Category — Education

Over the past couple of weeks we’d heard stories about the queues forming at bullion dealers.

Our old pal, Diggers & Drillers editor, Dr Alex Cowie had heard first hand from bullion dealers in Melbourne and Sydney about lines forming out the door and down corridors.

Anyway, being a cynical soul, we thought we’d check the scene out ourselves.

Bearing in mind that the last time we turned up at a bullion dealer four months ago, you could swing three cats tied head to tail and still not hit anyone, we were surprised at what we saw…

When we got there just before lunch there were four people ahead of us in the queue. [Read more →]

It is the task of Money Weekend this week to transport the philosophers Aristotle and Plato from the Greek agora of centuries past to today’s stock market. If this sounds like a turn off, stick with us, because your trading account might benefit.

But before we get to those two, there’s the small matter of the US Fed and the glitch in the bull run on the ASX.

Greed and Fear TradingStocks actually finished up for the month of February. In fact, the ASX / 200 broke through the 5,000 points mark for the first time since early 2010. And despite a few bumps, it’s managing to hold above that figure. But it is slightly down from the high it hit in the third week of February. You can’t have everything.

It could be thanks to the 2.3% drop in the market following the release of the January minutes from the US Federal Reserve. That spooked markets worldwide. The Fed reminded everyone that stocks look a lot riskier if the US central bank stops pumping money into the system.

Of course, it’s since been written off as an empty threat for now. Uncle Ben Bernanke says the Fed’s actions have helped markets and the economy. And stock markets worldwide recovered. But it was a good reminder of the old notion that there are two things that drive investors: greed and fear. And before the feelings of greed and fear turn up in stock prices, they show up as hormones in human beings. [Read more →]

I thought I’d spend today taking you through an actual share trade that I sent to my Slipstream Trader members last year. We’re still in the trade so I won’t reveal the actual stock code, but it won’t take a genius to work out which stock it is.

Therefore I have to add that this is not a recommendation to buy this particular stock right now. For me the opportunity to buy this stock with a very good risk/reward has passed. We have already taken part profit on the share trade and adjusted our stop losses so that none of our initial capital is at risk in this trade going forward.

Buying the stock now would be a completely different trade with a different set of risk and return characteristics. I want to point this out so you don’t mistake this article for a recommendation to buy the stock.

The purpose of this article is simply to give you some practical insight into how I go about selecting trades on the Australian share market… [Read more →]

The job of the share trader is not to tell the future. The job of the share trader is to accept that they don’t know the future and then structure their share trading activity accordingly.

I think accepting that the future is unknowable is the first step in creating a sound share trading strategy.

Your whole way of thinking about the market is transformed when you look at it in this way. The first question you ask yourself when you know you don’t know the outcome is, ‘When am I wrong?’ Also you can withdraw your ego from proceedings because you aren’t trying to predict the future to prove your self-worth.

The game of share trading becomes one of probabilities.

My long term aim is to have a strike rate (percentage of winning trades) of at least 50% and a risk reward of 2:1, meaning that I will make twice as much on my winners as I lose on my losing trades.

The fact is that the long term results contain a lot of volatility. You can have periods of a 20% strike rate and then periods of an 80% strike rate which averages out to 50%. It can be pretty tough to keep your eyes on the long term figures when you have been share trading with a 20% strike rate, I can assure you.

The psychological battles that a share trader must engage in are immense. And it’s usually this issue that brings most share traders undone. [Read more →]

It’s either the best time in the past year to buy stocks…or the worst.

If you take a straw poll of my colleagues you’ll probably get half screaming it’s a buy, and the other half screaming it’s a sell.

By now you’ve probably figured out which side we’re on. We’re banking on continued low interest rates helping to drive stockshigher.

After all, the old theory goes that ‘stocks rise as interest rates fall’. So why should this time be any different?

Well, there’s one indicator to look at that’s either a spanner in the works to our rising stocks stance, or proof that it’s a great time for stock investors. Let’s look at that now…

When you buy any investment you should always have two questions in mind: [Read more →]