I attended “Invest Wisely In 2012” 2 weeks ago, it was organised by PhillipsCapital, the main speak was Dr Alexander Elder, MD , who is a professional trader, an expert in technical analysis, and a practicing psychiatrist. In 1988, he founded Financial Trading Seminars, Inc., an educational firm for traders, a firm that provides intensive trading camps for traders worldwide. His first book, Trading for a living, and it’s companion Study Guide have sold over 160,000 copies. Dr Elder believes that successful trading is based on 3 M’s: Mind, Method and Money. Click here to read more about him.
It was great to hear from a expert in trading, what are the fundamentals in trading, who should trade, and who should not trade. There are other tips which the good Dr provides, below are the summary of what I learn from the first day (11th Feb 2012);
Who should trade, who should not trade.
When the markets are emotional, it is best time to enter. Emotion is the reason why most people cannot make money trading. They are attached to the trade with feelings, and why most people closed their eyes when there is a problem. (Like a ostrich, thinking by putting their head in the ground, the predator will not see them.)
He recommended to start trading part time first before going into full time.
People with addictions and impulsive are not good traders.
3M’s of successful trading
Mind – discipline and focus. A lot of people thinks that the stock market can make money easily. Instead Dr Elder commented that “The stock market is the hardest place to make easy money”. He recommended that to write down the reasons why you buy, why you sell, and take pictures.
Method – Set trading rules for all traders. Most traders do not have rules for their trading, they are like gamblers.
Money – Money management is like walking wire in circus with a safety belt wire. So Dr Elder suggested 1) keeping a journal, 2) what is the value of stock and buy below the value. 3) Use at least 2 different time flames for technical analysis (daily chart and weekly chart). Use end of day (EOD) data as live data are for the pros. They are dangerous for beginners, but impulse traders love it.
There are 2 different type of trading, 1 of them Dr Elder called it the elephant hunting, where it will happen once in a lifetime for that stock. Take for example “Apple” stock, it was worth USD$3.02 in 7th Sept 1984, and USD$522.41 in 24th Feb 2012. Meaning you would not know the stock will become an elephant. Dr Elder recommended to do rabbit hunting instead, where the trade is a win but small in profit. Keep doing the rabbit hunting, one day you might find an elephant instead.
I like what the good Dr presented, and it sound easy to execute. But the main issue is to faithfully executing the trade, and following the rules of the trade you have set for yourself. This is the most difficult part for most traders, because it is very boring. And most traders wants to find excitement, so they break their own rules. This is also the reason why intelligent people lost money.
In summary, fundamentals are important in trading, without holding on to it. You will find it hard being a successful trader who make money constantly.
