Hello All,
New to the forum so thought I'd introduce myself. Got interested in stocks in general in 1998 then in the ASX in 2001. Started off as most newbies do- wide-eyed, thinking of one day trading for a living while trying to apply technical analysis tools without a defined trading plan. Luckily, knew enough to set stop losses which kept the damage to a manageable level
. Eventually learned enough to develop a basic trading plan that involved entry/exit criteria, stops and money management rules. Struggled with emotions and discipline in the beginning as shown by my highly volatile equity curve, but after about a year and a half curve starts to be less volatile and finally on a decent upward trajectory. Had a good 02 despite the market retreating but somehow sputtered in 03. Came back strong in 04, but felt burned out toward the end of the year. In the past couple of years I had been spending about 2 hours a day, monday to friday, looking at charts and reviewing strategies then another 6 to 8 hours of the weekend planning the week ahead. With a baby just arrived and responsibilities at work increasing, I realized that I could not continue with the demands of trading. It was at this point that I made what I consider now to be a huge turning point in my growth as an investor -- I decided to create a seperate "investment" account with margin lending. Set up rules in the investment account like (1) stocks in this portfolio are to be held for a minimum of 3 years, (2) must yield a minimum of X%, (3) must have a minimum market cap of Y, (4) dividends must be reinvested, etc. Still used t/a for picking entry points but because of the rules set had to do much more fundamental analysis than what i was used to. Also had inter-portfolio rules like, 50% of profits made from trading account must be moved to the investment account. While I still traded occasionally, I consciously started moving more and more funds from the trading account to the investment account. By mid-05, 100% of funds allocated for shares were at the investment account on 55% LVR. At this time I considered the market to be fairly valued anyway and didn't think that the environment was suitable for trading. In hindsight I was dead wrong but since the investment account was fully invested I still reaped the benefits of the rising market.
I now find myself in what I think is a much better position as an investor, one that is looking at a bigger picture. Much of the amount of time that I used to spend analysing charts I now use for quality time with the family and yet still have enough time to analyze other investments (ie property) and investment structures.
What is the point of the story? Well the way I see it, Trading demands a lot for one to succeed. The more money you're responsible for, the higher the demands become. However if one doesn't step back and watch what one is doing, he can be caught up in a situation where a lot of effort is put in for a small reward. Finding a stock I could buy for a dollar and sell for four was fantastic, but after tax and paying for the costs of time and resources it worked out that the return on my overall investment was not as much as I thought it was. Trading can be a great tool to acquire wealth, but it must be part of an overall wealth-building plan.
Well that's it. Off my soap-box now.
Cheers,
Dennis
New to the forum so thought I'd introduce myself. Got interested in stocks in general in 1998 then in the ASX in 2001. Started off as most newbies do- wide-eyed, thinking of one day trading for a living while trying to apply technical analysis tools without a defined trading plan. Luckily, knew enough to set stop losses which kept the damage to a manageable level
. Eventually learned enough to develop a basic trading plan that involved entry/exit criteria, stops and money management rules. Struggled with emotions and discipline in the beginning as shown by my highly volatile equity curve, but after about a year and a half curve starts to be less volatile and finally on a decent upward trajectory. Had a good 02 despite the market retreating but somehow sputtered in 03. Came back strong in 04, but felt burned out toward the end of the year. In the past couple of years I had been spending about 2 hours a day, monday to friday, looking at charts and reviewing strategies then another 6 to 8 hours of the weekend planning the week ahead. With a baby just arrived and responsibilities at work increasing, I realized that I could not continue with the demands of trading. It was at this point that I made what I consider now to be a huge turning point in my growth as an investor -- I decided to create a seperate "investment" account with margin lending. Set up rules in the investment account like (1) stocks in this portfolio are to be held for a minimum of 3 years, (2) must yield a minimum of X%, (3) must have a minimum market cap of Y, (4) dividends must be reinvested, etc. Still used t/a for picking entry points but because of the rules set had to do much more fundamental analysis than what i was used to. Also had inter-portfolio rules like, 50% of profits made from trading account must be moved to the investment account. While I still traded occasionally, I consciously started moving more and more funds from the trading account to the investment account. By mid-05, 100% of funds allocated for shares were at the investment account on 55% LVR. At this time I considered the market to be fairly valued anyway and didn't think that the environment was suitable for trading. In hindsight I was dead wrong but since the investment account was fully invested I still reaped the benefits of the rising market. I now find myself in what I think is a much better position as an investor, one that is looking at a bigger picture. Much of the amount of time that I used to spend analysing charts I now use for quality time with the family and yet still have enough time to analyze other investments (ie property) and investment structures.
What is the point of the story? Well the way I see it, Trading demands a lot for one to succeed. The more money you're responsible for, the higher the demands become. However if one doesn't step back and watch what one is doing, he can be caught up in a situation where a lot of effort is put in for a small reward. Finding a stock I could buy for a dollar and sell for four was fantastic, but after tax and paying for the costs of time and resources it worked out that the return on my overall investment was not as much as I thought it was. Trading can be a great tool to acquire wealth, but it must be part of an overall wealth-building plan.
Well that's it. Off my soap-box now.
Cheers,
Dennis
