We consider ourselves blessed to be currently living and trading in Singapore. Why? Because Singapore is one of the few markets in the world that allows trading on contra. If you buy a stock through your broker in London or New York, you have to have the capital to pay the full purchase price two or three days after delivery. In Singapore, provided you sell the stock by the end of T+3, i.e. three days after purchase, you only have to settle the difference between buying and selling prices plus buy/sell commission. This allows amazing leverage for little capital down, and it also enforces a very rigorous discipline in stock selection and management, because you only have three days to secure your profit. Add to that the fact that capital gains on stocks are not taxable in Singapore, and you have investment heaven. So come trade the Singapore market, the SGX!
This blog is intended for those of you who are considering beginning stock market investing. It can also be of use to those who have actually started investing in stocks, but are not getting the results they had expected. It is Stock Investment 101, how the market works, based on our many years of actively trading the global stock markets.
It is an often-quoted fact that 90% of people who begin stock market investing give up within a year, presumably having totally lost or at least decimated their capital. How do you end up on the right side of that 90/10 line? Every successful trader has a system by which they trade, a set of rules that tell them what to buy, how much to buy, when to buy it, and when to sell. The problem is that you probably have to kiss a lot of frogs before you find your prince, and that costs money. If you read the trading books, they will tell you that you shouldn't expect otherwise - every profession has a training period, and this training is going to cost you money. We know in our case that early tuition cost us around $30,000! This website is our attempt to pass on lessons learned, so that investing in stocks for the beginner is not financially hazardous.
On our website, www.beginning-investing.com, we also showcase our pick of other traders who have gone through this learning process, developed a system, and now offer to pass on that system for a fee.
Beginning stock market investing is an exciting enterprise. The rewards can be tremendous - and I'm not just talking about the financial rewards. Just look at the facts - as a successful trader you are your own boss - you choose when and how much to work (it can be as little as 5 minutes a day!), and you work not just from home but from ANYWHERE with an internet connection - beach party anyone?!
So, we congratulate you on your decision to begin investing, or just to learn more about investing in stocks. If these are your first steps into trading, welcome to the world's best career!
If you were starting your own business, you would normally put together a business plan – if you required bank or private finance this would be a requirement – but quite honestly even if it were your money, more especially if it were your money, you should prepare one too. So why do you think it should be any different with the business of trading?
Having a trading plan adds another layer of discipline, which is one of the most important aspects of trading. How much money have you lost on a crazy impulse trade for a share which you thought couldn’t possibly go any lower?
What should this trading plan contain? There is really no fixed format, but in order to give you a head start on the things you should consider including I am happy to share my classification with you, as follows:
· Profit Goal
· Position Sizing
· Daily Trading Plan
· Stop Losses
· Open Positions
· Emergency Back-up Plans
· Record Keeping
This is not meant to be an exhaustive list, but this plan is better than more than 50% of other traders out there, because they don’t have one at all!
If you haven't yet found your perfect trading system, please check this one out!
Copyright © 2011 Mick Brooks
Copyright © 2018 Mick Brooks