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Wednesday, July 28, 2010

Reply to YJ

Hi Teh,

I noticed that your style of trading is quite the opposite of mine. I will normally go with the trend, trading stocks that are heading upwards. That way, I can minimize my risk by cutting loss when it hits below its previous low (or immediate support).

However, I sometimes also do track stocks that are on a downtrend ("waterfalls" like you describe them). But before I go in, I would normally wait for a clear signal of reversal before I enter, such as breaking through its immediate resistance.

Just want to share my observation for today (DISCLAIMER: this is not an invitation to buy). TMC Life today just broke through its resistance level of RM0.36 with high volume to close at RM0.385. In the next few trading days, it might head towards its next resistance level of RM0.40 and possibly the strong resistance level of RM0.44. Immediate support is now at RM0.36 and stronger support at RM0.34. Other observations include MACD still very much positive and Stochastic slightly overbought.

Hi YJ,

Well, I will like to reply this comment of yours which I will like to thank you for taking your time in writing to me a little of your strategies. I shall also clarify a little of my 'randomness' and reflect on my trades.

Here it goes ...

As you are a regular reader, i shall start with saying that I m LEARNING and experimenting with my trades. Yes, I do use REAL money(only real money could give me real experience - real joy or real pain) ... so, I do know the risk.

I have been trading using RSI on the stocks I like(fundamentally) and traded many stocks for some time. Yes, someone mentioned that RSI is just ONE of the many indicators and wonder WHY I mentioned only RSI. So, using RSI alone(I added stochastic in later stage), I will BUY when stock started to show RSI below 30(or historically low RSI is a beauty for me!). Thus, the 'waiting' period was longer ... at times, I gained a mere 5-8% in a winning trade after holding for 2-3 months!!

Then, since I attended the CN course, I focud on learning MACD and yes, MACD alone. Forget about oversold ... I have shown more failures in my recent 2 months trades as I was struggling with what I m learning!! I feel uncomfortable chasing the momentum. Perhaps I was too used to catching a waterfalls or if unlucky, I could catch a knife!! OUCH.

I was taught to FOLLOW the TREND. BUY only uptrending stocks!! Or look for some chart formations, coupled with the indicators to look for breakouts(ascending triangles, flag or pennant, BB bullish breaout etc etc).

MACD + RSI + Stochastic : I failed in many trades using these as I could not know the 'formula' for my trades yet.

Last week I started candle-sticks!! Hmm ... it is overhelming for a rookie or a novice like me, u see. But I want to experiment with it. I m learning each of it separately and trying to put the puzzle into one piece!!

Yes, I used 'buy at support, sell at resistance' before(last year). Obviously I read about all these before, but it takes me TIME to learn and apply. And also, re-learn or refine what I have learnt. I do many mistakes, but it is through mistakes that we learn(I hope). Yes, at times I do repeat my mistakes due to emotions(lack of patience, influences by articles etc ).

Waterfalls : I like TopGlove or MudaJaya now. These are not empty penny stocks like Kenmark or HwaTai or whatever they goreng-ing. So, if a 'good' stock that I like and in my stalk list are diving, I will tempted to move in. Today, instead of RSI alone, I tried to look into MACD and its support/resistance level. Adding in candle-sticks(which I m trying to memorising the types!!), I do try to see reversal in the downtrend.

Example : BJCorp supported at Rm1.00, shown a reversal candlestick yesterday, definitely oversold and MACD histogram showing many reds, and first green histogram. That was shown yesterday. So, today ... in the morning I hesitated. I was looking at JCY or TopGlove but seeing BJCorp moving, clearing my losing KKB, I give it a PUNT. It is a punt as I dont like the counter!!

How about JCY? Did I buy it too early again? I get greedier when stocks moving lower and to its lowest point. JCY is trading below its IPO level(dont know how they valued her). So, I place a position at its low ... and obviously I m going to average DOWN if it move below 1.30? I was thinking ... should I be waiting for the reversal candle-sticks? I will buy more if there is a reversal candle stick. You may say I still do not 100% trust TA ... it is because I DONT KNOW HOW, not because it is 'false' or not good.

Measat flew off, how do we catch a stock before it flies off? That is what in every trader's mind. Tmr or next week, there will be few stocks flying off. Which one? All speculators will be talking about hot-pick or hot babes ... without limited funds, limited knowledge, limited experiences ... the odds is stacking against me!!

Once I could placed FA + TA + EA making is a better 'rojak', certainly more customers will like my specialty. You will be my VIP guest. Hehe

Thanks again for pointing out. Night

TEH

1 comment:

YJ said...

Hi Teh,

Thanks for your reply.

Don't worry. We all are still learning. I myself only started trading only about 2 years ago so I would still consider myself a rookie like you. Most importantly is that we accept constructive advice and learn from our mistakes.

Anyway, I will also be attending the CN Trade Fest on August 15 so I hope to catch you there?

Take Care and Happy Trading! Keep up the good work on the blog.