Swing Trading the Forex, Futures and Stock Markets

GBP/JPY Short Trade 28 Mar 2011

2011-03-29T20:42:00.004+08:00

I was home when I made this trade. The time is shown in GMT+8.

GBP/JPY made a daily stochastic bearish reversal on 25 Mar 2011 after correcting 76.4% of its previous decline (yellow line 1). I was expecting a continuation of the decline and a strong one too because the 20 SMA line was declining. A sell signal would be given when GBP/JPY made a stochastic bearish reversal on the 3-hour chart.
GBP/JPY made a 3-hour stochastic bearish reversal on the 28 Mar 2011 18.00hr 3-hour bar giving a sell signal. I decided to use the 30-min chart to time my entry in order to get a better entry price.
GBP/JPY made a 30-min stochastic bearish reversal on the 28 Mar 2011 22.00hr 30-min bar after correcting 76.4% of the previous decline (line 1). I placed two trailing 1-bar low sell orders, which were filled at 130.738 (orange triangle icon) at the next 30-min bar. I placed the initial S/L order at 131.17 (above 28 Mar 2011 13.30hr 30-min bar swing high) risking -43.2 pips. The T/P order for the 1st unit was placed at 130.30 (above 28 Mar 2011 16.30hr 30-min bar swing low) giving a +43.8 pips potential reward.

GBP/JPY did not decline as strong as I expected. On the 29 Mar 2011 08.30hr 30-min bar, GBP/JPY made a bullish piercing line candlestick pattern near the Bollinger lower band. I decided to reduce the S/L order for the 1st unit to 1 pip above the 29 Mar 2011 08.00hr 30-min bar high and the S/L order for the 2nd unit to almost break-even.

The S/L order for the 1st unit was triggered at 130.634 (orange circle icon) giving a modest +10.4 pips gain on the 09.30hr 30-min bar and the 2nd unit at 130.722 (orange circle icon) giving an almost negligible +1.6 pips gain on the 10.30hr 30-min bar.

Disclaimer:

Trading and investment involves risk, including possible loss of principal and other losses. I shall not be responsible for any losses or loss profit resulting from trading or investment decision based on my posting and any information presented in this blog.

The Business of Trading - Managing and Controlling Risk

2011-03-27T23:57:00.003+08:00

All business involves risk. As for the business of trading, there is no method with 100% certainty that could allow us to buy cheap and sell dear all the time. The way that the financial market work we could not tell for sure whether the market is going to go up, down or sideway. The best we can do is to do our due diligence to study the market fundamental and technical and take a calculated risk when the potential reward is higher than the risk.

We therefore need to manage and control our risk so that we do not put our trading business at undue risk when our analysis turn out to be wrong.

How do we manage and control our trading risk?

The best advice I have read on the subject is the 2% and 6% money management rules given by Dr Alexander Elder in his best-selling book "Come Into My Trading Room".

How would we apply the 2% and 6% money management rules to trading?

Let's look at my EUR/USD long trade on 17 Mar 2011 as an example. See my earlier posting for detail in http://swingtrader188.blogspot.com/2011/03/eurusd-long-trade-17-mar-2011.html

The entry was made at 1.39291 and the initial stop-loss order was placed at 1.38600 giving an initial risk of -69.1 pips. The 2% money management rule means we should not risk losing more than 2% of our trading account size per trade.

Let's say you have a USD10,000 in your account. How many units of EUR/USD should you buy to limit your risk to 2% of your trading account size?

The maximum loss per trade calculation is shown below.

Maximum loss per trade = USD10,000 x 2% = USD200

The pip value of EUR/USD is USD10 per lot (100,000 units) per pip. The risk assumed for this trade is -69.1 pips. The maximum lots allowed = USD200/(69.1 pips x USD10/pip) = 0.28943 lot = 28,943 units.

This means that with your USD10,000 account you should not buy more than 28,943 units for this trade so that you would not lost more than USD200 per trade.

Can you buy 28,943 units? Yes, if you use OANDA FXTrade. Otherwise you have to round it down to 2.8 mini-lot (28,000 units) or 28.9 micro-lot (28,900 units) depending on what is allowed by your brokers.

The 6% money management rule means two things:

1. You should not risk losing more than 6% of your trading account size for all your opened trades.

2. Your maximum allowed loss per month is 6% of your trading account size.

With a USD10,000 account, the maximum allowed risk for all opened trades and the maximum allowed loss per month is USD10,000 x 6% = USD600.

Disclaimer:

XAU/USD(Gold) Long Trade 22 Mar 2011

2011-03-26T23:35:00.006+08:00

The time is shown in GMT+2. I was abroad when I made this trade.

XAU/USD daily stochastic has been bullish since 17 Mar 2011. On 22 Mar 2011, I was expecting XAU/USD to make an upward swing. A buy signal would be given when XAU/USD made a stochastic bullish reversal on the 3-hour chart.

XAU/USD made a 3-hour stochastic bullish reversal on 22 Mar 2011 18.00hr 3-hour bar giving a buy signal. I decided to use the 30-min chart to get a better entry price.

XAU/USD made a 30-min stochastic bullish reversal on 22 Mar 2011 21.30hr 30-min bar. I placed two trailing 1-bar high orders, which were filled at the next 30-min bar at 1426.95 and 1426.94 (cyan triangle icons). I placed the initial S/L order at 1419.475 (below 22 Mar 21.30hr 15.00hr 30-min bar swing low) risking -747.5 for the 1st unit and -746.5 pips for the 2nd unit.

I placed the T/P order for the 1st unit at 1434.90 (below 21 Mar 2011 21.00hr 3-hour bar swing high) for a potential +795 pips gain . It was triggered at 1435.19 (green circle icon) on 23 Mar 2011 15.00hr 3-hour bar for a +824 pips gain.

I placed a T/S order for the 2nd unit after the 21 Mar 2011 21.00hr high 3-hour bar was exceeded. The T/S order was triggered at 1437.5 on 24 Mar 2011 12.00hr 3-hour bar for a +1056 pips gain.

Summary of Trade:

Entry date: 22 Mar 2011

Entry price: 1426.95 and 1426.94

Initial S/L: 1419.475

Initial risk: -747.5 for the 1st unit and -746.5 pips for the 2nd unit

1st Unit:

Exit date: 24 Mar 2011

Exit price: 1435.19

Profit: +824 pips

2nd Unit

Exit date: 23 Mar 2011

Exit price: 1437.5

Profit: +1056 pips

Disclaimer:

EUR/USD Long Trade 17 Mar 2011

2011-03-26T22:36:00.007+08:00

The time is shown in GMT+2. I was abroad when I made this trade.

EUR/USD daily stochastic has been bullish since 14 Mar 2011. On 17 Mar 2011, I was expecting EUR/USD upswing to continue. A buy signal would be given when EUR/USD made a stochastic bullish reversal on the 3-hour chart.

EUR/USD made a 3-hour stochastic bullish reversal on 17 Mar 2011 03.00hr 3-hour bar after retracing 76.4% of its previous upswing (yellow line 1).

I placed two trailing one-bar high buy orders (cyan square icon) and they were filled at 1.39291 (cyan triangle icon) on the next 3-hour bar. I placed the initial S/L order at 1.38600 (below 16 Mar 2011 18.00hr 3-hour bar swing low) risking -69.1 pips.

I placed the T/P order for the 1st unit at 1.40000 (below 15 Mar 2011 21.00hr 3-hour swing high) for a +70.9 pips potential gain and it was triggered at 1.40001 (green circle icon) on 17 Mar 2011 09.00hr 3-hour bar for a +71 pips gain.

I placed a trailing stop order for the 2nd unit after EUR/USD almost reached the Fibonacci 161.8% external retracement of the down swing (purple line 1) and 161.8% projection level (yellow line 2). I placed the T/S order such that the profit for the 2nd unit would be at least 2x the initial risk. The T/S order was triggered at 1.40725 (orange circle icon) at 18 Mar 2011 03.00hr 3-hour bar for a +143.4 pips gain.

EUR/USD moved +100 pips higher after I closed my trade!! Nevertheless it was a good trade.

Summary of EUR/USD Long Trade:

Entry date: 17 Mar 2011

Entry price: 1.39291

Initial S/L: 1.38600

Initial risk: -69.1 pips

1st unit:

Exit date: 17 Mar 2011

Exit price: 1.40001

Profit: +71.0 pips

2nd unit:

Exit date: 18 Mar 2011

Exit price: 1.40725

Profit: +143.4 pips

Disclaimer:

The Business of Trading - Way Forward

2011-02-15T10:34:00.006+08:00

The business of trading is simple but many lose money trading the markets.

The reasons why traders lost are because of their inability to control their emotions and the way the markets work. What can we do to deal with these issues?

1. Have a plan and system to structure how we would conduct our trading business. As with any good business, we need to work to a system to organise our decision making process. Having a system in place will help to guide us to think through what we want to do and why so that we would be rational instead of emotional.

2. Manage and control our risk. All business involves risk. With trading we know that we cannot assess the market with certainty even when we are rational. We therefore need to have risk controls in place and apply the control so that we do not put our business at undue risk when we are wrong.

3. Have a trading record keeping system in place. To improve we need to record our trading action and measure our results so that we can assess our trading performance.

4. Have a regular routine to monitor and review our trading performance so that we can subject us to the continuous improvement process.

Disclaimer:

The Business of Trading - The Challenges

2011-02-14T21:36:00.006+08:00

Trading the financial markets is a business. The business goal is to make money and the return is potentially lucrative. The business is simple. We buy and sell financial instruments. We make money when we buy lower than we sell and when we sell higher than we buy. It is simple to make money from trading but many do the opposite and lose money.

Why is that? I think 3 of the reasons are emotional:

1. Our emotion of fear and greed. We are afraid to buy when what we trade is offered at a discount and we are too greedy to sell when what we trade is bid at a premium.

2. Our herd mentality. We tend to follow the crowd, fear missing out and chase price.

3. Our strong urge to trade even there is no good reason to do so. We sometimes forget that the reason why we trade, which is to make money.

I have been guilty too and occasionally still succumb to make the same emotional mistakes.

Besides that it is the way the markets work. Even when we are rational, it is not possible to assess the market with certainty so that we know when it is cheap to buy and when it is dear to sell. We cannot tell for sure whether it is going to move up, down or sideway. The best we can do is to do the due diligence and take a calculated risk when the expected reward is higher than the risk.

Disclaimer:

TOPGLOV _ Technical Outlook

2011-02-13T14:25:00.007+08:00

TOPGLOV was one of my favorite stocks in the past. It made a good run up from early 2009 until it reached its peak in July 2010. It has been on a corrective decline since.

The positive sentiment on rubber glove companies is not there yet but TOPGLOV seems to be close to reaching its possible support area.

Let's look at TOPGLOV monthly chart.

TOPGLOV Monthly chart

Monthly chart shows TOPGLOV is making a potential ABC correction with two potential support area to end the correction:

1. Support area 1 at RM4.40-4.60, which is the area around Fib 50% retracement of prior advance, Fib 61.8% price projection of potential wave A range and Fib 161.8% external retracement of potential wave B range.

2. Support area 2 between RM3.50 and RM3.90, which is the area around Fib 61.8% retracement of prior advance, Fib 100% price projection of potential wave A range and Fib 261.8% external retracement of potential wave B range.

Monthly stochastic is in the oversold zone supporting the case that TOPGLOV is near its support area.

Let's see how it unfolds.

Disclaimer:
Trading and investment involves risk, including possible loss of principal and other losses. I shall not be responsible for any losses or loss profit resulting from trading or investment decision based on my posting and information presented in this blog.

FOREX Technical Analysis w/e 11 Feb 2011

2011-02-13T10:02:00.007+08:00

To date, I have been posting my completed FOREX trades. This week I would like to share with you my technical analysis of selected currency pairs, which I expect to form potential swing trade set-up next week.

My trade strategies are fairly simple. I review the daily chart to identify a trade set-up and use the 3-hour and 30-min charts to execute my trade.

To identify a trade set-up, I review the following elements:

1. Patterns (ABC or Complex correction or 5-wave trend patterns) using simplified Elliot wave analysis.

2. Price position using Fibonacci price ratio analysis.

3. Momentum position (bullish, bearish, oversold or overbought) using a combination of stochastic, MACD Histogram and Bollinger bands technical indicators.

Based on my technical analysis, I expect potential swing trade set-up to form for EUR/USD, USD/JPY, GBP/USD, USD/CHF, AUD/USD, EUR/GBP and GBP/CHF.

Let's look at the price charts to see why.

1. EUR/USD

ABC correction of the prior upswing (line 3) is probable. I expect the potential ABC correction to complete at the potential support area around the Fib 50% retracement of the prior upswing, Fib 100% projection (blue line) of potential wave A range and 161.8% external retracement (purple line) of potential wave B. This support area also coincide with the Bollinger band lower line.

A good strategy would be to wait for the potential ABC correction is in a position to complete before considering a long position.

2. USD/JPY

ABC correction of prior downswing (line 1) is probable. Price is at the Fib 76.4% retracement of prior downswing. A good strategy would be to wait for daily stochastic and/or MACD Histogram to turn bearish before considering to enter short position.

3. GBP/USD

Complex correction of the prior 5-wave decline (line 1) is probable. With the price failure to break out above the Fib 76.4% retracement of the 5-wave decline and bearish divergence between price and stochastic, I expect GBP/USD to have completed its complex correction. The 3 Feb 11 swing high is expected to the corrective high.

GBP/USD has made significant decline since making the potential corrective high on 3 Feb 11. A good strategy would be to wait for a corrective pattern in the 3-hour chart and enter on a 3-hour stochastic bearish reversal.

4. USD/CHF

ABC correction of prior decline (line 1) is probable. I expect the potential ABC correction to complete near the potential support area between Fib 61.8% of prior decline and Fib 100% price projection (blue line) of potential wave A range, or, price zone between Fib 76.4% retracement of prior decline and Fib 127.2% external retracement (not shown) of potential wave B.

A good strategy would be to wait for daily stochastic and/or MACD Histogram to turn bearish before considering to enter short position.

5. AUD/USD

ABC correction of previous decline(line 1) is probable. With the price failure to break out above Fib 76.4% retracement of the previous declibe and daily stochastic bearish, the 4 Feb 11 swing high is likely to be the wave C high.

AUD/USD has made a significant decline since making a potential corrective high on 4 Feb 11. A good strategy would be to wait for a corrective pattern in the 3-hour chart and enter on 3-hour stochastic bearish reversal.

6. EUR/GBP

ABC correction of prior upswing (line 1) is probable. I expect the potential ABC correction to complete at the potential support area around Fib 76.4% retracement of prior upswing, Fib 61.8% price projection (blue line) of potential wave A range and 127.2% external retracement (not shown) of potential wave B.

A good strategy would be to wait for the potential ABC correction in a position to complete before considering a long position.

7. GBP/CHF

ABC correction of previous 5-wave decline (line 2) is probable. GBP/CHF has retraced 76.4% of its previous decline. With the daily stochastic overbought, GBP/CHF is in a position to complete its potential ABC correction and continue its decline. A good strategy would be to wait for a pattern of lower highs or take out of a minor swing low, and, stochastic bearish reversal in the 3-hour chart.

Let's see how it unfold next week.

EUR/GBP Long Trade 08 Feb 11

2011-02-10T19:32:00.006+08:00

This EUR/GBP long trade was intended as a swing trade lasting at least a day. I use the daily data as my higher time frame to determine the swing (trend) direction, and, 3-hour and 30-min data as my lower time frame to execute the trade.

The clock is shown in Malaysian time (GMT+8).
EUR/GBP daily stochastic was oversold on 07 Feb 11 after retracing 61.8% of its previous upswing and has formed a bullish reversal hammer candlestick pattern. EUR/GBP corrective decline was expected to complete. A buy set-up would be in place once the 3-hour data made a stochastic bullish reversal.
EUR/GBP 3-hour data made a stochastic bullish reversal on 08 Feb 00.00hr 3-hour bar. I placed 2 buy orders 1 pip + spreads above the 08 Feb 00.00hr 3-hour bar high (see cyan square marker).

Both buy orders were filled at 0.84231 on the 08 Feb 06.00hr 3-hour bar (see cyan triangle marker). The initial stop-loss(S/L) was placed at 0.83828 5 pips + spreads below 07 Feb 21.00hr 3-hour bar low risking -40.3 pips. The take-profit (T/P) limit order for the 1st unit was placed at 0.8469 and 2nd unit was placed at 0.8652.

EUR/GBP advanced as expected and the T/P limit order for the 1st unit was filled at 0.84692 for a +46.1 pips gain on the 08 Feb 18.00hr 3-hour bar (see green circle marker).

EUR/GBP continued to advance and when the 3-hour data stochastic has became overbought, I decided to use the 30-min data to manage my 2nd unit. The 2nd unit was closed at 0.84878 for a +64.7 pips gain after the 08 Feb 23.00hr 30-min bar low was taken out (see pink circle marker).

Summary of Trade:

Entry: Long at 0.84231

Exit: Closed 1st unit at 0.84692 for a +46.1 pips gain

Closed 2nd unit at 0.84878 for a +64.7 pips gain

EUR/USD Trade 22 Oct 10

2010-10-24T10:07:00.008+08:00

This EUR/USD short trade was intended as a swing trade lasting at least a day. Daily chart was the higher time frame chart to determine the trend direction, and, 3-hourly, 30-min and 5-min the lower time frame charts to execute the trade. The clock is indicated in Malaysian time.

As per 20 Oct completed daily bar, the position of the slow stochastic(13/3) suggested that the daily momentum was bearish. EUR/USD trend was expected to be bearish.
3-hour chart showed EUR/USD was making an ABC correction, which tested the 76.4% decline from 15 Oct 18.00hr 3-hour bar high to 20 Oct 06.00hr 3-hour bar low. With the stochastic overbought, EUR/USD was in a position to complete the ABC correction.
On 30-min chart showed EUR/USD stochastic has been bearish since the 21 Oct 16.30hr 30-min bar. I decided to execute my entry on the 5-min chart to reduce my capital exposure.
EUR/USD made a momentum bearish reversal at the 21 Oct 17.50hr 5-min bar after making an ABC correction, which tested the 50-61.8% retracement of the decline from 21 Oct 16.25hr 5-min bar high to the 21 Oct 17.05hr 5-min bar low. I decided to place a sell order 1 pip + spreads below the 21 Oct 17.05hr 5-min bar swing low.

My sell order was executed at 1.40140 at 21 Oct 17.55hr after the 21 Oct 17.05hr 5-min bar swing low was taken out. I placed my stop order at 1.40523 just above the 21 Oct 16.25hr 5-min bar swing high risking -38.3 pips.

The minimum profit target for my short term (ST) unit was at 1.39610, which was the 50% retracement of the advance from 21 Oct 09.30hr 30-min bar low to 21 Oct 16.00hr 30-min bar high.
I placed a trailing 1 bar high buy stop order on the 5-min chart for my ST units after the 50% minimum target was hit. The 21 Oct 23.40hr 5-min bar closed below the 50% minimum target. The last buy stop order adjustment was made at 1.39712 at 21 Oct 23.55hr.
The buy stop order for my ST unit was executed at 1.39713 at 21 Oct 23.56hr for a +42.7 pips gain.
The minimum target for my long term (LT) unit was the 50% retracement of the rally from 20 Oct 06.00hr 3-hour bar low to 21 Oct 15.00hr 3-hour bar high.
I reduced my stop-loss for the LT unit to 1.40400 just above the 21 Oct 22.00hr 30-min swing high at 22 Oct 01.00hr after the 21 Oct 21.00hr 30-min swing low was taken out.
EUR/USD declined as expected. I reduced further my stop order for my LT unit to 1.39422 (above 22 Oct 02.30hr 30-min bar swing high) at 22 Oct 08.25hr.
My stop order for my LT unit was executed at 1.39422 at 22 Oct 12.52hr for a +71.8 pips gain.

Summary of trade:

Entry: Sell short at 1.4014 at 21 Oct 17.55hr

Exit: Closed ST unit at 1.39713 at 21 Oct 23.56hr for a +42.7 pips gain

Closed LT unit at 1.39422 at 22 Oct 12.52hr for a +71.8 pips gain

Disclaimer:

XAU/USD Trade 20 Oct 10

2010-10-24T02:48:00.022+08:00

This was planned as a short-term day trade. I used 3-hourly chart as my higher time frame chart to determine the trend direction, and, 30-min and 5-min chart as my lower time frame charts to execute my trade. Times are indicated in Malaysian time.

As per completed 20 Oct 03.00 hr 3-Hourly bar, slow stochastic (13/3) suggested that XAU/USD momentum was oversold. I expected XAU/USD trend to be sideways to bullish over the next few hours. I waited for XAU/USD to make a correction and a momentum bullish reversal in the 30-min chart to have a buy set-up in place.
XAU/USD made a momentum bullish reversal at 07.30hr 30-min bar after retracing 61.8% of its rally from 02.00hr 30-min bar low to 05.30hr 30-min bar high. I decided to execute my entry on the 5-min chart in order to reduce my capital exposure.
After XAU/USD made an ABC correction to the 76.4% support zone and made a momentum bullish reversal on the 5-min chart, I decided to place a buy stop order 1 pip + spreads above the 06.45hr 5-min bar high(Wave B high) . My order was filled at 1334.86 at 08.06hr after the 06.45hr 5-min bar high (Wave B high) was taken out. Stop-loss was placed at 1330.34 just below the 07.20hr 5-min bar low.
The minimum target for the short term unit is the 50-61.8% retracement zone of the price decline from the 00.00hr 30-min bar high to the 2.00hr 30-min bar low.
A trailing 1-bar low sell order for my short-term unit was placed 1 pip + spreads below the low of the most recently completed 5-min bar after the 50-61.8% target was reached. The last adjustment for the trailing 1-bar low sell order was made below the 09.05hr 5-min bar low.
The sell order for my short-term unit was executed at 1336.53 for a 167 pips gain at 09.12hr after the 09.05hr 5-min bar low was taken out.
I decided to use a trailing 2-bar low stop order on the 3-hourly chart for my long term unit. The last adjustment for the trailing 2-bar low stop order was made at 1337.75 just below the 12.00hr 3-hourly bar low at 18.07hr.

My stop order was executed at 1337.57 for a +271 pips gain at 20.53hr.

Overall, it was reasonable trade for short term hold. I entered at 1334.86 at 08.06hr, exit my short term unit at 1336.53 for a 167 pips gain at 09.12hr and exit my long term unit at 1337.57 for a +271 pips gain at 20.53hr. Remember that the value of 10 pips for XAU/USD is equal to 1 pip for EUR/USD.

Disclaimer:

MTDACPI Trade 06 Oct 10

2010-10-20T20:09:00.005+08:00

MTDACPI Weekly Chart 06 Oct 10

Stochastic oscillator (13, 3) showed MTDACPI weekly momentum was bullish from w/e 24 Sep 10. MTDACPI has corrected 78.6% of its price advance from the weekly low of w/e 27 May 10 to the weekly high of w/e 23 Jul 10 r. MTDACPI trend was expected to be bullish.

MTDACPI Daily Chart 06 Oct 10

MTDACPI made a daily momentum bullish reversal on 01 Oct 10 after correcting 61.8% of its advance from the daily low of 8 Sep 10 to the daily high of 22 Sep 10. The high of the 01 Oct 10 daily candle was taken out on 04 Oct 10 giving a buy signal but I only entered on 06 Oct 10 at 50 sen.

The good thing about Bursa Malaysia stock is that it is not too volatile like FOREX. We can afford to wait for a day or two after the buy signal was made.

Learning from Robert Miner’s book High Probability Trading Strategies, I bought enough MTDACPI shares to allow me to exit my position in stages. The first unit is called the short term unit. It is usually exited fairly quickly for a relatively small profit once the minimum target is reached. The second unit is called the long term unit. The long term term unit is intended to capture the longer term trend.

MTDACPI Daily Chart 15 Oct 10

I sold my short term unit on 15 Oct 10 at 58.5 sen for about 16% gain following a bearish engulfing reversal candle on 14 Oct 10 and after the minimum target 50-61.8% retracement of the decline from the daily high of 23 Jul 10 to the low of 8 Sep 10 was reached.

MTDACPI weekly chart 19 Oct 10

The long term target based on weekly chart is 73-75 sen. The long term target is based on:

1. 78.6% correction from the weekly high of w/e 14 Aug 09 to the weekly low of w/e 27 May 10 .

2. 100% Fibonacci projection of the advance from the weekly low of w/e 27 May 10 to the weekly high of w/e 23 Jul 10 projected from the weekly low of w/e 9 Sep 10.

3. 127% external retracement of the decline from the weekly high of w/e 23 Jul 10 to the weekly low of w/e 09 Sep 10.

Will MTDACPI advance to this long term target? I do not know but I still have my long term unit just in case.

Disclaimer:

MUHIBAH Trade on 17 Jun 10 - Update No. 1

2010-10-20T19:43:00.005+08:00

I posted this trade on 27 Jun 10.

http://swingtrader188.blogspot.com/2010/06/muhibbah-trade-on-17-jun-10.html

It has been a long wait. MUHIBAH finally attracted lots of trading interest. Volume was well above normal last week.

In my original post I mentioned RM1.14 (8 Apr 10 high) as my initial target. This remains a valid target but I have now projected target zones based on the technique I learned from Robert Miner's book High Probability Trading Strategies.

These are shown in the weekly chart below.

MUHIBAH Weekly Chart 20 Oct 10

The initial target zone is rm1.09-1.15. The target range correspond to:

1. 38.2% retracement of the decline from w/e 12 Jun 09 to w/e 27 May 10.

2. 161.8% projection of the advance from w/e 27 May 10 to w/e 06 Aug 10 projected from the low of w/e 03 Sep 10 weekly bar.

3. 161.8% external retracement of the decline from w/e 06 Aug 10 to 27 May 10.

Next target zone is rm1.23-1.28. The target range correspond to:

1. 50.0% retracement of the decline from w/e 12 Jun 09 to w/e 27 May 10.

2. 261.8% projection of the advance from w/e 27 May 10 to w/e 06 Aug 10 projected from the low of w/e 03 Sep 10 weekly bar.

3. 261.8% external retracement of the decline from w/e 06 Aug 10 to 27 May 10.

Will MUHIBAH reach these target? Let's see.

Disclaimer:

USD/CAD Trade on 15 Sep 10

2010-09-16T08:57:00.006+08:00

As of 13 Sep completed daily candle, slow stochastic was in the oversold zone. USD/CAD appeared to be making an ABC correction and has retraced 76.4% of prior advance. The 14 Sep daily candle was not yet completed but was forming a Doji bullish reversal candle. I expected USD/CAD trend to be sideways to bullish. I waited for USD/CAD to make a momentum bullish reversal in the 3-hourly chart to consider taking a long position.
USD/CAD made a momentum bullish reversal after the 15 Sep 03.00hr 3-hourly candle was completed. I decided to use 30-min chart to time my entry to get more favorable price.
USD/CAD formed a bullish engulfing reversal pattern after 15 Sep 08.30hr 30-min candle was completed and retraced 38.2% of prior advance. 30-min stochastic has not made a momentum bullish reversal but were looking set to. I decided to place a buy stop order 1 pip+spreads above the high of the bullish engulfing candle pattern. My buy order was filled at 1.02728 at 09.40hr. I placed my initial stop order at 1.0235 for a -37.8 pips risk exposure.
USD/CAD advanced as the trade progressed and has reached the minimum target 50-61.8% of the prior decline on the 3-hourly chart.
I raised my stop order to 1.02516 below the 15 Sep 08.30hr 30-min candle swing low to reduce my risk exposure to -21.2 pips. I decided to place a 1 candle trailing sell order to take profit on half of my position based on the 30-min chart.
My sell order for half of my position was filled at 1.03092 at 13.17hr for a +36.4 pips gain after the low of the 12.30hr 30-min candle was taken out.
As the trade progressed, USD/CAD failed to break above the most recent swing high on the 30-min chart. This was not a good sign. I decided to place a sell order at 1.02871 at 17.27hr for half of my remaining position to protect my profit just in case USD/CAD trend should reverse down.
My sell order for half of my remaining position was executed at 1.02870 at 18.27hr for a +14.2 pips gain.
USD/CAD continued to decline. I was stopped out at 1.02516 at 23.01hr for a -21.2 pips loss.

To summarize, I entered long at 1.02728 at 09.40hr Malaysian time, exit half my position at 1.03092 at 13.17hr for +36.4 pips gain, exit 1/4 of my position at 1.02870 at 18.27hr for a +14.2 pips gain and exit the last 1/4 of my position at 1.02516 at 23.01hr for a -21.2 pips loss. Overall, it was still a positive trade.

Disclaimer:

Multiple Time Frame Momentum Strategy

2010-09-15T16:41:00.005+08:00

Multiple time frame momentum strategy is one of the critical factors described in Robert Miner's book High Probability Trading Strategies to filter a trade set-up.

When we have a chart pattern, and, price and time positions in place to suggest the market is in a condition to complete a correction or trend, we use the multiple time frame momentum strategy to filter our trade set-up. We only take the trade if the expected move is in the direction of the higher time frame momentum and time our entry in the lower time frame chart following a momentum reversal in the direction of the higher time frame momentum.

I have been using the multiple time frame momentum strategy to filter my FOREX trade set-up for quite a while now and have been very encouraged with the results. I use daily chart as my higher time frame chart, and, 3-hour and 30-min charts as my lower time frame charts. Does it work all the time? Definitely not and no strategies do but it will improve your odd of success when applied with good entry and exit strategies to control risk.

Disclaimer:

USD/CHF Trade on 14 Sep 10

2010-09-15T15:47:00.005+08:00

As of 13 Sep completed daily candle, stochastic showed USD/CHF daily momentum was bullish.
USD/CHF made a momentum bullish reversal after 14 Sep 09.00hr 3-hourly candle was completed.
USD/CHF made a momentum bullish reversal after 14 Sep 13.30hr 30-min candle was completed. My buy stop order was filled at 1.00387. My initial stop-loss was placed at 1.00063 for a -32.40 pips risk exposure.
USD/CHF did not advance as expected. I was stopped out at 1.00060 at 15.57hr for a -32.7 pips loss.
Another set-up developed after I was stopped out. USD/CHF daily momentum was still bullish.
USD/CHF momentum remained bullish as of 14 Sep 12.00hr 3-hourly candle.
USD/CHF made a momentum bullish reversal after the 14 Sep 17.00hr 30-min candle was completed. My buy order was executed at 1.00373 at 17.50hr after the high of the 17.00hr 30-min candle was taken out. I placed my stop at 0.99959 for a -41.40 pips risk exposure.
I was stopped out again at 0.99958 at 22.10hr for a -41.50 pips loss.

Disclaimer:

USD/JPY Trade on 14 Sep 10

2010-09-15T15:34:00.003+08:00

As of 13 Sep completed daily candle, slow stochastic suggested USD/JPY daily momentum was bullish. I waited for momentum bullish reversal on 3-hourly chart before I would consider taking a long position.
USD/JPY made momentum bullish reversal after 14 Sep 09.00hr 3-hourly candle was completed. I decided to use 30-min chart to time my entry.
USD/JPY made a momentum bullish reversal after 14 Sep 13.30hr 30-min candle was completed. My buy stop order was executed at 14.01hr after the high of the 13.30hr 30-min candle was taken out. I placed my initial stop loss order at 83.235 below the swing low made on the 14 Sep 08.30hr 30-min candle.
USD/JPY did not advance as I expected. I was stopped out at 83.234 at 14.36hr for a -47.80 pips loss.

Disclaimer:

USD/CAD Trade on 08 Sep 10

2010-09-14T15:32:00.009+08:00

As of 07 Sep 10 completed daily candle, slow stochastic suggested USD/CAD daily momentum was bearish. USD/CAD has retraced 50% of prior decline. USD/CAD trend was expected to be sideways to down. I waited for 3-hourly chart to make momentum bearish reversal before I would consider taking a short position.
USD/CAD made a momentum bearish reversal after the 08 Sep 10 12.00hr 3-hourly candle was completed. I decided to execute my sell stop order on the 30-min chart in order to get better entry price and to reduce my risk exposure.
USD/CAD made a momentum bearish reversal after the 17.30hr 30-min candle was completed. I placed a sell stop order 1 pip + spreads below the low of the 17.30hr 30-min candle. My sell order was executed at 1.04800 at 18.07hr. I placed my initial stop order at 1.05120 for a -32 pips risk exposure.
USD/CAD declined as expected. As the trade progressed, I lowered my stop-loss order to above the 20.30hr 30-min candle swing high at 1.04994. This reduced my risk exposure to -19.4 pips.
Once USD/CAD reached my minimum 50-61.8% retracement target, I then decided to use a trailing 1 candle high on the 5-min chart to take partial profit. I placed a buy limit order for half of my position 1 pip + spreads above the high of the 21.40hr 5-min candle at 1.04011 at 21.46hr.
My buy limit order was executed at 1.04012 at 21.49hr for a +78.80 pips gain after the high of the 21.40hr 5-min candle was taken out.
USD/CAD continued to decline further. I decided to use a trailing 1 candle high on the 30-min chart for my remaining position after the 30-min stochastic became oversold and look set to make a bullish reversal.
I continued to lower my stop loss and my last adjustment was made at 00.58hr 1 pip + spreads above the high of the 09 Sep 00.30hr completed 30-min candle.
My final position was stopped out at 1.03612 on 09 Sep 10 01.09hr for a +118.80 pips gain after the high of the 09 Sep 00.30 hr 30-min candle was taken out.

Disclaimer:

GBP/JPY Trade on 03 Sep 10

2010-09-06T16:34:00.006+08:00

At the end of 01 Sep 10 daily candle, the daily stochastic was still bearish but with the MACD Histogram bullish and the last 2 daily candles (hammer and doji) indicating potential bottom reversal, I expected GBP/JPY trend to be sideways to up. GBP/JPY has also retraced 76.4% of the prior upswing.
GBP/JPY made a momentum bullish reversal on 03 Sep 10 03.00hr 3-hourly candle. I placed a buy stop order 1 pip+spreads above the high of the 03.00hr 3-hourly candle. My buy stop order was executed at 129.930 at 08.10hr. I placed my initial stop order at 129.137 below the swing low made before the momentum bullish reversal and the take-profit order at 131.40 just below the 100% Fibonacci price projection for the expected upswing.

My take profit limit order was executed at 131.408 at 20.36hr for a +147.80 pips profit.

Disclaimer:

XAU/USD(Gold) Trade on 02 Sep 10

2010-09-06T16:10:00.006+08:00

The position of the daily stochastic and MACD Histogram on the completed 01 Sep 10 daily candle suggested XAU/USD daily momentum was bearish. Price has retraced beyond 76.4% of the prior downswing but a Doji candle with the stochastic in the overbought position suggested a top reversal was likely.
The 3-hourly momentum was bearish after completion of the 02 Sep 10 12.00hr 3-hourly candle.
I decided to execute my short entry on the 30-min chart. My sell stop order was done at 1246.98 after the low of the 02 Sep 10 16.00hr 30-min candle was taken out. I placed my initial stop-loss order at 1250.07 1 pip + spreads above the high of the 17.00hr 30-min candle and take profit order at 1239.

The trade did not work out as expected. I was stopped out at 1250.11 for a -313 pips loss at 20.11 hr. By the way the value of 10 pips for XAU/USD is equivalent to the value of 1 pip on currency pairs such as EUR/USD, GBP/USD and AUD/USD.

Disclaimer:

AUD/JPY Trade on 01 Sep 10

2010-09-06T09:52:00.007+08:00

The position of the stochastic and MACD Histogram after the completed 30 Aug 10 daily candle suggested AUD/JPY daily momentum was bullish. AUD/JPY appeared to be making a complex correction in the form of a triangle pattern and has been finding support near the 76.4% Fibonacci retracement area. AUD/JPY trend was expected to be sideways to up. I waited for a momentum bullish reversal on the 3-hourly chart to consider a long position.
AUD/JPY formed a bullish engulfing pattern and made a momentum bullish reversal (stochastic fast line crossing above its slow line and MACD Histogram was ticking up) on completion of the 01 Sep 10 03.00hr 3-hourly candle near the 76.4% retracement of the prior upswing. I placed a buy stop order 1 pip + spreads above the high of the 03.00hr 3-hourly candle.

My buy stop order was executed at 75.210 on 01 Sep 10 at 08.34hr. My initial stop-loss order was placed at 74.501 for -70.9 pips exposure and take-profit order at 80.800.

I took partial profit at 76.031 for a +82.1 pips gain on 01 Sep 10 11.47hr when AUD/JPY tested the 50% retracement of the downswing.

I raised my stop order to 76.60 based on the lowest low of the small candles after the last long green 3-hourly candle.

I was stopped out at 76.599 for a +138.90 pips gain on 02 Sep at 08.39hr after the low of the 02 Sep 00.00hr 3-hourly candle was taken out.

Disclaimer:

AUD/USD Trade on 01 Sep 10

2010-09-06T08:25:00.009+08:00

The position of the stochastic and MACD Histogram on the completed 30 Aug 10 daily candle suggested AUD/USD daily momentum was bullish. AUD/USD appeared to have completed a regular ABC correction after retracing to the 38.2-50% Fibonacci confluence area of its prior upswings. The ABC correction seemed to be potential Wave 4 of a bullish trend in progress. I expected AUD/USD trend to be sideways to up. I needed to wait for momentum bullish reversal on the 3-hourly chart to enter long.

AUD/USD formed a bullish engulfing pattern on the 31 Aug 10 21.00hr 3-hourly candle near the 61.8% retracement of the prior upswing. AUD/USD made a momentum bullish reversal (stochastic line crossover and MACD Histogram ticking up) after completion of the 1 Sep 10 03.00hr 3-hourly candle. I entered a buy stop order 1 pip + spread above the high of the 03.00hr 3-hourly candle.

My buy stop order was executed at 0.89340 on 1 Sep 10 at 06.32hr. I placed my initial stop-loss order at 0.8858 for a -76 pips exposure and take-profit order at 0.94800.

I intended to take partial profit on test of the resistance line at the previous peak but ended up by mistake exited my full position at 0.90361 for a +102.10 pips gain on 01 Sep 10 at 17.10 hr and at 0.90369 for a +102.90 pips gain at 17.11hr. Don't laugh but I executed the sell limit order twice thinking that the first one was not done. I made an excellent profit but could have made a lot more on my second unit. It was not just meant to be. By the way the highest for last week for AUD/USD was at 0.91762! That's another 100+ pips!

Disclaimer:

EUR/GBP Trade on 31 Aug 10

2010-09-05T21:29:00.012+08:00

The position of the stochastic and MACD Histogram on the completed daily candle on 30 Aug 10 suggested the EUR/GBP daily momentum was bullish. EUR/GBP appeared to have completed a complex correction pattern after retracing 76.4% of its prior upswing. EUR/GBP daily trend was expected to be sideways to up.
EUR/GBP made a momentum bullish reversal on completion of the 31 Aug 10 12.00hr 3-hourly candle. I entered long at 0.82034 on 31 Aug 10 at 15.02hr after the high of the 12.00hr 3-hourly candle was taken out. My initial stop loss order was placed at 0.81598 and take-profit order at 0.85291.
I took partial profit at 0.82692 for a +65.80 pips profit on 31 Aug 10 at 22.18hr when the high of the 18 Aug 10 15.00hr 3-hourly candle was tested. I also raised my stop order to 0.81691 at 22.26hr to reduce my exposure to 34.3 pips.
I raised my stop order to 0.83014 on 01 Sep 10 at 19.37hr based on the lowest low of the short hourly candles after the long green hourly candle.
I was stopped out at 0.83014 for a +98 pips gain on 01 Sep 10 at 20.51hr.

Disclaimer:

XAU/USD(Gold) Trade on 9 Jul 10

2010-07-11T23:17:00.007+08:00

XAU/USD(Gold) Daily Chart

Gold has retraced 76.4% of its gain after making a new high on 21 Jun 10. It made a daily momentum bullish reversal from an oversold position on 8 Jul 10 - Slow stochastic %K line crossed above its %D line from oversold zone, price was touching the Bollinger band lower channel and MACD Histogram was ticking up to signal a possible high probability long trade. What I need was a momentum bullish reversal on the hourly chart to have a long trade set-up in place.

XAU/USD(Gold) Hourly chart

Gold made a momentum bullish reversal on 9 Jul 10 19:00hr Malaysian time. I placed a buy stop order 1 pip+spreads above the 9 Jul 10 15:00hr swing high and my order was executed at 1200.81 on take-out of the swing high.

My initial protective stop was set at 1194.86 - 1 pip+spreads below the 9 Jul 10 17:00hr swing low. This gave an initial risk of 595 pips but the potential profit target was the previous peak at 1265 for a whooping 6,919 pips! On the pessimistic side should it turned out to be a correction of the downswing from 28 Jun 10 peak, I expected it to reach at least the 50% retracement level at about 1223 - for a potential 2,219 pips gain.

I took partial profit on 20% of my position at 1210.76 for a 995 pips gain. Later I exited 30% of my position at 1207.91 for a 710 pips gain after the 9 Jul 10 22.00hr low was taken out.

I still have 50% of my position for a potential ride to previous peak at 1265. To protect my profit, I have raised my stop to 1203.415. This will at least ensure 260.5 pips gain should the expected uptrend did not materialise.

Disclaimer:

DJIA

2010-07-03T08:19:00.006+08:00

DJIA weekly chart w/e 02 Jul 10

Weekly price chart is showing that DJIA is likely to decline further.

Where is the decline likely to end? Two probable target area.

Target area 1 - The price range between

a) 100% Fib projection of downswing range between w/e 30 Apr 10 and 11 Jun 10 projected from swing high w/e 25 Jun 10.

b) 50% Fib retracement of uptrend from 6 Mar 09 to 30 Apr 10.

Target area 2 - The price range between

a) 161.8% Fib projection of downswing range between w/e 30 Apr 10 and 11 Jun 10 projected from swing high w/e 25 Jun 10.

b) 61.8% Fib retracement of uptrend from 6 Mar 09 to 30 Apr 10.

Based on current market information, the decline could either be a correction to the prior uptrend or a trend reversal leading to new low below w/e 6 Mar 09 swing low. Let's see how the market unfold.

Disclaimer:

MUHIBBAH Trade on 17 Jun 10

2010-06-27T21:47:00.005+08:00

I've not been buying shares from Bursa Malaysia for more than a month until I spotted a trade set-up on MUHIBBAH that was too hard to resist on 16 Jun 10.

MUHIBBAH weekly chart 25 Jun 10

On weekly chart, I spotted a potential double bullish divergence between price and MACD - price making lower lows but MACD tracing higher lows. This is a positive sign.

MUHIBBAH daily chart 25 Jun 10

On 16 Jun 10, the MACD line was rising and above its signal line on the daily chart.

On Bursa news, I noticed EPF bought MUHIBBAH shares from the open market on 3 and 4 Jun 10. It looks like there were fundamental and technical reasons to buy MUHIBBAH.

I bought MUHIBBAH shares at 89.5 sen on 17 Jun 10. My stop-loss will be below 26 May 10 low at 83 sen and my initial target is 8 Apr 10 high at RM1.14. Let's see how the trade unfold.

Disclaimer:

DJIA

2010-06-27T08:10:00.004+08:00

I wrote on May 8, 2010 my outlook on DJIA.

http://swingtrader188.blogspot.com/2010/05/djia-end-of-rally.html

DJIA did decline last month but not as much as I expected. It did drop to below 10,000 before it staged a rebound. What do I expect for next month? Let's look at the charts again.

DJIA monthly chart

Monthly chart shows a Doji candle suggesting uncertainty after a long red candle.

DJIA weekly chart

Weekly chart shows a bearish engulfing pattern after 2 weeks of green candles. This is a negative sign.

DJIA daily chart

Daily chart shows a decline after shooting star candle tested the 50% retracement line on Jun 21.

MACD Histogram are red on all charts (monthly, weekly and daily) suggesting further decline is likely.

AWC Trade on 25 Jun 10

2010-06-27T00:42:00.005+08:00

AWC price charts showed a set-up for a swing trade.

AWC Weekly chart 25 Jun 10

AWC Daily Chart 25 Jun 10

AWC has been testing its prior resistance at 24 sen for the last 3 weeks. It now serves as a support line and is close to the 38.2% retracement level of prior uptrend from end Oct 08 low at 6 sen to mid Jan 10 high at 36 sen.

On weekly chart, AWC MACD Histogram has turned up and on daily chart MACD line is rising and above its signal line. I expect AWC to rebound off its support level at 24 sen for an upside move to test the upper resistance line.

I placed a limit order at 25 sen and it was completed before end of the morning session. My initial target is at 30 sen and stop-loss is below 22 sen.

DJIA - End of Rally?

2010-05-08T11:44:00.014+08:00

DJIA has been in a price rally since reaching a bottom in Mar 09. Is the DJIA rally about to come to an end? Let's look at the charts.

Monthly chart w/e May 07, 2010

Monthly chart shows DJIA has retraced 61.8% of prior decline (bear trend) from Oct 07 to Mar 09. MACD Histogram and stochastic oscillator have turned down but the monthly bar for May 10 is still not complete. It took DJIA 17 months to decline. The rally is now on the 14th month.

Weekly chart w/e May 07, 2010

Weekly chart shows a bearish divergence between price and MACD. The slow stochastic oscillator has also turned down from the overbought zone. These are negative sign. I expect DJIA to decline for the next few weeks or so.

Disclaimer:
Trading and investment involves risk, including possible loss of principal and other losses. I shall not be responsible for any losses or loss profit resulting from trading or investment decision based on my posting and any information presented in this blog.

KPS - A failed swing trade?

2010-05-01T20:01:00.008+08:00

I joined a discussion in Investlah on KPS on Apr 6, 2010. The subject can be found in the link below

http://www.investlah.com/forum/index.php/topic,7505.0.html

I mentioned a potential swing trade was setting up for KPS , which I entered on Apr 06, 2010 at RM1.53.

Weekly chart

Daily chart

KPS met all the conditions to consider it as a potential swing trade. This was the trade set-up on Apr 05, 2010 before I entered the trade.

Weekly chart: Price has retraced 76.4% of upswing from Oct 08 to Jun 09. MACD bullish.

Daily chart: Price has retraced 76.4% of upswing from Mar 15, 2010 to Mar 25, 2010 and tested the rising 20-day SMA line. MACD and MACD Histogram have turned up.

My outlook on KPS was bullish at that time.

Let's see what happened.

KPS did go up but very briefly up to RM1.60 and then declined to test the Mar 31, 2010 swing low at RM1.42. KPS did close below RM1.42 on Apr 28, 2010. This is a signal that KPS is not likely to work out. What will I do? Plan an exit to minimise my losses.

Disclaimer:

MUHIBBAH Update

2010-05-01T15:39:00.008+08:00

I posted MUHIBBAH swing trade on March 8, 2010. The set-up was great and the trade went up as expected but I did not execute my exit strategy per plan. This is one of the rare occasion that greed and fear got the better of me. Let's look at this trade from the beginning.

Weekly chart

Daily chart

I bought MUHIBBAH at 96 sen on Mar 8, 2010. The rationales were described in detail in my earlier posting.

MUHIBBAH moved up as expected and went above 16% of my entry price on Apr 8, 2010. That's about RM1.11 (0.96 x 1.16). It went as high as RM1.14 within my short-term target of RM1.09-1.21. It then declined and closed below the previous day's low on Apr 13, 2010 closing at RM1.07. What did I do? I should have sold half my MUHIBBAH shares the next day but I didn't! I did not follow my exit strategy Rule no 2! What a mistake! I was made to pay for it!

MUHIBBAH continued to slide down until it almost reached my entry price that I decided to let go half my shares at 98.5 sen on Apr 27, 2010. It was testing a support level (previous downtrend line turning as support and 78.6% Fibonacci support) so I decided to hold the other half. I made a small profit on the half the shares I sold but I could have made more if I had sold earlier as per my exit strategy and buy back close to my original entry price. The support level seems to be holding too but I may not be so lucky.

MUHIBBAH is now again setting up for a potential swing trade.

Weekly chart: Bullish divergence between price & MACD. Doji bar near a support level.

Daily chart: Price has retraced 78.6% of upswing from Mar 22, 2010 to Apr 8, 2010. MACD Histogram ticking up.

Outlook: Bullish.

Let's see how it plays out. I still have one half of my MUHIBBAH shares to see this out.

Disclaimer:

Secrets of FOREX Millionaires

2010-05-01T14:55:00.001+08:00

I saw this book by chance when I was in MPH bookstore at Mid-Valley late last year. The title caught my attention that I grabbed the book. After just browsing a few pages, I was very impressed that I decided to buy it. This book has given me a better understanding of Forex trading.

All this while I have been trading Stocks and Futures but now I will certainly include Forex.

Get hold of this book. It costs RM49.90 only but it is as good if not better than most books written by Western authors, which cost 3-6 times more.

Taking Profit - Malaysian Stocks

2010-05-01T12:18:00.007+08:00

I wrote on June 14 2009 some suggestions on how to taking profit for Malaysian stocks.

My rules have not changed but I have to admit sometimes greed and fear did overtake my better judgement. It is good to remind myself what are the rules so I will not forget.

(1) Trade at least two units. 1 unit should be at least one lot minimum. The amount depends on what you can afford based on position sizing and the stock price. Let's say you can afford RM10,000 per counter, you see stock "A" is setting up for a potential swing trade and stock "A" is trading at RM1.00. As you can afford to buy RM10,000 per counter, you would buy 100 lots (10,000 shares). 1 unit in this example would be 50 lots.

(2) Monitor the stock price closely after it has increased 16% above its entry price. Watch the price action against the previous day low. This could go on for days if price continue to move higher. Exit half the shares once price close below the previous day low. Using the Stock "A" as example, you would have sold 50 lots. Why 16%? This is explained in my earlier posting.

(3) Adjust stop-loss to break-even for the remaining half. We now have a risk-free opportunity to find out how high the stock can go up.

(4) If price continue to move up raise the stop-loss to the latest swing low. Stock usually do not move straight up but in a zig zag manner. There is usually correction along the way, which create a new swing low. As an uptrend is defined a pattern of higher highs and higher lows, violation of the latest swing low suggest the market ability to sustain the uptrend is in question.

(5) Monitor the stock price closely after it has hit the projected price target. This could go on for days if price continue to move higher. Exit if price close below the previous day low.

How do I project the price target? You can use chart pattern projected target and Fibonacci ratio analysis but this is a separate topic all together.

(6) If you can afford a third unit then you could use either Chandelier Exit or monitor on the higher time frame chart (weekly or monthly) and look for bearish reversal sign there.

These are the rules, which I want to remind myself to follow all the time with no exception.

Disclaimer:Trading and investment involves risk, including possible loss of principal and other losses. I shall not be responsible for any losses or loss profit resulting from trading or investment decision based on my posting and information presented in this blog.

UNISEM

2010-05-01T11:54:00.008+08:00

I posted this UNISEM swing trade in www.investlah.com on 2 Apr 10. The link is shown below
http://www.investlah.com/forum/index.php/topic,7509.0.html
This was the trade set-up.

Monthly chart

Weekly chart

Daily chart

Weekly chart: Weekly MACD is rising and above its signal line

Daily chart: Price has retraced 38.2% of upswing from 19 to 26 Mar 10 after the breakout of the cup with the handle pattern. MACD turned up on 1 Apr 10.

Entry: I bought UNISEM at RM2.82 on 2 Apr 10.

Exit: I sold half my UNISEM shares at RM3.34 on 22 Apr 10 to secure some profit. I did this for 2 reasons - (1) UNISEM has increased by 16% from my entry price (2) UNISEM has reached the 78.6% retracement target of monthly downswing from Jan 04 to Mar 09.

UNISEM went up for 2 days after I sold before declining but has since continued to move up. I still have half my UNISEM shares to ride this potential upswing. The stop-loss level is now closing below 27 Apr 10 swing low at RM3.19. The target is at RM3.61-4.13.

Disclaimer:

High Probability Trading Strategies

2010-05-01T10:44:00.004+08:00

I enjoyed reading this book. It is an excellent book for a swing trader. It provides a structured approach to determine whether a market is in a trend or a correction phase and the position of the trend or correction - at the beginning, middle or end. There are more. It also provides guide where and when to expect the trend or correction to end, entry and exit strategy, position sizing and how to manage trade from entry to exit.

These are very useful information for a swing trader because we want to go long (buy) near the swing low and sell short near the swing high in the early phase of the trend and ride the trend as long as we can.

The book comes with 4 trade examples in a video CD, which help to enhance the learning.

It costs USD44.10 from Amazon.com but it worths every penny.

AXIATA

2010-05-01T10:01:00.009+08:00

I posted this AXIATA trade in www.investlah.com forum on 4 Feb 10. The link is shown below
http://www.investlah.com/forum/index.php/topic,6560.0.html
At that time AXIATA was setting up nicely for a swing trade. This was the trade set-up.

Weekly chart

Weekly chart (close-up)

Daily chart

Weekly Chart: Weekly MACD was rising after crossing above its signal line on w/e 22 Jan 10.

Daily Chart: Price has pullback to the 20-day SMA line on 27 Jan 10 as well as the 61.8% Fibonacci support. MACD turned up on 2 Feb 10.

Entry: I bought AXIATA at RM3.36 on 3 Feb 10. The stop-loss is at RM3.16 (6% below my entry price and below the 27 Jan 10 swing low). The target is at RM4.45 (Sep 08 peak).

Exit: I sold half my AXIATA shares at RM3.90 on 10 Mar 10 to secure some profit. I did this for two reasons - (1) AXIATA has increased 16% above my entry price. (2) The 9 Mar 10 close was below the previous day's low.

AXIATA consolidated for more than a month after that and now beginning to show sign of moving up again.

I still have half of my AXIATA shares to ride on the current potential upswing.

Disclaimer:

SEALINK

2010-05-01T09:24:00.005+08:00

SEALINK is setting up nicely for a swing trade. See SEALINK charts and analysis below.

Weekly chart 30 Apr 10 (Price Target)

Weekly chart 30 Apr 10

Weekly chart 30 Apr 10 (close-up view)

Daily chart 30 Apr 10

Weekly chart - SEALINK price has retraced 50% of its upswing from w/e 27 Mar 09 to w/e 12 Jun 09. MACD line has turned up and stochastic made a bullish reversal,

Daily chart -Price gapped up and MACD line has crossed above its signal line.

Outlook - Bullish.

I entered at 67 sen on 30 Apr 10. Price target at 78.5-82.5 sen (50%-61.8% retracement of downswing from w/e 12 Jun 09 to w/e 30 Apr 10). Stop loss is closing below swing low at 61.5 sen.

Disclaimer:

MUHIBBAH

2010-03-08T12:29:00.011+08:00

MUHIBBAH is beginning to look quite attractive technically after recent decline.

MUHIBBAH Weekly Chart

On weekly chart, a bullish divergence has formed between price and MACD. MACD is still below its signal line but has turned up. Price has retraced 61.8-76.4% of the upswing from w/e 13th Mar 09 to 12th Jun 09. Traders familiar with Elliott wave theory should notice that the decline from w/e 12th Jun 09 is a 5-wave decline.

MUHIBBAH Daily Chart

On daily chart, MACD is rising and above its signal line. A long white candle on relatively high volume on 5th Mar 10 took out the high of the last 9 days price bars.

It opened at 95.5 sen on 8th Mar 10 and I managed to buy at 96 sen. The stop-loss is at 89 sen. The target is RM1.09-1.21 for short term trade and RM1.54-1.67 and RM1.93-2.01 for long term.

Disclaimer:

Trading and investment involves risk and possible loss of capital and other losses. I shall not be responsible for any losses or loss profit resulting from trading or investment decision based on my posting and information presented in this blog.

NTPM

2010-01-24T20:16:00.007+08:00

Back on 20th Nov 09, I wrote under Penny Stocks - Trading Idea that NTPM was one of the penny stocks in a consolidation phase. I promised to revisit in 2 months time.

Let's see what happened to NTPM by reviewing its latest daily chart.

NTPM Daily Chart 22nd Jan 10

NTPM started to consolidate on 26th Oct 09 and was trading between 50 sen to 52.5 sen until it broke out to the upside on 9th Dec 09. The ideal time to buy NTPM was on 30th Nov 09 when it tagged the Bollinger lower band.

After the breakout it went as high as 59 sen and currently is trading at 58 sen. The resistance is 61 sen, which is an all-time high and you know what usually happen when a stock broke its all-time high. But the question is will it reach it? That is a question I cannot answer. However, I do know that the latest swing low is at 56 sen and Chandelier Exit current reading is at 55 sen. Should NTPM drop below this level it is probably best to exit partially at least.

Disclaimer:

TOPGLOV

2010-01-08T10:40:00.007+08:00

It looks like that all the handglove manufacturers are trading at new high - a previously uncharted territory. This includes the best in the sector - TOPGLOV - the world largest handglove manufacturer.

TOPGLOV continues to scale new high. Where is the target? I have to look at the monthly chart as shown below to find out where.

TOPGLOV Monthly Chart 7th Jan 10

You will notice that at the end of 2008 TOPGLOV low was at around RM3.50. By projecting up from this swing low point by RM9.00, the swing target is probably around RM12.50.

Will it reach this target? Only time will tell.

Next, let's look at the daily chart. See daily chart below.

TOPGLOV Daily Chart 7th Jan 10

The technical sign on the daily chart is showing clearly that TOPGLOV is in a strong uptrend. You can see that the 10-day MA, 20-day MA and 50-day MA are in proper order and are rising in the daily chart. However, to protect profit, I am monitoring the Chandelier Exit on the daily chart, which currently reads at RM10.10.

Back on 4th Aug 09, I wrote about a potential swing trade for TOPGLOV.

http://swingtrader188.blogspot.com/2009/08/topglov-pullback-trade.html

Back then TOPGLOV was trading around RM7.00. I have taken partial profit but still have some to ride the upswing.

Disclaimer:

SUPERMX

2010-01-06T21:12:00.010+08:00

SUPERMX made yet another new high!

Back on 11 Nov 09, I wrote that the swing target for SUPERMX is RM4.36 and RM4.97. See my article in

http://swingtrader188.blogspot.com/2009/11/supermx.html

Both targets have been reached.

I took partial profit at RM4.37 on 28th Dec 09 but decided to ride my profit when RM4.97 was hit today and protect my profit with Chandelier Exit.

The Chandelier Exit reading at the end of today is RM4.92. See daily chart below.

SUPERMX Daily Chart 6th Jan 10

Where is the next swing target? I am looking at the 138.2% and 161.8% Fib expansion targets at RM5.58 and RM5.95. See weekly chart below.

SUPERMX Weekly Chart 6th Jan 10

Disclaimer:

Penny Stocks - Trading Idea

2009-11-23T09:49:00.009+08:00

Malaysian penny stocks tend to be highly speculative but if traded well can be highly rewarding. They have a tendency to consolidate within tight range for weeks or months then all of sudden without warning would jump up.

Is there a way that we could capitalise on this tendency?

I think there are but there is no certainty that it would work all the time. Remember trading is an exercise in probability. We look for a market tendency and we take a calculated risk.

What we want to do is to identify penny stocks undergoing consolidation within narrow range and enter in anticipation of the upside breakout. You can wait until there is confirmation as recommended in most trading books but by that time that happened most of the upside potential would have diminished. As a filter you should check the Company fundamental to make sure that financially it is still sound.

The technical indicator you need to use is Bollinger bands. It is one of the best tool to identify stock undergoing consolidation because Bollinger bands tighten when a stock consolidates into a narrow range. Let's look at SALCON chart as an example.

SALCON Daily Chart 20th Nov 09

You can see that SALCON Bollinger bands tightened from late Nov 08 to late Mar 09 and from early Aug 09 to early Nov 09. I have highlighted the price bars in those period in blue colour to make it easier for you to see. Notice that after the consolidation period ended SALCON price jumped up! How could you have capitalised on this. You would notice that SALCON tends to consolidate for 3-4 months. What we should do is to buy SALCON ahead of the upside breakout and buy at favourable price. We know that SALCON tend to consolidate within 3-4 months so we would buy SALCON whenever it is near the Bollinger lower band 2 months after it started to consolidate. You need wider stop and need to be patient though but your reward could be quite handsome.

My second example is DBE Gurney Resources Bhd.

DBE Daily Chart 20th Nov 09

Notice that DBE Bollinger bands tightened from end Jul 09 to mid Oct 09 before DBE price jumped up.

You probably spotted that DBE Bollinger bands are beginning to tighten up again. It took DBE about 2 1/2 months to consolidate last time so you should know what to expect next!

Another one I want to show you is NTPM, which has consolidated for about a month now.

NTPM daily chart 20th Nov 09

What would happen to DBE and NTPM? Let's revisit in 2 month time.

Disclaimer:

Swing Trading the Forex Market

2009-11-21T14:54:00.004+08:00

I began to take an interest in Forex trading after reading "Secrets of Forex Millionaires" by Yeo Keong Hee.

This week I started to trade Forex on a live account putting my money at risk after on demo accounts for a while. I started with a small account just to test the water.

Amazingly swing trading works well for Forex trading too but the time-frame is a lot faster. It is not end-of-day weekly and daily charts anymore but intra-day live charts. All those years of studying price charts help.

Money management is an absolute must to manage and control risk.

To date, I have made a total of 39 completed trades - 29 wins and 10 losses -this year in the stock market. In comparison, I have made a total of 8 completed trades - 5 wins and 3 losses - in 3 days in the Forex market!

Do visit my other blogspot.

http://swingtrader188forex.blogspot.com/

DJIA

2009-11-21T12:11:00.003+08:00

DJIA Daily Chart 20th Nov 09

DJIA is still trading within a price channel. The channel has became steeper than last week and the new high is validated by a higher MACD. Volume is however still not convincing. What is the outlook for next week? There could be correction before another test of the upper channel line.

Disclaimer:
Trading and investment involves risk, including possible loss of principal and other losses. I shall not be responsible for any losses or lss profit resulting from trading or investment decision based on my posting and information presented in this blog.

DJIA

2009-11-16T07:32:00.010+08:00

DJIA Daily Chart 13th Nov 09

DJIA is currently trading within a price channel. It has moved up from last week. What is the outlook for next week? There is likely to be a test of the upper channel line next week. Will there be a break out? It is not clear. Although price channel is rising but the volume pattern has not been convincing since it has been declining.

Disclaimer:
Trading and investment involves risk, including possible loss of principal and other losses. I shall not be responsible for any losses or lss profit resulting from trading or investment decision based on my posting and information presented in this blog.

Link List Updated

2009-11-15T00:22:00.003+08:00

I have updated my link list to include StockCharts.com - ChartSchool. This is a very useful website where you can learn about technical analysis. It covers the basic very well. Well enough to save you spending money unnecessarily on expensive books on Technical Analysis.

At the end don't forget to read John Murphy's Ten Laws of Technical Trading. You can build your trading strategy based on these ten laws.

Come Into My Trading Room

2009-11-13T14:47:00.009+08:00

This has to be one of the most comprehensive book on trading. It covers not only the method (Technical Analysis and Dr. Elder's Triple Screens System) but the other two more important aspects to succeed in trading - Mindset and Money Management.

You do not have to follow Dr Elder's method strictly to the letter but be sure to follow his recommendations on the two more important aspects of trading especially Money Management.
It is a bit pricey at USD40.95 if you buy from Amazon but it is certainly a worthwhile investment.

MTOUCHE - Start of an uptrend?

2009-11-13T10:13:00.013+08:00

MTOUCHE is a ACE-listed mobile messaging technologies and interactive mobile applications provider with international presence. Technically MTOUCHE is beginning to look very attractive. I usually trade big cap counters but MTOUCHE technicals is just too good to pass.
Now let's look at MTOUCHE price charts.

MTOUCHE Monthly Chart 12th Nov 09

MTOUCHE was in a severe downtrend from Nov 06 to Aug 08 where it dropped from 4.12 to 0.15. It then began to consolidate and appeared to have formed a base.

MTOUCHE Weekly Chart 12th Nov 09

Last week saw an exceptionally high trading volume on MTOUCHE. Something could be brewing? Technically there are clues that MTOUCHE could be at the start of an uptrend.

MTOUCHE Daily Chart 12th Nov 09

On daily chart, you could see that the moving averages in proper order to indicate an uptrend. The 10-day SMA is above the 20-day SMA, the 20-day SMA is above the 50-day SMA and all the SMA lines are rising. It is now setting up nicely for a pullback swing trade. A bullish candlestick pattern with long tail testing the 10-day SMA and 61.8% Fibonacci support indicates MTOUCHE could be starting another upswing. I expect the 10-day SMA line will provide support and another run up to test the previous high at 0.455 is likely.

As wider stop is required for penny stock, proper position sizing is very important to control risk. Remember the 2% rule. Never expose your trading account to more than 2% potential loss.

I entered today at 0.36. My stop-loss is at 0.295 and target at 0.455 and 0.52.

Disclaimer:

GAMUDA Trade

2009-11-11T18:52:00.011+08:00

I look for a few set-ups from my chart analysis to identify trading opportunities. I look for simple chart patterns - (1) Test of support (2) Pullback (3) Bottom reversal (4) Continuation patterns and (5) Squeeze - with a few technical indicators to support my analysis.

My trade set-ups generally have a good probability of working out but they do not give me positive outcome all the time.

GAMUDA Daily Chart on 20th Oct 09

On 19th Oct 09, I spotted a potential triangle pattern was developing on GAMUDA daily chart. I was expecting a breakout because the MACD downtrend line has been broken earlier, which provided a technical clue that the triangle upper line was likely to be broken soon. In addition, the Bollinger bands were tightening (not shown in chart), which is usually a prelude to a breakout move. The downside is the direction of the breakout could up or down - so setting stop-loss and proper position sizing is important.
You may notice a similar set up in mid Jul 09, which was followed by a strong upmove although the size of the triangle was smaller.
On the basis of these technical evidences, I decided to buy GAMUDA at 3.31 on 20th Oct 09. My stop-loss was at 3.12 (6% below my entry price) and my target at 3.84 (16% above my entry price).

GAMUDA Daily Chart on 29th Oct 09

As it turned out, GAMUDA did not breakout to the upside as I expected. There was a false breakout on 23rd Oct 09 but after that GAMUDA has been sliding downhill. On 29th Oct 09, GAMUDA dropped below its triangle lower line. I decided to cut loss when my stop-loss level at 3.12 was touched just in case GAMUDA price dropped even further. I exited at an average price of 3.125 for a 6.77% loss. The overall loss to my trading account value was, however, minimal - just slightly above 1%

Disclaimer:
Trading and investment involves risk, including possible loss of principal and other losses. I shall not be responsible for any losses or loss profit resulting from trading or investment decision based on my posting and information presented in this blog.

SUPERMX

2009-11-11T09:46:00.010+08:00

SUPERMX Weekly Chart 10th Nov 09

SUPERMX is setting up nicely for a classic pullback swing trade.

Its weekly chart showed a pattern of higher peaks and bottoms. All the price peaks were accompanied by higher volume and MACD. SUPERMX long term trend was clearly up.

SUPERMX Daily Chart 10th Nov 09

Its daily chart showed a pullback to the 20-day SMA line and 38.2% Fibonacci support line. From the price action these support level appeared to be holding. Should the support hold, I expect SUPERMX to test and likely to penetrate its all-time high at 4.04.
My plan was to buy at around 3.56 but SUPERMX gap opened at 3.60 and raced quickly to 3.67 within 10 minutes. I waited for a correction and was able to buy at 3.61.
My stop-loss is at 3.37, which is below 5th Nov 09 low. My swing target is at 4.36 and 4.97 based on 61.8% and 100% Fibonacci expansion respectively.

Disclaimer:

DJIA

2009-11-09T21:55:00.005+08:00

DJIA Daily Chart 6th Nov 09

DJIA is very resilient. On 28th Sep 09 I wrote that DJIA had made a triple bearish divergence with its MACD. As it turned out there was no top reversal but merely a correction to the uptrend line that DJIA has been on since mid Aug 09.
There is now a quadruple bearish divergence between DJIA and its MACD as you can see from DJIA daily chart above yet the uptrend line is still intact.
What is the market outlook? I have to say there is a positive bias on the likely market direction but I will wait for what the market tells me.

Disclaimer:

PPB - End of the Run-up?

2009-10-01T06:36:00.009+08:00

PPB Daily Chart on 30 Sep 09

PPB run-up to new high could be coming to an end. Yesterday PPB ended below its swing low at 15.56, the 20-day SMA line and the Chandelier Exit line to close at 15.40. In addition PPB was the second biggest loser.
It was a nice ride up for me from the day I bought PPB end Jun 09. I followed the technical clue from the MACD trendline break which preceded the breakout above 11.70 price resistance line. I then exited in stages and finally closed my final positions yesterday for a tidy overall profit.

Disclaimer:

KLCI Index

2009-09-28T23:54:00.009+08:00

KLCI Daily Chart on 28 Sep 09

KLCI Daily chart is showing a bearish divergence between price and MACD. You can see that KLCI made a higher peak in Sep 09 than in Aug 09 but MACD traced a lower peak. At the same time volume has been getting lower too.

DJIA Daily Chart on 25 Sep 09

You can see that DJIA daily chart is also showing a bearish divergence between price and MACD. It is not only a bearish divergence but a triple bearish divergence, which is more bearish! The volume has been getting lower too.

These are very bearish signals. The market could be due for a correction.

I am scaling down my position just in case it would happen! At the end of today I have more cash than open positions in my account.

Disclaimer:

Money Management

2009-09-19T00:09:00.006+08:00

Trading is a risky business. Trading offers us the potential to make decent money but requires us to expose our money (trading capital) to calculated risk. When we put on a trade we would not know what is going to happen. We could be right or we could be wrong. There is no fool-proof method which can guarantee 100% certainty. It is therefore very important not to lose too much when we are wrong.

The general money management rule is we should not risk more than 2% of our trading capital on a single trade. Risk even less to 0.5%-1% if you can. This is the advice given by most trading books.

I think this is a very wise advice since by risking less we would feel comfortable, which is very important when trading. We would feel more courageous to put on a trade when we are not risking too much. Even though we are good with analysis (fundamental or technical) to identify high probability trading opportunities, we need to act on our analysis to benefit from it. I'm sure you may have experienced the uncomfortable feeling of missing out on a good trade although you saw it coming because you have not acted on the trade set-up.

How much money do you need to trade? I think a good starting point is RM20K but a comfortable level is RM40-50K.

Disclaimer:

Stop-Loss Rule for Penny Stocks

2009-09-18T21:25:00.014+08:00

I wrote back on June 14, 2009 that I apply both a technical stop and a 6% stop to set my stop-loss level. We determine the technical stop from the price chart - usually based on the latest swing low. The 6% stop is simply the price at 6% below our entry price. I would then only consider to take the trade if the technical stop is above the 6% stop.

Back then I was trading mostly fundamentally strong shares price at RM5.00 and above, which were attractive because shares price between RM5.00 and RM9.95 used to move 5 sen per tick and shares price between RM10.00 and RM24.90 used to move 10 sen per tick. The 6% stop rule work very well for shares price at RM5.00 and above because their technical stop would generally be above the 6% stop.

Let's take an example to illustrate this point.

Let's just say we have bought SIME share on April 2, 2009 at RM5.85. The swing low for SIME back then was RM5.60. Using the 6% rule we would have set our stop-loss at RM5.50, which is below the swing low. See SIME daily chart below.

SIME Daily Chart on April 2, 2009

However, since Bursa Malaysia implemented the revised tick size structure from August 3, 2009, it has been less attractive to trade shares price at RM5.00 and above. Under the new structure, the minimum tick size for shares price between RM1.00 and RM9.99 is only 1 sen, and for shares price between RM10.00 and RM99.98 is 2 sen. What a big difference from 5 sen down to 1 sen and 10 sen down to 2 sen!

Only penny stocks (shares price below RM1.00) are unaffected by the revised tick size structure. Their minimum tick size was maintained at 0.5 sen.

The changes has made me decide to look at opportunities trading the penny stocks. However, I find it difficult to apply the 6% stop rule for penny stocks because of their larger % price movement resulting in their technical stop generally being below the 6% stop. A wider stop would be advisable - somewhere in the range of 10-15% below our entry price.

Wider stop is required for penny stocks and it can be based purely on technical stop provided we limit our risk to no more than 2% of our trading capital per trade. We may need to reduce our position size appropriately to reduce our risk to acceptable level.

Disclaimer:

Taking a break

2009-08-11T12:08:00.003+08:00

I'm taking a break from blogspotting for about a month. You see I'm going back to work.
I work abroad. I am not a full-time trader. I still have a job but I enjoy doing it. My work arrangement is great. I work for 4 weeks from 6am to 6pm everyday with no weekends then I get 4 weeks off. Accommodation, food and laundry service are provided at my workplace. I hardly spend on anything except for buying gifts and souvenirs to bring back home. During my off weeks then I can concentrate on trading and my other hobbies. I could not ask for a better job.
However, access to blogspot is barred from my workplace so that's why I have to take a break.
Hopefully I will start writing again in mid Sep 09.

Chandelier Exit.

2009-08-10T14:44:00.007+08:00

The Chandelier Exit is a volatility based trailing stop exit developed by Chuck LeBeau's. It uses Average True Range(ATR) and it works quite well when our stock is trending and/or making new high. It lets our profits run in the direction of a trend while still offering some protection against any reversal in trend.

It is called Chandelier Exit because it hangs the stop from the highest peak reached by the trend just like a chandelier hangs from the tallest point in the room.

The application of Chandelier exit is quite simple. Exit at the highest high since entry minus 3 ATRs.

You can program it in Metastock with the formula as shown below.
{ User inputs }
Lookback:=Input("Lookback periods",10,50,20);
Coefficient:=Input("ATR coefficient",1,5,3);

HHV(HIGH ,Lookback ) - Coefficient*ATR(Lookback)

Let's look at an example.

PPB Daily Chart 7 Aug 09

PPB has been trending up and making new high. There is no previous resistance level to use as target for taking profit since PPB has made a new all-time high. This is where Chandelier Exit could be helpful. The latest calculated Chandelier Exit is RM14.23. We should exit if PPB decline to this.

Disclaimer:Trading and investment involves risk, including possible loss of principal and other losses. I shall not be responsible for any losses or loss profit resulting from trading or investment decision based on my posting and information presented in this blog.

Game of Probability

2009-08-10T13:41:00.006+08:00

It feels good to be right but we can't be right all the time. Sometimes we are wrong. We bought a stock and it did not move as expected.

Trading is a game of probability. There is no certainty. We do not know what the outcome of a trade. When we trade we are operating in an environment of uncertainty. This is the reality of trading.

What can we do then to make money in the stock market?

1. We need to manage and control our risk. We need to have an exit strategy to cut loss when we are wrong and to take profit when we are right, and, we should not risk too much of our capital.
2. We need to have a method that gives us an edge. We need to test our method to make sure it is right most of the time and wrong only sometimes. There are so many methods. Some traders rely on chart patterns, some on technical indicators and some combine both, some rely on instinct, some use all sort of fancy methods etc...to identify a trading opportunity and make their trade decision. Whatever methods you use it will not work all the time. Remember trading is a game of probability.
3. We need to monitor and evaluate our performance.
4. We need to write the rules how we manage and control our risk and how we define and identify a trading opportunity with our method.
5. Most importantly we need to have the discipline to follow our rules.

Disclaimer:Trading and investment involves risk, including possible loss of principal and other losses. I shall not be responsible for any losses or loss profit resulting from trading or investment decision based on my posting and information presented in this blog.

IOICORP-CJ

2009-08-06T11:20:00.008+08:00

Call Warrant is currently a hot topic discussed in Investlah.com Bursa Malaysia stock forum. Its high leverage makes it a potentially highly rewarding investment tool but highly risky too if not managed correctly. In addition be cautious that Call Warrant has an expiry date. When expired it would become worthless unless you exercise your right to convert it to its mother share. When converting there is the conversion ratio and exercise price to consider too.

I provide the links for those interested to know more about Call Warrants.

http://biz.thestar.com.my/news/story.asp?file=/2007/12/7/business/19691801&sec=business

http://www.klse.com.my/website/bm/market_information/market_statistics/warrants/call_warrants.html

Anyway today I decided to give it a go. I reviewed my charts and I found IOICORP-CJ has a classic pullback swing trade set-up written all over it. See chart below. I entered at RM0.30. The stop-loss is at RM0.285 and a swing target at RM0.36 if the last peak at RM0.33 is taken out. This gives me a 3:1 reward-to-risk ratio.

Will it work out? I do not know. We shall see over the next few days or weeks.

IOICORP-CJ Daily Chart on 5 Aug 09

Disclaimer:Trading and investment involves risk, including possible loss of principal and other losses. I shall not be responsible for any losses or loss profit resulting from trading or investment decision based on my posting and information presented in this blog.

TOPGLOV - Pullback Trade?

2009-08-04T23:51:00.012+08:00

TOPGLOV Weekly Chart on 04 Aug 09

TOPGLOV Daily Chart on 04 Aug 09

TOPGLOV is currently the world’s largest rubber glove maker. It is highly rated by most Investment Research Houses because of its good fundamental and is recommended as a BUY.

On the technical side the outlook for TOPGLOV looks very attractive. Weekly chart shows a potential continuation candlestick "Three rising method" pattern is developing, which would be confirmed if the overhead resistance at RM7.50 is penetrated.

On the daily chart, the last 5 trading days high at RM7.15 was taken out on 3 Aug 09 giving a pullback buy signal. This is supported by the MACD line which also turned up. On 3 Aug 09 TOPGLOV closed at RM7.20 after making a high at RM7.30.

The trading plan was to buy TOPGLOV as low as possible on the next trading day on 4 Aug 09. TOPGLOV opened at RM7.20 on 4 Aug 09, moved up to RM7.22 then jumped to RM7.28 , hit its day high at RM7.32 before retracing to RM7.26 and closed for the day at RM7.29. Entry was made late in the day at RM7.27. Stop-loss was set at RM6.85 and swing target at RM8.10 and Fibonacci 138.2% and 161.8% extension target at RM8.56 and RM8.86 respectively.

Disclaimer:Trading and investment involves risk, including possible loss of principal and other losses. I shall not be responsible for any losses or loss profit resulting from trading or investment decision based on my posting and information presented in this blog.

CPO 3rd Month Contract - What is the likely movement for next week?

2009-08-02T14:01:00.007+08:00

The 3rd month contract is the most actively traded CPO contract. It serves as the benchmark and now it is the Oct 09 contract.

What is the likely movement of CPO Oct 09 contract for next week? We will look at the weekly and daily price charts for clues.

CPO 3rd month contract weekly chart on 31 Jul 09

Weekly chart shows that the 20-period MA is rising suggesting the long term trend is up although it is noted that the price is still below the 20-period MA. A bullish engulfing candlestick pattern suggests that short-term decline on CPO price could be ending. The MACD line is however below its signal line and still declining - providing no indication of a rebound.
CPO 3rd month contract daily chart on 31 Jul 09

Daily chart shows a price pattern of higher highs and lows indicating an uptrend. This is supported by the fact that MACD line is rising and above its signal line. Price gapped up last Friday but it failed to close above the downtrend line and ended up forming a Doji candle with long upper tail on relatively high volume near the downtrend line and Bollinger upper band suggesting uncertainty.

What is likely to happen? I do not know but I would be looking for an opportunity to go long. The weekly trend is up but the daily chart suggests uncertainty. The price may go up but I would favour a pullback to the 20-period MA on the daily chart, look for a bullish reversal candle and go long on the rebound.

Disclaimer:
Trading and investment involves risk, including possible loss of principal and other losses. I shall not be responsible for any losses or loss profit resulting from trading or investment decision based on my posting and information presented in this blog.

MACD - How I use it to support chart analysis

2009-08-02T09:03:00.012+08:00

Moving Average Convergence Divergence (MACD) is a technical indicator invented by Gerald Appel. It consist of two lines - the MACD line and the signal line. The MACD line is the difference between a fast Exponential Moving Average (EMA) and a slow EMA, and, the signal line is the EMA of the MACD line. The standard EMA settings for the MACD line are 12-period for the fast EMA and 26-period for the slow EMA, and, for the signal line is 9-period EMA of the MACD line.

I use the standard settings. Here I would like to share with you how I use MACD to support my chart analysis.

The classical way to use MACD is to buy when the MACD line cross from below to above its signal line and to sell when the MACD line cross from above to below its signal line. I use MACD in a slightly different way, where I look at the MACD patterns to provide clues on the likely outcome of a developing chart pattern on the price chart.

Let's look at some recent examples to illustrate how I use MACD.

PPB Daily Chart on 30 Jun 09

Daily chart on 30 Jun 09 showed a potential ascending triangle pattern developing for PPB. The overhead resistance was RM11.70. Was it likely to break above its overhead resistance line? MACD line did provide clues - MACD line was turning up and the MACD trendline was broken - suggesting the overhead price resistance was likely to be broken.

PPB Daily Chart on 15 Jul 09

PPB did breakout above its resistance line at RM11.70 on 1 Jul 09 and since then has been consolidating between RM11.70 and its next overhead resistance, which was the all-time high, at RM12.20. Was it likely to break above it? Again MACD line did provide clues - MACD line was turning up and making higher lows - suggesting the overhead is likely to be broken and PPB could be heading higher.

PPB Daily Chart on 31 Jul 09

PPB did break above its resistance at RM12.20 on 16 Jul 09. Last Friday on 31 Jul 09 PPB closed at a new all-time high at RM14.70. PPB is now well above its 20-day MA line. We should now think about taking profit.

GAMUDA Daily Chart on 31 Jul 09

You could have catched GAMUDA upside breakout of its triangle pattern on 14 Jul 09 with similar MACD pattern analysis. Notice that MACD line turned up, making higher lows and MACD trendline was broken on 10 Jul 09, which would have given you advanced clues to get on board before the breakout.
You may also notice that MACD line was also making higher lows on 23 Jul 09 after the recent pullback, which could have provided us advanced clues to get on board before GAMUDA made another upmove.

Disclaimer:
Trading and investment involves risk, including possible loss of principal and other losses. I shall not be responsible for any losses or loss profit resulting from trading or investment decision based on my posting and information presented in this blog.

How much can you risk?

2009-07-29T23:57:00.001+08:00

How much of our capital can we risk on a trade? The general rule is not more than 2% of our risked capital. How do we calculate it? It is quite straightforward. Let's assume we have RM50,000 risked capital. 2% of RM50,000 is RM1,000.

Let's work out an example using the TENAGA potential pullback trade shown earlier?

Let's assume we want to buy TENAGA at RM8.15 and set our stop-loss at RM7.85. How many shares of TENAGA can we buy to limit our risk to 2%?

Potential loss per share = RM8.15-RM7.85 = RM0.30
No of shares = RM1,000/RM0.30 = 3333 shares

We round it off to 3,000 TENAGA shares. That is how much TENAGA shares we can buy to limit our potential loss to less than 2% of our risked capital. We obviously can buy less, which would reduce our risk even more but our potential reward would reduce too!

Disclaimer:
Trading and investment involves risk, including possible loss of principal and other losses. I shall not be responsible for any losses or loss profit resulting from trading or investment decision based on my posting and information presented in this blog.

TENAGA - Pullback Trade?

2009-07-29T22:41:00.004+08:00

TENAGA Weekly Chart 29 Jul 09
TENAGA Daily Chart 29 Jul 09

Weekly chart showed TENAGA is in an uptrend and daily chart showed TENAGA is setting up for a pullback swing trade. A buy signal would be given out if the last 3 days high at RM8.15 is taken out. The target are RM8.55 and RM9.10 and possibly RM10.10.
The stop-loss should be below the swing low at RM7.95 but not exceeding 6% of your entry price.

Disclaimer:
Trading and investment involves risk, including possible loss of principal and other losses. I shall not be responsible for any losses or loss profit resulting from trading or investment decision based on my posting and information presented in this blog.

UMW - Breakout?

2009-07-29T22:26:00.007+08:00

UMW Weekly Chart 29 Jul 09

UMW Daily Chart on 29 Jul 09

UMW finally traded above its RM6.20 resistance line after closing above it on relatively high volume on 28 Jul 09. Pattern of higher highs and lows supported by MACD lows getting higher suggested that UMW could be testing its next resistance level at RM6.85.

Disclaimer:
Trading and investment involves risk, including possible loss of principal and other losses. I shall not be responsible for any losses or loss profit resulting from trading or investment decision based on my posting and information presented in this blog.

PPB in uncharted territory

2009-07-29T22:07:00.003+08:00

PPB Weekly Chart on 29 Jul 09

PPB Daily Chart on 29 Jul 09

PPB has been in uncharted territory since it broke past its RM12.20 resistance line.

What should you do now? The previous day candle was a Doji with an upper tail and its low was breached today. Although PPB closed higher, this suggested that PPB upmove could be halting. With this indication you may want to consider taking partial profit if you have position in PPB. However, if you want to take position in PPB, it would advisable to wait for a pullback.

Disclaimer:
Trading and investment involves risk, including possible loss of principal and other losses. I shall not be responsible for any losses or loss profit resulting from trading or investment decision based on my posting and information presented in this blog.

The Most Important Rule - Cutting Losses

2009-06-14T17:43:00.002+08:00

Let's face it. We cannot be right all the time. This is the reality of trading. But we can limit our losses when we are wrong by having a stop-loss in place. If our stop-loss has been hit then we need to cut our losses. It is difficult to do but we must do it to make our overall trading result positive.

The question is where do we place our stop-loss? There are 2 approaches - technical or a fixed percentage below the entry price. My choice is to apply both. We determine the technical stop from chart analysis. Next we calculate the stop-loss based on a fixed percentage below our planned entry price. Applying both approaches means we will only take the trade if the technical stop is not beyond the "percentage" stop. What percentage below the entry price should we limit our losses to? This is a personal choice. I have chosen maximum 6 % below the entry price, which would translate into 7% below the entry cost after including the brokerage fee etc. I have set it lower from 6.8% previously. I am somewhat influenced by the 7-8% rule set by William O’Neill. It has worked very well for me where I am able to limit my losses to maximum 7% below my entry cost.

Technical analysis can help to identify potential recurring patterns to put the odd of being right in our favour. With the discipline to cut our losses short, we can make our losses less than our gains, and, with technical analysis to make us more likely to be right than wrong, our overall result will be positive.

Disclaimer:Trading and investment involves risk, including possible loss of principal and other losses. I shall not be responsible for any losses or loss profit resulting from trading or investment decision based on my posting and information presented in this blog.

Taking Profit

2009-06-14T17:30:00.004+08:00

Taking profit when our stock has moved up has to be one of the most difficult trading skills to master. We become frustrated when our stock surged up after we sold it. The next time we hold a bit longer but this time the stock reversed sharply before we could sell it wiping out all our gain and turning it into losses.

How do we take profit then? We can take profit by selling our position in stages. Let’s assume we have decided to divide our sell order into 3, our take profit tactic could be as follow:

1. Sell the 1st third after the stock has moved up a certain percentage above our entry price.

The question is at what percentage above our entry price should we sell? This very much depends on the stock behaviour. I personally found from trading experiences and observations that our Bursa active stocks on normal market condition would on average move up about 10-20% during their upswing. I used to limit it to 10-15% but more observation suggest 10-20% is normal. Personally I take partial profit on 16% price increase from my entry point.
Some would move up further, some would consolidate, some would pullback and some would reverse after advancing 10-20%. Selling a third of our position would therefore allow us to lock-in profit in the event that the stock reversed.

2. Sell the 2nd third when the stock has reached a technical price target. Alternatively wait for a bearish reversal candle or trailing stop to appear there and confirmation before selling.

The technical price target could be a resistance line, channel line, swing target or projected price target. Swing target is the projected upswing objective based on the height of the previous upswing. Projected price target is the price objective following breakout from bottom reversal patterns, e.g. double bottom, head & shoulders etc or continuation patterns, flag, triangle etc. You may want to visit Chart School website at http://stockcharts.com/school/doku.php?id=chart_school to find out how to determine the projected price target. Sometimes the technical price target is within 10-20% above the entry price. In this case, we should look at the next resistance level to sell our 2nd third.

3. Sell the last third on negative divergence between price and technical indicator or trendline break.

Negative divergence between price and a technical indicator is when price made a new high but the technical indicator did not make a new high. It is a signal that the uptrend could be ending. We can use the trailing stop technique to sell our last third. Alternatively we can wait for the up trendline break.

We can obviously add or re-new our positions in case there is a pullback after selling our 2nd third or last position respectively. In this case, the selling process starts all over again.

Disclaimer:Trading and investment involves risk, including possible loss of principal and other losses. I shall not be responsible for any losses or loss profit resulting from trading or investment decision based on my posting and information presented in this blog.

Chart Analysis

2009-06-14T17:17:00.003+08:00

Chart analysis needs not be made complicated. We can make it simple by sticking to basic technical analysis tools - drawing support and resistance lines, trendlines and channels ,and, retracement on price chart - and supporting the chart analysis with simple to understand technical indicators like MA (Moving Average), Bollinger Bands and MACD (Moving Average Convergence Divergence).

Chart analysis involves 4 basic steps.

Step 1 - Determine the long-term trend

A trade made in the direction of the underlying trend is more likely to work out than a trade made in the opposite direction. The first step in chart analysis is therefore to determine the long-term trend.
We determine the trend by looking at the price pattern in the weekly chart. A price pattern of higher highs and lows depicts an uptrend, lower highs and lows depicts a downtrend and comparable highs and lows a sideway trend.
We complement our trend analysis by looking at the slope of the 20-wk Simple Moving Average (SMA) line. When the slope of the 20-wk SMA line is rising the trend is up, when it is declining the trend is down and when it is flat the trend is sideway.
Next we check for potential trend change by looking for divergence between price and MACD. A positive divergence between price and MACD indicates a potential trend change from down to up.

Step 2 - Find the support and resistance level

Support is the price level where a price decline is likely to rebound particularly when the underlying trend is up. Buying at support level when the underlying trend is up makes sense because it represents a high probability trade.
Resistance is the price level where a price rally is likely to turn back. However when the underlying trend is up the resistance level is likely to be overcome.
We draw support and resistance lines by connecting previous highs and/or lows.

Step 3 - Determine the Entry Point

There are generally 2 entry methods - breakout or pullback.
Breakout entry is used to enter a breakout from a bottom reversal pattern (double bottoms, head & shoulders etc) and continuation pattern (triangle, flag, pennant, wedge, rectangle, etc). Pullback entry is used to enter an uptrending stock undergoing correction. It is the bread and butter for entering a swing trade.

Step 4 - Determine the reward-to-risk ratio

The reward-to-risk ratio has to be at least 2 to make the trade worthwhile. The higher ratio the better. To calculate the reward-to-risk ratio, determine the stop-loss level and price target, and, from the entry point calculate the expected reward against the expected loss. Make sure to include the brokerage fee etc. in the calculation.

Disclaimer:Trading and investment involves risk, including possible loss of principal and other losses. I shall not be responsible for any losses or loss profit resulting from trading or investment decision based on my posting and information presented in this blog.

Pullback Entry Method

2009-06-14T16:33:00.008+08:00

Pullback entry is the bread and butter for entering a swing trade. We wait for pullback because we know no stock will go straight up without undergoing correction - even for strongly trending stocks.
The question is how can we tell when the correction is likely to come to an end and the uptrend is set to resume? The answer is when the pullback has reached a support level, which could be a price support line, trendline, moving average line, gap support or Fibonacci retracement level.

The more support level coincided with each other the stronger the support level and the more likely that a rebound will take place there.

Next we wait for a bullish reversal candle, e.g. Doji, hammer, engulfing bull, piercing line, bullish harami etc. to appear as a potential swing low bar and make the pullback entry on takeout of the high of the bullish reversal candle.
We will look at SIME DARBY BHD charts to illustrate the pullback entry method.

SIME DARBY BHD Weekly Chart

Weekly chart showed SIME had been in a downtrend since mid Jan 08. Positive divergence appeared between price and MACD from Sep 08 to Dec 08 suggesting a potential trend change. SIME started to make a potential higher low in early Mar 09. 3 weeks later SIME 20-week SMA line started to turn up suggesting the start of a new uptrend. Once the mid Feb 09 peak was taken out in Apr 09 SIME has been in an uptrend.

SIME DARBY BHD Daily Chart

We switched to the daily chart to identify our pull back entry point. Notice that SIME pulled back to the rising 20-day SMA line 4 times creating swing trade pullback entry opportunities since SIME weekly trend changed to up. The Pullback entry were to be made when the high of the potential swing low bars were taken out.

Disclaimer:Trading and investment involves risk, including possible loss of principal and other losses. I shall not be responsible for any losses or loss profit resulting from trading or investment decision based on my posting and information presented in this blog.

Trend Reversal - How can we tell?

2009-06-14T15:06:00.009+08:00

Trend tends to continue once it is underway but there will come a time when the trend reverse. The question is how can we tell? We can wait for the Moving Average (MA) line to change direction or a trendline break but by the time that happened the new trend would be well underway. Is there a technical signal that can give us an early indication. The answer is yes. What we need to look for is divergence between a technical indicator and price. There are many technical indicators to choose from but I opt for Gerald Appel's Moving Average Convergence Divergence (MACD).

Dow Jones Industrial 30 Index Weekly Chart on 12 Jun 09

I will show the weekly chart of Dow Jones Industrial 30 Index (DJI) to illustrate this point. DJI had been in a downtrend since mid Oct 07 until end Mar 09 when a downtrend line break suggesting the start of of an uptrend. The subsequent weeks DJIA had been heading higher. There was a technical clue that could have alerted us of this trend change earlier - Positive divergence between MACD and Price from end Nov 08 to early Mar 09. Price made a lower low in early Mar 09 than the previous low in end Nov 08 but MACD traced a higher low.

Disclaimer:
Trading and investment involves risk, including possible loss of principal and other losses. I shall not be responsible for any losses or loss profit resulting from trading or investment decision based on my posting and information presented in this blog.

The Trend is Your Friend

2009-06-13T07:19:00.002+08:00

I published an article on the above subject in my previous blog. I read it again and I have to say what I written remains valid. I edited it slightly but the message of the contents remain same.

Trading is a game of probability. When we put on a trade, we would not know with certainty whether our trade would work out as expected. We could make or lose money or our money could get stuck. There is no certainty in trading.

We can however put the probability of our trade in our favour by trading in the direction of the trend. The trend is your friend. This is one of the truth in trading. The question is how can you tell that the trend is there and which direction is likely to go?

KLCI Weekly Chart on 12 Jun 09

The easiest way to determine the trend is by looking at price patterns on the price chart. A pattern of higher highs and lows depicts an uptrend, lower highs and lows depicts a downtrend and comparable highs and lows depicts a sideway pattern.
KLCI weekly chart above showed clearly that KLCI was in a downtrend from early Jan 08 to end Oct 08 from the pattern of lower highs and lows. KLCI stopped making new low in mid Dec 08 suggesting that the downtrend could be ending. KLCI was in a sideway pattern from early Nov 08 to mid Mar 09 from the pattern of comparable highs and lows. KLCI made a higher low in mid Mar 09 clearly suggesting the start of a new uptrend. KLCI has since been in an uptrend.

The shortcoming with this method is we need at least 2 highs and 2 lows to establish the trend. The trend would have been too far underway for us to take advantage of.
To overcome this we can anticipate the 2nd high or 2nd low by looking at technical clues. For example after a stock has made a new high and undergone correction, we can anticipate the second low by looking at bullish reversal candlestick patterns. A take-out of the potential second low price bar high would provide an early indication of an uptrend instead of waiting for the 2nd high to be established.

Next draw a trend line connecting the lows when the lows are getting higher or highs when the highs are getting lower. When the trend line is up the trend is up and when it is pointing down the trend is down.

To complement our trend analysis we can look at the slope of a moving average (MA) line. This makes our analysis more objective. When the slope of the MA is rising the trend is up, when it is declining the trend is down and when it is flat the trend is sideway. The question is which type of moving average should you use and what is the length.
I use simple moving average(SMA). For swing trading, I use 20-week SMA on weekly chart to determine the long-term trend for trade direction, 20-day SMA and 10-day SMA on daily chart to determine the intermediate-term and the short term trend respectively for trade entry.
The KLCI weekly chart showed KLCI has been in an uptrend since early Apr 09 as indicated by the rising 20-wk SMA line.

For day trading I use 20-period SMA on the 30-min chart to determine the day trend direction and 10-period and 20-period SMA on the 5-min chart for trade entry. The choice is personal. Test the various type and length of MA, and, choose one that suits you.

You can use ADX to assess the trend strength but I hardly use ADX.

Disclaimer:
Trading and investment involves risk, including possible loss of principal and other losses. I shall not be responsible for any losses or loss profit resulting from trading or investment decision based on my posting and information presented in this blog.

AXIATA Trade

2009-06-13T00:11:00.007+08:00

On 16 Apr 09, I posted AXIATA as a potential good trade. I will share with you how my AXIATA trade went.

ENTRY

AXIATA Weekly Chart on 16 Apr 09

AXIATA Daily Chart on 16 Apr 09

AXIATA weekly chart on 16 Apr 09 showed positive divergence between price and MACD although the 20-wk SMA still declining. AXIATA downtrend appeared to be coming to an end.
Daily chart showed pulling back to the 20-day SMA line after breaching the Bollinger upper band. AXIATA high on 15 Apr 09 at 1.81 was taken out on 16 Apr 09 giving a buy signal. I bought at 1.81 on 16 Apr 09. Stoploss at below swing low 1.72 and target at 2.20 gave the trade a potential 3:1 reward-risk ratio.

EXIT No 1

AXIATA Daily Chart on 27 Apr 09

On 27 Apr 09, AXIATA went up early in the morning but weaken toward the end of the morning. Similar price move happened in the afternoon. Volume was getting lower. AXIATA has not reached my target of 2.20 but because of the way AXIATA acted, I decided to sell half of my position at 2.10. Besides, it was also consistent to my take partial profit rule since AXIATA has increased by 16% above my entry price.

EXIT NO 2

AXIATA Daily Chart on 6 May 09

Took profit at 2.32 on 6 May 09 for my remaining position after AXIATA went below its previous day low. This gave me an average sell price of 2.21, which was within my price target.

Disclaimer:
Trading and investment involves risk, including possible loss of principal and other losses. I shall not be responsible for any losses or loss profit resulting from trading or investmest decision based on my posting and information presented in this blog.

Crude Palm Oil Futures (FCPO)Trade

2009-06-12T22:07:00.001+08:00

It has been a long time that I traded the FCPO contract. I checked my record. The last time was on 10 Apr 2006!
Today I decided to trade FCPO contract again. I was excited but at the same time nervous. My heart was beating faster than usual.
I called my broker to check whether my cheque has been cleared and credited to my account. It had. Yes! I could trade.
FCPO has always been a highly volatile instrument. It is fairly common for it to gap up and down overnight. I decided therefore I would day trade to minimise my exposure. Besides the commission for day trade is lower by half.
I will share with you how my trade went. I made two (2) trades - one during the morning session and the other one during the afternoon session.
I enclosed the FCPO 30-min and 5-min charts.
FCPO 30-min Chart on 12 Jun 09

FCPO 5-min chart on 12 Jun 09

Morning Trade

The 30-min chart showed FCPO making lower highs and lows suggesting downtrend. Although the 20-period SMA was still rising but the uptrend line was broken by the 1st 30-min long black(red) price bar on 12 Jun 09.
The 5-min chart showed FCPO pulled back to the declining 20-period SMA line half way through the morning session.
Entered short at 2492 around 11.35am after the 11.20am and 11.25am 5-min price bar low at 2493 was taken out.
Exit at 2498 around 12.10pm after the downtrend line was broken for a loss of -6 points. The 20-period SMA line and MACD line were also beginning to turn up.

Afternoon Trade

FCPO gapped down 16 points at the start of the afternoon session. Wooh... It hurt! I could have made at least 20 points... but just to console myself I told myself I could have lost the same amount if it had gapped up instead! That's how volatile FCPO is!
The 30-min chart now showed FCPO 20-period SMA line was declining.
The 5-min chart showed FCPO pulled back to the declining 20-period SMA line and 38.2% Fibonacci retracement line almost half way through the afternoon session.
Entered short at 2469 around 4.25pm after the 4.10pm 5-min price bar low at 2470 was taken out.
Exit at 2451 around 5.20pm after the 2455 support line was broken for a profit of +18 points. At least it was more than enough to cover the morning trade losses.

Disclaimer:
Trading and investment involves risk, including possible loss of principal and other losses. I shall not be responsible for any losses or loss profit resulting from trading or investmest decision based on my posting and information presented in this blog.

AXIATA

2009-04-17T09:45:00.001+08:00

AXIATA formerly known as TMI has not been getting favourable review from most Research Houses. At best it has been viewed as NEUTRAL.
Technically AXIATA is however showing good potential.

AXIATA Weekly Chart

AXIATA Daily Chart

AXIATA weekly chart showed a positive divergence between price and MACD suggesting that the downtrend it has been in is likely to come to an end soon.

On daily chart AXIATA showed a classic swing trade set-up. A break above the 20-day MA line that soon tagged the Bollinger upper band followed by a pullback to the 20-day MA line and a pattern of higher lows supported by the MACD line pattern.

A swing target at RM2.20 and stop-loss at below the latest swing low at RM1.72 gives a very favourable 3:1 reward-risk ratio.

Disclaimer:
Trading and investment involves risk, including possible loss of principal and other losses. I shall not be responsible for any losses or loss profit resulting from trading or investmest decision based on my posting and information presented in this blog.

KLCI entering stage 2?

2009-04-17T07:15:00.002+08:00

KLCI Weekly Chart

KLCI weekly chart is showing that our Malaysian stock market appeared to have entered Stage 2 (Advancing phase) of the market cycle after breakout of the double bottom reversal pattern on decisively high volume.
Supporting the case, the 20-week MA is rising and MACD has traced a rising double bottom pattern. The Bollinger bands are starting to expand too.
What do we do? Start looking for good quality stocks.

Disclaimer:
Trading and investment involves risk, including possible loss of principal and other losses. I shall not be responsible for any losses or loss profit resulting from trading or investmest decision based on my posting and information presented in this blog.