Monday, December 20, 2010

Findings about trading behaviour in Singapore

I did a survey recently by Investment trends. Okay, maybe not recently but I remembered I was lured by some prizes if I took part in it. Since I've got time to spare, I took part in the online survey. I can't even remember what prize that is but they did promise to send me a report on the trading behaviour in Singapore. I thought It'll be quite interesting to list out the summary of the findings. After each point mentioned below, the comments following the points are from me, not from the report.

1. There are 290,000 active share traders in Singapore.

That is based on their model, presumably from the sample of survey participants. Active, in their definition, is someone who had put in a minimum of one trade in the past 12 months and have the intention to carry on trading.

2. Out of 290,000 individuals, they hold at least 450,000 trading accounts.

This means that each one is holding 1.55 accounts on average. Haha, I think I'm holding 4, though I really only use 2. Why have so many accounts? It comes from bad experience in my warrants trading days. I used to rely on solely one account, but it always lagged due to the high volume of trading (it's in the final hours of the bull). Don't try it, it get give you a heart attack! After some bad experiences, I had several backup accounts just in case I need to get through my orders. It's also to overcome the buy/sell limit when I first started. No longer a problem these days though.

3. The top 3 brokerage firms are Phillip securities, UOB Kay Hian and DBS vickers, in descending order of primary market share based on the survey

Interested to know the rest? After the three, it's followed by OCBC, Lim & Tan, CIMB-GK, Kim Eng and finally Saxo bank. I wonder where is Citi bank. I thought they have a real advantage over others - they allow orders that are good up to 1 week! It's very useful for deep sea fishermen like me, haha :)

4. 77% of participants trade local blue chips, 69% trade other local shares, 22% trade IPOs, 20% trade US shares, 20% trade indices, 15% ETF.

I only list out the few interesting statistics. 22% trade IPO...I think we're not near the end of the bull yet. It must be higher before we're nearing the final hours of the bull. As can be seen, not a lot of liquidity in ETF.

5. The average age of a share trader is 40 yrs old. Mode is 35-39 (20% of participants). Second highest age range is 30-34 (19% of participants). The age range is a skewed normal distribution, with peak at 35-39, a short left tail and a tapering longer right tail.

I think with more money, you tend to become more active in trading, so it's not surprising to see the peak at the 30-45 yrs old range. More than half comes within that range. What about retirees from age 55 and above? It took up 9% of the participants.

6. There are 29,000 FX traders in Singapore, defined as having placed at least 1 trade in the past 12 months and have intention to carry on trading. FX market is characterised by high frequency trading, with half having traded 30 times or more per month and closing their position within 4 hours. Only 9% of fx traders leave their positions over a week. Two thirds of most recent trades are conducted over EUR/US, USD/JPY or GBP/USD.

I think the data are interesting to know. The three most popular currency pair are listed above. EUR/USD is the most popular one, with 40% having trade this pair. I've not done FX before and probably will not try. I've seen how fast it moves (when it moves) and because it's near 24 hours trading, almost every day of the week, you can't really go anywhere but get stuck with the screen. I'm sure people like this kind of market, it's just not my thing.

7. For FX and CFD traders, 37% use the internet to do research. 33% uses newspaper, 33% uses other newspaper, 32% uses SGX site and 31% uses forums and blogs. 42% uses analyst research/recommendations.

Radio shows, TV shows are ranked rather poorly for those doing research in fx and cfd trades. I wonder how true this is for local shares trading/investing, haha :) Of interest is the almost similar % of influence in forums/blogs as compared to other more conventional sources of information.

8. There are 10,000 CFD traders locally, defined as having placed at least 1 trade in the past 12 months and have intention to continue trading. Local shares are the most traded instrument among those who traded less than 30 times per month. For those trading more than 30 times per month, only 44% trade local shares. Average returns of frequent traders (more than 30 times/mth) is 7% over their initial deposit in the last 12 months. For less frequent traders (less than 30 times/mth), the average return is 1%.

Among the frequent traders, there are two peaks. 12% made 6-10% pa and and almost equal percentage of them lost 21-30% pa.'s like cha cha. Move ahead two steps, move back 2 steps.

9. 27% of CFD traders went short in their last trade. More than 75% of CFD traders use TA to decide which trade to make. 38% uses analyst research, 35% uses business news and 33% uses FA.

I think this is one of the main advantage of CFD - the ability to go short on counters without the borrowing and having access to leverage. More CFD traders use TA than FA - obviously? Those who are into longer term positions might want to hold actual shares rather than using CFD. The most interesting thing is that there are those who use instinct/gut feeling, and that makes up 18% of the participants. Haha, instinct and gut feel are for those who have a substantial amount of experience doing this - for all others, they have no right to gut feel. Especially newbies.


Isaac said...

What came of your warrant trading days?

Could you share your tips and pitfalls from your experience trading warrants?

Thanks a million.

Grey said...


I must point out that although Saxo is ranked the last, it's platform is the most superior, and the rates are the best, compared to local houses;

For small trades, the savings is about Sgd5 round trip; Eg, for a trade of $6k transaction value, local houses will charge a min comm of $25 in and $25 out (if prices doesn't change too much) , but after all the other what not fees are included, it'd cost $59+ in total overheads; But with Saxo, even though the min comm is $25, but it is inclusive of GST & SGX access fee; So with Saxo it'd cost $54+ roundtrip; Minor savings u might say, but over 100 trades like that in a year, u'd save $500;

For big trades that cross the min threshold, Saxo charged 0.15% rate; Superiority self-explanatory;

Saxo also provides a good charting platform; However for the free version, there'd be some delay; But for Singapore stocks which are slow, the delay has negligible effect;

And for deep fishermen like LP, Saxo has GTC orders and GTD orders; GTD means u can set a specific date in the future where the order expires;

But the main downside which I believe is the main factor causing it to be ranked the bottom is that to open an account, u need to deposit $10k for a start;

Createwealth8888 said...

I am quite surprise at the low success rate since the survey is for CFDs trading and I think most CFD traders will believe that they are reasonably good at TA.

la papillion said...

Hi Isaac,

I started trading warrants before I did anything else, not even learning TA or FA. I won some money in my initial attempts, which is the bad thing because I thought money is easily made from the stock market.

I started with HSI warrants, which is extremely volatile. Then I started to find out why is it that prices tick up and down, so I began to learn about TA. Because my time frame goes in 5 min and 15 mins, I was practically hooked on the screen. It is a constant distraction from work. There's a point in time I was making a few thousands per trade, so I wanted to quit my job. I thought since it's so easy, why work so hard?

I mistook luck for skill.

Then I started to lose money. I can't remember how much I lost, but it was bad enough to make my mood swing up and down, so also made my learn about cut loss. I noticed that there's something fishy about the prices, because even though you're betting on the right direction, the movement is not big enough to make you earn money. I also noticed that the bid and sell queue are rigged, because the market maker can just add thousands of Q to prop or make the price go down. I actually profit after noticing this.

Wanting to find out more, I bought the macquarie warrant book and realised a lot of greeks. Ironically, after finding out more, I realised that it's pointless to fight against three things when playing warrants: direction, timing and market maker. For stocks, you just have to worry about the first 2. The effect of the third (BB, we call them) can act in your favour once good TA is practiced. Another thing about warrants is that you can't hold it for long, and there's no dividends.

It could be me, but it's extremely stressful and I feel my emotions being played to the extreme. I quit soon after finding out more. Eventually I exited from warrants altogether with a small profit.

la papillion said...

Hi Grey,

Wow, thanks for your detailed analysis of the good points on Saxo...I'm really interested to find out more because of the more complex orders that I can do, not so much because of the savings made from trades. I like the GTD order, saves me a lot of time and effort when I want to bait a big fish.

I'll find out more..might need you to recommend me your broker so that I can open an account.

la papillion said...

Hi bro8888,

It could be the period in which the survey is taken. The survey asked for the last 12 months.

Another thing to take note is that the survey differentiate between high freq traders and lower freq traders. The high freq traders made up a minority but they are actually the ones doing better than the low freq ones.

Majority loses, minority wins...the same thing goes even for cfd. Anyway, I think it's a bad assumption to think that most cfd traders are good at TA. I believe most are just attracted by the low up front fees and the huge amt of leverage they can command.

Isaac said...

"I noticed that there's something fishy about the prices, because even though you're betting on the right direction, the movement is not big enough to make you earn money. I also noticed that the bid and sell queue are rigged, because the market maker can just add thousands of Q to prop or make the price go down. I actually profit after noticing this."

hey La Papillon,

I kind of noticed this too. I have POEMS ProTrader and i notice when the under lying's share price drops, the delta miraculously becomes 1 whereas when the share price increases,it needs a couple of ticks to get MM to change their bid/offer spread. and they're very quick to change offer price, very slow to change bid. :(

How did you profit from MM's rigging of prices?

anyway could u take a look at my blog? I do trade warrants, have forced myself to stop at least until CNY, while i brush up on TA in the meantime. WHat would you advise me?


Createwealth8888 said...

Read? Story of Duck

la papillion said...

Hi Issac,

I noticed that the market makers come in at certain times for HSI warrants. There are also certain situation when they will come in and snap up the bid or sell queue if they want the price to stay at a certain level. Once I detect them, I'll buy and sell off within a vry short time, maybe 10- 15 mins, making 1 or 2 bids. Since I'm doing 30-50 lots, it'll add up substantially.

Don't try this though.

I would advise you to learn TA properly. Read Dr. Alexander Elder books and learn how to read charts properly. Your way is quite amateurish, so you might want to figure out how others do it.

Eventually you might realise that warrants trading is not the way to go, at all.

Isaac said...

Hey La Papillon,

thanks for your input.

Yep I agree. Pretty amateurish on my part. I think I got lucky with my wins. The only "skill" I used in my warrant trades was quickly stopping my NOL loss.

Grey said...
This comment has been removed by the author.
Grey said...


LP, you know where to find this cat; I'd be happy to help;

Since you mentioned "bait a big fish", I tot I should help a fellow cat even more; It's the cat thing to do; I posted pictures of order types at my place; When u r free, do drop by;


la papillion said...

Hi Grey,

Very much appreciated :) I drop by almost every other day to see if you have something new :)