Interview with Cheng

Re: Interview with Cheng

Postby Cheng » Sat Mar 06, 2010 4:50 pm

San San wrote:TQ Cheng Cheng,

You taught me a lot of things too, especially those 'observation skills' which are applicable in these markets ...

See you at our movie date!


Ok! Must remind me of the date haha... :lol:
"The really big money tends to be made by investors who are right on qualitative decisions." Warren Buffett

"Risk no more than you can afford to lose, and also risk enough so that a win is meaningful." Ed Seykota

Scan with FA, Time with TA, Volatility is my Friend. :)
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Re: Interview with Cheng

Postby Cheng » Sat Mar 06, 2010 4:51 pm

Musicwhiz wrote:Thanks for the interview Cheng! Keep up the learning and I am sure you will do great in the long-term! :D


MW you too! We must always be constantly learning to improve. :)
"The really big money tends to be made by investors who are right on qualitative decisions." Warren Buffett

"Risk no more than you can afford to lose, and also risk enough so that a win is meaningful." Ed Seykota

Scan with FA, Time with TA, Volatility is my Friend. :)
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Re: Interview with Cheng

Postby Cheng » Sat Mar 06, 2010 4:54 pm

lithium wrote:Dude, keep on doing what you are doing. I think you are a sure winner ;)


Thanks, I would like to be lucky again. :lol:

Wish everyone huat huat in the many years to come. :D
"The really big money tends to be made by investors who are right on qualitative decisions." Warren Buffett

"Risk no more than you can afford to lose, and also risk enough so that a win is meaningful." Ed Seykota

Scan with FA, Time with TA, Volatility is my Friend. :)
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Re: Interview with Cheng

Postby b0rderc0llie » Sun Mar 07, 2010 12:05 am

4) I also hope to pick up Option Trading from J.L. Lord when I have a bigger account size. He has written 4 books in total. The best is "One strategy for all markets". Sounds good heh?


I have read JL Lord's 4 books and they were very interesting.

I only invest in the Singapore stock market. I will enter the US market when I start working and saved a sizable account. In the US market, there are a lot of derivatives to play with when you are buying or selling a stock.

To keep it simple, if Buffett wants to buy ABC company at $50, the current price is $70, he can sell options to buy at $50. Two possible senarios can happen, the price stays above $50 and he collects the premium or the price falls to $50 and he buys it. We cannot do that in the SG or HK markets.


Yes, the US has many derivatives that are readily available in the exchanges.

For the selling put option example, it is actually possible to do so in the SG or HK market. One way is through an equity linked note. http://www.uob.com.sg/corporate/corpora ... notes.html

Another way is through Over-the-counter options. You can ask your bank to quote you a price for selling them a put option. Minimum amount is around 250k for them to entertain you.

From wiki: OTC options, also called "dealer options" are traded between two private parties, and are not listed on an exchange. The terms of an OTC option are unrestricted and may be individually tailored to meet any business need. In general, at least one of the counterparties to an OTC option is a well-capitalized institution.
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Re: Interview with Cheng

Postby Cheng » Sun Mar 07, 2010 1:24 am

b0rderc0llie wrote:Yes, the US has many derivatives that are readily available in the exchanges.

For the selling put option example, it is actually possible to do so in the SG or HK market. One way is through an equity linked note. http://www.uob.com.sg/corporate/corpora ... notes.html

Another way is through Over-the-counter options. You can ask your bank to quote you a price for selling them a put option. Minimum amount is around 250k for them to entertain you.

From wiki: OTC options, also called "dealer options" are traded between two private parties, and are not listed on an exchange. The terms of an OTC option are unrestricted and may be individually tailored to meet any business need. In general, at least one of the counterparties to an OTC option is a well-capitalized institution.


Bro b0rderc0llie,

Thanks for the additional info. I've only heard of equity linked notes. To benefit from both, one have to be a high networth individual. I'm not very sure about the terms but it doesnt "feel" very flexible, coming from your banker. Options will be much more liquid and if something went wrong, you will be able to "repair" it. Premiums will be a lot higher coming from a high delta option. Not sure about OTC option and equity linked notes.

Cheers!
Cheng :D
"The really big money tends to be made by investors who are right on qualitative decisions." Warren Buffett

"Risk no more than you can afford to lose, and also risk enough so that a win is meaningful." Ed Seykota

Scan with FA, Time with TA, Volatility is my Friend. :)
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Re: Interview with Cheng

Postby b0rderc0llie » Sun Mar 07, 2010 12:30 pm

ELN and OTC options are not flexible. They are illiquid and are unable to "repair" if something goes wrong :) Premiums will most likely be lower than premiums from an exchange traded option, since the institution will want a cut of the premium. However, these 2 are the only ways I have found for selling a put option in SG. If there are any other better ways, do let me know. Thanks in advance :)
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Re: Interview with Cheng

Postby millionairemind » Sun Mar 07, 2010 12:31 pm

Cheng wrote:There is a trader whom I occasionally go and read his blog(shall not mention), he cut losses very fast, hit 8-10% will definitely cut. He sticks to his cut loss principle and money management, but guess what? He takes profit fast and cuts fast, overall ~80% of the time he is cutting losses. Sometimes I ask myself, it is a strong company when it drop 8%, should I cut? For his record, after he cut, most of the time the price went up again. Trading is also not easy. :(


Cheng,

Thanks for the reply to my question about being the only child :D

Regarding this trader friend of yours, I think he probably needs to get his risk/reward ratio right before entering a trade. If he cuts loss fast (which is good), he must also allow his profits to double or triple his typical 8% losses.

If he is always taking losses and fast profits, very soon he will be washed out of the game. His profits cannot cover his losses.

Cheers,
mm
"If a speculator is correct half of the time, he is hitting a good average. Even being right 3 or 4 times out of 10 should yield a person a fortune if he has the sense to cut his losses quickly on the ventures where he has been wrong" - Bernard Baruch

Disclaimer - The author may at times own some of the stocks mentioned in this forum. All discussions are NOT to be construed as buy/sell recommendations. Readers are advised to do their own research and analysis.
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Re: Interview with Cheng

Postby kennynah » Sun Mar 07, 2010 2:34 pm

b0rderc0llie wrote:ELN and OTC options are not flexible. They are illiquid and are unable to "repair" if something goes wrong :) Premiums will most likely be lower than premiums from an exchange traded option, since the institution will want a cut of the premium. However, these 2 are the only ways I have found for selling a put option in SG. If there are any other better ways, do let me know. Thanks in advance :)


if you own very substantial amount of shares....you dictate Call options premium you are willing to write...and ask your banker to consummate the deal, making sure you clearly state that the buyer can be anyone (ie. ioffering the bank to take the bet)... but you must know how to price your Calls..
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Re: Interview with Cheng

Postby winston » Sun Mar 07, 2010 5:59 pm

millionairemind wrote: If he is always taking losses and fast profits, very soon he will be washed out of the game. His profits cannot cover his losses.


The rule is in MM's signature.

Three good trades can cover Seven losses, as long as you cut quickly on the bad trades and let the profit RUN on the good trades ..
It's all about "how much you made when you were right" & "how little you lost when you were wrong"
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Re: Interview with Cheng

Postby learn2win » Sun Mar 07, 2010 7:36 pm

winston wrote:
millionairemind wrote: If he is always taking losses and fast profits, very soon he will be washed out of the game. His profits cannot cover his losses.


The rule is in MM's signature.

Three good trades can cover Seven losses, as long as you cut quickly on the bad trades and let the profit RUN on the good trades ..


A 10% loss you will have to make 11.1% on the next trade to make back the losses. If the profit is not more than the loss, the trader will be wipe out very soon.
Guard Thy Treasure from Losses - The Fourth Cure for a Lean Purse - George Clason
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