Day Trading Guide in KLSE

1. Disclaimer

Day Trading is not for the fainthearted. Day trading involves financial risk, therefore do not trade with money you can’t afford to lose and do not trade on borrowed money. The reason you are seeing this “WARNING” here is I want to be honest with you that trading day trading is a risky activity. You could lose a lot of money. If you are not comfortable with this, then again don’t engage in day trading. However, if you are a risk taker and understand the financial risks and rewards involved, you are welcomed to explore all the possibilities in the exciting world of day trading trading but do read the rest of this page.

Any opinions, news, research, analysis, prices, trade recommendations or other information contained on this website is provided as general market commentary, and does not constitute investment advice. I will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information.

Trade at your own risk. All information and material discussed in this topic is for educational purposes only and is not intended to provide financial advice. Any statements about profits or income, expressed or implied, do not represent a guarantee. Your actual trading may result in losses as no trading system is guaranteed. You accept full responsibilities for your actions, trades, profits or losses, and agree not to hold myself responsible in any and all ways.

I do not assume responsibility for errors, inaccuracies or omissions in these materials. I do not warrant the accuracy or completeness of the information, text, graphics, links or other items contained within these materials.

2. The Controversy On Day Trading

With the explosion of the internet, stock market trading has become real time with open access for everyone, and with this revolution came the explosion of Day Trading – the buying and selling of a security within a single trading day at low costs! You and I would let ourselves down for not exploiting this god given chance.

Day trading, as the name implies, is when you buy and sell financial investments during the day and settle all your outstanding positions prior to the market closing. The profit potential of day trading is perhaps one of the most debated (and misunderstood) topics. The biggest problem with day trading is that it is almost seen as a form of gambling. This is perfectly understandable when you consider the number of day traders out there that lose money rather than making money. The thing is though, there is such a thing as a professional gambler and the truth lies somewhere in the middle.

Many professional money managers and financial advisors shy away from day trading, arguing that in most cases the reward does not justify the risk. They often cite that no day trader is world renown, whereas icons like Warren Buffett and Peter Lynch are a testament to the success that can be attained by more traditional forms of value investing. Conversely, those who do day trade insist there is profit to be made. They say the success rate is inherently lower as a result of the higher complexity and necessary risk of day trading, combined with all the related scams.

Overall, the street remains divided on the issue. At the very least they agree that day trading is not for everyone and involves significant risks. But from a strategical standpoint, and if you know what you should do and do it well just like a good poker player, day trading can actually bring down the risk of incurring a loss overnight due to differences between an opening price and the previous day’s ending price.

3. Advantages of Day Trading

Even when I had been day trading a few weeks and felt like I was in a nice routine, it still didn’t dawn on me until later just how many benefits there are to day trading (that is, being flat at the beginning and end of every trading day). Like many people, I thought day trading was way too risky and there was no way to make money doing it. (In fact, you’d be surprised just how many people continue to tell me that – I just have to laugh.)

3.1 You’re 100% Cash at the Beginning and End of Every Day!
What a feeling! It’s easy to sleep well at night when you’re in 100% cash. Even though this is often touted as a good reason to day trade, you still won’t appreciate it until you experience it. Imagine waking up in the morning and something comes up that will keep you away from the markets that day (sickness, errands, whatever). If you’re swing trading, being away from the markets will take its toll – it will always be in the back of your mind. Day trading does not tie up trading capital for long periods of time. If you’re day trading, you’re sitting in cash so just take a day off.

3.2 You’ll Have Twice as Much Buying Power
Once you refine your system, this is a big benefit. You’ll be able to trade more opportunities because you’ll have 4 times your account equity in intraday buying power. This startles a lot of newcomers, but if you have a handle on your risk this leverage is very valuable.

3.3 You Actually Earn Interest on your Overnight Cash Balance
This one was very surprising to me. One of the reasons most non-day traders shy away from using margin is because you actually have to PAY interest when you use it. Most brokers leave your cash account in an interest bearing account, so when you have cash in it you’ll actually be making money. Here’s the important point: interest is paid on the overnight cash balance, so because you’re 100% cash you’ll be earning interest just as if you had your money in a savings account. Last I checked my CyberTrader account earned 5% interest or so. This is like earning the better part of 1R each month for doing nothing.

3.4 You’ll Gather a Statistically Meaningful Sample Size Far More Quickly
Because you’ll have more opportunities to trade, you’ll gather a much larger sample size much more quickly. This is vitally important for good trading. Let’s say you make 30 trades in a month. That’s a decent sample size to begin delving into and to start learning from. If you’re trading on a longer time frame, it could take you much longer to make 30 trades so it will take far longer to learn how your system really works.

3.5 You Can Completely Ignore the News
The vast majority of price affecting news like earnings reports is released after market hours. You don’t have to worry about over-night risk which is getting more important since we are in a "world" market. Day trading permits one to better control risk by constantly moving in and out of positions, if they drop you limit your loses and get out, if the move up you take your profit and runYou don’t need to worry about how you’re going to react to the news – you can just let other people worry about the news and trade their reactions.

3.6 Day Trading Can Actually Be Less Risky
Because you’ll be avoiding those overnight gaps, with proper money management you can really have better control of your risk. Losses of greater than 2R are fairly common when holding overnight, but they are quite rare when day trading. Day trading permits ease of sound money management programs that control losses and protect profits.

4. The Core Principles On Day Trading - Speed and Fear

"Speed and fear" is the essence of day trading. The most important thing to remember is to protect your capital rather than capturing profits. Always remind yourself to buy and sell quickly and take profit on small price changes. Do not be greedy and do not attempt to bag the elephant. Basically the center assumptions of “speed and fear” are:

i. A brief exposure to the market lower the chances of running into an adverse event. (See, scalping has the advantage to let you fight greed and let you ride safely during these uncertain time.)

ii. Smaller moves are easier to obtain as bigger imbalance of supply and demand is needed to warrant bigger price changes. This means you have to sit down at your computers the entire day and watch for any price movements. There is nothing relaxing or fun about watching price fluctuations and ticker quotes, just like fishing. If you do not have the patience for this, then it's probably better you find another way of making extra money.

iii. Smaller moves are more frequent than larger ones. Even during relatively quiet markets there are many small movements that a scalper can exploit.

iv. Accept the fact that day trader lose in a while. Be ready to take small loss but never allow small losses to snowball.

5. The Pitfalls of Technical Analysis and Value Investment

Less is more in day trading. Your priority is to fall in love with money, not stocks or knowledge. The less you rely on technical analysis and value invsting, the more money you will make. These things dun contribute to day trading in KLSE and that is the beauty of it because it means you dun have to spend alot of time studying impractical things. Always remember day trading prey on market weakness and rides on news, rumours and investors sentiment. Let’s discuss their pitfalls

Technical Analysis
The disadvantage of technical analysis and chartist is that you will experience paralysis by analysis. The market has no memory and the past is not an indicator of the future. Relying on charts completely will not help you to pick up the signals about the changing of a trend until the change has actually taken place. That means you are drawing trends based on past performance and you don't make that trade because an indicator is not in the right place, or you just wait for the ideal time to come which never does. Or, better yet, you don't get out of that losing trade because the technicals said that “It will come back”.

Value Investing
Margin of safety, PE, EPS, NAPS are often impractical in KLSE because our market is not as advanced or as deep like US, Europe, Tokyo, Hong Kong and Shanghai stock markets, many of our blue chips are heavily owned by foreign funds who abandon ships at the slightest fear, and our stocks are heavily manipulated by syndicates, not to mention there are also frequent fraud cases. Frequently we have witnessed blue chips stocks underperformed penny stocks during bear market and penny stocks outperformed blue chips stocks during bull market. Margin of safety, PE, EPS, only work in a free, advance and non-manipulated economies. You can google a bit and you will know our ranking is way behind many other countries.

6. How to make money using day trading?

6.1 Initial Setup
Open a cash upfront trading account to enjoy low brokerage so that you can take profit on small price changes. The best method is to open a cash upfront account with a local security firm. This brokerage can be even lower because most security firm gives cheaper brokerage for intraday trade. Make sure you get a fastest broadband subscription like Unifi.

6.2.1 Daily Work (Identifying Steaming Stocks)
Study what stocks are "steaming" at present moment and create a portfolio of it. Steaming stocks refers to the most liquid and volatile stocks at present moment and demonstrates an average conviction of the overall market. i.e stocks that have plenty willing buyers and sellers allowing you to move in and out of positions easily and allowing traders to profit from moves of just a few cents. Steaming stocks are always reflected by the Buy-Sell transactions, Buy-Sell volume and the corresponding BQ-SQ relative to the total outstanding shares issued. They are the most important source of information in order for day traders to predict the velocity and price directions. To check whether you portfolio has lose its steam, you have to diligently export and update it everyday after market closes. Your portfolio should typically consist 5-10 stocks but usually the a few stocks should easily stands out among the rest. Also the same few steaming stocks should appear in the list for the next 2-3 days because market also need some time to digest news, rumours and sentiment.

6.2.2 Daily Work (Verifying Steaming Stocks)
Once you identified your steaming stocks, remember to counter check them against those recommended in Investlah, Stock Master and Bursa Community forums. This is to make sure your steaming stocks are also concurred by mass public and is also the fastest way to uncover further news and rumours. Dun worry. Even though most people said forums are full of liars, but if most forumers said a same good thing about a counter, chances are there is a high degree of truth behind it. In addition, you must also do your homework on the followings:

• newspaper headlines and biz news including the edge, CNN money and Bloomberg
• bursa announcement, esp on director shareholdings, quarterly result and dividend announcement
• buy or sell calls by investment banks or analyst
• keep an eye on the after-market DJ and Europe spot and futures index. Understand that world markets will react to each other every day. That means, if the U.S Markets fell yesterday night, as a chain reaction, the Asian Markets may also fall today, and vice versa. So, before your market opens, you have to check how the markets on the other side of the globe closed last night.

6.2.3 Daily Work (Finalising Steaming Stocks)

Once you verified your steaming stocks, remember to conduct a final quick check against the Moving Average Convergence-Divergence (MACD) indicator as an added insurance. This is simple, just click on the "chart" in your trading program and take a quick peep at the price trend and momentum lines to confirm the overbought and oversold situations.

7. Mentality of a day trader?

These are the CRUCIAL ingredients that turn day trading into a consistent money making business rather than a fruitless gambling exercise.

Business: Treat day trading like it is a business. Approaching your day trading like a business is mandatory in every single trade, day or year that you trade.

Education: Like any successful business, one needs to become educated. In this case, it is about learning the technical aspects of day trading. You don’t get fully educated by reading a book, watching videos or trading your own account. Trying to trade your own account as a newbie in a “trial and error setting” can only do one thing, defeat you. Regardless of your path to learning, I would highly recommend you paper trade for months before trading with real money; when you begin to trade with money, keep your position sizes small. ‘Hands-on’ education is what is needed to even begin to understand the complexity of day trading. You can rapidly get educated from watching a Professional Trader on a daily basis in a real-time setting and learning the correct way to trade. Education during a real time setting allows you to keep your learning curve small and make money through the long and treacherous process.

Psychology: To be a consistently profitable day trader you must have the proper mind set; without it, you might as well go to Genting because you will have better odds there! Simply put, you must be immune to losing money and must forget your last trade regardless of whether you made or lost money. Losing money is a reality in this business.

Methodology: You must learn the proper way to trade the technicals of a stock and never deviate from it. Once you do this, the second guessing yourself and the 20/20 hindsight will be removed from the experience of day trading. You will never second guess yourself because every single trade will only be placed when certain conditions are met, the same way, all of the time, regardless of the market environment.

Focus/Commitment: At all times, you must keep your eye on the prize, making money. You must believe there is no option for failure or taking second place. In this case, second place is losing money to KLSE.!

Patience: Never force a trade. Wait for the signal. Let the trades come to you the same as business lets the customers come to them.

Discipline: Develop your own rules and stick to them ALL the time. You should never sway from them otherwise you will start falling into the psychological mind traps. You must be willing to accept losses. You must not over trade or over leverage yourself. Try leveraging by taking 50% of a winning trade off the table and allowing the other 50% to run while using effective stop loss management.

Stops: Use them effectively, they are an ABSOLUTE MUST; they allow you to manage the trade the right way and maximize gains. If you do not use stops, stop trading right now! Seriously, go to Genting, your odds will be much better than day trading without using stops. Never assume a trade has to come back to your entry price to get you out at breakeven. You don’t believe me? Try it and see what it does to your psychology (mental state). When you play for breakeven without a stop it is game over and you are well on your way to taking huge losses, perhaps even losing your entire capital and more! The minute you do not use stops, this immediately throws you into the category of the nearly 100% of traders who are doing nothing more than gambling. Please, do not let a few winning trades lead you into false sense of security.

Risk/reward ratio: Not many “newbie” day traders use this to their advantage. You should never trade unless you have a minimum of a 2:1 risk/reward ratio. By doing this, believe it or not, you can be a very successful trader if you are only correct 33% of the time on your trades. You are probably asking how is this possible? It is all about trading the right way and managing the trade effectively. Using proper entry and exit prices along with using stops effectively allows one to make money on a consistent basis.

8. Day trading illustrated

31 Jan 2011 5.01pm

- Extract and export the list of Bursa closing stocks in MS Excel

- Identify the steaming stocks with the most buy transactions, buy volume and BQ-SQ relative to the outstanding shares issued means a lot of people have entered into a lot of transactions to buy a lot of shares for a particular stock during the day and a lot of people remain wanted to buy at closing time but failed to do so.

- Investlah forum and newspaper indicated that there is good M&A news!

1 Feb 2011 8.50am
- DJ rises 450 points last night with favourable Europe news

- You queue 2 steaming stocks from your portfolio with that has only risen marginally yesterday. This means these stocks remain steaming from yesterday’s closing and there is further upward price potential. A quick peep at chart shows that MACD is greater than zero, which means the short-term average is higher than the long-term average, suggesting the financial instrument is trending upwards.

1 Feb 2011 9.10am
Ok, bought your shares at the best buy price

1 Feb 2011 10.30am
- Monitor the regional market to make sure Shanghai, Hong Kong, Tokyo and Korea stock markets are all steaming

- Monitor your steaming stocks to make sure the BQ continues to exceed SQ by a widen margin

- The Price has gone up by 1 tick. But because everything look alright and steaming, we can safely give another 1 hour to “marinate” the stocks better

1 Feb 2011 11.25am
- Lunch time in about 1 hour.

- Sell Stock A with $500 profit and Stock B with $60 loss brokerage loss because there's no price change. Be satisfy with the net profit of $440 and do not risk your net profit with next half session.

- Enjoy the rest of the day off

9. Acknowledgment

Special thank you to forumer "Cals" who have supported me all these while. This topic wouldn't appear here without his encouragement.

laughing gor thanks for pasting here [You must be registered and logged in to see this image.]

most of us here daytrade your articles here are very helpful

+1 rep for LG, im still lots more to learn on day trade too much uncle style not quick enough

tks 4 sharing ...

LG do too much homework....[You must be registered and logged in to see this image.]

let me give u all shortcut....go top volume 9am look for low sell q stocks with strong buying force....take some and wait for uturn then run.....

example:

take 500 lot stock A sell one bid later 250 in pocket.....

hot stocks may chiong 2-3ct which is 1k-1.5k

very hot stocks i tried before aiming for half ct but it chiong 20 cts JACKPOT MAN [You must be registered and logged in to see this image.]

some trades can make profit in less than 1 min.....some 5 min....

like ruberex wa this morning 16ct go to 19.5ct in 10 minutes [You must be registered and logged in to see this image.]

remember day trading is "life" not theory [You must be registered and logged in to see this image.]

very helpful info. thx. [You must be registered and logged in to see this image.]

Thanks for sharing wit us LG. U r very kind in helping newbies n old fox too.

There r times that old fox will also forgot about the simple rules n prinsip, therefore ur sharing is very much appreciated! +1 rep for u [You must be registered and logged in to see this image.]

GreenTea wrote:Thanks for sharing wit us LG. U r very kind in helping newbies n old fox too.

There r times that old fox will also forgot about the simple rules n prinsip, therefore ur sharing is very much appreciated! +1 rep for u [You must be registered and logged in to see this image.]

greentea is old fox? [You must be registered and logged in to see this image.]

phoenix wrote:

GreenTea wrote:Thanks for sharing wit us LG. U r very kind in helping newbies n old fox too.

There r times that old fox will also forgot about the simple rules n prinsip, therefore ur sharing is very much appreciated! +1 rep for u [You must be registered and logged in to see this image.]

greentea is old fox? [You must be registered and logged in to see this image.]

no no, green tea is newbie, I only waiting for u all 'old fox' to give signal.

when i hear ahhh wooooff.... then i buy in [You must be registered and logged in to see this image.]

addition to something useful i found on original thread of LG, share with you guys

Interview with the World's Most Successful Day Trader

Is eight figures a realistic goal? Yes! It has been done by private own account traders for years.

Paul Rotter from Germany, 32 years old, is one trader that has made €50-60+ million ($65-78 million) per year for 10 years trading the most liquid contracts at the biggest futures exchange in the world, Frankfurts Eurex debt futures, primarily the Bund contract. Paul is arguably the single largest and most succesful individual futures trader on planet Earth, executing trades on the German Eurex exchange primarily in the Bund, but also in the Bobl and Schatz interest rate futures. He trades between 200-300,000 roundturns daily using the X_Trader platform, and clearing through GNI Touch. Every trader can aspire to imitate Pauls success as he is proof that it IS possible for a small trader to build on his success and grow into the biggest most active speculator around. Paul Rotter has made it - he belongs to the best traders in the world and counts as a real big player. he usually does 150 000 rt/d, sometimes up to 250 000 mostly in BUND/BOBL/SCHATZ futures. In the hall of fame of celeb EUREX players he´s top notch end even leaves tom baldwin (bonds) or lewis borsellino (S&P) behind. he had to work ahard to make it. he blew up in the beginning of his career, which was painful but also educational - he learned his lesson and with lots of research, seeking improvement all the time, he became the man.

Q: was there any key event that brought you into the game?
A: no, no key event like 'buying my first stock'. took part in some trading contest while at school.

Q: how did you get to professional trading?
A: when i was apprentice in a german bank i had to work on the DTB (now EUREX) execution desk for several weeks. this attracted me a lot. during that time i was doing gamble trades on my private account, losing pretty much all of it. when it was deeply in the red, i had to leave the bank but shortly after, i was allowed to start trading in a japanese bank. i was very lucky here, since i was allowed to gain knowledge through learning by doing.

Q: did the bank give you any mentor?
A: not, i didnt have one. in the beginning i was exchanging ideas with the chieftrader ajiasaka, who was constantly profitable. he sometimes even hedged the positions of his boss, when he thought that his boss was wrong. i had many conversations about market psychology, which proved to be very helpful, especially after bad losing days.

Q: how was your trading back then? have you been constantly profitable from the very beginning?
A: i was doing 100 - 150 rts a day after a short time...i had no losing month with the first 3 years of my trading. later on with bigger position sizes i took occasional hits, especiallly after EUREX allowed terminals in the US and big players like harris brumfield / chicago were entering the field.

Q: there is a saying that every trader has to completly blow up his account at least once before he can become successful. what did you learn out of it?
A: like i earlier said, my private account saw some bad times during my apprentice in the bank, although i must admit, that back then i had absolutely no idea that there was something like 'risk-managment'.
later on i found 7-digit losses to be cumbering. on day i had a blackout and after losing 2,5 mln € i was seriously thinking about stopping. i still had enough capital left to live without having to worry about financial issues and i just wouldnt want to take those psychological hits anymore. after taking 4 weeks off, i regained my motivation and returned in the ring. i was able to make up the loss in a relatively short period of time, so that i came out stronger than before.

Q: has this changed the views of the market in a way?
A: with the expirience of bigger losing days coupled with good phases right afterwards, i´m not so sensible for losing days anymore. i know that i can make it back. this has lead to being able to switch off the screens on a day with medium/small losses more easily, instead of forcing the way back into positive territory.

Q: what are your strengths as a worldclass trader and where are the differences between you and other traders?
A: it´s the ability to get more aggressive in winning phases, taking bigger risks, and scaling back in losing times. this is against human nature. the best thing is to have somebody around who is neutral to trading, that switches the terminals off, when a certain loss level has been reached for the day.

Q: you are known as a orderbook-scalper, could you please explaining to our readers what you are doing and what your strategies look like? what is your tactic?
A: it´s some kind of market making where you place buy and sell orders simultaneously, making very shortterm trading decisions b/c of certain events in the orderbook (level2). for example, i usually have lots of orders in different markets at the same time, pretty close to the last traded price. the resulting trades are usually a zero sum game, but i get a pretty good feeling for what is going on and then ultimately can make a decision for a larger trade.

Q: how long are you usually in a positon?
A: since i do trend plays very seldom and actually scalp the market, i constantly get fills in different markets on both sides which can cause constantly changing positions for hours. sometimes i change my opinion several times within a couple of minutes, which is not pretty hard for me, since i´m only looking for the next 3-5 ticks.

Q: during your professional career, have you always been a scalper or did you try other strategies (momentum/swing) as well?
A: yes, i have always been a scalper, but i am adjusting my strategies to different market situations all the time. on volatile days i of course have less orders in the market and do more 'single trades', although i ususally hold them only for a couple of seconds.

Q: your strategies only work on electronic exchanges?
A: yes, b/c you cannot handle that much orders in a pit, looking for counterparties and so on. computer exchanges grant faste orderflow and are not as easy to manipulate.

Q: as a scalper, are you trying to run stops?
A: well, yes, but because of the increase of liquidity in the last couple of years, the fast spikes caused by stops are not happening that often anymore. apart from that, that stops often are not where you would suppose them to be, because the other market participants are not silly either or learned their lesson in the past.

Q: what role plays risk-managment in your trading?
A: i set daily goals for my p&l, whereas the most important thing is the stopping limit, the maximum loss i take, before i switch off the screens. my biggest positions are 5 digit number of contracts. i dont use any specific money-management rules.

Q: what are you doing when a position goes against you? are you using stop-loss orders?
A: i striclly close my position when they start going against me. with bigger positions this is not that easy, because i move the market against me, which could cause other traders to get in the same situation like me, which could accelerate the move. however, most of the time i am able to make some of the losses up, b/c i know what caused that move and therefore take the opposite position.

Q: why dont you have any problems with closing out the position and even taking the opposite direction? shouldnt a trader stick to his opinion?
A: no, definetly not. an analyst or some kind of gure has to stick to it, but as a trader you should have no opinion. the more opinion you have, the harder gets it to get out of a losing position.

Q: what role plays market psychology?
A: i constantly try to read the psychologiy of the market and base my decsisions on it.

Q: how do you handle distracting thoughts and emotions?
A: when it gets really bad - taking a cold shower or jumping in a cold swimming pool.

Q: how do you prepare for the trading day? do you follow any routines or do you take it as it comes?
A: before the open i check all the economic reports that are about to be released, speeches of central bankers - simply anything that could move the market. then i try to define important levels in the markets i trade. i do this through my own analysis and through reading analyst commentaries. that´s how i get a picture of the market and its important levels. i am not interested in opinions of other market participants as this would influence my own opinion.

Q: anykind of mental preparation?
A: nothing specific. actually i am motivated all the time...i see trading more as a sporting challange and try to erease the thought of the money.

Q: how many hours do you spend in front of your screens?
A: usually 5 hours, thats when i trade actively...in case of special events i can be up to 11 hours

Q: isnt it hard to spend that much time in front of your pc´s? how do you stay concentrated for such a long time?
A: that is what my japanese colleagues asked themselves as well...well i take it as some kind of game where i forget the time. therefore the real troubles are more physical (eyes) than psychological.

Q: what do you do to calm down / relax?
A: i do lots of sports and take lots of vacations.

Q: what equipment do you use?
A: MD-trader from TT, reuters, bloomberg, CQG and a USD-squawkbox.

Q: why a USD-squawkbox?
A: i use it because €/$ had some effects on the intrest rates over the last couple of months. those effects change, right now it influences oil prices and the DAX.

Q: what timeframes are you using on your charts?
A: usually 5- - 30-min charts for trendlines and indicators. i prefer p&f charts because they give me a clearer view on patterns (triple tops). for indicators i like the CCI because it also shows the volatility of the markets.

Q: do you think is it possible for a single player to manipulate the market?
A: no, in my opinion a single player cannot influence the market around the clock. there are always several big players in the market. take the BUND for example - there are one million contracts traded a day. when a trend starts out of the blue with only slight pullbacks, i could trade against it, but with no effect. i couldnt stop the market from going up, because there would be more money needed that i could bring in. apart from that, so-called 'Analytics' computerized scalpers have made it tougher for me lately. as far as i know they are analysing the behaiviour in the orderbook and create a fully automated system. since they act in several markets at the same time, i think these computer freak come from the fully automated arbitrage- and spread-trading.

Q: what has one to do if he wants to become a scalper?
A: he has to watch the orderbook for a very long time."

Q: What are your strengths as a world-class trader and what are the differences between you and other traders?
A: I have the ability to get more aggressive in winning phases, to take bigger risks, and to scale back during losing times. This is contrary to human nature. The best thing is to have somebody around who is neutral to trading, who switches the screens off when a certain level of loss has been reached for the day.

Q: What role does risk management play in your trading?
A: I set a daily goal for my profit and loss, with the most important thing being the stopping limit, the maximum loss I take, before I switch off the screens.

Q: Shouldn't a trader stick to his opinion?
A: No, definitely not. An analyst or some kind of guru has to stick to it, but a trader should have no opinion. The stronger your opinion, the harder it is to get out of a losing position.

Q: Do you do any kind of daily mental preparation?
A: Nothing specific. Actually I am motivated all the time... I see trading more as a sporting challenge and try to eliminate thoughts of money.

Q: How many hours do you spend in front of your screens?
A: Usually 5 hours, when I trade actively... in case of special events it can be up to 11 hours.

Q: Isn't it hard to spend that much time in front of your PC? How do you maintain your concentration for such a long time?
A: That is something my Japanese colleagues asked themselves as well. I think of it as a kind of game and I forget the time, so the real trouble is more physical (eye strain) than psychological.

thanks +1

kasi semangat sikit to all BC'ers

What else is big in Japan? The secret life of Japanese suburban female market speculators.

There’s this woman who is not your typical Asian housewife. Well, neither am I, but that’s beside the point. This woman though, is part of an “underground activity” considered taboo, that many a suburban Japanese wife participates in. It’s clandestine, dangerous, and extremely exciting for those who do it. It makes for the adrenaline rush that many a bored housewife trapped in a domestic setting would get addicted to.

This secret occupation is nothing else but day trading.

Tens of thousands of married Japanese women ventured into online currency trading in the last year and a half, playing the markets between household chores or after tucking the children into bed.

Ms. Itoh, a homemaker in the central city of Nagoya, did not want her full name used because her husband still does not know. After cleaning the dinner dishes, she would spend her evenings buying and selling British pounds and Australian dollars.

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Well, you know what they say when you’ve got a smart, idle, thumb-twiddling housewife cooped up at home while you’re away at work, right? Don’t look now, but she may just lose control and get herself into some speculative investing (also known as day or online trading). And may make millions without you even knowing!

YUKA YAMAMOTO dutifully quit work to assume her expected role as suburban homemaker when she married six years ago. But she quickly grew bored at home, and when she saw a television program about online stock investing, she took $2,000 in savings and gave it a try.

Today, Ms. Yamamoto says she has turned her initial investment into more than $1 million as a day trader, scanning her home computer for price movements in stocks, futures and foreign currencies that could lead to quick profits. And by writing books and holding seminars on trading strategies, she has also become a celebrity among homemakers who are investors. She says she has met thousands of other married women who now play the stock market online, many without their husbands’ full knowledge.

Beware, the lure of online day trading.

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There are many other reasons beyond the typical for why these women speculators engage in these activities. Sure, there are the usual attributions to greed, to boredom, and to the competitive nature of aspiring wealth-builders. And in Japan, doing this sort of thing is even more distasteful as it is considered “wrong” to be making money without working for it. But for these particular women, could it be that culture also played a part in waking up this perfect storm — something to do with women wanting to ensure themselves some form of financial independence even as domestic homemakers? Lots of women want to feel in control of their financial destinies and want to avoid feeling vulnerable even as they dial down their careers to keep an eye on their home, children and families. And I guess they’ve become quite resourceful about addressing these matters in certain countries .

Some reasons for why this type of market play has taken off in some places:

Japan is a culture that highly values job stability. But in recent times, people are no longer guaranteed their jobs for life.
Living with uncertainty can change one’s views on how to make money.

Who knows how financial information and education are assimilated elsewhere? In different countries, market and cultural orientations are different, so what’s common knowledge for us here, such as index investing, asset allocation and so forth may not be as readily understood elsewhere.

And speaking of cultures…and subcultures — how about this possible motivating factor for trying your luck out this way?

The surge in day trading has even created celebrities, including its own “stock idol,” a young woman named Maiko Asaba who poses in miniskirts for photographs in day trading and stock investing magazines next to captions describing her fondness for ice cream and index futures.

“In Japan, every true subculture has celebrities,” said Ms. Asaba, 28, a financial researcher and part-time day trader who keeps a giant teddy bear next to her trading terminal in her cramped Tokyo apartment.

Oh yeah… the sweet taste of fame and glory. I quite find it amusing that this movement has molded “celebrities” out of those secret traders who went public with their success. These folks have gone on to ride their publicity to branch out as authors, as founders of trading groups, and as so-called expert consultants in this “money generating” field.

Where do you stand on risk vs reward?

And yes, I agree, this day trading thing is a money generating field….sometimes. When the market goes up and we’re in the midst of a massive economic boom, everyone’s minting money, and day traders, speculators, market timers are all big winners, along with the rest of us who’ve got investments at stake in the market and riding that same market wave. But when the market hos instead of heaves, and the market wave recedes? Well, then the hopelessly hopeful get a quick lesson on risk vs reward.

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Regardless of where you’re from, it doesn’t change the fact that day trading is highly risky. No matter where you do it, how smart you think you are or how rich (or poor) you already are, playing this game is very risky. That risk is the reason for both the huge returns:

During the four-and-a-half hours each weekday that the Tokyo Stock Exchange is open, Mr. Mimura sits in his bedroom monitoring stock prices on three computer screens. He said he became hooked two years ago, after he put all his savings, $25,400, into shares trading at about 25 cents, and then watched the price jump to 45 cents in just two days. He said his parents, who are farmers, were opposed to his day trading, but he appeased them by earning $127,000 in a month and using the money to renovate their home.

Over all, he said, he has made $2.54 million by trading stocks at home, enough to be invited to a New Year’s party attended by a few dozen of Japan’s biggest day traders.

and the massive losses that traders experience:

When the turmoil struck the currency markets last month, Ms. Itoh spent a sleepless week as market losses wiped out her holdings. She lost nearly all her family’s $100,000 in savings.

And you can definitely magnify those risks even further by doing a few more things:

Use margin trading. It’s speculative to the nth degree.
Leverage your entire life’s savings.
Put all your eggs in one basket.
Don’t tell anyone what you’re doing, especially not your spouse.
Don’t stop.
Even a broken clock is right some of the time.

For those who continue down the trading path, it doesn’t sound like they’ve read this book: Extraordinary Popular Delusions and the Madness of Crowds. If they did, then they’d realize that our history is littered with stories of snake oil, money schemes and fads that took off, became big sensations, and made a whole subset of people rich then very poor in a span of a few years. They’d realize that their financial strategies haven’t really been thoroughly tested until they’ve sat through full market cycles with trend lines going in more than just one direction. But as we would have it, there will always be a place in the investing community for market speculators, timers and traders because the dream to get rich quick will be one that people will nurture through eternity.

But don’t get me wrong, I don’t dispute that market timing can work for some people. A minute few, perhaps. But are they really experts or are they just lucky? Market timing experts do exist, but I doubt that you’ll find these people among the ranks of Japanese suburban housewives.

nice article, hope the wife is a big trader as me +1