Sunday, July 23, 2017

Trader Dad: What Makes a Successful Trader? Trading Advice From My Old Man

Since I can remember, I haven't lived with my dad. I barely meet him since he worked overseas for the most part, and never knew much about him. Funnily enough, I never knew he traded financial markets, until after I got into trading and brought it up with him.

Recently, I asked my dad to write a short introduction to trading, something that would be useful for people starting out and dipping their toes into trading financial markets or cryptocurrencies. Even though he doesn't trade Bitcoin or cryptocurrencies (yet), he's had decades of experience navigating the markets, and I hope this short and simple post can give you some insight into what an old-timer has to say about becoming profitable at trading.

So here goes...

Dear Trader,

I have been trading in the “futures market” similar to what we now refer to as the Exchange-Traded Funds (ETF) market for the last 30 years.

I would like to share my experience and knowledge with people that are interested in financial trading (*this is a short introduction and not meant to be a recommendation of any trade that anyone might like to take).

To make it simple, I will sum up the most important elements in making a successful trader. Successful traders are those that make a good and correct decision and/or action in the following:

1. Money

2. Time

3. Target

1. Money

A trader need first to decide the amount that he is prepared to invest or the amount that he is willing to cut loss in each trade and his overall trading.

One must be disciplined with this decision making and necessary control action is very important.

Unnecessary losses usually occur when one overtrades, or holds on to a position that had a big loss for too long that eventually that he cannot afford.

2. Time

Time is a very important factor in many ways:

1. Trader needs to spend time to analyze and decide on a particular trade.

2. Trader needs to decide if short term or long term trading that he/she will like to be working on.

Not spending enough time to understand the market that you are trading can result in unnecessary trading losses.

There are much to learn in trading such as margin requirement, historical high and low level, economic fundamental of the product, average cycle period of high and low, stop order, technical analysis, trading hours, daily swap value of the product, etc.

3. Target

Target refers to both sides of your exit point on either profit taking or cut loss.

A successful trader is more likely to be a person who is very disciplined in his execution of trade.

Trader should always remember that “the market is always there”, which means that one should protect his margin for his future trade.

Having a clear target will eliminate the emotional trading in your trade.

Other Factors

Other than those points in trading that I had mentioned above. I will also like to bring up some other factors and risks concerning futures trading in the modern market as follows:

A. Price Manipulation

Trader should be aware that the globalization of the modern world and the advancement of technology in computers and the Internet had made it very easy for the banking cartel to manipulate the prices throughout all the trading platform from index to currency to commodity such as gold and silver and all other counters.

This situation had been persisting and intensified over the recent years.

The high share index, the low price in gold price and silver are the result of such manipulation.

B. Stop Hunting

Trader will notice that there is always some sort of taking out cut loss movement occur before price is going to make a big move in the opposite direction are clear evident of the price manipulation by the major player in the market. Read more about stop hunting on Investopedia.

C. Economic Data

We used to depend on the economic data issued by various government department to plan our trade.

Trader should be aware that these data are no more as accurate and reliable in the recent time.

D. Major Economic Situation

Trade should be aware of the major economic situation which is going to have a major impact of the world economic in years to come such as:

1. Excessive quantitative easing (QE) (money printing) by various government over the years

2. US national debt of 20 trillion dollars and its debt ceiling

3. The death of petro-dollar

4. The conflict between US with Russia, North Korea and other middle east countries

5. Financial difficulties in the major bank in EU and the possible breakup of EU

6. The purchase of physical gold by central bank


The present market situation is critical and it represent a good opportunity for those that have prepared for the volatile market movement ahead. Do your study, prepare yourself and this will be a once-in-a-lifetime opportunity for many traders. Good luck and enjoy your trading.

Thank you.

Yours Sincerely,
Sam Lee

Sunday, July 9, 2017

[VIDEO] Cryptocurrency Trading Primer: Not Your Typical Trading Course or Technical Analysis Introduction - Human Emotions, Market Psychology, & Risk Management

I recently had the pleasure of speaking about trading Bitcoin and Cryptocurrencies at the first CryptoSG meet-up in Singapore, alongside 6 others speakers who covered various other topics about Bitcoin, Altcoins, and Blockchain technology.

In this presentation, I introduced an approach to trading that (I hope) is not what your typical "trading course" or "technical analysis class" would teach, and shared a method that I believe is one of, if not the only way to be able to make sense the market with a complete picture. I shared some tips and overarching concepts that I feel are more important than just charts and indicators, and hopefully this will be able to shorten your learning curve and help you find a footing in the market without having to go through the same mistakes I made.

It summarizes my last post, An Essential Beginner's Starter-Kit for your Journey into the Cryptocurrency Jungle that is Bitcoin & Altcoins Trading, while also covering some other key concepts spread throughout my blog.

Why does this methodology of "market structure" and "emotional market crash cycle" work so well? If you think about it, the only common denominator between all markets is nothing other than the people trading them. Therefore I believe it stands to reason that human emotions and trader psychology play an immensely critical role in being able to understand how markets work.

I'll just leave it at that so I don't spoil the rest of the video for you. Unfortunately, the first 5 minutes or so of the live talk got cut off due to technical issues, but I also recorded it into a webinar if you're interested to watch the complete presentation. Enjoy!

If you just want to look at the slides, you can view or download the PDF of my presentation here.

This presentation was merely an introduction and a very brief high-level overview of how to approach trading, where I highlighted a wide range of important things to look out for, but you probably still have a ton of more specific questions such as about how to get started, what to look out for on a chart, or how you can apply market structure and the emotional crash cycle into your trading strategy.

It's impossible to condense 3-5 years of experience and knowledge into a single book or a video which you can absorb and magically become a pro trader. There's no short cut to becoming a profitable trader, except through hard work and dedication, with time and experience.

Don't be afraid of getting your hands dirty; learn by executing trades and making mistakes, because nobody ever learnt how to ride a bicycle by reading a book. With the right attitude to succeed, you too can eventually become a full-time trader and achieve your lifestyle or financial goals. However, know that it is not an easy road; never give up, keep learning and improving, and you will be rewarded in the end.

To supplement what I covered in the presentation in my previous blog post, spend an hour to listen to this @chatwithtraders podcast with Michele Koenig who has over 14 years of trading experience and shares very relatable information about how to approach trading and start out as a beginner.

Lastly, I just want to again highlight the last but most important point about trading, and that is risk management. This is probably the most undervalued component of trading especially for new traders, and is coincidentally why most people continue to blow up their accounts.

If you play Texas Hold'em, or some other form of poker, you may have heard about 'bankroll management' and this concept applies to trading perfectly. Just like how professional poker players compete at a stake where their bankroll covers at least 30-100 buy-ins, professional traders typically risk no more than 1-2% per trade.

One of the most common sayings on Wall Street is to let your winners run and cut your losses short. Many new traders make the mistake of being patient at the wrong time, and holding onto a losing trade longer than they should. This is caused by 2 things, firstly not having a trading plan in the first place and hence allowing emotions to eventually get the better of you, and trading without a stop loss. Stop-losses can help you to quickly cut losses when a trade goes south, as well as to protect your profits as you continue to ride the trend. Read more about how to use stop-losses effectively with these tutorials by @Rayner_Teo, an esteemed financial markets trader who's also from Singapore.

With that, I hope I have opened up your mind with a unique view on how to approach the markets and changed your perception on what trading is all about, and also provided you with some practical information that can help you kick-start your trading journey.

If you have any questions or feedback, feel free to leave them in the comments section, or reach out to me on Twitter, Telegram, and join the AlunaCrypto community on Telegram to discuss Bitcoin and Altcoin markets, share price and technical analysis, and keep up to date with the cryptocurrency market.