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Friday, 28 June 2013

Taiwan goes on a property shopping spree in Malaysia and Thailand 搶進東協 馬泰 台灣包租公跨海炒房

Property, equities, bonds, currencies... the bull is roaming the markets of Southeast Asia, and ASEAN has taken the place of the U.S. and Europe in the hearts of Taiwanese investors.

During the Lunar New Year holiday, two large tour buses pulled up in front of Malaysia's premier address, Kuala Lumpur's tourist landmark the Petronas Twin Towers ( KLCC ). The more than 50 nattily attired Taiwanese tourists that alighted, however, were not there to take in the sights but to be guided through model units at a luxury housing project under construction in the area accompanied by local lawyers and bankers.

Each luxury apartment has usable floor space of 25 pings (about 82.5 sq. meters), is fully furnished and comes with a parking space all for one million Malaysian ringgit (about NT$9.6 million). More than a few of the Taiwanese guests signed on the spot, paying deposits with credit cards. Some even bought four or five units.

"In Taiwan, a rate NT$400,000-plus per ping would only get you something in a non-exclusive area on the outskirts of Taipei, but here you can buy in the capital city's most exclusive area. You not only get rental income, but the potential for future property value increase is even greater," says 37 year-old Ms. Huang, an airline cabin crew supervisor. This was Huang's third fact-finding trip to Malaysia with her husband, who also works in the airline industry. The couple ultimately decided to buy two units and become "ASEAN landlords."

Others in the group included retired teachers, technology executives and real estate speculators flush with cash.

A Taipei City councilor recently asked a friend familiar with developments on the Asian mainland: "I just want you to tell me, will the Trans-Asian Railroad be built?" Upon hearing "it's going to get built and some segments are already operating" for an answer, she duly showed up at the Kuala Lumpur briefing the following day.

For nearly a year now, as the economies of the Association of Southeast Asian Nations (ASEAN) boom, groups of Taiwanese jetting off to various ASEAN countries on "property market fact finding missions" have become quite the trend.

Malaysian, Thai Properties Hot

"I've flown to ASEAN [nations] at least once a month over the past year. I've lost count of the number of trips I've made," says Lin Guangyan, spokesman for the Taiwan Realty International Real Estate Division for local realtor Apac House.

Two years ago, Apac House began offering agency services for units in select Malaysian property development projects, organizing tours of the projects for groups of prospective clients. The initial response was tepid at best. Beginning last year, however, interest exploded and tours were booked solid.

Now, fact-finding tours of the Malaysian property market have become "incredibly popular," Lin reveals. Each group comprises 40 to 50 prospective property buyers with tours organized twice monthly. Tours are booked solid through mid-year.

Last year Apac House acted as agent in the sale of more than 500 units in Malaysian development projects alone, with total transaction value topping NT$10 billion.

And interest is not merely limited to Malaysia, with numerous Taiwanese investors recently showing similar interest in property markets in ASEAN members Indonesia, the Philippines, Singapore and Thailand.

Among those, interest in Thailand, a familiar holiday destination for Taiwanese, has been relatively strong. Even Taiwan financial information website has gotten in on the act, organizing fact-finding tours and agency services for prospective buyers of Thai and Malaysian properties.
Although the "Thailand Groups" can't compare in scale with the "Malaysia Groups," over the past year about a hundred people monthly head off to Thailand to look at properties and invest there, one industry insider notes.

In 2015, the ASEAN member states will merge their economies into a single market. ASEAN member economies have been showing vigorous growth, and that has led to an outbreak of "ASEAN property fever" in Taiwan.

Fueling that fever has been a return of easily six percent or better on rental income, and with more hot money pouring in, the "conceivable space" for further rises in property values there is virtually inexhaustible.

"Previously, the majority of Taiwanese investors were most keenly interested in China properties. But the future prospects there are now unclear, and disputes over property transaction rights are also numerous. In Taiwan, investors are subject to luxury taxes, real value assessments [for taxation purposes] and other official housing policies," one investor surnamed Hu says. "By contrast, ASEAN is growing rapidly, the possibilities are numerous, what with the Trans-Asian Railway to eventually provide a link from China all the way through to Singapore. Add to that the low interest rates and investment capital flowing in from a variety of countries, and it's hard to envision [property prices] not rising."

During 2009-2010, before Taiwan imposed its luxury tax, Hu made himself a bundle, with around NT$1 billion on hand. Even though he's unfamiliar with the local property markets there, today he's planning on "sinking some cash into ASEAN" to test the waters there.

Three Key Hurdles for ASEAN Landlords

According to statistics from the U.K.-based Global Property Guide, property values in Singapore, the Philippines and Malaysia have risen 30 percent over the past three years. Thailand and Indonesia have also seen property values rise 20 percent during the same period.

It's not just Taiwanese buyers investing in ASEAN property. Plenty of investment capital is also flowing in from Japan, South Korea, China, and Hong Kong. But experts advise that sinking cash into the ASEAN property markets is not without risk and note three key hurdles to which investors must pay heed.

Hurdle One: Varying Investment Laws

First of all, due to the differences in regulations governing investment by foreigners, buying property in the various ASEAN member states is a lot different than buying in Taiwan.

For example, says Lin Guangyan, the Taiwan House spokesman, in Indonesia and the Philippines foreign individuals may not hold direct property rights; property purchases there must be made in conjunction with a citizen of said country or through an asset management company, REIT fund or other mechanism securing indirect property rights. In Thailand, foreigners may own an apartment but may not own stand-alone houses or land.

In Malaysia, legal regulations guaranteeing citizens right to purchase low-cost housing mean that foreigners may only buy properties with a net value of RM$500,000 (about NT$5 million) or higher.

Hurdle Two: Climbing Tax Rates

The next thing investors must also consider is that property taxes in ASEAN nations may gradually rise.

In Singapore, for example, a new law was passed in January of this year specifically targeting property purchases by foreigners (including permanent residents), subjecting them to tax levies of five to seven percent, and limiting the percentage of the purchase which may be financed through lending.

Thailand levies no land value tax, house tax or property transaction income tax; buyers need only pay a stamp tax at the time of transaction. But in both Malaysia and Thailand, income tax of 20 percent or more must be paid on rental income.

"There's a possibility that each ASEAN nation will in the future follow Singapore's lead in boosting taxes to cool down [the market] in order to prevent [foreign] hot money from sparking inflation.

 Investors should take this into careful consideration," suggests Pauline Ng, an investment manager and Malaysia and Singapore country specialist at JP Morgan Asset Management (Singapore) Ltd. Whether investing in financial markets or the property market, investors would be wise to avoid relatively inflationary countries.

Hurdle Three: Unfamiliarity with Political, Economic Trends

Finally, as most Taiwanese investors are not particularly well-versed in the political and social conditions extant in ASEAN nations, it is difficult for them to get a read on the shifting winds of local property markets.

Early last year, for example, contentious border issues between Vietnam and China resulted in an indefinite suspension of cooperation between the two countries in building a new highway, the establishment of a duty-free zone and other economic development plans, resulting in a sharp decline in property markets in Hanoi and the region around northern Vietnam's border with China.

Experts advise investors to make judgments on long-term property market trends in a given country based on fundamental factors such as economic growth rates, trends in urbanization and population demographics. They should also avoid over-leveraging themselves to reduce risk.

Perhaps more attractive than property market speculation are ASEAN-based mutual funds, which offered nearly 20 percent returns last year and continue to rise this year, attracting keen interest from Taiwanese stock players.

Last year, Philippine and Thai equities markets led the ASEAN pack with 30 percent gains as ASEAN become the highest growth region among global equities markets. Whether or not that trend will continue has become the focus of great concern among investors.

"Judging from international capital flows, economic growth projections and other indicators, ASEAN markets will continue to rise this year, be it equities markets or bond markets," says JP Morgan's Pauline Ng.

Despite uncertainties like the ending of the third round of "quantitative easing" in the United States and the depreciation of the Japanese yen, international hot money continues to pour into ASEAN equities markets. An anticipated wave of depreciation among ASEAN currencies has also yet to materialize, and indeed, those currencies have continued to rise. Equity market indices in Thailand and Indonesia continue to set record highs.

On top of that, Thailand, Malaysia and Singapore are this year embarking on massive economic infrastructure construction plans and JP Morgan's Pauline Ng is bullish in her forecasts, expecting better than 10-percent growth on average across the ASEAN region.

Kuo Yu-lan, ASEAN fund manager for Fidelity Worldwide Investment says Northeast Asian investment destinations Japan, South Korea, China and even Taiwan, will be facing problems related to aging populations, declining workforces and other challenges over the next five years.

In contrast, ASEAN nations will continue to reap a population dividend. In addition, with a growing middle class in those nations, domestic demand stock plays in such sectors as telecoms, foodstuffs, and property development will continue to be attractive in the long-term, despite having already seen a surge in value, driven by growing domestic demand in the emerging ASEAN nations.

By Hsiang-Yi Chang
Translated from the Chinese by Brian Kennedy
Excerpt From  : CommonWealth Magazine

Update : New class of condos

搶進東協 馬泰 台灣包租公跨海炒房







東協炒房團 夯泰、馬










東協包租公 三大關卡
































天下雜誌 517期

相关报告 :  碧桂园加码投资 “依区引领新山成世界城市”


Characteristics of Successful Traders (Advertorial 4)

Many investors take actions that aren’t in their best self-interest. They make irrational trades; they trade based on emotion, rather than logic; they hold on to a losing position due to their unwillingness to admit they made a bad trade; they trade based on greed or panic… the list is endless.

Successful traders, on the other hand, all have a few things in common. Developing these characteristics and habits will help make you a successful trader.

Successful Traders Set Goals

Successful traders tend to be incredibly goal-oriented. Why? Most people perform at their best when they’re reaching for a clear goal. And there are three basic qualities that make up a clear goal:

1)The goal must be realistic. If your goal is to double your money every day, it sounds great – but it’s not realistic.

2)The goal must be attainable. Just like with a realistic goal, an attainable goal must be within your current capabilities. The best goals are short-term goals; make your first goal a small one, and then continue to increase your goals as you experience success. World-class sprinters don’t start by thinking of winning the Olympics.

3)The goal must be measurable. Goals that aren’t precise, and can’t be quantified or measured, aren’t really goals at all. If your goal is to be wealthy, that’s great… but what does “wealthy” mean? Our guess is that your definition of “wealth” will change as your net worth increases. If you can’t define your goal, and measure your progress towards it, then you have no way of assessing your progress or of making changes to your techniques and strategies that allow you to reach your goal.

Successful traders set goals, and they also are confident they can reach their goals. Confidence is a key to staying rational, logical, and disciplined. Starting with small, realistic goals will help build your confidence in yourself and your abilities.

Success Can Come at Any Level

Whether you’re a beginning trader, a trader with some experience, or someone who makes his or her living strictly from trading, you can be successful. Many people think they have to have significant capital, or years of experience, to trade successfully. That’s not true. (It’s also true that if you don’t stay disciplined, focused, and rational, you’ll end up as a losing trader, regardless of your level of "expertise.") All successful traders started as small investors; they didn’t trade more than they could safely risk, they learned from their mistakes, and they developed systems that worked for them and that fit their personal styles. We have not defined different strategies for different "levels" of traders in this e-course because the principles are the same: logical, focused, disciplined trading creates success.

Successful Traders SpecializeIt’s simply not possible to understand and stay in touch with everything that occurs in all the types of investment vehicles and markets across the world. While some traders have developed systems that allow them to trade in multiple venues (for instance, in different stock markets around the world), most traders specialize in a particular type of investment, and in a particular market. You may enjoy trading in commodities futures; that enjoyment will help you focus and stay in touch with market events. If you aren’t interested in currency trading, for example, don’t trade in it – your lack of knowledge and motivation will cause you to lose focus and make mistakes.

Successful traders tend to specialize; they pick an area to gain in-depth knowledge of, and they follow it closely, learning from past trends and patterns, and from their own trades. If you’re a beginning trader, we recommend focusing narrowly on a particular investment vehicle and market; learn all you can, about the market and about yourself, before you move into other investment types.

Successful Traders Take Losses in Stride

No one likes to lose. But losing is a fact of life for traders; they key is to limit your losses and maximize your successes.

A losing trade is not a failure. It isn’t a reflection of you or of your overall judgment. (If it was possible to be right every time, we’d all be rich.) The only way a losing trade is truly a failure is if you aren’t willing to take the loss, without hesitation, and move on to find winning trades. By accepting that they’ve made a losing trade, and getting out of the position, successful traders focus on making money – not on being right all the time.

Many traders feel they don’t want to “lose” money on any trade, and they stay in losing positions in the hopes that it will recover to at least the break-even point. There are three problems with this approach:

1. The position may never recover to the break-even point.
2. Holding on to a losing position ties up capital that could be placed into winning trades.
3. Holding on to a losing position is an example of unfocused trading and a lack of discipline.

Successful traders are willing to take small losses. If you aren’t willing to take small losses, or don’t have the discipline to take small losses, don’t trade.

Successful Traders Stay Focused During Rapid Swings

Most of us were raised to think that it takes years of hard work to acquire wealth. That viewpoint doesn’t apply to trading in the markets; you can make thousands of dollars in minutes under the right circumstances. Successful traders understand that money can be made or lost extremely quickly, and they stay calm and rational.

Why is that attitude important? Let’s say you’ve made several thousand dollars over the course of an hour trading futures contracts. You’re thrilled and excited, and you may lose your composure and start making irrational trades. You may stay in the position longer than you should, for one of two reasons:

1)You think the market will keep going up, and you don’t want to limit your gains.
2)The market falls, and you don’t want to give up all the gains you’ve made, so you hold on in hopes your position will rally.

If you accept and understand that huge amounts of money can be made in a short period of time, you are less likely to become undisciplined in your trading. Successful traders take their gains in stride, no matter how large. They quickly move to protect their positions by setting stops, or covering a percentage of a short position. Successful traders stay rational and disciplined in the face of rapid gains or losses because they understand the nature of trading.

Successful Traders Stay FlexibleStaying flexible requires that you stay detached and unemotional about your trades. No matter how strongly you feel about your analysis of a position or a trade, you have to be willing to change that opinion and act quickly if necessary.

Successful traders realize that bad trades reduce the gains made from past trades and potential gains from future trades. Successful traders change their minds quickly and easily, and are not concerned about whether they were "right" or "wrong." They’re concerned with maximizing their gains and minimizing their losses – and to minimize losses, they have to be willing to quickly change their minds.

Remember: the more flexible you are, the more successful you will be.

Successful Traders Don’t Leap Before They Look

One of the most common mistakes inexperienced traders make is to trade when they see an opportunity they think might be too good to miss. Jumping into a position based on a hunch, or on the belief that you may be missing an opportunity, is no different than gambling. Almost every investor at one time or another has felt a rush of greed or enthusiasm for a trade – based solely on the desire not to miss out on a great opportunity that might be available.

Successful traders practice self-discipline, and apply skill and logic to their trading. They learn every day, and they use what they know to make intelligent decisions on every trade. Successful traders don’t worry about missing out – they focus on making intelligent decisions.

Successful Traders Don’t Passively Follow "Expert" Advice

Blindly following the investment advice of a broker or analyst is foolish and self-destructive. Oftentimes, the broker’s self-interest is completely different from yours, because the broker gets paid when you make a trade, whether it’s a good trade or not. He or she wants you to trade. Analysts may have inside knowledge or years worth of experience, but in the end their opinions on the markets are just that – opinions.

Successful traders take responsibility for their trades and therefore their money. They learn, they stay focused and disciplined, and they make their own judgments about their trades.

Successful Traders Aren’t Affected by Mood Swings

Many traders get excited when their positions are making money, and they increase their stake in the position. Then, when the price goes down, they panic and sell. Emotional traders are affected by the highs and lows of gains and losses, and fail to stick to their plans and their strategies.

Successful traders understand how the markets work, what to expect, and how to capitalize on trends and events. They aren’t affected by the excitement or the disappointment that can come from good or bad trades.

"What Takes Some Successful Traders A Lifetime To Achieve Could Take You Just A Few Days... Or Less!"

Advertorial 1 - Introduction
Advertorial 2 - The Basics of Analysis and Rational Trading
Advertorial 3 - Basic Principles
Advertorial 4 - Characteristics of Successful Traders
Advertorial 5 - Playing to Your Strenghts, Overcoming Your Weaknesses
Advertorial 6 - Winning Psychology
Advertorial 7 - Avoiding Common Pitfalls
Advertorial 8 - Sound Money Management
Advertorial 9 - Trading Systems
Advertorial 10 - Final Words

Wednesday, 26 June 2013

Hiap Teck RM2.8million Out of court settlement with founder

Hiap Teck Venture Berhad, together with 2 of it wholly own subsidiary, Alpine Pipe Manufacturing Sdn Bhd and Hiap Teck Hardware Sdn Bhd have reach out of court settlement with it founder Kua Hock Lai with Kua Hock Lai 1st defendent have to paid RM2.8 million to plantiff above.

Hiap Teck Venture Berhad, together with 2 of it wholly own subsidiary, Alpine Pipe and Hiap Tech Hardware, claiming it founder Kua Hock Lai has form a new company Xinsteel Sdn Bhd (2nd defendent) to compete with Hiap Teck Venture Berhad and it 2 wholly own subsidiary after disposing Hiap Tech Venture Berhad to it new owner, by inducing customer of Hiap Teck group of company to buy from Xinsteel sdn Bhd and offer staff of Hiap Teck Venture Berhad to joint Xinsteel Sdn Bhd. This cause Hiap Teck loss of customer and loss of staff to Xinsteel Sdn Bhd.

Hiap Teck now run by new owner tycoon Datuk David Law Tien Seng.

This is not time first time Kua family dispose off a listed company to start a company again.

Kua family have started and listed a hardware manufacturing company Wing Teik Holdings Berhad.

Kua family disposed of now defuncted Wing Teik Holdings Berhad to Westmont Holdings Sdn Bhd in Dec 1993, which head by Joseph Chong at that point.Joseph Chong later dispose off Westmont group to Soh Chee Wen.

In 2003, Kua family listed another company Hiap Teck Venture Berhad in a low profile manner. When Kua family dispose off Hiap Teck Venture Berhad again. I am worried for the buyer Datuk David Law Tien Seng as Kua family have a track record of getting the timing right. Kua family have the reputation of getting the industry cycle correct. Will Hiap Teck become the next Wing Teik is yet to be see?

However, when news of Hiap Teck suing Kua family in court out in April 2013. It appear that one of their trade secret is to get all the old staff, supplier and customer to support their new business venture. It can't say them wrong if the new owner never sign an Anti-competition Agreement with the seller.

Looking at market capitalisation they build when IPO of Hiap Teik after they dispose off Wing Teik Holdings Berhad. RM2.8 million compensation seem a low value if all the business loss to their new company Xinsteel Sdn Bhd.

However, if you look at the deal. Hiap Teik has paid Datuk Law RM110million to acquired 55% stake in Eastern Steel from Datuk Law. Eastern steel is dormant but plans to build a blast furnace in the Teluk Kalung Estate in Kemaman, Terengganu, where it owns two parcels of industrial land measuring 600 acres.

In return, Datuk Law paid back RM88 million to Kua family for 17.08% stake in Hiap Teck.

It seem Datuk Law get Hiap Teik for free, instead, Datuk Law still get extra RM22 million from the deal in term of cash flow. this isn't the case if you are minority shareholder. Investment in Hiap Teik now become investment in Datuk Law's blast furnace project in Kemaman.

Another person that dispose off their old listed company and listed a new company is Mac family of Muhibbah Engineering (M) Bhd. Mac family disposed off Nam Fatt around same period of Kua family dispose off Wing Teik. the different is Nam Fatt survive last recession and only become (PN17) in 2010. Mac family also never dispose off Muhibbah Engineering (M) Bhd until to date. South Arfrican fast food chain Nando's Malaysian franchise are hold by Mac's daughther Mac Chung Lynn.

Basics Principles of trading (Advertorial 3)

To operate effectively in any trading environment, you need rules and boundaries to guide your behavior. It’s a simple fact of any trading, no matter what "system" you’ve developed, that the potential exists to do financial damage to ourselves — damage that can be greater than we think is possible. There are many types of trades in which the risk of loss is unlimited. To prevent the possibility of exposing ourselves to damage, we need to create an internal structure in the form of specialized mental discipline and a perspective that guides our behavior so that we always act in our own best interests. This structure has to exist within each of us because the market doesn't provide it for us.

The markets provide structure in the form of behavior patterns that indicate when an opportunity to buy or sell exists. But that's where the structure ends — with a simple indication. Otherwise, from each individual's perspective, there are no formalized rules to guide behavior. There aren't even any beginnings, middles, or endings as there are in virtually every other activity we participate in.

This is an extremely important distinction with profound psychological implications. The market is like a stream that is in constant motion. It doesn't start, stop, or wait. Even when the markets are closed, prices are still in motion. There is no rule that the opening price on any day must be the same as the closing price the day before. Nothing we do in society properly prepares us to function effectively in an environment with no real boundaries.

Even gambling games have built-in structures that make them much different from trading – and a lot less dangerous. For example, if we decide to play blackjack, the first thing we have to do is decide how much we are going to wager or risk. This is a choice we are forced to make by the rules of the game. If we don't make the choice, we don't get to play.

In trading, no one (except yourself) is going to force you to decide in advance what your risk is. In fact, what we have is a limitless environment, where virtually anything can happen at any moment and only the consistent winners define their risk in advance of making on a trade. For everyone else, defining the risk in advance would force you to confront the reality that each trade has a probable outcome, meaning that it could be a loser. Consistent losers do almost anything to avoid accepting the reality that, no matter how good a trade looks, it could lose. Without the presence of an external structure forcing the typical trader to think otherwise, he is susceptible to any number of justifications, rationalizations, and the kind of distorted logic that will allow him to get into a trade believing that it can't lose… which makes determining the risk in advance irrelevant.

All gambling games have specified beginnings, middles, and endings, based on a sequence of events that determine the outcome of the game. Once you decide you’re going to participate, you can't change your mind — you're in for the duration.

That's not true of trading. With trading, prices are in constant motion, nothing begins until you decide it should, it lasts as long as you want, and it doesn't end until you want it to be over. Regardless of what you may have planned or wanted to do, any number of psychological factors can come into play ― causing you to be distracted, change your mind, or get scared or overconfident. In other words, you can behave in ways that are erratic and unintended.

Because gambling games have a formal ending, they force a participant to be an active loser. If you're on a losing streak, you can't keep on losing without making a conscious decision keep playing (and losing.) The end of each game causes the beginning of a new game, and you have to actively put more of your assets at risk by reaching into your wallet or pushing some chips to the center of the table.

Trading has no formal ending. The market will not take you out of a trade. Unless you have the appropriate mental approach to end a trade in a way that is always in your best interest, you can become a passive loser. Once you're in a losing trade, you don't have to do anything to keep on losing. You don't even have to watch. You can just ignore the situation, and the market can take everything you own.

One of the many contradictions of trading is that it offers a gift and a curse at the same time. The gift is that, perhaps for the first time in our lives, we're in complete control of everything we do. The curse is that there are no external rules or boundaries to guide or structure our behavior. The unlimited characteristics of the trading environment require that we act with some degree of restraint and self-control, at least if we want to create consistent success. The structure we need to guide our behavior has to originate in your mind, as a conscious decision that will guide your actions.

You Need Rules

Almost everyone who is interested in trading resists the idea of creating a set of  rules . The resistance may be subtle, but it’s still there. People may agree that rules make sense, but most have no intention of consistently following logical rules. Why?

Most of the guidelines we live by was given to us as a result of our upbringing and is based on choices made by other people, like our parents, relatives, teachers, or friends. Our guidelines were instilled in our minds but did not originate in our minds. This is a very important distinction. In the process of instilling structure, many of our natural impulses to move, express, and learn about the nature of our existence through our own direct experience were denied. Many of these denied impulses were never reconciled and still exist inside of us as frustration, anger, disappointment, or guilt. The accumulation of these negative feelings causes may people to resist anything that keeps us from doing whatever we want, whenever we want to.

It may seem odd, but the very reason we’re attracted to trading, (the unlimited freedom of choice and decision-making inherent in trading), is the same reason we feel a natural resistance to creating the kinds of rules and boundaries that can appropriately guide our behavior.

The need for rules may make perfect sense, but it can be difficult to generate the motivation to create these rules when we've been trying to break free of them most of our lives. It usually takes a great deal of effort to break down the source of our resistance to establishing and abiding by a trading regime that is organized, consistent, and reflects prudent money-management guidelines.

You Have To Take ResponsibilityTrading can be characterized as a personal choice with an immediate outcome. Remember, nothing happens until we decide to start; it lasts as long as we want; and it doesn't end until we decide to stop. All of these beginnings, middles, and endings are the result of our interpretation of the information available and how we choose to act on our interpretation. Now, we may want the freedom to make choices, but that doesn't mean we are ready and willing to accept the responsibility for the outcomes. Traders who are not ready to accept responsibility for the outcomes of their interpretations and actions will find themselves in a dilemma: How do you participate in an activity that allows complete freedom of choice, and at the same time avoid taking responsibility if the outcomes of your choices are poor?

The reality of trading is that, if you want to create consistency, you have to start from the premise that no matter what the outcome, you are completely responsible. Not the market, not the economy, not world events – you.

The way to avoid responsibility is to adopt a trading style that is, to all intents and purposes, random. Random trading can be defined as poorly-planned trades, or trades that are not planned at all. Random trading is an unorganized approach that doesn’t allow you to find out what works on a consistent basis and what doesn’t.

Randomness is unstructured freedom without responsibility. When we trade without well-defined plans and with an unlimited set of variables, it's very easy to take credit for the trades that turn out to our liking, because in our minds we used some kind of method, however poorly defined. At the same time, it's very easy to avoid taking responsibility for the trades that didn't turn out the way we wanted, because there's always some variable we didn't know about and therefore couldn't take into consideration beforehand.

If the market's behavior were truly random, then it would be difficult if not impossible to create consistency. If it's impossible to be consistent, then we really don't have to take responsibility. The problem with this logic is that our direct experience of the markets tells us something different. The same behavior patterns present themselves over and over again. Even though the outcome of each individual pattern is random, the outcome of a series of patterns is consistent and statistically reliable. That may seem like a paradox, but it’s a paradox that can be overcome with a disciplined, organized, and consistent approach.

Many traders spend hours doing market analysis and planning trades for the next day. Then, instead of making the trades they planned, they do something else. The trades they make are usually ideas from friends or tips from brokers. By making unstructured, random trades, they are able to avoid responsibility.

Why? When you act on your own ideas, you put our abilities on the line and get instant feedback on how well your ideas worked. It's difficult to rationalize away any unsatisfactory results, since they’re the direct results of your effort, logic, and ideas. On the other hand, when you enter an unplanned, random trade, it's much easier to shift the responsibility by blaming your friend or broker for their bad ideas.

The nature of trading itself also makes it easy to escape the responsibility that comes with creating structure in favor of trading randomly. Any trade has the potential to be a winner, whether you’re a great analyst or a poor one, and whether you do or don't take responsibility. It takes a lot of effort to create and follow a disciplined approach that will make you a consistent winner. It's very easy to avoid the mental work required to follow a disciplined, logical approach… and that’s why most people do.You Have To Be In ControlMost of us are brought up so we'll function well in society, so we've acquired thinking strategies for fulfilling our needs and desires that are geared toward social interaction and acceptance. We don't just take what we want – we take other people into consideration, too. Not only have we learned to depend on each other to fulfill our needs and desires, but in the process we've acquired many socially-based techniques for assuring that other people behave in a manner that is consistent with what we want.

The markets may seem like a social endeavor because there are so many people involved, but they're not. While we may have learned to depend on each other to fulfill basic needs, the market environment is different: it’s every person for themselves.

Not only can you not depend on the market to do anything for you, but it’s extremely difficult to manipulate or control anything that the market does. If we've become effective in our personal lives at fulfilling our needs and desires by learning how to control and manipulate our environment, but as traders are in an environment that does not know, care, or respond to anything that is important to us, what does that mean? It means we’re in control.

One of the principal reasons so many successful people have failed at trading is that their success is partly attributable to their superior ability to manipulate and control their social environment. To some degree, all of us have learned or developed techniques to make the external environment conform to our needs and desires. The problem is that none of those techniques work with the markets. The markets don’t respond to control and manipulation, unless you're a very large trader.

However, we can control our perception and interpretation of market information, as well as our own behavior. Instead of controlling our surroundings so they conform to our idea of the way things should be, we can learn to control ourselves. Then we can perceive information from the most objective perspective possible, and structure our mental environment so that we always behave in a manner that is in our own best interest.

"What Takes Some Successful Traders A Lifetime To Achieve Could Take You Just A Few Days... Or Less!"

Advertorial 1 - Introduction
Advertorial 2 - The Basics of Analysis and Rational Trading
Advertorial 3 - Basic Principles
Advertorial 4 - Characteristics of Successful Traders
Advertorial 5 - Playing to Your Strenghts, Overcoming Your Weaknesses
Advertorial 6 - Winning Psychology
Advertorial 7 - Avoiding Common Pitfalls
Advertorial 8 - Sound Money Management
Advertorial 9 - Trading Systems
Advertorial 10 - Final Words

Tuesday, 25 June 2013

Titans of Taiwan Finance Head South East Asia

Titans of Taiwan Finance Head South East Asia

More and more Taiwanese banks are setting up shop in Southeast Asia, establishing comprehensive regional networks in a quest to become "supra-regional" banks. What are the hurdles, and the rewards?

Stifled in Taiwan, New Vistas Overseas

Chinatrust already has joint venture subsidiary banks in Indonesia and the Philippines and is now actively seeking opportunities to expand its presence in Thailand, Malaysia and other areas.

Buying up banks and setting up branches in the member states of the Association of Southeast Asian Nations (ASEAN) has become something of a trend, mainly because Taiwan's long stifled financial sector is enjoying a shot in the arm from international operations.

According to data from Taiwan's Financial Supervisory Commission, pretax profits from the overseas operations of domestically owned banks, including offshore banking units (OBUs), last year reached NT$73.5 billion, an all-time high. That was a 56 percent increase from the previous year and accounted for 30.6 percent of overall banking profits.

Bankers estimate 2012 profit growth from branches and subsidiaries in the ASEAN region to be over 60 percent, driven by explosive economic growth in the ASEAN economies.

"(In taiwan) Domestic banks are overly competitive, and the move toward development of overseas operations has actually long been an inevitable trend," says Grace Jeng, executive vice president for overseas operations at First Commercial Bank. First Commercial Bank is actively seeking acquisitions in Burma, Thailand and Indonesia.

The bread and butter of the banking industry is the interest rate spreads on lending and deposits. The average spread in Taiwan is 1.2 percentage points, while in ASEAN countries spreads can range from five to eight percent or even higher.

Indicators of the capital structure of Taiwanese banks, such as capital adequacy ratios and non-performing loan ratios, are the best seen in a decade. The "capital" from overseas expansion has indeed been "adequate."

"Taiwanese banks bring another advantage to bear, and that is the risk management experience gleaned from painful lessons learned in the past," says Joseph Huang, president of E.Sun Financial Holdings. In March of this year, E.Sun Commercial Bank bought a 70 percent stake in Cambodia's Union Commercial Bank and set up a representative office in the Burmese capital of Yangon.

Crises the Taiwanese financial sector has weathered over the past decade or two have included the corporate finance crisis brought on by so-called "landmine stocks," the consumer financial crisis sparked by the credit card-cash card lending bubble, and the wealth management crisis that derived from the recent global financial crisis.

"Domestic banks have endured severe ordeals in virtually every major aspect of the banking business," Huang says, "and this has been enormously beneficial when entering unfamiliar new markets."

'ASEAN + 1' Concept Banks

The cumulative financial clout of Taiwanese banks has serendipitously encountered the financial liberalization of ASEAN. Cambodia, Burma and Thailand are all now in the process of gradually relaxing past financial restrictions in hopes of drawing in foreign investment and beefing up their respective financial sectors.

And with American and European banks otherwise occupied "putting out the fires" within their own parent companies, resulting in a reduction in their investments in Asian markets, Taiwanese banks have been presented with a golden opportunity to strengthen their positions.

"These big international banks used to be an object of emulation for the Asian financial sector, like a model student or even the teacher," says James Chen, president of Chinatrust Commercial Bank. "But in the wake of the financial crisis they are no longer the unassailable opponent for local banks that they once were," he continues confidently.

Equity stakes in ASEAN banks that are "waiting for the highest bidder" can now be had for a share price hovering around a price/book ratio of 2.5 to three, far higher than the 1.3 to 1.5 p/b ratios commonly found among Taiwanese banks.

Another reason Taiwanese banks are willing to pay a premium on acquisitions to get into ASEAN markets is the ongoing gradual economic integration of the various ASEAN member states, a development that will eventually include banks. Looking ahead, it will be far easier for local ASEAN country businesses to secure access to markets in other member states.

As E.Sun's Joseph Huang notes, in 2015 ASEAN members will form an "economic community" and perhaps as early as next year will dramatically reduce the barriers for setting up banks and other financial institutions in fellow member states, possibly even to the point of equal status with domestic financial institutions.

China is a member state of "ASEAN plus one" and may very well join as a full member.

"We established a joint venture subsidiary bank in Cambodia with an eye on more than just local business. Best case, we can go into China. Worst case, we have an ASEAN presence. That gives us a lot more flexibility with overseas deployments," Huang says.

"Establishment of a more comprehensive regional network is necessary to compete in an expanded market," says Chinatrust's James Chen of his bank's moves into Southeast Asia.

That expanded market to which Chen refers is China. Chinatrust's overseas presence now stands at 67 locations in 12 countries, and it boasts one of the most extensive networks of overseas branches of any Taiwanese bank.

Chen is blunt, acknowledging that China remains Chinatrust's top-priority overseas market, even though it continues to heavily regulate the operations of foreign banks. Add to that the longstanding presence of state-run banks in China, hundreds of times larger than their Taiwanese counterparts, and it's clear that one must distinguish oneself from the pack to compete.

Currently, four out of China's five biggest state-run banks are proceeding with internationalization at a relatively slow pace (the exception being the Bank of China), and their networks of overseas branches are limited. A comprehensive regional network that keeps pace with Taiwanese businesses and the internationalization of Chinese businesses is certainly a distinguishing feature and one that could allow "David to battle Goliath" in the China market.

Maintaining a Low Profile

On its second foray into Southeast Asia, Taiwan's banking sector is adopting a particularly soft posture.

Upon completion of its majority-stake acquisition of Cambodia's Singapore Banking Corp., Ltd., Cathay United Bank reassigned only three directorships and appointed a new bank president. Personnel moves among top-tier executives were similarly light-handed.

Having shed his suit and tie and rolled up his sleeves, Feng-Li Tran, general manager of Cathay United Bank's branch in Chu Lai, Vietnam, is seated at a roadside stand in a small industrial town in central Vietnam, hundreds of kilometers from both Hanoi and Saigon, chatting amicably over drinks in fluent Vietnamese with executives of local state-run enterprises.

Without batting an eye, Tran digs right in to local favorites like dog meat hotpot and even deep-fried silkworms. The five or six men gathered at the table pass a single beer glass among them, a far cry from the eating and drinking habits extant in Taiwan.

"In Taiwan we'd reckon this to be unsanitary, but in Vietnam sharing a communal glass indicates a sufficiently deep personal bond," Tran says with a chuckle. "In Vietnam, establishing a personal bond with clients is paramount in the banking business. If you have good personal relationships and mutual trust, there is no need to compete on the basis of cost. Old clients will bring new clients to your door."

Last year, Cathay United bested numerous foreign banks in Vietnam, among other things becoming the lead underwriter of a US$60 million syndicated loan to state-run carrier Vietnam Airlines, relying largely on expatriate operatives like Tran who are now reaping the fruits of seeds sown years ago.
Taiwanese financiers like Tran are becoming increasingly numerous in Southeast Asia. Following their successes in gaining a gradual foothold in the China market, Taiwanese bankers have begun to turn their attentions to Southeast Asia. Unlike with previous endeavors under the "Go South" policy of former Taiwanese president Lee Teng-hui, this second wave of banks moving into the region is purely voluntary.

While still awaiting approval of its acquisition of 70 percent of Union Commercial Bank by Cambodian and Taiwanese regulators, E.Sun Commercial Bank made clear it had no intention of replacing the UCB's current chairman, stating it would replace only the bank president and the heads of UCB's IT and risk management departments.

"Banking is at its core an extremely local business. We need to regionalize and internationalize, and we cannot rely solely on Taiwanese business clients. We must first respect the local banks' existing staff and business models before considering further expansion of local business," says Alan Lee, Cathay United's executive vice president for corporate finance.

"Even if the parent company possesses more advanced technology and a superior management model, regardless of how big your equity stake is, when you enter a new market you want to work together with the original management team while maintaining a low profile, 'assisting' rather than 'directing' and by all means avoiding a 'big boss' mentality, if you hope to create more business opportunities," Lee emphasizes.

Lee notes that while Cathay United has held a 50 percent stake in Vietnam's Indovina Bank Ltd. for 13 years, its chairman has always been appointed from the senior management ranks of joint venture partner Industrial and Commercial Bank of Vietnam. Among top-tier executives and rank and file staff, 90 percent are Vietnamese nationals.

Lee believes that the trust engendered through retaining local staff has been a major reason behind Cathay United's success in breaking into the Vietnam market and why more than 80 percent of its operating revenue in the country derives from non-Taiwanese corporate business.

Integrating Multinational Services

It's not enough to simply maintain a low profile in a foreign land. Taiwan's banks must also adopt the trappings of a "multinational bank headquarters" in terms of vision, structure and preparation.

Many, including Cathay United, Chinatrust, and E.Sun, have organized internal overseas business management departments to standardize the operations of their various overseas institutions.

Over the past several years, for example, Chinatrust has sunk NT$2 billion into complete standardization of the computerized transaction systems of each of its overseas branches.

"It was definitely not something as simple as changing the software, because the laws and regulations differ from country to country. The system had to be capable of complying with the regulations in various countries while providing clients with the most efficient service possible, so considerable behind-the-scenes effort was required," Chen says.

Thus Chinatrust's legal department retained the services of more than a dozen legal experts from the various countries in which it operates to keep track of changes in the financial laws, tax codes and investment regulations in each country where it has a presence.

Taiwan's most extensive overseas financial management system sits in the basement of Mega Financial Holdings' Taipei headquarters.

"We spent two or three years constructing a complete video conference system and market intelligence reporting network," says Mega Financial Holdings chairman McKinney Tsai. "The idea was to be able to get a bead on changes in the operational circumstances in global markets as quickly as possible. Now I come down here every week for video conferences with managers in each country, reducing the need to travel abroad."

Besides the highly visible market intelligence reporting system, a new plan must be developed and a new system established taking into account the less conspicuous aspects such as personnel performance evaluations and the allocation of financial resources from various subsidiaries.

"If a Taiwanese corporate finance client wants to source financing in the U.S. and set up a plant in Thailand, we can provide them with comprehensive multinational service," Tsai says. "Using the system to distribute rewards to all the departments and personnel involved behind the scenes takes a lot of know-how."

Taiwan's banks are laboring to distinguish themselves on the key global financial battlegrounds of Asia amidst a reshuffle in the international financial order.

Translated from the Chinese by Brian Kennedy
Excerpt and translated from Common Wealth Magazine, Taiwan

Related News : : 3 Oct 2012: Taiwanese Banks Expanding into Southeast Asia and Australia : 4 Oct 2012 : Taiwan strives to establish banking presence in Southeast Asia
Asia Money : 8 Oct 2012 : Taiwan targets Southeast Asia as role of renminbi grows
Report: Taiwan's Mega in talks to buy RHB Bank stake

Saturday, 22 June 2013

The Basics of Analysis and Rational Trading ( Advertorial 2 )

For a number of years, fundamental analysis was considered the only real or proper way to make shares trading decisions. In the late '70s and early '80s, technical analysis was used by only a handful of stock traders. As difficult as it is to believe now, it wasn't very long ago when most of the financial experts, major funds, and financial institutions thought that technical analysis was a flawed and nearly useless tool.

Today the opposite is true. Almost all experienced shares traders use some form of technical analysis to help them formulate their stock trading strategies. Except for some small, isolated pockets in the academic community, the "purely" fundamental analyst is virtually extinct. What caused this dramatic shift in perspective?

The answer is simple: money. The problem with making trading decisions from a strictly fundamental perspective is the inherent difficulty of making money consistently using this approach.

In case you're not familiar with fundamental analysis, here's a brief explanation. Fundamental analysis attempts to take into consideration all the variables that could affect the relative balance or imbalance between the supply of and the possible demand for any particular stock, commodity, or financial instrument. Using primarily mathematical models that weigh the significance of a variety of factors (interest rates, balance sheets, earnings projections, supply and demand, and numerous others), the analyst projects what the price will be at some point in the future.

The problem with these models is that they rarely, if ever, factor in other shares traders as a variable. People, expressing their beliefs and expectations about the future, make prices move—not models. The fact that a model makes a logical and reasonable projection based on all the “relevant” variables is worthless if the stock traders who are responsible for most of the trading volume are not aware of the model… or don't believe in it.

As a matter of fact, many shares traders – especially those on the floors of the exchanges who can move prices dramatically in one direction or the other – usually don't have the slightest concept of the fundamental supply and demand factors that are supposed to affect prices. And, at any given moment, much of their stock trading activity is prompted by a response to emotional factors that are completely outside the parameters of the fundamental model. In other words, the people who trade (and consequently move prices) don't always act in a rational manner.

Ultimately, the fundamental analyst could find that a prediction about where prices should be at some point in the future is correct. But in the meantime, price movement could be so volatile that it would be very difficult, if not impossible, to stay in a trade long enough to make money.

Technical Analysis

Technical analysis has been around for as long as there have been organized exchanges, but the trading communities didn't accept technical analysis as a viable tool for making money until the late '70s and early '80s. Here's what the technical analyst knew that it took the mainstream market community generations to catch on to:

A finite number of traders participate in the markets on any given day, week, or month. Many of these traders do the same kinds of things over and over in their attempt to make money. In other words, individuals develop behavior patterns, and a group of individuals, interacting with one another on a consistent basis, form collective behavior patterns. These behavior patterns are observable and quantifiable, and they repeat themselves with statistical reliability.

Technical analysis is a method that organizes this collective behavior into identifiable patterns that can give a clear indication of when there is a greater probability of one thing happening over another. In a sense, technical analysis allows you to get into the mind of the market to anticipate what's likely to happen next, based on the kind of patterns the market generated at some previous moment.

As a method for projecting future price movement, technical analysis has turned out to be far superior to a purely fundamental approach. It keeps the shares trader focused on what the market is doing now in relation to what it has done in the past – instead of focusing on what the market "should" be doing based solely on what is "logical and reasonable" as determined by a mathematical model. On the other hand, fundamental analysis creates a gap between what should be and what really is. The gap makes it extremely difficult to make anything but very long-term predictions that can be difficult for a stock trader to exploit… even if those predictions someday are correct.

In contrast, technical analysis not only closes this gap, but also makes available to the shares trader a virtually unlimited number of possibilities to take advantage of. The technical approach opens up many more possibilities because it identifies how the same repeatable behavior patterns occur in every time frame — by the minute, daily, weekly, yearly, and longer. Technical analysis turns the market into an endless stream of opportunities.

Rational Analysis

If technical analysis works so well, why don’t more people consistently make money?

Once an investor learns to identify patterns and read the market, there are limitless opportunities to make money. But, as I'm sure you already know, there can also be a huge gap between what you understand about the markets and your ability to transform that knowledge into consistent profits and a steadily rising equity curve.

Think about the number of times you've looked at a price chart and said to yourself, "Hmmm, it looks like the market is going up (or down)," and what you thought was going to happen actually happened. But you didn’t actually make a trade, and you anguished over all the money you could have made.

There's a big difference between predicting that something will happen in the market (and thinking about all the money you could have made), and the reality of actually getting into and out of trades. The difference a mental gap that can make trading one of the most difficult endeavors you could choose to undertake – and certainly one of the toughest to master.

The big question is: Can trading be mastered? Is it possible to actually trade with the same ease and simplicity you feel when you’re only watching the market and having theoretical success, as opposed to actually executing trades? Not only can you, but that's exactly what  this e-course is designed to give you: insight and understanding you need about yourself and about the nature of trading. So the result is that actually doing it becomes as easy, simple, and stress-free as when you are just watching the market and thinking about doing it.

This may seem like a tall order, and to some of you it may even seem impossible. But it's not. There are people who have mastered the art of trading, who have closed the gap between the possibilities available and their bottom-line performance. But as you might expect, these winners are relatively few in number compared with the number of traders who experience varying degrees of frustration, wondering why they can't create consistant success.
There are two types of traders: those who consistently make money, and those who don’t. Traders who have learned to be consistent make significant sums of money in the market every year.

Surprisingly, most of the trading industry’s failures are also bright and accomplished people. The largest group of consistent losers is composed primarily of doctors, lawyers, engineers, scientists, CEOs, wealthy retirees, and entrepreneurs. Furthermore, most of the best market analysts are the worst traders. Intelligence and good market analysis can certainly contribute to success, but they are not the defining factors that separate the consistent winners from everyone else. So if it isn't intelligence or better analysis, then what could it be?

The best traders think differently from everyone else.

That doesn't sound profound, but it does have profound implications if you consider what it means to think differently. To one degree or another, all of us think differently from everyone else. We may not always be mindful of this fact; it seems natural to assume that other people share our perceptions and interpretations of events. In fact, this assumption continues to seem valid until we find ourselves in a basic, fundamental disagreement with someone about something we both experienced. Other than our physical features, the way we think is what makes us unique, probably even more unique than our physical features do.

Let's get back to traders. What is different about the way the best traders think as opposed to how those who are still struggling think? While the markets can be described as an arena of endless opportunities, the markets simultaneously confront the individual with some of the most sustained, adverse psychological conditions a person can be exposed to. At some point, everyone who trades learns something about the markets that will indicate when opportunities exist. But learning how to identify an opportunity to buy or sell does not mean that you have learned to think like a trader.

The defining characteristic that separates the consistent winners from everyone else is this: The winners have attained a unique set of attitudes that allows them to remain disciplined, focused, and, above all, confident in spite of adverse conditions. As a result, they are no longer susceptible to the common fears and trading errors that plague everyone else. Everyone who trades ends up learning something about the markets; very few people who trade ever learn the attitudes that are absolutely essential to becoming a consistent winner. Just as people can learn to perfect the proper technique for swinging a golf club or tennis racket, their consistency, or lack of it, will without a doubt come from their attitude

Traders who become consistent and disciplined usually experience a great deal of pain (both emotional and financial) before they acquire the attitude that allows them to function effectively in a market environment. The rare exceptions are usually those who were born into successful trading families or who started their trading careers under the guidance of someone who understood the true nature of trading, and, just as important, knew how to teach it.

Why are emotional pain and financial disaster common among traders? The simple answer is that most of us weren't fortunate enough to start our trading careers with the proper guidance. However, the reasons go much deeper than this. Trading is filled with contradictions in thinking that make it extremely difficult to learn how to be successful.

Financial and emotional disaster are common among traders because many of the perspectives, attitudes, and principles that would otherwise make perfect sense and work quite well in our daily lives have the opposite effect in the trading environment. They just don't work. Not knowing this, most traders start their careers with a fundamental lack of understanding of what it means to be a trader, the skills that are involved, and the depth to which those skills need to be developed.
Here is a prime example of what we’re talking about: Trading is inherently risky. No trade has a guaranteed outcome; therefore, the possibility of being wrong and losing money is always present. So when you execute a trade, can you consider yourself a risk-taker? Even though this may sound like a trick question, it is not.

The logical answer to the question is, absolutely, yes. If you engage in an activity that is inherently risky, then you must be a risk-taker. This is a perfectly reasonable assumption for any trader to make. In fact, not only do virtually all traders make this assumption, but most traders take pride in thinking of themselves as risk-takers.

The problem is that this assumption couldn't be further from the truth. Of course, any trader is taking a risk when he executes a trade, but that doesn't mean that you are correspondingly accepting that risk. In other words, all trades are risky because the outcomes are probable — they aren’t guaranteed. But do most traders really believe they are taking a risk when they execute a trade? Have they really accepted that the trade has a non-guaranteed, probable outcome? Furthermore, have they fully accepted the possible consequences?

The answer is no. Most traders have absolutely no concept of what it means to be a risk-taker in the way a successful trader thinks about risk. The best traders not only take the risk, they have also learned to accept and embrace that risk. There is a huge psychological gap between assuming you are a risk-taker because you make trades and fully accepting the risks inherent in each trade. When you fully accept the risks, it will have profound implications on your bottom-line performance.

The best traders can make a trade without the slightest bit of hesitation or conflict, and just as freely and without hesitation or conflict admit it isn't working. They can get out of the trade — even with a loss —and doing so doesn't create the slightest bit of emotional discomfort. In other words, the risks inherent in trading do not cause the best traders to lose their discipline, focus, or sense of confidence. If you are unable to trade without the slightest bit of emotional discomfort (specifically, fear), then you have not learned how to accept the risks inherent in trading. This is a big problem, because to whatever degree you haven't accepted the risk is the same degree to which you will avoid the risk. Trying to avoid something that is unavoidable will have disastrous effects on your ability to trade successfully.

Learning to truly accept the risks in any endeavor can be difficult, but it is extremely difficult for traders, especially considering what's at stake. What are we generally most afraid of? Certainly, losing money and being wrong both rank close to the top of the list. Admitting we are wrong and losing money in the process can be extremely painful, and is certainly something to avoid. Yet as traders, we are confronted with these two possibilities virtually every moment we are in a trade.

Now, you might be saying to yourself, "Apart from the fact that it hurts so much, it's natural to not want to be wrong and lose something; therefore, it's appropriate for me to do whatever I can to avoid it." And that’s true – to a degree. But it is also this natural tendency that makes trading extremely difficult.

Trading presents us with a fundamental paradox: How do we remain disciplined, focused, and confident in the face of constant uncertainty? When you have learned how to "think" like a trader, that's exactly what you'll be able to do. Learning how to redefine your trading activities in a way that allows you to completely accept the risk is the key to thinking like a successful trader. Learning to accept the risk is a trading skill — the most important skill you can learn. Yet it's rare that developing traders focus any attention or expend any effort to learn it.

When you learn the trading skill of risk acceptance, the market will not be able to generate information that you define or interpret as painful. If the information the market generates doesn't have the potential to cause you emotional pain, there's nothing to avoid. It’s just information telling you what the possibilities are. Seeing information and events objectively is your goal; you can’t be objective if you’re afraid of what is or isn’t going to happen.

I'm sure there isn't one trader reading this e-course who hasn't gotten into trades too soon — before the market has actually generated a signal, or too late — long after the market has generated a signal. What trader hasn't convinced himself not to take a loss and, as a result, had it turn into a bigger one; or got out of winning trades too soon; or found himself in winning trades but didn't take any profits at all, and then let the trades turn into losers; or moved stop-losses closer to his entry point, only to get stopped out and have the market go back in his direction? These are but a few of the many errors traders make time and time again.

Those are not market-generated errors. Those are not errors that come from the market. The market is neutral, in the sense that it moves and generates information about itself. Movement and information provide each of us with the opportunity to do something, but that's all. The markets don't have any power over the unique way in which each of us perceives and interprets this information, or control of the decisions and actions we take as a result.

Here’s the biggest difference between consistent winners and everyone else: The best traders aren't afraid. They aren't afraid because they’ve developed attitudes that give them the greatest degree of mental flexibility to flow in and out of trades based on what the market is telling them about the possibilities from its perspective. At the same time, the best traders have developed attitudes that prevent them from getting reckless.

Ninety-five percent of the trading errors you are likely to make — causing you to consistently lose money — will be due to your attitudes about being wrong, losing money, missing out, or leaving money on the table.

Now, you may be saying to yourself, "I don't know about this: I've always thought traders should have a healthy fear of the markets." Again, this is a perfectly logical and reasonable assumption. But when it comes to trading, your fears will act against you in such a way that you will cause what you are afraid of to actually happen. If you're afraid of being wrong, your fear will act influence your perception of market information in a way that will cause you to do something that ends up making you wrong.

When you are fearful, no other possibilities exist. You can't perceive other possibilities or act on them properly, even if you did manage to perceive them, because fear is paralyzing. Physically, it causes us to freeze or run. Mentally, it causes us to narrow our focus of attention to the object of our fear. This means that thoughts about other possibilities, as well as other available information from the market, get blocked. You won't think about all the rational things you've learned about the market until you are no longer afraid and the event is over. Then you will think to yourself, "I knew that.

Why didn't I think of it then?" or, "Why couldn't I act on it then?"

It's extremely difficult to see that the source of these problems is our own inappropriate attitudes. Many of the thinking patterns that adversely affect our trading are a function of the natural ways in which we were brought up to think and see the world. These thinking patterns are so deeply ingrained that it rarely occurs to us that the source of our trading difficulties is internal, derived from our state of mind. It seems more natural to see the source of a problem as external, in the market, because it feels like the market is causing our pain, frustration, and dissatisfaction.

Obviously these are abstract concepts and certainly not something most traders are going to concern themselves with. Yet understanding the relationship between beliefs, attitudes, and perception is as fundamental to trading as learning how to serve is to tennis, or as learning how to swing a club is to golf. Put another way, understanding and controlling your perception of market information is important only to the extent that you want to achieve consistent results.

We say this because there is something else about trading that is as true as the statement we just made: You don't have to know anything about yourself or the markets to make a winning trade, just as you don't have to know the proper way to swing a tennis racket or golf club in order to hit a good shot – occasionally. The first time you played golf, for instance, you might have hit several good shots throughout your round, even though you hadn't learned any particular technique; but your score was still probably well over 100 for 18 holes. Obviously, to improve your overall score, you needed to learn technique.

The same is true for trading. We need technique to achieve consistency. But what technique do we need to learn? If we aren't aware of, or don't understand, how our beliefs and attitudes affect our perception of market information, it will seem as if it is the market's behavior that is causing the lack of consistency. As a result, it would stand to reason that the best way to avoid losses and become consistent would be to learn more about the markets.

This bit of logic is a trap that almost all traders fall into at some point, and it seems to make perfect sense. But this approach doesn't work. The market simply offers too many — often conflicting —variables to consider. Furthermore, there are no limits to the market's behavior. It can do anything at any moment. As a matter of fact, because every person who trades is a market variable, it can be said that any single trader can cause virtually anything to happen.

That means no matter how much you learn about the market's behavior, no matter how brilliant an analyst you become, you will never learn enough to anticipate every possible way that the market can make you wrong or cause you to lose money. So if you are afraid of being wrong or losing money, it means you will never learn enough to compensate for the negative effects these fears will have on your ability to be objective and your ability to act without hesitation. In other words, you won't be confident in the face of constant uncertainty. The hard, cold reality of trading is that every trade has an uncertain outcome. Unless you learn to completely accept the possibility of an uncertain outcome, you will try either consciously or unconsciously to avoid any possibility you define as painful. In the process, you’ll subject yourself to any number of self-generated and costly errors.

Now, we’re not suggesting that you don't need some form of market analysis or methodology to define opportunities and allow you to recognize them; you certainly do. However, market analsysis is not the path to consistent results. It will not solve the trading problems created by lack of confidence, lack of discipline, or improper focus.

When you operate from the assumption that more or better analysis will create consistency, you will be driven to gather as many market variables as possible into your arsenal of trading tools. But what happens then? You’re still disappointed and "betrayed" by the markets because of something you didn't see or give enough consideration to. It will feel like you can't trust the markets; but the reality is, you can't trust yourself.

Confidence and fear are contradictory states of mind that both stem from our beliefs and attitudes. To be confident while you’re functioning in an environment where you can easily lose more than you intend to risk requires absolute trust in yourself. However, you won't be able to achieve that trust until you’ve trained your mind to override your natural inclination to think in ways that are counterproductive to being a consistently successful trader. Simply learning how to analyze the market's behavior is not the only skill you need.

You have two choices: You can try to eliminate risk by learning about as many market variables as possible. Or, you can learn how to redefine your trading activities in such a way that you truly accept the risk and you're no longer afraid.

When you've achieved a state of mind where you truly accept the risk, you won't have the potential to define and interpret market information in painful ways. When you eliminate the potential to define market information in painful ways, you also eliminate the tendency to rationalize, hesitate, jump the gun, hope that the market will give you money, or hope that the market will save you from your inability to cut your losses.

As long as you are susceptible to the kinds of errors that are the result of rationalizing, justifying, hesitating, hoping, and jumping the gun, you will not be able to trust yourself. If you can't trust yourself to be objective and to always act in your own best interests, achieving consistent results will be next to impossible. Trying to do something that looks so simple may well be the most frustrating thing you will ever attempt to do. The irony is that, when you have the appropriate attitude, when you have acquired a trader’s mind-set and can remain confident in the face of constant uncertainty, trading will be as easy and simple as you probably thought it was when you first started out.

So, what’s the solution? You’ll need to learn how to adjust your attitudes and beliefs about trading so you can trade without fear… but at the same time keep a framework in place that keeps you from becoming reckless.

The successful trader that you want to be is something you have to grow into. Growth implies expansion, learning, and creating a new way of expressing yourself. In order to become a better trader, you’ll have to change. This is true even if you're already a successful trader and are reading this book to become more successful. Many of the new ways in which you will learn to express yourself will be in direct conflict with ideas and beliefs you presently hold about the nature of trading. You may or may not already be aware of some of these beliefs. In any case, what you currently hold to be true about the nature of trading will argue to keep things just the way they are, in spite of your frustrations and unsatisfying results. These internal arguments are natural. Your willingness to consider that other possibilities exist — possibilities that you may not be aware of or may not have given enough consideration to — will obviously make the learning process faster and easier.

"What Takes Some Successful Traders A Lifetime To Achieve Could Take You Just A Few Days... Or Less!"

Advertorial 1 - Introduction
Advertorial 2 - The Basics of Analysis and Rational Trading
Advertorial 3 - Basic Principles
Advertorial 4 - Characteristics of Successful Traders
Advertorial 5 - Playing to Your Strenghts, Overcoming Your Weaknesses
Advertorial 6 - Winning Psychology
Advertorial 7 - Avoiding Common Pitfalls
Advertorial 8 - Sound Money Management
Advertorial 9 - Trading Systems
Advertorial 10 - Final Words