Half Time Score…. The bulls are leading against the bears… or is it???
Posted by admin in Market AnalysisDid you trade?
This is the question I love to ask my graduates in the morning.
Cos if you don’t, then the question to ask is why? Is it a conscious decision or are you acting out of fear?
Why fear the market when you are prepared to “invest a certain amount of $$$”?
Of cos to be truthful, I was, like most, wonder “When will Asian markets pull back? The rally has been on going for toooooo long. Surely it had to pull back right?”
Oh my, the moment I harbor such thought, my internal alarm starts blaring! “Dear CK, are you putting your views in the market or are you listening and following faithfully to the price action?”
Taking the example of HK:
Reasons to long: 1) Upside TSC, 2) Closed above Diff R/L
Reasons to short: 2) Open below V3Go SC, 2) W% near extreme
Hence, my odds to win on either the long or short side are almost the same i.e. 50-50.
Next, In terms of Risk to Reward, to long carries more risk than to short. Of cos, depending on your left, I could argue that the upside is more profitable than the downside given the heavy sell down since end 2007. But the question is are you prepared to risk almost 10000 points in HK in return for potential 40000 profit???
When I saw the regional market is trading higher than OP creating new high with the exception of TW, I’m prepared to go long since the odds of winning on the long side is favorable but I knew that market is likely to sell down first due to W%. Indeed, when market open, I longed at OP + 1 and it started coming off, but luckily it missed by stop loss level (-1V) by a few points before rallying up to almost (3V). Where do I take profit? Most will wonder… Sad to disappoint but I took profit at 266 despite the market edging another 100 plus points higher. Do I feel heart pain? I would be lying if I told you I’m not (Pls… I’m still human being) But looked at the market, the selling came in fast and furious just before lunch right, depicting fear in the market.
The bottomline is there is no right or wrong just trading on the higher odds of winning. How do I know the HK will not trigger my stop loss? Ans: I don’t know. If it triggers how? Cut loss and re-enter again at OP + 1. Simple. Why not short? Well, I had opportunities to and I used to flip my position like nobody biz… But I wanna limit myself from overtrading so I just chose the long side for the morning… and I was just lucky. I mean… Market could have slam down like nobody biz in the morning right? How would I know? Just that the odds of it happening is low since the Asian markets are generally bullish i.e. trading above OP.
So what’s my expectation of the market? Once again, my personal view have no bearance on the market (I mean… who am I right?.. hahaha)
1) Good chance of NK profit taking further leading to a possible gap down in HK.
2) HK likely to sell down further on sell stops triggered but should it recover… Good chance of HK testing 20500 level before coming off towards the close.
So what’s the game plan?
I shall wait for HK to break below OP to short for quick profit (i.e. if I see a support in the market, I will take my profit) if it doesn’t, I may consider to long above OP but OP – 1 will definitely be cut loss (Aggressive trader).
Good Luck!
CK
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