Thursday, April 16, 2009

Meteor showers

It sure looks like a key reversal day as we saw the market finished with alot of candlestick weakness. Property sector was especially under tremendous selling pressure today. Looking at my screening results, it was weakness across the board. Looks like the textbook signs are happening.... micro pennies rally would usually mean the end of the ah gu. All the bearish divergences look even more scary with these factors in mind: We are at the high. Today we closed with high volume and with candlestick weakness.

HSI: Failed at the resistance today. I didn't short here because i do not have the profit to risk here. We all know that HSI is a wild horse.. hence for my risk apetite now, i can only continue to observe and grind the profits to make the next trade on HSI!

Going forward it will be tricky... the last few weeks whenever we had weakness, almost all shortists were caught butt naked by the sudden return of buyers storming into the market. That's why i also no dare to anyhow short. Is it a reversal, is it a retracement... this is the top question in everyone's mind. For me, retracement would mean we see a higher low. Reversal is where the 20MA is broken and this is where i may turn short. However, right now, it is broadbased weakness. I couldn't see my favourite setup where one sector is obviously weak and thus i am not comfortable in shorting as yet. For now, i am happy to just grind the profits... they are returning slowly.... but surely.

I may have lost a substantial amount of my 2009 profits. But that doesn't mean i trade agressive now in a revenge mode. Rather, my recent trade size and frequency have been reduced. I am more selective and not taking uneccessary risk. This is how i trade. Build up the profits before i trade agressive. It makes sense... if i am successful in building up the profits, it also means i am winning in my trading... this means that i have gotten the direction right! If all these small trades are unable to generate profits, it means i haven't got the market feel back... then surely it is suicidal to trade agressive. Thus once the profits is built up, when i trade agressively, the odds is with me and not against me. So long, no profits, i trade small.

I must explain the recent trades on raffles edu and wilmar are still based on the 2% risk management i been faithfully following. After the MArch debacle, the 2% risk is lower and thus position size is also lower. With the small profits taken from these 2 positions, the 2% risk increases and the position size increases and thus the profits will be more. If my opinion of us closing higher on Friday is wrong, then the profits in Wilmar and Raffles Edu will be lost. The key thing is, never allow your capital to take a big hit. Trading is a business, it is a marathon...not a short sprint.

DISCLAIMER: The contents in this website are for fun reading and must not be taken as a buy or sell advice. You must do your own analysis on top of my postings. By reading this blog, you agreed that i am not responsible for your trading.