“Investments is like daily income, you invest in a basket for minimum risks, raking a few thousand a day from the movements of the markets, which is very good money for a trader, but when you turn speculator and take up enormous risks, you will either make a fortune, and lose a fortune and even your pants, it is like gambling, so there is no chance you can make a comeback. THE MOST IMPORTANT RULE : NEVER PLAY WITH MONEY YOU DON’T HAVE.” – Contributed by Oogle.
A friend ask me, since you are so good in investments, what is your advice?
1) Do your own research, never follow what others is chasing, by the time you go in, you are already too late.
2) Accounting balance sheet will give you an idea, it is the cash balance that is important, the earning potential and the location of that industry. Seldom you see a company that will top the top 5 earners of that industry, unless it has very new technology or new innovative products that extend their market share.
3) When you start going into the market to buy stocks or shares, you need to first find out your time horizon, the potential of that stock or share you are going into, and your cut loss when your investments turn on you based on your holding power, if not you are going in blindly and 80% you will lose money.
4) If you are into investments then you must be an expert in risks, always spread it out to cover a basket where you will put the most into those that has the highest earning potential, and also cover the risks with products when the market turned against you, unless you are a specialists, never invest in everything, you will surely lose money. It is better to invest in industries that you are familiar with, sometimes an index fund is good if you are not familiar with the industry as it will balance out everything.
5) Never be a speculator, a speculator invest short term and expect high returns but will take great risks when he does not have the holding power, 95% he will lose money. HFT Trading is different because traders go into the market with large orders and they make money with every ticks they convert, and they have lots of cash and holding power, but they seldom expose their positions, often cutting it within days to get out if they lose money. Therefore it is better to invest in mid to long term based on inflation and cover your risks, never play with money you do not have as you will be irrational, and cut loss easily before your investments make money.
6) Most people, even the rich borrow money at low interest to fuel their investments. An accountant will tell you very clearly what is your assets and liabilities, and you only book your income after paying your debts, that is what you have left to keep, nothing else belongs to you, you have the capacity to borrow that is all, everybody is living a dream beyond their means, ie living on borrowed money but not really earning their keeps. You can spend your income but you can never touch your Capital, you depend on it to make money.
7) When you learn everything about risks, how to analyse and manage it, you need to also learn about complex financial products like derivatives, options and futures to hedge against any events or positions. It is too complex for me to write here, especially the skills I learn from charting and reading all kinds of financial literature to enable me to “see” and “predict” and “control” everything in the markets.
8) Today with ETF it is possible to leverage trading of $50K to compete with experienced traders on your positions to make money, more than 10 years back without ETF you need at least $1 million, this is based on the risk/reward ratio on your regular income of daily investments, and make a living out of trading.
9) Since I had already studied the mechanics of HFT Trading, I can easily programmed all the factors, and all the possibilities, to put in buy/sell orders for all kinds of positions to make a profit according to the risk/reward ratio, even using the right instruments to hedge my risks. my automatic money making machine.
10) The highest order is the ability to use HFT Trading across all markets, if I see an opportunity somewhere, in an instant, I am already invested, and all my machines will do all the work for me, while I drink my coffee.
– Contributed by Oogle.