Jason Lu

Date: November 16, 2014

Name: TYPEABC – Million Dollar Traders: Tales of Two Independent Traders/Investors

Presenters: Jason Lu, and Andy Man

TYPEABC invites two independent investors to join the investment seminar to share their experience on investment strategies. Jason Lu, the CEO of Chop Chop Innovation and Instinct Advantage, will provide his insight about hedge funds and investment opportunities. Andy Man, the CEO of SER MAN Traders, will provide his insight about the mental knowledge behind the investment traders. This seminar will benefit anyone who would like to know about the fundamental of investment trading.

After the financial crisis, FED starts printing money to recover the economy. Financial institutions utilize the opportunity to receive instant cash flow from FEDs and companies will receive money from financial institutions. However, the economy improves but the money remains on the hands of financial institutions and companies. FED stops printing money and both financial institutions and enterprises need to change their spending differently.

Financial institutions educate company owners to dilute shares and initiate share buyback to improve the company worth; however, the strategy will not grow the company revenue.

To turn everything around, financial institutions starts to lend money to borrowers. The interest rates increase and bank stock will benefit. As for companies, they will do less share buyback, increase infrastructure spending and release more job opportunity. At QE ends, the US dollars will increase, financial institutions will start lending money to public and companies will start to invest on their business growth. The overall stock market will be benefit.

Instead of share buyback, CEO starts to take the strategy to borrow money and takeover small companies. Therefore, trend shows the investment opportunity is in the growth sector.

Proprietary stock picking techniques

Lu mentions there are two primary ways the Wall Street uses to pick their stocks. The first is called “Intermarket Analysis”, and the other is called “Top-Down Approach”. The Intermarket Analysis is for long term period that analyze the market relationship. This tool will breakdown the pattern and identifies the upward and downward trends within the stock.

The “Top-Down Approach” is a procedure to identify the potential stocks.

Macro Analysis -> Sector & Asset Class Focus -> Security Screening -> Security Selection -> Portfolio Monitoring

Lu simplifies the approach by using the Intermarket Analysis to find the macro trend in the stock market. By focusing the right sectors, traders will pick the stocks from those sectors and perform fundamental checks. Lu believes if traders buy currency stocks in the right sector, it has at least 50% potential gain; nevertheless, if it is in the wrong sector, it will be zero.

Lu emphasizes shopping is a good way to find stock. Good investment opportunities come from large traffic and people who are commonly talking about it. Companies that issue discounts are a signal that they are facing competitions, which means they are reaching the peak. The logic works for a majority of sectors.

ETFs Trading

Exchange traded funds (ETFs) are listed on stock market like regular stocks. People can purchase them as much as they want. It is one of the easiest ways to build portfolio for asset allocation strategy.

Many people will buy and sell in panic; therefore, most traders will not receive full gain from the right sectors. Lu suggests a strategy called ETFs for hedging.

ETF hedging is hedge against a drop in the market. This will leverage the inverse of ETFs. Moreover, if market goes down, ETF hedging will increase. ETF makes easy for investment around the world, and this implies to currency hedge too.

Lu recommends everyone not to buy IPO on the first day. There is insufficient financial information due to lack of history. The trend usually drops significantly after the first day. It is a gamble and dangerous. Lu believes there are a lot of investment opportunities in China and ecommerce. Hong Kong is opening up the A-share for everyone to invest.

Lu provides the list of information and resources for people who want to go deeper to investment trading.

Market News	Investment Knowledge	Stock Charts	ETFs & IPO
Investing.com	Investopedia	StockCharts.com	ETF Database
Bloomberg		FreeStockCharts.com	IPOScoop.com
CNBC			Insider Monitor
Market Watch
BNN

“US is affecting other country currency. US is the leader, which reflect on the end of QE”

Mental perspective behind investment

Andy Man is an engineer graduate from University of British Columbia. After taking the mentorship from his coach, Mike, in 2006, he works as independent trader for 8 years. Moreover, he becomes a millionaire trader in 2011.

Man learns investment trading is a nontraditional career that do not based on education, intelligence or capital. He pursues his passion to overcome challenges.

Traders use technical and fundamental to analyze the financial markets. They look for opportunities, and they utilize the charts, news and price to make decisions. Man believes anybody can be a successful and profitable trader.

Trader challenges

There are 5 primary challenges traders need to face.

Challenge #1: Limit beliefs.

People tend to limit their ideas and the way they see the world. They usually limit the potential to pursing the goals. Man suggests finding the inner confidence in people’s abilities. Success breeds more success.

Challenge #2: Giving up

People will stop due to lack of success or excessive loss. In order to overcome the challenge, Man suggests people to use demo account to build up the fundamentals. It is important to focus on developing the skills, not the results.

Challenge #3: Expect instant financial success

People tend to have unreasonable expectations of immediate or instant profit in investment trading. However, Man indicates trading is a journey to build experience and foundation of investment knowledge. Man suggests people build on small success and focus on the process.

Challenge #4: Do not do anything

People tend to do nothing because the lack of confidence. They scare to lose their money and hesitate to pull the trigger. Man suggests people to focus on the minimizing the risks and structure a daily routine to build up the momentum.

Challenge #5: Overtrade

People tend to be greedy and start to capture all the opportunities they can see. This generates a lot of commission and it is not worth in the long term. Man suggests people to focus on the big trading opportunities and set pending orders instead of market order.

Man simplifies the mental strategy is to have mindset, seek opportunity and take actions.

Man’s strategy to become millionaire

Man uses a strategy called “shortening contract”. This allows all traders to borrow resources from contract, sell the product and return back to the contract.

When traders identify the technical rebound, all traders need to find the exit strategy to exit the position. Therefore, when Man is executing the shortening contract strategy, he is using the analysis to figure out when the market will go up. When market goes up, he “long it”. Doing this repeatedly over a course of time, he manages to become a millionaire in investment trading.

“Try not to fall love in position; instead, take control”

“Do not be greedy. Lock it in and control the position”

“Success is a choice. You have been given an opportunity to design your dream lifestyle”