This blog is …
- A documentation of my trading development and thoughts about the capital markets.
- A learning experience for equity and derivative trading.
- A place to share ideas and opinions.
My Trading Objectives
- Application of independent and objective thinking
- Understanding of capital markets
- Prudent risk management
- Identification of values
- Study of quantitative finance
My Interest in Trading
My name is Paul. I am a twenty-something (30 soon!) engineer in Ottawa, Canada. I made my first stock trade in 2000 using my interest-free student loan as principle and have actively managed my own portfolio since then.
I was initially drawn to trading because of the excitement and the promise of great fortune. However, after having gone from rags to riches, and then back to rags again, I have learned better. The reason why I still love trading now is because I love being in control and learning in general. Trading is a hobby that stresses self-discipline and offers ample opportunities for learning. If anything, I feel I am a better person, or at least a better engineer, because of my experience in trading. It sharpens my analytical skills, critical thinking ability, and overall discipline.
My Trading Experience
From 2000 to 2006, I have traded based solely on fundamental analysis in the US markets on a long term basis (around a year or two). I have done fairly well during this time and averaged above 20% return per year.
Having been reasonably successful and with too much time and greed on my hands, I actively traded the OTCBB and pink sheet penny stocks for swing trading (1 to 3 days) from 2005 to 2007. That didn’t turn out so well and I lost almost 100% (!) of my trading portfolio. The silver lining in this plunder is that it made me realize my own limitations and shortcomings.
In most of 2007, I spent a lot of time self-reflecting and learning more about trading. It is also when I became aware of my trading shortcomings and started to study technical analysis, position management, risk management, and psychology of trading.
There is nothing like losing all you have in the world for teaching you what not to do. And when you know what not to do in order not to lose money, you begin to learn what to do in order to win. Did you get that? You begin to learn!
Reminiscences of a Stock Operator, by Edwin Lefèvre
In 2008, I experimented with day trading futures contracts and automated trading strategy development. This marked the beginning of my interest in quantitative finance to leverage my diverse engineering background. By the end of this futures market sojourn, I lost 40% of my play money. What came out of this is a much more disciplined approach to trading and a better understanding of the intra-day markets. This also led to my realization of the importance of documentation for trading. The result of which is the creation of this blog to record my trades and thoughts.
My Trading Style
(As of the September 2008)
I analyse the fundamentals of the US markets, sectors, and companies to make my picks. Then I use technical analysis to time my entries and exits of US market traded equities or ETF’s. My preferred holding time period is 6 to 18 months. However, I am adaptable to the volatility of the market (i.e. 2008) and go with the flow. I will take swing trade opportunities (days) or hold for the long term (one to three year). I will not, however, deliberately day trade, as I have been burned in the past and found by experience that I lack the risk capital for it.