Fund C Update @ 7-Feb-09

Unrealized P&L of about -$926.
Net Asset = $23,058.
Cash On-hand = $20,928.

On 5-Feb after opening during first 20 minutes BAC showed extremely skewed number of Sellers vs Buyers. Best time for momentum trades. Fund C managed to increase from $19.8K to $23.1K this week.

Fund C now 15.0% gain and ahead of Fund D performance of 13.7%.

Fund D Update @ 7-Feb-09

Unrealized P&L of about +$2,106.
Net Asset = $113,725.
Cash On-hand = $120,178.

2 more weeks to Expiry Friday 20-Feb.

C doing well. BAC dropped significantly & continuously for several days, heart-wrenching problem period early this week. Towards the end of the week BAC started to stabilize, a good sign. Only worry is not sure whether it is due to short-sellers covering their positions or BAC finally stabilizing.

Funds C & D Update

In January Fund D increased by about 13.2% from $100K to $113.2K but Fund C decreased by about -0.1% from $20K to $19.8K.

Fund C investor questioning why Fund D was very active and making money while Fund C was not highlighted much and was losing money. That's true, in January most of the effort was put on Fund D which is a larger fund of $100K.

OK. Will Blog less and put more time and focus on Fund C. Will cut-down Blog to only once a week or on some unique trades only.

Will try Momentum Trading using Level II Quotes for Fund C to catch up. This strategy is a lot of hard work as one has to monitor and hunt for the opportunity. Very intense and focus short-term momentum trading which can result in minimum 5% to 10% gain within 2 to 10 minutes.

This is how it works. Search for stocks that have significant skew in the number of Buyers vs Sellers (demand vs supply). A ratio of more than 3x preferred. But the window of opportunity can be very short. If it is 10x or more, chances of winning is greater than 90%.

This is done through monitoring and hunting using Level-II Quotes.

If Buyers are significantly more than Sellers, then follow the Buyers momentum and BTO at-the-money or in-the-money CALL options.
If Seller is more than Buyers, then BTO similar kind of PUT options.

Track closely and STC the opened positions once 5% or 10% target is met or when the Level-II ratio starts to reduce significantly (do not get caught by this). This usually can be achieved within 2 to 5 minutes and will normally be less than 10 minutes.

Things to watch out. Some of the market-makers use computer to generate dummy Orders in system that may trick you. E.g. BAC is at $5.00. You may see a single 10,000 order waiting to buy BAC at $5.50. When BAC price increase to $5.30, the 10,000x $5.50 order disappeared and a new order of 10,000x appear at queue price of $5.80. And when BAC price increases further e.g. to $5.55, you can see that huge order move up again and away from the current price. That is automatic computer trading by the market-maker and you can get trick into believing that those reflect the market.

This strategy is a lot of hardwork, very intense and can be stressful. Those with heart problem should not attempt this.