This is the headline that shown in the newspaper on last saturday. This news is about a financial correspondent finds out what the experts think the average investors should do in this global financial crisis.

Out of the 4 experts, none of them suggest the investor to educate themselves. Personally i find it very interesting on the opinion of the experts. These are the same experts that sold them the dream of good money during the boom.

Why Do People Give So Call Experts To Handle Their Money?

I always believe in handling my own money and doing my own personal account. Well of course i can always hire a guy to do all these for me but who will do a better job than myself. Im very amused that people still do not learn the lesson. The so call experts are just doing their job to sell us the perfect portfolio and the complicated financial product.

Warren Buffet says, “Never buy things that you do not understand”.

The above words are very true. Will we ever buy a shirt or dress without fitting it? Will we ever buy a PSP console without finding out what kind of game they offers? The answer is obviously no.

Why do we buy stocks or financial products without knowing what is it about?
I can only think of greed and ignorant.

So what should i do with my money?
I will buy some books or attend some course to understand the art of investing. When i have the knowledge, I will know what to do with my own money.

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.

Do we have to trade everyday? This question is target for day trader…

The answer is no. This is because there will be certain days that wont suit the trading system. By forcing to trade, we will actually incur loses as compare to not to trade which mean no lose no win. I guess it become part of the day trader life to trade everyday. It just like being addicted to it.

Do you feel emptiness when you don’t trade?

Sometime we just have to withdraw from this syndrome. Go out with your wife or girl to catch a movie. Trading is not like daily job which you need to work everyday. Trading is to work on the best day and shut off during the bad day. I believe different trader will have their best day and bad day.

Trade on your best day (You feel that the day is just for you)
Shut off your computer (You feel that the day is against you)