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Explore and Shape Your Trading Faith System

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Guest profile:

David Dai has more than 10 years progressively responsible experience in financial services, risk management and market research roles. He is Chief Strategy Analyst at TMGM, specializing in international political economics and financial risk management. Previously, he worked as a derivatives investment analyst at UBS Group for various portfolio management projects. David holds a Master’s degree in Financial Analysis from UNSW. He is an active member of Australia Financial Planning Association, FPA. Also, he is a senior financial adviser of Australia Stock Exchange (ASX), ALPA.

1.When did you first get into trading? Was it self-taught or did you have a mentor?

David:I started my trading career ten years ago. Like most traders at that time, I started as a self-taught novice and gradually became a strategist with considerable trading experience.
There is no official training provided by the organization and limited online resources. I learnt all fundamental and technical analysis through self-guided book. I think traders should cultivate the habit of self-learning. The process of self-learning may be long, but the process of thinking is very precious.

2.What is your starting capital for trading? What is the current size of your trading funds? What is the situation of your first profit and first loss?

David:I started trading with $10,000 as I was more interested in doing intra-day medium term trading, $10,000 felt like an acceptable and reasonable amount for me to start with. I usually withdrew the profit once it hits my monthly 15% profit target. I prefer to hold a balance between $15,000 and $20,000. Currently, I keep average $20,000 in one of my trading accounts.
My first gain and first loss were both from AUD/USD, which is the commonly traded forex pair in Australia. At that time, I just started using basic trading skills. Therefore, I was focusing on one or two currency pairs.

3.What is your biggest profit or loss in trading?

David:It sounds a bit like a cliché. However, I believe the biggest profit would be the next one. To expand on that, it has always been my goal to achieve a more impressive trading record. To date, my biggest profit would be around the time when the pandemic first hit, I gained about $33,200 by trading gold in a single order. I experienced my biggest loss when I just started trading. There was one trade on AUD/USD where I misread a pattern signal, and it was near the time when the Reserve Bank of Australia announced the interest rate decision.

4.Do you prefer technical analysis or fundamental analysis? Which trading instruments are you good at? Can you describe your trading strategy or trading style in detail?

David:Both fundamental analysis and technical analysis are important in real trading world. However, technical analysis is more likely the key for my trading success. A technical chart clearly shows the relationship between various variables and the results of their interaction and turns the complex causality into a simple price history map. It is important to grasp the trend of change by looking at the situation. Usually, the breakthrough of some main supports and resistances or moving average often means the coming of huge opportunities or risks.
In terms of trading instruments, I would prefer AUD/USD trading. Given that the Australian dollar is a commodity currency, its fluctuations are closely related to iron ore and gold. I am a trader who is very keen on current affairs and news. I would focus on the state of the country, the attitude of the leaders, and the emotions of the people. Therefore, the volatility of AUD/USD is closely related to Australia's economy and geopolitics.

5.Many of your transactions have made considerable gains. What do you think is the core factor that leads to such good trading results?

David:The first thing is to pay more attention to the news about current events happening around you, that is, market sensitivity. I maintain continuous attention and thinking about market information, and I believe that the accuracy of current affairs news can be judged by myself. For example, at meetings of the Federal Reserve, news reports usually record Powell's original words, but sometimes ignore the tone and emotion of his speech. I am very concerned because it often hides their true thoughts and opinions. Therefore, I suggest that you pay attention to the latest and most accurate current affairs news, data, original opinions and speeches in the market.
Secondly, as a trader, it is important to stick to your own ideas. Don't go with the crowd. As the saying goes, the truth is often in the hands of a few people. Through continuous learning and verification, I have confirmed that my idea is correct. Then just stick to it.

6.When you first came into contact with trading, which trading books helped you the most? Can you recommend it to readers?

David:For books on learning trading, I recommend Reminiscences of a Stock Operator by Edwin Lefevre. This book is about the deeds of trader Jesse Livermore. It is a very classic financial transaction book. It is not a trading guide or teaching manual, you can treat it as a story. But Jesse Livermore's experience, lessons, ideas and understanding of the market have a very important impact on me. For example, Jesse Livermore will follow this trend, and he will also chase the rise and fall. Never go against the market. Inside information is not credible. Learn to review your own operations, learn from your mistakes, and so on. They are all points of view worthy of careful reading and reflection.

7.In your past trading career, were there any unforgettable things for you? Can you share it with readers?

David:In my past trading career, there are many unforgettable things for me as I’ve gone through many experiences that have taught me life lessons both in and out of the trading scene. Although predictable, I think for everyone too, the greatest profit and loss would no doubt be the most unforgettable situation, as it presents such a stark impact to your emotions. The first loss and the greatest loss both enabled me to experience the risks of trading and the importance of noticing details even under stress. This strengthened my mindset, allowing me to persevere. Unexpectedly, in my trading career, an unexpected outcome has been being able to interact with a wide variety of people from all walks of life whilst going to learn and interchange ideas about trading. The experience I’ve gained from others is truly unforgettable and has shaped the way I view trading as a whole. The pairing of learning by yourself and learning from others is definitely necessary and complementary to the journey of shaping your own trading style.

8.Which one do you think is more important?The trading psychology or technology? Can you talk about it based on your own experience?

David:Technology plays an important role in trading, allowing trading to become more accessible to people all around the world. As globalization continues to occur, technology has allowed for information to be transmitted from one location to the next in a matter of seconds, including between different trading centers.
This has allowed for very precise market prices and fast transaction speeds, even with different countries, making it easier for everyone to trade. On a day-to-day basis I might be interacting with people from all parts of the world, discussing pieces of data as they are announced or change in real time in one seminar, which definitely would not have been as easily made possible a few years ago. Different meeting platforms have made the exchange of ideas simpler and clearer for people from novices to experts.
Many platforms have actually used this to their advantage and have begun conducting online seminars or have educational programs, making it easier for everyone to learn more about forex.

9.Did you encounter any difficulties in your initial trading period? How did you persevere?

David:During the start of the initial trading period, I think it is very easy to become focused on one particular product, especially if there are many pieces of news regarding those products coming out in a short period of time or it has high volatility. Even at the start of my trading journey, I found it to be one of the situations that I couldn’t help but get myself caught up in being very affected and impacted by what was said around me and blindly following the trends, sometimes without even doing sufficient research of what is going on.
Now, even though I still consider this to some degree, I try to keep a more relaxed mindset and focus on the bigger picture as well as the smaller details. As you gain more experience, I would definitely recommend this, making sure you stay aware of current affairs in the economic and financial sector and also any world news. Making sure you try to gather as much information from various sources as possible, which is essential to making informed decisions and understanding the outcome of these choices.

10.What will you do if there is a loss in the transaction? Do you usually set a stop loss for trading? How do you think about stop loss?

David:Setting up stop loss is very important. Loss is part of your trading. Therefore, it is necessary to learn how to set a stop loss level. Traders will have a fluke mentality and feel that the fall will always rise back. However, the market is unpredictable, you can't fight in the market and stay unscathed. Conquering one's own investment psychology is also an ability that beginner investors need to learn, but at the same time, many experienced traders will also suffer in this situation.
The second is to learn to measure your own risk tolerance and be prepared for your principal and maximum loss range. Appropriate stop loss setup and market risk hedge are the first lessons you need learn in trading.

11.In your mind, what qualifies an excellent trader?

David:Being a good trader should have many qualities. The first one I would say is quick-wittedness. Since the trading is day by day, a game of minutes, as a day trader, you cannot be deliberative or panicky and must act as quick as possible when seeing a buy or sell opportunity.
The second quality I reckon is important is the interest in the markets. The market is changing rapidly. It is essential that you love to watch the business news, following the securities business for years, because it is the best way to catch up the up-to-date information then make decisions about the price trade.
Also, an understanding of the cycles and systems that drive securities prices will give you a foundation on which you can build. The trader’s attitude is critical because the trading is stressful. A good trader should have strong psychology. The markets gyrate with news events that no one can foresee, which means you cannot guarantee every time you will win even though you are an excellent trader.

12.Does the trading work affect your normal family life? How do you deal with the balance between the two?

David:Trading work is part of my life. Like others working live, seeking a balance between my family and my work is an eternal issue that everyone loves to discuss. I will set up my timetable of what I should do during the weekday. The personal agenda gives me a brief view of how my work should be done and when it should be done. After that, I will plan a schedule with my family during the weekend.
The other advantage of being a trader and an analyst is that the markets close at weekends. Therefore, I would say my work life and my family life is not such that imbalance.

13.Which do you think will help a trader grow faster, learning from others or exploring on your own ? Please talk about your understanding.

David:Learning from others and exploring on your own is the key that drive individuals to become a great trader. By learning and clearly evaluating others’ successes and mistakes is really important contribution towards your own trading strategy. This allows traders to know what things work and what don’t, and hopefully they don’t commit the same mistake.
More importantly, I think exploring your own as a trader, dramatically accelerates a trader’s experience and knowledge of the market. This allows individuals to understand the knowledge through their own experiences and to self-evaluate their own mistakes or success. Jesse Livermore is a great example of self-exploring as a trader in my perspective. With his limited understanding from the beginning of his career, he was able to develop its own trading strategies by exploring and evaluating each of his trader plans. During his career, he went bankrupt many times, but every time he was able to get back stronger through understanding his mistake. This truly made him become one of the most influential traders in history.

14.Please use a few sentences to briefly summarize your current transaction status.

David:I am not trading as often as before now, only when I see a very interesting or very good trading opportunity. Trading patterns are solid indication for market entry and usually secure 70% of the profit once the patterns are confirmed. The last position I took was a long position on crude oil, which was closed with profit. I am keeping an eye on spot gold trading these days. I am always a big fan of safe-haven assets.

15.Under the current impact of the COVID-19 pandemic on the global economy, what trading strategies or suggestions do you have?

David:The pandemic has shaken the trade and development landscape. When the pandemic first strike, there are lots of attentions drawn to energy products such as crude oil and precious metals such as spot gold. Even though two years have been passed after the pandemic first strike, given the current situation, these two products are still showing us with potential for trading.
The precious metal in long term still has strong uptrend momentum. Other than that, it is noticeable that the inflation keeps rising, which leads us to pay more attention to commodity currencies. At the same time, people can invest the underlying assets which have a parallel effect to hedge against potential inflation.
Special reminder: The views of the guests in the article do not represent the position of this journal, nor do they constitute investment advice. The market is risky, and transactions must be cautious!


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Short Comments

  • In the early stages of trading, I was always distracted by what others said

  • 杰西利弗莫尔的书我也读了很多遍,他的很多错误每个交易者都会犯

  • I strongly agree with David that technical analysis and fundamental analysis should not be isolated from each other.

  • To become a successful trader, it is very important to measure your risk tolerance in trading. Only by doing what you can can you be stable and successful.

  • A good trader must be a person with a strong heart, who can stabilize emotions, make rational judgments, make high-value decisions and strictly implement them in the ever-evolving market.

  • It is really not easy to become a talent through self-taught and become an analyst working in a well-known financial company.


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