Thursday 26 April 2012

SELL IN MAY AND GO AWAY !

May is very near....Remember the old saying in trading ...."Sell in May & Go Away".
Why is this so???.... Hmmm, maybe because of the School holiday ??? Where the Fund Managers
will sell their holdings and go for vacation with their family ??? Or maybe in this 2012 will be a up year
for month of May ?

Lets check the history data, actually I would like to take a look only at the FBMSCAP rather that FBMKLCI cause in FBMSCAP consist of more stocks which most of us will buy into it. But my data only have 3 years of this and the result is 2 down/ 1 up, so is 67% probability (anyway I think the data would be too little to show). See below



Let see FBMKLCI , is 9 down/8 up which is only 53% . So, the saying of Sell in May & go away is not so valid for our Malaysia market. So, lets see how this 2012 May will display a Red Candle or a White Candle. My pick is a Red one. Time will tell :)


Wednesday 18 April 2012

April12 Momentum Play : UOADEV

I've been observing the UOADEV recently and realised that she has just breakout from a symmetrical triangle and may have a chance of climbing the bollinger band. Well, at this price RM1.54, for those not particular on a few sen, it would be a good entry point.

TA positive view
1) Breakout of symmetrical triangle
2) MACD line bullish crossover and cross zero line recently
3) Volume is picking up
4) Daily & Weekly MACD histogram at 2G (bullish).

TA negative view
1) Stochastic at overbought level
2) Red candle today
3) General market sentiment weak & Properties index is on downtrend

For aggressive trader, one can enter tomorrow at 1.54. For conservative trader, one can enter when stochastic return to oversold level (maybe around 1.51). Stop loss should be 1.49 (should not hesitate as the overall market is quite weak ). Remember the saying "Sell in May & Go away".





Happy trading. As always caveat emptor.

Sunday 8 April 2012

3 levels as a Trader...Where am I ?


I've copy a small part of Alexander Elder's book (Come into my trading room) where he categorise a trader development stage.

1. BEGINNER
The minimal acceptable performance level for a beginner is a loss of 10% of trading capital in a year.
Many lose 10% in a month if not in a week.  If you can survive for a year, learn about trading, and lose less than 10%, your education is cheap and you are way ahead of the crowd.
The goal of a beginner is to cover trading expenses and generate annual return on his account equal to one and a half times a comparable riskless instrument (example Fixed Deposit or Sukuk). You have to charge the cost of software, data, classes, and trading/analyst books against your trading account. Beginners often throw money at gurus who promise the keys to the kingdom.
If you can cover them and then beat the FD, you’ re no longer a beginner!

2. INTERMEDIATE (SERIOUS AMATEUR OR SEMIPROFESSIONAL)
The minimum acceptable performance level for a serious amateur is return on equity twice the current rate on Fixed Deposit (I replace T Bills to FD as in Malaysia, I think it would be more realistic to make a reference to the most riskless saving instrument). Your improvement is evolutionary, not revolutionary. Cut some of your losses a little faster, grab some of your profits a little sooner, learn a few more tricks of the trade. Once you’re covering your trading expenses and making double what you could get from riskless paper, you’re miles ahead of the efficient market theorists.
The goal of a serious amateur or a semiprofessional is to generate a 20% annual return on equity. At this stage, the size of your trading capital becomes an important factor. If you are trading a million dollars, you may be able to start living off your profits. But what if you trade a relatively small account, say $50,000? You know you can trade, but 20% of $50,000 is not enough for a living. Most undercapitalized traders destroy themselves by overtrading, trying to squeeze unrealistic returns  from their tiny accounts. Take crazy risks, and you’ll have crazy results—both on the way up and on the way down. Better stick
to your trading system and leverage your skills by trading other people’s money .

3. EXPERT
The minimal performance targets are more flexible for experts. Their returns are steadier, but not necessarily higher than those of serious amateurs. You have to continue outperforming Fix Deposit —to fall behind them would be ridiculous. An expert may grab a 100% return in a good year, but trading a serious amount of money year after year, just staying north of 20% is a very good performance. Certified geniuses such as George Soros maintain a lifetime average of nearly 30% per year.
The goal of an expert trader is to put enough money into riskless investments to be able to maintain his current standard of living forever, even if he stops trading. Trading at this stage becomes a
game that you continue to play for your own enjoyment. Curiously enough, when you no longer have to stretch for the money, it starts flowing in faster than ever.

Rei : I'm judging my myself as able to graduate from the beginner stage and into the earlier stage of SemiPro. I need to consistently generate 20% annual return of my portfolio (say 5~7 years) then I'm considered myself graduating in the SEMI PRO stage. Well, being in the EXPERT stage is where what we call financial freedom or Abundance, see the above blue highlight ? " ...able to maintain his current standard of living forever even if he stops trading...........that is the final objective (ideal or achievable  ???) though not many really success till this stage. I believe even many Trading course Gurus are either in the beginning or middle of this Semi Pro stage.

So, one must be persistent, patience and having Great passion if one is to embark his journey into developing oneself to become a EXPERT TRADER !!!!


Monday 2 April 2012

Anyone familiar with Street Fighter arcade ?

Well, last Sunday, feeling a bit bored, I pick up my Iphone and click into a street fighter arcade game. This game has been accompany us since the 80s. I believe those who like arcade game during that time will definitely had play this interesting and challenging game before. Do you like this game ? This game is my all time favourite since I was young. That time, it started with Street Fighter, then evolve to Street Fighter II, Street Fighter III and so on. They even have a Street Fighter combo with the Marvel Superheros. I remember in Street Fighter II, the programmer put in some  invincible  power for the fighter " Guile" where he can freeze other opponents & knock them out easily. But this invincible power can only be activated with some button pressing & joystick set up (I still don't know how to do it ). Really innovative for these arcade programmer.


When I reached the last stage, that is fighting with the most strongest opponent in the game, Bison. When I lose quite a number of game set, suddenly some thought came to my mind. Playing Streetfighter game is like trading in the share market. No matter how good I am, fighting with the initial stage opponents, I can win them in straight game. Then when I reach this last stage, I keep losing.



The more I lose, the more anxious I want to win. In other word, IMPATIENCE. Like in share market, if one has started to lose in a consecutive few stocks, one would get impatience and wanting to win back fast. And those skills that I have learned as "Ryu", I use them blindly without thinking and without carefully analysing Bison move, thus leading him to attack me and knock me down easily. What I want to say here, is when we lose our patience, we will lose all our logic & analytical skill that we have learned (even for years) while eagerly entering into trades to win back our loses. Then we will keep thinking how come our luck getting worse & worse as those trade we place keep losing.

So, the moral of the story is PATIENCE (MINDSET) is very much important in Trading & also Investing.

So, trade well with proper METHOD, MIND & MONEY MANAGEMENT.
Happy Trading & Investing :)

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