. The first set of portfolios is based on JWHs original trading system, but with less leverage. It comprises two unleveraged programs - one financial, the other diversified - which are uncorrelated to bonds, but aim for similar returns in the long run; and one with a slight gearing that is correlated to neither stocks nor bonds and which hopes to provide a return of up to 15% a year. The second set consists of 12 funds covering the worlds six main stock indexes - in the US, the UK, Japan, Germany, France and Australia - in both efficient and enhanced format. The efficient series offers a high correlation to the underlying but with less volatility and an annual return of 200-500 basis points over the index; the enhanced series aims to give a return of 300bp above the index while keeping tracking error below 300bp. The third set of products tracks two other indexes - the Goldman Sachs Commodity Index and one comprising US fixed-income instruments, which will initially use Lehman Brothers Long-Term Government Bond Index as a benchmark - in both efficient and enhanced form.
Some institutional money has already been invested in the US to be traded alongside proprietary capital, but the programs have yet to be marketed. The firm plans to offer the same products to European institutions. The three core funds are currently being filed for regulatory approval prior to trading proprietary capital. They will be domiciled in Luxembourg and denominated in US dollars and other major currencies. The other programs will follow.
The funds prospective appeal to institutions is based on their low gearing and low fees. "Our non-leveraged programs have management fees of less than 50bp and no incentive," says Henry, adding that many of those outside managed futures do not appreciate that high fees derive from high leverage and that the less a program is geared, the more money it can manage.
"Leverage is non-existent in traditional investment," he says. The firm is also developing a swap mechanism that will allow investors who are not allowed to open a futures account to gain exposure to the programs, add JWH executive vice-president David Bailin. Investors would pay Libor and receive 80% of an index based on JWHs programs.
Managed futures are currently ranked behind stock, bonds, overseas exposure and other mainstream markets in institutional preferences, Bailin says. However, he believes interest will pick up when investors start to study seriously the various alternative investments, as managed futures are among the most liquid and provide a great deal of diversification. He says the greatest problem afflicting institutional investors is that "they are all doing the same thing". Their performances are all evaluated against their peers, he adds. Henry says JWH funds have zero correlation with traditional investments.
JWH Risk Management is in its infancy, with much recruitment and legal and administrative work still to be done. "We have no CEO, no infrastructure and we are not even in our office space yet," says Henry. He envisages an initial staff tally of "a couple of dozen". Senior strategist Jules Staniewicz says the company is still looking into the legality of sharing employees. The details of how best the programs can be offered are also being worked out, but JWH Risk Management hopes to be fully operational early in the second half of this year. Staniewicz believes the new company could attract as much as $1 billion in a relatively short time. But equally, he says, it may take time to become accepted.
It is developing a series of products to be launched in the next few months, giving it a third style of trading. It now uses two systems, both of them long-term trend following. One is always fully invested in the market, the other can withdraw if there is no trend.
JWH trades almost 60 markets worldwide. Its 24-hour trading operation allows it to control all positions. Henry says JWH does not use options for investment management for reasons of cost. "We have made our business managing risk," he says. "We are comfortable with risk and we get our reward from risk."
"Positions held for two to four months are not unusual, and some have been held for more than one year," says a spokesman. Historically, only 30-40% of trades have been profitable, but the spokesman attributes favorable overall results to large profits on a few trades. These are in positions that, typically, exist for several months, while most losing positions are liquidated within weeks. The company has recently invested in both staff and technology and, as part of a review of its dealing controls, automated all its trading desks.
JWH offers 10 different investment programs. The Global Financial Portfolio - which invests in financial futures, foreign exchange and crude oil - returned a huge 86.2% in 1995, while the Original Investment Program returned 53.2%. The firms largest fund, the Financial and Metals Portfolio, which contains almost $900 million, earned 38.5%. Over the same period, the S&P 500 returned 37.6% and Lehman Brothers Long-Term Government Bond index rose 30.9%.
John W. Henry is an astonishingly successful self-made man who started without formal association to Wall Street. He developed trend trading systems in the 1970s that literally made billions and has captured some of the great trends of our generation. For example, by all available evidence Henry was on the other side of the Barings Bank blowout. In that zero-sum game he won what Barings Bank lost. Today, Henry is retired from managing money for clients. With his billionaire status solid he now runs two professional sports teams including the Boston Red Sox. While Henry may have exited the client business after 30 years--hold your breath if you think his now retirement casts a negative light on trend following. Far from it. In fact, Henry is an inspiration to all would be trend followers.
An excerpt from The New Investment Superstars sums Henry's trading philosophy up perfectly:
The Beginning
John W. Henry was born in Quincy, Illinois to a successful farming family. For a Midwestern farm boy in the 50s, there was nothing in the world like baseball, and from the time nine-year-old Henry went to his first major league game, he was hooked. In the summer, he would listen in rapt attention to the great St. Louis Cardinals broadcaster Harry Caray night after night. Henry described himself as having average intelligence, but a knack for numbers, and like many young baseball fans, he crunched batting averages in his head. Henry attended community colleges and took numerous night courses, but never received his college degree. It wasn't for lack of interest, however. When he was attending a class taught by Harvey Brody at UCLA, they collaborated on and published a strategy for beating the odds at blackjack.
When his father died, Henry took over the family farms, teaching himself hedging techniques. He began speculating in corn, wheat, and soybeans. And it wasn't long before he was trading for clients. In 1981, he founded John W. Henry and Company, Inc., in Newport Beach, California.
Getting Started Q&A
Q. How did you get started in money management, and what advice could you give to someone who would be interested in following in your footsteps?
A. How did I get started? I washedging crops for farmland that I owned in a couple of states. I just seemed to do fairly well trading by the seat of my pants. It was a broker at Reynolds Securities in those days that asked me if I would manage money for farmers, because I seemed to do so well in the grain markets. That is sort of how it all started. I said no to hedging for farmers. I spent five years working on some ideas I had for trading, and one thing led to another. I came up with a [trend following] philosophy. Career Insights From John W. Henry
Although now retired from trading--there are tremendous lessons to be learned from Henry.
|
No comments:
Post a Comment