[thoughts] How to start investing/trading

Foreword

Met 2 of my hall friends for dinner on friday, and we I spoke largely about our investments/trading experiences. I realized that for many, they have emotional luggage of the past, or might not be optimally investing. So i thought i should condense my thoughts into a few paragraphs, which i hope will be helpful.

The Start

Everyone says start as early as possible, which is true, but we need to start with a strong impetus. Personally, i got started because i had to pay more tax because i changed job. Figuring out how to reduce tax paid, one thing lead to another and i started my journey in stocks (see early post)

Initially, i would describe myself as someone who was purely on fundamentals (but was weak) For fundamental analysis comes to people very intuitively because it is in words, and people can read these words, and pick up certain values (PE, NAV, ETC), because these are very defined. Many beginners also are attracted to read about successful investors(Warren Buffett) or popular books ( rich dad poor dad), so certain notions establish a very strong foothold in their mind, like long term buy and hold, or investing for income.

I would say, overcoming the inertia to start investing is definitely the biggest hurdle to overcome! congrats.

Learning more

At first, I was resistant to technical analysis, for there were so many ways to see the same chart, and i felt that it was made up. However, the resources online and mentorship from my NS friend, allowed me to understand that technical analysis is an aggregate of human behaviors in the market. There was science behind these chart patterns because humans had the tendency to repeat.

There were also many different types of trade set up and plays to be in for technical analysis. Which i exposed myself and slowly learnt about.

and then there were also portfolio management and risk management skills that i had to have so that i manage my funds effectively.

Evolving

When i was first exposed to technical analysis, i was always jumping into the next strategy/indicator, however i realized that simple is best. and now i use volume, moving averages and look at the price/candlestick/pinbar ( total of 3 type of indicator) at most.

I also evolved into sizing my positions smaller, from 8-10K to 4-6K for trading counters. This allows me to manage my risks and also my emotions. because losing 10% of 5K, which is $500 was less painful than losing 10% of 10K. this was associated with the shorter route to ruin.

So for now, i use technical analysis for speculative positions ( short term type), while for growth and income assets, i use fundamentals to shortlist and technical analysis to tie entry/exit.

I am still evolving.

Lessons learnt so far

1. Keep an open mind to learn and be exposed to different strategies. Adopt the relevant ones.
2. Understand your risk appetite and comfort zone, then use it to management your risks.
3. Keep humble and understand that you can be wrong, and when you are wrong admit it.