Trading Your way to Financial Freedom and Abundance “Give a child a fish and he will eat for a day, teach the child to fish and he will eat for
a lifetime.” Allow us to translate this into the context of trading. “Work for money today and you can eat today, learn to make your money work for you, and you can eat
for a lifetime.”
Trading is one of the skills that makes your money go out there and fight for you
while you just sit back (and relax if possible) watching the battle. However, please be
warned that trading is RISKY if you are lured into thinking that the art of trading can
be mastered overnight after reading a book or attending a course.
The Millionaire Traders
If we want to, we can give you so many examples of people who pick up trading and
within a year or two, turned $3000 into $1,000,000. There are definitely people like
that and we should not be surprise because Trading suits them totally. They are made
to trade and perhaps, you are one of them. W can also give you examples of people
who lost all their money in trading and the reason is simple, they are not totally made
to trade and did not condition themselves to become better trader before sending their
entire fortune out into the battlefield.
Just imagine a Military General who is not trained, took over command of the army
and sent his entire army into a single war. This is nothing but foolish behaviour, so
you and us do not want to do something like that. Even genius traders take on training
before they go out and fight, but because they are so-made for trading, they learn at an
extreme speed and acquire the acute sense for trading in a time frame much shorter
than the others.
Can I Trade If I am Not Made to Trade?
To answer this question, just think of trading as any other skills. Lets take swimming
for example. Some people are made to swim. Within a few lessons, they are faster,
stronger and more natural in the waters than any other students. But if you are not like
these people, can you still learn how to swim and be a very good swimmer? The answer is yes! With adequate training in swimming, almost anyone can swim. The
problem with many people, in terms of trading is that before they become very good
in trading, they jump right into the sea without any life jacket. And when the sea
becomes rough, they drown. So the fact is you can to make sure you start training in
the baby pool, followed by adult pool and subsequently venture into deeper waters.
That being said, how long you actually take to master the skill of trading really depends on what is the shape of your financial key and how much you need to
condition is to suit Trading as a vehicle.
What About Those Programs Promising Huge Returns If I Follow Their Systems?
One word… BEWARE! We are not saying that these systems are fake or scams, but
the fact that these systems that work for them may not work for you. It is not as
simple as you acquire a system, use it and become as good a trader as these people in
no time. These traders who are selling their system is like someone who is a great
swimmer and found a swimming method that can make you go faster. But if you are
not conditioned in the first place, you will first need to condition yourself. However,
if you are a very seasoned swimmer already, perhaps this particular skill can indeed
make you a much faster swimmer. So again, let us warn you that Trading is indeed an
amazing skill that can accelerate you to Financial Abundance, but do not be fooled to
think that you can master the skill overnight.
Are You Ready to Enter The World Of Trading?
We would really want to take the first part of today’s course to give you adequate
warning as we ourselves had been fooled into thinking we can master trading
overnight and fell victim to such thinking. Not that the safety precautionary brief is
over, let us enter proper on this flight to the World of Trading.
Basics: What is Trading?
Trading is the Buying or Selling of Shares of Companies that are listed in the Stock
Exchange.
In Buying the Shares of a Company, you owe a part of a company. In some sense, you
are now one of the bosses of the company.
Buying A LOT…
In some exchanges, when you buy shares of a company, you can’t buy a single share.
You have to buy a “LOT”, which means a “bundle”. A “LOT” usually comes in a
bundle of 1000 shares or 50 shares
E.g
So if the share price of ABC company is $1 and it comes in LOTs of 1000, the
minimum amount you need to fork out to but shares of ABC company will be
$1 X 1000 = $1,000
Why Trade?
Traders trade in order to gain profits.
Some people buy and hold the shares for a long time, deeming it as a way to save up
for the future. This is more commonly known as investing
How to Profit from Trading?
There are mainly 2 ways to profit from trading as a trader
1: Buy a share first and sell it at a higher price
(This is known as the Long Position)
2: Borrow and Sell a share first and later buy it back at a lower price
(This is known as Short Position)
e.g.
Long Trade
Share of ABC company is selling at $1.
You buy a Lot (1000) of ABC shares @ $1 and pay $1000.
Some time later, the price rise to $1.50.
You sell the Lot (1000) @ $1.50 and receive $1,500.
You make a profit of $500
Short Trade
Share of XYZ company is selling at $1.
You borrow a Lot (1000) of XYZ shares @ $1 and sell them. You receive $1,000.
Some time later, the price drops to $0.50.
You buy the Lot (1000) @ $0.50 to return it. You pay $500 for the Lot.
You make a profit of $500.
In Summary
You take up a:
Long Position – When Prices are rising
Short Position – When Prices are falling
Million Dollar Question!!!
How do I if the prices are rising or falling
The truth is no one can be 100% certain. But analysis is done and the probability is
calculated via 2 main types of analysis:
1. Fundamental Analysis
A method of evaluating a security by attempting to measure its intrinsic value by
examining related economic, financial and other qualitative and quantitative
factors. Fundamental analysts attempt to study everything that can affect the security's
value, including macroeconomic factors (like the overall economy and industry
conditions) and individually specific factors (like the financial condition and
management of companies).
The end goal of performing fundamental analysis is to produce a value that an
investor can compare with the security's current price in hopes of figuring out what
sort of position to take with that security (underpriced = buy, overpriced = sell or
short).
Fundamental analysis is about using real data to evaluate a security's value. Although
most analysts use fundamental analysis to value stocks, this method of valuation can
be used for just about any type of security. For example, an investor can perform
fundamental analysis on a bond's value by looking at economic factors, such as
interest rates and the overall state of the economy, and information about the bond
issuer, such as potential changes in credit ratings. For assessing stocks, this method
uses revenues, earnings, future growth, return on equity, profit margins and other data
to determine a company's underlying value and potential for future growth. In terms
of stocks, fundamental analysis focuses on the financial statements of the company
being evaluated.
One of the most famous and successful users of fundamental analysis is the Oracle of
Omaha, Warren Buffett, who has been well known for successfully
employing fundamental analysis to pick securities. His abilities have turned him into a
billionaire. We will share with you his methods in Part 5.
In a shopping mall, a fundamental analyst would go to each store, study the product
that was being sold, and then decide whether to buy it or not. By contrast, a technical
analyst would sit on a bench in the mall and watch people go into the stores.
Disregarding the intrinsic value of the products in the store, his or her decision would
be based on the patterns or activity of people going into each store.
2. Technical Analysis
A method of evaluating securities by analyzing statistics generated by market activity,
such as past prices and volume. Technical analysts do not attempt to measure a
security's intrinsic value, but instead use charts and other tools to identify patterns that
can suggest future activity.
Technical analysts believe that the historical performance of stocks and markets are
indications of future performance.
In this course, we will touch more on Technical Analysis as it is the essential weapon
short term traders use.
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Contributor's Note
I acquired/attended 7 different trading courses and found the truth about trading. You got to put in hard work like any other biz. A person goes to university for 3 to 5 years to get a degree which earns him $2k to $3k per month. Don't expect to attend a 1 week trading course and start making millions!
Be determined, be strong and Live A Life Of Excellence, not excuses.
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