Sharing No. 2a

Let’s be realistic first. The stock market is a zero-sum game. For a person to make profits from the market, somebody else will lose. That’s why, it’s all about the law of the jungle once you step into the market. Yes, it's cruel. Only the toughest can survive. In order to do that, you need to be very disciplined in your trades, cultivate a good set of trading mentality, and have at least some capital to hold your stocks. As I blog longer, you will realize how important these highlighted attributes are already, because it is just not possible for me to cover so much in a single post. And I certainly do not want to be too long-winded. :p

Some people might not be able to imagine how scary the market can be because you are not at the frontline witnessing the bloodshed. Yes, do not underestimate what the stock market can do. It can give you riches; it can also destroy your life. When the credit crisis unleashed its full force on 23 October 2008, I began hearing stories of clients and remisiers alike going bankrupt and even contemplating suicides etc. Therefore, be warned.

It is also a fact that once you enter into a trade, you are already at a disadvantage. Why? The answers are: (1) You already made paper losses due to the commission charges etc that you pay to the brokerage house you are trading with, (2) you are a retail client meaning that you lose out in terms of speed, size and news/knowledge compared to the people such as insiders, remisiers, proprietary traders and institutions.

To elaborate, insiders and people close to such first-hand information can take action first before a particular stock can react to the news being released. Yes, it’s unfair and illegal. But the truth is, it is almost impossible to detect and round up all of these people. For the remisiers, proprietary traders and institutions, firstly they are faster as they have direct access to the trading systems, and secondly, they trade in huge quantities which mean lower admin costs and break-even points.

So, the odds against you as a retail trader are really big. Thus the need for such stringent attributes.

Ok, you think you fit the bill. But that doesn’t mean you are on the path to riches already. Because to embark on a successful trade, you need a good entry strategy, an even excellent exit strategy, and of course, a strong trading mentality. I shall leave this part till the next post as I’m too tired to think already.

Thank you.

Note: Kindly read my first post on my disclaimer. Thank you.