Nov 23

Professional Trading Strategies Seminar by CK Ee on 5 Nov 2016

I summarised some of the main points from the seminar by CK Ee.

  • He mentioned that we need to understand that: We don’t trade the market. We trade or invest based on our beliefs.
  • We should not listen to news too much when doing our investment. Just treat news as entertainment.
  • Investing is a skill and we need to put in time and effort. Just like cooking or playing basketball, if we want to be a better cook or skilful basketball player, we need to keep learning and practising.
  • Why does market goes up? Market goes up because money is flowing into the market.
  • Why does market goes down? Market goes down because money is flowing out of the market.
  • There are 3 main sources of money:
    • People are saving and investing more
    • People and institutions shifting money out of other kinds of investment
    • Government lowers interest rates and increase money supply – This is the biggest source of money
  • How to position yourself?
  • Is your investment backed by sound strategy?
    Reality check:

    1. Do you know which stock to buy?
      A good stock is a stock that bring you money.
      A bad stock is one that cost you money.
    2. Do you know when to buy?
    3. Do you know when to sell?
    4. Do you know how much to buy (position sizing)?
      The correct position sizing can bring you small profits, huge profits or the opposite – small losses or huge losses.
    5. Do you know how to manage position?

    Points 4 and 5 are the most important.
    Key takeaways:

    • Damage caused by drawdowns cannot be underestimated.
    • Steady and consistent returns year after year is superior.
  • 3 main reasons why so many investors lose money:
    1. For a stock, we can do three things: buy, sell or hold. Hold is the easiest option, as we do nothing and there is no effort at all. Subconscious is to defer loss, thinking that the loss is temporary (paper loss), and hold and hope.
    2.  When stock price drops, we think it is a bargain, and do cost dollar averaging down.
    3. I am right (ego) as to cut loss means to admit I am wrong.
  • Why does a stock price goes up?
    Because money pouring in. 80% from institutions, only 10-20% from retail investors.