Monday, June 13, 2011

How good is your knowledge as speculator?

I have gather some of the below points, especially for those who like to trade a lot in Stock Market, at least you need to know the answers for below questions:

1. Is stock market a kind of game?

Stock market always change, we need to follow the condition, make decision base on the card on our hand. If you take the bad card, try to minimized the loses, in this case, good card will win more, whereas bad card will lost less.

2. How do you decide when to buy or sell?Look at stock market as a forest instead of a tree, when stock market down, almost all the stocks will follow.

3. What is most important when buying a stock?
Timing – if you buy at wrong timing, even the good stock will not going to make any profit.

4. What contribute to stock market's short term movement?
What others think - it's technical condition base on buyer and seller's decision, if more buyer than the seller, the price tend to go up.

5. What contribute to stock market's mid term movement?
Interest Rate will give impact to stock market in mid term, normally it will take some time to see the impact. When the return of bond is low, more fund will move to stock market.

6. What contribute to stock market's long term movement?
The economy's growth rate will impact long term movement of stock market. Whoever can predict the industry's direction, he will make a profit.

7. When is the time to sell a stock?
Do not care about profit or lost, the time to sell come, just sell it. The price you pay should not determine if you want to sell a stock. The future earning of a company will going to reflect on the stock price.

8. When the volume is small, but the stock price moving up, is this good or bad?
It's safer to buy a stock when volume is small, as the stock move from weak holder to strong holder. On the other hand, when the price is high, the stock move from strong holder to weak holder, it's bad news to stock market. 

9. When the market having good news, but a stock price is flag, should you sell or buy?
You need to sell the stock, as there's always a reason for the price not moving up.

10. Market participate should think like Doctor, Engineer, or Maths Teacher?
Doctor, who need to observe the symptom, think for the next course of action. If realize the decision wrongly make, find for solution immediately. Flexible is very important, take the logic combine with imagination. Do not hesitate or insist you are right at the beginning.

11.  What is most dangerous things you may do? 
Make use of the news but judge incorrectly.

12. What's the different between Trader and Speculator?
Speculator observe and analyze the situation, then decide if want to buy or sell. He believe there's a reason for a stock to go up or down. The inexperience sell a stock because he want to take profit without consider if the stock will go up, he only look at profit or loses. 

13. Will you buy a stock that you already sold at lower price?
Every trade should be a new trade, nothing to do with the history trading price.

14. What's most important thing for investor?
Planing – if buy for long term capital investment, today or tomorrow's price movement is not important. 

15. If all investment bank recommended a stock, you will:
Be careful, somebody going to sell the stock, you better sell before it.

16. If insider recommended a stock, you will:
Sell it, just act opposite what they do, they will not tell you what they going to do.

17. Is the politic impact stock market?
Yes, Interest Rate and Tax policy will give impact to investor decision making and influence the future earning of enterprise.  

18. Is international politic impact on stock market?
Yes, for instant, Gulf war directly impact on stock market, as those fearful sold the stock. It will also give impact to industries earning, the country's income balance and trading contract. 

19. Do you think speculator can sell at high and buy at low? 
He lied if he told you he can always do that.

20.  You should read the trend once a week, a month or everyday?
Looking at the price chart every day will not going to help you, but you need to keep update on the latest news. Weekly chart is just nice to capture the trend and give you a peaceful mind. 

21. Do you think it's important to analyzed history record?
Yes, because you can not predict the future, at least need to learn the history, built the experience so that you can think in different way for future decision. 

22. A big company sue a small company, if you will be buy, which one to buy?
Buy the small company, as this small company must be doing very good until big company want to take some action to protect the earning.
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