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The investing landscape looks extremely volatile today. Markets are being dragged by various macroeconomic and geopolitical uncertainties. For example, technology stocks, using the NASDAQ as a barometer, have plummeted nearly 23% in the year-to-date. What is of greater note is the volatility during the current decline, which has seen rebounds of close to 10% on at least three occasions on the way down.
Source: DLC.socgen.com (Any past performance is not indicative of future performance)
While some of us may be spooked by what looks like a perfect storm brewing or simply want to stay away from such big swings, Founder and Market Technician at TerraSeeds, Binni Ong, has a different take. She sees the gyrating prices today rhyming with another familiar period for her – in 1997, when the Asian Financial Crisis was wreaking havoc in the financial markets.
Dinesh Dayani (Dinesh): Thank you for agreeing to share your trading and investing journey with me. You started trading really young – in your JC days. Can you share some of your earliest trading mistakes?
Binni Ong (Binni): I started trading with my mother in 1996. My first investment was on CLOB (Central Limited Order Book). We could earn about 20% or even 50% on a single trade in a day.
Editor’s Note: The CLOB International market was an Over-the-Counter market for Singaporeans to trade stocks listed in Malaysia. In 1999, the Malaysian government decided to shut down trading on CLOB. When this happened, trading on CLOB was frozen and prices crashed.
In the beginning, it felt easy to make money. My mother and I would scroll through Teletext page 306 which displayed top traded volume for new stock ideas. I also remember talking to aunties and uncles at the coffeeshops about stocks they were buying and what their brokers had recommended. Within a few months, we were making easy money.
Editor’s Note: For younger readers who may not know what Teletext is, it’s exactly what you would guess from its name – a function that allowed us to read texts over the television set, and one such set of information was stock prices.
When the Asian Financial Crisis hit in 1997, we lost a hefty sum – more than $100,000, including the profit we made. Looking back, I think we were very new and naïve when we started.
Dinesh: Having lost such a significant amount, you persisted in your trading and investing journey. How did you manage to do this?
Binni: It was a painful lesson. I didn’t actually have the confidence to make it back. I just wanted to invest properly this time around.
In university, I went to the library every day. It was the only place with a TV in school. You might think that it would be tuned in to educational or business programmes. But, no, it was always on Teletext page 306. At that time, the remote control was beside the TV and we could control it. Much to my surprise, I was not the only one in NTU looking at stock prices.
You have to remember that mobile phones or laptops were not as common. So, the library was the only place we could go to get stock prices via Teletext.
In the NTU Business library there was also a section at the far end, on the bottom shelf, they had many books on technical analysis and fundamental analysis. I spent many hours there going through all the books.
Dinesh: After this experience, you started TerraSeeds in 2007. What made you go down this route?
Binni: When I started TerraSeeds, it wasn’t to train others at first. Instead, I was a ghostwriter for a securities research firm, writing their technical analysis reports.
Many people became very interested in technical analysis around this time. However, I noticed a lot of misinformation about technical analysis in online forums and during discussions. Many were getting it wrong, and learning the wrong things.
Reflecting on my own path – I had a very easy start and then a bad fall that I took a long time to recover from. I felt people should know more about prices and how to read a chart, apart from fundamental analysis.
So, I started my first course on Technical Analysis called “Paper and Pencil” because I literally printed out price charts on pieces of papers and attendees used their pencils to chart out their strategies. I also made it very cheap at $88 versus what others in the market were doing at that time – which was about $3,000 to $4,000. It was about educating people for me. For me, it was all about educating people.
Binni conducting her Paper and Pencil course
As we grew, I started doing in-depth training and designing trading algorithms for financial institutions in the region and trained in many other instruments I traded.
Dinesh: You have been in the trading and training industry for some time. More recently, you have also become a trainer with SGX Academy. Have you seen a shift in the mindset of new investors and traders today?
Binni: In my training experiences with my own students and clients from many financial institutions, during the start of COVID-19, many new investors came into the stock market. During and slightly after the initial COVID-19 lockdowns globally, the markets were generally bullish. In recent months, things are coming down.
Initially, they were very enthusiastic about the stock market – many new traders’ portfolios performed well. After the market corrected, and a lot of them lost money, they’re now questioning what they need to learn to be successful – much like I was when I first started!
This was the reason why, as a trainer at SGX Academy, I teach many courses in which I share my experiences in 25 years of investing and trading. Not to mention, how to look at trading from a mathematical perspective, without making it very difficult or technical. It incorporates content on DLCs as it complements the trading strategy that I teach.
Dinesh: Daily Leverage Certificates or DLCs is a relatively new type of financial instrument we can trade in Singapore. But you have been trading for a number of years now. Can you explain how DLCs work?
Binni: I didn’t start trading DLCs immediately in 2017. It took me a while to get started – near the end of 2018. We need to understand how to use a trading instrument first.
When trading DLCs, we don’t have to start with a lot of money. The minimum size is 100 units – this can be as little as $10 for a trade in Tencent for example. We can start small, and get comfortable with the trading instrument.
While we can start small, we also need to understand that DLCs can magnify our exposure by 2x, 5x or even 7x. This way, our returns can be exponential, but we may also lose our investments quickly. But our maximum loss is capped at our initial investment amount.
Another way DLCs are useful is that we have an opportunity to make gains both ways – when prices go up or down. During volatile periods, we can identify stocks with strong trends and trade either long or short DLCs.
This is also why we can use DLCs for hedging our positions. For example, I am currently long in Hong Kong stocks. I bought many of these stocks a long time ago, and I’m still in profit. If I don’t want to give up these stocks but I think markets are becoming too volatile right now, I can use DLCs as a form of hedge. By buying short DLCs, I have an opportunity to profit in a downward-moving market.
Dinesh: Totally understand if you prefer not to share, but what was the largest loss and gain you’ve made trading DLCs?
Binni: As a rule of thumb, I go for DLCs with 5x leverage.
About 130% profit for a DLC trade, or about $15,000. This was on top of my stock trade – I also own shares of the underlying, which made about 30%.
The biggest loss was $970, or about 97% for a DLC trade. It was a trade in earnings season. Instead of buying the stock, I traded DLCs which limited my loss to the value of the DLC.
*Past performance of the Daily Leverage Certificates (DLC), or past performance of an underlying asset, is not indicative of future performance.
Dinesh: The swings can be quite big. What is your advice to individuals trading during periods of high volatility like the investing landscape today?
Binni: The first thing we need to do is have a trading plan, including a trading strategy. This goes back to understanding why we are making a profit or losing money.
Personally, I don’t generate constant income by focusing on one financial instrument. We should be more open to different instruments during various market conditions.
For example, I use DLCs especially during earning season. The key characteristic of earnings is that the stock can move a lot. It gives us a chance to make a lot of money or lose a lot of money. The maximum loss on DLCs is capped at the initial investment sum even if the underlying stock moves adversely against you, but the gain can be exponential.
We should also start small. As mentioned, we can start trading DLCs with a very small amount, and can increase our investment size as we become more familiar and confident.
Today, there are many free and resources on various investment and trading instruments we can and should learn from. One is the course I’m conducting at SGX Academy. Outside of it, publishers like you (DollarsAndSense) also write good content and other traders and course providers also give their take on the trading instrument as well.
Understand What We Are Investing In, And Being Open To Different Trading Strategies
New investors today can take heed of Binni’s early mistakes and how she navigates the current volatile market.
Today, we have access to many free resources Binni did not when she first started out. Just as she devoured every book she could find on technical and fundamental analysis, investors can read both books and online content today. Beyond that, there are SGX’s free programmes and the DLC issuer’s website.
We can also access near real-time price and use online charting tools for free on many websites online, including on Société Générale as well as our respective brokerage platforms. Beyond prices for both the DLC product and underlying assets, the Societe Generale website also provides basic charting tools.
Binni also believes that traders and investors should utilise the right products depending on the market conditions. She cited the current headwinds in the U.S. stock market as an example. Rather than be fixated on the U.S. market, we can be flexible to look at stocks in other markets, such as Hong Kong or Singapore.
We could also be more open to different trading instruments. Binni trades in multiple instruments like forex, gold, indexes, options, stocks and DLCs. Similarly, we can also trade DLCs to benefit from prices going in either directions – up or down – and test our trading ideas with a small amount and benefit from leverage at the same time.
We can also employ DLCs to hedge long positions, like Binni does when she is very unsure of the short-term market direction. This negates the impacts of short-term uncertainties on her long-term investment returns too.
We can invest in over 200 DLCs issued by Société Générale today. These include DLCs that track the NASDAQ-100 and S&P 500 Index in the U.S, Hong Kong’s Hang Seng Index, Singapore’s Straits Times Index, and a wide range of single stocks.
You can view the full list of DLCs on the Société Générale DLC website and learn more about the product features including the associated risks of trading the DLCs.
This advertisement has not been reviewed by the Monetary Authority of Singapore.
The views expressed under this article represent the personal and independent views of the author and do not constitute investment advice. The content of this article does not form part of any offer or invitation to buy or sell any daily leverage certificates (the “DLCs”), and nothing herein should be considered as financial advice or recommendation. The price may rise and fall in value rapidly and holders may lose all of their investment. Any past performance is not indicative of future performance. Investments in DLCs carry significant risks, please see dlc.socgen.com for further information and relevant risks. The DLCs are for specified investment products (SIP) qualified investors only.
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This advertisement has not been reviewed by the Monetary Authority of Singapore. The DLCs are for specified investment products (SIP) qualified investors only.