Sunday Thoughts: “I want to turn $1000 to $2000 by next week.”

Perspective

Who is right?

It is possible to turn $1000 to $2000 in a single bet in forex, in one day, in one minute, in one week, or one month, or any financial instrument that allows margin. Say for under Singapore regulations, the maximum margin allowed is 1:50. Meaning if you’re trading forex, every dollar you trade is worth $50. Overseas brokers can allow margin up to 500. Imagine your $1 being worth $500. And you have $1000 to trade. You effectively have $500,000 of margin.

With $500,000 of margin, you can do lots with it, just as what you can do with a bank loan. But it’s very, very different from a bank loan.

Simply because if you use all your margin, every little movement of a forex price (pips in common language) is going to be worth alot of money.

So as an example, with using all your margin of $500,000, betting long on the USDCAD on last Friday’s NFP results (which turned out higher than expected, but the USD CAD dropped by 60 pips in 5 mins), each pip is worth about SGD$38. So a 60 pip move against you will lose you $2280.

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HOW CAN I LOSE MORE THAN I HAVE? (learn to read bro)

Ok. So that’s what can happen. So let’s say it moves 60 pips in your favour. Thats $2280. Congratulations, you managed to turn $1000 into $2280 in 5 min.

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Dr Van Tharp in his book Super Trader did a very good experiment on this. And found that when it came to the biggest winners, there were basically 2 types: The one who bet large bets and got lucky, or the one who places small bets and profits little by little.

So who is right? Both are reasonable, and very possible ways of turning $1000 to $2000 although the more patient trader will take a longer time.

It’s all in your risk appetite. If you can’t afford to lose $1000 or even more (don’t be fooled that you’ll be closed out at $1000. Price can move so fast, the broker will just close it at the next possible price, which can make you lose even more than $2280 if there’s no one to take your stop loss. Happened to me once. And once is enough.), but willing to risk it because you have really nothing left to lose and wanna have a chance and doubling your money in 5 minutes, nobody can stop you.

The patient trader has an edge over you though. And it’s survival. Time. And luck only knocks a few times.

Which of the 2 types of big winners do you prefer to be? Rationally thinking, which is the right way to trade?

Both are possible. The only difference is time. And of course, this very important question if you want to be the big bet big winner trader:

What’s your next plan for the next trade?

Happy Sunday.

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The Smart Casual Trader considers the Dark Side

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There is this bias about doctors going private. And it’s a concern even for the government. The unspoken truth is, beyond the standard “for better quality of life”, “to provide better care”, is about money. Please, correct me if I’m wrong here. It is the “ladder” to climb for doctors. To gain experience and reputation in government hospitals, and then make it on their own. I’m stereotyping. I know. I know of truly sincere, noble doctors who leave the public sector to provide better care for their patients because they now practice on their own terms. And, they have a better quality of life. Sure, the charges are higher because of overheads and costs which come out from their own pockets, but there is no denying the dark side as well: The lure of money.

I’ve seen facebook posts of doctors opening their own clinic, and their friends commenting “huat ah!”

I guess, that’s the reality.

And so it is with what I’m doing with Smart Casual Trading. I’m starting small, trading on my own, and providing services on the side at nominal rates, and more. I’m focusing on my brand, and in time, hopefully, my brand resonates with the average Singaporean who have paid and got burnt by conmen who make more money coaching than doing what they actually coach, and in time, I hope I am able to build a community of followers and believers in what I do.

Then what?

There is the dark side. The dark side is to go “private”. Because I’m been noticing my posts showing my profits and trading performance get the most hits, instead of those “smushy” stuff about empowering yourself to  learn a new skill and to step out of the comfort zone.  People still just want the “Secret Formula”. The “Holy Grail”.

The dark side beckons to me, to leverage on my performance, and on my brand, and go the path of mass marketing, mass coaching, mass lecturing, and of course, mass income that exceeds my trading income.

It is the common sense to do, isn’t it?

I respect the doctors who choose to remain in the public sector, choosing to teach, achieving AP positions, going into research, while their colleagues enter fields that are money cows. I have nothing against either. I just notice this. And I respect both doctors for their own reasons.

What about the Smart Casual Trader?

Only time will tell.

#smartcasualtrading

Contact me if you’re interested to learn more.