Did You Enter the Market?

The SG stock market was down quite a bit last week. Stocks that I purchased few days were cheaper then, quite sad looking at it, haha but it only bother me for that few seconds when I login to my account. One should always remember, you won't know when is the lowest point in the price trend, you can never really guess it.

To me, as long as the price is right, I will just enter the market. Since I am holding to the stock for longer term, I should not be worried too much about the short term trend. Usually I look at longer trend, minimum 6 months to maybe maximum of 3 years. Who don't like to buy lowest and sell highest, right? 

If the price keep going down, I will just hold on, it will just be paper loss for that moment. As long as you don't sell it, no loss, until you really need the money, then it is another story. Hence, one must always use the money that is spare, i.e. you foresee that you won't need to use the money for at least 3 years or more.

Of course nothing is guarantee safe, we still have to cut loss if necessary. Sometime really no point holding on to false hope, just have to cut it off and put your money into other better options. You may be right or wrong, but there are always many other opportunities out there for you, why so stubborn and keep insisting that you can't be wrong?

Well, it is easier to say then to execute it. Emotion is the most difficult thing to handle in trading. One has to learn to handle it well, really well, it takes experiences I think, at least for my case. I have to learn not to be affected by the price movement, it is hard but we just have to overcome it, it's part of the game. One day the price goes up, you feel rich looking at the positive percentage, feeling smart and just want to kiss yourself for a job well done. But the next day, the figure turns opposite way and red number appears. You feel like the whole world is against you, you hate them so you just cut the loss and close the position. And you know what? Immediately when you close it, the market turn right up and bull charge like nobody business! And you can only watch the price goes up and up leaving you behind, haha, you start to ask yourself, why me!

I know that feeling...

Why me!

Picture credit: http://www.rediff.com/

That's what happened to me last time, mainly because I was playing with money that I can't really afford to lose. Hence the pressure is there when I see red figures, pressure to cut loss, pressure to take profit early, too early in many cases, fearing that the profit will be gone again like in many previous cases. Therefore, loss is big while profit is small, net net huge negative figures.

I still look to trade some stocks on short term basis but has a plan in place before I even enter a buy price for it, plan as in what price to enter, when to exit for either a profit or loss, whichever the direction the price goes to. With a plan already in place, it helps to keep my emotional in check. I just have to stick to my plan no matter what, to a stage whereby sometimes I even don't bother to check the price on regularly basis. Currently I tried to login to my account daily to keep myself updated but sometimes I was really busy with my other stuff. There was once that I was busy for few days and I only remembered that I still have a trade pending till I received an email notification that it was closed, and closed with a profit, make my day!

Anyway I am not going to depend on trading to make my millions, something that I thought I could many years back, it looks like easy money then. I think by putting a bit more effort in my job, the return is so much better, haha. Without the proper knowledge plus that fact that I am lazy to go read up myself to gain additional knowledge or skills, I think I will just keep it simple; buy and hold stocks for dividends or sell them if the price has reach a target that I think is time to let go. It will be like a saving but with a higher interest rate than normal saving account, unless we get to see fixed deposit interest of 5% again like in many donkey years back.

So I shall continue to ensure my monthly pay goes up, save large portion of it because you never know when the monthly pay will stop, put the saving into normal saving account, fixed deposit and build up my stock portfolio etc. Also if the property price is right in the future, may consider getting another one to get rental income, another way to get passive income. Always be prepared for the worst and always be prepared to downgrade if necessary, don't hold on to it if it starts to get beyond our means. Remember we can't bring everything with us when we reach our expiry date. Enjoy while we can!

Picture credit: http://www.theglobalbutterfly.com/passive-income/