Waking up and ........

Waking up every morning, I and grateful and bless. Everyday I will be wondering and thinking is there any more simpler approach that I can work on to improve my technique to chart analysis. 

Is there any better accurate and reliable indicators that I have not discovered or what I have is sufficient?

Why did most people unable to see the price trend under current momentum? What were they thinking? What prejudice plague these people?

A clean and simple chart to the naked eyes is nothing but some wriggle movements up and down moving from rising from left to right punctuated with occasional falls /retracements. The movements develop with different tangents/slopes.

What lies beneath these activities interest me. I was intrigue by the movement nature. What drive this motion? Why can't it be uniform movements? This irregular motion looks random. Is it random as I perceive or is there an order that I fail to see since I have mentally resigned to the fact that these are merely random movements as taught in school?

Can I smooth out this movements to make it less random and more orderly? IF YES, what should I do and can I benefit from it? Can I use these new found idea/knowledge and benefit financially? Is it possible to postulate the future movements and what type of possible motions and what degree accuracy? What of data do I need? How long a historical data do I need to back test?

I remember back in 1987 attending a class by Prof Richard Thaler (Nobel prize) in one of my MBA class at Cornell University, flipping a coin Head or Tail is random as both has equal chance (50-50). That came a pop in my head. However if one has more than 50 chance, the odds are in favor to one and not the other, this is no longer a random 50-50 but in favor or bias one sided.

IF we look at the chart above, it is BIAS upwards (TREND) with different tangents and occasional counter movements of different magnitude both directions. This series of movements is continuous.

The biggest question that came to my mind was HOW can I know the directional trend movement will continue or about to end changing direction? Which time frame is the appropriate time frame to use? How long a time horizon should the open position be? Which tool in the charting software indicators arsenal is best suit to answer all my questions above?

The question is how far are we willing to push brains to the limits to explore and discover? All available public information at best are just introductory and it is up to us to dwell deeper into the subject. Are we willing to push ourselves to the next level? How much time and attention are we willing to commit and sacrifice? Are we willing to break our norms and change our priorities?

   

 

 

FORECASTING price targets into the future - My opinion

IT is possible to forecast price target levels into the future BUT one need to put safety measures in place.

I would classify price forecasting into 2, namely the INTRA-DAY short term and the NON intra-day LONG term. Irrespective any forecast, we must have the same system for both that is a template for all time frames and all products. 

The important and key criteria is we need to be flexible with the targets. Flexible to be able to accept the target MIGHT NOT BE HIT, fall short of the forecast. 

There is NO rule to say the forecast will be 101% accurate but if the trend continues the likelihood the forecast be hit or exceeded will be high (SUCCESS). BUT if the trend weakened that very likely the target will not be hit is also high (FAILURE).

Understanding directional trend, its underlying momentum strength changes will be crucial to determine the probability the target is achievable or not or exceeded.

My approach to understand the above momentum strength analysis is using the chart indicator that I am familiar with and able to interpret the indicator formation accurately with minimal errors.

ONE tool to track and follow the trend direction and ONE different tool to measure the trend momentum strength and changes.

I have developed and kept my system simple, it did NOT negatively affect the accuracy and reliability. IF any losses incurred, it is my own failure NOT to follow the rules that complement the system. HOPE is the culprit. Yes, eventually, my opinion against the system will be proven correct BUT it is without enduring the pain in the process. 

One should remove the believe that the complicated or the more indicators, the system will be more reliably accurate. On the contrary, the simpler the system, the more accurate and robust without complications and contradictions. 

Convincing my opinion is correct and the system is wrong is NEVER a happy journey.It has always been painful.

A PERFECT SYSTEM is a template that can be used across all time frames and all products. MOST IMPORTANTLY it can be used across all platforms be it handheld mobile or PC/Laptop. This is exactly what I have polished over the years.     

       

   

Integrating Time Frames Trade Executions

 I use different time frames to improve my TIMING accuracy. Once my "anchor" time frame is SELECTED, I will take analyze the time One level lower the "anchor" and one level above the "anchor".

My antique charting software of 1990s allows me to only plot maximum 3 time frames.

Online charting software (realtime or 15m delayed) with intra-day capable are more flexible to accommodate more time frame.

Find the suitable time frames to suit your style. It can be 4 or 5. My suggestion is NOT to go beyond 5 time frames ie. 2 below and anchor and 2 above anchor. 

Eg. Anchor  = WEEKLY. One level below is Daily and one level above is Weekly, than it becomes Daily - WEEKLY - Monthly

Eg. Anchor = DAILY. One level below is 4h/6h depending on the total trading hours in a day. In some cases it is 2h - DAILY - Weekly

Eg. Anchor is 4h. One level below is 1h and one level above is daily, 1h - 4H - Daily

I will analyze the price trend direction moving averages and the chosen 3 different parameters for the same indicator across all time frames

Eg. Macd 12-26-9, Macd 24-52-18, Maccd 48-54-36

Each time frame will be plotted with the above on separate panel stacking.      

 This becomes the step (1) of my template. Step (2) is to apply the different Moving Averages settings on the chart and replicated across the other time frames.

This is how I analyze my charts. Different people will have different approach and what matters is the user must understand what they mean when the analysis is done. Most important it must be easily understood, reliable 80% accuracy and can be replicated across different charting platform.

Find the indicator(s) that suit your style and find the parameters that meet your requirements.

I have use the DEFAULT as example illustration. How one "drive" the chart will depend on your personality and objective.

 

Is Charting technique Perfect?

IF the world is perfect LINEAR, everything can be predicted to the dot! Since the truth is world exist in both LINEAR and NON-LINEAR making each and every different technique will NOT be perfectly predictable.

BUT if we look what is obvious from the trend chart behavior in the past, repeating and present, we will have UP - SIDEWAY - DOWN. Assuming a cycle is LINEAR = 50% of the time and NON-LINEAR = 50%. That brings us to the next question HOW DO WE MANAGE THE NON-LINEAR state? If we can develop something to manage the half of NON-LINEAR, we bring the manageable "predictable" reliability to 75% of a cycle. 

Any system that give 75% reliability should minimum. If we move to the next step is to manage the 25% uncertainty. I believe this should be the 2 price trend reversal state ie start phase and the end phase.

IF charting is perfect, all chart practitioners should be rich. In reality there are failures. Question is why?

I would say, charting should give a decent practitioner a minimum 75-80% reliability as long one mishandle and abuse this method.

Chart main advantage over the classical financial technique is chart technique has the ability to detect trend change, cycle movement and time the trend.

THE KEY IS TO FIND THE BASE TIME FRAME to TRACK THE MAIN TREND CYCLE. 

Is it Quarterly, Monthly chart, Weekly, Daily or 4h chart?   

The Charts debunking the myth - Part 2

The biggest advantage is we do not need to learn and do all the complicated financial calculation. All we need to do is to open the price chart overlay indicators below or above the price time chart. Study the trend behavior of the past, understand the recent trend directional movement and INSTEAD of predicting the future price level, one should sit back and ask if the existing is holding momentum, increasing or decreasing. Are such opinion reconfirmed with the indicators formation.

We are looking at arbitrarily opinion. We should have a systematic logic methods to ensure we have a sound and reliable system.

While the complex financial calculation does not necessarily translate into profit and accuracy, at least it has a systemic approach.

Too often charts has been used wrongly and abuse as a projection fortune telling tool.

The next few articles will touch on stocks, margin leveraging and FUTURES (forex, commodities and index)   

To me, learning about charts analysis is a journey that I have enjoyed despite it is self-taught. 

Regrets? NO

I will always have a peek at chart first before I do anything    

The Charts debunking the myth - Part 1

Price chart is a very powerful and reliable tool IF one understand what it delivers. The chart become a reliable tool and weapon as long one DOES NOT abuse what it can do or suppose to do.

We as human act upon PRICE movement and we crave for actions. THIS IS THE BEST DISASTER  Recipe couple with intra day charting.

ONE has to decide WHICH TIME FRAME becomes the anchor TREND time frame. Are you going to follow the trend of the anchor time frame? or Are you going to TRADE/SCALP using the lower time frame around the ANCHOR trend?

Up to now I didn't touch on all the jargon of candlesticks and what not. Focus on trend and time frame.

When one start to imagine and hallucinate over all the patterns and jerks on the price chart, one cant help but to be drunk and drunk driving is NOT the best approach in market.

Every indicators developed measures "something" and one has to identify what it measures and how it relates to trend. The abuse come when users ignorantly use them to identify BUY and SELL signals.

I have emphasize about trends, one also need to learn and understand the development inside the trend from the start to the end of an up move and down move.

If the market is easily conquer just using charts without the need to understand the whole universal chart knowledge than anyone can pick up a chart and just print money.

One has to unplug that candlestick is the holy grail. TREND HAS NOTHING TO DO WITH CANDLESTICK. Irrespective how the candlestick develops, the trend will go its own way until it is ready to change.  If we keep reacting to every candlestick, we will all be too busy to focus on trend    

The Past .. Present and Future ==== Profits everywhere !!! Is it ? ===== PART 3

Now that we have an idea the trend is about the start, the uneven, nonlinear, irrational growth and finally the end of the prevailing trend.

One of the interesting observation between a price trend and the clouds as there are similarities.

There are times we see clouds that are dark formation leading us to believe it is going to rain. Most of the times such formation confirm our belief and it did rain. This is like at time we feel strongly that the bull charge on the price is going for a correction and indeed it happen.

Occasionally, the dark clouds formation fails to rain leading to clear sky  and this is no different from the price trend that price consolidate sideways and continue to charge upwards.

The only time we know it is raining, is when it HAS already happen. Same goes to the price trend. Price trend change direction AFTER it has done so.

Forecasting or Prediction is ANTICIPATION and sometime they do fail like the clouds above.

What is more important is the CHANGE CONFIRMATION.

Do we act in anticipation? Or do we act upon confirmation?

Rain drop is a confirmation without the rain drop it is still anticipation.

Price change is a confirmation. How do we define, measure and confirm price change? When we have the answer to this. we have already solve the "equation".

In my case, I stick to Moving Averages and my selected preferred time frame.

While I put forth the tongue in cheek forecast, I monitor the moving averages movements and indicators formations closely. Indicators measure the inner price trend momentum and the moving averages CONFIRM the changes.     

The Past .. Present and Future ==== Profits everywhere !!! Is it ? ===== PART 2

My earlier years I have labored long hours on FORECASTING using charting techniques. The risk of over zealous with this is one fail to ask the most basic question. 

What happen between NOW until the FORECAST? What does one use since it is not and never a straight linear line? We can easily loose our focus and begin to act irrationally.

What happen between the start of a new trend till the end of the emerging calls for a system to FOLLOW the trend. How about chart patterns (Edwards and Magee) or Thomas Bulkowski? 

I have not come across anyone explain the behavior of a trend and how we manage the trend in motion together with indicators tools!

Let us go back to the basic of a trend and the simplest definition of a trend is the price directional movement CONTINUES until the direction change!!!! It is a "repetitive" directional behavior and the trend ends WHEN the direction changes. It does NOT matter what intensity the trend in motion is as long the current DIRECTION remains intact.

The most ideal tool for this is the Moving averages and trend lines. One need to remember that MOVING averages of the TIME frame under observation LAGS when the price movement move is intensely STEEP! Under such condition and situation look into one lower time frame to get a better feel.

When the intensity is moderate trending around 45 degrees, the time frame observed is sufficient. However if the trend is "horizontal" flat, look into one higher time frame for change  

THE CORE QUESTION one has to decide which time frame become the "core" or "nucleus" to track the trend?

STICK to the time frame and I believe this selected time frame as the focal trend analysis should work across all stocks and all financial products including FX, COMMODITIES.

Looking back into the past, in hindsight I now appreciate why certain non-intraday software offer only DAILY - WEEKLY - MONTHLY time frames and I am still using them from 1994 till today.

It is only when it dawn on me that I have to identify and select the CORE NUCLEUS time frame to monitor and track the trend, I started to see light.

EUREKA happens when I am able to appreciate the statement

RIDE THE TREND and GO WITH THE FLOW      

Many times in life, things are right in-front of us and yet we get distracted by other irrelevant issues which we thought was important

 

 

 

 

    

The Past .. Present and Future ==== Profits everywhere !!! Is it ? ===== PART 1

A market veteran like me walk through market with good, bad and ugly over 38+ years adventure. What astonishes me is I did not expect my journey to last this long and enjoy the journey with mix feelings. 

38 years is NOT a short time but almost half of my life. Many would not last this long in the market in fact many probably end up as fallen heroes!!! 

I am not celebrating but to sit back, reflect upon what I could and should have done differently given the benefit of hindsight.

All of us who are market participants has ONE and only objective that is to MAKE MONEY or PROFITS.

Rather than celebrating success and longevity in the market, I am grateful that I survived this far and able to take this challenge 38 years ago without any clue where I am heading and what lies ahead. The journey and path was and is NOT a straight road but fill will all sorts of unexpected events. Most importantly, I manage to overcome each and every obstacle keeping my composure and mental temperament intact.

My ingrained behavior of learning, disassemble and reassemble any issue or object help me to see things differently and develop new methods to solving a problem. Most critically my impartial mind and non-bias helps me to see a problem as opportunity.

Irrespective the past or the present and the future, I know there are and always be opportunities in the financial markets. How can we benefit from this financial market turning it into a money printing machine. WE ARE ALL ATTRACTED TO THE MARKET DUE TO PROFIT POTENTIAL and NOT ABOUT LOSSES/RISKS

I accept that I am NOT going to nail the TOP and BOTTOM of a trend right on the dot. I will NOT repeat the mistake of my initial years focusing on predicting TOP and BOTTOM. My one and only objective in the market is TO MAKE PROFITS and NOT FORTUNE TELLING.

The one and only way to make money in the market is TO FOLLOW and RIDE the TREND. As simple as it logically sound this is something many tried to crack the market code and only few succeeded.

The key word is TREND, FOLLOW and RIDE. Once we can define and understand these 3 words, more than 50% of the success equation is solved. 

Irrespective of whatever financial data we read, price will react in a TREND form display as PRICE (Y-axis) and TIME (X-axis).

Most important is WHAT IS THE IDEAL TIME FRAME for the price time chart? 

1min? 5min? 15m? 30min? 1hr? 2hr? 4hr? 6hr? 8hr? 12hr? Daily? Weekly? Monthly? Quarterly?

In my opinion from my past experience, selecting the CORRECT time frame according to our strategy will decide whether we can stay in the market alive and make profits.

When I started charting (1994) the only time frame available on the charts and data supplied was daily data FORMAT which means I can only see daily - weekly - monthly chart.  Later post 2000, intra-day data charting were made freely available to subscribers. Charts lower than daily is ONLY good for intra-day short term traders. Selecting the time frames for one's chart analysis in conjunction with your trend system will be VERY critical and main determinant to your success.

Understanding how the indicators relate across different time frames give one a grasp of the trend performance at different time frames.    

When ONE time frame is selected as the "anchor", it is advisable to have one lower time time on the left and one higher time frame on the right making 3 charts. What if TWO time frames becomes the "anchor" still one lower time frame on the left and one higher time frame on the right making it a 4 charts.

What about 5 time frames? Yes that is also possible with ONE anchor and 2 lower time frames on the left and 2 higher time frames on the right.

More importantly is the anchor time 1 or 2? One need to adjust and select according to one's preference and comfort.

This help one to understand the trend development in motion across different time frames. 

How does one follow and ride the TREND ? 

to be continued .... PART 2

 

Back after a short break

I have been traveling to different towns and states in Peninsular Malaysia driving my VW Tiguan around. Catch up with my UPM friends from the 1980s since I last visited in 1993 while I was on my way back to Singapore driving from KL.

All of us have reached the legal retirement age and less pre-occupied with full time work but pursuing our recreational passion.

My passion and interest has always about the financial markets and working towards a improving the systems I am using today in term on accuracy and reliability. Yes, I have sort of put PREDICTION the Future as the bottom of my list. But this does not mean that I have ignored this completely. More important that we need to know and understand the MAJOR trend reversal happens only two times i.e the START and the END of the current follow by the START of a NEW directional trend.

Most of the time is the 'traveling' adventure between the start and  the end. How we manage this 'in-between' journey will decide how well our performance will be.

We all know that any price chart irrespective the present or the past dating back to 1800s, the price chart will move at different tangent/steepness and not in a straight regular angle with different up and down swings.

After establish the basic premise/foundation of a trend, we need to reflect which time frame is suitable for us and which tool(s) is appropriate.

The last question that come to my mind is WHO is in control? Is the market action going to dictate how  I am going to behave in the market? or I am going to decide when to act?

After one has selected the suitable time frame, that will decide if your action is dictated by the market and you are merely a passenger or you are the captain and not the passenger.

The key advantage for being and an old hand in this game and alive is I get  to sit back playback the journey since 1987 October crash until today a good 38 years.

I have paid my fees and learnt my lessons = EXPERIENCE and SKILL.

There is no doubt chart has forecasting benefits but most importantly its ability to show us the seasons (UP - DOWN - SIDEWAY)  

If we cannot handle the volatility while waiting for the forecast/prediction to be come reality, it is likely that we will not be able to make a living from the markets

               

Organizing readily available resources to succcess

A lot of times the solutions to many of our problems when trying to profit from the financial markets has a lot to do with organizing and reorganizing the resources readily available with us. Sometime I call it spring cleaning your garage where we keep and store our not often use tools.

It is NOT about learning new materials. It is about putting our house in order before we learn new things to complement and progressively moving to success.

Formal Education is about LINEAR thinking process and the market is product of both LINEAR and NON-LINEAR cycle. At best anyone who approach the market using Linear Financial Analysis decision will be right 50% of the time. One has to sit tight for the market to prove we are right in this Linear approach because when we are wrong, it is due to the fact we are in the wrong trend cycle. We will wait until the cycle turn in our favor.

When price movement and financial analysis are in the same direction = LINEAR

When price movement and financial analysis are OPPOSITE direction = NON LINEAR. This is a painful process to convince the market and ourselves that we are right while the market speaks otherwise! Are we right and the market is wrong? or the market is right and we are wrong?

It doesn't matter what or who is right. Bottom line is going against market is NEVER a happy wonderful experience.

We can use the LINEAR ANALYSIS results as BENCHMARK but relying on this solely to make decision is dangerous. 

Going back to the "garage" means we need to look around and ask what CYCLE knowledge we can use and apply in the market to complement the Financial Analysis?

The key to treading well in the market is about understanding CYCLE and different phases. This will help your risk management to success after screening the candidates using Financial analysis.

IF we have made the 100% correct rigorous analysis, and price refuse to move in our anticipation, what good is our 100% mark analysis?

Even if we make a simple back of the palm analysis which can be at best 50% rigorous, but price move accordingly, than this is better than the earlier scenario.

Our main objective is to ensure that we can identify the bus that is going to move next with the driver ready and roadworthy vehicle !!!   

          

"Educated" investors/traders - Time frames

The availability and accessibility of public financial information ranging from news, financial details to price charts reflects the market maturity. All this information are now readily available without cost to the public. 

IS THERE ANY ADVANTAGE BETWEEN MARKET PARTICIPANTS?

It is like going to school where every students are given the same textbook materials and sitting for the same examination. We will have mix results grades from distinctions to failures.

This is no different from taking the market "examination". However, the distinction between the winner and the loser will be graded on the financial status at end of the period.

Let us examine 2 major different market participants. The mid-longer term versus shorter-mid term teams. The "fund managers" mainly analyze the weekly chart for the mid-longer term trend versus the "traders" analyzing the intraday-daily chart for short-mid term trend.

There is NO magic formula which time frame is CORRECT. The individual objective(s) and the temperament of the individual.

Over the last nearly 37 years, I have operated on intra-day chart right through to monthly chart. The final conclusion is 

WHAT IS MY OBJECTIVE? DO I WANT TO REACT TO EVERY PRICE MOVEMENTS ON A DAILY BASIS or DO I WANT TO ACT ONLY ON MAJOR TREND CHANGE?      

The above choice will decide which time frame charts to use. Once this is determined, selecting the appropriate chart indicator(s) to map the price trend action. The functional roles of the indicator(s) is to help us analyze the underlying momentum not visible to naked eyes but can be calculated using indicator(s) formula map on the price chart. 

I use the indicator(s) displayed on the price chart to track the underlying momentum and changes to it. A proficient user will be able to see and read the changes will lead to TREND reversal irrespective of the news. The indicators used correctly will help the user to sieve the "fake moves or traps" before the actual reversal happen.

There will "corrections" against the directional trend in motion. There will ALWAYS be a few of them which I term them as "fakes" since there are only temporary and revert back to the earlier trend direction ultimately proceeding to the finale trend reversal. Sometimes these "fakes" are very convincing with price actions affecting confidence. BUT any experienced traders can sniff out the fakes with indicators to confirm such moves.

Remember each DIRECTIONAL trend DOES NOT move in a straight plane line. Instead it moves irregularly to the inexperienced naked eyes with different magnitude corrective traps - fakes moves. The indicators should be able to assist in this a well if one invest the time to study and analyze the behavioral changes on the indicators and price.

 

The goal - objective - CONSIDERATIONS

When we discuss about financial gains (profits), we are ONLY interested in HOW TO GAIN and HOW MUCH. The worst advice one can get is the WINNER'S CURSE when the tip results in immediate profits without understanding the whole mechanics. This is exactly what happen to me in 1992-1994 despite so-called FINANCE knowledge. 

The offensive game versus the defensive game. Finance knowledge versus Market knowledge.

The correct approach from my experience IF I the opportunity to turn back the clock is to learn and understand the DEFENSIVE game FIRST. Identify all the weaknesses in me. Fix up all the weak areas. When this is completed robust defensive than only I can start the OFFENSIVE.

Finance knowledge is the theoretical knowledge about the details. It is NOT and NEVER about how to apply the knowledge and acquire new knowledge HOW to move in a changing DYNAMIC trend. Without a good grasp how to move and what to apply in the changing trend, the finance knowledge is useless. I would even go to the extend to say that learn about the dynamic trend FIRST.

Hope this helps         

  

Market Doing WHAT?

The actual meaning of "market doing what" is a common phrase that market participants wants to know which direction is the price trend.

The most valuable statement I have come across is from Ed Seykota

Ed Seykota's quote, "It can be very expensive to try to convince the markets you are right," highlights the futility and cost of fighting against market trends. He emphasizes that attempting to prove a personal view against the collective wisdom reflected in market prices is often a losing strategy

As simple as it sounds, this quote has very valuable lesson that we all should remember.

Irrespective of what we use, if the market is NOT behaving the way we expect, we need plan B

Revision - Recap - Ponder - THERE IS A TIME and A SEASON FOR EVERYTHING

 

Calm . Anxiety . ... steady state

We all go through the cyclical process between anxiety to being calm. We will face this emotional phases and panic as well when we are in a conundrum.

To overcome, we need to understand what we are dealing and facing. What are the issues. What are our resources. What are our skills. What are our capabilities. IT IS ALL ABOUT US and never about others. I believe that we have the capability to adjust and adapt into the situation that fits us to our favor and benefits.

This can only happen after we manage to solve and manage all the soft skills and knowledge that we do not have and needed.

What a car stalls in the past, we get a mechanic to fix the problem. Modern cars with ECU store the error codes. We can plug in OBD2 gadget into the socket and get a reading after the OBD2 diagnose the errors and telling us exactly what the fault codes are. This is only for parts that are wired to the ECU.

When we see error or red signals coming on at the dashboard, we get into anxious and panic mode. After the problem is identified, fix and tested to be resolved, we return to calm state.

This is no different from how we face the market. A lot of problems can be solved and managed using simple trouble shooting daily chores approach.

A mechanic can fix your car faults, ultimately you as the driver is the one handling the car in the traffic.

This come to the conclusion that YOU are driver navigating the market. Be prepared and ready to face the market traffic. The chart is your navigation map. While it does not tell you when you will reach your destination precisely, it does give your current location and trend conditions.

Analyze the chart correctly with the appropriate indicator(s) that you are proficient, you will be able to determine the trend momentum strength and set up for reversal.

IT takes time to learn, understand and be proficient with charts. IT IS NOT IMPOSSIBLE. With patience and determination, come with an open mind and eyes. YOU WILL SEE WONDERS!            

 

Trend change / Reversal and the indicators relationship

The common words used in ALL chart analysis text materials (aka Technical Analysis) is the word DIVERGENCE. It is simply used to describe both price trend and indicator are not in same direction.

Eg.

 

 

The are different types of Divergences

 

 

To simplify, anything that CANNOT be considered to be in the same direction between price and indicators, we classify them as DIVERGENCE.

 

While price trend reversal ends MOST of the time with some sort of divergence (refer to the above Macd Divergence table), there are situation and they do exist occasionally that price trend reversal happens without ANY sort of Price - Indicator divergence!!!!!

 

Once you can distill and summarize all the different traits and conditions for the situations, chart analysis become easier and less confusing.

 

The biggest challenge for me internally and mentally is the strong desire to be perfect and this "urge" often lead to wrong or bad choices due to premature trigger before confirmation.

 

Sometime a deep breath is needed and calmness for a confirmed change is not going to flip flop change immediately   

   

Internal - sabotage versus External - Neutral

Human are driven by emotion making both RATIONAL and IRRATIONAL decision with and without facts/data.

Irrespective whether it is financial matters or NOT, we as human CANNOT escape the flaws of our our mindset as we are MENTALLY design as such..

We are wired in a manner that we only CHOOSE and WANT to hear what we have decided.

We only want to see what our minds have established.

This is how we all end up classifying "RIGHT" or "WRONG". Over time things evolve and what is RIGHT today can be wrong in the future and what is WRONG today can be right in the future.

As human, we desire and yearn for PERFECTION when comes to financial matters. After all, who don't want money as a mean to an end to pay our expenses/bills.

As I walk my path in the financial cycles, I develop small and simple systems, tweaking the systems and parameters VERY FREQUENTLY in my first 10 years, filtering sets of parameters that fit best.

The 10 -20 years was refining the system and narrowing the parameters into VERSATILE system that can be applicable across all time frames (both intra-day and non-intra day) for ALL traded products.

During this period, I started to observe in details the relationship between different directional trends intensity (strong, neutral and weak) versus the selected indicators that I use on the charts.

Interestingly, there are common and obvious relationship between PRICE trend and indicators changes. What does it mean when the relationship is positively correlated or negatively correlated? What are the significant interpretation of trend in all this information?

The market is NOT a LINEAR straight line, therefore you will NEVER have one set of rule to analyze the price trend indicator relationship.

There is a START stage, a GROWTH phase and MATURING/ENDING part. This is straight simple. It is the different price trend intensity/velocity/momentum that is a bit more challenging and need a lot more patience to analyze and correlate while developing the strategies as it evolve.

This different intensity/velocity/momentum. This dynamic movement is NOT a straight line in ONE direction before it REVERSE and changes, make any inexperienced and amateur seeing the market as RANDOM and Haphazard movements.

The well seasoned ones knows this is DYNAMIC trend of different intensity in ONE major direction with speed bumps along the way until it ends at the final price!

The truth is many comes expecting a straight line and caught unexpected that it is a winding road with speed bumps and temporary retreats.

In a simple analogy, this market has "LIFE" and it has different pulse beats over time depending on the emotional/behavioral state.

How we internally react to the external will decide our OUTCOME!          

Trading Edge - System

A system can be implemented easily with good Risk Reward ratio and has to be able to fit into UP and DOWN trend (excluding side way).

This system has to be able to take away Guesswork and improve the probabilities.

Most important is a simple uncomplicated system that we can TRUST and have FAITH it will definitely work consistently in the past, present and future.      

Adapting - A simple word yet full of meaning

  "The world is not going to adapt to you. You're going to have to adapt to the world."

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GOLF and Trading/Investing

Golf is a game where the score depends the person in the mirror (yourself). It does not require any counter party to play. It is an individual game. This is no different when one goes into the financial markets. YOU DO NOT NEED A TEAM or PARTNER.

The score will depends on your mental, training, skill, the ground and equipment. Again this is no different from the financial markets where your performance depends on your appropriate applicable knowledge, back testing system, experience, mental/psychology readiness and your tools (charting).

The fairway ground can be flat, uphill or downhill, just like the trend can be flat, up or down. How one perform on the different terrain or trend will depends on one's mental and skills.

Whether the ground is wet or dry is like occasional rain and dry day.

I can draw the parallel similarities between this two.

Unlike most sports, where either one participate as a team or with a partner and in most cases many things are beyond our "navigation". But golf and trading/investing is a SOLO game where we can navigate our path accordingly. 

To be proficient one need to learn and understand the game, WHEN to "attack", HOW to attack, WHEN to retreat and HOW to retreat. Come with enough golf ball is no different from coming to the market with proper financial allocations.

At the end of each game, check your score and know where to improve if needed.

Enjoy the "GAME" and make less mistakes to improve your score.  

Market - Independent Price Leader

The most interesting part about the market is that IT DOES NOT SAY ANYTHING. All it does is to move and glide along the path of least resistance. It can be UP, if UP is the easiest to do when DOWN seems difficult. It can be DOWN easily when UP move is difficult. Or maybe it become sideway when there is no clear "winner" between UP and DOWN.

Human has a habit of rationalizing each and every move it takes and moves irrespective of the direction. The good news is there is NO RIGHT or WRONG answer to each and every reasons.

The market does not give excuse and reasons. It does not YELL out or leave behind notes. It is US that start to attach labels to it.

The most difficult part is to find someone who don't inquire about the reasons behind the moves.

IF you can't provide some sort of political or fundamental analytical logic, than you are deemed to be not sophisticated.

The truth of the whole matter is knowing the reasons and not profiting is merely a waste of time.

But knowing how to capitalize on the price movements is what we should be aiming to fatten our bank accounts. IF we can consistently increase the bank accounts without knowing the reasons other than which direction is dominant than I will say ... YOU HAVE ARRIVED       

Broad summary which I agree coompletely

 

Recession and the stock market

How we perceive the performance of the stock market has been developed from our education system and upbringing.

Talk to anyone what and how do they expect market to perform in a recession? I am very sure 99% will say DOWN with one say NO change and probably no one will say UP!!!

Irrespective of whether we get our education locally or oversea, the platform template is base on LINEAR thinking foundation.

The TRUTH is both LINEAR and NON-LINEAR (opposite) exist and co-exist BUT only ONE can show depending on which is predominantly the LEADER.

Everything goes in CYCLE and evolving through LINEAR to NON-linear state according to our "FIXED mindset" expectation benchmark.

But if one has NO fixed benchmark, than the Linear and NON Linear relationship versus our expectation does not exist but to follow and adapt as it changes evolving over time.

Once we have a benchmark as the foundation and things change in parallel according TO the expected benchmark, this we call LINEAR relationship. 

But when the things do not change accordingly and on the contrary go the opposite, we call this NON-LINEAR relationship.

The benchmark is an INTERNAL self made. The ACTUAL or REALITY is EXTERNAL beyond our control and out of our hands.

Our academic examinations is base on LINEAR approach be it the Chinese Scholar examination or the Western system. It is the right or the wrong answer. 

While the answer to any formal education examination is FIXED, the answer to REAL world is fluid and contrary at times. It is about the CORRECT answer. As things evolve and change over time, there will be situations where reality turns out according to our expectation and at times it will be opposite our expectations. It is our expectation!!!

Don't be surprise that the Stock market index fails to tag along during any economic recession.

WELCOME TO REALITY

         

  

The summary in a short and simple video

 

FOCUS - FOCUS - FOCUS

Life is full of distractions that we cannot avoid completely but we can learn to manage them and to focus on the key things we want to achieve.

The financial markets is loaded and full of 1001 distractions that can derail your path to your destination.

Being a chart analyst practitioner does not mean I will not be distracted. I have my fair share as well when the one is tested with a losing open position(s) before it make a turn for the better.

The only way to be good and proficient at anything that one wants to be is to FOCUS - FOCUS - FOCUS.

Specialize in a few strategies and techniques that give one the best results. 

One can be a macro generalist but one also need to specialize on certain methodologies.

Yes, all of us will walk through a phase where we cover a wide area of different approach and theories. As time pass, we should filter the appropriate ones that suit our personality.

Once we shortlist them, next is to study the strengths and weaknesses each of them for all the trends (UP, SIDEWAY and DOWN).

Finally, choose the one that you find most comfortable using and back test as far back across different time frames and different product classes               

Well said . life as a proficient trader

 

Forecaasting the future and tracking the trend

I walked through the path alone with hope of the future after 1994 crash in KLSE. In the list of "priorities" to do, the obvious reaction was to put "market prediction" as the Top1, Top2, and Top3. What happen between NOW and the prediction is NOT in my book!!!

As time passed, I wonder why I am not getting the results that I am expecting. A lot of it has to do with between NOW and the prediction(s). I do not have any idea what is in between.

After spending a few years learning and understanding the "in-between", I have familiarize this "in-between", things has improved. But the "potency" is somewhat not the level I want.

Going back to the drawing board, asking myself, what is this whole business or game is all about.

Is it about prediction? Is about following the trend? Hybrid of both? or Is it something I have never thought about?

I know there is an end to the "present" trend and emerge a "new" trend which becomes the current trend. "Present" becomes "past" and "new" becomes "current". This current trend will run its full course to the end becoming the past with another new trend emerging as the current trend. This will repeats into the future.

The question is HOW do I capitalize on this knowledge which I did not learn from my MBA in Ivy league classes?

Instead of forecasting market, I embark on a new journey, to refine the above using chart tools. Yes there are repeating price behavioral patterns across all up trends. All down trend patterns are similar naturally. Down trend patterns are opposite of Up trend and vice-versa.

Predicting the future levels is independent of trend cycle behavior. Both are 2 separate and different subjects. Trend cycle behavior is about NAVIGATING safely and profitably. If one is unable to navigate safely, predicting the future is just a past time.

My attention and priority is now realigned to new focus. It is a new adventure and a new objective. Towards the end of this new journey, I saw light. I have developed and tested new system, that is simple and easy to follow.

The final question that comes to my mind is with new knowledge, discovery and progress, which time frame is most suitable and how do I manage other time frames. What time frame should be base or CONTROL as we say in scientific life science experiments? What and when do I use the other time frames?

Once we have selected the "base control" time frame, we need to know and understand, when do we use higher time frame charts versus the control and when do we use the lower time frame chart versus the control.

When you understand this,  I trust .. you will see light at the end of the tunnel.

Select and use simple charting tools to follow and track the price trends. Next is to find chart indicator(s) that is simple to understand how the indicator(s) behavioral patterns "manifest" over time in the cycle in conjunction with price simultaneously. 

There is a NON-NEGOTIABLE behavioral pattern that happens in each and every trend irrespective the trend is up or down cycle. There are certain behavioral traits before and after this MANDATORY pattern.

I have observed this over the last 20+ years repeatedly happening in every UP and DOWN cycle.    

Questions lead to more work and discoveries that I don't read in trading books and learn from my Finance classes back in later 80s.

My final conclusion is Navigating each trend cycle successfully and profitably ultimately decide the winner and NOT predicting/forecasting the future.

Analysts will talk about predictions because that is what the audience wants to hear.

Have great weekend and the week ahead

  

              

    

Market - The reality - Stop Loss or Protective Stops?

Many people who have "experienced" MARKET will describe market like how the blind people feel and elephant.

My experience with market about 38 years ( + , - ) has been bitter, sweet and sour. But most of all I learnt from my journey without any regrets. Each day I want and strive to be better.

Market itself is NEUTRAL, impartial, don't discriminate and has no affinity for anyone or color. The direction of the market is dependent on who has the ultimate upper hand to move the price trend direction. 

Market as describe by many who has been bitten as unforgiving. But market also allows us to redeem our failures also means we need to reflect all our moves, admit our mistakes, learn, seek knowledge to improve, persevere, patience and mentally prepared to face the challenge.

Market has no place for anyone who are NOT willing to "invest" in learning, learning and learning. 

Market is NOT the place who anyone who do not have the patient to wait for a good low risk and high reward set up.

Market is the wrong place for people who do not treat this as a BUSINESS. 

Consider I have walk a full complete circle with about 38 years with the market. I have no regret and if I were do it all over again, I am more "experienced", mentally and emotionally prepared for the market.

I spend hours, days, weeks, months and years to learn about market and myself. 

1.Human by nature are impatient and this is the No1 trait to trip and fall.

2.Stop Loss or Trailing Stops. Any simple proper and reliable system, theoretically the system should yield a decent good risk reward ratio in favor of reward. Which bring us to the next question about implement STOP loss to a reliable system? Does it makes sense? The theory is a good reliable system should be allowed to operate accordingly and it should yield good results with PROTECTIVE TRAILING STOPS to exit the positions and to protect profits.

As a Trend believer and practitioner, I have been using stop orders to enter positions and protective trailing stops to exit my positions when I read the chart indicators are displaying set ups patterns that warrant my attention.

The other order that I use often is the OCO (one cancel the other) order at 2 different levels placed at the same time. This order means if I have key in order 1 at A and order 2 at B, when either one is HIT, the other automatically cancels.  

Not all platform has the OCO functions. 

I am in favor of using price trend following in conjunction with 1 or 2 simple indicators to monitor the trend velocity (intensity). 

If one takes the effort and observe closely the relationship between the price trend behavior and indicators changes, there are certain repeated patterns that correspond to every up and down cycle (NOT SIDEWAY).

OBSERVATIONS - OBSERVATIONS - OBSERVATIONS.

     

Winner's Curse and Cycle

The cycle of "life" is about the start (germination).. growth ... mature ... decay ... end. 

If one wants to remain in the cycle, one has to understand and respect the cycle and the stage. When I was first actively in the market back in 1993, I was in the growth state and prospering like I was good and invincible. Suddenly, the market experience a sudden death when the former Minister of Finance Malaysia (Daim) warn people to exit and the stampede.

If I had taken the effort and trouble to learn about markets before diving into the market after returning to Malaysia like the Bull and Bears trends. The strategy to protect capital when there are NO derivatives products to insured what sort of orders or action steps MUST decisively taken.

MY "LEARNING" started after the stampede. I paid a very heavy price for this LESSON. 

This doesn't mean that what is NOT taught in school when I was doing my MBA is NOT important. The finance subjects are theoretical analytical and not about how to be a commando in a combat.

It was the market that turn me into a commando in a combat and not the university. 

Stepping into the market and immediately churning profits without understanding the market natural behavior is exactly a winner's curse at the growth-mature stage. Winners will never be prepared with Plan B especially for first timer. The head is filled and full of confidence. When the market turns and without Plan B, this turns to panic and fear. 

How about one started the entry at Germination/start phase? Irrespective of any phase, if this does NOT include Plan B than one is bound to face the risk of financial loss.

There is NO exemption to learning about trend, cycle and strategies if one is serious about navigating safely and profitably.

One of the other issues is HOPE. When the market goes again one's position and a temporary situation only to climb higher, this HOPE is very detrimental as it gives a false confidence especially when one does not understand and have no idea about trend cycle behavior.

We cannot deny the existence and importance of Trend Cycle, the behavioral patterns within a trend (UP or DOWN) is similar over time except they are opposite direction. The differences will be duration of a cycle and intensity across different cycles. The side way trend  is completely different from UP/DOWN trend and every side way trend similar across except the duration and the price ranges.

Up and Down trend are opposite in nature BUT side way range trend is completely different from UP or DOWN trend as it goes horizontal.

Understanding the trend, cycle and behavioral patterns means one need to have a simple EXIT plan (PLAN B). This knowledge prepare us to the unfolding behaviors and what to expect.

Make mistakes, learn and improve than you will be upgraded.  

 

 

    

Financial Literacy ---- Buzz word

Simple 2 words but subjective interpretations Is it financial accounting knowledge? Is it market in-depth knowledge (whatever that means)? or Is it the knowledge to navigate safely and profitably in the market?

The majority of the financial markets participants are mentally bias towards academic financial knowledge. Which often anonymously interpreted as Financial literacy. IF such knowledge is requirement to navigate safely and profitably in the financial markets, than all business school graduates SHOULD be millionaire. Unfortunately this is NOT the case. Fortunately this GAME is an opportunity for ALL to participate and exploit the opportunities.

IF one take the effort to read the profile of top Traders/Investors, there are many successful ones WHO DO NOT HAVE FINANCIAL BACKGROUND. This confirms that there are NO pre-requisites.

In my almost 38 years actively in the market, I can confidently say that THE KEY IS TIMING. IF one is able to decode TIMING and using simple technique(s), than one should NOT be distracted by PRICE. 

We all have the freedom and rights to have our own views/opinions. BUT if the timing is NOT right and ripe for the event to actually happen per our expectations than it is NOT going to happen.

I have my fair share of "sitting it out" until the price trend move in my favor according to my expectations.

Over the years I invested my time, mind and effort in harnessing the TIMING accuracy and appropriate ORDERS execution to ENTER and EXIT my positions. Last one year, I have been doing more STOP and LIMIT orders trailing the market instead of hit MARKET orders.

This is only possible after I have refine my own trend system that help me to read the trend cycle GPS state to identify the current position within the trend cycle. Once I can confidently conclude the status, I will plan my entries accordingly.

This GAME is NOT about the Quantum financial knowledge. It is about Trend, Cycle Timing. Unfortunately we don't learn that in academic formal class BUT fortunately everyone has to opportunity to learn INFORMALLY from the ACTUAL market.

One of the key terms I learnt as an under Grad pursuing my B. Agric Sc in UPM in the 80s is in-vitro and in-vivo. What works in LAB need not necessarily works in the FIELD. 

What we ace in Financial subjects need not mean we will ace in the actual markets. In fact there is a risk it can work on the opposite. Simply because academic excellence give us the FALSE confidence that we are invincible BUT market proves we are vulnerable.

I am incline to believe that there are 3 components to this game. 

1.MARKET Analysis (Trend, Cycle, Timing)

2.Financial Risk Management/Strategy (Funds allocation) and 

3.Mental Psychology (Fear, Confidence).

If one is able to strictly following a reliable simple RULE base system, than we can remove the (3) Mental Psychology from the equation.

In general, market crowd psychology is base on herd instinct and thematic sectors "play" is he buzzword. The trend direction is self propel and price is the leader. It is like a locomotive train head leading the rest of the coaches behind on the TRACK.   

 

 

  

   

           

Good Morning

 

Trend reversal - simple approach

What is trend reversal? I define it as the existing or current trend direction has changed. 

Example. 

Price is moving UP directional and this motion no longer in motion. Instead the price direction has switched or changed from UP to either Down or Sideway.

What is defined as DOWN in this case? There are different school using different parameters to define this. Some might define as price breaking last 5 days low or others might define it as price breaking a certain % of the total move or another might say price need to break last 3 recent lows. Another group might say if price break a certain moving average parameters on either daily or weekly or monthly chart. Maybe another trend line practitioners might apply the trend line technique.

I prefer to use the term trend change instead of reversal simply because trend do not only move UP and DOWN, it also move SIDEWAY. This sideway exists and we cannot simply expect a trend that is UP will automatically change to DOWN but it can actually go sideway instead of down.

On the reverse, a DOWN trend need not necessarily change to UP but it can also go SIDEWAY.

When SIDEWAY phase ends than the greater force will decide if the emerging new trend will be UP or DOWN.

Once we debunk the wrong concepts and lay a proper foundation than it will be easier to move forward correctly

THE BIGGEST CHALLENGE / HURDLE ?

Assuming one has a decent good knowledge of the financial markets and simple reliable accurate system, this does not mean one is ready to make money. The biggest road block to anyone who wants to be successful in profiting consistently in the financial arena is no other than the same person when you look into the mirror.

Learning about markets, trends and systems can be achieved DIY swiftly. However, the one in the mirror is the hardest challenge to change.

By nature, human are eager for actions and immediate results. The patience level is almost NON-existent and this "internally wired software" need to be "reformatted" to be more patient waiting for a good low risk versus high reward setup to act.

I had my fair share of shooting from the hip over my years in the market. The biggest mistake comes when we react to price without checking and confirming a trend reversal set-up is in place before we pull the trigger. Instead of waiting for durian to ripe and let it fall, I fell into my own trap of cutting the durian fruit down prematurely. This is due to our desire to be part of the game and fear of missing the boat.

In fact, it is due to the condition that the trend HAS NOT reverse when we jump into water and most of the time our failure to use appropriate "orders" to initiate entry.

My own experience shows that 99% of the time and effort is learning the charts, systems but we spend less than 1% of the total time effort resources on rewiring our emotion and internal mental mindset.

This non-visual (emotional) factor is probably the most crucial element besides money risk management and trend systems. Unfortunately most of us don't pay much attention on this.       

 

Price Trend cycle physical charateristics (anatomy)

All creations on earth have their own physical characteristics. Even cycle has it's own characteristics. The anatomy within the "group" are generally NOT exactly the same, BUT similar.

Price trend cycle has it own anatomy given that it is "alive" and evolving as it goes along. Price trend moves in a certain direction within the cycle. If the cycle is UP, than price will go upwards above the horizontal BUT in a zig-zag manner like a snake motion. 

In general, the up zig-zag movements will under-go retreats or some label this as corrections or profit takings. One deep pull back correction will happen shaking the market participants only to retest the earlier top before this pull back after this temporary dip is over. Sometime if the trend is strong, the price will scale higher than earlier top and go beyond.

What happens to the up cycle also applies to the down cycle except they are opposite.

Due to the fact that cycles are products of human emotional actions (non-linear), No two cycles are the same. The cycle will differ in intensity, time and magnitude. But the basic features will remain the same.

How do we tread the opposite retreats of the cycle safely and not shaken before the cycle ends? I has my fair share of "missing" the boat in the 90s due to this serious opposite retreat. In the 90s, I was in stocks, the it is a one way street where I can only BUY/LONG the stocks. When a deep correction comes, I got shaken only to sell low in the process and to see the stock price scale higher after this "digestion" is over.

It was only after re-looking and analyzing the trend cycle behavior anatomy, I manage to see with clarity and map the features accurately.   

A lot of my discoveries is my perseverance, patient, self-questioning, observations and curiosity.

The systematic logic is when I know how and what a price trend cycle is like, the next obvious step is to develop a simple system to follow the trend until it ends. Last is to select the indicator(s) that I am familiar and comfortable to track the "movements" and most importantly the deep fake retreat using the indicators to confirm each and every move.

Strategically, I start to capitalize on this path map to lighten my positions before the massive retreat and reinstate my positions when my system indicates the probability of the retreat is ending and resuming the earlier trend direction.

We have read and heard about AI trading and the sorts. In my own opinion, I doubt the AI is capable of outperforming the simple trend following system.

The key advantage I have over many other people is my ability to put my personal bias aside, analyze the situation critically and honestly to see the truth. Accept wrong decisions and errors. Go back to the drawing board and improvise.

Forex markets on MT4 and or MT5 is where I do all the R&D, testing with small capital. 

 

     

My Journey from 1993

After baptized with fire and losses in 1994, I started on my journey in search of "truth". My first exposure charting was 1994 and occasionally I would have a friend call Mr K mentioning that ... Arrr the weekly chart hasn't turn during one of those few days of corrections in the KLSE (now called BURSA). This statement did not register as important to for many years. Why? After the bout of losses, I am only focus on immediate recovery. We had only Daily charts! I wasn't interested in weekly charts and trend. Weekly charts can be easily displayed using the daily chart data with time frame selection on any charting software. My road and mind was on immediate profits to recover my losses. I didn't have the patience to wait. I wasn't ready to wait. I wanted immediate results.

Between 1994 to 2008, my focus was daily and intra-day chart trends. Despite developing new and simpler systems my mind was fixated on intra-day. 

As time passes post 2008, I start to reflect and re-look into the whole system, time frames and trends. My mind start to travel back to 1994 and make me re-look into the time frames especially weekly closely.

Suddenly, it dawn upon me the validity and reliability of weekly trend charts. There is no need for me keep reacting to price volatility of the daily as long the weekly trend is intact. This is exactly Mr K said back in 1994-1999.

I was pre-occupied with the desire for immediate actions and results. I was engrossed with recovering my 1994 losses. I was wrongly focusing on predicting and forecasting market target levels instead of following with the trends.

The moment I woke up and realize the importance of simple weekly trend, I finally saw the "eureka discovery" which was right in front of me for many years. Because my mind is fixated on something else,  I didn't notice what is in front of me.

The obvious next question is when do I use lower time frame Daily instead of Weekly. What situation warrants me to use Daily chart over the preferred Weekly? While weekly chart is the preferred weekly trend, there has to be situations and conditions when Daily chart is more appropriate. When I finally solve this puzzle, than timing the market becomes more accurate, reliable and less erratic haphazard.

Can the timing be off or wrong? Yes, it is possible BUT this can be managed with using other tools in the indicators library to minimize the risk of wrong judgment.

The directional price trend has peculiar and repetitive behavior that is revealed on the indicators pattern especially MacdH tracking price trend changes. Over the last 20 years, I have analyzed in details the MacdH behavioral pattern with price trend over different stages of the start to the end of one trend cycle. If one were to observe and notice the price and indicators patterns between the start to the end irrespective a rising or down trend, one should be able to visually see the indicator patterns manifesting on the chart along with price patterns.

In my opinion, the 2 best tools to track and price trend is the moving averages and trend lines. They can be used jointly or separately depending on one's proficiency.

Take the time and effort to study the moving averages and trend lines with basic simple MacdH and RSI, this should be more than sufficient to navigate the market safely, easily and profitably. I have horned my expertise on RSI and MacdH for all products that I trade and all time frames.  

 

 

 

 

         

  

Prediction or Following ? Which comes first ? - Happy Lunar New Year

Too much emphasis in the media and talking head about forecasting irrespective whether they come from the "fundamental analysts" or "technical analysts". Forecasting is about predicting the future and the future outcome is beyond our control. In the LINEAR world, forecasting will be perfectly accurate. In the financial markets where emotion reigns this become a NON-Linear state or some might refer it as "erratically stable".

I have not come across anyone who can claim that they are able to make profits consistently predicting company earnings or someone who can vouch that they can both predict markets and consistently make profits.

The analogy of predicting and following the market is like walking and running.

Following the market is about NOW or the present. Following the market is about the most basic thing that any active human in the market should be doing and able to diligently practice. If one is unable to conduct this basic, then forecasting element in my opinion is useless.

The personal hurdle is a mental challenge that one has to accept due to the educational system ingrained. All results of any endeavor is about FUTURE results. However market price trend is bias in a certain direction at any moment. 

What can one do with the present trend and historical past behind us? If you cannot, what can one achieve predicting the market future?

The whole process after 30+ years in the financial market, can be summarized into how can one exploit the opportunities of the price trend direction.

What are our strategies for riding the trend in motion and trend change?

What are our strategies for riding through a turbulent stage which can deceive many into believing it as trend change? In actual fact it is just part of the whole trend cycle!

The price trend direction is a product of human emotional activities. The anatomy of a directional trend is NOT a LINEAR straight line but a tug-of-war between the for and against the direction.

The reason why trend move is a certain direction is due to the upper hand gained by this group. When this group start to loose control and the opposite group wrest control, the trend will change direction. Ignore the media, news and rumors. Just track which side is in control and which direction it is heading.

In a tug-of-war, we have marker on the rope to tell us which side is in control. Similarly we can develop a simple system to guide and indicate to us which direction it is heading and trend change confirmation.

How does one knows if the trend has changed? When it has already done so. 

How does one knows if the larva has changed? When it has already done so.

We have price change as evidence and other evidence for the larva.

As we approach the Lunar New Year, I wish all my readers

 

GONG XI FA CAI 

I am taking a month break

             

The market - Reality - Truth - What went wrong?

https://www.straitstimes.com/business/hedge-fund-stars-who-got-china-wrong-are-paying-a-big-price

https://www.businesstimes.com.sg/companies-markets/banking-finance/singapore-hedge-fund-asia-genesis-shuts-after-big-mistake-china

Our decision where and how to place money in the markets are actually the product of Experience, Education (formal/informal).

The market buzzword is "Fundamental". The truth is PRICE TREND direction which we don't learn in class or any academic Finance class.

When one is making profits quite consistently in the past base on one's belief the future will be developing in a certain manner and price should react accordingly, one will continue to operate on this so called FUNDAMENTAL approach. One will be caught off guard when the price did not behave as we expected. 

One fails to see that the success if due to the strategy is align with the trend direction. If one is not align to the price trend direction, losses will be the result irrespective Nobel prize strategy.   

Scenario (1) - The business operation CAN develop as we anticipated, it is NOT necessarily that price will react according to the fundamental developments. 

Scenario (2) - The business did not develop as we anticipated but price reacted as we expected. 

I learnt from my past mistakes and I adapt to changes accordingly. I understand the weakness of formal education and how to improvise accordingly to suit market conditions.

It is NOT easy to breakaway from the classical economic finance stereotype, but there is nothing to loose and more to gain to explore the "other side".

Experience don't make me smarter. Mistakes made me wiser.

We can belief all the hypotheses we created will come true. In the end the verdict is how price develops.

We will never be taught what market is all about in school (graduate or undergraduate). We will also never be taught what is price trend and what are the different strategies at different stages of the price trend. The beginning, mid-way and the end of the price trend. How do we detect and confirm the different stages.

We will continue to make the same mistakes ... as long we don't sit and ponder what is missing in the formulation.

        

  

 

Utilizing Time frames

The strength of USD against major currencies defies the academic premise of what value is all about. As simple as a chart can be; it is very potent; reliable as long one does not stray away from the basic principles of trend and trend direction.

Over the years I have learnt to tame myself when dealing with markets more than trying to tame the market which is IMPOSSIBLE.

As time pass, I find the markets easier to read and swim. Unlike in the past it is turbulent and treacherous.

I once read somewhere:

TIME IS THE GREATEST TEACHER.

Each and every day, I learn things that are importantly crucial which I did not pay attention.

For many years, I disregarded the importance and reliability of higher time frames trend and focusing on daily and lower time frames

Over time, I realized the incredible valuable weekly and monthly charts. This makes my game less volatile and more stable.

The different degree of trend strength can be simply determined using visual. It is best used with the 45 degrees to determine trend force of the core “anchor” time frame.

When the price chart is trending at Steeper than 45 degrees on the UP trend, I consider this to be strong. When it is price chart trending less than 45 degree on the UP trend, I take this to be weak.

How do we make use of lower and higher time frame with the strong and weak trend?

When the trend is STRONG, use the lower time frame chart with the anchor to analyze the trend reversal. IF WEEKLY chart is the anchor time, the lower time frame is DAILY chart. IF DAILY chart is the anchor time, the lower time frame is 4H or 6H or 8H chart depending on the available chart.

When the trend is WEAK, we use the higher time frame chart with the anchor. If DAILY is the anchor time, WEEKLY chart is the higher time frame. However if WEEKLY is the anchor, MONTHLY chart is the higher time.

Hypothesis - Criteria Qualifications and Confirmation

The biggest problem and challenge any market participants is NOT the lack of knowledge but rather the lack of SIMPLE systematic analytical methodology.

We all know price move in trends and we all know that trend "change" overtime as it progress.

The next question is WHAT do we consider as TREND CHANGE or reversal.  IF we can set the criteria that defines trend change than we have PROBABLY solve a major mystique.

The other MYSTIQUE that need to be address is the TYPE of Orders to Enter the market and to EXIT the market as well.

IF one has defined the criteria for trend change and back tested with reliable accuracy, logically one should be able to execute the ENTER or EXIT positions base on the criteria. Whether it is STOP orders or LIMIT executions will depends on ones comfort zone.

Over the years, I have "grown" and "mature" with the market. I have learnt the importance of the ANCHOR time frame to determine Trend reversal/change and using the lower time frame to trade along the anchor time frame.

Also using the higher time frame "above" the ANCHOR time frame as a confirmation of trend change/reversal.

Once one is able to grasp this, the need to scalp or trade frequently becomes the thing of NON Necessity.

Therefore one should have the Hypothesis ... like any other scientific methodological research and criteria to validate them.

  

Meaningful Principle of seeking opportunities in the financial markets

To the well-seasoned market surfers, this is like a very simple rule of thumb. To the beginner, what does this entails?

Let us put a few things in a proper understanding about Waves. Prices move in trends and "they" drift like waves that we see in the ocean moving UP and DOWN BUT with one caveat that it CANNOT retreat backward like sea waves. This price WAVE can only move forward from LEFT to RIGHT continuously on the price (Y axis)  and time (X axis) over time. REMEMBER IT CANNOT move backward from RIGHT to LEFT on the ONE-Dimension chart.

The price will bounce UP and DOWN with ONLY forward thrust.

The next question is WHAT is the TIME FRAME that is used as ANCHOR.

In general this anchor time frame is considered to be RELIABLE trend change determination.

Depending on one's comfort zone, the anchor time frame can be DAILY or WEEKLY or even 4Hours.

The anchor TIME frame will decide one's intended holding period. If one intends to hold positions for months and weeks than the preferred chart time frame is WEEKLY. If one intends to hold for a week or less than probably 4H charts is preferred.

One has to back test and plot the charts to determine and decide which is suitable.      

     

HYPOTHESIS - Experiments - Trials & Errors - Conclusions

Financial markets allow us to either blindly follow others recommendations/advice freely and the outcome can either be positive or negative outcomes.

Alternatively if one is adventurous, this is a place where one can develop and form own hypothesis, use historical data to back test across the different non-stocks products or stocks versus different time frames. Or a different sets of matrix combinations.

Given that we are dealing with a dynamic price trends which is NON-LINEAR, we should not expect LINEAR repetitive outcomes.

If one looks into the details of the price behavioral actions over time, there will be common traits across UP or DOWN trends but SIDE WAY is a total independent of UP and DOWN trend.

The logic is that UP and DOWN trend should have opposite traits. We should take note and remember that these opposite trends are NOT REFLECTIVE OPPOSITE and NOT EQUALLY OPPOSITE but they are of different intensity opposite directions producing different slope tangents.

The directional trend continuous state is build upon a series of zig-zags in a lower time frame in the trend direction of higher time frame. This is similar to the light and sound motion theories and diffraction.

Unfortunately the academic world does not subscribe to such premise and discourage others from exploring the truth. If the academic recognize and accept the existence of the "others" than the institution becomes irrelevant.

The academic approach is from the LINEAR paradigm which is "accounting" where all adds up linearly. Unfortunately the financial markets is NOT and NEVER a linear state which makes the classical approach using theoretical analysis rationale becomes inconsistent unpredictable. 

The biggest group of non-Linear approach is the charting approach besides throwing darts and flipping pages. The charting approach has different school of thoughts unfortunately. 

The charting fraternity is made up of TREND following versus the FORECASTING or HYBRID of the two schools. My approach is the HYBRID which I developed my own technique. 

 

 

 

    

China - Progress and Global Awakening

Recently I took my second short trip to China namely the Shanghai delta belt - Hangzhou versus my first trip to Shandong sometime last year.

Growing up as a kid with relatives in China and watching/hearing the Malaysian Chinese relatives relating to us the happening in China back in the 60s and 70s versus NOW, the leap and bounds seems unstoppable for the development at key strategic zones.

In 1990s the former Malaysia PM Tun Mahathir lead Malaysia business delegations to invest in China. Fast forward 34 years (2024), reverse happens and the ASEAN region is hungry and dependent on China investments and infrastructure development funds.

15 years ago, I went back to USA and back to the Ithaca where I stayed, studied at the Ivy. I took my family with me for 3 weeks to tour USA and Corning where I once worked.

The town were old worn and nothing significantly new.

As the saying goes, SEEING is BELIEVING.

The West will die of its own doing and natural death. Asia will grow at its own pace. Even if Asia does nothing status quo, the west will decay and not progress.

China has correctly focus on investing in infrastructure development the lifeline of all economies.

The high speed train, airports are the veins. The inland waterways for centuries remain the artery of transportation of goods as people rely less or more correctly no longer depend on the waterways to move about but top grade high speed train.

Major tourist attraction landmarks are filled with local Chinese tourists.

China is probably best describe as rag to riches story over 60 years.

      

Addictive intra-day. calendar spread.

Many times and I mean too many times I lost count reminding myself that all the blunders, mistakes errors when "trading" the trend is I got trap in the intra-day and lost my compass bearing on the higher time frames like weekly and daily trends.

Intra-day can be what I call as volume trades and addictive, whereas the higher time frames trades is generally slow and unexciting.

The other mistakes which I end up creating is the "high"and "low" zones of the trend. I am human with opinions and sometime they are right and at times can be wrong. When I walk away with more rights than wrongs, than this build confidence. Such development is TOTALLY dangerous and most of the time I did not properly execute a back up plan in case I am wrong.

Eventually I will be proven correct but I end up missing out most of the trend since the trend against me before it is for me. This is not only financial but mental impact as well.

Going back to the drawing board, the conclusions are 

1.We can trade the smaller or shorter time frames BUT don't ignore the higher and longer time frame,

2.Take profits on the lower time frames but place STOP orders on the higher time frames.

3.Take new positions or reinstate with STOP orders on higher time frame after exiting position.

4.IF calendar spread is available, use the different months spread to minimize losses and remove one of the 2 positions to ride the trend. Don't forget to Place STOP orders on the exited positions to reinstate them .Just to protect profits. 

  

5. Remember to analyze the situations, where improvement is NEEDED and CRITICAL ASSESSMENT.

6. The only way to increase the odds is to be HONEST and THINK and IMPROVE and SIMPLIFY

Day - Week - Month - Time frame

The longer I "trade" the market, the more I am convinced the power and reliability of the non-intraday time frames when it comes to major trend and reversals.

Yes, we can "scalp" the intraday volatility, but we must NOT and NEVER ignore the daily and weekly trend. We must always position in the direction of the daily and weekly trend.

Some charting software have the flexibility of choosing time frame between 4h and daily like 6h, 8h and 12h besides the normal time frames below 4h like 1h, 15m, 5m , 1m.

As I progress overtime, I rely less on time frames less than 4h.

In fact the only time I refer to intra day charts is WHEN the setup of trend reversals developing on the daily and weekly.

If there is any desire and appetite for intraday scalping, I will do it NO more than 20% of total positions.      

Trading - Driving

If one put the nearest explanation about the financial markets... the theory and the applications, I can only put it that WE don't learn about the markets in the academic university despite completing the accounting, finance and economics subjects. 

It is like we go to university to learn what a car is! The components, parts and software. But the only way to drive a car is to actually drive it on the road. Learn how to handle different situations on the road.

The only way to learn about market is to actually participate and experience every different trends.

Until today, I am not aware of any emphasis taught in the Finance Economic class that explain the importance of TIMING and CYLE and TREND.

Golfing different resorts and trading different product

Over the last few golf games, I have played at different golf clubs. Each golf course will have its own characteristics much like different products at the exchange will have its own characters.

Going to a new different course to play is unlikely to produce the same performance as the golf course that I am used to. Similarly trading new products will not yield the same results as the characteristics of the different products behave differently.    

It take time to play (train) the terrain of the different golf course similarly it take time to trade and understand the different characters of different instruments.

On a down slope fairway one can get 20m extra roll up to 30m and on the uphill one can loose up to 30m back roll from the landing point.

It is like trading a volatile stock that reacts to every little news that hit the market.

 

 

I am not good at trading ???

 A few days I manage to link up with a long lost friend from my Uni days who major in Finance during our MBA time. So we talked about A to Z and casually he said he is NOT good at trading so he kept to selling/marketing derivatives in the Investment Banking.

This is a common statement or comment that I get and hear over the year. I think and believe there is a misunderstanding what trading means. Trading is a generic term and broad coverage. I am sure many refer quick responsive act of buy sell activities as trading!! This is scalping in my opinion.

Trading itself does NOT and do NOT attach time frame duration.Trading is the act of profiteering from buying and selling.

Trading can be divided into short term scalping or long term investing.

When someone tells me I am not good at trading (golf), what I am hearing is someone who has not "invested" time and effort to discover the game and own-self. To be sufficiently good in anything, one need to understand the game, rules, tools (equipment) and most importantly OWN-SELF.

Profiteering from the financial market is like a golf game. It is my own score versus others. Like golf, I can play this game alone without any other people. Financial markets is the same the profit (score) is my and mine alone.

While Golf has a fixed tee off to the flag distance, the financial is more abstract with the start and the end for us to locate and figure out. What is fixed is we know the LOW start will end with the HIGH point with become a new starting HIGH and ending with a LOW next trend.

The key in financial market is to develop a system how you can locate the trend change and to flow with the trend. REMEMBER to forget ALL the noises that is external. Anything that cannot tell you the turning point and trend direction are NOISES including finance.

Once you understand where to focus than the rest is about YOU and YOURSELF with the market. When and How you are going to move is like deciding how to swing your golf club and which club what force/speed.

If you want to be proficient in anything, remember to spend time to understand learn and practice.  

Only you can limit and restrict yourself of what the opportunities the market present. The opportunities ares plenty.

Remember if you waste your time on other matters that has nothing to do with the market and trends, how do you expect to be proficient in profiteering from markets?

I sincerely believe that every effort done properly and smartly will pay off with benefits.