Forex coach Mario Singh teaches both the amateur and corporate investor to take advantage of opportunities in the forex market with his new book, 17 Proven Currency Trading Strategies – How To Profit In The Forex Market.
By Yong Yung Shin
“If your plan of wealth creation is to leave money in the bank, you will be having an annual nett return of negative 3.5 percent,” says Mario Singh of the harsh reality of saving. “Hence, learning to trade or invest in the financial markets is of great importance.”
In his new book, 17 Proven Currency Trading Strategies – How To Profit In The Forex Market, the founder and chief forex coach at FX1 Academy teaches readers to navigate the profitable yet volatile world of Forex trading by sharing tips on addressing real-world trading scenarios and identifying strategies that fit their personal styles and risk tolerance, among others.
The book, which took Singh one year to write, has received the endorsements of prolific global financial experts including Mark Mobius, the executive chairman of the Templeton Emerging Markets Group which manages assets worth USD$600 billion, and Kathy Lien, the managing director of BK Asset Management.
A regular guest on CNBC, Mario Singh shares with City News both the importance of learning to trade responsibly as well as its pitfalls. Plus, the most expensive lesson he ever learned.
What inspired you to write the book and why now?
The world is roughly split into three main regions: USA, Europe and Asia. All three regions are experiencing their own growth problems. The USA has just resolved its “fiscal cliff” issues, but unemployment and low GDP figures still persist. The Eurozone entered into a recession late last year, with large economies like Spain needing financial help. Greece might also be the first country to exit the Euro.
China and Japan are considered Asia’s largest and second largest economies respectively; China’s GDP was below eight percent for much of 2012, its lowest in almost three years. Japan is still stuck in deflation, which is the main reason why the new Prime Minister Shinzo Abe is pushing for bigger government spending and monetary easing.
This is the main reason why I wrote the book now—to give both retail traders/investors and financial professionals a “road-map” to guide them through this global economic turmoil.
In your years of trading experience, what was one of the most “expensive” lessons you learned?
That’s got to be the first time I started trading with real money. I funded my account with S$3,000 and rubbed my hands with glee, fully focused on making a million bucks by the following week. The charts were moving upwards and I reasoned that gravity would soon pull it back down. I decided to click “sell,” but to my horror, the prices kept moving up. I clicked “sell” again but prices still continued climbing! In my state of panic, I clicked “sell” a third time and even turned the laptop upside down in sheer desperation.
As it turned out, I lost the entire account in six days. That was the most expensive lesson I learned that day—never trade against the trend.
How important is personal finance management in the life of a trader, be it on a part or full-time basis?
It is of paramount importance. In fact, it is more important than the strategy itself. In trading, this is called “money management” or “risk management.”
Let’s say you start trading with $3,000. When you “blow up” 50 percent of the account, the amount is down to $1,500. Now, to bring the account back up to the initial capital of $3,000, you have to make a 100 percent return. When you lose 80 percent of the account, you need to make a whopping 400 percent return just to bring it back up to the initial amount.
This is the principle in risk management—it’s very easy to lose money; but it’s very difficult to make it back.
So, rather than find yourself in that uncomfortable position, the answer is to trade with minimal risk. Specifically, I do not risk more than three percent of my capital for each trade. This means that if I started my account with $3,000 and the trade didn’t go the way I intended, I would exit the trade when my loss hits $90.
What are some of the no-no’s in forex trading?
I’ll share three.
Firstly, don’t trade with capital that you can’t afford to lose. I’ve seen people throw in their last bit of savings into a trading account in the hope of turning things around. Don’t do that. You will be so caught up in your emotions that you won’t be able to trade sensibly.
Secondly, never trade without a stop loss. A stop loss is defined as the level you would exit the trade if it doesn’t go in your intended direction. When traders don’t put a stop loss, they leave the account susceptible to a total wipeout when the markets trend in the opposite direction. Ironically, the group of traders who are adamant in not setting strict stop loss levels are the same group who walk away from the Forex market saying it’s risky.
Finally, don’t be in a hurry to trade with real money. Almost all Forex brokers worldwide provide free practice accounts for you to start your journey. Make use of them. Open a free practice account, get used to the trading platform and familiarize yourself with the charts and buttons.
Psychologically speaking, how do you manage the non-technical aspects of yourself when you trade—the gut instincts and emotions?
In world-class trading, money management is twice as important as strategy, but one’s “state of mind” or “emotions” is twice as important as money management. You can have the best strategy or the strictest money management rules, but if you allow greed, hope and fear to grip you when you are trading, it will derail you from your trading plan.
In the book, there is an entire chapter that helps readers discover their dominant trading profile; some traders like to trade 20 times a day, others prefer to trade once a month. Once you discover your dominant trading profile, you will then be able to choose the strategy that best complements your personality, leading to more consistently profitable trades.
A lot of people have the impression that trading, whether Forex or stocks or something else, is for those who are out to make a quick buck. Is that accurate?
Couldn’t be further from the truth. In Singapore, our inflation rate is about 4 percent while one year’s deposit in the bank earns about 0.5 percent interest. This tells us plainly that if your plan of wealth creation is to leave money in the bank, you would be having an annual nett return of negative 3.5 percent. Hence, learning to trade or invest in the financial markets is of great importance.
The reason why many people equate trading and investing to making a quick buck is because most of us have a reference to someone (or heard of someone) who has made decent money in the financial markets. If at all, such examples should serve to encourage us that we can do the same.
What kind of reader is your book most suited for?
My book is suited to three groups of people.
Firstly, it serves the working individual who’s holding down a job, but with intentions to make an additional stream of income in their spare time. You can do this in the 24-hour Forex market with only a laptop and an internet connection.
Secondly, it’s for finance professionals who deal with global assets like stocks, commodities, bonds and bullion. In the book, I talk about “finance decoded” and “market sentiment” and its subsequent impact on capital flows. This understanding can help you better structure your portfolio of global assets.
Finally, it’s for companies which deal with revenues and payments in different currencies worldwide. Currency fluctuations can hurt your bottom line significantly if you do not know how to hedge your exposed positions.
17 Proven Currency Trading Strategies – How to Profit in the Forex Market is now available at 50 percent discount (u.p S$101.60 at all major bookstores) from now till Jan. 31, 2013 at http://mariosingh.com/PCT12/. It is also available at The Ink Room at S$75 from February onwards. Connect with Mario Singh at www.mariosingh.com and on Facebook at “Mario Singh – Asia’s Favourite Forex Coach”