“A Smart Financial Centre”

Recently  I encounter this article from MAS and I think is interesting to share.

“The Geeks Shall Inherit the Earth”

Technology is changing the way we live, work, and play.

  • Robots and unmanned drones are becoming more common.
    • Robotic cleaners like iRobot have lightened the load of household chores.
    • Pizza restaurants in cities ranging from Mumbai to Moscow have started to deliver pizzas using drones.
  • Digital payment systems are taking off rapidly, especially in developing countries.
    • Kenya launched in 2007 M-Pesa: a simple and low-cost service that allows users to deposit and transfer funds through SMS text messages.

When the legal profession is organising a conference on technology, you know that something momentous is brewing!  I congratulate the Singapore Academy of Law for its acumen in setting technology as the theme for its conference.

A sector where I believe technology is going to be fundamentally transformative is financial services.  In fact, there is a new buzzword: “FinTech” – financial technologies or the integration of finance and technology.  Two things are happening.

First, non-financial players are using technology to offer innovative solutions that mirror the services traditionally offered by financial institutions (“FIs”).

  • Payments – Apple, Google, Paypal, Amazon, and Alibaba have payment solutions that replace physical wallets and credit cards.
  • Lending – Zopa, Lending Club, and Funding Circle offer peer-to-peer lending solutions that match lenders and borrowers on their online platforms.
  • Investment – “robo-advisers” like WealthFront use data analytics to dispense online personal financial advice and investment management services.

Indeed, these non-financial firms look set to disrupt the financial industry.

  • As a senior banker in the US puts it: “People need banking, not banks”.

The second thing that is happening is that FIs are fighting back.

  • As disintermediation threatens FIs, they are being pushed into a rethink of their business models.
  • Rising costs, shrinking margins, and the weight of new regulatory requirements are pressing FIs to look into more cost-efficient ways of running their businesses.
  • They are increasingly turning towards innovation and technology for solutions.
  • In an ironic way, the FinTech insurgency is forcing change among the incumbent FIs.

Leveraging on their size and networks, FIs are using technology much more intensely to enhance their product offerings and service delivery.

  • Example: US insurance companies, Progressive and Allstate, are using telematics to develop usage-based motor insurance, also known as Pay-As-You-Drive (or Pay-How-You-Drive).
  • Instead of rewarding past good driving behaviour, these insurers are able to price premiums contemporaneously with current driving habits.

What does all this mean?  As a powerpoint slide used by a FinTech company in Silicon Valley rather immodestly proclaims: “the geeks shall inherit the earth!”.  It is no doubt an exaggeration.  But the message is clear:

  • In the years ahead, countries, businesses, and people who know how to use technology and innovate will have a keen competitive advantage.

Why This Time is Different

Now, have we not heard this story before – that technology will transform banking and then nothing changed fundamentally?  Indeed there have been false starts in the past.

  • In the 1990s, we thought that electronic money would replace cash and cheques.  That has not happened.
    • In most parts of the world, including the US, Japan, Europe, and Singapore, notes and coins in circulation outside banks has been increasing steadily every year.
  • In 2000, some of us were quite sure that Internet-only banks would eventually replace brick-and-mortar branches.  This too has not happened.

The most obvious evidence that both beliefs were manifestly wrong occurs year after year, when lines of Singaporeans form at bank branches to obtain new notes for “angpows”, to be given out during the Chinese New Year celebrations.

  • But this year, however, we saw “e-angpows” being given out for the first time.
  • Could this be a sign of things to come?

Technology takes time to proliferate.  More importantly, it is the interaction among related technologies that often creates transformation – and that takes time.

There is reason to believe that this time is different: that technology will indeed transform financial services in a way that has not happened before.  It has much to do with the concept of mobility.

First, mobility of technology.

  • Mobile devices, such as smartphones and tablets, have become common-place.
  • People do not just connect and surf from their home computers anymore – they also do so from their mobile devices, while on the go.  This has profound implications for how financial services are offered and consumed.

Second, mobility of ideas.

  • Today, online platforms provide a variety of social networking and peer-to-peer services.  And people are increasingly comfortable using these services.
  • These services have compressed time and space: interaction is real-time and information exchange transcends physical boundaries.
  • They allow information, knowledge and ideas to be shared widely across communities and geographies.

Third, mobility of payments.

  • In the past, it used to take several days and cost quite a bit to pay someone in another country or currency.
  • Today, online payment services have made it possible for people and businesses to transfer funds safely at very low cost.
  • This has not only allowed e-commerce to flourish, but also enabled faster and more efficient cross-border financial services, like lending and borrowing.

We are looking at a financial services industry that will be increasingly driven and powered by technology.

The Big Trends in Technology Affecting Finance

What are the big trends in technology affecting the financial industry?  Let me cite six technologies that appear potentially transformative:

  • digital and mobile payments
  • authentication and biometrics
  • block chains and distributed ledgers
  • cloud computing
  • big data
  • learning machines

First, mobile and digital payments.

Payment services are increasingly being enabled by mobile applications and near-field communications (NFC).

  • Gone are the days of the clunky cash register.
  • Today, accepting payments can be as simple as attaching a small dongle, no bigger than a matchbox, to a tablet or smartphone.

This is only the beginning.

  • Payments at stores and restaurants may increasingly not even require physical touch points, and could take place entirely over the Internet, using the customer’s smart device to effect payments.
  • Further out, we can look to a future of seamless payments, where technology automatically recognises the customer, checks out the goods, and charges to the customer’s account as he walks out of the store.

Second, authentication and biometrics.

Authenticating one’s identity is critical to gaining access to a variety of financial services and performing many financial transactions.  As authentication technology progresses, we can look forward to more secure and efficient solutions to authenticate identity.

Biometric authentication is making good advances.

  • In the future, we may not have to remember complex passwords or worry about password compromise.
  • Fingerprint, iris, facial and voice recognition, and even palm vein and heartbeat recognition systems are being explored for authentication purposes.
  • Biometric ATMs have been deployed in several parts of the world, including the UK, Japan, China, Brazil, and Poland.
  • Banks in Singapore have launched mobile applications that utilise the TouchID function of the iPhone for fingerprint authentication.
  • Some have also been exploring the use of voice biometrics in their phone banking and call centre services.

For users who are concerned about their privacy or have physical challenges, token-based authentication offers an alternative means of security:

  • Tokens embedded within mobile devices, or perhaps on wearable technology, are viable options.
  • And where stronger security is required, these could be used together with biometrics to provide multi-factor authentication.

Third, block chains and distributed ledgers.

Digital currencies – like Bitcoins – have attracted much interest.

  • Payments using Bitcoins are much faster and potentially cheaper than conventional bank transfers and, its advocates argue, just as safe.
  • Whether digital currencies will take off in a big way remains to be seen.
  • But it is a phenomenon that many central banks are watching closely, including MAS.
  • And if they do take off, one cannot rule out central banks themselves issuing digital currencies some day!

But the bigger impact on financial services, and the broader economy, is likely to come from the technology behind Bitcoins – namely the block-chain or, more generally, the distributed ledger system.

  • A block chain is essentially a decentralised ownership record.
  • It allows a document or asset to be codified into a digital record that is irrevocable once it has been committed into the system.
  • The digital record can be accessed and verified by other parties in the system without going through a central authority.
  • The potential benefits of such a distributed ledger system include:
    • faster and more efficient processing;
    • lower cost of operation; and
    • greater resilience against system failure.

There are many potential applications of distributed ledger systems in the financial sector:

  • Ripple in the US offers a solution, based on distributed ledgers, for real-time gross settlement, currency exchange, and remittance.
  • The same solution could potentially allow regulators to plug into the network to conduct surveillance of risks and to track transactions to detect money laundering or terrorist financing.

In fact – and this would be of interest to the lawyers gathered here – distributed ledger systems could potentially be applied in any area which involves contracts or transactions that currently rely on trusted third parties for verification.

  • Honduras is developing a land title registry system based on distributed ledgers
  • Other potential applications talked about include registry of intellectual property rights, supply chain management, electronic voting systems, medical records, etc.

Fourth, cloud computing.

Cloud computing is an innovative service and delivery model that enables on-demand access to a shared pool of computing resources.  It provides economies of scale, potential cost-savings, as well as the flexibility to scale up or down computing resources as requirements change.

There is a view among some quarters that “MAS does not like the cloud”. This is an urban myth, not true.

  • Well, MAS did have concerns about cloud computing previously.
  • This was because cloud services were at the time not sufficiently secure to safeguard the sensitive information that FIs held.
  • But cloud technology has evolved considerably and there are now solutions available to address these concerns.
    • For example, FIs can now implement strong authentication and data encryption to protect their data in the cloud.
    • MAS has been in dialogue with both FIs and cloud service providers
    • Providers have now become more aware of our security considerations while we have gained a deeper understanding of the safeguards they have put in place.
  • I am pleased to say that several FIs in Singapore have successfully rolled out cloud solutions in the past two years.

Fifth, big data.

The world is exploding with information.

  • Data generated by online social networking and sensor networks, and data collected by governments and businesses amount to a universe of digital information that is growing at about 60% each year.
  • There is also a global trend – including in Singapore – towards “open data” in which data are freely shared beyond their originating organisations
  • At the same time, the cost of storing and processing data has been falling dramatically.
  • These trends have created the opportunity to use data to understand the world around us with a clarity and depth that was not possible before.

Some FIs are investing in and using this big data to derive useful and actionable insights.

  • JP Morgan Chase and MasterCard, to cite two examples, are using big data techniques to derive insights from consumer spending patterns.
  • Visa is using big data techniques to detect fraud in financial transactions.

Sixth, learning machines.

This might well be the most impactful technological change of the future – computers that can think.

  • Traditional computing machines and algorithms are programmed to carry out specific tasks in response to defined circumstances according to the software programme that is written into them.
  • We are now moving into the age of cognitive machines which are designed to learn from the data that they hold and be able to, in a sense, programme themselves to perform new tasks.
  • They continuously adapt to new data as well as feedback and inputs gathered from their experiences, including interactions with humans.

We are already beginning to see examples in the financial industry:

  • In equity, commodity, and FX markets, some traders are using self-learning algorithms
    • they not only analyse historical data, predict price movements and make trading decisions, but continually upgrade and adjust their trading strategies in the light of new evidence and market reactions.
  • In lending, learning machines have been used to construct models for consumer credit risk and improve the prediction of loan defaults.

The legal minds assembled here might want to reflect on where the legal liabilities arising from the actions – or inactions – of such learning machines lie.

The six technologies that I have outlined have the potential to transform the financial industry globally.  There could well be others that I have not mentioned.

The important thing for our FIs is to be alert to these and other technology trends, understand their possible implications, and seize the opportunity to apply relevant technologies safely and efficiently – to boost productivity, gain competitive advantage, and serve consumers better.

Smart Nation Needs a Smart Financial Centre

At the national level, Singapore has set its sights on becoming a Smart Nation – one that embraces innovation and harnesses info-comm technology to increase productivity and improve the welfare of Singaporeans.  The Smart Nation Programme under the Prime Minister’s Office has brought together stakeholders from the government and the industry to identify issues and develop solutions with this objective in mind.

Government agencies have been rolling out a steady pipeline of Smart Nation initiatives.

  • The Housing Development Board has trialled a new system that utilises home sensors to monitor elderly folks who are staying alone and alert caregivers should an emergency arise.
  • The Land Transport Authority is studying the use of autonomous vehicles that can self-drive with the help of environmental sensors and navigation systems.
  • The Urban Redevelopment Authority has been utilising geospatial information and data analytics for urban design and land-use planning.

A Smart Nation needs a Smart Financial Centre.  Indeed, the financial sector is well placed to play a leading role given that financial services offer fertile ground for innovation and the application of technology.

MAS will partner the industry to work towards the vision of a Smart Financial Centre, where innovation is pervasive and technology is used widely to:

  • increase efficiency,
  • create new opportunities,
  • manage risks better, and
  • improve people’s lives.

MAS will seek to achieve this vision together with the industry through two broad thrusts:

  • a regulatory approach conducive to innovation while fostering safety and security; and
  • development initiatives to create a vibrant ecosystem for innovation and the adoption of new technologies.

Smart Regulation for a Smart Financial Centre

First and foremost, a smart financial centre must be a safe financial centre.  Technology can be a double-edged sword.  If not managed well, it can potentially lead to a variety of risks in the financial industry:

  • financial crime and illicit transactions;
  • loss of data or compromise of confidentiality;
  • glitches that damage reputation, disrupt business, or worse, cause systemic crisis.

The first priority on our journey towards a Smart Financial Centre is therefore to continually strengthen the industry’scyber security.

As more financial services are delivered over the Internet, the frequency, scale, and complexity of cyber attacks on FIs have increased globally.  Hackers and cyber criminals are constantly probing IT systems for weaknesses to exploit.

There are two reasons for concern:

  • First, the connectedness among FIs mean that a serious cyber breach in one institution can potentially escalate into a more systemic problem.
  • Second, repeated cyber breaches could diminish public confidence in online financial services and reduce people’s willingness to use FinTech in general.

MAS and the financial industry in Singapore take cyber security seriously.

  • FIs are expected to:
    • implement controls and measures to preserve the confidentiality of sensitive data
    • maintain the integrity and availability of their systems
    • conduct regular vulnerability assessments and penetration tests to evaluate the robustness of their cyber defences
  • MAS conducts regular onsite inspections of key FIs’ technology risk management processes and controls to check that they meet these requirements.
  • FIs have also established Cyber Security Operations Centres to enhance their cyber surveillance and gather cyber intelligence.

But cyber threats will not go away.  Like a cat and mouse game, both hackers and cyber defenders have been enhancing their tools and techniques along with advances in technology as well as in response to one another.

  • As part of this evolution, a new wave of next-generation cyber security solutions is emerging, in areas such as trusted computing, security analytics, threat intelligence, active breach detection, and intrusion deception.
  • The financial industry needs to keep abreast of these developments.

While seeking to ensure cyber security, MAS’s regulatory approach towards fostering innovation and the adoption of new technologies will take three forms.

First, innovation owned by FIs.

In matters of innovation, time to market is critical. FIs are free to launch new ideas without first seeking MAS’ endorsement, as long as they are satisfied with their own due diligence.

  • A recent case that went on this approach was a mobile banking application that utilised fingerprint authentication for balance enquiries.
  • The bank went ahead, did not need MAS approval.

What does this approach entail?

  • FIs’ board and management should take the responsibility to ensure that the risks of new innovative offerings are well identified and managed.
  • The compliance people should ideally be involved early in the innovation process. However, they should avoid second-guessing MAS by taking an overly conservative stance that might nip innovation in the bud.
  • If the FI encounters a specific issue on which it needs MAS’ guidance, we will be happy to help.
  • But the FI must offer its own assessment of the risks in what it proposes to do and take ownership for its decisions.
  • It cannot rely on MAS to do its due diligence.

Second, innovation in a “sandbox”.

Sometimes, it is less clear whether a particular innovation complies with regulatory requirements.  In such cases, FIs could adopt a “sandbox” approach to launch their innovative products or services within controlled boundaries.

  • The intention is to create a safe space for innovation, within which the consequences of failure can be contained.
  • FIs can seek MAS’ guidance and concurrence on the boundary conditions – for example, the time period, customer protection requirements, etc.

Third, innovation through co-creation.

MAS has a long tradition of active consultation with industry on proposed new rules or initiatives.  More recently, we have engaged industry players more directly to co-create rules and guidance – in other words, to jointly come up with proposals.

  • An example is the Private Banking Industry Code – developed by industry practitioners but in close consultation with MAS.
  • Such co-creation is particularly relevant for developing rules or guidance on new technologies whose benefits and risks are not fully known and where a more flexible approach may be desired.

A further possibility in co-creation might be MAS and the industry working together to develop common technology infrastructure that meets regulatory requirements. The aim is to clarify and address issues and uncertainties upfront during the course of development.

MAS is not seeking a zero-risk regime. And we understand that failure is part of the learning process.

  • If things do go wrong with an innovative product or service, and there will no doubt be some failures, the FI will need to review its implementation and draw lessons.
  • MAS will examine the facts to assess if there is any systemic or deeper issue that needs to be addressed, and determine if any action needs to be taken.

Development Initiatives for a Smart Financial Centre

Besides providing a conducive regulatory environment, MAS will work closely with the industry to chart strategies for a Smart Financial Centre.  Let me sketch some of the initiatives we have embarked on:

  • a Financial Sector Technology & Innovation scheme to provide financial support;
  • a multi-agency effort to guide the development of efficient digital payments systems;
  • a technology-enabled regulatory reporting system and smart surveillance;
  • supporting a FinTech ecosystem; and
  • building skills and competencies in technology.

First, the Financial Sector Technology & Innovation or “FSTI” scheme.

I am happy to announce that MAS will commit $225 million over the next five years under the “FSTI” scheme to provide support for the creation of a vibrant ecosystem for innovation.

FSTI funds can be used for three purposes:

  • innovation centres:  to attract FIs to set up their R&D and innovation labs in Singapore.
  • institution-level projects: to catalyse the development by FIs of innovative solutions that have the potential to promote growth, efficiency, or competitiveness.
  • industry-wide projects: to support the building of industry-wide technology infrastructure that is required for the delivery of new, integrated services.

Several FIs have already set up their innovation centres or labs in Singapore, some under the FSTI:

  • DBS, Citibank, Credit Suisse, Metlife, UBS,
  • as well as a couple of others that are in the pipeline.

Some examples of FSTI-supported institution-level projects that are ongoing include:

  • a decentralised record-keeping system based on block chain technology to prevent duplicate invoicing in trade finance;
  • a shared infrastructure for a know-your-client utility;
  • a cyber risk test-bed; and
  • a natural catastrophe data analytics exchange.

We look forward to see more such innovation projects coming on-board.

Second, digital payments.

Changes in the payments scene in Singapore have picked up pace in recent years:

  • Our retail banks have released their own flavours of mobile wallets or mobile payment applications:
    • DBS PayLah!, UOB Mobile Cash, OCBC Pay Anyone, StanChart Dash, Maybank Mobile Money
  • With the launch of Fast And Secure Transfers or “FAST” in March 2014, we now have a ready infrastructure that allows customers of the participating banks to make domestic fund transfers to one another almost instantaneously from their computers or mobile devices.

But there is a lot more we need to do on the digital payments front.

First, payments at stores and restaurants.

  • This is almost a Uniquely Singapore phenomenon
    • Many of our stores and restaurants have multiple Points-of-Sale (“POS”) at their payment counters.
    • This not only clutters valuable real estate but also makes life difficult for customers and merchants.
  • As more stores and restaurants introduce self-checkout facilities to improve productivity, we need a unified POS – a single terminal, preferably mobile – that will:
    • allow merchants to enhance efficiency by simplifying front-to-back integration; and
    • enhance the shopping or dining experience of customers.

Second, reduce the use of cash and cheques.

  • It costs as much as $1.50 to process each cheque.
  • The cost of cash is less obvious but just as real: in transportation, collection, delivery and protection.
  • We need to promote greater adoption of new payments technologies, including:
    • electronic Direct Debit Authorisation; and
    • fund transfers using mobile numbers or social networks

MAS and the Ministry of Finance have been co-leading a multi-agency effort to address these issues and guide the development of efficient digital and mobile payment systems.

  • The aim is to make payments swift, simple and secure.
  • The vision is less cash, less cheques, fewer cards.

Third, regulatory reporting and surveillance.

As the financial system becomes increasingly complex and inter-connected, MAS needs to sharpen its surveillance of the system with more timely, comprehensive and accurate information to identify and mitigate emerging risks.

The vision is an interactive, technology-enabled regulatory reporting framework which will:

  • reduce ongoing reporting costs through the use of common data standards and automation;
  • enable the dissemination of anonymised information to industry analysts and academics for deeper analysis of the financial system and its risks.

We are still in early days on this initiative and will work with the industry on how best to take this forward.

Fourth, supporting a FinTech ecosystem.

The effort to grow a Smart Financial Centre must go beyond the financial industry, to help nurture a wider FinTech ecosystem.  We need a strong FinTech community that can:

  • generate ideas and innovations that FIs could adapt and adopt; and
  • provide a platform for collaborations with the industry to produce innovative solutions for defined problems and needs.

For those of you who are not aware, we have a pretty vibrant FinTech start-up community that is growing over at the “Launchpad” in Ayer Rajah Industrial Estate.  MAS looks forward to engaging FinTech start-ups more actively – to better understand emerging innovations as well to help them design their solutions bearing in mind the regulations and risk considerations that apply to the financial industry.

Fifth, building skills and competencies in technology.

Technology will disintermediate and make obsolete many jobs in the financial sector, but it will also create new ones.   Finance professionals will need new capabilities.  And the industry will need skills and expertise from other disciplines traditionally not associated with finance.

MAS and the financial industry must work together to prepare for the changes ahead on the jobs and skills front.  Building capabilities and opportunities in FinTech will be a key area of focus in the financial sector’s SkillsFuture drive.

  • MAS will work with the financial industry, the Institute of Banking and Finance, training providers, and the universities and polytechnics to provide learning pathways relevant for a Smart Financial Centre.
  • We will also provide FIs funding and other support for training opportunities, to help our people acquire specialist capabilities in the relevant areas of FinTech.


Let me conclude.  I have said much about technology and FinTech.  The larger picture is really about promoting a culture of innovation in our financial industry.

  • Such innovation is not always about high-tech.
  • It is about designing better work processes and creating new business models that will deliver higher growth, more enriching jobs, and better services for the consumer.
  • Technology is very likely to be a key enabler for all this, and we must make a concerted effort to understand it and use it effectively.

Thank you.


Full credit to: Keynote Address by Mr Ravi Menon, Managing Director, Monetary Authority of Singapore, at Global Technology Law Conference 2015 on 29 Jun 2015

6 Timeless Trading Lessons from Jack Schwager

I’d like to share with you six timeless trading lessons I learned from speaking directly with Jack Schwager.

Lesson 1: “Early failure is not necessarily predictive of future outcome.”

Jack spoke about how an early or terrible failure didn’t necessarily mean that you are bound to fail in the future as well. This is an important lesson because there are a lot of talented traders with an amazing skill set that often get bogged down by failures early in their career. Jack Schwager goes on to say that he’s seen a number of traders turn their humble beginnings into hugely successful careers due to their self-confidence and extraordinary analytical skills. He gives the example of Michael Marcus, who originally lost his mother’s money early in his trading career, but later went on to turn $30,000 into $80 million in the space of 12 years. So the point here is to be undeterred by early failure, maintain confidence and understand that you only truly fail if you give up. Most traders will experience some form of failure before becoming successful in their own right. (Also see “What is Value Investing?“)

Lesson 2: “A trait that is essential for great traders is the ability to be flexible.”

Jack emphasizes how successful traders who have been around a long time are continually adapting to market changes, and are prepared to adjust their approach or bias to be on the right side of the market. A trading strategy that has worked in the past might not necessarily withstand the test of time moving forward, which is something we need to be aware of. The most important aspect of being a flexible trader is knowing when you’re wrong, being ready to accept that you’re wrong and also being humble enough to switch positions if required.


Lesson 3: “Don’t look for the trading secret, there isn’t any trading secret. Look for a trading method that’s right for YOU, it isn’t going to be the same for everybody.”

This one is mostly aimed at entry-level traders who are taking their initial few steps into the market. There’s a common misconception that a “secret formula” to achieving success in trading exists, which simply isn’t the case, as Jack Schwager points out. He goes on to state that it’s very important to create a trading method that aligns with your risk tolerance, patience and personality traits. Something that works for somebody else isn’t necessarily going to work for you. This can be backed-up by some of the traders whom Jack interviewed for his Market Wizards’ series, who share personal experiences of blindly following a tip which lead them to losing substantial amounts of money.

Lesson 4: “Don’t just trade anything because an example works, don’t jump to any conclusions.”

Jack shared one of his pet peeves, “the well-chosen example”. A term he coined that that refers to a chart pattern or trading strategy that has been taken from an isolated scenario in the past and presented as though it has an edge to continue to produce profitable trades in the future–which is misleading. This highlights the pitfall of looking at charts with tunnel vision and analyzing strategies with a small data sample/number of trades.

Lesson 5: “Know when you’re getting out before you get in.”

When asked to share one of the best chunk-size bites of trading advice he’s received in ten words or less, Jack responded with the above quote from Bruce Kovner. A trader should clearly know where (or when) they’re going to exit a trade even before they get into the market. The reason being, before you get into a trade you have complete objectivity, whereas once you’re in a position you can lose objectivity and make irrational decisions based on fear and greed.


Lesson 6: “There are a million ways to make money in the market, unfortunately they’re all difficult to find.”

Before signing off, Jack Schwager leaves us thinking about the reality and difficulty of finding edge as a trader. While there may be a million or more ways to make money trading (not a select few as some may lead you to believe), it requires a lot of hard work and dedication to be a sustainable trader who makes strong returns over the long term.

While reasonably simple, these six fundamental lessons are partially responsible for the success of many great traders. To hear Jack discuss each one of these topics in greater detail and more, you can listen to the full-length interview here
Full credit to: Aaron Fifield

A Day Trader’s Goals – 10 Good Reasons

1.VISION: They say success is a 2 part process, with part 1 being, ‘You Must Know Exactly What You Want.’ Goals give you the trading vehicle to envision EXACTLY what you want! As the great Stephen Covey So eloquently puts it, One Must; “Begin With The End In Mind.”

2.INTENTION: We live in reality, yet it is a filtered ‘PERCEIVED REALITY.’ Goals for  the Super Trader are used as a lens, shifting one’s ‘Frame Of Reference’ (His Thinking & Awareness) to envision new opportunities, guiding ones’ decisions within a structured ‘INTENTIONAL’ framework via conscious choice.

NOTE: The Important word, Choice. There is age old question;
“Are Traders Born Or Made?”
ANSWER: Neither! We are all products of choice!


3.DESIRE: Goals instigate a strategy to achieve a desired result. ‘Goals Come With Desire.’ With desire come goals. The greater your ‘Goal’s Desire,’ the easier it will be to change your old conditioning. Alter your old conditioning & you change your old habits. CHANGE YOUR HABITS, CHANGE YOUR RESULTS! Desire is VERY Important.

4.PURPOSE: Goals give you a sense of purpose; thereby directing one’s attention to ‘grow one’s awareness; conscious awareness. This relates among other things to the ‘Conscious Competence Learning Model.’

5.FOCUS: Goals are closely linked to ‘FOCUS.’ What is the most important part in a Super Trader’s Structure, his structure of excellence? ‘THE PROCESS!’ Goals help you to direction your focus (WITH CLARITY) on BEING! Being What?



6.PERCEPTION: By merely having ‘Goals,’ you instigate a ‘Comparative’ mode, so you can easily evaluate & make rational ‘Value’ judgements regarding your ‘PROCESS & OUTCOME Goals.’
The principle of perception is based on differences. So, what do we need to be able to compare. Start with a goal! All Super Traders quantify & qualify their performance. So all ST’s use goals!“What’s measured improves!” Peter Drucker

7.FEEDBACK: Trading involves learning. Learning & improving partly involves repetition which needs considerable feedback. A ‘Super Trader’s Goal System’ always incorporates a ‘Feedback Loop.’



8.ACCOUNTABILITY: Having goals & a goal process makes you purposeful, thoughtful rational & systematic. This transcends into the realm of ‘Personal Accountability’ having what is known as an ‘Internal Locus Of Control.’

9.HABITS FORMING: Goals are part of a ST’s consciously chosen system that helps ‘Reshape’ old negative self-limiting beliefs & habits that could be buried deep within his subconscious. Thus goals aid in the creation & formation of new habits.

QUESTION: What Are Habits?



10.CHANGE: Goals help you change. It is said (via quantum law) that the environment is an extension of the mind. So importantly; if the World is shaped by our thoughts (potentiality), then ‘INTENTIONALLY’ shaping our destiny via goals & goal setting we will ultimately reshape our conditions & our environment, thus changing the events, circumstances & outcomes.


“I wish you well in your journey & in your trading.”

Full credit to: daytradinglife

The recent hoo-hah of the 13.5% crowdfunding

So i just read some articles regarding the recent 13.5% crowdfunding campaign and i think that it is quite interesting to share my thought here.

For the heads up you can read at this few places first: BigFatPurse, Let’s Crowd Smarter and SGYI.

A lot of argument going on for the feasibility for this 13.5% annual interest rate campaign, it is quite interesting to read and to my surprise there are a lot of readers there (especially SGYI) have such high financial literacy really impress me.

But in this article I am not going into should we or should we not go into this crowdfunding as those arguments are mostly cover by those articles above. The things I would write in this article is some interesting perspective like what if….

So before i jump into my new perspective idea to look into this issue, let’s summaries what is this campaign about. Recently, MoolahSense has this campaign:

Issuer Summary

Date of Listing: March 17, 2016
Amount: S$500,000
Tenor: 12 months
Repayment Type: Callable
Repayment Term: Quarterly
Target Interest Rate: 13.50% p.a.
Purpose: Asset Purchase

About the company: 

The Company is a well-known brand started in early 2002 by a very experienced entrepreneur with over 25 years of experience in the IT industry. It was established with the objective to be a one-stop digital lifestyle store by offering a comprehensive suite of digital lifestyle products and high quality pre- and post-sale services.

Revenue Source: 

The Company generates revenue through a multi-channel point-of-sales strategy using both offline (retail) and online (e-commerce) channels to transact physical merchandise. Their products consist of a wide range of exclusive computing and mobile equipment (such as laptops, tablets, smartphones, accessories, cases, headphones, and stylus) from top IT brands and the Company’s private label.


The purpose of this funding is to finance the purchase of inventory as well as for general working capital.

Corporate Guarantor: 

Her parent company (an SGX-listed company) will provide a corporate guarantee for the notes.

This investment is brought to you by Moolahsense. They got the company on board their platform where the company started this funding campaign to raise cash. When we invest in this company, we are actually lending money to the company to expand their business in return for interest.

Risks of this investment:

Many of you might be worried about the risk involved when investing through crowdfunding platforms. While risks are always present in every investment, we can reduce it by doing our homework. The risk of notes/bonds investment is when the company defaults on its payment. Looking at its financials, the company has a operating profit of $330K and cashflow from operations of $5.1 Million in the current financial year. It also has an average cash balance of $1.4 Million. This particular investment is also guaranteed by the parent company which is a SGX listed company.

I am sure the company name is familiar to most people here in Singapore but due to some confidentiality, I will not be able to mention the name of this company in this post. If you are interested to find out about the investment, you will need to sign up for an account with Moolahsense and view the opportunity in their platform. If you already have an account with Moolahsense, you can login to view this opportunity straight away.


This particular investment is a callable note. In a Callable note, an issuer has an option to early redeem the note on a quarterly basis. If the note is not early redeemed, the issuer pays a quarterly interest. The principal will be fully repaid on the quarter that the redemption is early called or at the maturity date.

SAMPLE Scenario (only intended for illustration). 

Assume that you invested $10k in a campaign at a final note rate of 13.5% p.a. in a Callable note.

This is a short term investment which I have also participated in. I believe it is a good opportunity with decent returns for the short term.

To invest in this short term note, check out the investment opportunity on their website here.

Then, there are arguments going on with the feasibility on this campaign as the fundamental of the company seem can’t support this debt which promise such high return with interest rate.

But, but…but…

What if this is a marketing strategy of MoolahSense? Ok, so what do i mean right? Get a bit confusing…how did this become a marketing strategy?

MoolahSense is a recent startup of P2P lending company. if you check on their website, their campaigns can’t consider less but also not yet up to hundred. Recently, the participant of this “hoo-hah” apple retailer company put them into this shiny “spotlight”.

My perspective into this matter is, what if the 13.5% annual interest campaign is a win-win situation for both MoolahSense and the apple retailer company. That 13.5% annual interest investment might sounds a lot if the company who borrow this have to repay with a full year with the investors’ capital invested.

But then..do take note the keyword: CALLABLE NOTE

This is what i found in the website,

Take note on the Callable portion

Callable – The issuer has an option to early redeem the note on a quarterly basis. If the note is not redeemed, the issuer pays interests on a quarterly basis and the principal will be repaid on the quarter that the redemption is early called or if not called, at the maturity date. 

Before investing in a campaign, you can easily check the issuer’s indicated tenor on the MoolahSense Dashboard. The repayment dates will be indicated in the contract note and under the Offers Table on your Dashboard.

This mean that if the issuer decided to redeem for the first quarter, they have to pay for 3.375 for the first quarter with the capital invested or the 3.375 interest rate of your capital invested for the first quarter and another 3.375% interest plus your capital invested for the second quarter. (as illustrated above for the callable notes section).

For this crowdfunding, the apple retailer has to pay the MoolahSense 3% on the crowdfunding fund.

MoolahSense currently charges issuer a flat rate of 3%p.a. on the request amount PL. MoolahSense administrative fee = 3% x PL .The actual amount PA received by issuer will be net of platform charges.

PA = PL – (3% x PL )

My thinking is what if MoolahSense propose this:

For the 3% commission, they will not immediately redeem from the company but perhaps as a loan to the company and only redeem after 12 months (since they source the crowdfund up to 2 millions). This make the 13.5% that the company promise down to 10.5%. The commission then can be repay perhaps after 1 year so it reduce the burden of the company to pay back higher interest rate while it can act as their marketing strategy and the best part is they can get back their commission (not like they can’t), just with a slight delay. Wait, this is not the end yet, currently there are 3 campaigns going on for them which fully invested. 2 with callable notes with 1 monthly installment.

For the callable notes, if they just need the capital for 6 months and able to pay back to the investors after 6 months, this means that the interest rate now is only worth 5.25%! Which is pretty reasonable.

How about the 12-month equal installment? Let’s see at the MoolahSense website,


the 13.5% actually act as a nominal interest rate for the monthy equal payment, this meant that let say for every $10,000  you invested, you will get back $ 895.52 every month. If we sum up is $10,746.24,  this is far less than what we think of a total sum of $11,350! The interest rate actually is close to 7.47%, with a kind gesture of MoolahSense of the late payment of commission, the real interest rate for the company is actually as low as 3.47%!

That’s some interesting perspective from me on their collaboration which i am thinking that pretty possible and if that’s the case mostly it won’t create much issue for the investor as with the launch of the new products from Apple seem like they able to generate sufficient revenue to cover up the interest but if in reality that’s not how it is going on…then i guess time will tell it is a happy ending or sad ending.

Cheers…until next time!

Why traders lose: The mindset

I see so many traders fail unnecessarily. It hurts so much seeing them sabotage themselves over and over and over again and they don’t even notice it. One of the main reasons traders keep themselves from success is my favorite psychological concept called ‘cognitive dissonance.’ Basically, it means that you subconsciously hold two or more beliefs that contradict each other, ultimately making you fail in not only trading but all other areas in life which are influenced by these beliefs, as well.

Take a look at someone that has an interest in two girlfriends (or boyfriends, whatever). One is crazy and wild and fun, the other is down-to-earth and nice, she takes care of him and makes him feel comfortable. Both of these girls fulfill fundamental needs he has deep down in his subconscious. He can’t make up his mind for one and ultimately, obviously, will lose both.

Trading is just the same. Most people that get into trading are young males. Hungry for life, they want it all and they want it now. They want to live the life of a rockstar. The cocaine, the cars, the beaches, the girls, it’s what they are in the game for. Now, on the other hand, we look at the most successful traders of our time: Ed Seykota, Paul Tudor Jones, Jim Rogers, Richard Dennis, Peter Brandt. What do all of these have in common? Well, they are extraordinarily interesting personalities leading extremely ordinary lives. No rock star stories. No Hollywood fame. Simple people, with a singular interest: beating the markets, day in, day out, year in, year out.

This is not a coincidence. While I am sure they all can afford a nice lifestyle, they live a quiet lifestyle. And it helps their trading immensely. Because trading is not about being a rock star. It’s not about being the coolest kid on the block, and it’s certainly not about who has got the biggest balls. Or, as Peter Brandt puts it, a trader is simply a glorified order placer. There is nothing sexy about it, nothing exciting, nothing glamorous. Trading is a boring job. You sit in front of your screen by yourself, the market is your master and your boss, you obey it or you will be out of a job faster than you can say ‘margin call’.

But how does this compute? How can you live a crazy life, and on the other hand, be a total numbers nerd? The simple answer is: most just can’t. Their conflicting views and beliefs will make them do things in the markets that will cost them dearly. We often get messages from people asking us why we don’t trade more often, use more leverage, and generally, why don’t we make the market our bitch. It’s simple, because we are the market’s bitches. We are as humble as one can be, and that is the reason why we survive and thrive in this game.

It took me a long time to figure this one out, trust me. I was always drawn to the ‘finer’ things in life. I like to splurge, I like to party, and I like to show off. I hate having a boss, I hate to eat humble pie, and I generally do not cope very well with authority as everyone that ever had the pleasure to give me orders knows.

So, naturally, my first reaction when I came into the markets, was to make it suffer. I would squeeze every single penny out of that bastard and become the greatest trader of all times. No. Didn’t happen. But I certainly lost a great amount of money and sanity in the process. If you know what drives your decision making process, which motivations and beliefs, and how they interact and conflict each other, only then can you start to make progress in the markets.

The same, of course, goes for wanting to be rich but subconsciously thinking that money is bad, and only bad people are rich. This is actually a belief many of us have, instilled by their parents or by whomever.

The thing is, sure, you can have a crazy life. But you need to calm yourself down once you sit down at your trading desk, and bury your ego deep, deep, deep, so deep that you won’t find it until the weekend. Then you can dance on the tables again. You have to put on your nerd glasses, become the most boring, humble, uncoolest person ever, and do your thing. You have to become the person you never wanted to be. The high school nerd that everyone was making fun of. THIS is how you make money in the markets. I can only say it again, there is absolutely nothing rock star about trading. Losing money because you want to look awesome and take that scalp trade is plain stupid, that’s it. You gonna look like a jerk.

So, yeah, it is almost the weekend again. I for my part had a great week in trading, and am looking forward to Friday to have a good rest. Look for your excitement and your ego boost anywhere, but not in trading, and sooner than you think you will have plenty of money to spend on your rock star lifestyle.

Forex Trading on Position Sizing and Leverage

For the past when I hear about Forex, I will feel curious but at the same time feeling aversion about it. That is because when I hear people talk about it and see a lot of articles regarding Forex…all down to one same thing — People lose money on Forex. Slowly it crave a negative perspective on Forex in my head.

Until one day, a salesgirl from Oanda, a Forex broker firm called me. She called me as I was opening a demo account with them and she thought that I may be interested to open a real account with them as currently there is free 100USD cash promotion going on for opening a new account.

100USD? I was wondering if this is a scam. Due to my curiosity in the end I did open a trading account with them and I really got the 100USD. I am also able to withdraw that 100USD which is close to 140SGD. That is how i got free capital  to do forex trading and know about Forex.

So what is Forex? For the past I tried to understand from online resources but i found that the info from online were too overwhelming. So let’s me cut it simple in this article.

Forex = Foreign Exchange Market

There are two key things in Forex. Pips and Spread.

Pips = The pip is the smallest amount a price can move in any currency quote

Spread = The difference between the bid price and the ask price is called a spread

Example: USD/SGD = 1.35960/1.35975

Buy/Bid/Long = 1.35960, Sell/Ask/Short = 1.35965 (As Sell must greater than buy)

1 Pip = 0.0001USD

The spread is 1.5 pips.


In Forex, there is always a pair of currency, Like USD/JPY, USD/SGD, EUR/GBP, EUR/USD and so on…

So for example to buy 1 unit of USD/SGD in real life require 1.36SGD for an exchange of 1USD. But in Forex trading, they talk a lot about leverage.

As you can imagine USD/SGD for every 1 movement of pip is 0.0001USD…it need take 10,000 pips for us to see a 1 dollar difference. It just mean to get the 1USD, the current trading of USD/SGD need increase from 1.36 to 2.36..which is unlikely to happen in near term or next 5 yrs.

That’s why most broker firm give the leverage feature, some up to 250…for Oanda is up to 50. This mean that for every 100 dollars in your account, you can trade up to 5,000 dollars. Which mean that by right with 100 dollars you barely can buy 100 units of USD/SGD@1.36, now you can buy close to 4,000 units.

If 1 unit, 1 pip movement is 0.0001$,

1000 unit, 1 pip movement will be 0.1$.

So what is the appropriate leverage and position should we take?

With the understanding above, if we trade 1 unit, to be honest..how is it possible our account can burst or we can incur large losses? It take a dollar movement to make us only lose a dollar which is like not possible in 5 years…mostly every 0.1 change in the pair currency will make us lose few cents…and if we see from chart..it sometime take years to happen.

So why most people trade Forex loss money or burst their account?

The key word is Over-Leverage.

If we use leverage in a right way it will bring good than harm…let say you just need 50% of the capital to do the investment. Let say you deposit 500SGD and you buy 1,000 units. it takes 2,500 pips to make you lose half of your capital (2,500 x 0.0001 = 250SGD). Which is unlikely can happen (if you buy at 1.36, it need plunge to 1.11 to achieve 2,500 pips, which for the past 10 years it had never happen before, lowest is 1.20)

But if you over-leverage that will be another story. For example, if you want to invest 1000 USD with your SGD. You just need to deposit as low as 30 SGD for you to able to achieve the same investment.

But the problem is the volatility in Forex market, if you invest real 1,360SGD for 1000USD…and now USD is only worth 1,335SGD. Basically you still have your 1,000USD and you wait the USD grow stronger and you still can profit from it. But then for your forex account, when your fund is lower than 20%, there will be margin call and your position will auto close-out and partial of your capital will be wipe out permanently. This mean that you will permanently lose like 25 SGD.

So the key thing to trade or invest in Forex, position sizing is important.

My guideline is 5 times leverage is the maximum that we should take. Means that if we have 1000 dollars in account. maximum we can trade is 5,000 dollars and shouldn’t more than that. For starter we should try to trade without leverage. This mean that if we have 100 dollars only in the trade account, we should trade according to that amount of trade units. After we familiar with how it works and achieve consistent profit then we slowly increase the leverage.

A good guide is try to risk max of 1% of your capital. According to DailyFx (Click here to read more), the average retail FX trader captures profits on their trades more than 50% of the time. This means that most traders should able reap profits right but that’s not the case. Why?

They lose more money on their losing trades than they make on their winning trades.

So with appropriate position sizing, good risk to reward ratio and with a good trading plan with the compounding come into play, slowly your account will grow profitable.

If you got any questions, feel free to comment below. Until next time, Cheers!

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