Rules, Rules and More Rules
If you are a follower of my weekly journal, you would understand that my approach for successful investment in the stock market is rules based and mechanical. The SPA3 methodology forms the basis for my trading decisions, risk management and money management but I have additional list of “Golden Rules” that I use to trade […]
Thinking from a system’s perspective
With systems operating around us and our lives essentially dominated by systems – systems that are designed by humans for use by humans – why is it, that we seem to struggle to be able to accept this concept and the use of systems when it comes to investing in the share market? People flounder […]
A great truth
Many traders and investors, who have experienced the highs and lows of trading, regularly look for a method or system in the hope that they will discover a “new” hidden truth. A great truth is that there are no “new” hidden truths in the universe of the markets, just “new truths” to individuals that for […]
Practical lessons from past drawdown experiences
There is an old Chinese adage that says “that which does not destroy me will only make me stronger”. It refers to the internal battle with one’s self. As we know, trading certainly can be an internal battle but this quote could not be more relevant than when discussing a trader’s psychological mindset and their […]
Compounding Profits in the Market – Part 2
Basics of compounding Following on from last week’s Journal post, I felt it very important to continue our discussion on the positive effects that compounding can have on an active investment portfolio. A simple way to look at the effectiveness of compounding is to use a mental maths shortcut known as the “Rule of 72”. […]
Compounding Profits in the Market – Part 1
Have you heard of the economic term ‘velocity of money’? In effect, velocity of money is the rate at which money circulates, changes hands or turns over in an economy in a given period. High velocity means the same quantity of money is used for a greater number of transactions and is related to the […]
Types of Investment Risk
This week we move back onto the subject of “Investment Risk” and specifically the different “Types of investment risk”. As mentioned below in my 6th October 2010 post, there are two main types of risk, market risk and specific risk. Market risk is the downside potential that relates to the entire market or the industry […]
Investment Risk
When it comes to active investment in the stock market, the concept of Risk Management is about controlling the amount of capital that may be lost in the event that the market or a stock turns against your open positions. This week we will carry on from where we left last week’s post on Risk […]
What are Risk Management andMoney Management?
There are numerous risk and money management measures that can be adopted to protect capital but rather than focus on the varying methods of risk and money management, this post will look at “why you should apply risk management and money management rules to your investments”. What risk is there to manage you may ask? […]
What is your analysis paradigm?
Here is a question for you. What is your analysis paradigm? Do you conduct analysis to try to: • eliminate moves in your favour that turned into loss trades? • eliminate trades that immediately moved in the wrong direction? • ensure that you don’t get out of a trade too early? • ensure that you […]