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.