How I 5x My Investing/Trading Experience with Every Trade I Take
Huge Warning: If you are here thinking of looking for a shortcut to milk money out of the market, this article is NOT for you.
However, if you are looking for mini-routine hacks to help deepen and internalize your learning, I think you will find this post surprisingly helpful.
Regardless if you want to improve as a long-term investor or a short-term trader, it will require skill development. Skill development though, demand for our time and experience.
For most investors and traders, one trade* typically transpires into a single moment of experience.
What if there is a way for you to turn a single trade into 5 times worth the experience. Interested?
*The verb ‘trade’ is used in this article to reflect a position that you take in the market, regardless if you are investing for the long-term, or trading for the short-term.
You will be surprised that there is no secret recipe here.
The key to amplifying your experience from every single trade you take is through a systematic post-trade learning routine, all of which I will share with you below:
You did your pre-trade preparation and took a trade – that was 1x experience.
As a long-term investor, you placed a trade after doing your overall research on the fundamentals of a company.
As a short-term trade, you spotted this breakout pattern and placed the trade.
Either way, these transpired into ONE experience.
For most people, their journey ended right there – time to go and enjoy a good movie time, right?
What else is there for you to do?
Make detailed notes in your journal – that’s 2x experience
For me, I will write down WHY I took a particular trade.
As an investor, what are the characteristics and risks involved in the company that I’ve just invested in?
As a trader, what is the if-then context and price action setup that made me took that trade?
Putting my trades down into a journal makes doubled my experience with that particular trade.
Discuss trades with like-minded people/community – that’s 3x experience
One thing that I like doing is to discuss the trades that I took with like-minded traders and investors.
These are the people and communities that, to a certain extent, understand how I make trading/investing decisions.
As an example, they might notice a certain part of the company’s fundamentals that I’ve missed out on in a financial report.
As a result, I can receive feedback on what I’ve missed or maybe a certain perspective that I’ve not considered in that trade – which is extremely helpful.
Visualize your trades – that’s 4x
I can’t emphasize how powerful this routine is to your experience accumulation.
Replaying a particular trade in my mind – what happened, what went right and what could’ve been done better, contributed to my growth tremendously.
Visualization helps in reinforcing the right habit & execution in my subconscious.
In return, this will make my execution better if there are any similar opportunities in the future.
End-Of-Month Review – that’s 5x
Many investors and traders have the impression that once a trade is taken then there’s nothing left to learn for the trade.
However, that’s clearly not the case.
For me, reviewing my past trades every end of the month/quarter has been extremely beneficial.
Reason being, it helped me to again reinforce the good trades that I’ve executed and how I can do better moving forward.
Now, I know what I can do better with my breakout trades.
No Money Lah’s Verdict – Multiply Your Growth with Systematic & Mindful Learning Routine
Now, I want to end this conversation by pointing out the obvious:
Investing and trading are not easy to master. More often than not, it involves a deep learning curve that’ll take time to develop.
Hence, you will need all the feedback from the market to help you deepen your learning experience.
Good or bad, winning or losing, every trade is a learning opportunity.
In fact, every trade can be more than ONE learning opportunity. Using the methods above, and you can 5x your experience for every trade you take.
All you need to do is to just tweak your routine a little. For a 5x growth of experience per trade, I’d say the effort is pretty worth it.
Part of this article is inspired by the book One Good Trade by Mike Bellafiore. Bella is the founder of SMB Capital, a proprietary trading firm in New York.
He is one of my favorite trading coaches that I follow online which has been giving back tremendous value to the online trading community.
I found that some of his approaches to trading improvement, which has inspired me to implement and write this article, are equally useful in one’s investing journey as well.
The Cheetah and How a Struggling Trader/Investor can Learn from It
Many people that traded and invested in the stock market (or any market, in this case) experienced great volatility for the past few weeks.
Some made a kill, nailing their yearly return goal in a week. For many, though, it was an overwhelming time filled with emotions and anxiousness.
You are (were) probably in the red. You are (were) probably underperforming. You are (were) probably beating up at yourself for this outcome.
The reality is, this is a path that every investor and trader MUST experience in his/her journey. The difference is how one handles this hurdle that makes up to an amateur and a consistent investor/trader.
How to Climb Back Up from a Slump?
To be clear, it is NOT EASY to recover from a slump. Mathematically, it is hard (eg. a 50% drawdown will take a 100% gain to breakeven). Emotionally, it is even tougher to get back on track.
In times like these, it is crucial for one to go back to the BASICS.
Stop looking around Facebook groups and investing/trading forums for tips for the NEXT big opportunity.
Quit those groups if needed – these are noises that hardly contribute to your recovery anyway.
The point is, stop making investing/trading so complicated and difficult.
Back to the Basics
What are the trades that work the best for you? Make a list and focus on only taking these trades for time being – with smaller size.
If you are a long-term investor that has just dumped your holdings due to panic and fear, look into your investing process – have you followed your entry & exit strategy? Do you have one? Work on them one by one.
The point is NOT to remake your losses immediately. Rather, it is for you to rebuild the mental confidence towards yourself FIRST.
The Cheetah
“The cheetah, while the fastest animal on the African plain and can outrun any of the prey it feasts upon, always chooses to go for the young, weak or sick.
Once identified, it attacks with laser-guided focus and effectiveness. It is only then that the kill is most likely. That is the epitome of a professional trader.”
This is one the of most resonating trading analogy that I’ve come across lately in an article by Mike Bellafiore of SMB Capital (one of my favorite role models in trading).
As extraordinary as a cheetah is, it still focuses on the most basic kills which are also the most effective ones.
Likewise, the goal for us as an investor/trader is not to try to be smart and predict whether the market is bottoming. Rather, it is to understand our strength and take the best opportunity with probability in our favor.
Know your strength. Go back to the basics. Be a cheetah.
Are the Newly Listed Leveraged & Inverse ETFs for You?
TradePlus by Affin Hwang Asset Management has recently listed their highly anticipated Leveraged & Inverse ETF (FANG+ 2x Leveraged, FANG+ Inverse, HSCEI 2x Leveraged, HSCEI Inverse) on Bursa – the first in Malaysia.
Essentially, this means that local traders now have the opportunity to be exposed to the foreign market (US Tech sector & Hong Kong’s listed Chinese companies) via local platform. In addition, local traders also have more versatility when it comes to trading the market – with the advantage of leveraging and the ability to profit with inverse ETF when the market goes south.
That said, are these ETF products for you? Let’s find out:
First of all, what is an ETF?
Exchange-Traded Fund, or ETF, is a fund that tracks a collective of specific securities that is traded on stock exchanges.
Simply put, instead of a single stock, look at ETF as a basket of stocks that are being sold in the stock market – tracking the collective performance of stocks within the basket.
So…What are the newly listed Leveraged and Inverse ETFs?
For a typical ETF or stock investment, you earn 1% when the investment moves up by 1%.
Technical details (boring stuffs) aside, the newly listed FANG+ and HSCEI 2x Leveraged ETF allows one to double his or her return when the trade moves in one’s favor. Generally, it means that when the ETF moves up by 1%, your return would be 2%, which is twice (2x) the price movement.
On the other hand, the newly listed FANG+ and HSCEI Inverse ETF would allow a trader to profit when the price of the ETF goes down instead. Simply put, think of it as you are buying an Inverse ETF with the outlook that the price of the ETF is going to drop.
What are the stocks that the FANG+ and HSCEI ETFs track?
FANG+ 2x Leveraged & Inverse ETF tracks a basket of 10 US highly-renowned tech stocks, which is great if you have a specific trade idea on the US tech sector and is wondering how to trade the sector. (Interesting fact: FANG+ stands for Facebook, Amazon, Netflix, Google & Others)
On the other hand, HSCEI 2x Leveraged & Inverse ETF tracks a basket of the 50 largest Chinese companies that are listed in the Hong Kong’s stock exchange. Some of the notable companies include Tencent (tahu Wechat?) and Ping An insurance.
HSCEI ETFs are a great choice for traders with trade ideas towards Chinese companies.
Related Fees
Just like investing in a stock market via your broker, you’ll be charged your normal brokerage fee when buying the FANG+ and HSCEI 2x Leveraged & Inverse ETF.
Also, certain annual charges will be imposed too, kind of like mutual funds.
Is it For You? (and the Risks Involved)
Now, it is super clear that these ETF products are very niche and is NOT for everyone. Even in the product page itself, it has been stated specifically that Leveraged and Inverse ETFs are more suited to be traded short term instead of long term investing.
In particular, 2x Leveraged ETFs, while could deliver 2x the return, could also deliver a loss that is twice as much to traders when a trade goes wrong – hence should be carefully approached.
That said, this product is superb specifically for experienced traders with large capital. As such, these are traders that would like to profit from their short-term view of the US tech sector or from the thriving HK-listed Chinese companies via leveraged and inverse products.
That aside, Leveraged & Inverse ETFs are NOT for people who:
- Have little to no experience in trading.
- Do not understand the risk of leverage.
- Have small capital (because your brokerage fees alone could screw you up)
How to Trade?
For traders that are interested to trade these newly listed ETF products, you can do so today via your Malaysian stockbrokers - just search for the respective ETF names/stock code and you will be able to start trading them!
FANG+ 2x Leveraged (E830EA), FANG+ Inverse (E831EA), HSCEI 2x Leveraged (E832EA), HSCEI Inverse (E833EA)
No Money Lah’s Verdict
In short, it is very interesting that we are starting to see more interesting investment alternatives that are coming up in the local scene. While clearly not designed for most everyday investors, TradePlus’ Leveraged & Inverse ETF products are definitely there to fulfill the niche for certain traders in the market that are looking to profit from their view of the foreign market.
For the general everyday investors though, my recommendation to check out the normal (and equally exciting) locally listed ETFs or stocks like REITs to invest for the longer term.
Side note: For the niche group of traders who are interested in the Leveraged & Inverse ETFs, I will be trading them for a bit – and will write about my experience real soon – so stay tuned!
Real Estate Investment Trusts (REITs) is one of my favorites to invest in the stock market, as they provide relatively stable dividends – hence making them a great passive income source.
Disclaimer: This article is written based on my best research as of the time of writing, and should not be considered as a buy/sell recommendation. Please do your own due diligence and/or seek professional advice when making your investment decision.
Is Gold a Stable Investment?
A lot of people, especially among the Asian community, have a long conventional perspective where gold is a stable investment compared to other existing investment vehicles. I, for one, used to think so back when I was a teenager.
For a while, I have been intrigued by the conventional thinking of gold as a stable investment. Hence, I went on researching and managed to do some digging into this topic.
In this short yet important article, let’s explore if our conventional perspective is true, and do some myth-busting wherever necessary:
Gold is, in fact, not as stable as you think
To many, gold is thought to be a stable store of wealth. At the very least, gold should be something that, in our very own slang –
“Will not lose money one right?”
Apparently, that’s not the case.
Take SPDR Gold Shares (GLD), an ETF that tracks gold performance, as a benchmark – which has an mean annual return of 0.39% for the past 10 years (not too bad for a ‘stable’ investment, huh?).
However, just looking at the average annual return DOES NOT give us a clear picture of how stable gold has performed.
Now, instead, let’s look at the standard deviation value of gold – a measure that will give us a better view of how volatile is gold over a 10-year period.
With a standard deviation of 16.59, this provides us with a better picture of gold’s volatility.
Essentially, a standard deviation of 16.59 means that if you have held gold for the past 10 years, there is a probability that your return could go as high as 16.98% a year (0.39% + 16.59%), or as low as -16.2% (0.39% – 16.59%) a year.
In comparison, the S&P 500 index scored an mean annual return of 1.13% per year, with a standard deviation of 12.48 for the last 10 years.
This means that, if you have invested and held the US stock market for the past 10 years, your return could be as high as 13.61% (1.13% + 12.48%), or as low as -11.35% (1.13% – 12.48%) a year.
Simply put, gold’s movement to the upside and downside is huge and is definitely not as ‘stable’ as perceived by many. In fact, gold is a volatile asset – even when compared to the stock market.
Gold is Volatile, But…
It is not something you should overlook. This is because gold, even as a volatile asset, is a great portfolio diversifier with almost 0 correlation with the stock market. Also, gold is a great hedge of wealth against growing consensus towards global interest rate reduction.
Even more so, gold also plays an important part in the portfolio of prominent investors, namely as a hedge against inflation. In the All-Weather Portfolio by Ray Dalio (founder of investment firm Bridgewater Associates, one of the world’s largest hedge funds), gold makes up 7.5% of the total portfolio aggregation.
In other words, it still makes a lot of sense for one to include SOME proportion of gold into his or her portfolio as an effective way of wealth preservation.
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No Money Lah’s Verdict
In short, gold is not the ‘stable’ investment as perceived conventionally. As such, gold is NOT SUITABLE to become the MAIN store of wealth and investment vehicle for most people, due to its volatility as mentioned above.
However, gold should not be overlooked, as it still has its advantages in diversifying your risks when it comes to the preservation of your wealth.
To end, here’s an interesting angle to look at gold, as shared by a friend of mine, Jason:
Gold should not be seen through the investment lens, but the preservation lens. And not the preservation of fiat value, but for value where fiat money cannot exist (meaning, the day when our paper money is no longer valuable as a means of exchange)
Meanwhile if you like this article and would like to invest in gold, open a HelloGold account today (and get RM5 off when you invest a min. of RM50 when you use my referral code ‘CHIN012W’!)
Real Estate Investment Trusts (REITs) is one of my favorites to invest in, as they provide relatively stable dividends – hence making them a great passive income source.
Disclaimer: This article is written based on my best research as of the time of writing, and should not be considered as a buy/sell recommendation. Please do your own due diligence and/or seek professional advice when making your investment decision.
Malaysians' Guide to Gold Investment
Gold is an asset that has been universally recognized as a store of wealth since ancient times. Despite not being a legal tender form of exchange (read: currency) these days, gold is still widely accumulated by the society and countries alike.
In this article, let’s look at some interesting (and lesser-known) facts about gold, WHY invest in them, and HOW to invest in gold as a Malaysian.
What Makes Gold So Attractive?
(1) Gold is uniquely beautiful
Gold is stunning on its own. As such, gold’s shinny and elegant nature make it an attractive choice for jewelry and life accessories alike.
(2) Gold is scarce
Gold is a type of commodity. This means it is a rare metal and the amount of gold available to mankind is limited.
Not only that, the mining process of gold is also painstaking and expensive, making gold an even more valuable asset to own.
(3) Gold is durable and useful
Gold does not decay or rust – and it is almost indestructible. All the gold ever mined is still around in one form or another.
In addition, gold is a good reflector of light and an excellent electric conductor. This contributes to the extensive usage of gold in electronics such as circuits, dental fillings and more.
(4) Gold is homogeneous
One pure gram of gold is similar in value to the next gram. This makes it easy for people to ascertain gold’s value and utilizing it in trade and commerce.
Having understood the characteristics of gold, it is useful for us to understand WHERE gold is being supplied and HOW gold is being used in the world.
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Supply & Demand of Gold
Have you ever wonder how is gold being supplied all around the world?
According to the World Gold Council (WGC), around 75% of the world’s gold demand is contributed by gold mining. Unlike paper money which can be printed with relative ease, the only known way to produced gold is to mine them.
That said, gold that is mined is usually not enough to meet the demand for gold. Hence, the remaining 25% of gold demand is met by the recycling of gold. These recycled gold supplies come mainly from jewelry (~90%) and gold extracted from technological hardware.
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If that’s the case, WHO is buying gold around the world?
There has been 4 main use of gold worldwide.
The first use of gold, which takes up around 50% of the total demand, comes from (you’ve guessed it) – jewelry.
This is followed by investment-related purposes (eg. Gold-backed ETFs), which contribute to around 25% of total gold demand. In addition, gold is also accumulated by central banks all around the world. This takes up around 13% of total gold demand.
Lastly, gold usage for industrial production takes up the rest of the demand.
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Which country holds the most gold?
Now, as mentioned, gold is highly accumulated by the central banks of many countries. Gold is being held as part of a nation’s reserves, mainly due to gold’s nature as a safe haven asset and an effective diversification of their portfolio.
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With that in mind, let’s make a smart guess before you proceed – which are the countries that hold the most gold?
As of October 2019, the United States holds the most gold in its national reserves (8133.5 tonnes!) – which takes up near to 78% of the total reserves. The far second is Germany with a total gold reserve of 3366.8 tonnes, making up 72.9% of the country’s total reserves.
Countries like China and India have a gold reserve of 1942.4 tonnes and 618.2 tonnes respectively, making up less than 8% of these countries’ total reserves.
Back in Malaysia, we are placed at 53rd (out of 100 countries) when it comes to our total gold holdings. This translates to a total gold holding of 38.9 tonnes – which is 1.8% of Malaysia’s total reserves.
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Why invest in gold?
(a) Hedge against the drop in interest rate & geopolitical uncertainties
With global powerhouses like the US reducing its interest rate, it is inevitable that there will be a drop in return (or yield) of major bonds in the market. This will cause the return of bonds less attractive in the eyes of investors.
Adding on to various geopolitical uncertainties, this makes gold especially appealing as a safe-haven asset for institutions and retail investors alike in search of protection against uncertainties.
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(b) Portfolio Diversification
Gold is also an effective instrument for you to diversify your investment portfolio. This is because, for the past 10 years, gold has almost no correlation (0.04) with the stock market movement.
In short, this means that gold price is generally not affected by the ups and downs in the stock market, making it a good wealth diversification vehicle.
Useful link: S&P 500 vs Gold price movement for the past 10 years
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How can Malaysians Invest in Gold?
#1 Recommended – HelloGold
HelloGold is a mobile app that allows you to buy and sell gold for as little as RM1. This is really a big plus point, considering that the other offerings in the market have a barrier of entry of a minimum of 1 gram of gold (~RM200). Some of the advantages of HelloGold are:
- Low barrier of entry - Invest in gold starting at just RM1!
- No-hassle account opening - The easiest way to get started in gold investing. Open your account via HelloGold's mobile app - no need to be physically present at counters to do so.
- Shariah-Compliant
- Automated investment - If needed, you can automate your monthly gold investment via HelloGold’s SmartSaver plan.
- Flexibility in managing your gold holdings - With HelloGold, you can buy and sell gold via the app anytime, and even send gold to your family and friends via the app.
This flexibility is a huge thumbs up considering that I used to have to visit the Maybank counter myself to withdraw my gold investment as a Maybank Gold Investment Account holder.
In terms of security, every gold bought is yours and is held at HelloGold’s vault provider in Singapore (which, you can redeem them if needed), and is well-insured by insurance company.
With that in mind, unless you really need to hold solid gold, I definitely recommend HelloGold to most people that are keen to invest in gold.
#2 Physical Gold
Should you fancy physical gold bars and coins, you can also get them via sites like BuySilverMalaysia. That said, I personally feel that unless one has specific needs for physical gold, I do not recommend them due to safety and storage hassles.
#3 Gold-backed Exchange Traded Fund (ETF)
TradePlus Shariah Gold Tracker (Code: 0828EA) is Malaysia’s first shariah-compliant commodity ETF that tracks the performance of gold. Essentially, think of it as investing in a fund that goes up and down with the price movement of gold.
With some fees, you can invest in gold without having to take care of physical gold.
#4 Banks’ Gold Investment Accounts (GIA)
Alternatively, you can also purchase gold through banks’ gold investment account (eg. Maybank, CIMB). That said, GIAs usually charge a spread when you buy and sell gold.
Also, just a personal experience from using Maybank’s GIA: while I could purchase my gold online, I have to visit the counter should I wish to sell my gold holdings, which is a real hassle by today’s standard.
No Money Lah Verdict
With gold being an effective portfolio diversifier for your wealth, there is no doubt that one should accumulate gold as part of his or her portfolio.
However, the million-dollar question has yet to be answered: Is now a good time to buy gold?
In the next article, I will discuss about the price of gold and if it is a good time to invest in gold - Stay tuned!
Meanwhile if you like this article and would like to open a HelloGold account (and get RM5 off when you invest a min. of RM50, be sure to click HERE and use my referral code ‘CHIN012W’!)
Real Estate Investment Trusts (REITs) is one of my favorites to invest in, as they provide relatively stable dividends hence making them a great passive income source.
Click HERE to find out HOW you can pick and invest in quality REITs!
Disclaimer: This article is written based on my best research as of the time of writing, and should not be considered as a buy/sell recommendation. Please do your own due diligence and/or seek professional advice when making your investment decision.
If/Then Mindset: How this Hugely Overlooked Mental Skill will Transform Your Investing Performance
Have you ever been in a situation, where you were looking at a stock that you think you should buy, yet did not pull the trigger and ended up regretting your inaction?
How about the times when you think you should get out of an investment, yet too clouded by emotions to do so and ended up taking a huge loss?
When I first started in the market, I faced the similar problem over and over again. Not only it was frustrating, the huge emotional swings involved were also extremely tiring.
As times went by, I have learned an important, yet hugely overlooked mental skill by many that have since helped me improve my investing and trading performance alike.
What is the If/Then Mindset?
If/Then mindset is a simple, yet critical mental skill that is hugely overlooked by new investors and traders in the market.
In essence, the If/Then mindset is a mental simulation of the possible outcomes given a particular set of scenarios, and the actions that you will take should any of these outcomes happen:
“If A happens, I will do X. If B happens, I will do Y.”
Okay, So How Will the If/Then Mindset Improve My Investing Performance?
Let’s look at a simple ranging chart pattern, and how the If/Then mindset could help improve your performance:
What we are looking above is a stock price in a ranging (or zig-zag) pattern. For an inexperienced investor or trader, it is easy to conclude that there is no trend going on with this particular stock and hence no ‘excitement’ in the price.
However, using the If/Then mindset, one could easily simulate the potential price movements of the stock (scenarios A, B, C). With that, various interesting opportunities could be identified prior to any price movement at all.
As an example, if scenario A happens, then one could buy at the pullback upon a small retracement. However, should scenario B happen, then one could look to buy at the support level. That said, if scenario C plays out, then one could look to sell upon a mini retracement.
Benefits of If/Then mindset
Believe it or not, there are many benefits if you are able to build up your If/Then mental skill:
(1) Early Anticipation of Price Movement
Training your If/Then mental skill will help you to anticipate price movement effectively.
We can never predict with absolute certainty where the price of a stock will move. However, we can use the If/Then mindset to anticipate the different possibilities of price movement, and devise our actions should any of the scenarios play out.
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(2) Reduce Mental Stress & Emotions in Decision-Making
By simulating the possible outcomes prior to price movement, an investor could plan ahead of what could be done should different scenarios play out.
This might look like a simple thing, yet it is extremely helpful in reducing any form of emotional bias (eg. Fear of losing, Ego) and mental stress in comparison to the times when you have to make an immediate investment decision on your feet.
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(3) Improve Consistency in Investing Performance
As you make progress in developing your If/Then mental skill, you can expect consistency in your performance.
Reason being, a strong If/Then mental skill will provide you with a consistent execution process (eg. If A happens, then I will do X) by filtering out a lot of unnecessary biases involved.
We can never predict with 100% certainty what will happen, but we can always anticipate the possible outcomes and respond accordingly.
How to Apply If/Then Mindset in Investing & Trading
By now, it should be obvious that If/Then mindset is a mental skill that is applied prior to making any investment decisions.
As such, most application of the If/Then mindset should be done during the preparation phase of your investing workflow:
If you are a fundamental investor (read: Value Investing), your If/Then mindset could be “I will only invest in a company IF it has a consistent profit growth over a 5-year period”.
If you are a technical trader, your If/Then mindset could be applied in a way “IF price movement A happens, THEN I will do X”.
In short, practice and apply the If/Then mindset BEFORE you have to make any investment or trading decision live.
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No Money Lah’s Verdict:
If/Then mindset is a mental skill that is crucial for an investor or trader’s development to perform better and more consistent in the market.
That said, many tend to undermine the practice of this skill as it seems to be simple. However, ask yourself: How many times have you ever go through the If/Then thought process before making an investment decision?
If any, the If/Then mindset does not require one to be right at predicting the direction of a price. Rather, it trains a person’s mind to anticipate and be open to different possibilities of outcome and respond accordingly.
Personally, I think this is an important skill to develop, and one that I strive to improve on a daily basis.
I certainly hope you do, too.
Read my articles on REIT Investing HERE.
Every now and then, I organize sharing sessions to share insights on how I invest in the market. Book your slot for my upcoming session HERE!
Check This Out Before Opening Your Stock Trading Account!
To start investing or trading the stock market, the first thing that you got to do is to open a stock trading account. Opening a stock trading account is actually pretty simple, and in this article, we are going to discuss some of the things that you should take note of before opening your stock trading account, and HOW to open one!
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Step 1: Decide if you are opening a Direct CDS or a Nominee CDS account
A Central Depository System (CDS) account is an account that records the ownership of your stock holdings and any of your transaction history whenever you buy or sell shares. Take it as an electronic safe box that keeps your shares.
In Malaysia, all CDS accounts are maintained and operated by the Bursa Malaysia Depository. As such, you will receive a monthly account statement if there is any transaction made in your CDS account during the preceding month.
As a side note, you need to be 18 years old and above to open an account. Also, there is an RM10 fee for CDS account opening, and your brokerage will help you to open your CDS account simultaneously when you register for your stock trading account.
There are 2 types of CDS account – Direct CDS and Nominee CDS account.
| Description | Direct CDS | Nominee CDS |
| Account holder’s name | Shareholder (You – Mr./Ms.) | Broker’s name (eg. Rakuten Trade Nominees for Mr./Ms.) |
| Eligibility for IPO application | Yes | No |
| Dividend Payment | Credited directly into registered bank account. | Credited into the trust account (which is linked to savings/current account) |
| Paperwork on corporate actions (eg. Rights issue, takeover offer) | Managed directly by the shareholder. | Managed by the broker on behalf of shareholder with a service charge. |
| Annual reports & dividend vouchers | Received directly from the Registrar. | Will not receive directly from the Registrar. |
| Rights to attend AGM | Yes | Yes, with bank consent letter. |
| Shares transfer | Transferable to family members’ accounts. | Transferable to own account only. |
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If you are just getting started with stock investing, my suggestion is to open a Nominee CDS account as the broker will manage all the necessary paperwork on your behalf should there is a need to do so. (But it is, well, up to you)
Step 2: Choose a Stock Broker
Choosing the right broker is important, as it is its platform that you will be using to invest in the stock market. There are 2 main things that you have to consider before opening a brokerage account, namely the brokerage fees and whether you are opening a Cash Upfront or Margin/Contra account.
i. Brokerage Fees
The brokerage fee is an important consideration for an investor, especially if you are starting with a small capital. Below is a list of stock brokers in Malaysia and its brokerage fee:
As you can see in the above picture, there is a difference in how brokers charge their fees. If I were to buy into 100 units of shares at RM1.00 per unit:
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Maybank Investment Account (0.42% or RM12, whichever is higher): Total Cost = RM100 + RM12 = RM112
Rakuten Trade (0.1% or RM7): Total Cost = RM100 + RM7 = RM107
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Also, do note that the brokerage fee is charged twice: when you buy and when you sell your shareholdings. Hence, it is crucial for you to choose a stock broker with a low brokerage fee!
ii. Cash Upfront or Margin/Contra Account
Next, consider if you need a Cash Upfront or a Margin/Contra account.
Essentially, Cash Upfront is pretty straightforward: you only invest the money that you have in your account (imagine a prepaid card).
In contrast, with a Margin account, you get to buy shares with a total value higher than your available cash. In other words, you can borrow money from your broker to buy shares using your Margin account.
When you buy shares on margin, your profit will be amplified when the share price goes up. On the flip side, your losses will also be amplified when the share price goes down.
On a personal note, I do not recommend new investors to buy shares on margin, unless you really know what you are doing and you can handle the risk involved.
Open Your Stock Trading Account Online via Rakuten Trade!
Rakuten Trade is a joint venture between Malaysia’s Kenanga Investment Bank Berhad and Japan’s Rakuten Securities, Inc. Let’s dive deeper and find out more about Rakuten Trade:
#1 One of the lowest brokerage fees around
Rakuten Trade offers one of the lowest brokerage fees among the brokers in Malaysia – hence making it one of the most affordable options for new and experienced investors or traders alike.
|
Transaction Size |
Brokerage Fees |
| < RM1,000 | RM7 flat fee |
| RM1,000 – RM9,999 | RM9 flat fee |
| RM10,000 – RM99,999 | 0.1% |
| > RM100,000 | RM100 flat fee |
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#2 Hassle-Free Account Opening
Rakuten Trade is also the first in Malaysia that offers online account opening. It took me about 15 minutes to register for a Rakuten Trade share trading account. The best part is that your application will be processed extremely quickly and you can start investing after your account has been activated.
p.s. Rakuten Trade stock trading accounts are Nominee CDS. Meaning, you do not have to deal with all the related paperwork in your investing or trading journey.
Step-by-Step Guide to Open a Rakuten Trade Stock Trading Account (will focus purely on Cash Upfront account here)
Step 1: Select ‘Cash Upfront’ as your Account Type.
Step 2: Key in your Name, Nationality & IC
Step 3: Upload the front & back snapshot of your IC.
p.s. Select ‘NoMoneyLah’ under ‘Educator’, and you will get a free 500 Rakuten Trade points that can be accumulated & converted into AirAsia Big Points and Shell petrol via BPoints!
Step 4: Key in your Contact, Email, Username and Security Question.
Step 5: You have to set a 6-digit trading pin to execute any transaction for buying or selling shares. This pin is VERY important as you need to key in this pin for all your transaction on Rakuten Trade!
Step 6: Key-in your personal particulars in the next few sections.
Step 7: Update your bank account details & upload your Bank Statement.
Step 8: Answer the few remaining questions for profiling purposes.
Step 9: Update your bank account details & upload your Bank Statement.
Step 10: Pay RM10 for your CDS account opening.
Step 11: Upon payment, you will receive an email in your inbox asking you to verify your email.
Step 12: Done! You will be notified once your Rakuten Trade account is approved. Next, you can start to fund your account and start investing or trading!
No Money Lah Verdict
To start investing or trading the stock market, choosing a reliable stock trading platform is important, and I have no problem recommending Rakuten Trade due to its ease of application and additional perks (eg. Earning RT Points that is convertible to BIG Points for every transaction.)
- If you find this article useful, and would like to open your Rakuten Trade stock trading account, do consider using my referral link HERE to register for your account (or enter ‘NoMoneyLah’ under ‘Educator’ when you register). For that, you will gain 500 RT points from this registration. Otherwise, you can always google for Rakuten Trade and open your account too.
Open Your Rakuten Trade Account Today!
Read More: How to Make Your First Trade Using Rakuten Trade?
How to Make your First Trade on Rakuten Trade?
From my previous article, I have shared about the important elements that you should consider when opening a stock trading account. I have also shared a step-by-step guide on how to open a Rakuten Trade stock trading account too.
That said, opening a stock trading account does not solve ONE key problem:
How to make your first trade?
Reason being, every stock trading account has a different interface and it could be overwhelming especially for someone new to the stock market to start making transactions if one does not understand how and what certain key functions mean and works.
In this article, I am going to share a simple step-by-step guide on how to execute a transaction on Rakuten Trade, and explain some key terminologies along the way (Don’t worry it is very straightforward once you get it!).
Before we move on, I am assuming you have read my article on How to Choose a Stock Broker and have opened a Rakuten Trade (Cash Upfront) account. If not, you can read it HERE.
With that in mind, buck up, and let’s go!
Step-by-Step guide to Buy a Stock on Rakuten Trade
Upon logging in to your Rakuten Trade account for the first time, you will have to first fund your trading account using the funding methods available. In short, the easiest method is to fund your account using your savings/current account.
Step 1: Search for the stock that you want to buy at the search bar.
Step 2: Click ‘Buy’
At the order page, there are a few key sections that you got to familiarize yourself with:
1 – Trading Limit: How much capital you have to invest.
2 – Market Price: The price where a share is traded most actively between buyers & sellers.
3 – Best Buy & Best Sell Table (Market Depth): This table shows us what is the price that the people are lining up to buy/sell and the volume.
The more volume it is for a price, it means that the faster you will be getting it once you execute an order. (eg. You will be able to buy at RM1.28 immediately compared to trying to buy at a lower price of RM1.27)
4a – Board Lot & Odd Lot:
•Board lot means you buy in a minimum multiple of 100 units. (1 Board Lot=100 units of shares, RM1.28*100=RM128)
•Odd Lot means you can buy in a multiple of 1 unit.
•Since more people will buy in Board Lot, your order will usually be filled easier compared to buying in odd lots.
4b – Quantity:
•If you buy in Board Lot, your quantity will be in the multiple of 100. (eg. Put 2 if you want to buy 200 units of shares)
•Odd lot means you are free to key in any number of units that you want. (eg. Key in 88 if you want to buy shares in 88 units)
5a – Order Type:
- Limit Order: Queuing to Buy LOWER than market price. (if you are selling means you are queuing to Sell HIGHER than market price)
- Market Order: Buying or selling at MARKET PRICE. (order will be fulfilled almost instantly)
5b – Limit Price (not available if ordering at market price):
- The price you want to buy below market price. (eg. Queuing to buy cheaper at RM1.26 instead of the market price of RM1.28)
- Note that buying below market price may not 100% guarantee that your order will be fulfilled.
6 – Validity (only available if buying/selling via Limit Order):
- Day: Your order will be canceled if it is not fulfilled by day end (5pm). (eg. If you queued at RM1.26 but did not get fulfilled, then your order will be canceled by 5pm the same day)
- Good-Till-Date (GTD): You can decide the validity of your order. (eg. You queue for the price of RM1.26 until X date)
7 – Trading Pin: Your numbered pin to approve your trade. (Set when you open your account.)
Step 3: Fill in the details of your trade, your Trading Pin and click Confirm Order.
Note:
1. Decide if you are buying Board Lot or Odd Lot.
2. Decide your Quantity.
3. Decide your Order Type.
4.Key in your trading pin.
5. Confirm Order.
6. Wait for your order to be filled.
And we are done! This is how exactly you can buy your first stock via Rakuten Trade.
KLSE Market Operating Hours
The market is open from Monday to Friday, except for public holidays. Details on active market hours are as stated below:
No Money Lah Verdict
With a good understanding of the terminologies and functions, hopefully, you will not be so overwhelmed with these stock trading platforms!
- If you find this article useful, and would like to open your Rakuten Trade stock trading account, do consider using my referral link HERE to register for your account (or enter ‘NoMoneyLah’ under ‘Educator’ when you register). For that, you will gain 500 RT points from this registration. Otherwise, you can always google for Rakuten Trade and open your account too.
Open Your Rakuten Trade Account Today!
Check out: 5 BIGGEST MISTAKES that I Made In Stock Market Investing.
5 Differences Between Investing & Trading That 'Experts' May Not Tell You
Ever since I started to learn about stocks, I’ve always come across Facebook and Youtube ads about courses where ‘gurus’ or ‘experts’ will teach you how to make money in stocks. haha
The problem is, the terms ‘stocks investing’ and ‘stocks trading’ have been so frequently used in these marketing ads, people are starting to mix and generalize them into the same thing*.
(*Skip to point 4 & 5 to read about how these 'experts' fail to deliver the proper idea of investing and trading)
In reality, ‘stocks investing’ and ‘stocks trading’ are very different in nature. Hence, it is of crucial for you to understand their difference before you start your investment or trading journey.
Note: Essentially, there are various financial derivatives (eg. ETF, futures, stocks) that you can invest or trade in. To simplify this article, I will use stocks in my explanation.
With that in mind, let’s get started:
(1) Investors invest in a business, traders trade the numbers. What do you want to do?
Imagine, today, you and your friend bought a bag of corn each.
The next day, your friend sells off the corn at a higher price to another person. He profits from the direct price difference of the corn.
This reflects how trading works.
On the other hand, you decided to grow the corn in your backyard. Although you may need to wait to reap the fruit of your hard work, your bag of corn will eventually grow into a land of fresh sweet corns where you can sell in the market over and over again.
And this, is how investing works.
Investing and trading both involved the goal of profiting from the stock market, but in a distinct manner.
Essentially, you are buying part of a business when you invest in the shares of a company. As such, you care whether the company you invest in can grow and deliver profitability in the long run.
On the other hand, stock traders look to profit from the market with the short-term price difference. As a stock trader, you do not put much emphasis on a company’s long-term growth prospects.
Investor build assets with their capital.Traders, on the other hand, earn income with their capital.
The question now is, what is your intention when you want to learn about stocks?
(2) Investors are in for the long run, traders operate in the short run
How long do a stock investor and trader hold on to their shares?
An investor will normally eye to hold the shares of a company for a long-term basis, normally for years. Hence, an investor pays a lot of attention to the fundamentals of a company (eg. Cashflow & debt status) in order to make sure the company continues to grow in the long run.
Moreover, an investor does not need to constantly monitor their investments. Short term market movements are not a big concern to investors with a long-term mindset.
Depending on one’s trading style, a trader may hold their shares from a few minutes, hours, days or weeks. This is relatively shorter in timeframe compared to investing.
With such a short timeframe, constant monitoring is needed to ensure one does not miss out on any significant market movement.
In short, investing require more prior effort (eg. Studying annual report) before making a move, while trading requires more constant effort at any point in time (price monitoring).
(3) Investors and traders make money differently
Investors profit from the stock market via capital appreciation (the increase in share price) and dividend (profit sharing by companies).
On the contrary, traders earn their wealth via price movement (price hitting target profit in traders’ desired direction) and/or short-term price difference (a.k.a scalping or arbitrage).
While dealing with the similar derivative (stocks), there is a significant difference between how an investor and a trader makes money.
(4) Investors and traders experience risks differently
Now, this is where many ‘experts’ or ‘gurus’ failed to explain or clarify enough.
Ultimately, you will need to deal with risk regardless if you are investing or trading. However, the risks involved in investing and trading are not the same.
As an investor, your major risks involved the sudden change of fundamentals (eg. Low debt to high debt status) and business nature of the company (eg. People switched from watching TV to Netflix).
As a trader, your major risks involved price not moving in your desired direction (eg. You buy into Facebook shares in hope that its price will go up, but it turns out otherwise) and capital mismanagement (eg. Placing too much of your overall capital in a trade and end up losing them).
Investors invest their confidence towards a business, traders trade probability for profit.
(5) Expectation Setting: Quick & high return! (Or is that the case?)
The biggest problem with ‘experts’ and ‘gurus’ that offer courses these days is this:
They tend to give unrealistic expectations to their target audiences in order to convert them into paying customers.
As an example, investing ‘experts’ use marketing gimmicks to portray how one or two students managed to get X% of return within 3 months after attending their investing course. However, they fail to convey that the true idea of investing is a long-term effort that requires time and patience to bear fruits.
Another example would be trading ‘gurus’ that boast potential high return monthly after attending their course. The other side of the story that they do not cover is the steep learning curve that requires a lot of mental strength and discipline (plus mistakes & failures) before achieving the return they promise.
In short, these ‘experts’ and ‘gurus’ entice potential customers with (1) Potential Fast Returns and (2) Potential High Returns. This is totally in line with the mindset of people nowadays that greed for a fast and high return with little effort.
Investing and trading is simple to learn, but not easy to master. Set realistic expectation that includes time to climb the learning curve before enrolling in this journey.
No Money Lah’s Verdict: Are investing and trading for you?
The short answer for investing is a big YES. The short answer for trading is no.
Investing is an art of asset-building with your existing wealth on a long-term basis. In my opinion, the knowledge of investing is a crucial skill to learn as a part of personal finance management.
In comparison, trading is a discipline that makes a profit from the knowledge of probability and proper risk management in a short-term timeframe. Moreover, it’s the nature of a shorter timeframe and emphasis on price movement means higher commitment and psychological discipline for a trader.
Hence, trading is not for everyone as not everyone can commit and have the mental discipline to trade the market.
The bottom line is this:
Have a clear intention before you embark on your investing or trading journey. Do you want to invest in a business, or do you want to trade a game of probability?
Learn how I build PASSIVE INCOME in the stock market with MINIMAL RISK!
Now that you have a clear picture of investing and trading, it is also essential for you to know how to protect yourself during a market downturn. Check out how you can do exactly so HERE!