Monday, December 03, 2007

Firstly...identify market direction

In all my seminars, courses and even the newspaper interview done this year, i always stressed the need to first determine the market direction. The NUMBER 1 reason for most who lost money in the stock market is we don't know where the market is heading. This was why i failed in my early days. Think about it, if the market direction is heading up, shouldn't majority of the shares be heading up? If the market direction is coming down, didn't most of the stocks keep coming down? Hence I believe inorder to avoid unneccessary losses in the market, one should first form an opinion on the general market direction instead of focussing which stock to trade.

After standing aside the market for 30 days exactly to prepare for my wedding cum honeymoon, i lost the feel for market. This is the first time I have taken such a long leave from trading ever since I started persuing this life skills years ago. It was tough in the beginning as I fell sick due to trading withdrawal syndrome and this was 1 week before my wedding actual day. Forcefully I took my eyes off any financial feels just like quiting smoking where temptations linger everywhere. I treat this as a test of my discipline. Psychologically I won. Really, learning trading has changed me so much as a person. Sometimes my ex-gf and even my sister complained that I am cold blooded and function like a robot. I don't know if you feel the same? For example, I no longer get into senseless argument where one must win for no good reason. I also don't convince people to do things my way for I understand this is how the universe works. Everyone is unique and does things differently. This is also how the stock market functions. There is no way 100% of the market participants will arrive on one single opinion collectively. That is why I often nodded or smile even if i don't agree with what I heard. I mean there is no need to impress upon others my opinion. It's just like we shouldn't argue with market direction! This bring us to the next point, I learnt to take failure in my stride and admitting to making any mistake. In life how many of us really likes to admit to mistakes? Most of the time, we will find circumstances as an excuse. That is why cutting loss when wrong is most difficult for most. And finally, my all time famous quote i read somewhere... "people tends to act out the way they are in the market and this is often leads to disasterous results"

Perhaps I haven't talked to myself for too long... gosh really long winded tonight! haha 1 more thought to share, technical analysis is indeed a life skills just like cycling and swimming... despite being away for sometime, the where to start, what to do just flow automatically when i analysed the charts. By the way, during the trip to Italy, i met Leonardo Da Vinci (Statue) and learnt alot about this man... hence I probably enhanced my fibonacci skills... wahahaha

With 2 seminars coming up, I need to get back my tempo and without saying of course market direction comes first! I won't be too anxious to hook up any stock position as yet. It's my style to always form an opinion then trade it.

My next stint is scheduled on 12th Dec.... titled trading strategies...interested party... u know where to register ......

DJ: I be watching for 2 situations:

a) We form a higher low and then breaks the red line.

b) We breaks the support where it is shown by the 2 arrows.

HSI: I am looking for the blue line to be supportive or the gap up.

DISCLAIMER: This is not an inducement to buy or sell. You should do your own analysis on top of my postings.