Saturday, August 5, 2017

Technical Indicators For KLCI as at 4/8/2017

As at 4/8/2017 

Sector
20 Day MA
50 Day MA
100 Day MA
200 Day MA
Construction
Below 
Below
 Above
Above 
Consumer
Above
Above
Above 
 Above
Finance
Above
Above
Above 
Above 
Ind-Product
Above  
Above 
Above  
Above  
Industrial
Below 
Below 
Above 
Above  
Mining
Above 
Above 
Above  
Above  
Plantation
Below
Below
Below
Below
Properties
Below 
Below  
Below 
Above  
Technology
Above 
Above  
Above  
Above  
Trading/ Services
 Above 
Below 
Below  
Above  

Technical Indicator:

20 Day MA: Short term<1month div="">
50Day MA: Medium Term 1-3months
100Day MA: Medium Term 3-6months
200Day MA: Long Term > 6months

Sectors that have improved are:
1. Consumer:                 KLCI  above 20 Day and 50 Day MA
2. Finance:                     KLCI above 20 Day MA
3. Industrial Products: KLCI above 20Day and 50Day MA
4. Industrial:                 KLCI above 100 Day MA
5. Trading/Services:     KLCI above 20 Day MA


Sector/s that has/have deteriorated:
1. Properties: KLCI below 100 Day MA

Sunday, July 9, 2017

Technical Indicators For The Bursa Malaysia Sectors


As at 7/7/2017 

Sector
20 Day MA
50 Day MA
100 Day MA
200 Day MA
Construction
Below 
Below
 Above
Above 
Consumer
Below
Below
Above 
 Above
Finance
Below 
Above
Above 
Above 
Ind-Product
Below  
Below 
Above  
Above  
Industrial
Below 
Below 
Below  
Above  
Mining
Above 
Above 
Above  
Above  
Plantation
Below
Below
Below
Below
Properties
Below 
Below  
Above  
Above  
Technology
Above 
Above  
Above  
Above  
Trading/ Services
 Below 
Below 
Below  
Above  

Technical Indicator:

20 Day MA: Short term <1month div="">
50Day MA: Medium Term 1-3months
100Day MA: Medium Term 3-6months
200Day MA: Long Term > 6months

Thursday, June 29, 2017

Phillips Curve and The Central Banks

The recent market sell off followed by comments made by ECB Mario Draghi spooked investors worldwide. The market has misinterpreted his comments to be 'hawkish' rather then 'dovish'. The next day, markets went up again!  He did mentioned about being prudence, but at the same time he was also concern about the Euro zone inflation rate being less than 2%. (The ideal is 2% - 3%.)

Here comes the famous economic theory "Phillips Curve". Many economists think that it is not relevant in today's world but the US and ECB think the theory is still valid and they have been making economic decisions mainly on the unemployment rate and the inflation rate.

According to Phillips Curve theory, economic growth should come with rising inflation and falling unemployment rate as shown in the diagram below.


Hence, the US Fed Yellen and ECB Draghi have been tracking these 2 parameters closely to decide whether or not to raise interest rates. What we see in the US and the Euro zone are falling unemployment rate, but at the same time, the inflation rates have been low too due to the supply side factors such as low commodities prices, cheaper raw material, and rising productivity due to technology. Hence, the low inflation rate may cause the US Fed and the ECB to defer raising the interest rate to normalisation. The current interest rate for the US and the Euro zone are 1.25% and 0% respectively, this leaves little room for the monetary policy makers to play should there be another financial crisis. 

How about fiscal policy? Since 2008, the whole world have been pumping their economies with billions and trillions worth of constructions and government spending. For example, the government debt to GDP ratio for Japan was 250% while the US was 106% according to Trading Economics. 



In terms of Fiscal and monetary policies, there just aren't enough rooms to maneuver.

Many people are anticipating another financial crisis soon as we have seen one in 1974, 1985, 1997, 2008, if looking at this sequence, the next one could be in this decade?

Or may be not? I will be sharing on this topic on this Sunday July 2 2pm - 2:45pm at KLCC Convention Center POPULAR Bookfest Hall 5. Free full day workshop voucher to be given with the purchase of my new book. 




Saturday, May 27, 2017

The Guppy Multiple Moving Averages (GMMA)

The GMMA is a very useful technical indicator for long term investors. I am using this indicator together with the trend lines and simple moving averages for all my analysis on stocks. 

If you are not sure whether to hold a particular stocks and you need confirmation, GMMA is a good indicator to check whether the long term investors are still holding the stock by looking at the "green lines". For a long term bullish trend, the green lines have to be upward sloping, the lines must not compressed and the red lines (short term speculators) must be bouncing off from the green lines.






Monday, February 27, 2017

Trading in Your Own Style

I was listening to John Carter's interview (https://chatwithtraders.com/ep-069-john-carter/) and there was this line that struck me. He said, "As a trader you feel comfortable by being uncomfortable." 

Trading involves risk. It is this risk that makes people "uncomfortable".  I play close attention to my state of mind when trading, because I notice sometimes when I place a trade with a feeling of confidence, chances are that trade is likely to turn sour in the end. And when I was in doubt when placing that particular trade, it turned out fine! So each trade is based on my own calculation of probability of success given the risk scenario that I am projecting. In the end, "feeling comfortable by being uncomfortable" is what I am pursuing. And this is a great challenge to me because who would want to be constantly feeling uncomfortable in their mind? 

I believe each trader has his or her own unique personality that only he or she alone can determine what types of trading systems or styles that suit them. If you see other people become successful in trading, do not envy them, it would not be a good idea if you copy their trading systems, because the results will not be the same.

In addition, we have to acknowledge that the trading environment is dynamic, you need to be flexible to adapt to the trading environment. What has worked before may not necessarily work in the current market condition. Hence, the only way to overcome this is to keep on learning.





Saturday, April 30, 2016

Trading Personality


“If you get nothing else out of reading this book than the one following principle, it will still have been a very worthwhile endeavor: Successful traders find a methodology that fits their personality.” 

Jack Schwager, author of Market Wizards

“Traders must find a methodology that fits their own beliefs and talents. A sound methodology that is very successful for one trader can be a poor fit and a losing strategy for another trader."

Colm O’Shea


If you are a new trader, it may be a difficult task for you to choose your trading style, but it is absolutely a necessary step for your long term success as a trader. By choosing the trading style that best suits your personality, you will have a better chance of being a profitable trader. In this section, we shall look at the various trading styles and see whether you can find one style that suits you most.

According to Jack Schwager, author of Market Wizards, successful traders usually match one of the four types of trading with their personality type.

Scalping

Scalping is a very rapid trading style. Scalpers often make trades within just a few seconds of each other, and often in opposite directions (i.e. they are long one minute, but short the next). Scalping is best suited to active traders that can make immediate decisions and act on those decisions without hesitation. It is one of the most cognitive demanding forms of trading. Successful scalpers rely on intuition developed through years of experience along with a defined set of rules that are part of their overall system. This may be out of reach for traders who are just starting out. In addition, new traders who have more active personalities tend to overtrade their accounts. Even experienced active traders can fall into the overtrading trap as well. 

Day Trading

If you are one of those who get worried because of overnight positions then maybe day trading is for you. Like scalping, day trading also have no overnight positions, but it is the milder form of scalping. Day traders may take two or three trades a day and then liquidate all trading positions before the close of the day. A day trader does not subject his or her capital to overnight risk that can adversely affect a portfolio. 

While day trading requires skill, knowledge and discipline, it does not require the precision and high winning percentages to become profitable like scalping. They can usually locate trading opportunities that offer a minimum 1 to 2 risk to reward ratio. By only taking trades with a 1 to 2 risk to reward ratio, day traders only need to win 32% of the time to breakeven. Overtime, as the active personality skills develop, they may incorporate scalping as a natural next step.

By developing a solid day trading plan, active traders will have both a winning strategy that they can stick with because it matches their personality style which needs activity and variety. 

Swing Trading 

Swing trading strategy would ideally fit the analytical person as he aims to profit from both trend following moves and the subsequent corrections. Active personalities may find swing trading uncomfortable as they incline to make quick decisions, they cannot stick to a swing trading plan that may take weeks to unfold. They may feel restless and even begin to question the trade. As a result, they will find themselves taking profits or exiting a trade too early. Swing trading generally requires a larger stop loss than day trading, so the ability to keep calm when a trade is against you is a necessity.


Position Trading

Position trading is the longest term trading of all, and often has trades that last from weeks to months or even years. Therefore, position trading is only suitable for the most patient and least excitable traders. Position trading targets are often several thousand pips (for example, forex), so if your heart starts beating fast when a trade is 25 pips profit, position trading is probably not suitable for you. Position trading also requires the ability to ignore popular opinion because a single position trade will often hold through both bull and bear markets. For example, a long position trade may need to be held through an entire year when the general public is convinced that the economy is in a recession. If you are easily swayed by other people, then position trading is going to be difficult for you.


Being Faithful to your Trading Style

Choosing a trading style requires the flexibility to know when a trading style is not working for you, but also requires the consistency to stick with the right trading style even when it is not performing optimally. One of the biggest mistakes that new traders often make is to change trading styles (and trading systems) at the first sign of trouble. Constantly changing your trading style or trading system is a sure way to catch every losing streak. So often we hear that traders have to change their personality to fit trading. To some extent this can be done. However, if the changes are too far from a person’s core personality, failure is more likely. Personality should drive the choice of trading strategy rather not the other way round. Once you are comfortable with a particular trading style, remain faithful to it, and it will reward you for your loyalty in the long run.