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Copyright © Beyond Insights Sdn. Bhd., 2012. Trading for Consistent Success
Copyright © Beyond Insights Sdn. Bhd., 2012. 2 Most important Step Identify your holding horizon / timeframe first Choose your preferred trading style which typically depends on :- Your Capital available Your Time Commitment for trading Your personality traits Be clear about the entry and exit rules for the various investment and trading style to ease decision making.
Trading for Consistent Success Copyright © Beyond Insights Sdn. Bhd., 2012. 3 Follow Money Management Rules strictly For Traders Do not risk more than 2% of your capital in a trade (using Stop Loss and limiting #units) Only enter a trade after evaluating that the reward over risk is good (minimum 2 to 1 for directional trading) Do not enter more than 5 stocks on the same direction to avoid systemic risk. Have a trading plan and journal
Trading for Consistent Success Copyright © Beyond Insights Sdn. Bhd., 2012. 4 Follow Money Management Rules strictly For Investors Better to diversify among minimum 5 stocks (if capital allowed) but not too many. Best not to put more than 10% of your capital in 1 stock (for stock buyer) as your capital grow. Get out of a stock if the stock price decline more than 10% (if you buy stocks). This would be a 2% impact on capital (10% x 20% of capital in a stock if you have 5 stocks). It will be 1% impact if you have 10 stocks (10% x 10%) For CFD add an minimum of extra 10% margin for longer term hold to allow market fluctuation and cut loss at 2% of capital. Stagger buying on pullbacks Be clear at what price is a good deal and be patient. Stagger the buying on only good deals. Exit if there are treats to the long term viability or competitiveness. Check the news immediately when you identify unhealthy trend. May reduce positions or protect using hedging when overall market has a major treat of big correction. Have an investment plan and journal
Trading for Consistent Success Copyright © Beyond Insights Sdn. Bhd., 2012. 5 Long Term Investor Long term holding typically minimum 3 years Focus is on the Fundamental Analysis Warren Buffet said: I'm 15 percent Ken Fisher and 85 percent Benjamin Graham. The basic ideas of investing are to ▪ look at stocks as business ▪ use the market's fluctuations to your advantage ▪ seek a margin of safety
Trading for Consistent Success Copyright © Beyond Insights Sdn. Bhd., 2012. 6 For Long Term Investment (>3years) Shortlist stocks from the initial list given Select only the industry you can understand Best to go for defensive stocks Established household brand names that are less susceptible to competitive threats. Demonstrated resilience during economic downturn. Business model are structured for easy duplication for growth into new markets. Some dividends that can offset the CFD interests is a plus. To get better growth in stock price look for Strong management committed to consistent returns or minimum growth rates over the next few years. The company is in a growth industry based on the oncoming economic cycle.
Trading for Consistent Success Copyright © Beyond Insights Sdn. Bhd., 2012. 7 For every new stocks Fundamentals reading :- Trefis report The Latest earnings report Annual shareholder meetings report Seekingalpha.com for analyst report View 10 years weekly chart :- Identify major trends and volatility When is the period of most bearish and bullish and how long it can go sideways How does it correlate with the overall market or sector index Where are the range of value buy points
Trading for Consistent Success Copyright © Beyond Insights Sdn. Bhd., 2012. 8 One time portfolio setup Setup all the stocks you want to monitor in seekingalpha.com Setup email alerts on summary news headlines Monitor any major news that may impact the future competitiveness or fundamentals of the company Setup price alerts when certain stock price is reach (optional) On a weekly basis (daily is optional) View the stock charts for potential entry on bargain or pullback level. Monitor overall market index trend to take advantage of major pullback to buy.
Trading for Consistent Success Copyright © Beyond Insights Sdn. Bhd., 2012. 9 Once a quarter or as needed View the latest earnings report and post earnings commentary from analysts for potential fundamental opportunity and threats.
Trading for Consistent Success Copyright © Beyond Insights Sdn. Bhd., 2012. 10 Position Trading - Momentum/Trend Trading Mid term style of trading typically about 3-6months Trade the Trend How to identify trend changes? Use simple trendline channel MACD/Parabolic SAR indicators for major trend change Moving Average cross-over (EMA20/50) Chart timeframe is Weekly and Daily Charts
Trading for Consistent Success Copyright © Beyond Insights Sdn. Bhd., 2012. 11 Swing Trade A short term trading style where positions are held anywhere from one day to several weeks. Target is typically 1 swing from Support to Resistance and vice versa Use Trend Line Channel or horizonal support resistance. Best opportunity is when you trade in the direction of the bigger market trend.
Trading for Consistent Success Copyright © Beyond Insights Sdn. Bhd., 2012. 12 Weekly process Shortlist the stocks you want to focus on View the 5 years weekly chart to draw major support/resistance and trend-lines and 1 year daily chart to identify the recent trend. Make sure you know when is the exact earnings announcement date (check finviz.com or finance.google.com) View the www.forexfactory.com for potential major news for the week to prepare ahead for sentiment change so you can take advantage of interim price pullback due to economic news.www.forexfactory.com
Trading for Consistent Success Copyright © Beyond Insights Sdn. Bhd., 2012. 13 Daily Process View daily stock charts anytime of the day before market open to identify potential entries/exit/partial profit taking. 15mins-30mins before market open Check the headlines on cnbc.com and marketwatch.com. Check the latest price for the stock pre-market to fine tune your entries/exit for the day 15mins-30mins into market open Check if your entry is hit or any adjustments needed Go To Sleep
Trading for Consistent Success Copyright © Beyond Insights Sdn. Bhd., 2012. 14 Day Trading Entering and exiting positions within a single trading session/day Typical time needed is 9pm-11:30pm Chart timeframe is 1- 5,15mins Process covered in Smart CFD workshop
Trading for Consistent Success Copyright © Beyond Insights Sdn. Bhd., 2012. 15 Scalping Very Short Term trading with holding periods often measured in minutes. Attempt to take small profits in very frequent intervals Chart timeframe is 1-5minutes and even by ticks
Trading for Consistent Success Copyright © Beyond Insights Sdn. Bhd., 2012. 16 Consistent Success in Investment/Trading is 90% psychology and money management. Therefore you are strongly encouraged to attend the Trading for Consistent Success Workshop held once a year. The next schedule is Fri-Sun 14th-16th Sep 2013 Check out the detail agenda on www.beyondinsights.net (under Courses menu) Your Next Step to Consistent Results
Trading for Consistent Success Copyright © Beyond Insights Sdn. Bhd., 2012. 17 Smart Options Workshop Fri-Sun 31-May – 2 Jun 2013, 9am-7pm Followed by 10 tutorials on every Thu 8-10:30pm Smart CFD Workshop Date tbd (sometime in August) 2 days workshop followed by 6 tutorials Focus on Intraday trading, pairs trading and advance hedging. Your Next Step to More Income from Trading
Trading for Consistent Success Copyright © Beyond Insights Sdn. Bhd., 2012. 18 Follow-up support for CFD & Options Join our weekly student gathering on every Mon 7:30-9:30pm whenever there is no tutorials (Check out facebook for updates when there are changes of day/time). When there is CFD Tutorial on Mon, then the gathering will be held on Tues same time. Review the facebook (Power CFD Group) regularly for updates and post questions related to trading. Resit our next batch workshop/tutorials to enhance/reinforce your learnings. Send email to email@example.com for specific questions on course inquiries/payments or other non-trading related firstname.lastname@example.org
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