Rest & Recuperate from Trading

I’ve been trading for quite some time now. Paper trading as well as REAL trading since I was probably 19? “Play-play” trading for even way before that.

I’ve decided recently to take an R&R for a little while. Situations have changed and will change even further in the next few months. Hence, I need to re-evaluate my position and make a few changes to my trading plan and objectives.

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Trade to Survive, Not to be Profitable

Talking about trading, there’s one thing that I learned from a very good trader in Australia.

“You trade to survive, not to be profitable.”

What that means is, you need to set it clear in your mind that you are here to survive in the long run. Aim to preserve your capital first. Take the whole notion of profitability out of the equation for a little while. True, at the end of the day, profitability is all that matters but remember this, if you survive in the long run, profitability will be drawn to you automatically.

If you aim for profitability alone and you want it fast, that’s when impatience starts to kick in. This is then followed by greed. As a result, self destructive behaviour will start to take control.

Moral of the story: Patience is virtue.

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The two B’s in Trading (Equities, Derivatives)

I’m not too sure whether I got this from a book or I thought of it myself. Anyhow, in trading, I believe that you need to possess the two B’s. What are they? Well, they are:

1. You need to be BOLD

Being bold is indeed very important in trading. You need to be able to make out what’s happening with the market, be if you’re a believer in fundamental analysis or technical analysis. Often also, you need to make split second decisions.

2. You need to have BALLS

Being gutsy is also very important. Without this quality, you’ll freeze in front of the monitor, I promise you that. Plus, you need a lot of bravery to see your trading money whipsawing every other day.

So, if you’re a trader out there, do you possess these two qualities? As for me, I still need to do a heaps of work in expanding my BOLDNESS and enlarging my BALLS, so to speak ๐Ÿ˜‰

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Can I still achieve what I plan to achieve by the time I’m 30?

Truly, the global financial crisis that we are facing right now is taking a toll on me.

My unit trust investment with Public Mutual is down around 35%, and my CFD trading activities is crippling. I’m still making money with CFD but my bank balance is advancing very very slowly. One day I’m up a few hundred dollars and the next day, I’m down a few hundred dollars. I made a loss last quarter but it’s getting better this quarter (I hope). Whatever it is, my trading performance is beating my unit trust investment performance but of course, I can’t be comparing them two. It’s like comparing apples and oranges.

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Paper Trading FTSE 100 Day 2 – 11th April 2008

Here are the results for day 2. For day 1, refer to this entry.

Trade 1
Bought at 6006 (18:00), exited at 6002 (18:55).
Loss: 4 points.

Trade 2
Shorted at 6002 (18:55), exited at 6010 (20:05).
Loss: 8 points.

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Paper Trading FTSE 100 Day 1 – 10th April 2008

Here are the paper trading results for FTSE 100 on day 1. Refer to the original entry to read about my plan to trade the FTSE 100 Index.

The entry and exit levels were based on actual data from my online trading platform. The numbers in brackets are times of entry and exit.

Trade 1
Short sold at 5984 (18:06), exited at 5935 (19:35).
Profit: 49 points.

Trade 2
Bought at 5935 (19:35), exited at 5934 (20:45).
Loss: 1 point.

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Trading the UK FTSE 100 Index Contract-for-Difference (CFD)

I’ve been researching ways on how to trade London’s FTSE 100 Index.

What I like the most about the FTSE 100 is that the profits derived are in Great Britain Pound (that goes to losses as well!). Also, trading hours for the London market is also pretty convenient for me.

I managed to draw up a plan last week to make this venture a successful one.

This time, I shall be day trading the FTSE 100 through Contract-for-Difference (CFD). My trading hours will be from 6.00 PM till 2.30 AM. No positions will be held overnight.

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CFD Trading/Share Trading: Costly Mistake

A number of days ago, a trading signal was generated and I placed a limit order with my online trading platform.

Usually, with my limit order, I include a “time of expiry” in which, if the order was not filled by the specified date and time, the order will automatically be purged. For that particular order, it was supposed to be filled by the close of the trading day, or I’m not getting on board at all. However, I was too lazy to type in the date and time of expiry. I though, nah, I’ll just check back later.

Guess what? I totally forgot about the order. It was in the system for the next few days and was eventually filled. The next time I checked my trading platform, I noticed the screen registering a loss of a few hundred dollars. I was like, where the heck did that come from?

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CFD Trading: What can be traded with CFD

The best thing about CFD is that there are a wide range of products that can be traded from one single account. No more having different accounts for stock trading, FOREX trading, futures trading, international stock trading, and etc.

Here are some of the products that I’m able to trade on my trading platform:

– Domestic Shares
– International Shares
– FOREX (Spot and Futures)
– Metals (e.g. Gold, Silver)
– Energies (e.g. Crude Oil)
– Other Commodities (e.g. Coffee, Pot Belly, Orange Juice)
– Money Market Products (e.g. Interest rate products, Bonds)
– Stock Indices (Dow Jones, FTSE 100, S&P ASX200)
– Binary
– Options

Of course, I do not trade every single one of the above mentioned instruments but I still think that CFD is a wonder of the world.

Also, bear in mind that different CFD providers offer different products but usually, the basics are the same.

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Back to Basics: Alternative Investment Asset Classes

A couple of days ago, we had a look at the 4 general investment asset classes.

Today, I shall list out a few others of what I’d like to call as the Alternative Investment Asset Classes.

They are:

Venture Capital

Venture capital is the act of investing in new businesses. The field of venture capital can be very lucrative, providing above average returns, due to the high-risk nature of it. However, the risk of going bust is also quite high.

Basically, what happens is that you, as an investor, provides money to startup firms/companies with long-term growth potential.

Examples: Investing in a new Nasi Lemak business, investing in Nadlique’s Blog ๐Ÿ˜›

Private Equity

A private equity is basically a syndicate (not the bad kind of course) where funds are raised and used to develop new products or technology, expand working capital, make acquisitions and takeovers, or to build up a company’s balance sheet.

You need to have a heck load of money to be involved in private equity, thus it is usually not available to the average individual investor.

Art

There are many things that can be categorised as arts such as paintings, sculptures, and printmaking. These are usually long-term investments whereby capital gains are most likely to be produced.

Examples: Picasso paintings, Van Gogh paintings, Nadlique’s paintings here and here (anybody interested in buying my paintings? Hehe).

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