Sunday 10 July 2016

My Trading Edge

As usual, I shall lay out the context and perspective before I share what's my trading edge.

Paid to trade

Traders working for institutions like hedge funds, investment banks, sovereign wealth funds, etc; they all have one thing in common - they have a base salary.

That means they don't have to worry how to pay the bills every month.

With one thing less to worry, they can focus on making money for the landowners who hired them - knowing full well their landowners will reward them handsomely with big bonuses if they perform.

Ownself eat ownself

As for full time traders trading at prop shops, trading arcades, or at home, there ain't no base salary - we eat what we kill.

No kill; no meat.

We go hungry.

Multiple sources of income

Do you know how difficult it is if you want to trade for a living under the "ownself eat ownself" model?

Just ask any trader trading his own account and you'll know! Verify for yourself.

After struggling for a while, some of these traders will discover they need to find a more stable source of income like their "paid to trade" brethren.

If not, how to recover from big drawdowns or busted trading accounts?

Hence you'll see all these "I want to share my secrets", "I want to help others get rich", "I want to work for world peace", finger in the mouth kind of snake oil being peddled.

Pause and think for a moment.

If you are a successful trader, why do you need to burn your evenings and weekends finding other sources of income to complement your trading income?

Selling subscription services, giving seminars, and organising workshops and courses?

And you thought trading for a living gives you financial freedom? These multi-tasking traders cum training gurus are probably working longer hours than you!

Isn't it much easier to show your track record to the institutions and get yourself hired as a paid trader? (OK, institutions are better at verifications than retail; maybe that's a harder sell...)

My trading edge

I did my homework and when I started my journey as a full time home based trader 3.5 years ago, I made sure I do not have to trade with scared money.

The investment side of my portfolio pays for my lifestyle.

That means once I've seeded my trading account, I've no need to withdraw money out to pay for my living expenses.

All my trading profits stay in - that helps to grow and compound my trading account.

And it makes tracking and measurement of performance so much easier - I started with $1; now I have $11.

Simple. (What's with XIRR and CARG? Noticed the study types like to use percentages?)

No. That's not the edge. That's the pre-condition for my trading edge.

What's my trading edge?

I can afford to be standing on the sidelines.

Remember, if you are a "ownself eat ownself" trader, how to make money if you don't have a trading position on?

P.S.  Hang on! Some of you alert readers may be thinking to yourselves - I have a regular full time job that pays the monthly bills as I trade part-time. I can afford to be on the sidelines too! Why then am I still belonging to the 90% money losing group of traders???


Well, that's for you to figure out for yourself.

There's one big difference. Wink.


  1. Quote : "Isn't it much easier to show your track record to the institutions and get yourself hired as a paid trader? (OK, institutions are better at verifications than retail; maybe that's a harder sell...)"

    The true story of snake oil blogger who somehow known the Market best-kept secrets and so kind to share with weak minded folks who believe in fast money.

    Some years back; the snake oil was blogging that he was very happy to be invited by one institution for an interview and hopefully he could land a job with the institution.

    Till today; this blogger is still sharing market best-kept secrets at a price to retail and institution is NOT willing to buy the secrets.

    Re-quote one more time: (OK, institutions are better at verifications than retail; maybe that's a harder sell...)"

    Folks reading here. You get the message?

    1. CW,

      Of course folks here understand - those of us who can make our own independent decisions prefer to talk "male chicken" here and challenge each other on our blindspots.

      Those who need others to shepherd them on what stocks to buy, at what price, when to sell, etc...

      They won't be here ;)

      I'm no bleeding heart. I talk in code.

  2. Hi SMOL,

    You can come to my snake oil selling session this coming weekend. Click and register below. If you are interested in our Whatsapp, don't forget to register for next weekend.

    And yes, bring your friend CW8888 too. I'll extend buy 1 get 1 free. Hurry up, seats are limited and they're selling fast.

    1. Yaruzi,

      Just buy me a drink and I'll sing for you like a canary!



      Free can be most expensive as those who are weak to say NO have found out...

  3. Hi Smol

    This reminds me one of my colleague who is trading forex part time while working full time. He complains that he has no time to trade because of his work needs to OT often. He missed some opportunities, but he also escaped some calamity. When he has time to trade, the other side of market would have closed for the day.

    1. Small Time Investor,

      Before I left for my overseas posting, I like to take 2 week vacations to trade "full time" to see how it felt - no more excuses!

      Quite easy to verify commitment or burning desire:

      1) Those who find solutions.

      2) Those who find excuses.

  4. Hi SMOL,

    Could it actually be possible that someone has make it, and just want to share?

    I never did go for such course. But, if it's free, people dun believe ...

    Oh all are snake oil ?

    1. Sillyinvestor,

      Evidently no one has approached you to "market" courses at your blog.

      What if I tell you I can get $400 if someone signed up to a $1000 course that's referred by me?

      Guess how much the trainer is making off the remaining $600?

      I said no thanks.

      I see one financial blogger no up (look him down) when he put up an ad at his blog promoting a course from a known snake oil in the industry.

      If any "bei kambing" click on the ad and signed up for the useless $3000 course, the financial blogger gets $500. That's cold.

      And I don't care how "nice" and "friendly" this financial blogger is to his readers.

      Some food bloggers already have a bad reputation... Just pay under table money and we can get "great reviews" on the eateries.

      Remember those lifestyle blogging "prostitutes" who will say anything just as long its a paid advertorial?

      Well, it's a matter of time before some financial bloggers will be "caught" for engaging in questionable ethical activities.

      If you "make it", would you be willing to teach or give tuition for free?

    2. Hmm...SmOL

      Actually I am willing to give free tuition... That's why I ask.

      But time does not permit. But I dun give free tuition to rich people le. I do think I am quite an "established" teacher with sound teaching skills. Maybe not top in the game but ...

      I see poor but willing, I think I will give free tuition

    3. So I wonder if someone will too?

      Look at the info at value buddies, so much to learn, but free? No?

    4. But if my own pupils count, I giving plenty of "free tuition" above those required by the school

    5. Those extra hours weekly, had I go for the paid version, which is always available would have mean I get 600 more every week. But no thanks

    6. Typo again 600 every month. Bloody hell, too early in the morning ...

    7. Sillyinvestor,

      Think about what you've said.

      You would like to give free tuition but time does not permit... Yet for your own pupils, you are giving plenty of "free tuition".


      I know, too early in the morning!

      But you are right when it comes to human nature:

      1. When you are giving free, you select your own deserving students.

      2. When you charge as a business, you'll accept anyone and everyone - just as long they pay!

      There are very good active money managers with closed end funds that will not take your money as they care about optimum performance to their existing clients. They choose their clients; why help scumbags get richer?

      Then there are money managers that will accept all kinds of money no questions asked. 2% on $1 billion versus $10 billion asset under management is a lot of difference!

    8. The great difference between job and charity. For charity we are very selectively which ones to give much more than the usual tokens.

  5. Wa CW and SMOL,

    For those who can sleep as long as they like, you guys are early too!!

    Have a nice day

    1. Sillyinvestor,

      Have a super day yourself! Nice cool raining day today :)

      I heard senior citizens don't need too much sleep... (Long time no poke him liao)

      Me? The Simsci futures start trading at 8:30 am you know?

  6. Hi SMOL,

    Agree with the don't need to draw down on trading account for daily expenses which helps a great deal when trading...can afford to not place any trades if unsure. There are opportunities everyday just that some are riskier than others

    1. Joyce,

      Coming from a fellow full-time home based trader, the affirmation is a lot sweeter ;)

      Some days I stay cowered under my blankets as its so turbulent and scary out there.

      Some days I trade with glee and conviction as I've experienced similar trading patterns before.

      I can only focus on what I can control - my entries and exits. Everything else is just happenstance or randomness...

    2. i like to add, as a position trader, the opportunities lost in everyday price movement if you are out of the market is much greater than the losses you incured when you trade ramdomly.

    3. coconut,

      That's advanced stuffs.

      If I include "opportunity costs" into the equation now, I'll probably self-destruct through over trading...

      No. I'm not ready to level myself up to this higher level of trading yet.

      I don't get hurt by positions I owned that went up; I get hurt by positions I owned that went down :(

      I'll probably add opportunity costs when I'm more proficient in trading.

      All in good time :)

  7. sorry smol, being busy lately but i got to say your understanding of trading had improved greatly! yes, having an edge does not meant you will win on each trade, thats a very important point you made. winning a single trade or an idea does not meant anything at all. even if you say you had won for the pass who;e year, it does not meant you will win in the future.

    no one trading method can last even weeks in todays market condition, only traders who have the knowledge of trading methodolgies and continue to evolve trading strategies are able to survive in the market place.

    while i also does not know where my limits are, i do have one single edge compare to the other pro traders still in the market and thats FLEXIBILITY.

    "be water my friend".

    1. and i love the way you say it, traders who eat themselves have to have positions or otherwise, they ended up eating themselve something like that!

    2. coconut,

      No worries. Own time; own target.

      Thank you. My "smoking" skill has improved ;)

      OK, I'll update your edge - its FLEXIBILITY; no big baxxs!


  8. temperament,

    And that's what I've been poking all along...

    Is there a difference between a trader and an investor?

    Its never the noun; it has everything to do with the adjective - competent, profitable, skilled; etc.


  9. SMOL, I will only teach good friends who have potential for free. :)

  10. But I do know successful traders who teach or mentor people because they genuinely like people and enjoy the interaction. :)

    1. Jules,

      Of course there are.

      Its nice to know we have the potential and successful traders enjoy interacting with us ;)

      We are standing on the shoulders of giants before us; and merely paying it forward.

      Although I'm not sure I'm a torch bearer...


  11. Temperament, I find trading to be mostly about fighting my own demons. I don't think about my competition. Most of them are robots anyways. LOL!

  12. temperament,

    Self knowledge is half the battle won.

    Sticking to our strengths is an edge ;)


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