Just like starting over …
The Stock Market. The last place on earth I would have looked at to get a second wind.
Through my media work, I had worked on several IPO (Initial Public Offering) projects on some of the more recognizable (SGX) listed companies today; JEL, KXD and a host of smaller corporations listed on the SGX. Through this research and having interviewed the likes of CEOs, CFOs and COOs, I became enthralled with investing and the possibilities of a life as an investor. The only things holding me back from seriously pursuing the idea were the financial requirements (which I didn’t have) and the time I committed to my media work. It left me very little time for any sort of life and any free time I had was money wasted when I could have been working. It was a vicious cycle. It was taking a toll on my life. It was going nowhere.
At the rate I was going, there was no way to ever get a better life for myself and my family. It would have meant working well into my retirement. But as things were, it was already tough as a 40 year old competing with 20 somethings in a fast shrinking market; the market was healthy … it was the production budgets that were shrinking. It was getting to a point where I was quoting $800 for a video project instead of $1′500, just to stay competitive with the younger generation who didn’t have a family to feed. And to think that at the peak of my career, I had a reputation for not getting out of bed for film budgets less than $500′000. I had to stop. I had to rethink my life. But there was no other way I was going to bring the bacon home because after 20 years, media production was all I knew.
That was until I did a video project about online investing and trading with Options. Once again, the idea of being an investor grabbed my imagination. Only this time, there were realistic possibilities. I spoke to my wife, Lucy, about it. I showed her the material I was working on and how easy and affordable it could be to become a full time trader. After watching the video I produced and reading the promotional material, she too became convinced that this could be our ticket to a better future. The promise of becoming a millionaire and improving the life of our family and our future generations, the dream of having a financially free lifestyle and the simplistic approach to the method was just too good to resist. Testimonials from other “successful” traders and the ease in which they produced huge returns on their investments, further convinced us that this was our calling … the fast track to easy living and being financially free forever.
Funny how things work out sometimes … being in the media and advertising world, I should have known better than to buy in on the hype. But then, the shoes we wear can get so tight and unbearable that we become more than ready to jump into a bigger, seemingly more comfortable pair without first trying them on for fit and form.
After attending our first trading workshop in an intensive, mind-crunching 4 days, Lucy and I quickly funded our first account with USD5′000 and began trading. As luck would have it, profits came fast and easy and our account grew by 20% in our first week of trading. We then hit our first few losses and told ourselves that this was normal in trading. The losses accumulated and still we lived in denial. Ignorance became a reality check when we wiped out almost all of our capital and whatever profits we had made. So we re-funded our account and tried again. I attended several more trading workshops and picked up more strategies. Still, the losses kept mounting.
We couldn’t figure out why, after paying so much for these workshops and working so hard to stick to the rules, we were still losing money. Our savings were running thin, my media work was getting affected and the workflow had slowed to accommodate my trading workshops and trading at night. My health took a dip because of the late trading hours. My marriage was at a strain and the family was getting affected by my mood swings and short tempered flares. This was not how I dreamt it would be. Things had taken a turn for the worse and the dream was becoming a nightmare.
4 months and -USD10′000 later, upon the advise of some of my peers, I stopped trading and took some time away from the market. A friend suggested that I read Alexander Elder’s “Trading for a Living” and “Come Into My Trading Room”. That led me to pick up more books on investing and trading, specifically, the trading psychological aspects of the profession. It got me thinking about all the stupid things that I was ignorant about. How on earth did I expect to pick up something in four days and believe that it would be so easy to accomplish something that others have taken years to build? Build. There was the key word that was missing in my strategy. And to build, one needs a firm foundation. And that was where I was going to start all over again. Just like I did when I started in the media business as a grunt, mopping the studios and sweeping the floors.
I sat Lucy down and had a long discussion with her. I told her my plan and the time it would take to achieve it. Failing which, I would return to being a 40 something, desperately looking for some low paying job that I would have to hog for the rest of our lives. Her choice to support my decision was obvious. So I formally retired from the media business knowing that I could only achieve my goal if it was a “must”. (Something Adam taught me) There was no turning back and failure was not an option anymore.
“A goal without a plan is just a wish”
- Antoine de Saint-Exupery (1900 – 1944)
I hit the libraries, bookstores and internet to suck out as much information as I could gather. I got to know some real traders who gave valuable insights into the world of online trading. I started working out and running again and got my physical fitness back. With that, I got my self esteem back up on the high.
After three months of hard work and self study, I was able to formulate a simple and affordable trading strategy which I backtested more than 300 times. I put the strategy to test on paper and got a respectable return. Since it wasn’t going to be astronomical gains, I worked on making the strategy consistent with low risk. The hard work paid off and I began making USD50 on single options for every trade in less than 5 days. Soon enough, I was averaging USD300 a week with success in 5 out of every 6 trades. Humble profits, but consistent non-the-less. Thus, the 5 Day Pre-Earnings Game (5DPEG) was born.
Word got out amongst my peers and I was prompted to share this simple and safe strategy. As more people used it, we found that the 5DPEG was more than just a US$50 game. It was actually very educational in that it gave us a feel of how the market worked and opened up a world of possibilities simply by understanding the simple concept of buying and profit taking within a price or time target. More importantly, it showed us how easy it could be to cut losses. And that was the key to its consistency; not the strategy in itself, but the psychology behind the fundamentals of trading. Cut your losing trades early and let the profitable trades run. Its never easy to cut losses but the 5DPEG showed us how it could be done without fear. Its also never easy knowing when to take profits but the 5DPEG taught us to restrict our greed.
Armed with this new found confidence in trading, it was only the next natural step to advance my knowledge further so back to the books, libraries and more time on the internet. I also attended several more trading workshops, but not those that preached money making strategies. I studied the finer points of Technical Analysis, Pattern Trading, Momentum Trading, Sector Investing and even Japanese Candlestick Analysis. Today, I swear by them and I teach them. Which is where all this hard work has brought me today as I write this book with Adam.
After the 5DPEG, several traders urged me to teach them everything I knew. They were willing to pay me “kopi lui” (coffee money) to make it worth my effort. Thus, the Pattern Trader Tutorial was born.
The focus of the tutorial was not about making money, rather, it was about self defense. The principle practice behind any profitable trader, is not to lose money. When this technique of not losing money is mastered and becomes a natural trading habit, it is surprisingly easy to make money without complicated and elaborate strategies.
Getting back to basics and keeping it simple was always the practice in media productions. It proved to be time saving and cost effective when productions faced difficulties and impossible obstacles. Pressing on only made it more complicated and expensive.
Remembering this, I designed the tutorial to be simple, basic and progressive. It proved to be a hit. Its funny how, after accumulating losses, traders tend to step back and want to learn the basics all over again. Why then, doesn’t every trader begin with the basics in the first place? The answer is simple and exists in the trading world everyday; hype. For some strange unforseen reason, traders always buy the rumour and sell the news. So it is with the novices. They buy on the hype and sell the on hard knocks. Remember Vernon Sanders Law? Here’s another one;
“Good judgement comes from experience,
and experience comes from bad judgement”
- Barry LePatner
Since then, I’ve found the trader in me and helped others find the trader in themselves. We’re not all built the same. We don’t all have the same tolerance, patience, time and pocket depths. So why should one money making strategy suit everyone?
You have to find the trader in you and the style that best suits you. I found myself to be an effective and profitable Day Trader and Scalper. My secondary weapon is Short Term Momentum Trading. Some of my students have found Swing Trading or Long Term Hedging to be their cup of Earl Gray. Others prefer Sector Rotation and some hard core traders (against my advise) love the Earnings Gap, especially after taking my 5DPEG and re-formulating it to suit their strategy! Whatever! So long as the principle of not losing money is not lost, one can only be profitable.
It has been a (not that) long hard ride and I have come a long way in the quickest time possible. And there’s still a long way left to go. By keeping consistent profits of US$10 to US$50 a day for three months, I grew that into US$100 a day for the next three months. The following six months saw me take US$1′000 a week off the table. In January of 2007, I made more than US$7′000 in the first 6 trading days of the year. All this, by sticking to the basics and keeping it simple.
All this did not go unnoticed of course. Adam and Patrick Cheo, who had been inspirational up to that point, invited me to join them at their establishment to be able to teach at their premises with proper facilities, instead of cramping 7 students into my 3 room home every Saturday. It wasn’t an easy decision as I did not want to be labeled with the “guru” tag or be seen as another “hype and no hope” seminar. Adam and Patrick took a lot of effort to convince me that integrity was paramount at AKLTG and saw that I would fit in there without any labels. It has been a dream come true. With Trading as my main income stream, I now have a secondary income with my tutorials (yes, I do make more from trading than training) and am looking forward to my third income stream as an author. Lessons learnt from Wealth Academy. My next goal is a fourth income stream from Internet related content. And the dream goes on as does the plan.
“It takes a long time to bring excellence to maturity.”
- Publilius Syrus (~100 B.C.)
I believe it is every person’s dream to make it bigger and better. I also believe that it is possible when properly inspired and motivated. You need to believe that it is within your ability to succeed and then formulate the plan to achieve the goal. It will not be an easy ride and there will be obstacles. Within the frame work of your plan, you should have remedies for such events. Without anticipating these downsides, your plan is only a dream and it will fail.
My students are all taking the long road to achieve this as success seldom comes easy and never on swift wings. So to keep each other motivated and inspired, we have banded as a group, a fellowship, a society of traders who share and learn together in order to grow together. We’ve had our failings and we’ve leaned on each other to move on. We will continue to do so, because we have the passion and we believe.
“You always pass failure on the way to success.”
- Mickey Rooney
It is my prayer that everyone who reads this book, will move on to bigger, better things. I know it can be done. I know it will be achieved. I know, because not so long ago, I was a struggling middled aged nobody ….
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