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”).
The benefits of learning together in a group are well-known. We can learn from the experiences and knowledge of others while contributing our own insights, mutually enriching each other’s learning experience.
Adults learners who wish to pick up a new skill might choose to do so in a group, even though they might have an option to do so on their own. Even the national education system, which delivers some of the best learning outcomes in the world, encourages group work and learning within the classroom environment from Primary level to University level.
The same approach can be applied to our investing and trading journey. The financial markets can be intimidating for many new investors and aspiring traders. We have to deal with different investing and trading strategies, technical jargons and be exposed to the risk of losing our hard-earned savings.
But if we are afraid of taking our first step, how will we ever get started?
To get you started on your own investing and trading journey, DollarsAndSense is starting #MyFirstLoss, a brand new content series brought to you in collaboration with IG. We will interview prominent investors and traders in Singapore and hear them share about their first loss in the financial markets, how they overcame setbacks and eventually find their edge. This is a continuation from the #myfirsttrade content series that we had last year, where we asked prominent investors and traders in Singapore about when they made their first trade.
To kickstart this series, we interview Shanison Lin, CEO and Founder of InvestingNote, Singapore’s largest social network platform for investors, which allows users to share trading and investing ideas with one another.
DollarsAndSense (DNS): Thanks for agreeing to be featured. To start off, can you share the first time you make a loss in your investments? #MyFirstLoss
Shanison Lin (SL): After my first startup failure back in university, I joined ShareInvestor in 2010 as a software engineer. After the economic recovery from the 2009 crisis, almost everyone in my office was making money from the financial markets, which got me interested.
“Pick a stock you are familiar with and are willing to spend money on to buy their product” is an investing philosophy that I learned from some workshops. So, the first stock I bought was an S-chip, listed on the Singapore Exchange (SGX). The company is from Fujian, my hometown. I have seen their stores everywhere and have been wearing their sports shoes and apparels for a long time. I invested more than $3,000 on the stock and planned to keep it long-term to watch my investment grow.
One day, bad news broke out: the stock was suspended from trading! The auditor failed to verify the reported cash balances in the bank and found accounting irregularities. The company’s stock remained suspended for 7 years until the CEO offered to buy back the stock at S$1.60 per 1,000 shares. My $3,000 investment became $32 in the end.
DollarsAndSense (DNS): Your company, InvestingNote, is the go-to place in Singapore for investors and traders who want to share and learn from one another. Why do you think it’s important for people to have a community for learning and inspiration, as opposed to just trading and investing on their own?
SL: Firstly, a lot of people do not want to trade or invest because they mostly hear horror stories about others losing money. At the same time, by connecting with more veteran investors and traders, you will realise that there are also a lot of successful investors and traders out there, many of whom can help you become a better investor and trader.
Secondly, successful trading and investing are not easy, especially for new investors. Many newbies will not know how to start and which stock to buy or sell. Discussing ideas with others can give you inspiration, perspectives and confidence to get started.
DNS: The financial market can be a very humbling place. When you make a loss, some people might start to doubt themselves and lose confidence. Some investors and traders may even be so afraid that they decide not to invest at all. How should people view losses?
SL: Losses are something which are naturally scary for most people, but when it comes to trading or investing, we have to understand that there is no such thing as a 100% win. Even the best investors and traders will make their fair share of losses in the financial markets.
What you have to worry about is having the right risk management strategy. For any trades you place, you have to be willing to take on calculated risks. In order to be a successful trader, you don’t just need to overcome your fear of losing but also manage your losses carefully.
The key here is not to let the losses grow too big, otherwise it becomes more difficult to recover from it later on. Worse, you might be discouraged from placing the next trade.
In practical terms, it means you should define your stop-loss level and control it well. Before entering a position, you need to know what’s the maximum loss you are willing to take. This will make you more comfortable with trading.
DNS: On social media, people tend to only share their positive experiences. The same can be said for investing and trading, where people will happily talk about their positive results but are less likely to share poor results. Is this a problem and how does InvestingNote help overcome that?
SL: I think we always need to see things from both sides. To trade more efficiently, it may help when we get inspiration from successful traders, and also learn valuable lessons from the mistakes of others.
On InvestingNote, we also encourage everyone to share their views and experiences no matter good or bad. “Good” experience helps inspire other traders. “Bad” experience helps them learn some lessons and to help others to avoid the same mistakes.
We also allow users to filter out posts or individuals that may not be suitable for them. For example, some traders prefer not to see posts in their feed that focus on fundamental analysis. Users can hide other users’ posts or choose to follow people who they think they can learn from. By doing so, everyone’s feed will be personalised with relevant content based on their preferences and goals.
DNS: Do you think you have learned more from your failures compared to your successes?
SL: Definitely. Whenever I make a few successful trades, the chances of making a loss in the next trade is very high. The reason is that successes and profits can cause my judgement to be blurred, resulting in me being complacent. This is one of the biggest challenge and a lesson for me to continue to learn from.
Thus, after making a few successful trades, I impose a “cooling period” on myself and not make any trades for an entire week. I strive to always have a peaceful mind before entering any position.
DNS: How have you overcome some of the setbacks in your investing and trading journey to become a better investor?
SL: Constantly reviewing your trades is important. When we see prices move, we might sometimes be scared of missing out on the opportunity to make money and we quickly place new trades. It turns out that trades which are placed under this kind of pressure will usually cause you to lose money.
Before trading, write down your trading plan somewhere, even it is just a gut feeling. Review this regularly to help you control your emotions and stick to a consistent trading plan, rather than fluctuating from trade to trade.
DNS: Lastly, are there any trading or investing mistakes that you regretted making?
SL: Knowing yourself and deciding if being an investor or trader is more suitable for you is important.
Value investing philosophy was very popular when I first started investing with a lot of workshops and books out there talking about this. Back then, I wanted to be like Warren Buffet and followed his investing methodology. What I learned after that is that there is no one single method that works for everyone and it really depends on yourself. Do you have the patience to buy and hold investments for a long time or do you have the time to do active trading?
So, invest or trade based on what you are comfortable with. Rather than to feel pressured in following what others are doing.
Learn From Experiences, Both Good And Bad
Given a choice, nobody would want a bad experience. We would all prefer to have a smooth investing and trading journey full of ups and very little downs.
However, both our positive and negative experiences in the financial markets are important parts of our journey. The euphoria we get when we make money from the markets also comes with the disappointment when we lose money.
InvestingNote helps individual users in their investing and trading journey by giving users the tools to share insights, experience and analysis with one another, so that users can help each other be better traders and investors.
If you are looking to start trading, IG offers a wide range of products and services that you can tap on. You can get trade Contract for Differences (CFDs) on different asset classes such as Forex, Shares, Indices and Commodities and get exposure to major markets around the world.
In addition to that, IG also provides various services aimed at helping traders succeed. Traders can choose to use IG’s web-based platforms, apps or tools like MT4 to help them plan and execute their trades. If you are new to trading, you can start off with a demo account first which lets you try your trading strategy with $200,000 worth of trading credits.
IG also provides a range of resources to help traders improve their knowledge. There are trading seminars and webinars that you can attend to increase your knowledge. You can also read trading-related news articles to get you up to speed with the latest happenings around the world.
And if you want to get involved in discussions, IG has an IG Community forum that allows you to discuss with other like-minded traders about trade ideas and market opportunities. By learning from others, you can learn from their good practices as well as the mistakes they made.
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 article has not been reviewed by the Monetary Authority of Singapore.