Trading Conversations with Jay Tun, the trader who turned full-time right after graduation
Hi, everybody welcome to trading conversations, you. Are here my friend because you believe that profitable, trading is one of the most efficient, ways to attain financial freedom and can, be achieved as long as you are willing to put in the hard work to develop your trading competency, I will. Go if this show is to introduce you, to traders, who have done through the trenches and emerge at the other end from. The sharing of the our trading, stories, strategies. Workflow and best practices I hope, to help you shorten, your learning curve as you embark, on your journey towards, trading mastery, today's. Guest is a very young trader who started dabbling in the financial, markets during his undergraduate, days and, made an unconventional. Decision, to become a full time independent. Trader right after graduation with. 10 years of full-time training experiences. Under his belt I'm sure you'll be able to become ideas and concepts, that you can internalize to, accelerate, your growth as a trader it's, my pleasure to introduce to, you Jay, -. Hi. Jay hello. - good. Afternoon to you house they'll be right now oh it's, good oh it's good good to see you great, great all right change so much for. Accepting my invitation to. Be, interviewed, by me to ask you more about your trading, journey your trading experiences, to, share with our community and our audience, and I'm very sure that there's a lot of information that our audience will be able to to get from you all, right so it seems like you look quite young to me but, I saw one very interesting thing because our community, has quite a lot of young. Aspiring traders, so, I just wondered if you could quickly. Share, with us a little bit about your trading, background before we dive deeper into your current. Trading strategies, methodology. Workflow and such how. Long ago, was. It that you first had, an interaction about, trading, and started to get interest in it so. I started, my training journey if, you some. People may not believe it but it was 10 years ago when, I was still studying so. That was 2009, and I, at first in a Singapore market because that's where I'm from and then. I was working and I was studying at the same time and I met. A friend who was a colleague at that final time and he, was treating the Singapore market so how I chanced upon this was actually quite coincidental. One, day I was on my way out for a break then I walked by his death and then I saw things, like it was real and green so so I asked him like what, all this we say oh he's looking at chats and of the Singapore market so, that piqued my interest and, I was like hey, can you share more with me and yeah, that's where he pointed. Me to the resources, to get me started so I started, reading the trading websites like baby pigs calm, investopedia. And yeah. Basically started, from there I see, so would you consider this colleague as your first band or was, he just someone, that got. You interested that would know about reading, he's. A bit of both he. Did share with me like heaps which at, the time because I knew nothing so. I, asked. Him quite a lot like what were the stocks to look out for should, I buy I sell now and basically. He's like a cheap, provider, to Milla and it. Worked nicely for, a first few trades and then after, that it. Got horribly wrong, okay. Okay and that was so, you got to know this friend after you started working right so when you say you started to get interested in trading, even, before that when you were studying how did that come about okay, so I when. I was studying right because my school, term was only for two and a half days so the other two and half days I was working so I was working and studying at the same time oh. That's. How you met him okay okay so him. While you were still studying by you doing, some kind of time work yes, yes I see okay so how did it evolve thereafter so he gives you some tips you, make some money for the first few trees and then it didn't work out then what went, through after that okay. So uh the. The, pathway I made money well I would. Think that as beginner's luck then that, was. 2011. That's. Where I took my first heavy. Loss and again, that was to the teeth from HeLa okay. I lost, 5,000 almost around 5,000 on this, stock, college and in Singapore and because. The point of time right was August, 2011. And, the. The, news if you can remember it was the eurozone, crisis going on back then but, to me I had zero idea of, hey how can something like happen a few thousand miles away in all the way and you wrote right how can it affect us in Singapore so. Naively. I was still holding on to the position thinking hey I think it can go higher it will come back he will come back so what. Happened, was I I, bought. In around $2, and then I had the cut loss at 1:48. With a. Very reckless, position. Sizing and and that took me out quite quite badly oh I see, so you actually did, cut loss in the end what what, gave you that the. Decision, to do it, too. Painful. Cannot.
Cannot Take away the losses really because that was almost like half, of what, I set. Aside for trading so. So. You was you actually cut, loss because it was too painful yes. Pretty much typical like, what most retail. Traders or investors do. Right when they finally get out of a position me because it's too painful rather. Than because it was strategy all right so that's, not that particular episode did, you talk, about do, you think, about giving up on trading. And what how how do your mindset change there thereafter if any. Well. So of course the loss was devastating, I mean half the account and at the time I still wasn't, full-time. Working I was just part-time. Working and part-time study and of. Course after that I stopped reading for a while and it. Was pretty devastating and if, I'm not wrong, I think, I took like almost three months off and beside. Before. Deciding, to come, back to revisit, the market so, I discovered. That hey if let's see what I read online right because what, I got from Ruby Pierce was things like support, resistance how, to rekindle stakes and all the chat patterns like flag. Then, you got hit and shoulder so and so forth also all these things are available freely, online then. What happened after that was I discovered. That hey. If all these things should work right then I shouldn't, take such a hefty, loss of my, position, then, there must be something that that are missing from my. Knowledge base so what, happened was I went, on to be a quite. A couple of trading books to. Date right I've read about 200, / books and I, also attended, many trading. Training courses to sharpen, my age to know that what I'm missing yeah. Okay, so after, that that incident and you came back to trade again how, long did it take you. Before you, start to feel. A bit more confident, about the way you trade or or the, how, long did it take for you to know that you are starting to do the right things well. To, be honest you'll never be confident, after I, mean. The confidence level will never be the same right after you have taken such a hefty loss to be honest so, the.
Confidence Will only come back after some time so, what. One thing I discover is that. Well, the the. Market was interconnected so something like whatever. What's happened in Europe I can affect, us in Singapore, and you can also affect, markets, like the US then, I also realized, that the market, is affected. By what goes on in the economy and. The. Prices, will reflect, expectation. In the short term and while. The long terms do revert to fundamental, but short term is all down to expectations. And. Well. Then after that the, when the money right want another thing I discovered was the money will have inflow. And outflow usually. Not in and out of a stock but also is in and out of industry, by itself or as a whole sector by itself so, having discovered all this right through the causes, that I've attended to the books that have read then I decided, hey I think Singapore, is not the market that I should be applying all this because of the scale of the market and as. Always for all these theories to work right it works better in a bigger market like the one in u.s., and therefore, I made the switch from from. The Singapore market, all the way over to the US market so. When you decide to make the switch. Was, any one or. Any of the causes you took all the books you read. Result. In you thinking, from that perspective or. Was it just something that I decided, to switch to the u.s. market as a result do you already have a some kind of a mentor, or learning. Group at the Pawnee time already. Okay so at the time right I came across this book right which was the stop, trading. L Manette by yeah. I can't, remember who. But they had it every year so, they are 2010, 2011, 2012. Version so on so far then, that is from that book right that's right I discovered, that that. There, is a cycle, that is ongoing and, year, after year and this, cycle has been just there all along but we didn't realize it and I, realized. That for, me to find all this, historical. Data that I need for my back test the US market is the easiest, to work on instead of the Singapore market because for. Singapore context, either, everything is limited or you have to pay for the information mmm. I see okay so let's move, on accelerate, a bit how, was your, evolution. As a trader thereafter, when you switch to the US market okay. So when I switch, on to the US market what happened, was I started. With this concept, called cyclic analysis, and that, got me very interested because, I was able to go and look at like, a sudden cycles, that are going to repeat, year after year and I am back on my water. Call that back test and that got me the confidence to get. Back into the market after the devastating, loss in 2011. Hmm. And how did things go for you thereafter, so. From 2012. Onwards right, the model has been working nicely for the psychical analysis, and. 2012-2013. And, as you know it was a trending, market by then and therefore. The. Strategies, that I put in at a point of time was working nicely and all, the way until, 2015. I see. So not so, not not. Just from an analysis, perspective when. Do you thing was the aha moment for you from a trading, perspective, from from, the evolution, as a trader was there a certain aha moment, because. Of some books that you read or because of some some, mentors, that that guy you along the way well. The, aha moment came right is when, I did my road back s and I realized, that hey this, one can, be profitable, this strategy can be profitable, so before that I was taking, tips, from friends. From gurus, watching, news and, and yeah getting from so call all these experts but, after, doing the back test myself then I realized, that hey, I think this is really going to work and that gave me that confidence to move forward and start, to you, know put my money down again, to take the tree I see, and at. That point in time so you have a strategy that you feel confident about already, yes but at that point in time were, you already knowledgeable. Enough, in terms of things like risk management, position. Sizing side trading psychology and, stuff like that or trading would flow well were you was test a really something that's natural, for you or you, have not actually move on to those kind of phases. Yet so. For risk management definitely. I have them already because through. The causes that I've attended and to, the books that I've read this was a risk management was one thing that was emphasized, throughout so, I already had that but when it comes to workflow I was, still more for a, leisure, trader, I didn't have much of a workflow. Like, I have now so, at a time I just okay I think this stock and I know that I done my my research and back test on this stock I know it's gonna work so just, pick that stock and that's it so some.
Some Parts of the day I will have things to do then some some days I have nothing to do at all so, will you like trading full-time then, oh. Okay. We, used to starting at a pony time at a, point of time right I was, on my last year in my uni so, I had a lot more leisure time so I was at a cross functional of, whether I should, you know step into full-time employment or you know go go into trading so I choose, neither of those because. I. Know, that trading from experience at the power time right I had about two to three years of experience so, I knew that trading, was not going to be bringing. Any substantial, income because, my capital. Size wasn't, big and, so I had to look for a pattern income, that is going to supplement, me and keep my life going so, what I did was I took on a lot of part-time. Jobs and that includes selling computers, include, teaching, tuition, of which I'm still doing today and, that. Kept me going for my life and I I. Focused, the rest of my time down, to trading, I see. I see, alright so interesting. So so. Do you consider yourself. From that point onwards, about three to four years into your training journey do you cause yourself, Aradia, proficient, and proc generally, profitable, trader from, that point, onwards. January. Okay at least I wasn't losing so, I I wasn't, making a lot of money at a part-time but, at least I was getting like five to ten percent return, and to. About, three years down the road I see, I see. So how did your journey, as a trader evolve thereafter from the fourth 250 onwards for. The next four to five years it was there any significant. Changes. Or what was any significant. Growth, that. You see in yourself as a trader, yes. So the next turning point I came in 2015. Where, now, that we know that 2012. Or the way to 2014. The market was rallying all the way so the strategy ahead at a part time right which was directional. In Asia and it, was ripping, in nice profit and it, was quite consistent, on to, 2015. Where the market just went into a sideways, consolidation, for. The whole eight to nine months so. It was the eight to nine months where, I kept, taking on using, the same strategy, I kept doing the same thing but I wasn't getting the results that I wanted, and I was. Incurring small, losses here and there and, the. Losing. Rate is much higher than the reading rate during, that period and that got, me to to, think that hey what, is happening how come this strategy isn't working anymore, so, the BRIC troop came in terms, of trade, review that I did then I realized that hey, if the market changed right then I should be you.
Know Applying, a different set of strategy, to suit, this market instead, of forcing. My strategy, on this market and hoping that you will work out so, that was my second, like aha moment I see. So before that you were just simply trading, one kind of strategy and, there is a direction, trend. Trading kind of strategy, I suppose yes. Consolidation. Strategies. Yes, what happened thereafter so you understand, right now that you need to look at some other strategies when the market condition is not ideal for the original, identity. You use so, they're, after so. What, I did was I went, online again, to research and what. Kind of strategies would be best suited for consolidation. Market, then this. Instrument. Came to came, to my my so call per view which was options and then. I already. Studied, options in university, before so I knew what an option was but to trade options that as a totally, different thing so I started, reading. On. Options, and one of the the book that I will strongly recommend, right for options, trading it would be the one by Ron Anna read yeah. So from his book I've learned, how, what. Is option, how does the option, how. Does the option function, how does the pricing, the first when, the underlying moves, in a certain direction so. To. Cut a long story short I begin, selling, options after, reading Ron, einar is book and also at a power time right thing, or swim Singapore, which is a broker they, had this advanced. Demo, going on which was in. It. Was a demo, it was like a it, was like options. Lesser now by this trader, Costco. Know who, was the art director of education, so, these two Ron. I never threw his book and Scott, corner really taught me almost. Everything I, need to know about options, because they were coming from a practitioner. Point of view how to sell options, how. To collect premium, instead, of using, options, as a directional, substitute, for your stock I see. I see so if you can just quickly elaborate. A bit as. Many men as possible what. Do you think is the reason that you prefer, options more compared, to the, plain vanilla kind. Of directional, bets on equities. Or futures, or currencies. It's. All down to statistics. Because any, directional. Strategy, right would revert, to a mean of 50 percent that means half the time you'll get it right every time you get it wrong in the long run so that's, for directional, however. For options, because. Of how the instrument. Is constructed. We. Were able right, to keep treating. Each over there by selling, options. Right there as of very low, probability, of getting, in the money by the time he expires I see. I see so you are betting so. When you go, good, trip options from the anger of trying. To get a higher win rate. You. Generally try to do but with that also mean that at the same time your reward, to risk ratio, would, be generally, lower compared, to if you are taking directional, trades definitely. The risk, ratio, for. Option. Trading right will always be negative restore, it will never be one to find you would be like maybe, you are risking, five to get one I see. So if that's the case. We. Might be jump-jump-jump hitting. A beaner, but let, me just try to clarify a bit about this topic on options so, how do you protect yourself against, Black Swan events that could potentially cause. A big loss, for you is there any way to mitigate that, yes. One is of course true position size because. We. As a trader, we are always battling. Our tweener, vs., sanity. Sanity, and also greed so, on the, greedy path what we want is we want to collect more premium we want to make more profits so we will sell a lot more contracts, that we should be selling so, that, is on one hand so on the other hand right the sanity part has to come in and calculate, that Hey in the, event that let's say a 10%. Jammer, a 10%, drop, happens. And this. Is what what is gonna happen to my account am I going to well. Get a margin call or is it gonna be a drawdown of 10 20 percent can I live, with that loss if I'm able to live with that loss then, I will go ahead with the position, size that that I'm, comfortable, with so to, me get it to, me get it that that reach right we, can control it using, position. Sizing and of course having. A mental. Stock like okay if let's say I'm going to collect premium. Of $1.00 once, it goes up to three times that premium, which is in, losses of $3.00 then I'm gonna cut loss so, that the discipline has to be there okay. So you go for option three you have a very strict. Cut, loss, level. Two guys. Take make a decision on all right so so, thereafter, do, you. Simply trade options was. Options, the only thing that you fit there after from that point onwards okay, so from 2000. Almost the whole off like. Half. The the second half of 2015, hours, on options trading then, it. Went on to 2016. Then when the market was trending again in 2016. This time I was doing both options, and, directional.
Trades On equity, again, I see. How do you manage two. Different strategies at the same time okay. So options, selling selling. Options, premium, right yeah but you, you usually, let the position, go on for a few weeks or maybe, sometimes even, up to two three months so that that, wasn't a very active. Active. Management on the position, wasn't really required so. All, I need to do every day when a lot in write is to look, at what is the underlying where, is it going is it still in, accordance, to the, direction, that I plan it for so pretty. Much that was our options, premium collection, is pretty passive, then, our what. So. I realized, that hey I cannot be selling new options every day and that's why when a market, was trending, I started. To go back with the, directional, traits on the, equity stuff I see, so to put it very simply you. Use the directional, bets when you realize that the marker is starting to trend again you. Go back to the option strategy, when you realize the market is going into a consolidation, where the volatility, just simply, decreases is that generally, the, main methodology, that you use to use both the strategy. Concurrently. Together, yes. Yes and it, is not so much of I do options, I stop then I do equity, sometimes they may be overlapping, what. Are the some of the cases that could be overlapping. Like. For example options. Premium selling, right I do not like the volatility. To be - Wow because, if the volatility is too high then, I would have a tough time managing, my options position so, when volatility, is too high right I would, rather. Not do options premium collection I see. I see so it's a very strategic way. To. Decide what to use whether to use this or the other or both at the same time all right so was, that subsequently. The, two, main strategies, that you use all the way to now or was there any any major changes, along your journey. Pretty. Much it was still this. Two sets, of thinking. This this methodologies. But, of course there are some involvement, on. These strategies so, like. Before they're right I was collecting. Premium. On stock, equities and all, this of course in the US market then I realized, that the risk to reward like we have mentioned just now is always negative, that, means I'm risking far. Too much just to collect back that you know that one dollar so, after. That I if I went, on to sell options on, futures and, on, commodity, futures. Pretty. Significant, change, can. You explain a bit your process. Behind moving. On to this strategy. Okay. So why, I choose, the commodity, futures selling. Options or currency futures was because, of, two. Things one is because of the man gene the margin, required, for me to put on a position is a, lot lower which means that I could better optimize, the usage of my fans so that's number one number two right the wrist of your ratio now is instead. Of like a huge negative like, minus, one, is two five, now maybe I'm getting almost close to one is one kind, of risk, to reward so, from options, selling. Perspective, right it is pretty attractive, and that's, why I moved on to commodities, and also. On indices, and I have never looked back since I see. I see all right so so. More or less you have been using that until, today right now and, even today you're probably using a variation, of this either three types, of strategy, or methodology, right yes so how has your equity. Curve been like for you throughout the past ten years if you can just roughly illustrate, how you work for you the equity curve so. For the first three years it was I. Would. Be lying if I tell you I'm straight, of the bed are we making money no so for the first three years it was making. Making making and, after that one big loss we wipe out everything especially. So, that was, stage where you didn't really practice proper. Position, sizing and risk management year right I did, initially, then, I, got more complacent, as I got more winning trades than complacency. Setting greedy sets in then I undertake. A position, that is far too big for my liking and then that was when he came back and hit me that one trait that will wipe out the previous, few profitable, trades I see, I see so you sir do to discipline, in a way yes, okay, and after that three years how.
So. After a few years I switch onto the I switch over to a US market that's where I discovered, that the. Psychoanalysis, concept. That I mentioned, just now and. We've. True that right I'm, starting to not. Lose money and I'm getting, like almost, five to ten percent for, from. All from then on every. Year so. Yeah, that, was how it goes and but last year was a very, very. Interesting year for me last year so. Okay. So on average right, every, year if. I come back for the past ten years if average. Return should be around 20% oh yeah. However. Last, year I got more, than 50% return and they was this was because of the market, conditions and of course not every year I can repeat this and last, year was just a special. Year I would say what, was it about the market condition that gives you this kind of outsized returns in, a single year okay, so if. You recall what happened in 2018. We have two major pressures, one, was in January, and the. Second, one was, in October. Then, in fact there was a third one which was in December so, the. The street crash during, these Street crashes, right what I did was of course the directional. Swings I had to cut loss and, after. That I realized that okay in this kind of volatile market, I could no longer utilize. Both, my options, trading and also. My directional. Swing trading so what do I do i I can't, be just taking losses after losses so, that's, where I went into the. Intraday. Trading and it was only applicable, for for last year because like currently, the market, back into the normal. Movement again, and I do not have the, volatility, I require for the day trading so I'm no longer doing day trading not. As much for this year but for last year it was due to all the day trading that I got the excess, returns. I see, so it was more about last. Year the. Market having very. Significant, daily volatility. Anyway you actually need focus mode was introduced, reading so again this is. Based on the principle. That you, see what the market is too weak then you fry you use the right kind of strategy to, try to get. Profits out from the market based on the market condition right that's that's very very, interesting all. Right so now now that we understand, a bit a little bit about your background so, can you share a bit more a bit more is there anyone, throughout. The past 10 years that has a major impact on the way how, you trade. In. Terms of maybe the kind of learnings you go from the person or some.
Major Principle, concepts that you think that it's helpful for you, well. I wouldn't, accrue, it to a person, but if let's say we have two opinion, on one you will be mr. markey because, mr., market that really taught me a lot of lessons like. In. Options, trading when I meet one, meeting that a you. Just collect premium every weekend, everything just goes on autopilot well, it's not the case in. 2013. I was doing this options premium collections, strategy. Over, Google on on earnings, so on Google, over earnings so, what happened was overnight, I lost us. $4,800. So, that, one loss even though I knew what I was doing but, that one loss like, woke me up and and it's like shake, me up and say hey what are you doing you you have taken such a big loss before and how come you go back there again and again it is, me. Reverting, back to the GUI mode so. This. Mr. market right has educated, me well. For the. Educated. Me very very. Harshly. For the last 10 years and, true. A hefty, losses, to a series of losses and that's, where I realized, that trading. Is never about a. Destination. Is more like a journey is never, to say that hey I made, you know I know this strategy, and it's gonna work for me for the next few decades it is always about evolving, it's always about reading. The market, and being flexible enough right and also have, the humidity to admit that you are wrong and change, your strategy instead, of stubbornly. Holding, on and say no, no issue work it must work because for the past you, know 20 years of back tense it has work so, the market doesn't care about the backtest the market doesn't care about my opinion and what. I I do as a trader or in, fact what everyone, should do as a trader is to. Suit. Ourself, to the market not to foster, market to suit to our you. Know our strategy so, yeah that was one very important. Factor I see, interesting, now if let's, just make an assumption if you can go back to the start over again what, would you do differently uh. What. Do I do differently, well I would and back on back testing, a lot sooner so I do not have to go through, you. Know other so-called, waste of time in the first three years as I was getting only relying on teach relying, only on technicals, I would, go through a proper, education like. Started. Reading a lot earlier, so, that I know what really affects the market what, really moves the market what moves to stop so having, known, all this right then, I'm able to put, into action a lot, sooner but of course with a small account and that's where we we call it a forward, testing, now I see. So basically you would have started a reefer smoke I'll do more back testing and stuff like that and. The. Present, time right now so just, now during our conversation. You mentioned, quite a number of times on back testing and forward testing all right can you share a bit more about your back testing, process. Considering. That I think. That from your profile you describe yourself as a discretionary, vision, chart trader right yes, so much of a systemic, or quantitative. Algorithmic. Trader, so how do you actually effectively, do back testing if you are a discretionary, visual chart, trader, okay. So like. For. Example the, psychical, analysis, approach. That I use right what, I do is. Require the, historical. Price data for, the stock in order for me to proceed with this analysis, and. What. I will do is I'll go through the last 20 years and know, that once, I compile, and all the data together I know that for. The market itself let's say SMP 500 the. Most foolish man, for SMP 500 is, in March April then. November December, this, four month period so knowing. That in this four months right there is a high. Degree of reliability. That, is going to be bullish then, that's where when it's approaching, this four month period that's, where I start, to look for the. Entry. Criteria so, that's. Where the disruption, or repulsion sets in so before. That is just all, numbers. Or facts, and figures then, I, realized. That I cannot just rely. On a time, window, for me to open, or close my in position, because, sometimes, the market may train earlier sometimes, the market may only start trending, maybe.
You're Halfway through the window so that's, where the discretionary. Portion comes in and that's where I have. To eyeball, and look, at the track to to. Qualify, the trend to see the, degree of how. How strong this this trend is by looking, at a degree of a trendline by. Looking, at the price action by, looking at let's say in a consolidation. Is it more like a distribution, or, is it more like a further accumulation, so, modest, are these factors and discretionary, I see, so when you do, back testing because it seems to me that you treat, us index, futures, option, so do you look at you, trick options, for individual. Equities. I, used, to do that but I stopped doing that ever since I move on to commodities, for options, I see, so which means that now you actually straightaway, you cut down on the number. Of instruments, that you look at monitor right since you're not looking at individual, stocks so, that would be string, by a lot more so I still. Do individual. Stocks or so but, this time I do not use any derivative, on it I instead I just buy the underlying shares itself I see, okay so now, let's talk about the main strategy, that you you, you think that you are the most proficient in, all right and what would that strategy. Be is that option one or the directional, one or you think that they are equally comfortable with. I. Am, equally comfortable both, of them okay, so and okay let's talk about how do you narrow, down. The. The the number of instruments. Into. Your watchlist that you that, you look for trading setups and the unit for signals for how do you actually narrow that down since. You say that you look at index. You look at commodities and, you so look at individual, stocks do you actually short. Lease them separately, maybe. You can share a bit more insights about it okay. So for, indecent, right because they are just a limited number in the search that we can look at the. Ones that I look at is S&P 500, as well as Germany, 30 so, these, are the mean two indices I look at so it, is just two of them and for commodities, right I'm looking at coal oil as. Well as natural, gas but more focus, on oil, itself so, these, are just the five commodities. Plus in this as they I'm looking at so they are always there then, when it comes to stocks, right of course we cannot just be looking at a handful of them so there must be a process, to filter down to streamline, down to know that I wish, other stocks are going to move so, I utilize, this thing called five steps model, right for stocks in order for us to view a directional, tree and the. First step always starts from finding, the star, players the star performing, stocks and how. We find a star players is true psychical, analysis, so to. Put it everything in a nutshell is, if, you were to put, go. Back into. Researching. The past performance, of let's say this, team see, the so this company called Disney if we. Put on the past 20 years of price performance we, know that ok January, we have one kind of return in February or one can return so on so far all the way until December, then, what happens is when, you compile, all the man's together you would know that for, Disney.
November. December then. All the way up to. October. Sorry October, November. December all the way up to April right this seven-month period is where, Disney always. Tends to trend very nicely so. That's where the back testing portion comes in so in, order for me well, this first step is to find a top layer so I know that for the next seven months if let's see now be an October alright the. Next seven months at Disney is going to trend, and it, has been doing so for the last twenty years so I would be looking at that so that that is one of the ways that I used to funnel down from the 8,000, overstocks, available. In the US market I see, so what kind of tools do you use to help you to do all this filtering. Okay. So I I used two types of tools one is of course our scanner, and the. Other one is just, historical, data and, then there, are the start of the back testing process comes in I see so in a way the, way you actually, scan, and filter now is pretty. Much quantitative, kind of analysis, right because you are trying. To study the behavior of the price but, not visually is, true quantitative, much. To do that right okay, so typically. Let's. Say in Alaska, for example how, many stops, we actually in your. Shot list you. Know watchlist that you monitor close before potential. Trading ideas okay. So instead. Of like, having fuse. Our X number, of stops in my watch list every year I what I have is I had this market, calendar, where, Jen. Every January III, I. Go, across the whole US market and shortly, stood about six hundred over socks which are the leaders in their industry so. The top three to five biggest, company, in their respective industry, so, that, adds up to about six hundred overstocks. Inclusive, of all the tradable ETF then, I will place them right in the months, where they will have or exhibit. A strong trend but, for example Disney I will mark up October, all the way to April, then, for SMP. 500 I will mark up much April. November. December this four month period so on so forth and I will do the same for the rest of the 600. Overstocks well there's a lot of work to do right. Manually. Or you just let the software channel, all these things for your you really like use a spreadsheet.
Sadly. I do not I I do not come from IT background so I have to do all this manually, but the lucky, thing is I what. In a group I have a group of friends who are very interested in what I do and then that's where Andrew them your help or so to get on. Board and say hey how about six hundred a, few of us each one of us to two hundred ah. Yes. Yes yes. Very. Interesting all right so now let's go a bit more deeper, about your strategy. That you use yes I think options, might be a bit too difficult. To explain in just a simple interview so let's just focus what what's the directional, strategy, that you use a bit. More about. How. Do you, actually decide, to, enter. A trade how. To put a stop loss how, do you take profit based on that direction of strategy that you use and that. Strategy is it use on all the, index futures, and. Commodities, futures and the stocks itself or is that the emitter to some kind of instruments okay. So this, strategy, like psychoanalysis approach, - era it works best on stocks. As well as indices. But not so much of futures, because we do not want to be holding. A leveraged position for a few weeks or so because that would, be reckless. Unless, we have a well. A big account size law so, after. Finding the star players right what I do is that's where the discretionary. Part the visual part comes in ready so I would go. Through the chat itself, so knowing that let's, say now we are hit max right knowing that there X, number, of counters, example. Stocks they are going to be bullish I will, put all the charts on and I will go through each and every one of them that's, where I'll go and plot all the areas. Of so-called. Contention. Where the support and resistance resistance. Are and I, use the phone resistance, for me to Freema, whether, this. Stock. Itself or this chart itself is in consolidation. Or is, it in Soho. Trending and after, a certain price let's say now is in consolidation, after it breaks above a certain price then in this area, that's where than our decide, to end up with, an ending position I see. I see. So if basically. Are you mainly using. Breakouts. Or do you use more of a, reversal. Strategy. In this trend. Trend, trading neither. I use more of a pullback strategy, so one of like. After I qualified, to know that it is in the right terrain, or the territory in a training territory, so, what I did is I put, on, EMA. I put, on EMA and one of the most, what. Most most frequently, used EMA, would be the 20 EMA, but, instead of using just one line itself right what I do is I have two lines and one, is the high the EMA, high is they're relying on a closed price I am the EMA high and EMA low so, these, two lines right what they do is they will, they. Will behave, like a channel. A value. Zone so, I always wait for a pullback down to this value zone before I decide, to swing, the next leg up I see. So you basically. Is, a bit similar to like how people use Bollinger Band, for example wait, for it to go back to the lower lower, lower bound, to read and they look at buying at a lower boundary and expecting. That you will go back up in the in the towards, the upper boundary. Yes. Yes the thing about this using, moving average, I personally, realized in the past is that different. Stocks different instruments seems to have a certain, different. Different. Way. They move according, to the EMA yes, do. You actually. Very. Good question yeah so that's exactly what I did so, at first right when I started, with this EMA, strategy, what i did was i just used 20, am a true out and then I realized that if. I use 20 I am a true out some of the stocks right they may just D way, below the 20 ma before, coming back up again so that's, why I the, eyeballing, process comes in again and I will our so. Called, visually. Baptizer, to see which EMA, period, suits this, stock and every, different stock will, have a different, period EMA that, that suit them. You are actually looking in history, and try, to see which EMA, is a better fit for that particular, instrument for example yes use, that going forward with, any, case they use you do notice that EMA. Value has got to be changed after that because the characteristic, of the stock, changes, mmm. Okay, well when the MA so so when, as long as the market is trending as long as the stock is still trending right largely. Mark from my discovery. Is that it still sticks.
Back To the EMA, that it is a suit, - but. The, thing that will, change is when the market changes, from let's, say non-volatile. Trending, one to a volatile. Ah, non. Trending, one like that one we have last year so that's where this strategy will not work yeah, because you start to consolidate, and then you would just keep on bouncing, it. Doesn't go in a wrong, direction and move right yes. Correct, Aimee maybe, a, bouncing. Off is fine, what what was really frustrating, last year when you apply this strategy I was there it Pierce's, true and it didn't follow through all the way down what happened you did, a 180, degree snapback all the way up again. That. Was very frustrating last year yeah. Yes. Correct these, kind of issues right yes, what, would be a trading, setup for you in this particular strategy, I mean the point where you decided okay it's time for me to enter what. Is that that that signal or the trading setup that tells you to do that okay. So when, it falls back to the values. On a cow it is also value zone is the zone between, the high of the EMA and a low of the EMA so, when prices, pullback to this value, zone and what I want to see after that right is a conviction. In the resumption of the trend more, conviction, that comes in form of a bullish price action also, with a reasonable. Volume, to support, the breakup or the resumption so, these are the discretionary. Signs that I pay attention to when, I decide to enter I see, so do you only enter, the trade in the direction of the major trade regime do you try to take. The. Opposite trip when it hits the upper boundary, of that that value, so they look at. No so because I'm. Actually, a trend follower so. You can probably visualize that, the Train is just moving up and then after that you have bounced back down then go up and bounce back down and go up again, so it's unlike. The Bollinger Band where you you, encompass. The whole price, action within that band itself so, if let's say is trending upwards right what happened is the value, zone tends to be below, the price so all I'm waiting for is for the value zone for. The price to come down to value zone and then that's. Where I will, do. Take, my decision, and see whether I want to, trade.
It For the next lap I see, I see, alright so that's basically for the entry. Strategy. So, how how do you manage your exits, then whether it is with. Both regards to loss. Exit, or profitable, exit how do you manage these two okay. So the, exit, I always, enter, with a stop loss and the, initial, stop ride is always, determined by, two. Things like one is either the ATR, or to, the. Price. Structure so. As you know right let's say the price comes down and hits and. Hits the value zone and after that it does a resumption, so, sometimes. Right depending on the gauge. So-called. Confidence that I have on that trick itself it let's say I'm very confident, of the trick all off the trend that is going to bounce off a lot higher what. I'm gonna do is I'm gonna set a stop right that is much. Further. There's, much further that's way I will use the ATR and I will use like two to three ATR, away, and I'll set my stop and I will trow it ah I, see. So is. Truly, stop the only profit-taking, strategy, that you use to you have. A profit target that you exit as well uh I. Have profit target but most of the time you never go, according to plan. So. What's, of my exits, right are due to shifting, of stops I see. I see basically. To just summarize. It you. Use the EMA to, identify, the value so when you pull back to the value zone and it shows a, resumption. Of the mid, if you're the trend you. Get into a sweet, you have a stop loss there somewhere below oh that value zone area, all right sometimes, we use ATR and then you. Just simply stick. To a trailing. Stop call. Right and how. Do you, adjust your trading stock is, there any particular, way. Or in principle. That you decide okay now is the time to move. Okay. So the. When, I use the ATR, a. I use. A ATR, to set my stop loss right then by trailing. Stop be set at let's say one point five eight years away and as the price move right this, trailing, stop will just continue to go up so that's one way the but, most most, recently, I what I did was I did a Manuel Manuel Triola so instead of relying it on the eighth year itself, right I will, always treat manually, based on the price structure I mean I will set it to a distance, below, the most recent, swing low, yeah. Then. Would more. Effort, on your site to monitor right because so, previously, for, all your okay. So naturally, entry is Manuel because you need yes usually see design getting but once you get to a trade do you actually, ultimate. Eyes the rest of your stop-loss and you're truly into. The platform itself or has, it always been manual. And. Okay. In terms of execution whenever. I enter enter, for, the trade right pet. Stop-loss, order will always be there and, it was when I at the entry ID that's where I decide, what what should I do if the initial, stop and that's why I call the initial stop because after that I either will switch it to a auto. Trail, which, is determined by the platform, itself or I, will do a manual stop, that means I will drag it according, to what, way, I see on the chart I see, so basically your stop-loss is all the time when you enter a trade your stolen is automatically, placed into the platform yes. You just can you up if, it touches touches, it yes, surely initially, we were actually using Automator, but you recently switch to a manual, one how does that work out for you, by. Switching to the manual part okay. So switching to the manual part there there is always pros. And cons people we. Will never be 100%. Accurate because, most of the time what will happen is sometimes you take it too early sometimes, you take it too late so, we, just have to deal with the outcome and, personally. Why I choose a manual stop is because the. Stop-loss. Amount. Is a lot lesser than auto true because auto true usually, I will put it to about 1.5 to 2 80 hours a week which can be quite a hefty.
Hefty, Drop, a hefty, stop-loss mmm. I see, I see so, now. You have, your entry. Okay. So from. As, far as my fans are concerned right because one portion, of my fans already set aside for. Options, premium collection so, I'm only using, like, about 40% of my fans that that, is using, for a directional, swing, so, based on this forty percent so let's just say I have, hundred thousand so, forty percent would be forty, thousand on, directional. Swings and I would place, my our. Base my position, science right using two point five percent of this 40 thousand okay. So you, risking. Two point five percent of your forty thousand yes. Each trip, that you open you know yes yes, and I, would put in a position side from there okay, and how, many. Positions do you typically, open, for, this directional. Bets. Using. A forty thousand how many positions obviously. You will have leverage you have much into use right correct, positions, would you open until you will say okay stop I'm not going to open any more positions is there a certain way you decide on that. Usually. I will not go for more than three concurrent, positions, at one time because, I will always assume that, let's. Say three autry are lost, altogether. Then, there, will be a drawdown 7.5%, so. No, more than treat for myself laughs I see, I see and. Typically. How long does this particular strategy the, whites the trade equalizer for this particular strategy it. Goes on for a few weeks. If. It doesn't touch the stop-loss usually the profits will be about a few weeks before you actually. Start. Turning around and hit your trailing stops right yes. Correct. I see I see okay so, three. Trips though do you have do you ever face the issue of you, have taken on three trays then you find either one fantastic, idea that, comes up and then, how do you mitigate that. Psychological. Need, or want to do. Not miss that that the next next next better idea that comes along. Well. Better. Idea will always be there and it. Has been there since the first data and, this. Training journey and two, data now every, time I wish I would still be looking at what, all the missed opportunities. But one thing that I've learned is if you kept, focusing, on the missed opportunities. Right you, are not going to move. Move, on so. You have to keep what, one. Can do right is to focus, on. What. They can control which if let's say they are bound by the capital, size of the.
Account Either concise then, you just. Have to make do because if everything, is really utilized, unless. That, trading opportunity, is much, much more attractive, then maybe they can close away, an existing, one and then take on the new one if not, well. Even though they are so-called, spare funds available, in the account I would, advise, against. Utilizing. These spare funds I see, I see all, right so can. We just talk, a bit about your your daily trading, workflow, as well because I think that would be definitely be interesting, to. The audience because sometimes. It's not just about strategies, about how can, you be very efficient, and effective in, your workflow so, then you can use the least time possible to. Find the best, trading. Opportunities, as you have time to manage it along. The way so could you share a bit about your your. Your daily, process, your how you get into trading let's, differ so maybe what time do you wake up and how do you go into your trading workflow thereafter okay. Usually. I wake up about 11:00, a.m. then, yeah. You. Gotta sleep very late - I sleep almost about 3 to 4 p.m. every night ok yeah, for about 3 or 4 the we until 11:00 I wake up I 11 then I'll go for lunch and after. That hour come back and launch. My platform and because, I treat the. Easter's as well as yeah, I mean in visas in the Europe market as well so the Germany 30 so I would look at the Germany, 30 fuss in the, day which, is around the, time right now because so. Now now it's about 3 p.m. 3:30. That's where the European, market is in full. Force in active. Session, so I'll be looking at Germany 30 and one thing I do is if I can see, any opportunity. In the first one hour of the euro opening, right then I would take it as a day trip photo show you do you do to regular, day trade so if, the opportunity arise, yes. Yes, if the opportunity, arise and usually. Such opportunities. Are, rare. Because you, you, do require a, very nice trend, in a direction that's number one then, number two is the volatility, has to be dead so, like.
Last Year we are having a 2 percent 3 percent day and that is thought that was the normal and this, year what we are getting is like. 0.5. Percent 1 percent so. The range may not be so ideal, for day. Trading but I do look at it from time to time just so, there when I spawn an opportunity, I will be able to enter, the trade so that's for the day portion, I see, so since we are on that they. Just elaborate, a slightly further how, do you actually for, your day trading strategy. Right and we, decide. The entry, exits, okay. So for daily trading I use, a lot of framing, so there. Are 3 sessions for the a trading you have the asian session then. You have the european session and then a new obsession at night so, i would, not, trade in a asian. Session because, unless they are new slot but that is very rare so in the asian session I will look at the boundaries, that means the high and low of the asian session then. When, it goes on to the European session right based, on the boundaries of the asian session i'm gonna look at whether is it a continuation, is, it a reversal, amis is it, bouncing, off the support is it bouncing north of resistance, and. After. A brick true let's say let's, say asian session is trending upwards okay, then there is a resistance, set, there at the asian session and then, when it goes on the european session it bricks, both higher again, what, I would do is I would not enter immediately, because from. My experience I realized that if you enter the. First breakout right most of the time the first breakup may be a false breakup so I will always wait for a retest, a retest, of the boundary, first before, a, result. Trading the resumption yeah. So it's still, relatively, like a pullback style. Of treat but of course a little modified. Agency, so you are using the agent time zone yes. How's the general trends in order to support. Impose some kind of assumptions. When, the market. Opens and how does it move on to the US market you do you use the same way when it goes into the. US. Yes. The US market, the idea is do the same that's where I will have the mount Airy's of the European session the high and low of the European session then, when it goes on to the u.s.. Session I want to see whether there is a you, know a continuation. Or, a reversal. Of the, European, session, so, based on that that's where again is - based on the first, breakout or rather the first pullback the, first movement after the successful breakup I see, and why, is a strategy that so. For that one right the NZ I will always put a quite, a tack stop because, for, date rates the degree, of randomness is, a lot higher so, there, is not, much of a directional, age usually if if I were to look at it it reverts to about 55, percent 55, percent 50 percent that's my wait so, that's where I have to make sure that my losses are kept small because if once the losses are big right that's where the, rules are the reason is very high hmm, so you keep a very tight stop, and then profit-taking, we used to use trailing or do you just. Wait for it to hit a certain price again you just quickly get up I, would, he I will use a price target in this sense for the intraday, trading I see and typically, what kind of risk to real ratio do you try to get or introduce. Trade intraday, trades at this at, least I'm looking at one is 21.5. So many people have asked me before I why why not one is to - why not one in so five I say yeah you can set but if, the market doesn't trend, that strongly then there's. No point in setting, that high target.
So I wanting, through the backtest right eyeball, in Aegina is I, realized, that one is 21.5, kind, of restore your ratio right it can be achieved in any type of market. Whether is it like trending. Fiercely, or trending. Just Maui you, will still be able to get at least one point five R of. Your traits I see, what is the typical, we lose ratio like. Okay. So the win-loss ratio for, the day trades is, around sixty percent fifty, five to sixty percent there but it's not very high okay. But we for one is to one point five days to you a pretty good kind, of, small. Surplus yeah correct okay. Okay interesting so now, let's go back to your workflow so you in. The afternoon by looking at intraday, trades and, you, do when do you start looking for those, swing trading ideas that is. The main strategy. Okay. So after, after. 5:00 p.m. right after 5:00, p.m. I would take a break from the the. Workstation then that's where I will go out I have, to pick up my my, my. Wife from her work and then we will go out for dinner and then after that I come back that's where I will look. At a US market but, the work for the US market or whether should I be entering the any. Specific, stock right it's not done on the date itself is usually done on the weekends so, on the weekends I will squeeze out about two hours where I will go. Through the list of prospect, stocks then I'm going to look at in a coming week then, like. Let's say I'm. Looking at. Five. Starts then this five stops right I would have done my ta on the weekend also the technical analysis, to frame, up okay where's the resistance, where as a support. After. What price point and I will consider, taking a long trade on this and. Where should I proudly face my entry so all this plan right are being. Drafted, up during the weekends so in the weekday or during. Weekday when a US, market session comes on what I do is just look. At a plan and then if let's say it. Hits the price point I'm looking at then I will just enter ready I say, so in a way you actually. Just set alerts for those key price points you are looking for although you. On a daily basis you just go into those chests and visually see whether is reaching, those kind of levels. I find, it visually, looking at a chat is more. Convenient. For me instead of setting levels because I used to do that using. Setting. The levels through the application, through the apps then I realized that every, day I have to go in and set set set keeps, that thing so I really find it quite. A hassle so I rather just put. On a few different shots at a time and look at it I see, so basically you. Do all your planning and look for potential tree set up during the weekend so during the weekday itself when the market starts, to open so, before the market open on a daily basis do you do any work. Okay. So before the, before, the US market, opens, right I will look at the performance of the, US futures to. See like okay what where are we heading today is it going to go up is it going to go down most, likely based on, the trend based on a price then. Most. Importantly, one of the philosophy, that a dot right is that the, market, has to have. To support the direction, of the trade I want to take because, eighty-five, to ninety percent of the stock will move with, the market so, if let's say you want to swing longer the, stock itself but, if the market on that day happens, to be a fierce. Down day due to news or whatsoever then, it may not be such, an ideal. Ideal. Time. For you to get in because after. All is still follows the market first I see. So do you at that, point in time thinking about how, about I look for stops to I look for instruments, to shop instead. Are. You really know. This last so-called, last mini kind of planning. I usually, refrain, from me because back. Then in 2000. I would say early 2016. I was doing. This and I realized that okay every, time I will just look for last-minute candidates, for, four-day trades then I realized that the hit rate was quite awful it was like I, was, losing more than I was meaning it was getting more of like 60. 55, to 60 percent losing, instead, of winning so I realized that the issue wasn't there or at, least not for my set of strategies, I see, yeah so, in a way during the weekend you, were already decide I am only going to look for instruments. Too long Nana. Yes, I'm not gonna consider any shot instruments, so once. You decide on that and during the red regular, market maka days you, would just see whether the brought marker is it also bullish. As what you were and try to anticipate if the help they happen to be a bearish day then, you'll probably just not, do any tricks together yes right. Yes, that's right I see, I see all right so once. The US market opened then in. That case do you chose, or trade intraday for, US market as well, only. When there. Is a like, a huge range that, I can be looking at like for example, the.
October, Of last year and example, of last year the range was there and of course I I will do the intraday, trades because at the, power time if you were to do swing. Trades over a few weeks right it would have been pretty frustrating. Because the even. Though the breakout can be fierce but the reverser. The snapback can, be quite fierce as well so you been see maybe. Your position, I'm making profit for one day then the next session it raises, all the profits and goes back go back into losses. So, I tend to when. I see a market, or when I profile, a market to be volatile, trending. Fiercely, then I would, tend, to switch. Into day trading instead, of doing, the direction of directional. Swings, I see, so considering, the fact that you said you typically, who maximum three orbit rates no, for the swing trading at a pointer it was usually, suggest, that if your, trace is working out that means most of the time you aren't actually not doing anything for the swing trading right and you exist. Before you look for another new trade because you only take on three open trades at the same time all right a possibility. Like let's say you have three trades open already all, three of them are already in profit, yes. Not existed, but your trailing stops is already in profit zone already okay, see, the opening the fourth or fifth to get more risk exposure if you see good ideas coming a lot knowing that the first feature is already in, profitable. Area. Already okay, so this this, has to be determined by the, available. Of funds, that I have laughing account because I said si 60%, of my funds for, premium collection so. I'm I. Do. Not want to touch that unless, it's like a you. Know an, emergency. Where I have to allocate, a fan cells whele so I I do a. Separation. Of a fan even though they are in the same account, I see, so in a way because. Of your sizing, method, usually. Typically, with three open traits you probably. Fully utilize, that by my correct, including. The magic by yourself laughs so that is actually the constraint, to you opening a fourth trait, or fifth trade even, on three open traces already making money car, and correctly I think this is something that's important. To think about as well for those, traders. Out there alright, great so now. What. Happens during the US market so if. That's, the case that means you actually do have a lot of time on your hand right if your string tree is not so often so yes yes I have a tendency, to, want to look for more day trading ideas, since you have so much time on your head, so. Okay. A lot of time during the like. I mentioned I have quite a lot of time. When because, the swing, trades opportunity don't is. Over, a few weeks so during that time what I do is I watch a lot of trading. Videos I also, read trading. Books a lot yeah, so to test, to keep my hands, off from. Being eg from taking you know traits that I should not have been taking because, this, this was a lesson. Before because. Last time I used, to do kept looking at the market and kept squeezing out and after, after a period I realized. That I was, seeing. Things that I wanted, to see instead of seeing. What the market is showing me so I tend to be very clouded. In in terms of my judgment so now, instead of looking. If I have nothing to see if I do not have an intraday, trades going, on what, I do is I just leave my platform there and because my alerts are there I mean at least the chats are there if it. Has not hit the price point I won right I will be doing something else okay. And do you so. Do you stay until like three four o'clock before, you go and sleep. Yes. Not to stay beyond. That time, rather than having having a moderate you look is it a choice or is it due. To because you want to stay around for the market to reach. And do the stage it's. More like a more, like a choice because in the initial years when I started I will. Stage throughout the whole us, session and as you know right the u.s. session half. The year we will end up market at 4 a.m. then, the other half due to daylight savings we will end, a market at 5 p.m. then.
In. My early, 20s, I still could do that sleep at 5 and the next day go on as usual but now that I'm in my thirties I could, no longer do, that if I see at 5:00 the next day is going to be like okay, I'm gonna fall sick I know no more no, more trading ready I see, so in a way if not because of your, intraday, trader that Reed doesn't, admit for you two to. Stay be on the opening more than a few hours beyond, the opening right yes, yes I saw, yeah, usually, if. Usually. If there are any opportunities. To enter right it would be before the u.s. lunch time which is like, the. Time between, 9:30. To, traffic, and Singapore, time so if there is any entry, to be done it should be done during that period not, so much during the second half year but I mean second half of the session but in, the second half of the session I would be just watching trading, videos or sometimes reading books. Or even, sometimes, watching drama. Okay. Okay all right cool cool int
2019-05-17 11:51
