Journal of a Novice-Level Speculator

P

Pension_Admin

This journal will be different from most of the journals you see on ET. I can safely say that this will be a boring journal, because my goal is not to turn my underfunded account from $900 into $900,000 in a year, but to preserve what I have through swing trading and to enjoy a better and productive life.

I have now understood that trading is not a job but is a lifestyle. So I will use this journal also as a log to record the jobs that I have applied to and interviews (if any) that I have gone to. I will also log my progress in the Level II curriculum of the CFA Program. I hope through this journal I could obtain some good inputs and get a better perspective on this lifestyle, and eventually move on to the next stage.

I will be swing trading in my forex account. The reason I picked swing trading is that scalping forex does not provide the expected risk:reward that I seek. I will not day trade forex, because the spread is too big in relation to the daily volatility—compared to trading ES. Swing trading forex is my only option. Fundamental will be my edge. Technical will be my entry tool. Given the small size of my account, I am willing to risk a maximum of 5% of my account per trade. I will follow the trend and will build pyramids. I will always exercise my stop loss and will never add to a loser. Scratch trades will be considered good trades, because they preserve my capital. When I feel frustrated, I will reduce my risk to 1% until I don’t feel frustrated anymore.

I will update this journal on a daily basis.

Thanks!


PA
 
Today I did some studying, but not as much as I planned. Through studying the CFA material, I've learned how equity, equity index, bond, currency, and rate agreement forward contracts are priced and valued.

Tomorrow I will do some questions, and then continue to learn other derivative instruments such as futures and options. Hopefully by Monday I will finish the derivative section.

I also applied for a back office job at a bank. I hope they don't think I am overqualified for it and would give me a chance to work there.

PA
 
I did some more studying today. I learned more about future pricing and valuation. I learned about normal contango (F >(S)) and normal backwardation (F<E(S)) and how the positions of hedgers and speculators determine the situation. I also found out how the relationship between the underlying and interest rate could have an effect on the relative price of the future vs the forward. I also learned the Put-Call Parity (c+PV(X)=p+S)and the binomial tree. Prob = (1+Riskfree - d)/u-d

Through browsing the internet, I also learned a bit about Matlab. It is very confusing due to my lack of background in math. I was completely lost when I read the Introduction to Matlab. Anyhow, I found what Matlab is and how it could be used to run Monte Carlo simulation. It's an interesting software and I hope I am smart enough to use it someday.

PA
 
Quote from nutmeg:

Will you be studying unwritten rules and exceptions?
More...

Well, I am not sure, but I know whatever they teach in the CFA curriculum are mainly theories and are just the basic--just enough to impress investors and employers, but not enough to win in this speculative profession.

If you have any unwritten rules and exceptions that you wanted to add, please feel free to do so. I would like to know them.

Thanks!

PA
 
Quote from Pension_Admin:

I did some more studying today. I learned more about future pricing and valuation. I learned about normal contango (F >E(S)) and normal backwardation (F<E(S)) and how the positions of hedgers and speculators determine the situation. I also found out how the relationship between the underlying and interest rate could have an effect on the relative price of the future vs the forward. I also learned the Put-Call Parity (c+PV(X)=p+S)and the binomial tree. Prob = (1+Riskfree Rate- d)/u-d
More...

I just realized my posting was cut short for some reason.

Maybe it's the formula. Let me give this a try again:

I did some more studying today. I learned more about future pricing and valuation. I learned about normal contango (F >E(S)) and normal backwardation (F less than E(S)) and how the positions of hedgers and speculators determine the situation. I also found out how the relationship between the underlying and interest rate could have an effect on the relative price of the future vs the forward. I also learned the Put-Call Parity (c+PV(X)=p+S)and the binomial tree. Prob = (1+Riskfree - d)/u-d

This journal would be a good refresher before the exam.
 
Quote from Pension_Admin:

Well, I am not sure, but I know whatever they teach in the CFA curriculum are mainly theories and are just the basic--just enough to impress investors and employers, but not enough to win in this speculative profession.
More...

As a CFA candidate and a successful trader, I can assure you in advance that there's absolutely nothing in the CFA curriculum that will help you "trading". The closest you will come is to become a buy-side (or sell side I suppose) analyst and use what you've learned to make longer-term portfolio trades based solely on fundamental analysis.

Good luck BTW on your level II exam, I presume you're taking it in June?
 
Quote from cgeorgan:

As a CFA candidate and a successful trader, I can assure you in advance that there's absolutely nothing in the CFA curriculum that will help you "trading". The closest you will come is to become a buy-side (or sell side I suppose) analyst and use what you've learned to make longer-term portfolio trades based solely on fundamental analysis.

Good luck BTW on your level II exam, I presume you're taking it in June?
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Thanks! Doing the CFA curriculum is just to help me land a job in the financial industry and to ultimately fund my account. I know the way to success in trading is through experience and not through what has already been written. Regardless, I will try to learn as much as I can, because I know it will benefit me in some way.

Yes, I am planning to take the level II exam in June. Hopefully I'll pass it and that it will open up some doors.

BTW: What level are you working on?

PA
 
I took the Level 1 in December...chance of passing 50-50. I'll take the Level 1 again in June if I did not pass (should be easy to buff up on what I neglected), or crash-course study for Level 2.
 
Quote from cgeorgan:

I took the Level 1 in December...chance of passing 50-50. I'll take the Level 1 again in June if I did not pass (should be easy to buff up on what I neglected), or crash-course study for Level 2.
More...

I certainly hope you'll pass your level I exam and get to do the level II exam in June.

Just curious, say if you passed, how are you going to prepare for the level II exam with such little time left?
 
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