In my 26 years as a senior management and CEOs of a few stockbroking companies, I’ve been amazed at how so many people know so little about stock market and yet happily invest their hard earned money into stocks based on rumors and gut feeling, confident that they will make money from the market. And guess what: they are usually disappointed.
Stocks are one of the best investments for your hard earned money as the returns easily beat the returns from other types of investment. But the stock market is tricky – you have to know what and how and when to buy and sell at the right time to maximize your returns. When you have acquired the knowledge about share investment and trading, the opportunity and potential to increase your wealth is exceptionally high compared to other investment choices.
My observation is that many lost money in share investment primarily because they do not invest based on facts but on fantasies or hearsay. This book is written for the newbies to stock investment and those who always lose money in the stock market. It covers most aspects of the stock market, including Bursa Malaysia (The Stock Exchange) Trading Rules, stock valuation approaches and some commonly used technical analysis tools to identify the inefficiencies of the stock market for profit. It also covers interesting topics like how to set up an effective technical monitoring template to review stocks, getting familiar with 5 key fundamental analysis factors in stocks selection and the factors that can affect share prices.
I think it is important that before anyone venturing into stock investment, he/she has to understand the two major distinct approaches to share investment which I have included in the book. One of the approach is ‘value investing’ which has been popularized by the investment gurus such as Warren Buffet and Prof. Irving Fisher. The concept of value investing is always associated with more elaborate assessment of the ‘intrinsic value’ of a company, quality of its business, particularly in respect of its profitability, earnings growth quality of its assets, the ability of the business in generating operating and free cash flow consistently and its business outlook.
The other more popular approach among young people is using various technical analysis tools to study the past ‘price volume actions’ and momentum indicators to understand the ‘mass psychology’ of the market players to forecast future price action. It is based on the primary assumption that history repeat itself and that human behavior never changes. The greatest challenge to making money in the stock market is not the market but the ability of the trader/investor in managing his/her emotion when faced with the volatility of the market. Prof. John Maynard Keynes mentioned that it is the ‘perceived value’ that drives the stock price. A good understanding of technical indicators, chart patterns and candlestick reversal patterns can be very useful in harnessing the accuracy and timeliness of entry and exit of a position.
The book presents a comprehensive and systematic approach to stocks investment known as Bull Traders Strategy (BTS), using a combination of fundamental analysis criteria for picking stocks and the application of technical analysis tools to set entry and exit criteria to manage the stocks in the portfolio. This is particularly useful for those who are new to stock investment and having little knowledge on how to navigate the investment journey with minimum risk exposure. The BTS approach can help investors to overcome emotional weaknesses like fear, greed and hope. Investors generally lost money in stock investment due to lack of knowledge and the poor management of their emotions. The BTS systematic Trading and Investment approach introduces a very methodical and systematic process in selecting the stocks that suit our investment objectives, setting up entry and exit criteria and the creation of a trading and investment plan
Remember the trading game is to win money! To win you must understand the operations of the market, the characteristics of the different segment of market players, the different risks associated with different type of stocks and the factors that could affect share prices. You need to have a strategy to beat the market, to ride on the winning stocks and cut loss fast on your losing stocks.
Therefore, I strongly encourage you to read this book to understand the market operations, Bursa Trading Rules, the best account type that suit your trading or investment style and to learn to find the stocks that suit you and to create a trading plan (BTS) that will guide you on the following 5 questions:-
What to buy?
When to Buy?
How to Buy?
When to Sell?
How to Sell?
This book will be useful to all new stock investors, investors looking for consistent investment returns with systematic approach to investment, stock investment trainers/educators. It is my hope that this book will provide sufficient information to you to kick start your stock investment journey and be an informed investor.
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