If 2009 was the year to bear fruits for my customized strategy trading then 2010 no doubt will be the peak with maximum return so far. The sharp rebound of the bull in 2009 carried over to 2010 and getting profit consistently on a daily basis was like everyday drawing money from ATM to me. However, there was a correction in the market around June period when the Greece's debt saga first emerged and that was the first time my customized strategy undergo some serious test. The sudden drop due to fear of the Greece's debt can cause global economy on a double-dip recession no doubt caused me to take hit as when on contra play, time is the number one enemy for me. The hit wasn't that serious but caused me to reflect on refining my strategy. From that lesson learned I began to cut down on trading in stocks that are slightly more volatile to avoid this type of sudden turn of event in the future. Months later when global stock markets recovered from that shell shock Greece issue, I earned back what was loss during that period and market continued to scale new high. Around September that year, I also started to document my Trading Statistic as I wanted to keep a record of what I have done (right or wrong) so that in the future I can look at them, enhanced on the good points and rectified the bads. It was in November and December that probably hit the peak of my strategy trading as I have been chalking up 25 consecutive contra gain from 11 trading days (a record which I held until was broken just recently). Needless to say the rewards came with was a sweet sweet one as the nett profit I achieved for that year was more than I can ever get from being a paid engineer and best of all, capital gain from trading is non-taxable in Singapore. It was like in cloud nine for me in 2010.
2011 :-
2011 was a year that clearly divided into 2 distinct half. First half of the year apart from the March Japan tsunami disaster rest of the months were pretty much the same for me as in 2010. The Japan tsunami did cause market to sharp drop within days and this sudden unexpected event no doubt caused me to take some damage but the loss was minimum as most of the stocks that I traded were less volatile and the downside was pretty much controllable. Furthermore, the Japan tsunami event to me was just a temporary short-term setback as from past history knowing Japan always managed to recover back from such natural disaster. Hence the loss was pretty much recovered back within weeks. However, second half of the year was another game changer for me which required me to change my trading strategy again. Couple of events took place and I have go back to drawing board again.
1. There will be a change in minimum bid size of the stock price in August and that change definitely will have impact on my contra trade. The notice was known months prior to the change so I was already planing how to change my strategy to counter that coming in June. As contra play time is the critical factor (T+3 days only) and with the reduce bid size, within that contra period might price might not move enough for me to churn some reasonable profit. The good thing about the reduce bid size was damaged can be reduced from previously too.
2. The Greece's debt crisis again resurfaced in June and well lightening strikes twice and people started to talk of double-dip recession again. That event caused some correction in June.
3. Come August, the US deficit ceiling issue which led to downgrade of US Government from its AAA status for the first time shocked the market as fear of US entering double-dip recession (also QEs effect from US was ineffective as unemployment rate stayed high, economic data stagnant) caused global stock markets to be extremely volatile (swing of +/- 3% to 4% from day to day in US and +/- 1% - 3% in STI).
4. The boiling point of the year September to October when Europe crisis melting point in which globally known that should it cannot be contained systemic risk will appear and the impact could be global depression.
In June I was changing and testing my new strategy to cater for the coming August changed in minimum bid size system. In doing so, I was mentally prepared to pay some school fee too and that was why in June I recorded my top worst performance of 7 consecutive contra loss within 4 trading days so far. The testing carried on till July and that was the reason both June and July I recorded the worst monthly hit rate too (Trading Statistic). Getting into August I was more or less ready to change strategy to cater for the new minimum bid size but unfortunately the US issue in August caused the market to be extremely volatile and at one stage didn't know whether my new strategy was not working or because due to the extreme volatile situation. To prevent unnecessary contra loss, I decided to sit deep and observe and trying to rethink the strategy again. That was one of the reason despite the market volatility I did not suffer big hit then. The global events which led to market great volatility has somehow taught me another lesson and at that stage I decided to try something daring and different. As an engineer I was very analytical, every issue will analyze on their pros and cons before making decision to act. With that in mind, I decided to use that on stock market. It was daring and high risk as if analyzed wrongly will incur losses but I decided to give it a try as I knew if I get it right, I will be ahead of the market and easily beating the market. Then I started to focus on the global events, reading all the positive and negative views and analyzed for myself which view should be correct. During that process, I further confirmed that market analysts are either most of the time wrong in their views or lagging in it. This gave me a moral boost as I know if I get it correctly, the market is there for me to beat it.
My first testing on this approach was September and October when the Europe debt crisis hit melting point. Talk of Greece default, Euro breakup and global recession also surfacing in the market and it was in October after reading a statement by European Central Bank President Jean-Claude Trichet on “The crisis has reached a systemic dimension” (Market Analysis -- 15th Oct 11) that resulted in me making an analysis to conclude market has hit the bottom (till today I yet to hear any analysts saying so despite market really rebounded more than 20% from there). That was a breakthrough for my analytical approach in trading and that gave me some confidence in my new trading strategy. In my engineering days I remembered all the extreme conditions (best and worst case scenarios) must be thoroughly tested before the product or solution could be certified usable. That was why for the rest of the year I continued to use the analytical approach as the core engine for my new trading strategy and slowly test on it with the view that market has hit bottom in October. Trading results were mixed as the volatility sometime took me out due to contra play time constraint and I have to accept that as time factor is always an handicap in my trading. Despite paying school fee in the second half of the year to change and test out new trading strategy, the profit from first half of the year still enable me to record a nett profit for the year.
2012 :-
My testing continued into 2012 as I want to make sure most of the trading scenarios were tested and not rushing to it. By March I felt that my testing was almost done and during those testing months I still manage to edge out profit on a monthly basis so I actually quite glad with it. April onwards was the bearing fruits stage for my new trading strategy as I have been hitting more than 90% hit rate on a monthly basis (Trading Statistic). Well it might also partly due to market was on an upwards rally then which I will not rule out that contribution factor. In April I analyzed that market will hit another bottom in June (Market Analysis -- 1st April 12) and highlighted again in June (Market Analysis -- 1st June 12) citing Europe debt crisis as the game changer for the reversal and with that analysis in mind, I planed my strategy around that direction and trade accordingly. The result was correct and didn't suffer any major loss despite I only trade on the long side with market slowly trending down (trade against market general trend and still can profit, that is probably something not anyone could do it). That was the second correct analysis since October 2011 and that without any doubt given me more confidence on my analytical approach. With that strategy, I hit new records on my trading statistic, Best Performance (hitting 29 consecutive contra gain within 26 trading days surpassing previous record of 25 in November 2011) and Best Monthly Performance (hitting 100% hit rate, that is no a single contra loss in a calender month) categories in August. That was something very very sweet and satisfaction given that the trading conditions were more difficult (reduce minimum bid size and low volume) than in 2010 and 2011. My next analytical view on the market will be between October to December market will hit another low due to issue from US and whether can I hit it 3 in a row to be analytically correct months later will I know. A bear fruits year so far for my new analytical trading strategy.
A brief outline of my analytical trading strategy, not the detail as trade confidential and furthermore this approach is very much customized to suit my personal risk. Each individual has different risk hence should I detail out and others without my risk appetite follow suit it will be dangerous for them. In analytical trading strategy, I look at global events that could dictate direction of market and do analysis on it to see which direction they could move the market. With that in mind, all possible scenarios would be taken into consideration and then tactically crafted each move. A typical TA trader would say "Never fall in love" with a stock but to me it is totally wrong, I would like to know the stock inside out so that how they behave under what conditions is all within my grab. To put it in laymen term, I treat the stocks as my "lover" and know that every move inside out. Another thing is I am also better mentally prepared now for another change of trading strategy should trading conditions change again in the future.
Looking back as a full time trader (or Strategic Investor which I term myself) I might be losing out to my peer in term of financial aspect. Most of my peers probably now staying in private property, driving big car and having a fancy or blown your hair away job title in which all I don't have as a full time trader. However, there are things which I achieved and have they never get to have. The satisfaction in beating the stock market consistently, able to spend time with my kids' growing up phase (that is priceless and no money in the world can buy) and not worry about retrenchment should economy goes to tailspin again. To me as long as stock prices move, I can trade and earn profit from it. It is a niche skill that even in recession I should have no worry about being unemployed and no income. Many see trading to get rich but not me, I am a strong believer of only fundamental and value investing can get one rich (Investing) and to me trading is to provide daily income that all.
Trading Is A Science But With The Skill It Could Turn Into An Art
