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Sean Wheller
Home
Dec 29 2007
Trading CFDs on the JSE
Saturday, 29 December 2007

I'm not a gambler and I've always viewed stock market trading as gambling. Hence, I've never really investigated the opportunity of investing this way. I've always preferred to place my money in real-estate. I've never lost money in real estate. However, I was recently chatting with a friend about stock market trading when he mentioned that he new somebody that was doing very well from it. In fact this person makes their living from trading CFDs or Contract For Difference on the Johannesburg Stock Exchange.

Long story short, my friend arrange a meeting with this person. During our conversation he outlined a method of trading and showed how he makes his living from it. He agreed to help me get started and give guidance as to what I should and should not do. Naturally, nothing comes for free. There is the cost of purchasing the software toolbox and commission charges to brokers. What does this person get out of it? Well he gets a percentage of the brokers commission every time I trade.

So, it's a no 'brainer' really. I listen and learn, putting my money on positions under guidance. If I follow the guidance I should make money. Well that's the theory anyway. I've not been doing it for long and seem to have entered into this at a time when some funny things are happening around us that impact on the market in a negative way. I've made some money already, but found that it is not as easy as it was explained to me. I cannot blame anyone but myself for anything if things go wrong. I mean it is my money after all and I always have the choice of standing aside and not trading. However, as is normal with me, when there's a challenge I like to meet it head on.

Now one of my philosophy's in life is that you will not win if you are not prepared to lose. Following on from that I live in the school of thought that if I am to fail, let it be quick. That way I will lose less. I mean, nobody likes to lose, but if one does nothing, then one loses anyway because one never had the opportunity of winning. So one has no choice but to do something.

In the short time I've been doing this I've realised something. It's just like everything else one does in investment. To win you must learn and educate yourself. Thinking about it, this is exactly what I did when I started investing in real-estate. I realised that I knew nothing and started learning. Today I am what could be considered as a expert in various areas relating to real-estate investment. I don't know what I was thinking when I expected somebody to give me the guidance I needed to make money stock trading. With my experience I should know better. That said, if I had not met this person and he had not convinced me to embark on this course, I probably would never have done it on my own steam.

So, I am not sorry and though I've not lost anything, yet, and I fully expect, I am sure that I will learn my lessons quickly. At least I've started learning already, purchased a box of books and started reading. It's fascinating really. There's lots of psychology in this. I mean the market after all is just lots of people buying and selling. It's a crowd and therewith comes some crowd mentality.

I must say, I do enjoy the technical side of all this. Being able to do technical analysis on a charting software is an amazing science and art all wrapped up in one. The analysis gives an amazing insight into the psychology and mood of the crowd and with proper reading of the charts using various techniques helps to reduce some of the risk involved in trading stocks.

Once again, the Internet provides amazing ability to stream data to a desktop PC and makes the process of buying or selling the market very efficient. However, seeing things in near real-time is also an emotional roller coaster. Watching your position ticking up and down can give you the real jitters and yet, whether the stock goes up or down, there's a very real excitement band entertainment value to all this.

I guess it can be as addictive as gambling or drinking, so one of the first challenges I think I must face is that of serving. Not in a financial sense, but in being able to play the game without being addicted to it. As with my real-estate investments, I think I must focus on playing the game and not focus so much on the money involved. If I lose, then I must be able to say, "I'm a loser." I must be able to look at my losses without emotion or regret and see them for what they are, mistakes. The more mistakes I make and learn from, the faster I will become a regular winner.

who knows, perhaps I may find a new business to start in all of this.

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Copyright (C) 2007 Alain Georgette / Copyright (C) 2006 Frantisek Hliva. All rights reserved.





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