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 Dollars and Sense and do not in any way reflect the views, opinions, or endorsements of IG Asia Pte Ltd (Co. Reg. No. 20051002K) (“IG”).
A trading coach with the SGX Academy, Philip Teo, the Founder and CEO of Traderwave, has spent most of his career analysing the financial markets.
Before starting Traderwave, Philip spent more than seven years at OCBC Investment Research as the Chief Technical Analyst, where he analysed global financial market trends daily and identified cyclical and sectoral investment themes.
In 2015, Philip made the bold decision to trade (pun intended) his stable, full-time corporate job for entrepreneurship. He then started Traderwave, a trading education and software company that aims to empower retail traders to become more proficient and profitable in their trades.
In 2018, Philip organised and hosted the inaugural Online Trading Summit, possibly the first virtual trading conference in Asia Pacific. In total, more than 30 experts around the world shared their trading experiences with more than 20,000 participants during the summit.
Besides the Online Trading Summit, Philip also shares his knowledge at events such as the Singapore Financial Conference, SGX Trading Symposium, Invest Fair Singapore, SIM Youth Financial Symposium, as well as conducted training for the NTU Invest Academy and SIM Young Investor Workshop.
In this edition of #myfirstloss, our writer Timothy, spoke to Philip about his trading journey, what prompted him to start Traderwave, and the setbacks he had to overcome in his entrepreneurship adventure.
Timothy Ho (TH): We always start each article in this series with the same question. Do you still remember the first time you make a loss in your trade? #MyFirstLoss
Philip Teo (PT): Honestly, I can’t remember when my first loss was and how it felt like.
The main reason is that I’m someone who tends to look forward to big goals in the future rather than dwelling on small setbacks that happened in the past. The other reason is that I’ve never experienced any losses that were catastrophic enough to become a bad permanent memory.
I’ve interviewed many successful traders through the Online Trading Summits that I’ve hosted in the past and noticed that many of them usually have some kind of war scars or bad experiences, either of blowing up their trading accounts or being hit with huge losses in some of their trades.
Fortunately, I started my trading journey on a strong foundation and was able to avoid making such catastrophic mistakes right from the start.
As an avid reader, I researched extensively and understood the importance of risk management and position sizing right at the start before I even put in my first trade. That’s probably why I’ve never experienced any big loss that remains memorable to date.
TH: You been looking at charts pretty much your entire career thus far. If you don’t mind me asking, how did it end up this way? Looking at charts the entire day can’t be what you had in mind after graduating from NTU right?
PT: Absolutely not! I was actually a passionate self-taught fundamental analysis guy when I graduated from NTU and dreamt of becoming a fundamental analyst in an investment research firm.
However, such roles were highly contested by fresh graduates such that usually, only the top graduates from leading universities were considered for such positions. For myself, I graduated with an Engineering degree with pretty mediocre results.
Despite that, through some luck and perseverance, I was eventually offered the role of a junior technical analyst, although I knew nothing about reading price charts. It was a role that not many fresh graduates would take on because that job was kind of “unglamorous”.
However, I saw the offer as a stepping stone for me to get into an investment research firm before finding opportunities internally to transit into a fundamental analyst role in time to come.
In a way, taking on a job to look at charts all day was not something that I had in mind, but that was simply a means to an end for me at that point in time when I took up the job (of course I didn’t tell my boss this!).
TH: How did you decide to favour technical analysis over fundamental analysis? Is one method necessarily better than the other?
PT: After I accepted the technical analyst role, I knew that I was obliged to empty my metaphorical cup – in other words, put aside my passion for fundamental analysis – and focus on honing my technical analysis skills to make sense of price charts.
Every day for about three months, I scrolled through hundreds of charts across different markets and asset classes while devouring more than 50 books on technical analysis and trading-related subjects.
Through this intensive observation of real-time market movements in charts and self-learning all the trading best-practices from the books, I started to realise how useful and important technical analysis was.
One important realisation I came to then was that prices movement are caused by people’s decisions, motivated by fear and greed. In a way, technical analysis holistically captures market participants’ final trading decisions around important and prominent price levels, which includes all the reasons why they make those decisions. In contrast, fundamental analysis captures only one aspect of why market participants make those decisions.
This was the point when I realised that technical analysis is crucial to how one can potentially time their entry and exit to take advantage of the greed and fear of market participants’ trading decisions while minimising the opportunity cost of buying a stock too early or selling a stock too late, which are the typical downsides of pure fundamental analysis.
It was from this point onwards that I became a devoted “technician” and remained as the Chief Technical Analyst for the next 7 years. Fun fact, I was offered the opportunity to become a fundamental analyst a few years down the road but I turned it down!
Don’t get me wrong. This isn’t to say that fundamental analysis is pointless or that technical analysis is better than fundamental analysis. But based on my own personal experience, technical analysis coupled with a proper risk management plan is a more productive and time-saving methodology compared to using pure fundamental analysis.
TH: What prompted you to move from a stable, full-time corporate job to starting your own business? At that point, wasn’t the financial risk quite great?
PT: There were both push and pull reasons why I decided to leave my cushy corporate job to become an entrepreneur.
Firstly, as a licensed financial advisor in the financial markets, there were many restrictions on what I can and cannot trade on a personal level.
Secondly, the pressure to keep issuing trading ideas to get clients to trade (my main KPI) although market conditions might not be ideal, also took a toll on me.
Lastly, I wanted to do something at scale that could help millions of retail traders rather than just the few thousand clients whom my investment research firm was servicing.
The financial risk was definitely big, but because I’ve always been a prudent person with low expenses and minimal debts, and my wife’s career was pretty stable as well, I saw that as a window of opportunity to take the plunge.
TH: How does Traderwave help people become better traders?
PT: I started my entrepreneurship journey by assembling an engineering team to build the Traderwave app, a web-based charting application that allows retail traders to do technical analysis on more than 120,000 instruments across 69 global exchanges on your mobile device or desktop.
Subsequently, I also developed a comprehensive but affordable Price Action Trading Blueprint 6-week e-course, complete with demonstration videos, assessments and homework, to help new traders get started on the right footing.
On top of that, we also launched Traderwave TV, a video streaming service that provides on-going training for retail traders who have started their trading journey, and want to bring their trading competency to the next level.
All these services combine to help a brand new trader lay a strong foundation and follow-through on all the necessary steps to become the best trader they can be.
TH: As a fellow entrepreneur, I know that the entrepreneurship journey is full of ups and downs. Do you mind sharing with us some of the setbacks that you have faced and how you overcame them?
PT: Other than the few entrepreneurs who managed to hit the jackpot quite early after starting their business, there are many more downs than ups for most other entrepreneurs, including myself.
Capital (or the lack of) was a major setback for us right from the start because I was pretty naïve to think that we could build and launch a software prototype without having substantial capital.
Although I invested a big part of my personal net worth into the company and even raised some money from external investors to develop the software, subscriptions were moving too slowly for us to gain the kind of traction we needed before we ran out of cash.
Fortunately, other revenue sources from the virtual summits, e-course and video streaming service helped us achieve positive cash flow to keep the company going.
Today, revenue from our digital education arm has become such a significant revenue contributor that we’ve decided to dedicate more resources to grow this part of our business.
TH: We have noticed a lot more people getting interested in trading in recent weeks because of market volatility. At the same time, I think a lot of people are not fully aware of the risks they face trading. What would be your advice for these people?
PT: Market volatility is often what attracts new and inexperienced traders to the market because the temptation of making some quick bucks from a volatile market is hard to resist.
Coupled with the low-interest rates and easy access to margin, these new traders naively leverage up their trading account with the unrealistic “optimism” that they can make huge returns in a short time.
Unfortunately, volatility and leverage are double-edged swords and most of these new traders will end up blowing up their trading accounts if they do not know how to use such these ‘weapons’ correctly. It is thus of upmost important to back your trading strategies with a risk management plan to mitigate risk.
Human weaknesses such as greed can cause inexperienced traders to chase the last leg of a move, while the fear of losing can cause them not to cut their losses when a trade moves against them. I will advise any new traders to be patient and focus on building their trading proficiency, ahead of trading profitability.
Any new trader can be profitable in the short run through beginner’s luck but only proficient traders can be profitable in the long run through their hard work, patience and risk management strategy.
Start by laying a strong foundation through understanding the most important aspects of a trading system, and then developing a proper trading workflow or trading plan that fits your personality and lifestyle. Finally, apply all of the above in a disciplined manner while adhering to best practices.
The free 2-hour masterclass video that I’ve produced specially for new traders demonstrates the six key pillars of competencies that a new trader needs to develop before they even put their first dollar into the financial markets. In my view, that’s the best way to start their trading journey on the right footing, regardless of market conditions.
Learn How To Trade Well Before You Worry About Being Profitable
Through the interview with Philip, one recurring theme that was shared is the need to learn how to trade well comes before anything else, even profits.
As we all know, even the most proficient traders make their fair share of losses when trading. It’s the actions they take after making a wrong trade that is important.
Starting his career as a technical analyst made it essential for Philip to pick up knowledge in technical analysis. Philip read more than 50 books on this topic and spent hours every day on looking at charts and the market, even though there were restrictions on what he could trade on due to his job.
Similarly, if you wish to start trading, it’s important to first pick up as much knowledge as possibly can in the topic.
Other than Traderwave, you can tap on free resources such as the IG Academy, which offers online trading courses and live sessions to help both new and experienced traders build up their knowledge and to stay up-to-date with the markets. There is also an IG Community that you can be part of to share and discuss with other like-minded traders about market opportunities and trade ideas.
Besides producing free resources for traders to learn from, IG also offers various platforms and products that traders will need to use for their trades. If you are new to trading, you can start with a demo account first, where you can practise trading with $200,000 in virtual funds, and also gain exclusive education content on IG Academy. Experienced traders can explore using IG and sign up for a live account directly via MyInfo.
If you wish to refine your trading strategies such that it’s executed in a professional way, you can also use IG automated trading platform, which helps you execute your trades automatically, based on the parameters that you have set. This allows you to take your emotions out of the trades that you make. You can also improve on your strategies by back-testing your strategies against historical data.
Watch Now: A Day In The Life Of A Singapore Trader
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.
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