Tips on investing

When you trade 5 times or more a week, investigate whether you’re eligible to trade as a business by the current tax rule.  A business allows its owner to deduct business expenses.

If you create a trading plan on when and how to trade and then monitor your trades periodically, you would likely become more disciplined and a better investor.

Monitor your trades. You may need to take a breather or switch to paper trading if you have a few losses in a row. Paper trading would be useful and it serves as part of the education.

You should keep a trading log or journal to review what you may or have done wrong, and then learn from that. This may be part of the tuition for trading and there are always lessons to learn. This book can help you to reduce errors but there is no substitution for actual experiences with real money.

Technical analysis (a.k.a. charts) may not be good for penny stocks as their trade volumes are usually low. However, using charts for market timing is fine.

Be careful when using a historical database to test screens / strategies. Penny stocks have more of a chance for survivorship bias. If you have two stocks, one down to zero and one up by 100%, your total return of these 2 stocks should be zero. It could be 100% up if the database took out the losing stock. It means you never find this losing stock in your test as it is not in your database. 

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For more of my reasoning, check out the book described next. The Kindle has 850 pages (6*9) for $9.99. It could be the best $10 you ever spend.

The above is an abstract from my book "Complete the Art of Investing" which is available from Amazon.


I challenged to have the best-performed article in Seeking Alpha history, an investing site, for recommending 5 or more stocks in one year after the publish date. The concepts for that article are discussed in this book.

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