4 September 2008 -- Black Swan upon me -- 55k USD loss

it was Sept 4, 2008 when i was struck by the Black Swan event.

I lost all my trading stake of 55 000 USD in blink of an eye on a 'sure trade'

the event: I longed eurusd & gbpusd at the session lows after they had both descented 200+ pips so I felt pretty sure I would get a little profit riding the quick retracement

needless to say I was stupid enough not to use stops!!!

for a minute the prices backed down so I loaded more to a 1 mio per both positions - then once they reached breakeven they both stalled -- then I thought 'they are pretty weak maybe I'd better sqaure here and wait and see'

well I didn't square - instead they started free-falling and I kept buying until I had 5 mio Long GBPUSD and 3 mio long EURUSD and then they just kept falling until the dayly range extended to the surprizing 300+ pips in both...

pretty unusual event -- but that doesn't excuse my mistake not to manage my risk thru stops!

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well what can I say - just as I fel sure in myself and I thought I had a basic system to trade I lost it all - now again I have to start from a scratch

in the last 6-7 months I turned 10k stake into 57k and it would be even greater since I drew on the account around 21k...
nominal return was 550%
........
well man, next time please do it better!

Stock Portfolio Rebalancing - 07.07.2008

Today I rebalanced my Stock Portfolio on the Bulgarian Stock Exchange - Sofia.

I dumped the old holdings of:
1. Alcomet
2. Doverie United Holding

they were both very poorly performing - the Alcomet P/E has risen above 58 and the basic materials were giving it a huge toll over earnings.
Doverie I believe is watering the stock holdings as he new shares are in the market the value has long ago disappeared.
>>> I know I was dead late for this move - worse I don't find any reason for consolation - I was reckless and overstayed bad trades

Alcomet - long average at 1760 for around ~ 9.30
liquidated ~ 6.70

Doverie - long 2000 around 10 - liquidated at 6.60-80

>>> all the freed capital is invested now in the doubled position of Eurohold - today 8888 shares.

Possible Double Bottom formations - 30.06.2008

Here are the major and the broad indices - Sofix & BG40.

The charts suggest possible Double bottom formations >>

thus I decided to hold my investments in the major companies.

The portfoilo consists of 9 positions with slight bias to the financial sector as I suspected a rebound there to be stronger than the market as a whole.

However I realise the stock market is actually dominated by the infractructure companies and financials seems to have lost their shine.

The plan is to liquidate the BSE stock holdings on the subsequent rallies as I expect the overall economic conditions to get better for the time being in the US and the Euro zone but the Autumn to bring some very bad consequences of the credit crisis expansion.

25.06.2008 - EURJPY 2.3 mio short trade

>>> What a day today - we had a historical High in EURJPY at ~ 169.49

Somehow I feel those old tricks now seem a bit plain to be fooled.

Anyway I had like 10 exhausting hours of waiting until EURJPY grinded down and finally it just broke --> then I covered the short.

I was originally short ~ 169.15 but also added 169.30 lower highs - there I saw confirmation that was weak trend so I added 169.10 - last add was 168.81 where the action was still not so strong but whenit broke 168.50 I was sure and just waited for 168.28 to cover.

Today US Stox broke the recent bottoms badly and it was evident that we see a liquidation in carry trades. But now in hindsight it is easy to say..

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A word of caution to myself:

"Dude, why the fuck did you forget to put a stop to that stupid Gold trade, you silly punk!!!"

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I know it is useless to point this after the fact but it is absolutely important that I put a stop at every single trade and start with only a mild leverage until I gather enough conviction and have a profit in the trade until I start to commit more!!

Today besides my perfect trade in EURJPY and the previous short in AUDJPY which I closed way too early I LOST and actually HAVE A NEGATIVE BALANCE in my other account which I have to cover now!!!

All just because I entered a stupid Short gold trade without any conviction and didn't pay enough attention - but above all because I just carelessly left it without stop!

You silly boy!! Never do that again!!

23.06.2008 - trading against the trend

Today I had the strong conviction to trade conservatively and protect my capital after the last Friday 2.5 mio trade in Sterling/Yen.

No matter I started testing the market with only 100k positions the 3 consequtive attempts to long the bottom in EURUSD & GBPUSD with tight 30 pips stops proved to be expensive.

Also it was my impatience to wait for confirmation that those trades were advancing properly and I added leverage too soon which weighted additionally to the testing cost.

However I traded strictly with stops and adjusted them for the position size and location.

Given the average trading ranges I got very confident that I must see some reaction from the lows -- that is why I entered in my last attempt a considerably sizeable position from the outset:

400k in EURUSD & even riskier

500k in GBPUSD

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I had a sore realization that while I am incessantly looking for trends and constantly convince myself that I am on my steady way to spot and manage trend following trading style I seem to be going for contra/reactionary style.

I found myself today trying to pick the bottom instead of getting on the trend and just riding it...

Well, after I see these weak spots in recent times much more clearer I feel I am at least a step closer.

Baron Rothschild quote.

>> Old Baron Rothschild when asked how he makes so much money:

"I have found an easy way and I stick to it. I simply cannot help making money. I will tell you my secret if you wish. It is this: I never buy at the bottom and I always sell too soon."

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Again just to reiterate and confirm for my own conviction:

> Always try to bend against common logic!
> Always do the HARD thing as the easy way always leads to ruin.
> There is no easy way for the common human being as the mainstream Joe is always too busy to study and live in accord with nature >>

so 95% of people always live against the natural way and that's because choosing the easy way is wrong as this is just the wrong human perception..

>>> Just as one evolves and finds energy and courage to live by the natural way he finds that the HARD thing and the RIGHT thing converge - and then the simple is not easy but correct.

That's why in the beginning there is always necessity to apply unhuman portion of intent to change the life, the rules, the perceptions, the decision-making process, the thoughts, the areal, the people.

A TURNAROUND doesn't happen in one day - it is a PROCESS. Such as LIFE - it is a constant process of evolution, change, transformation and sublimation.

Just need an vigilant eye and courage to appy change.

20.06.2008 - 2.5 mio trade in GBPJPY

>> This was a bit of a wild card trading as I overleveraged in a purely declining market that was obvious in the chart.

Certainly I will remember however that the most easy looking trades always turn to be actually the toughest. I sure shot I thought turned into an all day grinder -- anyway the averaged short around 212.49 was covered 212.08 before the Friday close because the rollover would be considerable expense.

Well, that was it - now going back to risk management and trend spotting.