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Sunday, October 24, 2010

Learning Corner

How do I use RSI

If you are my 'old' readers, you will notice that I do use RSI the most(instead of MACD or Stochastic - I seldom mention about ADX or CCI, of coz). And many TA-kaki have pointed out that RSI should not be used alone by itself. Agreed.

Now, I do use RSI to see if a stock is at a high or low. That is only my first indicator telling me if a stock is reaching an overbought region. Then, by knowing that ... I could alert my friends that it is time to consider taking profit of reduce the positions. Or if they want to buy into a stock, WAIT. That is basically my first criteria in buying/selling. Reversely, we can consider to buy when it is at oversold positions.

TEH : You could buy me my D&C if you want more details on my "RSI" strategies, ok? hehe

Example : I m going to use IGB as an example as one of my friend bought into it at around RM1.80 loooong time ago. I think he is a buy-n-hold type. If a person buy-n-hold in such a volatile market, we might not gain as much as we wish tho market reaching a new high at 1,500 now. Is our portfolio gaining 30% or so too?



IGB : Trading at RM2.00 again(I will hear someone trying to correct me, it is at RM1.99 la - if you have such a MENTALITY, believe me, you are deem arrogant and stupid to me - get lost and get real).

I drew a horizontal line of RM2 - there are FOUR times it is at RM2, testing this level. We called it resistance(those arrogant FA-kaki who criticised TA, please get lost too. If you are pure FA, you do not need to read blogs or even trading books - investing is an easier work once foundation placed, ok?). Then, each time when it is at RM2, it will go to overbought region, indicated by RSI(I m using the usual 14 days here as it is NOT for short-term trading).

Imagine a person bought at RM2 on AUG 2009(first red), it is back to the square in OCT 2010. Wow ... that is ONE YEAR plus without a profit while KLCI continue to surge, property index continue to surge too!!

So, as seen in the chart(yes, only for those know what TA is - excuse me, I do know the FA of IGB, ok?), it went down to RM1.70 level twice(oct 2009 and feb 2010) and into oversold region. RM1.70 becoming our support level. WHEN should you buy into IGB? Yes, at RM1.70 when it is oversold. Dont ask me if IGB could go back to RM1.70 or lower, ok? IGB dived to RM1.50 level on 26th MAY 2010 this year. IF I m holding to IGB at RM2, I will wallop HUGELY on 26th May(assuming I do track ONLY IGB and my eggs in this basket). Why I will not buy at RM1.50 when I paid RM2 months ago?? Hey, it is a big discount? WHEN do you buy again?? When it DIVED. If you know how to see that candle-stick, before market closing ... gosh, BUY BUY BUY is yelling.

So ... it is back to RM2, its resistance with RSI showing overbought. To me, it is time for me to sell while waiting for retracement. But, if I have bought it at RM2, then I have no choice ... but to wait either (1) for it to go back to RM1.70 support level to BUY more - with a condition that KLCI is still in uptrend (2) buy more when it breaks RM2 convincingly.

So, I spent my 1hour Sunday morning typing these line for LEARNING purposes.

I have written about TanChong last week when it is oversold and I was preparing to move in. I did on Friday. Today, IGB is just the reverse ... it is at overbought, ok?

Treat me dinner, I might give you some idea, ok? What you want 'free lunch'? Then, continue to read this entertaining blog. Haha

This page is for novices and investors, actually. It is not a call to buy/sell IGB or TanChong, ok?

Message from my friend, SC

hi, u are an expert now with all yr AAA, wow i know nuts about this.. I took yr advice and left the tiger in the cage, just wana ask u abt E&O, i bought it rm1.17 and now she is having sakit perut, diarea the whole week. Since najib did mention abt property and construction, will this sector really move? i also bought coma counter like lcth at 27cents and its comatize for weeks now. Went in kbunai took profits and lari leow. Now tomorrow morning wat shd i punt ? Still thinking if i can go and grab HWBG for 25cents? Just hopeful! wat do u recommend? I missed Tanchong !

Reply to the message

Sorry, if you are offended. I DO NOT know much about FA or TA yet - I am only in market for less than 3 years, so I do not have EA to show. BUT, I do know I m LEARNING in order to be the minority 10% who is gaining from markets in the LONG run. I dont know how u view markets, but to me it is a place I want to be here for a loooong time. So, I will use another 3-5 years to LEARN. WHat you used is called PUNTING(TIKAM in malay) meaning you THOUGHT you have 50-50 chances but in longer run, believe me ... market is merciless to majority of punters. You MIGHT be lucky this year or next, wish you lots of LUCK. You do need it, honestly.

When a person bought at stock at a certain level, a WISE knowledgable minority 10% who is profitting are those who have as SYSTEM. So, if you are to continue YOUR ways of punting or gambling, please spare me YOUR heart-ache. You must be joking if you dont know what KheeSan is or Tiger is doing ... I thought of sending you the negative FA of Tiger to you until I QUICKLY realised that you are gambling, what is there to talk about FA? FA and/or TA are for those stupid people like me who spent THOUSANDS of dollars buying investment/trading books and attending talks or paid THOUSANDS to learn TA now. You(and many more punters) making me FEEL stupid ... I used averagely 6 hours per day reading biz-papers, economics 101, reading annual reports, learning tonnes of financial terms, recognising trends etc etc ... and now I m leading MACD, Candle-sticks, Money management ... nd using more hours daily writing this stupid blog to benefit those who wish to LEARN. I m stupid, as my wife pointed out. She asked " why should you be so concerned if she is going to buy KheeSan or Tiger"? Imagine if Tiger jump up 30-50% tmr, will I be blamed/cursed? Stupid fella stopping me from buying Tiger that day? See ... it is up 40% today. Know what I mean? Understand how I m concern ...? IF you are not my friend, I wont even bother to reply!! Ask my readers ... many messages 'unreplied'.

So, I will maintain my NO COMMENT view on your E&O. At least E&O is a cyclical stock I could use to trade. HWGB, KBunai and such ... God bless you.

I will want to make it CLEAR here OPENLY to you ... DO NOT tell me what you are buying as I m concern about you. Just keep it to yourself and I will PRETEND that you are good in your insiders news or think positively that you are gaining much from markets. I will promis myself NOT to reply to ANY of your questions anymore. We are VERY different ... I m stupid, I learn FA well, and currently applying some basci TA ... I m stupid as I m STILL using 4-6 hours PER DAY looking into opportunities. I m stupid to share it OPENLY to so many here. Excuse me, please.

No, you are NOT a trader as you initially told me. You are a PUNTER, thousands of those in markets doing daily. So, we are different ... sorry, I cant help you anymore.

But ... one day, IF you wish to learn ... you may join my classes(with a fees) for novices what to look for in FA and how to use TA to enhance our CHANCES in our TRADES. Even if you need to PUNT, you need a system. I spent HOURS of reading before that ... lost thousands when I first trading CWs 2 yrs ago(read my 1-2 years posts on CWs) ... and learning and learning till I m much more confident to TRADE call-warrants.

Sorry again if I offended you with my 'harsh' reply. You still only owe me my D&C for the Supermax trade(RM4 to RM4.80). That is called TRADE, my friend. Buy when RSI is ridiculously low, candlestick showing rebounding in play ... sell when it is overbought and candlesticks showing reversal. sigh ... why am I explaining for?

By the way, do you really THINK I was lucky with my JCY when I caught at 0.90 level and to sell for 15% profits in days? Do you really THINK I prayed hard enough to catch SUpermax at RM3.75 only to sell it days later at RM4.20? I was lucky to catch at almost the bottom, that is YES. But when I bought into it, I PLANNED for days of stalking and such. Watch ... do you think I m PURELY lucky to buy into TanChong on Friday morning and it rebounds? THINK again ... I get averagely 4-6 strikes per game in 10 throws because I DONE many 'small' things before I even bowl .. what I played is called bowling, not throwing!! Now THINK ... do you know how I catch TanChong-cd? Do you think anyone without LEARNING in their mind will EVER manage to do that? When I get a strike, I do know how it strike, not merely pure LUCK. I dont think so you want to challenge me in throwing ... ooooppsss ... I mean bowling.

Never mind. We all have our own mind and attitudes when in market. Good Luck.

TEH : There are few categories of readers - some read my blog(only WHAT TO BUY part) only to know what to PUNT next while on the other side, those NOVICES who think they have points to LEARN from my blog. I only WELCOME those wish to learn and share. Those punters, BUY at your own risk. Please GET LOST as you are making me feel stupid-la. Sigh.

Night.

1 comment:

Anonymous said...

Looks like you are an expert in this field, you really got some great points there, thanks.

- Robson