「Do not focus on what is happening, but on its cause」
Talks with Heath Sanders
I’m 48, and my occupation at the moment is private equity which is trading, and I have done a bit of contract work over the last couple of years. I was selling houses probably 18 months ago.
Q：What is your background story? When did you first start trading?
My trading in the markets started a couple of years ago. My education around the global economy and the Eurodollar and plumbing of the financial systems started about 5 years ago from Sir Robert Kiyosaki and then I progressed from there- he’s Rich Dad/Poor Dad. A lot of my education has come from spending time watching YouTube videos. I probably have watched over 800 videos in the last 2 years, I watch 4-5 a day and spend 5 -6 hours a day learning. Two years ago, I decided to get into trading, I've learnt so much about the fundamentals, the technicals and sentimentals, which are the three ingredients that you need to have in a trading environment because even the algorithms that the major firms use are finding it tough in this environment right now.
My real education started when I watched the movie The Big Short. Don't know if you know that movie it’s about Michael Burry, who predicted the subprime mortgages in 2008. So, he saw the collapse of the housing market in the US in 2006, and then it happened in 2008, Lehman Brothers and all that came crashing down. But he saw those two years earlier and he understood the bond market, which is what I've been studying the last few months and understanding the inversion of the two and ten-year yield curve. And over history when they invert, which means when the ten-year drops below the two year, we go into recession 100% of the time.
Q：Where did you hear about Tiger Trade?
I used TradingView as my platform, and I saw Tiger come up a couple of times. I looked into Tiger, and I saw you trade the Australian markets. I'm a big believer in commodities and minerals and a whole lot of those things. And I was using another platform, but I was restricted to the number of stocks I could trade. Joining up with you guys, I have a smorgasbord of assets, there are futures and options and a whole lot of things that I can do that I couldn't do on my other trading platform, which is why I've got a couple of people that I teach using Tiger as well. I’m impressed with what you guys have.
Q：What's in your Tiger Trade portfolio right now? And why did you invest in these specific companies?
I've got a couple of stocks.
In March 2020, I got an inverse ETF. What that means is that's basically a shorting stock. In fact, I'll share it. People can go and have a look at it. It's called Uvixy, the ticket code is UVXY. And another one is SQQQ, and I'll explain what they are. So UVXY is the futures market, it's an inversion. If you understand future contracts, what happened in March 2020 is when the market crashed, the UVXY went up 1400% from $100 to $1400 share within a month. SQQQ is also an inverse of the S&P500. S&P500 is a collective of the 500 largest companies listed on stock exchanges in the US. That's where a lot of assets go. When banks put their money in, financial institutions put their money in. That's where a lot of the money goes that people reinvest, because obviously when a dollar comes into a bank or something, they're going to reinvest that money. That's why they had bonus bonds and things back in the day because you would take your money to a bank, and they end up using that money and reinvesting it. But now, no bonus bonds are around.
There's a lot going on in the world. And I think having a strong education and a good platform, to leverage from is important. But I'll tell you now, quite honestly, the commodity market is in a bull run for the next 10 to 15 years. By commodities, I mean zinc, cobalt, wheat, and corn. I'll tell you something about wheat. So, Russia and Ukraine supply 25% of the world's wheat. Wheat feeds cattle, sheep, and goats. There’s a stock I’m watching called WEAT- wheat. There's a whole dynamic of things going on in the global economy that affects us here in New Zealand as well.
Q：What are your investing styles or strategies?
I do a bit of swing trading. I use indicators, I use an indicator called the MACD and the RSI. The MACD it's an isolator, it looks at the divergence and convergence.
If I'm trading a stock, what I look at is the MACD. So typically, you can see the convergence when the blue line crosses the orange line, that's telling me it's trending up. See if it's green, then the stock typically comes down. So, these are the indicators used in swing trading, this might be on a day, but I trade on a particular hour. But if you have a look at a stock over a particular time, you can look over its history. Stocks go up and down, but you can trade in the short term, which is what I see. Commodities as I mentioned if you look at commodities, you'll see a lot in the green.
So short selling, swing trading, using divergence and convergence are my strategies.
Q：How are your returns so far?
They vary. I'm using a small number of dollars while I learn to use your platform because I'm transferring to my other one. Profit and loss, I’ve made 12% so far. I’ve been with Tiger for a week or something like I’ve only had three stocks at the moment. But I'm getting familiarised with it. I haven't dived into futures and options, that’s something that I'm going to go next level. But my thinking is the number one lesson that anyone can take out of trading is, you've got to have an exit strategy, you've got to decide what it is, and your stop losses if you're not going to watch the stock. If you're going to get up and trade or you need to put stop loss in place if you're going back to sleep.
Q：What's a piece of advice you'd give a beginner investor?
Okay, so start small. It doesn't matter if you put $100 into an account. I would say educate, invest in courses. I think paper trading is a good way to start. Trade with paper trading so you can get familiar with trading. I jump straight in because having skin in the game, I believe when you got your money in it, you learn to control your emotions. Because when you're seeing stocks go down $400 to $500 in a day and a $1000 within a few minutes, you've got to understand what's going on. I think that's really important.
It's not looking at what's happening in front of you but having a look at the underlying reasons why something's happening.
The other thing is to buy cheap stocks. And if you look at the history of some stocks, some of these stocks are trading at two or three dollars a share, and their all-time highs of $200- $300 a share. And their underlying asset is they produce real things that we need, like food, corn, wheat, and cobalt.
Q：What stocks or options are you watching right now? Why?
I'm concentrating on the commodity space. I'm in silver stocks, Caldwell stocks and metal stocks. I moved from corn to wheat. When I say I moved, it’s because I'm swing trading. The indicators I’ve mentioned earlier on, those indicators tell me when to get in and when to get out. If you stand up close to a wall and you're looking closely, you see little drops. But if you stand back and you look at it over the long term, it'll be heading up slowly.
What I do is I buy and sell in those peaks and troughs because the stock can make 10% over a year, but you can make 3% buying and selling those stocks over the short term. That's why if you're going to get into stocks, you're going to decide if you're an investor or a trader, you've got to have a plan.
If anyone wants to reach out and have a chat with me, because I'm self-taught, I can take people through the beginning of what's going on because I built my assets with a very small amount of money. I purposely did it that way. That's why I encourage people to start with small amounts because it's not the money that matters. It's the education around that money. Because if you lose a lot of it, which I did in the early days, I gained it back by changing a couple of small things. And risk management’s number one, cut your losses early is absolutely the number one rule.
Q：What are the characteristics of your ideal stocks? For instance, if you had to choose right now, which U.S. stocks do you like best and why?
It depends on the day. Typically, in the commodity space, I've got a scanner. So, one of the scanners I go into is to go and look at stocks that show high volume. There are a few fundamentals I've got. If they have a relative volume of over ten, relative volume means volume is a big part of playing and trading.
So, in swing trading, you've got to use scanners and things to decide what you get into because it can change daily. But if I was to look at a further picture it’s commodities, so it would be corn, wheat, gold and silver and sugar, things that we use every day. Because at the end of the day, with an inflationary environment, people aren't going to go to restaurants as much.
People are going to spend more time purchasing food. People are going to put food in their stomachs, with a roof over their heads. People are going to live in tents on the beach and feed themselves before they starve and live in a house. You know what I mean? That's extreme. But when you look at the basics of human needs and what they need, it's commodities. And that's why I believe in the next correction, those assets will go up and I've got a portfolio.
Q：What are your opinions on global stocks in the next few months?
In the next twelve to 18 months, I think we will see a correction in the markets, and I believe in New Zealand. I believe the housing market is going to have a major correction as well. I think we're going to see that very, very shortly, because what's happening is we're seeing inflation, right? We're seeing the cost of living going up, seeing food prices rise. We're seeing the banks are raising interest rates, the cost of living is going up, and better income is not going up to match it. So, what's going to happen is when our cost of living goes up, and income doesn't go up, there's going to be people that are squeezed out of the housing market, which is going to bring the market down the other way. It’s a view based on my knowledge of people that understand the market. So, it's not my view, it's a view of a collective amount of people.
Q：Are there any memorable achievements that you have made in your investing journey? What did you learn from them?
The achievement is using those indicators. I know in the early days when I used those indicators, I could see patterns play out. One of the most important things in trading, absolutely, the number one thing is to cut your loss daily, because there's no such thing as a certainty, only probability.
When you use probability as your mathematical equation, it gives you a better chance of getting things right. So, I've lost more trades than I've won, but yet I'm up. And that's because when I'm winning, I ride the wave. When those indicators start to tell me that something's happening and to get out, I get out, and then I go away and leave it. So that's with swing trading if you want to invest your money, like I said, it’s in the commodity space, I believe. I think overall, you've got to have a portfolio that covers all areas. If the market correction comes, you're in assets that are going to go up. And typically, those inverse stocks that I talked about, go up when a market crashes.
Q：Are there any mistakes you have made in your investing journey and what did you take from them?
When you're trading, you can trade on different levels. In my early days, I missed out on making USD 2,000 in a day. I made $130. My mistake was that I was trading on the minute instead of the 1 hour. So, with the 1-hour time zone, you'll see that it can go up and down, but you know that it gives you a better picture because you're standing back and you're looking at the whole picture whereas if you're on the minute candle, you're standing up close, and when you see something go down, you go ‘I'm getting out’. Actually, on the hour candle, it's come down a week, but it's still on an upward trend. If I trade it on the 1-hour candle, I would have pulled out USD 2,000, which is like $3.5K for the day. I missed out. I took out $130. I learned that trading on the hour candle is as important as more of a perspective on what's going on. Some people don't want to watch a stock, they’re better to trade on the day, which means they look at it then put a stop loss and then go and leave it. There's no one way to trade. There are many ways you can trade in the markets, and you just got to decide which way you want to go about it.
Q：What's your investment goal in 2022?
I've just taken on learning breadth indicators. What a breadth indicator is, is it's a forward indicator. And one of those breath indicators is the bond market. Now, in the bond market over the last 50 to 60 years, 100% of the time probability, that when certain things happen in the bond market, then those things happen in the market. So, my goal over the next year is to have a forward understanding of an indicator list that will let me know what's in front of me with high probability. It's like a lung, right? You put air in it, you see it going out, and, when it retracts, you can see it happening before it happens, right? That's what I mean by breadth indicator.
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