Tuesday, 30 October 2018
Orthodoxy and Orthopraxy Revisited
Recent events and a fun discussion with a landowner yesterday made me realise I can resurrect this old post below.
But be warned. Its not light reading. Move on if you're not into critical thinking.
Orthodoxy vs Orthopraxy
Most of us do not have the time, competence, or right attributes to be intraday traders. Its just too damn difficult!
What do most people do when we find we suck at something? We demonise it of course!
Saw the US indexes last night?
When I went to sleep around midnight, it was all green. What do I see this morning? Man! Talk about heart stopping reversals!
My long held "Correct Belief" is: Real money is made on the longer term trending trades.
My "Correct Practice" recently is: Close all my freaking positions every night!
(Of course that's until things calmed down so I can go back to holding my trading positions for multimonth periods)
Why? Because I've been brutalised by the wild volatility in recent weeks!
I not smart. I learn from crash got sound.
If the mountain don't turn, I turn.
Oh! We were talking about Warren Buffett yesterday and I just remembered the question I posed for Warren Buffettt acolytes in my old post:
If your "Correct Belief" is Buy and Hold, and you swear by Warren Buffett's remember rule 1 and 2....
How do you reconcile the two with your "Correct Practice"?
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Hmm ... I took back capital and lock up at low return. Follow Rule 1 and 2. Not correct practice but low practice.
ReplyDeleteCW,
DeleteCapital safely under your mattress so can't lose money!
Risking profits is about earn more or earn less ;)
You never say your "Correct Belief" is to maximise profits mah!
That's the advantage of a bigger base.
And more importantly, EXPERIENCE ;)
We have seen the movie before!
Its easy to parrot follow Rule 1 and 2.
But when we trust but verify ask HOW and WHAT exactly you are doing to put it into practice...
Need to go through at least one bull/bear cycle right?
When we started, we also have no idea!!!
what wild volatility? we just went into normal mod, but i got a feeling it will go back to low volatility again, why, liquidity still very low.
ReplyDeletecoconut,
DeleteI really missed your intellectually stimulating comments!
No need say a lot. We can read between the lines ;)
Yes, yes. This is how the markets should be.
Central banks have artifically suppressed volatility until shorting volatility has become a great money making trade (except in Feb)!
I know what you mean. Thanks for the heads up!
I had to postpone a kopi session this week with a reader as I see what you see. Better make hay while the sun is still shining!
i'm like the fish in the pond, knowing every changes within. most traders are staying along the pond, their feet stay dry.
Deletei can't, i suvive in the pond along side with 60-70% of robot fish trying to eat each other, what is left for the real fish to eat?
stay out if you can!
i also had a coffee session with a friend over the weekend, she again ask my advise, 75% vested and bleeding, ask if can buy some more!
Deletewhat can i say, don't know much about stock market and investing, since already 75% vested, i say if i'm her i'll stay as it is, market is still on the way down.
luckily i'm a trader, i'm still net short the local stock market, i'm going to push harder if market does not turn around.
Deleteif market really tank and got panic, i might jump out of the pond and turn into investor like many of us, i'm sick and tired staying in the pong with all those stupid robot fish!
you know every time when come to the month of october, my sense always stay on high alert, don't know why, history tell us that if there is anything wrong with the stock market, it must be in october!
Deletecoconut,
Delete1) Ah! You feel all the little vibrations in the water ;)
I don't envy you; its no easy.
If pros like Fat find it hard transitioning from the trading floor to electronic trading, what's more is there to say? Don't try this at home?
2) Well, the consolation is your lady friend "only" 75% vested?
Sometimes I feel like shaking such people to help them wake up their senses!
Why DIY when you have to ask others what to do?
If no time or interest to take up investing seriously as a craft, why don't pay someone to manage it for us (actively managed mutual funds) or go for the "Look ma! No brains needed" route (passive index funds)?
But then again, without people like your lady friend, how can I survive? I cannot beat the pros; I can only outrun the bei kambings :(
I only hope more bei kambings will realise sooner we veterans are not here to be your friends; everyone and anyone are all here to steal their candies!
Ownself help ownself!
3) That's the dream! Make enough we get out completely :)
Buy some real properties and enjoy life as landowner. Paper assets are still paper assets ;)
4) Yup, after a while, we begin to notice repeating patterns in the markets. Occupational hazard!
LOL!
this lady friend of mine is no push around one! i ask her how much did she invested as i need to know if i'm in her position, she didn't reveal to me but i estimate around 2-3 mil! she has around half a mil to invest.
Deletei explain to her that trading and investing are 2 different animal, and what i do is likely opposite of what she should be doing (except in extreme cases) and she understood quickly. she conclude by saying what i do is gambling and she is asolutely right!
coconut,
DeleteLOL!
She trolling you?
Got dragon sabre but don't know how to use also...
Come to think of it, even lagi dangerous!
If you lady friend went to a bank, they will smell blood.
Nothing attracts their attention than a bei kambing who is also rich!
Remember those high networth retail investors who bought Swiber bonds?
The banking snakie oils will sell your lady friend Accumulators!
i think she consider high net worth, have private banking account.
Deleteshe made (her hubby) her money else where, stock market is for her to give back some.
Deletecoconut,
DeleteI guessed as much ;)
High net worth means exactly that - got a lot of money :)
Nothing more; nothing less.
Well, at least she did one thing right! Marry rich!
I say throw away what orthodoxy or orthopraxy. Just be honest and look at your own equity curve. If you like what you see, carry on. If you dun like what you see, you can pretend that you never saw it and never look at it again LOL.
ReplyDeleteMacroanalyst,
DeletePrecisely!
You'll be surprised how many behaved like the Black Knight - its just a flesh wound!
LOL!
eh last night really chua sai indeed.. wake up with no positions this morning cos stopped out!
ReplyDeleteSGRetailTrader,
DeleteTell me about it!
After repeatedly getting abused by the market on my overnight positions, I decided to close all my daily positions last Friday ;)
Small profits; just getting a feel for it!
Next time I find myself in similar market conditions, I'll be prepared :)
SGRetailTrader,
DeleteMust say you are one of the more exotic retail traders out there!
Not many Singaporean traders would short 3X leveraged ETFs to earn the decay ;)
I did explored and research shorting the VIX ETF to profit from the decay too. But after the Feb event, I chickened out.
LOL!
Haha I have not updated my blog but am no longer shorting leveraged ETFs for decay. The commission for doing that is doing me in. Now just straight up long on them vanilla style!
DeleteSGRetailTrader,
DeleteAh so!
Pure directional plays. Keep it simple ;)
Vix ETFs are scary.. one vix etf I was shorting got trading suspended and magically failed to reflect price drop in vix whilst suspended. Well at least it didn't wind up like the other one..
ReplyDeleteSGRetail Trader,
DeleteYou stay healthy and nimble OK?
There are only a few true blue retail traders at this watering hole.
Free do drop by and talk shop OK?
I'm more into currency and stock index furtures. So we won't faceoff in the markets ;)
"abused by the market" haha thats a pretty good discription on how the market treating me for the pass one two years!
Deletenow, at least for the time being, i'm out of the blue.
coconut,
DeleteWe definitely don't "glamourise" trading!
If we don't treat it as a craft, who would put ourselves through so much pain, self-doubt, humiliation, and crushing self-esteem?
Lucky I don't take myself too seriously, and can laugh at myself ;)
I mocked myself during my 2017 year end trading review:
I'm the only sotong who lost money when - yield hogs, look ma no brains needed investors, and those who voluntarily contributed to CPF - ALL outperformed me!!!
If I can poke others, I must also can poke myself mah!
LOL!
Such is the market condition recently that if I set a stop-loss for my trades, it's = sure loss when I check back the next day.
ReplyDeleteRainbowcoin,
DeleteCrazy right?
Most of the time, it pays to let my profits ride. But not the last few days :(
Can't stand 1 day up, 1 day down kind of markets $#@!!%*(^@
LOL!
Interesting strong up move in the STI after the lunch hour. Europe is up and green too!
Hope tonight the US markets will continue its bullish reversal.
Not asking for much...
Can we have 3-4 days of up or down moves?
I would prefer a "leisurely" swing trade over an "exciting" intraday trade any day!
Yeah SMOL!
ReplyDeleteIt was a good decision that I made to remove all my stop losses and sleep in peace last night. So ironic right?
"Mountains don't turn, I turn" but problem is this is not mountain hiking, this is white water rafting!
Rainbow girl,
DeleteCareful now...
Flying or driving without safety belts can be nasty when things go bump...
Closing all my positions at the end of the day is not the same as not having stops.
I did not amend or touch my risk management system; I only changed the time frame of my trades ;)
If sometimes use, sometimes don't use - its not a system anymore ;)