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.

R

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".

R