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Diploma in Share Trading

Investment Programme

A World of
Opportunity

SHARE TRADING INVESTMENT PROGRAMME

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Contents 3

4
Why are you here?

What do you want to achieve?

5 Trading vs Investing

7 Market basics

8 A few things to remember

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Why are you here?

In order to really understand how to answer this, you need to
consider the three following sub questions:

1. Do I believe that I’m worthy of success? Some people don’t

because they look at a chart for the first time, get freaked out
and stop dead in their tracks. I want you to find comfort in
knowing that I will be helping you simplify every aspect of the
markets and its dynamics so that you can confidently move on
by pulling the trigger on a trade when the opportunity arises.

2. Do I have a healthy attitude towards money? Listen, if I had

to start with a few clichés about money like “money doesn’t
grow on…”, you will already know where I’m heading. The
fact is that there are so many negative stereotypes attached
to “having more money”. You need to focus on forgetting the
negative conditioning that you have on the topic of money and
re-mould your mind to accept what actually makes sense to
you. Why not try saying, “Money is a resource of opportunity”
- sounds a bit more positive, right? In order to attract more
money into your life you must start being more positive about
the entire concept of it all.

3. Do I truly understand the concept of financial freedom? This

is going to mean something different for everyone. You need
to be so invested into the WHY of what brought you here in the
first place because I can’t stress enough about how much you
need to use that WHY as a driving force throughout this entire
experience. And trust me, that’s going to be the foundation of
your conceptual understanding of financial freedom and why
you want to achieve it.

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What do you want to achieve?

What do you want to achieve through successful investing? Maybe you just want
to make money long term with some part-time trading and investing. That’s a
perfect enough reason to be involved with the markets. You may find that you
have disposable time available throughout the day that you would like to use
constructively instead of wasting away on the couch in front of the TV. The
markets will be a great place for you to use the spare time to your benefit!

You could have a keen interest in just wanting to learn the basics of the markets
and become an active and profitable investor. Learning the skill and art of
trading and investing is justifiably worthwhile on its own. There is a lot of joy
that one can get from just learning a new skill that empowers the mind and
your capabilities, that’s for sure! You may be wanting to improve your skills
in the market because you are not currently successful in the system you’re
using - sound familiar? I find this to be the case quite often with many of the
people who have started our program. Many people try the approach of being
self-taught and when they start developing questions or need a more detailed
understanding of the markets or the strategies they are using, then there is no
one to assist them. If that’s you then rest assured, you have definitely found your
saving grace with myself, Gavin Gerrits, and Shaw Academy.

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Trading vs Investing
Both involve seeking profits from the markets, but
which side should you be on? The only way you are
going to be able to determine that preference is by
understanding what the differences are between
the two.

Trading is the action or art of buying and selling the

markets for a short-term profit gain. It really is an
artform. Your decisions are justified by cases being
You certainly don’t have to own the instrument to trade
built through technical analysis and a strategy-
it. We are simply speculating on changes in the price of a
based trading approach.
currency’s value against another. This doesn’t mean that
you are buying or selling physical currency but rather
A trader can make money in upward and downward
focusing on the fluctuations in price differences.
moving markets. This style of trading is referred to
as a contract for difference (CFD). Unlike investing
The markets are highly sensitive to noise and this is
in stocks, where you only make money if the
especially evident when analysing the market with
underlying shares in your portfolio increase in
technical analysis. There is a very evident difference
value, trading the market means that you can make
between a natural spike in volatility and a spike which
buying decisions and make money when the market
is a result of political, geopolitical or environmental
moves upwards or make selling decisions and
influence. We have a discretionary decision though that
make money when the market moves downwards.
really aids to our general risk management - and that’s
Majority of the time, we use technical analysis
choosing whether we want to be trading or even analysing
because it assists in making quick decisions and
the market when there is high impact news events. This
picking the perfect timing to enter a setup. Trading
is definitely something that we will focus on in detail in a
relies heavily on volatility to move price over short
later lesson.
periods of time. Volatility (or activity) creates
liquidity in the markets. The more activity there is
Investing is a different kind of breed all on its own. You
in the market, the more aggressively we will see
must really have an uninterrupted sense of patience to
the market move. This is something that would
allow for your investment decisions to grow and offer
benefit us because you can only make money when
return over the long run.
the market moves and not when it’s lazing around
enjoying a picnic.
It’s the action of buying a favourable asset for long term
gains. This is the most evident and obvious difference

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between trading and investing. It's the time period comparison of short-
term versus long-term. An investment decision is based on a projection of
future value. When you are investing into an asset of some sort you must
realise that you are planning for the value or price to increase over time
(and most of the time indefinitely) to a point where you are satisfied and
want to cash in. Sometimes people never cash in on their investments and
instead hand them down to children, grandchildren or family.

Fundamental analysis is the analytical method of choice when it comes to

investing. Here influences such as news, fiscal policy, company reports and
political influences, to name a few, certainly come into play.

An investment decision needs long term growth to offer the investor any
sort of significant return. If you are thinking about investing and need to
pull profits to sustain yourself on a month-to-month basis then forget it,
it’s not going to happen. Investing is like nurturing a baby all the way up to
adulthood. It can be immensely rewarding but certainly needs time to grow.
You must also own the asset or instrument or at least a piece of it in order to
be eligible for the dividends that it could potentially pay off at a later stage.

A similarity between trading and investing is that they are both sensitive
to news and external forces of fundamental influences primarily because
when you make an investment decision, you are buying into an industry or
environment that can influence the price of your asset - and where there is
influence, there is noise. So, as I already mentioned, we need to tread lightly
when there is too much noise.

NOTES

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Market Basics
On the topic of the stock market, you may wonder why the market exists
and why it is available for investors to take part in. Essentially, it’s to
generate cash for the underlying business that has offered its shares.
It’s really because companies need to raise capital – to grow and expand
and do research and similar other things. When companies go public
for the first time, they release what is called an “IPO”, an initial public
offering. The public has the choice to buy shares in the company at what
is normally quite a cheap rate, which creates quite a bit of excitement
and a bit of a purchasing rush.

The company makes money by selling a portion of itself to raise capital.

A great example would be what Facebook did back in 2012! They “went
public” and they allowed their shares to be traded on the public stock
market, which is the NASDAQ.

The transfer of risk is another reason why companies go public. Let’s

imagine a pharmaceutical company who believes that it is on the
verge of developing a cure for some horrendous disease but to further
research this potential cure would cost a lot of money and if the cure was
unsuccessful, it could put the overall survivorship of the company at risk.
The company would then put a plan together where they would make
the public aware of what they believe they’re on the verge of discovering
(this life-changing cure) and perhaps the public would then “buy into”
this potential reward. So, they essentially invest in the company because
they buy shares in the company. With the pharmaceutical company
taking on this additional investment, and using that capital to prove (or
disprove) the cure is indeed viable, they are able to continue and finish
the research. And regardless of the outcome, the company will survive.
If the cure is successful – everyone wins! If the cure is unsuccessful it’s
essentially only the investors who lose – but that is the risk in investing!

Regardless of the outcome, the point is that the company has offset
the risks involved!

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A Few Things To Remember

An important piece of information you must understand

right away is: How much a stock costs to purchase is not
necessarily a true representation of the stock’s true value. A
stock price might be low but it doesn’t mean the company
is worth less. Sometimes a company’s true value is only
recognized a few years after their stocks are listed on an
exchange. It’s not uncommon for a company’s stock price to
trade low and slowly fluctuate and then only find favourable
price volatility a few years later after the company achieves
significant success. Always remember that current price does
not dictate whether that stock is heading higher or lower in
the future.

Successful investing is the art of identifying stocks that are

currently undervalued by the market.

NOTES

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