Before you start

Introducing Trade Profitably ‘The informed Investor’: Your Path to Innovative and Personalised Stock Picking on The Australian Stockmarket.

Welcome to The Informed Investor, where we transform the way you approach stock picking. Our platform combines advanced technical analysis with comprehensive insights, empowering you to make profitable trading decisions. Whether you're an experienced investor seeking new strategies or just starting out in the world of investments, The Informed Investor equips you with a comprehensive suite of tools and resources to enhance your trading experience.

Key Features:

Technical View and Recommendations:

Gain a competitive edge with our comprehensive technical view of the market. Our platform offers precise buy, sell, and stop loss prices, ensuring you never miss out on lucrative investment opportunities. Our team of experts continuously analyses market trends and promptly uploads detailed recommendations as potential trades arise, keeping you informed and ready to act.

Quality, Value, and Growth Investing:

We understand that different investment strategies suit different investors. That's why we offer a range of market prospects all within the one information hub. You will have access to quality investing opportunities to focus on stable, high-quality companies. Explore undervalued opportunities through value investing or target high-growth prospects with our growth investing approach. The Informed Investor caters to your specific investment style.

Tailor your own Investment Profiling:

We recognise that every investor is unique, and we empower you to align investment ideas with your individual investment profile. By considering your risk appetite, financial goals, and preferences, you can make informed decisions that reflect your specific investment strategy. With the Informed Investor, your investment journey is tailored to your needs and objectives, set by you. What this simply means is that you will make the judgement call whether the presented trading opportunity is right for you. Dismiss it or take it on board, it’s all up to you.

Expanding Stock Universe:

Dive deeper into the market. Our stock selection goes beyond the traditional medium and large-cap household names, uncovering small-cap emerging opportunities with substantial growth potential. By broadening your investment horizon, you gain access to untapped market segments and diversify your portfolio for enhanced returns.

Weekly Market Recap:

Stay informed and stay ahead with our exclusive weekly dynamic market recap. We provide comprehensive summaries of the Australian and overseas equity markets, currencies, commodities, and even the crypto markets. Stay up-to-date with the latest developments, trends, and potential market-moving events, empowering you to make more informed investment decisions. 

Our platform fosters collaboration and learning, allowing us all to grow together. Have specific technical queries on specific stocks or markets? Feel free to email us, and we'll initiate a segment within our platform or we will include it in our weekly market recap. With the Informed Investor, you'll thrive through collective knowledge and support.

All subscribers will be notified via email about investment opportunities. They will be advised to access the website and evaluate the opportunity to determine its comparability with their investment criteria and time horizon. 

Technical Trading: Emphasizing the Art of Reading Price Action

In the world of technical trading, an essential skill that sets successful traders apart is the art of reading price action. Instead of relying solely on complex indicators or mathematical models, adept technical traders keenly observe the price movements depicted on the charts. This approach empowers them to gain valuable insights into market dynamics and make well-informed decisions.

The Mastery of Price Action:

Reading price action involves recognizing patterns, trends, and significant price levels without the need for elaborate indicators. Traders who excel in this art can discern crucial information from the patterns formed by candles, bars, or line charts, understanding the market's sentiment, supply-demand balance, and potential price direction.

Real-Time Analysis:

The strength of reading price action lies in its ability to provide real-time analysis. As price unfolds on the chart, traders can gauge the market's response to news, economic events, or geopolitical developments instantaneously. This on-the-spot evaluation grants them a competitive edge in navigating dynamic market conditions.

Embracing Simplicity:

Emphasizing price action brings simplicity to the trading process. Instead of becoming overwhelmed with a myriad of indicators, traders can focus on the essential elements directly presented by the price movements. This straightforward approach fosters clarity and allows for a more intuitive understanding of the market's behavior.

Reinforcing Discipline:

The art of reading price action promotes discipline and patience in trading. By relying on tangible price patterns and trends, traders can adhere to predefined trading plans, avoiding impulsive decisions driven by emotions or noise in the market.

Risk Management and Timing:

Complementing technical analysis with a keen eye on price action enhances risk management and timing. Traders can pinpoint optimal entry and exit points with greater precision, leading to effective risk control and improved overall trading performance.

In the world of technical trading, reading price action stands as a fundamental skill that unlocks the potential for traders to gain deeper market insights. By honing this art, traders can decipher the language of price movements and interpret market sentiment with clarity and confidence. As a result, the emphasis on price action reinforces discipline, real-time analysis, and a clear understanding of market behavior - attributes that are integral to achieving success in the dynamic and ever-evolving financial markets.

In the realm of technical trading, two crucial aspects that significantly influence trading success are money management and the acceptance of losses. A disciplined approach to these elements can have a profound impact on a trader's long-term profitability and risk management strategy.

Money Management:

Money management encompasses a set of prudent practices aimed at preserving capital and optimizing risk exposure. It involves effectively allocating capital across trades, setting appropriate position sizes, and employing risk management techniques to safeguard against excessive losses.

Position Sizing: Technical traders carefully determine the size of each position based on their trading capital and risk tolerance. Employing a percentage-based approach, traders allocate only a fraction of their capital to any single trade, thus mitigating the potential impact of individual losses on the overall portfolio.

Risk-Per-Trade: Implementing a predetermined risk-per-trade, often expressed as a percentage of trading capital, allows traders to maintain consistency in their risk exposure. This prevents disproportionate losses and ensures that no single trade jeopardizes their trading account.

Stop-Loss Orders: Utilizing stop-loss orders is a critical aspect of money management in technical trading. These orders serve as safety nets, automatically triggering an exit from a losing trade once a predetermined price level is reached, limiting potential losses.

Acceptance of Losses:

Successful technical traders understand that losses are an inherent part of trading and demonstrate the resilience to accept them with equanimity. Embracing the acceptance of losses is fundamental to maintaining emotional stability and adhering to the trading plan without being swayed by fear or impulsive decisions.

Learning from Losses: Instead of viewing losses as failures, adept technical traders treat them as learning opportunities. Analyzing losing trades provides valuable insights into refining trading strategies, identifying potential weaknesses, and improving overall decision-making.

Staying Disciplined: Accepting losses enables traders to remain disciplined in following their trading rules and predefined risk levels. This discipline ensures that they do not abandon their trading strategy due to temporary setbacks.

Risk-to-Reward Ratio:

The risk-to-reward ratio is a key metric in technical trading that compares the potential profit of a trade to its potential loss. A favorable risk-to-reward ratio signifies that the potential reward outweighs the potential risk, making the trade more attractive from a risk management perspective.

Professional technical traders meticulously assess the risk-to-reward ratio for each trade, ensuring that it aligns with their trading strategy and money management principles. By favoring trades with higher potential rewards relative to the risks taken, traders increase their probability of long-term profitability.

In technical trading, money management and the acceptance of losses are paramount to sustainable success. By employing disciplined money management practices, traders can preserve capital and optimize risk exposure. Simultaneously, embracing the inevitability of losses fosters emotional resilience and enables traders to learn and grow from their experiences. A focus on the risk-to-reward ratio further enhances the efficacy of trading decisions, ensuring that trades are assessed in the context of their potential rewards relative to the risks involved. Ultimately, the combination of sound money management, acceptance of losses, and a prudent risk-to-reward approach forms the foundation of a well-rounded and professional technical trading strategy.

Dear Traders,

We understand the importance of prudent risk management in achieving sustainable success in the dynamic world of stock trading. This document outlines essential risk management guidelines to protect your capital and navigate potential challenges effectively. It is important to note that these guidelines are not personal advice on how much you should risk or invest; instead, they offer insight into how some professional traders manage their risk. By adhering to these principles, you can enhance your trading discipline and make informed decisions with confidence.

1. The 2% Rule:

Never risk more than 2% of your total trading capital on any single trade. This fundamental principle ensures that potential losses are controlled, and your overall trading account remains protected. To calculate the maximum risk for a trade, multiply your total trading capital by 0.02 (2%). This will determine the maximum amount you can afford to lose in any given trade.

Example:

Suppose your total trading capital is $100,000. Applying the 2% rule:

Maximum Risk (2%) = $100,000 x 0.02 = $2,000

Therefore, you should not risk more than $2,000 on any single trade to adhere to the 2% rule.

Enhanced Explanation of the 2% Rule with a $100,000 Bank and Buying Shares at $1.00 with a Stop Loss at 80c

Let's delve deeper into the 2% rule and how it applies to a trader with a $100,000 bank who wants to buy shares at $1.00 with a stop loss at 80 cents.

Step 1: Calculate the Maximum Risk

The trader's total bank amount is $100,000. Applying the 2% rule, we can calculate the maximum amount the trader can risk on any single trade:

Maximum Risk (2%): $100,000 (total bank) x 2% = $2,000

According to the 2% rule, the trader should not risk more than $2,000 on this particular trade.

Step 2: Determine the Number of Shares

Now, the trader wants to buy shares at $1.00 each and set a stop loss at 80 cents. Let's calculate the number of shares they can buy while adhering to the 2% risk limit.

Purchase Price per Share: $1.00

Stop Loss Price per Share: $0.80

Maximum Risk (2%): $2,000

To calculate the number of shares, we need to find out how much the stop loss (in cents) represents as a dollar value. This is the potential loss per share.

Potential Loss per Share: $1.00 (purchase price) - $0.80 (stop loss price) = $0.20

Now, we divide the maximum risk per trade by the potential loss per share to find the number of shares:

Number of Shares: $2,000 (maximum risk) / $0.20 (potential loss per share) = 10,000 shares

The trader can purchase 10,000 shares of the stock at $1.00 per share while maintaining a stop loss at 80 cents, and still adhere to the 2% risk management rule.

2. Stop-Loss Orders:

Always set stop-loss orders for each trade to limit potential losses. A stop-loss order instructs your broker to automatically sell your shares if the stock price reaches a specified level. This mechanism safeguards your capital from significant declines and enables you to exit losing positions before further losses occur.

3. Research and Due Diligence:

Conduct thorough research before investing in any stock. Analyze the company's financial health, market position, and compliance with exchange listing rules. Be aware of potential risks, such as delisting or regulatory issues, and carefully consider a stock's long-term prospects before making investment decisions.

4. Diversification:

Diversify your investments across different stocks and asset classes. Spreading your risk helps reduce the impact of a single stock's performance on your overall portfolio. By diversifying, you can mitigate the effects of any individual stock's adverse movements.

5. Delisting Risk:

Be aware that there is a risk of stocks being delisted from stock exchanges for various reasons, such as failure to meet listing requirements, financial troubles, or regulatory issues. Delisting can lead to challenges for traders and investors, and it is essential to be cautious while investing in stocks with a higher likelihood of delisting.

6. Trading Halts and News:

Stay informed about significant news and announcements that may affect the stocks you trade. Be prepared for the possibility of trading halts during periods of increased market volatility or when important news is expected. Exercise caution and consider reducing position sizes during uncertain market conditions.

Conclusion:

Risk management is the cornerstone of successful stock trading. The guidelines provided here are not personalized financial advice but offer valuable insights into how some professional traders manage their risk. By adhering to the 2% rule, setting stop-loss orders, conducting thorough research, diversifying your portfolio, and staying informed about market events, you can mitigate potential losses and enhance your overall trading performance.

Please remember that while these guidelines can help manage risk, no trading strategy can eliminate all risks. The stock market inherently involves uncertainties, and staying disciplined in your approach will contribute to your long-term success.

If you have any questions or require further assistance, do not hesitate to contact our dedicated support team.

Happy trading!

Sincerely,

John Pontikas