Where to start Investing and Trading

You have arrived on this site with the intention of learning how to trade and invest. But, do you really know where to start or better than that should you start? I am going to ask you a few questions to guide you on your path of Investing and Trading.

Screener

A Screener is:

The evaluation or investigation of something as part of a methodical survey, to assess suitability for a particular role or purpose.

I am going to try hard to stop you from trading and investing. I care about you and I care about your financial positioning and future. Whether you trade and invest or not does not affect me or this site at all.

So here are the questions. Read the question and if you answer yes to any of them then read the note afterwards, if not you can ignore the note:

  • Are you broke (don't have any money)?

    That is not something to be proud of. Don't even use that word. `Capital` is what keeps an investor or trader alive and preservation of capital is key. You need to get some capital (by working hard) and preserve it by saving it.
    
    __Please leave and only come back once you can answer no to this questionand have at least R5000 in savings_
    
  • Are you unemployed (not retired and not studying)?

    Get a day job.
    Trading returns fluctuate and will at times not cover your expenses each month. You need a stable income as well as the acquisition of skills and experience. Contrary to popular belief, being a trader does not give you any skills and experience required in the workplace.
    Getting rid of the **need** to make money will improve your risk management and psychology.
    Trading and investing can also be very boring.
    
    __Please leave and only come back once you have a steady day job__
    
  • Do you save a portion of your monthly income?

    You are not in a position to preserve capital.
    
    __Please leave and only come back when you are in a position to maintain a comfortable standard of living and put some savings away from your income__
    
  • Are you busy? Do you not have 30 minutes each day of free time?

    Trading and investing requires practice and discipline.
    You do not have enough time for the planning, risk management and identification of opportunities.
    Hoping on picking a penny stock that just runs and runs is a `pipe dream` and `wishful thinking`. We all would love that but awareness of the market is important.
    
    __You are too busy, you need to have time to be focused on trading and investing__
    
  • Is a loss unacceptable?

    If you cannot accept a loss then you should not be trading.
    Short term losses happen and although we try to ensure profitable trading, long term losses happen as well.
    
    __Please leave, do not come back__
    
  • Do you avoid risks and taking chances? Do you not want to worry or play an active role in your investments?

    __Please leave, you are better off in a fixed deposit account. This is not a bad thing, you are a legend.
    Or you can pay for a fund manager to take the risks, and make it feel like there are less risks.
    Keep up the good work and invest in a fixed deposit instant savings account that is beating inflation.__
    
    You are welcome to visit the site and possibly start taking a few small calculated risks to enhance and add to your portfolio in the future.
    

Getting Started

Well done, you have made it through a touch screener

So what are we talking about when say investing and trading.

Investing is usually long (you think price will go up) only and involved buying actual commodities and stakes in companies (equity). Lower frequency of trade purchase and sale. Buy and hold mentality.

Trading can be long or short (you make profit thinking price wil go lower) and involves derivatives (a financial tracker of an underlying commodity, index or equity). Higher frequency of trade purchase and sales.

If you want to be less active then you should stick to investing (with a trading mindset). You will still need to identify opportunities and use the same trading techniques just with a lower frequency of trading.

Capital Preservation and Risk Management

The most important thing in trading and investing is not to lose your capital. Capital is the life blood and to preserve capital you need to understand risk and risk management.

Whenever you place a trade, it might lose or win (Often the win rate is 15 - 30%, much less than the perceived 50%). When you lose your capital amount is decreased and it is much harder to get that money back.

So an important aspect is keeping the amount you lose in a trade small. A good rule of thumb is never stake more than 1% of your total capital in a single trade. The amount should be small enough that you can afford to lose and big enough that the win is important.

Getting Started