Brief explanation in my
trading methodology
I should briefly explain my
trading methodology before starting this blog. Roughly 90% of my trades are
trend following among global macro asset class such as stock index, bond or
commodity. As long as there is a trend, I will take it to trade regardless of the
market where fewer traders to anticipate. Major of trades are analyzed by
fundamental and technical factors. In addition, to define my time horizon on
trading or investment, short, mid, long term means, in my trading style, less
than 1 month to 3 month, 3 month to 6 month and 6 month to 1 year respectively.
Moreover a secular trend is regarded as over 10 years.
At last, let me talking about my
trading experience and criteria. It is fourfold in my heart deeply. Firstly, it
is passion to trade. It no longer means your desire to trade only. Before
starting trading, it should be a life time career or achievement that is needed
to take longer and longer time and more and more effort to reach successes. Too
many people only view market as a place where I can take some pocket money.
They totally overlook the difficulties and risk so if you don’t prepare to take
life time to devote to trading, please don’t anticipate.
Discipline is important in trading because it involved in following
trading plan and risk management. Thirdly, it often is ignored my most traders------Flexibility.
Market sometimes develops not as your imagination so we cannot deal with it
without flexibility. For example, interest rate stays at close to zero level
longer as more analyst and trader think after financial tsunami in 2008. Like
others, my analytical tools of interest also deliver more wrong signal in
several years. I must need to adjust my analysis and risk portfolio towards
even though interest rate market our economy had been under a disinflationary
force over 30 years. Capital management is an old and boring rule in trading
when you read more trading books and websites. However, can you achieve it in
what extent? I don’t explain this point too much and just ask myself two
questions when trading my portfolio. How much loss do I need to bear if all
trades trigger stop loss point? Can I be still alive when I am wrong over 20
times in trading? Different people have different rule of capital management
due to different trading style for example 3% of total of capital in a stop
loss is acceptable to me but not all trader. Try to imagine a daytrader who
trade frequently set a 3% stop loss. He will go bankrupt quickly.
Hope you have a successful trading
life and enjoy this blog!!
