More About My Trading System

I do hope you take some time and read this section before following my trades. It is important for you to firstly understand how I do it, what are the risk involve, what and why I trade or avoid certain counters.

My trading system is not an intraday trading system. It isn't even suitable to play contra. As I've said many times in my blog, I try to trade with minimal risk. All my trades require me to hold indefinitely. Sometimes the price target is reach within weeks, at times months. As a rule of thumb, I usually close my positions within a period of 2 weeks to 3 months. If you intend to follow my decisions, please make sure you have the holding power.

Some of you may want to trade using margin accounts. The decision is entirely up to you. Just bare in mind that such accounts charges interest for the amount leverage. On top of that, the most dangerous part is that you can get margin calls. I DO NOT use margin accounts, so there are times when I hold certain counters as they dip. So long as it does not reach my cut loss target, I will be willing to hold it for a while.

I do not trade penny stocks. As time goes by, you will noticed I seldom or never trade penny stocks. My experience in such counters are that they are usually heavily manipulated and the buy/sell queues are thick. I prefer to trade counters that are more liquid, less speculative and also more reliable.

For SGX counters, I try to avoid China stocks. There are 2 main reasons for my decisions. Firstly, most of these counters are rejected goods from HKSE. They are usually smaller companies, badly managed, and loosely monitored by the Singapore Exchange. Secondly, I can't "see" or "feel" these companies. I have absolutely no idea what these companies are doing back in China and therefore, I don't see the rational in investing in them.

Trading NYSE is exciting. The daily swings can be high (so is your mood) and I wouldn't recommend it for the very conservative people. But should you want to trade it, my suggestion is to open a multi-currency trading account. This is to avoid the conversion losses involve every time you open or close a position. This is again entirely up to you. I have some close friends who insist in keeping everything to SGD and they are still making decent amount from trading NYSE.

Finally, your trading size. It doesn't matter which brokerage firm you use, there is usually a minimum brokerage amount for every trade you make. For me, SGX counters minimum brokerage is SG$25 (0.25% normal brokerage) and NYSE counters minimum brokerage is US$20 (0.35% normal brokerage). It is important to note this amount so that you know whats the optimum trading size. For example, I will always trade SGX counters with sizes of at least $10,000 so that I pay only 0.25% brokerage. It doesn't make sense to buy $1000 worth of stock and yet pay $25. That's a whooping 2.5% brokerage and trust me, it'll be detrimental to your trading.

I hope this article has provided you with some basic knowledge of my trading system. Do remember to always trade with caution and never be too greedy.

Good luck.