Sunday, September 11, 2022

So many considerations - FUTILITY

Anyone who is literate and is NOT dormant in the financial markets, will be reading chapters of manuscripts about trading and investing with all sorts of ideas and recommendations. Irrespective whether one embark on the chart or classical financials, he or she is bound to develop list consideration points.

The essence to all the different approaches is we must accept and recognize that we all will make money only when our open positions are in the same direction as the trend.

We can have the most complicated and sophisticated analysis BUT if our positions are AGAINST the direction of the market trend, the answer is we will end up losing

It does not matter whether one use classical finance or charts or tossing a coin or even random choice, as long as our positions are NOT align with the prevailing trend directions, we will end up naked.

There are millions of traders and it is clear that there will be 2 different opinions within the same methodology.

The market trend direction is INDEPENDENT and not affected by any opinion except it's own directional force.

Over the years, I have come across people taking opinions disagreements personally and very vocal insisting their own analysis is correct and the truth.

One can provide the best analysis per text materials and not making money if one is NOT in the same direction with the market trend.

One can merely analyze the market direction nothing complicated or sophisticated and place the positions in the direction of the existing trend direction walking away with profits.

 

WELL ... THAT IS WHAT MARKET IS ALL ABOUT

 

  

   

Tuesday, August 30, 2022

Elusive success? or Chasing shadows?

Why do we have inconsistent performance when make our moves in the market?

Inconsistent meaning we have profitable moves and losses.

Did we sit and reflect why such situation happen?

Is it due to knowledge? Skill? System? Time frames? 

I strongly believe it has least to do with knowledge because they are people who have been making money consistently over the years merely being lucky or just happen to be on the same page direction as the Trend direction. Plain lucky.

There is another group who are consistent winner because they have been deploying simple tools and system to be on the same page riding the trend direction on the same time frame.

If someone is experiencing yo-yo results, it is highly probable that, it is due to TIME frame selection. Switching erratically across different time frames losing focus on the main and major time frame trend and change.

While it is normal to claim and take self-credits for profits, but blame others for the losses, such behavior will only continue to produce mediocre and inconsistent results.

Until and unless one begins to accept and address the failures - THE CAUSE FACTOR, overcoming the hurdle will remain elusive and one can continue to chase own shadow         

Friday, July 29, 2022

Transformation Development

Market is always right. Is this true? Is the market really concerned if it is RIGHT or WRONG?

In my opinion market is IGNORANT of everything and anything. Market will do anything it is going to do irrespective of anyone's views and opinions.

MARKET IS NOT AWARE and IS NOT CONCERNED about others views and opinions. Market don't know what is right and wrong. Market has NO grading of its own action. Market has no benchmark of itself.  

Many times in the past, I struggled with market when market move in the opposite of my positions. My positions are products of my analytical views which in my opinion does not contradict the old school of FunnyMental Analysis.

It took me a long time and a personal challenge to BLEND into the market and forgo my personal views.

Is the market WRONG when we are in the losing position? We never say the market is right. When we are making money, did we say market is wrong? All we say is WE ARE RIGHT.

All this RIGHT and WRONG is another set of lingo that I need to remove from my vocabulary.

Market is NOT and NEVER about RIGHT or WRONG.

Market is about doing what the MAJORITY wants and doing it with least effort easily. 

We struggle in the market because we are not able to BLEND into the trend. We continue to struggle against mental conditioning what market SHOULD do instead of giving in and surrender to the market.

The market does not understand anything at all. The market does not understand too high, too low, support, resistance, overbought and oversold. As long as there is continuous support the present action against any changes, the present prevails.

The market is a very simple "creature" that moves UP - DOWN - SIDE WAY. The market did NOT tell us anything WHY it is acting and behaving in a certain manner. BUT we start to attach reasons and rationalizations for each and every market actions. This is where and how the complications start with US.

Success is NOT elusive IF we start to unlearn and surrender our opinions. Blend in and go with the flow.  No more why!!!

EACH ANALYTICAL CONCLUSION HAS THE WORD EGO ATTACHED TO IT.

When we struggle against the market, something is NOT right 

 

 

 

  

 

Monday, July 25, 2022

Taming Yourself (NOT MARKET) - FOLLOW BLINDLY

The deep inner secret is as human we have in born desire that we are in control and we have the power. This sort of "inner being" develop and make us to be REBELS.

REBELLING in a sense that we are disobedient when comes to dealing and handling markets.

When we take our cars on the road, the desire to overtake others.

In the market, we refuse to acknowledge market direction. We choose to go against the market with some wild fancy ideas only to suffer major significant paper losses. To sustain means we must have the ability to tolerate such draw downs and emotional nightmare.

ONLY if we can obediently follow the market direction or shall I ideally say we FOLLOW THE MARKET BLINDLY WITHOUT HESITATION.

The people who succeed in the market in general are the ones WHO ALLOWS the market to lead while they follow blindly and obediently. NO THINKING and NO QUESTIONS ASKED

The ones that come out with 1001 reasons are the ones more likely to suffer.

We strongly believe we know what we are doing and we are right while the market is wrong especially we are enduring financial losses with market against us. 

Seriously, tell me if one is right and market is wrong when one is suffering losses.      

If you are right, you should be making money and not making losses!!!!!

Listen to the market, and follow from behind. Is this a very difficult task?

The greatest thing I learn from the market over 34 years, is STOP thinking what market should do per blah blah blah. Instead honestly and diligently listen to the market without ANY REASONS and FOLLOW.

Yes, it is a difficult task. So difficult that it is impossible to do it. Why? 

Because we do no have any desire to listen and follow

Thursday, July 21, 2022

Taming the market??? Wishful thinking

The "mysterious" creature called Market is a simple minded animal that does whatever it likes.

No one and nobody can control and tell this Market creature what to do. To think one has control over this creature reactions is living in FANTASY world.

This creature Market dance to it's own tune and tempo and pace. 

The most difficult part for anyone is to accept that no matter how much we believe and think we know about this creature, we are not in any position to DICTATE what and how the creature should behave and act.

Shouting to CONTROL and DICTATE this creature Market movement is to display our EGO and ARROGANCE in a circus. This Market creature can maul or be a friend depending on how you react to the Market creature.  

When you try to exert control and dictate how this Market creature SHOULD behave, you will use a lot of effort and energy. It is NOT necessarily that in the end the market is no guarantee it will behave obediently to your liking.

Rather than trying to TAME the market, I decided to let market move on its own and holding it on a leash, pulling me whichever way it wants.

In other words, the market has more force and energy than me.

Never tell the market how to behave. Market will tell you how to behave

Sunday, July 17, 2022

Trends - Objective Analysis - THE STORY versus REALITY

What is NOT taught in school does not mean one cannot learn post formal education. I did not learn and neither was I taught or introduced the other school of analysis called CHART ANALYSIS during my graduate school back in late1980s.

I learnt about Chart Analysis in early 1990s on my own gathering reading material from the KLSE library and Stock Commodities magazines and reading books from MPH Bookshops.

I have used very short time frames (seconds) to much longer time frames in weeks and months.

Chart analysis is viewed to be NON-analytical given it does not use any numerical quantitative analysis BUT qualitative chart price trend behavior analysis.

The biggest advantage is my own experience being able to provide personal comparative analysis of both QUANTITATIVE FINANCIAL ANALYSIS versus CHART ANALYSIS.

Yes, I use my own version CHART TREND ANALYSIS acknowledging there are different many approaches to chart analysis.

I remain entrenched in Chart Trend analysis for it's simplicity and REALITY.

REALITY is about what the price trend is doing and NOT what we think it should be doing base on the Financial Analysis.

REALITY is what it is doing NOW and NOT what it should be doing with financial data.

What it should be doing does NOT tell anything about WHEN it should be doing and what it is doing NOW.

What really matters is NOT what it SHOULD be doing but what it is going to do next if one understands the price trend behavior.

We can map out all the quarterly earnings ahead PRECISELY accurate BUT that does not translate into what it is doing now and what it is going to do next.  Market will decide what it is going to do next.

We BELIEVE base on the financial analysis, the market SHOULD be holding at a certain level. All this BELIEF is about HOPE!!! HOPE is something arbitrary. Many times MARKET can and will destroy your HOPE/CONFIDENCE despite getting all the financial analysis correct.

In the school of Chart Analysis, there are 2 distinct schools i.e TREND Following and Price Forecasting. I am a Trend Follower Proponent Practitioner. The biggest risk for the Forecasting practitioner is to understand and accept that forecast can go wrong and what is the game plan if such situation happen?

A trend follower merely tracks from behind and reposition when the trend changes. Instead predicting/forecasting, trend follower WAITS and ALLOWS the changes to happen .

I AM NOT IN THE BUSINESS OF COUNTING BEANS

I AM IN THE BUSINESS OF MAKING MONEY WITH REALITY


Saturday, July 2, 2022

Market and the talking heads

What is my conclusive understanding about the market and talking heads after 35 years in the markets?

It is a unique interesting UNIQUE creature that is INDEPENDENT. It will flow its on direction and velocity independent of other OPINIONS. 

When we on the TV or other media listening to 2 different camps offering their OPINIONS. Even if the 2 camps SHUT up, market will go on its own direction. That means what they say or opine is IRRELEVANT. 

Sometime one of the camp A views are in the same direction as market contradict camp B. Other time, market and camp B are in agreement and contradict camp A.

The independent state of the market price trend only tells us conclusively .. OPINIONS are nothing but noises.

Opinions is a dangerous EGO tool and can be lethal. Opinions is about TELLING what the market should do, forgetting that MARKET IS INDEPENDENTLY IGNORANT of others.

Only if one can humbly sit down, relax and come to term admit that no one can or will be able to tell market what to do.

Market is a FORCE that has its own GPS and AUTO-CRUISE.  

We should all learn to accept that. Learn to develop simple system to track/follow the market trend direction.

The more opinions we have or seeking opinions, the risk of self sabotage increases.

Don't parade the whole town like you control the market when the market is moving in synch with your views. There will be situations when market contradicts your views/opinions.

I learn to understand and accept that MARKET is the SUPREME LEADER.. IT has its own unstoppable right to tread on its own direction irrespective of which camp wins the debate.

Such a simple things took me a long time to accept wholeheartedly

 

Friday, July 1, 2022

Trend - Over confidence or lack of commonsense ???

The biggest and clearest advantage and disadvantage of using Financial Economic Analysis in financial market WITHOUT taking price trend direction into consideration is one can "overstay" the position when the trend direction changes.

When one draw a conclusion from the analysis and coincidentally in synch with the price trend, confidence builds up. As price continue to rise, OVER-CONFIDENCE takes over. 

The problem starts when the price trend has changed BUT the "investor" remain unaware the majority poll has changed to new different direction. 

This is what happen when anyone coming into the market does not have a game plan or system to track and follow the price trend directional change.

By the time the "investor" realize, price changed significantly and too late to act upon.

The other scenario is the Financial Economic Analysis and the price trend direction are OPPOSITE. 

The "analyst" will come up with terms to justify their opinions. In an uptrend, the analyst expect the market to retreat/drop BUT facing a "stubborn" situation where price continue to scale higher will use words like over-valued, over-bought, over-priced to deny and admit MARKET is right all the time and our opinions are not.

In a downtrend, analysts believe the price should be higher despite the continuous decline will use words like, under-valued, over-sold and under-priced to deny again their opinions are IRRELEVANT to the market while trying to call the market what to do. Market trend continue to fall to its own final bottom before the trend reverse!

MARKET IS DEAF TO US !   

Some will even take the trouble to publish, repeat/spam that the INSIDERS are doing this and that.

Again I sincerely and honestly believe that the ONE and ONLY way to exploit the market successfully and consistently is to

LISTEN TO THE MARKET and ACCEPT what the market is doing and telling us.

It is even better for us to completely "discharge" our opinions and look at the market. 

When one try to FORCE an opinion on the market especially when the market trend direction CONTRADICTS us, our ego become even bigger upgrading into DENIAL mode BIG TIME. This is the most dangerous phase that most of the time results in FINANCIAL calamity.

Incorporating a system that can warn us the price trend change should help us manage the problem.

 

From my own experience 99.9% of the so-called "fundamental investor" will not consider and incorporate some sort of trend system into the consideration

 

More likely they will remain blind and chose to be blind while the mind is CLOSED

 

Sunday, June 26, 2022

LESS IS BEST

It is been a close to 6 months since I last tweak the system parameters.

Living in Cambodia for the last 6 months has sort make me relook into the system to determine the weakness that need to be improved if needed.

Keeping myself busy with my work and allowing my LESS frequent trades but longer trend trades allow me to ride the markets

LESS IS BEST ... if there is one thing that manage to relook from a new angle is I have a system that is FUNCTIONAL ... RELIABLE and SIMPLE.

It is about Trend and TREND and MORE TREND

Let market pick it own TOP and BOTTOM

It is useless to predict the PEAK and LOW way ahead if the SETUP and Formation is not there

What is the use of prediction when one cannot do the most simple task of IGNORING all the noises and focus on price!

 

Wednesday, June 22, 2022

Update - After a long break .....

The journey has been wonderful, educational and most of all rewarding. Many things I have not understood in the past when I read books about different traders/investors journeys.

Now that I walked the path, everything is so meaningful.

This journey has tamed my anxiety and the deep ingrained desire to take positions. 

This has been an eye opening as I learn to LISTEN to the system FAITHFULLY and DILIGENTLY.

The desire and the ego mind is now like a mind with no opinions and no desire to call the markets.

 

Market is about WHEN it will happen and not WHY it should be.

 

As long as the TIMING is NOT RIPE or RIGHT, WHY is NEVER going to happen.

 

This is what market is all about. NO MORE .. NO LESS.


I have been deeply entrenched with some of my major projects that I have no  time to write.


Market has been a good teacher to me. 

 

Knowing why the market reacts NEED NOT TRANSLATE into profits. Knowing  WHEN it is ripe for the market to react is the key to success 

Saturday, April 2, 2022

Why are mistakes made and what is going on?

In the financial market, all that matters is actually PRICE and TIME. When one act, what is recorded is the price it is done and when it is executed. There is NO record WHY it was done!!!

But each and everyone .. almost EVERYONE has his or her own reason why a decision is made.

It is HUMAN to be engrossed with WHY while it actual fact the reasoning is sort of IRRELEVANT in my opinion.

Other than trying to impress other with my "intellectual academic" abilities explaining why things are evolving, there is NO value add to my decision making. In fact engross with such acts and mental hostage can always result in financial ruins.

All sort of different reasons are behinds many trades at a particular price and time. While there are 1001 reasons for trades to be concluded at that price and time, this proves that there is conclusive evidence that a certain rationale is the only reason "WHY" for the actions.

However if one can figure out if the PRICE and the MOMENT is the RIGHT moment with minimal risk and maximum gain potential, than one is moving on the right path.

Knowing the reason is the pitfall of our LINEAR mindset and this is only about maybe 33% of the time. We should not allow the mind to fall into the trap of developing the 1001 "why" reasons, instead we should be asking if THIS IS THE RIGHT MOMENT.

MOMENT or TIMING will decide everything. Will it be a winner or a loser? This will depend on WHEN or TIMING at best.

If we can develop and work on a model structure that can guide us to the best timing and lower risk, than we have achieve what many has failed to understand and remain elusive to the majority.

A team of us were on the water heading to Koh Seh and took the opportunity to check the water depth.

There was wind along the journey to the spot we are interested to check. 

On the way back, the same route was HOT with still air like SAUNA. A 2.0h journey one way and the same route, direct timing means different experience 





 

  

Sunday, February 27, 2022

Bursa CPO Monthly

The long term monthly remains "intact" but this is quite a conflict with the forward months trading SIGNIFICANTLY much lower than the near months.



Saturday, February 12, 2022

CPO .... the Trend and the Channel

The price has been moving within the BLUE channel and in a uniform manner. Outside the blue channel "boundaries" raise the red flag and the the retreat back into the channel seems highly likely. 

Pulling back to test the red lines with the MEDIAN red as the center.

The pundits in the media has been touting CPO going for 6000 level. The Green channel guide the immediate trend and the price has been holding up. The question remains interesting as the lower green and the upper blues seems to be hinting of a "pause"???

With the borders opening and any more of such close borders will not be sustainable economically as this pseudo virus did only to exploit human behavior - FEAR.

If the expat plantation workers return to Malaysia, expect the crop yield to increase sooner rather than later.

The only pressure will  not be flood as this is normally a 2 weeks affair in Malaysia but produce a 2 months impact on the CPO Futures market. 

The only pressure will be international vegetable oil and grain markets that will ultimately affect CPO future prices.

Is this bull tired??? What do the indicators postulating?

     

Sunday, January 9, 2022

Euro - Daily Chart


 It is all about TREND ... NO BS ,,, NO story ... NO Gossip... NO EXCUSES and NO REASONS.


Saturday, January 8, 2022

Vege Oil - Crude Palm Oil Soy Oil and Grains


 

CANOLA - Futures prices 2022 and the Spread

 


There is nothing much I can add or say to all the tables and chart above.

BUT where do you think the CANOLA oil is heading after July contract expire? 

When is the FIRST NOTICE DAY for the futures trader to exit JULY and move on to NOV 2022?

Look below.

IF the spread JULY - NOV narrows, it means either NOV rises and JULY no change or NOV rises and JULY FALLs, or JULY Falls and NOV no change

Let us see which one happen!      


 

Thursday, January 6, 2022

CPO ... Flood panic ... temporary or permanent?


IF history is a guide when the fear of scarcity (if that is what define the present bull run) no longer applies and normalcy returns, than look at the weekly (MIDDLE) and monthly (RIGHT) for the clue where CPO bottom might bottom out.   


CPO 3 - Continuous Monthly chart



CPO 3 - Weekly Continuous

USA - Are we there or NOT


 

IF the USA markets has finally peak, what is next?

Will non-USA market run helter skelter looking for places to hide?

Or is it a start of the retracement?

Saturday, January 1, 2022

Beggar and Donor

2021 has passed ..... ushering into 2022. Going to the financial is best described using the analogies of my observations of our daily activities.

There are times we get "instructors" who had never driven teaching others how to drive.

The are conman dressed up like a millionaire when in actual is a poor pauper.

There are people and many to be exact that believes market is a linear function and blind to the non-linear state before their eyes. Denial or blind?

The roles played by market participants and the market is like a beggar and the donor walking by.

Who is the beggar? 

Beggar do not have the choice to tell the donor how much to drop but to depend on the goodwill of the donor. Beggar "wishes" many ideals but accept what is given or rant all the way.

Sometime the beggar curse and swear at the donor ... sometime the beggar are full of praises of the donor. Just like unhappy people in the market.

Beggar can move to a better location just like changing or swapping stocks. Or remain at the same location maybe due to some beliefs that someday in the future a generous donor will appear.

Someday the donation is generous other days can be pittance. Just like good and bad days in the market.

A smart beggar will be out in the day and keep away at night for the robbers come to rob the collection at night. Just like there is a time to buy, a time to rest and keep away from the market.

A wise beggar will find a proper location during bad weather,  just like choosing the more resilient stocks in one insist of remaining "exposed" to the market.

A street smart and wise beggar will know which location is best, the time and the season to go and beg. For the beggar knows, the donor decides the quantum and not the beggar. Sometime the generous donor has a good day. For the beggar accepts and knows, to accept what is given for the demands is futile.

BEGGARS CANT BE CHOOSERS!    


Wednesday, December 29, 2021

CPO - the Futures price CPO3 continuous vs the plantation stocks - SNAP SHOT analysis


I have label the plantation stocks approximate lowest level and the peak.

CPO 3 continuous active contract is about 2.5x average from the low of 2000.

One glance, the plantation stocks moved up about 2x to 3x with max 4x the range before CPO peaks.

The question is - Did or Has the stocks prices PEAK before CPO futures peak? what is NEXT?

REMEMBER CPO futures is about SUPPLY - DEMAND of the physical and stocks prices is about company performance or anticipated future performance and confidence.

DID the company stock prices LAGGED versus CPO Futures? or Did the CPO Futures LAGGED the stock prices?

The plantation stocks has moved up ERRATICALLY independently sometimes and coherent in sync other times with each others. Meaning the presumably "assumption that CPO Futures and stocks are positively linear related is nothing but BS".

The ignorant and the denial ones will continue to think and see from the paradigm of Positive Linear Relationship between the CPO futures and the stock prices.

If you ever wonder why Plantation stocks fail to track CPO Futures closely? Well the answer is they are NOT PERFECTLY POSITIVELY correlated with each other!!!

The charts above clearly display the assumption that CPO Futures and stocks are of perfect correlated is WRONG,  FAULTY and DENIAL. More aptly put no proper analysis done correctly. 

If one is to do a PEARSON statistical analysis, at best my bet is a coefficient of  0.6 (minimum 0 and maximum 1) which I will call it a 60% POSITIVE correlation. The other 40% of the time? Non positive correlation. Or random. Or NEGATIVE.

Even a ANOVA statistical analysis will not be any better.

Let market lead us and see if the CPO futures will come down or the stocks will continue to move on their own independently on their own  

Saturday, December 25, 2021

Chart projection - The Challenges

Last update I mentioned about the scenarios when one put forth a projection which can either exceed ... under achieve or right on dot.

In real scenario, the projection shall remain unchanged PROVIDED the trend remains unchanged.

Many a times whenever someone solicit information or opinion about projection from a chart analyst practitioner,  the one who solicits and the one who provides fails to understand or ask the key question 

UNDER WHAT SITUATION THE PROJECTION WILL NOT MATERIALIZE?

Very conveniently, when a projection is given, one will walk away with the projection and treat it like something cast in stone.

If the financial projection can be changed as the economic condition develops, why the chart projection cannot be changed as the trend progress?

IF the actual EXCEEDS the chart projections, no one will blame the chart approach. BUT if the actual fails to reach the projection, than the chart approach will be label as inaccurate or not reliable.

The are inherent bias against the charting methodology without really understanding the intent of charts.

Unfortunately, there are more people on EGO trip when discussing the analysis approach methods getting into arguments. To me is unnecessary because the market will decide the outcome. NOT anyone else. 

We can agree or disagree over matters, but bear in mind ... WE DO NOT DECIDE THE OUTCOME. THE MARKET WILL DECIDE FOR US and DELIVER THE VERDICT

Just agree we have different opinions or views and wait for the verdict        


Sunday, December 19, 2021

Prediction or Swimming with the directional trend.

If one can make forecast or prediction where the market is heading, how can one benefit from such action?

How can one weather the volatility storm till the prediction come to past?

It is a fact that we need to accept and admit that such prediction has 3 possible outcomes

1) Overshoot the target

2) Right on the target 

3) Undershoot the target

The fact remains how can swim with the volatility and benefit from it?

One can make the prediction and unable to maneuver the volatility along the way. This ability of one to adapt into the treacherous journey will ultimately determine and decide if one falls off the path or reach victory.

What if one does not know how to predict but can comfortably swim with the flow, using the force of the directional flow to navigate effortlessly.

Instead one should focus on how to capitalize on the directional force. 

The next question is when will one be able to know the market has reach its target?

A simple answer is when the price fails to achieve higher ground in an uptrend or a lower level in a down trend. 

To me prediction using charts is a bonus. What ultimately decide the winner or the loser is NOT prediction but ones ability to flow with the directional price trend.

The priority is NOT to count the seed in the apple, since one will never be able to count the apple in the seed.

I started on the understanding that we use chart to PREDICT the target(s). Much later as one "matures" with the market(s), I also matures into "follow the trend first" and "prediction" a BONUS.

It took me many years to seriously understand and appreciate the adage. . . .

 

THE TREND IS YOUR FRIEND ... ALWAYS FOLLOW THE TREND  

 

When one finally understand and appreciate that prediction is a BONUS, than one has reach the ultimate level of a chart analyst.

At this level, one has the ability to withstand short term volatility as long as the longer term directional trend remains intact.

Saturday, December 11, 2021

Chart Analaysis ... a misunderstood field .....

All the materials or early developments of this approach from the East (Japan) or West prior to the computer technology evolution, were basic price trend analysis.

When this subject gained the interest of Engineers, came the development of indicators. With the introduction of computers, 1990s saw the explosion of Charting using daily data. The post 2000s with 3G - 4G technology bring this to another level, real-time hand held charting platform.

To the ignorant, all this is lumped into one group called TECHNICAL ANALYSIS. 

In my opinion, there are 3 different branches of school that uses price trends or volatilities.

1) Signal Systems /ALGO systems

2) Forecasting systems

3) Classical Trend Followers  

1) The signal systems in General generates BUY and SELL signals per the parameters inputs. ALGO systems is a more advanced of the signal systems

2) Forecasting systems involve the price projections and time projection.  

3) Classical trend following looks at the trend directions and act accordingly.

I operate on the premise of Trend Followers where the signals are valid for longer time frames and lower time frame signals are noises.

The trend followers are a totally different school from signals and forecasting. Trend follower are ignorant of signals system and forecasting methods.

Trend followers DO NOT forecast the market with signals. Trend followers are merely practitioners that will ride on the trend until the change come to past.

Trend following techniques are BORING yet simple and effective. The philosophy is that a trend in motion remains in that INERTIA state until a change happen. The key is what parameters or tools that one employ to define a directional move and a change.

To spice up a little we can add indicators. We need to understand indicators are derived from price. How to the indicators changes over the course of trend in motion. The beginning .... the growth and the decay or ending. This is one cycle and the ending of the current cycle means the start of a new cycle.

Trend followers normally operates below the radar unlike Signal and Forecasting systems who are in the media front. Well this is due to the fact that public love some crystal ball talks.

Trend followers are opposite and not interested in crystal ball except TREND DIRECTION and CHANGE.

IF you are NOT a TREND Follower than you are likely to be either signal system or forecasting practitioners.

If you are wrong..... WHAT DO YOU DO  

Saturday, December 4, 2021

Taking Positions - Allocating Resources

While there is NO fix formula that fits everyone, there some rules that I follow when I start to take positions.

Do you need to be a chart analyst expert or proficient to minimize risk and maximize opportunities? The answer is NO.

A simple chart will give you an idea the past and the present. The future will be a guess that only market unfolds its actions. The past will give you an idea WHAT if the worst happen, what is your risk? What if the best happen, what are your rewards.

With your current or present situation, one can assess the risk reward when one take action. Assuming you are NOT an expert in deciphering the chart or a reliable system to guide you. What should a reasonable strategy be for stocks?

My normal SOP is I divide my capital into 2 (50:50). I call them A50 and B50.

I will use my A50 to buy ratio 1 : 2 : 2 

I am assuming the market is falling and the trend has not changed but your are excited to get your dreamed stocks.  

How about price levels? The first entry normally I move when it is 30% from the peak.

Each buying has to be 20% away from each entry. By time the last (2) is used the price would have fallen 40% from your entry when you use up 50% of your capital. (A50)

How about B50? I will wait for a simple confirmation for the falling trend to end before I dip into B50. This time it will be reverse 2 : 2 : 1 and the 10% price difference per entry instead of 20%.

This should bring your weighted average lower.

 

What about those who are proficient in basic trend reversal chart analysis?

They must be able to track the trend for reversal setup and change confirmation before committing your $$$.

A discipline TREND follower WILL NOT and NEVER COMMIT unless the trend has confirmed it has changed. 

Assuming you want to be a HYBRID with a little of excitement to prematurely strike before the trend reversal changes, than use maximum 30% of your funds.

A classic typical trend follower will commit at 50% of the fund when the reversal happen and continue to add when the trend move in the direction anticipated.        


What about me? Over the years, I have developed and refined my own system to track the market trends in term of the ending of the current trend, the set-up of a new trend, the confirmation of trend change and the ending of the new trend, the set-up of the next trend and the cycle repeats.

When I read my system as the ending of the existing trend, most likely, I would have committed about 20% of my funds.When the trend reversal is confirmed, another 50% will be utilized leaving 30% cash. As it progress, my last 30% will be used.    

The trend has some fixed characters or behaviors with some temporary abbreviations between the start to the ending of a trend. I capitalize on my trend behavioral knowledge to minimize risks and downsides when I buy  

Thursday, December 2, 2021

Flying Experience ..... and ........ Applying to financial markets.

Market is PERCEIVED to be a complex subject although it is NOT. The approach to handle market actions is best to use our daily experience. 

Market moves from one destination to the next just like the transportation system. I like to use the analogies of aeroplanes and ships with sails.   

The Captain of the vessels (planes/ships) will have a map of the routes and the path can change due to weather. The market trend is no different and similar. The only different that I am aware is the route map for transportation is fixed from the start to destination BUT the destination is NOT fixed when we refer to financial markets.

The ships/planes has a navigational map to denote the departure and arrival BUT the market has NO arrival indication !!! The only way understand the ARRIVAL destination is AFTER it has arrived.

Both market and transportation system share ONE common trait, they in general have to slow down to "land" for arrival. On rare occasions the market will arrive suddenly and depart abruptly.

Navigating  the financial markets share the traits of ships/planes but the map routes is NOT fixed. BUT we can work on systematic plans to track the trend path to provide clues the "arrival" and "departure".

There are 3 parts to a market trend path.

1) Starting of a new trend is also Ending of old trend

2) Growth state

3) Ending of the existing trend is also the Starting of new trend.


My approach to developing MY system is to detect potential changes to 1) and 3). 

If I intend LONG and SHORT, I need to ensure my 1) and 3) are reliable and consistently accurate. 

As long as my "system" do not flash 1) and 3), it by default it has to be in 2)

 

I do not want to be in a predicament of shorting the market when the downtrend is ending (1) and when market is rising (2). I want to be shorting when the uptrend is ending or after the up trend has ended and the new down trend has confirmed (3)

 

The same applies to the reverse when I do not want to be in a long positions when falling or my system did not flash any warning the down trend fall is ending.

 

What about "positive" news in a downtrend? As long the LOW final destination has not reached, the news only can cause temporary rebound.

What about "negative" news in an uptrend? The input can only provide temporary retreat before the TOP

 

NEXT UPDATE ..... How to allocate your resources when you do not have a system for 1) - 2) - 3)                      

Tuesday, November 23, 2021

Outright Futures or Calendar Spread trades ? or Inter Commodity Spread trades ?

One of the things I learned over the years is about using different tools for different market conditions as potential opportunities come knocking.

The dynamic nature of the market trend DOES NOT warrant one template or one formula fits all.

We can build the anchor template on the premise that can be used to derived other templates.

RECAP : 

The trend can only exist in what I will classify as UP - SIDE WAY - DOWN trend.

In the UP and DOWN trend. Both this phase are opposite with different magnitude or intensity. 

Like the weather we will experience light rain, pouring heavy rain and "normal" rain. We will prepare and equip differently depending on the condition.

Similarly, we will need different templates for different trend intensity.

Yes, occasionally we do observe the near vertical trend moves and  at time the gradual moves. Obviously, the question is do we use ONE standard template or RULE for an UPTREND or do we have 2 different templates? 

Many things we can learn by seeing the obvious if we take notice.

All we need is to take notice and come up with a simple small strategy

There are time, taking the FUTURES outright is the preferred choice. There are situations CALENDAR spread is the better option. Sometime Inter Commodity spread is the alternative to all.

How we decide to use will depend on the trend and the position of the current versus the expected overall trend. Only from such assessment we will be able to determine our Risk Rewards Ratio and implement an appropriate strategy   

Monday, November 8, 2021

SHIP - Wind - Sail

The price trend goes up and down like a tide rushing to the shore and with draws. In the midst of all these back and forth actions there is sub-actions which is called wave. The waves like the tide are similar except they are smaller scale and co-exist.

Instead of trying to figure out why the Tide behaves and act a certain way, up, down, back and forth which can be a Nobel prize, we accept the existence of this state. The wave the same but a smaller scale of tide.

Either we learn to accept and see the financial markets as (1) an unfriendly dangerous place or (2) an accommodating acquaintance?  It is our choice and our mental state.

I have always treat the financial market as (2) Always moving non-stop on its own like a wind blowing. Whether I learn to use the wind force to my favor like a ship with a sail on the water or not, it is my choice. Whether I know when and how to navigate the ship will depend on my skill and experience. When do I raise the sail and when do I lower the sail.

As long as mentally, we treat the financial markets as a hostile and treacherous place, we spend more time mentally focus on "enemies" instead of enjoying the journey.

Let the wind stop blowing and we lower the sail. Instead of trying to forecast and anticipate when the wind will subside or stop to lower the sail before the wind actually stops. Once we learn to understand how to use the wind force to our advantage than it becomes a friend and not something we are fearful.

If we raise the sail up when there is no wind, we wasted our effort. If we don't raise the sail up when the wind is blowing, we wasted the opportunity. When it rains, we lower the sail. Know when to do what. Know when NOT to do what.

The astronomer or someone on the ship will have the knowledge of looking at the stars and the moons for guidance. Today we have charting technology like a GPS to show us the journey. Unfortunately, the pressing desire to know the future leads to the abuse by many inexperienced users.

The whole game is not about proving SUPERIORITY like a Gladiator battle. 

I have learnt overtime to be patient and act when the time is right flowing with the tidal force. A journey that is long and lonely.   

Instead of looking at the computer screen coming with a preconceived mental state or opinion the market SHOULD behave this way or that way, I come humbly to see what it has done in the past, now and what it MIGHT do today and will it continue. What is my tentative plan(s) IF it did not turn out the anticipated path?  

The only times I get into collision with the market trend is when (1) I don't have my tentative plans or (2) I fail to act on tentative plans as needed. 

The only reason why I am able to go into different financial markets is because I learn to treat financial markets as a friend and not a foe/enemy. Sometime I like to treat it as a friend in the stock market. Sometime it is a friend in the commodities market. Sometime it is a friend from the currencies market. Sometime we all meet together and have a party.

Learn to see and appreciate the wonders of the markets and not the fear.

A leaking ship will sink even if the wind is strong. So check for leaks and weakness in the structures than set the sail up and go sailing.

Your mental state will ultimately decide whether your action is accommodative or prohibitive.    May the force be with You.

 

Sunday, November 7, 2021

Bull and Bear run quadrant

When does a bull run happen ?  When E1 +  E2 +  (GREEN)

When does a bear run happen ? When E1 -  E2 - (RED)

The mix Green Red only tells u the market retreat or consolidating mode in a confusing state

Friday, November 5, 2021

Quadrants - 2 dimensional Analysis

Many years ago I read a book and the author specifically wrote and stated that know the difference between SIMPLE versus EASY. 

Simple does not equate to easy. Normally, people has the tendency to equate SIMPLE = EASY. This is not the case. To ride a bicycle seems a simple process BUT it is not easy to someone who does not know. You learn to balance, to apply force and momentum. There are no notes to write, read except to practice and practice. There is no rocket science needed.

The author goes on to describe that the act of trading/investing is a very simple act but it is not necessarily an easy task. The breakthrough happens when one is able to focus on the simple process and not complicate it. When one become familiar with the technique and strategy, a simple task become and easy process.

My favorite simple and easy approach is to do a 2-D analysis or 2 Dimensional Quadrant analysis. Using X - axis versus Y- axis.   

 

 

This is the magic box that I use since 1987 to do a simple quick analysis and correlation for all different products. Example

                      Event 1 = Price                                                    Event 2 = Earnings

Upper Left Quadrant = (E1 +   E2 -)  read as Price Up with Earnings Down

Upper Right Quadrant = (E1 + E2 +) read as Price UP with Earnings UP

 

The cycle state will move without any fix order clockwise or anti-clockwise. But it will be in anyone quadrant at any one time.

This will give us a MACRO outlook of the state the current and where it is going next.   

Sunday, October 31, 2021

The nucleus of making money

Over the years walking through and seen crashes in 1987 (USA), 1994 (Malaysia), 1997 (Asia), 2008 (GFC!!! AFC!!!)..and 2020 (GFC!!!).. I sit and ponder all the stories one can read in the media on HOW TO MAKE MONEY INVESTING or SPECULATING. Portfolio and all the different stories you can figure out.

Irrespective whether one view it as LONG or SHORT term, one makes money Buying Lower and Selling Higher or SHORTING the product HIGH and exit LOW.

No matter how one cream or spice up the story like a fairy tale, the essence or the nucleus of making profits is about the above paragraph.

Throw in topic like retirements, blah blah blah ...sugar coat .... the BASIC most important concept is the about PROFIT.

Whether one claims this is SUPERIOR approach or otherwise, the PROFITS matter.

The Nucleus or Center of all the different ideas is about PROFITS. 

It doesn't matter if the time horizon is SHORT or LONG term. If one cannot make profit either on SHORT or LONG term, what is use of TIME horizon?

Whatever techniques are used, as long as it cannot make profits, WHAT is the use???

We can talk all the wishful matters, dreams, ideas or retirement and "growth plans". What is the use of all this if the most basic is NOT addressed ... WHAT DO U NEED TO DO TO MAKE MONEY and HOW TO DO IT CONSISTENTLY

Tuesday, October 26, 2021

Time ... Price .... Trend

One of the key issue that one should sit and think deeply is to understand what is the objective and term of reference when one decides to walk in the financial markets. 

What is the TIME factor, the term of reference one intend to hold on to a position committed. Are we talking about days or weeks? Or are we talking about minutes or hours or a few days?

A price scalpers will be looking at microscopic trends or minutes, hours or a few days at most. On the other hand, a trend trader/investor will be looking at days or weeks sitting on the positions.

Once one is able to distinguish which group he or she is classified, the next obvious choice is to select the product(s) to take positions.

Yes, we can have a set of BASIC common ordinary rules but we will need another set of extra ordinary rules when the trend goes off !!! Which I call the cruising and the turbulent trend.

Different books and proponents will advise differently. But we need to go back to basic. The essence of the market is PRICE axis... TIME axis ... and TREND drawn or plotted.

We all make profit only if the price trend behavior move in accordance to our expectation. Trend is NEVER uniform or move in STRAIGHT line. It move in a haphazard zig zag manner which seems random. To a seasoned veteran, we are only interested in the direction and continuity. It doesn't matter if the price zig zag all over as long the underlying trend is intact,

There is no point of thinking about all the wanders and greatness if the very basic price-time-trend is not understood and appreciated.

Most of my gains are made from weekly trends unfortunately that is the truth.            

 

Tuesday, October 19, 2021

Is it (1) or (2) ???

There is only ONE way to look at the chart. There are many ways to interpret the chart. There are different approaches to dissect the chart.  

While all these are being done, there are only 2 (TWO) questions remain that can determine whether you are going to make it or break it.

 

1. IS THE MARKET TREND TURNING?

 

2. HAS THE MARKET TREND TURNED?   


The premise to learning chart analysis is to ........................?????? The answer to the question will determine if you will be chart for (1) or (2) above.

IF we try to preempt and anticipate what market is trying to do before it actually happen, than we will embark on the mindset (1).

IF we do not attempt to preempt, anticipate or predict the turning point, than we allow the market to LEAD and act accordingly while we follow closely from behind, we will be operating from  (2).

The likelihood of jumping into many false alarms when we operate in the (1) mindset. We will be less likely to muddle into false alarms if we can successfully consistently take each and every step in the (2) mindset.

Operating in (2) sphere means an appropriate time frame has to be selected as the ANCHOR which has proven to be a reliable and good tool to use when each and every turn will run it course out over a longer period of time.


Sit back and ponder if one is (1) or (2)

Thursday, October 14, 2021

TREND ----- TIME FRAME ----- VOLATILTIY ---- REVERSAL

Trend ..... Time Frame .... Volatility ..... REVERSAL are all inter-related. 

A trend reversal or trend change is significant on a higher time frame. This is a rather generic open ended without specific which time frame refers!!!

I group time frames into 2 namely the intraday versus the non-intraday.

Depending on one's appetite, either one will end up trading the intraday or non-intraday time frame.

The intraday move will be frequent with smaller range as we trade the ripples.

The higher time frame namely the non-intraday will be bigger volatility range and less frequent.

Trend reversal or change on higher time range will run for weeks or months before the next reversal appears unlike intraday reversal which is insignificant with false moves.

Intraday is meant for "scalpers" and the non-intraday is for longer term trend traders/investors.

After going back and forth between the 2 groups of time frame, one has to sit back and have an honest deep soul searching to try understand the underlying profile and behavior. Decide which is best and suitable for your mass temperament.

Swinging between a fast scalpers and investing for a longer time frame, I conclude that a more reasonable strategy is to keep to higher time frame and minimize intraday shorter time frame.

When the market is volatile, generally this dynamic is for a short period against the higher time frame trend. Eventually the temporary diversion will revert to the trend direction of the higher time frame.

  

 

Saturday, October 2, 2021

Why Crossing the Plateau of Latent Potential Is Essential for Success


Click on the link below to read the article by

https://mikevanderpoel.com/plateau-of-latent-potential/ 

 

YOUR EXPECTATION = LINEAR THINKING

REAL OUTCOME = NON LINEAR EVENT