Thursday, March 08, 2007

Don’t change your system, if it works for you

White cat or black cat, if it can catch mice, it’s a good cat (former Chinese premier Deng Siau Peng)

So long as your strategy or method works for you and yields you the desired result, you should not change it. Whatever we do we have a reason. More so when it comes to buying or selling in the stock market. If you really want to improve you trading system or investment strategy, you should write down the reason as to why you buy or sell. This will tell you what works and what doesn’t. Over time you will have a great strategy.

We learn from our mistakes; we also learn from our successes. Investing is very simple. All you need is to buy great stocks at bargain prices and sit on them. You don’t need to be an accountant, but you need to know how to read the annual report.

Trading is very much more difficult. You have to keep track of price-changes every minute of the day, make split-second decisions and have steel-like discipline. Also you must be able to bear pain. Once you have learned to cut small losses without feeling pain, you have moved up one grade. The excitement is there but few have mastered the skill to enjoy it.

Easy money is not easily made.