When we look at investment returns, we need to be clear on a few things !
1. Timeline of investment - that means the time frame you are looking to make your returns on investment. Is it 1 year, 5 years or 20 years? So, when I asked this questions to many friends, they answered as a matter of fact - Of course, the sooner the better. Fair enough but how about the risks ?
2. RISKS - so if you want fast returns , can you also stomach the risks ? High returns and low risks in short time frame ? It does not make sense so if anyone offers you that, think thrice. Yes, I heard the people behind shouting they made millions in Cryptocurrency. For every one million made, multi millions are lost as well...........
Thus, when we look at SIA chart for instance, we can potentially spot 3 likely secenarios -
1. last candle shows a doji pattern which means more buyers than sellers so a rebound is in sight.
2. move sideways
3. break down from the support and head down to close the gaps.
Now, if you are a trader, then the above options become crucial information to you since you are likely to either buy or sell this counter at any one time. But, if you are a long term investor, then this short term price fluctuations will be less significant to you. Other good examples include BABA, Tencent, BAIDU, etc recent tumbling of share price.
You have the fundamentals of the company to rely on or should I say, use it to assess its future performance. Therefore, you have a margin of safety over the short term traders in that sense. So, in short term, you may buy at current price and suffered paper loss should it tumbled down to 3.40 level. But, in the long run, you are more likely to make profits compared to the short term traders who go in and out of this stock. Their need to analyse the price action correctly becomes KEY in their decision making.
Also, dun forget that even if it bounce up now , it can retreat just as quickly and we called this a false trap to attract the early bulls. There are so many ways the big boys can manipulate the chart if they want to. Unless you are privy to such information, the chart analysis will still have a certain % of errors especially in the shorter time frame.
Someone who finally saved enough money and is now actively trading or investing in the stock market hoping to catch up for the "missed opportunities" in the past is more vulnerable compare to a young grad who has minimum capital . The latter has plenty of time to play catch up so long as he starts saving and contribute a portion to his investment pot. The compounding effect works to his favour over time!
The senior may have larger capital base but he runs the risks as well if he blindly follows the trend to punt on cryptocurrency which had burnt one too many traders. Or he hopes to make faster returns with bigger position size. Now, all these are part of risk management and is extremely important that one understand well before placing a trade .
I urge all to spend some time to understand your investment objectives, time frame of investment , size of capital allowed to invest, risk tolerance, etc before hurrying to place your trade or searching frantically for the next trade idea, be it currency, index, commodity or even shares of companies.
1. Timeline of investment - that means the time frame you are looking to make your returns on investment. Is it 1 year, 5 years or 20 years? So, when I asked this questions to many friends, they answered as a matter of fact - Of course, the sooner the better. Fair enough but how about the risks ?
2. RISKS - so if you want fast returns , can you also stomach the risks ? High returns and low risks in short time frame ? It does not make sense so if anyone offers you that, think thrice. Yes, I heard the people behind shouting they made millions in Cryptocurrency. For every one million made, multi millions are lost as well...........
Thus, when we look at SIA chart for instance, we can potentially spot 3 likely secenarios -
1. last candle shows a doji pattern which means more buyers than sellers so a rebound is in sight.
2. move sideways
3. break down from the support and head down to close the gaps.
Now, if you are a trader, then the above options become crucial information to you since you are likely to either buy or sell this counter at any one time. But, if you are a long term investor, then this short term price fluctuations will be less significant to you. Other good examples include BABA, Tencent, BAIDU, etc recent tumbling of share price.
You have the fundamentals of the company to rely on or should I say, use it to assess its future performance. Therefore, you have a margin of safety over the short term traders in that sense. So, in short term, you may buy at current price and suffered paper loss should it tumbled down to 3.40 level. But, in the long run, you are more likely to make profits compared to the short term traders who go in and out of this stock. Their need to analyse the price action correctly becomes KEY in their decision making.
Also, dun forget that even if it bounce up now , it can retreat just as quickly and we called this a false trap to attract the early bulls. There are so many ways the big boys can manipulate the chart if they want to. Unless you are privy to such information, the chart analysis will still have a certain % of errors especially in the shorter time frame.
Someone who finally saved enough money and is now actively trading or investing in the stock market hoping to catch up for the "missed opportunities" in the past is more vulnerable compare to a young grad who has minimum capital . The latter has plenty of time to play catch up so long as he starts saving and contribute a portion to his investment pot. The compounding effect works to his favour over time!
The senior may have larger capital base but he runs the risks as well if he blindly follows the trend to punt on cryptocurrency which had burnt one too many traders. Or he hopes to make faster returns with bigger position size. Now, all these are part of risk management and is extremely important that one understand well before placing a trade .
I urge all to spend some time to understand your investment objectives, time frame of investment , size of capital allowed to invest, risk tolerance, etc before hurrying to place your trade or searching frantically for the next trade idea, be it currency, index, commodity or even shares of companies.
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Praise the Lord
