This article was written in partnership with IG, the world’s No.1 CFD provider (by revenue excluding FX, June 2019). All views expressed in the article are the independent opinion of DollarsAndSense.sg
Earlier this year, DollarsAndSense interviewed Jonathan Tan, founder of Charting Academy, in an article where he shared what it’s like to trade for a living and educate others. Jonathan was also one of our speakers at the DollarsAndSense’s inaugural event – In The Footsteps Of Masters: Going Beyond #myfirsttrade.
Jonathan has been trading professionally since 2006. Today, he trades on a wide range of products including futures, forex, commodities, stocks and cryptocurrencies. His specialty lies in trading futures specialising in Hang Seng Index (Hong Kong), DAX (Germany) and Dow Jones (US).
Jonathan has conducted training for thousands of traders in Singapore, Malaysia, Indonesia and Thailand. Jonathan also posts YouTube video every week with more than 2,700 subscribers on his YouTube channel, a Facebook group called Gathering Of Traders with close to 7,000 members and a Telegram Channel, which provides signals and trade alerts for members.
In October, IG launched a new product called Knock-outs. To understand more about this product from the viewpoint of an experienced trader, we sat down with Jonathan to find out more about what he has to share about this new product which has been launched in Singapore.
DNS: Share with us what are some of your thoughts on this product? What are some of its strengths?
JT: Most beginner traders do not like to set a stop loss or do not know how to set a stop loss. With Knock-outs, there is a preset stop loss, which means there is a limited downside to prevent them from having a major loss while potentially having an unlimited upside.
For advanced traders, it is less work as the stop loss is already preset. Recently the Monetary Authority of Singapore (MAS) increased the minimum margin requirements which limits the volume a retail trader is able to trade based on their account size. With Knock-outs, we can continue to trade various products using a limited trading account size. Knock-outs can also be used as an “insurance” or hedging where I can long the futures by buying the Bear Knock-out to protect myself in case I am wrong.
When trading with CFDs, there is a possibility that we can lose more money than what we have in our trading account. However with Knock-outs, we cannot lose more than the cash we have already put up for the trade. In other words, even when we are wrong, we will not owe money to our brokers.
As an existing IG client, it feels great to have more products which retail traders can use and mitigate risks during volatile market conditions.
DNS: With markets being very volatile lately, do you think Knock-outs could be an ideal products to help limit the risk for traders who are intending to capitalise on volatility?
JT: Traders love volatility and with Knock-outs, we will be able to enjoy the protection of having limited downside when the market moves against us without having to worry that the market may open at a much higher or lower level than our cut loss level (also known as the knock-out level). Knock-outs will limit those losses when we are wrong.
DNS: How do you think this product can potentially help your students in their trades? Who are some of the people whom you think would benefit from using this new product?
JT: For longer timeframe trading, one of the ways to trade Knock-outs is to use the indicator, Average True Range (ATR). With this value, we can find a safe Knock-out level to set to avoid being whipsawed out from the market and hold on to winning positions.
For shorter timeframe, we can use pivot lines to find the support and resistance levels and set the Knock-outs slightly away from the pivot lines for a limited downside. This makes trading a lot simpler and easier to trade.
DNS: What are some of the disadvantages that traders should be looking out for when using Knock-outs?
JT: With every product, it has its own risks. Knock-outs are susceptible to market whipsaw where it goes against you for a quick moment and then goes back in the direction without your trade. This can happen especially when trading just before major news announcements.
DNS: Your personal view. Will you consider using knock-outs for your own trades in the future?
Though they are new to the Singapore market, knock-outs are not a new product in the financial world. Currently, IG is the only broker in Singapore which offers this product to traders. If you would like to start trading knock-outs, or would like to open a trading account today to trade knock-outs, you can open an account with IG here.
If you are keen to find out more about how this product works first before you start using it, we would recommend for you to download and read a free e-book – Alternative to FX CFD, which is written by Bloomberg in partnership with IG.
ublished half yearly financial statements, june 2019
This article was written in partnership with IG, the world’s No.1 CFD provider by revenue excluding FX (Published half yearly financial statements, June 2019).
All views expressed in the article are the independent opinion of DollarsAndSense.sg and do not in any way reflect the views, opinions, or endorsements of IG Asia Pte Ltd (Co. Reg. No. 20051002K) (“IG”).
IG provides an execution-only service. The information in this article is for informational and educational purposes only and does not constitute (and should not be construed as containing) any form of financial or investment advice or an investment recommendation, or an offer of or solicitation to invest or transact in any financial instrument. Nor does the information take into account the investment objective, financial situation or particular need of any person. Where in doubt, you should seek advice from an independent financial adviser regarding the suitability of your investment, under a separate arrangement, as you deem fit.
No responsibility is accepted by IG for any loss or damage arising in any way (including due to negligence) from anyone acting or refraining from acting as a result of the information. All forms of investment carry risks. Trading in leveraged products such as CFDs carry risks and may not be suitable for everyone. Losses can exceed deposits.
This advertisement has not been reviewed by the Monetary Authority of Singapore.