Straits Times Index Update on 25/10/2015

While the markets have not been making "headline" news about falling stock prices, I do think that we are currently correcting the existing downtrend. The Straits Times Index may continue to trend up to 3,245, before continuing its slide.

Long Time, Long Time

Dear readers,

It has been a good 6 months since I've last updated my blog. I have been through lots of ups and downs throughout this period, and I would be writing them in my blog in time to come.

If you have been an avid follower of my blog, thank you for your support. I hope that my previous posts have been educational to you. If you are new to my blog, I do hope that my upcoming posts would be engaging for you.

HouTian signing off.

Seed Capital

How is it going everyone? This post will be about Seed Capital. Not exactly in the business start up sense, but more for my Forex career.

Over the past 2 years, I have been trading with my own money. Back then, I only have a few thousand dollars to trade with. I may not have shared this with my readers, but I started trading Forex with my very own $2,000. Being relatively new to this market, I was overwhelmed by my own emotions. This has eventually resulted in the loss of my own capital. While I was quite heart broken, I felt that was what I deserved, for being emotional, for not sticking to my own trading plan.

For new traders out there, start small. Because it's quite certain that you will lose your money. It's the first time you trade, and all the emotions will come haunting you. To be honest, it takes quite some time for traders to get used to the ebb and flow of the market. How many accounts you will bust before becoming successful all depends on you, the trader. If you are willing to learn, you may work out with your virgin account. If you aren't, you are going to bust as many as you can until you learn, sadly speaking.

After which, I created a new Forex Trading Account with my existing broker in Australia. This time round, I funded this existing account with another $4,000 of mine. Personally, I do not have a lot of savings to begin with, hence I was very determined to make the best of what I invest and not screw up my trading career. As lucky as I can get, just after a week of depositing the money into my account, my father has offered to give me 30 grand to trade. I appreciate his generosity as well as faith in me in trading.

In time to come, I hope that I can achieve my financial dreams with the seed money my dad has offered to me. While I understand that not all are as lucky as I am, I would like to be a part of budding entrepreneurs' business plan.

Here's a shoutout to entrepreneurs out there, if you are keen in starting your own business, please feel free to drop me a message. I would be more than happy to review your business plan and invest in you! I guess you could call this pass it forward, but I do sincerely encourage entrepreneurship, and the best way which I can do so would be providing seed capital to you, just like how my father did to me.

Signing off guys!

The Interview...

Hello everyone! Recently I have just completed an interview for a close friend of mine, relating to Forex Trading. I hope that I can inspire some of my readers here! I have posted the interview down here, but you can also visit his website! It's right here!

1. How long have you been trading currencies?

I have been trading currencies since 2013, when I first entered tertiary education. Having a major in Accountancy, it sparked my interest in the financial markets. It was a close friend of mine who introduced currency trading to me while I was still learning how to trade stocks.

2. Can you give us some background into how you began trading and how you evolved.

How has trading changed your life?
It was 2008, when I first got my iPhone. There was a stocks app preinstalled in the phone, which got me curious about stocks trading. For the next 4 years of my life, I actually learned more about how to value a company, especially using ratios, as well as using the Discounted Cash Flow analysis which is a method popularized by the famous Billionaire Investor Warren Buffett. It has made a significant impact on my life as I went from no knowledge to being relatively well versed in this market. After I entered tertiary education, I slowly shifted into currency trading. I was introduced to this market by a friend, and was also enticed by how liquid this market was. It also required far lesser money to enter this market, compared to its equities counterpart. Right now, my life revolves around currency trading, and I hope to extend my portfolio to equities as well, which requires far less intervention than currency trading.

3. Do you intend to trade forex for a living?

Absolutely! I would be more than happy to trade for a living! As I see myself as an entrepreneur, I would also want to start a business revolving around the financial markets. I would also like to give talks and teach people how to trade forex too. I do hope that I have a chance to coach you someday!

4. What's your current average return/month for the past 12 month?

After making a loss for almost a year, I have successfully trained myself to be focused and less emotional during trading. As such, I would say that I can achieve a 5% return per month now.

5. Can you describe your workstation setup?

As I do not have a big budget at the moment, I use my laptop with a 15” screen to trade. I do have a 23” external monitor which I connect to with a wireless keyboard and a mouse during days when I want to see a bigger picture of the entire market. Personally, I would recommend traders to use a laptop to trade because of the mobility it gives. I love to go to air-conditioned places that are quiet and trade the markets. It gives me a sense of freedom!

6. What charting service do you use?

Most forex traders should be aware of the software called Meta Trader 4, or MT4 for short. I only use this software for my charts. It’s good and reliable. It comes with lots of indicators and functions. For traders who are interested in automated trading, it is also supported on this platform.

7. What are your favourite currency pairs to trade?

I primarily trade AUDUSD, GBPUSD, and USDJPY. The reason why I trade the Aussie Dollar is due to its stability. As China is the Australian’s largest economic trading partner, the Aussie is very sensitive to news releases of the Chinese Economic Data. However, because Aussie is much more liquid than the CNH, therefore I chose to trade it over the Chinese counterpart.
GBPUSD was chosen because it is very similar to the EURUSD. It usually loves big moves and is usually in trading in a particular direction. The Euro was a big turnoff for me because there are too many economic data from multiple countries to follow.

USDJPY has been popular among new traders because of its simplicity. With the BOJ’s intervention of deflating the Yen, going long on this pair is a sure-win thing, at least for now. Analysts are expecting the Yen to reach 135 by the end of 2016.

8. How many hours/day do you spend currency trading?

I usually spend about 2 hours a day to look at the charts. Not all of the time are spent sitting in front of the computer to do so. As I use the MT4 app on my smartphone, it has allowed me to go even more mobile than a laptop, therefore I would estimate myself to be spending 2 hours a day on the screen. In actual fact, I would probably spend only 30 minutes in front of my computer to do so.

9. Describe your best trade, what currency pair, why you placed it, and how much profit did you make?

My best trade was actually a commodity. As we all know that oil prices have been plummeting, I took a bet that it would that prices would bounce back. I placed a long trade on it and I took a $1000 profit.

10. What was your biggest mistake ever?

Letting my emotions take over what’s in my head. Many successful traders have said so, and I cannot emphasize how important this is. Being emotional will make you even more so at the end of the day. Every trader needs to understand that losses are common and as long as we trade accordingly to our plans, we would definitely be profitable at the end of the day.

11. When placing a trade, do you use technical analysis, fundamental analysis, or a combination of both?

As much as I am a technical trader, I do take note of important economic news releases because these are the time when the market starts to whiplash and take everyone out of the market. But other than the times when there are news releases, I would trade solely on technical analysis.

12. How do you manage risk?

I manage my risk by using a position size calculator to calculate the amount of lots I have to take each time I want to place a trade. They take into account the currency pair that you are trading, stop loss level, and amount of risk I would take. I highly recommend any traders who wishes to be successful to take not more than 3% of risk for each trade placed.

13. What lessons have you learned that have helped you find profitable trades, and keep losses relatively small?

Following your trading plan. That is the number 1 lesson that I have learned over the years of trading. The number 2 lesson that I would like to advocate to traders out there would be not be emotional. It really does nothing but ruin your trading career.

14. Do you agree that forex trading is more risky than trading stocks? Why so?

I do not agree with that statement. To me, risk is the result of ignorance. I am sure that a successful forex trader trading equities can lose as much money as an equities trader trading forex if he does not know what he is doing. Similarly, I would not say that options and futures are riskier than forex or equities. Knowledge is power.

15. What indicators have you found most useful such as Slow Stoch, Fibonacci, ADX, RSI, etc.?

Personally, I do not use much indicators to trade as I believe in price action. However, I do use the Fibonacci tools for projection of retracement of prices as well as extensions. While I do not condemn trading using indicators, I highly recommend traders to learn more about price action trading. I believe that they are the most efficient and effective way of profitable trading.

16. What are some of your favorite resources for learning about and following the forex market?(promote your website?)

One of the websites I would recommend would be babypips.com. It is a great websites for every trader, amateur or experienced, to learn more about forex trading. You’ll never know what you can learn from there! Another website I would recommend is my own website (www.theforextrader.info). I do update my website often for readers to know more about my trading experience. You can definitely find out more about my trading experience from my website!

17. What do you feel as a currency trader that new traders starting out in the market should focus upon?

Learn the dynamics of the market. Understand how price action works. When you have successfully master and understand how price action works, start trading using a demo account. Once you get the hang of it, start trading using live accounts. This is where your discipline comes into action. Trust me, every new trader thinks that they can manage their emotions, but more often than not, it takes a few trading accounts to do so. You need to stop greed and fear from interfering your trading decisions. If you can’t master this, then no matter how profitable your trading plan is, you will still lose money at the end of the day.

First Withdrawal

Hello readers!

Firstly, I must apologize for not updating my blog for such a long time. I have been rather busy with my personal life recently, henceforth the hiatus.

It has been quite a fruitful month of January, as you can see, I have achieved a 13% return on my portfolio, and I hope to do the same for the month of February. According to myfxbook, I have already achieved over 4% return for the month! Way to go! I hope that I am able to keep this performance consistent so that I can build a career out of trading forex.

Anyway, I have finally made my first fund withdrawal from my broker. Emotionally, I felt really happy because it is a milestone achieved as I am able to "touch" my returns from the market. This would certainly be a source of motivation for me to be emotionless (no puns intended) when trading the market in order to perform well.

I have to bring this message across to the fellow traders out there, that you need to reward yourself after reaching a certain milestone in your trading career. Because ultimately, you trade for the profits. If you persistently refuse to take out part of the profits in order to reinvest the money, it can work out both ways for you.

One, you REALLY grow your money faster, thanks to the compounding effect. However, more often than not, you will end up burning your account because greed comes into play as you want to see your money grow even more before you actually cash out. Trust me, this has happened to me before, and I believe that it would happen for most traders out there. Hence, it is really important that you take out a small sum of money after reaching a milestone in your trading career, in order to be less emotional when trading.

2015, a good year for everyone.

Hello everyone! This post will not be about trading, but rather, what I hope to achieve in 2015. I have just graduated from Basic Military Training Center last weekend, and I am currently enjoying my block leave before I embark on the next journey in my National Service life.

I hope that this will be a good year for me, as I plan to inject more funds into my trading account, and withdrawing a fixed amount of it every month to invest into other financial products. I am currently looking into savings-investment plans offered by banks such as the one offered by POSB and OCBC. You may click on the links to find out more!

To you guys out there, are there any other types of investment products which I can place my money into to grow them? Leave them in the comments section!

Traders Enjoy Best Year Since 2008 as Swings Return: Currencies (Bloomberg)

Good news for Traders like you and me!

"Currency traders will be starting 2015 on their hottest winning streak in a decade.

An index of foreign-exchange returns has risen for the past six months, the longest stretch since 2005 and turning this year into the best since 2008. That marks a comeback for traders who, as recently as September, were facing a fourth year of losses as record-low volatility limited opportunities to make money.

The catalyst for change came with a divergence in monetary policy, helping the dollar burst higher while pressuring currencies such as the euro, Norwegian krone and Australian dollar. First, European Central Bank President Mario Draghi said the central bank was ready to act to counter slower inflation. Next, the Bank of Japan expanded the supply of yen via its quantitative-easing program. Now, Federal Reserve Chair Janet Yellen is preparing to raise interest rates next year.

“The second half of the year has been much more encouraging for us from a perspective of generating returns from currency,” said Gordon Ibrahim, a money manager at BlackRock Inc. in London. “We are always cautious about whether this is sustainable but we are more optimistic. We have been increasing our risk allocation to currency within a number of our funds.”

Jackson Hole

Prior to Draghi’s Aug. 22 remarks during a speech at the Fed Bank of Kansas City’s annual economic symposium in Jackson Hole, Wyoming, the Parker Global Strategies LLC index that tracks the performance of 14 top currency funds had fallen 2.7 percent from Dec. 31. It has since climbed more than 5 percent, set for a 2.6 percent annual increase.

The measure had fallen in 2011, 2012 and again in 2013, losing a combined 8 percent in those years.

This quarter, the ruble is the worst performer against the dollar among the 31 major currencies tracked by Bloomberg, dropping 32 percent, followed by the Colombian peso’s 15 percent decline and the krone’s 13 percent plunge. Only the New Zealand and Hong Kong dollars have strengthened.

The Parker gauge’s performance in the first half coincided with a drop in price swings that pushed the JPMorgan Global FX Volatility Index to a record low 5.29 percent on July 3 based on closing prices. The JPMorgan index was at 9.98 percent today, and Europe’s common currency is more than 8 percent weaker since Draghi’s speech, set for its first annual decline since 2011. It declined to a two-year low of $1.2124 yesterday, and was at $1.2146 today.

Gaining Momentum

Fluctuations may increase with policy makers in Frankfurt studying additional stimulus measures.Japan’s monetary policy will also be under scrutiny with strategists surveyed by Bloomberg predicting the yen will weaken in 2015.

The divergence in monetary policy that has boosted returns in the foreign-exchange market is set to continue, according to Jane Foley, a senior strategist at Rabobank International.

At the conclusion of the Fed’s meeting on Dec. 17, Yellen said officials were on course to raise the overnight target rate from close to zero and suggested a “patient” approach may translate into an increase by the middle of 2015. U.S. gross domestic product expanded at a 5 percent annual rate in the third quarter, the most since the same period in 2003, revised government data released last week showed.

“It’s fairly normal to have a heightened amount of volatility at the turn of an interest-rate cycle,” Foley said in an interview from London on Dec. 22. “Certainly for investors there can be opportunities in volatility. The people who are going to find it more difficult are those who have to set pricing policy, people who have to hedge, even policy makers and central banks.”

Lull Over

Away from the largest currencies, geopolitical tensions and a collapse in commodity prices helped trigger the greatest moves in foreign-exchange markets this year.

The lull in volatility also ended as a conflict between Russia and Ukraine escalated and crude oil tumbled to the lowest since 2009. The ruble slid more than 40 percent against the dollar and the krone dropped 18 percent.

“Volatility is here to stay and that will present opportunities for currency investors,” Paresh Upadhyaya, Boston-based director of currency strategy at Pioneer Investment Management Inc., said in a telephone interview on Dec. 23. “It will make it a little trickier to use some of these currencies as funding currencies because with that volatility you can’t rest too easy for the whole year long.”

Upadhyaya, whose company oversees about $250 billion, was referring to carry trades, in which traders attempt to profit by exploiting differences in interest rates.

“You have to be a bit more tactical and strategic as to when to put on carry-trade opportunities,” he said."

Credits: Bloomberg

http://www.bloomberg.com/news/2014-12-31/traders-enjoy-best-year-since-2008-as-swings-return-currencies.html?hootPostID=98b501d5bbbbf5fdc3d232b7378b5b4a