Did You Trade

Once again… TGIF!!!

My friends are meeting me for dinner… Hmmm… I can almost smell the seafood melting in my mouth now… *Slurp Slurp*

As mentioned this morning, Market did try to recover higher than OP before selling down on profit taking. It managed to recover from the low but are still trading below OP.

Trading game simple.

If you are short in the market, the market should recover above OP… PERIOD

If it did, means it is not ready, will it trade higher and gap up… Errr… I won’t know for sure…hahaha

Levels to watch for HK: 19980 (OP) and 19863 (SC). I shorted in the morning but my trailing profit got triggered. Now I’m waiting for my chance to either long or short…

Fickle minded???

Well may be… But at least I make profit right? *Wink*

CK

As expected, GBP and Eur did test the Diff R/L before coming off. Hence, we are right to stay off the market for a while.

Yen did break the Diff S/L (1.0555). Currently it is trading higher to “close the gap” and perhaps it may test the Diff S/L again. However, should it break OP again. More selling is likely to happen. After all, Fundmentally wise, USD seems to be strenghening which is reflected by the recent gains in the US market. Reports on talk of investment outflows from Japan while retreating against other risk-sensitive currencies may catalyse further gains on the dollar.

Once again, being a purely technical driven, price action dictates my course of action. If the news are “true”, Yen should weaken against the dollar by trading below its OP (1.0525).

Good Luck!

CK

Good Morning!

It’s Friday!

TGIF!!!

YIPPEEE!!!!

DOW posted spectacular gains last night, which fueled by positive earnings results from AT&T and Amazon. Last night marked the highest year for the year.

“Earnings are showing in many cases that companies are increasing their bottom lines with lower revenue, which means that corporate management is taking  responsible cost cutting steps to navigate the economic downturn,” said Michael Farr, president of money
manager Farr Miller & Washington; “this will prepare them to recover strongly on any economic upturn.”

Looks like positive sentiment is in the air.

Hence, I’m sure a lot of traders who didn’t held their position overnight is likely to bang tables while those who have endured the emotional upheaval of holding their position are celebrating right now.

So, Market Psychology wise… What’s likely to happen?

The moment the market opens, CHEONG AH!!! (Hokkien: Run for it!)

Hence, if the market rally, it is expected. Note that Asian markets are likely to gap up, which already priced in the gains in Dow. However, average investors wouldn’t think likewise and would just jump in to buy. If the market doesn’t edge higher, something is wrong. Who is selling? If it breaks OP, what do you think will happen to those who bought today? Lose $$$ right? Good chance, profit taking will happen in the morning.

Of cos, I wouldn’t know what’s the extent of the profit taking. All I know is since today is Friday, many investors may be reluctant to hold positions overnight and may want to reduce their holdings so as to enjoy their “holiday”.

The key is OP. Hence if your counters are trading above OP, good for you. If not, May be it is prudent to reduce your position.

After all, Trading is all about capital preservation. He who has the “ammo” to fight the protracted war will have the last laugh!

CK

I’m not sure whether the traders in Indonesia are able to trade Asian Futures like SIMSCI or Taiwan Futures. Hmmm…. Perhaps I shall take a look at the FX market where there are more participants

Yen Futures (Yen/USD): Watch if it trades below 1.0555 (Diff S/L)

Good chance GBP and EUR futures are likely to test the Diff R/L and come off. I would prefer to wait first before taking futher action.

Back to Asian Equities.

Watch out for HK. It is a buy above Diff R/L 19657. However based on W%, It is likely to experience some sell down before any upside can happen. To long above Diff R/L is not wrong but the risk is higher since it is against William % (W%).

That’s all folks!

Good Luck trading tomorrow!

CK

I was struggling this afternoon at about 1230 pm whether to suggest any potential stock pick on Indonesian market

Reasons for my hesitation:

1) I’m not trading Jakarta stock since I don’t have an Indonesian brokering account. Moreover I only trade futures. Hence I don’t want to create the perception that since I’m not trading anyway, hence I can be relaxed in my posting. After all, I’m not going to lose any money from putting in these calls, which I find it rather unethical.

2) I have total blackout of how the stock is performing real time. Whatever data I have is EOD (End of Day data) from Chart Nexus.

I decided not to go ahead especially since I’m not aware of the opening price (OP).

Like the saying, market is always there but frankly to ask you to buy stocks tomorrow carry higher risk. After all, you are buying at a higher price tomorrow when you could have purchase your counter at OP + 1 bid.

Anyway my pick based on Diff:

Bank International: Good short if it opens below 415. Short only when it trades below OP by 1 bid.

Bank Negara: Good short if it opens below 1780. Short only when it trades below OP by 1 bid.

Darma Henwa: This counter looks like it is consolidating. Good long if it can closed above 205 on tomrrow’s trading. I suggest to just wait for tmr closing first. Those who are a bit more aggressive may want to consider to long this counter if it trades above 205.

Energi Mega: As per Darma Henwa. Looks like it is finding a support. But it would not be a long unless it closes above 355.

Just in case you may wonder why I didn’t pick those runners/winners today e.g. Aneka, Timah, etc.  My reasoning: If the stock has already run, good chance that the big boys are in position and perhaps retail crowds are already in position, waiting to take profit. Of cos, the stock may carry on to move assuming the fundamentals are strong. Just that the risk to buy at higher price is higher.

Everyone knows to make $$$ in the market is to buy low and sell high or sell high and buy low. So isn’t it a good opportunity to buy stocks who are already in a downtrend. Of cos, I’m not a contrarion. I will only buy when the stocks is showing signs of recovery. Hence I shall pick those stocks that are on a downtrend and are finding a support based on Diff to long and those stocks that are on a uptrend and are finding a resistance  to short.

I’ve mentioned that Hang Seng Futures (HK) is likely to break below Diff S/L (19322) and sell down based on the chart formation.

Well… I was wrong. SHUCKS!!!

CK bei zhun (Hokkien: Not accurate) Waste my time reading the blog… (#@&$(… blah blah blah

But does it really matter??? Cos I’m not losing money right? Once again, Diff Technique (part of KH techniques) can’t tell me with 100% certainty whether the market is going to end positive or negative. I’m not God nor a Big Boy there’s no way I can control how the market moves. However, I’m just an investigator… constantly looking out for signs of Big Boy (Institution) in play…

My game plan is simple: Follow the Big Boys (aka the 10% that is consistently making $$$ in the market)… Of cos, then your next question will be “How?” Sorry to disappoint… I can only tell base on probability… unless I personally know a Big Boy myself (In that case, I will forgo all technical… If Big Boy buy, I will buy else I will sell… right?)

Why is it a better short than long?Let’s look at HK when it closed yesterday…

KH Techniques aside… Simply on the chart patterns, My risk to short is from Today’s OP price 19387 to the Day High (DH) of 21st Jul 19657. But where is my potential loss… From Today’s OP to potentially Day Low (DL) of 13th Jul right? So simply base on risk and reward, it would be more prudent to short than to long. Of cos, does it necessary means that the market will SURE to go down? Obviously not as the market has proven to us this morning.

Trading is about managing odds. We trade when the odds of winning are high but doesn’t mean that it will definitely win right. Hence, there is always a need for us to put in our stop loss. At the end of the day, price action rules. I, for one, have lost dearly trying to fight the market. Yes, Someday I do win i.e. Sell at DH, Buy at DL. Do I feel good? EXTREMELY But at the end of the day, I realise I lose more trying to outsmart the market. That’s when I realise… What is REALLY Important? To make max profit daily or to make consistent profit? Of cos it would be good to milk the market for all its worth but seriously… How many of us have the emotional tenacity and capital to do that???

Clue 1: 21st Jul closing price (CLP)

Notice that the closing on 21st July is lower than the close of 20th July despite breaking the high of 20th July? Am I right to say that the whole world knows that it is a buy when it break DH and a sell when it break DL?  So why is it that the market can come down despite everyone being bullish on HK? Hmmm… Who is selling? Notice that 21st Jul ended off below its Opening Price (OP)? Am I right to say that whoever bought at the DH and Closing of 20th Jul aren’t feeling that comfortable?

Clue 2: 22th Jul CLP

When HK broke previous DH of 21st Jul but then sell down to below DL of 21st Jul, notice how fast the selling is… How many stops are triggered especially when HK did edge up higher upon opening in early trading? Sometime is not right already. Obviously there are people pressing down the market? Are they big boys manipulating the market so that HK ran today or simply investors getting frightened and therefore cutting their losses? I wouldn’t be able to tell u that. All I know is there are signals of selling and it make sense in terms of profit and loss to short

So conclusion

Yup. It a good short if it breaks Diff S/L. But too bad, it didn’t. So What do I do? Chase the market? Of cos, the beauty of KH Techniques is that it will give you an indication when the market sentiment has changed. Instead of buying at the lower band (LB) of my Uptrend (UT) KH Channel (19605), I chose to buy at 19658 (1 point above my Diff R/L) and have taken profit at 19771. Why do I take profit so fast? Didn’t CK kept saying have to let profit run? Right… But I should hold my position on my short side right? Since the odds of winning is higher on the short side than long side.

All these are covered in KH Mentoring Programme. Teaching techniques are easy… Everyone can do that… But truly understanding the psychology behind the buyers and sellers and thereby taking a calculated risk is priceless! Technique may fail but Market Psychology will not!!! Simple. Why? Cos Human Behavior doesn’t change! Therefore, market kept making the same pattern again and again regardless of time and place!

Hahaha… Guess I’ve gone a bit excited… Got to take a break now… HK needs to stay above 19605 for futher upside. Should i failed to stay above 19549 by 2 pm time, do expect more selling to come.

Cheers!

CK

I understand there is a growing Futures community in Indonesia. It seems that quite a number of traders are exposed to Asian index and especially forex (Thanks to a number of FX Gurus active in Indonesia!)

My Futures pick would be Hang Seng Futures (HK) based on Diff

HK will be a short below 19322 (Diff S/L) and is likely to test the support at 19040 in today’s trading.

Remember to trail your profit while keep your losses small.

Good luck in trading!

CK

Took a nap cos I was busy preparing for the upcoming Diff Preview this coming 5th and 6th Aug.

As promised, here is an example of the application of the Diff Indicator Technique:

Frankly, I wasn’t too sure about doing it but my mentor Kelvin wanted me to give some examples. Being a skeptic myself, any “back testing” or “hindsight testing” are all crap to me (Sorry for the language but that’s how I exactly felt). A skeptic will most likely dismiss whatever I’m going to say later cos “Oh… Surely this joker will be smart enough to show me data to justify Diff Indicator Technique works like MAGIC…. blah… blah… blah… ”

Before I carry on further, Let me assure you that I will present as objective as possible an assessment of the Diff technique. Personally, I will avoid the March period since everyone knows that that is when the Asian markets recover from the bottom of selling. Any buying of stocks, regardless of counters, will almost guarantee you excellent rewards (Duh… Anyone can make $$$… So what’s special about Diff?)

Let me then choose a period whereby the stock market isn’t doing well… How about Beginning of this year, Jan 2009, 2 months before the rally…. where, supposedly, volume is thin, Fear is in the air, Stocks are swinging like mad! hahahaha….

I’m really pushing my luck… Here goes….

Advantage of Diff

1) Very Simple to Use. You need to only draw 2 lines and you will know exactly when to long, short or wait.

2) Very useful Market Sentiment Indicator. Wouldn’t it be nice to immediately know whether the market bullish or bearish with just a look?

3) No Need to Stare at the Screen. This is by far the best advantage of Diff cos you know the entry price before the market starts trading! I don’t believe in being a slave to trading. Trading should be a tool for me to make $$$ not otherwise… Errr…. Right?

4) Suitable for Position/Long Term Trading. Wonder where is a better price to buy when the stock market is selling. Fret no further… Diff to the rescue.

Let’s take a look at Aneka Tambang in Jan. Note that Diff changes with time. So I’m preparing 4 charts for your reference.

Diff Peak was formed in Dec. But since we would like to see how Diff works for the entire month of Jan. I shall start exactly on 5th Jan… to be fair…

As mentioned, there are 2 lines: The top one is call Diff Resistance Line (Diff R/L) and the bottom is the Diff Support Line (Diff S/L). The rule is simple. Buy when it break Diff R/L. Sell when it break Diff S/L. Don’t trade when it trades in between.

Strictly there are more to Diff but I shall take the more aggressive approach i.e. Trader A approach (This will be covered more in the Diff Workshop hence I’m not privilledged to share).

Jan 5: Make Profit (long)

Jan 6: No Trade

Jan 7: Make Profit (long)

Jan 8: No Trade

Jan 9: Lose $$$ (Short)

Jan 12: No Trade

Jan 13: Make $$$ (Short)

Jan 14: Make $$$ (Short)

Jan 15: Make $$$ (Short)

Jan 16: Lose $$$ (Short)

Jan 19: Lose $$$ (Short)

Jan 20: No Trade

Jan 21: Lose $$$ (Long)

Jan 22: No Trade

Jan 23: Lose Commission

Jan 27: No Trade

Jan 28: No Trade

Jan 29: No Trade

Jan 30: Make $$$ (Long)

Let’s subject Diff to Acid Test – We shall assume that the profit level and Stop loss level is the same i.e. Profit to Risk Ratio is 1:1. Obviously for Diff Technique, there is a system to trail your profit (Letting your profit run) and keeping your losses minimun. Anyway for discussion purpose, the probability of win is 6:4 assuming u trade everyday. Obviously if I tabulate the winnings and losses, we will still make profit at the end of the day. Of cos this is the worst case scenerio, how about the actual technique….???

I struggled whether to go the extra step but hey… I realised my job is not to convince you that Diff is the best technique aka Holy Grail. (No point actually cos the skeptics would just simply dismissed it as data manipulation since they don’t know the technique). In fact, what I really want to share is Diff does help you to make consistent profit. Isn’t that more important considering that many traders lose $$$ in the market?

Hmm… Food for thought…

CK

The simple ans is yes.

A more complete answer would be “Yes It should on stocks with sufficient liquidity”

Yup. A technique is just a technique by itself. For the market to move, there needs to be sufficient interest on this counter – Interested buyers who are prepared to buy at a higher price as they felt that the prices are going higher. And interested sellers who are willing to sell to them.

Hence, my rule:

1) If the stock average volume traded is less than 10M, I wouldn’t be too inclined to trade the stock.

2) Price should ideally be more than 500 for sufficient trading range on a daily basis.

Let me show you how Diff works on a few Indonesian stocks for a start in my next few postings. (I will try to be objective as possible, you can always verify the data on your trading charts).

Stay tuned…

I never expect the day would come for me to start my very own blog on trading.

Since young, I was always captivated by movies depicting the rise and fall of stock market… How rags can turn into riches through the mysterious world of trading… Like most beginners, I would sign up for as many courses as possible. But the problem I faced was the more I learn, the more confused I got – Different trainers would use different parameters even for the same indicators. So who is correct then? Is there a holy grail system in trading? That was the basis of my “hunt for the holy grail”… And so I thought….

Just to give an example… I’m sure everyone is exposed to the concept of RSI and Stoch. While different trainers may set their parameters different for stoch (5,3,3 etc), there seems to be a common concensus: “Oh… If the Stoch can rise up above to 10 or 20 level (Vary between Trainers) from a low of 0, it is a good indication of buying the stock.” Of cos, it works initially. But magically, everything starts to fall apart: The moment I long when it breaks the 20% level, my stock price will magically stall there and started to slide down to trigger my stop loss before moving higher

So am I wrong to follow the technique? Are the trainers whom I faithfully idolize fail me? What went wrong?

Frankly, I begin to be disillusionised because of the losses I make – No matter how hard I tried to change the parameters to beat the market, Market somehow has this ability to elude me?!?!

It was only when I got to know Kelvin Han in Singapore – where he started to show me the actual psychology involved in the buying and selling of stocks – I begin to appreciate what is truly the stock or futures market. Exciting… Intriguing… And a CLEAR reflection of the human psychology namely Greed and Fear.

I will be showing you all one of his simplest technique, Diff Indicator. How to profit consistently from this technique? I realize that most traders are afraid to enter position despite the signal is clear. I hope that, through this blog, I will show the importance of consistency… That it is possible to make consistent $$$ from the market using very simple techniques…. That there is no need for you to be on the screen to watch “price action”

Of cos, Nothing is 100% and same for Diff…

Kudos to Diff!