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 […]
The importance of controlling emotions when trading and investing
Financial markets have ups and downs, sometimes extreme, which cause market participants to experience emotional roller coaster rides in line with the market’s price swings. In recent years, as information that affects financial market prices has become rapidly and readily available, the volatility of the ups and downs has increased, along with the emotional swings […]
Some thoughts to kick off 2011
2011 is underway and 2010 is behind us! What’s in store for investors over the next 12 months? Well, I can’t tell you where the index will be on 31 December 2011 and I can’t tell you what trends and cycles will occur between now and then but I can tell you that there will […]
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 […]
You are surrounded by systems
Systems underlie everything we do, they are everywhere we look and we are in contact with or use them all day, every day. Yet there are many investors who have no system for their share market activities – believing instead that insider knowledge or tips from their broker or reading a newsletter will provide them […]
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 […]
The Psychology Challenge of Active Investment Part 2
If you are investing according to a consistent method then all trades are potentially “good” trades. Don’t fret about which one is the best of the “good” trades or which one will be a loss trade. Just do the trade according to the rules of the methodology! The rules are your edge in the market […]