Sunday, October 12, 2014
Cut-loss : How to be a better trader
Good morning ... I have an e-meeting for my trading group last night, talking about the importance of cut-loss. As traders, we need to observe that ... be discipline enough to cut-loss or taking profits. Otherwise, we will be played out by our emotions ... our fear-greed.
RHB talk : I went for the talk yesterday. I will summerise the talk when I could find a little time for that. It was NOT full as what the person who called me said so ... many did not make it even tho they registered. I guess it is due to market diving or many went to KLCC instead. There ate few talks around. Well, I chose to go to RHB as it is at Taylor's University!!
I met two traders there(Malays) ... one is a full-time trader and another engineer aspiring to be a trader. Great ... one of them recognize me as CPTEH when I intro myself as TEH. Yes, is it from i3. Nice to know a full-time trader and by keeping in touch with him, we could share trading ideas!
Next week I will be attending RHB's post-budget talk. See if I could get to know another 1-2 traders.
Ok ... listen to simple clip of what the person saying about how he started as a novice ... to expert level. Interesting ... it is true that it is easy for us to forget that we have started from the newbies level ...
Yes ... I started from newbie ... a total zero-level about financial markets, or anything related to money. I do not even understand inflation, never bother about budget, never plan about my own personal finances .. hmm ... never thought of retirement funds. Anything about money ... I was a total idiot. If u tell me rule-72, I will think of it as something related to a gold-game which I knew nothing about.
I started by observing those few related companies which I heard of being listed in KLSE. Being in Sabah, working at Inti ... I was checking Inti College. It was listed by then ... around 50cents. BUt then, take private by an education-group(from US at RM1.50 ... the stock price was shooting up! Interesting .... I was checking Ngui-Khee ... Karambunai too ... AirAsia, Astro ... and I knew nothing much about the fundamentals or technical, of coz. I don't even understand why some companies not listed in KLSE. Haha ... yes, it takes TIME to digest ... to understand and more hours to learn/understand.
So .. I will like to encourage newbies or novices to LEARN. Need not to pay thousands of good money for trading courses. See if u could stay long enough to be in markets ... riding on the roller-coaster, and still in a piece. To explain trading in a day or few hours or even few days is not possible. Learning takes TIME ... give yourself 3-5 years. I am in my 6th year, and I leaped from newbie to novice level after 5 years!! And not, I need another 3-5 years to move to intermediate level. Yes, I am at novice level ... and it is high risk to listen to me, but give me time ... I will show you here that I m still moving to higher level. It takes more than just simply buy-sell .. to improve, to experience. It is actively checking, planning on our trades.
Cut-loss : Example Ecoworld
Ecoworld has been trading uptrend ever since Liew and gang came from SPSetia. So, everyone stating that Ecoworld will be SPSetia 2. It went to the high of RM5.80 ... and then DIVED with 3 black candles to RM4.50 ... last week it has broken RM4.50, that is an important support. Now it will be diving like a free fall ... closed around RM4.30, we shall only check her at RM3.80 level.
If we do not cut-loss ... say we bought at RM5 ... we have to prepare to average down(investor will not buy Ecoworld at this level ... it is playing on hot-air story that Ecoworld will be SPSetia 2 in coming years ... that is left to be seen, but current valuation is quiet ridiculous) ... RM3.80 is the next level to buy, but do prepare to buy more at lower price?
Why cut-loss? So that we could buy the same stock at lower level, if we like Ecoworld so much, right?
So ... we can use simple technical charts to plan.
I am still busy to have y next trading workshop(cohort-13) and postponing it to end of this month, tentatively 25-26th Oct. Market is diving now ... so nice. Many cheap sales around ... hope it will dive more next week and break 1800?
contact me(at email@example.com) if one wish to learn simple technical charting, which is sufficient for trading good fundamental stocks. Learn slow from here ... advance when we have better understand. All those indicators will not help us much ... it is the DRIVER not the car.
Have a nice weekend ... and I am still very excited waiting for next week.