Again and again I stare at the charts, looking back to the days I started my first move in USD-YEN physical trade with my monthly pay in Osaka (1988). That was the first time I do it on my own without any tools except tracking the daily USD YEN quote at the bank desk. Just price alone. It was much later in 1993 that I learn about the existence of price charts and indicators tools.
There are some books in Malaysia book stores and not the proliferation of books from different authors like we see today if one get to Kinokuniya Singapore. Steve Nison's popularization of Candlestick was the fashion buzzword.
After learning all the different techniques over the years, I have concluded that I can safely place the finance economic (fundamental) knowledge from my graduate school in the closet and focus on the charts. This is more true with the markets I am trading. The idea of financial analysis is more apt to determine the target company is a good candidate for bankruptcy or not.That is best it can do and DOES NOT GUARANTEE that this analysis in anyway provides fool proof conclusions. There are risk that the financial statements are contaminated.
What I do learn is a stock trade at a particular price for its own reasons. Be it high or low! That is what market believes the price should be. Some can be high PE others can be low PE. I believe market is smart enough and it is up to us to accept.
My focus has been a TOP down approach for stocks. Selecting stocks within the index counters that are low priced and with long historical of 10 years minimum. This allows me to study the stocks trend movement.
The name of the Game IF one intends to LONG/BUY be it stocks or futures, it to enter WHEN the market change from DOWN to UP or Stopped falling. Yes... it is WHEN. You do not want to buy into a position at a certain price and to see it continue to fall. IT does not matter what the price is when it is time to go up after a prolong fall. The price one targets may never come at all if the TIME for the trend to change has come!!! Especially if the time to change has arrived at a higher level than you hope!!!
Sometimes we do get lucky that the market decides to change trend at the price level we hope. Most of the time it never happen. The financial analytical school has a draw back which I call it PRICE ANCHOR BIAS.
Over the years I have unwind, unlearn and unloaded the formal education bias. The pundits have been calling the super bull DJIA to crash. I guess this pundits has never experience what a super bull is like and to be honest I have never heard the word super bull in class. What are the characteristics of super bull? Do you think I learnt that during graduate school? No.
The weakness of the formal education is the analysis allude a certain price a BUY/SELL or EXPENSIVE/CHEAP but never address IF it is the RIGHT TIME to act!!1
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