As from April 2013 my Journey in Investing is to create Retirement Income for Life till 80 years old for two over market cycles of Bull and Bear.

Welcome to Ministry of Wealth!

This blog is authored by an old multi-bagger blue chips stock picker uncle from HDB heartland!

"The market is not your mother. It consists of tough men and women who look for ways to take money away from you instead of pouring milk into your mouth." - Dr. Alexander Elder

"For the things we have to learn before we can do them, we learn by doing them." - Aristotle

It is here where I share with you how I did it! FREE Education in stock market wisdom.

Think Investing as Tug of War - Read more? Click and scroll down



Important Notice and Attention: If you are looking for such ideas; here is the wrong blog to visit.

Value Investing
Dividend/Income Investing
Technical Analysis and Charting
Stock Tips

Thursday, 28 February 2008

Tharp Trader Test

I am a Planning Trader

You tend to be decisive and to the point. You'll quickly assume leadership when it is called for by the circumstances around you. You have the ability to quickly develop and implement trading systems to meet your needs. You can easily spot logical inefficiencies in the market and take advantage of them, especially if you are pointed in the right direction.

You enjoy long-term planning and goal setting and seem to enjoy learning, expanding your knowledge and staying well-informed. Consequently, you should have no problem developing a sound business plan for trading successfully.

You are excellent at planning in advance especially when you have specific trading goals in mind. You are good at keeping both your short term and long term objectives in mind during the planning process. You like to be effective and efficient and will quickly abandon procedures that do not help you to accomplish your goals. Your dislike for repetition in error will probably help you with trading, because uncovering and fixing any mistakes that you make is an important task of trading.

You are probably quite career focused. Thus, if your current focus is on trading, it's probably because you've had a major disappointment or frustration with your initial career of choice. However, you need to be careful with trading/investing because it tends to be a solitary activity and you love to organize others and pass on your knowledge.

Nevertheless, you tend to have the three important qualities that we look for in top traders. Thus, if you apply yourself, develop a business plan for trading/investing, and really work to understand what trading success is all about, you have the potential to be hugely successful.

Trading Strengths

Originality and drive; willingness to follow your ideas through to completion.
Quickly see patterns and possibilities, with the ability to rapidly hypothesize and generate low risk trading ideas.
You could probably generate a trading business plan and trading systems quite easily and naturally.

Trading Challenges

Probably so logical that you don't recognize when emotions are causing you to self-destruct.
Your willingness to take action based on rapid insights may result in premature actions, which may create tension with your risk management system especially if you really believe in your rapid insights. You may be susceptible to the loss trap. Therefore you may not honor your stops because you want to be right about your trades.

May become bored with routine systems, even if they are performing to standard, and seek excitement to "stay in the game."

Monday, 25 February 2008

Retire young, retire rich

Published February 25, 2008

Retire young, retire rich

JASON LOW shares some tips on how you can turn this dream into reality

ACCORDING to the annual world wealth report compiled by Merrill Lynch and the Capgemini Group last year, Singapore registered the fastest increase in the number of US-dollar millionaires in 2006. More than 11,000 people joined this wealthy club that year, raising the number of high net worth individuals to a total of 66,660.

With more and more people making it into the group of the wealthy, it appears that joining their ranks is no longer as unattainable as once thought. No wonder many young professionals and undergraduates here are dreaming of joining that select group sooner rather than later. If you are one of those with that goal in mind, it may be timely to start planning how to get there. After all, the earlier one starts, the higher the chances of getting there in time. Here are some tips culled from various sources.

Start saving now and let compound interest work your way
'Tip number one is you have to start saving immediately,' said James O'Shaughnessy, founder of O'Shaughnessy Funds and author of How to Retire Rich in an earlier CNN Money report. 'The younger you are when you start, the better chance of retiring in style.'

Easy as it seems, most people have trouble saving for the long term. 'Saving is often a vicious cycle for most people. They are only disciplined enough to save in the short term before blowing all their savings away in a big ticket item like a car,' said Alvin Chia, a private investor who turned financially free at the age of 27. 'It is important to live below your means and avoid splurging on unnecessary items if you want to achieve the retirement dream early.'

Both early savings and living below your means allow you to take full advantage of the power of compound interest. If you save $2,000 a year starting at the age of 20 until you are 30, you will still have more money than a person who saved the same amount between the ages of 30 and 60. Enough said.

Pay yourself first
Taken from David Bach, who shared the powerful concept of automated savings in his book, The Automatic Millionaire, the trick to this is to have money automatically channelled from your payroll and deposited into your savings account before you even have access to it.

Invest for the long term
Equities offer the best form of long-term growth among most classes of investments. From 1926 through 2004, stocks - using the S&P 500 index as a measure - have posted an average annual return of 10.4 per cent versus a mere 5.4 per cent for bonds, according to Ibbotson Associates.

Both Mr Chia and Laura Oh, a 26-year-old home tutor, have their investments mostly in equities as well. They both have achieved their financial freedom.

Interestingly, they are both long-term value investors who invest in undervalued companies that pay high dividend yields and use these dividends to re-invest again when the right opportunities strike. Miss Oh, for one, started paper trading at the age of 19. 'Starting to invest early and putting your money into the right class of investments definitely helps you grow your money faster than putting it in fixed deposits,' she said.

Have a detailed game plan and monitor your progress

Set realistic goals by projecting your retirement expenses based on your needs. 'Know how you want to live in retirement and be honest about it,' said Mr Chia. 'Then calculate how much savings you need to put aside a year to achieve your ultimate goal.' One rule of thumb is that you will need at least 70 per cent of your annual pre-retirement income to live comfortably.

Review your status at least every couple of years to make sure you are still advancing towards your goal.

Don't be discouraged by failures and remain focused
It is not uncommon to meet with obstacles along the way. Don't lose faith or be daunted by the goals that you set for yourself. Break that impossible goal into a million achievable bite-sized goals and conquer each one at a time. As Mr Chia recalled, he was relentless in the pursuit of his retirement dream and took small steps to build up his investment pool. He said: 'When I was 19, I worked as a security guard at night to make sure I was making money sleeping. My main duty was to open the gates for the staff every morning and in that process, I earned myself $1,400 extra a month just from sleeping.'

Find a mentor to guide you
Having a mentor to constantly give you personal advice on your financial state and the allocation of your investment portfolio is a major plus. Very often, your mentor should also be someone who shares the same life and investing philosophy as you. Only then can the mentorship be very successful.

Portfolio update - Bought NOl 3.43

Contra GAR 4.8% and Wilmar 2.2% on sign of market weakness

Friday, 22 February 2008

Hard road to recovery

Slowly crawling the hard road to recovery and another 70% of losses to be recovered. This MUST be the FINAL and LAST hard lesson to be learnt.

Portfolio update - Bought back Golden Agri @ 1.09



Golden Agri closed at 1.14. Well done. Will watch closely on Monday for a quick profit again.

Thursday, 21 February 2008

Wednesday, 20 February 2008

Portfolio update: Sold FRC and REL



Took profit on Ferro China, ROC 21.5% and Rotary ROC 6.5%

I have managed to wipe off the losses in Feb 08. Now, working towards reducing losses in Jan 08. Cheers!

Tuesday, 19 February 2008

Ferro China": Good run +15.3% on 40.5M




This volume was last seen on 2 May 07 and ran up to the high of $2.43. Can it happen again? Maybe if we believe the below report from DBS Group Research

More Reasons to Buy FerroChina


Story: We highlight a few key points that we believe can help FerroChina re-rate significantly over the next three to six months.

Point:

Firstly, a potential bid for steel-maker Delong by the Evraz Group at over 11x FY08 earnings suggests that FerroChina, currently trading at 5.3x FY08 PER, is significantly undervalued and also highlights the latter as another potential takeover target for larger steel companies.

Secondly, we believe the Group’s fundamentals remain strong and that it should report a record earnings year in FY08, boosted by full consolidation of recently acquired SuperbTeam’s numbers. Our forecast net earnings for FRC in FY08 is RMB1,138m compared to RMB427m for FY07F, translating to a fully diluted EPS growth of 28% for this year. Furthermore, we expect FerroChina to announce a good set of 4Q results next Thursday, 28 Feb, which should help further reassure investors of its strong growth prospects, as well as the positive contribution that can be expected from having fully acquired SuperbTeam.

Monday, 18 February 2008

Portfolio update - Bought Synear





I went in to buy Synear @ $1.06 at market price after withdrawing overnight queue at $1.00. The last two days of doji, and today with higher volume, I am expecting a reversal soon.

Sunday, 17 February 2008

FRC



Bought FRC on 12 Feb @ 1.25. It has then stopped moving up and consolidated.

REL - some reflection



Company will be releasing its full year financial results for the year ended 31 December 2007 on 26 February 2008, after the close of trading on the Singapore Exchange

Press Release - Rotary Engineering posts record S$40.5m net profit for the nine months ended 30 September 2007

I am expecting record full year net profit. REL has came down from the high of $1.54 and recent low of $0.82.

I will accumulate more on Monday @ 0.94 after its pull back on Friday.

I am also mindful of selldown in Keppel and Tat Hong after posting good result, perhaps, fund managers are raising cash as it is easier to dispose them after good result as there will be a ready pool of buyers.

P&L Performance review

Overconfidence has lead me to excessive contra trading and improper money management forcing me to take realized losses and wiping off 66.7% of 2007 realized profit.

Slowly, I have crawled back some 17.3% realized profit, and now the nett realized loss at -49.4% of 2007, and -114% off 2008 target profit.

Look like 2008 is going to be a very tough year ahead for me to meet the 2008 profit target. Cheers!

Thursday, 14 February 2008

Wednesday, 13 February 2008

Rotary Engineering

Rotary Engineering ups stake in Saudi Arabian JV
to 51%; seals US$62m deal to build storage tanks
for petrochemical complex in Saudi Arabia

REL breaks resistance level, but closed badly. Will this news enable REL to surge up tomorrow?

Tat Hong Q3 Result

Portfolio update - Bought STX and NOL

Tuesday, 12 February 2008

The Three Vices of Trading

The Three Vices of Trading

Brett N. Steenbarger, Ph.D.


The following is a short article for Woodie’s CCI traders. It summarizes several of the psychological pitfalls that interfere with accurate pattern recognition. My hope is that CCI traders can focus on these three “vices” as mental preparation prior to entering the markets. One of the best ways of becoming an observer to your negative behavioral patterns—rather than a trader lost in those patterns—is to periodically take your emotional temperature. That means standing back and asking yourself: Am I falling prey to one of the vices below? Remember, observing and interrupting your patterns are the first steps in altering them! Your patterns lose control over you as you become better at not identifying with them. When you become an observer to your patterns, you are separating yourself from them. What great progress that is!


Vice Number One: PERFECTIONISM

Perfectionism is often the chief culprit when the pain of losing exceeds the pleasure of winning. Desperately trying to feel good about themselves, perfectionists set unrealistically high ideals. They think they will finally be OK if they just accomplish X. (For X, you could substitute many things, including looks, wealth, popularity, or achievement). Because X is an unattainable goal, perfectionists ironically use their ideals as a basis for self-criticism when their performance doesn’t match up. After all, is achieving X will make me OK, then I must not be OK if I fail to achieve X. The emotional theme of the perfectionist is “not good enough”. Perfectionists are driven to do more and more because they never feel competent, worthy, and loved as they are. Thus, even when there’s a profit on a trade, perfectionists will look for the portion of the move that they did not participate in. If they caught most the move, they will reprove themselves for not trading a larger position. And when trades don’t go well, perfectionists review all the reasons that shouldn’t have made the trade, should have known better, etc. By focusing on the portion of their performance that doesn’t match their ideals, perfectionists transform successes into defeats, losses into failures. They rationalize their perfectionism as a drive for achievement, but all they are accomplishing is an undercutting of their confidence.

Perfectionism shows up as negative self-talk and self-blaming. Emotionally, we recognize perfectionism from frustrated, angry feelings when trades don’t work out as planned. “Beating myself up” is how many perfectionists describe their self-talk. The way to beat perfectionism is to make a concerted effort to talk to yourself the way you would talk to a good friend in a situation where things went wrong. Most people know how to treat others with respect, love, and dignity. They just haven’t learned to do the same for themselves. If you would be more nurturing, understanding, and supportive of a friend than you are of yourself in the identical situation, then you know that you’re not being your own best friend. If a trade doesn’t work out, the constructive trader focuses on, “What can I learn from this?”—not “What’s wrong with me?”. In Woodie’s language, the best antidote to perfectionism is the ability to reassure yourself, “There will be better trades down the road.” The key is to not miss those better trades while you’re beating yourself up!


Vice Number Two: EGO

Everyone likes to win in the markets. It’s only natural to feel good when you’ve done your homework and end the day with a profit to reward your efforts. Ego involvement in trading, however, goes further than this. When the ego is involved, we write the market a blank check for our self-esteem. If trading is green, we feel good about ourselves; if we go into the red, we feel diminished. That places tremendous pressure on our trading over time. Not only do we have the burden and challenge of reading complex market patterns; now we also have a psychological gun pointed to our head ready to go off any time our pattern recognition fails us.

Most traders are aware of the dangers of trading with too much leverage. A trader accustomed to trading 2 lots, where each tick in the ES is worth $25, would feel overwhelmed jumping to 100 lots, where each tick now moves the account $1250. With the stakes raised to such a degree, the same trade would now no longer feel the same. It would be hard to let a position go against you by a point ($5000, instead of $100), and it would be difficult to let a profit run. When traders invest their feelings about themselves in their trading, they are operating with maximum emotional leverage. In the currency of self-esteem, they trade 100 lots. So much of their emotional account rides on each trade, that it inevitably affects decisions about cutting losses, letting profits run, and entering and exiting in a timely fashion. The successful trader wants their trades to work out; the ego-involved trader needs them to be profitable.

We know that ego threatens our trading when we find ourselves needing to trade just to win back some recently lost dollars; when we feel a desire to advertise our positions; and when we find ourselves riding an emotional roller coaster as profits wax and wane. Just as we can recognize traders’ perfectionism from anger/frustration, we recognize ego-involved traders from euphoria/depression. If trading has us truly depressed, we know that it’s not just our trading account that’s hurting. The antidote to ego-involved trading is to place our self-esteem eggs in many baskets: recreational interests; other work involvements; relationships; and our spiritual lives. Many times we pour our self-esteem into trading because those other facets of our lives are not properly developed. A balanced life makes for balanced trading. In the spirit of Woodie’s CCI Club, we can take some of the ego out of trading by learning from others, by becoming a candle that lights other candles, and by using a portion of market profits to help others make a wish that will come true. If your good feelings in life come from good relationships and worthy achievements, you won’t need the markets for your happiness. Market success can be the frosting on the cake of your successful life, rarely can it substitute to the cake itself.


Vice Number Three: OVERCONFIDENCE

It is common for traders to complain of a lack of confidence in their trading, but very often it is overconfidence that does them in. Overconfidence results from a lack of appreciation of the complexity of markets and an underestimation of the challenges of trading them successfully. In a sense, overconfident traders lack respect for the markets. They think that reading about a few setups or buying the newest software will prepare them to make money. Overconfident traders don’t want to work their way up the trading ladder: they resist the idea that screen time is the best teacher. They also chafe at the idea of growing their account. Rather than start with one contract and wait until they’re profitable before trading larger size, they want big positions—and profits—right away. Because they’re so eager to make money—and so sure they can make it—overconfident traders generally trade impulsively. They won’t wait for the setup to form; they’ll jump the gun—and get whipsawed in the process. Instead of being patient and waiting for short-term patterns to align with longer-term patterns, they will take every trade, enriching their brokers in the process.

The hallmark of overconfident traders is that they think they are going to make something happen in the market, instead of patiently waiting to take what the market gives them. Spelling out profit goals for each day or week of trading is one manifestation of overconfidence. Humble traders know that markets expand and contract their volatility—sometimes the trade just isn’t there. The overconfident trader, however, feels that he/she is bigger than the market. Indeed, overconfident traders will often take great pains to try to catch the tops of bull swings or the bottoms of corrections. As a result, they often fight the market trend—and can get run over in the process. If the emotional signs of perfectionism are anger/frustration and the emotional signs of ego involvement are elation/depression, then the emotional signs of overconfidence are impatience/impulsivity. Overconfident traders overtrade. They fear missing opportunities more than they fear losing money. The antidote to overconfidence is rule-based trading and the intensive rehearsal of trading rules. By making entries, exits, stops, and position sizing rule-governed and vigorously rehearsing trading rules during simulated trading (as well as in real time with small positions), traders can greatly reduce their impulsive trading. Very often this means training oneself to focus on (and rehearse) what-if scenarios of being wrong in the market, as well as forcing oneself to spell out the rationale, targets, and stops for all trades. By making trading a more self-conscious process, traders interpose thought between impulse and action, gaining greater control of their trading. When the trading room admonishes, “No boasting, just posting”, it is encouraging restraint on overconfidence.


Summary

Clearly, the three vices are not completely independent of one another. There can be significant overlap for traders. For example, a trader might take a position out of overconfidence, then hold onto it out of ego-related stubbornness and pride. Whether the vice is perfectionism, ego, or overconfidence, the basic problem is the same: Making the trade about oneself, rather than about the markets. If you are thinking about yourself—how much you’ll make or lose, how well or poorly you’ve done, how much you’re a success or a loser, how much better you could have done—you can’t be fully focused on the markets. It’s not about you. It’s about the setups and the ability to read them. And to read them, you must be one with them, immersed in them, so that you feel them, not just observe them. You can’t feel the markets and become lost in feelings of anger, frustration, elation, guilt, depression, impatience, or impulsive need. The greatest vice in trading is to take it personally, to become so focused on the outcome of trading that you lose sight of the process. If you are fulfilled outside of trading, your other needs will not infiltrate your decision-making and sabotage your entries, exits, and money management. If you build yourself physically, socially, spiritually, and professionally, you will find that the markets won’t need to bear the burden of carrying your identity. At that point, you’ll be able to say (in your best Woodie voice):

We Don’t Need No Stinkin’ Vices!




Brett N. Steenbarger, Ph.D. is Associate Professor of Psychiatry and Behavioral Sciences at SUNY Upstate Medical University in Syracuse, NY. He is also an active trader and writes occasional feature articles on market psychology for MSN’s Money site (www.moneycentral.com). The author of The Psychology of Trading (Wiley; January, 2003), Dr. Steenbarger has published over 50 peer-reviewed articles and book chapters on short-term approaches to behavioral change. His new, co-edited book The Art and Science of Brief Therapy (American Psychiatric Press) is due for publication during the first half of 2004. Many of Dr. Steenbarger’s articles and trading strategies are archived on his website, www.brettsteenbarger.com.

Portfolio update - sold wilmar, bough tat hong and Ferro China



Wilmar has a good run and I have decided to take profit. Bought Tat Hong @ 3.10. Tomorrow it will announce Q3 result. Tat Hong has been quite positive despites market going down.

Q2 result highlight as follows:

TAT HONG’S 1HFY2008 NET PROFIT AFTER MI MORE THAN DOUBLES
TO S$40.2 MILLION
- Record Half Year Profit (excluding investment gains) in three
decades
- Highest Gross Profit Margin of 39.4%
- Growth seen in all business segments, with Crane Rental
registering highest growth
- Maiden contributions from newly acquired Australian subsidiaries
- Share of Associates’ Profits almost tripled to S$5.5 million
1HFY2008 Financial Highlights:
· Net Profit jumps 2 times to S$40.2 million
· Revenue reaches a new high of S$298.3 million
· Earnings Per Share (EPS) up 86.8% to 7.94 cents
· Proposes interim dividend of 3.0 cents less 18% tax, and
interim dividend (One Tier) of 0.8 cent


Also bought Ferro China @ 1.25, like Tat Hong, this one seems going against market down trend.


FerroChina 3QFY07 net profit surges 87.7%
to RMB101.9 million; completes Superb Team acquisition
• Earnings accelerate with increased contributions from associates as one additional
300,000 mt reverse cold rolling mill started production in May 2007.
• One-off rebate from raw material supplier arising from purchases of raw material in
previous quarter.
• Superb Team acquisition catapults FerroChina market capitalization to S$2 billion,
making it among the top ten S-Chip companies on SGX.

Monday, 11 February 2008

Portfolio update - Bought wilmar



$4.00 is well supported and I was waiting at 3.98; but, after lunch it went up and I have to catch it at 4.04. Trading on MACD turning positive and stochastic, its low is supported by lower MA channel.

Thursday, 7 February 2008

Book: A Complete Guide to Technical Tading Tactics by John L. Pearson

A great lesson that I have repeatedly failed to learn and re-learn as written by John as follows:

For those who do experience trading success, take money out of your trading account! Diversify your trading profits. One great analysis and trader, Fibonacci expert Joe Dinapolis, told me before going on the radio show that he likes to buy selected properties in real estatw, whether it is in Bangkok, Massachusetts, or Florida.

I have heard many a trader start out with $5,000 or $10,000, make a large sum trading a particular market move, and decide to just build their account. Quite frankly, I really do not remember any of those people acheiving that goal. I have seen traders give most, if not all and more, back to the markets. One reason is they become overconfident. They think, "If I can take $5,0000 to $30,000, maybe I can take $30,000 to $1 million!". Greed sets in, they trade larger positions, take on more risk, and forgot what got them their initial profits. If you are a one-lot or two-lot size trader, then take money out of the market on a consistent basis and reinvest elsewhere. Wealth creation is the goal, and diversification is the key to success in life.

Some Trading Thoughts

You only have three choices when you are in bad position, and it is not hard to figure out what to do: (1) Get out, (2) double up, or (3) spread it off. I have always found getting out to be the best of all three choices


No opinion on the market or you are doubtful about market direction? Then stay out. Remeber, when in doubt, stay out.


My reflection:

Last year, I have great success in doing choice (2) double up when in bad position as had done well when market recovered quickly. Last month, this choice has failed terribly, and wipe off most of the past year profit. The reason is overconfidence, and Greed sets in, I trade larger positions, take on more risk, and forgot what got my initial profits.

My great mistake is : Not knowing your market!. The market condition that causes the market fall is very different this time and Fed rate cut has lost its magical power and market could not recover.

I will re-learn these lessons:

1) Control risks
2) Put away some money


and move on. Cheers!

Top 10 Reasons Why You Should Trade Stocks

Top 10 Reasons Why You Should Trade StocksWednesday February 6, 1:08 pm ET
By TradingMarkets Research

Extract:

More Information Than Ever Before

The economic boom of the 1980s and the financial boom of the 1990s led to a proliferation of finance- and business-oriented newspapers and magazines. And the majority of this new financial media was all geared toward the same purpose: helping the average trader get a piece of the action.

Nowadays, researching information about both specific stocks and the stock market in general is one of the most popular past-times on the Internet.

For traders looking for information about companies, managements, earnings, balance sheets, and even rumors and insider buying, there is more information more readily available than at any time in the history of finance. Retail traders can now listen in on earnings announcements and conference calls that were restricted to professional stock analysts only a few short years ago.


Profit in Up Markets and Down

Trading stocks -- as opposed to simply investing in them -- means you can make money whether the market is moving higher or lower. When markets are moving higher, you can buy the breakout, ride the trend, or if you are already long stocks, sell into strength. When markets are moving lower, you can sell breakdowns short, ride the bearish trend downward, or buy the dips. As a trader, all you want is volatility -- direction is a secondary issue. As long as stocks are moving, you will always have a chance to win.

Easy to Buy, Easy to Sell

Stocks are highly liquid. Unlike speculating in real estate or starting a business, stock trading is a purely financial endeavor that requires very little in the way of equipment, inventory, or a virtual fleet of salesmen, appraisers, inspectors, agents and other middlemen that are required personnel when it comes to many other ways that people have traditionally tried to make money. Trading stocks not only allows you to be your own boss -- it allows you to be your own, sole employee, as well!


Outperform Mutual Funds

For investment, and for those with little time to devote to the markets, mutual funds are a perfectly legitimate option. But for those with a little more capital and a little more time, trading stocks is a far more effective way to make money than trading mutual funds.

Although many stock traders have attempted to trade mutual funds, many mutual fund companies have increasingly imposed steep fines and penalties to restrict accountholders from trading mutual funds in their accounts. Not only do stocks not have this problem, but a portfolio of well-chosen stocks -- such as the high PowerRating stocks published by TradingMarkets -- has been shown to beat the market by a significant margin since 1995.

More Tools than Ever Before

Along with the overwhelming amount of information available to retail stock traders today, there are more tools that traders can use to analyze stocks on their own. Analytics, charts, and trading message boards are just a few of the tools and resources that are available to do-it-yourself stock traders. Gone are the days, for example, where technical analysts and chartists were required to hand-draw charts after the market close, tediously updated their graph paper charts with all the attention (and efficiency) of a medieval monk.

Now, with a click of a mouse, traders not only have eye-poppingly informative price charts to study and analyze, but the sheer computer power available to retail traders of all types makes it possible for the average guy (or gal) to be able to test and backtest trading strategies, experiment with technical indicators, and review and process far more stocks in a short period of time than would have ever been possible in decades past.

Intellectual and Emotional Challenge

Most people who trade for any length of time become interested in the mechanics of trading, sooner or later. This is often true even if they start out with a service that just provides entry and exit signals. Whether that means looking at a price chart (such as our PowerRating charts) to confirm a recommended buy or sell, or using other technical or analytic tools to understand how a given system or service makes the recommendations it does, the desire to want to "look under the hood" and see how a certain trading system really works is both an understandable and a healthy temptation. Many traders have referred to trading and trading systems as being like putting together puzzles, calling it some of the most intellectually challenging work they've ever done.

Not only can trading stocks give your brain a workout, but also your heart is likely to feel more than a few heavy thumps as you embark upon your trading career, as well. Anyone who has traded stocks for any length of time will tell you trading stocks is one of the toughest vocations you can get involved with in terms of playing with your emotions. The idea that trading is 10% method or strategy and 90% psychology is no secret among stock traders, who know that even the best stock trading system or method will fail if the trader does not have the requisite confidence and discipline to follow it.

Opportunity to Make Money

Last, but not least, trading stocks provides a great opportunity for people to make money outside of their 9 to 5 (or 8 to 6, nowadays) jobs and careers. There are a variety of techniques -- from intraday and "day trading" to swing trading to position trading -- that stock traders can choose from, making it possible to find a trading style that matches both their person (i.e., full-time worker, student, retiree, work-at-home parent) as well as their personality.

One of the best things about trading stocks is that there really is no "one way" to trade stocks. Contrary to popular wisdom, there are plenty of people who make a fine second income trading stocks -- and almost none of those people trade in the exact same way. Moreover, many popular myths about trading -- from the idea that technical analysis doesn't work to the notion that you cannot trade unless you use stop-loss orders to the idea that buying low and selling high is not as effective a strategy as buying high and selling higher -- are really just that: myths and habits that have worked for some, and not worked for others.

The trick is to find a method that works for you, test it, and if the tests are good, trade it. Who cares what anybody else thinks about your personal style of trading -- as long as you are making money?

So, Do You Wanna Be a Stock Trader?

Like a lot of activities that take a great deal of skill and focus, there really isn't any way of determining whether or not you have the necessary confidence and discipline to trade stocks until you actually begin trading stocks. Paper trading and trading simulations are very helpful for traders to master the mechanics of trading, the placing of orders, the management of positions, and so on. But the only way you will know if you have what it takes to trade stocks is, to put it bluntly, to start trading stocks.

Invest for retirement, looking to buy and hold the best stocks for as long as possible. Start a business if you want to get rich -- as the saying goes, nobody ever got rich working for somebody else. But to simply enhance your lifestyle, to make everyday living that much more potentially rewarding and secure, or to afford those creature comforts that provide just the right amount of spice to life, there are fewer better methods than trading stocks. And no better time than the present to get started.

David Penn is Senior Editor at TradingMarkets.com

Wednesday, 6 February 2008

Portfolio update - add REL



Bought Rotary yesterday after observing it was moving up after opening with an increasing volume despite poor market condition. Today, its low is still higher than yesterday low. I will try to hold it longer for Rotary full year results announcement.

The 3Q result is good.

Rotary Engineering posts record S$40.5m net profit for the nine months ended 30 September 2007.

The oil and gas and petrochemical industry here is still vibrant
and there is ample room for growth, says Chairman and Managing Director Chia Kim Piow

Tuesday, 5 February 2008

Performance update




I was punished for not strictly following my risk control rules. Keep committing the same mistakes again.

Monday, 4 February 2008

Portfolio update



I have committed another sin - over-confidence on Keppel as I have expected good result; but the market disagreed.

I have to keep re-learning those trading lessons in a hard way. Cheers!
Related Posts with Thumbnails