Wednesday, March 05, 2008

Update for the Sake of an Update

A lot has happened in the past 15 months or so. I won't fill in the details. It would take too long. It's not like anyone has been reading my blog anyways. Moreover, I've been spending more of my time on FaceBook. I may choose to update this blog in future, but I think it may be best to wind it down. If someone is reading this, thank you for your attention. Please feel free to go through my archives.

Friday, November 24, 2006

A Look back at 6 Months of Trading

I know that I haven't really talked about this much. No one seems to visit my blog anyways, so I've been posting things a bit more vigourously on Facebook, where I know at least some of my friends will be looking. Anyways, my trading has been progressing slowly. But make no mistake, I am getting better. As of right now, I'm $97 away from my profit target of $2000 this month. With four trading days left, it seems almost certain that I will make it.

When I started out, I was trying to scalp penny profits on Lucent Technologies and Nortel. This was back in June and July. Back then I had to stave off exhaustion on a daily basis because I was getting much less than 7-8 hours of sleep a night and I had to walk forty minutes down Burnaby Mountain every morning to catch the bus to get to work. It was tough because it was midsummer and those stocks are not very interesting. I've come to realise that not very interesting is actually a virtue though and my biggest regret from then was not taking a bit more risk and trying to trade a bit more size.

By the end of July I had moved on to EWJ, which is the iShares ETF for Japan. Things were pretty good for me then. At the end of July, I was doing a 300-500 share default, but not making much money. In August I moved that default trade size up progressively and managed to take home my first paycheque - a meagre US$305.97. I said things were good, by that I meant that I finally felt I was getting somewhere. I was doing between 1000 and 2000 shares on every trade. Furthermore, I was getting magical fills on EWJ using Bloomberg and AMEX without having to wait in the Island or Arca queues and the outlook was good for that to continue.

Then September came around and my whole system was upset. The first week went pretty well, then the order size on EWJ just got excessive. It got much harder to read whether the bid or offer was a better bet. Fills were fewer and further between. I tried trading more shares, usually around 2000-3000 shares to compensate. I still made money in September but it was clear by the middle of the month that I needed to find a new way to make money. I tried experimenting with the index futures, but I never really got far with my strategy and I abandoned it. I figured out how I could arbitrage them, but the opportunities seemed too few and far between to exploit regularly since the far futures contract orders are moved around by algorithm. I tried trading EMC and Nortel a bit, but I just couldn't get into the groove for either. By the end of September, I believed that I had found the stock I was looking for: UMC aka United Microelectronics Corporation.

At the time I was looking for a stock that was cheap (the SEC fees really add up on expensive stocks), relatively stable and did respectable volume. October went pretty well even though I had more losing days than I had had in the previous two months. I moved up my trading size as time when on and by the end of the month, I was trading 3000-4500 shares per trade and moving around 1% of the stock's volume every day. I made a new personal monthly profit record and the outlook was still pretty good even though my financial situation seemed to be deteriorating.

This month, I continued trading UMC, but in the the middle of the month, I managed to locate an algorithmic buyer on another stock: Gateway. After fumbling with it the first two tries, I managed to post some solid profits on the stock by feeding the buying algorithm. This was a skill I had developed from my time trading UMC. For three or four trading days, Gateway was in the top fifty stocks for volume on the ATS (Alternative Trading system) I used to trade the stock. As of right now, I'm back to trading UMC, which has acted rather peculiarly as of late. The algorithmic buyer on Gateway is gone and I haven't really noticed too much program trading on UMC either. So now, I'm back to the drawing board in a sense. Four days of trading Gateway combined with system problems dulled my instincts for UMC. I need to get back into the groove.

I'm really looking forward to the $2000 graduation target. When two of the traders who started the same time as me graduated I got a bit envious. It seemed to me that they had figured it out: how to make good money in the market. Other traders started copying their methods. My style seemed diametrically opposed to theirs. They were pretty clearly momentum traders while I am just a spread trader. Still, their profits fluctuate a lot and they take more risk than me. In the meantime, so far this month I've only posted one losing day. It was a pretty bad blow out that cost $400, but it taught me that I need to be more careful off the open and pull orders when trouble seems to be knocking at the door.


Thursday, November 23, 2006

Quebec a Nation?

So, this issue has been splashed all over the Canadian news, and I'm still not entirely sure what to make of it. For those not in the know, here's a synopsis: Several weeks ago, the issue pops up in the Liberal Party leadership debates; The Bloc Quebecois tables a resolution in the House of Commons declaring Quebec a "nation" to be debated today; The Tories preemptively table a resolution that declares Quebec is a nation inside a united Canada, to be debated before the Bloc resolution. That's where things stand right now as of 7:17 PST.

Anyways, I'm a bit confused as to why this is coming up at all. This may have been some kind of challenge by the Bloc to counter the Tories gains in Quebec by forcing them into the uncomfortable position of stating that Quebec is just a province of Canada. Of course, Canada's constitutional issues have not been resolved, but since the last the collapse of the Charlottetown Accord and the last referendum in Quebec, the issue has been in limbo for fear of opening up a can of worms. After all, didn't Brian Mulroney's government pay a political price when the Charlottetown Accord failed? Anyways, Canadians seem relatively content fudging the issue.

According to some political journalists, this appears to be a bold move by the Conservatives by throwing the issue out there. It seems intended to make Quebeckers believe that the Tories are the better federalist alternative in Quebec to the Grits in Quebec. Some soundbites from prominent Liberals, including Stephane Dion, seem to indicate that the Tory move is forcing the Liberals into the uncomfortable position of having to support the Conservative resolution in order to avoid losing support in Quebec. Seemingly, the traditional Liberal position was that Canada was a united country in which Quebec was a province and not a "distinct society".

IMHO, this seems all about semantics and no substance. Unless it appears in the constitution, these resolutions on whether Quebec is a nation have no legal weight. What seems certain is that constitutional issues will be central to Canadian political debate for some time to come. I'm less inclined to view this as a bold masterstroke by the Tories and more of a risky gambit. The Conservatives only won 10 seats in Quebec last election. While Quebec may be the key to winning a majority in the next election, (since it seems impossible that the Tories will win anything in the Greater Toronto Area any time soon) I think they risk alienating their political base in the West and suburban and rural Ontario. Most Canadians outside Quebec would rather not talk about constitutional issues. Furthermore, this whole issue stinks of pandering to Quebec. That was one of the reasons the Progressive Conservatives imploded and the Reform Party burst onto the scene as a protest movement.

On the other hand, the Conservative resolution could be just affirming the status quo that most of us refused to acknowledge. Maybe Quebec is a nation in a united Canada, just like Scotland and Wales are nations in the united United Kingdom (never to be confused with England). It all depends on what one means by "nation".


Wednesday, November 01, 2006

Strike Two for the Tories

Okay, I admit being mildly drawn to the Tories in the lead up to the last federal election. Given the turmoil in the Liberal party, the sponsorship scandal and the policy drift they were exhibiting, I was willing to give the Tories the benefit of the doubt. I'm not a party member or devotee to any party. Now I can see that the Conservatives are little better than the Liberals. It's not entirely their fault. They have only a minority government after all, and they have no allies in the Commons to give them the necessary votes. The other parties are intractable and everyone is jockeying and posturing in anticipation of another election. It's not an environment that's conducive to the enactment of sensible policy.

The first few months seemed decent enough despite Tories' pandering to Quebec. I can't fault the government for the policy regarding Afghanistan. Two things have come up lately that have been pretty outrageous though.

The first is the so-called "Clean Air Act". This misnamed piece of legislation will probably do nothing to dent Canada's greenhouse gas emissions or bring Canada closer to it's Kyoto obligations (though it could do something about the smog problem, maybe). Of course, the government got saddled with these obligations from the previous government and the Kyoto protocol is a flawed mechanism to deal with global warming. When Canada signed on, no one forsaw the boom in commodity prices and the massive growth in extrative industries such as oil and minerals. Still, it would have been nice to see if the Tories could have come up with some kind of market-based mechanism to help reduce our emissions. At the bare minimum, I was hoping to see some kind of cap-and-trade system like they have in Europe. Perhaps we could have joined their system. Better would have been a carbon tax system that would pass on the cost of emissions onto the emitters (ultimately consumers). Of course, a carbon tax would have been political suicide for the Tories. So, instead of a policy that would have had a chance to reduce Canada's emissions we got something that was only marginally better than doing nothing: a statement that the government will do something in future.

The second travesty is the government's announcement last night that it will try to end the special tax treatment of income trusts. My beef is not that income trusts will lose special tax status, but that the Tories refused to do the sensible thing and end the double taxation of dividends. That stupid taxation is what gave rise to the income trusts in the first place. The problem is that interest payments on loans and bonds are tax deductible while dividend payments are not. So earnings paid out to bondholders as interest are only taxed once (paid by the bondholders as income tax), while earnings paid out as dividends are taxed twice. It gives rise to "optimal debt ratios" and the valuation of the tax shield value of projects in corporate finance. The government should have moved to end the double taxation of dividends and made dividends deductible to either corporations or investors. Naturally, neither of these actions would have been politically palatable. Everyone's inner populist would cry out in rage to hear that either corporations or stock holders would see their tax bill reduced. Nevertheless, the Tories have moved one step closer to losing my vote come the next election. Oh, and I hope no one reading this was holding shares of BCE or Telus. They took a beating on the market today. BCE lost something like 13% of its value because of the government's announcement.


Wednesday, July 12, 2006

IMHO: Middle East

This may sound absolutely heartless, but I think Israel should issue poison pills to its border soldiers. Really, Israel says that it will not negotiate with terrorists, but they have done so in past and released prisoners for the safe return of citizens held hostage. If they want to prevent this in future, they should put their money where their mouth is and write off kidnapped soldiers and citizens. I don't advocate suicide, but Israel would find itself in fewer tight political situations with Hamas and Hiz-b-ullah if any of its kidnapped soldiers killed themselves. As Leonard Nimoy has said in past, "the needs of the many outweigh the needs of the few". Consider how many Israeli troops and Palestinian civilians have already died as a result of Israel's recent assault on the Gaza strip and their incursions into southern Lebanon. Where their lives any more or less valuable than Corporal Shalit?

I can't see any way out of the current situation in the middle east. The tit-for-tat violence needs to end. Israel has a right to defend itself, but why do they need to overreact so much? Their reactions only play into the hands of their enemies. Can't they see that? Furthermore, can't Arabs see that provoking Israel only leads to needless death?

Wednesday, July 05, 2006

Me 1 ; Grouse Grind: 0

Yes folks, that's the final score. Don't ask me how long it took to make it to the top. Let's just say it was about average for a person who doesn't train. I was just happy to make it to the top. On some level, that tells me that I'm not as out of shape as I've been leading myself to believe. So, that's positive.

On the work front though, things are not going as well. Despite last week's successes, I have not been able to repeat them so far this week. Plus, I really need to experiment more. Thus far, I've been focusing on my scalping skills. Until I can make some consistent returns though, I will probably feel I need to keep honing those skills. I would be interested in doing research to try and pick winners, but when I get home, I never feel like putting in the time. I am also interested in getting a faster news feed, but I'm not sure if I'm willing to pay $70+ a month yet.

Commentary on the Situation in Israel/Palestine

Also, on a more political note, I read a great article on the situation in the middle east here. I agree, both sides need to abandon their dreams. The truth is right before the eyes of the citizens of both countries, but they are almost all self-deluding. Provocation only plays into the hands of the hawks. Israel needs to accept that it cannot keep (most of) its settlements in the West Bank. "Greater Israel" is an arrogant dream. It is perhaps ironic that it is almost identical to the Nazi ideal of the "breathing room" of "Greater Germany". At the same time, the Palestinians need to accept that there is a narrow window for a negotiated settlement. Israel's unilateral actions will soon create the facts on the ground. Once the security barrier is completed, Israel's hold on the settlements that will then fall within its territory will be "fait accompli". Palestinians will need to abandon the ideology of "right of return".

I guess I hate to admit it, but I guess I do favour the Israelis to an extent. The concessions IMHO they need to make for peace are significantly less than what the Palestinians need to make. As for the current situation, I'm not sure what to make of it. Israel has overreacted, and yet so much of what it says makes sense. Negotiating for the release of the hostage is giving in to extortion and will only encourage more audacious attempts. Still, there are provocative and humiliating actions going on behind the scenes. How many Palestinians does Israel jail every month? How many of those are justified? Seriously, I'd like to know the truth and not the distortions. Was is really necessary to detain Palestinian legislators, or to attack Ismail Haniya's offices? Obviously the civilian and terrorist infrastructure is next to impossible to separate, but was it really necessary to knock out Gaza's power grid and bridges? Also, on some level, the current crisis seems almost engineered by Hamas. Before the hostage crisis, Hamas and Fatah's feuding seemed to be tearing apart the fabric of the remaining PA institutions. Now they are forced into the same boat. I can't help but think of the movie, Speed. In which Keanu Reeves' character suggests shooting the hostage so the hostage taker can not longer use the hostage as leverage. On some level, a better, and more heartless response to this crisis would have been to write off their captured soldier and done nothing.


Tuesday, July 04, 2006


Apparently the New York Stock Exchange is open a half day on July 3rd and closed for Independence Day. It was not the most pleasant day at work because the market was so thin. I could sit in a queue of 50-100 share orders and still not get filled because there were so few buyers and sellers. When I did get filled it was inevitably from larger participants, such as mutual fund managers or the specialist, swiping the bid or offer.

On the plus side, I hope to do something different for my day off. I want to go up to Grouse Mountain in the afternoon. I mean, really, God knows I see enough nature every morning as I hike 40 minutes along Burnaby Mountain Parkway to the bus stop to catch the first bus of the day. Not only that, I have an irrational fear (irrational because it is extremely unlikely) of getting attacked by coyotes or bears along the road. My biggest annoyance is avoiding stepping on slugs in the dark. That reminds me that I ought to buy a rechargeable flashlight before it gets too dark at 4 AM to see what slimy creature I'm squishing. Another annoyance is the fact that my computer is still in the shop and I haven't changed the music on my iPod for like 2 months. I love Copland and Beethoven, but I can only listen to his 9 symphonies so many times before I start to bore ... but I digress. While I've never had a lot of stamina, I would like to try the Grouse Grind. I don't care how long it takes me. I'm undaunted by a 2.9 km hike. I do that or more every morning (though downhill).

Frankly, one of my biggest problems now is too much free time. When I had my new computer around, I could waste hours playing Civ 4, Gal Civ 2 or AOE3. Instead, I soak up a couple hours of television and maybe play some old Playstation games. I have things I should do, like study for the CSC and finish it, though that's not very pressing. I should read more, since I have so many books, but I can't seem to get into it lately. Then there's net browsing, at which I waste the other time which isn't used watching TV, cooking, eating, commuting and working. I've been spending a startlingly large amount of time read online personals on Craigslist and sending propositionary messages to girls on LavaLife. Really, I would like to meet someone. None of the women I have contacted seem interested in meeting me though. Maybe I'll get lucky yet.