We are pleased to have an interview with Glenn Ho, co-founder of Streetpips.com. He believes trading of financial markets should be systematic based on strategy, and automated using software.

Please tell us more about yourself, how did you get involved in trading?

I first learned about equity valuations as a finance undergraduate here in Singapore. A local stock broker had set up a booth in our school compound, and approached me to open a trading account with them, so I did. Eager (and ignorant) in my early twenties, I began to apply what I studied in school to the Singapore stock market, using common valuation tools such as price/earnings ratios and financial statements analysis. The S-Chips china-based companies looked perfect back then with healthy financials and cheap valuations, so did REITs with overseas assets which delivered very high yields. My returns on such investments were both exciting volatile, and I quickly realized there is more to investing than stock picking. Other market forces such as corporate governance, country risk, currency risk, and the global economy momentum can throw textbook valuations out the window.

Somewhat cautious and jaded about the academic method of stock picking, I began to learn about other asset classes and modes of seeking capital return. I explored the world of technical analysis which I found both fascinating and creative, especially since it was not taught in university. Wall Street and finance professionals largely view fundamental analysis as forward looking and professional, and often discount charts analysis as backward looking. However, even fundamental analysis requires historical information as a basis for projection, so I conclude that technical analysis is equally competent to fundamental analysis in forming projections. Therefore, trading with technical analysis offers excellent diversification to traditional fundamental investing. Thats how my trading journey kicked started.

By the way, people often draw the line between trading and investing. I feel that everyone is trading, just that their time horizon and strategy is different. Very often value investing funds exit their positions in less than a year once their price target is reached, simply because no logical person would hold on to an overvalued asset when there are undervalued ones to own. While they are perceived as investing, I view them as traders too. A line can be drawn between fundamental and technical analysis, but it is not so clear at times because they can lead in the same direction. Practitioners also often borrow concepts from both realms. In my opinion, if a value or long term investor even glances at the price chart of an asset, he or she is already applying technical analysis.

Do you trade? If yes, do you do manual or automated trading?

Yes I trade forex using automated computer software. These robots or expert advisors run on the forex Metatrader 4 (MT4) platform. I started off with manual trading and immediately faced these challenges:

• I did not have time to watch my screen all day.
• Emotions affected my trading decisions it is amazing how greed can switch to fear and vice versa in a split second
• My mind could only handle one trading strategy at a time so I could not diversify via multiple strategies or currency pairs

The holy grail of trading is to determine when markets are trending, and when markets are ranging. If anyone can clearly determine this, he or she can apply the appropriate strategies to capitalize on respective price action movements. Unfortunately, even professional fund managers have to make judgement calls on this, and no one can paint the future like a crystal ball. The media glorifies those that make the right calls with big bucks, but the majority who predict incorrectly are not mentioned. In the finance industry, it pays to have a view. While I can make an informed best guess or guesstimate of where an asset is headed in price, I cannot bet my life on it. For this reason, I believe in strategy diversification so that a portfolio can better weather unforeseen market conditions. The downside to diversification is often lower returns, but on a risk-adjusted basis a diversified portfolio is more sustainable. This is why I utilize computer software to manage multiple strategies and currency pairs automatically for me, while I get on with my daily routine.

Who are your target audience for your automated trading software?

Anyone who is interested in diversifying his or her portfolio via forex as an asset class. Our goal is to program publicly-available trading strategies into MT4 trading software, which brings trading sophistication to the mass market.

How do you build a diversified portfolio of strategies?

Financial markets are very stimulating because there are numerous instruments and corresponding ways to diversify. In the context of forex trading systems, a trader can diversify based on:

Time-frames: These range from 1 minute to Weekly on the MT4 platform, but the most commonly traded time frames are 5 minute, 15 minute, 30 minute, hourly, and 4 hourly. There are longer time frames but then the trading system will not trade much in a calendar year if the charting time frame is too long. When we trade a portfolio of forex strategies it is interesting because there can be trades on the same currency pair, but in opposite directions, because each system is managing trades based on individual strategies. From the brokers perspective, this is a hedging trade so take note that not all forex brokers allow hedging.

Currency Pairs: Over the years certain pairs have proven to execute behavioral traits. For example, EURUSD and USDCHF are somewhat mirror images of each other, and there is strong correlation between AUDUSD and NZDUSD. These are driven by the related economies driving EUR and CHF, as well as AUD and NZD. The EURUSD is the most liquid pair to trade and often presents trends, while the AUDNZD pair demonstrates mean reverting traits because it will take a significant event for AUD to deviate far from NZD. Therefore, selecting currency pairs to trade is another way of diversification.

Strategy Trade entry

Many traders focus on this component, and pay large sums of money for forex trading seminars which teach people when to buy or sell a currency pair. This is often misconstrued as the strategy but there is nothing further from the truth. In fact, you will learn from many experts and read in books that trade entry identification is arguably the least important component in any trading system. But nonetheless, traders definitely can diversify using different strategies of trade entry, which involves using different indicator combinations. In the realm of forex trading indicators there are momentum/volatility/direction/volume indicators and a combination of these provides higher probability entries.

Strategy Trade Management

A famous trading quote is to Let your profits run, and cut your losses short, which goes against human instinct of capturing gains fast and holding on to losing trades in the hope of breakeven. This quote is talking about trade management, which encompasses take profit and stop loss methods, which in turn contributes to a systems win ratio. There are trade management systems which offer a trailing stop loss so a trader can ride the trend, there are also those with fixed take profit to stop loss ratios, and there are also Martingale trading systems with more unconventional trade management. Therefore, different trading systems do diversify trade management systems.

Strategy Money Management

Warren Buffet is against losing money, and for obvious reasons. A portfolio which falls 50% will need a 100% return to revert back to the beginning capital, and we know how challenging it is to earn a 100% return. As part of risk management, a trader should not risk too much of his pot per trade. The amount of lots to buy and trade size is also dependent on the leverage of the account, so different strategies can employ different leverage and money management systems, and offers another angle of diversification. A good book on money management I recommend will be Van Tharps Trade Your Way to Financial Freedom.

With the above said, traders are often limited in their diversification abilities due to a lack of trading capital to begin with. This is even more true for stocks compared to forex, because it is more expensive to invest in stocks compared to trading in forex.

What can a trader expect from your software? Is there someone to guide him to setup his portfolio?

We are a software company and do not provide financial advice, we are not allowed to anyway. Our goal is to program publicly-available trading strategies into MT4 trading software, which free us from staring at screens all day. Since our own programmers code the software, we are also assured of the quality and correctness. Finally, we share these resources with our members. Our software is free of charge because we have a partnership with major brokers. We test our robots with 99.9% quality, and continuously launch new robots once we have stress tested them for robustness. As of this interview we have 12 forex trading software, each a strategy on its own.

We realized that while the interest in forex trading robots is very strong in Singapore, there are no books or trainers who actually provide support in the technological know-how aspect. In response, we are holding free monthly forex seminars which are very hands on in nature. Traders bring their laptops and learn the whats and hows and whys of forex trading software. We feel that beginners should start with software, before proceeding to manual trading should they choose to. This is because installing, testing and evaluating software is a lot easier compared to trading manually with your hand, eyes and heart.

What is the reliability of automated trading?

The Metatrader 4 (MT4) platform comes with a strategy tester function which effectively allows any Expert Advisor (EA) strategy to be easily tested. At Streetpips we backtest every software using 5 years of tick by tick data, achieving a modelling quality of 99.9%. It is the most effective way for a retail trader to backtest a strategy on his own, without having to pay for expensive software or using excel spreadsheets. Once a trader is satisfied with the backtest, forward testing is also simple. You basically run the software on live markets, often a demo account to forward test in live market conditions. Compare this against any strategy that you learn from seminars or read in books; there is no effective way to test the strategy over a 5 year period otherwise, unless you are willing to wait that long.

Another advantage of robot software is that it does not have any emotion and operates like a loyal soldier, following instructions round the clock without fatique. Having said that, nothing in this world is perfect. Automated trading does come along with archilles heels as well. For example, if a trader were to run a software on his laptop, and experiences a power shut down or computer restart, he may miss a trade or lose control of his EA for that period. Also, automated trading is only as reliable as the programmers coding, since a robot is essentially pages of programming language.

The solution to computer shut downs or power shortages is to run the MT4 platform on a Virtual Privare Server (VPS), which comes free with some brokers such as Forex.com. This essentially means your robots are running on the brokers servers, so you do not require a laptop or computer to run them in your home or office. Traders can access their platforms using browsers or mobile apps, so this limits the risk of any down time, allowing us to sleep peacefully knowing that our robots are alive. Another word of caution is to be careful when trading expert advisors which you download from public sources such as 3rd party websites or forex forums, because these are often coded by rookie programmers who are simply sharing their knowlegde, and their software or not fit for trading, often carrying bugs.

Therefore, ensure that the software coding is reliable, and that the server connection is reliable, then your robot will do as it is told.

Are there safeguards to limit losses when the system malfunctions?

Many robots have in built stop loss or exit strategy mechanisms, but these are strategy specific. For example, some EAs have the option to automatically stop all trading when the trading balance reaches 50% of starting capital. Other EAs which calculate position size using account balance, will enter smaller and smaller position sizes as the account gets smaller, thus reducing risk. So safeguards to limit losses is strategy specific, but a trader can always turn off live trading whenever he wants to.

It is important to back test the software to understand the strategys drawdown in various market conditions. From there we can observe how badly a strategy loses capital in unfavourable conditions, and how it can potentially recover from a setback. Many traders only look at how well a strategy can perform in optimal conditions, but fail to observe how the strategy survives in other market environments. With an understanding of the drawdown, we can better manage risks by allocating a suitable amount of capital to a specific strategy. Only then can we be alerted when a system is suffering a loss extending beyond its historical average, and manually stop the trading if we want to. So an automated trader still has a good amount of control over his systems.

Would you be able to disclose the brokers you work with? What would you say to a subscriber who is concern about putting capital with a foreign broker based overseas, out of MASs jurisdiction?

We currently work with Forex.com of Gain Capital, which is listed on the New York Stock Exchange. Forex.com is a registered FCM and RFED with the CFTC, and member of the National Futures Association in US, and in UK, Forex.com is regulated by the Financial Conduct Authority. We are open to working with more forex brokers should we see a fit between geographical presence and platform quality.

Regulation is important to reduce risks such as mishandling of client funds, unfair trading practices and conflicts of interest. Regulators such as CFTC, SEC and MAS are all of good reputation. Risks will be reduced if a broker is regulated by such regulators.

Every trader should manage his or her own risk and should not rely on others to manage their risk. The old adage of do not put all your eggs in one basket applies; if you are trading $100,000 for example, it will probably be wise to use a few brokers, because even regulated institutions can go under (example was MF Global) .

There are easily hundreds of forex brokers in the market, each offering their individual strengths and services. It will be best if a broker is MAS regulated since we are in Singapore. If not, the broker should at least be regulated by an overseas jurisdiction, or listed on a stock exchange for added corporate governance.

Streetpips.com conducts free monthly seminars in Singapore, on how to trade forex with robots and expert advisors. Please RSVP for the free forex seminar here .

>>> Warren Buffett’s secrets to investing is buying a great company at a fair price. Now you can use this simple yet powerful spreadsheet to determine the intrinsic value of a stock. You can download it here for FREE.

DO YOU KNOW: Blue chips stocks are expensive to buy and slow to profit. Discover the uncommon approach to stock gains. Find off radar stocks for profits (Hint: They often give triple-digit returns). Simple method you wished you knew in our 1-day content packed course. Click here to register

3A%2F%2F0.gravatar.com%2Favatar%2Fad516503a11cd5ca435acc9bb6523536%3Fs%3D80&r=G /%