Rogue One: Is Demo/Paper Trading a Mistake?

Imagine yourself being the manager of an airline company.

Would you allow a junior flight school student to fly a real plane for you, even though this student may have read and understood the theories on how to operate a plane?

By now, you may be thinking:

“Ridiculous, of course no!”

Hey, I figured the same too.

I’d throw this fella into multiple flight simulations and make sure that this flight school student is able to follow standards & procedures for a flight.

More importantly, I’d not want this soon-to-be pilot crashing my real planes if he/she can’t even handle landing the plane safely in a simulated environment.

Make sense, right?

I hope I have made my point of this article by now, but if not, here it goes:

Putting a junior flight school student into simulations is exactly the same as you going through the demo or paper trading phase when you first started investing or trading.

Essentially, you are doing yourself a HUGE favor by making sure that you can follow the rules and strategies consistently in a risk-free environment.

Here’s the thing:

At the beginning of your investing or trading journey, it’s not about making a lot of money. It’s not even about having a ‘feel’ with putting in real money into the market.

It’s about you having the discipline to follow the rules and processes and learn the foundation properly without additional emotional baggage.

Honestly, if you can’t land a plane safely in a simulated environment, what makes you think that you can land a real plane in reality – before crashing a few costly planes and hurting yourself (and others) badly in between?

I believe I’ve made my point clear.


p.s. Related Read: Here's What I’d Do if I Had to Start My Investing Journey All Over Again

Rogue One is a new weekly 1-min article series where I share my random thoughts and ideas.


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?

There's more to do after you take your first trade.

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.

You'd be surprised to find that there's a lot that you can learn from yourself through journaling.

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.

Discussing your trades with a like-minded community is super helpful in your growth as an investor/trader. (pic: My mini REIT income investing community - let me know if you are curious to know more!)

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.

Visualization helps in reinforcing good trade executions and habits.

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.

Monthly + Quarterly review is a must.

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.

 

Rogue One: Being Right in The Market

I used to have a bad tendency of wanting to be right in life. Sometimes, I still do.

In a debate, I want to prove my point right – and someone else’s opinion wrong.

In the stock market, I want to be right in the market direction so badly – that being right made me happier than making returns.

But here’s the thing:

This can work both ways.

Whenever I'm proved wrong in a debate, I felt ashamed.

Whenever the market doesn’t go in my favor, I felt frustrated.

The emotional baggage that I carried from trying to prove myself right is suffocating.

Here’s a lesson that I learned the hard way:

We live in a world that makes up of different personalities & agendas.

We invest in a market that makes up of different perspectives & emotions.

In the market, your opinion doesn’t matter. The market moves however it wants. The market is always right.

The key here is not trying to be right all the time. Rather, it’s having the humility to accept the lessons from different outcomes that’ll ultimately benefit you in the long run.

Be open with being right, AND be equally open on being wrong. There is more money to be made when you embrace both sides of the coin.


Rogue One is a new weekly 1-min article series where I share my random thoughts and ideas.


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.

A great illustration of ETF, credit to Investors.com

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.

An illustration of Leveraged & Inverse ETF, courtesy of Equities Tracker and TradePlus

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)

An illustration of Leveraged & Inverse ETF, courtesy of Equities Tracker and TradePlus

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.

An illustration of Leveraged & Inverse ETF, courtesy of Equities Tracker and TradePlus

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.

More details HERE

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:

  1. Have little to no experience in trading.
  2. Do not understand the risk of leverage.
  3. 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.


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.

This chart would be super boring to untrained minds.

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.

Different possibilities can be simulated with If/Then mindset.

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.

Investors can plan ahead and respond to price movement accordingly with If/Then mindset.

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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"If A, then X. If B, then Y. If C, then Z."

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!

 


Why Are You Still Suck with Investing after Paying Thousands for Courses?

Have you ever attended any of those investing or trading courses out there, and yet not getting the returns you expected?

Even worse, you paid thousands, and sometimes millions for those damn courses!

Hey wait, if this is not hurtful already, those experts even promised you a ‘consistent’ return if you learn their strategies!

If that’s the case, why are you – in spite of the hope and promises (not to mention an initial burn to your pocket) – still not making any money out of what you’ve learned?


Yup, You Are not Alone

I was there.

Sometime before graduating from university, I enrolled in my first ever 3-days investing course (in thousands). Just like many paying for these courses, I thought I will be able to make damn a lot of money (read: immediately) with my initial investment into my investing education.

You bet I was wrong. Super, duper wrong.

Instead of starting to make money from the stock market, I lost money instead. What the hell?


Can you relate?

Then, after losing money with the strategies that we paid thousands to learn, we embark on the journey to look for another course that could promise us a strategy that could provide us consistent and high returns.

Sounds familiar?

The irony is, for most of us, the cycle will continue to roll, and yet we will never find the one holy grail strategy that will make us huge and consistent returns.

Seriously, why is it so? Why do we pay that bloody money and yet not getting the returns we are promised?


‘Experts’ Overpromising Is Real

If you resonate with what I’ve written so far, I bet you will find what I am going share next even more relatable:

Firstly, there will be testimonies of students making X% within 3 months after attending the course. This gives people hope (the most important element in marketing courses).

Then, there will be a pitch to for you eventually quit your job through your returns from the market. This touches the soft spot of most people nowadays.

Wait, there’s more.

How about for everything above, you only need to ‘spend 5 minutes in front of the chart every week/month’? Or ‘get a sure-win stock-pick with a click of a button’ with their trademarked proprietary investing system (or some premium strategy with macam yes bombastic name)?

“Holy sh*t, this looks like something that I could sign up to I fire my boss sometime soon!”

Sounds like something that has slipped through your mind before? Well, it certainly did for me.


Marketers Tell Stories their Customers Want to Listen

Give what you’ll be reading up next a thought:

A weight management company will NEVER market their product as something that’ll produce results slow.

A hair-loss control company will NEVER market their services as something that’ll take a long time to see any effect.

However, we all know that both weight management and hair growth doesn’t happen overnight! In fact, it takes a grueling commitment and dedication to really get the results that you want (depending on your condition too, of course).

In short, a lot of marketing materials are likely not a reflection of the real deal. Rather, those are stories that leverage consumers’ emotions and desires in order to convert them.

It could be a ‘true story’ though. But it is likely not the WHOLE story.

Now, think about how an investment ‘expert’ that is real good in marketing would market his/her expensive courses:

Would you rather sign up for a course that claims that their students make 30% return consistently?

Or would you rather sign up for a course that claims that their students make 30% return consistently, BUT you will need to put a lot of practice and time into the system?

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"Earn quick and guaranteed profit by using our system and strategy!"

‘Experts’ Marketing Stories is NOT the most important reason WHY you still lose money in investing/trading

Humans are naturally born to the desire for instant gratification.

If any, I am willing to bet that 95% of the people sign up for investment/trading courses as a means to learn how to earn money – fast.

And again, I was there as well. The idea of seeing the ‘experts’ flashing their Ferraris, luxury houses and cash is simply too irresistible in a time where most people hate or dislike their jobs.

As a result, people are more inclined to succumb to too-good-to-be-true money games and overpromising marketing ads for investment courses.

The idea of earning money easy and fast from the market touches all our desire for an easy way out.

You may not like what you have been reading so far, but you know there is certain truth to these words.

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Humans, are unfortunately born with the tendency for instant gratification - especially when it comes to quick bucks.

Investing & Trading is a Skill That Needs to be Built Over Time and Practices

Now, think about one of your biggest achievement in life thus far.

It could be your piano grades, your career in consulting or a sports achievement. Did you achieve them by just spending ‘5 minutes’ honing your skills everyday?

Hell no!

The skills that you have today, is a result of the time and effort that you put into building that particular skill. It is the practices that you’ve poured whole-heartedly into your work that led to your mastery in that particular skill.

Becoming good in piano is a skill. Mastering the art of consulting is a skill. Becoming a pro in football is a skill.

If that’s the case, what makes investing and trading any different?

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Investing & trading are both skills that need to be developed over time and effort.

There is no Holy Grail in Investing & Trading

It took me a long time, but it eventually hits on me that there is no shortcut to investing and trading mastery.

They are skills that need time, discipline and practices to develop. They require passion so that you can persevere through the steep learning curves and losing streaks.

More importantly, no one strategies taught by courses out there will bring you results unless you are patient enough to allow for your skills to catch up to what you want to achieve.

If you haven’t got it by now, there is no holy grail to quick wealth in investing or trading.

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Can you become a world-class footballer by practicing 5 minutes everyday? Now relate this back to investing & trading.

The Takeaways

There are many factors that led to us not making any money from the market, even after signing up for expensive investing or trading courses.

If there is one key problem, though, then I would say that it is unfortunate that most of us that signed up for investing or trading courses started off with a wrong mindset.

We wanted to profit from the market quickly, and we thought it was easy. Then, course marketers make it seems like it is really that easy with stories we want to listen to.

But here’s the thing:

Investing and trading are skills that need to be developed over time, practices, consistency, and discipline.

Until we can accept this fact, chances are we will still see people jumping over courses and strategies, in hope to look for the quickest way to well, lose their fortune.


Disclaimer: The article above is not by any means a suggestion to sign up (or to not sign up) for any investment courses out there. It is just a personal opinion on the stated topic and does not reflect any interest in any particular party.


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
!