Performance (Warrants) - Week of 8th Nov

250.00 I got back in bro refund from Bank A (which charges 1% - and can get lost).

I've also added how much bro I've generated trading warrants since the start of the experiment.

Next steps:

- Adding by how much I was underwater at the worst point. For example on the 30.10.2009 trade I was down over 6'000 intraday. On paper it looks so tame with just the end return.

- Adding the weighted return to each trade. At the bottom I already have the total return weighted.

Positive points:

1. Got bro back

2. When I saw no opportunity I didn't try and force the market to give me any profits and walked away.

3. No doubling up on positions going south

Negative points:

1. Thinking that I've paid my banks/brokers 1461.- is a bit sickening (since beginning)

2. Only used 20% of account balance this week.

3. Can't use leverage to trade warrants currently

* Also just noticed that in the amount "investment" I've included is the entry price PLUS commission - which isn't really "clean" performance measurement!

Felt Extremely Aggressive!

I've contacted a fairly large bank and said I want certain conditions. These conditions would let the bank earn a fixed ticket fee when I trade their warrants and a 10bp fee when I trade shares in that banks local market.

I clearly stated these requirments of mine at the outset of the account opening process. I was given the impression that those would be doable. During that process since Tuesday (or earlier?) the account manager has sent me forms to fill in regarding where the money came from etc (which I completed and returned overnight). Then he decided that my photocopies of ID weren't enough and that they needed me to either come by personally or drop into a branch. I went to a branch and had that done.

So today he calls me, tells me he's received everything. It's all in order he says. Then: However regarding conditions I won't be able to offer you those rates at the outset. We need to see how your turnover is and what kind of transactions. So I ask him: What's the counter offer?! He said none really, he's been told to suggest the account run for 6 months with me trading at usual 0.8% (0.4% electronically) and that even for there own fcking warrants where they have a 4-10% spread!

I felt like telling him what a pisshead he is and hanging up. But I tried to stay calm and tell him in that case I'd be unable to trade with them. He didn't seem in the least bothered. Useless halfwit! Those kind of things really get on my wick. Spend loads of time sorting out paperwork and some moron in the bank thinks they need six months of transactions before they decide IF they can offer better rates.

Well, life's all about plan B isn't it!? So I already have another bank lined up doing final checks to open an account at even cheaper rates than I asked the one mentioned above. I'll be damned if I don't get this ball rolling! As Samantha Fox eloquently put: NOTHINGS GOING TO STOP ME NOW!!!!!

No trades since beginning of week. Enjoy your weekend!

Ethics & Trading: Desk Head Gambles Away Millions Via FX-Trades

"The investigation established that Desk Head ‘A’ and certain other employees on Desk X had engaged in and/or facilitated unauthorised foreign exchange (“FX”) and precious metals transactions by using certain international wealth management customers’ money without their authorisation and allocating any resulting profit or loss to the affected customers’ accounts. There was a high volume of FX transactions during the Relevant Period; UBS’ investigation identified approximately 50 such trades per day during 2006, which continued (at a reduced rate) throughout 2007." (source: FSA, UK)

- FX transactions could be executed by providing UBS’ FX traders with only an identifier for the trade and the details of the amount and the currency to be traded. Full details of the transaction, including the account number, could be provided to UBS’ FX traders up to 24 hours later. This allowed the performance of the trade to be assessed before Desk Head ‘A’ decided how any losses (or profits) should be allocated;

- FX trades that had already been executed and booked could be cancelled and then subsequently re-booked onto another customer’s account; and

- FX trades made nominally on behalf of a number of customers could be consolidated into a single trade with an ‘averaged’ price, thereby hiding the number of deals and the patterns of price."

The damage the bank had to compensate clients for was over 40million....

The oldest tricks in the book...

Money does bring out the worst in people eh....

Pixar-Disney Film: (Thumbs) Up

I love stumbling across films that I'm not really expecting much from - apart from a bit of entertainment - and then finding them to be funny and yet deep in a way and really enjoyable. It's like finding an exotic secluded beach in some wild yet beautiful part of the world and having the impression you're a discoverer or adventurer treasure-hunting. I'm a big cartoon fan, so this type of action loaded long "cartoon" was just my ticket. The dog is such good fun. (IMDB)

Which brings me to my trading. Not long ago an advisor asked me why I wanted to trade: fun or income. I want both. I want trading adventures that are fun, exciting - an adrenaline kick. And yet I'd like to pay for whatever luxuries in life I want with the income from this adventure - if possible. I guess I want to have the cake and also eat it.

At the moment I'm not sensing much opportunity intraday for my favorite trading style. But as I read today - here - knowing when to stay sidelined is one of the most important abilities of any trader.

I'm making some progress opening an account as a "pseudo hedge fund" with one bank at the moment. Aim: get a track record going and lot better fees than I currently have in place. Should know by friday if administrative part of it is looking good.

Spreads Making Life Hard

The Stock

This bluechip saw a decent runup. Yesterday 15-20min before the close I decided to buy some puts on it. For a start I didn't trust the Dow being up 120 points. Also this stock seems to have lost steam (unable to smash prior days high). Not going up as fast and mood in general seems less euphoric.

The Warrant

The put had been trading .20/.21 in the morning and then .19/.20 for most the day till the Dow came in so strong, then it went .18/.19. I bought.

My emotions

I had been contemplating going long the put at .20 for a while y'day (14-16CET). So when the Dow was up like it was, I just had feeling that .19 was a good price to be long in case we saw a Dow reversal intraday. The reversal did happen, but to my dismay the Dow sprinted toward the close of US session giving me a very bad feeling about how my Puts would do this european a.m.

Shortly before the options/warrants european opening underlying was 47.95-48. There market maker was pricing warrant .19/.20. So I was annoyed at myself that I've bought this put when stock was 48.30-48.35 and I can't even get out without losing bro.*

Performance

Anyway. Stock went to 47.85 and my warrant .20/.21 - I knocked them out. Net + 800.-, or 4% (rounded). Should factor in that I've got money sidelined that makes the real return more like .8% - and therefor a lot less impressive.

Thoughts

I'm just risking too much for too little though. If price doesn't change I'm out of 5% spread plus .4% commission each way. If underlying moves down .2%-.8% I'm only able to get out taking a hit on commission, so loss of -0.80%.

*Told myself I must find some deal where I can short shares directly with 3-5x leverage. I'd be a lot less inclined getting screwed by the spread then.

Not surprising the market makers are cash generators for banks?!

Performance (Warrants)

So here's the recap of my warrants trades till now...

Couple of not good things:

1. I've paid my banks 1'549.00 in bro and made 1'450 myself!

2. My one loser was double the size of my average winner

3. My latest winner was huge risk for very little return

Couple of good things:

1. Green

2. Should get back 240.00 in bro from my bank after email & chat

Profit Warnings & Knives

This stock has traded between 100-120 for over a year. Then yesterday it surprises the market with a big effing profit warning. Stock opens over 15% lower (88) snaps back to 92 and quickly falls to 90 before tumbling down to 86-88. I'm watching and wondering when and if the time has come to bottom fish.

Couple of hours pass and stock deteriates further to down to 25% (80-83). I'm not watching my screen at that point. Even before the good US GDP numbers come out this stock starts moving higher. Only with good GDP numbers do I start looking at warrants for this stock. I find one that is .55/.56 (84). 1min later it's .56/.57. Another 5min later .58/.59 (85). I see the high was .70 for the day and wonder if I should jump on?! (Didn't realize at the moment that around 92 of course that .70 would be normal price, but that I should not expect that)

Then it starts ticking down. I feel good and expect a 1-2% fall on the underlying. Warrant is .55/.56 again and I go long 40k. I feel my heart pumping (adrenalin rush) as I enter order cos I think I have to act quickly before it snaps back to .58. Imagine my shock and horror when literally as I'm buying the stock gets another 1.5% hit and falls to .52/.53. Less than 20seconds after paid .56! I think: Ok, overreaction! , I'll buy another lot and dump them both at .56 or .57 in an hour.

Then for 10min nothing much happens till it once again takes a beating of 2% and warrant is offered .49. I double again up buying 2lots this time. I'm really stretched at this point. I see the markets everywhere are ticking up, surely whoever is shorting this profit warning is going to take breather!?

But this stock just won't make a comeback and closes at the low of the day and with the warrant worth .45/.46. I was pretty devastated. But still a bit hopeful of a corrective move come today, what with the Dow being up 200 points!?

It opened at .50. My breakeven's .5175. It moves up gradually. I am able to dump the whole lot at .53 and thank my lucky stars for this close encounter!

[On a looney side note: I received an email yesterday that made it through the spam filter and was titled "You are going to be lucky". Talk about spot-on! :) Then I also started watchin a film called "Paranormal Activity" - a guy (daytrader) and his girlfriend (student) - trying to get rid of a demon she is haunted by. Makes you wonder sometimes. haha :) ]