Sometimes we think we have split personality when we look at market. One side of our brain tells us to look at big picture of the market outlook, be patience and look for value buy stocks; ignore the noise, sit tight and wait patiently to see our result. As a result, we have an investment portfolio where our time frame is mid to long term.
On the other hand, the other side of our brain tells us; while there is potential upside or downside in the market, we shouldn't sit there without doing anything. We should take the opportunities to look for trading signal, make use of the volatility to make money on price fluctuation. Therefore, we came out with a portfolio of short term trading in indices and commodities.
Each of the strategy requires different mindset and execution. To make money successfully in investment; we need to find out what are the stocks that have potential upside base on current price and fundamental of the companies. We need to know about the dividend yield; just in case market is not doing well, we have dividend payout as bonus. Then, base on technical chart, this provides a check point for us to enter the market. When we are in the market, next thing to do is sit tight, ignore the noises and price fluctuation, enjoy the journey and wait patiently. For this strategy, the time frame we are talking about is mid to long term. It could be months or years to see the result.
In the fast trading world, it is a different kind of mindset and strategy. We need to identify are we able to take risk and cope with losses if the market is against us. If we are ok with it, then we can proceed to the game. If not, keep the capital and look for other option.
In trading, a trading plan is crucial to support us before we enter the market. We need to know where is our target price if we are right, in other words, we need to know where to exit the market to secure our profit. Meanwhile, if we are wrong, we need to have a cut loss point; to stop our losses in order to protect our capital.
It is easier to say than execute. This is because human tends to be emotional when in the market, be it making paper loss or paper profit. Therefore, discipline and risk management are important to help us in trading successfully.
Is there a chance we'll lose all our capital? There is a possibility if we are not discipline in following our trading plan. When it's time to take profit, but our greed kicks in and we cancel our order; is time to cut loss, but we refuse to do that in order to believe the market will favor us...These funny funny action will jeopardize our trading capital.
We know it takes time to build our wealth; and it takes second to destroy it. Hence, J&M investment portfolio is a slow and steady race. Our trading portfolio, we believe with a good trading plan, combine with discipline and risk management, we can slowly increase our capital. The worst thing can happen is we lose all of our trading capital and we will not trade with margin lending. Just like when you go casino, you walk out from casino with your winning and a happy face; but never ever walk out with sad face plus borrow money if you lost all the capital.
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