HE Shuhan, 23, is both an undergraduate and the chief operating officer (COO) at Farseers - a specialised asset management and investment education firm set up by him and three other partners.

High flyers: Partners of Farseers (from left) Donnie Tay, He Shuhan, Neo Chee Kiong and Tan Heng Chian (seated) started trading with individual accounts as retail investors but soon discovered the benefits of becoming institutionalised

At Farseers, a company registered only this year, Shuhan is the youngest among the four who started the company and also the only one under 35-years-old in his company.

When BT asked how he came about gaining the respect of the other partners who were much older than him, the political science undergraduate at National University of Singapore says he likens himself to Henry Ford who uses his passion to influence others to become better. Despite his youth, Shuhan has been actively trading for more than four years. 'Before Farseers was set up, the four of us were already trading together using individual accounts as retail investors,' Shuhan says. 'However, we soon realised that it was pivotal for us to become institutionalised to benefit from the better pricing rates as compared to trading as individuals.

'For example, in Forex, institutions are able to bid for prices at half a bid intervals as compared to the three to five bids intervals that retail investors can only manage.'

Trading mainly in derivatives, Shuhan has managed an annualised growth rate of between 30 per cent to 60 per cent for the past four years since he started trading. Today, the company's fund is worth an estimated $5 million, with more than 10 other private investors vested in the fund.

But it was not always smooth sailing for this young trader whose love affair with the market started during his junior college days. In the beginning, when he was trading with the guidance of his American meJntor in the commodities market using his mentor's capital, Shuhan's lack of insight and protective stop loss built up a six-digit debt for his mentor. 'At that point of time, my mentor did not even seem worried at all. All he did was to teach me even more and told me to return the original sum to him over time. This made me even more determined to recoup the losses with my improved trading skills,' he says.

To date, Shuhan is the creator of three precise technical indicators which pre-warns, pre-empts and pre-forecasts market direction; as well as the discoverer of a reliable and profitable chart pattern. All these allowed him to make a clean profit of US$112,000 in one week when he was just 22 years old, using his own pocket money.

At Farseers, he handles mainly derivatives, but he trades equally well in equities and foreign exchange. His trading style involves intraday scalping, position trading, swing trading and value investing. Given the dynamics of the market, it is of paramount importance for a trader to be able to strive in almost any kind of market conditions.

'The moment a particular market proves to be illiquid, overly underhanded (means) such as stop hunting or payment for order flow; or bounded by political regulations like uptick rules, a trader must be able to move to a higher quality market whenever he detects a lower risk to reward ratio,' he says.

'Traders, especially young traders who do not have enough capital to last through price engineering, should strive to be multiple asset, capable traders who can trade in any part of the world as long as he has proper data feeds and communication capabilities with brokers and counter-parties,' he adds.

Intense training necessary

As an avid derivatives trader, he believes that options and futures are wonderful instruments to trade, provided one understands and knows how to deal with them. Options are meant to hedge against equity position risks while futures require relatively small margins per contract yet giving similarly high leverages when compared to options, however the risks are real given the volatility of the market and the required skills for a trader to execute the trade astutely.

'Although it is possible to swing trade using options for quick returns, its inelastic pricing reflection speed and high-bid ask slippage gives a bad risk to reward ratio in the long run. That is when the futures market can be more useful as it has similarly high leverages and requires small margins per contract thus making it possible for a quick return within a short span of time. But one must realise the risks involved in such trades and it requires in-depth knowledge, skills and intense training to achieve this,' Shuhan says.

For young traders who do not have much start-up capital, have higher risk appetite and tend to buy derivatives to make quick money, Shuhan has this to share: 'Something that young traders may not know is that their orders are being exposed to counter-parties such as fund houses. Thus, an individual will always be at a disadvantage. Trading is a lonely business. Not everyone can support you ... in the pursuit of happiness. Find someone who is in this business, form interest groups, stay ethical and positive, and never give up.'