My DLC Journey: Amplifying a Conviction While Managing the Risk

1. Why I Chose $SGX(S68.SG)  — and Why I Started Exploring DLC

For me, actions speak louder than words. I personally trade SGX and my conviction in the counter comes from both its fundamentals and its business model. SGX is fundamentally different from many ordinary companies because it operates the market infrastructure itself. Its business benefits from market activity through trading and clearing fees, settlement and depository services, derivatives, market data, connectivity and other related services. In simple terms, when more investors trade, hedge and use the market, there are more opportunities for SGX to generate revenue.

The numbers also support my view. In FY2026, SGX’s securities turnover increased 35% year-on-year to S$455.7 billion, while derivatives trading volume rose 15% to 363.5 million contracts. Its securities daily average traded value reached S$1.8 billion, the highest in 18 years. This gives me confidence that SGX is a structurally strong business with multiple recurring sources of revenue, rather than a company relying on a single product or one-off event. I therefore see SGX as a relatively stable, fundamentally strong counter with a positive medium-term outlook.

However, having a bullish view is one thing — maximising the potential return from that view is another. That was what led me to explore DLCs. Instead of simply holding the underlying stock, I wanted a way to amplify my exposure when my conviction was strong. I started trading the 5x Long SGX DLC, $SGX 5xLongSG280516(JLFW.SG) and my latest position is a good example. I waited for a pullback towards the EMA50 area rather than chasing the price, accumulated during the weakness, and was rewarded when the counter rebounded as expected. I am glad to have achieved almost 30% profit within a relatively short period.

2. DLC Is Powerful — But It Cuts Both Ways

My experience has also taught me that DLC is a powerful but dangerous tool. A 5x DLC is not simply a faster way of holding the stock. The leverage magnifies both gains and losses, while the daily reset means the return is calculated and compounded day by day. This makes timing especially important. A trade can work very well when I get both the direction and entry timing right, but the opposite can happen just as quickly when the underlying moves against me.

This is why I personally treat DLC as a short-term tactical trading instrument, not something I blindly hold indefinitely. I pay close attention to the underlying’s trend, support and resistance levels, momentum and my entry price. Position sizing and risk management are equally important because leverage can make a small movement in the underlying translate into a much larger movement in the DLC.

For me, the biggest lesson from trading JLFW is that leverage itself is neither good nor bad — it is a tool. When I have strong conviction in a fundamentally sound underlying like SGX and can identify a favourable technical entry, DLC gives me the ability to maximise that opportunity. But I also know that the same 5x leverage that helped me achieve almost 30% can work against me just as aggressively.

So I see DLC as a powerful tool for traders who understand what they are trading, but definitely not a shortcut to easy profits. Good fundamentals give me the conviction, technical analysis gives me the timing, and risk management keeps me in the game. That combination is what makes DLC useful to me.

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