Archive for the ‘Money Management’ Category

If you understand the game of leverage then you may be interested to find out how you can leverage using CFD.

http://www.infinitesparks.com/dev/webcast_flash_investfocus_cmc/

Of course there are a few CFD service providers in Singapore if you are interested and need any help, you may like to drop me a message.

In our Advanced Alert Report, we had included 2 prices known as “Beware 1 and Beware 2″.  A question was posed on why the two Beware prices have such a drastic difference for both stocks.

Please note that we are using our system (JIN proprietary scanning criteria) to provide a guide only. If you find the two Beware prices are too much for your risk appetite, you can also use certain percentages eg. 8% to 10% (whichever you are comfortable with) or previous pivot low to calculate your stop exit price.

Attached are the charts using our JIN Template for reference.  I have demonstrated three stocks from the Buy Bottom worksheet. From the charts, you  will see that the chart for Allgreen is more gentle now as compared with the other two which have big swings.  From the chart pattern point of view, it is likely Noble and Z-Obee will need to consolidate for a period of time before it continue the trend, otherwise correction may continue too.

“It’s not whether you’re right or wrong that’s important,

But how much money you make when you’re right and

How much you lose when you’re wrong.” – George Sorros

Many traders stubbornly hold on to their stocks when the losses are still very small.

However, getting out of a trade when the market dictates a loss will keep you in the game. You can’t afford to lose big.

Successful traders are the ones who live by 2 rules.

Rule 1: Protect their capital (by cutting losses if necessary)

Rule 2: Never forget Rule 1

The following show the % losses and the % required to break even from the losses.

% Loss              % to Break Even

8                         8.7

10                      11.1

20                      25

40                      66.7

50                      100

60                      150

80                      400

The first goal of money management is “Protect Your Capital”.

If you focus on handling your losses, the profits will take care of itself.

Do you know that sitting on 100% cash is also a strategy?

“It’s not the thinking that makes the money, it’s the sitting.” – Jesse Livermore, 1877 – 1940

Do you know that there are 3 elements that will affect one’s trading success?

Also known as the 3Ms, these are:

1. Psychology or Mental

Your most formidable foe to your trading success is your emotions.

In normal circumstances, “Thought + Feeling = Action”. In trading, we must remove our “Feelings” from the equation.

2. Money Management

Many a trader and investor has lose a lot of money due to poor money management.

Do you know what lot size you should buy?

3. System or Method

These include:
Strategies e.g. Trend trading
Tools e.g. Computer, charting software such as Metastock
Market Data (SGX, KLSE etc)

Here’s a pictorial view of the 3Ms: