Monday, 3 December 2018

Candlesticks

What have I been busy with? I guess picture says a thousand words.




I have been reading up about candlesticks lately. What an art! It can be combined with trend-lines and momentum indicators like Stochastic or MACD to give buy/sell signals.

The chart I marked above did not have inclusion of momentum indicators for the sake of simplicity. Candlesticks are remarkable tool for identifying reversal points. As with any kind of indicator, it cannot be 100% as sometimes the patterns do fail. Nevertheless, possible reversal points can be alerting for us to observe and confirm the price action that follows.


A summarized version of important bullish / bearish reversal patterns here.


I am still a novice at it and have not really put it into practice. Will update in future on my applications.

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The highlight of G20 summit over the weekend is the (3-month) truce reached by President Trump and Xi. Let's see how the market will react to the news this week. 


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Saturday, 17 November 2018

We choose to see what we want to see...



And we choose to hear what we want to hear...
Good news or Bad news alike.


The latest buzz word is G20. Stay peeled.





“If you don't read the newspaper, you're uninformed. If you read the newspaper, you're mis-informed.” ― Mark Twain

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Saturday, 3 November 2018

A terrorizing month of trading

My school fees are due.

In the month of October, my trading account took a dent as Mr market got volatile and swung in highly unpredictable manners. The swings were rough enough to send those who are not nimble enough or not patient enough (yes both, even though they seem contradictory) flying off their seats in all directions.

Even VXX has now broken its trend. No more trend to ride. :(


Lesson 1) When Stop loss = Sure loss
Should close position for the day and NOT just set a stop loss for next day when the market is mad volatile and gapping is rampant. Even though my (limit) stop loss is set exactly at my bought price, I still can get forced stop out with the gap difference at a much lower price the next day when market opens.

Conclusion? My stop loss is practically useless.

Then Jedi warrior SMOL reminded me that each time frame has their own stop-loss rule. I am probably not so sure of my 'time frame' and thus set all the wrong stop loss points.

And must remember the No 1 trading rule -
"Never let a short term trade turn into a long term investment."


Lesson 2) Do not try to prove the market wrong
Do not long (catch falling knife) till there's signs of rebound. Just the same as what I have told myself time and again for long term trades / investments.

The problem all lies in the psychology. When the price drops below the price I sold it for, I will think 'Eh cheap ah. Maybe it has bottomed out." then I buy only to see it continues plunging...


Lesson 3) Some high volatility counters cannot be sold short. Bewarned.
And you will feel shit when you cannot enter the other side of the trade. Like you got slapped but you can't slap back kinda feeling.

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On the bright side, my SG portfolio took a mini ride down then went back up yesterday to an overall +5.9%. Too bad that I did no buy in, as I had expected the plunge to persist for a while longer. >.<

Trading the US market allows me to see how SG market correlates and reacts to it.

December SSB is out and its return doesn't look too shabby. I shall continue to subscribe for the Multiplier acct hack.



Next week on a clean slate. Lalala...

Some news to keep up on what's happening - The week ahead.

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Saturday, 13 October 2018

Revisit: How interest rate affects the market - a mathematical courtship

What would happen when the banks increase their interest rate? Here's a very simple theoretical summary of the relationship between interest rate and securities.

  • REITS might be adversely affected due to the increase in their debt's interest (so they either have a higher sum to repay as a result or may cut down on borrowing for expansion). That's why we always talk about NAV and gearing ratio when we look at REITs. On the bright side for those looking to get in cheap, REIT yield would increase when their share prices drop.

    To learn more about REITS, I would recommend these 2 blog posts by namely Heartlandboy and Financial Horse:
    How to understand REIT jargon when investing in Singapore REITS
    5 things to look out for when investing in REITs
  • Bond prices would decrease, because again more people will choose to park money in the bank (risk-free). Bond yields of new bonds issued would increase to compensate as a result.


Conversely, in bad economy, governments would lower interest rates to help stimulate the market. So a falling interest rate would typically cause the market to change from bearish to bullish. Borrowing cost for companies would be lower in a low interest rate environment and companies could then use the borrowed money to grow their businesses. When earnings improved, it would drive up the market. It's slow multi-year transition from bad economy to good economy then back again. Nevertheless, I think many of us would have experienced the cycle at least once in our life.


So with that, we have a rough idea of how the money flows and why re-balancing of portfolio allocation in a cycle might make sense.


Related news for reading pleasure:
https://www.bloomberg.com/news/articles/2018-10-11/wall-street-sees-treasuries-yield-curve-flattening-into-2019


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Wednesday, 10 October 2018

Trade risk management - a lesson

My trading motto is "Be clear on my trade set-up and risk-reward, AND find out the catalyst for current stock price movements".


Finding out the catalyst, as what I have mentioned earlier, is keeping up with market news.

When we talk about managing risk and using a risk-reward ratio, it is about HOW MUCH WE GAIN when we are right and HOW MUCH WE LOSE when we are wrong. Then we perform all that TA magic to find out if the ratio is satisfactory for us to enter a trade.

To control how much we lose when we are wrong, we need to have a stop loss or trailing stop loss in place.

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