Friday, June 26, 2015

Trading with technical analysis

Hi Mr. Tan
Do you encourage people to trade gold and commodities? Is it risky? I refer to this posting
http://tankinlian.blogspot.sg/…/how-to-trade-on-technical-a…

REPLY
I do not encourage people to trade - as it is similar to betting. In the long run, they will lose their money.
But many people like to take a bet. They call it investing, e.g. in gold or stocks, but in reality they are trading with the aim to make a profit in the short term.They should realize that it is easier to make a loss.
Some of them attend training courses and paid a few thousand dollars to learn the technical analysis, i.e. how to read the charts. It is a waste of time and money to attend these courses, as they will not produce the results that you look for. It takes a lot of practice and skills to be a good technical analyst.
I am suggesting an alternative approach. Let the experts make the technical analysis and follow their recommendations with a demo account. You will learn that apply the recommendations is also not easy. At least, the difficulty is reduced to some extent.
If you make a profit after trading with a demo account for a month, you can venture with real money. But you must remember:
1) Online websites allow you to trade with leverage. You are trading with 10 to 50 times of the money that you put in. At 50 times leverage, a 2% move against you will wipe out your entire capital.
2) Trade with money that you an afford to lose. It is like buying 4D. Do not think that you are investing.

Good luck.

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