It was a different venue this time at NTUC auditorium and the place was fully packed when I arrived.
Throughout the day, Alexander Elder spent a lot of time reading charts of local stocks and giving his analysis of them. The crowd seemed to like this and kept shouting out more names of companies they wanted to be analysed. Probably the question in many of their minds are “Please tell me what I should buy on Monday”.
Along the way, I lost interest and went into my own world… 😀
Besides the chart reading, there were some points on trading which Elder either delivered from the slides or came up when answering questions from the audience. Inevitably, there were some points bought up which had also came up during the first day.
In no particular order, these are some of them:
There are four types of analysis: technical analysis, fundamental analysis, inside information and trading from the gut. The fourth method is not for beginners and should only be used after you have earned the right to use it. Unfortunately, many beginners use the fourth method and are always on the lookout for the third.
Price is a momentary consensus of value among the crowd of market participants.
The two main messages from the moving average lines are the slope and distance of the moving averages. The slope shows an increase or decrease in value and helps you choose the trade direction. The distance between the long and short moving averages determine the value zone where a trade can be initiated in the direction of the trend.
Always use two time zones for trading. Make a strategic decision on the longer time frame, and your tactical decisions on the shorter time frame. Set your profit target on the long term chart and your stop loss level on the short term chart.
The two main reasons for trader mortality is a single big loss or a series of small losses. Having the 2% rule on every trade and 6% rule on the entire portfolio will protect you from these two pitfalls. Institutional traders do much better because they have managers to impose discipline on the risk controls.
Have a written trading plan, keep accurate records and grade yourself on your adherence to the trading plan.
Beginners should not day trade (live data) because you won’t have time to think and react.
Elder doesn’t trade spot forex because the prices are not transparent and are determined by the platform you are using. Most platform’s profit and loss are inversely related to your profit and loss. So there is a conflict in interest. He prefers trading forex through a regulated exchange and uses only forex futures.
I reserve the last point for the most important tip on how someone starting out can become a full time trader.
Forget about the advertisements you see that show you testimonials of people making an incredible amount of money in a short period of time using a limited amount of capital. The cases (if true) are outliners and the chances of it happening to you is close to zero. With limited capital, the most practical way of making a living from trading is to trade well with whatever capital you have, and keep verified records of your trades.
If you manage to show steady and consistent returns over a period of few years, you can then use your records to go into money management. ie trading other people’s money.
In Singapore’s context, I think there is perhaps an even better way to achieve the Holy Grail of trading. Conducting training. 😀