- Published on Saturday, 18 February 2012 12:22
- Written by News Editor
FJ : Please provide a background of yourself ?
What were you doing before you become a trader ? When and how did you get into trading ?
DW: I graduated from High School College in 1986 and was immediately called to serve the National (military) Service. After I was officially discharged in mid 1989, I was in a dilemma to make a choice between furthering my degree in property management, which was not what I wanted, or to start finding my bread and butter. Fortunately, I chanced across a “Floor Apprenticeship Program” organized by Singapore International Monetary Exchange (SIMEX), and was short listed among the 22 youngsters out of 200 over other participants.
Upon the completion of FAP, I joined Bank of America Futures Inc as a trainee trader at end of 1989, thereafter followed by my subsequent employment with Bankers Trusts Futures Inc in 1991, Barclays Zoete Watt PLC in 1992 and Smith Barney Shearson (Citigroup) in 1993 – 1996. During these employments, my job scope was a floor trader in the financial futures trading and I had many opportunities to receive in-house trainings and certifications allocated by these employers.
Part I : On Trading ?
FJ : What was it like when you first started trading ?
DW: I was a young and successful house-floor-trader in my mid twenties. However, I still left Smith Barney Shearson when the headquarter Citigroup merged with Salomon Brothers Inc in 1996. Despite having a monthly income of 5 figures at that time, I firmly believed my potential could reach out to higher level of milestone since I was well versed in futures market trading. Thus, I started trading on my own account from end 1996 – 2001 as an individual non-clearing member of SIMEX.
The initial part was tormenting. Losing money seemed to be a daily routine than making profits! After losing for first few months, I realized it was due to my bad trading habits and loose risk management. I hibernated for a month and re-developed a brand new personal trading system that reinforced my daily trading plan that uncompromised trading discipline. After this inter-phase, my trading became smooth and consistent for following few years!
FJ : How much capital did you start with ? How much capital is required to start trading for a living ?
DW: As an individual non-clearing member (local member), I started with USD35,000 which was the initial required amount during that time. However, due to globalization nowadays, new (retail) traders only need to start off with estimated USD5000 -10,000 and still able to make a living income, depending on the effectiveness of risk management! In fact, there are many mini-contracts nowadays that require only USD2000 or lesser to initiate trading activities. In my opinion, to trade for a living or not, will depend largely on personal risk appetite vs. the expectation of monthly return.
FJ : Which markets do you trade and how often ?
DW: I trade in commodities, stock index futures and FX (forex) markets. My participation in commodities is based more on hedging advisory to plantations. Stock index futures and FX markets are purely based on fast speculations and riding on breakout trends!
You do not need to trade everyday to be profitable! Trading is based on spotting of good trends generally ranging from few hours to few days. There are some series of swing days that whipsaw a lot, which should be avoided!
FJ : What methodology do you use ?
DW: Basically, I utilize candlestick charting method to identify trend extension and turning, together with long term and intraday wave projection. This can further be blend with some useful trading strategies involving indicator e.g. slow stochastic, that helps you to spot effective price extension or reversal for fast profits on 30 minutes chart.
Getting a good entry will reduce your chance of stop loss getting triggered. However, the exit is just as important as most traders square off too early or too late!
FJ : Do you use mainly classical chart setups or are these setups that you’ve devised on your own ?
DW: Throughout years of trading, I have simplified my trading skills to use any chart that can be interpreted by candlesticks. I depend on daily chart to look at short term trend of up to 7 days, 30 minutes chart to spot intraday entry/exit, and weekly chart to forecast the coming week trend! The indicators that I need are only moving averages, slow stochastic. In summary, my trade studies are based on evaluation of wave trading concepts from weekly, daily and 30 minutes charts that consist of projected extension, reversal or consolidation tightened with risk control!
From the above combinations, I favor trade entries at the beginning or at the end (reversal) of the trend. During the mid-range of a daily candlestick, I would enter only after a correction or a new breakout based on intraday 30 minuets chart. Otherwise, I will never initiate a trade out of convenience or idleness by betting on luck!
FJ : Does the amount time it takes to set up determine your trade length or your holding period ?
DW: That depends. If the trade is derived on 30 minutes chart, then it may take just few hours to close it. If it is based on daily chart, then it could be a position for that whole day or may even sit for next few days. Likewise, spotting a new breakout trend on weekly chart will require me to be involved for 2-3 weeks!
FJ : Could you tell us about your shorter term or day trading setups ?
DW: For daily trading, one surer way of winning is to locate your entry from the initial shadow of daily candlestick and exit from an estimated price based on average day range of last few weeks. For shorter time frame of intraday trading, I utilize 30 minutes chart to spot for breakout or reversal formation!
Try not to read too many books that teach you the goodness of various indicators. Many trading scholars still lost monies after investing so much time to digest the multi-contents in academic books. Understanding the characteristics of your intended market and its chart patterns are more important before you apply anything to them!
FJ : Are you continuing to develop new trade setups ?
DW: Yes, of course. Trade setup is very personal and it also depends a lot on individual experience on what to see and what to use for first priority. Our past associates who graduated from our FX Mastery Trading workshop, often come back to share with us their new trade setups and discovery of new strategies. I would fine-tune them and later share the strategies (with permission) with our circle group for better trading performance. Other time, I usually share my new trading strategy with all of them on periodic basis.
FJ : How valuable is it for trader to be immersed in his/her own market research and devise his/her own trading setups ?
DW: Only genuine experience can polish a trader’s skills. You can learn everything from a master but the skills will never be yours if you are not good in applying them. Hence, I always encourage our trading associates to practice a lot in order to gain numerous ground experiences. Only through such process, they could improve tremendously and also devise /discover new trade setups and strategies.
It is always worth to spend time in this expertise field. Once acquired, it will become your integrated skills for the rest of the life!
FJ : When you are in a trade and looking to exit, are you looking at other markets for confirmation or non-confirmation ?
DW: For most instruments, they are indeed inverse or co-related to other markets. Hence, tightening of market fundamentals is necessary in order to strengthen a trader’s skills over time. Nevertheless, like I have just mentioned earlier, you still have to first understand the characteristics and chart patterns of your intended market. Sometimes, an individual market chart can tell you lots of stories even without doing any cross-study with other markets! At the end of the day, you are responsible for your own action in the market!
FJ : With your exits, is there also a time element involved ?
DW: Everything boils down to timing and precision (price). To confirm both entry and exit, you need to combine timing and precision which are largely based on technical and fundamental backgrounds! Like what I mentioned earlier, it depends on what time frame chart that initiated your entry. This will decide how long you should hold on to the position before intended exit, based on the chart patterns and price movements.
FJ : What about your gut feel or intuition ? How important is that?
DW: Hmmm….. I never depend on gut feeling to trade. It will eventually develop into bad habits which may result in irreversible losses! It is very important not to have this element in you no doubt many traders practice it. Over the years, I have seen too many traders fallen or suffered the mother of all losses due to a simple initial six sense decision to make the first market entry! Better not let this be accompanied with your big ego or stubbornness, lest it will ultimately become the highway to bankruptcy!
FJ : What about times when a winner becomes a loser ?
DW: Everyone lost in the market before. Trading is not just about winning or losing. Trading is about when you win, you win a lot; when you lose, you lose little! I love this statement. I think it is quoted from George Soros.
An experienced trader can self-tune himself very fast when he loses a few rounds. But a new or intermediate trader should go to an experienced mentor just like visiting a golf clinic if your swing is out. A good mentor can fine-tune your entry /exit points with good risk management, together with some inner adjustment of EQ control. Strategies and market fundamentals are other essentials to improve your trading performance.
FJ : You’ve been trading for some time. I think one of most difficult things traders are faced is dealing with emotion. How do you avoid falling into the type of trap?
DW: Trading is just like playing golf. Sentiment control plays the most vital role before you acquire anything else. Ten years ago, I discovered that keeping and carrying a personal trading journal can eradicate bad habits. Before market opens, I planned my trades properly with an entry point, potential stop loss and a probable exit point if the potential profit extends in my favor. Of course, this would only be effective if you stick to the plan 100%, especially when it comes to your stop loss level!
If you have few losing rounds or have been losing over few days, at least you know that your trading plan has flaws and it is time for some fine-tuning or self-evaluation! If your discover it is the market irregular sentiments that makes trading difficult, then record it down and learn to identify such patterns in future in order to avoid unnecessary losses. I share this little secret with many new learning traders and most have been doing fine now. By doing this, you can improve very fast and become very sensitive of your performance relatively to the market environment!
FJ : Do you still make the same mistakes that you made in the past after you have been trading for so long ?
DW: We are human. Of course we might repeat same mistakes sometimes due to misleading market sentiments. But you have to be sharp enough to identify the mistakes very fast and isolate it. Ultimately, you need to have clear thinking mind before you trade – knowing a mistake is a mistake and using a winning strategy on repeated market patterns are open secrets to making monies!
FJ : Have you had to change your trading style significantly during your trading ?
DW: Trading is about being rewarded or punished by market. Over the years, I have kept adjusting and improving my trading plans and strategies in order to adapt to changes. It is not easy though…. As the saying goes, “old habits die hard!”
As mentioned earlier, I wrote down all market opinions, trading thoughts and variable methods of trading almost everyday. From there, I summarized them into trading Standard Operation Procedure (SOP). In times when you made mistakes or when market simply did not move rationally, this would become your “trading almanac” for sticking to contingent plan which had been pre-devised. This will really help in long run.
FJ : Do you think that experience has made you a stronger trader ?
DW: Of course it has. Experience is the only factor to make everybody stronger and sharper. However, it must be learned and digested but not just going through the sufferings!
FJ : Do you find it is difficult to adjust between trending and consolidation markets or high and low volatility conditions ?
DW: Actually a successful trader does not need to trade everyday. If the market is out of line or becoming confusing (consolidating trend), just stay out for few days until the sentiment becomes clear. In a healthy market sentiment (new trend unfolding), you should see everything pointing to one direction for your intended entry!
Likewise, market volatility plays an important part. Therefore, it is good to execute your trades in the active time zone like London and New York morning hours. In other time region where volatility is low, you can skip them!
FJ : Is there usually a case of the market not being ideal for your trading methodology ?
DW: I usually do not like to trade during consolidating period. Sometimes, it will take few days to 7 market days for market to do such adjustments. This may be a good time for you to resume your private schedules for a while, or take a break. It is important to strike a balance between trading and happy lifestyle. Do not stress out yourself when the market is in difficult range. We need to stay healthy in order to trade better and in long term.
FJ : How do you handle losing periods and slumps ?
DW: Honestly, I do not allow myself to lose a lot of money. That’s because I always set a potential losing cushion to my trade entry. If the market is really difficult, it always saves me more money by going out for my own recreation than to trade aimlessly!
Somehow, all traders will agree that it is easier to lose monies than to make monies! Therefore, do not take unnecessary risk if you do not feel good in market or in losing streaks. Go for some fine-tuning or self-revision before entering market again! Always preserve your confidence and capital as first 2 priorities!
FJ : How do you define success in trading ?
DW : Success in trading comes in monetary term as well as personal values like humility, eagerness, passion and effective money management. Knowing how to make monies in such speculative trading is not good enough. A good trader should also learn to become good investor; that is by investing the profits for furthering into future retirement plan!
FJ : What is the largest contributor to your success ?
DW: Beside having been grateful to my past employers for grooming me, the other part of my success contributions come from my willingness to convert my mindset and trading methodology at the very beginning of floor trading conversion to electronic conversion.
However, I see a very special trait in most academic achievers. They always prefer to pursue expensive trading books than learning from experienced mentors, thus suffering high attrition rate! I feel that trading is one rare business that does not rely on academic qualification. Everyone starts from a rookie once you enter into this market since day 1 - No preference to whosoever. Therefore, those that reach the high limits first will be classified as winners regardless of your origins.
In short, contribution to each and everyone’s success is very personal issue. You’ve got to find your key to it!
FJ : Why do some traders have difficult time following a trading methodology or system ?
DW: There is never a sure-win strategy in market. To make consistent profits, a trader has to build good foundation in both technical and fundamental arenas. Many traders lost monies because they usually are good in one of these 2 fields only, which is insufficient!
Basically, human beings are greedy. Most traders are sucked into the markets because of its mega-wealth and nothing else! Because of the impatience with the desire to make lots of monies but in shortest time, people tend to be distracted easily by many trading methodologies and strategies, hence confusing themselves!
FJ : What are your thoughts on trading using fundamental analysis ?
DW: Fundamental news usually gives market instant booster to move when there is a differential between actual figures vs. expected figures. However, fundamental overview on a country’s or central bank’s policies will take longer term to realize market trend, hence not reliable for short term trading. To compensate such shortcoming, technical knowledge becomes essential and a better bet by spotting regular combinations out of variation patterns!
FJ : What do you foresee for the markets in the next few years in terms of trading opportunities ?
DW: Over the next decade, it will be easier to access to various global markets but trading will also be more competitive. This is due to Globalization. All in all, more opportunities of course!
FJ : Given a chance, what do you like to do differently in trading again ?
DW: I would like to spend time doing more financial market researches on fundamentals, building more successful new comers in this global market to tap more profits as well as educating the proper risk management to the passionate learners!
Part II : Recommendations :
FJ : Let’s talk about trading education. How long do you think it would take for someone to master the art of trading?
DW: If a new trader has been properly trained by an efficient mentor, he should take 3-6 months to learn effective risk management. After that, the personal experience and gradual profitable growth will take another 3-12 months to become steady. Of course, minority will learn faster but most will take about 2-3 years to master the art of trading, if properly trained!
FJ : You conduct seminars too. Why do you do that ? What do you teach at the seminars?
DW: I do seminars and workshops to educate the people who have interest to pursue in the trading and investment fields. This is a joyful fulfillment to my personal life as well as reaching out to make more friends and associates with identical mindset. My workshop covers various topics that have never been found from the books purchased from the market. They cover effective risk management, price target trading strategies and time-window strategies. Most importantly, I impart the tri-wave trading concepts that I have spent many years to self-discover from the financial markets!
FJ : What advice do you have for people who want to follow in your footsteps and trade for a living?
DW: Assess your own risk appetite, risk tolerance and risk capacity first before you begin this trade. Risk appetite refers how much profit/loss each time you trade. Risk tolerance refers to the loss amount you can maximize if the worst thing happens to you trade positions. Risk capacity refers to the maximal loss amount that you can stomach without jeopardizing your living tomorrow! This assessment can help you decide if you should start out as a part-timer or full-timer.
FJ : Any last advice to our readers ?
DW : In summary, trading is based on knowledge built on technical and fundamental fields. Combination of both factors will help to decide the timing and precision to trade profitably. However, this boils down to what you can foresee in the market that others cannot see which I refer to as EQ control. This will make you a potential winner together with effective risk management!
Trading operates on fast money turnover. There is no holy grail! You’ve got to find the formula and shape the golden key to your own wealth. Of course, this journey can be shortened if you have found a good mentor.
In general, the total risk involves in speculative activity should not be more than 30% of your whole net worth asset. Successful individuals should channel 30% of speculative profits on regular basis to some backend investments funds for their future retirement. This can ensure a smooth withdrawal or gradual retirement if the trader should decide to semi-retire or reduce his trading volume one day, eventually when age arrives.