Saturday, April 13, 2019

The OBJECTIVE determines the route really???

As the saying goes ... MAN PLANs GOD Decides!!!

We can draw up the whole game plan from the start to the objective. But we can't determine the conditions of the route. Will it be a smooth, bumpy or whirlwind journey? If we can understand the possible different difficult conditions we will encounter and well prepared for them, automatically there will no longer be any surprises along the journey.

Yes, each journey is never a smooth ride all the way. A good example will be sailing a ship like the old days without ENGINE except depending on wind! The moment we depart from the port with the sail up, the ship will encounter all sorts of conditions on water. Strong wind, no wind, rain, shine even rough waves. Safe navigation to the destiny is about having trained to anticipate all the above that can be detrimental to ship. When the ship is cruising near the coast, it has to watch out for shallow water. Now one has to understand both the conditions above and below water.      

It is no different from trading. But trading is less complicated. One has to understand the conditions of your product and the overall market condition. We have less combinations for trend direction versus velocity (gradient). The actual conditions from the start to the end of EACH trend is rather predictable except the LENGTH and TIME taken to complete the move.

Every trend in ONE direction (major trend) will encounter some reverse trends (intermediate trends) in the opposite direction but NOT powerful enough to change the Major trend. Ultimately the major trend will change or reverse when the time is up or has arrived!

All those market calls is NOT going to work as long the TIME and SEASON ripe for the cycle change is not due. Over the years I have seen many people pretending to know about the market got smashed when they attempted be smart. Some will claim the candle pattern formation is fool proof and confidently shouting market reversal. Well, the market most likely pause BUT continue the journey further. Some Fibonacci believers will even state market reversal base market reaching a certain level. Again market continue to go even further. Why? Simply because the TIME for the cycle change has not come!

Unfortunately, this is the truth and this is how market actually works. CYCLE and TIMING. The rest are simply pure rubbish.

The chart is the most beautiful piece of art if one understand the flow message. It is just another piece of random rubbish graffiti if you can't see.

Always remember, it is highly unlikely that we can see exact replica of each trend but it is possible to see similarity of different intensity. IF any exact replica exists, it is merely coincidence.

The BIGGEST and GREATEST challenge that one will definitely face when following the chart is about CONFIDENCE when you hit a bumpy ride. But if you understand the CYCLE MORPHOLOGY, you can sleep soundly through the temporary bumpy ride for you know the cycle has not ended!
  
   

  

Friday, April 12, 2019

Difficult Market or a Confused mind? Nincompoop!!!

The most difficult part about learning is a WRONG start and a wrong path that lead to chaotic confusion. Or you have a RIGHT start and a right path that show you ENLIGHTENMENT.

Despite all the BS and Rubbish you get to hear from others, price Trend can only exist in only 1 of the 3 directions below. ONLY 1 direction not HYBRID combination.

1) UP or 2) DOWN or 3) SIDE-WAY. (never a hybrid of any 2).

What you need to understand next is the strength or the power of the UP or DOWN trend above can exist in only 1 of the 3 different conditions below when you see the PRICE vs TIME chart .

a) Steep (greater than 45 degree gradient/slope)

b) Normal (45 degrees gradient/slope)

c) Flattish (less than 45 degrees gradient/slope)

Having said the above, the combination will be Trend+Gradient is the behavior of the trend.

The total confusion starts when you get a "nincompoop" teaching you all the rest of the IRRELEVANT and IMMATERIAL rubbish about Candle, Fibonacci, Volume, Over bought, Astrology ... and too many rubbish for me to list including the grand old academic  Financial Economic analysis.

When the time has come and is ripe for the trend to change or turn, IT will change and it will turn irrespective of  what you read or hear in the media. Whether you got positions or not is indifferent to the market. It will change on its own freewill or accord.

If the time to turn has not arrive, it is not going to turn even if you threaten to jump into the sea or promised you behave or even donate your profits!!!!

How more logically simple can this get!!!!

Yes they are tools that you can use to track the TREND direction and the Gradient. That is as good as it gets and as simple as it can be! You can bury the rest IF a simple concept like this you don't even have an answer and you want to embark on a more confusing difficult approach.  

If someone walks up to you and tell you how he or she predicted each and every market turns, well he or she should be the Billionaire greater than anyone of the names you hear in Fund Management! Make sense? Logical?

Now when you get a "nincompoop" teaching, do you think you will produce GENIUS?

Sometime and in fact most of the time I seriously wonder when it come to financial matters, suddenly commonsense lost its way or got kidnap.
 

Tuesday, April 9, 2019

The SUBJECT (TOPIC) ... THE TEACHER

One of the things I learn in life is about Making Things Simple, Interesting and Easy to Understand especially if the subject is perceived to be "dry".

In many circumstances, the teacher's role goes beyond "teaching". If the teacher is passionate about his or her work, she need to reposition herself in the shoe of the one listening to her lectures. To try understand from the view of the students, the confusions or why students fail to grasp the message.

I have encountered teachers who use real life examples to explain the concepts and it is stuck in my mind forever. I have also experienced teachers who came to teach and unable to relate. Well, needless to say what went in came out exactly and nothing stuck in my mind.

When WE are on the BUY side of the GAME, we must determine if we are on the right path and position. Has it got limited downside? Is it on the way up? Or is it the beginning to go up? Or it is beginning to come down? Has it got limited upside?

Most of time the BUY is done without understanding the situation and the overall. Once you have written down your questions, the next step is to understand what tools are appropriate. What is the reliability of the tools? Have the tools failed to work? If yes, when and how often?

Once you manage to establish the Rules and the system, you minimize your risks and to be honest it can very boringly monotonous. Some smarties will vouch the inter and intra relationships between A and B and C. My own experience is IT WORKS SOMETIME and NOT ALL THE TIME. It is easier and less problematic when you try to make a conclusion to just study the matter INDEPENDENTLY without attempting to link it to others. Each "moving" matter has its own cycle and it is highly unlikely it will be 100% synch with others all the time.

When you look at something, what you see if the thing as a WHOLE before you pry into the inner details. When you try to reverse the process, it will be a total failure. 
     

Sunday, April 7, 2019

The Chart - Are you a Driver or a mechanic or Driver and Mechanic

One has to decide if you are a Driver, a mechanic or both!!!

It will be very good if you know how to write some program or indicators for your charting software but this is NOT mandatory to learn how to exploit the opportunities. It is like if you are a mechanic and a rally driver, it is very good.

If you know how to drive but has ZERO idea about how a car mechanically works, you can still travel from point A to your destination safely assuming you know how to read the traffic on the road.

If you are a good mechanic, it does not translate into a good driver!!!!

Most of the time when you send your PC to be fixed due to hardware or WINDOWS problem, they are rectified by technicians who probably does not know how to trade! But they know how to fix your PC problems.

So we should focus on driving, drive well, drive safe and enjoy driving.  As long as you can do those I just mentioned than you are on the right track.

What do you need to enjoy driving? I will leave that for next update!

It is not about how much you know about the car that determines how well you can drive. It is how well you know about navigating in different traffic conditions and terrains that will be your determinant assuming you have a problem free car (in USA we say it is not a LEMON!) 

Sunday, March 31, 2019

1,000,001 reasons

Human are so mentally wired to SEEK employment and preferably LIFE EMPLOYMENT!!!. Actually this is the most disservice one can do to yourself. It is about selling your TIME for money. It is about your TIME buyer benefiting not only your time but your brains as well!!! Now let us think if you seriously do think if you are capable of using your time and your brains for your own benefits.

When we deal with money, we are dealing with either profits or losses. Fine.... when we make profit. What happen when we make losses??? Do we buried them and avoid analyzing how it happened? Avoid this matter completely and never re-open???

Losses to me are more precious than gold or diamonds. The losses allow me to discover my weaknesses and where I need to improve and beef up my defense.

Almost all the stock pickers are ONE way mind track. BUY mindset. Looking and digging for stock(s) to buy. Next it must be supported by 1001 reasons the selection is a BUY. All stock pickers are always beating their chest to tell the world their stars. How many will blow their trumpets to announce the failed fallen starts despite back by 1001 good reasons why you should be holding the stocks!!!

Over the last 31 years, trading my own funds, managing  private portfolios, advising clients, .........and the list goes on .......one of the worst kind of people I met are the ones that will bury their losses, close the books and never even take the effort to try understand what happened, how did they make the fatal mistakes and how to improve to avoid mistakes in future. The group of people will conveniently walk away and try something else. Unfortunately there are many of such people.

Are the reason to support why a particular stock move up important???? Truthfully, my honest answer is NO. Why? There are 1001 people or more with 1,000,001 different reasons why the stocks should go UP. But what is critical and less OBVIOUS and BLIND to all if not most are ...people are willing to pay more to keep the price UP for the 1,000,001 reasons including your reason(s).

Or in simple English, there are greater fools willing to buy higher believing price will continue to go up. Some will rationalize with Horses mouth, fundamentals, candles ... u name them ... we got them.

Over the year, every weekend is a time for me to reflect and re-look in making my system SIMPLER and SIMPLER over time knowing there is a LIMIT to how long and how far a price can move. As long as the there are people willing to buy higher, than the price will continue to rise or at least not decline. We need the last greater fool to jump in than we will see price stop rising or start to decline. To look at the opposite when people are willing to sell lower, price will continue to fall or at least not rise. Again, we will need the last desperate seller to sell out only than we will see price stop falling or start to rise.

I am talking about COMMONSENSE instead of the 1,000,001 reasons of WHYs!!!!

The inconsistent performance is due to people so wired up with 1,000,001 reasons and so blind to what is OBVIOUS  
  

Sunday, March 17, 2019

Abuses and misrepresentations of chart analysis ....the road to hell

If anyone who has taken classes in Finance, I can assure you the topic of Chart Analysis or maybe Technical Analysis is definitely blackout from the topic. The next source of chart analysis is from published materials or internet or maybe some talk shows.

The biggest idea that come to people who are interested in this field is all about target predictions like a fortune teller or fengshui. This is the wrong way to approach market analysis using charts. Well for commercial reasons this charting software will be of no value or interest if it is not capable of making predictions. The problem with such predictive approach is dangerous as some predictions may come true and some might not. Well this is why it is called VOODOO analysis.

If one is to be patient to learn and understand the value and correct approach to chart analysis, it is about trying to understand what it has done in the past, what it is doing now and what it is most likely to do in the future. While the classic academic financial valuation analysis also uses historical data to predict the future,  the mathematical approach makes it "credible".

Chart is about Direction. Direction is about Trend. Trend is about momentum. Momentum is about Demand. Demand is about Willingness. Willingness is about Appetite. It is all about the ability to repeat the past till it is exhausted. This is a simple one sentence what chart trend analysis is all about.

Like any other product, without adding the ability to predict where and when it will end, this chart trend analysis will be dry and boring. When you add this in... it become unstable.

In my years of guiding and teaching or sharing what chart trend analysis is all about ... the crux of this topic ... is about the trend, the ability to repeat what happen yesterday and the sustainability. PREDICTION is last on my list and most of the time it is not in the list.

IF you do not know if you can understand with good certainty the ability of yesterday action will be repeated today, HOW ON EARTH ARE YOU GOING TO PREDICT THE FUTURE!!!!

If the trend is intact has no sign of weakness or going to stall, it doesn't matter what the volume is despite all the books mentioned about trend and volume. It doesn't matter what the candle or bar looks like. They can be long or short candles and if the trend is not going to change or due for a change, it is not going to change irrespective of what fancy names you are giving to the candles formations.

Unfortunately they are many people trying to sell snake oil to make a living. It is when you did not profit consistently or loss your money only than you know you are a victim of the unscrupulous profiteers and your own mental trap.

It is all about asking simple commonsense questions. Remembers, predictions take time. Most of time it goes the opposite before it goes the right direction.

A simple strategy is and can be more effectively potent than a complicated one. What if it exceeds your predictions or fall short. If predictions can't be right on the dot, why bother!!!!