As Robert said, “Don’t Be Average, Be A Professional!”

I am often asked, “What advice do you have for the average investor?” My reply is, “Don’t be average.”

Most of us know of the 80/20 rule. That rule is a good rule for averages. And in the world of money, the rule is 90/10. This means 90 percent of the people make 10 percent of the money and 10 percent of the people make 90 percent of the money.

This 90/10 rule holds true in almost anything financial. Take the game of golf, for example. Ten percent of the professional golfers make 90 percent of the money.

Taking the ratio to the next level, the top 10 percent of professional golfers make 90 percent of the money. Just look at Tiger Woods. When you compare his winnings plus endorsements, he is in a league unto himself.

Last year, my wife Kim was invited to play in a pro-am as part of a professional Tour event in New York. (No, they did not invite me…) Kim is pretty good and was the only woman in a field of around 300 golfers. I was a proud husband as she confidently walked alone to the women’s tee. Without hesitation, she placed her ball on the tee, took a clean back swing, and swung her club.

She out-drove two of the men in her five-some. Bruce Vaughn, the professional golfer in the group, rushed up to congratulate her. The men amateurs were also complimentary. I could tell they were relived to have a much better than average “woman golfer” in their group. Kim hits her drives longer than most men, myself included.

Tough Way to Earn a Living

The tournament was the first time I got to see the real life of a professional golfer. It is a tough life. It is not the glamour I thought it was. If a professional did not make the cut, they simply moved on to the next tournament in some faraway city…and teed up again. They do not stay for the tournament. They pay for their own transportation, lodging, food, and fees. They are on the road, away from their families for months at a time. Even those who make the cut and play on the weekend have no guarantee of enough earnings to offset expenses. It’s a tough way to earn a living.

Like professional golfers, who live and die by the ‘money list,’ money is how I keep score. It’s my score card, my report card as an investor. It’s how I tell how well — or how poorly — I’m doing. My rich dad said, ‘Making money is my game.’ It’s my game, too. And that’s why I have so much respect for professional golfers… their livelihood depends upon how well they play the game — as professionals.

In the world of golf there are average and professional golfers. The same is true with investors. The problem with being an average golfer or investor is that average people rarely make any money. Many average investors are in financial trouble today because they are simply that: average. They never turned pro.

When the financial crisis began in 2007, the professional investors were already out (or getting out) of the market. The average investors did as they were told, which is to invest for the long-term, hanging on tight as the Dow plunged from 14,000 to below 7,000, a 50 percent loss in value. Many real estate flippers and homeowners enjoyed the same wild ride.

Tragedy of the Average Investor

The tragedy is that many amateur investors are still clinging to their losses. They hope the market will bounce back. Amateurs are still following the advice of “invest for the long term in a well-diversified portfolio of stocks, bonds, and mutual funds.” Or they continue to believe “your home is your biggest investment.” That is subprime advice for subprime investors.

It seems to me that more people keep track of their golf scores than keep track of their money… their ‘financial’ scores. That’s why they’re amateurs… in the money game.

Even after the crash, the same subprime financial advice continues to be dished out in magazines, newspapers, and on television. Subprime advice continues to flow from real estate and stock market professionals who are not professional investors. They are professional sales people. They live on commissions — not ROI, the returns on their investments. If they do not sell, they do not eat.

If you’re going to turn pro, you will need to upgrade your financial advice. Why continue to invest for the long term while the market is crashing? Why continue to diversify when diversification did not protect investors from the crash?

In 1974, as I was leaving the Marine Corps, I decided I wanted to become an entrepreneur and investor. In other words, I did not want a job with a 401(k). That meant I had to become street smart, rather than school smart. It meant I needed a different set of life skills and better financial mentors if I were to survive on the street.

Just like the life of the pro golfers, there were long stretches of losses, no wins, no money or security.

In early 1985, things got so bad that Kim and I were temporarily homeless. I still remember leaving her in San Diego with only $2 for the week, while I traveled to Australia to put a deal together. Somehow we survived the year. In December of 1985 we finally made $1,500 after a year’s worth of losses. That year was a great qualifying school. Today, even in this tough economy, our investments continue to grow. This crisis is a good time for professionals and a bad time for amateurs.

Not Good Enough

Years ago, I asked my rich dad, “What is the difference between a professional and an amateur?” His reply was, “Professionals know their best is not good enough. They always want to do better.” He paused before continuing and said, “When someone says, ‘I’ll do my best’ or ‘I’ll give it my best shot’ or ‘I’ll try,’ they’ve already lost. Those are not words of a winner.”

In the world of ‘the best,’ your best is never good enough. If you’re going to be a winner in life, you have to constantly go beyond your best. Most people are happy being average. Most are happy being faceless in a sea of faces. That’s why 10 percent always win 90 percent of the rewards. I get up every day, grateful for what I have accomplished, yet looking forward to doing better. I want do better than my (previous) best everyday. It’s not about the money anymore. I have enough money. I just love the game of making money.

Today I give most of my money away…but I will not give up the game of money. I play the game because the game is always better than me…and my best will never be good enough. I continue to work hard to become better at a game I love.

I once read a book on golf that said, “People say amateurs play for the love of the game and professionals play for money. That is not true. Amateurs are amateurs because they do not love the game enough. When it is cold and rainy, a professional golfer will play. The amateur will not. When they are sick, the professional will play. The amateur stays in bed. When they are losing, the professional will practice harder and enter more tournaments. The amateur will quit and take up tennis.”

It matters little if the game is golf, tennis, or money. Ten percent of the people will always make 90 percent of the money. When the markets began crashing in 2007, the money did not disappear. Ninety percent of the money went to 10 percent of the investors.

A financial crisis is a great time for professional investors and a horrible time for average ones. If you’re going to invest, don’t be average. It’s time to turn pro… or take up tennis.

One way we can increase our financial knowledge is to learn to play Robert Kiyosaki’s cashflow game.

You can play the game online for free.

Successful trading is not a game of chance or luck, it is a strategic approach based on a technical understanding of price movement in the market. Naturally, there are many important things that a trader must know and identify before they would ever consider taking a trade. However, there are three things that I will discuss in this article that are paramount to the success and profitability of any trade.

1) Support and Resistance

Many traders overlook the importance of support and resistance on a chart. Support and resistance are two important concepts that must be carefully analyzed by every trader.

Support and resistance levels help us to see where buyers and sellers are on the chart. Support occurs at points where there are an abundance of buyers, ready and willing to buy at the support level price. The exact opposite occurs at a point of resistance, when the market has an abundance of sellers at the resistance level. The sellers outnumber the buyers and price tends to drop when resistance levels are met.

Before entering any trade, a strategic trader must know where their trade is relative to support and resistance levels. Support and resistance are typically defined by price zones, rather than absolute, set values or prices.

If you are taking a long trade, you want to be above support and well below a resistance zone. There is no sense in entering a long trade that will quickly confront a price resistance level.

Similarly, in taking a short entry, you would like to be below a resistance level that was not broken and well above the price support zone.

2) Direction and Presence of Momentum

The first thing that a trader must determine before taking a trade is the presence and direction of momentum in the market. Identifying the presence and direction of momentum in the market will allow a trader to benefit from the natural force of price movement. Many traders lose money on their trades because they enter their trades in the opposite direction of the momentum in the market.

Momentum is an incredibly powerful force in the market and it is far more advantageous to trade with it rather than against it. It is important to note that momentum is not always present in the market. The markets can experience prolonged periods of non-directional, or sideways, movement. So don’t count on always finding momentum in the market. In addition, when you do find it, it’s not always going to be equal in intensity.

In directional, or trending markets, when they do occur, momentum is always in the direction of the trend. In directional markets, a prudent trader is always taking trades in the direction of the trend. There are a number of ways to identify the direction of trends, one of the simplest being to look at the slope and direction of the ten-, 20-, and 50-period moving averages for the period that you trade. If all of them are parallel and increasing in value in the same direction, that is the direction of the trend.

3) Risk and Reward

Before placing any trade, a strategic trader must always know and identify the maximum risk exposure for the trade. Once the risk is identified, it should be compared to the possible profit target. If the profit target does not justify the risk exposure, the trade should not be taken. It does not make any sense to risk a dollar to earn a penny. One of the common mistakes that cause traders to consistently lose money is that they fail to let their winners run. They quickly close out their trades as soon as they become profitable. While no one can argue against taking a profit, consistently taking profits that are not consistent with the desired risk/reward ratio ultimately leads to a net loss. Once a stop is hit, it immediately eradicates the small profits of three or four trades that were prematurely closed. It is hard to leave your money on the table, but there are ways to move up your stops and use a trailing stop to allow you to stay in your trades to realize your designated target.

Once a trade is placed, prices will always fluctuate; that’s the nature of the auction process. Rarely will a trade directly navigate to the profit target without a retrace. This is where paper trading comes into play. It allows a trader to watch, learn, and record how long it takes to reach a profit target and whether the risk/reward strategy that they are using is in fact feasible and workable.

Since not all trades are likely to succeed, your reward should always exceed the amount of the risk in the trade by at least a factor of two.

To learn more from Dr. Keppler, be sure to visit his Web site: Strategic Trading at http://www.strategictrading.net/

Share with us your thoughts after yo have watched the movie.

We are indeed fortunate to be living in Singapore.

Too some, things may be a tad too regulated but there are always pros and cons. In fact Singapore has been voted one of the best places to start a business.

Below are some videos of the celebration!

The Red Lions (commandos) with the national flag

“Song for Singapore” by Corrinne May. Corrinne is based in Los Angeles.

And lastly, the fireworks grand finale (this was recorded during the rehearsal)

Candlestick charts are thought to have been developed in the 18th century by Japanese rice trader Homma Munehisa.

The charts gave Homma and others an overview of open, high, low, and close market prices over a certain period. This style of charting is very popular due to the level of ease in reading and understanding the graphs. The Japanese rice traders also found that the resulting charts would provide a fairly reliable tool to predict future demand.

We should “study the past to predict the future,” the presenter urged the audience.

The great general, Suntzu, had said:

So it is said that if you know your enemies and know yourself, you can win a hundred battles without a single loss.

If you only know yourself, but not your opponent, you may win or may lose.

If you know neither yourself nor your enemy, you will always endanger yourself.

If you are serious in making some serious money from the stock and currency market, the ability to read charts is an important skill to pick up.

I would highly recommend that you start learning candlestick charting basics from Steve Nison. Check out his programme here.

Candle Mistake #1: Not Using Western Indicators
Candle Mistake #2: Not Using Trade Management

Candle Mistake #3: Trading On Every Candle Signal

According to the article “Most traders don’t realize that each candle signal can have different trading implications, depending on the market situation.   This is why trading or testing candles without using other considerations – such as adding Western technicals as discussed in Mistake #1  – is a financially dangerous misuse of candles. And will surely lead to unnecessary losses….”

Learn how to master candlestick reading with Steve Nison, click here.

Today we continue with “The Four Common And Costly Mistakes Almost Every Trader Makes With Candle Charts” by Steve Nison.

Candle Mistake #1: Not Using Western Indicators

Candle Mistake #2: Not Using Trade Management

According to the article “Trade management includes risk-reward analysis, protective stops, looking at the overall technical picture and many other aspects….one of these trade management items is adapting to changing market conditions.”

The iPADs are set to hit our shore this morning from 10am at the Apple retailers.

Will it be another record product launch for Apple in Singapore?

It would be interesting to see how the Apple iPAD Syndrome affects our local stock market today. Will the market players stay away because they are busy queuing up for their iPADs?

Why is Apple so successful?

This can be attributed to:

1. The vision and tenacity of Steve Jobs.

Do you know that Steve, one of the Founders of Apple, was actually asked to leave Apple? Yet through his vision and tenacity he bounced back and now he is back in charge of Apple. In stock trading, you might have suffered huge losses before. Are you still afraid of the market? It is important that we keep a trading journal, understand why we win and why we lose. We must have that spirit to keep learning and going on until we succeed. We must know the reason why we want to succeed in stock trading. This vision will drive us on to persistence and ultimately success!

2. Apple has learned to manage the psychology of the crowds.

Apple has to manage the psychology of crowds. Apple understands market behaviour. Do you know what is one of the key factor that drives Apple’s growth? APPS, otherwise known as Applications. Do you know what drives the stock market? FEAR and GREED. We need to understand the psychology of crowds. In addition, we need to manage the psychology of our inner voice.  We must learn to accept that losing is part of the game of trading. We must replace the focus on winning and losing with the goal of following our trading plan.

3. Be simple. Be focused.

Do you know how many types of iPhones Apple has? 4? Since it has just released iPhone 4? Nope, there is ONLY ONE. Apple focused on developing it and developing it well. iPhone 4 is but an improved version of iPhone 3. iPhone 3 was an improved version of Generation 1 iPhones. In fact, iPhone has been said to be at least one year ahead in terms of technology compared to the rest of the smart phones. How many different types of phones does the Nokia have? How about Samsung, LG?

Likewise in your trading, it is very important that you follow and fine tune a trading plan instead of jumping from one Holy Grail to the next.

Stay simple and stay focused.