Stock market
(Picture from stock.xchng.)

This is the second part of my story on how I come into the trading world. If you miss the first part, please see the link.

After I came to Canada, I read many books about investing. I just realized that I was financially illiterate. I left my money in the saving account and didn’t let it grow. Well, it did grow in the saving account, but after inflation and tax deduction, it basically didn’t grow at all.

After reading so many books, I tried to do my own investment. I bought some Canadian mutual funds. I made some money from it. I was so happy because I just found that we can get much higher return than saving account or term deposit.

I bought my first individual stock in March 2006. It was Citi Group stocks (NYSE:C). I received some dividends and realized a small capital gain from it. In the same year, I bought some other blue-chip stocks. However, everything is just for investment, not for trading.

Year 2007 was my first trading year. I learnt how to do swing trading. I learnt how to do options trading. I read so many books about investment and trading. It was a pretty good year for me. I managed to get 50% return, which is about $25K. I couldn’t be happier. We bought new TV set, new furniture, etc, etc.

The disaster came at the beginning of 2008. The housing market crashed. Financial institutions in the US collapsed. I lost all my previous year’s profit within the first 2 weeks of 2008. Yes, I lost ~$25K within 2 weeks! It was really shocking.

Slowly, I realized that my trading skill was not good at all. I could only trade on the one side of the market (bull-market). I didn’t know how to handle the bear-market. The bear market requires completely different strategy. People are fear of losing money in the bear market that makes the situation worse.

Now, we are in mid-2008. I have gradually recovered from my big lost. Anyway, it was very good experience. It also taught me many things about trading world.