Category: Traders’ Secrets

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Moreover, here you’ll find some rare techniques and strategies that are successful forever, for any market condition. Also, how to trade with a little money and gain consistent returns. By following these posts you’ll e able to trade with greater success. You’ll increase your profits and your wealth, of course.

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Traders’ Secrets will arm you with those skills, so you’ll never have a losing trade again.

Question everything, it is a vital part for your trading

Forex Education Part 5

by Hans Stam – Trader, Mentor, Author

Interview

You must question everything.

Recently I received a request for an interview.

This was a rare invitation going out to the best traders available to share some wisdom.

Most of the questions were easy for me to answer, but there was one I had to think about for a while, and I would like to share it with you as this might be useful to you.

You see, I’m not a wealthy man at the time of this writing, so let me be an inspiration to you.

Patience is better than a quick fix, experience and knowledge are greater than gambling your way to success.

Best advice

One Question that stood out for me was,

What is the best advice you gave give to other traders?

My answer was…

Question Everything, then make up your own mind!

This may not be advice about how to spot a trend, or how to manage funds, but it really is an answer I like to explain.

You see, in my years of trading, I have tried a lot of ways to make a decent profit.

You may recognize yourself trying to make it all work for you.

As in many cases, the most talented people are also the ones that have made a lot if not all mistakes possible.

The thing that stands out is the way they solved those problems.

Question Everything...

Especially in trading, you can’t just accept what you are being told without any credentials.

There is a lot of misleading going on in the Forex Industry, I rather see proof.

Of course, there are many ways to trade, but even the fancy guru’s don’t always provide you the insight on how to do it yourself.

What I’ve learned in my years of trading is to question everything, and to make up my own mind.

I suggest you do the same.

Example

I’ll give you an example of how to apply this to your trading.

Let’s pick a random scenario.

Some guy tells you he found a great strategy but conditions apply.

And every time it fails, you didn’t understand the conditions or this was a rare case of where you had to take a loss.

Let’s say he claims to win by watching a combination of candlesticks, and whenever that pattern emerges, you have to buy or sell.

When you investigate the claim, and compare it to a monkey pressing buttons, who would win?

Then, I don’t care about the times it works, I’m more concerned about when it fails.

What happens when it fails and why? Is it really worth it or could I just as easy trade the other way around and get the same results?

Does it make any sense to you and are you willing to lose your money on that claim?

It’s up to you to decide.

Make up your mind

Keep in mind, no one on the other side of your trading cares when you lose.

Also, keep in mind, there are people ready to take your money and even might provide you with false signals just because they have to give signals they are selling.

Whatever signals or tools you are being given to work with, ask yourself the question, is this really benefitting me?!

Can this tool cause me to lose? Can this signal be explained and what causes the failing trades?

You have to be very skeptical about everything you hear or read.

Does it make sense to you, does your own trading make any sense to you.

I have provided some serious advice to some people around me, and even though they knew it was working, they still used their gain to waste it on trying something else.

To me, that was frustrating to see, but on the other hand, it’s their money and they too can try and question everything, including what I tell them.

Success ratio 1:5

I had a question earlier by someone who asked how to get a 1:5 success ratio.

While understanding what he was trying to achieve, this question also was a bit silly to me.

Why would you want to have 20% failure in your trading?

Wouldn’t you rather have less losing trades than that?

What causes the 20% losing trades?

Why would you take those trades anyway?

No one can predict the market?

If that would be true, then why are some more successful than others?

Don’t you think that when other traders are consistently winning their trades, they have another mindset?

In this article, I’m asking a lot of questions rather than give you the answers right away.

I do that to make you think for yourself, to question everything and to let you make up your own mind.

To me, this is the basis of becoming successful.

This has to work for you because You will need to make the decisions which trade to pick.

Something to think about

Hopefully, this has given you something to think about, because nothing will change if you stick to being ignorant.

You could read all the articles in the world, pay for whatever service, or follow a stock picking money,

as long as you don’t start to Question Everything and make up your own mind, it will lead nowhere, and nothing changes for you.

Dedication

The chapter most of you will want to read has come.

How do I make money?!

I hear a lot of people telling me, this is my dream, I really want to do this, etc.

Unfortunately, statistics show dedication sticks to words and not often become a reality.

Some people seem to forget it took me about 30 years to figure out what works and what doesn’t.

Also, a lot of people think they can start at $100 and hopefully be rich next week.

Their way of doing that is gambling which most likely will blow their account.

Be smarter than that, do whatever it takes and make educated decisions.

As mentioned before, this really is a career, and you can decide to do it or not.

But it does take action and patience, that seems contradictory but it is what you will need to do.

OPM

Other People’s Money (OPM) is a way to make money faster, once you built your track as mentioned before, you will want to use your talent to make money using OPM.

The way to do that can vary, and usually is done by attracting investors and trade through a MAM or PAMM, which are basically the same technically speaking.

How does that work?

You have your own trading account, and the software will copy your trading to sub accounts.

These subaccounts are in the investors’ name and you have agreed on a fee or commission.

After both have signed all legal documents, the investor funds his account and trading will be done as you trade your own money.

The agreed earnings are then automatically transferred directly into your trading account.

How to get Investors

You might think to yourself, I don’t have any investors, so now what?!

There’s good news for you if you really are talented or educated.

If you are prepared to deposit a fair amount on your trading account and let your results being tracked by A.I. you can get a Track that can be used by a Broker linked to that specific software, and it will make it possible for you to get funded.

How to get funded?

I will go through this simple process step by step.

Step 1. First, sign up for a Live Trading account by clicking here

Step 2. Then sign up for the Free Tracking software by clicking here

Step 3. You keep on trading the way it works for you, and you will automatically be funded once you have gone through the process of 6 months and if your score is 75 or higher.

Step 4. Progress through the system, and 4 months later you are a Pro Trader if you are doing well.

Step 5. Once you already received funding from the Broker, you are now ready to be introduced to the Investors market. No way to tell where that will lead you but it is Free money for doing the same thing.

If you have questions or need help, then Click Here and I’ll help you the best I can.

Experience

Since I’ve been in the market, this really is the best way I have found to start making money while trading the Forex market.

There are other similar programs, and I have had many discussions with several others, but I couldn’t manage to come to a fair arrangement.

Another reason why I promote this one is that there are a lot of options here to make a solid income.

Sounds like a big commercial but this is my experience, the choice is yours.

If you are serious about making Forex trading your career, these are some good tips to your benefit.

If you like to ask me any other questions, I’m here for you.

Click here to contact me

Best Regards,

Hans Stam

5th June 2019
Track Record

by Hans Stam – Trader, Mentor, Author

Track record – What is it and why do I need it?

A Track Record is an overview of past trading.

For example, it shows what your results were in the past year.

January 2,4%

February 3,1%

March 1,9%

April -2,3%

May 5,0% etc.

But it can also show the percentage of profitable trades and losing trades.

A more detailed Track Record can also advise you on what you are doing right and where you need to be careful.

If you would like to have your Trading Station checked by A.I. and give you an overview of past performances, you can try that out by clicking here.
This gives you insight on how successful you are and it creates value.

How does track record create Value?

First of all, this is valuable information to yourself.

Sometimes in your trading, it might seem you are not going anywhere, but if you take a step back, you might be surprised by how well you are doing.

But there is a second reason.

Others may not be as willing as you are to do the work, or they just don’t know how.

Many still want to make some money and will want to have others trading for them, but that is risky as those people never know for sure who is for real or not.

While doing due diligence, those people will want to see proof.

Having a Track Record creates value for yourself and those people as they can see what kind of results you had in the past and therefore hopefully will continue in future trading getting similar results.

Although this is not a guarantee, it does create some confidence.

Think of track record as going to a movie with actors who are well known, you don’t know if the movie is any good until you went to see it, but going by the actors you have seen before, you do get an idea of what to expect.

Taking another view is where you are the actor, you will need to have some good results to show if you want to be hired for the next movie.

Of course, you can do an audition, but your chances would be a lot less in comparison to when you featured in a few blockbusters.

Brokers

There’s a lot to be said about brokers and although I would want to mention a thing or two, I choose not to.

What I can tell you, that it’s best to check if they are registered with the FCA.

I’m very well aware of IB’s and how Brokers work, and I do realize it’s not easy for Retail Traders to make a consistent profit.

I’ll stick to my end of the line, and will continue with the options we have.

My guess is that the future is not set in stone and that we may see some changes in the near future.

If you like to stay in the loop, You’re invited to join my Community.

Successtory

Why don’t you tell me about a brand new car or trips to the beach?

Or how I can make a million dollars starting from scratch?

First of all, I do not want to you have an unrealistic expectation.

Second, I do not want you to start chasing after the big money as fast as you can.

Why? Because you would be in very dangerous waters.

My advice is to monitor risk as much as you can and to take small trades and consistent profits.

Make sure you have enough buffer on your account and don’t get greedy or lured into risk-taking based on past successes.

Not all may agree on that, but those people may very well be gone off the market next year anyway.

MT4 / MT5

Many Brokers use the MT4 / MT5 Platforms.

Those are platforms where you can automate your trading, or place your orders manually.

It lets you program your strategy so trading would run by itself.

I do not advice letting trades and orders run without monitoring, but you could preset orders and take only those trades you really want to have.

MT5 has a few more options but in most scenarios, MT4 will do just fine.

Passwords

There are two kinds of passwords available in MT4 / MT5.

Your own to trade, and a read-only password.

The read-only password, also known as Investor Password, can be shared with investors or linked to analyzing tools such as PsyQuation.

It allows them to see your trading and the results so they can see for themselves, but it will not interfere with your trading.

Hedging

Hedging is when you pick a trade and place another trade in the opposite direction.

Wherever the market goes next, one trading is winning, the other loses.

Basically, you freeze up the trade by letting it lose as much as you let it win.

This might be a way to make some money, but don’t forget the opposite trade is in the negative just as much as your gain.

Pitfalls

The most common reason you make a loss are just a few.

Did you pick the wrong direction?

Whatever analyses you use, almost every trader will agree you can’t be right all the time.

And when traders are new to the Market, most traders won’t be.

So try to rethink the reason why you pick a trade and review it once it’s done.

What did you do wrong, and what went right?

Also think of another possibility, even though you won a trade, were you just lucky, or did you really think it through?

Did the trade hit your Stop Loss?

What caused it hitting the Stop Loss?

Was it too close, did you do it right but the spread of the broker hit it anyway, did it hit because it was there in the first place?

Did you not take full advantage of the trades once you were winning?

Taking profits too early or taking them too late is another pitfall.

Once you have picked you trade, you should know where to take your profits.

There are ways to take profits automatically, first is a trailing stop.

A trailing stop can close in the profits when you are following a trend, but it can also kick you out of a trade on the worst possible moment.

The other way to take the profit is by using TP (Take Profit)

Of course, you can always close a trade manually at any time you want.

Did you get impatient or nervous?

Sometimes when you take a loss, or you get impatient you may want a quick trade to make up for it.

Usually, that ends up in losing even more which causes more panic.

If you find yourself caught up in trading like that, and don’t even have a good reason to take the trades anymore, step away from the market and come back the next day.

Do not get bummed out, because now you are your worst enemy if you don’t step away.

Did you get in too heavy or run out of Margin?

Going in too heavy is a common mistake, what is important to know is that trades are done with leverage.

That can really be a benefit, but also takes trades south much quicker.

Be aware you always have enough buffer so whatever trade is done, positive or negative, it will not influence your account too much.

Greed can really mess that up, just as much as fear can. Keep that under control if you find yourself in that place.

That would probably cover the majority of reasons, so if you do not want to lose, you will have to figure out how to deal with that.

Facts

What facts do we have once we enter a trade?

The only facts that I can come up with are even less.

The Market Fluctuates

On any given timeframe on the charts, you can see fluctuations.

You’ll see them on the 5-minute chart, as well on weekly charts.

If there are no fluctuations in price, there would not be a market.

You will not have a Loss until you take it or when you run out of Margin.

Taking a Loss can be manual, or by hitting a Stop Loss.

Also when you ignore a trade which is eating up your Margin can cause a Margin Call.

A Margin Call means the broker will close all your trades due to lack of funds in your account.

Some will warn you up front, others will just Close everything and you basically blew up the account.

Much more facts we don’t have really.

I do not have to wear a fancy suit or go to some guru in a hotel conference to convince me my 100% winning system is wrong.

Going with these facts, it’s possible to create your own 100% winning system. Try it out on a demo first as that takes years of experience!

I truly hope you will benefit from these very simple basics.

Hans Stam

You would like to read Automatic Trading – What Is It

risk disclosure

31st May 2019
Invest in any age, put the money in the stock market

2 min read

Invest in any age. Don’t care how old you are you, you should put the money in the stock market. You should invest. Also, it doesn’t relate to how wealthy you are.

What makes us think like this.

The stock market is, yet, the genuine way we have for the progress.

Think!

Who invests a nice part of salary every year can be compensated after a decent number of years.

For our financial growth, long-term investing is the best way to increase our wealth.

Build your investing portfolio with the right stock and bond mix.

Support it with index funds to maintain costs low. Avoid hedge funds for small investors and ETFs. In other words, you have to be smart and manage your investments.

It is never late. Yes, we know. Everyone will tell you that the early ages are the best time to start investing.

That’s true, but also, you can invest in any age.

The stock market is open space, who would forbid you to invest at age after 40, for example? Or after 50?

Human’s life is longer and longer. Hence you could buy some stock, invest in bonds and in some index fund and supply your investment account for the next 10 years.

When picking stocks you need to have in mind how you project to manage your investment. Say you are in your 40s, so you might want to invest in some high-risk assets.

You might choose shares in some new or small company. But you might be interested in some abroad assets and developing markets.

If, however, you plan to invest shortly before retirement you will need some different strategy.

Therefore, you should invest in a less volatile property. For example, you might like to invest in bonds and shares that are paying plentiful dividends. If you are an older investor who just starts investing it is recommended to hold a mix of stocks, bonds, and index funds. Just put your money in the stock market.

Invest in any age no matter how old you are.

The S&P 500 gives a 10% return per year, with dividends included.

You might think it isn’t too much, but thanks to phenomena of compound interest you will double your capital every seven years.

You see, just a little amount of money simply put in the stock market can produce big pays after some time.

Where to invest in your 50s?

As you are nearing your retirement it is allowed to be a more aggressive investor so put your money in the stock market. For example, you may have a portfolio with 60% in stocks and 40% in bonds. It is a good balance for the majority of investors. Keep in your mind your plan to retire at 65 and you have 15 years at least to collect very nice income thanks to compound interest.

Of course, it is best if you can start earlier. But, truly, you may invest in any age. Think how much you will have after 14 years if you start in your 50s with $10,000. The compound interest phenomena are on the scene again. Just count, after 7 years double, and the next 7 years, and… Not bad, not at all.

Maybe you wouldn’t be able to buy the new house but you might have enough for a relaxed life.

That’s why you should invest in any age.

risk disclosure

30th May 2019
Creating strategy for Forex trading

Forex Educational Series – Part 3

by Hans Stam – A Forex trader

Creating a strategy

We left off in the previous chapter talking about creating a strategy of your own.

It’s obvious you do not want to lose money, your aim is to be right on your trading as much as possible to make a profit.

So how can you create a strategy that will work for you?

I mention specifically it has to work for you because many will sell trading signals on their analyses, but once you try to implement the signals, your timing could be off and totally miss the trade.

Then again, who knows if that signal is very successful and why would you trust other traders signals?

Of course, that’s a personal choice to make, but once you would decide to create your own strategy, here are some tips.

Demo testing before creating a strategy

While creating a strategy that works for you, you obviously do not want to spend a lot of money so you will use virtual money using a demo account.

Once you have set up your demo account, you can start trading as if it was real money, but more importantly, you get to know the trading station you will be using later on.

You see all kinds of options, and most will not apply to you so you will have to figure out what you will use or not.
For instance, the chart used.

If you like to open a demo account.

Charts

Most will stick to candlestick charts but there are many other types of charts to choose from.

Also, there are timeframes you can choose from.

In this example, we’ll stay with candlesticks but many other types of charts will have similar info.

A candle represents what the price did in a specific timeframe.

If you pick an hourly chart, it shows candlesticks and the info of the price in an hour.

Main info a candlestick is giving you the Opening Price at the beginning of that hour, the highest price, the lowest price and the closing price of that hour.

The next candle would start its opening price where the previous candle ended its closing price.

(If that is not the case we speaks of having a gap, but that’s not common)

If you would change your hourly chart to a 5-minute chart, it would give you a lot more information whereas the hourly would give you the bigger picture.

It’s for you to decide what you do with that information and how you would apply that in your strategy or not to apply it at all.

Indicators

Using charts you will also have indicators. For example, you can use a curving line which follows the Simple Moving Average of the price known as SMA.

Others are MACD or RSI to name a few. There are countless indicators, and it’s up to you to use some of them or to ignore them.

Every indicator you would use has its own specific purpose and shows you the result of what that indicator is designed for.

We can’t go through all of them, so if you choose to apply you can do some research on a specific indicator.

Most commonly are MACD, RSI, Moving averages, often in combination with trendlines, Channels which form, Support/Resistance, Fibonacci or Elliott Waves, etc.

It’s up to you what you want to use or go a completely different way in your trading.

Trends

Often when patterns emerge from the charts it shows a direction to where the price is heading.

If you see a clear direction you could translate that to yourself as seeing a trend.

As we talked about previously, we would like to figure out what most other traders would do, and seeing a trend could be useful.

If you build your strategy, you could make up some rules for yourself to test and see what result that gives you, one of them could be catching those trends.

The beauty of trying that out on a demo is, it will be virtual money, so even if you lose, no harm is done. But it is very useful while creating a strategy.

Stick to what works

While trying out your strategy starting from scratch, you will notice some things work, others don’t.

Try to figure out what causes losses, and eliminate those reasons by altering your strategy to where that won’t happen again.

Then go test it again on your demo.

You decide when you think your strategy is working properly, then you can try to trade real money and go make a profit.

As soon as you notice it’s not working, stop trading and go back to demo trading, see what caused it to fail, and alter the strategy.

Rules

When you look at how others trade, they often have rules. Institutions also have rules which you cannot break if you want to work there.

The big advantage we have as private traders is that there are no rules at all.

We can make up our own rules. It’s our money, our strategy, and whatever anyone else says, you can choose what to apply or not.

The broker you work with could have some rules, but other brokers might not have those rules at all.

Choosing a broker may be of importance when you want to trade your strategy.

It really takes some creativity and patience to create your own style, but once you have done that, the rewards will be all yours.

Mentor

If you think to yourself, it’s hard to do all that work, can’t I just get a mentor?

Well, that may be harder than you think.

Often when people look for a mentor they end up in a strategy that can be incredibly difficult to follow.

The alternative is to just let some robot trade which is programmed by these “companies”

Real mentors will learn you how to think for yourself, and if what they have tried and tested makes sense.

The reason why a mentor is very valuable to you

…is that you will have to make your own decisions in the future.

You can’t rely on anyone else to make all the decisions for you, because what would happen to you when that mentor decides to just quit?

Or what would happen when that mentor starts to charge you $1.000 a month just to follow instructions?

If that would happen, the information may or may not be that valuable, but you would still have to make more to end up with a profit.

A good mentor will take you by the hand and walk you through all your questions, pointing out the stones on the road so you can find your way in the dark.

I once met a man who had sold over a thousand courses for the price of $300.

So he made over $300.000 just by selling his course and in addition, he lets his students pay an additional $30 a month just to get access to “Hindsight Trading” on YouTube.

When I talked to him, he did know a lot about indicators, etc. but frankly, I thought he didn’t know what he was talking about as he was guessing just as we would too.

He’s a great salesman, but that is not a guarantee you will get value for your money.

In the end, results count and you will be the judge if it is worth your money or go look for another mentor if you would need one in the first place.

Q&A

If you like me to cover a specific item regarding trading, just let me know by sending me an email, and I’ll try to clear that up in the coming articles.

Best Regards,
Hans Stam

29th May 2019
Forex is the area to focus on

Forex Educational Series – Part 2

6 min read

by Hans Stam, A Forex trader

The terminology of trading Forex

When I first started showing interest in trading, I might have been where you are now, so I will go back a long way to put myself in that place again and try to help you.

The first obvious attempt was going for stock trading and I didn’t have a clue what I was looking at.

After I had done a course on stock trading I soon got stuck on terminology.

Also, I figured out very quickly, stock trading was not for me.

At the end of the course I was getting really good grades, but in real life that didn’t do much for me as I simply did not have the money to buy stocks in masses and get something of real value back. Back then I had to go to the bank and buy stocks, but the commissions were very high and it wasn’t really worth the effort.

The other problem I had was I did not understand the language traders used, so in my writing, I will try to explain every step so you can follow this series with ease.

First, I will try to explain trading to you, before going to set up an account and trading platform, as that is a totally different story.

Options vs Forex

When I figured out stock trading was not for me simply because I did not have the money, I soon found out about trading options.

The big plus of trading options was that you didn’t actually buy the stocks, but you bought a contract to buy these stocks at a certain price.

Think of it as getting an option to buy a house, it simply means the house is being taken off the market for a while because there is a potential buyer.

Now I was able to trade at leverage. Instead of buying 100.000 shares hoping they would go up to sell them again against a profit, I could buy a contract to buy at current price and keep that option for say 3 months, if the price went up I could still buy these shares at the previous price and make an instant profit.

Instead of actually buying and selling these stocks or commodities like oil etc. the put and call options that were being traded.

The contracts were much cheaper than buying the actual stocks or commodities, but the negative to me was that if the stock went against the option, the option was worthless.

Why would anyone buy a contract that would allow them to buy a stock at a higher price than they could at the current price? If that happened, the money to buy the option was gone.

So back to Forex. Again, forex trading is being done using leverage. But this time, although you may lose some of your money, it’s always worth something.

Closing out your position (your trade) will still have some value even if the other currency went down. That’s when I knew, Forex will be the area to focus on.

Bull and Bear Market

You might have seen this before, and you probably have.

Think of the bull of Wall Street, or the phrase bullish or bearish markets.

Maybe it seems irrelevant to write about this, but once you are looking at a chart, it’s good to see of the Pairs go up or down.

When the market is heading upwards, we call that a bullish market. When it’s heading down, it’s called a bearish market.

The way to see this clearly, think of it like a bull that takes you on his horns and throws you up in the air, as where the claw of a bear crashes you down.

Explaining Pairs

In our previous example, I used the pair EUR/USD.

But how about Base and counter currency?

In this example, it’s simple to understand you can buy the Euro against the Dollar.

But what if I want to buy the Dollar against the Euro, I don’t see that pair anywhere?

That’s correct, so instead of buying the Dollar, you will now Sell the Base currency, the Euro.

That also explains the next bit of terminology, Buying the Euro (EUR/USD) now becomes going LONG, and buying the Dollar now becomes going SHORT on the pair EUR/USD.

Simply put, Long is buying, and Short is selling the Euro against the Dollar pair (Where in fact you are buying the Dollar as the counter Currency of the pair)

Analyzing the market

As you may have read in the previous article, there is a difference between trading and gambling.

So what makes the difference? And why are traders not agreeing with each other on where prices will go?

The final judge is the market itself, and sometimes you are right and sometimes you’re wrong.

To make sure you are more right than wrong, you would want to try to analyze what the market is going to do based upon what other people think.

Although, there are analyses of the market, even so, if everyone would disagree with the projections and still went another way, the market as the judge would rule that the price would head towards supply and demand.

Unfortunately, that doesn’t happen often in real life. If you’re interested in reading more about this, Google George Soros and see what he did.

The majority of traders will try to analyze based upon two different types of analyses, Fundamental or Technical.

Knowing that other traders have the same information, they will very likely try to figure out what most others decide to do based on the presented information and go along with the flow.

Fundamental vs Technical in Forex

Fundamental analyses, in a nutshell, are more or less analyzing where the market will go based upon the news and events that happen around the world.

It’s possible the influence of these analyses are very high, high enough to even close the markets temporarily. Think of an event like 9-11 or a war for example.

More common in this type of analyses are reports that are presented publicly like unemployment rates or elections etc.

Whatever the news is, usually this is affecting the market greatly and prices will go up or down rapidly, sometimes in seconds.

Once the move happens, you probably are too late already because of the speed, so many will preset orders in case the market goes up or down fast, others will already have the trade open based upon their expectations of what will happen with certain rates like unemployment.

Technical trading Forex

…is something completely different.

When trading based upon technical indicators, many will look for patterns in all kinds of shapes and sizes.

There are many tools to use, think of moving average price waves based on the last X numbers of price values.
Others are Elliott waves or Fibonacci for example.

Also, support and resistance levels are used a lot. When a price is trying to go upwards, it often happens it will try to break a ceiling, bounce back, and have another attempt to breakthrough. Once that happens often, a resistance level is forming. Other traders will see that too, and will most likely trigger a lot of buying orders once that level is broken which is a self-fulfilling prophecy as it will go up because others will buy in that direction which supports the move.

The support level works the same, the difference here is that it supports the lower side of a move.

So the difference between Gambling and Trading basically is that you can try to analyze what most traders will do and go along with that direction.

If you made it this far, you really seem dedicated to learning! Well done!

When you need mentorship, please contact me by clicking here.

Is there another way?

In short, Yes.

We’ve been over Emotions, we’ve been over Analyses. So basically I need to be a robot?

No, you don’t, you can be a vibrant human being and still get very good results.

In fact, it doesn’t have to be difficult at all, but it does require a bit of money to do it right.

I’ll say it out loud, it will take between $5.000 – $10.000 to get started, so a few hundred doesn’t really get you very far with this option.

If you want to know more about this option, please contact me here and I’ll set it up for you.

What is PIP?

For consumers, the best-known decimal is in cents.

For example, if the rate EUR/USD is 1,12 it means that 1 Euro is worth 1,12 Dollar.

It would be very difficult to trade on that decimal.

So in trading, we add a few numbers behind the comma and start trading in PIPs.

PIP (Price Interest Point) Although some have other versions, it’s the point on the market.

1 PIP equals 1/100 cent on the dollar.

Example:

1.1200 to 1.1300 equals a price change of 100 PIP’s and that equals 1 cen

1.1200 to 1.1201 equals a price change of 1 PIP…

But wait, there are more digits when I’m trading?

Correct…

When you see 1.12000 to 1.12001 that’s 1/10 PIP So we call that a Pipette.

Hopefully, this is a simple way to understand how that works.

Demo Trading

The best way to start learning is to open an account and start demo trading. You can do that by clicking here.

Those account with real live numbers are FREE to use, and most will be temporarily but on request, most brokers will extend the trial period.

It might be overwhelming at first, but the good part is, you can get to learn how it works, and you can see directly if you make or lose money.

By the time you are ready, you can open a live account, and start trading for real.

Be aware, going live is really different!

The main difference is, you can refresh your demo, where on a real account your money is gone when you lose.

I have seen people trade on a demo and all seemed reasonable, but when they switched to a real account their balance went south.

The most common difference I noticed was the demos were being traded without much stress in comparison to live-accounts.

It didn’t really matter if this was about thousands of dollars or a few dollars; the tension was just making traders fail a lot quicker on the live account.

Most common mistakes were taking profits way too early, and experiencing fear of loss which totally ruined their trades.

Although some brokers do have their tricks, it’s usually something you can figure out and workaround, but the human factor makes trading more difficult than you may think for most people.

Many also think it will not affect them until they realize they too are human.

Artificial Intelligence (A.I.)

Many of us are aware of Alexa, Siri, and other A.I. which to a lot of us is very intriguing.

For us Forex Traders this is the future.

If you want to experience A.I. which checks your trading and gives you advice on where to focus, you can try that out for free by clicking here.

What you will need is a Free demo account or set up a live-account by clicking here.

This A.I. does not give you strategies, but it makes you aware of the risks you are taking, and if you are doing well or where you need to improve.

If you are struggling to get a good score, and need to perfect your strategy, wait until upcoming articles where I will explain how to create a strategy of your own.

This is not like the trading robots you may have heard about, as I believe you always will have to keep a close eye on your trading instead of letting whatever robot take your decision from you because to a robot it doesn’t matter if it is blowing your money away or not. And of course, we don’t want that to happen.

We will go through more valuable information coming very soon!

Hopefully, you appreciate the value offered to you on this website, stay tuned!

Best Regards,

Hans Stam

risk disclosure

27th May 2019
Forex – What is it – The Differences and Similarities With Other Tradings

Forex Educational Series

by Hans Stam

As a Forex Trader, I would like to create a series of short explanations about how this market works. What are the pros and cons etc?

My aim is to make this as clear as possible, so you can follow the process step by step.

What is Forex?

Forex (FX) is the abbreviation for Foreign Exchange.

When you travel to another country, you may want to exchange your local currency to the currency of the country you’re traveling to.

At the bank or airport, you can exchange your money into the currency used in the country you are heading.

The exchange office works with an exchange rate, depending on the current value of both currencies of a “pair”.

A Pair is, for example, a euro against a US dollar which would be the EUR/USD pair, where the EUR is the base currency, and the USD the quote or counter currency.

EUR/USD – Base / Counter

At the end of your trip, you like to exchange the remaining funds again, back to your currency.

Again, the exchange rate can be changed as it is constantly changing.

So it could be very possible that you will get more value back compared to when you first exchanged it, or a lot less value.

The excitement of Forex trading

This exchange can make or lose you money, and that is very interesting to investors, especially the part where the trader can make money of course.

Just like stocks, currency can be traded on the Market, and you don’t have to go to an exchange office to do it.

So what makes Forex different from trading stocks?

First of all, you don’t have to find a buyer for the trade you are holding, you can close the trade any time you want and instantly get the current value credited back to your trading account.

The second main difference is, leverage!

For instance, the broker gives the trader a 1:100 Ratio with your broker, which means you can trade 100 times the value you pay for.

An example would be trading the Pair EUR/USD and you would buy 10.000 Euro’s, the broker will then take 100 Euro’s locked in your account while you trade the exchange rate over 10.000 euro.

It’s easy to understand you can make far more profit over 10.000 euro, than over 100 euro.

When the market goes your way

Now, when the market goes your way, and close the trade to take the profit, you get the initial 100 euro credited back into your account. So all that happened was that you win or lose the price difference from where you entered the trade to where you closed the trade over 10.000 euro.

It’s logical that when you take profits over 10.000, you make a high percentage on 100 initial deposit.

This goes both ways, so it can be risky, but the rewards can also be a very nice ROI (Return on Investment)

If you like to find out more about how you can enter this market, please visit my page.

Can you really make a living trading the Forex Market?

That is a question I’m getting a lot, so I will try to give some clarity.

The exact percentage of the people who really make a consistent profit is low.

Some speak of a top 5% and that is going as low as a top 1%.

What most traders will agree on is that the number is low whatever that percentage might be.

So how come many people are still trading this market and how come so many are struggling?

The first answer on to why so many people still have an attraction to this market is that it’s possible to make a lot of money really quick, on the other hand, they can lose it just as fast.

But in the end it is very simple, you either are right in the direction your trade will go, or not.

I will elaborate in later articles some more about market directions, but this is the basis of all trading.

The trader buys or sells at a specific price, hoping the counter currency will have a positive price change for their trade.

Forex isn’t the same as gambling

Some traders are hooked on the possibility of great profits, and you could compare it to Las Vegas Casinos, and it can be very addictive.

So that it the why people keep on trying, it’s like gold fever or putting your money on Black or Red in a Casino.

Second, why are so many people struggling with this fairly simple way of trading?

The biggest reasons are emotions and lack of knowledge which basically makes it like gambling.

The lack of knowledge speaks for itself, but how about emotions?

Many struggling traders have fear of loss and get excited too quickly when they are winning.

It’s usually when people are doubting a strategy they bought or came up with themselves and experience fear of losing.

When they see the trade going against them, they let the trade go really deep, but when the trade finally goes their way, they can’t wait to take the profit and have that excitement produce an adrenaline kick.

The strategies can be altered

Often strategies are altered, without really knowing why, but if they had that strategy a bit different on the last trade, then their loss would have been profitable in their mind, forgetting the trade would probably have been closed well before it matured.

Hindsight trading has been used a lot with this type of trader, and that doesn’t count.

The top percentage of the traders who make a consistent profit have learned to do things differently, and it would be wise for traders to have a mentor who knows where the pitfalls are.

Also, it is typical for this kind of gambling trader to put in a few hundred dollars, while in reality, the minimum should be at least $5.000 just to have a buffer.

Once a trade goes against the direction desired, it will need some breathing space. The bigger the buffer, the longer you can keep the trade open.

Fact is, you will not lose a trade until you take the loss, or when you run out of margin. So part of that is a decision, the other part financial.

If you like to find out more about strategies or have specific questions, please visit my page.

I hope this short explanation has your peaked interest, and it is clear to you how the basics work.

In the next article, I will go deeper into some facets of trading the FX Market and its terminology.

Make sure to bookmark this page, and come back to read more soon.

24th May 2019
How to invest in a mutual fund

4 min read

To invest in a mutual fund, you can buy into a mutual fund through a mutual fund company, bank, or brokerage firm (similar to stocks).

Typically, funds are either equity funds (investment in stocks), fixed income funds (investment in bonds), or money markets (kind of like cash).

You will have to consider what is the minimum threshold for investing in the mutual fund. Because different funds have different investment minimums.

Also, you will have to decide if you want to invest in a load or no-load fund.

This means you will either be paying commission or not. But regardless of if you invest in a load or no-load fund, you’ll still be paying some fees. So, you have to factor that in when deciding.

And, it is really simple to invest in a mutual fund.

You simply determine the amount of money you’d like to invest in a mutual fund over the phone, online, or in person. There are so many options today.

Online brokers generally often offer more diverse selections. However, you will have to open an individual retirement account.

There are several expenses to account for. Like, transaction fees accumulated when investing in a mutual fund, early redemption fees if you wish to sell a fund in the first 60 to 90 days, and expense ratios that are a percentage of your investment.

You can make money off of your mutual fund by selling it for more than you paid for it. Or through a variety of distributions like dividends or interest that can be paid out throughout your investment. However, most mutual funds will reinvest dividends for you unless you specify otherwise.

Can money invested in mutual funds be lost?

We will try to keep it simple. If you have invested only in mutual funds, theoretically the money can be lost.

Reasonably – it depends.

Well, investments are time unstable. So, at some period, your portfolio can hit the loss.

But over the long period in time, the odds of losing your money are close to null.

Yes, there might be accidents like some major market breakdown which could destroy your collected profits notably. But, in most cases, it is for a short time and markets would recover and your investment too.

Let us explain.

During the 2008 financial crisis, the fall in stock prices led to near 50% decline in the portfolio value of many people nearly throughout the world. Many people had panicked because this was a huge story. But, inside a one year, the portfolio value jumped back to its 100%. So, if some investor was really holding till today, it would be extra up 50–60% at least. In short, the possibilities of losing in the long-term are very small when investing in mutual funds.

Take a look at this chart:

Let’s do some math.

You invested $100 and holding it for 10 years earning 15% CAGR = $404.5.
You remember from the previous lessons: CAGR is the compound annual growth rate (CAGR).

Some breakdown in the 11th year decreased prices by half – $202. But, this is still a return of 7.3%.

The risk, if you are forced to sell here is not reaching your financial intentions and considerably it will influence your habits if you are retired.

But what we can learn from the history of the present business world? The value of assets has jumped back to healthy from the critical after the great depressions.

One note more. Instead of focusing on the systematic investment plan (SIP) a better choice is a focus on the systematic withdrawal plan (SWP). That’s the point where you begin to take out your money from risky assets. You are close to your goal and place in secured assets.

So, the chances of not reaching your financial aims are reduced.

The note: Mutual fund investments are subject to market risk.

You have to keep this in your mind forever when investing in mutual funds. There are no investments without some risk associated with it.

Missing or getting the money depends completely on the investment period an investor picks.

We will show you how it looks in one more chart. We aimed out the period of big crisis 2008, in the red circle.

For example, you invest $1,000 for a day or two. If the stock market slips the preceding day, the value of your $1,000 will surely not appreciate.

Also, if you invest the same amount for a week and the market is in a downtrend throughout that week, the invested money will not yield any profit.

If you choose to stay invested for a year or more than that, though there is no guarantee, there is a possibility that your $1,000 may go up as a long-term investment horizon is always likely to give better results.

In other words, you won’t lose all your money.

Money can be lost mostly due to wrong timing.

When the market is bullish, people invest aggressively. When the market corrects, people get scared and they take out money when the market is down or sideways.

Say, investing in stocks through mutual fund route is a safer way to putting in money in the ever-volatile stock market. In a mutual fund, your investments are managed by professionals, who ensure the protection of your capital.

Past trends have shown that usually mutual funds are profitable giving an average return of around 10-12%.

Mutual fund investments become even safer and convenient if done via SIP (Systematic Investment Plan) route. SIP is a type of investment set up whereby rather than putting in a lump sum, you put in small amounts of money either in monthly, quarterly or annual installments. This, in turn, enables the fund to benefit from the power of compounding and also isn’t too much of a burden on the investor.

risk disclosure

20th May 2019
Mutual funds are an opportunity to make wealth

3 min read

What are the benefits of mutual funds? How much do they cost? Which funds are right for you? What should you consider before investing?

These are just a few of the questions we’ll answer here.

Mutual funds are not bank deposits and are not guaranteed by any government agency.

They involve risks, including the potential loss of some or all of your investment. Past performance is not a solid sign of future performance.

However, it can help you evaluate a fund’s volatility and how it operates in various market circumstances.

WHY INVEST IN MUTUAL FUNDS?

Advantages

As an example, more than 100 million Americans use mutual funds to invest in their long-term goals. Here are some of the benefits they offer:

Professional management

When you invest in a mutual fund, your money is managed by full-time professionals. They research and select investments that are appropriate for the goals of each fund, and monitor the fund’s performance so they can change the portfolio when needed.

Diversification

Buying shares in a mutual fund make it comfortable for you to spread your investment over many different companies and industries. This may help to protect your assets over market volatility. Nevertheless, diversification doesn’t ensure a profit or defend against a loss.

Choice

Mutual funds give you a wide variety of choices to help meet your financial goals. You can invest for different objectives, at different levels of risk and in different kinds of securities.

Affordability

Mutual funds allow you to invest with a nearly small amount of money. Without a fund, it would usually demand a much considerable investment to build such a diversified portfolio.

Liquidity

You can ordinarily sell your shares at any moment and for any cause. Anyway, there may be exceptional moments when fund purchases are limited because of some extreme market requirements.

Automatic Reinvestment

Mutual funds give you the choice of reinvesting your yields and capital gains in new shares of the fund, without being indebted a sales charge.

A mutual fund is when a group of investors gives money to managers to invest in diversified securities. It can be stocks and bonds, for example. Because it’s group, every part-owner as the investor is, profits and loses an equivalent piece. The costs of the mutual fund are divided according to the cost proportion. And, because the funds are diversified among stocks or bonds and other securities, they are regularly lower risk than individual stocks or bonds.

To some investors, choosing individual securities to invest in and guide can be a risky task.

Access mutual funds. With benefits like added assurance and lower risk, mutual funds are one of the best investment opportunities to enter the market. But before you take your place into the group funds, you need to know the tricks.

Mutual funds are under the control of money managers.

They create portfolios for investment with a pool of money. Often, they have different kinds of investment goals. Some managers, like fixed-income managers, focus on generating low-risk, high pay-off investments for their funds, while long-term growth managers try to beat the Nasdaq or S&P 500 during the fiscal year.

Shares in a mutual fund are typically bought at the fund’s current net asset value (NAV, or sometimes NAVPS) per share. This figure is determined by dividing the total value of all the securities in the fund by the number of outstanding shares.

Mutual funds are actually investments like buying stock in companies.

Investors purchase shares into the mutual fund. That, in turn, provides them a right to the fund’s assets. Hence, the value of the mutual fund represents the value of its portfolio.

Let’s say you invest in a mutual fund. Well, not you but a manager will invest the public funds added to the fund. A manager will invest them in several securities, for example in stocks and bonds.

The manager is ordinarily selected by a board of directors and is frequently an owner of the part in the fund.

Such a fund manager will pick analysts to help in making investment decisions. Majority of funds will engage some accountant who’s task is to measure the net asset value of the fund every day. That will define the price of the share in the fund.

Most mutual funds also have compliance officers who keep up-to-date on regulations.

When investors purchase into a mutual fund, their money is managed by the fund manager. Such professionalist invests that money in different assets with specific intentions for risk and returns in judgment: like long-term increase or fixed-profit.

Some funds may be more dangerous than others, that’s true. But usually, the composition of a mutual fund manages risks well-known low.

Mutual funds only trade once daily and are often part of a 401(k) or an individual retirement account, IRA.

The biggest benefit of mutual funds is, they are handled by someone other than the individual investor. You just have to put the hard decisions in an expert’s hands. The fund manager is more prepared for reasonably allocating our funds than we could do it by ourselves.

The mutual funds regularly submit several portfolios with a group supply of money. So the personal risk to all investors is lessened. So we can say that mutual funds are honestly low-risk and high-reward.

But, mutual funds include some fees in the kind of annual fees and stockholder fees.

Annual running fees usually are 1%-3% of the annual funds under control. The stockholder fees are in line with the commissions paid by when buy or sell funds.

Besides that, an obvious lack of mutual funds is that you don’t have constant control of stocks you’re investing in. Hence, for some traders, this may produce some difficulty, particularly if your fund begins dropping.

Don’t waste your money!

risk disclosure

19th May 2019
Modern German Investors

Who are modern german investors? Why are they popular? How do they differ from others?

By Traders-Paradise Team

Modern German investors escaped traditional limitations. They are truly representatives of modern times. Young enough to understand the requests of modern times. They are strong enough to ignore what is wrong in traditional opinions. And, the most important, modern German investors have the knowledge to build their own empire.

Oliver Jung is among Modern German investors

Oliver Jung is one of the modern German investors. He was born on July 5, 1972, in Heidelberg, Germany. As a boy, he spent most of his childhood in Hockenheim in southern Germany.

Later, he relocated to Karlsruhe.

He attended the Technische Universität Karlsruhe, the University of Karlsruhe. When he was 20, he got a degree in computer science.

As a student, Jung showed interest in Internet technologies. Today, investing is one of his main interests. He participates as founder, the consultant also, in a big number of companies all around the world.

Jung’s first company was eCommerce consulting “Entory AG’. He founded it in 1997.

Only 4 years later he sold the company to Deutsche Boerse Group, which is the giant operator of stock exchanges in Germany.

In that time Jung’s company reached about €100 million of annual sales.

After this purchasing Jung became a member of the Executive Board of Deutsche Börse Systems AG. He held that position for almost one year, not longer.

In 2003 he started to invest in internet and mobile companies.

Form 2004 to 2010 Jung was investor and consultant in various companies in Germany and over the world. Among others, Xing, StudiVZ, Canadian Beyondtherack, Russian KupiVIP, Brazilian Brandsclub, Markafoni from Turkey. He was an investor in Australian Spreets which was sold to Yahoo 2011.

The other company sold to the bigger one was Brands4Friends. It was a German company sold to eBay and Facebook.

Jung founded a lot of companies. In 2007, established the consulting company Springstar. Next year, he founded the real estate investment company Awari Capital GmbH. The core of the Awari business is to buy and hold real estate, essentially in Germany.

He spread his money and influence in Switzerland too. He was a co-founder of Adinvest II, as a part of Adinvest AG, which is the dominant shareholder of Adyen.

In 2011, Jung scored with Springstar when the company partnered with Airbnb.

Jung joined Airbnb full-time and dissolved Springstar in 2012.

He took the main role in Airbnb’s efforts to develop its business in 72 countries. When this project was done, he moved to Houzz. It was 2014.

Houzz is an online network for home design and home improvement professionals and Jung developed their international business.

In the same year, Jung was involved as an investor and consultant, with SpoonRocket, Artsy, Flightcar, iCracked, and Homejoy.

Jung, modern German investors, is a partner, at Jung-Miropolski, Investment Manager at Adinvest AG and Chief Executive Officer at Awari Capital GmbH.

His investments are in Lyft, Adinvest, Airbnb, Artsy, BeyondTheRack, Homejoy, Houzz, Wash.io, Tilt, Ticketfly, and many others.

Elvir Omerbegovic as one of the Modern German investors

Elvir Omerbegovic is one of the modern German investors too.

He is an Angel Investor. We add him because his life-story is incredibly interesting. Omerbegovic was born in Germany, in Mettmann, in 1979. But his origin is from Bosnia.

Actually, Elvir Omerbegovic is a German entrepreneur of Serbian– Bosnian descent. His father is from Bosnia, and mother from Serbia.

He is a German entrepreneur who is largely known as the founder and CEO of the Hip Hop label Selfmade Records and as President of Rap of Universal Music Germany.

He played basketball. By the age of 20, he was professional in basketball. At age 16 he also played basketball at a High School in Kentucky, the US for one season.

When he was 20, he stopped professionally in basketball. Elvir enrolled in college and began studying sociology.

He merited a bachelor’s degree in Political Science, Media, and Sociology. Later, he received a master’s degree in Political Communication.

He started building his publishing house from the age of 24. The first repertoires, with which he began to gain success, were Kollegah and Farid Bang.

Elvir’s milestone was In 1999. He met Philipp Dammann during a community service training in Herdecke, Germany. Dammann alias is Flipstar and he was a member of the Hip Hop group Creutzfeld & Jakob.
Omerbegovic was interested. He began to perform as a rapper under the name Slick One. Flipstar also gave Omerbegovic opening contacts in the German Hip Hop scene.

In 2003, Omerbegovic was introduced in the song Game Over for the first time on the Creutzfeld & Jakob album “Zwei Mann gegen den Rest’.

Over the next two years, he recorded contributions to five releases by Selfmade Records.

On the track Bruderkrieg, a collaboration with Edo Maajka, Bosnian musician, Omerbegovic appeared as a rapper for the last time.

He established a music label with Philipp Dammann under the name “Selfmade Records.” Initially, the label was only supposed to work as a platform for Dammann’s publicity as Flipstar.

But soon he spread his business to the other Hip Hop acts in the region.

In 2014, Elvir Omerbegovic and Maximilian Scharpenack established the Suckit GmbH. They did it with Marco Knauf and Inga Koster, founders of the company true fruits. Suckit specializes in the production of alcoholic water ice, freeze-pops.

Soon after sales began by the company’s website in April 2014, Suckit sold almost 30,000 units of its products.
Today, this merchandise is distributed over numerous supermarkets. According to Suckit, 750,000 units of ice were sold in the first two-year. More than 500,00 just in one year, in 2015.
Next year they hit the new record, 1.4 million units were sold.

In April 2005, the sampler Schwarzes Gold was released as the first Selfmade Records production.

At the end of May 2009, Omerbegovic established the fashion brand Pusher Apparel.

The new fashion products were combined with the marketing efforts of the album “Jung, brutal, gutaussehend”. Rappers Kollegah and Farid Bang promoted new fashion products.

Pusher Apparel is part of the network of the Bravado Merchandise GmbH, a sub-company of Universal Music Group.

The product line fundamentally targets sporty male customers between 13 and 28 years of age.

The interesting part is that sales are exclusively done via the company’s online shop.

Many German rappers promote this fashion label. In June 2016, Rappers Gzuz and Bonez MC of the 187 Strassenbande signed a cooperation agreement with Pusher Apparel.

Later, MoTrip, Marteria, Farid Bang, KC Rebel, Schwesta Ewa, 257ers, Favorite, Joko Winterscheidt, Klaas Heufer-Umlauf, and Micaela Schäfer had shows with the product.

Why Elvir Omerbegovic is here as one of the modern German investors?

Because he is a kind of Slumdog Millionaire. He raised in a problematic environment, came from the family with broken roots, but he had the power and strength to fly to the sky.

Guy Spier is one of the Modern German investors

Guy Spier is a great German value investor and one of the best among modern German investors. He was born in South Africa on February 4, 1966. Spier spent his early years in Iran and Israel. He received a bachelor’s degree from Oxford and an MBA from Harvard. Also, he lived in New York. In 2008 he moved with his family to Zurich.

Spier is a polyglot thanks to many different countries he lived in.

His reputation among the value investing community is growing day after day. Spier is well-known for paying $650 000 to have charity lunch with Warren Buffett.

His 2014 book, “The Education of a Value Investor,” is very popular among investors. It’s one of Amazon’s best-seller.

Almost three years, from 1988 – 1990, Spier worked at Braxton Associates. Later it became Deloitte Consulting. In 1991, he worked at the European Commission in Brussels.

Spier started out as a professional money manager in 1997 with $15 million mostly borrowed from family and friends.

Since then he achieved excellent returns in the S&P 500. In 2011, his profit was 221.6% versus the S&P 500’s 36.7%. That’s an awesome result.

Spier manages the Aquamarine Fund, an investment partnership inspired by Warren Buffett’s 1950s investment partnerships. He is also a financial commentator in the media, from time to time.

Aquamarine is fairly restrictive with regards to who it manages money for, and fund information is only distributed by request. Also, the fund inspiration was Buffett’s early investments but Speir is more Benjamin Graham type of investor.

Meaning Spier prefers traditional deep value investments.

Just like many other young investors in value investing, Spier’s focus was on Warren Buffett’s investment strategy. It means buying growing companies with powerful moats at fair prices.

He was really devoted to Buffett’s strategy. He studied every single detail. And he was playing according to that.
But soo, Spier revealed some errors.

As Guy Spier explained, Buffett’s strategy has a few major pitfalls.

“Something I learned during the financial crisis was that when you pay up for a better business, you can suffer greatly when the price people are willing to pay for that business goes down dramatically, as it did in 2008. …I lost more money owning those businesses than I would have if I had owned the right cigar butts…”

But large declines in price in the periods of bear markets wasn’t the only investment problem that Spier, this modern German investors, detected. He revealed, the GARP strategy also forced investors into doing extreme behavioral errors when investing.

“If you talk about your stocks, it will affect how you think about them as well as the portfolio decisions you make. At the time, I did not believe it would skew my decision making. But if I go back over the life of Aquamarine Fund and examine my letters to investors, I can see clearly how this created a bias for better businesses, simply because it was more fun to talk about them.”

This was followed by an admission that he developed a bias for companies that are fun to talk about.

Say, Buffett was right when calling inflation a ‘corporate tapeworm’.

So, as a result, we have, emotional prejudices are surely an investor’s tapeworm.

They make investors overvalue the returns they can expect from specific stock. Also, there can be some misconception about how quick some company will become, or how big profit the business will produce. This trick occurs frequently due to the Halo Effect.

When investors assume that one single good company’s feature is followed by others, also good.

The trend to assign or overvalue a spectrum of good features that a company may not truly have.

For example, you may see the fruit from the South as juicy, sweet, and tastier by virtue of its image. But it may not actually possess any of those attributes.

The same belief is at play in investing.

As Guy Spier reveals, you end up paying a large price upfront for a business that is suffering a continual rule of nature.

And finally, that return on equity will drop. So the company will be far less successful than when you detected it.
Moreover, the risk-reward correlation may still be in an investor’s benefit, but the company’s margins can face a huge volume of pressure.

Spier supported firmly Warren Buffett’s principles on Value Investing and capital allocation.

Today, he also reveals that Value Investing has changed over time. Well, the reputation and popularity of this style mean that fewer chances are possible to investors. Beliefs that it will work would still be around.
But the victorious value investor of modern times has to look beyond. Sometimes out-of-the-box.

And Spier gave that possibility, a critical view on traditional value investing.

Spier lives in Zurich with his wife and three children.

13th May 2019
Young investors feel stress and insecure while investing

The survey “War on Stress” showed young investors feel stressed and insecure while investing.

By Guy Avtalyon

Young investors are stressed when investing. Janus Henderson, the Financial Planning Association and financial portal Investopedia recently conducted a survey named War on Stress about the young investor and their feelings about investing.

This survey is important because the result showed a high level of stress among young investors.

The main concerns among millennials are increasing student loans and stagnant salaries. That makes them stressed more than anything. Those circumstances are in line with their stress.

This survey shows that 53% of millennials are not earning enough to satisfy their financial obligations. So, they have no possibility to invest. The advice coming from financial advisers and experts that exactly Generation Y should start the first investment as soon as possible, sound pretty nice but not relevant for the young people

Stress has an influence on the young investors

Yes, but in other fields of their lives too. The survey shows that stress is a “significant” or “moderate” for their spirit, prosperity, and well-being because it is present in their everyday life.

Young people under the age of 35, said that they are somewhat or very concerned about the effects of a market downturn.

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It is very strange because early investing gives them an opportunity to invest for a longer period of time and make corrections in their portfolios if it is necessary. They have much more time to recover if they hit the losses. Anyway, they have much more time than older.

Stress among millennials

On the other hand, a high level of stress among millennials is logical.

The majority of young investors started to work during or near the time when the financial crisis has begun. People under 35 have fears about their jobs and financial chances, which is in correlation with the possibility to lose jobs and financial support.

And they still didn’t pay off their student loans.

Investing is triggering more stress for them.

Their salaries are $2,000 lower than that it was the case before the crisis., according to the National Association of Colleges and Employers in the US.

Young investors are disappointed with their financial condition.

More than 32% of them under the age of 35, points exactly that problem in this survey.

Previous generations never had such difficult and heavy packages on their shoulders. For example, their student debts were much lower. But not only younger investors feel uncertain. The whole range of investors between 35 and 44 age have worries about retirement. So, stress is the problem for each group younger than 45 age. All of them are upset with the level of stress that they’re feeling.

The 2019 War on Stress survey recognized an important distinction between younger and older investors. It is the difference in the mindsets and stress levels. Millennial investors with some level of financial security and financial goals claimed that they feel less stress.

The conclusion of this survey is that ‘financial literacy and an established plan may have an effect on reducing stress. Well, that is common with other investors.

10th May 2019