Saturday, January 30, 2021
I will classify the existing analysis used by traders/investors/speculators into 2 approaches namely the charts and the non-charts methods.
The non-charts method include the Financial analysis and any other methods that do not use chart technique.
The chart technique is suppose to be simple straight forward without too many "justifications or confirmations" to rationalize or substantiate the actions taken.
The history of chart began with the records of price actions - Open-High-Low-Close. Such exists prior the invention of computers. Chart is about trend and trend is a collection of price actions. Obviously someone decided to infiltrate price analysis to include volume behavior into the equation.
This brings me back to the basic lessons in physics when we refer to directional motion or directional path. When we analyze the motion of the object from the start to the end of the motion, we only record the changes in velocity along the path. The acceleration, the deceleration, the steady state and the end. Does it mean that the changes to the mass or weight is needed to confirm the object motion state?
Adding more variable(s) into the analysis do(es) not translate into accuracy or reliability. More likely it is going to add more confusion(s).
We will need to define what the trend is and anything not within the parameters is automatically classify otherwise. The oldest approach that I am aware is the TRENDLINE and later the popular Moving Averages.
The next step is to classify what is accepted as the trend change for the end of the existing trend and automatically is the start of a new trend.
The final step is to develop a plan how u manage the bumpiness or volatility between the start to end of the trend.
Saturday, January 16, 2021
Sunday, January 3, 2021
If one looks at... looks for ... all the so-called considerations of the financial economics, well it does not make any sense why the markets are at this levels globally????
If one just ignore the stories we read in the media and go with the chart ... this is not easy ... a personal challenge when we realize the discord or decouple between the charts and the economics .... which one do we follow?
The human bias is we tend and will follow the brick and mortar economic news.
The truth .... BITE YOUR TONGUE PULL YOUR PANTS and SOCKS ... follow the charts
Wednesday, December 9, 2020
As I sit back, take stock of my venture and experience since 1987 walking this journey in the financial markets, I have seen ... experience ... all sorts of things trying to link how market behave to financial analysis ... charts ...and what not.
Does having opinion(s) or views after getting all sort of reports and inputs ENHANCE your profitability? Or will it do more harm than good?
This creature called MARKET is a unique independent force. Human are mentally brought up to think having more knowledge means you have an edge of profitability!!!
Well this creature market is very unique because IT IS INDEPENDENT and we need to think how to make best what it presents.
We can be right about ALL and everything about the facts and figures but that do not directly translate into successful investment and profitability. We can be wrong about facts and figures yet we can make money all the way!!!
One of the first thing I keep asking myself .. HOW MUCH DO I NEED TO KNOW and NOT OVERLOAD!!! Or maybe the least I know ... the better off I m!!!!
We are all human and the biggest danger that we face is the INNER Mental Enemy and the is called the OPINION enemy ...This enemy called OPINION is the biggest inhibitor to one's mental and paralyze your ability to see things differently. It has a TWIN brother called RIGID mind. The twins is the worst combination for everyone.
Over the years .. I know and I vouch that .. my profitable periods are the time when I trade without the presence of the TWINs. The worst draw will be the season.. I am busy entertaining the TWIN visitors.
The most objective strategy for the markets is not how much facts one know but how much one does not need to know!!! All you need to know and understand is WHAT DO YOU THINK THE MARKET WILL BE DOING NEXT and I can guarantee that your facts might or might not agree with the market next actions!!! Sometime it may be in unison .. sometime it does not!! Since it is NOT always in agreement.. do you want to emphasis on this!!!
What we seriously and really want to do is to draw and list down the things/action steps that we need to adopt and internalize which have proven to be reliable and consistently accurate.
FACTS and FIGURES are for academic intellectual discussions!
Tuesday, December 8, 2020
The term CYCLE is often wrongly interpreted by many who use the word and hear the word.
cycle[ sahy-kuhl ]
Monday, December 7, 2020
Tuesday, December 1, 2020
Nothing for me to add or write ... except to share this updated chart.
It depends on your interpretation skills to know if market is going up or down .....
My work has been completed and fine tuning as well ...
Yes these are modified improved version of the histogram to determine the trend cycle. It is NOT perfect but this is as close and as good as it gets.
See if you can pick up or trace where the start and the change of the trend above ...
As 2020 comes to an end ....this is once a life time that I experience a sort of Global lockdown ... near to ZERO international flights and to a certain extend domestic also.
Buy/Sell on Rumors and Exit on News. If you are a stock trader ... we say ... buy on rumors and sell on news!!! But if you are a commodity or forex trader where you can either buy or sell ... than it is ACT on rumors .. Exit on new!!!
Friday, October 30, 2020
Sunday, October 11, 2020
Sunday, October 4, 2020
Friday, September 11, 2020
The charts above across different time frame as I do not have intra day data. ....so it is the more basic ... daily .. weekly n monthly ... which I feel is more than sufficient ///
The beauty of the chart above will depends on the eyes of the beholders.
Whether you believe or not ... can see or not ...it is up to you and not me.
IF you see the chart is rubbish .. than rubbish will echo in your mind and you will hear only echo that resonate inside.
Wednesday, September 2, 2020
The approach I adopt when someone try to convince me or make me believe or accept what is said, I will take 3 steps back, take note of all the points presented.
Next I will draw up my road map and try to prove why I should consider what is said and next is to draw up another plan to prove why I should not.
With the results than I will weigh which direction I should be taking and consider when I should be taking the opposite if warranted.
Sunday, August 30, 2020
The older charting software that I use from the 1990s do not have the flexibility of charting intraday data except DAILY, WEEKLY and MONTHLY. This is long before INTERNET explosion and trading platform which are intra-day enabled become widely available FREE without cost.
Does this mean with real-time one become more profitable? NO. There is guarantee that real time intra day users are more profitable than EoD (End of Day) users. When one is given many time frames and spoil with many time frame options, once can become confused which ONES to use.
Trading is like cooking. The cook has to decide how high the heat or fire to turn up or down and which spices or ingredients for which dishes.
Even curry a generic word has many different variations from different countries using some different ingredients and preparations.
One should sit back, ponder over which time frames to be selected to match the relevant trends accompanied by the compatible indicators.
Take your time to think over and study the charts across different time frames with different trend !!!!
The vertical RED lines and the Yellow Zones show the 2 different possibilities for both price and indicators moving forward.
While the blue oscillator has been moving up when it was below ZERO, it can either continue to climb higher cross ZERO and continue to move up or abruptly make a U-turn and swim back down.
The plan of trading is always having a PLAN B ...in case PLAN A comes to an END gradually or abruptly.
Most of the time casualties is due to the failure to consider scenario B is possible and we are fixated mentally on the path despite the change. Rewiring our mind is NOT easy despite what we see.
We need to be convinced that change is happening and PLAN B has to be a serious Option to implement.
IF we think that RED lines zone on the above will continue to go up like the BLUE while it actual fact it is moving down, than we will need to weather the storm until it turn back up.
The different shapes of the Blue Oscillator versus the price trend direction only confirms the NON-LINEAR properties of the trend. The price trend rate of change is NOT uniform at times increasing and decreasing which is captured by the Blue Oscillator.
At times you will notice the Blue oscillators rises with price and drop in-line with price retreat.
Other time price and Blue oscillator going different direction with price going up and Blue Oscillator retreating. Follow by the next action where both Price and the oscillator moving in the same direction after diverging.
In other words, the relationship between price and oscillators will be 2 phase ...
1) Agreement in same direction.
2) Disagreement in different direction.
What is the definition of AGREEMENT in same direction? My definition is both and are moving in the same direction but different gradient or slope. Anything not within this is automatically reclassified into DISAGREEMENT.
Price UP with Oscillator UP (Agreement)
Price DOWN with Oscillator DOWN (Agreement)
Price Horizontal with Oscillator Horizontal (Agreement)
Price UP/DOWN with Oscillator Horizontal (Disagreement)
Price Horizontal with Oscillator UP/DOWN (Disagreement)
Anything outside of the 3 agreements state = Disagreement.
What do you do when you see the disagreements? Alarm bell goes up and trade more cautiously.
Saturday, August 29, 2020
Today, we do not need to manually construct the charts. It is all readily available from any trading platform that one subscribe. They will have BARS, CLOSE LINE and CANDLESTICKS but the more "traditional" one might include Point and Figure or Kagi or Renko ...etc.
Irrespective of whichever format you use, the basic function is to determine whether it is going up or down and the steepness or gradient for the mathematicians.
Well the truth is the trend moves NOT in a uniform straight line from the start till the end but ...zig -zag with different gradient in ONE direction until it do a reverse or change to the next direction.
The biggest obstacle to most people how one define the trend in motion and the trend reversal.
What and how one define trend in motion will also incorporate the temporary trend retreat before resuming in the earlier direction will decide one ability to weather volatility.
The next set of rule to define trend reversal is normally easier than the above.
Some of the veterans will not even look at any indicators other than simple basic bar charts. The gradient will be used to define to strength and momentum. Whether it is accelerating or cruising, the veterans
This veterans understand there will be turbulence, storm in the flight path until the destination is reached!! Experienced veterans know how to pilot the plane in all the different circumstances and that demand strategic plans to be implemented.
The modern veterans will move one step up to include indicators to help in precisions.
Is this game about precision? Or is it about ones ability to go with the flow???
Wednesday, August 26, 2020
When we look at the chart ... what we need to understand are only a few things or more precisely 2 things.
How about price? Well price represents your APPETITE when you see the number!!!!!!!!! Some people don't have appetite for big absolute price numbers and some have appetite for pennies!!!!!
Some maybe bias with certain price values and some may see them as irrelevant.
The whole idea is NOT to look at the numbers BUT look at the chart and try to write down WHAT DO YOU SEE. It is only after one is able to overcome the mental paralysis than there is no need to write what you see.
Even one should ignore the name of the chart or products or stocks or instruments.
Even one struggle with charts from past or present teachings/beliefs ... one should take 10 steps back ... re-wire ... re-engineer the whole process from the very basic foundation of CHART TREND ANALYSIS.
All the pollution and contamination comes when one start to intro and mix all sort of idea into the recipe instead of asking yourself when you look at the chart, what DO YOU SEE!!!!!
Forgot the indicators, forget the volume forget all the ratios... Just see the chart without all the makeups and cosmetics. Only than you can see the light.
When you are proficient, you can put on chart cosmetics to add a bit more zing to the chart but be careful not to over spice it up
The next step is to ask yourself, how do you know the direction has changed? It does not matter whether you are using candle or bar or line chart.
What do you use to track the direction and what do you use to confirm the directional change? When this can be applied across all different products/instruments for all different time frames , than you have got a working functional basic reliable system
Tuesday, August 25, 2020
IS the act of trying to make sense out of so-called "irrational and erratic" market a futile effort or maybe not????
What one can do and achieve within the normal realm in this world can be conceived mentally and achieved physically. That is the power of mind and belief.
If one believe that the market is a random act, than it is highly unlikely you will try to disapprove it is NOT a random move.
IF you believe there is order in the market, than you will start to find and see ...identify the behavior is no longer random.
The biggest challenge and acceptance is that NO ONE can map the pattern or behavior 100% accuracy. Instead one should distill the evident, imminent behavior up and down.
The question is .. HOW DO YOU MANAGE THE non-normal behavior that you can't map? How will you act when you face such conditions?
What you see is an image or echo of your mind ....!!!!!
When one start to see things like in the most simplest form... like an innocent kid who don't know anything instead of approaching it from the high tech rocket science mindset, than you eyes and mind will be open to see what is obvious before you ..it will be
Saturday, August 22, 2020
Wednesday, August 12, 2020
The are many ways to make money in the financial markets BUT there a consistent way to repeat the same mistake. Sometime this act is called self-inflicted injury, self sabotage or even friendly fire. Whatever name you want to call it and how it happens will only result in losses in the trading account.
I have my own fair share in this as well and over time put in place rules to ensure this do not happen or minimize or manageable.
Two common contributor to this is the distractions cause by short term intraday volatility instead of the longer term trend or more aptly called microscopic price volatility analysis.
The other is the wrong priority between flowing with the trend versus predicting trend reversal. It took me many years to realize one of the author in one of the books I read stating .... let market worries about itself when it is going to turn. let market pick its own time and level where and when it is going to happen. You just worry and focus the in between.
Simple non-mathematical .. rocket science statement ... very philosophical ... very profoundly true!!!
Trend don't change all the time .... only certain time and twice. This events accounts for less than 10% and 90% is the in-between.
If one spend 90% of the effort in market reversal prediction or forecasting, than one has the time allocation and priorities WRONG.
It need not be 200% perfect but it must be reliable and flexible to adapt into a changing/dynamic trend
Tuesday, August 11, 2020
Looking back my 30+ years journey, and not many people can last that long in the arena ...I look into the different stages or phases as a "market opportunist" trying to learn, unlearn and relearn all thee different things about financial markets. The DOs and DON'Ts. The truth and the facts and the fakes.
From the perspective of writing reports, it is how you write to prove to the readers your "academic intellect". Whether it is going to make money or not is IMMATERIAL. GAYA MESTI MAU!!!!
From the viewpoint of managing your own personal funds, I can only say that a streetsmart approach is the right strategy. There is nothing intellectual and all it takes is to work on simple rules that is reliable. One can use the most orthodox approach and still be profitable.
I believe that the MUST get rid trait in ones mind is to completely ban the mindset of using some tools to PREDICT market like fortune telling!!! Most people will spend lots of time and effort to PREDICT the market which happen only at 2 points of the trend ..namely START and the END. The rest of the time is BETWEEN the start and the end. Probably 90% of the time. Or at least 80%.
A realistic and most streetsmart is to focus the in between where big bucks or meat is!!
You to be in when it change and out when it change again.
Thursday, August 6, 2020
Wednesday, August 5, 2020
Dominated by junk stocks 99.9% on the front page ... guess the cowboys are back .....noo UMA no question asked ... Bursa need to show to create excitement even if it is DIY
Tuesday, August 4, 2020
Well well well ... let the charts tell you the story ...I might end telling you some different storyline. ...
The USD Index and WTI seems to have an opposite effect. The DJIA continue to be world Index leader while KLCI outperform STIndex.
Silver was a Johnny come lately while BITCoin has decent rebound.... Unlike a few years ago the buzzword was Bitcoin ... now I don't hear people talk about it in any conversation.
Monday, August 3, 2020
Thursday, July 30, 2020
Tuesday, July 28, 2020
UP or DOWN when it breaks out?/??? Just be patient and what for market to show and lead us along..
No need get excited. Market will do what it wants to do. What it wants to do is the easiest task and never the hardest task. That is why it will keep doing what it is doing until it is tired and change to a different actions completely.
Don't waste time trying to tell what market should be doing... utterly waste of time. NO ONE IS GOING TO LISTEN TO US except we listen to our own voice!!! Sound like a mental unsound people self talk!!!!
Some sort of sobriety ... Soon the Malysian DWI .. will be passed with heavier penalty. This spreader drunk drivers now need to behave!!!!
Sold spread yesterday ... now waiting to exit ....!!!!
Monday, July 27, 2020
The OCT month is the most active month with declining volume going forward and backwards. In the case of CPO, for its own reasons the Calendar spread seems to be actively traded.
This is the only Commodity Futures product that I know with such activities. WHY ??? I don't know and I don't understand. This is just an academic curiosity as I try to comprehend such phenomenon.
Coming back after a short diversion, looking at the table above, it shows the actions is around the active month with declining volatility beyond the active month. IT is safer to trade the forward upcoming months
Sunday, July 26, 2020
In fact more we will find when prices move to the extremes, both camps will be chanting not sustainable and "expensive" / "cheap".
These are 2 moments when price at extreme peak/bottom that it is most likely the 2 different schools will be on the same page.
The major time the differences will come in during the period of in-between 2 extremes.
Monthly chart - using the old technique .....we have the GREEN mov. avg as the ceiling, RED and BLUE as the support on the big picture.
Both Weekly and Daily only tell us the trading range. It is in a state that the upthrust is a suspect and trading with the 50-100 points range until the break out happen.
Indicators interpretation is all not so rosy and the daily ones seems to agree.
Will there be a final thrust up before the fall ??? or that is all we are going to see now>>>>
Such a price consolidation will mean EVENTUALLY it will break away either to up or down side.
Let us wait for the drama to unfold....
Friday, July 24, 2020
The table above shows the CPO Spread Quotes for the active months and the corresponding charts.
The big squeeze has been the OCT active months outperforming the rest in this unprecedented rise today!!!!
The bull run ... or bear squeeze is OCT and lesser in NOV ...
The forwards months are relatively quiet from Jan till June.... Looks like the CPO marketeers have manage to convince more CPO usage !!!!
Drink CPO, bath with CPO, moisturize with CPO, Soak in CPO, ......Cleanse with CPO, Sterilize with CPO, Sanitize with CPO and don't forget to DEEP FRY with CPO!!!!
With the new culture there will never be sufficient CPO to supply for the next decade!!!!
Sensing something was not quite right, I decide to SELL the forward months in 2021 and long OCT 2020!! ...
I made the right choice and decision.
We will hear the news later why the squeeze if there are any or maybe just a typical classic STOPS triggered!!!!
Tuesday, July 21, 2020
At times both are conflicting and at times both are in-line. Well, you guess it, the verdict and the judge is no other than the market that marks your positions!!!
As I have numerous occasion brought up and focus on this conflicting status, this are real and very challenging to try and find which direction or analysis to adopt when it comes to market.
Price is a product of 2 components namely the LINEAR and the NON-LINEAR factors.
I will define LINEAR as the Financial Economic Components and NON-LINEAR as the PSYCHOLOGICAL components.
The LINEAR components can be deemed to be MEDIAN and the NON-LINEAR as the VOLATILITY/EXTREMES around the MEDIAN.
Having said, it is highly unlikely a LINEAR personality will be able to understand the non-LINEAR paradigm unless one take the effort and initiatives to explore the other universe.
With the analogy of non-linear oscillating around the linear median, it means there will be time when the 2 personalities will agree before they separate and diverge. The linear will call the non-linear as undervalue or overvalue.
The LINEAR personality tends to portray the "giving orders attitude" that the price should be this or that. The non-LINEAR will be ignorant of the LINEAR, zoom up and down, does what it wants to do waving to standing LINEAR as it pass by to and fro.
Linear will be so preoccupied with all the formula and analysis while non-Linear will be just surfing along.
Once one can grasp this 2 personalities, one need to come to an understanding agreement that, one need to find a methodology to latch on the non-Linear and be productive.
The mix-up characters of non-Linear come due to some that preach and focus so much about projection and forecasting like fortune telling. Than we have another school who practice trend following.
This 2 attitudes can complement each other if one knows how to manage. One can do the forecasting between NOW and THEN. What happen between now and then is actions and trends. The projection can be right or wrong only market will decide for finale. Just like market will decide the outcome. Not LINEAR and NOT non-Linear.
The conflict between LINEAR and non-LINEAR is all about EGO. Well market will say, fine, I am going my way..
Like all objects in motion, one can develop tools to track the motion activities. Sometime there is acceleration, steady state (no deceleration or no acceleration) and sometime there is deceleration. Until the price change direction, the trend will undergo all this 3 forms or velocity state before it finally concede to end the existing direction superseded by a new direction.
While one is bias to have only UP and DOWN direction, one must not IGNORE SIDE WAY as a DIRECTION. SIDE WAY IS ALSO A DIRECTION!!!
Remember we are dealing with a dynamic living creature which is NON-Linear most of the time. It is not easy to accept that one has to completely obey the market no matter how irrational or drunk market action seems to be. Until we release this knowledge ego and humbly listen/obey the market, it will be an uphill battle until we get our mind to understand what market is all about.
OBEY OBEY OBEY
Sunday, July 19, 2020
I have my fair shares of winnings ...losses ....and most of all the experience to learn and understand that market is about not how much we believe we know or need to know and believe we must know to qualify as expert. Most ignorant people comes from this tangent and are manipulate to believe this are all the per-requisites.
When the prices rise beyond the so-called "fair value", there will be voices of fundamental calling this as irrational, overpriced, overvalued, not sustainable, or maybe even some might even call for further rise with more demands or insufficient supply.
On the reverse, when the price drops below the "fair value", we will hear the opposite
The "arena" is where the fights are fought. The price gyrates with different intensity anyone who believe the financial analytical approach can discover the true value of the price will be dismayed that price can remain aloof for a long time or depressed for a long period before it finally touches the "fair value".
Market is not about fair value or any value. It is about perceived acceptable agreed value that changes all the time.
I have my own encounter buying into grain commodities future contracts, knowing that are trading below production cost and they are "undervalued bargains". Well, I did sit and waited and rolled my contracts for months until the grain contracts turn from losses into profits!!!
On the opposite, I have also experienced selling products/stocks that per textbook finance to be deemed irrationally overvalued only to see the prices scaled and climbed many times more than my exit levels.
After trading and testing and trying all the different methodologies over 30 years, I conclude by saying understand the charts.
I have my fair shares of tolerating the pain when market trend is against my positions in a rising market thinking that the economics DO NOT warrant this prices before it finally turn around in my favor. Such painful and harrowing experience can be attributed to my one and only factor - NOT listening to market fighting a battle between the "outside" world of actual physical conditions versus the market trend which is completely opposite and seems to imply the ECONOMY that we see and feel is IRRELEVANT!!!!
The message I am getting is .... market is telling me that it is is not bothered about what I think and feel with regards to the actual economy and finance. All this are irrelevant to market actions!!! If it is not time for the trend to change, it is not going to change. If it is time to change, no one can stop it and no reasons can deter it either.
When we contaminate chart analysis with economic analysis, we are bound to create more troubles and confusion. This will only lead to the inner battle struggling and mental paralysis.
WE CAN'T AVOID SEEING and READING ALL THE NEWS and ALL THE ACTUAL HAPPENINGS AROUND US. But we have to be blind and deaf to all we read, hear and see in the media including our first hand encounters. Challenge our inner personality to sense the charts and believe what we see on the charts. We are taught, trained, groomed and wired to think in a certain SOPs. As far market is concern, this SOPs are wishful acts which has no added value to the trend. Sometime, our analysis will agree with the trend direction. Sometime they don't. IF our SOPs analytical process is correct than it should be 101% in-line with market trend. Since it is not, I guess we have to dump this SOP!!! Listen to the market. Believe what we see and stop arguing with the market.
I have resigned to the fact that, battling the market is not going to be easy and 99.9% will be wrong. IF we are the 0.01% that are proven right, such victory will create false confidence that will definitely lead the a faster path to deadend.
It is all about the least we know, the better off we are. It is about believing what we SEE and not what we hear. It is about having no opinions about market. It is not about telling what market should be doing. It is not about imposing your beliefs, views, opinions no matter how thorough you have done your analysis.
IT IS ABOUT ACCEPTING and BELIEVING THAT IF IT IS NOT CHANGING, HAS NOT CHANGED and NOT ABOUT TO CHANGE, it is not going to change, no matter how ridiculous it seems.
WHEN THE TIME HAS COME and RIPE for a long overdue change, it will change accordingly.
I humbly accept that all my wishful thoughts are totally absolutely irrelevant to market. As long someone is willing to pay more on the way up, it is not going to come down. Until the sellers stop dumping the price lower, the price will not recover. As simple as this statements may seem, they are the truth and not complicated or sophisticated.
Market has taught me lots and if there are mistakes and errors, they are mine. When I defy my system with disbelief, I will be penalized.
Market is not at all bothered what it is doing and continue to do what it wants to do. If it wants to go up, up it will, or if it wants to go down, surely down it heads, and if it wants to stay flat, it will also remain flat.
The fact is every action is not eternity and time will come for a change. It is a matter of WHEN and WHERE.
There are "general" signs of change or symptoms. They are not foolproof but sufficient guidance.
The sky can be as dark it looks, until the rain starts to pour, we can't classify it as raining!!!
Thursday, July 16, 2020
If my views are not in-line with the charts ... the inner struggle and the dual personality manifest. In the end I have to admit, the chart REIGNS and it is the KING or EMPEROR.
No one can defy the chart no matter what we feel or how rich we are or how high we sit in the tower or how highly educated we are. The chart trend reigns and irrespective of us and disagreements.
Wednesday, July 15, 2020
Monday, July 13, 2020
As long the price is in the green zone heading up ... the route is still KLCI is UP ... if it goes back the brown path, than I might have to retink abit ///
Forget all the story about economy and unemployment ...... as long the Index is happily and easily want to defy gravity, nothing you and I can do anything about it. Not even the worst economy headline can stop the rise if the time to change is not there!!!!
The time will come for each of this trend to change ... so far ... looks like it is sunshine!!!!!
Where do you think it is going next? .........The answer is the direction where it has the most support and easiest to flow.
IF the price should head south and cross the black dash line as the boundary for the blue territory between the 2 sides ....than you should know what to expect.
With the brown path holding horizontal ... means still range trade.
Looks like we need to wait a bit for trend to develop
Sunday, July 12, 2020
We are dealing with a market that is NON-MONOTONOUS and it is dynamically alive moving at different ferocity. At time it is lethargic and other times it can be ferocious. My guess is that when we people do not take into aaccount of this and insist of using one approach for all different market conditions, it is highly probably one will end up with a yo-yo performance.
One should take time to understand the behavioral patterns of the indicators under different market velocity and strength. When one start to decipher the behavioral details, than one will appreciate the indicators better.
I am a avid user of Macd and MacdH despite my early unsuccessful attempts. After a hiatus and appreciating market trend better, I revisit Macd and MacdH thus began to appreciate the tools better. The developers of both MacdH and Macd did not go into details how the indicators are related to trend except more as trading signals. However I went abit more to explore to understand how both Macd and MacdH are related to trend in action.
Similarly the usage of time frame(s) is also hotly debated. My conclusion is one need to look at an ANCHOR time frame with the option of one higher time frame above and one lower time frame below. Again no one seems to suggest how do we use them and when do we use which time frame beside the ANCHOR!!!!
Remember that all indicators available on the public domain are products of PRICE function formulated. They do not use TIME or incorporate TIME into the calculations.
We will encounter 3 situations when we use indicators to determine turning point.
1. Trend turn on time in synch with indicator.
2. Trend change before indicator change.
3.Trend change after indicator change.
Understanding the 3 above, one will appreciate how use the indicators in a more appreciative manner. Not many will accept and understand the 3 situations above and be prepared at all.
Like I said, they way we are wired mentally form our views how market SHOULD and MUST behave. One of this is about why this is the next course of action if these are the symptoms or signals. Well, the turth is there are only 3 possibilities with ONE of the 3 that will happen.
As I use to say and joke .....
IN THEORY ......YES ... IN REALITY .... MEBE YES .... MEBE NO.
We are not dealing with linear mathematics and sciences. We are dealing non-linear paradigm. The outcome can be different than the theory.
Saturday, July 11, 2020
With some coloring to the charts ... than one decide which way market will go and most likely to go in that direction.
For now we are stuck in this range until it break outs.
Will this break-out be real one or fake with temporary move one way than abruptly swing reverse to the other direction and all the way in the reverse???
Trading the market is not about having a fixated opinion. We are dealing with a moody "erratic" behavioral crowds that determine the trend direction. It is like driving on the road. Moving at different speed and different traffic conditions all the time.
Our driving style will need to change and adapt per the traffic ahead of us and the conditions of the road not to discount and forget the weather.
Driving is probably the best analogy to trading. Except that we will normally allow out learned IQ to interfere with our analysis.
One of the reason why it is hard to detach our Quantitative Analysis equation from our decision making is due to our FEAR of failure. I guess and suppose it will take time to transform and remove this from our analysis.
IF Financial Quantitavie holding the one and only answer to financial prosperity in the analysis than all the finance people should be at least a millionaire. The truth is there are more casualties than millionaire. This brings us to the starting point and most basic question,
WHERE IS THE TRUTH????
CPO buck the trend and went north. SoyOil and Dalian Palm oil went South. Will CPO have the buyers to continue to support the prices? What is going on?
Or is it purely left hand pass to right hand???
How long can the CPO drama serial continues? Or is it feel good CPO prices before the purported snap election for Malaysia is called???
Thursday, July 9, 2020
It is the winnings that lead one to believe INVINCIBILITY and confidence. I had my fair share of this when I started out in late 1980s. When one is drunk with success, the possibility of destruction is never on one's mind and no one even bother to prepare for the calamity. No one believe it can, will or is going to happen.
IF one believe that cycle exist, the START will have the WIP (work in progress) or TIP (trend in progress) concluding with END of the existing process! The only 2 differences are like I mentioned are 1) magnitude (intensity) and 2) completion time.
I have discussed about the different areas and challenges that one need to aware, know, understand and manage to be able to consistently successful playing this game. This is NOT a simplistic SOP or manufacturing processing. It is about the art of moving in a dynamic environment.
While we have volatility in every aspect of our lives including financial markets, over time things will smooth out.
TIME is the key.
We all need to understand what the temperament of this creature we are dealing with like we get to know our car or colleagues or equipments. When do we make our moves and what or which tools to use. The non-uniformity and non-exact replication of the past into the future means our templates will need to cater to 3 speeds, SLOW, MEDIUM and FAST.
The different speed will affect the different time frame to refer our tracking or analysis.
Once one can define what are the 3 speeds, than I guess time frame to use will be final.
Rather than thinking offensive and about how much one is going to make, start thinking how one can avoid all the possible and potential mistakes and traps. The rest will automatically be the winning and correct moves.
Tuesday, July 7, 2020
The academia approach to understanding market prices is rigidly static which only proves time and again that the practitioners fails and do not subscribe to understanding the cyclical nature of market. Classic financial approach will not anticipate the cycle although one might have the hunch or gut feel something is not right.
Ignorance or denial is most likely the factor that prevent the individual to seek the possible clues.
The skill and the art of reading market is not something can be taught like in classes where there is standard template to calculate. Trading is about trying to make sense of the movements. The behavioral trend and the position of the current versus the overall trend in progress.
The trading game like any other sports requires one to understand the game, the rules and the offensive/defensive moves. We are dealing with a lively dynamic trend that moves at different strength and magnitude either in quick time or prolonged period.
The sea waves and tide is not the same every minute but the surfers will be able to surf because he or she is trained to accept the dynamic waves and tide. Trained to manage himself/herself against the wave since this is uncontrollable. The only thing that can be managed and controlled is the surfer decision and actions.
Over time, the surfer will be able to feel the waves by looking at the behavior and act accordingly. Similarly, the trader should be able to feel the market by looking at the charts
Sunday, July 5, 2020
Our academic curriculum, our upbringing and our SOP are all within the LEFT brain parameters. Even walking through fire, it is highly unlikely the LEFT BRAIN fanatic will never open up and questions all the situations and conditions that went against them.
The left brainer who "convert" and open up to questions will start to explore the RIGHT brain. A convert like me takes a long time to open up and seriously question the left brain paradigm. It is super hard to surrender my left brain operations when it comes to trading. As I start to surrender my left brain abilities and focus with my right brain, I start to question the market behavior less and lesser over time and not to judge whether the market is right or wrong or irrational.
It is within us to form opinion if market is not with us Market is wrong and we are still right!!! Market is not at all bother what we think of market. Market is IMMUNE to anyone opinion. Market will do what it wants to do until the TIME has come for a change! while we continue to operate in the logical rational reasoning SOP struggling all the way to try keep up or miss the boat!!!
There is no way we can judge the market and be right when market is not inline with us but we will be judged!!! Market can remain in its current state against us for a long time no matter what the media writes and whatever name we call the market behavior.
Market is not at all bothers or will take into consideration what we think market "SHOULD BE". Market is at it is!!!!
I suppose the old tested proven technique is to listen to the market and follow the market trend no matter how reluctant we feel and how irrational mad it seems. Remember it is our opinion and we are dealing with an INDEPENDENT market trend that is not at all bothered about others.
When we use our quantitative knowledge to apply to the market and we are on a winning streak, we are vindicated. Yet the same technique is not foolproof and unable to escape the downtrend. The key question is one should ask.... WHAT DID WE MISS? WHAT WENT WRONG? HOW DID THAT HAPPEN? How often does one take a back seat, think over and ask if there is another side that he or she did not explore?
Every rise will be succeeded by a fall and every fall will be succeeded by a rise. The question is whether there are signs change is due or developing. The next question is whether the trend is up or down or temporary retreat irrespective which way the trend is heading or a trend change confirmation.
As I slowly mechanize my strategy and execution, my opinion about market behavior diminish over time. It is no longer if the market valuation is cheap or expensive and rational versus irrational. It is about what the market trend is doing now, is it likely to continue further or is it in the process of losing momentum or gaining momentum or is it changing and confirmation.
Now it is all about are there any signs of market trend is changing and confirmation it has changed.
The day we can abandon our left brain SOP controlling our minds and start to appreciate our right brains, that will be the day we see LIGHT!
The journey will be very challenging and satisfying if one gets it right. Yes, we need to unwind many things that are conditioned in our mind that will be hindrance to journey as a consistently successful "trader". These are not about our quantitative or financial modelling skills. They are about qualitative skills. It is not about financial skills. It is about "beliefs and values".
Each and everyone of us will and have the ability to make a "conclusion" and succeeded by actions. Our "conclusion" will be derived as a result of our sights (reading/seeing), and hearing.
It is the ability of our mind to make transition to utilize our right brains more when our left brain keep telling and reminding us it is wrong when market goes against us will decide either we are going to make the cut to be a PRO or AMATEUR.
Over the years, I admit that my trading failures and error are not due to the lack of knowledge in the quantitative area (left brain) but rather lack of my ability to fully develop and exploit my qualitative discipline (right brain). The conflict between the left and the right brain can even break ones confidence. It is the way we have all mentally conditioned to think and make conclusions resulting in BELIEFS/OPINIONS.
I will keep reminding myself that market is neither LOGICAL nor ILLOGICAL. It is us that impose our opinions on the market and we believe that market should listen and do as our wish.The only way to win is to downsize your left brain and let your right brain to take over.
Once we accept market will do whatever it wants to do at its convenience and continue to do so irrespective of whatever we think or opine than the next thing that we need to do is control our left brain. To prevent it from creating conflict with the market direction so that we can make the proper correct right decision no matter how "wrong" our left brain is telling us.
The market will tread on its own no matter how right or how right we think or believe market is. That means our opinions is IRRELEVANT.
Left brain dominant is everywhere. Why? It is the number. The corporate only read numbers. Bring them into the market which is cyclical,... they will be eaten alive.
The important things we need to do to be in a successful trading business, we need to stop our overpowering left brain. If there is anything that is holding us back it is the dominant LEFT brain. Let the right brain thrive and dance.
The right brain is not going to see the world as logical and illogical. It is just going to respond to the music.
Left brain is RIGID and the Right brain is flexibly adaptive
Know when to use your left brain and know when hide your left brain.
Wednesday, July 1, 2020
Due to prolong formation years each adult that are active or participating in the financial market will have anomalies. More often it is the attitude and perception that need to RESET and REFORMAT. If one can't do a complete reset or reformat the mental wiring, we end up like renovating and old house to incorporate something new and different. When this happen if not properly done, we might end up with mismatch electrical, civil structure or even insulation between the old and the new.
From my own experience and encounter, the corporate world only knows how to see and talk in the "number lingo". This is the only language that is accepted and considered to be worthy to consider. Outside this "fundamental" parameter, don't even try or bother to discuss with the circle.
The corporate world is caged in this fundamental parameters that anything beyond this is a taboo. It is the system, the years of grooming that entrench one's mind in this corner. More often than not, fundamental approach is not perfect. I would always say that ... fundamental HELPS to screen out which one are SUPPOSE to be good. Sometime it is proven to be immediate and sometime it take a long time and tolerate/bear the pain and patience.
In the manufacturing process, we are only interested in efficiency and productivity. Meaning reliability, accuracy and fast.
If the world is linear and operate in a straight line without cycle than accountants and financial folks need not wait after the purchase. The price will only go in the direction of the entry. More often this purchase or entry will take time to be proven correct. Take time means .. U R WRONG on YOUR TIMING cycle.
Until the world start to seriously open up and consider the other options, the corporate world will never escape the clutch of market cycles. Such failure to anticipate will and can cause castatrophic disaster even risking the demise of the company.
We are not lacking in academically qualified people to manage the companies. We are seriously lacking the talent of people who are both academically qualified and who can incorporate cyclical nature into the business.
I would even go to the next level to say that the inabilities of companies to prepare for any downturn with the PhD or Prized scholar and highly qualified academic graduates sitting in the management and board levels only prove that these are anomalies and will be repeated for over 30+ years I seen this repeating.
Unfortunately we live in a world where this people rules the companies and we will see this blunders. Either we decide to understand how to track the cycle and embrace it or we will wait for the time bomb to go off sometime in the future again
Tuesday, June 30, 2020
This is the key stumbling block and hindrance to progress as a REAL trader who can move, swing, kick, punch, crawl and even duck if one meet any unexpected.
I took me quite a long long long time to realize and accepted the existence of the NON-LINEAR illogical and unexplained paradigm. The reason why it can't be explained is simply due to the fact we are not exposed and taught this discipline. When that happen it becomes very difficult to accept this state while we know they exist but we refused to recognize and accept. Simply because we don't know how to handle such situations.
How many of us sit and take time to think why WATER and SMOKE travel in its own way without any external interference? Yes, we all know "they" don't move in straight line unless we guide them in pipes!!! Yes we all know and we call this random brownian motion.
To cut the long story short, we all know that there are millions of reasons and opinions why market behave a certain manner. On the same token we all also know even whether the opinions agree or disagree with the market, market will move in its own path and own direction.
Whether our opinions as a result of our "analysis" agrees or disagrees with the market direction, market will continue to tread on its own INDEPENDENTLY. Can we use our learned knowledge and mind to improve our performance with the INDEPENDENT market?
The biggest challenge is when our analysis and opinion contradicts market trend direction, WHAT DO WE DO NEXT? Who is RIGHT in this case? We opined that market is WRONG and we are right. What does that mean? It mean our pocket will bleed and our accounts will shrink.
As strong as our opinion can be and our conviction, unfortunately market is NOT Convinced and agreeable to us!!!!! Market move against us and the next thing we know is our cash value shrinks!!! So who is right? Who is wrong? The higher we sit in the ivory tower, the bigger our ego is. Ego is ok when we are in-line with the market. But when our EGO has blinded us and mentally paralyzed us from seeing and feeling the obvious, that will only lead us to the path of pain and misery.
The common SOP (standard operating procedure) in this case is ... I am right, market is wrong. Do we accept our shrinking account as we are still right???
Many mistakes are made in the past and they serve as my lessons, guides and experience. To learn, to improve and to be open to question if improvement is my goal and my ONLY GOAL.
Life is easy if and when our template is in agreement with market trend direction. Everything is sunshine ...
Over the years I learn to listen to the market and slowly "divorce" my learned analysis and observed what the market is telling me especially the old habit of analytical opinion come up.
REMEMBER, you can be the NOBEL prize winner or the smartest person with Top Grades, but when the market disagree with you, YOU BETTER LISTEN or PAY UP.
Market is reality and market punish those who disagree. Punishment is not the act invitation to a feast. It is an invitation to pay for the feast.
I have fought the market as my enemy and make friend with market. My conclusion is... It pain to fight and my pocket hurts. A survivor will understand and learn to be friend with the market. When our ego is big, we will definitely end up fighting the market. Let us see and face the reality if anyone fighting the market can smile BIG in the mirror.
On the contrary, anyone that make friend with market and follow whatever the market wants to do, letting go our ego and opinions will be rewarded handsomely and with BIG smile!!! That is reality
EGO = EMOTION = DENIAL
To win with market is to make friend with market even if you disagree with your big learned mind. In one word ... you need to be a HYPOCRITE.
Friend the market like a hypocrite even if you disagree and you walk out with a super big smile or ... fight the market and walk away with ugly face and shrinking bank account.
The choice is yours and good luck
Sunday, June 28, 2020
While too many rosy advertisement are misrepresentations, the blinded participants also fail to ponder over how the whole system works. To those who decided to embrace and embark on using charts or use charts as reference one should sit back and think why there are many time frames, why are there many different indicators and finally which one(s) do we use and when do we use them or not to use them.
Visually a naked chart we will see the chart goes from left to right with time on the X-axis (horizontal) and price level on the Y-axis (vertical). Price tracks move up and down over time from left to right swinging up and down. Some swings are longer than the others vertically range and some swings are shorter. Some swings last longer move in time and some are shorter. In summary we are looking at some basic combinations of
1. Longer price swing move with longer time. 2. Longer price swing move with shorter time. 3. Shorter price swing move with longer time and 4. Shorter price swing move with shorter time.
The third component to this is the GRADIENT or slope of the swing move.
Irrespective of the 3 components - PRICE, TIME and SLOPE(GRADIENT), it is universal that all has a timing cycle from the start to the end of the swing move and start of a new different swing.
The universe evolve around cycles and cycle are part of nature. Nature is not static. Nature is evolving and changing all the time.
Change means DIFFERENT from the past or something that just happened.
Trend cycle is no different. A direction trend will have intermittent opposing direction reacting but not sufficiently forcefully able to change the prevailing direction trend. Whether the major directional trend is up with intermittent small down moves or vice versa, the time will come for the trend to end and change either to down or sideway.
Many of us will be distracted by all the news and actions that we loose focus on the whole gist of trend. The core to the whole price and time actions (trend) is about the START and END with in-between!!!!
While all this sounds very simple and basic, the truth is this is what the whole game is all about.
The key is to develop system or methodology or techniques to identity the START and the END.
Commonsense logic only tells us that if you see potential a setup or work in progress the end of the present it also mean the start of something new. Another commonsense is if you don't see anything that is likely for you to consider the warning or setup up for the end of the present prevailing trend, it means we are "in-between" and means we sit and wait!!!! It is this in-between that are full of distractions. This template sequence has stood the test of time and never changes.
If it is bad performance, it is highly likely it is not the car is a lemon but the incompetent driver is the culprit.
Instead of focusing what if .. what if .. what if ...and coming up with all sort of trades, we should be looking at are there any signs and confirmation of change. IF NOT let it be and do nothing!!!
Saturday, June 27, 2020
Over the years I had and have read all different books and tested many different charting indicators tool. Obviously, if it is 101% accurate and reliable, it won't be readily available. I can only conclude that these tools do works but NOT all the time and definitely does work more than 50% of the time.
The main reason why it fails to work 101`% accurately is because I believe the wrong interpretations by the users and partly I believe it is due to the nature that market exist in both non-chaotic/linear state (rational) evolving into chaotic non-linear state (irrational). It is not easy to develop a tool that can capture both non-linear and linear state given that we are wired mentally in a LINEAR mindset.
Non-linear chaotic state means it is challenging our mental conditioning, logic over how things are suppose to work and things do not work exactly how it is suppose to work all the time when financial market is concern. It took me many years to shed this mindset HOW THINGS ARE SUPPOSE TO WORK with mental conditioning from academic education.
When things happen per our mindset template in a logical rational manner we can readily accept without a second to disagree. However, when things do not happen per our mindset template in a logical manner, we find it unacceptable and mentally challenging to accept the existence of such situation although we see and experience it. This is the handicap of the mental conditioning over the years.
As we trade the market, we will experience both situations where the trend agree with our opinions/views and there are times when the trend disagree or contradicts with our mental perceptions. We are entitled to have our own opinions. Whether market trend agrees or disagree with us is another matter completely.
Market trend direction does not need our opinions and does not need our permission. Yes, we can opt to disagree with market direction with our opinion and open positions, but it also means it will take time for market to change and agree with us.
Remember, the biggest obstacle before us and to overcome is how market trend direction should behave after we read the news or experience things first hand. Over 30 years, the statement of how market "should" behave after hearing and reading news did not yield produce 101% accurate trades. It is a 50-50 bet.
Everyone loves to win in an argument but arguing with the market is something we will never win in the short term. Although market will and can agree with us in the long term, the short term disagreement between our mental views and market direction is sufficient to shake our mental temperament.
Without a doubt market exist in both linear and non-linear state, the greatest challenge will be to develop a robot trading that can cope both state. Most robot will fail when market transit into the non-linear irrational non-logical state. It is highly unlikely programmer will appreciate and understand this condition making it difficult to robot trade.
It is for this reason and challenge before me, that I took time to develop and test systems, improvise, upgrade and update the methodology that I use. Refine and simplify the system to capture both linear and non-linear state. It also means, I don't need to glue my eyes to the screen and I am aware the trend direction.
In conclusion, market is NATURE and nature evolve around cycles. Cycle means different phases. Cycles means changes. Changes mean agreeing and disagreeing.
What good is projection and forecasting if one does not understand the current position in the overall cycle. The key to accurate forecasting entails one ability to accurately pinpoint the current versus the overall trend cycle in motion.
Like Nature, there is Birth, Growing, Maturing and Decaying for each trend cycle. The peak of a cycle is also the birth of a different opposing cycle.
Appreciating and understanding the cycle's nature will enhance one in deploying assets or executing positions in a good timing and efficiently minimizing risks and waiting time
Friday, June 19, 2020
The Mechanical Wave example tells of 1 subset wave oscillating creating oscillating force pushing the direction.
The Light Wave example shows the 2 interacting waves RED and BLUE producing the Wave Direction.
The example above are CLASSIC LINEAR symmetrical wave oscillation.
The actual situation of financial markets a simple example will be the LIGHT wave BUT in the state of NON-LINEAR DYNAMIC motion. Meaning each successive motion will need NOT be symmetrical and most highly not identical due to the emotional nature of financial markets. This non symmetrical nature has been wrongly labelled as RANDOM.
When one accepts and understand the non-linear (non-symmetrical) successive wave oscillation, we get NON-LINEAR (non symmetrical and non perfect repetitive wave). That is how human emotion actually behave.
It is the NON-LINEAR state or effect that move the wave into UP - DOWN - SIDEWAY trend direction.
This sort of behavior will not be accepted and clearly understood by most people. It is for this reason that we have extreme moves due to "panic". Unfortunately we are not taught about how to deal with panic extremes in school when we sit for exams. Nether the academic will be able to explain. It is for this same reason the A grade in Finance will not know how to act when this appears. That is why companies go bust despite having the academically excellent graduates helm the top management positions.
A war is won by how well one understand the war, the opponents, the resources, the nature, the terrain, the preparations.