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FUNDAMENTALS-Share Consolidation (Reverse Stock Split) RichemontOn 19 April 2023, Richemont went through a Share Consolidation (Reverse Stock Split). That's why we saw the price move from R300 up to R3,027 (909%). But before you get excited with whether you could have profited big time we need to remember what a Reverse Stock Split is... What is a Reverse Split (Share consolidation)? • The opposite of a stock split where • When the company makes a corporate action to • Reduce the number of its outstanding shares to its shareholders • Which simultaneously increases the share price • The shareholder will still have the same value proportional. What happens to the par value of the share price? A decrease in the number of shares means that the share price will go up! Why would a company do a reverse spit? The company might be under the impression that shareholders think the share price is too low. So, they’ll cut the number of shares and increase the shareholder which will give the impression of the share price higher and more valuable. EXAMPLE: With Richemont – 19 April 2023 SPECIFICS: Share consolidation: Reverse Stock Split 10:1. BEFORE: The share price was R300.00 AFTER: The share price is R3,027 No. SHARES OWNED: 100 AFTER CONSOLIDATION: For every 10 shares you owned before, you now own 1 share. So your 100 shares would be consolidated into 10 shares. OVERALL VALUE: BEFORE: 100 shares X R300 = R30,000 AFTER: 10 shares X R3,027 = R30,270 In this case, the value of the investment has indeed increased after the share consolidation but only marginally.
JSE:CFREducation
by Timonrosso
EXPLAINED: A Bearish Fair Value Gap (FVG) - Smart Money ConceptsA Bearish Fair Value Gap is a 3 candle structure with a DOWN 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 BEARISH FAIR VALUE GAP IS CONSTRUCTED: 1st Candle Draw a horizontal line from the bottom of the wick. 3rd Candle Draw a horizontal line from the top of the wick 2nd Candle Draw a BOX between the bottom and the top 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 lower & the upper wicks do NOT overlap. With a Bearish FVG we can expect the market price to move UP. HOW MUCH? I believe a Bearish 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 Bearish Fair Value Gap has been filled. SO WHAT? When you see a Bearish Fair Value Gap, you can expect the price to move up. So you can place your stop loss below the downtrend. You can place your entry where it shows upside is imminent to close the gap. You can place your take profit above the 50% of the formation, as you expect the price to close. But also, we use other confirmation signals with the Bearish Fair Value Gap. Let me know if you have any other SMC (Smart Money Concepts) Questions.
TVC:SA40Education
by Timonrosso
Why you should NOT view LOSSES as LOSSESI want you to stop thinking of trading losses as losses. It’s having an effect on you emotionally and is stopping your full potential of growth. Financial trading, like any other business or aspect of life, involves costs. That’s just life. In business, there are costs associated with equipment, rent, salaries, taxes, and legal fees. In our personal lives, there are costs associated with household expenses like rent, groceries, insurance, medical fees, taxes, and repairs. Similarly, in trading, there are costs associated with normal losses, daily interest charges, and drawdowns. It’s crucial to remember that losses are an inevitable part of trading and should be viewed as a necessary cost of doing business. Just as a business owner must invest money in equipment, rent, and salaries to run their business, traders must also be prepared to invest money in losses in order to be successful in the long run. If you try to avoid taking a trade, because you are worried about the loses, you will miss out on the greater rewards for when profitable trading opportunities come your way. When you see trading losses as costs… You will be able to take a more objective and strategic approach to the trading decisions that you make going forward. This can help you to minimize losses and maximize profits over time. So there are few things you need to do to mange your costs (losses) emotionally and physically. Action #1: Set realistic stop losses Place your stop loss with every trade and never risk more than 2% of your portfolio per trade. Action #2: Understand the concept of Risk to Reward better. The risk-reward ratio is the ratio of the potential profit of a trade to the potential loss. By understanding the risk-reward ratio, traders can make more informed trading decisions and can better manage their risk. Action #3: Don’t feel your losses If you feel 2% is too much to risk, risk less! Get to the point with your life where a loss isn’t that much as with where the reward isn’t worth celebrating. Overtime, you’ll slowly grow your account and your mind too.
TVC:SA40Education
by Timonrosso
Why we MAKE Excuses as tradersIt is an innate habit to make excuses in life. We make excuses because it is the easy way out. And let me tell you. With trading, there is no EASY way. As I like to say trading is the easiest hard way to make money. It starts with NOT making stupid excuses such as: Excuse #1: “I don’t know enough about the markets – so I won’t trade yet” People don’t trade because of one thing. Ignorance. People may make this excuse because they have not put in the time and effort to research and understand the stock or market they are trading in. They make this excuse that they believe the market is a difficult, advanced and complex world to financially grow. If you passed school, or university – you can definitely learn how trading charts work and how the market operates. Besides, it’s just demand, supply and volume and the rest is micro and macro economics (which you don’t even need). I know some 20 year olds who dropped out of school to learn to trade the markets and they are doing fine (for now). Excuse #2: “I’m scared of losing money – so I’m not going to trade”. Sure you’re worried about financial loss and that you can blow your account. Besides 98% of traders fail, because of this. But you do know you can start with a demo (paper) account in the mean time. Once you see consistent paper returns and that you have a solid and adept strategy, you can start depositing little by little. Money is no excuse when you can learn to trade – for free! Excuse #3: “I won’t be able to stick to the strategy” Most people make this excuse because either: They do not have a proven and profitable strategy. They do have a strategy but do not have the confidence to trade it. They do NOT have the faith to actually take the discipline to take a trade when the system lines up according to the strat. They don’t think they’ll be able to focus on trading because, they are distracted by other things in their lives. This is a mind game, so work on yourself before you trade for yourself. Excuse #4: “I can’t stand the fact of losing” Back to ego, pride and integrity. Let me try and help you with this one. When you buy yourself clothes, cars or other material stuff. You do know you’re spending your hard earned money – poof – gone. With business, you have monthly costs fixed and variable. With life you have expenses and unexpected doctor appointments. All of these come with an opportunity cost. I lose this to get that. Trading shouldn’t be any different. You lose a bit of capital off one trade, to bank a higher return the next time. Rinse and repeat and your losses will start to feel like costs of the business. Your winners will feel like the money to pay for some of the costs next month. Cut your ego out because every week and month you spend and waste money – it’s called maturity. Excuse #5: “I’m waiting for better conditions” When the market Is not that favourable, how do you know when it will turn back? You just need one day, one week or one month – and your portfolio could head to all time highs. It’s not our jobs to trade when markets are favourable or not. It’s our job to follow the proven strategy because we know it will yield a consistent return over time. Also… When you do eventually get into trading – then what? Are you going to stop trading again because the market isn’t feeling right for your strategy? I should hope not. You’ll be entering into a discretion and subjective form of trading which eventually ends up to be a losing strategy. I hope this helps and makes you realise that excuses are nothing more than going back into a comfort zone of no change and progress… When later in life you’ll realise. Your comfort zone, was uncomfortable to begin with.
TVC:SA40Education
by Timonrosso
MC DONALD'S TRADING LESSONSStory time… One of the greatest success stories of all time, is with the company which is based on the glorious golden arches we still see today. Mc Donalds… It all started in 1940 where, two brothers, Maurice and Richard “Dick” Mc Donald’s made a small fortune selling hamburgers in San Bernardino, California… They took a product and an idea and turned it into a fast, convenient and consistently profitable business. Once they mastered their strategy and system then they introduced Ray Croc (a shrewd American businessman) into an agreement to build more Mc Donalds… However, he barely made enough profits to sustain, find more franchisees and even pay off his expenses… That’s when Harry Sonneborn came about where he made Ray Croc realise, he was in the land business rather than the restaurant business… Ray Kroc explained… “Pretty simple, really. Franchisee finds a piece of land he likes, gets a lease, usually 20 years, takes out a construction loan, throws up a building, and off he goes.” Sonneborne then said: “You don’t seem to realize what business you’re in. You’re not in the burger business. You’re in the real estate business.” This conversation lead to the global expansion of McDonald’s, turning it into the most successful fast food corporation in the world. In this article, I’m not going to talk about Ray Kroc, but instead how the brother’s starting concept applies to trading. Here are three lessons I learnt from Mc Donald’s Success #1: Less is more… The brothers were geniuses from the start… When something didn’t work, they threw it out… When something showed to work, they harnessed it, optimised it and improved it… They did this with data. The brothers took sales data to compare which products were making more money. They found that 80% of their sales in the last 3 years came from simple burgers. Each burger was made with precise ingredients. Any deviation and this caused sales to drop. The rest of the 20% were drinks and barbeque. So the brothers made their life easy and got rid of the barbeque pit completely. They also cut their menu down from 25 items to just 11 items. It mainly had Burgers Fries Milkshakes and Soft drinks They said let’s do less of what’s not helping sales and focus on what is making the most revenue. Once they got rid of the barbeque pit the brothers later on systematised the burger making process. So how does this relate to trading… Less is more is one of my most powerful quotes when it comes to trading… You need to cut out a LOT of data to maximise your returns… Find one or two systems that suit you. Minimise the number of markets, time frames and charts to look at. Cut out unnecessary indicators that conflict with the systems signals and frequency. Choose a certain time that works best for your system. Stick to 1 or two financial instruments to trade. Only have 1 or 2 or max 3 trading accounts with reason. It will take time and effort on your side to cut out what needs to be cut, but you won’t regret it in the long run… As Mc Donald’s did… Take a product improve it drastically then sell it to the masses. #2: Find a system to repeat over and over With Mc Donald’s did you know… They took a tennis court and drew out the compartments of making a burger. They then orchestrated it with their employees until the flow and speed was at the most optimised level. Once they found a winning system, reduced the time to make a burger and optimise the process – they were able to even drop the price to appeal more demand… At the time, they could drop the burger to 15 cents… With trading, you know this… You’ll need to find, adopt, follow and repeat your turn-key system. It doesn’t matter whether it takes you 2 months, 2 years or even 7 years to get right. Once you have it, you’ll be able to generate consistent results year in and year out. Just like the cycle of burgers, you’ll have your very own consistent cycle of success through trading… Also, with your one system you’ll be able to optimise it and improve it when conditions change… This brings us to the third lesson… #3: “We love to see you smile” This was one of Mc Donald’s campaign they used from 2000-2003, which has stuck… Not only does Mc Donald’s keep to their winning formula, systems, products and manner – but they also adapt to change… They continue to offer new items on the menu’s as time’s change… From Happy Meals, Toys, Lollipops, Café’s, Ice creams, food cultural adaptions to even Vegan food… They think of everything to adapt to change… BUT! They don’t stop offering their winning products that bring in revenue. With trading you need to also evolve as a trader and adapt to change. Sure, your system will remain consistent. Sure, your risk management won’t change… But there are certain elements that require change such as… New markets: You might want to incorporate your system with new markets i.e. AI, Electric Vehicles, Metaverse, Cannabis, Energy alternatives, Crypto, NFTs. AI (with ChatGPT, DALLEE, BING) and so on… New instruments: Also, we might need to evolve from the current financial instruments we’re trading… Once day, CFDs and Spread Betting might be a thing of the past. I personally have evolved from shares, warrants, futures to ETFs. You never know what will be next… New automations: We might soon have robots and AI to use out system to find trades and execute them. You get the point… If you want to be successful with trading you have to understand the power of systems to repeat… This way the system will do the job for you… Next time you’re at Mc Donald’s, you’ll see what I mean.
NYSE:MCDEducation
by Timonrosso
EXPLAINED: Runaway GapLESSON OF THE DAY Runaway Gap A Runaway Gap is a continuation move where the price gaps in the middle of a trend e..g Up or Down. The gap is a void (where no prices overlap between two candles) And then the price follows the previous trend. I like to think of a Runaway Gap as a horse that goes from trotting to galloping. The trend then starts to accelerate and continue in the direction. Specifics for this example: · Previous price moves in a downtrend. · Price then gaps. · Price then follows the continuous downtrend. Please react so I know to provide more daily lessons...
JSE:PIKEducation
by Timonrosso
2
T.G.I.M - Thank God It's Monday Traders! As a trader, Monday is probably the most exciting day of the week to trade... But before I tell you why let me remind you.... We live in a world where… Most people hate Mondays… Not only that… They wait 5 days to finally enjoy and live two measly days. They live for the weekend ONLY. That’s sad… But let’s try to conceptualise how lucky you actually are… Every action that your great, great, great, X 1,000 grandparents did, is the very reason you get to enjoy consciousness and existence in this blip of time. If just one of them got up to get a glass of water instead, you wouldn’t be around… Then let’s talk about that one day… Out of the millions of swimmers in one occasion on one day, you were the winner. YOU WON THE GIFT OF LIFE. That is a reason alone to celebrate every passing minute of your life. You won the cosmic lottery… Then, as life progresses you learn what you like, how to live and who to live with. You adapt to your idiosyncrasies, tastes, habits and interests… That’s what makes life a little easier to get through… And… Technology continues to outperform each year. We now have ways to communicate online, build our own empires and make an income through different career choices. Whether you enjoy investing, horse racing, online gambling or my favourite (financial markets trading), you have a multitude of options to choose and benefit from… And because you’re reading this today, tells me one thing… You have that passion, determination and discipline to try out the trading thing… Am I right? So what does this have to do with T.G.I.M? You need to stop saying “I hate Mondays” and start saying… “Thank God It’s Monday” Each Monday you start a new journey of life experiences to take you on the path of success, financial freedom and happiness… Mondays and the rest of the week days, are the days when you have the opportunity to grow your financial position. NEW OPPORTUNITIES TO: Learn about new markets with trading. Refine your trading risk management skills Take on new high probability trades to build your portfolio Educate yourself on new financial markets terminology, concepts, strategies and systems Go one step closer to achieving your financial goals Each day you learn, adapt and grow your portfolio, is another day closer to achieving your freedom. Also, you can ONLY get better. Find a reason to love Mondays. Next week wake up and say with confidence. T.G.I.M. Write it down somewhere BIG and read it out loud each week before you take a trade.
JSE:J200Education
by Timonrosso
1
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
ROADMAP from COMFORT to GROWTHMost people take the easy road of being in a Comfort Zone. For this reason, they keep getting the same results and remain in their ‘uncomfortable’ position in life. Think about it… Those that don’t understand new things, never adapt to something that could change their life for the better. Those that keep earning the same old salary, never grow their retirement kitty to the level they wish. Those that never throw things away, end up cluttering their life with the old. Trading is no different. It requires you to step out of your comfort zone in the beginning, to create something that can change your life. Besides, great things never came from being in a comfort zone. Let’s talk about the stages required to become a Growth Trader. ZONE 1: COMFORT 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 people who’ve followed me for 15 years, and haven’t taken ONE single trade. You need to jump out and take action. ZONE 2: FEAR When you have finally decided to take a leap of trading faith, a whole bunch of new fear with encompass your mind. Will I lose money? Will trading work for me? Will I be able to follow a strategy each day? Will I be on time to trade the markets? What if the market environment is not conducive when I start? Harness this fear, because it means one thing… CHANGE IS COMING… ZONE 3: LEARNING Every loss, gain, rule is a lesson and adaption to entering a NEW zone. Every challenge you face, is one less challenge you’ll need to deal with in the future. Every difficulty you experience is a skill that you’ll acquire for trading. The more you learn about the technical and fundamentals of the financial markets, the higher the level of experience and wisdom you’ll gain as a trader. The learning phase is imperative to achieving success in any field… ZONE 4: GROWTH The accumulated lessons, experience, wisdom, actions and tribulations of repetitive actions – are the foundations to entering into a new comfort zone of GROWTH. The difference is… You would have taken the necessary steps to succeed and accomplish your trading goals. It will eventually reach the point, where the above zones will help you enter into a conditional and automatic process into your life where trading is nothing more than a continuous habit. Once the fear, thrill and uncertainty are removed – only then you’ll realise that the initial comfort zone of inactivity was the uncomfortable phase that took you nowhere… Life begins at the end of your comfort zone. Read that last sentence again.
JSE:J200Education
by Timonrosso
5 Choices you Make as a Trader - THIS Or THATFrom the second you turn on your computer, to the time you press buttons commit your funds into your trades and close your computer. You are making your own choices. Do you choose this? Do you follow that? Do you go against this? Do you type that? So technically, your financial future success lies all in your fingers. In this TradingView piece, you need to ask and answer what choices are you prepared to make – to turn your life around as a trader. CHOICE #1: Sleep until noon – Wake up early If you’re a position trader (trade once per week or so) like me, then you’ll know profitable opportunities knock VERY slowly. You can wake up late, open your trading platform and see a missed trading opportunity just like that. Or you can set your alarm, wake up to check the markets to confirm if there is a trade lined up or not. DON’T MISS YOUR TRADING OPPORTUNITIES! CHOICE #2: Only trade your starting portfolio size – Deposit money each month Let me be frank. R5,000 isn’t going to turn you into a millionaire. R20,000 isn’t going to turn you into a millionaire. I’m sorry but it has to be said. You need to find a way to keep depositing a bit of money into your trading account each month. Whether it’s 5% or 10% of savings, the more you deposit each month – the faster your portfolio will grow as you have more to make money from money. CHOICE #3: Go against your strategy – Follow your strategy I know it’s tempting to want to go against your strategy. You want to move your take profit, stop loss, you want to buy more. You want to take some money off the table. The problem is – make this choice and you’ll set a dangerous precedent. It will be the start of going against your strategy the next time and eventually, you’ll only be trading with discretionary (self) which I need to remind you is… A COMPLETE LOSING STRATEGY! The stock market doesn’t work on emotions. It doesn’t think and it doesn’t feel. So why should you? Keep to your proven and profitable trading strategy, and the profits will yield as your system has shown you time and time again. CHOICE #4: Learn and then drop the E – Try to earn and drop the $ Trading is a forever learning business. You need to learn how the markets work. You need to learn how the trading environments operate and when they are favourable or unfavourable to your strategy. You need to learn WHICH are the best instruments to trade. Which are the most reliable and secured brokers. Which trading platforms are up to date with technology. What NEW markets there are to utilise and profit from. The list continues. Please follow your own learning time line as a trader and then you’ll find it will all be worth it. CHOICE #5: LATER – NOW! I still get people who send me messages like… “Timon I’ve been following you for 15 years and haven’t started trading yet, what do you suggest?” Simple! Get out of your comfort zone, stop being lazy and take the necessary steps to start your trading journey. 15 years! You could have had all the experience you needed by now. You could have gained important lessons to build your portfolio. It’s all on you. The best time to start is NOW! There is no past (as it already happened). There is no present (as it automatically becomes the past). There is no future (as it’s still to come). So all you have is an infinitesimal photo shot of time called NOW! Got it? Make your choices and materialize your trading into the reality you’ve desired.
JSE:J200Education
by Timonrosso
Tips to be a Healthy Trader - Wisdom Yields HealthI came up with a corny slogan in 2013. “Wisdom Yields Wealth”. Well, today I came up with another corny slogan but relevant to today and this year. “Wisdom Yields Health”. As you know, health is the greatest wealth of all when it comes to your: Physical appearance Mental cognitive thoughts Important decision making Longevity In 2023, health is everything as the world continues to linger in a very stressed phase. (Especially, what’s going on in South Africa with Eishkom, water issues and tax month having kicked off). If you want to be a good trader, you need to focus on not only your money and mind but also your health. Health will help you optimise your trading performance. So, this is a short but important article to remind you to try be a little bit healthier. HEALTH TIP #1: Sleep Even Hours It’s an old wife’s tale that you need 7 hours of sleep. It’s proven that the sleep cycle works on EVEN hours, NOT odd. So if you sleep 7 hours, you’ll deprive yourself of the last 1 hour you need to complete your cycle. When you decide to go to sleep, set an alarm for 6 hours or 8 hours to get the right amount you need. Also, if you wake up before the alarm and you feel fresh – stay awake, don’t go back to bed. Listen to your body more and it will reward you better. You need to be clear headed when you wake up in order to take on the markets with a fresh mindset. HEALTH TIP #2: Drink COLD Water Listen… You’re made up of over 73% water. So you might as well fuel yourself up and stay hydrated. First glass in the morning and another glass every two hours. Or just have a 2 litre bottle next to you. When it’s finished, refill it. Ok you’ve heard that a million times. Here’s where it gets interesting. Did you know that if you drink ice cold water, it will help you to keep awake, will fire your neurons and will boost your thinking capabilities. That’s the big tip with drinking water as a trader. Ice, Ice baby! HEALTH TIP #3: Eat less ‘high energy to consume’ foods in the day You know what puts us off work, trading and life? Having a bloated and painful stomach, because of the stuff we ate. I’m talking breads, pastas, sweets, crisps and fried food. When you eat this stuff, you won’t feel in the mood to trade, think or work. It’s also probably affecting in the bedroom too! Eat these in moderation and NOT when you trade or a few hours before you trade. Anyway, I’m not giving advice, just some tips that’s helped me to trade better over the years. HEALTH TIP #4: Keep Walking Gyms might be inaccessible right now. And exercise is just too difficult to keep motivated to follow. So instead, take your trade for the day and go for a walk around your complex, park or anywhere just to burn those calories and keep you fit and healthy. I’m in Greece right now and nothing beats a good walk around the Ancient historical sites in Monastiraki such as the Agora, Acropolis and even the amphitheatres. Or a walk around the Marina – Flisvos harbour to take in the cool breeze and breathtaking view of the sea. Find your piece of heaven (where ever it is) to walk around and burn those calories at least twice or three times a week. I can go on about health tips, but four is more than enough to start with. Please look after yourself, your body and your mind.
JSE:J200Education
by Timonrosso
1
How to Earn Self-Respect as a TraderIntegrity… It’s what gives you certainty, confidence and trust for yourself. It’s what tells you, you can do it. It’s what makes you leap forward in life. And it’s what earns you self respect. With trading, you need to achieve self respect, to help feel more assertive with the trading decisions you make. In this short letter, I’ll give you some actions to help you earn the self respect as a trader. Action #1: Do the hard things Anything that requires risking your hard earned money is tough. I get it. You didn’t make money just to lose it right? Well, you need to understand that in life there are no HIGH rewards without taking some element of risk. So, force yourself to sit down, deposit money into your account, wait for the proven trading setup to line up and TAKE THE TRADE. Next hard thing to do is, wait for the trade to hit your stop loss or take profit and don’t interfere with the process. And the last hard thing, is having tunnel vision and not listening to anyone about your trading decisions. Don’t listen to the news, your friends, strangers or even your family. You have your plan and system, follow it and you’ll feel in control and you’ll gain more self respect. Action #2: Don’t think it – DO IT Coming up with ideas are easy. Writing down goals and gluing your vision board with mansions and cars – are easy. What’s hard is actually taking the action. There is never the right time because it’s always the right time. So buckle up and take action with what you need to do to achieve trading success. Action #3: Take control and learn from your losses Losses are parts of the ying and yang of trading. You need a bit of good and a bit of bad to balance and build. Remember, the markets move in a zig – zag shape and so will your trading account. So when you realise this you’ll be able to acknowledge, own, take control and learn from your trading losses. But most importantly. The losses must only come from your proven plan. Don’t move a stop loss to make you risk more. Don’t remove a stop loss because you believe the market will turn. Take small losses so that the big winners make up and drive your portfolio up. Action #4: Don’t quit when it gets hard You only fail when you quit something. Read that again. When you quit, you lose. When you quit, you give up. When you quit due to premature excuses you lose self respect. Too many traders quit because they think the market is out to get them. This is either because they are taking a few losses or because they are trying to OUTBEAT the market through emotions. Listen if you have a few rules to manage your money like: ~ Risk 2% per trade. ~ Never allow your portfolio to be in -20% drawdown. ~ Never hold more than 7 to 8 trades at a time. You’ll be able to control your risk and boost your portfolio. Let’s sum these 4 actions up to trading self respect. Action #1: Do the hard things Action #2: Don’t think it – DO IT Action #3: Take control and learn from your losses Action #4: Don’t quit when it gets hard
Editors' picks
JSE:J200Education
by Timonrosso
12
How to Get Your Trading **** Done!So you have a trading account opened. The money is in, your watchlist and charts are set up. But you have left your trading half-hearted with doubt, concern and little energy. This is what is slowing your performance. This is what is stopping you from growing your account. And this is why you’re living with second thoughts not seeing progress. May these 5 steps be the wake-up call to get your trading done! Step #1: Get a cheat-sheet Every trading plan you have, needs a cheat sheet. Your cheat sheet will remind you of the criteria you need to enter your trade, put your stop loss and take profit levels. You can also add what percentage you would like to risk and the Risk reward you’ll follow. Once you fill in the blanks and info – Print it, laminate it and stick it up somewhere. Step #2: Prepare your watch list As you know there are countless of markets to choose from (stocks, indices, commodities, currencies and crypto-currencies). Make sure you have a solid short list of markets you’ll be looking at when you trade. Once a day or so, you can go through them and see what is lining up with your trading system. Step #3: Sit down and set up At the most suitable time, shut down all your distractions for the day. Phone, Netflix, family, pets etc… Sit down for a couple of minutes a day – going through your watch list and writing down the trades that are lining up for the next day. Step #4: Place your trade/s order Whether you’re placing a trade during the day or after the market closes, you need to take the trade. If all is aligned in syzygy, you have no excuse but to type in a couple of figures and click BUY or SELL. Easy… Step #5: Journal your trades Once all four steps have been accomplished, you’ll then write down the trades you’ve taken in a trading journal. This way you can keep track of your progress and have an archive of your trading performance with the right stats. Don’t waste any more time waiting for the right time and feel. There is never the right time. Hope this wake-up article will help you really kick off your trading success from here on end.
JSE:J200Education
by Timonrosso
Don't be a still trader!“Timon, I’ve been following your trading tips for the last 12 years and I STILL haven’t taken my first trade." But I will soon trade... Soon? Like tomorrow? Next week or in the next 12 years? Procrastination is the thief of time. I hate clichés but I love that saying. #1: STILL not ready for losses I think most people don’t want to take losses. They are seen as small failures or small fractures to a person’s pride and bank account. Whether you’re running a business, a household or a trading portfolio – there are going to be oopsies. So how do we deal with the idea of taking losses? Well, don’t think of them as losses. Think about them as costs… When you run a business you have to pay costs – equipment, stock, admin, salaries, legalities etc… When you run a household you have to pay costs – electricity, water, take the trash out, taxes and repairs. When you run your trading account you have to pay costs – Losing trades and drawdowns… You pay costs with everything in life, and so it shouldn’t be any different with trading… Instead of calling them losses – call them ‘costs of trading’. Helpful? #2: STILL no right system This one is common. You don’t know what the right system is for you. You’ve tried a couple of moving averages, indicators, price action even volume. Nothing seems to work for you yet… I don’t have a correct answer for you, but I can tell you with how I found my system. I wanted something that didn’t require too much thinking, little indicators, worked on all time frames, was easy to back and forward test and is timeless. And it took me years until I finally found a system that you see here in TradingView. So ask yourself exactly what you want in a system and drill down each detail that matches your current lifestyle and times… Just maybe, the answer will stand out for you better. #3: STILL Not making money Now this is ambiguous. If you end up positive for the year, you’re making money. If you’re not happy with how much money you’re up for the year, that’s different. It’s all relative. Step one is to make sure your portfolio is positive by the end of the year. Then it’s a numbers game as to what your portfolio should be to make more of an income. But first make sure you’re in the positive before you play with Mr Market. #4: STILL Making excuses The only thing I can add to this is the wonderful comfort zone of doing nothing. It’s safe, it’s consistent and we’re used to it. But if you are constantly thinking of wanting to trade and build your wealth on a regular basis – it tells me you’re ready but not ready to leave your comfort zone. You got to pull up your socks and just START. The hardest step to trading is taking your first step. I hope these tips will help you shake off the STILLness that’s lurking inside you, so you can achieve greatness.
JSE:J200Education
by Timonrosso
1
Don't let Captain Hindsight mess with your tradingCaptain Hindsight is bound to get in your head. Whether you’re just starting out or you’ve been trading for the last 10 years or so. He is going to question you with two simple words. And these two words, can really cause a negative impact on your trading portfolio. In this short article, I’m going to warn you about how he’s going to uppercut your mind and most likely cause havoc with your trading. This way, you’ll know what to watch out for. A dangerous two word question to interfere with your trading What if?” Here are some… “What if the market is in a bubble and I buy too high?” “What if I’m wrong about this trade?” “What if my trading strategy worked then, but won’t work now?” “What if the market is in a period where I’m just going to take losses?” Whenever the captain whispers these questions, you’re going to feel vulnerable and start second guessing your trading system, strategy and skills. Succumb to the Captain and he’ll be back stronger and more powerful than the last time. Here are THREE ways to beat Captain Hindsight before he returns ACTION #1: Extend your back-testing So you have a trading system that you believe works… Prove it. Go back and re-test different markets and jot down every time the system lined up. Record every trade, including the costs and the statistics and prepare yourself for what is to come. The more you back-test your system, the more markets and environments it would have weathered and endured. If it came out with all time highs on your portfolio, it’s a winner. Captain Hindsight – won’t have anything on you – with a decent track record… ACTION #2: Drop your risk The most common way for a trader to feel emotional, is when they have a lot to lose. The larger your trading position, the more desire to win and the more fear you’ll have to lose. This is why greed, fear and panic are the most ongoing reasons for traders to annihilate their portfolios. Trading is a get rich slowly but surely game. And when you accept the gains and losses, you won’t care what the Captain has to say. ACTION #3: Step away from the screen Not only will Captain Hindsight creep in before you take a trade. He’s bound to enter your mind while you’re in the trade. “What if you’re wrong about this one?” “What if you get out of your trade now while you’re in a profit?” “What if you take a small loss, because it looks like this trade is a loser?” The best action to take, when you’ve entered your trade with your trading levels (Entry, Stop loss and Take profit), is step away from your trading account. Distract yourself by getting a drink, water your garden, take a drive or do other work. The less you’re glued to the screen watching your trades, the less you’re going to feel worried about the small moves that happen in the day. Always remind yourself… “My trading strategy will REWARD me for following it. My trading strategy will PUNISH me for NOT following it.” These three actions will eventually help you beat Captain Hindsight for good, as it did for me over 20 years ago.
JSE:J200Education
by Timonrosso
What is Holding You Back Trader?So you want to trade, but just not taking action. You’re on the computer and so close to taking a trade or opening an account with a broker. The button is right there. And yet, it feels like there’s a wall between your finger and the button. I get it. It’s a big step to take when you know you’re entering into uncharted financial waters. You know risk is involved… You know time is needed. And you know education is crucial. And yet you’re still hesitant. In this article, we’ll pinpoint what is holding you back from creating your financial freedom as a trader. REASON #1: You’re talking more than doing This is a big one. Maybe you’ve been reading trading and investing articles for years now. And yet, you keep finding excuses to not take action. 1. “I’ll start next month” 2. “I’ll wait for the market to correct before I trade” 3. “I’m stressed with work and family” Listen… Life is going to continue with new problems, stresses and issues. And this will extend your delays and increase the number of excuses you’ll make with any new hobby. You just need to start doing, and the rest will take care of itself. And you’ll find you’ll feel more accomplished and proud of the fact, you took action. REASON #2: You’re concerned of the short term Every trader I know wants their first trade and month to be profitable. I was the same. In 2003, I bought a bunch of Anglo Gold shares. I felt so much panic because I wanted it to be a winner. I didn’t think of the long term effects. Let me tell you, I don’t even remember my first winner. I’ve taken thousands of trades and I’ll tell you, the first trade is over looked and felt. When you have a proven trading strategy, you lose interest in what a few trades will do for your portfolio. You keep your eye on the long term rewards. REASON #3: You are scared of losing This is one humble game, where the market takes a little and gives back to you and then some. It’s all down to one simple method – Risk and reward. You’re in a calculations game now, where you need to lose in order to win. Embrace the losses and own them as you would with any business costs or overheads. REASON 4#: You’re waiting for the right time What does that mean? Are you waiting for enough money? You never start with a lot of money as a trader. You test, you learn and you gain experience. I guarantee you blow more money on a holiday, on petrol and at restaurants than the amount you’ll lose as a start up and humble trader. Are you waiting for the right time? There are thousands of markets that are either in uptrend, downtrends or sideways trends everyday. There is never the right time to get into trading. Why? Because it’s always the right time. REASON 5#: You’re too busy to start I’m sure this article has helped open your eyes to a new spectrum of reasons why you’re holding back. Stop talking, start doing. You do have enough money to start trading. You have more than enough time You need to lose, to win. Nobody is ever too busy to not pursue their dreams and create their freedom. Got it? So stop holding back and listening to some imaginary voice inside your head
JSE:J200Education
by Timonrosso
Risk Less money in Drawdowns. More money in winning streaksA drawdown is a period of decline in the value of a portfolio. This is where you take a number of trades, and the losses drop the portfolio at a marginal level (if you know what you’re doing). During these times, the market is typically more volatile (jumpy) and unpredictable. And so you have a higher chance to risk money in unfavourable times. Risk less with drawdowns When your portfolio drops 6%, 8% or even 11% - This is where you’re not sure when the market will become more favourable. This is the time where you decide to risk less money per trade. You would drop the risk from 3%, 2% to 1.5% or even 1%. Then keep trading until the markets pick up and start to favour your portfolio… Once you’re out of the drawdown then… Risk more money with the winning streak During the winning streaks, the market is typically more stable and predictable, and the chances of making a profit are higher. You can then pump up the risk back to 2% or 3% (if you’re a risky biscuit). When do you do this? When your portfolio is either BACK to an all-time-high. Or when you can see the market has broken out of the sideways consolidation and volatile period. Risk management is an important aspect of successful investing, and adjusting the amount of money being invested based on market conditions is one strategy that can help investors achieve their financial goals. By risking less money during drawdowns and more money during winning streaks, you as the trader can lower your potential losses and maximize your potential gains.
JSE:J200Education
by Timonrosso
Humble yourself or the markets willAs a trader, you must approach the market with humility and an understanding that you are at its mercy. And so you need to remember that the market, doesn't know you, doesn't care about you, and doesn't work to reward you. Let’s break that down. The Market Doesn't Know You The financial market (Mr. Market) is a complex and dynamic system that is influenced by a multitude of factors. These factors are beyond our control and are pretty much impossible to predict. As a trader, you need to remember that the market doesn't know you, isn’t out to get you and that your success or failure is not a personal reflection of your worth. The Market Doesn't Care About You It can be tempting to think that the market is out to get us and that every loss is a direct result of our own mistakes. However, the market doesn't care about us as individual. They don’t have some personal vendetta against us. Every trade is simply a result of supply and demand dynamics along with risk, reward and probabilities. We must accept that sometimes the market will work against us, no matter how skilled or experienced we are. The Market Doesn't Work to Reward You There is such high competition with trading. This environment is very high-pressured. It sometimes feels like we are in some race to make as much money as possible. However, it is important to remember that the market doesn't work to reward us. As a trader, you must be humble and understand that success in the markets takes time, patience, and you must be willing to learn from your mistakes. Also need to approach each and every trade with a level-headed and open-minded perspective. Focus on this, and you you’ll make which will help us to make better decisions and increase our chances of success.
JSE:J200Education
by Timonrosso
Why You Need Humble Pie as a TraderHere's why you need to be a humble trader. REASON #1: Humility is required for losing I’ve mentioned this for the last 20 years. And nothing has changed. We are NOT in the trading game to be right. We are in this process, to follow a proven and winning strategy in order to grow our trading accounts over time. Not in a week, not in a month and not even in a quarter. It is our job to take the trades, bank the medium sized gains and take the small losses along the way. There should be no ego with expecting a trade or a sequence of trades to be right. If you want to be right, go become a lawyer, accountant, swimmer or find another hobby. REASON #2: Humility betters your trading strategy process It can also be tempting to try to change the system. This is where you act on impulse, bank a premature winner or cut a loss quickly. This does nothing to your strategy except turn it into a discretionary, non-tested and a temporary winner in the short term. But in the long run, when the markets rectify and become more favourable your winning, your strategy will stop working. Instead, rather focus on your system, improve on your entries, look for conducive markets and master execution. Your portfolio’s results will then take care of itself. REASON #3: Humility is not trying to avoid drawdowns You need to be humble enough to believe your carefully proven strategy ‘knows’ better than your short-term ‘wise-guy’ ideas. It’s not your job to avoid drawdowns (sequence of losses). It is your job to manage your drawdowns with structured and consistent methods. I have three strategies with drawdowns: 1. Trade your Equity Curve (portfolio) to know when to pause trading 2. Drop the level of risk per trade 3. Look for only high probability trades on other markets REASON 4#: Humility highlights your weaknesses You have to be honest as a trader. You can’t keep thinking you’re best at every aspect of trading. Break down the processes including (Markets allocation, Methods and systems, Money and risk management and Mind and psychology). Then ask yourself… Where am I weak with trading and why? Dig into your personality, traits and preferences. Become vulnerable so you can see the truth where you may be lacking in your success. Here are some thoughts: Do you convince yourself your trades are going to be winners? Do you look for confirmation signals that you don’t need to worry, when your trades move against you? Are you scared your ego will be hurt from taking losses? Are you only looking at a few markets because you’re scared to branch into international markets? Are you feeling old to the point you don’t have time to make slow money as a trader? Find your vulnerabilities, then look for solutions or research on how to improve them. Treat the market with respect and you’ll find the answers you need to win. Final words: Trading is not a race – work on your own time line. Trading might sound like an easy hobby, and it is. But you first need to overcome your demons in order to streamline the process. I tell you this because… You need to be humble as a trader, or the markets will humble you!
JSE:J200Education
by Timonrosso
1
10,000 Hours to Master Trading?Welcome to another Trading Myth Buster’s episode. This is where I take the old adages and see if we can bust them or not. Today’s adage goes to… “You need 10,000 hours to master something”. Let’s first break this up into how many days this will take. If you practise an art of something for 30 minutes a day… 10,000 hours equates to 300,000 minutes. We then divide that by 30 minutes and of course we get 10,000 days. Divide that by 365, and here’s how long it will take you to master something… Drum roll… 27 years! However, most professionals practise 8 to 10 hours a day – hence them being able to master the art in a short time. This is definitely plausible if you want to be a professional ballet dancer, golfer, cricketer, rugby player and even a chess champion. But no ways in hell, should it take that long to learn how to trade. I am just the exception but it’s because of what was available when I started… So please bear with me, on this side note… In 2003, when I started, it took me 10s of thousands of hours and years and years, to learn how to be a successful trader. This is because of a number of reasons: I spent two years studying both technical and fundamental analysis Each year I learnt and adapted a new trading strategy I back-tested and forward tested countless systems I had no one to show me the way I made unnecessary and timely mistakes Charting platforms and education were extremely limited I traded from morning up until 4am trading different markets I went back to the drawing board trying to find what works, year in and year out I entered into limbo mode for three years living in doubt and thinking trading was a scam So as you can see, I wasted thousands of hours of finding out HOW NOT TO TRADE… Made countless mistakes and wasted a ton of money – without having someone to direct me. But I pushed through it all and eventually found my feet one day. And so, yes it took me a lot longer than what it should have. So how many hours do you need to learn HOW TO TRADE? If a trader follows a path of a successful trader and method, it should not take more than 10 months to get their feet off the ground. Here’s how I calculated this time for learning to trade: #: 1 Month – Learn the basics to advanced theory #: 1 Week – Adapt and learn a proven and trusted trading strategy #: 1 Week – Back-test and journal 20 trades with different markets #: 4 Months – Forward test 20 trades with the proven strategy using a demo-account #: 4 Months – Real test 20 trades using a proven trading strategy with a LIVE (real money) account Here’s how to follow the foot-steps of successful traders The above is how to master the art of trading on your own… But having said that, you’ll still most definitely need to learn the mechanics of: How to trade CFDs How to take a trade How to adapt money management rules How to develop the mind of a successful trader This is a subjective and introspection journey that you need to run your own marathon. Take your time, go with your own energy and day by day you'll get closer to achieving your trading goals. And the more you do it, the quicker and more effortless it will become.
JSE:J200Education
by Timonrosso
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
5 Reasons why others trade VS why I tradeIn the last 20 years, I always love asking this one question. “Why do you want to trade?” Have you ever written down the reasons why you want to become a trader and what your true motivations are? When you answer this question, only then you’ll become more clear with the goals you wish to achieve and how to achieve them. Here’s one clichéd answer, I don’t want you to write down… “I want to make money”. This answer is lazy, impersonal and it tells you and me nothing about who you are truly, deeply and emotionally. If you think trading only teaches you one aspect of your life… I believe your eyes are still yet to be opened with the incredible possibilities that trading will bring you. And so, in this article I’m going to share a few reasons for why people want to trade. And then, I’ll share a few reasons why I trade… Here are 5 reasons why people want to trade… Reason #1: Diversification “I want to diverse my portfolio with different asset classes. This way I can produce a stream of income through long-term investing via stocks and property, short term trading with Premium MATI Trader and medium term investing through index ETFs.” Reason #2: Hobby “I have spare time and money. And what better way than to spend my time trading and making an extra income while doing something I love?” Reason #3: Monetizing my ‘down-time’ “I’ve earned the same income for the last seven years and now I want to earn an extra income during my off-hours too. For the first time in my life, trading has helped me make money while I’m watching Netflix and spending time with my wife”. Reason #4: Invest for my family and kids “Most people depend on portfolio managers and hedge funds to invest their money for their family. I’ve decided to trade the funds I have for my kids instead and take control of the growth of their inheritance through trading.” Reason #5: Keeps me sharp and well-informed “Trading might not be making me super rich yet, but I got to tell you this. It is keeping my brain sharp, well-informed and helps with my skills with decision making.” These are some of the reasons I’ve heard, which have stuck. Now I want to share with you five extra reasons why I trade… 5 Reasons why I trade! My reason #1: FREEDOM – Earn your own income when you want I want the freedom to trade and build an income stream on my own terms, times and conditions. My reason #2: Independence – Be your own boss Trading gives me the platform where I am responsible for my own trading results. This gives me full independence where I take pride with my own financial decisions. It gives me the place where I can grow my portfolio in a way that suits my personality and risk profile to a T. My reason #3: Extremely fun – New career Trading is not a job… This means, you don’t have to do it… But rather it’s an extremely productive and fun hobby to make your free time work for you. This hobby is not like sports or gym where your reward is more on the physical side. Trading is where you gain many different mental skills and bank a consistent income once you get it right. My reason #4: Mind control – Control your emotions Trading well means you have to lose at times. and when you do, you need to be able to cut out the ego and ‘baby tantrum throwing side’ away. You learn to grow up, develop a thicker skin and become a mature trader. This is one of the greatest benefits to learning to trade. It gets to the point where, after you’ve taken hundreds of trades, whether you take a loss or bank a profit, you’ll stay content. You embrace failure with open arms, because you know that it’s one step towards winning. My reason #5: Life skills – You learn risk, rewards and probabilities Once you have mastered the four elements to trading success (Markets, Methods, Money and Mind) you develop a very strong understanding of concepts like: Risk & reward management and probabilities. This won’t only apply to trading but to almost every aspect in your life. You start taking accountability of events into your life. Predictions turn into probabilities. Risk evolves into calculated acceptance. And you start to see things as they are, rather than what you want them to be… SO WHY DO YOU WANT TO TRADE?
JSE:J200Education
by Timonrosso
1