Brainy's Share Market Toolbox Brainy's
Share Market Toolbox
(public information)

Robert's underlying
philosophy

When it comes to investing or trading in the share market,
there are many approaches, and many of them are right.

It is most useful to have a clear picture of your own approach before you start.

Robert's underlying philosophy...

If you are in search of an approach, or some guiding principles, to help you with investing or trading, the following key points might help you:

  1. There is some benefit in using Fundamental Analysis — but to a small degree. Some people enjoy performing Fundamental Analysis to a very large degree, and that is okay — each to his own.

  2. Technical Analysis should be used to optimise the entry and exit of (share market) investment positions.

  3. Funda-Technical Analysis is a sensible blend of these two analysis approaches.

  4. Have your key trading criteria already recorded (eg. a trading strategy). Consider things like:

  • The amount of total trading capital to “risk” on any one position. A common amount is in the order of 2% to 3% “at risk”.

  • The portion of total trading capital to devote to any one position. One often used measure is to have no more than 20% of capital tied up in any one position.

  • Determine the exit criteria — it might be a Stop Loss approach, coupled with a Profit Take approach.

  1. One basic approach for stock selection and entry is to look for stocks in a rising trend.

  2. Stocks in a falling trend should not be purchased, and if held, then they are candidates for disposal.

  3. Before entering a position, we should investigate the likely reward for risking money in the market. Determine a possible price target, and determine the amount of possible reward.

  4. The position size should be optimised. This will help to reduce the impact of transaction costs like brokerage, slippage, etc.

  5. Stop Loss - If a stock falls below my pre-determined Stop Loss level, then it is sold, in order to minimise losses.

  6. All of this is much easier, and more enjoyable with good charting software like the Australian BullCharts software package.

Food for thought and more information?

Sensible Investing - ask yourself "does that seem sensible?"
Contrarian Investing Redefined - a revised approach to contrarian investing.
Having trouble getting started? - Are you really Share-Market-Ready?

For more information, see the top of the column at right. 

More Information

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Terminology
Any special terms that might be used in the text at left, can probably be found discussed in the Toolbox somewhere. Perhaps in Brainy's eBook Articles - see the Master Index list for details. Or, search the eBook Articles.
The Share Market - more information about the market and investing and trading.
Brainy's Share Market Toolbox
The toolbox is an arsenal of weapons to help you tackle the share market.
 
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Robert Brain provides various support to both new and experienced traders and investors.
Who is Robert Brain?
Beware the sharks in the ocean.
And whatever you do,
beware of the sharks in the ocean!
This is one of the many tools in Brainy's Share Market Toolbox.

The information presented herein represents the opinions of the web page content owner, and
are not recommendations or endorsements of any product, method, strategy, etc.
For financial advice, a professional and licensed financial advisor should be engaged.

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© Copyright 2011, R.B.Brain - Consulting (ABN: 52 791 744 975).
Last revised: 5 July, 2011.