Trading Critic: Forex, Stocks - Traders' Delusions

Greedy and Gullible: Make $5692 in 7 days

Tue, 19 Jun 2007 16:06:57 -0700

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Are you greedy and gullible? I hope not. But if you are reading this post, you must either be in the business of making money or just in the search for making an easier buck. Flip open the classifieds section of your local newspaper and you'll find plenty of programs promising easy money. Make $5692 in 7 days selling health supplements, cosmetics, jewelry, lingerie or clothes. The advert claims the money is easy. "Fire your boss!" They claim. Of course, these types of advertisements come in all shapes and forms, some extremely tacky and are obviously targeting the very desperate to advertisements that target the "smart players" or the white collars with something that may seem very easy to do but in reality it is rare to succeed. I am not going to point fingers at companies, but they are out there. Some are MLM companies and others are involved in share trading or options. I've seen companies try to entice people to buy their products purely on the basis of gullibility and greed. Other products companies try to promote on this same pretence are resume products, software and other informational "learn to do it yourself and sell your service" type courses.

Their target market are the greedy and the gullible. Those who have heard riches can be easy to come by. A technique used by these companies are to herd in a few hundred people into a free seminar. They present case studies of successful people who have bought their product. This leaves the audience in awe and wanting more. Statistics says that someone is bound to succeed just based on numbers… if 1 percent of the people who bought the product succeed the company can use them as the testimonial success story then plonk a "results may vary" statement on the bottom.

These companies utilise techniques that can be classified as NLP (Neuro-Linguistic Programming) techniques. Suggest the good stuff during the presentation and people will tend to lean on the good stuff, even though they have heard the bad stuff, the risks and the actual numbers of people that succeed. Logically it doesn’t make sense. But emotionally, we tend to lean on the prospect of the dream of better rewards, and tend to give bias towards that. Once the gullible are convinced there is not return.

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Advertising to the Greedy and Gullible: Make $5692 in 7 days

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Share Trading is Gambling

Thu, 10 May 2007 16:11:00 -0700

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Share Trading is gambling. There. I said it. The worldwide stockmarkets are one big glorified casino. Or is it? It depends on how you see it: your perspective. I've defined what gambling was and concluded that trading WAS NOT trading in this article at MyShareTrading.com. But I revisited the idea after discussion and reflection about the topic with a few colleagues and I eventually turned my perspective to conclude that trading WAS INDEED gambling in "Gambling Revisited". To keep the argument simple, everything in life involves risk. Driving a car is risky. Having a job is risky. Setting up your own business is risky. Living is risky. And so Investing is risky. Owning a house is risky. Trading is also risky. And so anything to do with risk, playing the odds for a "positive" result, is a gamble.

Personally, I associate share trading with gambling because it is so similar to a visit to a casino. Professional casino gamblers usually have some sort of gambling system they follow. And in turn, professional share traders (or stock traders) also have a system or a trading plan which they follow. Both want returns. Both ventures aren't creating anything useful except a positive reward if the odds go your way. Investment isn't usually associated with as much risk as it is usually longer term compared to share trading. Investment can include property, longer term stock investing or putting money into a business venture. Why aren't they associated with as much risk as short term share trading? Because the results can be researched more thoroughly, and because of the long term nature of the investment, actions can be taken to fix or improve returns. But in my mind, it is still a gamble - just in the longer term. You make your own mind up.

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Share Trading can be Considered as Gambling

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Stupid Trading Mistakes

Mon, 26 Feb 2007 23:41:13 -0800

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We all do it. We're only human. Stupid trading mistakes. That's right, trading mistakes that are plain stupid. Remember that Japanese broker who put in the wrong figures and ended up losing the firm millions of dollars? For amateur traders, or should I say, retail traders any mistake of that magnitude translated in our home office would almost certainly mean financial ruin.

Yes, you have a trading goal. Yes you have a trading plan - and in that plan you have a money management plan, a trade entry plan and a trade exit plan. And surely if you execute that system to the dot you would be certainly in profit? I'm not talking about erroneous trading systems here. I'm talking about the minor human mistakes that traders can make in between making the decision to enter and executing the order and the time when you have decided to exit and execution of that exit strategy.

Yes, I'm talking about the typos and pressing the wrong buttons when you surely intended to press the other button. It happens. Minor mistakes can be costly. So besides your other plans, you should also have a systemised approach in checking and cross checking your orders when you do execute them. One such simple system could be to type in the number, or if possible set a default in your system. Check if your trading system tells you to go long i.e. BUY, or to go short, i.e. SELL and then press the relevant button. Double check your order ticket, then double check your executed orders as well as your account balance to make sure everything has been processed correctly. And here's one final tip: don't trade under the influence of any substance and don't trade wen you have just woken up two minutes beforehand.

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We all do it. We're only human. Stupid trading mistakes. That's right, trading mistakes that are plain stupid.

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David Tweed

Sat, 30 Dec 2006 13:01:31 -0800

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David Tweed, the notorious share raider has again made an approach to shareholders to purchase their shareholdings at a discounted price. David Tweed had recently approached AWB shareholders back in November 2006, hoping to convince shareholders to let go of their stock at $1.50 when the ongoing market rate was around $2.71. This time, David Tweed has sent out a letter to Commonwealth Bank (CBA) shareholders in a bid to buy their shares at $35 per share. CBA shares were trading at around $48.75 when the offer was made - some 28 percent discount to the actual market price.

David Tweed has a long history of approaching shareholders of companies offering a discounted price for stock. Tweed operates under his company, "Direct Share Purchasing Corporation." The letter has a heading of "Offer to Buy" and appears to look like an official bank communication. Commonwealth Bank has some 699,000 shareholders, 80,000 has been sent letters by CBA's CEO, Ralph Norris to warn shareholders of the offer. In the letter Norris warns that the offer is substantially under market value and that the offer has no association with the Commonwealth Bank. Norris also explains that the bank was obliged to provide shareholders' names and addresses to David Tweed's outfit as required by the Corporations Act. The extraneous mail out by CBA to shareholders cost the bank $50,000.

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David Tweed, the notorious share raider has again made an approach to shareholders to purchase their shareholdings

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About Price to Earnings (P/E) Ratio

Tue, 21 Nov 2006 18:40:58 -0800

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The Price to Earnings (P/E) Ratio is the most commonly used valuation metric used by investors to help determine is individual stocks are reasonably priced. It is a simple ratio to calculate but can be confusing to interpret. The ratio can be useful in some cases yet useless in others. The ratio was popularized by Benjamin Graham - author of "The Intelligent Investor" (a must read for all serious investors). Graham used this financial ratio as a quick way to determine if the company stock was trading on an investment or speculative basis.

How is the Price to Earnings (P/E) Ratio Calculated?

The Price to Earnings (P/E) Ratio is rather simple to calculate. You simply take the net earnings and divide by its average outstanding shares and then divide it with its Earnings Per Share or EPS.

P/E Ratio = [ Net Income - Dividends on Preferred Stock ] / [ Average Outstanding Shares on Issue ]

So if the stock is at $50 and the company pays out a dividend of 10 percent or $5 a year then the P/E ratio is 10. Most brokers would have some facility to automatically display the Price to Earnings (P/E) Ratio for a stock. If you are hard pressed to find it you can even look up a company's P/E ratio on Yahoo! Finance. There are two ways to calculate EPS which result in either a trailing P/E or a leading P/E (projected P/E). A trailing P/E takes historic data using the EPS from the last four quarters. A leading P/E takes estimated EPS figures expected over the next four quarters (which is just the analyst's best guess).

Now that I've calculated the P/E Ratio, What does it Mean?

Most investors would nominate the P/E ratio to be "the" financial ratio to use to determine if a stock was cheap (if the company had recently fallen out of favour) or overpriced (could be the stock was the latest "hot-pick"). To give the number some meaning, or a little bit of context you'll have to research the typical Price to Earnings Ratios of other companies of the same type and industry - you could calculate comparable company P/E's as an average. This will determine what P/E ratios are "normal" for that type of company in that certain industry and this benchmark number can give context to the P/E ratio you calculated and hence allow you to compare the two numbers. Usually similar types of companies or companies in the same industry are classified in industry sectors like infrastructure, retail, biotech, pharmaceuticals, telecommunications and utilities.

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The Price to Earnings (P/E) Ratio is the most commonly used valuation metric used by investors

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Religion, Politics and Trading

Fri, 03 Nov 2006 21:30:11 -0800

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Religion, politics and trading. At first glance they don't seem to have anything in common. However, there is something that ties these seemingly different topics together. We'll delve into that later. What you will find out in this article (the professional trader's secret) is important for your own professional trading health and safety. You may think your trading is FINE but if you don't use this secret tactic in your trading, you are bound to be a loser. Save yourself that distress and keep reading!

So, what do these three have in common? Religion, politics and trading... three totally different things. One is the pursuit of the "bigger picture," call it spirituality, God, the circle of life... whatever. The other is the pursuit of order and control for the greater good of society. Trading is gambling - and is wholly the pursuit for more money. So what do they have in common?

The answer not coming to you yet? Each pursuit, is not an exact science. Unlike mathematics and certain areas of science, there are proven laws; religion, politics and trading are not exact sciences. In mathematics, one plus one is always equal to two and ten times ten is always one hundred. The speed of light will always be 299 792 458 metres per second and gravity on Earth is always 9.80665 metres per second. There are many religions on our planet, many differing views that is a source of much conflict. There are many political parties, each with a different view - left wing, right wing or somewhere in the middle. Are any of the religions the right one? It depends on your personal beliefs. We'll definitely find out which one is the right one when we die. Is any of the political parties the right one? No, not all the time - that's why the political landscape always changes. The same goes for trading.

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What do Religion, Politics and Trading have in common? Find out a secret about trading the markets successfully

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Shares that Double and Halve

Wed, 18 Oct 2006 02:27:56 -0700

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There are stocks on the Australian Sharemarket that readily double or halve in value the short term. Better yet, there are traded financial instruments that are linked to the volatility of the larger valued stocks which also are highly volatile. The former are simply vanilla stocks. The latter example relates to derivatives, namely warrants and Exchange Traded Options (ETO's).

There are stocks that increase their value exponentially on the exchange markets in the short term. It is not only restricted to the Australian Stock Exchange (ASX) but this effect translates to exchanges around the world. What you are looking for are the stocks that are plainly labelled as "penny dreadfuls" or "penny stocks". One of the main characteristics of these stocks is that they are cheap, usually under a dollar or even a few cents a share. They are highly speculative and they don't have much trading volume if at all. The ASX is famous for these types of shares especially in the resources arena, as they let any speculator to invest their money hoping to hit the big jackpot. When a miner or an exploration company finds more to dig, that's when you'll find their stock to escalate. If the news that the property they own or their exploration hasn't reaped any rewards find their stock slide into the doldrums. This type of stock price movement isn't restricted to resource stocks, other stocks like pharmaceuticals or even retail have their share prices jump on the back of news of any success.

Derivatives. Be warned, derivatives are risky. Risky because they require a little more know-how and experience to be used effectively. Risky because they are a double edged sword. – profits are exponential: losses are exponential. Warrants and ETO's are both traded on the ASX. The catch is that warrants is basically a synthesised market created by the market makers – the major stockbroking companies that choose to participate. With ETO's what contracts you can write or trade is limited by the trading volume. There is simply too much depth in this topic to explain in this short entry, but I hope I have got you thinking and perhaps got you actually researching about these financial instruments.

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There are stocks on the Australian Sharemarket that readily double or halve in value the short term

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T3 Telstra Deja Vu

Mon, 09 Oct 2006 00:43:53 -0700

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Here's the main reason why I don't read tabloid newspapers: they give useless mish mash information that does no one any good. One case in point was a short piece about the upcoming Telstra (T3) (TLS) float in the one-page "Business" section of the The Saturday Daily Telegraph. It took a quote from the Channel Ten "Video Hits First" show host: Faustina "Fuzzy" Agoiley (The woman that reminds me of a golliwog because of her hair). The "news" piece reported that she had been one of the 1.6 million shareholders that had bought into T2 at $7.40 a share. Asked about whether she would invest more of her money into Telstra in the T3 float she sensed a case of déjà vu stating that: "I wouldn't invest into [T3] because I'm still burnt from T2 and I'm still looking for a long term gain from that so I wouldn't see why people would want to invest more money into those sorts of shares."

Now what good is that reporting that crap in the newspaper? As a trader it makes no sense at all. As an investor the reasoning in that statement isn't logical. Okay, she has the right to claim she has been burnt from the Telstra (TLS) share price halving in value and hence wouldn't invest in T3. If she stopped there, I would be empathic to her case. I have a problem with the two last points: the long term gain and the point about not investing in "those sorts of shares."

If I was really an investor and I was really in for the long term I would see the upcoming float as an opportunity to buy into more Telstra (TLS) shares. I would see it as a discount. As an investor, if you had no belief in the shares, you would have let go of those shares a long time ago. As a trader, if you were to buy into this cheaper price with a bullish view and you are still holding your T2 shares then you are effectively lowering your break even price.

Finally, what does she mean by "those sorts of shares"? Shares that you put money into and which halve in price? I didn't know there was such a classification. If there was a class of shares that regularly double in price let me know. (Actually there is a class of shares on the Australian Stock Exchange (ASX) that regularly doubles or halves in price – will post more about them in future). When you invest in shares there are inherent risks. Any investment holds risk. There are no guarantees. Even the long term chart showing the markets from early 1900's slowly worming up is no sure bullet proof reason that the markets will continue to go up. "Those sorts of shares"? If you don't know the risks of any investment don't put your money on it.

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Faustina 'Fuzzy' Agoiley seeing Deja Vu in the T3 Telstra (TLS) Float

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The Price of Holding a Position

Thu, 21 Sep 2006 17:10:47 -0700

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When you trade with derivatives, especially utilising Contracts For Difference's (CFD's) your break even price is dynamic. If you trade with options and similarly with warrants, there is time decay to consider. With CFD's as well as forex contracts, the price of holding a position is much simpler than dealing with delta's that define decay with derivative instruments such as options.

In this example we shall look at trading one standard forex contract across the AUD/USD (Australian and US dollar) currency pair (with the base currency set for Australian dollar) of AUD$100,000. In this case study, we will go long on the position – meaning that we are bullish for the currency pair. The amount of US dollars you can buy with AUD$100,000 is determined by the current price of the forex pair.

The AUD/USD dollar stands at 75 cents, and you determine from your own analysis that there is a prospect that the dollar will rise to 75.30 cents which means that when you trade long your one standard forex contract you will be able to buy AUD$100,000 (or sell US$75,000) and you are looking to sell your position at 75.30 cents which equates to a US$300 profit (Sell AUD$100,000 to Buy US$75,300). Even though you are trading on margin, your dealer would naturally see charge you the cost of borrowing that AUD$100,000 per day. The current Australian interest rate stands at 6% and the forex dealer or stockbroker usually adds a 1.5 percent to 2 percent premium on top of that. So you may be liable for 8 percent per annum interest rate for your position and usually your broker will collect the interest charge daily. The calculation is as follows: $100,000 @ 8% per annum / 365 days = 21.9178 = AUD$22 a day (about 2 pips) per contract

Your dynamic BEP (Break Even Point) if you have a take profit target of 10 pips, would be around 5 days. This is because after 5 days you will be liable for about AUD$110 in interest charges. If your target is 30 pips, then your break even point if 15 days, or about AUD$330.

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When you trade with derivatives, especially utilising Contracts For Difference's (CFD's) your break even price is dynamic

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Unrealistic Returns and Benchmarks

Wed, 20 Sep 2006 03:10:15 -0700

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I was watching local Australian TV the other day and I cringed when I heard saw an advertisement for investment properties and this voice over stated:

xxx returned 109% over three years for their investors – try to match that with a bank.

We all know that "past performance is not a guarantee of future performance". Of course that was written with small print on the bottom of the screen. I have no qualms about that. The point is that the investment property and an investment in a long term deposit or a high interest bearing account in your bank are totally different investment classes. You can't realistically compare them because they have different risk profiles. It's like comparing apples with oranges.

How's this related to trading? Well, when I first began I used to benchmark my trading with returns from bank accounts – the interest rate. After a while I realised that it wasn't realistic to compare your returns (or losses) from trading as they massively exceed (or fail at) equitably comparing with the modest gains of an interest account at a bank. (In Australia, the typical high interest bearing account is at 5.85 percent per annum) So what do you benchmark with? You can make up your own (how much you want to earn) or benchmark with another trader with a similar risk profile and capital base.

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Unrealistic returns and benchmarking in your trading

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Quality versus Quantity Forex Trading

Wed, 13 Sep 2006 03:01:29 -0700

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Just a similar thought to last week's post with the forex trading case study discussing the issues of risking a little or risking the lot. Similar concept, just a different perspective or twist.

Risking a little translates to a "Quality trade". You've put a little out, you're holding on for a large pip movement on the forex market. Armed with your trading system, which you've backtested and set your stops, you're ready for the large returns.

You have a large capital base. You want to risk the lot. (When I say "risk the lot" it isn't meant to be literal, I'm referring to large contract trades) Risking the lot is a quantity trade in two dimensions. One refers to the large contract size but secondly, this style of trading demands a larger number of trades. (Well, it's up to you how many trades you take, and perhaps "demand" is too strong a word for this context) [n.b. you must read the previous post so this article makes sense!] Actually it’s a lie, you don't have to take every possible trade, so if you're patient enough you don't have to take every possible trade. But since you are risking a lot you are only looking for a small pip movement to make a profit of the same magnitude compared to trading a little. And because it's only a small movement, this (may) allows you to take advantage of more volatile movements in the currency price. It's a matter of choice and it's up to you if you want to take the risk. However following this path may lead to another trading folly: overtrading.

Won't it be great if you can always have a good quality forex trade? Those are the trades I prefer... But the markets are dynamic, sometimes you've got to change your game play. But that's another story.

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A different perspective on Risking a little or risking a lot: Quantity vs Quality trading

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Trading: Risk Little, Risk the Lot

Wed, 06 Sep 2006 06:41:23 -0700

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Traders are risk takers. We accept the market risks in the hope of making a killing making a living from trading the markets. Here I will discuss a case study on the consequences of leverage and the critical decision whether to "risk little or to risk the lot." I will use the forex markets for this case study. Similar concepts apply across other markets, but this particular concept works well with the foreign exchange markets due to their volatility. You may not agree with me with this case study and I reserve the right to change my position on this at anytime. Also, this is written for people with some experience in trading forex.

After trading the forex markets for a few years and a little reflection I came up with this thought: I can risk a little or risk a lot. You've got two choices and four outcomes. First you have the choice of either risking a little money or risking the lot. The secondary outcome for both cases is not your choice: it is up to the market to decide whether it shall go up or down.

Yes, so aren't you stating the obvious? What's the point? The point is, your initial choice of the amount of leverage is critical in determining your success in trading the forex market. But Marco? How did you arrive to that conclusion? Bear with me and you'll see. In this case study we will use the AUD/USD (Australian and US Dollar) currency pair, assume we are trading a standard contract size where each contract is worth $100,000 and so 1 pip equates to US$10. So in this case we will assume that we have a profit target of US$1000 for this particular trade. How we make that amount of profit, and the amount of risk you take on board depends on your fundamental choice (of risking a little or a lot) as well as the volatility of the particular equity. For the Aussie and US currency pair, it is quite rare to see 100 pip movements per day, unlike currency pairs such as EUR/USD (Euro/US Dollar). Typically the Aussie moves around 20 to 50 pips a day. That is the amount of volatility we are playing with. So to be realistic about your profit , assuming you are day trading and perfect "market conditions" (the market is going the way you set your trade), you should only expect to make 20 to 40 pips a day (that is in optimal circumstances - remember this is only a case study after all).

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Forex trading: do you risk the lot or risk a little when you trade the foreign exchange markets

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Examples of Greed

Wed, 30 Aug 2006 05:09:44 -0700

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Greed. The desire for more money. More money! Greed is one of the main drivers for our equity markets. The greed for more money. I'll have a look at a few examples of greed from the simplest - a case that we can all hopefully relate to, to something that may apply to some of us (forex traders and stock traders) and an example at a professional level.

First example of greed. Imagine you are a child again, and you are playing with a group of friends. You are host to a playgroup and your Mum comes along with a plateful of treats - all the kids gather round and grab at the sweets. Your Mum had brought enough to be equally shared among your friends, but you manage to grab more than everyone else. "Share your treats," your Mum tells you. "But Mum…" Greed at the most basic level...

Second example of greed. You are now an established forex or stock trader. You are holding a profitable position. You can sell at any moment and you would be sitting on a substantial trading profit. You have a take profit price in mind. You are simply watching the screen waiting for the price to tick your way a few more pips or cents. You know you are pushing it, as technically you have set your take profit at the top - virtually picking up a top. (And as we all wise traders know that picking tops and bottoms are an impossibility) Take profit is at $20.00 or 1.200 (for stock and forex traders respectively. The current price is $19.90 and 1.190 respectively. Suddenly, the price falls and you are back to break even. Greed is your worst enemy.

Finally we come to a professional example of greed. These come in the form of professionals misusing their places of trust, breaking company systems and procedures for their own gain. We are talking about the likes of William Adler of HIH fame (Australian example) and Prudential Financial (US example). We shall look at the US example as it is the most recent case in the news. The investigations have been going for three years as part of a crackdown into market-timing abuses in mutual funds. So far, 16 firms have reached settlements totaling $4 billion. Among those include the Janus fund, Prudential Financial and the $9.3 trillion dollar fund Eliot Spitzer. These market-timing transactions are prohibited trades in and out of mutual funds. These excessive and illegal trades can benefit hedge-find clients but can harm long-term investors as they increase the mutual funds' operating costs. These professional traders broke the rules. Why? It all boils down to greed.

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Trading Critic looks at an example of greed; Greed runs through the markets

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Stock Trading Insurance Policy

Wed, 16 Aug 2006 08:20:59 -0700

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I recently went on a trip overseas, and as part of my preparation of going I bought travel insurance. Why did I buy travel insurance? Of course, to reduce my risk of financial loss as a result of any loss, sickness or misadventure. As a trader there are avenues to reducing your trading risk. There are many ways to reduce your risk when you trade. The simplest method is by limiting the amount of capital at stake. The next simplest is by utilising a stop loss, or better yet a guaranteed stop loss. If you want to hedge your position in some currency you can either use forwards or options. If you like to get your hands dirty, options can provide you with an advanced strategy to reduce your trading risk.

But this article isn't about stop losses or options. This is about insurance policies. As a trader, you are your own insurance agent, broker, investigator and claims officer. You have a Duty of Disclosure to yourself to know what your limits and abilities.

When you apply for an insurance policy you have the obligation to tell them everything you know so they can decide if you are an insurable risk, how much premium you will pay them as well as any special conditions. Is your trading risky? Is your trading an insurable risk?

Ponder these points before you go ahead investing your life savings and over leveraging your position. How much trading experience do you have? This should tell you what your trading capabilities are and what it is limited to. Ignorance is bliss when you first start out, I know from my own personal experience that I will never take such wild risks that I took in my first year of trading. If you are new to trading – it is the perfect opportunity to make the most mistakes. Think about how many times a baby has to fall before actually grasping the art of walking. If you never experience this in your first year or first few years, then you will find it harder to succeed in trading. Keep your leverage to reasonable levels and your trading simple – a baby doesn't jump, run or skip in the first day they try to walk.

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Trading Stocks or Forex is a risky venture. Don't you wish there was an insurance policy for Stock Trading?

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Australian Share Market Game: What You Should Know

Tue, 08 Aug 2006 07:18:05 -0700

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The Australian Stock Exchange (ASX) often runs a virtual share market game for schools as well as for charity. Traders / Investors are often given $50,000 of virtual cash to invest on the ASX. The number of shares are often limited to the ASX100 or ASX200 companies. The time horizon is usually a few months, from two to six months.

Why does the ASX run these games? Of course, there has to be some ulterior motive for the ASX to run these virtual stock market games. Obviously, the game is like an advertisement promoting the stock exchange and the financial benefits of investing in the stock market. And charities also benefit from those corporate sponsored games. So the more people the ASX get to actually trade the markets, the more money ASX can make!

When I participated in the share market game back when I was in Year 10, I remember sitting down and strategising. I figured that, in order to win the game - you need to choose a very different route from everybody else. Because of the limited time, this style of trading, given the constraints, you really need to be lucky. Your choice of stock is essential in your success. In my view, you're either lucky or you're not in this game.

My strategy was this: To choose a cheap stock so that when it moves, it would be greater percentage wise than buying an expensive stock. For example, If you buy a 50 cent stock, it can potentially jump to $1.00, which is a 100 percent return. What if you buy a $10 stock: what are the chances of it jumping by 100 percent to $20 in your short time horizon? (Similar concept to the usage of leverage through derivatives)

And so my partner and I bought into a 20 cent stock called Peptech (The company is involved in research, development, production, formulation and marketing of peptides, and related products for the the pharmaceutical, veterinary and agricultural industries and was first listed on 23 January, 1986 and has stock code PTD). All $50,000 worth. I didn't win the competition. I was not lucky that time. One thing I overlooked then was the volatility factor. The stock price didn't move much if at all. These two lessons that I carry with me in my trading today: volatility is a key factor as well as the principle of leverage.

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The truth behind the Australian Share Market Game: Virtual Stock Trading

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