Forex (FX) Basics

Currency Pairs

USD/ SGD

USD = base currency

SGD = quote currency

i.e Buy USD, sell SGD

Minimum Price Increment: 0.00001 ( 0.1 pip)

Settlement: T+2

e.g USD.SGD 1.3703 means 1 USD is worth 1.3703 SGD
So the ideal rate is 1:1   ie. Using 1 SGD to exchange for 1 USD

6 Steps to a Trading Decision

1. State your Forecast

- important to be specific about price of stock and time frame
e.g. XXX stock will rise from $10 to $15 in 20 days. Today is 40 days to expiration.


2. Calculate the Implied Volatility

- volatility percentage in the option pricing formula
- Stock price
- Strike price
- Dividends
- Interest Rates
- Days to expiration
- Volatility


OIC Option Pricing Calculator

Trading Strategies

1. Stock- Oriented Strategy - Covered Straddle

- Normally price rise, sell shares to realise profit. Price drop, buy more shares.

- BUT Alternative to waiting for price rally/ dip --> can use COVERED STRADDLE
--> call + put with the same strike price and expiration date


LONG STRADDLE 

- Buy both call + put
- depending on the underlying stock's direction of movement, either the call will profit more than the put (vice versa)

Option Strategy - Long Stock; Stock UP/ DOWN since Purchase - what next?

Long Stock, Stock UP since purchase

Next steps

1. Take no action - monitor price and change strategy if price outlook sours

2. If want to sell at my Target Price --> write Covered Calls

    - look for Strikes = stock target price, short time to expiration, high option premium

    - at least gain premium from selling

3. Buy Protective Put to protect downside, but require cash outlay to purchase

    - protective put will "kick in" when price drops to strike price

    - "insurance" is valid until expiration date

*Credit: OIC Beginners - Managing Stock Positions

Basic Information for Trading the US market as a Non- US Citizen

As a Non- US Citizen
Not subjected to Capital Gains tax
subjected to 30% Dividend tax
NASDAQ	Indices, Stocks
NASDAQ OMX	Equity Options
NASDAQ OMX BX	ETF, Stocks
NSX	Indices
NYSE	Indices, Stocks, Warrants
NYSE MKT	Small- cap firms
NYSE ARCA	ETF, Stocks, Warrants
Mutual Funds	-
Trading Hours
DST: 1 April to 7 Oct 2018 - 2130 to 0400
Outside DST - 2230 to 1700
Settlement Date	T+2 market days
Settlement Currency	USD or SGD
Trading Lot	1 share
Share price (USD)	Minimum Bid Size (USD)
<1	0.0001
>=1	0.01

CANSLIM

System for Selecting Stocks


C - current Q earnings of a firm - last Q earnings have > 20% growth

A - annual earnings growth - annual EPS growth of 25- 50%
N - new product, service, management or new high in price level
S - supply and demand - smaller firms with smaller # shares < 25 mil

    - less #, more movement.
      Also, look out for re- purchasing which signals mgmt confidence
L - leader or laggard - relative px strength ~ 70% - ΔP stock/ ΔIndex over the same period of time
I - institutional sponsorship - ideally between 3 and 10 sponsors - over-owned, be cautious
M - market direction - uptrend/ under pressure/ correction - invest in time of definite uptrend - see Indices