Thursday, July 26, 2012

How not to lose money

Learning Corner

Fajar : Trading below 0.85 now ... take a look at the huge spike from 0.85 to 1.15 levels in THREE days. If you have chased her and did not take profit or cut-loss, today the losses will be huge.

So, I m adding another pointer in my system .... never to chase up a stock that spike up(unless you have intention to go for short contra trade, assuming you are an experienced trader).

I am not sure if it is Fajar or Senja now ... just do not buy and hope it will spike up again ...

Cybert : I am not sure about the stories ... I simply glanced through its fundamentals when someone asked me and told me about this stock continues to move high ... I think it was at 1.20 level, then I checked the noises ... everyone is making money, happily with this goreng stock. Increbible as it really moved above RM2 level before the plunge!! OUCH ...

Yes, another pointer not to lose money in my system is ... look into some fundamentals before you jumped into a stock. Remember, if a stock is 'suddenly' in focus, discussed in forums ... or some blogs(to lure you in) ... check the fundamentals. DO some homework and decide on your trading plan.

Whether it spike up hugely in days or moving higher and higher into unrealisitic levels, I will no ttrade such counters. Yes, I am defensive and conservative. I do not like to be caught in such situations and NOT LOSING money to these stocks overweight the profits.

I could still 'safely' stocks like GenM or MPHB ... it is easier to use simple basic technical charts. Yes, I use very basic charting ... as I believe in keeping my trading plan as simple. More importantly, we trade with RULES and SYSTEMS we generated base on experiences ... and lots of knowledge about the fundamentals(of counters and markets).

Keep these two simple pointers with you, newbies and novices. Then you will not be in such situations of hope-n-pray. If you have to ... cut-loss even it is huge losses ... and LEARN from the pain. Get away for a while from market, to recover ... and start learning the RIGHT way. Just do not blame whoever asked or lured you into buying Fajar or Cybert ... only you know why you are sucked into them.

Learning takes time ... painfully yet ... making us stronger, if we are diligent enough.

p/s : Will you listen to these simple rules or still thinking there is someone out there will help you to gain lots of money? Get you logic right.


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