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Sunday, October 22, 2006

Secrets Of Options Trading Champion Revealed!

I have the honour to interview WeiPing Leong, who is the Grand Champion of the Options Trading Championship 2006 held in Singapore. During the 3 days championship using real money trading, WeiPing grew his portfolio by a whopping 198%! As part of his winning prize, he will be flying to U.S to visit the three Exchanges in Chicago. Here's our chat...

Simply Options Trader: How did you get started on options trading?

WeiPing: I got to know about options as a hedging tool during my university days way back in 1998. However, it was not until recent years that I started to look at it more seriously as a tool to trade for living. Thus, through attending options course which provided hands on exposure and doing extensive self studies, I believe I have equipped myself with ample knowledge to pursue my dream towards financial freedom through options trading. I always feel that we should take charge of our own financial life instead of waiting for the single paycheck at the end of the month.

However, at this moment, I'm still looking for every possible way to upgrade my skills in order to bring my trading experience to another level up.

Simply Options Trader: Describe your style of trading. How long do you typically hold positions? Do you buy front month options or options with more time value? Do you buy OTM, ATM or ITM options?

WeiPing: I consider my trading style as cautious as money management come on top of everything else. I plan my trade before placing a trade and I will trade according to my plan earlier. I normally do not hold my positions for more than 3 days to avoid theta decay. Most of the people have overlooked this by applying the stock investing principle in options trading which they are constantly hit by time decay without even knowing it.

My unique trading strategies give me the flexibility to switch between front month and longer term options to capitalize on the opportunities available that would maximize my risk to reward ratio. Having to say that, I do play OTM, ATM as well as ITM options depending on different circumstances.

Simply Options Trader: What are your favourite stocks for trading?

WeiPing: I personally like volatile stocks such as those from the energy as well as technology sectors. However, I do not restrict myself to other opportunities available as long as it fits my trading criteria.

Simply Options Trader: How do you determine entry?

WeiPing: My trading alert is mainly based on historical patterns, chart analysis and news. Any indication or confirmation of these would possibly trigger an entry signal.

Simply Options Trader: What's your exit strategy for winning and losing trades?

WeiPing: My exit strategy is simple. As I mentioned previously, I go into every trade with a trading plan that would predetermine my targeted profit and stop loss. So, whenever my profit target is reached, I would take profit by closing up my position. On the other hand, I would cut loss ruthlessly if my stop loss level is triggered.

Simply Options Trader: What technical indicators do you use?

WeiPing: MACD, Slow Stochastic, Fibonacci, Bollinger Band and SMA. However, most of the time I would use the combination of MACD and Slow Stochastic to determine appropriate entry level and I personally think that they are the best combination that I have come across.

Simply Options Trader: What single lesson did you learn along the way that has helped you the most in your trading?

WeiPing: I attribute my success to proper money management and I'm glad to learn about the importance of it earlier rather than later. What I have noticed along my trading journey is that newbies tend to succumb to the challenge of greed and given up their dreams thereafter. What I'm attempting to say is if you trade without proper money management, it's like you go to the battle field unprotected. Remember, money management always comes first.

Simply Options Trader: Tell us about 3 books you would recommend to traders to read

1) Trading For living-Alexander Elder
2) Short term trading in the new stock market-Toni Turner
3) The Complete Option Player-Ken Trester

These 3 books had played an important part in helping me to develop a consistent money making strategies in options trading.

Simply Options Trader: Give some advice to traders who have just started out

WeiPing: Always paper trade for at least half a year to get used to the strategies you are using. Make all the kind of mistakes you could possibly make and learn from it before risking your hard earned money. Do treat the paper trading seriously as it's a true reflection on your personality.

Simply Options Trader: What do you like best about trading?

WeiPing: Options trading is the kind of tool that could give us the maximum leverage with minimal capital outlay. It best suits the beginners who would like to enhance their trading skills with minimum risk which could possibly generating maximum profit. Besides that, no instruments other than trading can give you the privilege to convert information into cash in the fastest way.

Simply Options Trader: Thanks Wei Ping! Have a great trip to Chicago & we look forward to hearing more from you after your trip.

WeiPing: Yeah, I'm really looking forward to this trip and I hope to share my experience with you by the time I come back. Good luck!!


Blogger Cal said...

Great article!!

12:52 PM  
Blogger Simply Options Trader said...

Thanks Cal!

WeiPing is back from his Chicago trip and hopefully we can get him to reveal some secrets of the trading floor. Stay tune!

5:34 PM  

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