Umbhali Oqavile

 Is that even possible, yes. Can I do it, yes. The Stock Market. The Market of Stocks Beating the stock market is probably the main goal for every DIY investor. I mean if I was not obsessed with beating the market I would just delegate the investing task to the professionals and get whatever returns they can manage to get annually. By beating the stock market I mean generating alpha, have higher returns than the market. If the JSE All Share Index return 14% in the year, return more than 14%. Foundation of beating the market The first and major component is having a strategy that has a proven edge. Edge is described as the probability of one thing happening over another, in this case you need to have more profit than losses. However, your win rate does not mean much, it is the size of your wins/losses that matter, the trick is in asymmetric risk-to-reward. Your wins must dwarf your losses by a broad margin.  I use Trend Following, this approach is known to have a low win ...

At some point I nearly quit trading, or whatever that I was doing and thought it was trading. I had a strategy, by then I had already read  Trade Like a Stock Market Wizard  and  Trading in the Zone . In theory I was already in the path of consistent profitability but I was still not profitable. Not trusting the System This could be not understanding the System, but I will stick to not trusting the System despite proven results that it works. Systems, set of rules, work in certain markets, they are designed for certain markets and will not work in all markets. A Systematic Trend Following system will only work in a trending market, in a range bound market you will die by multiple cuts as you will be taking a series of stops. If you trade support and resistance levels you need a range bound market. So, the lack of trust often comes from not understanding the system and when it works. It is important to understand any system before you use it. I had a system, the JSE was i...

This was supposed to be a Facebook Post, but who does that when they have not published anything in days. Today I want to touch on some limitations of using technical analysis exclusively for trading or investing. I have been caught off guard many times, thanks to risk management, I manage to swim out of those situations. This list is by no means exhaustive, just what I can remember and what I have experienced. You can buy a company that is about to delist. I believe that insider trading is rife, and you cannot convince me otherwise. Typically a company can make an offer to buyout existing shareholders, more often than not at a higher price than the trading price. Some insiders may want to load up, the retail trader will start to see irregular trade volumes, and jump in if it fits their strategy. The price can go up, making really good profit. Until one day you wake up to a letter telling you that your days as the company shareholder are numbered. Well, if the offer is higher than my p...

I find myself wondering if I will ever have a multibagger in my portfolio. Granted, I have had trades returning north of 100%, but I have never went past 200% in a single trade . Trade. There lies in my biggest enemy; I trade stocks and I am not ashamed of it. Trading, or price action investing , is different to the conventional way of investing, value investing . I do not dive into the company financial statements to try and assess if the company is trading at the fair value. I look at the price action of the stock, make my mind if the risk is worth the potential reward, if it does, I buy few shares of the company. Some trades do well, multiple R returns, some beyond 50% return. Sure, 50% is not that great but if you look at it from risk management's perspective, it is a lot, assuming you risk -10% on that position. See, a 1:5 risk-to-reward is a big deal, unlike 1:2. In this case, you do not look at stock with the intention to double your money. You determine how much you are wil...

  To succeed in the market you need to have a trading (or investing) system. System =  A set of rules What to buy How much to buy When to exit; profitable and losing trades Design a system that is in line with your personality, and time allocation for trading purposes. Don't design a system that uses H1 time-frame when you have other commitments during trading hours. Don't design a fundamental analysis system when you don't understand the information presented in financial statements. Can't read a chart, forget about technical analysis based systems! After you've designed your system, it's time to test it (or back test it if you're an advanced Trader), you can use a demo account but I prefer to use a small, reasonable, real cash account (you can't back test emotions on a demo account). If the system is profitable, and you're emotionally ready to trade it, use it in 10, 50, and 100 trades. Check the numbers. Win rate, percentage of winners vs losers ...

  Preparation is key if you want to have an ounce of success in the securities markets. More often than not people are drawn by the possible riches of the market, then they neglect the most important aspect of trading. A trading plan . In this Blog I want us to discuss "A Trading Plan". A trading plan consist of three components; the "strategy" and risk management. The third component of a trading plan is the Traders mindset. All these components contributes to the Trader's success, you can't leave one at the door. The Strategy There are various ways to trade the markets. Without going into more details; the two common ways are derived from fundamental analysis, where a large of pool of people uses  Value Investing , or technical analysis. Fundamental analysis, for the sake of simplicity we'll take as if value investing is the only way to do fundamental analysis, is the art of diving into company financial statements to diagnose the state of the company ...

  In this Blog we will introduce beginners to  Forex  trading. Please note that this is  not a financial advice , just an informative Blog. Introduction Currency trading , also know as Forex, is the process of buying and selling currency pairs through a  broker . All the transactions go though an  exchange  that facilitates these transactions. In the exchange, at least in the 1980's, the transactions are carried out using United States dollars (USD), even though you can trade pairs like EUR/JPY. There are pairs known as  Major Pairs , these are the mostly traded currency pairs in the world. The FX market is  liquid  but these pairs are the most liquid pairs as they contribute a large amount of volume linked to economic transactions. Major Pairs: EUR/USD GBP/USD USD/JPY USD/CHF These "major" pairs are known as commodity currency pairs: USD/CAD , AUD/USD , and NZD/USD Laws of Supply and Demand Currency pairs are free-floating, meaning that...