Tuesday, July 31, 2012

Liquidity : An important point

Book : Getting organized at work

1.Organize for success

2. Take control of your day

3. Set goals

4. Think realistically

5. Plan your work

I am very busy these weeks due to tratles' meeting, new nest, new cohort ... and office work. I do need to get myself organised(my weak point) in order to utilise my TIME effectively.

This morning, I done a recording to share with my e-tratles price-volume analysis. It is a VSA(Volume spread analysis) which I learnt by myself some time ago. It is important for newbies to understand some conditions before we trade, especially in KLSE where we do have liquidity issues. Well, many candle-sticks are planted in the last 15 minutes, anyway.

Check PetGas candle-stick. Nice white candle jotting higher, right? It was planted in last of minutes, pulling the whole KLCI up by 7 points yesterday. Yeah right ... if one use MERELY and PURELY technical on such charts, it fails us. Understanding such BASICS of charting is important.

Learning Corner : Liquidity

Liquidity ... volumes traded and turnover is very important and I shared that in my first module that day with my new batch, cohort-7. No one could trade without volumes. In fact, a low volume is good ... for investors and to check accumulations. When volume increases, it shown that interests coming in to push up the stocks, perhaps by spreading rumours in forums, news in media, reports by brokers ... etc etc. Just remind ourselves that those writing in forums, media and reports could have their OWN agenda, not ours. They are meant to be used to MANIPULATE the movements, creating FEAR and GREED in novices or retailers ... and trapping many in.

Liquidity is like a fuel, as i read. Once rumours spreading and news out ... as syndicates(sharks or whatever u want to call them) accumulated enough, they will push the stocks up to make us believe in those rumours/news ... the "I TOLD YOU SO" being played. Yet, so many novices or those reading forums/broker reports ... those newspaper/magz BELIEVE in such thing. It is NATURAL for human(lazy, busy, greedy, ignorant, impatient, etc) to re-act to such movements ... and not wanting to miss the boat(an e-tratle of mine use the word beca = trishaw. haha), we CHASE the stock up, only to realise that those syndicates were happily distributing ... and take us, ikan bilis as their snacks.

So, basically ... we need to take TIME to understand WHAT IS BEHIND the movements of the stocks. How do we see whether the stocks are specualtive? It is a good question being asked by my new tratle. And many of times, we heard ...specualtive stocks. To me, it is simple ... top 10-20 most actively traded volumes without any financial background or fundamentals to support the movements. Now we have RC being popularised of goreng penny empty shell stocks. Yes, that is VERY speculative stocks.

How about JCY, Oldtown or Hibiscus? Are the sepculative too? Yes ... they are!! But, to lesser extend comparing to Cybert, Harvest, DVM, Focus and those lousiest stocks in market(especially ACE).

Even Supermax and Padini could be seen as specualtive, right? Playing with news of strenthening of USD, lowering of latex prices .. etc etc ... these news are there for some REASONS right? It is giving us excuses to buy, and the price being pushed up. Check out UOADev ... abandoned at 1.30 level, then proposed 10cents dividends ... shot all the way and sharp profit-taking yesterday!! I was explaining to few tratles of mine to check on her ... funds or not, stocks are bound to be speculated. Accept is as a rule of the game!! Knowing the rules are important ... and do play by the rules.

How about GenM or MMC which retracing to be a sharp knives now? Will you buy into the stories why they are retracing blah blah ... or are a contrarian to like those abandoned and un-like counters? THINK.

If one could not THINK logically, also do not track stocks for years, following the latest developments ... checking new rules of the game, we could be 'lost'.

I wish I all the time to explain charts by charts ... and giving examples to explain simple(yet unknown to many) concepts of seeing price-volume, using news related to check how stocks being ... err ... manipulated.

Just trade cautiously. Try not to listen to noises(forums, news, broker reports) and read these media with open-mind, filtering what is GOOD and LOGICAL to you. Make sure you are reading with your thinking cap on ... as they are GOOD in playing with your emotions.

Like my 'learning corner' posts? Yes, it is for educational purposes.


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