Managing Trades and Investments: What’s the Difference? December 3, 2018

Managing Trades and Investments: What’s the Difference?

The Psyche of Traders and Investors

In the world of stocks and shares, it is important to recognise that rules for managing trades are different from that of managing investments. The Phillip Youth Stocks Challenge 2018 was a long-only trading competition over a three-week period. This provided opportunity for a suboptimal strategy given that the market has been undergoing a correction this year.

The psyche of a trader is unlike that of an investor. Traders usually hold positions over much shorter time frames, and correspondingly have clearly-defined entries and exits which are likely to differ from investors. In most cases, it does not make sense for investors to follow the calls of “trading gurus”. If you are an investor, ask yourself honestly, do you have a stop loss or exit strategy? Have you ever followed your stop loss policy and exited from a losing position? Knowing this, I offer three perspectives about managing personal investments, after taking part in the Youth Stocks Challenge.

Invest within Your Means

Do not use leverage if you cannot manage risk and refrain from borrowing. Many top-tier funds like Blackrock, Allianz and Manulife are down almost 30% year-to-date. If you started a fund in 2018, a 2x leverage would imply that the equity is 60% in the red, closing in on margin call territory. This stance was reversed for trading in the Challenge, where we were given $1,000,000 Buy and Sell limit daily. Not fully utilising this would be playing to lose.

Knowledge is Key

In this Challenge, you could get by with some awareness of market trading rules. In order to win the trading Challenge, I only traded stocks with the highest margin per tick (minimum unit change in stock price). In these short-term trades, the fundamentals of stocks are negligible as opposed to investing.

Knowledge allows you to make more rational and logical decisions. For example, investing in Temasek Bonds, with a 2.7% interest rate, may not be the appropriate option for all. Consider that interest rates are likely to challenge 5% within 5 years. Similar to how home buyers want to lock in fixed interest rates in a rising interest rate environment, an investor may seek floating rates of return.

Another example is structured products that banks offer to clients. Structured products offer the convenience of managing a position with various accompanying conditions. Some understanding of quantitative finance will allow you to deconstruct these products. You may recognise that by taking on a structured product, you would have lost the spread and margin to the bank. Additionally, the structure is such that the bank is hedged, and risk is passed to the client.

Paying for an investment course does not magically make you a better investor. Such courses typically organise and present factual information to you – information which you may otherwise found on your own by Googling. The question is whether you are willing to take that step to do so!

Treat Investments as Written Down

This may not apply to the short-term high-risk trading nature of the Challenge, but can be helpful for young investors. Invest only what you can afford to lose and treat all investments as sunk costs. You won’t lose sleep over your portfolio, and you will be happily collecting in a down market. If you do not have time to research on individual companies to invest in, try investing in an index. Warren Buffett’s successful bet that the index would outperform a basket of funds selected by an asset manager at Protégé Partners between 2007 and 2017 is testament to this.

You may not hit a home run by banking on a tech name like Apple, but who knows what other gains you may make?


These commentaries are intended for general circulation. It does not have regard to the specific investment objectives, financial situation and particular needs of any person who may receive this document. Accordingly, no warranty whatsoever is given and no liability whatsoever is accepted for any loss arising whether directly or indirectly as a result of any person acting based on this information. Opinions expressed in these commentaries are subject to change without notice. Investments are subject to investment risks including the possible loss of the principal amount invested. The value of the units and the income from them may fall as well as rise. Past performance figures as well as any projection or forecast used in these commentaries are not necessarily indicative of future or likely performance. Phillip Securities Pte Ltd (PSPL), its directors, connected persons or employees may from time to time have an interest in the financial instruments mentioned in these commentaries. Investors may wish to seek advice from a financial adviser before investing. In the event that investors choose not to seek advice from a financial adviser, they should consider whether the investment is suitable for them.

The information contained in these commentaries has been obtained from public sources which PSPL has no reason to believe are unreliable and any analysis, forecasts, projections, expectations and opinions (collectively the “Research”) contained in these commentaries are based on such information and are expressions of belief only. PSPL has not verified this information and no representation or warranty, express or implied, is made that such information or Research is accurate, complete or verified or should be relied upon as such. Any such information or Research contained in these commentaries are subject to change, and PSPL shall not have any responsibility to maintain the information or Research made available or to supply any corrections, updates or releases in connection therewith. In no event will PSPL be liable for any special, indirect, incidental or consequential damages which may be incurred from the use of the information or Research made available, even if it has been advised of the possibility of such damages. The companies and their employees mentioned in these commentaries cannot be held liable for any errors, inaccuracies and/or omissions howsoever caused. Any opinion or advice herein is made on a general basis and is subject to change without notice. The information provided in these commentaries may contain optimistic statements regarding future events or future financial performance of countries, markets or companies. You must make your own financial assessment of the relevance, accuracy and adequacy of the information provided in these commentaries.

Views and any strategies described in these commentaries may not be suitable for all investors. Opinions expressed herein may differ from the opinions expressed by other units of PSPL or its connected persons and associates. Any reference to or discussion of investment products or commodities in these commentaries is purely for illustrative purposes only and must not be construed as a recommendation, an offer or solicitation for the subscription, purchase or sale of the investment products or commodities mentioned.

Contact us to Open an Account

Need Assistance? Share your Details and we’ll get back to you


This material is provided by Phillip Capital Management (S) Ltd (“PCM”) for general information only and does not constitute a recommendation, an offer to sell, or a solicitation of any offer to invest in any of the exchange-traded fund (“ETF”) or the unit trust (“Products”) mentioned herein. It does not have any regard to your specific investment objectives, financial situation and any of your particular needs. You should read the Prospectus and the accompanying Product Highlights Sheet (“PHS”) for key features, key risks and other important information of the Products and obtain advice from a financial adviser (“FA“) pursuant to a separate engagement before making a commitment to invest in the Products. In the event that you choose not to obtain advice from a FA, you should assess whether the Products are suitable for you before proceeding to invest. A copy of the Prospectus and PHS are available from PCM, any of its Participating Dealers (“PDs“) for the ETF, or any of its authorised distributors for the unit trust managed by PCM.  

An ETF is not like a typical unit trust as the units of the ETF (the “Units“) are to be listed and traded like any share on the Singapore Exchange Securities Trading Limited (“SGX-ST”). Listing on the SGX-ST does not guarantee a liquid market for the Units which may be traded at prices above or below its NAV or may be suspended or delisted. Investors may buy or sell the Units on SGX-ST when it is listed. Investors cannot create or redeem Units directly with PCM and have no rights to request PCM to redeem or purchase their Units. Creation and redemption of Units are through PDs if investors are clients of the PDs, who have no obligation to agree to create or redeem Units on behalf of any investor and may impose terms and conditions in connection with such creation or redemption orders. Please refer to the Prospectus of the ETF for more details.  

Investments are subject to investment risks including the possible loss of the principal amount invested. The purchase of a unit in a fund is not the same as placing your money on deposit with a bank or deposit-taking company. There is no guarantee as to the amount of capital invested or return received. The value of the units and the income accruing to the units may fall or rise. Past performance is not necessarily indicative of the future or likely performance of the Products. There can be no assurance that investment objectives will be achieved.  

Where applicable, fund(s) may invest in financial derivatives and/or participate in securities lending and repurchase transactions for the purpose of hedging and/or efficient portfolio management, subject to the relevant regulatory requirements. PCM reserves the discretion to determine if currency exposure should be hedged actively, passively or not at all, in the best interest of the Products.  

The regular dividend distributions, out of either income and/or capital, are not guaranteed and subject to PCM’s discretion. Past payout yields and payments do not represent future payout yields and payments. Such dividend distributions will reduce the available capital for reinvestment and may result in an immediate decrease in the net asset value (“NAV”) of the Products. Please refer to <> for more information in relation to the dividend distributions.  

The information provided herein may be obtained or compiled from public and/or third party sources that PCM has no reason to believe are unreliable. Any opinion or view herein is an expression of belief of the individual author or the indicated source (as applicable) only. PCM makes no representation or warranty that such information is accurate, complete, verified or should be relied upon as such. The information does not constitute, and should not be used as a substitute for tax, legal or investment advice.  

The information herein are not for any person in any jurisdiction or country where such distribution or availability for use would contravene any applicable law or regulation or would subject PCM to any registration or licensing requirement in such jurisdiction or country. The Products is not offered to U.S. Persons. PhillipCapital Group of Companies, including PCM, their affiliates and/or their officers, directors and/or employees may own or have positions in the Products. Any member of the PhillipCapital Group of Companies may have acted upon or used the information, analyses and opinions herein before they have been published. 

This advertisement has not been reviewed by the Monetary Authority of Singapore.  


Phillip Capital Management (S) Ltd (Co. Reg. No. 199905233W)  
250 North Bridge Road #06-00, Raffles City Tower ,Singapore 179101 
Tel: (65) 6230 8133 Fax: (65) 65383066