Chapter 2 :The Art of Trading

One of the trees of wealth that I have chosen in my path to wealth creation was Investment, which involves buying low and selling high in certain financial products such as stocks and currencies to make money. But to explain it clearly, I was actually pursuing the path of Trading which is a bit different to Investing. People who trades are called Traders, while people who invest are called Investors. In general explanation , I can say that trading and investment are different as in the following aspects:

• Time Frame - A trader would get expose in the market at very much shorter time frame compare to the investor, sometimes between minutes to months where as a investor would stay invested for a long time, maybe for years. 
• Market Direction - A trader makes money in the financial market through three directions which is up, down and sideways. He can short the market when it is going down to make money. An investor can only participate in the up trending market, which is long the market. 
• Leverage - A trader use leverage to margin trade which means using borrow money from the financial institutions to trade. Through leveraging, he can participate in multi-million worth of contracts trading by just providing only a fraction of that capital amount. A investor instead would require to come up the whole capital to invest in that particular financial instrument.

Trading can be done in various categories of financial instruments available such as stocks, futures, commodities, option and currencies. Trading also require two skills to be learn, which in this part have some familiarity with investment. These two skills are the Fundamental Analysis and Technical Analysis a.k.a TA.

• Fundamental analysis is the study of market economies and financial situations which can influence the long term movement of the related financial instrument, examples like a company annual reports and a country interest rates decision over the years.
• Technical Analysis is a skill where one involves the plotting and analyzing graph of the related financial instrument to catch its short term direction to trade. Traders use this method to buy low and sell high as well opposite transaction in certain stocks and currencies to make money.

Trading is a fascinating path to wealth creation which was not really known to most people in the world, it's probably one of the best kept secret to create wealth today. One of reason could be the non exposure to common people today, especially people with no financial education. It's also the most riskiest way to create wealth today, as it's stated 95% of people who trades or invest will loose money to the 5%.

When I was growing up in my small hometown Kuala Terengganu in the sunny beach side of East coast Malaysia many years ago, there wasn't any exposure to such opportunity around. Even when I started working in Kuala Lumpur after graduated from university few years ago, there wasn't people around me who have the exposure too. It wasn't until after three years of working in Singapore, this wonderful world of trading opened itself to me through seminars talk by some of the successful traders. Since then. I attended various free trading seminars all over Singapore and some of invest fairs held from time to time. After a year of continuous studying,. my knowledge of trading have definitely increased tremendously.

I started trading Forex a year ago after attended the only course I paid throughout the whole learning journey, which cost me around SGD 2300. I can say it's a money worth spending because this course teaches me a whole lot about TA in trading. The reason I choose Forex is because it's uses the most TA to trade in this instrument, so I can learn faster about TA skill. With TA, a trader can develop a trading system plan that can suits his style of trading to be successful in this field. Beside learning TA, I also took the initiative to learn about trading psychology and risk management skill as these are important ingredients to be successful in trading, as touted by most of the successful traders in the world.

Basically, there are four important elements to be successful in trading which are :

1. A sound trading business plan - A trading plan that incorporates trade entry and exit in which financial instrument to trade, as well the appropriate time frame to trade.
2. A systematic trading methodology that works - A trading system which use TA to find signals and triggers in the financial instruments to catch the timing for the trade entry and exit as well potential profits and losses.
3. A discipline mindset - A very discipline mindset is require to take the trades when the signals and triggers been provided, as well the determination to see through the process for potential profits and loses.
4. A proper risk management plan - The proper amount of capital to use in trading as well the potential losses which a trader is willing to take to enable himself to continue trading  in the long run.

Some masters had said that trading is like a journey and I couldn't disagree it more. Over the year course, I had read and listen through numerous successful traders talks about how to be successful in the trading business. They all said the same thing, trading involves continuous learning and getting hard experiences through making mistakes overtime while learning to correct it. To state it clearly, Trading is not a Get Rich Quick Scheme thing where there's no effort being done to get that wealth.  A successful trader have to endure the pains and hardship over many years to become a consistent profitable trader who can really make money.

This is not an easy road to walk, but I already knew about it when the decision to take the path was made. I had learned and made few mistakes along the one year period, but I expect to continue making mistakes and learn along the road ahead. Hopefully over the next year years I can truly be one the consistent profitable trader who can claim the wealth prize.