Who is Your Sherpa?

A LETTER FROM OUR STUDENT

 

I stepped foot into the world of trading just months before the Global Financial Crisis back in 2008. I was fourteen back then and had all the hubris and drive a young teenager would possess, I wanted to be the “best” and was determined to be so.

 

In my quest to be the next trading legend, I attended many courses before the age of 17 and spent a total of approximately $20,000 by then, a hefty sum for a teenager. This does not include the “tuition fees” paid to the market by blowing up accounts at least three times, one of them was even on my mom’s line of credit. In my pursuit, I believe I looked as far, wide and deep as any retail trader possibly could, I read every famous book on technical analysis, fundamental analysis and biographies of trading legends, even down to the esoteric studies like Gann Analysis, Gartley Patterns and Harmonics (these use angles as part of their charting analysis). It was to the extent that I fought for a 9-5 role during my time in the Singapore Armed Forces, just so that I could read and use these 2 years of isolation from society to make a desperate (not last) hurrah, devouring 51 books on trading, risk and philosophies related to strategy within that time. By the age of 21, I knew many things about trading and the markets, but I still could not be consistently profitable and it was getting weary, many internal doubts started surfacing which I did not communicate to anyone, I had gone too far now to give up on this, the aspirations and visions I held so intimately in my mind, I could not let it go. Sure, I was definitely better than when I first started out, in terms of skill and understanding, and had gained some understanding of what I need to acquire to achieve consistent success, but the time spent trying to tinker my way to success was met with the reality of “adulthood” and real world responsibilities, this was the beginning of a much more arduous path, or so I thought, and that was when I met Vee and came to know of TrackRecord Trading Academy.

 

The first time I met Vee, I thought his quirkiness was a breath of fresh air and he was the first professional trader I had come across after 7 years who had actual serious working experience in hedge funds and banks . This was my sanity’s last hope and the rest was history. Under Vee’s watchful guidance, I have learnt the standards risk-management professional traders adhere to in Tier 1 Hedge Funds and Investment Banks, how the best Macro Traders thought about the world and what it means that the goal is not to be “right”, but to be rich. It was there and then during the process that I understood the importance of having a mentor who has played in the Major Leagues before. Unbeknownst to most retail traders who are constantly looking for that one trading strategy, it was not a specific “holy-grail” that Vee imparted which changed the course of my trading destiny. It was his Trading Framework that allowed me to harness the knowledge I have accumulated in the last 7 years and put it to good practical use to overcome the barriers to success, a literal coup de grâce to the fairytale retail traders have in their mind about what it takes to succeed. It was never about finding a specific trade set-up that can be rinsed and repeated to riches.

 

Trading is unlike a jackpot machine, you don’t just stumble upon success after a 2-day course as propagated by many imbeciles, it’s a competitive sport where skills need to be honed over a period of time. A mentorship is the only way to success in trading, precisely because it’s a long enough process to get you the right strokes and fundamentals. A Trading Framework might sound esoteric and unattractive to most retail folks only because it’s not the easy way out, but the easy way out never made anyone truly wealthy, so your success is dependent on what you choose to embrace, the truth about trading or continue chasing butterflies. I will end this with the most cliche of wisdom, and cliches become so because there is much truth to it. “Give a Man a fish, and you feed him for a day. Teach a Man to fish, and you feed him for a lifetime”. As a personal testament to the importance of having the right mentor, I’ve managed to open doors I’ve always wanted to since my younger days. In the recent years, I run a Managed Money Macro Portfolio and recently became a founding partner at an Algorithmic Trading Company. Sure this may seem like the final destination and the end of this tale, but in reality this is only the beginning of the aspirations this 14 year old teenager had when he started out back in 2008. There are many more mountains to conquer and trenches to climb out of and you need to have a “Sherpa” if you want to conquer Everest. I’ve found mine in Vee, and I will encourage those of you who are staring up this colossus mountain to take along with you a battle tested veteran, because you’re already on the road less travelled.

 

“Walk with the dreamers, the believers, the courageous, the cheerful, the planners, the doers, the successful people with their heads in the clouds and their feet on the ground. Let their spirit ignite a fire within you to leave this world better than when you found it…”

Wilferd Peterson

 

To Your Success,

Nick.

 

Nick is one of the first to join TrackRecord’s mentoring programmes, and this piece above documents his journey to become a successful trader.

What If You Could Make A Living Just By Answering These Questions?

Answering these macro quiz questions is what Macro Traders do on a consistent basis, wagering real money behind their answer is what separates them from the rest of the folks with just an opinion.

Macro trading is the ability to distill global narratives into a thematic market hypothesis that you believe will play out in the long run. The aim is to predict and interpret macro-economic and political events and profit from the possible outcomes using the most optimal expression among a range of possible trading products, including currency, interest rates and securities.

Source: Illustration by Ingram Pinn

“Those with skin-in-the-game and the refined skills to trade their narratives will inevitably be rewarded handsomely by the markets.”

The most famous example of such a success comes from George Soros and his then lieutenant and head trader, Stan Druckenmiller. Both closely followed the development of Great Britain’s efforts, under the leadership of John Major, to stay within the European Monetary System. The problem was that Germany’s and England’s economic cycle didn’t coincide, causing huge economic friction between both their monetary and fiscal policies. The result, as both Druckenmiller and Soros predicted, was a necessary devaluation of the British pound and termination of their plan to join the European Monetary system. The trade was clear – sell the British pound.

According to sources, Druckenmiller came up with the original idea, but it was Soros who ordered him to bet the house – meaning to leverage Soros’ hedge fund operation to the hilt (according to various sources, at one point it was a 10 times leverage of their original NAV). The trade paid off – the Bank of England had to devalue the pound, Soros’ fund made over $1 billion in profits, and the rest is history.

The Return Of The Macro Trader.

Source: Illustration by Tom Jung

Over the last four to five years, the global macro strategy has suffered in performance. Consequently, this strategy has been in decline in popularity among institutional investors. Low volatility and the trend for computerized trading and automated decision-making has taken a big chunk out of macro funds. It seemed the strategy and their managers were out of touch with the rapid change of technology and the new normal of never-ending equilibrium and low volatility through February 2018.

Furthermore, a rare form of global economic stability with low inflation, low interest rates, and moderate growth resulted in very little volatility in any segment of the financial markets. However, volatility returned suddenly to equity markets with a spike in the VIX index (a measure of volatility in the US equity market) at the beginning of 2018, from low single-digit to as much as 35. Computer traders who had been betting on low volatility lost massively, with some ETFs losing everything. The winners were foremost individuals following a macro strategy.

Top 10 Performing Hedge Funds 2018

Source: https://www.bloomberg.com/news/articles/2019-01-09/hedge-fund-performance-in-2018-the-good-the-bad-and-the-ugly

“Institutional investors, anticipating more interest rate increases in the US and political risks globally, have been regaining their interest in big macro funds. They poured nearly $12 billion into the strategy during the first four months of the year, surpassing the inflows from all of 2017 (data compiled by eVestment).”

Macro investments tend to perform best in high uncertainty/high volatility environments where macro factors exert a meaningful influence on asset pricing.

These types of markets affect factors such as interest rate differentials, foreign exchange balances, and the consequent over and under valuation of asset classes and sectors. As such, markets may be exploited through nimble and tactical positioning.

For the reasons stated above, we believe today’s markets are moving toward a state of disequilibrium that makes current asset valuations increasingly fragile. In other words, the current environment seems to be one in which Macro would be well positioned for strong performance and the time for active management is back.

3 Mistakes Every Successful Trader must Avoid!

I have done this a long time, and it took me a long time to become confident that I can trade for a living. In my career which has given me the opportunity to live and work in the different financial centers around the world – London, New York, Singapore, Hong Kong and Seoul – I have had the opportunity to meet, work with and learn from some of the best traders in the world.

One of the most interesting things I have noticed is that regardless of where, and when, traders of all creed and experience make the same few mistakes. If you have been trading for a while, it is almost a certainty that you would have made some, if not all, of these mistakes.

The first step to becoming better is to understand what are the mistakes that a trader will inevitably fall prey to. So, what are the common pitfalls you must avoid?

1.

Making money is not difficult but losing money is infinitely easier.

If you have been trading a while, and you are not rich beyond your wildest dreams, but you haven’t yet given up, you will be very familiar with this.

You keep trading because you have experienced days of profits and spurts of intermittent success. Unfortunately, all these strings of gains invariably end with a few days of huge losses, which may even end up crippling your bankroll. You will then regroup, put in more capital after convincing yourself it is just bad luck, and repeat the process. Rinse and repeat until you get worn down and give up or you wake up to the fact that there is a better way to do this.

To succeed, you need a process to stop yourself from suffering those few days of crippling losses.

Don’t take my word for it. Almost every trading legend or market wizard, when interviewed about the secrets of their success, will tell you a story about how they almost bankrupted themselves which led them to resolve to implement a process that will stop them from repeating this same mistake ever again.

“Don’t be a hero. Don’t have an ego. Always question yourself and your ability. Don’t ever feel that you are very good. The second you do, you are dead.”

– Paul Tudor Jones  

2.

Overtrading. Sometimes the best trade is to have no trades.

Being market neutral is also a market view. You can’t expect to have an idea of where the market is going ALL the time. Don’t expect this of yourself and don’t try to be a hero.

It is okay to have no positions and to take a step back till a clearer picture emerges and a better risk vs reward opportunity arises.

3.

Thinking that you can make money in all market conditions.

If I were to come to you to sell you a black box with a secret trading algorithm and if you have any sense at all, you will ask me a set of questions similar to the following

  • In what market conditions does it work best?
  • In what market conditions does it stop to work or even lose money?
  • Where is the failsafe switch where it knows when to stop trading?

Yet, of the many traders whom I have met – both professional and the retail variety – very few of them actually ask these questions of themselves. They expect to make money come rain or shine, in

bear and bull markets, in volatile and quiet markets, in trending markets as well as range-bound

markets. They expect to make money every day that the market is open regardless of their health

and their mental state. They expect not to have to switch themselves off when they are, after all,

human. Is that a rational expectation to have of yourself? If Djokovic tells you he can win every single  tennis match that he plays on every surface, week in and week out, all year round, would you think he’s gone crazy?

Do you make these mistakes? If you do, and realise that you do, then you are ready to change for the better and become better.

ARE YOU READY TO LEARN MORE?

Work for Money, or Make your Money work for you

The world is full of people who work for money (well, of course, there are some who don’t need to work for money but those are in the minority) and have dreams of not having to do that at some point of their lives.

Most of them, however, will continue to spend most of the productive years of their lives working for money because they have no clue how they can achieve those dreams besides continuing to work to get enough money to not have to worry about money. Seems paradoxical and sad, doesn’t it?

The way you can afford to stop working for money is to either have a lot of money or to learn to make your money work. In the absence of a lottery win, most people can only hope to achieve the latter. However, many people, for some reason or other, often postpone that decision far into the future. They tell themselves, they will learn when they have “enough money” or when they are ready to retire.

WHAT?

The whole point of learning to make your money work for you is so that you CAN retire sooner! To paraphrase Mother Theresa – yesterday is gone, tomorrow is too late, and the best time is now

Let us begin!

“THE SOONER YOU GET YOUR MONEY TO WORK FOR YOU, THE SOONER YOU CAN STOP WORKING! ”

It’s never too early to manage your money wisely and the sooner you begin, the sooner you will achieve your dreams of being free from financial worries.

This is what I think learning to trade and invest is all about.

It is about putting your money to work, and as they say, money never sleeps! So, it can be doing all the work for you, while you can be free to pursue your dreams and check items off your bucket list!

ARE YOU READY TO BEGIN?

17 Forex Trading Questions For Beginner Forex Traders In Singapore, Answered!

Forex-Trading-for-Beginners

Fancy yourself a forex trader? We’re sure you have a lot on your mind. Here are short and sweet answers to 17 of the most common questions about forex trading for beginners that can help you decide whether the FX markets are for you.

  1. I don’t know anything about how to trade forex. How do I get started?

It’s as easy as opening an account with an online trading platform. Just fill in the form, wait for the verification, and you’re good to go as soon as your account is open. You’ll need to fund your account to get started. Whatever amount you intend to start with, don’t lift a trading finger without first preparing your trading plan.

  1. Are there forex trading headquarters just like the stock exchange, and if so, when are the trading hours?

the forex market does not have a building or a brick-and-mortar office, although the biggest trading centres are New York, London, Tokyo, Singapore and Hong Kong. Much of forex trading occurs on electronic systems as well as in the over-the-counter (OTC) market where all the licensed brokers, banks and traders are connected.

This also means that forex trading takes place 24/7, because there is always a forex market open somewhere in the world, at least from Monday to Friday.

  1. What’s the difference between a retail trader and an institutional trader?

A retail trader is an individual trader, while an institutional trader is a corporation, a bank or a large fund.

  1. Just how risky is forex trading?

While all types of trading and investment have their share of risk, forex is considered riskier than most because it involves leveraged trading, which means it’s possible for you to lose more money than you have in your trading account.

  1. What’s leveraged trading?

Leveraged trading is when you borrow money from your broker to trade currencies. In using leverage, you will only have to pay an upfront security deposit in case you incur any losses. This allows retail traders to earn even from small currency movements, as well as to take bigger market positions on a relatively small amount of capital.

  1. Why should I trade forex instead of stocks or commodities?

The currency market is the world’s largest and most liquid financial market, with a daily trading volume of USD5.3 trillion. It’s also the only market that operates round the clock. There are more than 170 currencies you can trade in the forex market, which is 12 times bigger than the futures market, and 27 times bigger than the stock or equities market.

  1. What are the most popular currencies for FX trading?

The seven most popular currency pairs are called “the majors”, and more than 85% of the world’s forex transactions involve them.

  •    EUR-USD
  •    USD-JPY
  •    GBP-USD
  •    AUD-USD
  •    NZD-USD
  •    USD-CAD
  •    USD-CHF

As part of almost 90% of the world’s trades, the USD is the most traded currency. Apart from the majors, other popular trading currencies include the Mexican Peso (MXN), which is the eighth most traded; and the Chinese Renminbi (CNY), which is the ninth. The popularity of Bitcoin was likewise on the rise in the first half of last year.

  1. How do I know which currencies to trade?

Just because the majors are the most popular pairs doesn’t necessarily mean that they are the pairs you should be trading. Traders need to do a lot of research and study before trading, and the currencies they should be trading are the ones they are most familiar with or know the most about.

  1. What’s a pip?

A pipis the basic unit used by forex traders to measure movements when trading currencies. For example, for EUR/USD, 1 pip is 0.0001.

  1. What’s a market spread?

A spread in the forex market is difference between the bid price and the ask price in a currency pair. This difference is measured in pips and is usually used by brokers to calculate their compensation for a transaction.

  1. How do I know when to enter or exit?

Figuring out when to enter or exit a trade, is arguably one of the most important skills that you have to master as a forex trader. The decision to enter or exit must be made objectively and free of any emotional influence. You can base your decision on price levels or technical formations which can be read from charts.

Your entry and exit can be planned out in advance according to your trading plan or strategy. Generally, it would be best to keep your trades small, and enter your position gradually, or commit your assets a little at a time over a certain period. This way, you can limit your risk, as well as the losses should you choose the wrong entry or exit point.

  1. What’s a stop loss and how do I use it?

A stop loss is a trade management technique that predetermines when you exit a losing trade, to keep you from losing more money. While losses are inevitable in the course of forex trading, stop losses put you in control of the situation by allowing you to decide what to do when the situation isn’t going your way.

You can decide your stop loss point according to the percentage of your account that you’re willing to risk, prevailing market conditions, price volatility, a time limit, or support and resistance levels on charts. If you’re totally new to forex trading, it’s highly advisable to receive expert training and advice on including stop losses in your trading plan.

  1. What’s the difference between CFDs and Spot Trading?

A CFD, or Contract for Difference, is an agreement wherein every time you close a contract, you will be paid for every pip that the currency you bought has moved in your favour. If the currency doesn’t move in your favour, however, you will be the one to pay.

CFDs are so-called because every time you close the position, what you take is the difference between the closing and opening price. That difference will either be added to or deducted from your account. Take note that you never actually own the currency you buy, whether virtually or physically, and that you will never have to deliver the currency you sell.

A Spot Trade, on the other hand, involves the actual exchange of currencies, either virtually or physically. This means that if you buy or borrow a currency overnight, you will either pay or receive interest on it.

  1. What are binary options and how are they different from forex trading?

Binary options are contracts with fixed risks and rewards, where the trader predicts whether an asset (or specifically in forex trading, a currency) will go up or down during a certain time frame. The trader can see, right away, what value their earnings will have if their predictions come true. You get all your money back along with a return if your prediction pans out, and lose all the money you risked if your prediction doesn’t.

Both binary options and forex trading can be done online and can be undertaken with small amounts. The difference between them lies in how much profit you can earn in the long run. With binary options, you need to make more correct predictions in order to make significant gains. The transaction costs (spreads on binary options) are prohibitively expensive in the long run.

Forex trading, on the other hand, allows you to set your own profit targets and stop loss orders, which means you can still earn profits even if your predictions are mostly incorrect.

  1. What is technical analysis?

Technical analysis is a method that uses charts as a tool for making informed trading decisions. These charts present information such as volume and price movement, and by analysing this information, forex traders are able to speculate on how strong or weak certain currencies are, and make forecasts on future movements.

  1. How do I know my trading plan is working or when to change strategies?

As with any plan, results are the only way to gauge your forex trading plan’s effectiveness. However,  these results must be consistent over a significant period. Just because your strategy worked a couple of times, doesn’t make your plan fool-proof or a guarantee of long-term success.

  1. Where can I get help to improve my forex trading game?

There are a lot of helpful educational materials available online (most of it for free), as well as real-time, up-to-date market information from providers such as Bloomberg or DailyFX. You can find forex trading basics and more advanced advice such as technical analysis techniques, but make sure that the organisation offering the information is reliable, and, if it’s a financial service provider, duly licensed.

You can also “practise” with play money using a demo account offered by some trading platforms, and build up your confidence along with your experience before risking real money. But instead of navigating unexplored territory without a guide, or learning through costly trial and error, you would do well to undergo training from professional traders with decades of experience and a proven track record of market successes.

At TrackRecord Asia, you will benefit from the experience and expertise of professional traders who can show you how to earn consistent profits from forex trading regardless of prevailing market conditions or your current skill level. Register for TrackRecord’s FREE “Learn to Trade like a Professional” Workshop today.

Sources:

https://www.cityindex.com.sg/forex-trading/start-forex-trading/

https://money.stackexchange.com/questions/45576/what-is-the-difference-between-spot-forex-trading-and-cfd-forex-trading

https://www.valuepenguin.sg/basic-guide-forex-trading

https://brokernotes.co/forex-trading-industry-statistics/

https://www.financemagnates.com/binary-options/bloggers/binary-options-vs-forex-trading-understanding-the-difference/

https://www.ig.com/sg/forex/how-to-trade-forex

https://admiralmarkets.com/education/articles/forex-basics/what-are-the-best-currency-pairs-to-trade

https://www.forextraders.com/forex-education/forex-strategy/trade-timing-entry-exit-points/

https://www.babypips.com/learn/forex/stop-loss-whats-that

https://www.investopedia.com/terms/t/technicalanalysis.asp

https://vantagepointtrading.com/5-step-plan-forex-trading-success/

https://www.oanda.com/forex-trading/learn/getting-started/pips

https://www.investopedia.com/ask/answers/06/pipexplained.asp

https://www.financemagnates.com/executives/insights/what-is-a-spread-and-why-does-it-matter/

https://www.babypips.com/learn/forex/news-and-market-data

10 Reasons To Be Passionate About Trading in Singapore

Forex Trading Singapore

Having a passion for something makes a huge difference in your chances of succeeding at it. When you’re passionate about what you do, you work harder, make more sacrifices and go the proverbial extra mile to become the very best you can be. Can the same be said of you when it comes to trading in Singapore?

There’s a lot to love about commodities, stocks, bonds, index and forex trading in Singapore. Our time zone lets us trade most of the active hours of the trading cycle, and we’re in the middle of the world’s major trade flows. The world loves investing in Singapore for our political stability, and recognises our economy as one of the most favourable for trading.

But what is it about trading itself that makes you, as a Singaporean or an international trader, have a genuine passion for it?

It’s not (just) about the money, as there are plenty of other ways you can earn, and one can easily burn out after a protracted series of losses. Yet there are many of us who continue to pursue trading and to put up with the inevitable hardships that come with it. Here are 10 reasons why we truly love trading and look forward to every trading day.

1. Trading is action-packed.

If you’re passionate about trading, chances are it’s because it suits your driven, type-A personality. You’re good at distancing yourself emotionally from objective decisions that need to be made. You enjoy taking risks and thrive in fast-paced environments that involve numbers and working with other people.

2. There are so many markets to choose from.

There are the stocks and the ETF markets, forex, the options market with its derivatives and CFDs. Of these, forex and CFDs are particularly attractive to day traders because of the minimal investment involved, although they also tend to favour stocks or ETFs.

3. Anyone from anywhere at any skill level can trade.

It has been said that one of the great attractions of trading is how anyone, regardless of where they’re from, how old they are or whether they’ve got years of experience or not, can get into trading. And in the market’s eyes, your chances of becoming a successful trader are just as good as the next person’s.

4. Trading is like having your own business without having to open a store.

The truly serious trader regards his practice as a business, which takes commitment for it to grow. Trading allows you to enjoy all the benefits of having your own business without having to hire staff,
market to customers or file all the paperwork that comes with setting up shop.

5. You have absolute control.

In trading, how much money you lose is entirely up to you because you have control over the risk. You set your own income goals according to your own trading plan and strategies, and make your own trading decisions without having to answer to a superior.

6. You can still make money even if the economy is bad.

Experienced traders know they will be able to profit in an up or down market if they trade properly. They know that there’s no way to predict which way the market will move, so they follow the trend regardless of the direction it takes and trade accordingly.

7. All the information you need is readily available.

Keeping abreast of developments in the various markets is easy thanks to the internet. You can get the solid training you need in trading principles and effective training methods for growing your investment capital consistently at TrackRecord’s “Learn to Trade like a Professional” Workshop. Take part in this information-packed two-hour workshop for FREE.

8. You never run out of second chances.

Even if you should lose in the market today, you can always start afresh tomorrow. What counts is that you learn from your losses and use what you’ve learned in the following day’s trades. Not many other professions or investment types are as forgiving.

9. Trading offers great freedom and flexibility.

Traders enjoy more flexible working hours than the average full-time employee or entrepreneur. You can trade as much or as little as you like, and, depending on the market you’re in, whenever you choose—forex and other securities will allow you to trade at odd hours, while commodities and stocks will require you to trade while those markets are open.

Thanks to technology, you can also trade wherever you like without necessarily sitting at a desk. You can take breaks for as long as you want and spend your off-hours with your family or on other pursuits.

10. There’s no limit to how much money you can make.

Unlike other jobs where earnings or bonuses are defined by percentages, how much you earn from trading depends entirely on your performance, which entails being ready to respond on time and persevering in carrying out your strategies. And because you get real-time feedback on your daily profit and loss figures, you always know exactly how much you’re making and how well your strategies work.

A trader who is truly passionate about his craft is so for reasons beyond those listed above. As in other professions where people derive fulfillment from the work itself, and not from the actual earnings, trading provides a sense of achievement in knowing that you have mastered your markets and your strategies as well as yourself.

Just as an artist would place less importance on the remuneration from a painting than on the painting itself, how much you make while trading becomes secondary only to your own enjoyment and satisfaction from the very act of trading.

Becoming a successful trader takes a genuine interest—when you love trading, you deeply enjoy following the market and are interested in developments there, the same way others might be interested in a particular sport or follow tournaments. You relish opportunities that allow you to keep on learning the business and are eager for the instant results you get from every trading decision.

Fuel your passion for the art and science of trading at TrackRecord, where professional traders take you through training modules designed to help traders from all backgrounds understand how to make consistent profits in the long run.

 

Sources:

  • https://www.investopedia.com/articles/trading/10/know-your-trading-alternatives.asp
  • https://bclund.com/2012/09/25/10-reasons-everyone-yes-even-you-should-learn-to-trade/
  • http://www.businessinsider.com/why-do-you-trade-dr-brett-steenbarger-2011-6
  • https://www.wallstreetoasis.com/blog/why-do-you-want-to-be-a-trader
  • http://mikebellafiore.tumblr.com/post/115858389112/17-reasons-why-traders-love-to-trade
  • https://www.tradingacademy.com/lessons/article/5-reasons-traders-love-what-they-do/
  • https://www.babypips.com/trading/enjoy-forex-trading
  • https://www.iesingapore.gov.sg/Trade-From-Singapore/Commodities-Trading
  • https://dollarsandsense.sg/beginners-guide-start-trading-singapore/
  • https://dailyreckoning.com/you-can-make-money-in-up-or-down-markets/

20 Things Every Profitable Forex Trader Should Know

forex trader in singapore

Becoming enthusiastic about forex trading in Singapore is easy. Because of its extreme liquidity with many currency pairs to choose from, forex trading has seen booming popularity in Singapore over the last few years. Singapore happens to be the largest forex trading centre in the Asia Pacific in terms of volume, and the third largest forex trading centre in the world.

Several brokers in Singapore cater to the needs of retail investors. The better known ones are LSE-listed IG and CMC Markets, and Canada-based OANDA, all of whom are regulated by the Monetary Authority of Singapore (MAS). Many other brokers outside of Singapore are likewise on hand to serve local forex traders, but investors need to be vigilant on who they use as many may not be subject to the rules that MAS enforces to protect the average retail investor.

You can trade round the clock here on any day except Saturday, Sunday, Christmas and New Year. And best of all, profits from forex trading in Singapore are tax-exempt, if you engage in it to supplement your income, and not as your main source of revenue.

With the many advantages that trading in Singapore can offer, it is not a surprise that many traders cannot wait to get started in forex trading. However, while diving headlong into the forex markets with this gung-ho enthusiasm is understandable, it’s hardly advisable. Seasoned forex traders will tell you that one stands to lose far more than he can gain in forex quicker than one can say “George Soros”.

In this article, we’ll take a look at four sets of “Forex Trading Top 5’s” that new forex traders can use as guides or for gaining trading knowledge.

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Top 5 Forex Trading Principles You Need to Master

  1. Master the basic forex concepts. Bear in mind that yield drives return when it comes to forex, because you are basically buying one currency and selling another at the same time.

    Because all currencies come with the interest imposed on them by each of their respective central banks, you’ll have to pay the interest on every currency you sell. This also means, however, that you get to earn interest on every currency you buy.

  2. Master the use of leverage.Remember that while many trading platforms will give you access to leverage, or borrowed capital that increases potential returns, it does not mean that you should use the maximum amount of leverage that you have access to. Yes, leverage can either lead to huge gains but it can also lead to huge losses. Therefore, you should always use manageable amounts of leverage relative to your capital and the volatility of the market. Leverage should be able to give you a fairly decent return on a regular basis if used correctly and conservatively.
  3. Master the basic forex trading strategies. These strategies include the 2% stop-loss, which involves never risking more than 2% on a trade and is a relatively easy way to ensure safe and profitable trades. Not trading against the market is another strategy that is recommended to new traders who lack the necessary experience for taking advantage of short-term market fluctuations.

    The carry trade involves profiting from the interest rate differential between two currencies, and waiting for the value of both currencies to appreciate. With this strategy, you’ll have to pair a currency with a high interest rate with a currency with a low interest rate, and take a view on the direction of the spread.

  4. Master yourself. If there’s one recurring piece of advice in forex or any other form of trading, it is to master your emotions. Reason should prevail over all your trades, even when those trades turn out to be successful. Indeed, one key forex trading principle is to be extra cautious in the face of early successes, or the first few hundred dollars of profit that you manage to make.

    Mastering yourself also involves knowing your limits, or how much you can afford to lose at any given time, as well as learning from your trading mistakes. This is why it’s important to keep careful track of your own historical trading data with well-organised records.

  5. Master plan. To know yourself means only you know the forex trading plan that will work best for you. In planning your forex trading strategy, have good reasons for getting into trading in the first place, and be sure to set realistic goals. Find advice for drawing up an effective trading plan in our previous post here.

If you are a new trader, you’ll want to limit your risk (by watching leverage, for example), and start slow: try starting with our own currency (the SGD), and with one currency pair at a time.

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Top 5 Forex Trader Traits You Must Possess to Become Successful

  1. Learned. As a successful forex trader, you not only know your stuff, but continually verify and update what you already know. You have access to timely information, which means you know what you need, when you need it. You’re also able to learn from experience, taking careful note of what works and what doesn’t, and leveraging that knowledge in making your future trades.
  2. Systematic. As rule, you never undertake anything major without preparation and forex trading is no different. You are organised with a well-laid trading plan that sets the time frame and techniques to be used. Rather than focusing on short-term results, you place more emphasis on how those results were obtained, and are confident knowing that the plan will help you to achieve your objectives in the long run.
  3. Patient. You are disciplined enough to stick to your plan, and far be it from you to let emotions sway your trading decisions. You know how to bide your time until the price point you want has been reached, and to enter or exit at the right time. You are also realistic and prudent when it comes to setting your trading goals, and know how to manage the risks involved.
  4. Objective. While you may be said to possess a certain element of audacity for getting into the risk-laden world of forex trading, it can never be said that you lack self-control. You thrive in high-pressure situations, exhibiting the self-control you are known for. This is not to say that you feel nothing during a trade, but the way you handle the tension that comes with trading is truly admirable.
  5. Determined.  Even after a series of losses, which is inevitable in forex or any other trading type, you have the panache to pick up where you left off and trade again. You well know that forex trading success doesn’t happen overnight, and that it takes time and perseverance to develop your trading skills. Even so, you are persistent in your efforts to master forex trading and remained undeterred by the difficulties involved.

Take your first steps toward mastering the forex trading principles you need and developing the traits that will help you succeed at TrackRecord’s “Learn to Trade like a Professional” Workshop. You will learn how to grow your investment capital consistently through effective trading methods. Find out how you can participate in this two-hour information-packed workshop for FREE.

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Top 5 Benefits of Forex Trading

  1. Ease of Trading. Forex trading is highly accessible to everyone with its low capital requirement, low transaction costs, and low barriers to entering the markets. There are no commissions to be paid, and no single person can corner the forex markets or discourage you from entering. And as long as a market is open somewhere in the world, you can trade 24 hours a day.
  2. High Liquidity. It’s easy to convert your assets to cash in no time and with no price discount—however large the amount in question, no matter the currency, and with little price movement. This is because liquidity remains almost constant in forex markets, which almost always guarantees that there will be someone out there willing to trade with you.
  3. Widely Available Trading Technology. Forex trading platforms are some of the newest in the world compared to those for trading futures, stocks and options. There are also several helpful forex trading extensions from third-party software providers. Thanks to technology, you can even practise trading on a free online demo account, using real-time, real-world trading conditions without risking real money.
  4. Leverage. Leverage, one of the important forex trading concepts you need to master, is what allows you to trade up to 50 times more money than you actually have. This means that even without substantial capital, you stand to earn substantial profits while risking a minimal amount. However, this also means that you can lose much more than you can afford to if used wrongly. Just because some platforms allow you to have so much leverage does not mean that you should use such a high amount of leverage. Leverage must be used with caution as it is a double-edged sword. If you are unfamiliar with it, start with a low leverage factor!
  5. Flexibility. The profit potential of forex trading that comes from price fluctuations allows you to buy or go long, or sell or go short on currency pairs without any restrictions. You can trade when with the view that markets are going higher or lower, enabling you to profit from both upward and downward trends. There is also no fixed lot size, meaning the size of your position is up to you.

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Top 5 Forex Trading Words of Wisdom for Young Traders

  1. Study. Looking back, many seasoned forex traders will tell you they wished they’d studied more—money management, market fundamentals, even forex trading basics, instead of making (costly) mistakes first, and then studying afterwards. Studying is also an ongoing process when it comes to considering factors affecting price action and market reactions.
  2. Stick to your stop-losses. There are also forex veterans who wish they hadn’t put tight stop-losses when they were first starting out because they were afraid of locking in their losses. This is completely wrong. Paper losses are losses too! Using a stop-loss the right way, however, gives you greater control of your risk. So it is imperative to always use them. Make sure your stop-losses are at a reasonable distance from your entry price (relative to market volatility), and are aligned with your exit plan.
  3. So little beats so many. This piece of advice that some experienced forex traders might have wanted to give their younger selves applies to frequency as well as quantity. Frequent trading tends to encourage emotional rather than rational trading decisions, and so increases the risk of making mistakes. You’d also be better off trading smaller amounts instead of risking your entire trading account for one, big windfall.
  4. Seek out your fellow traders. Some forex old-timers wish they had reached out more to other traders when they were novices, as they now appreciate the value of suggestions, feedback or the perspective of traders with experience. Joining an online group or community, or writing a blog are great ways to engage particularly if you are an introverted beginner.
  5. Sidestep the hearsay. Other experienced traders gained their experience the hard way—they allowed themselves to be led astray by the promise of a supposedly infallible forex robot or fool-proof method. They might also have given way too much weight to the doings and sayings of other traders. Just remember is that there is no such thing as an “only strategy you’ll ever need” that will succeed all the time.

Still can’t wait to get started in forex trading? Let these “Forex Trading Top 5’s” be your stepping stones to the effective training in trading techniques that you can receive at TrackRecord. Sign up now for TrackRecord’s FREE Learn to Trade like a Professional” Workshop and learn about a field-tested framework that will help you on your way towards a profitable forex trading career.

Want to dramatically improve your trading results? TrackRecord regularly runs trading courses and workshops for all levels of traders. Submit your contact details to be informed of our next event!

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Sources:

https://blog.moneysmart.sg/invest/forex-trading-pros-and-cons/
https://www.valuepenguin.sg/basic-guide-forex-trading

5 Things You Must Know Before Opening A Forex Trading Account

Forex Trading 101: What You Need To Know Before You Start Trading Forex

10 Reasons To Be Passionate About Trading in Singapore

Advantages of Trading Forex in Singapore


https://www.dailyforex.com/forex-articles/2017/05/forex-trading-in-singapore/80134

Are profits from FOREX Trading taxable in Singapore?

Six Insider Traits You Did Not Know About Forex Traders


https://www.investopedia.com/articles/forex/09/5-important-forex-attributes.asp
https://www.forexfraud.com/forex-articles/forex-trading-tips.html
https://www.investopedia.com/articles/forex/08/forex-concepts.asp
http://www.forexforambitiousbeginners.com/blog/82-articles/93-the-6-simple-secrets-of-successful-forex-trading

10 Principles of Successful Forex Trading


http://www.streetdirectory.com/etoday/basic-principles-of-forex-trading-ujuaeu.html
https://www.portexmarkets.com/blog-post/6-basic-principles-successful-forex-trading/
https://justforex.com/education/forex-articles/trading-principles
https://www.thebalance.com/the-benefits-of-forex-trading-1344927
https://admiralmarkets.com/education/articles/forex-basics/main-advantages-and-benefits-of-forex-trading
https://www.babypips.com/learn/forex/advantages-of-forex

Forex Trading: Top 10 Advantages and Benefits of Trading Forex


http://www.forexforambitiousbeginners.com/blog/82-articles/88-5-forex-beginner-tips-that-will-save-you-money

Top 10 Forex Trading Tips for Beginners


http://www.newtraderu.com/2017/11/20/top-10-forex-trading-tips-beginners/
http://www.newtraderu.com/2017/11/21/10-forex-trading-tips-beginners/

Start the Year Right with an Effective Trading Plan

Success rarely comes by accident, if at all. Any successful undertaking is a planned undertaking. Traders of all skill levels, especially beginners learning to invest, need to remember that planning is the only way you can make sure that you have everything you need for success, and that conditions are as ideal as possible.

While there will always be factors outside your control, a well-laid plan maximises your chances of achieving the desired outcome. It also makes it easier for you to make adjustments, as necessary, as the plan is put into action, whether you engage in online trading in Singapore or any other form of investment trading.

As the start of a new year is an ideal time for planning, here are some pointers for preparing your trading plan.

  1. Be honest with yourself. If you are new to trading—someone who has just taken up forex trading for beginners, perhaps—ask yourself whether you have sufficiently mastered the trading skills you need, and have the confidence to trade. Regardless if you are risk averse, or are willing to take chances and accept the consequences,  you have to plan to accommodate your risk appetite.
  1. Know your goals. Set feasible trading objectives for yourself to reach every week, month and by the end of the year. Express these objectives in terms of profit targets and risk/reward ratios either as percentages or dollar-amounts. Your plan should include a schedule for regular assessments of these goals.
  1. Write your own plan. You have your own individuality as a trader with your own trading style, and only you know what you want to achieve as an investment trader. Following a pre-made plan by someone who doesn’t know you or your preferences lessens the chances of achieving your personal trading goals.

Details in your plan may include:

  • Tools
  • Concept
  • Objective
  • Rationale
  • Chosen markets
  • Time frame
  • Monitoring frequency
  • Potential problems
  1. Determine suitable market conditions. Define ideal market situations that would suit your chosen forex trading strategies or trading approach. Know how you’ll identify trends and ranges, as well as where the transition points are.  Also decide on the best time of day for you to trade: ideally it should be a period of time during the day when you can be free of interference and interruptions.
  1. Study the market. Look for indicators that suggest that the market is likely to be on the up and up, or on its way down. You’ll be better able to prepare once you’ve identified potential trends, and be assured of trading based on research and data rather than gut-feel.
  1. Know when to quit. Include rules in your plan for knowing when to exit, which seasoned traders say is more important than knowing when to enter. Determine your stop loss and your profit target and resolve to stick to them, making sure you don’t go beyond the percentage of your portfolio that you planned to risk.
  1. Decide when you want to enter. Set conditions that will make it easy for you to trade at a moment’s notice, but make sure they are conditions that aren’t purely subjective, and that there aren’t too many of them. Set too many conditions to be met and you may end up never trading at all.
  1. Determine your evaluation parameters. Know how you’re going to assess your trading performance before you actually start trading by knowing how many trades you’re going to base your performance on. This can be more effective than assessing after a certain period of time because the number of trades placed within a time frame can vary between traders.

As a plan is only as good as its execution, here are some pointers for carrying out your trading plan in the coming year.

  1. Stick to the plan. A plan is there precisely to keep you from making knee-jerk reactions to the inevitable changes in the market. But while this plan should be conscientiously followed, you should be able to evaluate its effectiveness after the market closes.
  1. Clear your mind for every trading day. As you go about executing your plan, ask yourself whether you are mentally and emotionally prepared to make sound trading decisions. Trading while distracted, under pressure or during periods of extreme emotional stress is likely to cause you to make costly mistakes.
  1. Follow a daily, pre-trading routine. Some traders make it a habit to never place the day’s first trade without performing certain activities such as reviewing their trading plans, determining their support and resistance zones, or checking out major news updates. You should also follow up on orders that have been executed or what took place during overnight sessions.
  1. Keep an eye on the main markets. As you manage your open trades, make sure you monitor prices and any developments around major markets such as Singapore, Hong Kong, Japan, the US, Europe, the UK and Australia.
  1. Keep your records straight. Make sure you keep a record of all your trades, both the winners and losers. This way, you can keep track of the why’s and how’s and study them later on, allowing you to re-apply winning strategies and to avoid making the same mistakes.

Details in your records may include:

  • Targets
  • Entry and exit prices
  • Profit or loss
  • Position size
  • Time of trade and trade duration
  • Stop loss and take profit levels
  • Reasons for making the trade
  • Emotions while making the trade
  1. Keep a daily journal. On top of taking note of the day’s gains and losses, take a moment at the end of every trading day to record what led to each loss or gain. These notes will be invaluable references when the time comes for you to plan again. For those engaged in fx trading in Singapore, you might also tweak your watchlist of currency pairs, for example, to prepare for the next day’s trades.

Both new and experienced traders stand to benefit from expert guidance when preparing and executing their trading plans. TrackRecord Asia has successfully guided junior and retail traders, hedge fund and investment bank professionals, non-finance professionals and other traders of every skill level, showing them how trading with a structured framework can lead to more profitable and consistent trading.

Leverage the expertise of professional traders who have a proven track record in investment banking and hedge fund management when you prepare your trading plan and get the trading edge you need for the year ahead.

Want to dramatically improve your trading results? TrackRecord regularly runs trading courses and workshops for all levels of traders. Submit your contact details to be informed of our next event!

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Sources:

https://www.investopedia.com/articles/trading/04/042104.asp

https://www.thinkmarkets.com/en/learn-to-trade/intermediate/how-to-create-a-trading-plan/

https://pepperstone.com/en/client-resources/how-to-develop-a-trading-plan

https://www.dbs.com.sg/treasures/investments/online-trading/online-equity-trading

https://tradingsim.com/blog/trading-plan/

‘Tis the Season for Trading in Singapore

forex trading singapore

It’s the most wonderful time of the year! But are there such times for investment trading, particularly when investing in Singapore?

As its name suggests, seasonality is a regular periodic fluctuation in an area of business according to a certain season. As we work on our developing our trading strategies towards becoming better at trading in Singapore, let’s take a look at how seasonality affects trading and how you, as an informed and conscientious trader, should act accordingly.

What is Seasonality?

Seasonality, by definition, is when data changes predictably every calendar year. This is different from cyclicality, which can last shorter or longer than a year. Also, in order to be considered ‘seasonal’, a trend has to repeat consistently: recessions, which can last from a year-and-a-half to two years, do not count as seasons.

Seasonality can either mean a holiday like Christmas, an actual season like spring or summer, or an event like elections, long weekends, or the opening of the school year or graduation.

Risk.net says that seasonality affects all commodity futures markets to some extent. The effect of seasonality on business can readily be seen in terms of sales or supply and demand, but might take a little more effort to recognise when it comes to investment trading.

An investor, for example, might base his decision to buy or sell his securities in a certain company because of a spike in revenue—without considering the season behind the reason for the spike.

Some investors in the stock market look to seasonality to help them make trading decisions, arguing that if historical data shows recurring results, then you should be able to duplicate those results successfully.

For instance, a company that manufactures air conditioners will see a jump in revenue during the summer, which is also when companies involved in travel and tourism usually enjoy increased profits. For the Christmas season, it will be the time for consumer goods and retail sector to rejoice.

What are some Seasonal Trends?

Other seasonal trading trends include the so-called ‘January Effect’, which gives traders an idea of the market’s performance for the rest of the year. The End of Quarter Effect, on the other hand, is the time of year when portfolio managers get the urge to ‘end on a high note’. This is done through aggressive bidding on shares that they already own to boost stock values for the time being.

The End of Quarter Effect is also quite similar to what happens in the market at the end of the year itself, AKA the Year-End Effect.

There is also a type of seasonality that refers to a period before a season, called the Pre-Holiday effect. This is when stock prices go up on the last trading day prior to the actual holiday: this year for Christmas, for instance, would be on December 22nd.

Some say the Pre-Holiday trend is caused by the general optimism in the air during a holiday season, and that the reduced market activity during these times of year also lowers overall market liquidity, which in turn affects stock prices.

Others say that Holiday trends in general are caused simply because everyone participating in the market expects the holiday at hand to affect market performance, and in acting accordingly, they effectually cause their own expectations to come to pass.

With forex trading in Singapore, seasonality can be observed during certain months in both currencies such as the USD and JPY, and commodity currencies such as AUD and CAD.

Seasonality as a Deciding Factor

So should you let seasonality affect your trading decisions? There are seasoned traders out there who advise against it. While history may repeat itself, it’s not a 100% fool-proof guarantee that the results you gained last year will be repeated this year or even the next.

Making seasonality the sole basis for your trading decisions is insufficient for justifying your trading and investment strategy. A Christmas rally, for instance, might be based mainly on the prevailing emotions of market players at the time (and as any savvy trader or investor will tell you, making trading or investment decisions based on emotions is a no-no).

It is also quite likely that investing based on seasonality will not be in sync with your personal risk appetite. You would do well to note that investment decisions based on seasonality comes with more risk, as well as its share of capital gains tax and transactions costs.

If a trader has a thorough understanding of how seasonality works, only then should he even consider it as a deciding factor in his trading decisions. Even then, this knowledge of seasonality only gives such a trader a slight advantage, at best.

Seasonality might appeal to those with a short-term outlook who are after quick gains before selling their shares and planning their next steps. For traders looking for long-term, consistent gains, they would do better to focus on an asset’s performance over longer periods of time instead of the changes brought about by the seasons.

Tread Carefully With Seasonality

Traders who do choose to factor seasonality into their strategies would do better to zoom in on seasonality per industry, instead of an entire market. For instance, if you invest in a particular company, consider how seasonal trends affect the products and services of that company and its competitors.

Take note, however, that the more industries you consider, the more variables come into play, and the effectiveness of seasonality as a deciding factor will drop. It is therefore better to focus on the seasonality of one industry at a time.

If you invest in a mutual fund or an exchange-traded fund or ETF, try to pinpoint the periods during the year in which the sector shows its strongest performance. Taking a close look at seasonal trends might also help those who are learning how to trade forex.

The difference between seasonality and ‘timing the market’ is another point an informed trader ought to bear in mind. Taking the current season into consideration is one thing; focusing on a short-term patterns to determine market highs and lows is quite another. Some experts believe that ‘timing the market’ is practically impossible.

Knowledge of a season’s effect on the market can inform your trading decisions, but it shouldn’t be the be-all and end-all of your investment strategy. When all’s said and done, seasonality isn’t a single, ‘guiding star’ for deciding trades to be used by traders, particularly those who are just starting out. Seasonality is just one of several other factors that you should consider when planning out your trades.

Learn techniques and strategies to help you become a more profitable and more consistent trader at TrackRecord Asia. Founded by professional traders, TrackRecord Asia puts you in touch with mentors and trainers with proven track records in investment banks and hedge funds, who will show you how to use a structured framework to form an effective investment process.

Achieve the level of trading performance you aspire to with TrackRecord. Get one month’s FREE subscription to our CIO’s Week Ahead Update and Traders’ Risk Call for updates and insights to give you the trading edge you need, today.

Sources:

https://www.investopedia.com/terms/s/seasonality.asp
http://www.blog.sanasecurities.com/seasonal-stocks-impact-seasonality-stock-prices/
https://finance.zacks.com/seasonal-stock-market-trends-5830.html
https://www.motifinvesting.com/blog/investing-based-seasonal-trends
https://learn.tradimo.com/advanced-stock-trading/how-seasonsa-holidays-affect-stocks
http://www.cbc.ca/news/business/taxes/playing-seasonal-investment-trends-to-your-advantage-1.1285947
https://www.investopedia.com/ask/answers/030415/how-does-seasonality-affect-financial-services-sector.asp
https://www.investopedia.com/articles/investing/101315/company-analysis-how-think-about-seasonality-trends.asp
https://www.ig.com/sg/trading-opportunities/2017/09/05/seasonal-trends-in-the-forex-market-39690

Making sense of the mechanics of Bitcoin

BitCoin? WHAT THE…?!

What in the world is Bitcoin and why does it matter? Well, for one, blockchain technology could completely change the financial industry as we know it. Even if you find it hard to understand how it works, it doesn’t mean it will not change the way you live. How many of us actually understand how electricity magically lights up our homes at the flick of a switch? Did the average person know how the heck the internet works when they first got online?

Here’s a good 5-minute ish primer on how Bitcoin works –