As a believer in the philosophy that ‘timing the market’ is more important than time in the market (although both are necessary), we must endeavour to learn a number of new trading specific paradigms and prevent some of our old societal paradigms from impacting our trading. I’ve written about some of these paradigms in previous…
Gary Stone Journal
Using leverage in your portfolio
Last week we explained the concept of leverage and the benefits and drawbacks the use of leverage can have for the average active investor. This week we would like to focus on the use of CFDs as a leveraged instrument for increasing exposure to the stock market and share some stories and suggestions on how…
Adding the use of leverage to your portfolio
Much is made of the use of leverage in trading to increase returns on both investment and trading portfolio’s. But what exactly is leverage and how can we use it effectively to improve our returns? The big issue that is usually highlighted but little understood is that leverage is a double edged sword. Just as…
Trading – A life long journey
This posting was recently brought to my attention. It originates from an international trading site and is repeated here verbatim. Trader John lists in point form the 38 steps it has taken him to become a successful and profitable trader. I think this is a very pertinent article as it outlines in a simple yet…
The extinction of an industry?
The financial planning industry could be forced into some major changes as a result of the government’s response to the financial crisis and the collapse of financial advice firms such as Opes Prime and Storm Financial. ASIC has recommended that the majority of remuneration practices currently used by the financial planning industry be abolished. This…
Making hay while the sun shines
The old saying about ‘making hay while the sun shines’ applies as much to trading and actively investing in the markets as it does to making hay in the spring time for farmers or other life endeavours, hence the saying. Farmers know that each year in the spring time is the ideal time to make…
Why would you trade?
This is an extremely important question and one to which the majority of investors/ traders do not give sufficient thought. Successful traders understand with absolute clarity why they trade. Why you trade must be the subject matter of the mission statement in the trading plan you are going to write. Your purpose for trading is…
Achieving trading competence – part 4
The ultimate goal for the trader and active investor is to reach the point where trading becomes automatic. At this level all trades are simply executed according to a plan and the rules of their system(s) have become internalised to the extent that they are adhered to flawlessly, consistently and objectively without hesitation or reservation….
Achieving trading competence – part 3
This week we begin to look at how to get from trading incompetence to trading competence. That is, moving ‘above the line’ on our competence matrix as shown in the figure below in order to achieve consistency and objectivity in our trading. Through trading in a disciplined and mechanical approach we are now able to…
Achieving trading competence – part 2
Typical attributes of the Unconscious Incompetence level that we discussed last week include relying on the advice of others as the basis for making trading decisions (including brokers, the media, hot tips, chat rooms, newsletters and forums – typically referred to as ‘market noise’), and having no clearly defined and unambiguous strategy, system or trading…
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