Online Stock Investment

date Aug 14, 2007
authors Loh, Soh & Lai
reading time 3 mins
  • Book Title: Online Stock Investment: 5 simple steps to Profit
  • Author:Leslie Loh, Charlie Soh, Stephen Lai
  • Year written/published: 2004
  • Book Source: Library
  • My Comments: I found this book really useful. After reading all the finance and investment concepts, it was indeed time to know how to actually do it especially online. This book gives clear guidance on using an online broker as well as an investment tool for analysis.
  • Contents page:
  1. Introduction
  2. Online Investment - 5 easy steps
  3. Identify Potential Stocks
  4. Select Stocks with Best Probability of Success
  5. Study Charts to Time Purchase
  6. Determine Demand/Supply to get Better Price
  7. Manage Your Portfolio
  8. Your Winning Edge
  • Some extracts: Investment and inflation…

The purpose of investment is to preserve the value of money against inflation and achieve a positive return higher than inflation. Inflation erodes the value of money. … … which means you are getting negative return and not preserving the value of your money.

Online Investment Plan.. 5 easy steps:

  1. Identify potential stocks
  2. Select Stocks with the best Probability of Success
  3. Study the charts of the stock to time purchase
  4. Determine demand/supply of stock to get better price
  5. Manage your portfolio to improve investment performance

Portfolio Management…

A portfolio is a collection of stocks, bonds, and other assets owned by an investor at a particular point in time. Portfolio Management is about which assets )eg. stock, bonds) to invest, how much to invest in each asset, and monitoring the investment to maximise return and minimise risks. The concept of portfolio management is originated form the  work of Markowitz, who was the first to quantify risks and demonstrate quantitatively why and how portfolio diversification reduced risks and optimise return for investors. Markowitz also introduced the concept of an efficient portfolio, which has the smallest attainable portfolio risk for a given level of expected return or the largest expected return for a given level of risk.

your winning edge…

  1. avoid mistakes of losers
  2. develop the habits of successful investors
  3. have an investment plan
  4. use an online investment tool to give you an edge

avoid mistakes of losers…

  1. do not have an investment plan
  2. do not practise money management
  3. lack investment knowledge
  4. highly emotional
  5. No discipline
  6. greedy
  7. Gambler attitude
  8. Do not learn from mistakes and repeat them instead
  9. do not cut losses when they are wrong and allow losses to get out of hand
  10. buy on tips and rumours without checking the validity on the reliability of information source

word of wisdom for trading…

  • have a game plan for trading
  • make sure you have a money management system in palce
  • practise positive and proactive mental attitude
  • only trade stocks you know well
  • only trade in liquid stocks
  • establish a risk/reward outcome
  • understand the trend of the stock well and trade the trend
  • recognize a hidden change int rend
  • test our your price discovery ability
  • break trade into smaller sizes to hone in price discovery ability
  • get your entry price right
  • practise trading discipline by giving limit order
  • have a cut loss strategy and cut your losses quickly
  • cut your losses quickly before it damages you permanently
  • cut your loss when the events you bet on did not materialise
  • keep a trading journal
  • use an online investment tool to give you an edge