Trading Techniques   

Four Investing Mistakes to Avoid

Hi Mani,

 

Anyway I wish you all the best in your trading! 

 

 

To reduce the mistakes of choosing the wrong stocks,. it is important to read. Some TA people here said they don't trust information in the news or that it is late. It is simply not true.

 

Quite a bit effort goes into research but it is definitely not wasted time. TA charts were bearish on Noble Group quite some time ago. Just look at Noble Group share price now.

 

If a stock is falling, holding it for a while will make one lose a bit...

Holding it longer will make one lose more...

By holding even longer, one is possibly devastated!!!

But this is true only if a stock is falling... (ie. on a downtrending mode)...

Thus, this does not apply to all counters...

But the question is Which One?...no one can tell!

 

Hi Ten4one,

I  am not saying based on hindsight. It was precisely I made too many mistakes not holding to stocks longer than I should that I decided to CHANGE strategy one year ago.

 

This is not hindsight. This is learning from past msitakes and willingly to learn from it so one can maximise one's profit. Actually I already mentioned this is not hindsight in my previous message. 

 

 

Ten4one... :) ... 

 

See Moneycomemoneygo, not even a single word was said is bad

Livermore, I do agree that one must be flexible in whatever we do, especially in the Stock Markets. And hindsight with 20/20 vision is always crystal clear - you could hardly go wrong on that!!!! In The Stcok Market, we're talking about the future which could be anything but a 'sure-thing'. Therefore you've to find the most efficient ways to protect and manage your capitals.

FYI, 9 out of 10 top B'aires don't put their money in the Stock Markets. They invest in their own businesses and hire the best people to manage them! Cheers!

 

 

I agree with solar 2000 on what is said below 

"One more thing, I feel if one has accumulated enough cash,

longterm value investing plus lookout for correction and bad news is enough to make alot of $$$ and shake legs.

No need to trade anymore."

Take Wing Tai as an example. I can still remember the TA people here who bought it at near $1.50 one year ago and now it is $3.54! With all that crash which happend in Feb and lately this year, you won't have lost any money  and way in profit!  You already created a huge buffer in profit. You don't need to worry so much about losing money through trading other shares. If you had bought Wing Tai at $1.50 for 20 lots , you would have made early $40K now! It might not be so easy to make $40k through trading in one year.

 

For those TA lovers, it is good to have at least one good stock for long term. The rest of the stocks you can continue trading.

 

Yes, different people have different styles. But be flexible.

 

Haha...how rite you're MoneycomeMoneygo. Like they always said " Different strokes for different folks.". As far as Investing in the Stock Markets is concerned, there isn't a  '1 size fits all' solution to every Investment Plays be it long term or short term! But one thing is for sure : IF YOU DON'T SELL YOU DON'T MAKE MONEY ...OR LOSE!".  Therefore, you've to know when to sell which in fact, is not that simple as it sounds. We very often heard the phrase "Buy low Sell high" but you could also 'Buy high and sell higher' or 'sell low and buy lower'. So whichever stand you take, you can't be wrong isn't it?  Having doubts? So do I........Cheers!

 

That's very right... :)

That's the way of the stock market... there are many ways and styles of playing the market...

Whichever way is used, it should suit the personality of the player himself/herself...

For some, holding a big loss (ie. assuming it is bought high) is hell...
but for others, holding even a small loss for days on end is also hell...

Thus this is what is meant by "suit the personality of the player"...

 

One more thing, I feel if one has accumulated enough cash,

longterm value investing plus lookout for correction and bad news is enough to make alot of $$$ and shake legs.

No need to trade anymore.

I feel trading is meant to maximise return with limited cash, provided one can trade well but wrong mistake can also lose fast.

And im sure trading gives one more kicks :)

 

Trading and Investing are different.

It is easier to invest. Difficult to trade.

 

Most people can invest and make money during bull run.

While traders can make money bull or bear.

 

There are many tricks that professional traders use which normal investors do not know.


And some good ones make hell lot of money over just a few days.




But trading is not for everyone. So most people should be doing value investing.

Just my 2 cents. :) 

 

Hey Mani,

As I mentioned in the past and I shall mention here again. Don't need to be a die die must hold investor. You can use TA for the major correction but forget about all the minor corrections. I think TA would be useful in that aspect. But try to find a good stock with long term propsect and use TA to sell off before a MAJOR correction and not a minor one. Then buy back the share price.

 

Labroy went from 50c to $2.40. If you use TA for all the corrections how many times are you going to buy sell buy sell?

 

I think TA and FA are both useful if used in the right combination:).

 

Anyway just my point of view yah. Good luck!  

 

 

 

 

Thus, trading is really a compromise of sorts to suit those who can't bear to be long-term investors. 

 

Livermore... :)

Trading is different from long-term investing...

In trading, one attempts to avoid the losses that can occur in the immediate future...

Whereas for long-term investing, one is willing to take  losses in the near-term in favour of the longer-term, eg. one year, two, five years or longer than that...

Many people can hold out because they don't need their money, but on the whole, many also can't bear to be holding big losses for a long time (since no one really knows for sure if and when prices will go back up to former levels)...

 

Well Mani, carry on trading then. Good luck!

 

 

 

"...I look at it this way, if you get all pumped up and glossed over with positive beliefs about your market success, your conviction will lead you to mismanage losing trades. That is why belief systems are so important to a trader. If your belief system tells you the current trade will be a winner-and it isn't, the need to confirm that belief in your mind will literally force you to let losses run, to stay with losers, something no successful trader ever does. An outrageously positive belief that the next trade or two will turn your account around or make a small fortune for you is most dangerous..."From the Introduction in his now famous book,"Long-Term Secrets To Short-Term Trading"

 

 

left_bug,  I am lousy with fundamentals too so I have to leverage on my accountant friends to vet my homework.  I started drips and draps from 2003 and it was until Sept 2005 then I completed my portfolio purchase.  Dividend earned each year are consolidated and if a stock price is beaten down, I will use those money to buy some e.g. during the recent sell down.  2006 was really a good year and I cannot say for the same for 2007 yet but overall whats important is portfolio value over time.

Your wife and you needs to be in sync to do the objective for investing in stocks - really else both may spiral out when things goes wrong.  Wish you luck in your portfoilio building (was quite fun during the buying phase.)  :)

 

Thanks KiLrOy. FX means foreign exchange? I am still learning and its not easy. Got to read those boring income statements, balance sheets, and cash flows. Well, it's boring. It's more fun reading charts. Although I got no portfolio now, but I am trying to build up my wife's. And that's even harder work. Ha. She simply doesn't  trust me. Wives always have a mind of their own. What two become one. Oh, please.