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Stock Investing is one of the oldest types of investment that represent the ownership of a corporation and its businesses. One of the ways for a company to raise capital is through equity financing. The process is to find investors who are willing to buy into the business. The company sells and transfers its shares to investors in exchange for money. A stock exchange is a marketplace where the investor can buy or sell their stock at a price. As a stock trader or investor, the primary goal is to profit from the stock price appreciation by buying undervalued stocks and selling them at a higher price. Stock trading can be very rewarding or painfully unprofitable, making millions of dollars in a year or losing it all in a year. It all depends on one’s emotional control, competency, and trading strategy.
Stock Trading is not rocket science. You can do it too once you know how.
When you ask most people what comes to mind when they think of generating wealth outside of their careers – they will probably say stock trading/investing. Owning stocks not only allows you to create wealth but also gives you a feeling of ownership in a business you strongly believe in. This is the reason why stock trading is always in demand.
There is plenty of open information on stock news, company fundamental and technical analysis, and detailed analysts’ reports online. Easy access to stock related information makes stock trading popular. The availability of online brokers, low commission costs, and small capital requirements make it so easy for anyone to start their trading journey. Even many young students are into financial and stock trading at a young age to gain experience.
For better comparison, let’s lay out the differences of investment types in terms of
For all its glory and glamour, do you know that about 90-95% of retail traders lose money? Well – why is that the case?
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First, trading is one of the toughest professions out there. It’s extremely competitive and difficult to maintain an edge in the market. The main issue is that stock traders tend to think they are prepared, are confident (stock tips, for example) and have full awareness of their trading decisions. However, the reality is that most stock traders do not make correct decisions because they do not act on complete information.
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Second, your chances of making trading a success diminish if you do not have a systematic and proven working strategy. For those who trade longer in the market, you know that the market does not behave rationally. And this explains why the market still rallies in April 2020 despite economic contraction due to the Covid-19 pandemic. A good working system is designed to manage trade rewards and risks in various markets. Therefore having a good systematic trading strategy is the key element to generate income from the stock market successfully.
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Third, and probably the most important, even with a robust trading system, traders will fail when they continuously flout their own trading rules by letting emotions take over. In the financial behavioral theorem, we learn people have a strong inclination to make decisions based on utility value, which is very subjective, and it varies for each individual. This is to explain best why some traders are putting a stop loss at 20% (because they find the loss amount is emotionally unbearable), but to the contrary, they even make more losses in the longer run. The trading rule is created to eliminate one’s feelings and calculate a real or expected value when you hold any unrealized loss based on historical patterns. A similar case happens for many greedy traders jumping in to buy a cheap stock because it is cheap. But the opportunity cost of holding it is expensive. Greed and fear affect humans’ ability to choose what best for them, and this poor decision-making execution will gradually erode the portfolio value.
Trading in the stock market is just like setting up a business. There are times when it is profitable, there are times when it is not. There is no shortcut to attain a consistent success in stock trading. Still, traders must have relevant information, collect unbiased trade sampling, adopt the right-working methodology, execute proper money management, apply robust risk management, etc.
Therefore if you are serious about stock investing, it requires systematic approach and commitment. Without being disciplined and adopting a correct-systematic approach, we are just like the most 95% of the common traders gambling their money in the stock market, yet thinking that they are in the right investment vehicle.
Making money in the stock market is getting more difficult. Yes, most successful traders do have extraordinary knowledge and experience. What makes their investments work is none other than their strategies and systematic approach. They have no secret recipe or a magic crystal ball to pick all profitable stocks. But instead, they follow a precise and proven working strategy that has consistently made money in the stock market over a period of time.
It governs the timing, trade size, capital allocation, trade analysis, risk controls, and trading decisions. In short, we call it a systematic or rule-based trading strategy.
Applying a systematic or rule based trading startegy and being committed to implement it is key in gaining profit from the stock market.
Technology has changed our lives for the better. And nothing could be more exciting than to hear about creating technology that helps people making money. Many have tried to create the software that executes a set of investing rules (e.g. market scanner, automated asset allocation) and label it as a robot trader, which is very misleading since there are many limitations on how it functions. The solution is bounded by the biased rules set by the developers, and the system has no independence to analyse and make smart execution based on a dynamic market situation.
Development in Artificial Intelligence has made it possible to create intelligent investing algorithms that can achieve a high degree of consistency in delivering strong risk-adjusted returns. Many top-notch hedge funds today, leveraging the technology to develop robust mathematical modelling to capture and exploit the market’s inefficiencies to profit consistently. However, the solution is only made available to serve ultra high net worth investors.
Our years of research and development in Artificial Intelligence has made it possible to help anyone, without prior investing knowledge, to be a great trader and generate wealth consistently from the stock market.
AlgoMerchant’s technology has successfully aided retail investors with intelligence to trade and invest like professionals. Furthermore, it was developed to bring automation to trade execution. Our A.I. solution or robot trader works 24/7 without your interference, and you can free more of your valuable time on other interests. The solution was designed to take any human emotions out of the equation!
For example, in the extreme Covid-19 market selloff that caused the S&P 500 to plunge -35%, AlgoMerchant’s A.I solution was able to generate positive returns of more than 2% in that difficult financial environment.
Our robot eliminates the common failures encountered by many traders, as attested to by the community of users!
By using proprietary machine learning to identify statistical patterns and predict price movements, AlgoMerchant is the first Singapore technology provider that empowers retail investors with A.I. investing solutions.
Business Times Nov 17, 2017.
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