Me & My Money

Trading to travel the world

Self-taught trader, who has done well enough to leave his IT job, hopes to pursue his other passions

Computer science graduate Bharath Jayaram picked up trading by himself and did so well that he could eventually afford to leave his job as a software developer.

Mr Jayaram, 26, had moved from Bangalore to study in Singapore, wanting to be independent.

He then discovered his love for trading, spending hours after work reading and practising. The Nanyang Technological University graduate, who started work at the end of 2013, put his programming skills to good use in his financial journey.

Mr Jayaram, now a Singapore permanent resident, says that he is a technical trader "who places great emphasis on playing the statistics and making sure probability is on my side whenever I make a trade".


Mr Bharath Jayaram, 26, gave up his job as a software developer last year after making some great trades that allowed him to become financially independent. Since he started trading, 90 per cent of his profits have come from selling options. He has now expanded to trading stocks and futures, and plans to move into forex and bitcoin soon. ST PHOTO: ARIFFIN JAMAR

The hard work he put in finally paid off when he was able to replace his monthly income, and make great trades last year.

"I was able to profit from the biggest potential 'disaster' events last year - Brexit and the United States election day - and I made money from trading futures these two days. I made a five-figure sum and it was close to my annual salary."

Mr Jayaram decided to leave his job last August as he had reached his goal of being financially free, and was also motivated to explore the world and his interests in the financial markets.

"When I wake up, I see this on my room door every day: '$1 million before 30'. I have achieved a six-figure sum already, and make an average of five figures a month, so I'm not really looking at that number. I just want a peaceful life and travel as much as I can.

"If I really had enough money, I'd work in the wildlife reserves in Africa and take care of animals, even though I know it does not pay."

Q Moneywise, what were your growing-up years like?

A My dad, who used to work as a tax supervisor in the public sector for 38 years, was super-strict and I had to forgo things in my childhood. We were told to just study and get a good job. He was very frugal. We lived in a small house, and never ate at restaurants and fancy places. When my grandma gave us pocket money, which was once a year, it was a highlight.

My parents spent a lot on education, even if it was something they couldn't afford. My elder brother is very smart and the bar was set very high - so it often got very competitive. He is currently a postdoctoral researcher at Harvard University, and has been my biggest supporter and inspiration.

HIS WINNING STRATEGY

When buying options, you need to be making directional trades all the time, but I got rid of that by selling options on either direction. I don't care if the stock goes up, down or doesn't move, as long as the price stays within range.

MR BHARATH JAYARAM, on how selling options on equities and indices that are not very volatile has worked for him.

Q How did you get interested in growing your money?

A I had promised myself that I'd never borrow money from my dad, and I was extra motivated. Also, before I started working, I had a bad experience with money. I was quite stupid to rent a condo in East Coast for $1,000 a month, before I got my pay, and had to beg someone for help. I vowed to never be in such a situation again.

I really got started when I read Rich Dad, Poor Dad by Robert Kiyosaki in the first month of work, when I started three years back. From then on, the idea of working for someone else didn't appeal to me.

Foreign exchange or contracts for difference were the "in" thing but they didn't make sense to me as you potentially lose more than your investment. With stocks, Singapore stocks don't move much and the US stocks were also expensive.

With options, you need only a few hundred dollars to get started, but options as a derivatives product have a lot more factors that affect the pricing. It's different from how stocks work, so I researched more.

In the first half of 2014, I spent a lot of time reading books such as general help books on managing emotions, and also on the technical part, such as how to read charts.

I started trading virtual money for two to three months and almost trebled the account, which gave me confidence to start with US$12,000 (S$17, 100).

Initially, it was too good to be true as the first few trades always ended up profitable, and in the first month I had already made 50 per cent. But, I made a bad loss later on and learnt that I had to do my due diligence.

  • Worst and best bets

  • Q What has been your biggest investing mistake?

    A In early 2015, I was trading a new index called Russell 2000.

    Weekly options usually expire on Friday every week, but some options on this index expire on Thursday. I didn't know that as I was mostly trading S&P 500. I should have researched this aspect.

    I was waiting on Friday to adjust my position and I saw I already had the maximum loss on that trade, which was US$8,000 (S$11,400) on a US$20,000 account.

    Q And what has been your best investment move?

    A I noticed a pattern with Brexit and the US election day, which also happened during the threat of a Greek exit from the euro zone in 2015.

    The majority of the big moves happened before the US market opened. People who were looking at the news and drama weren't going to make money after the market opened. Even those who tried to bet on the results before or after didn't make much as the markets opened fairly unchanged.

    I was trading S&P 500 futures and noticed that when the results started coming out, favouring the opposing view, there was a huge down move.

    S&P has a circuit breaker which is activated when it moves more than 5 per cent during a day. It was activated on these days and stopped trading for a few minutes. When trading started, it almost retraced its entire move.

    I shorted when the results were coming out, and closed my position when the circuit breaker was activated. I bought the futures when it was activated again, expecting a retracement of the huge reaction of the market.

    The S&P 500 was over 100 points down and 120 points up, all before the market opened, and this was when I made the money.

    Rachael Boon

Q Describe your investing strategy.

A Most of my trades are either short-term trades or last a few days, and are either plays on capturing theta (rate of time decay) or vega (sensitivity to changes in volatility) on the underlying security. I've expanded to trading stocks and futures, and plan to move into forex and bitcoin soon.

I trade based only on technical analysis. Among the existing indicators, the ones that I use most are Fibonacci trendlines and channels.

Most of the conventional indicators like the relative strength index, moving average convergence divergence and simple moving average are not very helpful in making money, although they are great tools to analyse what happened after a move has already occurred.

The key benefit that draws people to trading options is that the losses are small. But, that happens only when you're buying options. I realised that is more like a gamble because you're betting against time and direction - and need to be exactly right on both.

With stocks, you have to be concerned only with direction. But, with options, even if the price moves in your favour but not fast enough, you'll still lose money. For minimal capital exposure, you can play the same trade on options with a lot less than on stocks. But, you have to be exactly right as each day the underlying security doesn't move in your favour, the options are losing their premium.

I didn't do a lot of buying of options which most traders are drawn to, and turned to selling instead. I researched, backtested, tried it and found that it works for me. Since then, 90 per cent of my profits have come from selling options. I sell high and buy it when it's about to expire or almost worthless.

When buying options, you need to be making directional trades all the time, but I got rid of that by selling options on either direction. I don't care if the stock goes up, down or doesn't move, as long as the price stays within range.

Selling options works only for equities or indices which are not very volatile, in the sense that they don't move up and down a lot. This was why I first started trading options on indices like the S&P 500 index, as there's a weighted average of 500 stocks, and so there are no wide swings or news-related events affecting it.

Since I come from a computing background, I have coded and developed more than 10 of my own indicators and use them on my charts.

I have also developed two completely independent trading systems that I regularly use. I'm now working on building one more for day trades for trading futures, to capture big moves intraday. I'm also looking at automated trading so that I can be hands-free, as now I still pick and choose the best set-up indicated by the signals generated to trade.

I started trading futures just before Brexit. I noticed that most of such huge economic events were being scheduled outside US market hours. The best way to make money on these events is to trade on the news as it's happening, through futures or forex.

Futures like gold and crude oil move a lot faster than stocks, and you need enough margin in your account to ride the wide swings.

Q What's in your portfolio?

A My trading account currently stands at more than $250,000. I can't say that I invest in stocks, but I do regularly trade in them through options.

My favourite stocks are those like Netflix, a favourite in 2015, and Priceline, my favourite last year, because they are quite volatile and move around a lot. It's good since I hold my trades for only a few days and do not care which direction they move in the long run.

Q What's the most extravagant thing that you have done?

A Last year I was in Africa for a few months, volunteering and working with wild animals, something I've always wanted to do. I even spent a night with cheetahs in their enclosure.

I did a lot of research and found that this was for a non-profit organisation which takes care of cheetahs and has a breeding project. It raises funds by getting volunteers to pay to work for it. Overall, my trip was more than US$10,000.

Q One of your biggest regrets when it comes to investing?

A I didn't plan ahead when I quit, so I can't get a loan as banks require you to have a stable job, and I'll never be able buy property here. If I could go back in time, I'd have applied for a loan then.

Q Home is... and I drive ...

A A rented condo in Upper Thomson.

I don't plan to buy a car here as I trade from home a lot and I'd rather invest the money instead.

A version of this article appeared in the print edition of The Sunday Times on January 22, 2017, with the headline 'Trading to travel the world'. Print Edition | Subscribe