Trade review 090918

Took the long at the edge,help the long thru news but chickend AFTER that. Next time, if I were to hold thru the news, I may as well hold it all the way.

Then took the short hours later. 9 + 30 pips I think...

Trade review 090917

Quick scalp today. Sideways Range...zzz

Trade review 090911

My trade today. I think it was a graet trade we good setups. Got spooked out twice tho. The first time at LMO with the spike. The second just before the news when the red candle (and hence bull div) formed. Should I have held?

Trade review 090910

My trade today

Trade review 090909

More coming...

Right after summer...

A friend posted this trade right after summer. I think it's brilliant, but you judge for yourself.

Watching differing time frame

It is always good advice to check different timeframes when trading. The general rule of thumb is to watch a timeframe that is roughly 4 tmies apart to give us an idea of what is happening in the 'long term' and 'short term'.

For example, if you trade on the 15mins time frame (tf) then watch the 1hour (tf) for what's happening in the longer term. If you trade on the 5mins then watch 30mins, as that's the closest. Often times when we do this, we see that the longer term may show bullish indicator signal while the shorter term show bearish indicator signal. The contradiction gives us reason to pause and wait for all signals to align before pulling the trigger on a trade.

I found it to be true also, that whenever indicator signals align, there are more chances for the move to be stronger.

But I have also found looking at closer timefram helps. For example if you trade on the 15mins tf, look at 5mins, 15mins, 30mins and 1hr tf for clues. Wouldn't the indicator contradict each other and add more confusion then you ask? Yes it would.

What IS consistent however should be the price action (and remembering that all indicators are lagging). Afterall the summation of 5min will give the 15min and the summation of 15min will give the 30mins and so on and so forth.

So while the indicator may contradict, the price action in different time frame forms a stream of continuous information, painting a consistent picture throughout.

Knowing this is advantageous to us because

1. We are also able to perceive price as a continous flowing story, instead of snap shots taken in the 2 time frame.
2. As a result, giving us more understandnig and clues as to what is happening
3. And that, hopefully, translate to good pips

Hollywood on Wallstreet

As a continuation from the previous post.

Here's what Bernanke saying: Economy On Track for Recovery This Year ; Recession Will End Soon But Pickup Will Be Slow

Stocks: Banks gain on stress test hopes.

The result of the bank's stress test has been delayed from Monday to Tuesday and now I hear that it'll be released on Thursday.

All signs confirms: People wants to believe that recession is bottoming out... hollywood magic is making it happening.

***updates***
Fed’s Bank Results ‘Reassuring,’ Show No Insolvency

It seems confidence is back up. Market wants to believe recession is over, so it's over. The problems are still there but for now it's 'over' until the next 'recession'

Is the recession over?

I've been thinking about the question a fair bit last few days. I think, imho, it's bottoming out but it'll take a couple more years for the recession to be over.

The governments are eager to tell the market it is 'almost over' and the world wants things to go back to 'normal'. But what is normal?

To these economies, normal means (very simply), the bank has money to lend to customers who show a decent ability to pay back the loans plus interest. The customers then go out and use the loan money to spend resulting in a GDP growth.

When the crisis hit, the banks don't have inventory - money - to loan out. Because they've lost too much money in bad investments. Without loans to give, they have less business, the consumers/businesses have less money to spend. There's no GDP growth and no GDP growth for 2 months is defined as a recession.

To fix it, central banks around the world just print more money and get it to the banks. At thisw time of writting, it seems now the banks are flushed with cash. But they still aren't eager to loan out. Why? Because being bitten by the bad investment they're cautious who they loan to.

• They can't loan to other banks now because evem the bankers do not trust other banks. This is because no one knows how much they have lost in the bad investments. How much are the bad investment worth? How much is that piece of paper worth? Who knows?
• They can't loan to the good customers with good track records because now they are suspicious if they can pay? What if they too lose their job?
• They can't lend more to bad customers because that's what gotten them into this mess right? Who knows? And the bad customers already have so much NINJA loans - no income, no job or assets.

So who can they loan to? Without more money in the market, people can't spend. No spending, no growth, no GDP = BAD. In short, there is a lack of confidence in the market.

Now to fix the 'confidence'. Some accounting rules are changed to prop up the balance sheet. What was 'mark to book' was then changed to 'mark to market' and then 'mark to model'... and then now to something else. The bad investment, since no one knows how much it's not worth, is written off to partially. I'm not sure how all that accounting is done (you can see here) but the result -- Citibank was able to report profits. Wells Fargo, JP Morgan...etc are stabilizing. In layman terms, they just pressed the 'delete' button on the bad investments.

PURE Hollywood magic in Wallstreet.

Next week, the stress test result of the banks will be out. (Last month, US treasury conducted stress tests on banks in America to see how strong they are, if they still need extra cash...etc). I predict that the 'important' banks (you can tell who is connected and who is favoured) will pass with flying colours. Then someone important, Obama most likely, will say "... I believe USA has the best economy system, our banks are the strongest in the world and... " *drum roll* the end IS very near....

Confidence is further boosted. The market will most likely buy it. Someone shout "make me a believer!" The market rallies, stock surges up....

But still the key question is, how to get ppl to spend? Who are the bank going to loan to? Unless they issue out more NINJA loans, create more business very suddenly and quickly this process is going to take time. Unemployment rate is at a very very high level. (see my previous post here). Without employment, loans are hard to give out... not that they wont be. There are lots of NINJA out there.

So the key indicator for me to watch out is the unemployment rate. If it goes down for a sustainable period, we're out of the woods, sort of.

No one can keep spending and incurring great deficiet to keep growing. McD grow by making profit not by having more debt. One day this gigantic bubble will burst. Perhaps then, we will have a unifying currency. Scarily, that's what the bible predicts.

Trade review 090424

I had a tough start today and had 2 losses and 1 BE consecutively. Thankfully I took this gu short which worked out beautifully.

Unemployment Claims - USA

From forex factory.

I thnk it's far from over.

So much for "the end is near"

I took a trade today which I'm quite happy about. Although there was a few false start but I still manage to get in to enjoy some of the ride. Here's a screenshot of it. It's good to take trades like this after a long time.


And after the G20 meeting, the media has been singing with news that the end of the recession is near. Market rallied. Shares went up. Everyone's happy. CNBC was so upbeat that it sounded like a motivational channel to me - almost like watching oprah. (she's better of course ;) )

Well, the media may sound upbeat... but so's the comedy channel :) Today CNBC reports: Banks' Toxic Debts Could Hit $4 Trillion. I guess the only positive note in that headlines is the word "could".

*update*
And a day after the above post: Bear Market Will Continue: Roubini ... So much for the end is near.

2 great entries but...

I haven't been blogging much that's because I haven't been trading much either :) So it's nice to be back trading after 3 months!

My entries today were great but I didn't held on to it. Thought I put it here to remember how costly impatient is. The coloured circle is where I closed half my position but the rest of the half was either taken out when my SL was put at BE.

Trading in the zone pt2

Believing is seeing, Jesus said. And how true. Whatever we believe in, we are right about that believe.

And our world viewed is seen thru that believe. Are you handsome? If you believe so, you are. Can you do it? If you believe you can, you can. And amazingly enough ppl around us detect that energy and respond with you. The concept is not new, believing is seeing. Books like "the secret", "think and grow rich", "as a man thinketh"... etc are repeating the same thing.

But what if we believe in the 'wrong' thing? like for example, if I believe that ALL dogs are friendly, my natural reaction when I see a dog is to pet it and befriend it. What if a dog bites me- I will get hurt, because I wasn't ready for a dog to bite me. After all, ALL dogs are friendly in my world. Will I still think that ALL dogs are friendly?

See, our brains are wired to prevent physical and psychological pain. If the dog's bite is pain enough, chances are my belief will change to prevent future painful occurences. Maybe my belief will be changed to SOME dogs are friendly. Maybe then, I will hurt less....And when that change occur, chances are we get hurt less. We aren't caught surprise the next time we meet an unfriendly dog.

Our believes are now aligned closer to the actual 'truth'. This, I believe, is the core of the book. Changing our beliefs to match that of the market.

One of the most common wrong belief is that we can predict the market through our analysis- be it fundamental or technical. When we belief that and the market doesn't move the way our analysis predict it, we feel hurt. After several losses, we start to question our analytical tool. After 10 losing trades in a roll, we start to believe that the system we're trading with is shit and it's time to learn a new system. This cycle continues with us learning more and more. We try different system, changing timeframe, using different indicator or worst pile on more indicator. With each change comes new hope that the next one will be THE system that gives us the consistently. I think many traders are not unfamiliar with this feeling.

We feel hurt because we our expectation are not met. We feel angry with the market. We feel revengeful (sounds familiar?) We want to be right.. and in the end we made foolish mistakes- overtrading, revenge trading... etc.

Other times, we get scared of pulling the trigger although the setups are all there. We're afraid that we may just be wrong like the last 10 times (... and maybe, a tiny voice tells you, the system you're trading with is shit). We hesitate on pulling the trigger to see the trade run and out of panic, we jump in the middle....

Truth is, the market is neutral to all system. It's not alive. It's like gravity. It doesn't hurt you nor benefit you unless you have a right belief on it. And no tools on earth can give you a prediction on it...

THE MARKET CAN DO WHAT IT WANTS

And if we truly belief that, we won't be hurt by the outcome of our trades. We would remain calm at all times. The reverse is also true. If we are not calm at all times, then chances are our beliefs are not in sync with the market.

All we can do then is have a system that have a positive edge that give us a long term winning strategy.

Now that we belief that the market can do anything it wants, the book gives us the 5 fundamental truth of the market:-

1. Anything can happen.
2. You don't need to know what is going to happen next in order to make money.(because anything can happen)
   
3. There is a random distribution between wins and losses for any given set of variables that define an edge (so don't worry if you have 10 losses, it's just random distribution)
4. An edge is nothing more than an indication of a higher probabiligy of one thing happening over another (ie you get to win in the long run)
5. Every moment in the market is unique ( no two instances are going to be alike: just because the last double top works out to a nice short doesn't mean that this one will)

Think about these. When we do belief these truths, we would be constantly in sync with the market because nothing will 'shock' us anymore.

Trading in the zone pt1

Trading in the zone by Mark Douglas has been such a wonderful book that I'm going through it the second time. The principals I learn from the book has profound effects in my life and as I revise through them, I'll blog about it here for you.

However these principals are not listed in the order of the book.

Trading down to its simplest form is pattern recognation. Setups/Systems are simply that - patterns. These patterns form because of mass psychology - repeatable, repetitive and predictable - patterns. To consistently capitalize on these patterns, the trading skills we need are:

• trust and confidence with our edge/setups/systems
• thinking in probabilities

Whatever our system is, we need to have trust and confidence about it. We trust that the system will in all probability create a profit for us in the long run.

These skills are psychological.

Therefore to solve the puzzle to become a consistently successful trader we have to tackle the problem - our pschology. And at the root of that is our core believes. (I will write more about the believes which the book has outline.) And when it comes to personal transformation, the most important ingredients are our willingness ot change, the clarity of your intent and the strength of our desire.

The final destination is to become consistently successfuly. Now to become consistent is to make 'consistent' become part of who we are. The good book says, "Be holy as He is holy...." it doesn't say "do holy..." Similiarly, we have to "Be consistent" and not "do consitently..". And how do we get about there? The way to get there is to change our believe.

Our believe is our mind's underlying programming. Whatever we do, it reflects on our belief. In fact, it is difficult to act AGAINST our belief.

This book deals with some of the common wrong believes trader have which hinders us from being consistent. I will be written more about them in the weeks to come.

Jan. 14. 2009

Quick guide to the GU:

Weekly: S.A. but candle is red.
Daily: S.A. although slightly bearish
4H: Bullish, indis and price. But T5's is just above as abit of resistance.
1H: Bullish, with mixed indis. but in OsMa territory and its bullish

DP has been holding as strong resistance. But is in the process of breaking above.

The worst scenario.

During the holidays, I have been spending my time and effort to learn how to be more consistent. To that objective, I read the book 'Trading in the zone' by Mark Douglas. I highly recommend that book to anyone who's trying to be more consistent in their trading.

I have benefit greatly from it and it has changed the way I look at trading and in many ways my own life. I will probably write a summary of that book later in this blog so that I can refer to it myself, so keep a look out.

On being consistent, I asked myself an interesting some time ago: what's the worst possible outcome?

My first answer was of course "a bad analysis which lead to a trade and hit my stop loss... or keep going without hitting my stop loss"

But after some thought I think what is worst in the long run is "a bad analysis which lead to a winning trade". Because now not only you're rewarded for not sticking to your system, your inner programing thinks it can now bend the rules...etc It is a recipe for inconsistentcy. And inconsistentcy just leads to many emotional pain which usually leads to loss.

So stick to your analysis (or your system or your edge) whether the analysis leads to a win or loss, because in the long run if you stick to rigid rules you'll win.