I remember...
While I was working in the corporation more than a decade ago, I started some investment through hearsay, then studied some fundamental analysis on companies... It just did not workout.
Then, I studied some Technical Analysis and learn some technique on trend line, resistance, and support with some Moving Averages... It did not help much.
Then, someone told me that I needed to attend some professional course... And, I said Yes.
I happened to come across a course advertised by "Business Wxxk" for about USD3000 for a day course that come with internet-based Technical Analysis Tools Box with annual subscription of USD600. It promised (or I should use the word advertise, and reader perceive as promise) that after the training, the student would only need 5 minutes a day to successfully manage his portfolio for success!
What's made me more convincing was that, IF I don't satisfy with the course after the day, I can get my full refund!
The set up was great... More than 300 participants... At the end of the day, I didn't see anyone ask for refund! That's was a very positive sign (my thought at that time...)
So, what did I got to learn from the course in one day?
1. Some Fundamental Analysis Skill... Such as P/E, PEG, etc... (Things that you can find in Yahoo, and countless trading sites for free.)
2. Basic Technical Analysis - Trend line, Resistance Line, Support Line, etc.. (Any basic Technical Analysis books or website has this.)
3. MACD Indicator - Moving Average Convergence/Divergence with arrows firing at the crossing points telling people when to buy and sell... (Any first timer to come across this would be impress with it. And, it indicator is SO POPULAR that it is freely available in any trading website.)
4. Stochstics Indicator - A kind of momentum indicator that with arrows firing at some boundary saying buy on oversold and sell on overbought.. (Available in any trading website.)
And... The course comes with Video CDs for revision, and Self Study Course that cover Options.
That was basically ALL!
And, more importantly... It does not produce Result as stated... At least to far far majority of them...
Now. Looking back...
That's funny, but to any person who don't have any background or know someone who can share the knowledge, that's probably the path he needs to go through and price to pay.
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Recently, I come across a new book - New Frontiers in Technical Analysis. It is a compilation book with many authors with each author wrote a chapter.
What's interesting is that... In Chapter one, the author provide a statistics on what's the most popular indicators, charts, tools that used by the trader across the global at different regions from East to West.
And, I find the attached information worth THINKING!!!
Anyone who do some research know that, in long run, at least more than 95% of the public lost money in the stock market. YET, those trading courses out there are mainly consist of these few indicators for the beginners... Doesn't it sound more than Interesting???
Nevertheless, these indicators - as already learnt, believed, and practiced by a mass of traders - do have value and that's called the "Self Fulfilling Prophecy". I read a book quite sometime ago by Joe Ross (Professional Trader). Although he created his own indicators, he would also learn some popular indicators - for the reason of knowing what the Public probable Entry and Exit points in order to take advantage of it... So, knowing is good, but use it Creatively is the Point!
Nevertheless, these indicators - as already learnt, believed, and practiced by a mass of traders - do have value and that's called the "Self Fulfilling Prophecy". I read a book quite sometime ago by Joe Ross (Professional Trader). Although he created his own indicators, he would also learn some popular indicators - for the reason of knowing what the Public probable Entry and Exit points in order to take advantage of it... So, knowing is good, but use it Creatively is the Point!
..
."It Ain't the Things You Don't Know That Hurt You,
It's the Things You Know That Ain't So."
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8 Comments->:
Interesting view, especially on the "95% of people losing money in long run", so does it means that we should be using Value investing strategy more often then? ;-)
A little knowledge is dangerous. Basically, if don't have sufficient knowledge and skills, then don't put so much investment money in yet. Treat as practical course fee first - the best way to learn is to try.
When get a better hang of things, then put more money in.
Good day,
Thanks for your comments.... and here is my view point....
To: Richard Ng
I don’t mean using "Value Investing Strategy" that published in any book that can help.
I mean that be aware of those Obsoleted Indicators that don’t work anymore and still selling at high price as investment or trading education to the public. I wrote an article long ago,in this blog, on back testing with results… There are charts showing that many public indicators had already lost their effectiveness after 1980, which is after the PC became more popular.
As for the term “Value Investing Strategy” – most people, especially from the academy, like to use Warren Buffett as an example. But, how many professors in teaching these skill or writers who wrote books about Warren Buffett make that kind of profits?
For example: I give a KEY point that why the general public cannot use Buffett's Method.
After Warren Buffett closed down his first business in Textile Factory, his vision was to be success in the Financial Market. And, he wanted to use OPM (Others People Money) to help himself to achieve that goal.
So, he started up a Car Insurance Company. With the constant inflow of cash, he can buy and hold the companies’ stocks that he perceived as good buy (value investing strategy). When he starts buying a company share, he is willing to accumulate enough shares so that he can be on the board of director to involve in decision making IF IT IS NECESSARY.
So, just based on this point, how many general public, especially working class, can follow?
Calling it Investing or Trading does not make the difference from Educated Speculation…
For those who believe in VALUE INVESTING… My suggestion is VERY SIMPLE AND YET EFFECTIVE.
Here it is… Pay the Professional to do the job.
YES. There are quite some good source that can help to get a pre-screen watch list with very low maintenance cost. Such as the IBD 50 or Value Line Selection. Get a few persons and form a team to share the cost. Then with the Pre-Screen List – A list of 100-200 good fundamental stocks, yet full of institutions and professional traders focus, would both generate enough liquidity and bless with self-fulfilling prophecy… Then, speculate them with your own indicators.
To: Anonymous
Well said: “A little knowledge is dangerous.”
You said : “ The best way to learn is to try.”, and I learned that the word “try” has the implication of “failing with honor.”
Let me explain...
As most people trying many things and then give up… then said, "Oh! I tried that, and it is just not my cup of tea......."
Why not try the new term called “Deliberate Practice”.
Yes, the best way is to do Deliberate Practice on paper trade… Until the beginner has the confidence to deal with this animal.
Ref: The term “Deliberate Practice” is coined in the book –Talent is overrated by by Geoffrey Colvin. And, I find that is very helpful for learning any new skill, including trading. :-)
Good material for trading – Wyckoff Method by SMI.
Bless You
KH Tang
So what's the true knowledge that we can learn and survive in the market then??
If you ask me: Understanding your own emotions (Mind) and your Money management (Your account size and ultimate goals) skills to ride the Bull and slide the Bear
Astonishing post regarding putting trap on traders or investors and also the trading indicators of market. But I want some Best SGX stock picks for Singapore market.
Good day,
Yong Siri,
You asked a number of time, and I would give the same answer...
Good material for trading – Wyckoff Method by SMI.
Although many methodologies can now be programmed as software that make the application (stock screening, etc)... Conceptually, there is no short cut to understand the fundamental and principles of Trading.
Bless you
KHTang
Hi KHTang,
On wyckoff SMI there are 2 online courses.one is Introductory course and the other is unleshed course.
Which one would be better? Can you suggest on this please.
Regards,
Sudhakar
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