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Interested in the stock market but not sure where to begin? Special guest Louise Bedford shares her secrets to becoming a successful day trader. She talks about how to cut through the amateur advice that might get you into trouble, and navigate market volatility like a pro.
Andrew, Chris, and Young have a riveting conversation with Louise about the intricacies of trading, the difference between trading and investing, and delve into different investment styles, such as the comparative strengths of using technical analysis versus fundamental analysis to guide your decisions on the share market.
HIGHLIGHTS FROM THIS EPISODE OF TALKBIG:
- Navigating market volatility
- Candlestick graphs and optimising trades with data
- Technical analysis vs fundamental analysis
- The difference between trading and investing
- How to get started on the stock market
- How to use a stop-loss order in trades and in your romantic life
- The value of emotional distance for a trader
- How to create an effective trading plan
- How to select shares
- How to avoid losing money on the stock market
- Understanding stock market behaviour and self-sabotage
- Managing risk when trading or investing
- The value of a supportive accountant
- How much money do you need to get started trading?
- Practical first steps to get started with shares
- Spreading risk and diversified assets
- Battle of the sexes - which gender makes better trades?
- Online research - who to trust for market advice
Take a listen and subscribe to talkBIG on your favourite podcast platform.
Please note: the information shared on this podcast is of a general nature only and does not take into account the objectives, financial situation or needs of any particular person. Before making an investment or trading decision you should consult with your financial adviser & consider how appropriate the advice (if any) is to your objectives, financial situation and needs.
For expert financial advice tailored to your personal situation, please reach out to one of our wealth management specialists.
Louise Bedford is a best-selling author of five books on the stockmarket. She is a behavioural finance expert and has degrees in Psychology and Business.
She’s been running the 6-month repeat-for-free www.tradinggame.com.au Mentor Program since the year 2000, and she’s also the founder of www.talkingtrading.com.au, a free weekly trading podcast.
TRANSCRIPT:
Intro
Andrew Sykes
Well, hello everyone and welcome to the RSM talkBIG Podcast. I'm your host today Andrew and I'm joined in the studio by Young.
Young Han
Hi!
Andrew Sykes
Chris.
Chris Oates
G’day.
Andrew Sykes
And online with Louise Bedford. So Louise, we're going to have a chat with her about a bit of trading and she is a professional in this and she's from the trading game. Louise is the founder of TradingGame.com.au and she's a best selling author of five books on the stock market. Well done. And a behavioral finance expert with degrees in psychology and business. Welcome, Louise.
Louise Bedford
Oh, it's fantastic to be here. Andrew and Young, very excited about today.
Andrew Sykes
And in particular with a time of a lot of market volatility. We're getting advice from everyone from the butcher, the baker and the candlestick maker. Aren't we, Young?
Young Han
That's right.
Young Han
And then just COVID with the share market's been crazy. So, people are interested, but then just not sure where to start. And I never tried before. But now I started to have more interest and thinking about getting a portfolio under my children's name. So I'll be very interested to get some tips from you today.
Louise Bedford
Yeah, fantastic. Well, we could kick off with the market volatility perhaps because there is some good news on the horizon. Would that be a good spot to start?
Andrew Sykes
That’s a great place to get started because that's what - standing around a barbecue, that's what we hear, the market volatility. And look, they love you to start with that. But also just explain how we cut through some of that. You get a tip at a barbecue, how you cut through that.
Chris Oates
There's a lot of opinions aren’t there?
Andrew Sykes
Stack of opinions. So, talk to us about market volatility.
How to navigate market volatility like a pro
Louise Bedford
Well, look, currently around the world, if we look at the world's major indices, sure. The volatility has been historically high. There is no doubt. And it's been climbing for the majority of indices since the very start of the year. And that has made it difficult for traders because in general terms, what I'd love is a very clear trend with very low volatility.
Louise Bedford
I don't want a big peak to trough ratio. It makes it really hard because you keep getting stopped out of positions. But if we look at the percentage of volatility, which is how much do these indices move on a weekly basis? Every single indice that is a major driving indice around the world is rolling over. So volatility has started to drop and the Australian market has got about half the volatility of things like the NASDAQ the CAQ, the DAX. So that makes the Australian traders sitting pretty in terms of some of the things that they can do with trading.
Andrew Sykes
So now is actually a better time to be trading than it has been over the last 12 months?
Louise Bedford
Absolutely. I do think we have had a very choppy time. It has put a lot of people off the markets and has been traditionally very difficult to trade a market like that because a lot of false signals are generated and you sort of jump at your own shadow in that type of market. But what we're facing now is a time if all of those indices are going to continue in that direction, the length of the candlestick is actually decreasing so that does make it a lot easier.
What is a candlestick graph and how does it help optimise trading?
Louise Bedford
Candlesticks are the basic building block of a share chart. So they cover the open and the close and the high and the low. And if the candle has gone up for that period, let's say a day, then the little candle colors in green. And if it's gone down, then it colors it in red. So we've got green the color of growth, we've got red, the color of blood.
Louise Bedford
So you have an instant visual about whether that share that you were in or that you're considering buying is on the way up or on the way down.
Andrew Sykes
So there's different ways. So you mentioned charts, etc., and I understand that forms what's called technical analysis. What's the difference between technical analysis and say, going reading a research report or going and looking at a company's website, etc.?
Louise Bedford
Yeah, look, I do think there are a few differences here that we need to discuss. And Andrew, with your background, your listeners may not even realize that you used to be a stockbroker, so isn't it lovely that you’re involved in this.
Andrew Sykes
Yeah, a different lifetime ago, yes.
Andrew Sykes
Yes, I know the term technical analysis.
Louise Bedford
Quite a long time ago, I know. But I do think all of these types of mindsets, we carry them with us. So often the way we do one thing is the way we do everything, which is why property investors often do very well in the share market. If you've got a business where you're used to calling the shots, often you do well in the share market as well.
Technical analysis or fundamental analysis? Which investment style is best?
Louise Bedford
So in terms of the types of analysis that we can do, fundamental analysis is where you're looking at things like profit and loss and P/E ratios, and it's the standard type of things that the talking heads on the TV show say are important. You know, some of the things they say, though, it's completely contradictory. They will sometimes say, well, the market went up on profit taking today and I'll go, what?
Louise Bedford
That makes no sense. So years ago, I had a role at a credit information company. I had all of that fundamental data at my fingertips, and I could not get that fundamental data to help me make money. And that is, of course, what I was interested in. So I switched completely over to technical analysis where I'm looking at share charts, I'm looking at price and volume information on a share chart, and I'm making my decisions on a predefined set of rules.
Andrew Sykes
So would it be fair to say, based on what you said, is that “Fundamental analysis - understanding what a company does, its business, etc- can tell you whether to buy it. And a chart can tell you when.”
Louise Bedford
Beautifully put, a lot of people do it that way. I dumped fundamental analysis actually completely because it wasn't aiding my decision making. However, a lot of people do like to help that detect a shortlist of shares before they decide when to enter.
Andrew Sykes
Yeah, and I think you did point out that once I was a stockbroker. And I have clients ringing me up and saying, well, why is this share going up? And I would say, well, there's more buyers than sellers! It can often be as simple as that can’t it, Chris?
Chris Oates
That’s right.
Andrew Sykes
And you would deal with that, don't you, Chris?
Chris Oates
Yeah, that's exactly right. In the financial planning space. There's plenty of reasons. People will have money, they want to buy. They say, “What should we be buying? What shouldn't we be buying?”
What's the difference between trading and investing? And how do you get started on the stock market?
Chris Oates
And it really comes down to whether you're trading or investing. And I know Louise, you look at your talk, people say, Oh, well, I'm a day trader. I trade every day and try to pick bottoms and tops and make money that way. But it's really about investing for the long term. And I think that's the difference between when you look at the fundamentals and the technical analysis. The technical analysis really helps to know when to get in to the market. So you're able to sort of help explain what the difference you would how you would say a trader and an investor are?
Young Han
So I think it was oh, sorry!
Young Han
For me because I'm - we are accountants so we know that fundamentals and financials and how to read financials. But if someone does not have that finance or accounting background and are actually looking at getting into the trade market, I think it’s safer to start with investing rather than trade because trades comes you know, it requires a lot of knowledge and expertise.
Andrew Sykes
So a couple of great questions there. The difference between trading and investing and like kinda, how do you get started?
Louise Bedford
Yeah, look, I think a lot of people think in binary terms. You know? Do I do fundamental OR technical? Why? Why not merge into the two if you're more comfortable with that, particularly if you've got an accounting background, Young. You know, you've got the knowledge already with the fundamental side. So you can use technical to give you an edge.
Louise Bedford
And to Chris as well... I do think people from the financial planning background have such a wonderful expertise in terms of that long term view. And I do want people to take that on board because it is such an important aspect of wealth creation. It is not something that I do on a day to day basis in the markets where I'm in and then I'm out, then I’m in. My average hold time is a lot longer than I think most people would realize. I'm looking to have that primary trend in place.
Louise Bedford
So some of the differences between a trading and an investing type of mindset? Some people who are investors, they may never have thought of using a stop loss order. So that is where you make a pre-determined decision about when to exit. Prior to even getting into that trade. Now I do think every investor should borrow that from the trading community. I think everybody should work out even in their relationships, frankly.
Stop-loss orders - limiting losses and reducing risks... In relationships?
Louise Bedford
What is it...
Young Han
Maybe we won’t go there...
Andrew Sykes
Stop loss on a relationship, I like it.
Don't be a stock cheerleader - shares can't hear you
Louise Bedford
What's the deal breaker for you? When is that thing that you're in love with? When have they just abused you too much so that you have to walk out the door. Take that any way you like, Andrew.
Chris Oates
So it's really about well, you’re protecting yourself. So, so many people, they say, “It'll come back. It'll come back. We'll make our money back one day.” But it's not always the case. It's - you do need to make a decision at some point. This isn't working. What else should we be doing?
Louise Bedford
Yeah, the interesting aspect to that as well is from a mathematical point of view, you actually make more money by staying out of the worst days compared to if you were in for the best days. So that defensive mindset that “I have to be careful here because the market is a big hairy beast and I'm just a little human,” that's not a bad way to consider the way that you should think about trading and investing.
Louise Bedford
No share can hear you, no matter how much I barrack for them. You know, I sit there. Okay. Come on, baby. Come on. Jump resistance. You can do it. It can’t hear me. I think we all know that. And perhaps that's a sign that I'm working alone a little bit. I think that we really need to treat trading like a business.
Louise Bedford
When we're getting started - back to your early topic there, how to get started. You educate yourself, you read excellent books, you find a mentor, somebody who's a little bit further down the path than you are so that you can hang off them, you know, listen to their every word, immerse yourself in their field. And that way you've got a really good shot of rising above these people who continually lose money and hang on in there because it's a gambling mentality.
How to create an effective trading plan
When we're getting started - back to your early topic there, how to get started. You educate yourself, you read excellent books, you find a mentor, somebody who's a little bit further down the path than you are so that you can hang off them, you know, listen to their every word, immerse yourself in their field. And that way you've got a really good shot of rising above these people who continually lose money and hang on in there because it's a gambling mentality.
Young Han
I guess that's the really overarching strategy that you want to tell everybody. But what other strategies that you think we should be considering or, you know, be interested?
Louise Bedford
Yeah. Well, look, I think there's a lot to creating an effective trading plan in the first place. So one of the first steps is to work out why do you want to trade? You know, what is it about trading that gives you a bit of a flutter in your stomach that says, yes, this is where I want to be. That's what I want to do. And that is a really good place to start.
Louise Bedford
And then have a look at the markets that you are comfortable looking at and trading. If you don't like staying up at night or staying up for 24 hours a day, maybe that is a good reason not to trade some of the other markets around the world.
Should you choose shares based on your personal interests?
Louise Bedford
Maybe there's some instruments that you've decided that can be your forte. So I prefer weekly charts, I prefer the ASX market and I prefer equities. Okay, so that narrows it all down for me as to where I'm heading.
Louise Bedford
Maybe you choose two or three different markets or timeframes, but no more because it gets very complicated. You work out a system and whether that's from a mentor where for example, the members of my mentor program that borrow my own trading system because it's easier sometimes than creating one yourself.
Louise Bedford
And then you look at every quarter, perhaps every six months, you monitor your own behavior. So what have I been doing well? What would I do differently? What do my results say? Is there an area of the market where I'm excelling, so I should put more money into that area? Is there a system or a timeframe where I'm not making as much money so it's not a natural fit, so maybe I should strip that away.
Louise Bedford
So treating this as a business from the very beginning is going to give you the best results.
Young Han
And I think another thing will be about your interest. So if you're really into medical industry, then you're obviously going to be more switched on looking at those companies that, you know, developing more in the R&D medical space or with COVID, you know, a lot of vaccinations has affected a lot of companies, how they perform.
Louise Bedford
Absolutely. I think that is a real situation as well. What calls to you, because that can really spark that interest. I do find though, one of the things that I have noticed about the people I've trained, Young... If they've got a particular specialty, for example, mining, often because they do fall in love with those shares, they actually don't do as well with their results in that domain.
Louise Bedford
So we do have to be careful about objectivity; keeping our head, making sure we don't fall in love with a particular industry, segment, share. And relying on the data so that we can actually make a very sound decision.
Young Han
I can't agree more than that. There's you know, it's like when you're teaching your own kids. You just can't do well. Because you're so emotionally attached to them.
Louise Bedford
I fell in love with a share called Wesfarmers. So in my own trading plan - specifically - in my trading plan I have that I'm never allowed to trade Wesfarmers ever, ever again. I have no objectivity. It's like I don't I've never had an ex-husband, but I imagine it would be like an ex-husband that I keep bouncing back to, which is never, never a good idea in my view.
Louise Bedford
So Wesfarmers and me really it wined me, it dined me. It showed me such a good time and then it dumped me.
Louise Bedford
So. Yeah, I have to leave that as a bit of an exception, but other than that, I will trade anything that is providing that buy signal for me.
Staying objective to avoid losing money
Andrew Sykes
One thing that you're saying and it really resonates with me is the importance of not losing money. We've just recorded a podcast on what rich people know and you should. And one of our tips in that was that I try not to lose money. And we gave the example if you start with $1,000 and you lose $500 - 50%, you have to make 100% before you get back to square one.
Andrew Sykes
So does that resonate with your - are we reading that, right? What you're saying?
Do you go broke making profits?
Louise Bedford
Absolutely. And Chris, you would have found the same with the people that come to see you. That would be exceptional in terms of organizing their life, organizing their finances, by avoiding that trauma of a critical loss of a significant downfall. They would be much further ahead. And I think that would be something that really that whole financial planning area, the trading area, the investing area would all have in common.
Chris Oates
Oh, it's exactly right. It's whether somebody is about to thinking of retiring or they're trying to build up wealth. If you're not chasing the 8-ball or chasing your losses from the get go, then you'll do a lot better over the long run. And I think that feeds into there's the old saying you don't go broke making profits.
Andrew Sykes
Yeah, I hate that saying. I think you do go broke taking profits because you don't tend to take your losses. How do you deal with that, Louise, that you don't get broke taking profits?
Louise Bedford
I disagree with that statement completely. I do want to emphasize that the majority of my profits only comes in two or three positions every single year. So what happens is I'll throw myself at these according to my trading plan, I'll do everything the same as well. So it's very duplicatable. However, not every trader has read that rulebook.
Louise Bedford
And often what I'll find is that I get stopped out for a lot for break even. Sure, there are some little profits in there for a lot of them as well. But every single year, just two or three, maybe five, if I'm lucky, go absolutely ape. And they are the ones that make my entire bank account.
Louise Bedford
So this you can't go broke taking a profit, worries me. It is against one of the key principles that I follow in the trading world. We call it “be a pig”. So if you're making a lot of money, throw more money at it. Pyramid in. Make sure that you have a wide stock to give it a lot of room for volatility and movement. Hang on in there - even though your gut feeling is telling you jump out because that's more money than you've ever seen in one pay packet in your life.
Louise Bedford
Do everything that you can to stick with that primary trend. So if people are getting out because they've made a little bit of money, they won't be hanging on in there for those big outlier trades.
Andrew Sykes
And that's exactly right, is because you generally hear you don't go broke taking a profit after the person's taken, say, a 10% profit and the share has gone up 200-300%. So it's generally said when people miss out. And I think that comes down to people sabotaging themselves.
Andrew Sykes
And look, I had noticed you've got a degree in psychology. How do you apply that to trading and people sabotaging themselves?
Using psychology to understand stock market behaviour and traders who sabotage themselves
Louise Bedford
Yeah, I see a lot of that actually, Andrew. It's fascinating to me to see people's results because a lot of my traders... when they're coming back for their kind of ‘maintenance’ type of meetings. I get to look at the core data that they've used. They've purchased all the shares they've got out of all of these ones. And then we can crunch the numbers and see where the issues are.
Louise Bedford
Now, I have got a couple of traders I am fascinated to watch. They are exceptional traders. They make so much money. But because they have a shoot yourself in the foot mentality....All of a sudden, once they get to a certain peak, they actually make mistakes. They make a transcription error, they put an extra zero on one of their orders. They go short instead of long, which is the exact opposite of what they were hoping to do.
Louise Bedford
They will go and blow a lot of money on a couch. One person paid $32,000 for a beautiful - but a couch! $32,000? So it's almost like that person was trading themselves back down to a comfortable level because they hadn't emotionally developed that wherewithal to be able to handle that higher level of being.
Young Han
I think that's what makes it more interesting because yes, you can do all this analysis based on the facts, but because we are not robot, we are not programs. So your emotion comes in and that's why becomes more interesting sometimes can be really good sometimes could be very bad. And that nicely leads to, you know, what do you do to manage your risk?
How do you manage your risk when trading? The value of written trading plans
Louise Bedford
Yeah, managing risk is a real key. I think most people, when they start in the markets, they think entry is so important. How do I get in? And they forget about ‘how do I get out?’ for a start. And how much money to put into a position to equally valid aspects of actually trading. So I do think that risk management people don't realize... I’ll throw some terms around you've got some traders listening, I know you have.
Louise Bedford
So if you don't have some of these terms in your written trading plan, I guarantee you you are doing it wrong. Have you considered your portfolio hate? Do you have an anti martingale strategy? Have you got a Kelly principle guiding your maximum position sizing? Have you asset allocated between segments of the market, whether that be timeframes, whether it be instruments, whether it be countries?
Louise Bedford
These are the type of aspects that come into play at a more advanced level. Sure, you can get started just by throwing a few dollars in and watching it grow and hire. And I a superstar that, as we know, there is always an extra level of sophistication required to get those top results.
Andrew Sykes
So you're talking really about trading as a business. We would expect as accountants, we would expect our clients to have a business plan.
Young Han
That's right.
Andrew Sykes
To work towards something, have some rules around how they run their business. So you're essentially talking about this. This can be a business for people.
Louise Bedford
This is - this should be that same mindset that you apply to your business that helped you succeed in business should be applied to the markets.
Louise's first accountant - Why accountants should support their clients
Louise Bedford
And actually, I do have a little story about my first accountant. I've been dying to tell you all this. When I started trading my first accountant, I guess he was my starter accountant. He was like on training wheels.
Louise Bedford
I do remember when I said to him, I'm going to be a full time trader. We were walking up some stairs at that stage and he towered above me and he laughed at me. He laughed in my face. He was this far away from me. It was pre-COVID days, let's remember.
Louise Bedford
And he goes, “You? You're never going to be a full time trader. What makes you think that you've got what it takes?” Now, I have to say, at that very moment, I had two options I could say here, you're right. Maybe maybe this isn't for me. You know me better. So maybe I should quit. Or I could work out in my mind roughly what I thought he was making every year, trade myself up past that level, and then dump him as an accountant.
Louise Bedford
And that’s actually what I did.
Andrew Sykes
I'm certainly never going to cross you, Louise!
Louise Bedford
So I do urge everybody listening to make sure that the team that you have surrounded yourself with has your best interests at heart. Make sure that they have an understanding about you as a person. The vehicles that you're looking to create wealth and can grow with you.
Louise Bedford
Which is one of the reasons why I'm on your show. I love your philosophies. I love that you've got the financial planning side and the accounting side, and that you all like a tapestry. You intermingle and you talk to each other for the wealth and the health of your clients. And that is an extremely rare aspect, and I do commend you for that.
Andrew Sykes
I thank you very much. But really what your story brings to mind is so you obviously had no financial background or for your accountant to question you so much. So have you noticed among your clients, I mean, can can anybody do this or do you need a special type of person or background?
Louise Bedford
Yeah. Look, I've toyed with this idea a lot. My business partner says the opposite to me. See, I think everybody can do it if they want it badly enough. So that's where I have seen some amazing results.
Louise Bedford
There was an artist that I trained. She had barely even used a calculator before, and because the whole red and green thing came together for her and she got really into patterns and from an aesthetic point of view, she, she actually painted candlestick charts. She really got into it. And all she had to do then was follow step by step about how much money to put into each position, when to get out, how to put on the orders. She had checklists so that she could follow it and she did all of that because she had a big enough dream to create money out of a side.
Louise Bedford
It's a side hustle, really.
Andrew Sykes
A side hustle?
Louise Bedford
Yeah.
Andrew Sykes
And that's really interesting because that's that's what I was going to ask you next. We get the impression that the stock market is only for for people who've got a lot of money. I mean, realistically, if you wanted to get started and give it a go, where are you sitting? How much would you need to invest or to trade?
Louise Bedford
I often think the first step with wealth creation is saving because that is often underestimated. So if you've got less than the $10-15,000 mark, you really need to save your way up to that level to be an effective trader. Because otherwise you just kind of fritter away money on brokerage. You know, it's still -even though it's cheaper than it used to be- it still actually has an impact. Your brokerage that you're paying.
Young Han
Not only that, I think emotional pressure. Like, if that's the only money that you have that you can and then - you’re just going to be so emotionally attached to it. So if something goes wrong, you're just going to make a wrong decision.
Chris Oates
And you're going to be so focused on, well, performance. So and then you get that pressure that that's where you start making decisions based on emotion and going back to that fear. And yeah, well we talk about fear of missing out. So, it really does. You need to make sure that you have that structure, you know what your goal is. In another episode that we recorded, we were saying about making sure you're putting away your savings.
Andrew Sykes
Yeah so and you are making it obviously, Louise, you're making it very difficult for yourself if you're trading in $500 parcels and you're paying $50 brokerage each to buy and sell. You've got to make 10% before you even see a profit.
Can anybody make it as a professional day trader?
Louise Bedford
You do. And I do think people really, when they kick off, they need to be in it for the education. You're not going to instantly become a full time trader. This is going to be a 3 to 5 year project. You're going to learn so much about yourself, so much about how the markets work.
Louise Bedford
That theory where ‘scared money never wins’. I love that because you're right, money flees need. If you are saying “Share market, produce these results for me, I want a new boat!”
Louise Bedford
You are never going to be able to provide the correct signals in your mind to be able to trade that, you're going to be forcing trades. You’ll take inappropriate exits, and you’ll shoot yourself in the foot.
Andrew Sykes
Yeah. Okay. So, say I've saved, I've got my $10-15000. Am I just putting that all down on one trade? How am I managing my risk there?
Louise Bedford
Andrew, put it all on black.
Andrew Sykes
Well that'll make it $30k and then we can start really playing! But seriously, how am I. How much of that - I mean do I have a risk management strategy? How am I making sure I don't lose it all on my first trade?
How much money should you have saved before you begin investing or trading?
Louise Bedford
Absolutely. Well, look, I think that $10-15000 is really just for starters. So ideally, if you can go the $50-100,000, think of this like an investment property. What would you put in for a deposit? That is the type of now you're getting serious type of level. Now when you're looking at a very low value before you get involved in the market, you're really only going to be able to buy, say, five shares, watch them, learn from them, hopefully grow.
Louise Bedford
But once you’ve started with about, say, the 40, 50, $60,000 and above, that's where you can really seriously invest in some good software. So you'd have something like beyondcharts or metastock to be able to scan the markets. You'd have a good broker, usually an online broker these days so that you can transact online, which is fantastic.
Louise Bedford
And you'd probably also be investing in your own education pretty seriously as well. You know, I'd really suggest people find people they relate with and hang on in there so that you can actually give yourself time to learn.
Louise Bedford
So, no, it's not just pulling a name like, you know, way back in the day: Sausage Software. What a cute name. <chuckles> I’d invest in sausage stuff software. Because I thought it was so sweet. Yeah, we don't do that these days. There’s a lot more to this!
Practical first steps for getting started with shares
Andrew Sykes
These guys are too young to remember sausage software. But I remember when it was bought out, it was a great takeover. It was a good it actually was a good company.
Louise Bedford
I know. And so then I did other things based on a name because of that way back when. Not good. Not a good strategy. I don't recommend it. What you're looking for is something that's already going up, so you're never going to be able to catch a falling knife. If something is dropping like a stone. Even if you've heard a rumor that they've discovered gold in out west, don't buy that one until you see a breakout and you see it turn around.
Louise Bedford
You've got an uptrend that you can read and you're looking for a break past resistance with a long blocky candle on good, heavy relative volume. And that is a breakout signal. There’s some other signals you can use as well. But that would be a great place to get going.
Chris Oates
And having that analysis and doing the hard work because a lot of people, when they get started, they say all shares go up and down. I'll just put some money in them. It might go down to start with and then it'll go up. But if you actually can do that analysis and you'll it's again, you're protecting your losses and you're actually thinking about, well, what am I buying, and when?
Louise Bedford
You really are! And I think this is a good opportunity, Chris, to talk about specific risk as well. So a share by themselves, that particular share has the chance. I mean, it's an unlikely chance, but it could go out of business, it could drop from the sky, for example. So that's the specific risk. So we need to look to spread our risk as well.
Spreading risk and diversified assets: ETFs, indices, managed funds and "Specific risk"
Louise Bedford
There are things called ETFs, there are index trades that you can take. There are managed funds in the Chris world as well. All of that is appropriate because you're not looking at specific risk. With indices, if you do have a share in an indince that's looking a little bit like a dog, they snapped that out of the indices and put in a winner.
Louise Bedford
So that's why indices have that upward bias, that pressure to keep going up, because that's a lot of bias. Taking out the duds, putting in the new ones means that we do have a trend that is more likely to be up in the medium to long term.
Andrew Sykes
And that's why you are saying you need $50-100,000 so you can spread that risk across multiple stocks. You don't just need to be right every single time.
The value of success: financial freedom
Louise Bedford
Absolutely. It takes the pressure off you. It allows for a learning curve and it gives you that basis for wealth creation because we're not looking at a flash in the pan here. Now, I put money into share traders pockets and I make it stick. And that is the key, making it stick. You don't want to have this flash in the pan where, hey, we've got an explosive winner and then, oh, my gosh, it's crashed back down to nothing, taking you with it.
Louise Bedford
So we want to make sure we evaluate risk carefully. We take measured steps based on a written trading plan and that we focus on a few different aspects of wealth creation.
Andrew Sykes
So you must have seen - you've been doing this for quite a while through your website trading game dot com dot au. You must have seen people starting out with that $50k or $100,000 that have been patient and over the period of years they've then turned it into their full time business.
Louise Bedford
Absolutely. It's just amazing. The thing that I love about that, Andrew, is that seeing - because I've got a repeat for free mentor program, I've been running these this is our 23rd year that we're coming into. Seeing people who kicked off with that very first mentor program and seeing the changes in their lives. Oh, wow.
Louise Bedford
It's the schools they send their children to. It's the cars they drive. It's the holidays that they go on. And probably the thing I love most is their ability to say no. They can say no to a boss. They can say no to a move interstate. They can say no, I don't want that promotion or I don't want that demotion. I'm not going to do that because they've got a side income.
Gender differences - do men or women perform better as traders?
Young Han
I mean, like I’ve always been interested; my dad always did share trading. But when I actually thought about starting, like, I felt like it wasn't for me in a way. Because when I actually, you know, because I didn't know where to start, I was looking for an investment adviser. But funny thing is they are always male dominant. Like, I couldn't find anyone like a female investment adviser, you know, who actually gets my lifestyle. You know, some, some I'm not being gender biased, but like there is a difference in emotions and you know, the commitment, the family commitment and things like that.
Young Han
So, I don't know, like. Do you find that a lot of your clients, do you have more of the female or the males? And who - do they do better?
Louise Bedford
Yeah, yeah. Look, it's been fascinating. Because I've got that psychology background, my traders, they’re quite used to me running surveys. And you're running rats through mazes as somebody kindly put it recently. So I can actually rely on the data coming out of the surveys that I run. But also there are some broader global studies as well. So yes, women do outperform the men.
Louise Bedford
This is the fascinating thing. The thing is, though, there are fewer women who are trading than there are males. It runs about 70% male, 30% female. Now I'm sure there's some people in between as well just to cover all of our bases here. Now, the thing that I think is really fascinating is relying on very recent data because we have had a pandemic that is well, I think we still are having a pandemic.
Louise Bedford
We really have got information around the world about performance. Now, in times of stress - and I'm just going to read this headline so that I don't mess up one of the words. “In times of stress, female fund managers take less risk than men, for the same performance.” So let's think about what that means. We're often more conservative. We avoid risk inherently.
Louise BedfordAnd it's interesting that with this one in particular, it's the same performance. So you can actually have somebody who's protecting you, that's earning what a male fund manager would. And so I love that. I think that that is pretty much what I see in
terms of the surveys. Yes, my females do outperform the males, but in particular their views towards risk are very different.
Andrew Sykes
Yeah, I'm not surprised by what you're saying. I would have thought that most men would think that they're better than their trading plan and would second guess it. Whereas women are probably more likely to stick to the trading plan and have a bit more discipline about what they're doing, which is discipline's critical to doing this is not.
Louise Bedford
Oh, it sure is. I do think that ego can be really such a twin-edged sword here. We need enough ego to get us involved in the markets, but not so much that we ignore the signals. You know, the number of times I see the guys kind of beat their chest. It is. It's a fascinating journey.
Louise Bedford
So the ones that really do the best are the ones that allow the markets to educate them. They come down a notch in terms of their pride. They listen to signals. They follow a written trading plan. They are willing to support and nurture and care for other traders. I actually team up my traders: an experienced trader with a newbie, and that way they've got somebody to rely on. You know, when my child was first in prep, they were given a grade sixer to look after them.
Louise Bedford
So yeah, I do the same for my traders.
Finding good information about trading online.
Louise Bedford
Look, I'd love to have you over to my website, come to trading game dot com dot au and I will give you my free trading plan template when you register on my site and you'll also get my trading made simple e-course.
Louise Bedford
Now what that will do is give you that broad basis. It's often a good starting point for people who haven't traded before. But for people who have traded before, it can actually just polish what you've got there. You're getting another perspective, somebody who's been in the in the market for three decades. Oh, my God. I don’t know when I’m going to stop admitting to how long I've been trading. Might be sooner than we think.
Louise Bedford
So I do feel that that would be the next ideal step for your listeners. Come over, get my trading plan template, get my free e-course at tradinggame.com.au
Andrew Sykes
And I could not recommend that more because Young, you asked before about getting started and where do you find information. I find if you Google share trading you get mainly overseas sites and you mainly get paid for advertising type sites. I think having a reliable source where you can go to and actually get started, I think.
Outro
Young Han
I actually feel much more comfortable now, actually seriously considering starting it and it's I thank you so much for providing all your information and wisdom.
Louise Bedford
Absolutely. Well, look, I've loved being on this show. I love what you guys are doing here, what everybody's doing. I shouldn't use that gender term any more.
Andrew Sykes
We’ll take it as neutral.
Louise Bedford
An inclusive term.
Louise Bedford
And really as well is if there's anywhere where you're stuck, Young, or anybody listening to this show; you're welcome to actually contact me through email. You can get it on my website tradinggame.com.au Send me an email say you’ve heard from me on the show and give me an idea about what you're aiming to achieve.
Louise Bedford
And I'm more than happy because I have had all those years experience. I'd like to shortcut your trading journey so that you don't have to achingly go through every painstaking step that I went through.
Andrew Sykes
Excellent. Well, there's some great ideas on trading there today, guys. I think we've just just scratched the surface of it and we could go on with it. But that's all we've got time for. Thank you very much, Louise, for your time today. Thank you, Young and Chris.
Andrew Sykes
This has been the RSM talkBIG podcast and I've been your host, Andrew Sykes.
Andrew Sykes
You can get our podcast, subscribe to it wherever you get your favorite podcast from. Until next time. This has been RSM talkBIG. Thank you.
Young Han
Thank you.
Chris Oates
Thanks.
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