Mr Andy Chan's interest in stock trading began when he was working at a trading desk in a natural resource firm last year, during his vacation.
'It was really exciting to see a group of traders at work, and looking at the mechanics of the market. I also found it fascinating how different markets are all inter-related and that everything fits into one big picture,' he said.
He opened a stock trading account in the middle of last year, when he turned 21.
So far, the second-year computer engineering undergraduate at Nanyang Technological University, now 22, has invested about $30,000 in the stock market.
This came partly from savings accumulated from vacation jobs, national service allowances and profits that were ploughed back into the market.
When it comes to stock selection, Mr Chan relies on various indicators.
'I would select a stock based on a mix of its fundamentals and technicals. But before anything, I would first determine the general trend of the market,' he said.
'Next, I will narrow my focus to certain industries that are strong and actively traded, so as to assess the liquidity, before taking a closer look at the leaders of the said industry to determine if the earnings and future earnings estimates are growing.'
He realises that it is the anticipation of growth rather than growth itself that leads to price changes.
He believes a good, basic way to stock-pick in current conditions is to look for shares that are rising quickly, with good volumes supporting the trend.
'There are many technical indicators out there, but different situations call for different combinations to confirm a trend. Currently I am using indicators like MACD (moving average convergence divergence), OBV (on balance volume) and Parabolic SAR (stop and reversal),' he said.
Should the fundamentals and technicals diverge, he said, he tends to lean towards the technical indicators more, as they tend to better reflect current market conditions.
So far, his best investment was buying StarHub at $1.85 early last month. He sold it within three weeks at $2.16. From a capital outlay of $11,000, he made a profit of $2,200 from both capital gains and dividends.
Mr Chan is also keen on the foreign exchange market. Last year, he more than doubled his initial sum of $2,000 by 'shorting' British pounds against the US dollar over a two-month period from July to August.
To learn more about behavioural finance and shore up knowledge on technical trading, he is currently reading How I Made $2,000,000 In The Stock Market by Nicolas Darvas.
His parents are also invested in the stock market.
However, they are more conservative and prefer to buy and hold long term, according to Mr Chan.
His father is a full-time tutor and his mother is a housewife. Mr Chan has a younger sister and they live in a four-room flat in Tampines.
