Why am I not making money from the market?

I often encounter people asking me why they are not making money from the market even though they are doing well. Huh you might be wonder how come a guy doing well in the market is not making any money? This really does not make sense.

The guy really does well in trading as out of the 10 trades, he make more than 6 trades. So this mean that the percentage of him getting correct is more than 60%. In normal circumstances, he should be making money. Well in the world of trading and investing, then this might not be true.

The main reason is most of the time we lose more money than we make in the market. As for his case, the 3 or 4 trades that he lose is more than the 6 or 7 trades that he made. This is also known as your risk and reward ratio. The risk and reward ratio is really depend on which trading system you are using.

Day Trading

Usually for day trading, I will risk 2 to make 1. This is because the percentage of getting correct is very high as there will be no surprise news in between the close of the market and the open of the next day market. Thus the risk of getting out of control is lower. Furthermore, I will only notice the lost when it is around losing at the ratio of 2 and also to allow some allowance for the stock to move.

Short Term Trading

I will risk 1 to make 3 in short term trading. This is because the percentage of getting correct in short term trading is roughly 50 - 60. This is due to the fact that the news will affect the stock that I hold for a few days. The longer I hold, the more risk I am taking.

In conclusion, knowing the Risk&Reward ratio and Hitting Rate will definitely increase the profitability of your account.

After such a hectic week in the market, where will you think the market will be going? The Dow closes relatively unchange for the week at 11,388.44.

As you can see from the chart, the credit boom(s1) started from the year of 1995, which create a run from 4,000 to 7,600. This is a 3,000 point run which is almost 100% run. The bubble did not burst instead the Asia Financial Crash create an opportunity for the Dot Com Boom. The Dot Com Boom create another 4,000 run from 7,500 to 11,500. The Dot Com Bubble burst in 2001 and bottom at 2003. In 2003, another boom was created. This boom is another credit boom(s2) from 2003 to 2008 at 7,500 to 14,000. Currently the Dow is lingering at 11,388.44.

From the look of the Monthly Candle Dow Chart, it is very scary to me. This is because whenever a crash come, it will ease off the boom. When i look at the booming in recent years which cause by the credit issue, then I was fearful as what has created upside and when it fail the downside should be equal. This mean that the Dow most likely will fall back to either 7,500 or 10,000.

What is the impact if the market rally again now?

This is the scenario that i hate to see. This is because if it is going to rally now, the Dow chart will become a parabolic chart. This also mean that the fall for the future will be greater. If Dow at 10,000, it will create a smooth trend up. According to what i see, I would like the Dow to hit 7,500 so that there will be a great run again for the future as the trend is much more gradual.

Which sector will create another Boom?

There are a few sector which i think will contribute to the another boom. I am looking at the Healthcare sector and the Commodity sector.

Healthcare Sector

The reason that i choose Healthcare sector is because i think that the life of our future will revolve in things like implanted chip, stem cell technology, cloning, cyborg, genetic stuff and many more. These might create a new market and a new kind of economy in the history.

Commodity Sector

This is obvious as the upcoming of countries such as China, India and many more. This create a demand in commodity products.

Well I always believe what go up will have to come down. Every Boom that have created will have a Crash. It is always a nature rule. It is in our surrounding.

Trade and invest wisely. As long as you are not greedy and you have a plan then everything should be alright.

Please let me know your thougts on what will be the upcoming sector that create the boom and lastly is it wise to keep on push up the market?