Life of a Intraday Trader..

Trading US equity Market

After your dinner, you look at the clock and it shows 8pm. You played with your kids for a while more and you go to your working desk. Switch on your laptop / personal computer and starts to read some major news. 
You open up your trading platform and you do your analysis on stocks. You draw some technical data onto the basket of stocks you monitored and you're ready to start your day. 

9.30pm (Malaysian Time), US Market opening bell rings. You monitor the stocks and the price movement and you're reading once again on the market data. You're confident that the trade is good and the opportunity is up and you put in your entry. You set your stop loss and you place your alert. 


You continue to watch news and monitor other market data. You watched your trade and it turn out to your favor. Around 12am at night you look at your summary with an unrealized gain of US300, you're satisfied and you think it reaches the target profit. You close all your position and happy with what you've made for the day. Switch off your laptop and you're prepared to read some books, watched some movies before you go to sleep...


You can even start your day ANYWHERE in the world as long as you have internet. 


Now would you like such a life?

How to trade stocks online?

Trading in stocks is no longer the same like 10 years ago. With the revolution of Internet, trading stocks is now much easier, faster and cheaper. I strongly urge all of you at least to try and open up an online trading account even if you're not ready to start your trading business.

Benefits of Online Trading
1. You get cheaper brokerage fees. Normally in Malaysia it will up at a rate of 0.42% compared conventional brokerage fee which can be up to 1.25%. That's more than 50% saving.


2. Connect directly using the web and provide you with faster and better view of the price and volume compared to using a remisier.


3. You'll be able to check out more data such as volume, moving price range, chart, some technical data, etc and these data is difficult to provides to you by your remisier.


4. You can check out your stocks anytime, anywhere as long as you have Internet connection. Go traveling around the world and still monitoring your stocks. 


5. Better control of the price by setting Good To Date and Good to Day which means you won't missed the chance of buying it when the price dropped until your desire price.


You see that there are many advantages of online trading. How do you get started?

1. If you're already having a trading account with a stockbroker, you'll just need to inform them you need to activate your online trading which normally comes free. 
2. If you're new to stock trading. Go to any stockbroker of your choice and open up a trading account and tell them you need to have online trading. They'll assist you in opening up your CDS (Central Depository System) with a mere RM10.
3. You're required to also provide them with some documents including of your income statement, IC. 
4. You'll need to deposit a minimum amount into the trading account but this differs for different stockbrokers. 


I personally used CIMB Securities for Malaysia's stock market due to my preferential rates with them, however I saw RHB Investment Bank providing an online trading platform that is quite impressive and you may check it out.

An Overview of Bull ELI

What is Bull ELI? Basically it is a option strategy but in Malaysia we called it ELI which is Equity Linked Investment.

It is a structure product for active investors to either who wish to purchase certain stocks or seeking to earn short term yield for bullish companies.

For example if a person would like to buy RM1million Genting stocks price at certain price point RMXX. He will first purchase into a 30 days Bull ELI and this allow him to pay an amount that is a prefix percentage (taken an example of 94%) it will allow him to pay only RM940,000 rather than the full RM1,000,000. Within that 1 month if the price of genting stocks is higher than the strike price then the investor will get back his RM1million and in this case he will profit a RM60,000.

In the case where the stocks fell below the strike price then the investor will get back the amount of stocks with RM1million worth at the strike price.

This is rather a good strategy for active investors who wish to accumulate stocks. Because you can potentially get the stocks at a price cheaper than the one you initially planning to went in at the same time if the stocks did not came down you can also get a short term profits from it.

The Power of Compounding

How it is possible for people who earn a little to grow their money into a huge sum of money?
A lot of people thinks that money needs to be earn and yet they've missed out on one of the most important part in growing money is through the power of compounding.
I'm sure a lot of people have actually heard of this term "compounding" but what does it really means to you? Do you really know what is compounding or have you been calculating if you compound the money how much return it will turn out in future?
Compound return is when you invest a sum of money at a particular percentage of return (rate of return and then instead of taking out the return earned (to spend it), what you actually do it to add it back to the principle amount and reinvest it as a larger sum of money. So that a year later you'll have a larger sum of money and you'll do the same again and again... it continues until the returns becomes greater and greater.

If you invest an amount with a rate of return of 20% and you compound it over time. It basically takes you less than 4 years to double your initial investment.

How long it takes to have your money double in value?
- Albert Einstein who is still one of the greatest mathematician of all time once discovered that in order to have an amount double in value. We use the Rule of 72.
- It basically takes 72 to divide the annual return in percentage and it will gives you the number of years your investment would double.

For example. you take 72 / 20% = 3.6 years.You'll see your money double in value in 3.6 years.

The Power of Compounding also helps today's greatest investor Warren Buffet to owned the greatest fortune in the world. Warren Buffet achieved an average annual return of 24.7% for 49 years and it means that he basically double his money in 2.9 years turning a mere $100,000 into $4,200,000,000 and still growing..