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Common mistakes most investors make
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iPunter
Supreme |
12-Jan-2007 05:14
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hahaha.. you are right... Hindsight by those who are experienced (the authors) is highly beneficial to those who are still yet to learn. So there's no need to rediscover the wheel. Many people look at a book as a book, and that is the reason why they won't buy a single book in their lives. They not only make the bookstores fold, but they also deprive themselves of the goodies. It is good to treat each book as a live person rather than just a book. Money is never wasted on a book because you always have the book. And learning itself is an unending. There's so much to learn from, even in children's books.... :) My Favourite Stock Market Books |
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ten4one
Master |
12-Jan-2007 00:02
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I agree that it is good to get more knowledge to widen your horizons....and reading pleasures! As far as the Stock Market is concerned, nothing beat the knowledges you gained thru participations in the actual environments. All books on the Stock Markets were written with HINDSIGHTS. Cheers! |
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iPunter
Supreme |
11-Jan-2007 10:11
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That's why I say it's very good to get more knowledge. When it comes to the stock market, more knowledge is always better than less... Collect a lot of stock market books and study hard first... then your chances of losing money will be much much less... The little that you spend on books is worth it in the long run, since without enough knowledge, you will stand to lose a lot of money. My Favourite Stock Market Books |
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ten4one
Master |
11-Jan-2007 09:53
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The commonest mistake is not understanding what you know or knowing without understanding, PERIOD! Cheers! |
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Livermore
Master |
10-Jan-2007 19:24
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When a stock suddenly surges after being "quiet" for a long time, it usually means it is headed higher. Although you may have missed the first uptrend, it is still not too late to join in. Some may feel they have missed the "boat". If you are afraid and let's say you have 40 lots to play, maybe throw in 15 - 20 lots, then you still have 20 - 25 lots to cover yourself should the price pulls back after the first surge. AsiaPharm's recent run up is one good example. The idea is to stagger your buys. |
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iPunter
Supreme |
10-Jan-2007 12:56
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Livermore... You are quite right there... If you are very confident a stock will rise and then soar thereafter, it is better to market in than to queue for it, cos unless you are in front of the queue, you're not likely to get it. But it would be different on a market down (day like today), where quite a lot of people are fearful and they just sell at a low price. |
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Livermore
Master |
10-Jan-2007 12:35
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We often like to queue when we wish to buy. I seldom queue and buy direct as sometimes it is better to buy the selling price straight. Let's say a stock buy price is 40c and the selling price is 41c. Frankly it is only 1c. Many times people choose to queue and in the end the stock went up and they missed the boat. Once they missed the boat, they don't want to chase. In the end, the "boat" end up travelling from the "South China Sea to the Pacific Ocean" |
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Livermore
Master |
07-Jan-2007 20:58
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Yes, my method is a bit similar to derek. Don't average so much after a certain range. The greatest stock trader, Jesse Livermore and George Soros both also average up.Yes, I do agree it adds to the brokerage fee. But at least I can sleep better at night rather than put in say 80 lots at one price |
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waterfalls
Senior |
07-Jan-2007 17:05
Yells: "Investing is calculated risk, patience n luck" |
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A classic example of averaging up would be Genting :-) |
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iPunter
Supreme |
07-Jan-2007 16:51
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Hi bunbun... If you want to get a good picture of what "averaging up" can do in a bull market, you can try reading the legendary Nicolas Darvas who is was adept at the art of buying more and more, adding heavily to his stock position as the price rises. ... :) My favourite Stock Market Books |
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derekchong
Veteran |
07-Jan-2007 16:50
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when I average up as the price goes up, the number of addition lots purchased decrease.example bought 100 lots , 50lots, 20 lots.......gradually lesser.This way is to preserve the profit if the px suddenly reversed.Clear all on one go. |
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bunbun
Senior |
07-Jan-2007 16:21
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when i average down, usually it is when the gap is more than 10cts. if it's about 5 cts or so, usually i either cut loss or sit and cross fingers (and toes) and wait for it to bounce back. hmmm... i have never tried averaging up. because i usually trade in 20 or more lots on a counter, so have never added more to it due to lack of additional funding. so, if i wish to try averaging, what should be the rule-of-thumb gap? 10cts? personally, i think for averaging, anything lesser than that is kinda pointless and one just contributes to brokerage fees. |
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Livermore
Master |
07-Jan-2007 15:17
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Actually if you average down, you can also make money. But what if you average down on a stock that is continually declining. SPC share is one good example. I just find averaging up gradually allows me to see if it is a confimed uptrend. Sometimes I average down but it will be very minimal lots. Now after a certain range I don't average up any more so I don't get caught. But if the share price goes up a lot, I might average up a bit. I know my earlier lots are already in "profit" so I am not too worried. If you wish to average down, give a bigger gap of maybe 5 - 10c, and if the stock still continues to come down, then I think cut loss. |
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waterfalls
Senior |
07-Jan-2007 14:44
Yells: "Investing is calculated risk, patience n luck" |
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The benefits of averaging up is not immediately apparent. But it allows you to ride on a wave of a bullish market thereby increasing your profits. Let's take an example. Assume you bought 100 lots of shares at $1.00. When the price rises to $1.20, you bought another 100 lots. You average cost is now $1.10. If the price increases to $1.30, you would have made profits of $40K ($0.20 X 200 lots). Compare this to if you did not average up, your profits is only $30K ($0.30 X 100 lots). If the price continues to climb, say from $1.30 to $1.40, $1.50, $1.60 you would be able to maximise your profits by averaging up. Along the way you can also lock in profits by selling some, if not all of the shares. |
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bunbun
Senior |
07-Jan-2007 13:59
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if i do it, i tend to average down than up, obvious cos me losing $$$. then when should one average up? |
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iPunter
Supreme |
06-Jan-2007 19:33
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hehe... agree... this forum does have the human touch... :) |
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singaporegal
Supreme |
06-Jan-2007 18:38
Yells: "Female TA nut" |
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Yes, iPunter. I agree with you. This forum has participants who genuinely want to share and help one another. The other forums I know of are very different. It can be quite a waste of time to visit them, if you ask me... :) |
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iPunter
Supreme |
06-Jan-2007 16:30
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It is so heartening to see so much help available in this forum which I must say is deliciously different from some forums. I am sure beginners or 'rookies' in particular and even those well-versed in the stock market mechanism will agree. Although such help 'from cyberspace' can and do improve our knowledge and widen our perception of the workings of the market, there is nothing that can be better than a determined dedication to learn more about the strange market beast. When money is lost, one will readily agree that the market is a beast which is not sensitive to our needs. The best way to acquire a deeper understanding of the market is by starting to build a library of stock market books which will stand you in good stead in your stock market 'career'. Each book should be treated as a different person (ie. the author), since the different approaches and content will add to our overall repository of market knowledge. My Favourite Stock Market Books |
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Livermore
Master |
06-Jan-2007 15:09
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There was some discussion that share target price given by analysts are not met. We always see the share price being pushed up 1 day before the buy rating is released. Somehow they seem to like to push it to just about 20c below the target price then release a buy rating. Well target price can be met with growth stocks. Look at Cosco and Unisteel. Both of these used to be penny stocks. They have gone through so many re-ratings that you would have made money if you followed during their earlier buy ratings. Today Unisteel is rated a buy again at $2.53. When I bought it a few years ago, it was maybe about 50c? I cannot remember. Unfortunately I did not hold this long enough. I think a combination of selling some shares to "lock in" profits and keeping some for long term could be good. We might not always be right about the growth of a company so it is still good to sell for some profits. For instance, Magnecomp was once 90c a few years back, then went all the down to 50c, then went back up to $1.50 and now back to 70c. TPV went from being a penny stock to $1.80 and now back to $1.05. |
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singaporegal
Supreme |
05-Jan-2007 23:46
Yells: "Female TA nut" |
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Haha.. I must be too tired...long day and very sleepy now.... I read (1) as not putting all your eggs in 1 basket and (2) as averaging... |
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