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Thursday, 10 November 2016

Bet you never saw it coming! (Wrong but make money)



Neither did I!

Let's not talk theory about Trump's win yesterday.

There's enough pontifications and red-faces out there. We know who got it right; who got It wrong...



Boy, was I wrong!!!

Like the majority of the market, I had a small skin in the game that's positioned for a Clinton victory - long USD/SGD.

Nearly spilled my coffee when I saw Trump leading Hillary early in the morning.

Markets went bonkers and it was Brexit deja vu all over again.

USD dived; equities markets in Asia bled big time. S&P futures went limit down 5%, and gold went ballistic!



I was so close to closing my position - to protect my profit - before I noticed something interesting in the price action.

Each time Trump won a state, the USD/SGD pair will bounce up a bit; and the reverse is true when Hillary won? All these happened in a broad and general USD downshift. 

That's not how its "supposed" to be??? Isn't USD "supposed" to weaken if Trump won?



The advantage of trading fulltime and watching the price action "live" is spotting these little tell-tale signs that someone is building a counter-trend position against the general market.

I removed my finger from my mouse as I watch in suspended animation when the markets start to reverse in the afternoon.

Simsci was off the lows of the day, so was USD/JYP, and gold has lost its upward momentum.

I finally closed my long USD/SGD position at a profit of 511 pips in the evening at around 5:20 pm.

Before you get any wrong ideas, I had this position since August - no, it wasn't an intraday trade. I'm not an intraday trader; I suck at that!



There you go! This is another one of those examples where I was wrong; but I made money.

Its better to be lucky than smart!

I was so glad I'm not in the long USD/JYP pair for I surely would have been profit-stopped out and missed the reversal in the USD...



No, this is not a bragging post.

Guess what? At 10:00 pm last night, I knew I had sold too early. USD/SGD went up another 40 pips.

And this morning at 8:00 am? If I held my position one more night, I would have made an extra 80 pips.

See? After so many years, I still leave so much money on the table... How's that for my exit skills? Much work remains to be done...



I think I shouldn't be so hard on myself. I was wrongly positioned and when market gave me an opportunity out, I should take it!

For those who don't trade forex, did you expect the STI to gap up today after the sell-off yesterday?

No right?

And if you panicked sell yesterday, don't be too hard on yourself too.

Remember beginning of this year? Those who panicked sell on the first day were glad they did so;  especially when seeing STI continue to bleed towards 2500 in the coming days...



Whether you are an investor or trader, once you in this arena for a few years, you'll soon discover there's only 2 things you can control:

Your entries; and your exits.



Humbling right?







15 comments:

  1. yesterday was a super roller coaster ride, this time DOW recovered faster than BREXIT's time

    ReplyDelete
    Replies
    1. bro come to thk of it, you didnt execute your plan. this is very dangerous and can double cross you. you are lucky this round, if next round how? u cant be lucky everytime

      Delete
    2. Jimmy,

      No, the price didn't hit my profit-stop. It was going to ;)

      This USD/SGD pair's price action was "mild" compare to USD/JYP's 300 pips plunge before the equally strong reversal. Hence got time to pause and recalibrate ;)

      Either way, it was a profitable trade - its more a matter of make more or make less.

      I made more compared to my profit-stop; but still left 80 pips on the table... Oh well... LOL!


      But you are right. That's why I hinted in the last paragraph it was better to stick with our rules than always 2nd guess ourselves.

      When the reason we got into a trade is not longer valid, we should get out the hell out! Period.

      But I "overrode" this rule as I saw the price action telling me something is not "right". I 2nd guessed and got lucky!

      That's why I said I was WRONG but made money.

      These kind of trades are exceptions; not the norm. My playbook has room for these exceptions ;)

      I am discretionary; not systematic. Grey, grey, fuzzy, fuzzy remember?


      Imagine if I had been right that Trump would win - short equities; long gold - but still end up losing money on the monster reversal!?


      That's why is so humbling. Markets will always find a way to humiliate us if we lapsed into complacency...

      Delete
  2. HI SMOL,

    I was surprise at the results, but not shocked with trump win, maybe because we already have Brexit as a precedent.

    It made me wonder how to they do the polls? By phones, those who are free enough to do the phone poll are the citylites that are more clinton leaning, while those who are frecking working hard are anti-establishment? Maybe the same goes for those polls at Brexit....

    I did nothing this time round, didn't add and subtract, the funny thing is I got a call from my wife when there is the early panic from Trump's lead, asking me anything to buy LOL

    I say chill la... wait for dusk to settle, she must be cursing me now... 2 days earn money liao, had we enter there and then LOL

    ReplyDelete
    Replies
    1. Sillyinvestor,

      Well, just like credit ratings agencies got some black eyes during GFC, now its the turn for polling agencies...

      Well, something for those who like to seek "experts opinion" to think about ;)


      Would you or your wife have sold today if you had bought near the bottom yesterday?

      I didn't think so.


      But got to love your wife - she "garang"!


      Sometimes its better to don't know what cannot be done...

      LOL!

      Delete
    2. Haha... The world is getting more and more unpredictable.

      Maybe if you prefer Trump to win, then maybe you can bet financially on Clinton to win. So either outcome, you still win!

      Marc Faber said "If Trump wins, US will collapse!, If Clinton wins, the world will collapse".

      Delete
    3. Rolf,

      You know what?

      I may need to take the next few days to rethink my thesis for 2017.

      Not losing money will definitely be high on the agenda!

      LOL!

      Delete
  3. I had the same like you too, taking a position which is not meant to be that way but at the end profited a lot from it. I will talk about it in my next post.

    ReplyDelete
    Replies
    1. B,

      Fantastic!

      See? I'm not making it up!


      Most of the time, when we were caught wrong footed by the markets, we will pay the price...

      This time we both got lucky!


      Now I finally understood how that institutional trader mentioned in Market Wizards felt. He lost a couple of millions, admitted it to his bosses, and when supposed to liquidate all his positions the next day, saw the price action and decided to wait.

      He managed to make a small profit instead!?


      Delete
  4. Hi smol,

    I give another example: Richard wanted to buy singtel but instead pressed the wrong order and sold instead. He made a mistake but 'made' money instead if he is to 'buy back' what he had mistakenly sold that day.

    Lucky beats smarts anytime, if you're lucky ;)

    I was just observing the market on that day; woke up esp early to see this historical moment. I didn't have any expectation of who to win and was prepared for both scenarios playing out. I q but i guess I was too low ball, as usual lol

    ReplyDelete
    Replies
    1. LP,

      Sometimes mistakes can be painful like hell; sometimes it can be hilarious funny! LOL!


      I see you entry style is to let the price come to you; not you chase after prices.

      Impressive ;)

      Delete
  5. Congrats SMOL, expect the unexpected

    ReplyDelete
    Replies
    1. Yaruzi,

      A bit embarrassed but I'll take it any day!

      I'll rather be wrong and make money; than being right but lose money ;)


      Lucky most Singaporean retail investors are not into bonds; damage limited.

      Who will buy Singapore Savings Bonds when we can get US 10 year treasuries at above 2% yield? And with the added tailwind support of USD appreciation against SGD?

      A lot of pain for bond investors right now.

      Same goes for gold investors.


      "Safe" turned out not so safe after all...

      Delete
  6. i think if you can afford to buy 99% of the time (not average down), you can control your exit price to a certain extend.

    So what's trading?

    Don't know leh!

    After caught by Brexit exit, is this "US exit" any difference?

    Prefer to let the price comes to me rather then going after it.

    Too difficult for me to go after anything (old already) lah!

    ReplyDelete
    Replies
    1. temperament,

      Trading is speculation.


      Talk about difficulty... Letting the price to hit your selling price is totally in a different league - how many retail traders have a selling target?

      Shhh...

      Delete

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