Aloysius Chan's Blog

Type of alogrithmic strategies Data trading: economic data. Market making: earn spread. Coorelation: compare with other market. Arbitrage: profit from disparities. Trend following: pullbacks, moving average or breakouts. Mean reversion: go against trend. Gamma trending: generate income on the excess cost. Type or orders Risk price: bid price. Stop loss order: risk management. Market order: standard order. No worse than price: stop or limit. Two-way price: both bid and offer price. TWAP: time-weighted average price. Iceberg orders: limit order in wholsesale. Dark pool: wholsesale matching. The players Banks. Coporations and hedgers. Hedge funds. Discretionary/macro funds. CTAs (Commodity Trading Advisors), systematic and model funds. Real money. High-frequency trading (HFT). Central banks. Policies is a major driver. Moral suasion for currency preference. FX intervention on currency too high or low. Diversification: hold or protect own currencies. Retail traders. Groupings USA The dolla...

Emotions in trading Hope: I sure hope this goes up right after I buy it. Fear: I can’t take another loss; I’ll sit this one out. Greed: I’m making so much money, I’m going to double my position. Despair: This trading system doesn’t work; I keep losing money. Cognitive bias Loss aversion: The tendency for people to have a strong preference for avoiding losses over acquiring gains. Sunk costs effect: The tendency to treat money that already has been committed or spent as more valuable than money that may be spent in the future. Disposition effect: The tendency for people to lock in gains and ride losses. Outcome bias: The tendency to judge a decision by its outcome rather than by the quality of the decision at the time it was made. Recency bias: The tendency to weigh recent data or experience more than earlier data or experience. Anchoring: The tendency to rely too heavily, or anchor, on readily available information. Bandwagon effect: The tendency to believe things because many other pe...

Basics Learn goal setting and focus. Develop skills instead of money. Versatile to market changes. Identify your risk level. Execute trades immediately. Let market do the talking. Develop a system in trading. Being objective. Recognise true information and act on it. Unsuccessful trader Lack of skills. Limiting beliefs. Lack of self-discipline. General The market is always right. There is no beginning and ending price in the market. The market is an unstructured environment, it can go all direction. Reasons are unrelevant in the market. Strong Mentality Complete disciplined trading approach. Release yourself from the negative trading emotions. Memories are stored as charged energy. Building a framework Understand your behaviour. Learn to manage your conscious. Monitor relationship with your environment. Psychology of price movement What kind of price action will sustain the buyers' beliefs that thay can make more money?: When are sellers likely to come into the market in force? Whe...

Common mistakes Overly lured to the its benefits. Not creating rules. Ignored responsibilities. Addicition to random rewards. Avoid boom buster. Winner Loser Boomer Buster Stay consistent Know the risk. Understanding yourself What are the objectives? What sre the skills? What is a carefree state of mind? What is objectivity? What does it mean to make yourself available? What Is the "now moment'?   Truth about skills Anything can happen. You don't need to know what is going to happen next in order to make money. There is a random distribution between wins and losses for any given set of variables that define an edge. An edge is nothing more than an indication of a higher probability of one thing happening over another. Every moment in the market is unique. Beliefs They manage our perception and interpretation of environmental information in a way that is consistent with what we believe. They create our expectations. Keep in mind that an expectation is a belief projected int...

Important fundamentals Nonfarm payroll. Gross domestic product (GDP). Trade balance. Treasury international capital (TIC).  Producer price index (PPI). Consumer price index (CPI). News headlines to take note of "Dollar" & "surge". "Dollar" & "plummet". "Dollar" & "plunge". Sentimental indicators U.S. dollar index (DXY). Commitments of traders (COT). Chicago Mercantile Exchange (CME). International Monetary Market (IMM). Speculative Sentiment Index (SSI). Daily Sentiment Index (DSI). Technical analysis EMA (current) = EMA(previous) + SmoothingFactor × (Price − EMA[previous]) SmoothingFactor = 2 ÷ (1 + n) Pivot point for current = high(previous) + low(previous) + close(previous) ÷ 3 Momentum = price(current) − price(x periods ago) RSI = 100 − (100 ÷ [1 + RS]) Initial RS = (total gains ÷ n) ÷ (total losses ÷ n) Subsequent RS = ([previous average gain × (n − 1]) + current gain) ÷ n/([previous average loss × (n− 1]) + c...

Splitting 1000 pips into 4 parts of 250 pips each. Splitting 100 pips into 4 parts of 25 pips each. Spitting 10 pips into 4 parts of 2.5 pips each. It should be used with fundamentals.

Reversal Almost same length candle Dark cloud cover (bearish candle with higher high and full body). Bullish candle followed by bearish. Pattern piercing (bullish candle with lower low and full body). Bearish candle followed by bullish. Stars Evening star (and hang man and hammer). Morning star (and inverted hammer). Shooting star. Doji star. Bullish tri-star. Bearish tri-star. Rickshaw man (long legged doji). Harami The shadow can exceed mother's length Bearish mother with bullish baby near the lower body. Bullish engulfing. Tweezer bottom. Bullish mother with bearish baby near the upper body. Bearish engulfing. Tweezer top. Crows Upside gap two crows. Two crows. Counterattack line. The close met at the same place. Bearish counterattack line: bullish candle then bearish candle. Bullish meeting line. Bullish counterattack line: bearish candle then bullish candle. Bearish meeting line. 3 middle range candles 3 white soldiers. 3 advancing white soldier. Advance block. Stalled pattern...

Engulfing (reversal) Big long candle overtake the previous candle completely. Doji (reversal) Open and close at almost same price indicates market does not know what it want. Dragonfly doji: bullish. Open and close at the top with long lower shadow. Gravestone doji: bearish. Open and close at the bottom with long upper shadow. Stars (reversal) Morning star: long candle, short lower candle, long candle. Evening star: long candle, short upper candle, long candle. Pin bar (reversal) Hammer in bearish: small open and close with long lower shadow. Shooting star in bullish: small open and close with long upper shadow. Harami (reversal) Small baby candle after long mother candle. Bullish harami: baby at bottom. Bearish harami: baby on top. Tweezer (reversal) One bullish and another bearish long candle or vice versa of almost same height.

Strategies The last kiss: wait for retest before placing your trade in a drift (type 4) price action. There will be a breakout after the retests. Do not enter the market too quickly as there will be fake-outs. Take profit and stop loss at half of the drift (type 4) length. The big shadow: engulfing candle (reversal). Bearish candle bigger than bullish candle or bullish candle bigger than bearish candle. The bigger is more powerful. Stop loss after the wick. Wammies and moolahs: double bottom and double top (reversal).  The next test should be at least 6 candlesticks apart. Stop loss at the end of the double bottom or double top. Take profit after the next zone. Kangaroo tails: long doji (reversal, type 2 & 4). Market has gone too far and reversing its course. Open and close should be within the previous candle, or it will just be another "runaway". Stop loss after its tail and take profit in the next zone. Trendy Kangaroo (type 1) If the kangaroo happens in a strong trend...

Slow down: as you may be heading the wrong direction. Start over: if you are starting from scratch on today's price, will you buy it? You don't have to like someone, you just have to do business with the person. Find your focus this year. Avoid rushing to judgement, any luck can be maybe good or bad. Practice good habit of not procrastinating Do it immediately Schedule it Let it go Someday/maybe When you say no, mean it, and you won't needlessly lose your time.

"You can't connect the dots looking forward; you can only connect them looking backward" Steve Jobs Career operating modes Inactive Reactive Proactive Innovative Riskometer Stagnation zone Comfort zone Stretch zone Panic zone Calibration questions What is your ideal day like without money concern? What excites you most? What are you most proud of? What compliments people give you the most? What would your closed ones say you value the most? What are some powerful memories you have? Who are your 3 most admired people and why? What do you want less in your life? What challenges are you currently facing? What are you unanswered questions at the momemt? What are you missing in life? What do you want more in your life? Value clusters Connection, community, friends, family, intimacy Creativity, innovation, ideas, writing, expression Courage, risk taking, challenge Freedom, independence Financial security Gratitude, being present, mindfulness, rest and rejuvenation Health and we...

Who trades forex Flow traders: execution traders. Proprietary traders: speculative. Forward traders: beyond spot rates. Options traders: bank's portfolio. Sales staffs: intermediary. Fundamental data United States Non-farm payroll (NFP) Unemployment rate Change in manufacturing payrolls Average hourly earnings Average weekly hours Consumer confidence index University of Michigan consumer sentiment index ABC consumer confidence Institute for supply management (ISM) employment indices Regional federal reserve indices Existing-home sales New-home sales Housing starts Building permits Chicago purchasing manager index (PMI) ISM manufacturing report ISM nonmanufacturing report Philadelphia Fex index New York Empire State index Richmond Fed manufacturing index Consumer price index (CPI) Producer price index (PPI) Peresonal consumption expenditure (PCE) Institute for Supply Management (ISM) prices paid index Gross domestic product (GDP) Trade balance Current account balance Budget and defi...

One kind of intelligence is acquire while the other kind is memorised facts and concepts. Higher level of education are directly related to better health outcome, lower fertility and longer lives. People always think they are above average: over-confidence. If you are a hammer, then everything looks like a nail. Knowledge to become an expert can limit and narrow your perspective. It's not a good idea to take a forecast from someone wearing tie. The illusion of knowledge make people don't know what they are talking about. Flashbulb Memories: memories that are affected by our emotional state. Types of situation Simple: the route to work Complicated: restructuring an organisation Complex: forecasting global economics Chaotic: 911 event We are all suffering from the illusion of control. It is not the mountain we conquer, but ourselves. Treat people greatly and they will show themselves great. Types of listening Downloading: already know Factual: to gather more data Empathic: open h...

5 traits of execution factor Vision Self-reflections What could stop you from achieving your vision? How to plan more time for your vision? What will you give up for your vision? How to realign back to your vision? Getting back on track Don't get lost in thinking. Understand timing is everything. Know ideads are a dime a dozen. Make sure your vision is a business. Accept that feedback is a gift. Passion Am I willing to suffer for this idea/product/business/person/company? What is one thing in the past you are emotionally connected to? How emotionally connected are you to this thing you are doing? Action Self-reflections What was your first step? What happened? How did it make your feel? What was the results? Whatever you want to start, you need to start with the first step. Steps to employ before you start Identify additional action steps. Create a time frame. Build in accountability. Anticipate possible obstacles. Create a list of resources. Create a review process. Techniques for...

Stick to using 3 tools Tools must be universally used and simple SMA: 100 bar crosses candle = reversal Draw support level and if 100-bar SMA crosses = downtrend Draw resistance level and if 100-bar SMA crosses it = uptrend

Why traders lose money?   Insufficient education Insufficient practices Trading with the money they can't lose Lack of money management rules Over-leveraging Lack of a proper trading plan Overtrading Entering trade at a bad time Only care about one currency in a pair Dilettantism - insufficient backtest Trading too many pairs Choosing the wrong time frame Trading against the trend Using too many indicators Making careless exits Watching one pair and trading another Not assessing properly the market's technical condition Emotional downfall Acting from basic emotions related to money Being afraid to take a loss Trading on a hunch Feeling a lack of confidence Feeling overconfident Doing too much analysis Trading 24 hours a day Lacking the will to follow own rules Being fearful of pulling the trigger Moving stops Giving up because of disappointment Counting your chickens before they hatch Feeding on adrenaline Feeling the need to be in the market at all times Externalities downfall...

George Soros Global micro king Quantum fund, 16 turn $5m to $1b "The markets are almost always wrong" John Henry Technical trading genius Unique characteristics His discipline His ability to ride trends for significant periods His risk management Philosophies One must have a valid personal philosophy. There is no holy grail to trading. Discipline is more important than genius. Persistence is more important than talent. Performance is more important than capability. ***Ability to create value is more important than ability or creativity in any realm. ***Continue to look for ways and to think about how you can create value. Elliot wave 1: Middle up 2: Short down 3: Long up 4: Short down 5: Middle up A: Middle down B: Short up C: Long down Jim Simons Quant king Renaissance Technologies, Medallion fund Renat Fatkhulin   Founder of MetaQuotes, MetaTrader 4 and 5 Books A book: broker passes order to liquidity pool and earn some mark up. B book: broker deal with the order at desk.

General notes Always use stop loss. Avoid overtrading. Think of risk in terms of percent loss, not pips. Control risk through position sizing. Keep risk consistent for every trade. Do not trail stop too closely. Focus on trades with a good risk-to-reward ratio. Know when to take a break. Indicators Commodities Channel Index (CCI) Line reverse down on 100 = sell Line reverse up on 0 = buy Major events and affecting currencies ADP employment survey USD Balance of goods and services (Trade balance) USD, EUR, GBP, JPY, AUD, NZD, CHF, CAD Central bank rate statements USD, EUR, GBP, JPY, AUD, NZD, CHF, CAD Consumer confidence USD, GBP, CHF Consumer consumption USD, CHF Consumer price index (CPI) USD, EUR, GBP, NZD, CHF, CAD Durable goods orders USD, JPY Employment change USD, AUD, NZD, CAD Gross domestic product (GDP) USD, EUR, GBP, JPY, AUD, NZD, CHF, CAD IFO business climate survey EUR ISM manufacturing USD KOF economic barometer CHF M3 money supply EUR Producer price index (PPI) USD, EUR,...

  Currency Going down Rise in employment Fall in GDP Fall in exports Fall in interest rates Geopolitical tensions Natural disasters Threat of terrorism Going up More jobs Rise in GDP Rise in exports Rise in interest rates Super-stable political system Discovery of gigantic oil or mineral resources Essentials in trading Technical analysis Fundamental analysis Sentiment analysis Capital analysis Overall analysis Chart patterns Double top: trend reverse down Double bottom: trend reverse up Triple top (head and shoulder): trend fall Triple bottom: trend rise Saucer top: trend reverse down Saucer bottom: trend reverse up Rising wedge (6 points touch): trend down Falling wedge: trend up Rising wedge during downtrend: follow Falling wedge during uptrend: follow Symmetrical triangle: follow the up or down trend Rectangle (neutral): follow the up or down trend Ascending triangle: up trend Descending triangle: down trend Candle Doji: open and close almost the same price Morning star: long be...

Potential correlate markets (secondary following) Gold ∝ US dollar WTI oil ∝ USD/CAD WTI oil ∝ USD/NOK WTI oil = CAD/JPY Copper = S&P 500 Nikkei 225 = USD/JPY EUR/JPY = S&P 500 Nikkei 225 = S&P 500 VIX ∝ S&P 500 Key indexes VIX, CBOE CRB, Commodity Research Bureau CCI, Commodity Channel Index TED spread: difference of the three-month Treasury bill and the three-month LIBOR Treasury Inflation-Protected Securities (TIPS): protection against inflation Currency Weak currency good for export and bad for import. Rising inflation signals economic health, but may also lead to inflow from overseas which strengthen the home currency. Data to be used GDP CPI Employment data and NFP PPI PMI Trade balance Retail sales Housing data US pending home sales Building permits Loans and mortgage data Composite indices CB Consumer confidence index Candle stick The hammer: small top, long bottom wick: reverse bottom Shooting star: small bottom, long top wick: reve...

Popular chart pattern Ascending triangle Descending triangle Triangle Channel down Channel up Rising wedge Rectangle Head and shoulders Inverse head and shoulders Triple top Triple bottom Continuation Reversal Continuation and reversal Basic technical indicators Fibonacci Golden ratio of 61.8%, 1:1.618, 0.618:1 VT Pivot point indicator Finding potential support and resistance level Major economic announcement Election and referendum results Corporate earnings of major companies (Apple, Cisco, banks) Major political events: wars, military or terrorist attacks, warlike rhetoric Bankruptcy of major market participants Sovereign debt auction results Natural or human-made disasters Prices of commodities Government policies: deficit spending, trade restrictions Currency weaken factors Borrow too much Have large trade deficits Pay low interest rates on deposits Have low rates of economic growth High unemployment rates Engage in wars Main economic announcement Nonfarm payroll (NFP)/employment ...

 Reasons for clients to switch account Complacency Sense of entitlement Apathy and lack of communication Resentment New stakeholders Long-unaddressed needs and changes Unaddressed systematic challenges Value creation Product Good product or service Service Outstanding service Outstanding support Good product or service Business results Solves tangible business problems Outstanding service and support Good product or service Strategic partner Strategic outcomes Envision the future Integrated Relationship value and economic value of value creation Level one Transactional Product or service Vendor Level two Experience Support or service Supplier Level three ROI Tangible business outcomes Preferred vendor Level four Strategic Proactive Trusted adviser Discovery Individual = Intentional + Behavioural Exterior = Behavioural + Systems Collective = Systems + Culture Interior = Culture + Intentional Intentional Values Status Levels Types Motivation Preferences Behavioural Key performance in...

Empathy and ego drive is the characteristic for top salesperson. Top salesperson also focused on the customer instead of the sale. Rules of selling Know your product. Know your competition. Work harder. Be organised. Be assertive and consistent. Be honest. A salesperson is fearless and ask probing questions Why a salesperson fail He do not enjoy what he does. He is not finding the right decision-maker. Failure to ask questions and be curious. Not making enough calls. Sell benefits and not features. Forget about scripts, they will never work. Don't just learn how to handle objection but understand what the customer really meant. Setting goals helps the entire sales process. CRAP Caring Relationships Attitude Passion

Reasons people do not ask for help (choose 1 that best reflect your situation) Underestimated other's willingness and ability to help. Overly self-reliance, Suspect on social cost for the help. Work culture lacks psychological safety. Systems, procedures or structure of your organisation get in your way. Do not know how or what to request. Have not earn the privilege of asking for help. We could be selfish. Guidelines for giver-requesters Give without string attached or expectations of return. Give freely and know your limits to avoid generosity burnout. Ask for help freely and avoid dependent help-seeking. See it long-term as in the long run you will be giving and seeking. Examples of asking for help I am currently working on ... and I could use help to ... One of my urgent tasks is to ... and I need to ... I am struggling to ... and I would benefit from ... One of the biggest challenges in my life is to ... and I need advice on ... My biggest hope is to ... and I need ...