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Tuesday, 20 August 2013

OK, arbritrage is almost risk free

You win coconut!

During the usual bantering and super poking of each other at the comments section of my previous post, I got sand kicked in my eyes when I used the academic definition of "arbitrage".

Well, what do you know?

Last Friday's "fat-finger trade" by a Chinese brokerage - which single-handedly helped pulled up most Asian bourses before noon - turned out to be a glitch in the proprietary High Frequency Arbitrage Trading System instead!

You can read about the story here: No rewind button on Everbright's trades in China.



To fundamental investors, the biggest fear is when the whole of their investment thesis were based on fraudulent numbers and snake-oil promises. For eg, Informatics and Accord Customer Care Solutions (ACCS). 

One of Big Daddy's funds were invested in one of the fraud case above. If pedigree offers no immunity, what more for ordinary retail investors out there?

How's that for jumping into a Value Trap? 

While others were rushing out; you keep averaging down screaming "Cheap! Cheap!" like in an IKEA sale, only to realise too late when the venus fly trap slams firmly shut.


I should be talking! For a person who trusts Price Action, the recent "unintended" trade in China may give technical traders out there a pause for concern. 

Were you faked out of a perfectly good short position last Friday? Or did you go long on a momentum or reversal play only to be stopped-out later in the afternoon? 

Everything is in the charts? Price action never lies?
 


What is real? What is fake?

Does it matter?

I not so sure anymore...

Which is good. Conviction is one thing; over-confident is another thing.

   


19 comments:

  1. So there is a place for buying the STI INDEX or S&P 500, isn't it? Or would you rather "Ken TA Tu YI MA? Put all your eggs in one basket? Bust or Boom?
    HA! HA!
    To tell you the truth, i always dream of "Ken TA Tu YI MA? if only i am sure of course. But how? Can you tell? So better don't dream too much.
    "How i wish only i know i am sure, this time; please only one time," says the Investor...err errr, i mean the Hustler/Gambler.

    ReplyDelete
    Replies
    1. temperament,

      Me too! Imagine we brave enough to go all in during 2009?

      Looking back it was "easy".

      Could STI have gone below 1,000 like during 97 after we Ken TA Tu YI MA around STI at around 1,500 during 2009?

      I think I would have tore all my hair out!!!

      Now we go ai yeah! Could have doubled our networth...

      LOL!

      Delete
  2. what did i win???

    if i want to die, i'll like to die in my own hand, not some stupid computerised system.

    ReplyDelete
    Replies
    1. "not sure" is ok, as long as its stay outside. be sure inside can liao.

      Delete
    2. coconut,

      You won a praise from me.

      I know...

      Kenna sai.

      Delete
  3. What is real? What is fake?

    Getting pregnant with condom on!

    Sometime, thing does breakdown. Fake?

    ReplyDelete
    Replies
    1. CW,

      Pin-hole...

      Fake sense of confidence...

      Abstinence is the best kind of contraceptive :(

      Delete
  4. we like to call it breakdown, or crash, or desaster, or flash crash, or unusual event.

    actually these are all so common, very usual and real. it just don't happen too often.

    ReplyDelete
    Replies
    1. whats the probability of getting 2 tickets in one park? one in a ten thousand? hundred thousand? still i got it!

      Delete
    2. coconut,

      Now that's one phrase for English teachers ;)

      all so common... it just don't happen too often.

      I must steal with pride. Try saying it with a straight face!

      You very de good man!

      Delete
    3. whats why you must learn "relative" and stop playing with words haha.

      its very common but event not happenning is even more common, see!

      Delete
    4. who ask you to learn from english teacher, can he trade or not?

      Delete
  5. SMOL, get ready your dry gun powder, or bullets, don't wait until enemy right infront then start looking.

    i have this strong feeling for the next few months, bond market is going to collapes and will drive equities down with them!

    feeling only ah!

    ReplyDelete
    Replies
    1. i'm polishing my rifle and cannon!

      Delete
    2. coconut,

      I shorted the Simsci last Friday afternoon.

      Took some money off the table for my equities on Monday.

      Boo.

      Delete
    3. Nothing and everything!

      It all depends on tomorrow's FOMC minutes.

      Fake - If taper off, there's goes my UNREALISED profits on the Simsci short.

      Real - My REALISED profits taken on Monday.

      Delete
    4. why? can't you get back in again?

      Delete

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