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The Trading Matrix: 14 Vital Lessons DecodedThe Matrix is a movie where no matter what age you watch it, you’ll gain a different perspective from it. And there is a wealth of knowledge and ideas that you can unlock when you dig deep into the movie. A world where the line between reality and illusion blurs, much like the iconic film. The Matrix, with its deep philosophical underpinnings and action-packed storyline. It isn’t isn’t just a cult classic; it’s a treasure trove of lessons for traders. Let’s decode a few trading lessons you can learn from The Matrix. Building Confidence: The Neo Path Remember Neo’s metamorphosis? From Thomas Anderson, a man riddled with doubt, insecurity and worry. To Neo, the confident savior of humanity. This journey is similar to one that a trader takes. You begin with uncertainty, doubt and worry. You then develop greed and ego. The market disciplines and humbles you again and again and again. But then you develop the edge. You adapt to the trading world with gains, losses, drawdowns and different streaks. And then you develop self confidence and resilience as a trader. Like Neo, you might stumble, but remember, every setback is a setup for a comeback. Confirmation Bias: Dodging the Bullet Much like Neo’s iconic bullet-dodging scene, traders must learn to dodge the deadly bullet of confirmation bias. Neo created some form of movements and hand gestures in order to stop the bullets. But what he truly did was create confirmation bias that he was beyond the physics and laws of the universe. And this system is how he was able to go beyond the normal. Create or adopt a trading system that with Confirmation bias, you can identify high probability trades. And even though, you’re using some pseudo system that no one knows about. You’re simply turning chaos into financial order, to have a mechanical process involved – to grow a consistent account. Only by actively seeking diverse viewpoints can you dodge the bias bullet and make decisions that are truly informed. Take the Red Pill: Embrace Reality Taking the red pill is about confronting the brutal truths of the market. The trading world is not a bed of roses; it’s volatile, unpredictable, and sometimes harsh. Those traders who take the blue pill – Only look to win. Only look to build their portfolio with an insane win rate. Only look to go all in on certain positions. When you take the red pill, you take on the realities of trading. You acknowledge the risks. You prepare for the drawdowns. You know you’re going to take inevitable losses. You understand that your past trading does not indicate future results. Those oblivious traders – get destroyed. Like Neo, when you choose the red pill, you choose to see the market for what it truly is, warts and all. There Is No Spoon: The Power of Perspective The “There is no spoon” scene teaches us the power of perspective. In trading, the market isn’t your enemy; it’s your perception that needs adjusting. Bend your mind, not the spoon. Adopt a system which has a flexible mindset. Be ready to pivot your strategies in response to market dynamics. Success comes not from forcing the market to your will, but from adapting your will to the market. Understand the Code – Understand the Matrix Trading involves deciphering patterns, much like understanding the Matrix’s code. The market moves up, down and sideways. Given. But with Price, Volume and probabilities – there is a proliferation of world of opportunities with each market. Develop the ability to read charts, trends, and indicators. Recognize that behind every market movement, there’s a code to be cracked. Agent Smith and Market Manipulators Just as Agent Smith represents a threat within the Matrix, market manipulators pose real dangers. Stay away from markets with: Too much volatility Too many gaps Unusual trading activity Stay vigilant, and don’t be swayed by pump-and-dump schemes or misinformation. They will disrupt your trading journey. Training Simulation: Practice Makes Perfect Remember the scene where Neo was practice fighting in simulations with Trinity and Morpheus? He was testing, improving, adapting and learning. You should do the same before you risk your hard earned money. Test, Test, Test, Forward Test and Real Test. Use demo accounts and simulations to hone your skills. Make mistakes where it’s safe to do so, and learn from them without risking your capital. Morpheus’s Faith: Belief in Yourself Morpheus believed in Neo before he believed in himself. Cultivate self-belief. Trust in your analysis, your strategy, and your decisions. Without belief, fear and doubt will cloud your judgment. The Architect’s Plan: Strategy is Key Understand the market’s architecture. Develop a trading plan and stick to it. Adjust as necessary, but always with the structure of your overall strategy in mind. Free Your Mind: Emotional Control Neo’s journey was as much about freeing his mind as it was about saving the world. In trading, emotional control is paramount. You need to learn to let go of Ego, Fear and Greed. These are your greatest enemies. You can do this by: Having a strong back tested track record to prepare for what is to come. Risk even less until you don’t feel the losses. Real trade with the smallest positions to get an idea on how the markets work and will operate when you incorporate costs. Train yourself to remain calm and objective, regardless of the market’s ups and downs. FINAL WORDS: The Path to Financial Awakening Trading, is much like deciphering the Matrix. It is an ongoing journey fraught with challenges, revelations, and the need for constant adaptation. The key points to remember with the Trading Matrix are: Building Confidence: The Neo Path Develop self-belief through education and resilience. Confirmation Bias: Dodging the Bullet Seek diverse viewpoints to make informed decisions. Take the Red Pill: Embrace Reality Embrace the reality of the markets with all its risks. There Is No Spoon: The Power of Perspective Adjust your perspective and adapt to market dynamics. Understand the Code – Understand the Matrix Understand the code behind market movements. Agent Smith and Market Manipulators Stay vigilant against market manipulation. Training Simulation: Practice Makes Perfect Use simulations to hone your trading skills. Morpheus’s Faith: Belief in Yourself Cultivate self-belief and trust in your decisions. The Architect’s Plan: Strategy is Key Develop and stick to a well-thought-out trading plan. Free Your Mind: Emotional Control Master your emotions to remain calm and objective.
TVC:SA40Education
by Timonrosso
Bla Bla Bla Excuses to NOT trade Bla Bla BlaWhat is your biggest trading excuse? 1. Not enough money - Then paper trade! 2. Not enough time - 15 Minutes is enough 3. Not enough education - Learn it's FREE 4. Not the right time - It IS the right time 5. Not the best market environment - Let's get into them... #1: I don’t have enough money to trade Open an account and start demo-trading then! TradingView gives you everything you need. Start back testing and kick off your trading on the right note. #2: I don’t have any time to trade Seriously? Do you have time to watch Netflix? Do you have time to walk your dog for 15 minutes? Do you have time to read a book? If so… You have time to analyse for 5 minutes, 2 minutes to place a trade signals and then leave it up for the market. 15 minutes a day or at worse, 15 minutes a week – that’s all you need. #3: I don’t know how to trade What do you think TradingView tutorials are here for? #4: I’m waiting for the right time This is the biggest excuse for people to take action in life. Not just with trading. With a new hobby, with opening a business, with learning to cook… You’re not waiting for the right time, because the only time is NOW. You’re just afraid of failing and too scared to start. Prove me wrong… #5: The world and the markets are in a bad state Hello! With trading, we don’t care whether the markets move up or down. If it goes up we profit. If it goes down we profit… That’s the whole point of trading. Or else I would just do the passive income (which I don’t believe exists) approach and just buy and hold forever in hope. #6: I don’t know what to trade Why choose? A chart is a chart. Any market with a ton of volume, is going to move in one of three ways. Up, down or sideways. Stocks, indices, forex, commodities or crypto currencies. They all move the same, they all act the same. So, diversify your trading and trade all high volume traded markets. #7: Trading is complicated Everything seems complicated in the beginning. But as you repeat the process on a daily basis, it gets easier… This isn’t programming, you don’t need to know maths or science. All you need to know is where to type in your prices. Market Buy Or Sell Volume (CFDs) Entry (Where to get in) Stop loss (Where to place your risk level) Take profit (Where to place your reward level) Trade (Enter) The rest, we show you via videos or in the Premium membership step by step processes EACH TIME. Say less, do more… If this motivation helped give the kick you need, let me know by replying back. What is your excuse?
JSE:J200Education
by Timonrosso
How does OUTsurance have Data from 2013?“How is it possible for Outsurance to have data on my charting platform, as far back as 2013 while it was just listed on the JSE.” A. The data that you see from 2013, came from the parent company Rand Merchant Investment Holdings (RMI). They then changed the name to OUTsurance Group Holdings Limited (OUT). And they have been in the process of transitioning and rebranding from RMI to OUT following the unbundling of its investments in Discovery1. And now, the Centurion-based insurer has officially swapped places with its parent company, Rand Merchant Investment Holdings (RMI), which is no longer listed on the exchange.
OEducation
by Timonrosso
1
The Raging Bull on a Falling Roller coaster - JSE in the nutshelAbout sums up the JSE right now... 📉📈 The JSE ALSI 40: Where Sideways Meets Rollercoaster! 🎢🐂🐻 Hey there, fellow traders and market enthusiasts! 📊💰 Have you been following the JSE ALSI 40's wild dance since December 2022? It's like watching a cat chasing its tail, but with more financial suspense! 😅🐱 Picture this: The ALSI 40 chart looks like a DJ's soundwave, with highs and lows that leave us all scratching our heads. 🤨📈📉 It's as if the market decided to throw a never-ending party, but with a catch – every time it cranks up the music and heads for the stars, it suddenly crashes back down like it remembered it had a curfew! 🎶💥 And guess what? Just when you think the party's over and everyone's heading for the exits, the market pulls a 180 and starts the bull run again! 🐂🚀 But here's the kicker – when you finally give in to FOMO (Fear Of Missing Out) and join the party, that's when the bearish bear shows up, and it's not in the mood for hugs! 🐻📉 So, what's a trader to do in this wild ride? 🤔 Here's the deal: 💰 Money Management is Key: It's time to be the disciplined partygoer. Risk management should be your DJ, controlling your moves on the dance floor. Allocate a smaller portion of your portfolio to each trade to weather those unexpected downturns. 🚫 Ego? Leave It at the Door: Ego is that party crasher no one likes. Don't let your ego dictate your trades. Remember, even the best traders face losses. Stay humble, stick to your strategy, and cut your losses when it's time to bail. 📆 Patience is a Virtue: Keep your dancing shoes on, because sooner or later, the market will decide on a direction. It might seem like a chaotic dance floor now, but trends emerge eventually, and when they do, you want to be there when the music starts playing. So, fellow traders, while the JSE ALSI 40 keeps doing its sideways cha-cha, let's stay nimble, manage our risks, and be ready to groove with the raging bull when it charges or stay steady with the bear when it takes its turn. 🕺💃 It's all part of the game, and in the world of trading, the only constant is change! Let's keep our eyes on the charts, our hearts in check, and our portfolios ready for whatever direction the market decides to sway next. 📊💼
TVC:SA40Education
by Timonrosso
10 Black Swan Events that shook the marketsBlack Swans are highly unpredictable events that go beyond what is usually expected of a situation. One definition I like is this. A Black Swan is where an event can cause the market to move 10 standard deviations away from the norm. When this happens they could potentially have severe and wide-reaching consequences. You’ll see the market will jump erratically and even cause a halt in trading activity completely. So when you spot a Black Swan. Just take it easy from trading the markets that can be affected. Here are 10 Black Swan Events that I can think of that had an impact on the markets. 2008 Global Financial Crisis Triggered by the collapse of the US housing market, it led to a worldwide banking crisis and severe global economic downturn. COVID-19 Pandemic An unprecedented global health crisis that had significant repercussions on global economies and markets in 2020. Dotcom Bubble Burst (2000) The dramatic rise (due to greed and optimism) and fall (due to fear and panic) of internet companies in the late 1990s led to a severe market correction. Brexit (2016) Britain’s unexpected decision to leave the EU had immediate impacts on global markets. Japanese Asset Price Bubble Burst (1992) This led to a lost decade of economic stagnation in Japan. (Have you seen the Nikkei! And can you imagine holding stocks from 1992?) Swiss Franc Unpegging (2015) The Swiss National Bank’s sudden decision to remove the cap on the Franc’s value against the Euro led to extreme currency volatility. (Forex trading was a nightmare seeing some prices drop hundreds of pips). September 11 Attacks (2001) The terrorist attacks had immediate and long-term effects on global economies and markets. (I was too young to worry so I missed this one.) Fukushima Nuclear Disaster (2011) Triggered by a massive earthquake and tsunami, it had significant impacts on global energy markets. (I remember holding oil stocks while driving. And I came home to R120,000 loss). Flash Crash (2010) The US stock market crash, triggered by a high-frequency trading algorithm, sent a financial shockwave around the world. (Fat fingers caused by unknown factors). Oil Price Negative (2020) For the first time in history, the price of US oil turned negative due to low demand during the COVID-19 pandemic. Which Black Swan event affected you the most? Let me know in the comments?
TVC:SA40Education
by Timonrosso
2
DID YOU KNOW? Trading has never been more...What was a realm for Wall Street titans and for the affluent investors… In the last couple of years, it has knocked its walls, and has broken the financial chains. Today, it’s at the hand to the everyday individual, regardless of their financial background. Just to put it into perspective. In 2003 until like 2007, trading was very limited. I had a very old-fashioned trading software which updated once a day. I only had shares to trade. And then as the years progressed, I was paying R17,000 a year to have a software that updated every 15 minutes. The struggle was REAL! But today, is a different story. You are in the best times every to trade. It’s the cheapest it’s ever been. It has more markets, instruments, options and features at your fingertips. And you can even start with your charting, preparation and work on your trading track record – essentially for FREE. So, if you’re not in the trading game yet – WHY NOT? And that’s just the start of it. DID YOU KNOW? Trading has never been more… #1: Affordable Trading, as we know it, has undergone significant transformations in the past decade. It is now more affordable than ever before. A combination of technological advancements, regulatory changes, and the evolution of trading platforms has significantly reduced the financial barriers to entry. Just look at TradingView? Many brokerages are in such high competition that they have had no choice but to: Cut brokerages Make minimal spreads for trade Remove the yearly platform fee Some even have a zero-commission trading platform The only expensive thing, with some brokers, is that you might need to have a minimum account size. But the money is yours. It stays in your account. And you might even earn interest just by keeping it there. It’s amazing. #2: Easier to Learn With the proliferation of online learning resources on YouTube, TikTok, websites - you can master the art of trading – FREE. Even most reputable brokers now offer comprehensive trading education, to help you on the way to trading their platforms. And many brokerages offer demo accounts where beginners can practice trading with virtual (paper) money. This way they can gain hands-on experience without the risk of losing any real money. #3: Accessible Trading has never been more accessible. Gone are the days when trading meant being physically present on the exchange floor or having to call your broker to place a trade. In today’s digital age, you can trade on your smart phone tablet or computer. Also, with the high competition – most great brokers offer their own customised trading apps and online platforms. And the variety is crazy. Whether you want to trade CFDs, Spread Betting, Futures, Options, Lots, or other instruments – the world is your trading oyster. Just go to TradingView and you’ll see hundreds of thousands of markets to choose from. (Stocks, indices, commodities, Forex, Crypto, ETFs, Bonds, Economic indicators and Funds). #4: Hospitable With brokers and market makers with their obligatory regulatory frameworks and criteria, around the globe, they are constantly pushing for more transparency and fairness in financial markets. They are also pushing for more educational sources. They are improving with HR and pristine customer services features. The odds are no longer heavily stacked in favour of institutional players. Such features help retail traders make informed decisions, level the playing field and make the trading world a more welcoming place for newcomers. So, we can see trading is becoming more affordable, easier to learn, accessible, and hospitable. And they will continue to do so and improve, which is why you have got to take the leap and harness what is available. As I mentioned earlier. Today the world is your trading oyster – Go fishing!
TVC:SA40Education
by Timonrosso
Why MOST Traders QuitI have said this many times. You only lose when you quit. Until then you’re either earning or you’re learning. But the issue is majority of people quit trading. And it goes far beyond just money lost. I say that because the essence of trading is playing with money you can afford to lose and you can psychologically handle. Right? So, it goes beyond money. If you’re thinking of quitting trading, first give this piece a read and let’s identify the cause and it might help you to carry on. You’re closer today to achieving your trading goals than yesterday. The Pitfalls of Financial Trading REASON #1: They blew their account by risking too much One of the primary reasons why many traders ultimately quit the financial markets is the common mistake of blowing their trading account. There are three main reasons you blew your account. You risked far too much on certain trades. You did NOT adhere to strict money management principles. Your portfolio was tiny (Under $1,000) to start off with. So the costs, the brokerages, the margins were all too much. It’s like flying a plane at a low altitude hoping you won’t strike a mountain. REASON #2: They keep adapting losing strategies based on non-tested methods Another reason for you to abandon your trading is this. Your methods, strategies and systems are losers. If you back and forward test, it yields negative results. So, technically the system is achieving what its numbers are in a way. I’ve back tested a LOT of strategies in my youth. 100s of thousands of parameters, indicators and criteria. And 89% of them were just plain losers. Don’t think by logic, that the system will work. Don’t think by a few months, will dictate a systems complete and eternal performance. Don’t just follow a trader’s strategy and adapt to your own without any backtested results. Without proper testing and evaluation, you are at risk of adopting strategies that are based on faulty assumptions or rely on limited historical data. REASON #3: They go against their strategy as their ego takes over and they lack confidence Ego is a dangerous trait to have as a trader. And with you feeling like you know better than the market and deviating from your plan, is a recipe for disaster. Do it once, you’ll do it again. Do it a few times, and you’ll get right back on that emotional roller coaster that comes with trading. And it will grow and infect your trading as it will lead to even more impulsive actions and irrational decision-making. Your confidence will get shot. Your vibrations within yourself will be depro and will reflect onto your trading performance. The psychological pressures associated with trading can magnify the impact of losses and amplify self-doubt, ultimately push you out of the game. REASON #4: They can’t weather through drawdowns NOTE: Drawdowns, which refer to the decline in a trader’s account value from its peak, are an inherent part of trading. Here’s something funny. When you go through good times with trading, it almost feels normal. And you can go through 6 months of great upside for your portfolio. But when that one or two months drawdown kicks in (inevitably it will), time feels different. It feels like an eternity of failure and with the feeling of you’re never getting out of this.. Unfortunately, many traders find it challenging to cope with these challenging phases, leading to frustration and ultimately quitting. Am I right? Well as my friend and great colleague Igor said to me: Your biggest winning streak and your biggest drawdown is still to come. So you might as well embrace it with strict money management principles along the way. Successful trading comes with the ability to easily withstand drawdowns and navigate through extended periods of market downturns. Also, psychologically you may find as a new trader that when you endure through longer periods of downside in the market, it can be both mentally and emotionally draining. Extended periods of drawdowns can cause a few problems: It can erode a trader’s confidence It can take away their optimism It can make them feel envious over other traders who are winning It can demotivate them to carry on It can cause them to make irrational decisions It can lead to over trading and revenge trading It can make them quit. They find the next “best” thing, onwards to the next holy grail (which never arrives). REASON #5: To continue the pursuit of the next “best” thing People follow where they think the quick money it. They are constantly on the quest to find their holy grail. Sure, trading isn’t for everyone. And Yes trading is the hardest and most easiest way to make an income. But, you seek will also require a ton of research, psychology, sacrifice and time. Nothing of high reward comes without a degree of risk. Bigger the reward, greater the risk. Or everyone would make a ton of money, right? So don’t fall into that trap of jumping to the next lily like a frog… Traders who constantly search for the next big thing end up chasing elusive dreams instead of focusing on developing their skills and understanding the markets. The reality is that there is no magic strategy that guarantees success in trading. The markets are ever-changing, and what works today may not work tomorrow. It is important for traders to recognize that trading success is not about finding a secret shortcut or relying on external factors beyond their control. It is about continuous learning, discipline, and a willingness to adapt to changing market conditions. Develop your robust trading plan, manage your risk effectively, and stay focused on long-term goals. Those factors alone will keep you on the right quest to trading well.
TVC:SA40Education
by Timonrosso
1
6 IMPORTANT Trading Orders You need To Know!DO YOU KNOW THE 6 TRADING ORDERS? There are many trading orders that a broker can offer. You’ll just need to confirm on the platform or give them a call, which ones they have. And it’s important to know which one suits your trading needs best. Before you buy or sell a trade, there is usually a setting that you can choose to execute your trade. Common options include: 1: GTC: “Good Till Cancelled” Where the order remains active until you manually cancel it. 2: FOK: “Fill or Kill” (Settle!) This type of order requires immediate execution of the entire order quantity. If the full amount is not executed, it is then cancelled. 3: GTD: “Good Till Date” Where you can specify a specific date until which the order is valid. 4: MIT: “Market if Touched” This order is triggered when the market price reaches a specified level (trigger price). It then becomes a market order and is executed at the best available price. 5: LIT: “Limit if Touched” If a Limit if Touched order is triggered when the market price reaches a chosen or trigger price. 6: GTC (Good Till Cancelled). This way you’ll know that your position (order) will stay in the market until you cancel it manually.
TVC:SA40Education
by Timonrosso
1
Revenge Trading is Lethal - 5 Reasons Why!Do you feel it in your bones. Where do you want to: Take trades to make up for losses? Take trades for the sake of trading? Take trades out of emotions and gut (gat feel)? Take trades to make a quick buck? If so, you have felt the power and dangers of Revenge Trading. TO put it blunt. Revenge trading is detrimental, dangerous and just plain stupid for any traders to succumb to. I feel like I can finish the article already as I have said what I needed to. Not just yet! You need to understand why Revenge Trading is to your downfall. Let’s start with these: #1: Impulsive decisions are dangerous In the heat of the moment, you just want to take an impulsive trade. This can lead to disastrous outcomes. Revenge trading happens when you want to try recoup losses quickly. And so traders abandon their strategies, systems and rules. And they take on unwarranted risks. This will stop you from making good, calculated, logical and well-informed decisions based on sound reasoning and market research. Don’t do it! #2: Trading on emotions is deadly Emotions such as fear, greed, and frustration have no place in trading. Revenge trading is fueled by these emotions. And this causes traders to deviate and steer way from their plans by instead acting irrationally. What then? Bigger losses, unnecessary risks to the portfolio and skewed results on your trackrecord. Your hard earned and timely worked on journal! Is it worth it? I think not. Cut out your emotions and work at being calm and take on the more logical approach, devoid of emotional interference. #3: Violating trading rules is damaging Every trader should have a set of well-defined trading rules in place. Not just rules but also a list of criteria. Revenge trading typically involves disregarding these rules and just going against everything you should do. Basically, what the average dumb retail trader does which results in 98% of traders losing in this financial endeavour. Violate your rules and there will be severe consequences. Loss of confidence. Bigger losses More losses Erratic wins (which make you want to do it again and again and again) Not worth it. Don’t do it. #4: Too much unnecessary risk You know you’re using your hard earned cash to trade and build a portfolio right? So why are you burning it and cutting it up like it’s nothing? This reckless behavior can lead to bigger drawdowns and can even wipe out trading accounts entirely. Don’t do it! #5: Creates an ongoing cycle of doing it again Great! Once you have violated your rules, gone against your strategy and pretty much gone ape or rogue on trading – it takes a lot to gain ones integrity and discipline back. One of the most dangerous aspects of revenge trading is its cyclical nature. Break the rule, you’ll break it again. Cheat, you’ll cheat again. Enter a gambling mentality and you’re in trouble. Bank a winning rogue trade and you’ll succumb to the trading world of discretionary action. However, if these subsequent trades result in further losses, the cycle repeats, trapping traders in a never-ending loop of revenge trading. Breaking free from this destructive pattern will then need a ton of discipline, self-awareness, and a commitment to sticking to one’s trading plan. So please be careful. Trade well! Don’t trade like gambler. Avoid the perils of revenge trading by all means, starting from today. And when you feel the need to do it (like a junkie), come back and read this article. Had to be said.
TVC:SA40Education
by Timonrosso
Traders Help the Economy in 4 Ways!When you trade and invest, there are many elements that you will continue to help contribute to. I can think of 4 main ways including: Way #1: You help with liquidity (volume) Remember, you are the intermediary in the markets. When you exchange money and buy and sell, you’re helping provide liquidity and volume. This makes it easier for other market participants to trade and manage risk. No matter how small or big the account size is, every trade counts. (Similar to the butterfly effect). Way #2: Helping our fellow brokers and managers Yes I know most people can’t stand the fact of the fat cats making millions of rands off other portfolios. But in South Africa, I find that most brokers are very small and don’t earn a lot of money. (Some small brokers earn under R25,000 per month). So when you buy and sell trades, you will help pay the small brokerage fees, which will aid to the salaries of the brokers you are using. Way #3: When you pay brokerage and fees, it creates more jobs When you pay the brokerage and trading platform fees. You are not only helping the brokers. But also the company they work for. The more money that goes into the firms, the more jobs that are created for other employees (Facilitators, marketers, support staff, risk managers, accountants, analysts, domestic workers, etc…) Way #4: This brings growth to your broker or market maker When your broker is doing well, as they have good clients and investors – this gives them a bigger incentive to help build and grow the company further including: · Better technology. · Better innovation · Better efficiency · Better features in the business This will also improve your experience with their growth developments. And so, I’m sure you can see that even if you want to trade for yourself, you will still be helping many companies, people and the economy as a whole… Nothing to feel bad about.
TVC:SA40Education
by Timonrosso
5 DANGERS of Trading Penny StocksJust so you know. I believe if you’re following a world renown and successful Penny Share expert, you’re in good hands. They are able to spot low risk investments and guide you through the process of owning great Penny Stocks. But as a trader , who only looks at charts – THIS IS DANGEROUS TERRITORY. Remember, Penny Shares are high risk, high volatile, low credible companies that are LOW prices i.e. Under $1.00. And so, I just want to write as a trader point of view five key reasons why penny stocks can be dangerous to traders. DANGER #1: High Volatility (Jumpiness) Penny stocks are notorious for their high volatility. These stocks tend to experience rapid and drastic price fluctuations, often without apparent reasons. I’m talking about companies that can jump 10%, 30% and even 70% in a day. The lack of stability and price predictability can make it very difficult for traders to make informed decisions. Sudden price jumps or drops can result in significant gains or losses within a short period, amplifying the risk factor. And if you place your stop loss within a tight range, there’s a bigger chance you’ll get stopped out. DANGER #2: Low Liquidity (Less Volume) Think of Liquidity like the flow of water. It tells you the ease of being able to BUY or SELL a market, without impacting too much of the price. Once again, we look for low to medium volatility. Penny stocks typically have low liquidity due to limited trading volume. With fewer buyers and sellers in the market, it can be difficult to execute trades at the prices you want. And this leads to slippage and even higher transaction costs. Also, low liquidity may also prevent you from even entering or exiting your positions quickly. And this can even TRAP you in an unfavourable market environment for an extended period of time. DANGER #3: Not Established Businesses Penny stocks are often associated with small, early-stage companies that are not yet established in their respective industries. These companies may lack a proven track record, have limited financial history, and face various operational and market risks. So if you want to invest in these type of companies as a trader, it’s better you do it with fundamentals, research, business models and future prospects. If you do it purely on speculative purposes, this could be very risky for your portfolio. DANGER #4: More Likely to Head to Zero Yes all trading requires levels and degrees of risk and rewards. But it is not worth it, if some petty company is doing really badly and is showing signs of going to 0.00. Penny stocks are more susceptible to declining in value and potentially heading towards zero. I mean, South Africa has witnessed instances where penny stocks have experienced substantial losses, which took out a ton of investors. For example, companies like African Bank Investments Ltd (ABIL) and Oakbay Resources and Energy Limited serve as cautionary tales, where investors lost huge amounts as these companies approached or reached bankruptcy. Talking about bankruptcy. DANGER #5: High Chance of Bankruptcy and Liquidations Penny stocks are also more likely to go bankrupt or get liquidated compared to a Blue-chip stock. This is because of the nature of the companies, the inexperience, the lack of funds and structure, as well as its credibility. Financial instability, mismanagement, or unfavourable market conditions can lead to the collapse of these businesses. We saw this also in South Africa with the liquidation of Sharemax Investments and the bankruptcy of Pamodzi Gold Limited. This lead investors with little to no value for their investments. So remember this as a traders We want low volatility, high liquidity (volume), credible companies with great reputations, track record and credibility. And we want attractive charts that work with our trading strategies. If you want to be a savvy Penny Share investor that's fine. But as a trader, I have given my precautions.
TVC:SA40Education
by Timonrosso
Why you DID NOT take the trade - 4 REASONSSo you never took a trade again? This could be where the problems are rising. It’s also where you are probably missing out on what could help take your portfolio out of the drawdown. And sometimes, despite favourable market conditions, you may find yourself still hesitating to enter a trade. I want to explore four common reasons why traders fail to take the trade and how to overcome them. #1: The market moved too much One of the most common reasons traders hesitate to take the trade is that… The market has already moved significantly, and they fear they have missed the opportunity. However, it’s important to remember that the market is constantly in motion. The train will move and there is always an opportune moment to get into a trade. A sound trading strategy should take into account different market conditions, including volatile ones, and provide clear entry and exit points. If the market lines up despite how high or low it’s gone. Just take the trade. #2: You’re scared to lose the trade FOLO or Fear Of Losing Out is another common reason traders hesitate to enter a trade. While it’s natural to want to avoid losses. It’s important to remember that trading involves risk, and losses are inevitable. A sound risk management strategy, including setting stop-loss orders and managing position size, can help you to minimize potential losses and build confidence in entering a trade. #3: Too much money to spend Traders may also hesitate to enter a trade if they feel they have too much money to spend. Take oil for example. Most market markets (brokers) offer you to buy Brent crude but you have to buy 100 contracts as a minimum. In this case, it MIGHT be too much money to spend. Not because of how much of your portfolio you’re using up, but also because the risk might outweigh 2% of your portfolio. Then you get other markets like the JSE ALMI 40, where you’ll need to spend around R9,000 to enter a trade. It sounds like a lot (especially if your portfolio is less than 10,000. But, that’s why one should start with a larger minimum account size. I started with R30,000 in 2003 and even then it was too little to grow into a substantial amount. Then when it grew to the first R150,000, I started feeling comfortable with the portfolio size and it opened more opportunities to trade additional markets. So, that’s why if you want to take trading seriously, you got to cough up the cash into your portfolio and trade accordingly to strict money and reward management. #4: No trust in the system yet This one is a given and the most abundant reason to NOT take a trade. You might hesitate to enter a trade if you don’t have faith or confidence in your trading strategy or system. In this case, it’s essential to go back, review and test the strategy, ensuring it aligns with personal trading goals and is backed by sound research and analysis. When you build trust in a trading system, and you take the time and patience to see the good and the bad, then your confidence will grow. And that will be an essential step towards taking more trades to help grow your portfolio. Why don’t you take trades when you should? Is it because: You don’t trust your system You’re scared to lose money You don’t trust certain markets You don’t have enough money to trade different instruments You’re not ready with your strategy You don’t have confidence with yourself, discipline and emotions yet? Find them, harness them, work on them and you might have your answer.
TVC:SA40Education
by Timonrosso
Trading Success Stoppers Part 1Trading as you know is a fantastic alternative to grow your wealth. However, it is not without its challenges. In fact, there are several success stoppers that traders face that can derail their trading efforts. Let’s look at four of them. STOPPER #1: Same Old Routine One of the biggest success stoppers for a trader is falling into the same old routine. It is easy to get into a rut and continue doing the same things day in and day out. However, this can lead to a lack of progress and stagnant trading results. Yes you need the same ‘ol strategy, risk management rules and criteria for a consistent track record. But you also need to be open to try new things and adapting to changing market conditions. You can do this by: ~ Backtesting and forward testing other strategies. ~ Adapting new markets into your trading ~ Identifying new market environments ~ Even improving your current indicators and chart layouts Always looking out for better brokers, chart platforms and sources to help your trading Improving your calculators and trading tools. STOPPER #2: Self-Doubt This can cripple a trader’s confidence and ability to make sound trading decisions. It is natural to experience doubts and fears when trading. But make sure you don’t let it take over and lead you to emotional decisions, doubting during drawdowns and missed trading opportunities because of how you feel rather than what the charts say. To overcome this success stopper, you should focus on building your confidence and self-belief through trusting your proven track record. You can do this by keeping a trading journal to track your successes and failure. Also seek out the advice of a mentor or coach, and regularly review their trading plan to ensure they are on the right track – to help with your own confidence. STOPPER #3: Procrastination Procrastination is a common success stopper for traders. It is easy to put off making trading decisions or taking action on a new trading strategy. However, procrastination can lead to you never taking action which means: No trades No consistency No growth No results To overcome this success stopper, traders should develop a sense of urgency and take action quickly. Adapt the 1,2,3 JUST DO IT mentality as I mentioned in the previous video. Break down larger tasks into bite sized and more manageable ones and set deadlines to complete on time. STOPPER #4: No Big Idea Finally, having no big idea or vision for their trading can be a major success stopper for traders. You need to know your goals, strategy, risk profile and trading personality. When you do this you will have the BIG idea on what you need to progress and thrive. Stop these stoppers before they stop you from achieving trading greatness. Tune in tomorrow for Part 2!
TVC:SA40Education
by Timonrosso
EXPLAINED: Calculation for CFD Brokerage with Anheuser ExampleHow do I calculate the brokerage I'll pay on a local CFD trade? You’ll need to calculate the brokerage you’ll pay to enter your trade and the brokerage you’ll need to pay to exit your trade. We’ll first need to lay out all the necessary information to calculate what brokerages you’ll pay… For this example, we’re going to use a trade example with Anheuser Busch InBev. And we’ll use the brokerage of 0.30% leg in (entry) and 0.30% leg out (exit) to pay. Here are all the specifics needed for this trade: Portfolio value: R40,000 Trade: JSE:ANH Type: Long (buy) Brokerage rate in: 0.30% Brokerage rate out: 0.30% Entry: R1,184.00 Stop loss: R1,143.00 Take profit: R1,215.00 Calculation #1: Calculating your ENTRY brokerage with CFDs Step #1: Know what your max portfolio risk is per trade Max % risk = (Portfolio value X 2%) = (R40,000 X 2%) = R800 Step #2: Find out the rands risked in trade Rands risked = (Entry – Stop loss) = (R1,184.00 – R1,143) = R41.00 Step #3: Calculate the number of CFD contracts to trade No. CFDs = (Max % risk ÷ Rands risked) = (R800 ÷ R41.00) = 19.51 SIDE NOTE: We always round down the number of CFDs, so that we risk less than what we choose to risk instead of more. Therefore, we will buy 19 CFDs in this specific trade. Step #4: Calculate your ENTRY exposure for the CFD trade Entry exposure = (Entry price X No. CFDs) = (R1,184 X 19 CFDs) = R22,496 Brokerage in = (Entry exposure X Broker rate in) = (R22,496 X 0.30%) = R67.48 This means, you’ll need to pay a brokerage of R67.48 in order to buy (go long) 9 Anheuser CFDs. Now we can move onto the next brokerage leg. Calculation #2: Calculating your EXIT brokerage with CFDs Step #1: Work out your EXIT exposure for the CFD trade Exit exposure = (Exit price X No. CFDs) = (R1,215 X 19 CFDs) = R23,085 Step #2: Calculate your brokerage leg out Brokerage out = (Exit exposure X Broker rate out) = (R23,085 X 0.30%) = R69.25 Step #3: Calculate the total brokerage for the CFD trade Total brokerage = (brokerage leg in + Brokerage leg out) = (R67.48+ R69.25) = R136.73 This means, if the trade hit your take profit level you would have ended up paying a total brokerage of R136.73 for your Anheuser CFD long trade.
JSE:ANHEducation
by Timonrosso
Maximise your trading success with market analysisWhen it comes to trading, one of the most important skills to develop is market analysis. When you know how to read the market and make informed decisions, it can be the difference between spotting high, medium and low probability trades. Here are some ideas to analyse the market and maximise your chance of success. Start with the Main Indices The first step in market analysis is to take a look at the main indices. These indices, such as the JSE ALSI, SP500, Nasdaq, FTSE100, and others, are a good indication of the overall market direction. Once you have seen the indices, you’ll get a sense of how the market is moving as a whole, and what kinds of opportunities might be available. Identify the major Trends Once you’ve looked at the main indices, it’s time to: Identify any market trends (Market environment) If the market is showing a strong uptrend (trend, momentum, moving averages analysis) Then it’s best to ONLY look for longs or buys. On the other hand, if your indicators suggest that the market has confirmed a downtrend, it’s best to look for sells or shorts. Look for Breakouts Sometimes the market doesn’t confirm an up or down trend. If you see the market is moving in a sideways manner, there’s still an opportunity to profit. In this case, it’s a good idea to write down the levels of breakouts you’d expect. If the market breaks up, you’ll expect longs, and if it breaks down, you’ll look for shorts. This way you’ll prepare for both outcomes And you’ll be able to capitalize on whichever direction the market takes. Final Thoughts Market analysis is a critical skill for any trader to master. When you start with the main indices, to identify trends, and looking for breakouts, you’ll be able to make informed decisions about your trades and get a good idea of where they’re more likely to head.
TVC:SA40Education
by Timonrosso
4 Ways to STOP Impulse TradingHow do I STOP Impulse Trading? Just a reminder. An impulse trader is one who makes quick, irrational decisions to take a trade (long or short) for some form of immediate satisfaction it may bring in the short run. Impulse trading might occasionally work. But it's risky and can damage your trading confidence and psychology in the long run. That’s because when you win, you’ll take more impulse trades that go against your strategy. But then the winning streak will end and the losing streak will come. And that’s where you’ll blow your portfolio eventually. So, to help you overcome impulse trading, I suggest these three solutions: Solution #1: Take a break When you feel the urge to make an impulsive trade, step away from your computer for an hour. Use the time to go cook a meal, go for a walk, or do something else that helps you relax. Then when you’re feeling more relaxed and in tune, you can come back to trade the markets with a refreshed, rational mindset to see what has or is lining up. Solution #2: Reflect on your trading history Review your trading track record. It is your game plan. It shows you the potential of what is to come. And it allows you to look at your past data and trend of your portfolio. Consider the gains and losses you've experienced and remind yourself of why it is super important to stick to your trading strategy. This alone should help you resist impulsive trades. Solution #3: Set specific conditions for impulse trading If you still struggle to control your impulsive trading instincts, then this might be the best idea. Open a separate trading account with disposable funds. This way, you can indulge and take your impulse trades without jeopardizing your primary trading strategy and account. Maybe it’s a R10,000 or even a R50,000 account. Or if you just want to trade for trading sake it, it might be a R5,000 account. Whatever it is. When you feel impulsive, trade using your impulse trading account. And then when it comes to your main account, you’ll be able to follow your specific trading strategy according to your track record. Remember, trading should be approached and seen like running a business, not like playing a slot machine. Keep this in mind, and this should help save your portfolio.
TVC:SA40Education
by Timonrosso
1
4 Ways to ACTION a trade - WHEN TO FIRE!You know that successful trading is… . . . . Patience. You need to wait for the setup, reason, system, lining etc… But then there is the 2% time where you actually ACTION a trade. We action a trade for three reasons. To enter To adjust To get out But we need to talk about these reasons more… Let’s do it., ACTION #1: Trade lines up – JUST TAKE THE TRADE! When your trading signal lines up with your entry, stop loss, take profit, and system: This is the most obvious time to take action. It tells you “HELLO AN OPPORTUNITY HS ARISEN” It is crucial to act quickly and decisively when this happens, as opportunities in the market can disappear just as quickly as they appear. ACTION #2: Adjust your levels – JUST CHANGE THE TRADE There are two levels you can adjust with your trades. Stop loss and Take profit. When the market is moving in your favour, and you have solid rules to move your stop loss in the favour. This is done to lock in minimum gains. For example. When my trade is 1:1 in the money, I might move my stop loss to just above breakeven. This way I have nothing to lose if it turns against me. Then when the market is shooting in your favour, you might want to adjust the take profit. This is because you can see the market wants to move further or… There is a new setup with a new take profit level in place – which happens often with my analyses. Action #3: Execute the time stop loss – JUST GET OUT When an extended period has taken place i.e. 35 days or 7 weeks. You might want to just get out of the boring trade. You are either : • Chowing (eating away at) unnecessary daily costs holding a non performing trade. • A trade setup seems null and void as a new contrary setup as formed. • Or it’s just a plain old opportunity cost where you can put your money in better places. it may be necessary to exit the trade in order to avoid incurring too much in daily fees or missing out on other better opportunities. Action #4: Exit due to unforeseen circumstances- SERIOUSLY JUST GET OUT! For example when a black swan event occurs: A black swan event is a term used to describe a market collapse (10X the standard deviationof its normal price move) that is unexpected and has a significant impact on the market. In the event of a black swan event, it is essential to exit your trade in order to protect your capital and avoid taking a bigger loss than you expected.
TVC:SA40Education
by Timonrosso
What just happened to Richemont? 911%!REMINDER: Compagnie Financière Richemont (CFR) is a Swiss luxury goods company that has a subsidiary in South Africa. The subsidiary's depositary receipts and warrant receipts were previously listed and traded on the Johannesburg Stock Exchange (JSE). However, starting from April 19th, 2023, these financial instruments will be suspended from trading on the JSE and relevant A shares and relevant A warrants will instead be listed on the exchange. Hold your horses! The 912% increase in Compagnie Financière Richemont (CFR) share price likely resulted from the conversion of financial instruments related to the company's South African subsidiary. The company announced a deadline for the conversion of depositary receipts and warrant receipts, which resulted in the suspension of trading on the Johannesburg stock exchange and the listing of relevant shares and warrants on the exchange. This process likely had a positive impact on the company's share price and resulted in the significant increase.
JSE:CFREducation
by Timonrosso
1
EXPLAINED: A Bullish Fair Value Gap (FVG) - Smart Money ConceptsA Bullish Fair Value Gap is a 3 candle structure with an up impulse candle (2nd) that indicates and creates an imbalance or an inefficiency in the market. WHAT DO THE IMBALANCES TELL US? These imbalances tell us that the buying and selling is not equal. Now the market needs to rebalance (move at least to 50% of the fair value gap to fill) to make up for the imbalance and rebalance. For this to happen we need to see orders filled in the prices of the candle with the FVG. HOW A BULLISH FAIR VALUE GAP IS CONSTRUCTED: 1st Candle Draw a horizontal line from the top of the wick. 3rd Candle Draw a horizontal line from the bottom of the wick 2nd Candle Draw a BOX between the above and below and pull it over to see the FVG range. BETWEEN CANDLE 1 and CANDLE 3: Do NOT show common prices. They do NOT touch where the upper & the lower wicks do NOT overlap. With a Bullish FVG we can expect the market price to move DOWN. HOW MUCH? I believe a Bullish FVG needs to close at least 50%. So you can drag a Gann Box or a Fib retracement (take out all the other levels except 50%). Wait for the price to close and fill the prices and boom - Your Bullish Fair Value Gap has been filled. Let me know if you have any other SMC (Smart Money Concepts) Questions.
JSE:BVTEducation
by Timonrosso
Why Trading Should be like Watching Paint DryIt has to be said. If you want excitement, take $10,000 and go to Las Vegas for a day. Trading should not bring about the same level of excitement. I’m not saying, the entire process should be boring. In life and with the careers you choose, you have to love what you do. You have to keep the reward and vison in your mind, to drive you each morning. And you need to have the discipline and integration to follow your plan each day. So, should trading be boring? Um, yes and no. Let’s start with where trading should be exciting and fun. When Trading is a Thrill This is where most people stay. They don’t take the necessary steps to open a trading account, fund it and grow their portfolios. Instead, they stay in a feel safe and in control of their non-growing finances. I still have members who’ve followed me for 10 years, and haven’t taken ONE single trade. You need to jump out and take action. The thrill of trading should be before the execution takes place. This includes: Analysing the markets Optimising your strategies Searching for high probability trades Reading up on new trading developments and fundamentals Monitoring your results and working on your statistics Finding new markets and instruments to trade and add to your strategy This part is an absolute blast. And requires no risk and no waiting. But then, when you do find your trade line up and put in your trading levels and click buy / sell… Then… Trading needs to be like watching paint dry or grass grow Once you have taken your trade, set your entry, stop loss and take profit levels – you’ve done your job. You now need to let it go and let the market to take over. Don’t interfere… Don’t get excited when it’s in the money. Don’t fear when it’s going against you. Don’t watch every tick. It will drive you insane. Just leave it alone. It should be boring to even see what your trade is doing, because it’s out of your control. If it hits your stop loss – cool… You’ve got your risk management in play. If it hits your take profit – cool… You’ve got your reward management in play. If you have rules to adjust your stop loss, when the market is moving in your favour – cool… You’ve got your reward management in play. Rather focus on the next trade idea or the other bullets I mentioned in the beginning. Keep control with what you can control and leave what you can’t control to the “stars”.
Editors' picks
JSE:J200Education
by Timonrosso
6
How to be a LASER Trader!Rinse and repeat. That’s it… It’s one simple little acronym you’ll never forget… Ready? LASER your TRADES 1: Look The first thing you’ll need to do, is to go through your watchlist very quickly. A watch list is a list of markets you’ll LOOK through when finding trades. These markets can range from anything including shares, indices, commodities, currencies and crypto-currencies. When you have your watch list, you’ll go through the list and get a feel for how the markets have moved for the day. Example: Before I trade anything, I LOOK at the JSE All Share 40 stocks that are in my watch list. I then run through them briefly to see how the markets are performing. 2: Analyse The second round of going through your watch list, is where you’ll look for specific trading setups. Whether you trade using price action, patterns, indicators, volume etc… This is where you’ll ANALYSE the charts individually. Also with this step you’ll write down potential trades that are lining up. 3: Setup The third step is to go back to the markets that you’ve written down – which you’re looking to trade. You’ll then do your simple trading calculations and place your chart SETUPS so you can see where your trading levels are. EXAMPLE: If I see a trade that’s lined up, I’ll draw horizontal levels showing where my entry, Stop loss (risk) and take profit (reward) levels are… I like to use: Blue for entry Red for stop loss Green for take profit 4: Execute You’re ready to JUST TAKE THE TRADE! And then you’ll place your entry, stop loss and take profit levels. You’ll choose how many CFDs you’ll need to buy according to your money management rules. And then hit trade! 5: Record As soon as you’ve successfully taken the trade, head over to your journal (excel document) and record your trade transaction. That’s how to be a LASER Trader… And on a daily or weekly basis, you’ll repeat those steps…
JSE:J200Education
by Timonrosso
BEFORE and AFTER Each Trading Day you shouldA game-plan is a must, to see a potential goal, dream or vision. You got to have a proper POA (Plan Of Action) and execute. Whether it’s selling property, building a business, playing a sport or growing your wealth. You need a BEFORE plan and AFTER plan. Same with trading. You need to have a trading plan BEFORE and AFTER each trading day. BEFORE Each Trading Day: 1. Know the main market’s trend direction The first thing I want to know is, what the main market’s trend direction is. Plot the resistance (ceiling) and support (floor) levels, so you know whether they are in an up, down or sideways trend. If up – look for longs (buys) If down – look for shorts (sells) If sideways – look for potential breakout levels. 2. Scan through your watchlist Once you know the main market’s trend direction, have a quick scan through your watch list (markets you trade). Orientate yourself with where the markets are heading and whether trades are lining up. This way, you won’t go into the trading day blindly. 3. Write down high probability trade setups You know the main market’s trend direction, and have an idea of where the markets are heading – now you can plot your trade ideas. Go through the watch list again, and write down any potential trade setups (with your written entry, stop loss, take profit and reasons for entering the trade). 4. Choose your TRADES for the day Just because you have written down trade setups, doesn’t mean you need to take every one of them. Instead, look at which ones which will yield a better probability at working out and has a better chance at winning. All done before the trading day has even begun… AFTER Each Trading Day 1. Journal every trade When the markets’ have closed, and you have time to breathe, go to your trading journal and jot down the trade/s you took for the day. Each entry should have the (Market name, date, type, margin, entry, stop loss, take profit and reason for entry). 2. Outline lessons of the day If you’re just starting out or you’ve been in the markets for less than five years, I suggest this extremely useful step. Write down any market lessons you learn for the day. Here are some lessons you can write down: How the market reacted to a news event How you felt taking a trade or holding onto current trades Mistakes of the day you learnt or made Trading lessons that you want to incorporate into your trading… Write these lessons down, as they will forever be part of your experiences to become a successful trader. 3. Re-check & confirm your open trades This is extremely NB*. Make sure your entry, stop loss and take profit levels are still in the trading platform with all open trades, at the end of the day… Sometimes, brokers have certain glitches in their systems, that can remove your trading levels (automatically). It happens on a continuous basis and it’s our job, to make sure everything is running smoothly and our levels are still in place. 4. Quick scan your watch list & look for potential trades for tomorrow Last action you can take for the day, is preparing for tomorrow. Go through your watch list, look for the next batch of trade setups and write them down. This is so you know what to do for the next day… Trade well, live free. Timon
JSE:J200Education
by Timonrosso
Compounding Trading EXPLAINED with an exampleListen up. If you want to grow your portfolio exponentially, you’ll need to understand this concept. It’s called ‘compounding’. In short, Compounding is a strategy where you allocate your money with your original and current portfolio in order to reinvest it and grow it into an even larger portfolio. Let’s cut to the chase with an example. Meet Jack and Jill. Jack and Jill both deposit R100,000 into their trading accounts and they decide to follow each other’s trades exactly. At the end of the first year, their portfolio performances were identical. As they enter their second trading year, Jack decides to do one thing different to Jill. He decides to withdraw all his profits so that he can enjoy a lavish holiday. Jill on the other hand, decides to reinvest her profits. This way, in the next year, she’ll be able to grow her account even more. They trade this way for the next 10 years. Let’s compare how their portfolios differ. Simple trading versus Compounding trading in action It is clear that Jill is a lot wealthier than Jack where, she has been able to grow her account from R100,000 up to R2,164,657 in just 10 years. Jack on the other hand is right back to where he started, but with 10 memorable holidays. Which position would you like to be in? Every year, Jack takes on the simple interest trading approach. This is where he continues to earn returns on his original portfolio value only. At the end of each year, he takes out the R36,000 in profits, that he earned, and uses the money to go on a holiday. Even after 10 years, Jack continues to bank a fixed R36,000 each year leaving his trading portfolio back to his starting account of just R100,000. Jill on the other hand, takes the compounding interest trading approach. This is where she continues to re-invest her earnings into her portfolio each year, in order to grow it even larger than the previous year. After 10 years of trading, Jill’s R2 million trading account continues to snowball and compound each year. The science of compounding is an extremely effective wealth building strategy. Do you have a trading or investing question, let me know and I'll be happy to help where I can. Trade well, live free. Timon Financial trader since 2003
JSE:J200Education
by Timonrosso