Sunday, July 26, 2015

Market like Language - Alexander Elder

Alexander Elder

"The market speaks to us in its own language, which we can learn like any other.  In the beginning, a foreign language may feel incomprehensible, but the longer you study and the more you hang out with locals and practice speaking, the more you understand.  You can get some basic working knowledge in a few months, and after a few years you can become fluent in it."

Financial Market Enterpreneur - CAN YOU ???????

It has been quite a few months since I last penned my blog. I was busy trading the CBOT and FX markets. Too many books have been written about the QUICK FIX to successful trading. No one dare to mention the path is full of booby traps, robbers and killers. It dawned to me that too many materials covered WHAT YOU ARE SUPPOSE TO DO instead of WHAT YOU ARE NOT SUPPOSE TO DO!!!! IF you can eliminate what you are not suppose to do, the rest is you are permitted to do!!!!!! Do not look NEGATIVITY in a bad light. Look it from the positive angle and you shall see TRUTH in a different dimension.   

Can you fellow traders are able to discard the mentality of BUY or SELL signals? 

Can you be interested to understand TREND? 

Can you be less engrossed with PREDICTIONS? 

Can you seriously commit to LEARNING? 

Can you sit back and feel safe with open positions?  

Can you unlearn and let go the mental garbage or obstacles?

Can you look at the macro and not the micro?

Can you weather the storm?

Can you be less impulsive?

Can you trust a reliable system faithfully?  

The more NO ,,, the less likely you are able to succeed as FINANCIAL MARKET ENTREPRENEUR.  

Saturday, May 9, 2015

The Wonder (Wander???) of Trend

The beauty of trend is it almost never and rarely moves in a straight line. The only time trend move in a straight line is ALWAYS briefly for a short period vertically either UP or DOWN. This is caused by many factors which are only academic. Most if not nearly all the time trend moves in non-uniform oscillating waves in ONE direction. Such action will persist until the task is completed and changes to a new direction.

Everyone will never cease to explain and rationalize the price actions using different techniques be it "fundamental or technical". To complicate matter many different variables are introduced into the analysis. An objective analysis without adulteration and complication should and must address simple basic issues assessing the CURRENT DIRECTION, UNDERLYING STRENGTH, PROBABLE NEXT ACTION and GPS POSITION. Without understanding these, it is futile and risky to act. Always reconfirm the analysis with higher time frames.

Often the mistakes are committed when one act on a lower time frame without reconfirming with the higher time frames if they are all in synch. This is more prominent with intraday traders expecting and hoping for a quick kill. A top reversal in a 5 minute chart if not confirmed by 30 or 60 minutes (hourly) chart is not a SIGNIFICANT reversal and most likely it is only a temporary short term reversal follow by a quick retracement subsequently climbing higher to the disillusioned 5m trader.  Yes, it is emotionally and mentally challenging to wait for all time frames to synch as it is inherent human nature to preempt and the need to be RIGHT (another ego journey).

The quest to be profitable and successful trader is easy but again not equates to "easy". Generally, it is not the system factor but the human factor that need to be changed. The ability to analyze OBJECTIVELY without OPINION BIAS. The ability to follow the RULES without HESITATION.

One should not fool himself or herself to think that a better or new system is going to overcome all the obstacles. The onus is on the trader to have a complete and comprehensive analysis what he or she expects and what is layout to achieve the objective in a systematic manner.

    
Light when shines as seen by naked eyes as directional uniform luminous. An atomic microscopic analysis of the light actually appears as wave components. It has a directional path with waves oscillating in the direction of the projection.

Similarly when we look at price trend, it moves in the direction of the trend except it is not uniformly oscillating like light waves. It is immaterial to understand and rationalize why the trend waves are not uniformly enveloping the directional trend. It is critical to know and understand that the oscillation is not and never will be perfect equal waves replicating like light waves but it will non-uniform waves oscillating in the trend direction until it is exhausted. 
       


  

Sunday, March 29, 2015

Simple Thing

Finding opportunities in markets is never a difficult. It is we as human who makes things difficult with complicated approach. 
The ideas of adding many ingredients (economics and esocentric charting techniques) to a simple recipe results in a disastrous product. 

The most simple as basic question one should address is why is pricing continually moving in the same direction and reverse or pause? What is encouraging this behavior?

Most people are only keen to look for leaders to follow, to predict the TOP and LOW. Predicting is easy. Will the predicted levels be achieved, surpassed or not is not for us to determine. Market will decide. 

The only TRUTH I know is as long as there are people willing to buy higher, price will continue to rise and vice-versa. Can it be anymore complicated or simpler? NO. That is the truth.

The follies of people trying to find the secret formula can never be found as long as the basic truth is not understood. 


Thursday, March 26, 2015

WHAT IT SHOULD BE versus WHAT IT IS.

Over the years, financial markets have evolved into a new creature compared to when my first foray back in 1990. One school of thought is prices are dictated by the economic financial factors and the other is the non-economic factors.

My honest observation is that I conclude cycles exist 1) when prices are in coherent state with the economic derived financial valuation according to textbook and 2)there is another cycle when prices will remain in a state that contradicts the valuations better known as IRRATIONAL.

Irrespective how we want to view the market trend be it align or non-align with our expectation per educated valuation it goes to tell us that IT DON MATTER what we think the valuation should be simply because market has its own agenda and direction.

This is the challenge that all financial educated based analysis will face because of the training and bias in thoughts.

WHAT IT SHOULD BE versus WHAT IT IS. 

Market trends is not driven by economic valuation alone. It is a combination of many factors. The most powerful factor is PERCEPTION and EMOTION.

Perception controls emotion and overrides the economics. Perception controls confidence. Confidence swings market trend back and forth depending which force is stronger. A state of range trade is a draw between the UP and DOWN forces. The one with the upper hand will lead the trend direction.

QE 1, 2, 3 did not weakened USD despite the many soothsayers on USD on the contrary USD gained strength. There is no sign it is letting down the "BULLS". Now how will the economics justify such ABNORMALITY? 

To be honest what I learned in school is when supply increases, prices drop. I can't explain this per textbook financial economics simply because the dogmatic theory cannot accept such situation.

Beware of what you know coz it is only half of the story.  
 

   

Sunday, February 1, 2015

Do you really know what you want, what you have and what you lack ???

Confidence develops when you are certain when outcomes are according to your expectation. Fear develops when things don't turn out as you expected after applying the same methods that produced the expected results earlier. Fears create DOUBTS and leads to confidence LOST. This is a natural progression when one swings between CONFIDENCE - DOUBTS - FEAR especially when you are trading, speculating or investing (whatever name you want to call it) in financial markets.

Luckily market are easier to manage.One needs to understand confidence is not gained over night and it is a LONG LONG LONG road to success. Success leads to confidence. Failure lead to doubt.

The internal battle is and basic foundation to overcoming fear and sustaining profitable venture is to have a CONSISTENTLY RELIABLE and PROFITABLE technique or system that survives all market conditions (up, sideway and down) that helps you make decision consistently profitable.

It is the human weakness and desire to sell at the highest point and buy at the lowest level. This shift one focus to "perfecting" the technique to pick points. In the long run it is less stressful to be able to work with a system that can identify the LOW RISK HIGH REWARD opportunities.

It is impossible to commit all the funds at one go when the market peaks out or bottom outs. It is more likely we will be taking positions in stages assuming one has sufficient funds and buffer range.

One needs to understand if your objective is to pick market extreme points or make profits consistently. This will ultimately decide your "future".

CUT LOSS and STOP LOSS are only for people who do not know the RRR (Risk Reward Ratio) and limited funds (poor planning). If you have a system and a consistently profitable reliable system that can guide you through, why would you want to indiscriminately take positions and continuosly put Stop Loss and Cut Loss.

Yes, all the seminars and books will tell you to limit your losses to X% of capital .. blah blah blah. If you have a system that can tell you or locate the market bearing, you should be able to next deploy a plan or strategy to act accordingly. This systematic techqnique should and must work across all different markets and instruments not forgetting time frames.

I have been trading for more than 22 years starting from financial analysis, rumors, charting, system and developing system in forex, stocks, futures, commodities and agricultural options. Evolving into a more systematic strategic trader from the indiscriminate irresponsible haphazard trading.

Do you really know what you want, what you have and what you lack ???