bigato's journal

Where are you and where are you going?
bigato
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Re: bigato's journal

Post by bigato » Tue Oct 22, 2019 9:51 pm

Yeah, I may need to rent a place in the nearby small city, about 7 km away, for high speed internet.

bigato
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Re: bigato's journal

Post by bigato » Fri Nov 22, 2019 4:35 pm

So I've been studying with a local options trader wizard. The one that I met at a friend's birthday and which is an early retired programmer and statistician who uses mathematical models to guide his trades. He keeps an whatsapp study group of people who are studying the subject, and I pay him a small monthly fee, which was easily covered by the addtional profits the knowledge brought me, even in month 0 when I was just playing around with the minimum amount possible. He makes video conferences with us every now and then, where he teaches the concepts.

Some things that I learned so far are that one, he is a very cautious person, which reflects in the strategies he uses and teaches. I like it. And two, the math formulas that he uses to calculate probabilities in options tradings, are an interesting guide but developing the intuitive feeling for what do it may be enough most of the time. That and using proper strategies with little downside and controlled risk/exposure. He showed me some numbers, from a few years of his history, telling that he has been able to keep an average of 20% returns per year on the hedging operations (not considering variations in asset prices).

In my experience so far, I estimate that what I learned may be able to add something like 0.4 to 1% per month of additional returns, which is nice. But to achive that on the whole of my investments would require me to move away from my golden butterfly portfolio, which I'm not willing to do. In fact, I'm using something like 5% of the portfolio for training for those options trading strategies that I've been learning. What I did though, was a change in the GB portfolio that allows me to use a slightly bigger amount of it to trade calls and puts. I was previously using an ETF which consists in the 50 biggest companies of my country, instead of the proper GB way of a market index ETF. I did that because of the much smaller ETF fee. But now I changed to a proper index ETF because it has liquidity enough to be good for covered options trading. Still, I only use a portion of it to cover puts and calls I write.

So far it's all very conservative and obvious, and the group study goes quite slow. I actually like this rythm, because ptions can get complex fast. On the other side, those 5% of my portfolio are not so much experimental nor risky anymore, it's quite boring.

I've been studying chart analysis every now and then at a leisurely pace. A friend which is involved with market analysis and is considering starting a company for that has been telling me for a few days about this particular stock which has been the target of a lot of speculation in the last few days. So today I did my first couple of day tradings over this stock, ending the day with a nice profit which, after fees and taxes, amounts to almost 5 months of my rent. I like the game very much and intend to play more of it in the future as I see good oportunities.

bigato
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Re: bigato's journal

Post by bigato » Fri Nov 22, 2019 4:45 pm

Ah, another relevant update from the work. This week I read an article on bbc about how different personalities have different acceptable levels of noise at the office. I sent it to all colleagues in the team and to the boss, using the opportunity to explain why I am using big headphones most of the time, and also mentioning that the information in the article explains one of the reasons why having me as a remote worker would be beneficial and productive for the company and for me. This is the first time I approach this subject directly to my boss, and I'm preparing the terrain for the moment in the upcoming future when I'll have this serious talk with them about remote work.

I like what I'm doing a lot right now and would like to bring my job with me when I move to my rural property about 1 thousand km away from here.

bigato
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Re: bigato's journal

Post by bigato » Fri Nov 22, 2019 4:49 pm

A third update and that may be the last for today if I'm not forgetting anything else: thinking about my future rural life, I started watching material about food fermenting and this week I started my first three experiments on fermenting.

bigato
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Re: bigato's journal

Post by bigato » Mon Nov 25, 2019 4:52 pm

Today I lost two times what I've made on friday. So I have to study more, and remember to experiment with much smaller amounts and also have proper risk management in place.

But for now, back to food fermenting and growing my ginger bug while I recover from too much emotion in a day :)

Hazel-is-ok
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Re: bigato's journal

Post by Hazel-is-ok » Tue Nov 26, 2019 3:34 am

Fermenting things is a lot of fun! I started a ginger bug, and made lemonade for a while, till I decided to cut back my sugar consumption. I still make kombucha, and am experimenting with flavouring it with ginger.

The other week DH and I made sauerkraut. It's really good! I now have some kimchi on the go, and some beet kvass. It'll be interesting to see if we like them.

horsewoman
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Re: bigato's journal

Post by horsewoman » Tue Nov 26, 2019 8:53 am

Sorry to hear about your investment losses but since it is an experiment it was to be expected, I suppose! I hope you get some valuable knowledge out of it.

Regarding wearing your head phones at work, I thought of you on Saturday. There was open day at my daughters school, 1000 chatting people, music, strange food, too much sugar, excited kids... pretty stressful! When we go home my daughter went to her room immediately. After I while I went looking for her, but she was nowhere to be found. My husband found her later, nestled into in a small compartment of her wardrobe with headphones on, listening to an audio book. One of my first thoughts was - bigato would understand this :) DH and me both found it a reasonable way to deal with the stress of such a day. I handed her a bottle of water and closed the wardrobe door again.

bigato
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Re: bigato's journal

Post by bigato » Tue Nov 26, 2019 1:35 pm

Hazel: yeah, fermenting is cool! Also useful to preserve food now that I don't own a fridge. Those three others that you mentioned are definitely on my list to make too.

Horsewoman: I can definitely relate, ahaha. This month I had to endure 6 hours of torture in an anual event from my work, watching presentations and talks with 4 thousand more noisy people, and a very loud sound system. There was a couch there where I sat. At some point a woman sitted by my side with headphones on. When she wanted to look at something on the big screen, she would even wear her sunglasses. And that was indoors, ahaha. I guess it's easy to recognize us.

But I couldn't stay inside in the couch much, even with the headphones on. And I could only go home after the 6 hours. So I found that the place had an exit to an outside area with a view to the lake. I laid in a shadow below a bush, using my bag for a pillow, with my sunglasses on and headphones on maximum because the sound from the event was so loud. Those expensive noise-cancelling headphones that I didn't buy would probably help me there. But at least using mine, I could then withstand the 6 hours without getting mad hahaha.

It's very good that your daughter knows how to deal with the overload. It took me a long time to understand how this works and develop strategies to deal with it. It's so cool that you are understanding, congrats on that. :)

rube
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Re: bigato's journal

Post by rube » Tue Nov 26, 2019 1:48 pm

@Bigato, as I am writing this I sit at a very noisy airport with my (active noise canceling) headphones on after a long day of interacting with a group of people. I like it, kind of, but only for a limited time and not too often. It is good I can work partly from home to offset those busy/noisy days.

I like your solution also, just go outside and lay down :lol:

bigato
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Re: bigato's journal

Post by bigato » Tue Nov 26, 2019 5:56 pm

Thanks rube, because you know, it's tempting to spend the money :p
Although if I'm honest, this was the only instance where my cheaper wired Edifier phones weren't enough to fight the noise.

bigato
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Re: bigato's journal

Post by bigato » Wed Nov 27, 2019 5:23 pm

Today I made over 30 small day trade operations (60 if you count both ends), most of them selling first and than buying after.Actually a little over that if you consider those that didn't went through immediately and I decided to cancel. Out of all operations, about 4 or 5 were losses and the rest profits. I started exposing the minimum possible, where I'd get 1.00 from a 0.01 change in price. After a little over 10, when I got some method, I transitioned to 10.00 changes in profit/loss for each 0.01 change in price. My profits went a little over 100.00 and then I closed the day at 42 (all of those are in my currency). All in all, if I were able to keep this consistency and traded every day, I'd make about 80% of a minimum wage per month. I learned some more and adjusted some parameters during the day so as to minimize the value lost from those transactions that didn't went as planned. My goals were to spread and minimize risk, resulting in smaller profit/losses and maximizing training/learning.

bigato
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Re: bigato's journal

Post by bigato » Sat Nov 30, 2019 10:51 am

The trading is not going well so I retreated to risking the minimum values possible again, so as to minimize the cost of learning. Also, listening to a competent trader say that it took him 4.5 years to become consistent made more humble. I don't intend to play simulation because that'd be too boring, but I'm trading only in the smaller amounts now.

The food fermentation on the other side is going awesome! It's very useful and at least with vegetables it's so freaking easy that there's no reason to not learn it. It makes it much easier to take advantage of produce on sale and it can not only preserve food longer than the fridge but also make it more delicious. Other than preserved olives (with way too much salt), you usually can't buy fermented vegetables at the grocery store, they are just not commercially viable. It's something that you really have to make yourself if you want to consume it. Like sauerkraut? The thing you can grab from the shelf is a joke. Growing, foraging, cooking and fermenting are basic life skills that everyone should learn, and I'm glad to be improving mine.

Speaking of foraging, it's mango season around here and the many trees around the city have plenty of them in the ground below them. Yesterday I came back home with around 3kg of it, the amount of which was only limited by how much my bag would carry.
Last edited by bigato on Sat Nov 30, 2019 11:04 am, edited 2 times in total.

jacob
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Re: bigato's journal

Post by jacob » Sat Nov 30, 2019 11:02 am

Standard rule of thumb for a trader-in-training is that it takes 1 year (so ~2000 hours of focus) to stop losing money (that's your tuition money) and about 2 years (so ~4000 hours) to become consistently profitable(*) ... and about 1 in 10 has the required X-factor, which is pretty much impossible to select for in advance.

(*) Making money on 4 days out of every 5 days is a good benchmark for a professional trader.

bigato
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Re: bigato's journal

Post by bigato » Sat Nov 30, 2019 11:03 am

Thanks jacob, that's valuable information.

Zanka
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Re: bigato's journal

Post by Zanka » Sun Dec 01, 2019 4:12 am

I am def not a daytrader myself but as a professional pokerplayer I know there are a lot of similarities between trading and poker.

First of all, If you have not looked at a probability calculator you absolutely should do that to get a grasp of how much swings in results you are likely to experience. (Think of it like throwing a dice, you want to roll evens, What are the likelyhood that you have rolled 50% evens after 10 throws? 100? 1000?). Most pokerplayers are suprised that you actually can be a great player but still lose over a period of 3-400 000 hands (yes). This is probably the same in daytrading to some extent.

Second of all, when poker was booming ”everyone” could claim to be a good coach since there we’re so much easy money to be made from clueless people, this could equate to the stockmarket performing well over a 5-10y period where it is very likely that tons of daytraders have earned a couple of % to high of an ROI and thus seems to be Good.

And lastly, it Will be a full time job for at least a couple if years if you want to get good enough to earn something doing this.

Just my 2c, and im not saying it cant be done of course:)

bigato
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Re: bigato's journal

Post by bigato » Sun Dec 01, 2019 9:23 am

Thank you, Zanka! I definitely relate to you when I think about experimenting with day trading. Some of the most important factors are actually the same: probability and risk management comes to mind. I actually started buildings spreadsheet to calculate things like, what would be the required percentage of hits so that I earn say, 0.1% a day on average. Or how much I could risk on a given strategy, knowing that it should work x% of the time. Stuff like that.
Thank you for the two years estimate, interestingly it falls in place with Jacob’s information ano the trading market. For now, I’ll probably keep it as a side hobby, knowing that I can control the expenses on it so that it doesn’t affect me much. Like if I had a small “bad habit” that will cost me some small money, but not much else.

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Re: bigato's journal

Post by jacob » Sun Dec 01, 2019 11:21 am

+1 on the connection between trading and poker. (Cf. value investing and bridge). People who are interested/good at one in any given pair tend to have an edge in the other.

I recommend: https://www.amazon.com/Thinking-Bets-Ma ... 735216371/

One way to calculate the "tide effect" is to use: Absolute profit = Sum ( Position * Diff(Price) )

Price is a time-sequence (list) of prices say e.g. tick by tick, minute by minute, hour by hour, or day by day .. or whatever you have.
Diff(price) is the difference between one price and the price at the previous timestamp (a lot of times this will be zero)
Position will be the number of shares. E.g. +100 if you're long 100sh, 0 if you're flat, and -50 if you're short 50 shares.

When you're trading, the position variable will change ... Now, you compare this to a situation where you're simply long all your capital all day long (the position is a constant positive number). Comparing the absolute profits of the two calculations should show whether you're actually adding any informational value to the market-process.

Trading costs, etc. should be pretty easy to calculate, e.g. if you pay a flat rate, it's simply Rate*Sum(Min(1,Abs(Diff(Position)))) or something close to that (I'm too lazy to think it through :) ).

Note that "volatility" is also an important concern... there are different ways to calculate that. The standard academic way is the L2 norm, but there are more realistic and practical ways. I suggest using maximum daily loss or something like that. It should reflect your pain tolerance rather than be a way to make the math easier.

These equations are flexible enough to modify to incorporate leverage (or beta concerns) as well.

7Wannabe5
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Re: bigato's journal

Post by 7Wannabe5 » Mon Dec 02, 2019 8:27 am

Sounds like you are having fun with your endeavors. I like foraging and trading too. One thing you might notice is that foraging for personal consumption (household market) and day trading on the stock market are at near opposite ends of the "capital required" spectrum, although the level of skill applied could greatly vary in either realm. Obviously, your salaried work is found at other point on (Skill, Market, Capital, Time, Vigor.) It has been my experience that Market is an interesting variable to play with or consider.

Anyways, I can't day trade, because although my outlook is more trader than investor, and I am pretty good at poker, I can't stay focused for very long in a fast-paced environment, so I tend towards something more like Season Trader :lol:

bigato
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Re: bigato's journal

Post by bigato » Mon Dec 02, 2019 4:05 pm

Thanks Jacob, ordered it!
7W5: curious minds think alike in a sense, don't they? I like diversity of knowledge and skills. In this book order I mentioned above I also included one that was on my radar for a while, about the edible wild vegetables in Brazil, so as to benefit from the free delivery :)

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Bankai
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Re: bigato's journal

Post by Bankai » Mon Dec 02, 2019 5:21 pm

I wonder if you read any of the books below, and if yes, what are your thoughts? (Douglas, Elder and classic Livermore are more relevant to what you are doing while Mivervini and O'Neil just offer generally good advice (imo)). Personally, I prefer these kinds of books written by practitioners, over academic theorists.

Douglas Mark - Trading in the Zone
Douglas Mark - The Disciplined Trader, Developing Winning Attitudes
Dr.A.Elder - Come into my trading room
Dr.A.Elder - Sell and Sell Short
Jesse Livermore - Reminiscences Of A Stock Operator
Mark Minervini - Think & Trade Like a Champion
Mark Minervini - Trade Like a Stock Market Wizard
O'Neil - How to make money in stocks

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