Re-entered the market with Kepland

I have bought into Kepland at 2.13 come matching time at 5:05pm on Wed. The entry looks good as STI took out the high of Tue. Similarly for Kepland. My cut loss is 2.05. My 3:1 reward/risk is justified.

I know I said I am staying out. Sorry guys. But I see a good opportunity and so I took it. Market sentiment is markedly bullish for today. Kepland produced a nice bullish bar pointing up for a reversal. I am risking a further nibble of my SIA profits, but I know I will end up green this month.

Profit preservation and cycle review

I am staying out of the market to preserve 50% of my profit from SIA til the next month. In doing this, I ensure that I am green for this month, as I was green from the previous 2 months as well. This shows consistency and I believe it is one of the first challenges to becoming profitable in trading for the long run.

I will review this market cycle as now it looks more like a sideways trending one. My strategy will still be the same: defining my channel and scooping up the bottom. And always remember the golden rule: Cut losses short and ride your profits!

OCBC cut!

I have cut OCBC at the price of 6.46. Despite 3 strings of recent losses, I pleased to say I am still positive for the month. I will make a monthly summary of trades and present them here. If you like what you see then please do follow my blog! Otherwise feel free to look at other approaches. There are infinite ways to profit from the market. Mine is definitely more on the boring end of the spectrum.

OCBC still holding

OCBC did a low of 6.56 then closes at 6.6. I mentioned before: in a bullish market cycle, I want to see price acceptance before I cut loss. If the price is below 6.6 for a half day, I take that as price acceptance and I will cut. Also I will look at the Dow Jones in the morning, the general sentiment and the level of STI. If OCBC gaps down and bounces up above 6.59, I will still be monitoring it on a half-daily basis.

Basically, I want to be convinced that it is really breaking.

Re-entered the market with OCBC

Looking at the STI 5-day chart, I see a probable rebound as the STI's high today is at yesterday's high. And if you compare today's morning session with yesterday's afternoon session, it has already taken out the high of the previous session if you were to use a half-daily chart. I am going in!

Which stock? OCBC! Similarly to STI, it took out the high of the previous session on a half-daily chart. CCI is perfect on the rebound off the floor. It is at 2 major support lines: the 50d MA and the straight trend line drawn since March.

I entered at 6.72, 6.59 is my cut loss, risk is 13cts, reward must be 39cts i.e 6.72+0.39= 7.11. I see overhead resistance at 7.4 thereabouts.

I am risking 1 unit at this point. I will risk another unit probably by using a daily chart with the high taking out the previous session's high.

Cut loss for Capitaland

I have cut loss for Capitaland this morning at 3.59. I believe that the fragile sentiment is now cracking and this could be the start of a deeper correction. I am now flat and out of the market.

What's next?

Ok, now that I have cut OCBC, I will be looking at Dow Jones in the morning. The level to watch is 8600. If it breaks strongly, I will be looking to cut loss on Capitaland as well. If not I will be watching for any rebounds that take out the previous high on a half-daily chart. The stocks I am watching will be Wilmar, DBS, UOB, SIA, and even OCBC. I do not watch many stocks, just the banks and some strong notable ones. Strong stocks give you time to cut your losses small in a downturn, while they also tend to rise up faster than others should the rally resume.

Please feel free to email me or comment regarding any stocks you are interested in. BTW DBS should be cut too.

Cut loss for OCBC

I have taken a minute loss off OCBC at end of day today at 7.08. Time to practice my discipline and cut my loss while they are still small.

Consistently take small losses, ride your gains. That is the Golden Rule.

I am still holding Capitaland.

DJI breaking 200MA

DJI seems to be breaking the yellow line which is the 200MA.Taking a closer look, volatility has started to come in when approaching the 200MA(yellow line). Look at those candlesticks, 8 days of dojis, dragonflys, hammers, stars what have you. Each warning of reversals but no reversals the next day. Just uncertainty and volatility. Consolidation seems to be it. Why volatile? It usually happens when approaching major sign-posts like the 200MA. Also the 200MA is meeting the 50MA(the red line) if their courses hold steady.

Of course nothing is 100%. No one should risk ruin following such TA. In fact no one should risk ruin based on FA, TA, magic, voodoo, hocus-pocus or even if you are a time-traveller. Simply because risking ruin affects any sane mind emotionally, mentally, physiologically. Whereupon your judgement will be impaired. (Not even having a 'Star Trek grade' time-travelling device, should anyone risk ruin because alternate universes exists! You may come back to 13th jun 2009, thinking that you have seen DJI breaking 9000 in the near future. But you may not be aware that you landed back in an alternate universe where DJI will break the 8200 level).

So what am I rambling about now? That nothing is for certain, no matter what the probability is for something happening. So risk something such that the loss does not matter much to you. Go have a life, stop worrying about the market so much!

SIA: Took profit to minimise exposure

I have taken profit of SIA yesterday because 1) it is a good day to take profit (candlestick hammer) 2) I want to minimise exposure to the market ( I am riding on OCBC and now Capitaland with profits)

Capitaland was not stopped out because I look at the closing price at the end of day, which was 3.71. Why?

1) For uptrending and bullish sentiments, I want to see acceptance of the price level of below 3.69, meaning if the closing price is 3.68, I would cut the next day.

2) However, for other market conditions like sideways or bearish, I would cut the next day, if the bar even touches 3.69.

I like to trade with my left and right brain, hence my trades are not strictly mechanical but also guided by intuition developed over my 2 years of active trading experience.

I highly recommend these 2 books for a more thorough education in trading:

• The Three Skills of Top Trading by Hank Pruden
• Trading in the Zone by Mark Douglas

Trading is so much more than just Fundamental Analysis, Technical Analysis, probabilities, trading edges and techniques.

I am watching Capitaland today.

1) It is uptrending if you pull out the chart and take a look.

2) It was dipping to support at 3.7, now it bounces to 3.77. I place a mental stop at 3.69. My risk is 8cts. My reward must be 24cts or more. I look at the 3.77+0.24=4.01. I do not see much resistance til the 4.15 level.

3) Bear in mind your exposure to the market. If you are already taking too many positions, it could get uncomfortable as the market fluctuates and will jolly well affect your emotions and your mental state and cause errors in jugdement. I try to read the market and the participants' sentiments with my right brain as well as my left. My right brain's jugdement will be impaired, meaning I cannot really have a intuitive feel for the market if my emotions come in.

Well, STI Index has a golden cross too. I notice quite a few other crosses as well. Some of you may be wondering what style of trading I advocate, let me summarise.

1. My approach is to buy near support preferably after it shows signs of rebounding. Similarly, I short near resistance preferably after it shows signs of falling. 

2. The trend is my friend, so one of the first things I do is determine the trend: long or short and I follow signals accordingly.

3. I go for a reward/risk of at least 3:1 in my favour. Otherwise, I do not take the trade.

This is only the summary of my style of trading. My approach is a wholistic one. My methodology is only a tool, such as fundamental analysis or technical analysis is a tool. Use the tool appropriately, do not use a hammer to hit a screw, or a screwdriver to hit a nail.

Teaching my methodology has no real value without also teaching the more important stuffs like risk management, emotional and mental state management. You may use a hammer to happily hammer your nails, until you meet a screw and you just cannot hammer it in. Then you get frustrated and mistakes happen. Same with trading. 

Now you may say you are investing not trading. I say it is just labels for the activity we do. I see investing as trading abeit for a longer-term duration. We can argue this for hours but the end result is the same. Trader and/or investors and/or speculators, estimated 95% lose money in the market. 

I know cash-rich people who win close to a million over 1 year, then proceed to give it all back and more in 6 months. Then rinse and repeat. It is a common story because we are only too human. The market environment however is an alien landscape. We see the market as money on the floor, but thats an illusion. When we enter the market, we are actually more on a tightrope above the grand canyon. The market makes geniuses out of us, then turn us into fools.