RiskAddict.com

From despair.com at Dr. Steenbarger&s webinar on how to get to the next level of your trader development:

Before you attempt to beat the odds, make sure you can survive the odds beating you.

Something to bear in mind before taking on risky endeavors.

Maybe I should change the name of the high frequency system to infinite patience because that is what it nearly takes to trade this system. High frequency is really a misnomer. Today there were no trades at all. Yesterday, there were a couple of trades in the morning and that was it. The day before there were no trades until just before the close of the afternoon session. March is getting off to a slow start.

The high frequency system netted a gain of 1,087.60 HKD on the day. I've been running simulation and real-money accounts simultaneously for comparison. There were no trades today with simulated money. That may because I used my best computer for trading with real money. Yesterday, however, the performance was better with simulated money, a gain of 1,770 HKD in simulated money, compared with a gain of only 1,175.20 HKD in real money, so I don't think it's a computer issue. I think it's a data issue. The computers receive slightly different data and thus do not generate identical signals. There is also the human issue. Namely, I am more emotional when trading with real money and am prone to enter break even stops too quickly.

I have a new addiction now, it's called Second Life. What fascinates me about Second Life is that it has its own in-world economy that functions using Linden dollars, which are exchangeable for US dollars. What's even more interesting, is that businesses can be launched in Second Life with very little capital. I would think that this would be a great educational tool for business students at universities. You want a good grade in Entrepreneurship 201? Start a business in Second Life and show consistent profitability by the end of the term. One entrepreneur in Second Life is reported to have been worth more than one million US dollars if her holdings had been converted from Linden dollars to US dollars at the time of the report.

What I've been doing for the past week, is developing a business in Second Life. I have figured out how to automate it to some degree so that going forward, it should take much less time to operate. It's been started with zero capital, so my risk to reward is quite large as the amount at risk is zero. The initial goal is simply to generate enough profit to pay for premium membership for one year. It looks like it may take awhile.

Meanwhile, back at the HKFE, I spent the last week plus one day in simulation mode because it was the transition week from February to March contracts. That appears to have been a mistake because the high frequency system was profitable everyday that week, including the preceding Friday. The opportunity cost for me to have been out of the market for those days, was 7,750 HKD, assuming that I would have gained as much had I been trading with real money.

So today, I traded the high frequency system with real money and I am happy to report a profit on the day. The net gain in real money was 1175.20 HKD.

The trading gods smiled upon me once again. The net gain on the day was 3,281.60 HKD. I am of course grateful, very grateful. The questions I keep asking myself, though, time after time, is it luck or does this system really have an edge? Will the system suddenly have a bad day and wipe out all of the gains? And if I'm too happy, will the trading gods destroy me?

Finally traded with increased size today. The net gain on the day was 625.20 HKD, which is the result of a few break even trades. Nevertheless, I'm grateful because any gain, no matter how small, is far better than a loss.

The net gain on Friday in simulated money was 380 HKD. That was one break even trade with two contracts. So I missed even less on Friday than Thursday by staying out of the market with real money.

Tomorrow is first day the new Lunar Year, and it's the year of the tiger. The Lunar New Year holidays are not listed on the calendar at Interactive Brokers. However, this calendar (pdf download) from the Hong Exchange is showing both Monday and Tuesday of next week as exchange holidays.

Happy New Lunar Year to everyone.

I didn't miss much too much on Thursday by trading with a simulation account instead of real money. The net gain on the day was 740 HKD in simulated money, trading with two contracts. That was basically a couple of break even trades. Let's see how Friday goes.

Wednesday was a losing day for the high frequency system, snapping its seven day winning streak. The loss wasn't too bad, down a net of 1,584.20 HKD. Nonetheless, I'm going back into simulation mode. My plan was to go into simulation mode on Friday before the Lunar New Year holidays, but with this loss, I'm going back into simulation mode one day earlier. If the system performs satisfactorily on Thursday and Friday, I'll return to trading the system with real money after the Lunar New Year holidays.

Unlike yesterday, Tuesday proved to be a profitable day in trading with both real and simulated money. The low frequency system netted a gain of 3,700 HKD in simulated money, all in the afternoon session.

The high frequency system did about half as well in trading with real money. The net gain in real money was 1,825.20 HKD with the high frequency system. It's on quite a streak, seven consecutive days of profitable trading. Hope it keeps it up.