Wednesday, October 08, 2008

Will Concerted efforts salvage the situation?

News is out, concerted efforts to cut interest rate by major central banks. This is the action that i have been wary about. It always happen. The more i am in this trade, the more experience i gets. Hence when similar situation happens, i know what to anticpate. True i miss out the greatest plunge in history by covering my shorts early. I looked back, would i have done the same? No. After covering capland, cosco, yanlord, plus the profits from my HSI trades, i should not covered all my shorts. With the profits in my account, i would be only risking my profits if i hang on to my noble shorts and leave a trailing stop. This is a simple rule in trading, risking profits to make bigger profits. Something i was so used to doing yet this round, i miss a great chance to make more money. Is this greed? No i think this is a chance for me to reflect and remind myself to be always sharp. Perhaps dabbling in forex took my focus away from my positions. After some months in forex, i find that it is indeed more difficult than stocks. There are carrying trades unwinding to look out for, economy data which may swing the currency up and down, oil price affecting la,... if u realise, it's the same for stocks... however the difference is, for stocks, it moves slower and hence if you are slow in reacting, it's more forgiving. When comes to forex, if you are slow, you end up run over by a lorry!

Today i have sinned. Like many, I saw that the market had a strong rally during the afternoon session. No one knows what happened, but my guess is, the concerted efforts that i am wary about may have happened - concerted efforts. Hence i went long on HSI but within 30 mins, i was stopped out. Itchy fingers.. keke Anyway, how the market reacts to the concerted efforts is more important. If market moves down instead of up to cheer the move, it means we are going to see new low. If the market cheers the move, it means we could have seen a temporary bottom and hopefully we have a sustained rally. The key thing here is to recognise entries into the rally.
Next is where are the resistance to short. Even scooby doo will be able to sniff the low level of confidence in the market currently.

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