Chaos or volatility has increased markedly since online
trading has become popular and will continue to be a part of
the ongoing investment process.
Learning is continual:
The demand for a commodity, as reflected in its price, is
created by human beings and as with all energy, tends to
move in cycles from valley to peak and back. Minute cycles move within hourly cycles
which occur within daily cycles
which in turn occur within weekly cycles which occur
within monthly cycles and so on. The more frequent
and intense these cycles, the more volatile the
commodity and the greater the financial risk and short term capital gains.
Day traders focus on the "minute cycles" where as
the Wealthsaver strategy monitors "daily, weekly, and
monthly cycles."
Investors constantly experience two conflicting
emotions of greed and fear of loss. Fear of loss makes us
hesitant to enter the market as the price may go against
our position; Greed, on the other hand, makes us hesitant to
change positions as the commodity may still have
momentum in our favour. Both
emotions can be controlled by deciding in advance the
type of changes that will trigger a short sale or long purchase and
reacting automatically when they occur. Some losses can never be eliminated entirely but they can be
minimized by following a structured set of trading rules
faithfully.
It is easier (and with less risk) to double an investment
through a series of small gains rather than from a single drawn
out long-term transaction.
It costs only a few dollars in commissions to change
positions or to get out - when in doubt. There
will always be another opportunity where there is
greater clarity.
There are no "get rich quick schemes" for
by the time the average investor is made aware of
information that may impact the direction of movement, the
market has already factored it into the price. The
only exception to this is called "insider
trading" and is illegal.
Earning a higher than average rate of return and
becoming a successful commodity investor has nothing
to do with luck or astrology or who you know. It has everything to do with
effectiveness and discipline. To be effective an
investor needs a structured approach to investment that
is correct most of the time. The discipline is
needed to follow the structured routine and control the
emotions when the investment strategy appears to be
wrong.