It was rather slow trade. However, it was profitable. Entry at 282.9 and exit at 282.3. It is a very small gain. Exit decision was made as RSI was making higher lows in oversold zone and recent downtrend line was broken. I have considered failure swing in RSI as one of important factor to enter the trade, and same treatment is for exit. The objective here is to capture the intraday movement with the effect of market sentiment and profit from it. Small gain +0.6 point. This is 12-min chart of SIMSCI.
Wednesday, May 31, 2006
Short level has been moved up to 282.9. Nikkei extends losses to more than -300 points,12-min chart of Nikkei shows a failure swing of RSI indicator which support my bearish sentiment. SIMSCI has from a descending triangle again.
Short position of SIMSCI has been established after market reopen.
It does not take a bachelor of science to understand that current market is in very negative sentiment. It looks like more than correction. Though I hesitate to say downtrend is in place. I am waiting for price setup to establish short position of SIMSCI.
I am looking at 282.4 as entry level for short position.
Tuesday, May 30, 2006
As mentioned in the morning posting, sentiment was negative. The entry came later than expected. After failure swing was observed in RSI, short position was established at 290.6. Position was closed as trailing stop was triggered at 289.4, with 1.2 point gain.
I am very interested in following news about Larry williams. I have been learning a lot from his books, and respect him as a excellent trader. Here is news for morning coffee No jogging on Bondi for stockbroker guru
Monday, May 29, 2006
It was pretty fast. Within the first hour of trading, target was hit with 1.7 gain. This is an intraday trading. The trade off is missing bigger profit. This is trading. We focus on our own trading time frame, target, and stop. The chart above is 12-min chart of SIMSCI in the afternoon session. Morning session (trade setup)
Sunday, May 28, 2006
This was originaly posted on Traderswin Stocks Trading. I have edited in this version. The advantage of using stop loss (mentally or submit to your broker) is nothing new. There are numerous literatures on this topic. To me, the most important feature of stop loss/trailing stop is giving me a peace of mind to ride the trend and protecting my capital and paper profit. I am not going to discuss stop loss now, instead, I am interested in position size with relevant to stop loss.
It is very important for a trader to believe and acknowledge that outcome of each trade is always unknown when we enter the trade. This leads us to a very important information, since the outcome of the trade is unknown, then "how much can I afford to lose in this trade?"
So we have an idea about the potential risk now, we should start thinking about position size. I remember I was once teased by my broker (partly because he is my friend) when I purchased only 5 lots of a penny stock. 'There is no way for you to make any big profit'. Well, outcome of this trade is not the purpose of this posting, but it does show that we tend to focus on the outcome of a trade instead putting the importance of protecting capital. It is not how much you are going to earn from the market, but how much you are preparing and afford to lose that matters. Remember, we do not know what is going to happen after we establish a position.
How much share to buy? A very simple formula is as below:
Position size = (Risk amount - commission)/(entry - stop loss)
This assumes we do have a trading plan with risk amount and stop loss well defined. Risk amount is defined as the amount we are preparing to lose if the trade did not work out. There are theories and discussion on determining risk amount, the most popular and the simplest one should be the 2% rule. The rule basically tells us "Never risk 2% of your total trading capital in any trade."
I use support/resistance level in conjunction with trend lines (Straight or sometimes parabolic) to determine stop loss level of any trade. This takes a little of time and experience to learn the technique.
The position size that is calculated by the formula will limit our risk exposure in the market. Of course, for punters or novice trader, no one shot big profit will ever happen since position size is limited, but, over the long haul, it shows us the way to survive in this fantastic business. Here are some good articles on Money management Position Sizing: Why Size Matters to All Investing Greats Money Management or Position Sizing or Bet Size... No Matter What You Call It, Better Know It
I read some interesting counters mentioned in forums. I have done some analysis to check if there is any trading opportunity that suits my trading style. I will post up the chart for counter that provides me trading opportunity. Here is the list of counters mentioned in channelnewsasia.com forum - market talk. - Capital land - Correction still in place - keppel Land - Correction still in place - Celestial - ignored for the time being. - AusGroup - correction still in place. No new opportunity is found for the time being.
Friday, May 26, 2006
This 12-min chart of SIMSCI closed. It appeared to be a mistake by moving stop loss to break even too early. SIMSCI had a nice swing today indeed. Initial stop loss of 291 was not violated at all. And planned target was reached at the last 12-min of trading. It happens in trading. Missing profit.
The market sentiment caught my attention when Nikkei and Hang Seng are gaining above 200 points. A ascending triangle was formed before SG market re-open for afternoon session. These supports my buy decision just above resistance at 292 with stop loss set at 291.
First Target was set at 293.8. I expect this as a fast movement trading.
SIMSCI failed to performed. Instead , after reaching high of 293, it starts to drift down. Trailing stop has been moved to break even point. I am pretty cautious when seeing SIMSCI failed to stay above morning high of 292.8.
Stop loss was triggered. No gain for this trade.
This is a 12-min chart of SIMSCI.
Thursday, May 25, 2006
I am updating the chart of DMX tech. I posted this counter yesterday as a potential short sell candidate. Original posting can be found here. I am looking at first target 0.74, should downtrend continues. It is normal to expect some rebound tomorrow given today's loss. And in fact, at the point of this posting, NasDaq has gained 12 points while DJIA gains 51 points.
Here is an interesting article by Robert Kiyosaki
Here is another article of my favourite risk management guru Ryan Jones.
An audio version of Ryan Jones' article can be found on smarttrading as well.click on the link for full article.
There were few postings on Traderswin stocks trading blog targeting on shorting candidates over the past few days. From BeautyChina, HTL Intl to StatsChipac , Datacraft and DMX tech. With the negative market sentiment, these counters are currently moving our favour. I have quoted some rules for short selling from Leon Wilson, a outstanding Australian private trader. In SG market, short selling is to be done through trading CFD.
#1 Do not short trade a position that does not show clear signs of suitable short term downward momentum
#2 Do not take a short position immediately above a significant line of support
#3 Trade securities which you are familiar with and markets that you can gain access to with little effort
#4 Price action of underly security is below the long term moving average
#5 Have the discipline to act when required, as CFD trades should never become investments.
To me, #5 is the most important rule. Risk and money management is always on the top of all trading techniques. CFD is , in fact, a bucket shop product. We are trading with the CFD providers. CFD providers are there to make profit from traders. Another important note is to choose the right stock for short selling. As I believe, during the bullish market, sky is the limit of rising share price. There is nothing called 'over valued' stock. With this in mind, I will only short sell stocks which are trading below 150-day and even better 200-day moving averages. This puts me in a better position to deal with short selling. As the stocks are weak and price action is below long term moving average, the chance of the share price to sky rocket overnight is minimal.
Take care of the risk involved in short selling, clearly understand our trading approach, we are on the way to make profit in the bear market as well.
This news caught my attention. Larry Williams was arrested for alleged tax evasion. Full details of the news can be found in the link below. Celebrity market guru arrested This is just for entertainment during this bearish day.
Wednesday, May 24, 2006
As expected, it was a choppy day for SIMSCI. No position was established as market seems to be directionless. This is 12-min chart. The view of choppy day was built when observing positive Nikkei and negative Hang Seng during morning session. These two leading indices in regional market are contradicting and it was likely to pull down SG market , especially when market is attempting to recover from recent loss. Though Nikkei showed strong gain during afternoon session , HangSeng still failed to follow. From these observations, SG market is unlikely to have impressive gain.
I saw DataCraft and Statchipac as interesting shorting candidate for 24-May-2006. Position has not been established yet. As market tends to be moving sideway. Nikkei is trading is positive territory as well. I would like to watch further before taking any action. Datacraft daily chart statChipac daily chart
I am actively trading Singapore stocks and Futures market. It is a long journey to become a better trader. Non stop learning is the key to be better. Technical analysis is my trading approach. I will invite other traders whom I feel they can offer some valuable experience or information to reader to contribute to this blog.