Wednesday, November 04, 2009

Supports are still holding

Hello everyone, i'm sure you have noticed the decrease in frequency of me updating on the market. To the minimum, i'm trying to update at least once a week. This is the best i can offer as i no longer have the energy to multi-task so many things. Thus, the weekly update would be the most significant as we look beyond the daily noise. There are many methods to make money in the stock market, some like the excitement of intra-day trading, some may like to contra but i like to ride trends and trade according to market directions.

Many months ago, I was busy shorting a bull market at it's infancy stage, each time i covered my shorts, i would often time have to turn long to cover back my losses. As soon as the market turns soft, i would try to short again. In short, it is by far a "eat pig, pay dog" experience. Few weeks back, there was a Saturday night where i spent hours reading my trading diary in 2006... and i saw how i learnt from the market and what were my mistakes. One particular obvious way which i made the most money was from riding the trends of strong sector. Not only that, my game plan was solid as i build a portfolio of stocks from leading sectors. Fast forward to this year, i was more of a maverick. To be honest, i even traded FX earlier this year. Yes i made money from it but my eyes were on the screen for more than 16 hrs a day. I have to watch my positions from 8pm to 11pm... then wake up at 4am to make sure the market didn't suddenly turn against me. On active nights, i will be watching it till the wee hours. Months later, i begin to question my lifestyle. Did i enjoy the experience of following HK, SG stocks in the day time, then US market at night? As for FX, it supercedes both time zone starting at 2pm. My answer is no. It was so laborous that it killed the fun factor. In anything we do, the fun factor must be there, otherwise we will not enjoy it. I made my money from the stock market before and i know how it feels and how it is done. It certainly didn't feel this way when i overtraded too many markets, too many instruments. Thus i thought it made sense for me to do what i know best - stocks.

One of the reasons i like trading the stock market is, I can still enjoy life while my money grow in the market. I can be out the whole day either leisure or business and not worry about my positions. This is the benefit of my method. It is not a get rich quick method but a consistent method to grow money from the market while having a healthy life outside the speculator in me.

Orite, lets talk more about what you like to read most - the current market. The above is just an avenue for me to share my experience which may save you from a few obstacles in trading life. I am still vested in Hyflux and CDLHTrust. Like i say in the last two posts, so long the support of broad market doesn't crack, it is still a bull market to me. The index has to correct as the chart looks bearish, but i notice majority of the stocks are still there, nothing much has changed, they are only stuck in a range. If i want to play this range, i would rather long as close to support than to short at resistance. Because, in a bull market support will hold, in a bear market resistance will hold. You ought to have a view and trade it.

Then the big question, why did i not add more positions? Simple! If i do not see both my stocks swing into deep profits, it means my prognosis is not correct yet. Why increase the risk by adding a third position? If the market proves me wrong, instead of losing 2 positions which is still kept under my money mgmt rule, i would have lost more than what my rule allows me with the third. Thus, in this market, my risk appetite is only 2 positions at most. But once they break new high, i will be hunting for the third purchase. Meanwhile, the waiting game continues....

I am waiting to see either of the following:

1. First batch of buy signals to rally to new highs
2. Resistance level of one particular sector cracked
3. STI at it's support and resistance relative to the broadbase market

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.