My Focus

I am by nature a lazy person and numbers have never sat down well with me. But from now on, I'm going to seriously start planning for myself financially and numbers will become my best friend. Financial literacy in addition to trilingual literacy are now my priorities in life.

Two tools which I am learning to use now in order to build my wealth:
1. Stock Investing
2. FX Trading
I acknowledge that I am very much an amateur in both areas. I have just started out a few months ago but I'm gonna be recording my learnings here to serve as my reminders. Slow and steady can still win the race.

On stock investing
On 25/6/2010, I bought 2 lots of Noble Group at S$1.86 for $3,760. The stock price stands at $1.70 now. Unrealised P/L of $325. I bought it without any analysis. The only onus for buying was that I thought it was a reasonable blue chip and commodities will always be in China. Liked the fact that it owned and managed its own supply chain, from processing facilities to shipping, port management etc.

I'll admit that is not strong reasoning. I should have paid first investment to their financials which I eventually did a few days ago. If I had calculated correctly, the P/B ratio stands at 2.47 based on Q2 financials. Further work to do by comparing it to Olam and Wilmar the other 2 commodities player on SGX.

Given that the stock price continuously fell and even hit a low of $1.56 at one point, I'm surprised I still feel alright, although yea, was a little worried when it dipped below $1.60. My strategy here is to invest and not trade. So I'm looking to hold for at least 1 year and hopefully I can look at at least 20% returns.

The learning point here:
1. Check the stock price once every few days/ per week. Don't keep checking every minute. It destabilises you. Something, which also applies to FX, despite the volatility of the market.
2. Instead of trying to predict a trend before entering into a position. It may be much better to use Fundamental Analysis to understand which part of the trend the stock is on. After all, an investment strategy where one is looking at capital gains is different from stock trading. More to come on this in future.
3. Think before jumping in. You don't wanna kill yourself.
4. Very importantly, how much returns are you looking at and how much losses can you stomach. Don't be greedy and don't be stupid. If you reach 20% gains and wonder when the price will crash, pocket and exit. If it exceeds your 10% stoploss (depends on the reason), then liquidate and move on.

On FX Trading
Will be concentrating on 3 major currencies for now since I'm still paper trading in the red.
USDJPY, GBPCHF and EURUSD.

Rules:
1. Never trade in ranging market
2. If you just closed a position in either of the 3 currencies, don't immediately enter on the opposite direction especially if you exited when the entire down/uptrend on the weekly chart is not completed. The sudden move in the opposite direction against the current trend is often momentary and corrects itself after 2 to 3 days. Which is why you should stop looking at only the daily charts.
3. If you are swing trading on a trend, don't keep checking the platform every morning, afternoon and evening. You risk making the wrong decisions. The holding period now should be at least 3 days to 10 days and you should be looking at returns of $150 to $400.

Things to do:
1. Observe the value of RSI indicator and Stochastics for all 3 currencies when the trend turns in opposite direction. Which is the optimal combination? (Daily Chart?)
2. Observe the reaction time of GBPCHF to changes in trend.