The Traders' Blueprint

Winning Strategies for Profiting from Stocks, Forex, Commodities, and Options

Collin Seow, Rayner Teo, Marc Liu, Alex Yeo

• Publisher: Candid Creation Publishing
• ISBN:
  9789811177958
• Topic: Personal Development
• Subtopic: Personal Finance

In The Traders' Blueprint, you'll find winning strategies to profit from stocks, options, and Forex trading. Following Collin Seow's best-selling trading book The Systematic Trader, this book expands on his strategies along with three other proven top traders that he personally knows and endorses.

There are many different types of asset classes to trade, and The Traders' Blueprint offers creative strategies for trading stocks, options, and Forex. It's an exciting time to trade the markets and generate returns on your money that will pay you over and over again.

This book will show you, no holds barred, how skilled traders create the alpha to build consistent wealth.

In The Traders' Blueprint, you will learn:

- How to trade options safely and generate a consistent income

- A trading methodology that has been profitable over the last 200 years, and that is used by hedge funds and market wizards

- How to profit on your trades even if they go against you

- A little-known trading technique which minimises your losses and maximises your profits (that most traders never find out)

- How to quickly find the best stocks to trade instead of looking for the next "hot tip"

- A simple technique that lets you ride massive trends in the market and grow your wealth steadily over time

- Proprietary trading setups that you can use to profit in the stock, options, and Forex markets

Make sure to check out this blueprint, and augment your trading arsenal with these powerful strategies.

COLLIN SEOW

PART ONE

Systematic Trading Concepts

A Clear and Objective Method to Profitable Stock Trading

CHAPTER 1

THE GREATEST ENEMY IN TRADING

When I wrote my first book The Systematic Trader, pictured in Figure 1.1, I told myself not to be someone who churned out book after book. However, since the book was published, the response has been overwhelming. People from Japan, Europe, Australia, and even South America have sent me private messages on Facebook or emails thanking me for inspiring them. They said that I have given them a tool that helped them understand the markets and trading, and more importantly, understand life.

Figure 1.1 The Systematic Trader

ANYONE CAN BE A GOOD TRADER

One of the challenges that many people face is following a trade plan, which is why I decided to invest in and work with a company called AlgoMerchant, a financial technology start up that provides a platform for retail investors.

Let me ask you a question. When the man on the street wants to invest his money and doesn’t have the time to do it, where does he usually go? The answer: The banks or insurance companies.

When you go to the bank, the relationship manager or private banker will serve you. After the relationship manager serves you, your money is then processed by the back office, and finally the fund manager will make the money work for you. On top of this, because the money is held in trust, it is also overseen by the compliance officers.

The returns that are generated by the fund managers need to feed the relationship manager, back office staff, and also the compliance officers. So even if the fund manager is really good and making returns, your profits will be reduced because of the expenses.

AlgoMerchant (AM) seeks to change this. You see, it is possible for anyone to be a good trader or investor. You need not be a chartered financial analyst (CFA) or work for the bank. At the end of the day, it is the results or track record that counts. With AM, you can link up your trading account with AM, and from there, AM can track the real time performance of your portfolio. Once a track record is established, you can choose to publicise your portfolio. For me, I have more than 10 years of backtested results and live results to show my returns.

HOW I GOT STARTED

I started trading more than 20 years ago. Since I was in school, I have been interested in trading. My dad was 40 when he had me, so when I graduated from the army, I wanted to make money quickly to repay them.

Though I majored in engineering, I did not want to become an engineer. Through a speed-reading course that cost me a lot of money then, I came to know a financial advisor manager. He shared with me what I could do to become successful. I became a financial advisor instead.

In the first five years of my career as a financial advisor, I did very well; in fact, I was one of the youngest members of the Million Dollar Round Table (MDRT) at the age of 22. After being relatively successful as a financial adviser for five years, I wanted a slower pace in life, and I started trading more seriously. I slowly changed my trading method from fundamental to technical. A few years later, I went on to become a full-time trader, which lasted for two to three years.

During that period, I also sat for two examinations to get licensed as a remisier. The second paper was the toughest. Failing that examination twice would bar one from becoming a remisier. I failed the first time, but fortunately, on my second attempt, I passed.

I did not become a remisier immediately after I passed the examination. Instead, I waited for almost another three years. Before my examination qualification expired, I had to decide whether I wanted to become a remisier. I decided to go ahead and become a remisier, and trade using my account.

Originally, my intention was to trade and not to serve clients. The total clientele I had numbered less than 20. I was basically my biggest client during that time. Then, I had a big client in the first six months.

He was also trading quite a bit, and initially he was profitable.

However, he started to lose money after six months, and instead of slowing down and reviewing his trades, he actually traded more to make back his losses. As his remisier, I could see that he was trading more and increasing his bets. This was the time to stop him from buying, and lower his buying limit. However, I could not control his selling limit. He was desperate and wanted to make back his losses, and so he went to short the market using the selling limits.

Long story short, in three weeks he lost $250,000. However, instead of thinking about how to pay off the losses, he consulted some of his friends about the situation and decided he should file for bankruptcy. The reason was very simple. When a bankrupt owes less than $300,000, it is likely for him or her to be discharged in about 10 years. He and his friends felt that it made more sense for him to declare bankruptcy.

When he said this to me, I was at a loss. He also said that he had a solution for me; it was simply for us to declare bankruptcy together and let the company pick up all the losses! What a good friend.

At that time, he was single, but I was married with one kid and another one on the way. It would wreck the whole family for me to file for bankruptcy too.

I had to find another solution. It was then that I was taking my Certified Financial Technician (CFTe) examinations. I was studying with two other friends. One of them, an Indian national, was a technical analyst at Dow Jones. The other was a fund manager from Germany. We were studying together regularly, and one day, I shared my challenges with them.

My German friend shared with me something that changed my life. He said that a lot of what we learn in the books cannot be used in trading, and can only be used to pass the examinations. I asked him what the best way to learn trading was. He showed me a few books that were written by very successful traders and managers trading billions of dollars. The funny thing is, I have never heard of them, as I have never seen those books in bookshops or in the library.

I studied some of these books and came to my own conclusions about trading. Using some of my research, I developed a unique way of looking at the market that no one was using. Long story short again, after applying the system I developed, within a period of about 18 months, I made back the $250,000 and I used that to pay off the losses.

WHAT IS THE BEST WAY TO LEARN TO TRADE?

I am always asked by fellow traders, friends, and clients about the best way to learn trading, to know exactly what to do and how to do it. I thought about it long and hard. Is it a particular strategy, a special money management method, or even a backtested trading system? The answer is no. Even if you had the best strategy, you may not be able to execute it correctly without the right mental discipline. So what is it? What is the one thing we must have before we really become successful in trading? The answer is in the following quote by Bill Gates, one of the richest men in the world: “Everyone needs a coach. It doesn’t matter whether you’re a basketball player, a tennis player, a gymnast, or a bridge player.”

Get a coach. When you get a coach, you can see exactly what the coach does. Trading requires skills and knowledge, but more importantly, it tends to get emotional. You may have the skill and the knowledge, but you may not have the emotional makeup to succeed. That’s why it is important to get a coach. With a coach, you not only learn the skills and the knowledge, but also get feedback regarding what you are doing. It is entirely possible to learn trading from books and videos through the Internet. However, the percentage of people who succeed is very, very low. On top of that, you will waste a lot of time finding out what does not work. The learning curve is steep, and most people will not be able to make it.

Secondly, trading is risky. Everything that is risky in life requires you to get a license. For example, driving a car. You need to pass your basic theory test, final theory test, and practical test to protect yourself, your family, and other road users. I love diving and have just completed my advanced diving course in Tioman. This allows me to dive deeper, in strong currents, and at night.

Why is it that when it comes to trading, there is no license required? One can just open an account with a brokerage firm with as little as $1,000.

Many years ago, when I was trading full time, I took my CFTe to get certified. Getting certified as an analyst will not guarantee that you become better at trading, but it will help you grasp the basics of technical analysis. By getting a license, you will understand the risks involved, know the drills to do if something goes wrong, and also find out whether technical analys...

Table of contents

• Cover
• Title
• Copyright
• Contents
• Preface
• Part One: Systematic Trading Concepts: A Clear and Objective Method to Profitable Stock Trading
• Part Two: The Stock Trading Success Formula: Dominating Tactics and Consistent Setup Patterns
• Part Three: Forex and Futures Trading: How To Profit in Bull and Bear Markets
• Part Four: Selling Options: How To Trade Options Effectively And Generate A Consistent Income
• About the Authors
• Backcover