Friday 4 April 2014

Discipline In Trading

Since I started to change the my blogging style from June 2013, I notice that there is also a significant change in my style of stock market investment.

It is called DISCIPLINE.

Before 2010, I bought shares and left them aside. Some of them are good shares and some are bad. Overall I found that I actually gain from the share market.

From 2010 to 2012, because of more time available due to change of job, I became more active in share trading. I bought and sold shares frequently. I thought I knew fundamental analysis. I learned and applied technical analysis. I played contra and even day trade.

Overall, I actually lose money while the stock market was booming. I dissected the reason and found out that it was mainly because I didn't know when to sell. I sold good shares for quick profit but held on to those hopeless losers for too long.

Since June 2013, I reshuffled my portfolio. At the same time, I came to know about i3investor website. I learned from the unselfish sharing of the contributors of this site, bit by bit.

So, I set an investment strategy or plan, and I set buy/sell rules.

I also came to know more financial blogs. Some bloggers share their shares transaction or shares they own in their blogs. I find this quite useful, as I think that if I do this, it can make me more discipline in executing my investment strategy and shares transaction.

From October onward, I decided to share my strategy along with the stocks I own or plan to own in this blog. I'll do a summary in the end of each month to keep track my portfolio performance and decide from there whether any changes are required.

However, I try my best not to show the timing of my transaction as I don't want to lead those with less experience blindly to Holland.

Since the change of my trading style, thus far I'm very satisfied with the results, even though I know that this is because the market is bullish in this period of time.

Like mentioned earlier, the big difference I experience is DISCIPLINE.

Before this, when I encounter a stock which I think is good, there is a very high chance that I'll buy it. I'll sell those stocks that register profit to buy other stocks. I'll just keep the losers as I'm reluctant to realize loss.

Now, if I were to use the old method of trading, I would have trimmed down Tambun substantially and sold all the other stocks except Tropicana.

Most of the time, when we are in the process of disciplining ourselves, we have to go through some period of pain.

I didn't buy any shares in Mac14, which didn't happen for many months. This is because I'm in the process of accumulating fund to buy a plantation stock. During March, I'm actually very tempted to add BJAuto or Coastal Contracts to my portfolio, especially BJAuto which I have studied so much on it.

However, I know that if I were to use up the little fund I have, then I'll not be able to buy a plantation stock or top up Latitude Tree in the near future, which is my priority.

So I did nothing in March, which for me is considered very disciplined already. The sad part is, BJAuto has moved up a lot. Sometimes "discipline" can be painful and also work against you...

Anyway, I believe that in the long run, discipline in investment is a must and will benefit investors, as long as it is implemented with logic, skill and knowledge.

It seems like my pain of regret outweighs my pain of discipline now...


  1. hi, may I know what would you do if bear market is happening now?

  2. Hi 股灵精探, If I were to know for sure that bear is really coming, esp as severe as 1997 crisis, I don't think it's wise to hold the shares. My plan is to sell during bear market, may be not all but those with higher PE. The problem is I don't know when this will happen.

    The market may drop close to 10% like Aug last year. People may think bear is going to come and sell their shares. However, it turns out that bull still takes control.

    Luckily I didn't sell that time but what if it drops another 10% and bear takes over? Really can't predict the market accurately.

    I have no experience in trading actively in bear market in 1997/2008, so sometimes I'm also wondering what should I do...

    What do you think?

  3. when the china growth start to slow down then i think bear market will soon reach toward us ...

  4. I also have a feeling that the next financial crisis might be related to China...