Commodification of Water Questionnare
A friend’s work colleague’s son is doing a dissertation on the Commodification of water…..And has asked me to help a little by circulating this questionnaire. We would appreciate all input.
Many thanks
Lee
Its Beginning to and Back Again
Well, I’ve been extremely poor in updating my blog. There have been a number of reasons I could use for this, but the truth is procrastination is my middle name!
After reading @red5trading blog http://lunchboxtrader.blogspot.co.uk/ on Risk is relative I decided that I had to document how my trading has evolved over the past 15 years. Cathartic sort of thing that will help me understand what i do right and wrong.
When it became apparent the Liffe floor was going to go screen based I thought I would take the leap early and get ahead of the competition. I felt my understanding of trading on screens from Liffes APT system held me in good stead. I would “job” the ftse purely of the back of the net change in the Dow. I learned a few extra scum local tactics along the way……When UBS had a 5 lot on bid or offer there was a good chance they had size behind it, so you would trade a 1 lot with them. If it stayed as a 5 lot(they’d iceberg their size orders) in size then you front run em….easy money! It was all just a computer game…I loved computer games. Thing is i was now paying my mortgage, buying cars paying for a wedding and holidays all off the back of this game. I had no concept of this as a business, I just thought….I’m really good at this game and carried on behaving like everything will always be the same as it ever was.
As the global investment community became smarter in its trading strategies and execution my game playing was being left behind. At first I didn’t notice, take a small loss here, take a small loss there. I didn’t recognise the luck that played a part in my previous returns.(Nassim Taleb’s “Fooled by Randomness” can take credit for teaching me that much later on) You could be wrong and get away with it because there was always enough noise and two way flow in the market.
I was now in the process of buying a silly big house in the country, wife about to give birth to our first child and things started to dramatically change. It was all so weird, weird because this month in particular was my best trading pnl….Things couldn’t of been any better. I actually took the month off to oversee the building work in the new house. So all my trading was via a broker….every morning i’d give him all my bids and offers in a nice neat system and what prices to work them out for profit/stops. I never paid attention to data…..that just created the waves to get in and out.
Anyhow, when i got back to the office, wife had given birth to daughter number one and I had a naive confidence that I was untouchable. Worked out how much was made for the month and thought….crikey do that for 12 months and I’ll be comfortable for a life time! So without any consideration for how I did it I went ahead and punted the markets like gambler with a bottomless pit of cash. Needless to say we were now a one income family of 3, not the 2 income family of 2 we were just a month before.
A few months of treading water couple of big losses here, a couple of big losses there and the risk manager came to tell me my trading limits will be halved. Now, that was a spanner in the works coz now i can’t make the same daily target….but somehow i could still achieve the same size down days….how can that be.
It gets worse(see @red5trading’s blog http://lunchboxtrader.blogspot.co.uk/) the guy who sat to my left was an Oxford PHD mathematician with the pnl curve of a small hedge fund, to my right was a ruthless scalper whose PnL although not as smooth as the quants was the same at the in end of every month in absolute terms. So i was flanked by two intelligent guys who were absolutely cleaning up. this only amplified my complete capitulation from mini master of the universe to clueless mug punter. Surely i should pick something up from these guys via osmosis.
Not a chance, my head wasn’t in a good place I was now in a situation where I couldn’t make enough to pay bills. So we sold the dream home realised some breathing space. This allowed me to continue trading blindly with same disastrous results. By now I’m sending out C.V.s(resumes) and looking for a job, these were not easy to come by. Especially if you include Liffe floor or screen based local on a cv you might as well put psycho killer Qu’est-ce que c’est!
I did have some fortune eventually, finding a job with the I.T. trade support for a large investment bank. Brilliant I thought, understand this algorithmic trading lark (I blamed my lack of resources for my failure(of course it couldn’t be that i’m a dumbass)) and maybe get myself onto their trading desk. Who was I kidding. Still in my brief spell I went on to their intranet site and looked at the research from their FI and interest rate desks….started to get a handle on how they did things. During this spell I had built up a list of job descriptions as long as war and peace all with fantastic skill requirements. Loads of words that I had never heard of and to be frank I bloody well should’ve done.
And so in 2006 began my reinvention as a trader. It was clear that I was never going to get a transfer across to the trading desk at the large investment bank. (Hindsight tells me this was not a bad thing! said bank now being state owned an all). So the next step was to understand more about risk management. No better way than to bluff a job at a large commodity brokers without a risk department. Here I had use of bloomberg enabling me to understand Value at Risk, and spend time putting things like Kelly criterion and cointegrated fair value in to practise purely for my own gain……but it looked like I was breaking new ground for the company. I witness lots of different ways to trade/invest and put them all into practise in my “paper trading” account and started to develop a whole new way to earn a living from trading.
With my new found knowledge and understanding coupled with my overall trading experiences, I felt equiped to become a trader again. But the most important piece of the jigsaw was still missing. In order to be consistent as a successful trader you need to be in a very good place mentally. You can’t just sit down at your desk see a chart of bund, see a lots of offers being bought and jump in with a buy order. It may work sometimes, but that’s just pure luck. God knows how many times I’ve been “unlucky” in trading. When I mean in a good place mentally, you can’t be fretting the minute your position goes offside. The market goes where it has to go, regardless of whether you are in or out of it at the time. It doesn’t always do as it says on the tin either. How many times have we seen the bonds finnish non farm Friday down despite a poor number? In my time as risk I also witnessed the cleverest oil trader I know constantly lose his arse over oil inventory numbers despite his understanding of the fundamentals! The market is never wrong, never! So the only thing you can actually control is the amount you have risked. You need to be able to afford to be wrong every time you open a position in order for you to stick to your plan and remain rational in your thinking.
So whether you’re a trend follower, a scalper, a mean reverter, breakout trader, stop catcher or a global macro long term investor. Plan your trade blah blah blah (don’t you really hate the cliches) But it is true!
That’s where I’m at today….And the most important thing for me now is to make sure I read this on regular basis and insure my discipline to the plans. I have missed lots of opportunities by being defensive in my mindset. Still, the markets arn’t going away anytime soon so there’ll be plenty more to take advantage of and that’s important….Gotta be there.
I shall now get off the couch and down the gym.
I’d also like to take this opportunity to say thank you to all the Twitter contributors I follow….You’re all increasing my knowledge daily. Not always the way its intended, but I guess that’s why serendipity is my favourite word.
Be lucky.
L
#4thmodernDrachma
Wow, January nonfarm payrolls rose by 243,000….that was quite a bit above expectations. this was backed up with a decent non man ISM. So all is rosey, The Fed statement writers already rushing to find the Tippex! no longer will rates be at these low levels til 2014, QE3 Ha. Obama may even get another term in office.
All this positive sentiment led to a substantial down move in the long end with 30s and 10s bearing the brunt of all this new found optimism. In Europe, German 2s10s reflected this with a cracking break out of the 412.30 to 413.00 range to the upside reaching as hi as 413.50.
However; this weekend the Greeks have managed to piss on everybody’s chips by refusing to accept the austerity measures required to get their bailout package. Juncker appears to have given up….. “If we determine that it’s all going wrong in Greece” then no new program & “a declaration of bankruptcy” in March.
Cool, so lets sell 2s10s now (short from 413.25) and run it back back below 412.85, my stop above is 413.36. This was the support area from friday evening when we made the hi around 413.50. If the talks do break down today then i’m more likely to add to the position regardless of where it is trading coz its only going one way if this is the case.
I’m hearing rumours that final decision will be made at 10 GMT today…..Cheap holidays to Greece here we come! #2Drachmaforapint!
Later on in the week we have ECB an UK rate announcements, todays outcome could make for a very interesting ECB.
This morning was Porridge for brekky and a second helping of Hybrid for the train journey in….”I choose noise” . By the way, the trains had no problems this morning regardless of the weather….could we as a nation be getting capable of dealing with this sort of stuff? Bring on the Olympics
Be Lucky
L
curvededge 