Trading Made Easy

With TradingView, trading has been made easier. In my previous post, I've talked about how you can access the hundreds of trading ideas on TradingView and trading in 2017 is more of understanding and picking the winning ideas than having to develop your own.

Anil is a trader that I follow closely and his weekly briefs is one of the must-have for me. Here is one trader who knows what he is talking about and make it really simple to understand.

Philippians 4:11-13

[11] I am not saying this because I am in need, for I have learned to be content whatever the circumstances. [12] I know what it is to be in need, and I know what it is to have plenty. I have learned the secret of being content in any and every situation whether well fed or hungry, whether living in plenty or in want. [13] I can do all this through him who gives me strength.

When I first started trading, I made many mistakes. It felt terrible and I struggled when I loss. I thank God for carrying me through during those tough times; and thought I share the follow verses that came to me recently. While all of us would have known verse 13 since young, I never really understood the meaning; reading the entire passage from verse 11 to 13 puts a whole new meaning to it.

Another week ended and a brand new week next week. God bless!

Taking a break

French election over the weekend and brokers are lowering their leverage to protect themselves from another EURCHF-crash. I've kept my positions to the minimum and will take the next two days off.

Thank God that last night was a good night with April's US data exceeding expectation and a positive FOMC message. Looks like the dollar is about to set a new trend. New account is growing up nicely and catching up with its brothers.

Matthew 6:31-33

[31] Therefore do not worry, saying, 'What shall we eat?' or 'What shall we drink?' or 'What shall we wear?' [32] For after all these things the Gentiles seek. For your heavenly Father knows that you need all these things. [33] But seek first the kingdom of God and His righteousness, and all these things shall be added to you.

Consistency

I started a new account with Pepperstone to spread my investments across different regulated brokers.   I have 3 accounts with one trading major dollar pairs, one trading dollar minors and metals; and the newest addition focusing on Euro trades. I thank to God for His blessings for it has been a good week.

Fellow Classmates

One of the most valuable benefits of attending a professional course is having access to a group of classmates that you can learn from. (instead of talking to a volley ball)

In our group, trading ideas are constantly being shared, reviewed and sometimes debated. It helps refine our trading strategies and ensure that our trades have a higher chance of success.

Mentors and friends whom I have never met helping and encouraging each other to get better; sharing our stories, happiness and sadness. They come from all walks of life, from all over the world; men, women from different age group.

To me, this group of classmates whom I have never met have become a wonderful gift God has given me. If you're reading this, you know who you are guys.

Bien Joué!

It's official. The French are better artists, cooks, lovers and voters! Well done. Now for the next round, please continue to do the same.

Forex Trading Basic Part 2

What a month! With North Korean tension starting to ease, surprises at the French election drove the geopolitical tension back up and Theresa May sprung a surprise with snap elections that drove GBP through the roof.

How did you fare with your demo account? The likelihood is that you would have experience some, if not all of the following,

• The market hates me
• It drops when I buy and rises when I sell (unable to catch the direction)
• It drops/ rise farther after I close my trades (unable to determine the optimum entry/ exit)
• I win small but when I lose, I lose big (emotions overtake patience)

Wouldn't it be nice if we can tell with direction the market is heading and when it the optimum time to enter/ exit the market? Technically, there is no way one can know the direction of the market with 100% accuracy unless there is a major global event that affects everyone the same way (a.ka. a binary event).

At this point, you would be right to feel that forex is like playing black and red on the roulette but that would be incorrect.

What if statistically, for every 6 consecutive wins, there is a 89% chance that it will reverse? That changes a lot thing and now, we are getting closer to what forex trading really is.

The fact is, there are ways that you can predict where the market will head and combining that with confirmation derived from real time price action allows a trader to trade with near certainty in most cases.

A simple analogy would be that of a traffic light system. When it is green, you know it will switch to red but you do not know when. Adding an amber light/ countdown helps a driver know with certainty when that change will take place; not counting in the fact that traffic lights do fail from time to time.

Here lies the beauty of God and His creation.

You see, God is a master mathematician and everything in the world we know are all ruled by the same set of sequence through His design; there is not greater proof of creation than this. Businesses use the rule of large numbers to run their business, traders uses fibonacci ratio to plan their trades.

Once a trade plan is in place, a trader just need to wait for the price action (amber light) to confirm the trade plan and execute accordingly.

I've put together a short deck on Forex Trading (dropbox) for a friend whom I gave a crash course to. It would be better to explain the patterns and go through a few examples in person but that will have to do for now; until I find time to write each of these in detail for the next few parts.

💡 Note this is totally insufficient for anyone to trade profitably as it serves only as an introduction. Trading itself is not complicated and you don't need complicated patterns or tools. But you do need to understand the fundamentals of how the market moves and what moves the market.

Technology and ideas sharing sites like tradingview.com has also made it easier for amateur traders to lean on experience and knowledge of professionals.

Finally, below is a free training video from Jack that is immensely helpful to beginners.

Till next time!

Forex Trading Basic Part 1

I'm sorry I have not been blogging for a while. The market has been very volatile in March with FOMC (Federal Open Market Committee) meetings, Europe's geo-political changes and of course Trump.

Earlier this month, I also attended a formal forex trading which opened my eyes and corrected many of my earlier trading bad habits. I would highly encourage anyone keen on forex trading to attend. The fee may seemed like a challenge but you'll make it back in one or more trades. My teacher is Jack Zhang - a very experienced trader and you can find his website here (http://harmonicasia.com)

In this and subsequent posts, I will try to impart what I know and my experiences with forex trading; starting with the very basic so you can get yourself started towards gaining financial independence.

So, without further ado, let's start!


What is Forex

Forex or Foreign Exchange is the trading of currency rate fluctuations between currency pairs. Currency pairs are grouped in to majors, minors, exotic, metals and commodities; majority are traded against USD as the base currency.

Examples of currency pairs are

• Major - AUDUSD, EURUSD
• Minor - EURAUD, USDSGD
• Exotic - USDZAR, USDTHB
• Metals - XAGUSD (Silver), XAUUSD (gold)
• Commodities - Sugar, Oil against USD

💡 Like stocks, you need to be familiar and keep yourself current on what you are trading. As such, it is not advisable to be trading in more than 3 forex pairs for a start.


How do I start?

Forex is traded through CFD (contract for differences). CFD is a derivative in which you do not own the underlying asset. As such, it gives you the flexibility to buy or sell a product without needing the capital to own it first. On the flip side, it also makes it more risky.

Step 1 - Create a demo account and get used to some paper trading before you jump in with real money. I would recommend using IC Market as they are reputable and have the lowest spread amongst the brokers I have tried.

Step 2 - Create a account with TradingView. This is where you can get really good trading ideas and use their chart tool to plan your trade.

Right, you're set.


Forex Trading Basics

Q: How much do I need to start?

It can be as low as $2,000. There are many students in my class who are using forex to pay for their study loan. A larger deposit will enable to trade in larger quantity. The rule is simple - deposit what you are willing to lose.

Q: What is balance, equity and margin?

As you are trading CFD, you are using margin to buy those contracts. Contracts are typically traded in lots; 1 lot usually equates to 100,000 contracts and you can trade 0.01 lot or 10 lots.

Every currency pair has different value per contract. One you lock in a trade, that amount is calculated as your margin requirement and will not change while you are holding the contract.

Equity is how much your account is worth as the exchange rate goes up or down. In simpler term, it is your balance at the point in time if you close all your open trades.

Dividing your equity over your margin gives you the margin level in percentages. This is probably to most important indicator you need to take note of and keep as high as possible. Once your margin gets below 100%, you will no longer be able to execute new orders; and when it goes below 50%, your trades will be closed automatically, realising whatever loses you have.

💡A simple rule is that you should trade a maximum of 2 lots per $10,000 deposit.

Q: Do I have to own the asset before I can sell them and can I be buying and selling the same currency pair simultaneously?

No. In forex, because you are not buying the underlying asset but the direction and magnitude of rate change, you can choose to buy (long) or sell (short) the asset. There are different school of thoughts to hedging. My view is that you should avoid hedging and unless necessary; and if you plan your trade, you would not need to hedge.


Try Out

Before we go into the really understand how to trade. Let's try some basic trading.

1. Install MT4 trader on your laptop and launch it. For a start, let's focus on one chart and close all others. If you do not have USDJPY as your chart, simply find the pair in the Market Watch window and drag the pair into the active window.

2. Right-click on your chart and enable 'One-click Trading'. You should have something like this.

3. Finally, locate the 3rd icon from your right on your menu list and add the following indicators

• Bollinger Bands
• Stochastic Oscillator

You should see something like this..




The last step for the try out. Do one of the following;

1. Green candle touching the top of your band, if the next candle starts red and on your Stoch Oscillator - Red line above Green. Click on the Sell button.
2. Red candle touching the bottom of your band, if the next candle starts green and on your Stoch Oscillator - Green line above Red. Click on the Buy button.

Congratulations! You have placed your first trade.

Till my next post, try it out and see if you are making or losing money by the end of the week. It is certainly not so simple but you will appreciate the next few lessons more once you have some experience figuring out trading on your own.

Cheers!

General Investment & Forex Tips

Forex trading is an art. If I am an educator, I would make sure that there is a module on Forex trading in every university course. It teaches one important lessons in life - money management, controlling your emotions, patience, fear, analytical skills, current affairs. I have never been so aware of the world when I was just doing a job.

Below is my view how one should allocate his resource in building up his wealth for retirement. Forex being both a passive and active option for wealth accumulation.



Learnings and observations

• There are four key markets and each have varied activities. In order of highest activities - US 41% (from 9pm to 3am), UK 16% (from 4pm to 12am), Tokyo (from 9am to 4pm), Australia (from 6am to 2pm). 

• The first 30 minutes of each market open represents the trade direction and that direction usually reverse 30-45 mins before their market closes. As forex is a derivative, they can start with either buy (long) or sell (short) positions but will always clear their positions before the end of the day. Any trade carried forward incurs a swap fee and additional risks.

• There are two quiet periods - 10am-3pm and 5pm-8pm where volatility and price movement are low.

• For intraday trades (scalping), the ideal time to trade is from 3pm to 12am. Always clear your trades or set stop loss before logging off.

• For swing traders (those who has a day job and trades on daily charts), the ideal time to trade is between 9pm and 12pm.

Events

• Before high impact events listed on the Economic Calendar, the trade usually goes quiet as well. Avoid the first 5-10 minutes after the results is announced as there will be high volatility. The audience interpreted the news differently and there could be huge swing up and down; that can be very misleading. It can also create slag - meaning that the prices are jumping so fast that you are not seeing the actual price when you trade.

• Stay up if you need to; especially during wage data, labour data and Fed announcements.

February Performance

February has been a volatile month that thankfully ended with a good note. A lot of changes to my portfolio that can be summaried into

1. Reduction of equities investment and redirecting them into Forex
2. Experimentation of Forex brokers and efficacy of Expert Advisors (EA)
3. Change in growth plans and tuning down of trading activities for a more balanced lifestyle

For the month of February, I ended the month at 314% of February's target and 246% of YTD target; with winnings from Forex contributing a whopping 88%. I made just a few hundred dollars shy from my last drawn 1H OTE in February alone.

With initial success from Forex, I have been spending the last two weeks learning to code my own EA and is in the midst of testing a rather promising EA. It'll be another month before I can declare it a success but I am fairly confident that it'll do well. If that happens, I will retire officially and terminate my rather feeble attempt at job hunting 😄. Stay tuned.

myFXbook - A Must Have for Traders

I've sold all my equities and CEF earlier last week and made off some a decent profit. Since then, I have been putting all my efforts on CFD trading on SimpleFX. As of this post, I stand at 223% of my monthly target and 197% of my YTD target; with another two weeks to go. The result is both encouraging and frightening.

One of the many great things you can do with CFD trading platform developed using MetaTrader 4 is that you can easy export your historical trading record and analyse your trading patterns for repeatable success/ failures to avoid.

That what many traders do, and take it a step further to develop automated traders or Expert Advisors (EA) based on their successful trading patterns/ rules.

Note💡I do not advocate trading using automated system. Personally, I think it is extremely important to trade manually so you can react quickly to the slightest market movement.


In this post, I will introduce a very powerful online tool - myfxbook. It is a must have for Forex news and Economic calendar updates. Beyond that, Myfxbook also help you tracks your performance.

Myfxbook allows you to connect your trading account to it using a investor password (read-only password) and automatically imports (as well as update) your trading history. It then provides you with very detailed information that you can easily filter in any ways you can think of.

A quick of a summary of your performance is presented below and in a bar chart.



And then finally, the last section contains all your trade history (which I will not show as there is too many lines to blank out before I can publish it). In this section, you can view detailed performance summary in a numberer of ways.




As a data person, I love Myfxbook. I wished our company's performance dashboard look like this. It was primitive compared to what myfxbook does for free. 😜

If you're checking out Myfxbook, please also read up on their Payback Rebate scheme which uses them as a reference to earn rebate from trading platforms; and they in turn, refund the majority of it back to you.

Knowing Where To Knock

(repost from my LinkedIn)

My father did not believe in higher education. A self-made man who grew up in the streets; he started his apprenticeship as a mechanic at the age of fourteen. He firmly believed that all his children should be independent after completing high school. So at the age of sixteen, I started the first of my nine years with the Republic of Singapore Navy in exchange for allowances and a diploma in engineering.

During a regular sortie (sailing exercise), one of the ship's engine failed to engage; stranding the ship out at open waters. I was off duty and asleep when I was required in the control room where everyone else had already gathered. Stumbling out of bed, I made my way towards the engine room. 

At the hatch, just before the engine room that separates the CPO mess and the control room, I peered through the porthole and studied the indicator lights on the engine panel. I knew where the trouble was. I picked up the sound-powered telephone nearby and hailed the control room "Go to engine 4 and lift the 3rd floorboard to its left. You'll find the brake sensor mounted on the frame. If it is engaged, give it a gentle tap." Sure enough, the engine engaged shortly and I went back to bed.

There, a real life story of knowing where to knock. I wasn't paid $10,000 for it (far from it actually) and stories like these are not uncommon as there are countless others who are better. Yet, it was a lot of hard work to achieve the level of competence and experience. Immersing yourself into the problem and getting your hands dirty is often the fastest and best way to learn.

The Navy taught me many things but most importantly, it taught me the need to go above and beyond; Consistency beyond discipline, excellence beyond competence, loyalty beyond respect, resilience beyond endurance. 

I was posted to the Naval Logistic Branch and did the job for a non-uniform officer who was perpetually absent from work. I was given the opportunity to participate in the EMMIS migration to NLMIS and the privilege to be trained in SAP R3 solutions. It was through this experience that I realized what I have a flair for and from there, I took MCSE and CCNA, and planned for my eventual exit from military service.

Forex Strategy

I am happy to say that after much trial and success, I've settled down on my CFD trading strategy. As of this week, I've already met and exceeded my OTE for the February with 12 more trading days to go. I did a total of 42 trades yesterday; of which 40 of them made money.

During the early days of my trial with CFD, I applied my strategy for trading equities and it was a terrible idea. I ran up to thousands in paper losses, could not trade for a good number of days and was nearly forced to close my trades. 

I learned that for Forex, you lose more money if the market moves against you than you would make, had you made the same bet and the market moves with you. Just look at my trades below; it took me 780 pips to win $3,000 but took only 340 pips to lose $4,800.



Trading Forex is stressful. I am literally glued to the screen more than 16 hours a day (a friend corrected me that Forex trading is not stressful, it is not having a regular income and depending fully on Forex that is).

So for the benefit of others, I am sharing what I do in a simple 3-steps process below. Do note that there is no guarantee and my strategy may not suit you. You should always make your own judgement and understand the tremendous amount of risk in trading Forex.

Step 1: Know Your Trading Band

The first step is to research what is the band in which Forex will move. This is to ensure that I do not trade, and God help me that I will never hold (again), any positions outside of the band.

Some traders will use the monthly, weekly, daily and hourly support and resistance levels as a guide. I tend to take a less stringent approach and go with the very general longforecast.com's monthly forecast (which is updated daily).

Once I have that, I set my general direction for trade and trading limits within the band.

Step 2: The Bollinger Bands

Green arrows represent buy positions and orange represent sell

In the screen shot above, you can see that the trades always move within the Bollinger Bands and it "bounces" off the top and bottom of the wall. 

I have marked the positions that I entered a buy or sell position using green and orange arrows respectively. It is important to note that I did not open the positions when the trade touches the wall immediately. Instead, I relied on two additional checks below

1. That the direction of trade is changing
• Indicated by the lines showing that it is about to turn. One must be extremely lucky to catch the tip of each change and I tend to play it safe by entering only after it turned.
• Referring to the 5 mins technical analysis on Investing.com
2. That the Relative Strength Indicator (RSI) is less than 40 for buy positions and more than 60 for sell positions.

Step 3: Trading Limits

The next and final step is to know when to cut your losses and when to take profit. For all my trades, I target to earn no more than 15 pips per trade.

Using 15 pips as the limit, I then go back to the Bollinger Bands and use the bands as reference to further limit my exposure. One can play it safe and use the average (purple line) or be bold and use the upper or lower wall as limits. Always remember set targets for both especially if you are going to be away from keyboard (AFK).

SimpleFX allows you to enter the position for profit taking and stop loss

I'm going to be writing less. Need to make more money 😁 I've set a new (and lofty) target for myself.

January Performance

I have introduced several investment options in my previous posts. In this post, I will piece them together with a view of how my investments are spread and a summary of their performance for the month of January 2017.

Invested Capital

About 70-75% of my cash assets are invested. When I was gainfully employed, my target was to invest 80% of my savings but since I am no longer drawing a regular income, I need to maintain a higher liquidity for monthly expenses.

Asset Allocation

Composition of Earnings from Investment

For the month of January, the larger portion of what I make from investment came from my equities. However, I suspect that the composition will change as my focus shifts. I plan to dial down my investment on US equity and gradually shift more of it to Close Ended Funds (CEF). While Close Ended Fund may be the least performing investment, it is certainly the most consistent.

Contribution Mix from Investment

Performance Summary

I started tracking my financials with a spreadsheet after receiving my first pay cheque in the private sector. I will explain why over a cup of coffee but coming back to the topic, it is important to track your finances diligently as you cannot improve what you cannot measure. It is also important that you set a realistic target for yourself to achieve.

Using my On-Target-Earning (OTE) as the benchmark, income for January ended at 195% of my monthly target with a return rate of 16.3% on closed trades! In simpler terms, I made twice of what I was earning when I was employed. 

Of course, it is just the first month so it is still inconclusive that I would be better off. I have put in a lot of work into research but a couple of the larger earnings are unexpected. Basically, I got lucky a couple of time and thus, I am not confident to say I can repeat this in February. However, I am pleased with the result so far as it has been very encouraging.

HUAT AH!

CFD - No Guts, No Glory (Part 2)

Happy Chinese New Year!

As the title suggest, this post is a continuation of my previous post on Forex trading.

My first encounter with Forex trading occurred more than twenty years ago. A friend had recommended it as a way to earn an alternative income and for a short while, things were good. Sadly, it all ended when when the owner of the firm absconded with all the investors' deposit.

Back then, we were given a couple of days of training on Forex and worked in a small office in Shenton way. Every night, we would turn up to be briefed by the analyst who would show us the charts, trends, support and resistance points for the day. I trade USDJPY week nights between 8pm-2am. Technology was primitive and we had to enter our trades by passing paper slips to the traders who are licensed to execute our orders.

Fast forward to 2017 and while the fundamentals are the same, technology has advanced by leaps and bounds. It is easier now but at the same time, more complex and at a faster pace.

Trading in USDSGD can be a little tricky as SGD is NOT one of the 6 major currencies the USD is balanced against (US dollar index), nor is it one of the 8 major traded currencies in the world today. That being said, the reverse is true that it would not be as heavily speculated/ influenced as compared to the other currency pairs. Forex is not for the faint hearted and it is highly volatile, complex and merciless to the unprepared.

In this post, I will cover two resources where you can obtain all the analysis you need for Forex trading; especially if you are trading USDSGD and has a hard time coming across information that may be useful to you.

Investing.Com

Investing.Com is my primary resource for Forex trading. It provides real-time analysis and recommendations, as well as regular write ups on trends and current affairs. It is also available as a mobile app (in-app purchase to remove ads).



Summary for USDSGD on Investing.Com

Investing.Com provides you with the summary of technical trends in different time intervals, the corresponding action recommended using different indicators, as well as the support and resistance points. Their mobile app does an excellent job presenting the indicators in a single view.


Investing.Com Mobile App

If you are not good with reading charts, Investing.Com makes it really easy for people like us 😀 For example, a number about 70 on the Relative Strength Index tells you that the market is overbought and a number below 30 tells you it is oversold. Investing.Com simply tells you to sell or buy based on what that index is.

Relative Strength Index is a common gauge for investing. DailyFX has a write up here on how to use RSI indicator for Forex trading.

Trading Economics

Next on my list is Trading Economics. Not a frequent read but a great place to get a summary of all your monthly/ quarterly key economic reports and forecasts.


Singapore's Economic Indicators on Trading Economics


Singapore's Economic Forecast and Outlook from Official Sources


Economic Calendar of Upcoming Reports

On a More Cautious Note

Now that you are introduced to these resources, it is important to understand that none of these tell you where the market is heading with 100% certainty. RSI, Stochastic Oscillator, Bollinger Bands etc are all lagging indicators; meaning they tell you where the market was and at best, where it could be going.

We track these indicators not because they tells us where the next pot of gold will be but where the pitfalls are. Forex is 95% risk management and most amateur day-traders fail because they do not have a risk management strategy or because they did not follow through with it. The importance of risk management is true for all kinds of trade but especially so with Forex.

The following are two defensive trading strategy I was taught

1. Buying only when the market is oversold and shorting only when it is overbought; minimising the risk of the market moving against you. That is, in addition to all the other indicators pointing in the same direction.
2. Locking your profit and loss on an open trade when you leave your desk using an opposing trade of the same amount so that regardless of where the market moves, your profit/ loses are protected/ minimised. 

That being said, it all depends on the individual; and so, I urge you to read this and formulate your own trading strategy before you throw your savings in Forex.

The following are additional reads and resources that I would recommend.

• Richard Lee's write ups on Forex must-knows
• Impact of GDP on currency (here)
• Impact of Trade Balance on currency (here)
• Using technical analysis - Moving Average Explosions (here)
• Using technical analysis - Golden Cross (here)
• Trading Economics on Singapore Indicators (here)
• Kathy Lien's articles on current Forex analysis and opinions
• Marc Chandler's articles on Investing.Com based on historical technical analysis

Do you know of other resources that would be useful to Forex trading? 

CFD - No Guts, No Glory (Part 1)

I wrote about Contract for Difference (CFD) a couple of days ago and how it has potential for great earnings while it carries a higher risks due to its leveraged nature. However, if that's your cup of tea, then you should really look at SimplexFX if you are not already on it.

SimpleFX is an extremely powerful and yet easy to use platform for CFD trading against multiple types of assets; ranging from forex (currency), cryptocurrency (bitcoin), indices (DJI), commodities (oil), precious metals (gold) and equities (APPL). It's a one-stop shop for CFD!

Once you get onto SimpleFX, it automatically creates a demo account for you. To trade, you will need a live account and creating one is simple and easy; just follow the onscreen instructions and you cannot go wrong. From there, SimpleFX offers a number of choices for funding your account.

Funding options for SimpleFX

If you are based in Singapore,  I suggest you fund it through Telegraphic transfer. It will take somewhere between 30 mins to 8 hours depending on the size of your transfer. Once funded, you can begin trading immediately. Below is a screenshot of what you will see as the 'dashboard' or 'trading wall' of SimpleFX.

SimpleFX Trading Wall/ Dashboard

There are numerous write up that already talked about SimplexFX and you can also find a number of guides on using SimpleFX. Therefore, I shall simply cover my experience on using SimpleFX in this write up. Feel free to hit me up if you have questions too!

In the example above, I have tiled my charts on my live account but you can also arrange them in tabs.

The chart tells you everything! 

SimpleFX draws a line to indicates where your open price whenever you place an order. The current price is marked by solid lines, green for buy and red for sell. You're profitable if the red line keeps above your greens and the green line keeps above your reds. That's it.

Your account details (balance, profit, margin, equities etc) are are all visible at a glance.

In addition, SimpleFX also provides advanced charts (free)!

SimpleFX is also extremely easy to use 

With 'one-click trading' enabled, you can place orders by simply clicking buy or sell after changing the trade size. 

One-click to Order

Similarly, you can edit (pencil) or close your orders (x) with one-click.


One-click to Edit/ Close Positions

What I love most about SimpleFX is the margin level indicator at the bottom left. Since CFD technically has no expiry and is dependent on your margin allowance. This indicator is an important and useful information to have on display.


Margin indicator

You do not have to manually calculate how much margin you have left, SimpleFX does it for you. In fact, if you are running low on margin, it automatically prevents you from opening up more positions and over-leveraging!

Bonus

All these functionalities are on mobile too! You can download the iOS version of MetaTrader 4 and connect it to your SimpleFX account to start trading. You can find the guide on connecting to SimpleFX here but basically, you will need to reset your password and connect using our account number.

Summary

I have been using SimpleFX for a while now and am very satisfied with the result. Below are some pointers on CFD trading that you can consider.

• Trade in only assets that you are familiar with. For example, USDSGD (forex), BTCUSD (bitcoin) or XPDUSD (Palladium). The reason is simple - you are consciously and subconsciously aware of news that affect the currency movement (i.e. GDP, inflation control measures etc)
• Trade in small steps and keep your margin level above 100% when opening up new positions. Target small profits but accumulate them through multiple trades
• If you're uncertain of the market direction or when the market goes sideways, use a butterfly spread as your trading strategy.

As a standard disclaimer, there are risks with all kinds of trading and especially so with CFD. Deposit and trade only what you are prepared to lose.

Note💡Turning on FIFO will allow you to enter opposing trades. Otherwise, SimpleFX will automatically consolidate your orders.

Important❗️Take note of your margin level. SimpleFX will automatically close out your largest order if it drops below 30% and all orders if it drops below 5%.

Important❗️If you have to hold your trades overnight, take note of the Swap (rollover) charges. SimpleFX has a higher swap rates than most trading sites (especially on Bitcoin) that can easily eat up all your profits.

A Better Investment for Passive Income (Part 2)

Voya Global Equity Dividend and Premium Opportunity Fund (IGD), formerly known as ING Global Dividend Fund, had been my primary CEF holding until recently.

• Period of accumulation: 8 years
• Highest price paid for each share: US$13.50
• Lowest price paid for each share: US$6.30
• Average price paid for each share: US$6.70

Tip💡It is important to average down your holding to keep it inline with the current price for capital protection. The best way to do this is to set aside your monthly savings and acquire new shares on a regular basis.

I spent the first few years holding on to my initial investment and watch anxiously as both share and dividend price drop steadily before I started to average down my holdings. When I sold my holding, I recovered my invested capital and made a little more; not including the dividends I collected over the 8 years plus and the appreciate of USD. In total, my ROI is somewhere around ~92%.

In my next post, I will talk about some of the resources I use to evaluate equity investment.

A Better Investment for Passive Income (Part 1)

I met with my personal banker a few months ago; a nice, intelligent chap who is driven and hardworking. To cut the story short, our meeting ended shortly after he introduced a couple of investment options and I asked which of them offer returns in excess of 8% per annum.

For comparison, your standard savings account pays between 0.05% to 0.4% per annum. That's $40 every year for for every $10,000 you leave in your bank account. What if I say I know a way to make 37x of 0.4%? I bet I have your attention now.

I discovered Closed End Funds (CEF) more than a decade ago and they formed the larger chunk of my investment portfolio up until recently. Investopedia explains what a CEF is but in short, it is a mutual fund that offers higher dividends (monthly/ quarterly payouts) with little-to-no capital gains (appreciation of share price).

Below are two CEF currently in my portfolio. Charts are added only for aesthetic value :)

Cornerstone Strategic Value Fund (CLM), pays a monthly dividend of US$0.23 (before tax) at a price of US$14.90 a share. This gives you a return of 18.5% per annum.

Oxford Lane Capital Corporation (OXLC), pays US$0.60 quarterly  (before tax) at a price of US$11.02 per share for a return of 21.8% return per annum

As you can see from above, CEF are great investment tool for generating stable passive income with significantly lower risk than investing in equities. 

Who should invest in CEF?

If you are currently employed and does not have the "freedom" to track the stock market. CEF is a great way to park your money aside and let it bloom on its own. 

If you have large amount of savings sitting idle in your bank or wads of cash rolled up in your Milo tin can. Definitely!

If you are wondering if there are better options than buying endowment plans or topping up your CPF OA/ Special account for that paltry 4% (well, it's capital protected). Maybe. It depends on your risk appetite.

Who should not invest in CEF?

What you lose with CEF is opportunity cost. Thus, CEF is not for you if you are a savvy investor who can make more through other investments. 

Here are some tips💡for investing in CEF

• CEF depreciates in capital more often than they appreciate. As such, the common strategy is to average down your holdings on a regular basis to keep it inline with the current share price.
• Some funds pay monthly dividends versus quarterly dividends. Monthly dividends are smaller and hence, capital depreciation during ex-dividend is usually unnoticeable.
• When choosing CEF, take note of it's net present value (NPV) and its reputation for paying out dividends predictably. CEFConnect is a great site for finding those information. In addition, you can read up the fund at Yahoo! Finance and download the historical performance the fund.
• Invest in the CEF before the ex-dividend date to receive a payout but the lowest price to get in is usually on the ex-dividend date itself.
• The upside to investing in CEF is stability but you will need to pay a 30% tax to the US government as dividends are classified as income.
• Low risk does not equate to no risk. Investing differs from gambling when you make informed decision based on facts and historical data.

Advanced CEF investing

There a couple of investors I know personally who moves between funds to maximised their capital returns. Doing this requires impeccable timing, precision and an uncanny familiarity with the  dividend calendar. Most of them pick 2-3 CEF and cycle through them monthly; selling on the ex-dividend date and making in excess of 40% returns on capital annually.

I am not smart enough for that. 

Once again, I have intentionally kept this post short. Feel free to drop comments, ask me any questions you might have on this topic or if there are topics you would like me to write about.

Have a great week ahead!