Lone Voice

HK Market views are all forwarded to Absolute Traders' Newsletter.

2008-11-28T20:18:00.003+08:00

All of my views in the HK market and sometimes currencies are being submitted to Absolute Traders site. It can be read by all the members and non-members who have wished to avail of the subscription. That explains the reason why this blog has been dormant for a long time.

If there are any questions on getting them via mail, kindly post a message to

Gwen P Nava
Absolute Traders & Consulting Services Inc.
mobile: 09178040060 / 09228633299
ym/skype id: gwenpnava
gwen.nava@absolutetraders.com
http://www.absolutetraders.com/newsletter

Thanks.

- Nix

Just hit the jackpot

2008-10-14T06:03:00.003+08:00

Couldn't sleep as I compute the profits I'm going to make in hk, philippines, US and currencies today.

lalalalalalalalalalalallalalalallalalalalallalalalalla

ok. perhaps im taking some of my profits so that I am prudent, let the rest of the profits run.

-nix

2008-10-13T18:37:00.000+08:00

Short
term Bottom Confirmed!

As of
5:58 pm last October 13,2008, US Dow equity index futures are up 361
points closing at 8731, with an intraday high of 8,801. Oil which
would represent commodities, have started picking up going to 81.48,
up 3.78 from last Friday’s close which sent it intraday trading
at 77.00, in its lowest. AUD/USD which has been the gauge of
investor fear has also started to find a lot of people’s risk
appetites coming back, bouncing from its low of 0.6370 last Friday to
open .6652 today and managing to stay at 0.6702 as of writing. On
the local currency front, PHP also started to appreciate signaling
that a short term top in the USDPHP trade has been formed. We don’t
discount that the USDPHP chart’s long term trend is still going
up but that it will correct short term, which is a sign that risk
aversion is dissipating.

I copied
the chart of Asia pacific indices this Monday to note that the rally
was broad based. Note that Nikkei and the Japanese indices are only
down mainly because they are closed for a holiday. The 1% uptick in
the Philippines is puny compared to the whopping 10.24% gain in the
Hang Seng Index.

If the
above charts do not convince you that a short term bottom is in play,
perhaps talking about credit default swaps, TED spreads would help
but I am not gonna spend another page convincing you anymore. That
is not the main play. Let’s talk about that 10.24% rally in
the HK market this October 13, 2008 which actually stemmed from the
11% rally of the US indices last Friday, as well as all the
government interventions that the G7 did last Saturday.

Daily
Chart of HK Market

You don’t
need a single MACD to tell you that this volume accompanied with
today’s bullish reversal will lift the index back to 18,000
levels.

As they
say, those who throw the towel usually find themselves too numb and
callous to see that this bear market reversal is the REAL THING.
This is the short term bottom all traders have been hoping to happen!

Stock
Picks:

China
Tracker Fund (2823 HK)

Note the
large increase in volume accompanied with the upsurge.

Support:
9.00

Resistance:
11.20

Entry:
9.50 or lower

China
Cosco (1919 HK)

Note the
large increase in volume accompanied with the upsurge as well as the
increased volume activity of China Cosco for the past week alone.
This tells traders that there is real demand willing to buy China
Cosco. This is my top pick that will deliver substantial returns.

Support:
4.70

Resistance:
6.00/7.00

Entry:
5.10 or lower

Disclosures:

Author
is long the following HK shares: 2823 HK @ 9.10, 1919 HK@ 4.66

2008-10-03T18:14:00.002+08:00

I have nothing boldly interesting to say.
I simply wanted to write out my thoughts.
So I begin.

I seriously sometimes think about the other things that I could do, which I could have fun doing, with people I probably would be happy being with, doing something unrelated to trading or with any resemblance with the markets that is both challenging, rewarding and something I can want to wake my mornings up to.

I don't know why I suddenly am feeling this way. While steep losses can surely sway a person's mind in changing careers, I surely feel that this is not the case with me. I love my job. It's something I see myself doing in the next ten years. I'm not kidding. However, of course, there could be some twists and turns, which I want to do, if I can do, at some point in my life. Say, take night classes listening to Wall Street finance professionals, touring around the world learning about companies, managing funds say for teachers welfare through people's donations instead of placing them in time deposits, and giving dividends to the school. Maybe buying a place, learning to cook, trying out a sport, and learning to be more of a girl, whatever that means.

However, learning about the markets is hard enough and time consuming. Taking any other additional stuff to do (say studying something like creative arts/ multimedia designing) would be fun but would entail commitment and responsibility. Plus, it's not like a long term thing. It's just a hobby which will quickly fade away to something I "used to do". Such as taking photography lessons, taking photoshop classes and the like.

I'm concerned as well with the way I have been living my life. I feel like a hermit at times. A hermit is someone who likes living alone right? Ok. I think I have been living like a recluse these couple of days.

Hmm, I dont really know. I have no particular set of friends that I will constantly be around with. It's not that I don't have friends. I just don't develop any close connections so much. It's always just about playing basketball. Not so much caring about other people's lives really. Friday is being spent with people who help me learn what God can teach me. Saturdays and Sundays are erratic but they're usually booked, and I usually do things that I don't particularly like doing but, well still do.

brb. need to eat fast. But I'll continue the train of thought.

-nix

2008-09-22T18:44:00.000+08:00

HK
Market

Market opened higher by
500 points starting at 19,869.02 but this proved to be the high of
the day as traders used the opportunity to sell their shares. The
pullback due to profit taking from the two big sharp rallies allowed
the market to correct by as much as 650 points down falling to
19,137.67 but quickly found buyers pushing the index higher to close
304.47 points up at 19,632.20.

Technical
View: Market may be due some short term choppy trading due to
the sharp rallies from previous days. Use intraday entry points as
the bias is still up with short term resistance seen at 20,500 to
20,800. It should be noted that the Hang Seng Index closed in a
hammer candlestick chart which is still bullish despite the 3300
points up from the Thursday lows.

Recommendation:
Lighten down on positions bought two days ago, look to buy
issues on a pullback.

Disclosure:
After recommendation, author has sold Tencent shares(700HK) at 62
and 63 levels after buying last Thursday at 51.90 for a rough 20%
profit. Author has also made tsupita trading, adding more shares
last Friday at 58.50 level and selling at 60.60 last Friday. Author
is currently long 2600 or Chalco at a price of 6.10. This was bought
last Sept 22,2008.

Stock
Pick: 2600 or Chalco

Chalco
has rallied from 4.6 to as high as 6.10 representing 30% profit from
the lows. While the rally seems substantial for some profit taking,
the chart is clearly showing that a MACD divergence is still in play
and strong volumes confirm more potential upside.

Recommendation:
Trade using a small position size, so as to have a wide proper stop.

Support:
5.50

Resistance:
7.00

Preferred
Entry: 5.80

2008-09-20T08:23:00.000+08:00

Theory of Unintended
Consequences. (A collection of stuffs I got from the net- enjoy-
Lonevoice)

My
boss and I believe that those who lost money deserve it. Those who
held financial shares deserve their losses. They deserve the loss
for poor risk management, poor technical analysis and poor
fundamentals or lack of knowledge in buying the instruments that
they've done. However, here comes Hank Paulson and his team,
rewarding the sinners and punishing the innocent ones who did their
grunt work analyzing the companies that are bound to go belly-up. An
official from California public employees' retirement system called
shortsellers- greedy predators-. We'll see the ending.

Just
Putting It Out There , chart from Bess
Levin

Disclosure:
I am long EEM (the emerging markets fund) through call options.
Call options allow you to lose only the capital that you put in.
Nothing more, nothing less. Being defensive :) -Nix

If I had principles, I would have lost my shirt keeping shorts in
this massive short squeeze. I have no conviction ideas. I told my
boss, I am a disciplined trader, but that I didn't have principles.
He laughed . It's true, in this business, we are simply disciplined
traders. We will reinstate our shorts next time. Currently, I will
go long troubled companies in the financial industry, perhaps
intraday trading them due to massive short covering, but not as
conviction longs for position trading.

Read the best
commentaries I've heard from Wall Street active bloggers on the best
market manipulation ever :)

Here’s the deal. The problem was never
subprime. The problem was reckless and uninhibited gambling. That is
now being rewarded and repentance granted. All sins washed away. Ah,
but not without payment from someone to balance the books. You soon
will be getting the bill. Watch for it.

Comment by stockwatch -

Whew! All of the globes financial problems wiped
away in one day!

Comment by stockwatch -

Traders who have sought
to profit from the financial crisis by betting against bank stocks
were attacked on two continents on Thursday. -By Vikas Bajaj and
Jonathan Glater

In these unusual and extraordinary
circumstances, we have concluded that, to prevent substantial
disruption in the securities markets, temporarily prohibiting
any person from effecting a short sale in the publicly traded
securities of certain financial firms…is in the public
interest and for the protection of investors to maintain or restore
fair and orderly securities markets. - from news pages

Here’s the translation: As Republicans,
we’re all about free markets. Until they start to get messy and
then we’re not. Clearly, the folks at the SEC were very busy
last night and it should be even clearer to anyone who has even
cursory knowledge of the stock market that bad politics are getting
in the way of rational market behavior.

Short sellers may make for an easy target, but
that doesn’t mean it’s the right one. What about the
people — the executives and the directors — who were
making the daily decisions that drove many of these companies to the
brink (or in the case of Lehman, bankruptcy)? Shouldn’t they
shoulder at least some of the blame?

Here’s a radical idea: Let’s leave the
new rules to comedians like Bill Maher. That’s because coming
up with hastily put together new rules — not to mention new
forms that seem unlikely to address the real problem — makes
for both bad markets and bad politics.

-Michelle Leder

Welcome to USA - Where profits are privatized
and losses are socialized. - heard
this somewhere (just can't remember where).

There is no question
that we are going to spend a lot of public money to address the
current crisis. We have already put a very extraordinary amount at
risk. The question we should be asking is not whether or how much,
but to whom and for what. The financial crisis we are facing is a
symptom of a much larger economic and social crisis. Wall Street is
not the source of the pain. On the contrary, the financial sector has
been put this decade primarily in the service of hiding, literally of
papering over, unsustainable trends in the current account, income
distribution, human and physical capital deterioration, and the
sectoral composition of the American economy. The conventional wisdom
is that this is a financial crisis, and that so far "Main
Street" has been largely insulated from the catastrophe. That is
rubbish. The cancer is on Main Street, and the tumor has been growing
there for years. Wall Street provided drugs to hide the pain and keep
us going, palliative but not curative. What is happening now is those
drugs are wearing off. The American economy is fundamentally unsound,
and has been for some time. We would have noticed sooner, were it not
for financial methamphetamine conjured by mad scientists in lower
Manhattan from a whirlwind of foreign central bank money.

Steve Randy
Waldman

How can short-selling destroy a good company?

The simple answer is that it can't.

First of all, short-selling can't force down your
share price. Short-selling only forces down your share price if
buyers don't emerge to defend your share price.

Banning short-selling cannot protect a bad
stock. If nobody is willing to buy XYZ at a price higher than
$.02 a share, then the price at which XYZ will trade will be $.02 a
share (or lower). It doesn't matter whether you have short-sellers or
not.

What drives stock prices down is the lack of
people willing to buy them at the higher price. If the company has
sufficient value, there will be sufficient buyers.

-Arnold King

Great Articles (Some
are excerpts):

Wall Street Crisis Not Quite 1929

David Wessel
reports:

Is 2008 The Equivalent of 1929?

“It is not,” writes Berkeley
economist and blogger Brad DeLong, who
is an Obama backer.

“The most important reason it is not is
that Bernanke and Paulson
are both focused like laser beams on not making the
same mistakes as were made in 1929,” he writes on his blog.

Back then, the Hoover Administration and,
particularly, Fed misread the economy, and made a bad situation
worse, a case made definitively by Milton Friedman and amplified by
current Fed Chairman Ben Bernanke in his academic work

“They are also focused, but not quite as
much, on not making the mistakes made by Arthur Burns in the 1970s,”
DeLong adds.

In 1970s, then Fed Chairman Arthur Burns
misread the economy and is widely regarded to have bowed to political
pressure from Richard Nixon. He kept interest rates too low and
sparked the Great Inflation that ended only with the very high
interest rates imposed by a subsequent Fed chairman, Paul Volcker.

“And they are also focused, but not quite
as much, on not making the mistakes the Bank of Japan made in the
1990s,” DeLong adds.

The Bank of Japan misread its economy, the
consequences of a burst asset bubble and the devastating effects of
deflation, and is widely blamed for contributing to a decade of
stagnation.

“They want to make their own, original,
mistakes,” DeLong concludes.

Great
Charts from Bespoke Investment Group

Below
we highlight the percentage changes that global equity markets have
seen from their lows yesterday. As shown, Russia is currently
up 20.2% today. Yes, the country's bear market has reversed and
turned into a new bull in one trading day! Hong Kong is up the
second most at 18.7%, followed by China, Singapore and the UK.
Japan and Australia have seen the most muted
gains at 5% to 6%.

Massive
Shortsqueeze through market manipulation at work in Statestreet stock
(STT)

Contrast one day's
news article with the chart :)

News
article from WSJ (Sept 18,2008 145pm) from David Gaffen:

The
marauders, having burned through the wreckage of the investment
banking stocks, are now moving on to asset
managers and fiduciaries heavily involved in money-market funds,
where investors are worried about their holdings in these normally
safe assets.

The
stocks most heavily hit include State
Street
Corp., down 42% on the day to $37.96 a share, Genworth
Financial,
down 59%, Bank
of New York Mellon,
down 21%, and Northern
Trust
Corp., which has lost 16%.

G
reat
Pictures to note:

P
icture
courtesy from David Gaffen

Note:
While seeing that the dollar is literally being burned in the system
today, I am bullish the dollar against the Phillipine peso in the
long run (I.e. my view is that php hits to 49 first rather than 43 a
year from now mainly because of the deleveraging theme, and that USD
has bottomed out. Europe and UK have no room to hike rates and this
will cause an interest differential play. Arguing about my view
lengthily may be written for a different topic. Short term, of
course I am aware that the USD is being battered which provides me
one of the best entries to go long usdphp perhaps at 46, but i'll let
the market tell me the price.)

2008-09-20T08:21:00.000+08:00

A
short squeeze theory

Why
I think 17s 18s and 19s of the month are more dangerous

– Lonevoice

Note: This text
may not be readable for those who do not trade options yet. Just to
clarify for those who may not have basic understanding of options:

Calls- A call option is
a right, not an obligation, to buy shares at a specific strike price.

Puts- A put option is a
right, not an obligation to sell shares at a specific strike price.

There are expiration
dates, deltas (volatility range), open interest volumes (liquidity),
strike price that need to be taken into account, other than the stock
price to calculate the option value. Nevertheless, it's not
altogether rocket science in order to trade these things.

At the money(ATM) calls
for example simply mean – the call option's strike price is the
same as the stock price (or whatever the underlying asset is)

In the money calls mean
that the stock's price is now higher than the call option's strike
price.

Out of the money(OTM)
calls mean that the stock's price is lower than the call option's
strike price.

_________________________________________________________________________________

I always wanted to back
up my theory that we will always be in for a surprise during 17s, 18s
and 19s of the month mainly because options will soon expire those
days. Remember August 17,2007? March 18,2008? and more recently
September 18,2008?

I read an article
written by Adam Warner last August 20,2007 who maintains a blog at
the Daily Options Report and here is the reason why it may be what I
think it to be. He writes:

So how does
putting a market-moving Fed action as close to expiration as humanly
possible have the maximal turbo effect? One word:
Gamma.

Consider a world
where there is just one option, ATM SPY calls. They have a 50 delta,
so let's say there is an open interest of 100 where each call gives
you the right to buy 100 SPY's. If they are ATM, the calls have
approximately a 50 delta, so presumably the call shorts own 5000
SPY's, while the longs are short the SPY's.

But the delta
changes as the stock moves. That's the gamma. Let's say the gamma is
10, so in other words if SPY lifts a point, the calls now have a 60
delta. The longs can thus sell 1000 SPY's up a point, while the
shorts have to buy 1000 up a point in order to both stay flat. The
quantities are always going to offset, options are a zero sum game,
so it becomes all about the urgency of the two sides.

And who
has more urgency lately? Clearly the options shorts. So it stands to
reason that the higher gamma gets, the more turbo in the stock.

The
closer you get to expiration, the higher the gamma. And the more
pressure on the side that is squeezed. In other words with a few days
to go, maybe that gamma is 20. So a one point move causes the
scrambling shorts to buy 2000, while the longs can sell 2000,
probably at prices more their liking.

And what if it turns
back down to the strike? The option shorts now have to sell back
those 2000 shares to flatten out again. And so on and so forth.

And
then the next day maybe they have 30 gamma near the money. Even more
pressure in each direction exerted by the shorts in this
environment.

Which brings us to Friday. Gamma is essentially
infinity in the SPX August options. They have stopped trading. They
are merely cashed out at the "opening" price (defined as
whatever the calculation formula spits out taking the opening tick
from each component). The rate cut and market pop comes an hour and
change ahead of the open. All a call short can do to defend his
position is chase futures/ETF's up. Some OTM calls he is short now
have a 100 delta between now and the open. Sure there is an
offsetting long that can sell the futures/ETF's, but who has the
urgency here? Clearly the squeezed short. And thus the kindling wood
lit by the Bernanke match.

Throw in a similar dymamic on all
other index/ETF options that expire at the end of the day, and Big
Ben literally found the perfect minute to cause the most pain to
options sellers.

The greatest trade ever made -so far-

2008-09-20T05:11:00.004+08:00

The action in the Dow Jones for the past two days is described by financial experts as "the mother of all short squeezes" and that the implications of the government's action has changed Wall Street FOREVER. The term that we are living in very interesting times is an understatement. I am privileged that I started trading and watching the markets only since Jan 2008. Previously, I was telling myself that it is such a sad thing that I never experienced the bull market but the learning experience of 2008 has really been great. It's worth a blog post definitely. I am honored to have lived in a time when everyone else will be writing in history books the entire action of this whole week. Lehman Brothers falls, Merrill Lynch gets bought, AIG in the verge of bankruptcy, bonds off 10 points at least, stocks crumbling more than 30-50% in a matter of hours and falling another the next day. Black swans and bizarre does not give justice to what we are experiencing today. Even family and friends who do not care what the financial markets are doing, suddenly call me up 7am in the morning to ask how their deposits and insurances will be. Massive panic , financial armageddon and the end of the world was being highlighted all over the headlines and articles in Seeking Alpha, WSJ, BW and all leading finance journals.

My mind recalls a couple of things I heard from my mentor. He was sharing to me a story about greatness. He told me that plungers such as Jesse Livermore are usually taken out of the game not because they weren't right, not because they lacked fundamental and technical analysis, not because of anything that you can ever pinpoint of but mainly because of position size. Plungers get jackpots or wipeouts. It's always an all-or nothing trade. The greatest trade made by Jesse happened during the 1987 crash when he was heavily short the market. There is a book called "Shark Investing" that thoroughly states that sharks like to take advantage of their preys at the most opportune time. The "PERFECT STORM" that we, as traders, always searched for in our lives was converging last Friday. We were preparing for it. I was very much giddy when Hangseng opened down 600 points last Thursday and fell 700 points more to close down 1300 points during the morning session. All of us were already calculating at which price we were going to bottom pick. We were so happy to see capitulation at the brink of our lives. Our boss would always recall the 20% drop in the DOW in a single day last 1987, when all the exchanges were halted for a week. All of us were short the market. Neither one of us took out our shorts. I was expecting to bottom pick HSI at the support of 15,000. It was a gamble indeed because my guess that it will hold is as good as everyone else's. It was the 10 yr moving average. It was the 50% psychological support. Everyone was panicky. We wanted to have the time of our lives. THE GREATEST TRADE EVER MADE.

Lo and behold, I was already calling my folks and close friends that they should not be swayed by their emotions when the market falls 1000 points the next day. To pick up a few stocks was my battle cry. I even had spoken superstitions that the kneejerk reaction rallies happened August 17, March 18 and now the inevitable SEPTEMBER 19!

Of course, we all know that just that afternoon, Shanghai was the first to lead the market. From being down 100 points, it suddenly erased all the losses and even made gains of about 20 points in the first 30 minutes of trading.

I was damn scared. 230pm. The first trigger of my hand was to sell all my shorts, and to go long. I went long my favorite stock, went long some bull warrants and made a hefty 42% return on the total capital I invested that day. Wow. To see the index move 3000 points! from 16,200 to 19,200! WOW WOW WOW! You never see such a rally like this. Historical experts say there was never any recovery like this since the 1920's.

The news that there was coordinated central bank action only came out 3pm. Can you imagine how those 30 minutes would have changed my portfolio forever? Had I not seen the move in Shanghai? It's really just like a scene whether if Michael Phelps really beat the other swimmer (forgive I can't remember his name) by a hundredth of a second! It's really like a buzzer beater shot! I can't quite explain the entire feeling.

I am conflicted though. You know, if there was ever a loss that I will take? It would probably be getting squeezed yesterday (Thursday). Although the action in Thursday did give traders ample time to really cover!!! Watch the DJIA move! It was up 100 points, and down 100 points and surged 500 points to close up 410. It's so damn cool! Ok, so i got hit in the US. My mind thought maybe the gov't couldn't help the market when DJIA fell 100 points.

Here's the thing. Greatest trades always get interrupted. Capitulation is almost always prevented by someone or something. If I'm gonna make an investment gamble (note it is a calculated gamble), I'll bet that there's a 100% chance that capitulation never comes. I was surprised that Lehman was allowed to fail. Hell I would have made a killing. My boss would have been earning millions with his shorts at $45 in LEH had he held with his convictions that LEH will fail and tumble to cents! 2008 was a really difficult year but it was bound with so many life-changing opportunities: whether it's to the downside or to the upside.

I guess all I want to highlight is that although the excitement to make lots of money is there, position sizing has been key. The stocks that make the most gains in the past two days are not fundamentally good but the most shorted. That is clear short covering folks! The ones that lost the most money today are the conviction shortsellers.

Clearly, when the pendulum swings violently, I am reminded by the words of one of our bosses: The greatest traders are dead before they are proven right. We may want to hit those jackpot trades, but there's a commensurate risk. We need to watch our position sizes. Clearly I didn't make money in the US because I was "all in" early in the open and had to cut when the DJIA fell 100 points. I was so convinced with the HSI thursday rally that it will do it again in the US! I forgot my real cutloss, when I calculated them it was too much to handle. I couldn't bear the possibility of losing that much and I had to cut the trade. Hindsight will kill a trader because the trades I made would have made more than 50% of my capital. They were call options and some longs in Chinese stocks. That's why.

In summary, I really just had to say that this market move has given me confidence but cautious optimism only. I relish the "shark investing principle" that our boss told us, that our advantage against the huge elephants(hedgefunds) in this financial jungle, is that we can move so fast, and make a 360 degree reversal in our portfolios, while hedgefunds will take numerous days to do just the same (and by then, they will have been late).

We live in interesting times.
Don't shoot for the greatest trades.
Always take a calculated investment gamble.

:)

- Nix

2008-09-18T19:20:00.000+08:00

HK
Market

ZOOM
ZOOM ZOOM! Jump up your seats and BUY! BUY! BUY!

In
its most dramatic session for the year, Hong Kong stocks zoomed in
the afternoon session after falling 1400 points during the morning
session, after the Federal Reserve, the European Central Bank, the
Bank of Japan and other central banks took joint action to alleviate
tensions. The Hang Seng Index pared the losses down to 4.73 points
or 0.03% to close at 17632.46. The HSCCI advanced 87.01 points or
2.7% to close at 3314.47. H-Shares slipped 31.42 points or 0.36% to
close at 8633.73. Turnover was significantly higher at HK$102.35
Bil, higher than HK$76.354 Bil.

Technical
View:

Market staged a very very
clear cut rally. As traders, we simply buy and ask questions later.
Lo and behold, the news came out afterwards that the central banks
all over the world are coordinating action to inject funds into the
market. This is a clear government intervention to stop
capitulation. For us traders, this is a happy day and a sweet
reversal. You don’t have to be a technician to know that this
is a clear boost in sentiment and in risk appetites.

Short Recap:
Market opened 600 points down at 17,120 from previous close of 17,636
and continued its momentum to the downside sending the index to a low
of 16, 283.72 or 1,400 points down. As a trader, I looked for the
support of the 10 year moving average at 15,000 and was looking to
bottom fish tomorrow. Lo and behold, the market prevented the
capitulation and zoomed all the way up as much as 1600 points to a
high of 17,849.97 before slightly slowing down to close at 17,632.46.
So this is what a bull market feels like, even if it’s just
for a brief 2 hours! It really is a great feeling.

Preferred Action: BUY
BUY BUY! 700 HK or Tencent is my top pick.

Support: 54.00 (Tight
support found in intraday)

Resistance: 64.00

Preferred Entry: 54.05
but 58.00 is still fine

Disclosure: Author is
long Tencent

On Plungers, High Rollers and Graveyards

2008-09-04T12:34:00.001+08:00

“The graveyards of Wall Street are filled with great people who were right too soon.”

– Juanis Barredo, Citiseconline Technical Analyst

I am privileged enough to have heard Juanis quote this line to remind fellow traders and investors that big bets in Wall Street will leave you either living with the hall of fame or forever doomed to the hall of shame. He quoted this line to remind us that we don’t need to be great in trading. We just have to be consistent with our risk management. This must be a revelation to most beginning traders as all other professions would want their trainees to dream and be at the top of their leagues. In the markets, I keep on reminding myself, not to bet aggressively, to follow my stops and always be humble especially in determining how much position a bet will be. (Sounds more like Danny Go telling absolute traders to be disciplined right?)

Ospraie Closes

Sept. 3’s most read event was the highly publicized closing of Ospraie, a $3.6 Bil hedgefund in the US after losing 38% due to the unwinding of the commodities and agriculture this past month. Personally, I cannot help but feel sorry with the traders of this fund. Every price chart pointed that the commodities will be collapsing anytime soon. It’s just too difficult to get out of positions that are already too large without affecting the prices. To be a hedge fund trader is perhaps the pinnacle of any new trader’s dream. Managing billions of dollars of other people, however, is a hell of a job.

Dwight Anderson, Ospraie Management LLC founder, poses in the Park Avenue offices in New York, on Oct. 12, 2007

I quote from a Bloomberg article below:

`I Live With Stress'

Anderson says the task of managing $7 billion of other people's money is a persistent source of anxiety. ``I live constantly with stress,'' he says. ``I'm always worried that we're wrong.'' Until the 6-foot-3 inch (1.9-meter) money manager got married two years ago, he relieved the pressure with motorcycle riding, scuba diving, bungee jumping and heli-skiing -- the last at resorts in Cordova and Girdwood, Alaska. He says he's cut back on adventure sports since getting married and having a child.

Graveyard lessons

I guess the only thing I wanted to point out in this short story is that the demise of Anderson’s hedge fund is very parallel to the trading style of the best hedge fund manager in the US last year, John Paulson. In 2007, Paulson’s funds were up $15 Bil over the previous year, helped by aggressive betting against the overvalued subprime mortgages and securitized risky mortgages. The stark difference between the two is that John Paulson’s team got it right while Anderson wasn’t able to leave while the commodities were still hot. I guess the story poses a lesson to all traders, new or old, that traders’ number one job is to protect the capital, not necessarily to earn money in such a tight environment. Perhaps this is a revolutionary idea to some, since traders are expected to make money. No one ever highlighted that before making money, not losing money is the more important job. Position sizing is key. Aggressive traders who are blind to risk will show up either in the billionaires club or sued by their clients. Nassim Taleb, the author of the book “The Black Swan”, has perhaps excelled in teaching Wall Street to prioritize their risk issues before making any bets once said that

“ The payoff in a human venture is, in general, inversely proportional to what it is expected to be. — Nassim Taleb

In summary, life is always uncertain. There are no sure bets in life, except as they say, death and taxes. We can have all our support and resistances, our preferred entries, our chart patterns, our fundamental catalysts, insider information, astrological superstitions or what have you, but the key to everything is position size. Not everything is what we expect to be. Kindly don’t suicide in trading. I’ll miss you.

- Nix (lonevoice)

2008-09-03T17:00:00.000+08:00

Sept 3, 2008

Hang Seng Market Overview:

Certainly not outside the realm of possible

I mentioned last Sept 2 that the index could retest its previous low of 20,350 and this certainly cannot be ignored. Wall Street’s sell-off from 240 points up in the open to close negative 27 showed just how bear market rallies typically behave. Hong Kong’s index followed suit. It opened yesterday at 20,964.75, near where it closed a day ago, but went down with heavy selling to fall at an intraday low of 20,526.73 or 500 points down and closed slightly higher at 20,585.06 closing 457.40 points down or 2.17%. While these occurrences can be frustrating, it should be noted that market bottoms will usually retest lows, or it may also not. 20,350 is the next support. If it falls lower, then all hell is loose. MACD points a divergence so bulls still have a fighting chance.

Recommendation: Traders can go long on selective stocks. Many chart patterns are divergent. One of which that I will highlight today is Zhejiang Express or 576 HK.

Intraday Hangseng Chart

Daily Hang Seng Chart:

Stock Picks:

Zhejiang Express (576)

Support: 5.00

Preferred Entry: 5.12

Resistance: 6

Risk Reward Ratio : 88 cents gain for 12 cents loss

2008-09-02T17:13:00.000+08:00

Hang Seng Market Overview:

One day reversal?

HIS opened at 20,956.94, a little lower from where it closed yesterday and fell as much as 350 points to a low of 20,595.59 in intraday trade. However, the decline of oil prices to as much as $106/bbl sent the airline stocks higher in the last hour of the market giving the HSI a gain of 136 points closing at 21,042.46. MACD divergence is still in place. Rally mode is very very near. A good follow through coming from the decline in oil prices will probably send the US markets a lift allowing HK to maintain the bullish mode.

Recommendation: Traders can go long on selective stocks. Many chart patterns are divergent. One of which that I will highlight today is Intime Department Store or 1833 HK.

Intraday Hangseng Chart

Daily Hang Seng Chart:

Stock Picks:

Intime Department Store (1833)

Support: 3.74 (3 day previous low)

Preferred Entry: 4 or below, or breakout of 4.15

Resistance: 4.95

2008-09-01T17:51:00.000+08:00

Hang Seng Market Overview:

A floor or a retest at 20,350?

After the sell-off in the US markets last Friday, HK followed gapping down approximately 300 points in the open at 20,999.32, and solidly went down but only for a further 50 to 150 points more. Market made an intraday low of 20,844.15 and closed 355.58 points down at 20,906.31. While today’s action was largely sideways, traders should still be long in this market considering the divergent path between the MACD and the price amid these oversold levels. However, a retest of 20,350, market’s previous low cannot be ignored.

Recommendation: Traders can go long on selective stocks. Many chart patterns are divergent. One of which that I will highlight today is Orient Overseas or 316 HK.

Intraday Hangseng Chart

Daily Hang Seng Chart:

Stock Picks:

Orient Overseas (316)

Support: 25.45

Preferred Entry: 26.00 or below

Resistance: 29.80

Risk Reward Ratio : 3.80 gain versus 0.55 loss ~ 6.91

2008-08-30T17:34:00.000+08:00

Hang Seng Market Overview:

Bottom has been made, although volatility should be cautioned.

Following the more than 200 points gain in the DJIA, Hang Seng market reversed the 400 point loss last Thursday to gap up opening at 21,289.70, up approximately 300 points. It spiked even higher during afternoon trading hours with an intraday high of 21,474.31 but was sold slightly by the market making a low of 21,223.99, after which the bulls regained their force and closed 289.60 points up at 21,261.89. It should be noted that the market performance last Friday has shown positive momentum for the market to rally. The doji pattern, as seen in the daily chart, shows that the market has been resilient despite its market leader China Mobile still falling for a second day. Gains were broad in the sector, although not as sharply as before.

Recommendation: Traders should get back to work and enter aggressively in issues when market sells down, since a short term bottom has been in place. The characteristic of the Hong Kong market is unlike the US nor the Philippines because there are gap-ups, leaving traders who do not enter ahead of the pack, left behind. Stock picks include : 2333 HK and 3383 HK. Note that I also illustrated the chart pattern of 576 HK and 1200 HK, as these small cap stocks have already shown the potential upside that can be taken advantage of in this volatile bear market short term bottom. A quick glance at the charts of China Life Insurance (2628 HK), Ping An Insurance (2318 HK) as well as Tsingtao Brewery (168 HK) will prove that Chinese H-shares have been leaders in this market’s rally.

Intraday Hangseng Chart

Daily Hang Seng Chart:

Stock Pick Summary:

I already computed the optimal position size, with a 1% risk size as well as assuming a 500K HKD capital for the following stocks. Thanks.

Watch List:

Midland Holdings (1200 HK) and Zhejiang Express (576 HK)

1200 HK has already moved 33% from its bottom of 3.00, closing at 4 last Friday. Zhejiang Express has moved from its low of 4.60 to a short term high of 5.39 for about a 20% gain in just a week. Sounds familiar? While the substantial gains may find people thinking that the rally may have been finished, I think it is not. Midland Holdings may behave similarly like 2038 HK or Foxconn which still showed further rallies after a short term pullback. Zhejiang Express should be visualized like CEO (a stock listed in the US). The pattern is very similar. This should be taken advantage of, if a pullback ensues due to some profit taking from traders.

Stock Picks:

Great Wall Motor (2333 HK)

Agile Property (3383 HK)

Great shows to watch (non-trading)

2008-08-30T09:22:00.005+08:00

Before I "formally woke up" today, I told myself that I will not be watching CNBC nor Bloomberg extensively. I say "formally woke up", because I have started a different time clock with myself ever since watching the US markets. I sometimes wake up about 3-4am in the morning, to check how the portfolio is doing, so that I can probably place some new orders or keep the ones I have. Well, I'll get used to this one day. I woke up 4:05am unintentionally and without cellphone alarms. Markets are already closed so I went back to sleep.

When I woke up, first thing I did was to switch the channel from the TV to things I don't frequent much. A couple of things I found interesting were the following shows:

1.) There was CNN's talkasia and they interviewed this celebrity chef Bobby Chinn. Now, I'm not so much into chefs, but it's more on how this guy turned himself from a waitress to celebrity chef and restaurateur that got me intersted. Plus, people who know me, will acknowledge that I love food. I think the guy has a food show, flavors in malaysia or something. just look it up. Discovery is great. I want to do things they have in Travel and Living!

2.) Switched the channel to Animal planet and found them to be covering the animals with the most extreme workaholics. It's pretty interesting knowing more about bees, ants, cleaner fish, megapodes and beavers. Great show. I might frequent this more nextime.

3.) There's this show in discovery's travel and living entitled 5 takes. It's really cool. There are these 5 TJ's (traveling journalists) armed with only USD50 every day each to go around the city. I got interested and checked it out. For those who are "so not connected with the world", read the reality show in wikipedia, and external links are just there.
http://en.wikipedia.org/wiki/5_Takes

The Filipino comic book artist from the Philippines selected to be the TJ is damn lucky. :)

4.) I remembered my friend telling me to watch the last lecture of a professor in youtube. Am still downloading it but from the reviews, I'm sure I'm gonna be moved.
Check it out as well: http://www.youtube.com/watch?v=ji5_MqicxSo
It's Randy Pausch's Last lecture.- Search it in youtube.

wokei.

Have a great day.

This week was tough. Made money, let it go away, learning to make money again, looking at missed opportunities (576 and 1200). Learning to take things easy. I might go drink some lemonade, fruit juices and give myself a healthy meal.

Byee. For the indonesian who commented on some HK posts, thanks and I'll try to post some HK ideas as well as US ideas aroudn here more often.

my ymid is y_nikki2003. Looking forward for more ideas. Reading blogs on seekingalpha and broker reports can be time consuming. It helps to have peers.

-Nix

HK Daily Picks- 08-21-08 (2600)

2008-08-21T20:21:00.005+08:00

Hang Seng Market Overview:

Hold your horses… Healthy correction is a given. Learn to look before you leap.

Most traders today did not find themselves happy upon seeing the downtick at the open of Hang Seng. I guess it was only I who was happy because the HK market was giving an entrance for me to participate in a plausible short term rally. The momentum traders who chased stocks yesterday are now back to reality and are supposed to cut their losses or stand the volatility, while I was happy watching the correction. Learn to look before you leap. I didn’t chase stocks yesterday since it passed through my buying point, watched patiently for a retracement to better entry levels and bought a few commodity stocks for tomorrow. Yesterday, while everyone was giddy about the government package. I was checking my trend lines to see if any breakouts were made. I was happy that there was none and the correction today proved very good in shaking out all the bottom callers who blindly chased stocks without looking at the risks. Mind you that the market could have also broken out on the upside today and I would have to have bought and chased the prices already, since a reversal would have already been in play. Nevertheless, the market rewarded the patient ones. :)

Hang Seng index opened at 20,762.65, roughly 200 points down from yesterday’s close and did the opposite today compared to yesterday. It steadily moved lower to close 539.20 points down closing at 20,392.06. It should be noted that in today’s down day, what makes this correction healthy is that it is still within the trading box. The real support according to technical analysis is 20,200 which suggests about 200 points down from today’s close. This should be expected. Nevertheless, we should commend Hong Kong markets despite the downtick because the sell off was contained in weak sectors. Good companies and sectoral plays such as energy and commodities still closed higher today (E.g. 2600 HK or Chalco, 358 HK or Jiangxi Copper as well as 688 HK or China Overseas Land). This indicates to traders that strength in commodities will be the theme for the US markets tonight as well as a plausible catalyst for tomorrow or the next day’s HK rally. It should be noted that checking the movements of EUR versus the USD, as well as the price of oil would have lead to the conclusion that the dollar strength is easing, while commodities are oversold.

Recommendation: Play the sectoral theme. Energy and commodities are good probes. Good setup featured in the stock pick is 2600 HK (Chalco). Watch the steel stocks : 347 HK (Angang Steel) as well as 323 HK (Maanshan Iron and Steel). Worldwide commodity strength can propel these stocks to the upside, fundamental wise and chart wise.

Stock Picks:
Chalco (2600)

I like Chalco because this is a clear cut technical set up with risks to the upside. First, after the profit taking in Chalco today, the sell off stopped at 6.40 to 6.50 levels and closed to the upside. It should be noted that with the 400+ points move in Hang Seng yesterday, it is not surprising for short term traders to take profits near the 6.80 to 6.90 levels since the overall sentiment in the index is down today. What’s commendable is that the sell off stopped at the level of yesterday’s breakout. Note that this is particularly positive for short term traders because most aluminum charts in the US are all oversold and have all shot up higher on the upside. Commodities such as oil are also setting up for a rally. From an inter market analysis’ point of view, this stock is affirming that demand for the stock is higher than the selling pressure. Daily chart’s beautiful as the parabolic buy signal is there as well as a MACD divergence. Risk reward ratios are also compelling.

Recommendation:
Support: 6.20
Resistance: 6.90/7.60
Preferred Entry: 6.40
Risk Reward Ratio: 50 cents gain, 20 cents loss (2.25) or 120 cents gain, 20 cents loss (6)

P.S.
(See the chart through www.bigcharts.com : Just type HK:2600, 1 yr daily chart and 10 day 15 minute charts) Thanks

-Nix

HK Daily for 08-20-08 (2866,203)

2008-08-20T18:24:00.003+08:00

Hang Seng Market Overview:

Is this finally real? Looks like it…

I actually cannot believe my eyes as I’ve seen this market open and steadily moved higher. Perhaps it was partly due to cutting a lot of losses from the market as the bottom seemed to be near and yet it seemed so far. So when the boy who cried wolf wolf cried again today, I couldn’t get myself to trade. Though I think I should…I finally threw the towel and the government finally helps boost investor confidence by saying in the news that they are planning a “stimulus package” worth RMB400-500 Bil to help the ailing markets.

Hang Seng index opened at 20,388.79, not far from yesterday’s low and moved steadily higher from morning to afternoon after rumors aired in the news on government’s possible intervention in the markets. Market responded aggressively with upticks across all sectors. Most of the stocks that moved higher were the most beaten down ones that are potential beneficiaries of the China package such as Anhui Conch Cement (914) as well as CNBM (3323) which are cement industries that will be primary builders of the destruction caused by the Sichuan earthquake.

Recommendation: Things happen fast in the markets. Traders can look to probe on issues that are forming good setups. 2866 and 203 look to be good probes.

(sorry didn't upload the charts of the stocks anymore here coz ang bagal ng blogger ko magupload. Just look at bigcharts.com na lang for the stocks.)

Stock Picks:

China Shipping Container Lines (2866)

Intraday action is showing a cheap cut at a close below 1.90. In Hong Kong Markets, most stocks will follow the uptick in the index, and this stock provides one of the best risk-reward ratios. Parabolic has not yet chased the price. More conservative traders will look to buy on an uptick that hits the parabola before entering. Target price seen is at 2.50/2.25

Recommendation: Probe

Support: 1.90

Resistance/ Target Price: 2.25/2.50

Preferred Entry: 1.94

Risk Reward Ratio: 7.75/ 14 ( 31 cents of gain versus 4 cents of loss/ 54 cents gain versus 4 cents of loss)

Denway Motors (203)

Denway Motors is steadily going higher and has finally gone past the parabolic signal with a box breakout intraday. Probing by buying near 2.75 with a cut at 2.65 is a good risk/reward trade because target is about 3 to 3.10 from the daily chart as confirmed by the heavy 32 day MA resistance. MACD started to cross today. Volume is still average.

Recommendation: Probe

Support: 2.65

Preferred Entry: 2.75

Resistance: 3/3.10

Risk Reward Ratio: 2.5/3.5

-Nix

Hong Kong Daily Outlook for Aug 19, 2008

2008-08-20T00:10:00.001+08:00

Scary thoughts fulfilled: Prepare for Gruesome Lose –em

Hang Seng Index has broken lower than its March 18 low and the only support waiting right now is just simply the August 17 lows which rests at 19,386.72. From today’s close of 20,484.37, what’s most bearish on today’s performance is that the weakness of Hangseng was broad based leaving all sectors down despite Shanghai posting a 1% gain today due to good earnings of China Merchants Bank, a big cap heavyweight in Shanghai. With these headwinds, traders should stand aside and let the heavy overhead supply get distributed before taking any long positions. Prepare to see new lows.

Recommendation: My previous recommendation to just simply detach and take a vacation holds. Just observe and watch the markets from a distant view. Avoid HK markets until a decisive amount and size of bounces form within a sustainable trading range.

HK Daily for 08-18-08

2008-08-18T17:01:00.001+08:00

Scary thoughts: Hong Kong to make its newest low?

Hang Seng Index closed down lower than 21,000 today to 20,930.67, amidst a 5% drop and 10% daily stock limit drops for Shanghai. It was a harrowing weekend indeed as selling pressure from this year’s Olympics host has distinctly decoupled from all markets. It has been in a constant downtrend, albeit see-sawing violently within days. This breakdown is very important as we will soon test the March 18 lows. This is just approximately 350 points away. 1 day of downtick is all we need, after which the August 17 lows which rests at 19,386.72 will be the next support. Hong Kong’s correction is really killing all traders softly. Intraday chart suggests that we are just at the beginning of another trading box. It’s just a matter of time before HK slips down again.

Recommendation: Detach yourself from the Hong Kong markets for the meantime. Go on vacation first as we approach this long weekend in the Philippines. I know it is still Monday but the carnage will come, although we may see sharp intraday see-sawing moves upwards, whipsawing oblivious day traders. Avoid HK market until the market bounces with a sustainable trading range.

HK Daily Outlook for August 15,2008

2008-08-17T01:55:00.002+08:00

Hang Seng Market Overview:

Support Retested: Monday is Make or Break Time
Hang Seng Index didn’t have a follow through rally from the commodities as oil fell another $1 in US trading overnight last Thursday prompting HK commodity companies to shed their gains of 5% yesterday. This has led Hang Seng to fall 232 points at the close of Friday. What’s interesting though is that despite the market not having a follow through rally from commodity stocks, it hovered throughout the day, bounced after a clear retest from 21,000 (20994.54 to be exact) and traded slightly above near the support area closing at 21,160. The downtick in today’s price action should not have been a big surprise to traders as the 21,000 key support level was clearly outlined from the breakdown of the box of 22,400 to 21,700 signifying a possible 700 point drop which has happened in the following 3 days. Monday will be a make or break time for Hong Kong. Since Wall Street closed mixed or relatively flat last Friday, HK market’s direction will most probably follow Shanghai’s lead. If it closes lower than 21,000, prepare to cut all positions into a loss as another downside of 700 points could happen. On a brighter note, if Hang Seng opens at a higher note, then stocks could trend higher.

Recommendation: HK market is still in a correction phase. Most traders are advised to avoid trading Hong Kong due to the high volatility but aggressive traders can start probing into some stocks that are forming quiet patterns of support. A break below 21,000 will be a definitive signal that HK has a lot to go down, but if it just hovers above that level, then it will be a see-saw ride again for HK.

HK Stock Picks for 08-14-08 (2600,2866,323,1200)

2008-08-14T18:27:00.004+08:00

Hang Seng Market Overview:

Temporary Support Found?

Hang Seng Index’s performance today is commendable. First, it didn’t gap down (which is normally what I would think it would do considering its weak performance for the past couple of days whenever Wall Street falls more than 1%.) Intraday, Hang Seng was basically just hovering between a range of 21,400 to 21,100. The nice thing is that it closed up and most of the stocks, especially the basic materials staged their first uptick for a very convincing follow through rally the next day. The move is very much connected to the rally of energy stocks in the US with the first uptick of oil prices from $114 to $116. To understand the strength of today’s performance of Hang Seng, consider the volume and value traded of 2600.HK also known as Chalco for today. In my view, HSI is likely to tread higher tomorrow and this will already mean about 5-6% gains potentially made in a single day.

Recommendation: Start probing especially with the most beaten down stocks. Those that fall fast will recover violently once the Wave 4 Elliot Wave rally comes. While HSI is still undergoing a correction, beaten down stocks have been resting in their support levels (e.g. 200.HK, 2866.HK, 1200.HK, 2600.HK).

Stock Picks:

All the stock picks were chosen mainly because they broke out from fast downtrend channels. I am trading this for the short term. A move from 2 to 3 is already 50%. I am choosing the most beaten down stocks whose prices are all about down 80% from its high (meaning it has really underperformed the whole market.) I am playing for the worst of the crop (ones I like to call abandoned beauties). I repeat that I am not catching falling knives. The trading patterns from the charts will illustrate what I mean. I am merely here for the short term bounce which is usually a sizeable return. Think about the Philippine bear market rally in the Philippines and you will understand that a move of MEG from 1.14 to 1.72 is already worth 50%. That is the kind of stock that I am looking and trading for.

Summary of Stock Picks: (Viewable through google docs just above this blog post.)

Hang Seng Market Overview for 08-13-08

2008-08-13T17:09:00.002+08:00

Hang Seng Market Overview:

True Colors Shown: Hang Seng Breaks Down

Hang Seng Index gapped down roughly 350 points at the open following the dismal GDP of Japan as well as the negative sentiment following Wall Street’s 130+ point loss yesterday. The whole day was another see-saw but the breakdown was never violated. Before lunch, Hang Seng tried to stage a rally, but was quickly sold down by the market when it opened in the first few minutes, finally succumbing the fight to the bears. As can be clearly seen from the intraday chart, Hang Seng rallied to a clear 21,700 resistance and was sold all the way down, closing at 21,293.32, roughly the same as where it opened which is down 347.57 points.

Recommendation: Avoid trading HK stocks unless you are looking to short. Observe until a retest of a short term support at 21,000 convincingly bounces before looking to go long. Short any rally to resistance (21,700) since the trading box has already been violated.

HK Daily and Stock Pick (1200) for August 13,2008

2008-08-12T20:48:00.008+08:00

Hang Seng Market Overview: Up and Down = Directionless

As was mentioned by my colleagues at work, Hong Kong's Hang Seng is like a roller coaster. I copied below the 10 day 15 minute chart to show just how fast it is to lose money, despite the rallies in the US markets and the falling oil prices. Every rally in Hang Seng is mostly being sold down. HSI is essentially going nowhere but don't think it is a quiet day. It has been violently shifting back and forth from news driven events such as China's CPI, PPI and JP Morgan's $1.5 Bil loss from debt prices. Hong Kong traders are essentially too jittery to say the least. They are either over-bullish or over-bearish. From the daily chart, it is very much apparent that Hang Seng is just going inside a resting box currently moving between 21,600 to 23,000. Don't think shorting is such a good idea, because although the bias is still on the down side, stocks are still oversold and is trying to look for a bottom.

Recommendation: If possible, avoid trading HK stocks unless you are very aware about the company's earning reports that may likely beat estimates assuming it is a short term earnings play trade. It seems as though the stocks are mostly news-driven. Note that there are a lot of resistances. Allow the market to correct, or simply probe on good risk-reward ideas. I highlight a stock pick below on 1200 HK.

Stock Pick: Midland Holdings (1200 HK)

Support: 3.30
Resistance: 4.50
Preferred Entry: 3.55

% Risk Reward: 7.04 % Loss, 26.76% Gain
Risk Reward Ratio : 25 cents loss for 95 cents gain ~ 1 : 4

Technicals:

Midland Hldgs (1200 HK) is exhibiting a MACD divergence which may finally breakout tomorrow. Notice that the volume today increased on the upside. RSI is also resting at the same 20 which was the short term low exhibited by the stock last time when it moved from 4 to 5 in a matter of 3 days.

The intraday graph confirms our bullish bias for the stock as it bucked the Hangseng Index trend which has fallen afternoon following Shanghai and European indices when news about JPM's losses came out. Notice that Midland Holdings surged from 3.30 to 3.60 during the morning and held on to its gains, closing at the high. This indicates that there is a lot of demand getting in the stock.

Midland Hldgs (1200 HK) is exhibiting a MACD divergence which may finally breakout tomorrow. Notice that the volume today increased on the upside. RSI is also resting at the same 20 which was the short term low exhibited by the stock last time when it moved from 4 to 5 in a matter of 3 days.

The intraday graph confirms our bullish bias for the stock as it bucked the Hangseng Index trend which has fallen afternoon following Shanghai and European indices when news about JPM's losses came out. Notice that Midland Holdings surged from 3.30 to 3.60 during the morning and held on to its gains, closing at the high. This indicates that there is a lot of demand getting in the stock.

Fast Fundamentals:
I pasted the data from Bloomberg. Company's P/E ratio is dirt cheap at 4.02, Dividend yield at 3.96% with a return on equity of 47.41%. The company is liquid with value turnover greater than 10 Mil HKD. I am cautious about the prospects of the company, knowing that it's clearly an under performer from the rest of the companies listed in Hong Kong but I believe that there might be a technical rebound. I'll be reading on any research published on the company.

Gamecrab

2008-08-10T22:33:00.002+08:00

Game Crab Cafe

I don't normally advertise places I love. Like example, I love eating japfood in Inagiku but I don't essentially type it out loud...(though I just have) haha. What i want to say is...I highlighted a picture of gamecrab perhaps because I really like the fact that a friend of mine actually had the guts to risk it and set up a business like this which he loved. I know it's just a partime biz thing..but I applaud him coz he set out what he wanted to do...and made it real.

Aniwei, I'm a freako when it comes to boardgames...so I'll surely drop by this place. Plus, their rates and food prices are so cheap. haha...will try it out but from the way the stuffs are presented the site...i like it.

good job. clap clap.

I copied what this gamecrab does from its site:

Game Crab Boardgame Cafe will incite a revolution - a boardgame revolution. In a country flooded with Internet cafes, casinos, badminton and basketball courts, and more pool halls than any sane person would care to count; Game Crab Boardgame Cafe has opened its doors to offer everyone a healthy social alternative. It's a place where everyone has a roaring good time.

ok... will go watch usa and china na.baboo.

-Nix

Learning to cut losses

2008-08-10T18:15:00.003+08:00

Before I type, I want to caution my invisible readers that below is more of a personal reflection. This is more of a diary as well as a trading blog aniwei so no apologies coming from me for wasting your time.

Ok. I'm done defending the things I do.
----------------------------------

Learning to cut losses. It’s almost cliché but not many people can do it (in any aspect of life). I have learned to cut losses in my trading,but I can't quite apply it sometimes with the way I view relationships. I just had to type it out loud because I figured that by at least typing it in virtual space, I somehow am freeing myself from the shell I've been hiding for quite some years now.

Okay. I hate ....though I know I shouldn't even allow hate to be staying inside of me...but I simply hate the silent treatment.

I can take awkwardness but I don't understand damn right silence. Oh well, I guess people manage things differently.

All I know is that when I learned to cut my loss, I have cut the loss. There's no reason moping about the losses. awryt? so why can't we get on with our lives like all ordinary people? Ok. I might not get it. But there's just this certain thing that cranks my head. Why can't I talk to someone close to me before? What have I done wrong anyway? This is so unfair. If that is the way you will act towards me, then I shall just simply stop even remembering simple birthdays.

okay... this is totally wrong of me to even hate. I just don't understand why we can't even be good friends. That's all. I'm not asking for anything. I just can't understand. There.

-Nix

Greed is Good

2008-08-09T23:24:00.003+08:00

Lines that struck me:

1.) From a friend's blog:

"But they're there. Just like the many unkempt places here, they aren't so rare as they seem."

2.) Don't get all giddy yet n the dollar rally.(From a WSJ article)

You would think a U.S. dollar rally would be a good sign. But this is all relative: Strategists say the euro, the pound and other dollar rivals are flailing due to the weakness of their domestic economies, rather than a strong U.S. outlook.

A “massive unwind of commodities-linked trades” is the reason the dollar is gaining against these currencies, writes Tony Crescenzi of Miller Tabak — as the buck has become “a major safe haven” in the face of a commodities slide

3.) Who's Gaining from Volatility?

Jim Simmon's Renaissance fund is up 7% last July, and up 48% YTD. (After taking out fees).

What does this mean for stocks? Well, if you're looking at financials, Goldman Sachs might well end up surprising on the upside when it reports third-quarter earnings next month. It's got the best traders on the Street, and it hasn't seen any necessity to rein them in. As a result, there's a good chance they're having a monster quarter.

---best traders on the street ? hmm... hope i can even just...be an inch of those great traders of GS one day. one day...

4.) Fundamentals of Market Bottoms (excellent)
Bottoms are more jagged, the way corporate bond spreads are near equity market bottoms. They spike multiple times before the bottom arrives. Investors similarly grab for puts multiple times before the bottom arrives. Implied volatility is high and jumpy.
As a friend of mine once said, “To make a stock go to zero, it has to have a significant slug of debt.” That is what differentiates tops from bottoms. At tops, no one cares about debt or balance sheets. The only insolvencies that happen then are due to fraud. But at bottoms, the only thing that investors care about is debt or balance sheets. In many cases, the corporate debt behaves like equity, and the equity is as jumpy as an at-the-money warrant.

5.) Greed is good.

In the marketplace, if investors are so risk averse that they never touch equities again, the markets will take a long and deep recession before recovering. But if risk appetites are there... then we have a market. I observed this with Japan and a few articles I read somewhere around the net and I wished to relate it to something more common to mankind.. perhaps relationships and life.

If we stop being "greedy" getting the things we love/want, we'll always stay contented. There won't be innovation. There won't be determination. No one will go for the gold. We won't have the great olympics show Beijing just displayed to the whole world recently. Ok...people have to be greedy. We have to want someone only for us. We have to love something..only for us. We have to be a little bit greedy sometimes. ......ok...people who read this blog will get it. I'm just damn using every word I find from the net to relate trading with perhaps a lonely life haha.

ciao.

lets just go watch the olympics. here's a pic...

-nix

Stars Who Walked Away From Mega-Hits

2008-08-09T22:45:00.004+08:00

Of course after watching Dark Knight, we figured Katie Holmes was such a fool for turning the role down right? Well, this business week report is sure cool. Check them out. Wow.
Kate Hudson would have played Spidey’s Mary Jane pala ah.
Leonardo as Neo in Matrix? Angela Bassett for Storm (I like Haley better). Angie can decline Charlie’s Angels any day. She doesn’t need to share the spotlight with other girls haha. Sean Connery as Gandalf? Haha. Find them all out.

Click the link here...
Stars Who Walked Away From Mega-Hits

Sidenote reflection:

I don't know if this is just me but I'm just getting hit by senti bugs lately.

Well for one, I am currently thinking about those same lines where my friend used to tell me about a certain bus ride story akin to relationships. I believe the gist was mainly to hop in for the ride and just drop off if the ride proves to end up in a car crash. I don't know why I'm even saying this. Of course it doesn't matter anymore. I have changed though, I don't know if it has been for the better.

I guess the only reason why I'm suddenly reflecting on these things is mainly because of the title " stars who walked away from mega hits." Have I actually walked away from perhaps possible mega hits? And if I did, the only way to have made it not a concern was if I had a super mega mega hit. Getting so risk averse when it comes to trading allows you to pass on perhaps one of the best trades you can ever have for fear of not making it. I have opted to fear losing rather than fear missing out and so I have not made those trades. I don't do this anymore in trading and neither have I been thinking of doing such a thing in life. Perhaps due to a doggone experience.

In trading, we are taught to preserve. We don't risk so much of our capital. We measure it. We fight another day. We try to stay alive. We'd rather be consistent rather than great. We'll never plunge and that's why we get to see the light of day when the bull markets arrive where we can do all our stupid things.

With respect to relationships, I guess I'm being that conservative trader. I'd rather pass up those wonderful and exciting trades, just so that I can live to trade(love) every single day without getting crazy or those sleepless nights.

But of course we don't love this way. We love using the "crash and burn" system and hope that we "crashed" with the right space and make splashing waves. I don't know what I'm saying haha....

Anyway, though I sure hope there'll be a good fella/stock for that matter who would let me ride without volatilities, I shall say I'll be simply walking away from mega hits for now. I'd rather go with the solids and the steadies. Maybe it would be sad but I dunno. As they say, girls are fickle. We change minds often and we don't know a thing on what/who we want.

oh but this isn't how relationships are supposed to be...

(just thinking out loud)
-Nix

Quit Talking, Start Doing- IBM

2008-08-09T21:25:00.003+08:00

Start young, think big and stick to it.

There ain't no reason why CNBC is topping ratings in its shows: “Fast Money” and “Kudlow and Co.” I'm one of their new fans. It’s coz the show has full of conviction and have full of “balls” to say their thoughts out loud. It can be right and it can be wrong. It doesn’t matter. At the end of the day, we lie a thousand times to each other and it becomes the truth. They deliver the markets with so much passion, so much energy and so much excitement; it gets viewers to act either in the stock market or in currencies, or at least in their thoughts on making their own opinions and staking a thing out of it. I especially love it when they’re debating. It’s fun to watch plus it’s the only show I know where making money is so much fun. You just voice out your vote and boom! Or doom!
I go to write the importance of doing, instead of knowing because we always like to talk. Talk is cheap. We don’t lose anything when we say “Hey, I wanted to short oil, or I wanted to short EUR when it was breaking 200 day MA.” The question is.. did we? Eventually, its what we do, not what we know. Or it is what we induce others to do. .. that makes us richer or poorer. I say this because I recently read this book by Napoleon Hill entitled “Think and Grow Rich.” It’s an old 1954 book but wisdom doesn’t really age. Talk, while cheap, can give confidence to people who already wanted to do something themselves,(say short EUR or the commodity currencies such as NZD and AUD against the USD). Confirmation of strategy with our peers helps induce us to either “bet more aggressively” on our conviction trades and die with it when it goes wrong. This also happens inversely. When the market is not acting right and giving us volatility moves intraday or the next single day, we get scared. Our cushion is gone and we could be taken out. When we’re not earning money and we’re still holding our positions, we’re being contrarians for the primary reason of not cutting our losses yet. That’s why at some point, we have to use technical levels such as our support and resistance plans so that we stick to our plans before leaving the “battle”. Volatilities will be sharp in bear markets, and although our position is correct, our plays can be wrong. My idol Jesse Livermore used to say that to me through his books. “My position was right, but my play was wrong.” We can sometimes be shaken out of our positions and if we don’t follow our trading plans to cut at a certain level, to take profits at a certain level, the more we trade, the more we get frustrated.

Trading is fun. It is lively and highly stimulating. It’s also frustrating and stressful. But as long as your core intention is to keep score, be on top, the money will just flow assuming you have the discipline to follow good risk management. It’s just harder when volatilities can kill you with your position sizes or the magnitude of the surprise gaps.

People in the markets each have their own beliefs. Their votes are essentially the money they’re putting in their buy and sell orders. Your money is your vote. Your talk is unimportant. Quit talking, start protecting, start doing. That’s the IBM commercial and I am happy that the market doesn’t pay talk. Market only pays to those who have balls to make their stakes.

US market rallied due to the sharp strengthening of USD against all other currencies as well as the continued downtrend in oil. This shows this market still has legs to go up. All this talk about humdrums in China and Hong Kong post Olympics (which I personally don’t believe from the reasons they give in their articles) but that I wouldn’t contest if that’s the reason why market is going down. The most important thing is to be in the game and to live to fight (trade) another day. You cannot be right unless you have a position on and position size is key to that end. We will just get vindication on Monday and the coming weeks ahead.

My talk is that I don’t know the right timing of the short term bottom where I won’t be shaken out off my position but I am going to do position trading for an inevitable rally long term on China. It will be too lengthy to elaborate which stocks in China plus I’m not sure if people will listen to me anyway. Perhaps the easy investment program of doing peso cost averaging is the most hassle free and yet most rewarding as well that I shall submit to doing after the short term rally has finished.

- Nix

Another one of those days...

2008-07-22T23:46:00.002+08:00

I would say, today is one of those days when I'm not totally busy and yet I feel too tired to do anything much. Maybe my mind is dizzy.

I don't exactly know if I will seriously set up a separate blog..this time, really just into stocks.. organized as it shud be, with fundamental and technical categories to help me (for discipline) and benefit more peeps.. if any.

And yet I don't know if I can do all these things, my teammates are encouraging the idea..so when I get the tempo, i'll probably start it...

I'm thinking of possible names...
nu kayang ok? I like food so i figured... hongkong stocks..hmm...

1.) Dimsum-trader.blogspot.com (a menu of daily stock picks (you got served) kind of thing.) Green tea setting, lots of siomai, taropuffs, hakaw in the background so that when a person gets into the blog.. the person is hungry..mouth watering stock picks hopefully. value for money.haha. sabog ako..pasensya.

2.) HK-Stockfeast- basicaly same type of concept, only its too "stocks".

Okay.. lemme defend myself by saying that im getting tired..not coz im losing.. because apparently, the market is getting better, so at least the portfolio is better looking these days but.. I guess the point is I'm just getting a bit tired watching cnbc and bbg. Been married too much wid bloomberg, i suppose. im thinking of taking a vacation. haha..fat chance...

Oil is falling to the direction of $100 but why's oil so expensive pa rin at the pump? GRR...mm... read read read...so much to read. info overload...no such thing as an overload... hows a choco overload... oil can save the markets.. ho hum... mails mails.. gazillion of mails.

i am sleepy. i am sad and i am unaffected wid the markets.

airline stocks soar...asheesh.. missed that again. tsktsk...

financial turnaround....

rollercoasters

hows that.. The-HK-Ride.blogspot.com --- how's that haha.. pangit eh. walang dating. tapos ung background is a rollercoaster.

nextime i shud put my money where my mouth is.. shud have shorted the dollar versus the php kanina.. coward me.

wow oil 100 i can see it.. hate the airlines!!!and the refiners!!! boo boo boo!!! boo coz i am left behind that ride!!!

talk about me as a liar eh noh.. not affected by the markets and yet thats all i talk about.

so maybe that is me and my day

maybe i shud create art thru photography...maybe that can make me happier.

-nix

Senseless post beware

2008-07-06T00:07:00.002+08:00

Note: Below is uhm...a lot of senseless digressions hehe.. You can forget this post. Thanks:)

___________________________________________________________________
sh*T..un lang ang masasabi ko.. Parang nawala tlga ako sa mundo ever since nagtrade ako ng stocks ah haha.. Ung alam ko lang palagi is kung ano nangyayari sa bloomberg. wah loser.

Namiss ko tuloy ung pagbabasa ko ng mga blogs nina baricaua..haha..so funny...if only i can just plug his blog to everyone kaso lang..naka-for contacts eh..oh well.

Pwedeng araw arawin ung blog niya haha.

If there shud be a future quinito henson, dapat siya na maging isang sportcaster pero niche market kasi siya eh. Ibang klaseng humor..tska talino eh.

Hmm...wala akong ginawa today kung hindi.
1,)maglaro ng tower defense
2.) nagpagod nang konti wid my vv6 team, cant play basket na haha. bilis mapagod.
3.) uhm, had the car fixed with all those gasgas
4.) ate kfc (i told u this post was senseless).
5.) Finished reading a short book (Bo Sanchez)
6.) Read a 3 days old wsj paper
7.) Read some BW articles
8.) Stalked around looking at multiply, facebook, and mails. (WOAH by far this is something ive yet to finish.) Sobrang dami eh.

---uhm---there.

-im gonna rest---but not until tower defense. (so addicting.)

----senseless post.

-Nix

Taken from Baricaua's blog : Life is a gamble

2008-07-05T23:52:00.002+08:00

(Hmm, I actually didn't ask Joe's permission to copy this, but nevertheless, wala namang sensitive stuffs dito eh...just plain baricaua fun. I've always liked reading his posts. good sense of humor+very witty. This one's a bit serious though, the execution is still baricaua style...) Oks. -Nix

Blog Entry Life Is A Gamble Jun 6, '08 12:29 AM

...you can't win if you don't place a bet.

***

As I scribble the first few words of this entry on a piece of scratch paper, I can hear Chino and Quinito welcome the Filipino viewers to a parquet floor somewhere in Massachusetts. This stage will serve as today's Supreme Court of Basketball: The NBA Finals '08. It's just a matter of time before Quinito starts sidenoting all the Fil-Ams who have a connection to the game they're covering. Incidentally kabayan, etong asawa ni Karl Malone is a Filipina. Incidentally kabayan, etong tatay ni Dennis Rodman worked in Subic. Incidentally kabayan, one of the Laker girls is a half-Filipina... (he ends up mentioning Garnett's highschool teammate who played as Import in the PBA)

LAL@BOS -2.5, 192
Life is not fair. Sometimes you have to shave 2.5 points off the team with the homecourt advantage to make it even. Yung iba, pinanganak na mayaman. Yung iba, pinanganak na gwapo. Yung iba, pinanganak na may oido. Pero kung maabilidad ka, you have what it takes to make it all even. Vujacic just hit a three.

Life doesn't take 10% of your winnings
You get everything. Just like O-Town who 'wants it all or nothing at all', sayo yan lahat pare. You don't have to feel obliged to please anybody in order to feel good about yourself. Well, unless dun ka talaga masaya, edi go! But kung napipilitan ka lang, adjourn bro! That's a lose-lose situation for you. I don't think its selfishness din naman eh, kasi kung napipilitan ka nga lang naman, edi you're doing good things with a heavy heart. And that's never good. Farmar with a circa 2000's Caguioa-esque floater.

Parlay = high risk, high reward
Don't expect everything in life to be perfect. Minsan matalino ka nga, ok family mo, mayaman ka, pero panget ka naman. In parlays, all your picks should be correct in order to win. Therefore, your definition -- and the probability -- of achieving a 'perfect life' depends on how many 'games' there are on your parlay. A high paying job? A beautiful wife? Smart kids? Good neighbors? Miss even just one of those four is enough to ruin your dream life. Its like putting a pimple on Mona Lisa. Rondo hits a jumper.

Doing nothing is a bet in itself
Nathan Scott missed the scholarship bus to Duke because he messed with Rick Fox. He tried to ask for help from Dan, but the Mayor opted to do nothing. Ayun. Nagkagulu-gulo tuloy buhay ni pogi. Althroughout Nathan's childhood, Dan had been pressuring Nate to be a great ball player and end up in the pros. But because Dan chose not to help Nathan this one time, its scandal time for Scott. Incidentally kabayan tungkol din sa pustahan yung problema ni Nathan. Halftime - Red Panda Acrobats FTW

Double or Nothing?
Hell no! I say that's Bopol or Nothing! A lot of lives have been ruined when bettors try to erase their debts by betting how much they're supposed to pay. Kung talo, double or nothing. Kung talo ulit, double or nothing ulit. E bayaran time na. Pak-tay na! Life is supposed to be win-some-lose-some. Don't make it a win-some-lose-all affair. Pierce gets injured.

Quit while you're ahead
Its basically an argument on discipline. E shempre the assumption here is up ka diba? Have you had enough to walk away from the game, or has this become an addiction? Or even if down ka, can you pick yourself up and walk away from being buried further down the depths of debt o ipagpipilitan mo pa bang mabawi ang mga talo mo? Pierce re-enters court in a pa-star-like fashion

The house always wins
There's a famous saying: "The house always wins" From experience, mukhang totoo nga 'to. So what do you have to do to win? Be the house pare! Be your own bookie. Make your own odds, place your own bets. Choose your own battles, fight your own war...

...Boston wins the game. Bwiset. Talo kami ni Pat.

Excerpts from Bo's Book on Hidden Addictions

2008-07-05T19:25:00.004+08:00

Marc Faber and a few friends told me before that if there is anything striking that you find in the day, try to write it down, else your memory will just fail you. And knowing how this memory of mine quickly forgets... I figured just jotting down what I liked from what I've read.

Some excerpts from Bo Sanchez's 7 Secrets to Real Freedom: How to Stop Hidden Addictions and Achieve Great Success: (Lines that struck me personally.)

Opinion on the book: "Relatively straightforward. Sometimes, a little simple but this may be one of its strengths as well. I don't think most readers want him to go and explain things too deeply so there may be times when a reader feels that the message only comes through the surface. Not the type of book that you'll be awe-inspired so much, but it's a decent book. Good reminders."

Let's just say I'm a little bit harder to please. Message is good to hear and to pass on to others. Some may think its a bit radical when he talks about toxic faith etc. For me, the book emphasizes and clarifies the differences and similarities of people's perception on faith. Overall, I'd give about an 8/10 only because, while the message is simple and not at all new, too few people actually talk about it.

1.) Pain is only a messenger telling us there's something wrong.
2.) Depression, anxiety, shame- did nothing else except press the rewind button.
3.) That another human being is listening to you.
4.) The real cure is dealing with the now.
5.) The moment we choose to love, we begin to move towards freedom- Bell Hooks.
6.) Focus on your dreams, gain confidence and healthy self love in the process.
7.) What you focus on grows.
8.) The ability to delay gratification.
9.) Fear is that little darkroom where negatives are developed. - Michael Pritchard
10.) People who want to overcome their addictions, focus on their addictions,and it simply won't work.
11.) To sacrifice what we are ... for what we could become. - Charles Du Bois
12.) Give up your addiction. Give up what destroys you.
13.) Because Judas did not allow God to love him. Judas didn't learn to receive God's love. Because of this, he never learned how to love himself.
14.) Peter betrayed Jesus, denied Him, but ended up becoming Pope.
15.) Despair is the end of the road. Focus on God's dream for you instead.
16.) You're a mix of the good and the bad, and you need to love that mix.
17.) Forgive yourself, accept your weaknesses, feel your feelings and trust your needs.
18.) If we confess our sins, He is faithful and just to forgive us our sins and to cleanse us from all unrighteousness.
19.) But I can't forgive myself for what I've done. You fall into pride on three counts. First , you seem to think that your sin is bigger than God's love for you. That's pride. God's love is bigger than your sin. Second, you seem to think your moral standards are higher than God's standards. That's pride. Allow God to love you in your brokenness. And give yourself permission to love you. Third, you have been focusing on your sin. God doesn't want you to grieve and wallow in guilt. You're wrong. When you focus on your sin, you're not focusing on God. Focus on God's love for you or you fall into despair. Judas' despair killed him. Pride goes before destruction and a haughty spirit before a fall.
20.) Make a choice to forgive me, I don't have to be perfect for me to love me. As God loves me, so do I love ME. I forgive ME.
21.) Fire your inner parrot.
22.) At first I didn't think of it as a gift, and begged God to remove it. Three times I did that, and then he told me, "My grace is enough, it's all you need. My strength comes into its own in your weakness."
23.) God chooses what the world considers the weak in order to shame the powerful.
24.) Entering into our painful feelings with boldness, we realize they're not as terrifying as we feared them to be.
25.) As soon as you trust yourself, you will know how to live. - Johann Wolfgang von Goethe.
26.) God calls us to be childlike, not childish.
27.) You're made in the image and likeness of God. You're not just good. You're very god. So Trust yourself because God trusts you.
28.) Set your boundaries.
29.) Do you have time just to rest and reflect, read and plan?
30.) Remind yourself that there's a saint in you too.
31.) We doubt our worth. We doubt our goodness. We are very desperate for love. We need to love the saint within us. Celebrate your positive qualities. Celebrate your goodness. Celebrate your beauty. Love the sinner and the saint within.
32.) Break the rope one strand at a time.
33.) The story of the baby elephant. - learned helplessness-
34.) Allow love to heal you.- the story of Freddy-
35.) Marianne Williamson " Our Deepest Fear"

Our deepest fear is not that we are inadequate.
Our deepest fear is that we are powerful beyond measure.
It is our light, not our darkness, that most frightens us.
We ask ourselves, who am I to be brilliant, gorgeous, talented, fabulous?
Actually, who are you not to be? You are a child of God!
Your playing small does not serve the world. There is nothing enlightened about shrinking so that other people will not feel insecure around you.
It is not just in some of us, it's in EVERYONE. And as we let our own light shine, we unconsciously give other people permission to do the same.

As we are liberated from our own fear, our presence automatically liberates others.

(Repeated in a relatively recent basketball movie---cant remember the title.)

Personal Reflection:
Basically, I just wrote the quotes above to remind myself, to break from the ropes one strand at a time. To accept forgiveness and all that stuff. People may think this is in allusion to trading. I think it has to do with well, my own relationships to people and God. So there...

-Nix

Position Management, Market Psychology and Trading Rules

2008-07-04T11:36:00.003+08:00

Position management and Market Psychology

Reference: Citiseconline

1.) Quality is never an accident. It is always the result of high intention, genuine effort, intelligent action and skillful execution - Willa A. Foster
2.) Entering a trade is but half the work done in an investment scheme. Exiting a trade is the other crucial half, which in itself can call for loads of study and practice time.
3.) We are human.
4.) Systems are good as long as they are practiced and followed with diligence.
5.) The primary cause for major losses in trading is the overwhelming rush of human passions. These are expressed by greed, hope, fear and on occasion, desperation.
6.) Proper usage of position management will indeed come to save the day.
7.) Preventive maintenance is the key to one's success as it ensures one's ability to survive unforeseen or unlikely outcomes that would have otherwise been ruinous.
8.) Our objective therefore is two-fold. Raise the winnings ratio and Curb trade losses by introducing the 1:3 risk management system.
9.) Keep potential losses down to a controllable minimum.
10.) There is no point holding on anymore as the price has already proven your trade wrong, whether it is momentary or not, your read or timing was erroneous. You can always buy the stock back once the formations solidify.
11.) Break your risk management system and you are effectively leaving an open door for disaster.
12.) Success will come to those who can manage effective control of 2 capacities: financial ability and emotional steadiness.
13.) Distribute risk and condition heavier investments into more lucrative prospects.
14.) Comb a range between 3 to 5 stocks. Having all your capital into a single position can be just as devastating as it can be remunerating.
15.) Select the best possible performers.
16.) Even acrobats in high wire acts do their stunts with a safety net below them, for they know that it only takes one mistake...that mistake could cost them everything.
17.) Markets offer unlimited opportunities for self sabotage.
18.) A good trader watches his capital as carefully as a professional scuba diver watches his air supply. Cherish what you have. Focus on what you have. Don't focus on your losses.
19.) Move on proper motive. Move on proper time. Duck when the opponent is strong. Always have the upper hand. Hit then run. Never get yourself in a situation that you cannot control.
20.) The market will always be there, and it is you the trader, who is the variable who may or may not continue to exist as a player. There are a lot of vultures out there

Risk Control strategies and ideas:
1.) It may be a good idea to maintain a stop loss option that bleeds more than 2% to 3% of your entire capital.
2.) Only maximize your position if you are trading along with a trend. Let profits run in the direction of the market.
3.) Never bargain hunt into a downtrend or try catching a falling knife, do so only upon weakness within an uptrend.
4.) Never let a profitable trade run into a loss. Put a breakeven order on your trade.
5.) Correct mistakes immediately. Do not try to trade out of it.

6.) The gods cannot help those who do not seize opportunities. Always trail your stops along the trend move. Do not guess a corrective reactions power.
7.) It is better to get stopped out and reenter later than to risk too much on a single trade.
8.) Windfall profits should be taken advantage off. Take some profits into your position and trail a stop on any balance.
9.) Your only control over the markets, your best control over your profitability, lies in determining your risk, that is, how much you decide to lose when a trade turns against you.

- Nix

Marc Faber's Reading Guides

2008-07-02T18:09:00.000+08:00

What to read and how to read it
"Everybody gets so much information all day long that they lose their common sense." Gertrude Stein

Remember: The mental digestion and interpretation of what we read is the most important part of acquiring knowledge. That is why I suggested earlier that you read demanding articles and reports only when your mind is completely at peace and best of all with some nice wine or whiskey.

Remember this, too: Don't read only for the sake of acquiring money and knowledge; read also for the beauty of the language and for the pleasure that a well-written report or book can give you.

From Marc Faber
- Nix

Standing BESIDE the shoulders of Giants

2008-07-02T17:48:00.005+08:00

When I was young, I read in one guy's commencement address the following verse:

"If I have seen further, it is by standing on the shoulder of giants."

I thought before mejo astig ung quote na un ah, only to find out that the verse wasn't original. I dug deeper and the quote came from Isaac Newton.

The essence of the quote, as Wikipedia has defined, is

Someone who develops future intellectual pursuits by understanding the research and works created by notable thinkers of the past

Today may be another great day for having stood BESIDE the shoulder of giants. I guess that's the beauty of working with great people.

Anyway, let me share to you what they've shared to me (invisible strangers/readers/ complete void virtual spaces). They told me to read this newsletter from Marc Faber.

Marc Faber wrote the following:

Remember the definition of a stock that has fallen 90%: one that's fallen by 80% and then halves. - Gerard Minack

Great quote eh? But even greater if you actually delve deeper. Wow. Shorting a stock that is 80% down can even present a 50% profitable opportunity. Now if that's not a great "cheat sheet". I don't know what is. Imagine, the stock that has fallen 80% of its value is clearly a stock that has probably had fundamental issues, downgrades etc. No wonder, financial stocks and insurance stocks have been dead but nails are still being hammered in their coffins. The resurrection of the dead are zombies :) Watching zombies in the movies are nothing as scary as the zombies of the market haha.) When the zombies try to come alive, shoot them down :) It is a great opportunity to short things. (Okay...I'm trying to be corny :P)

Here's to go down further with the point. Marc Faber illustrated the great Kirk Kerkorian's costly mistake of trying to pick bottoms.

Kirk Kerkorian – not exactly a naïve and novice businessman – (seven richest American who started with nothing) thought General Motors to be a bargain at around $30 and bought close to 10% of the outstanding shares (he sold his shares in the meantime). But with the shares now at a 53-year low (11!) he was clearly wrong about GM’s potential but shrewd enough to get out in time.

The lesson of the story ?
All I wish to bring across is that
a) You should not think that I know much more than you do and
b) The fact that a stock or for that matter any asset market including a currency which has declined by 60% or even 90% does not make it necessarily a great buy!

We should have no confidence in calling a low for stocks. :)

You know the old cliche of not catching falling knives right? Well, don't get your hands slit. Those knives are dangerous. They can even cut through not just your pockets but your minds.

I attached a simple picture. It is the divergence between Energy and financial stocks. Among the stocks that are still up there in the charts for the US stocks, they are mostly technology and cyclical stocks as well as emerging market equities.

The investment strategy team here (where I work for) as well as in Marc Faber's newsletters have been bearish in consumer discretionary for quite some time now.

Here's Marc Faber's encompassing monthly view:

Sell into rallies – in particular technology and cyclical stocks and emerging market equities.

Byee :) Till nextime.

-Nix

Managing those 4 Fears

2008-07-01T13:21:00.002+08:00

Mark Douglas, an expert in trading psychology, noted in his book, Trading in the Zone, that most investors believe they know what is going to happen next. This causes traders to put too much weight on the outcome of the current trade, while not assessing their performance as "a probability game" that they are playing over time. This manifests itself in investors getting too high and too low and causes them to react emotionally, with excessive fear or greed after a series of losses or wins.
As the importance of an individual trade increases in the trader's mind, the fear level tends to increase as well. A trader becomes more hesitant and cautious, seeking to avoid a mistake. The risk of choking under pressure increases as the trader feels the pressure build.

All traders have fear, but winning traders manage their fear while losers are controlled by it. When faced with a potentially dangerous situation, the instinctive tendency is to revert to the "fight or flight" response. We can either prepare to do battle against the perceived threat, or we can flee from this danger. When an investor interprets a state of arousal negatively as fear or stress, performance is likely to be impaired. A trader will tend to ?freeze.? In contrast, when a trader feels the surge of adrenaline but interprets this as excitement or a state of greater alertness before placing a trade, then performance will tend to improve. Many great live performers talk of feeling butterflies just before they go on stage, and how they interpret this as a wake-up call to go out and perform at their highest level. That's clearly a more empowering response than someone who might interpret these butterflies as a reason to run back to his dressing room to get sick! Winners take positive action in spite of their fears.

1. Fear of Loss
Analysis Paralysis and Its Cousins

The fear of losing when making a trade often has several consequences. Fear of loss tends to make a trader hesitant to execute his trading plan. This can often lead to an inability to pull the trigger on new entries as well as on new exits. As a trader, you know that you need to be decisive in taking action when your approach dictates a new entry or exit, so when fear of loss holds you back from taking action, you also lose confidence in your ability to execute your trading plan. This causes a lack of trust in your method or,more importantly, in your own ability to execute future trades.

Thus, you can see how fear can set in place a vicious cycle of recurring doubt and, in turn, reinforce a traders' lack of confidence in executing new positions. For example, if you doubt you will actually be able to exit your position when your method tells you to get the heck out, then as a self-preservation mechanism you will also choose not to get into new trades. Thus begins the analysis paralysis, where you are merely looking at new trades but not getting the proper reinforcement to pull the trigger. In fact, the reinforcement is negative and actually pulls you away from making a move.

Looking deeper at why a trader cannot pull the trigger, I believe the root stems from a lack of confidence about the trading plan, which then causes the trader to believe that by not trading, he is moving away from potential pain as opposed to moving toward future gain. No one likes losses, but the reality is, of course, that even the best professionals will lose. The key is that they will lose much less, which allows them to remain in the game both financially and psychologically. The longer you can remain in the trading game with a sound method, the more likely you will start to experience a better run of trades that will take you out of any temporary trading slumps.

When you're having trouble pulling the trigger, realize that you are worrying too much about results and are not focused on your execution process. Make sure your have a written plan and then practice executing your plan.

Start with paper trades if you prefer, or consider trading smaller positions to get the fear of losing out of your system and get yourself focused on execution. When in the heat of battle and realizing you need to get in or out of a trade, consider using market orders, especially on the exit. That way you can't beat yourself up for not pulling the trigger on your trade.

Many traders may get too cute with a trade and try to work out of a position at a limit price better than the current market price, hoping they can squeeze more out of a trade. But as famed trader Jesse Livermore advised in the classic book Reminiscences of a Stock Operator by Edwin Lefevre, ?give up trying to catch the last eighth.? Keep it simple with a market order to exit allows you to bring closure when you need it, which reinforces the confidence-building feelings that come from following your trading plan. In the past when my indicators noted it was time to exit, I have experienced firsthand the pain of not getting filled at my limit, watching the option drop and then placing a new limit back where I should have exited at the market in the first place! Then I have realized I was not going to get filled there either, so I again kept lowering my limit until, in frustration, I placed a market order to exit much lower than I could have closed the position initially. Not only can you feel the pain of loss financially but, more important, you can chip away at your internal state of confidence and create frustration by not getting filled.

You should be more concerned about avoiding big losses and less concerned about taking small losses. If you can?t bear to take a small loss, you will never give yourself an opportunity to be around when a big winning idea comes along, as every trade you enter has the risk of first turning against you for a loss. You must execute by knowing what your risk is in each trade, and define parameters to make sure you can ride favorable trends correctly as well so that your winners will be larger than you losers. And never get stuck in the mindset of hoping a loser will come back to "breakeven," as that is one of the trader's most deadly mental fantasies. Billions of dollars have been lost by technology investors hoping their stocks would bounce back in recent years to allow them to escape the downtrend. That only led to even greater losses in most cases. That's how a short-term trader can become a long-term investor unintentionally, and that is a position in which you never want to put yourself.

Ask how well you trust yourself to execute your trading plan. You want to judge your effectiveness based on how well you get in and out of the market when your method gives entry and exit signals. You?ll need to be decisive, not hesitant, know in your heart that your method is well tested and that your risk is low compared to your likely reward. In other words, you must be fully prepared before you go into the heat of battle during a trading day. You need to know where you will enter and where you will exit if you are a discretionary trader. Or you need to know what system you are following and be prepared to enter and exit as the system dictates. This keeps you disciplined and focused on following a process that can generate favorable results over time.

2. Fear of Missing Out
Being a Part of the Crowd Isn?t
Everything It's Cracked Up to Be

Every trend always has its doubters, but I often notice that many skeptics of a trend will slowly become converts due to the fear of missing out on profits or the pain of losses in betting against that trend. The fear of missing out can also be characterized as greed of a sorts, for an investor is not acting based on some desire to own the security - other than the fact that it is going up without him on board. This fear is often fueled during runaway booms like the technology bubble of the late-1990s, as investors heard their friends talking about newfound riches. The fear of missing out came into play for those who wanted to experience the same type of euphoria.

When you think about it, this is a very dangerous situation, as at this stage investors tend essentially to say, "Get me in at any price - I must participate in this hot trend!? The effect of the fear of missing out is a blindness to any potential downside risk, as it seems clear to the investor that there can only be gains ahead from such a "promising" and "obviously beneficial" trend. But there's nothing obvious about it.

We remember the stories of the Internet and how it would revolutionize the way business was done. While the Internet has indeed had a significant impact on our lives, the hype and frenzy for these stocks ramped up supply of every possible technology stock that could be brought public and created a situation where the incredibly high expectations could not possibly be met in reality. It is expectation gaps like this that often create serious risks for those who have piled into a trend late, once it has been widely broadcast in the media to all investors.

3. Fear of Letting a Profit Turn into a Loss

I get many more questions from subscribers asking if it is time to take a profit than I do subscribers asking when they should take their loss. This represents the fact that most traders do the opposite of the "let profits run, cut losses short" motto: they instead like to take quick profits while letting losers get out of control. Why would a trader do this? Too many traders tend to equate their net worth with their self-worth. They want to lock in a quick profit to guarantee that they feel like a winner.

How should you take profits? Should you utilize a fixed target profit objective, or should you only trail your stop on a winning trade until the trend breaks?

Those who can accept more risk should consider trailing a stop on their trending position, while more conservative traders may be more comfortable taking profits at their target objective. There is another alternative as well, which is to merge the two concepts by taking some profits off the table while seeking to ride the trend with a trailing stop on the remaining portion of the position.

When I trade options, I usually recommend taking half of the position off at a double or more, and then following the half position still open with a trailing stop. This allows you to have the opportunity to ride my best trading ideas further, as these are the trades where I am mostly likely to continue being right. Yet, I am also able to get the initial capital at risk back in my pocket, which frees me from worrying about letting a profit turn into a loss; I am guaranteed a breakeven even if the other half position were to go to nothing overnight. My general rule for the remaining half position is to exit if it reaches my trailing stop of half its maximum profit on an end-of-day closing basis, or scale out of the remaining half position every time it doubles again.

I?m also a big fan of moving your stop up to breakeven relatively quickly once the position starts to move in your favor, by about five percent on a stock or by roughly 25 percent on the option. It is also critical to recognize the impact of time spent waiting for a position to move. If you are not losing but not yet winning after several trading days, there are likely better opportunities elsewhere. This is known as a "time stop," and it will get your capital out of non-performers and free it up for fresher trading ideas.

4. Fear of Not Being Right - All Too Common

Too many traders care too much about being proven right in their analysis on each trade, as opposed to looking at trading as a probability game in which they will be both right and wrong on individual trades. In other words, their overall method will create positive results.

The desire to focus on being right instead of making money is a function of the individual's ego, and to be successful you must trade without ego at all costs. Ego leads to equating the trader?s net worth with his self-worth, which results in the desire to take winners too quickly and sit on losers in often-misguided hopes of exiting at a breakeven.

Trading results are often a mirror for where you are in your life. If you feel any sort of conflict internally with making money or feel the need to be perfect in everything you do, you will experience cognitive dissonance as you trade. This means that your brain will be insisting that you cannot exit a trade at a loss because it ruins your self-image of perfection. Or if you grew up and feel guilty about having money, your mind and ego will find a way to give up gains and take losses in the markets. The ego?s need to protect its version of the self must be let go in order to rid ourselves of the potential for self-sabotage.

If you have a perfectionist mentality when trading, you are really setting yourself up for failure, because it is a given that you will experience losses along the way in trading. Again, you have to think of trading as a probability game. You can't be a perfectionist and expect to be a great trader. If you cannot take a loss when it is small because of the need to be perfect, then the loss will often times grow to a much larger loss, causing further pain for the perfectionist. The objective should be excellence in trading, not perfection.

In addition, you should strive for excellence over a sustained period, as opposed to judging that each trade must be excellent. The great traders make mistakes too, but they are able to keep the impact of those mistakes small, while really riding their best ideas fully.

For the trader who is dealing with excessive ego challenges (yet, who wants to admit it?), this is one of the strongest arguments for mechanical systems, as you grade yourself not on whether your trade analysis was right or wrong. Instead you judge yourself based on how effectively you executed your system?s entry and exit signals. This is much easier for those traders who want to leave their egos at the door when they start to trade. Additionally, because we are raised in a highly competitive culture, the perception of a contest or competition will also bring out your ego's desire to win and beat others.

You will be better off seeing trading as a series of opportunities that will become apparent to you, and your task is to create a plan that finds opportunities with potential rewards that are several times greater than the risks you incur.

Be sure you are writing down your reasons for entering each trade, as the ego will play tricks and come up with new reasons to hang on to losing positions once the original reasons have evaporated. One of our survival mechanisms is remembering the good and omitting the bad in our minds, but this is dangerous in trading. You must acknowledge the risk and use a stop on every trade to admit when the analysis is no longer timely. This helps prevent undesirable situations where you get stuck in a position because you did not adhere to your original stop. This is a bad use of capital being tied up in an under-performing position, when there are likely to be many better opportunities elsewhere. Trading without stops is an ego-driven approach that hopes to avoid accountability for a losing trading idea. This is an unacceptable behavior to the successful trader, who knows he must limit risk with stops to stay in the game for the next trading opportunity.

In summary, your trading plan must account for the emotions you will be prone to experience, particularly those related to managing fear. As a trade, you must move from a fearful mindset to mental state of confidence. You have to believe in your ability as well as the effectiveness of your plan to take profits that are larger than the manageable losses. This builds the confidence of knowing that you are on the right track. It also makes it easier to continue to execute new trades after a string of losing positions. Psychologically, that's the critical point where many individuals will pull the plug, because they are too reactive to emotions as opposed to the longer-term mechanics of their plan. If you?re not sure if you can make this leap, know that you can if you start small.

Too many investors have an "all-or-none" mentality. They're either going to get rich quick or blow out trying. You want to take the opposite mentality - one that signals that you are in this for the longer haul. This gives you "permission" to slowly get comfortable and to keep refining your plan as you go. As you focus on execution while managing fear, you realize that giving up is the only way you can truly lose. You will win as you conquer the four major fears, to gain confidence in your trading method and, ultimately, you will gain even more confidence in yourself.

Article taken from Price Headly of bigtrends.com
-Nix

Great Stuff for training your mind to be a winner

2008-07-01T12:58:00.004+08:00

References: Price Headley articles from bigtrends.com

A lesson every trader should take heed of is the famous Pareto's Principle: 20% of your actions create 80% of your results. Applied to trading, this means 80% of your profits will come from just 20% of your trades (while the remaining 80% of your trades will contribute only 20% of your total profits). One of the secrets to making big money as a trader is knowing when your system is no longer fitting the profile of the Top Twenty percent of your trades. To me, this means that you should not be worried about taking small losses nor should you fear unloading small profits if the price action since you put the trade on now suggests that your Top Twenty profile has now been violated.

If you have a 90% winning percentage, but your one loser out of 10 trades is 10 times your average winner, you're not going to do well. Similarly, I have seen numerous systems with low winning percentages do well, because they keep their losses small and let their winners ride, forming a very large Ratio of (Average Win/Average Loss). For example, with a winning percentage of 30%, if the size of the Average Win is five times greater than the size of the Average Loss, this system will do well.

Option selling strategies give you the ability to generate more consistent cash flow even in slow-moving or choppy markets.
Click here: Selling Naked Puts and Selling Covered Calls

Consider the mind game more important once you master the primary requirements of any game.

Here the vanquished Ferrero bravely admits that the match was won or lost in the mind, and what happened on the court merely reflected which player was more mentally fit.

Great trading is "10 months grind and 2 months gravy." The secret is to minimize your losses and grind out some smaller profits for most of the year, and then be in the game for the other two months that make up the bulk of your trading profits. Trying to trade like a hero through the tough markets can lead to overtrading, which in turn can lead to many whipsaw trades, resulting in a demoralizing loss in confidence in your trading methodology.

When you feel as if your back is against the wall in trading or you psychologically feel you're losing, here's how to get yourself into a winning mindset:

1. Preparation - Guga never appeared to be hitting bad strokes even when he was losing to Russell. The disciplined approach of Guga eventually won out, but that confidence had to start with Guga knowing he could hit the winners he needed to, once he sensed the opportunity. If you're not prepared, by creating a written trading plan of your goals, and knowing specifically how your battle-tested trading method dictates your entries and exits, you give yourself no chance to confidently execute the plan. If you're flying by the seat of your pants, your emotions will take over and force you into a reactive mentality (for example, selling only after a significant decline). And a disciplined trader will consistently take money from an emotional trader 9 times out of 10.

2. Commitment - As I watched Guga, I was amazed at how he showed a certain determination not to quit when things were not going his way. Even as he faced match point, you had a sense that he would make every shot count. I have learned in life that those who succeed in any endeavor have made a commitment to seeing it through both good times and bad. Those traders who come in to the markets expecting that the market will only provide them winning trades are setting themselves up to quit when they let small losses turn into big losses. Make sure you are committed to a successful trading plan, and then see it through even when times look bleak.

3. Execution - Once you have your plan, you have to execute. One of my biggest challenges has been pulling the trigger once I do my research, because of fear of failure. But I made my life 100 times easier when I took my analysis out of an ego-based approach (where I had to be right) to a systems-based approach (where I had to execute the system, which generated small losses but bigger gains over time). If you focus on execution, you'll take your ego out of the game and worry less about being right and concentrate more on following your system over time to mirror its results.

4. Staying Sharp - Once you start to have success, many traders start to coast. They think they have the game figured out, and now the easy money will just roll in. Such complacency can get a trader right back into another trading funk, so you have to constantly follow your plan and your process to be successful. Once Guga escaped the near-death match with Russell, he started to get ahead of his next two opponents and won the next two matches in straight sets. Make sure you stay focused on consistent success, and if you feel you've reached your trading goal, you should celebrate that day, but come back the next day with a new goal to stretch yourself and stay sharp.

-Nix

7 Habits of Ineffective Traders and How to Learn From Them

2008-06-30T10:33:00.002+08:00

I figured sharing what I got from my boss. This article had been published 3 years ago by Ken Wolff, a contributor for realmoney.com

The article can be found here. 7 Habits Of Ineffective Traders

I also figured sharing what my mom quoted me which I think should be beneficial for a lot of people, whether they be traders or any profession n life.

"Don't count what you lost but cherish what you have and then plan what to gain. The past never returns but the future may fulfill the loss."

Seven Habits of Ineffective Traders
Recently, a couple of people I know packed up and quit trading after struggling for a long time to hold their heads above water. They didn't make it.

This isn't unusual, of course. This profession has a high failure rate. But it frustrated me.

It frustrated me because I could see potential in them. I don't believe you have to be particularly talented or intelligent to be a successful trader, but these people seemed to have a grasp on the market and the love of trading that's necessary.

They had the tools, the knowledge, the time and the funds. It also frustrated me because I could see the pressure they were under that contributed to their failures. Most of all, though, it frustrated me because I could clearly see what they were doing wrong, but they couldn't stop repeating the same mistakes.

This happens a lot. I see a lot of people making the same mistakes. So I thought I'd share my list of the seven most frustrating things that struggling traders do.

1. When people won't do their own homework. Too many people want to make money, but aren't willing to put the time in and do what it takes. I love answering questions, and I have a passion to help people learn, but when I notice someone asking the same questions over and over, and they are basic questions that anyone could Google, and gave it 30 seconds worth of effort, I know that person is lazy and probably won't make it.

You want to know what makes successful traders? People who glue their butts to their chairs. Look at their computer desks and you're likely to see lots of coffee rings and crumbs. You get out of something only what you put into it. If you aren't willing to take notes, take some initiative, keep a journal and spend a lot of time watching stocks, I don't see much hope for you as a trader.

2. When people can't explain their reasoning for a trade. If your reason for entering a trade is something vague like, "I thought I saw buyers, and last week it had news, and I dunno, it just looked good," then you don't belong in that trade! People like this usually have no clearly conceived, written, organized trading strategy because they are lazy. They are doomed to failure.

If you have no solid reason for a trade, you will have no confidence in it. You will wind up mistiming, misjudging, fumbling and losing. Here's a quote from my partner Phil Rosten, who is a brilliant technician:

I think the most important thing to do is to develop a system that you have confidence in. You will get nowhere if you are second-guessing what you are doing. When the market is open, you need to know what you are doing, and why you are doing it, without thinking too much about it. If you start thinking too much about what you are doing or second-guessing yourself, you will quickly get taken out of the game.

Believe it or not, it doesn't matter much what your reason is, as long as you are consistent with that reasoning. But you'd better have a reason.

. When people make things more complicated than they need to be. Let me give you an example. One of the leaders in my chat room finally unveiled a new trading system he had developed after more than a year of extensive testing. The system works just as it is. It isn't perfect (no trading system will be 100%), but it is highly profitable.

People's initial reactions were interesting. Instead of saying, "Wow, great. Let me give it a try," a common first response was, "I wonder if it would work even better if we changed this and that, and instead of a 15-day moving average we used a 10-day moving average," and on and on. Before they even tried or understood the system, before ever becoming profitable and successful with it, they immediately set about trying to improve it.

Maybe it's human nature. We love trying to reinvent the wheel. Many of us see trading as a puzzle. If we could just find that solution or formula that no one else has thought of yet, we would be rich and happy. A lot of people think that the more indicators they pile on, the better their trading results will be. So they wind up with analysis paralysis, unprofitable and frustrated, convinced that trading is an unwinnable gamble.

I can't say this enough: What matters is not the system itself, but what you do with the system -- your discipline to use it and keep stops. You won't find a system that always works, so you'd better limit those losses. Two percent of your trades can easily wipe out 98% of your gains if you can't keep stops.

4. When people enter a trade for a good reason, then lose their nerve and exit too soon. This is a lot like walking across a log over a river. If you keep focused on your goal, you will get to the other side. You know how to walk a straight line, and you would have no problems if the log was on the ground. But once you are out there, if you start second-guessing yourself and looking down at the rocks below, you will fall. Too often emotions set in and sabotage good trades.

If you have a reason, stick with it. Stay in the trade until your target is reached, you have an exit signal, or the reason for your entry is no longer valid.

5. When people hesitate, or follow others, and enter a trade too late. I understand traders' lack of confidence and I can empathize because I've been there. If they don't get a grip on it, though, it will be their downfall. Calls are great and gurus are great, but if you follow, you will always be late. You need to learn to rely on your own reasoning. Otherwise you will be too slow and you'll become fish bait.

Inexperience is often the reason for this, and that will take care of itself with time. That's why I recommend starting with small shares until you gain confidence in your system and your ability to keep stops. But this problem frequently has to do with deeper emotions, pressures and self-esteem problems that may not go away as easily.

This is hard stuff because it's all about confidence. When you are under pressure from a spouse who disapproves of your trading, or under pressure to pay bills, etc., you are working under an enormous amount of fear and pressure. And that is automatically going to cause hesitation. I know that's a hard situation.

But I tell you, if you don't get that under control and learn to trade like you don't need the money -- with control and a system, leaving out emotion -- you are not going to make it. You must find a way to ease that pressure. Get a part-time job if things are that rough and you still believe trading is the job for you. If you cut back and trade a couple of days a week without the pressure, you'll probably trade better for it and wind up making more money than you did trading five days a week under pressure. I've seen it happen many times.

6. When people will not contemplate the real reasons for their failures. I don't know how many times I have heard this: "The market was tough today. I had one good early trade and then gave it all back in the afternoon in a few bad trades."

Let's be honest here. The market wasn't making you do those stupid later trades. It was you. Don't blame it on the market when in reality you were chasing longs all day when the market was tanking.

Then people will say something like "I need help with risk management," "I need help learning to find good entries," "I need help learning executions" or some other topic not really related to their true mistake. What they need instead is a dose of self-restraint and some personal accountability. They need to stop making trades out of boredom, frustration, regret or any other reason other than "it met my trading criteria." They also need to be honest about these criteria and not stretch things into "well, it kind of meets my criteria -- if I look at it cross-eyed."

I know this is hard. It's tough to sit there all day and stare at these numbers, especially when things are slow and there have been no good trading opportunities that day. It's like fishing. Fishing can be really boring. But if you aren't sitting there waiting with your hook in the water, you won't catch anything when the big fish come by. And it won't help if you jump in the water every time you see a ripple, trying to convince yourself you had a bite.

7. A defeatist attitude, especially in me. The potential in our lives far exceeds what we ordinarily imagine. Too often we put limitations on ourselves with Eeyore-like thinking. We say "I can't do this" or "I am just not smart enough" or "I'm just unlucky." In doing so, we fail to challenge ourselves and develop new potential because we've lost faith in ourselves.

We are like circus elephants tied with small weak chains to a stake, believing we could never get free, unaware of our own strength. We possess tremendous potential, but if we develop the bad habit of convincing ourselves that our potential is limited, we will not actively challenge ourselves and grow. Like the elephant, we will be held captive by our own beliefs.

If you have a defeatist attitude, you've already lost. So let's keep a positive mindset and try to see each mistake as a stepping stone to growth.

P.S.

What strikes me in all of this is that Ken Wolff specifically wrote in the last habit of an ineffective trader the defeatist attitude. I think he saved the best for last.

I have committed all the 6 mistakes but if I give up on that last one, and have a defeatist attitude, I wouldn't be literally standing up today. Okay, so maybe I'm not standing up on such a high ground nor am I standing tall, but at least I'm standing. And that is all there is to life.

Cheers and move on with all those failures. Else, you're just fulfilling a loss.

-Nix

Aftermath of the Downfall.

2008-06-28T06:59:00.003+08:00

2 am and a day has passed since my catastrophic destruction.

Up until today, I still don't know how I can escape from the hole I dug so deep in. Never had I been scared so much in my life that after effects still scare me. I don't know how to face people, much less face a person I've pushed away for my irresponsibility. With kindness, I have returned abuse. I have even blamed the person for being too good to me when I only learn my faults through whips, through harsh methods, through shouting and scolding.

I have not yet grown up.

Its really sad now that I reflect upon my life because trading has only been a reflection of a deep seated problem inside of me. It would have turned out sooner, I suppose, but I would have probably delayed my self=destruct button in just a matter of a few more trades, unless I just get lucky but I'll still end up in the same conclusion.

I am far more vicious than a monster trapped in a bottle because my monster can go far and disguise itself as just a chameleon that can quickly change gears. I can be a demon and an angel at the same time and that has been such a difficulty that I've never recovered from.

I only become a good kid whenever I am scolded, whenever I am scared.

I have never, I suppose, really understood what unconditional love is.

I've never grown up with such a thing for the past 20 years.

The people who love me, I even push away through my words and actions.

I have lived in a world where I might be a Christian, I might have loved God, sang praises to God in church, helped children who have not gone to school but when there's something wrong at me, I never correct them unless I am freaking scared.

And freaking scared is not even perhaps the right word to describe my state right now.

I suppose there are secrets that we have in this life that , sooner or later, will come out and they will be things that we think we can never live as normally as we would have, had they not been left a secret.

My problem is that when I do a person wrong, I have always gotten away with it mainly because people normally can take just so much "wrongs" in life.

People could not withstand tremendous amounts of wrongs, thats why, I was able to overcome them. The problems seemed small compared to my abilities.

However, when kindness meets me, I've often done stupid things. I mean it.

The people who had loved me the most are also the people I've hurt the most.

I couldn't live knowing so much hurt and pain that I've caused that I only try to do things more.

If I flunked a test, I would have simply studied more.
Back then, If I had gotten a D in accounting, I just had to study for the next exam. My parents, my family would have known how sad I was with my failure but failing, to them, is something that is common to everyone. Also, in our values system, a test is a test. There will be other tests. As long as one would study harder, the next exam will at least be higher.

Fortunately or unfortunately, I've always passed my next series of exams. I have usually learned from one mistake. I have never repeated them quite again. When I reflect upon my life, I don't think there was any endeavor where I committed the same mistake twice or even thrice. I always had gotten away, learned my lesson, and moved on.

Not in this case, and this time...a lot of people are already mad.

It pains me to know that I don't think I can ever smile again.

AGAIN.

The last time I told myself "I think I can never smile again." was when I loved, I suppose I thought I loved, a person so deeply, that I couldn't understand how it seemed easy to dismiss things as a non-event.

I think it took me about 2 years at least to recover from whatever experience that was. It influences me up until this day. So now you know why I can be sordid at times. My family most especially would often tell me that I am the most stubborn person in the world and that all I ever cared for was myself. It had always been me, trying to be independent, knowing everything, fixing my own problems. I had to cope up. I had to find myself and solve my needy side. I had to move on.

Anyway, things today have crept inside the veins of my brain cells. I've tried everything I could to escape the heavy feeling in my heart of the nightmare that came alive in my world. I am like the princess in the Rumpelstiltskin fairy tale..where the king locked me in a room with a pile of straw, who had to turn them all into gold the following day. Or so I had pressured myself to be, which had led me to my ultimate downfall. Because I have no rumpelstiltskin. I have no genie who would give me my happily ever after. I only have myself. And I couldn't get up to the plate during the pressure.

The problem was...I locked myself in the addiction of pressuring myself to the highest limits.

No one was expecting anything. It was my brain that was trying to find a way out when the more I try to do so, the more I end up losing myself, my sanity, and more and more into the quicksand. I've pushed the people who have cared for me. That was the mistake I've made.

Had I not felt any pressure to make money, to recoup anything, I figure none of this would have happened. I would not have had the eagerness to think all sorts of theories, all sorts of strategies just to fix the problem.

The difference between trading and other things in life, is that the markets are impersonal. The markets dont care. The markets are simply psychological patterns of supplies and demands. The more pressure we have, the more we will not perform.

I dont know if in basketball or in Math or in studies if the same things apply. I think that sometimes its not coz when I pressured myself to perform in school and I studied hard, i had direct results. The markets are independent of whatever or how many hours you diligently work yourself off... the only thing that is constant with the market, is that there is always the risk. Try to figure what the market will do is a sure no no. Whether it be technicals or fundamentals.

Risk management has always been the key.

Because in the markets, when you humbly approach that your cup is empty, that you know nothing, you never ever go into a trade without a plan.

Trading with a plan, to me...and following that plan...no matter how simple those words are, and no matter how often repeated they are, are the only reasons why successful traders are alive today. They never knew what the markets were going to do. They just managed the risks. They always predefined how much they were going to lose in any trade.

So what had I learned?

Well I've learned a couple of points...

1.) Dont pressure urself
2.) Always learn
3.) Empty your cup.

Thats all. really. I can go on and specify the exact trading cutlosses but it all boiled down to the psychological error of trying to pressure myself to earn.

That was the ultimate downfall.

-Nix

Always Remember June 27, 2008

2008-06-27T10:40:00.001+08:00

There are many dates that are unforgettable.

January 25, 1998 was an unforgettable date for me.

Another date for the history books is June 27,2008.

What transpired 10 years after. I don’t know if it’s coincidence.

But this day will forever be mired in my memory.

- Nikki

Timeless Rules for Profitable Low Risk Trading

2008-06-24T23:24:00.000+08:00

Timeless Rules for Profitable Low Risk Trading
(Summarized Version)
1.) Gerald M. Loeb “ The Skittish Trader”

• Take things more slowly and start gradually.
• Assess your strengths and weaknesses. Requires knowing yourself and your limitations
• There is no sure investment.
• Application and diligence are the keys to success
• Speculating is taking a calculated risk based on an intelligent estimate of future possibilities.
• Hard work is required to succeed in trading.
• Luck played no part in the success or failure of a trader. Rather, it is knowledge and a premium ability that lead to success.
• Best traders are usually psychologists. Worst traders are accountants.
• You must trade with the actions of the market, not with how you think the market should trade.
• Trading decisions should be based on opportunities, not on hopes and dreams.
• Rely on solid trading rules instead of emotions.
• It doesn’t matter what you think because the market will come to its own conclusions whether stocks were overvalued or undervalued.
• Great successes could lead to overconfidence, which would end up doing considerable damage if not contained.
• Manage confidence levels to avoid getting out of control.
• Overtrading and trading against the market is a losing strategy.
• Big money is made in the leaders
• The very best speculators want to make a killing in the stock market.
• Set goals at the highest levels.
• Speculation is for large gains, not for income returns, but you need to measure and reduce the risk as low as possible.
• Review losing trades to keep oneself learning and avoid making the same mistakes in the future.
• Success in trading is measured in 3 dimensions:
o Risk
o Reward
o Consistency
• Early movers will normally make new highs before averages do and end up being the real leaders, providing the best price increases.
• Worry when all stock prices are very high, when most investors are overly optimistic and when everything in the market seems perfect.
• Stocks that make new highs and quiet stocks that start to creep up in price and develop positive signs on higher volume are the best candidates for further study.
• The ability to cut losses short and move on if the stock moves against you is the surest insurance policy to protect against large losses.
• The trend of the market is so important, it also determines how certain trading rules are implemented and acted upon.
• It is expectation, not the news, that moves markets.
• The most expensive is actually the cheapest.
• Sell your worst shares first and keep your best performers in your portfolio.
• You need to sell before it’s obvious to everyone else.
• It is better to let the action of the market determine if the stock is too high priced rather than your own personal opinion

-Nix

2008-06-20T18:16:00.003+08:00

Few stock markets this year have seen a greater reversal of fortune than China's

Today's fall is the latest evidence that shares are headed south. "Sentiment is very bad," says Nicholas Yeo, a fund manager at Aberdeen Asset Management in Hong Kong.

China investors rue plunging stocks

"If I can make my money back from the market this time, I promised my wife that I will stay very far away from share trading," said Gu Zichang, a woebegone looking man in his 50s, as the benchmark Shanghai Composite Index fell for the eighth straight session.

"My wife keeps scolding me and I can understand how she feels because I'm also depressed," he said.

Why is this happening?" said a retired schoolteacher, who like some media-shy Chinese would give only her surname, Zhong. "I expected there to be a technical rebound, based on my past experience, so I used some money I'd saved for traveling to buy stocks last Friday. Now I'm trapped," she said.

"I wish I'd just stayed away," she said.

So far, it's hard to see any bottom to this market. I don't see any signs of a rebound,"

hk spreadsheet as of yday june 18 2008

2008-06-19T06:23:00.000+08:00

http://spreadsheets.google.com/pub?key=pJsEJWR_me8u6kEW1lgvxIQ&output=html&gid=1&single=true

different kinds of worries

2008-06-16T17:39:00.000+08:00

A poor person is one who worries about how to pay the bills. A middle income person is one who worries about funding retirement. A wealthy person is one who worries about leaving enough for the next generation. More assets do not necessarily bring fewer worries, only different ones. When you don't have money, you are worried about making it; when you have excess capital, you're concerned about keeping it.

-Nix

Risk Control Guidelines, Handling Losses, Discipline

2008-06-16T16:49:00.003+08:00

1.) All it takes is a moment of emotional frenzy.

2.) He lost money, so no matter what happened later, he was wrong.

3.) The single most common cause of failure is the inability to cope with internal conflicts.

Risk

4.) Many fail to recognize the limits and tolerance for risk resulting in loss of equity.

5.) Success in trading requires more than just a comprehensive study of technical and fundamental analysis; it requires the careful orchestration of risk management, discipline, and patience, and keeping tight control of the emotions of greed and fear.

6.) Risk is present in our willingness to accept mistakes and failure, with the intent of moving forward toward the possibility of success.

7.) The qualities that make up a good gambler are also evident in a good trader. They are always in control of their emotions.

8.) Successful traders will admit to being wrong and accept a small loss.

9.) But luck is only one outcome of probability, and it plays an inconsequential role in the consistent success of a trader.

10.) The discipline in controlling risk is not to wager more than you can afford to lose.

11.) If you’re a day trader, using intraday dollar cost averaging in a market that is running against you is like piling on more pillows in front of a locomotive. You will still get run over and you will lose more money.

12.) Set stop losses and higher stops as the position goes in your favor.

13.) Once the position is in your favor, reduce the risk by locking in part of the profit early, and letting the rest of your winning position run. (Should have sold half of positions awhile ago...)

14.) Trading is a profession based on consistency, preservation of capital and equity building.

15.) If you have difficulty taking small losses, the inevitable end would be the pain of large losses.

16.) A string of losses can cause serious damage not only to a trader’s account, but perhaps more importantly to a trader’s confidence- your ability to believe in yourself. You will become a prisoner of your own trades.

17.) The hallmark of a successful trader is his ability to accumulate equity. – Dr. Alexander Elder

18.) Doubling down? All this will do is increase the risk in a losing trade and perpetuate the destruction.

19.) Take the losses, swallow your pride and come back to trade another day.

20.) The endeavors of most novice traders to succeed are cut short by their inability to sustain longevity and preserve their capital.

21.) f(objectivity)= discipline

Discipline and Objectivity

22.) Discipline goes beyond the basic interpretation of rules of conduct.

23.) Discipline is the ability to maintain self control and to exercise the management of risk.

24.) Discipline requires commitment, motivation and the willingness to struggle in the pursuit of your goals.

25.) Discipline is NOT AN INNATE QUALITY. It can be cultivated.

26.) The market is not your foe, you are.

27.) Get educated before you trade.

28.) If discipline does not make you take losses, then the depletion of your capital will.

29.) Being wrong is not a measure of failure.

30.) Refusing to admit to yourself when you are wrong and eventually being forced out of the game is what constitutes failure.

31.) All the profitable traders had confidence in their ability to trade.

32.) The market will always be there.

33.) Confidence was restored because he focused on his trading ability and reduced his concerns about losing money. He saved not only his career, but also his sanity.

34.) Risk capital should be money that can be lost without destroying your life.

35.) When you consider yourself ready, do not hesitate.

36.) Fear of losing money destroyed his confidence and potential.

37.) Needing to make money soon is equivalent to hoping for it.

38.) In the stock market, there is no room to hope, only room to act.

39.) Too much movement in and out of trades can lead to overtrading.

40.) “A person with good self-discipline but a poor trading method will outperform a person with poor self-discipline but the best trading method currently available.”

41.) Must have his best interest in mind and not allow all of that profit to evaporate, even if that means missing out on the big winner.

42.) They are all very goal-oriented.

Goals

1) Your goal must be realistic.

2) Your goal must be attainable.

3) Your goal must be measurable.

43.) “Just as important as setting specific goals, you must visualize yourself successfully reaching those goals each and everyday. If you can’t see yourself in your mind’s eye as a success, there is no chance you will become successful. It just won’t happen!”

44.) Just like anything, you’ll want to start small and slowly make your goal larger.

45.) One of the lessons he teaches his students is to make $250 a day for 20 straight days in a row.

46.) Once they reach the attainable goal, they can strive to have a somewhat larger goal.

47.) If you’re going to be a successful trader, either on or off-the-floor, you will have to learn to love taking a loss.

48.) What that means is it does not bother you to have a losing trade. Don’t get me wrong, you’re not going to be happy to have a losing trade, but you should be happy to be out of the market when the trade no longer represents a profitable opportunity.

49.) Successful traders confront the possibility of being wrong, and thus, when the time comes to take a loss, they do it without hesitation.

50.) “Your losing trades do not diminish you as a person. You are not your losing trades. You are also not winning your trades either. They are simply by-products of the business that you’re in.”

Mark Douglas, author of The Disciplined Trader states, “Execute your losing trades immediately upon perception that they exist. When losses are predefined and executed without hesitation, there is nothing to consider, weigh, or judge and consequently nothing to tempt yourself with. There will be no threat of allowing yourself the possibility of ultimate disaster. If you find yourself considering, weighing, or judging, then you are either not predefining what a loss is or you are not executing them immediately upon perception, in which case, if you don’t and it turns out to be profitable, you are reinforcing an inappropriate behavior that will inevitably lead to disaster. Or, if you don’t and the loss worsens, you will create a negative cycle of pain, that once started will be difficult to stop.”

“Just because the market gave you $1000 in profit in 2 minutes, it has nothing whatsoever to do with whether the market is going to continue in the same direction. Nothing whatsoever!!!”

Instead of being so sure that the market must do what you think it should do (continuing in your direction), you must be prepared that it can do anything.

If you don’t remain flexible and stay detached from your trades, you will not become successful in this business.

You see, to be a successful trader you need to be willing to change your mind quickly and easily. You certainly can’t be fighting with yourself back and forth when you’ve got an open position in the market.

“If I don’t get out of this bad trade (that has very little potential), it will eat away at my past and future winning trades. And obviously, I don’t want anything to eat away at my winning trades.”

Avoid at all costs getting caught in that trap. Doing a trade because you’re afraid of missing out on a big move is not acting in your best interest.

Again, the market doesn’t stop moving. If you weren’t able to get into the previous opportunity, look for the next one. Don’t let your mind play tricks on you.

You don’t need to buy the low and sell the high to make money in this business.

What flawless execution means is acting on an opportunity (either getting in or out of a trade) the moment you see that it’s an opportunity without hesitation.

You can’t be a risk taker and still get guaranteed outcomes.

-Nix

scatterbrain on the loose..things that need to be done

2008-06-14T15:49:00.002+08:00

Things that need to be done hopefully by this weekend...

1.) Really find those books that I have :( Risk by Bernstein and Inside the House of money. WHERE DID I LEAVE THEM? damn it.

2.) sort out plenty of chicken scratch notes and write/summarize in a cohesive article just to remind myself.

3.) finish larry williams.
4.) finish market wizards.
5.) finish b reports n cfa hw.
6.) write mail summaries and ideas for invt
7.) need to update charts and create new improved list
8.) need to do some kickboxing or gym or exercise
9.) sigh.too tired. need to watch some series/ movies or...something like a footspa.

maybe sleep first.

-nix

on trading's purpose, and some cool stuffs i heard/read

2008-06-14T15:21:00.004+08:00

1.) Step away from trading because of the potential dangers when in a state of euphoria.

2.) When it comes to trading, people want the freedom that being a successful trader offers, they want the money, but they don’t really like to make never-ending decisions or be accountable of an event of what they’re responsible for.

The best traders have the passion for wanting to make those never-ending decisions. They love the process of trading. Money is just keeping score. Being a trader requires truly accepting the risk and loving to make these never-ending decisions.

3.) We come with too much baggage.

4.) When you consider that by trading randomly, and compare it against the kinds of skills and efforts that u have to expand to trade consistently for profits. There’s a huge gap. That’s the reason why 95% of people lose and 5% win.

5.) Change your reason for trading. Trade to acquire skills, certain fundamental skills that money will certainly be a byproduct of.

6.) You don’t need to know what will happen in the market next to profit from it. Once we believe that truly anything can happen, we always predefine our risk.

7.) A candle loses nothing by lighting another candle.

8.) Lots of observation and immersion in markets and plenty of experimenting with different markets and trading styles--all are important in advancing the progression toward expertise. When new traders are frustrated with losses, it's usually because they've tried to short-circuit the learning curve.

9.)Your goal is not to make money. Your goal is to learn markets.

10.) "Good books teach, but the best books enlighten".

-nix

Art of Uncalculated Risk

2008-06-12T07:57:00.002+08:00

Taken from "Aaron Brown's: Poker face of Wall Street"

p.2-3

For some of us, conformity is the problem. We are sexual, political or religious deviants or uncategorizable eccentrics who just cannot fit into polite society.

Conventional comfort is too dull. But the most common reason for embracing risk among people I know is pure egotism. We believe we have some talent that must be nurtured and allowed to flower. We must write or act or research or explore or teach or create art or just be ourselves as an end in itself. This obsession puts us above the rules and justifies any risk or action.

For most, its a quiet article of unexamined faith. If you have it, it's impossible to settle for what everyone else gets, however comfortable that is in absolute terms.

*such a great article...captures my mood for the day, and perhaps for most everything that i do.
-Nix

This should be called lonely voice.

2008-06-12T07:44:00.002+08:00

I should call this blog instead of lone voice to lonely voice.

It's been a sad month for June and we barely have started this month.

I know I should stop ranting.

I'll try to post something decent in this blog later.

-Nix

The Faces of Success

2008-06-09T21:15:00.002+08:00

Cluttered chicken scratch notes:

1.) I didnt realize until Macau how much I really wanted to be.
2.) Jay Chou---such a good inspiration
3.) Eye opening experience --- Going for Gold
4.) Luxuries and dreams that are bigger than I can imagine...
5.) $3.6 Bil integrated casinos in SG
6.) Cotai Strip from nothing into something
7.) To even qualify marks the very pinnacle of sporting achievement; to win gold places you in the pantheon. Success is almost expected.
8.) Women dressed in Chanel, LV and really sexy skimpy bikinis make me want to lose weight and concentrate....
9.) That the world became aware he was the real deal.
10.) When I saw the shining tree undergoing all shades depicting the different seasons exactly like the real thing, that's when I marvelled and thought of someone I thought could do the same thing. So I clapped. It seemed magnificent. That's all...
11.) Liu Xiang- It's hard not because of anything to do with his form but figuring out how to kill even the slightest chance of injury.
12.) A nation watched and waited--- POWER. Yao Ming, Trichet, Bermonkey
13.) Yao had been preparing for the world stage all his life. After some early game nerves, Yao had paid back Houston's faith.
14.) Guo Jing Jing- a woman everyone can recognize instantly and an athlete everyone has an opinion about.... cover herself in all glory.
15.) Ana Ivanovic--- stepping over Maria Sharapova (Move over Maria.) She's got the looks, she's got the talent. She's an ad man's dream. She's 20!
16.) I can't promise anything. Everything is possible and what I can do is to perform my best.
17.) I was looking for adventure. China started to open up so I came over.
18.) Need to be thinner to fit in great clothes. Need to exercise so that i can eat more.
19.) earn so much money to afford luxuries of this world. (zara, piaget, promod, charriol, chanel, hearts on fire, etc.
20.) learn to splurge at times

-Nix

So Right but so f*cking wrong time

2008-06-07T06:31:00.002+08:00

.......I cant help but rant in front of this computer just so I can express how solidly disgusted I feel with the way Thursday and Friday US action happened overnight.

Reading from most articles and blogs of top traders, there was a consensus that the jobs report will surely disappoint but the shorters (like me) got scared with that big Thursday move above 200 day MAs only to be proven right just the next day.

I remember one told by Larry Williams in his story on how he "knew" soybeans was it or cattles were overpriced, but the prices kept going up. He didn't cut loss and so he was wiped out. To him, it was a 2 Mil dollar lesson. To me, well let's just say the amount still hurts.

I am deeply disgusted with my performance for this month.

This blog is simply an expression of my "emotional weaknesses".

F*ck.. i shudnt even be feeling this. I shud just be like a robot. Cut the losses and cut it again fast.

Hay... im not holding any high speed warrants but I am long equities...and seeing how equities were smashed last Friday...surely HK equities will die...and be really dead.

--------------nix--------------------
so disgusted wid myself

---will be off in a vacation for the long weekend. (as if it could cool things and take markets away from me.)

no room to hope..only room to act..

F*ck those americans....GRRR!!!

if thursday was merely a sideways day, i wud have held it! It wouldn't have touched my stop losses!!!I HATE HATE HATE HATE!!!
ok ok...stop ranting.

nextime..u know this post will be just me laughing at myself for this.

-nix

When you're feeling so blue...and frozen

2008-06-04T20:06:00.002+08:00

Handling Volatility and Unexpected Circumstances

I don't know what's gone on my mind but it's been exactly 4 hours since that trade but I can't keep it off me. I just had to write it somehow.

I am just so tired that I can probably drop. I think there are times when you think you've beaten yourself up to the maximum and that you can't take a hit any longer...the worst part is that you've just overcome your battle and then the market does the same thing, and your computer hangs...and those crucial 5 minutes which you have been waiting and wishing and hoping for your software to not hang...it hangs... it happens.

I don't know what makes me sick. Is it that I lost money 4% today? Or is it that I had no control whatsoever, not knowing what was happening in the market and when the computer got fixed.... I was already down 4%. I had to cut my losses or else it would have been larger. But I guess the brunt of the heartache was primarily rooted in making a forced trade.

1.) WHY DID I EVEN MAKE A TSUPITA TRADE? I knew upside would have been less at that point in time.. But then my backup plan was to really cut it at a certain point. Should I have had thought that tradelinx would fail me at my most needed time? WHY oh why? Was I destined to have that loss?

I dont really know now what to think.

Was it the market teaching me? Was it divine intervention that of all times that my computer will hang....it hanged on exactly the time the market broke down???

WHY??? I really wonder why it had to happen to me.

I really just want to cry but I know I can't. I can't be emotional. A number is just that... a number.

If I would just stop my objectivity and think about being too attached to these losses, then I'm already admitting to defeat which I am not. I'm a fighter. I should know better.

Okay...so my learning curve essentially just taught me the following things for the day. I know these things are simple and often repeated but I just had to say it out loud to myself...

1.) Cut losses fast.
2.) Let Profits Run.
3.) Trade your own system. Be confident with your style.
4.) You can overcome things one bit at a time. No blockbuster trades. Manage risks. Enter safe bets.

Always prepare for things you never really thought could happen.

Hey...your computer can hang.. Sh*t happens. Anticipate that. Learn to manage.

- Nikki

Quicksands and Second chances

2008-05-30T23:55:00.003+08:00

It's been a long time since I last posted anything in this blog. Perhaps you could say that I've had quite a lot of things going on in my life for the past month.

I watched two films today: Forbidden Kingdom and Replacements as advised by my "mentor". I could very much relate with the following lines:

Forbidden Kingdom quotable quotes:

1.) Show respect to your teachers. Empty your cup.

2.) Kungfu- hard work over time to accomplish skill

3.) Learn the form but seek the formless. hear the soundless. Learn it all then forget it all. Learn the way, then find your own way.

Replacement quotes:

1.) Winners always want the ball when the game is on the line.
2.) A real man admits his fears.
3.) Quick Sand

You’re playing and you think everything is going fine and then one thing goes wrong, and another, and another. The harder you fight, the deeper you sink until you can’t move. You can’t breathe coz you’re in over your head…like quicksand.

Second chance...

Lose that fear.

4.) The man you are and the man you ought to be. When those two things meet, you’ll make one hell of a fantastic player.

5.) What they didn’t know was that their lives will be changed forever because they had been part of something great. Greatness , no matter how brief, stays with a man. Every athlete dreams of a second chance. These men lived it.

________________________________________________
For some reason, I don't know what I'm up against. I guess I'm up against myself? I'm up to test my limits? I'm up to see where "this heart" will take me. to be given this second chance...
to be treated special... as though I had some trait

The seeker in Forbidden Kingdom and Shane Falco in the replacements were being used by my "mentor" as metaphors for me. Or so i think...

It's a real honor to be even considered the part but as Shane's fear is the quicksand...I need to lose that fear...I need to lose my own quicksand.

yeah... ive had my own fair share of quicksand.

Aniwei, I've always liked the mentor-student type of relationship really. It's great someone's taking interest and I suppose I have to pay back in some way...respect for the teacher, respect for the confidence and to remember the line that...greatness, even if it is brief, stays with a man.

Thanks for the second chance.
This obstacle... I hope I can succeed in.

and another thing... i was recently thinking about how my guama lived all her life for the benefit of others while they squander away all her hard work. Her legacy has to be remembered and expanded and shared... niwei. thats just me.

ho hum...

- Nix

lessons I learned on trading warrants

2008-05-18T08:32:00.003+08:00

I'm sure a lot of people earned money from the Philippine markets trading AT and the like. I was so focused only on HK markets that I wasn't able to ride most of the stocks in the Philippines except MEG and the rest which were bought previously pa which are now above cost. Haha.

The past week has made me age about 3 years older I believe.

I shall not discuss the entire swings of my portfolio account but basically I just want to narrate the things I learned by trading warrants in HK market.

*Warrants is a derivative product based on an underlying asset (HSI market, China mobile, u name it.). The warrants move depending on the delta (or the rate of change of the underlying asset moves). High delta would mean high correlation of the move. That means a 300-500 pts drop or up in the HSI market, if timed perfectly would yield about 30% worth of gains and possible losses if you are at the wrong side of the market. The volatility is astounding especially since the market makers will usually have an implied volatility (that often goes wrong.).

Quoted from Brett Steenbarger:

The standard method of sizing trades will lead to lower performance volatility as markets become less volatile, leading more aggressive traders to become frustrated with the truncated range of their returns

Specific Trading Lessons Learned on Warrants:
"Trade by the only rules that matter, your own rules."- Tradestation

Warrants, as I have learned by trading this week, is an effective "return kicker", as long as one manages the risk behind it. We don't want to be overtrading in warrants because it will wipe us out but maintaining good position sizing, respecting MACD crosses, and cutting based on our planned stops will help ensure a decent return and with good churn.

Note: Insights below are suited only for my trading personality (small position sizing and wide stops), Results and lessons will vastly differ if we're different, i.e. you're a very tight stop player.)

1.)Wait for a retest before entering. Do not anticipate a move else your prices will be too far from the right entry point.
2.) Maintain good position sizing. Allow for a lot of slippages especially with warrants because of its volatility.
3.) Any standard method of placing stops and targets will perform poorly as volatility changes dramatically.

On a very bad day where volatility could easily be 30%, put in only a maximum of 3% of account to risk only .9% if wrong. In this condition, I need to be consistently right 75% or more, else I will lose money in the long run.

Gains : 10% -- .3%
Losses: 30% -- .9% (before cutting, because large volatility swings will happen. We dont want a very bad shakeout.) When proven with the bounce, use #1.

On a flat volatility day, where volatility is expected to remain -/+10% only. One may hold a position size of 10% of account.

Gains: 10% -- 1%
Losses:10% -- 1%
Since risk reward is 1:1, we need to be right at least 50% of the time for this to pay off.

On a very bad day where only shorting possibilities can be taken, an aggressive stance must be taken. Risk 2% of account so one can buy 10% position sizing

Gain- 20% -2-4%
Lose- 20%- 2%

If you're ahead and you know it, increase the position size to 20% and don't allow a loss. Place a trailing stop if the price moves down back to your second purchase price.

Reward:Risk ratio here is 2:1- you just have to be right 33% or more of the time and this will pay off.

4.) Don't do overnight positions unless risk is very small. (1% of a/c max and expect a possible 20% move down).

Overnight position can only be .5% of account.

Gains 5%-- .25%
Losses 20% - 1%
Need to be right 80% or higher to get good rewards.
_____________________________________________________

Strategy: Earn .3% for 10 days ---3% (on a 3% capital swinging back and forth)
Earn 1% for 10 days ---10% (on a 10% capital)
Earn 2% for 2 days ---4% (on a 10% capital)
Earn .25% for overnight positions on 3 days --- .75% (on a 1.5% capital)
_________________________________
possibility of absolute return of 17.75% on a very small position size (max of 10% of account being placed on warrants).

Downside risks: 1% of account for every wrong move.

Good luck trading:)
-Nix

Just a rehash from Brett the best: Eternal Truths of Trading Success

2008-05-14T06:21:00.002+08:00

I wanted to share this to all the people I know but I can't simply email things. So for the people who view this blog, I just wanted to share Brett's excellent post.

Below is copy pasted from Brett's blog: Traderfeed.blogspot.com :

happy trading. ok na pinas markets ah haha. :)
______________

A portfolio manager lent me an interesting small book from the late 1800s written by Dickson G. Watts and reprinted by Traders Press. Entitled "Speculation as a Fine Art and Thoughts on Life", the book begins with a description of the "qualities essential to the equipment of a speculator" (p. 8). Here is the author's perspective, written well over a century ago:

* Self-Reliance - "A man must think for himself, must follow his own convictions...Self-trust is the foundation of successful effort."

* Judgment - "...equipoise, that nice adjustment of the faculties one to the other...is an essential to the speculator."

* Courage - "...confidence to act on the decisions of the mind...be bold, still be bold; always be bold."

* Prudence - "The power of measuring the danger, together with a certain alertness and watchfulness, is very important."

* Pliability - "The ability to change an opinion, the power of revision."

I especially like Watts' formulation: "There should be a balance of the two, Prudence and Courage; Prudence in contemplation, Courage in execution."

This very much fits patterns of success I detect among the most profitable traders. They are prudent in contemplating their ideas--they wait for the odds to be in their favor and conserve their capital when the edge is not there--but they are courageous in executing those ideas.

Equally important, they can be courageous without getting their egos tied to their ideas. If markets are not confirming their views, Pliability ensures that they can revise those views and not hang on to losing trades.

"The qualifications named are necessary to the makeup of the speculator," Watts explains, "but they must be in well-balanced combination. A deficiency or an overplus of one quality will destroy the effectiveness of all" (p. 9).

Too much courageousness and too little prudence leads to impulsive risk-taking. Too much pliability and too little self-reliance leads traders to get chopped up, reacting frantically to the last market movements.

Some trading truths never go out of date.
_______________________
-Nix

Random Thoughts

2008-05-04T12:06:00.002+08:00

Some things I found in my chicken scratch handwritings:

1.) Street's trades (streetchild trader.) - a far dream for me to be able to teach one
2.) psychology of streetchildren - one of my innate curiosities to know more about
3.) being rich by helping change lives...lumil cavite
4.) social entrepreneurship + private equity.

Our aspirations are our possibilities...

random stuffs
position sizing page 252 (jason zweig book)
books to get for myself someday...
1.) Professional stock trading - mark conway 2003
2.) trading for a living- alexander elder 1993
3.) charles le beau and darrell lucas, tech traders guide to corp analysis of futures 1992
4.) against the gods- peter bernstein 1996
5.) trading to win - ari kiev
6.) history of monte carlo method
7.) matthew rubin, inference by believers in the law of small numbers 2000
8.) master ur trading demons -

van tharp, brett steenbarger, ari kiev, mark douglas.

-Nix

ramblings, corporate bonds, iphone and oracle of omaha

2008-05-03T11:42:00.003+08:00

Hello to my stranger friends in the virtual world! hehe. Joke.

Here are some of my ramblings for the week.
1.) I love Iron Man! So cool! I don't want to spoil any of your time but go watch! u'd love it.
2.) Hmm.. Iphone for 199USD? Cool!! I might get one if ganun na lang ung price! Check this article: An Iphone for 199?
3.) I love Warren Buffet's ideas on corporate bonds and I believe that if you're traumatized with equities, why don't u consider corporates? I dont assure that its safer but it sure is very attractive. I place my money where my mouth is. :)

Asset allocation wise for conservative investors, im confident in placing 100% corporate bonds in different countries such as brazil, russia, and some china. Specific companies--u need to make ur due diligence in selecting, but technicals wise...ok na sila. You get yields from 8% to 15%. I'm not joking or some scam person.

Anyway, I am very bullish with the current short term play. HK and US markets are the best. Sadly I only know of HK markets (but its been doing good. very well.)

Hope that readers of this blog get encouraged and try to open HK market accounts! I'm not advertising this but im using citiseconline HK accounts. there are others like boom securities and all but its in hongkong. U can choose ur own brokerage house. Doesnt matter.

Come on! If you have questions, ask it here. My mail's just posted online.

See ya guys.

Here's a short summary from an article in Marketwatch about corporate credits:

Good luck is preparation plus opportunity

Now, as thousands of Berkshire shareholders prepare for their annual pilgrimage this weekend to the company's headquarters in Omaha, Neb., some are hoping Buffett has the crisis he's been waiting so patiently for.

corporate bond spreads have ballooned -- a measure of rising risk aversion.

"This year's meeting is going to be so good because he's really a tremendous recession/crisis investor," Jeff Auxier, manager of the Auxier Focus Fund and a Berkshire shareholder, said in an interview this week. "He's the type of investor who comes alive during these types of crises and he has the balance sheet to act."

"We've got fabulous capital markets in this country, and they get screwed up often enough to make them even more fabulous," he told Fortune. "I mean, you don't want a capital market that functions perfectly if you're in my business."

Berkshire has also made big bets on high-yield, or junk bonds, which have suffered in recent months from the credit crunch.

Berkshire bought junk bonds in 2002, during the depths of the dot-com bust, and ended up making billions on the positions.

The current credit crisis has triggered even more forced liquidations of investment portfolios than in 2002, explained Russo, who's largest investment is in Berkshire stock.

"It's very, very telling that he has not made any investments," said Whitney Tilson, head of hedge fund firm T2 Partners LLC and a Berkshire investor. "Every major pool of capital in the world has made big investments in distressed financial institutions. He's seeing every deal, so why hasn't he done one? Maybe because he thinks things will get a lot worse."

-Nix

Every abundance creates a new scarcity

2008-05-01T23:28:00.001+08:00

Great Finds:

Found this in a blog, reflect on this:)

"Every abundance creates a new scarcity"

For instance:

An abundance of information can create a scarcity of context
An abundance of choice can create a scarcity of advice
An abundance of content can create a scarcity of time
An abundance of people competing for your attention can create a scarcity of reputational ways to choose among them.

Also check out this site :

http://www.100people.org/

Most Attractive Buy List: 991 and 836

2008-05-01T13:51:00.002+08:00

Theme Plays:-a function of intermarkets analysis report for short term momentum plays.

A pocket of US dollar strength, naturally places downward pressure on USD-based commodity prices, particularly energy (Oil). Also, commodity prices index (look at crossmarketstrader analysis on the CRB index) are correcting currently.

Beneficiaries: Datang Power and China Resources Power

Share Price Performance

CR-Power and Datang have been the top performers in the power sector, outperforming the H-share index by 82% and 11% over the past 12 months.

In comparison, Huaneng, Huadian, GD-Power and CYPC have under-performed their respective local indices by 65%, 47%, 39% and 1% over the past 12 months.

Comments: 836 and 991’s technical charts look to be in a consolidation move for a possible breakout. 902, 1071 have all risen. I believe this is because their share prices have been bogged down massively that’s why they were first to rise. GD power and GYPC are Shanghai listed stocks.

Main Drivers

The main drivers will remain the same in 2008, including continued coal cost hike (less impact on CR-Power and Datang), flat utilization, and further asset acquisitions (Huadian, CR-Power and GD Electric Power likely to benefit).

Comments: Commodities charts have formed double tops which are beneficial for power producers (lower oil prices will be good for them as they will have lower fuel costs.) I think it has something to do with how the prices in the charts are acting. One has to notice that most energy plays such as 1898(China Coal) has also fallen, 1088(China Shenhua) has also fallen. If one were to bet on what these charts are telling us, the power sector looks to be quite good.

Recommendations:

CRPower(836)-

Summary: The best coal cost control. CR-Power has the lowest break-even utilization level and hence relatively lower earnings sensitivity ratios. CRP’s participation in the upstream coal market is just another example of management’s excellence of their long term vision that differentiates them from the rest of the pack.

Key company-specific catalysts going forward

are (1) further development of the Inner Mongolia coal project and (2) further M&A.

Minimal utilization decline in 2H07

The company’s utilization dropped by just 2.5% Y/Y on a same plant from Jul-07 to Nov-07, compared to a >7% Y/Y decline for the whole China (thermal only) over the same time period.

JPM expects a capacity growth of 19% CAGR from 2007-10E and a 12% CAGR from 2007-15E

Downside risk to our PT exists from higher coal prices, and lower than expected tariff hike in FY08E and beyond

Comment (since higher coal prices are not seen within the short term, this risk is less of a concern today.)

JPM View: The coal-to-liquid business will become much bigger part of Datang's business in the future; apart from Duolun, Datang is reportedly looking for 2 more mega projects in Fujian and Liaoning. Upside potential to our Dec-08 PT exists from Datang’s coal-toliquid investment. Assuming project IRR of 15-25% on Duolun and 9% WACC, maximum DCF upside is HK$0.41-1.18 / share.

Nix Remarks: My comments on their technicals are inside the charts. Take a look. Thanks. I agree with Oliver (from Crossmarketstrader.blogspot.com) that power plays in HK market are bullish.

Disclosures: I don't have any of these stocks yet. I plan to buy them Friday. I have 2777 though in my portfolio.

-Nix

Read everything, but accept nothing.

2008-04-27T23:44:00.003+08:00

Great stuffs:
1.) 35 Important Trading Tips

I copied them here with my own comments.

1. Enter strong stocks when stochastics are oversold.

(---Take note of "A Bear in a Bull Market's blog on phil stocks as well as pinoyfitnesstrader's blog." This has been one of their strategies this bear market (judging by the stock picks they make in their blog.) and i personally think this will work and pay off. just not easily. There might be some short term pains.

2. Make sure volume confirms entries.--- Always!

3. Analyze the top and bottom 20 sectors every Sunday.- hope I can do this!

4. Keep a daily list of stock breakouts and breakdowns. --- yup! need to.

5. Do not let your watchlist get too big. --- true true.

6. Weed out your watchlist on a weekly or monthly basis. --- tough work but hafta.

7. Keep it simple. Complexity leads to wasted time and subpar results.

8. Watch for OBV divergences. - dunno what this is

8. Make sure uptrends are on strong volume. --- sometimes they aren't but average volume is fine. Strong volumes though suggest better probabilitie of going higher. 8089! rocks.

9. Always journal why you entered a trade the same day you enter it. --- yup

10. Review completed trades monthly. - already doing.

11. Pay attention to market sentiment. -- yep.

12. Check S&P support and resistance levels daily. -- yep, doing this via tradermike.net

13. Do not confuse breakouts of support or resistance with breakouts that are within a range. ---good tip.

14. Manage risk with stops and targets, and stick to the plan. - valuable valuable tip.

15. Master a basket of 5-10 different trading setups that will work in different markets. --- dis is something ive yet to do.

16. Never chase a stock. --- sigh, true but minsan kakahinayang like 2318 ping an!

17. Ignore the pundits, news, media and dare I say it, some bloggers. --- hehe.

18. Stick with your own analysis, so long as you have well tested setups. -- correct.

19. Create a "daily prep report" for each trading day. - hard ta do.

20. Become a slave to price, volume and support and resistance levels. --- discipline!

21. Unless you daytrade, do not watch every tick. -- hehe. stop being a trading whore.

22. Let your stops and targets work for you. - correct.

23. Do not "micro-manage" trades. ---hmm?

24. Understand your own trading psychology. -- VERY IMPORTANT

25. It gets a bad rap, but I believe in "paper trading" as a learning tool. -- pwede na rin but its better tlga to do actual.

26. Read everything, but accept nothing. - BEST tip i believe.

27. Do not get discouraged by a few bad trades. - yes.

28. Manage risk by position sizing. - double yes

29. Only take your best trades --- compromise? hay...kaya siguro minsan nadadali kasi dapat nga BEST trades.hehe.

30. Learn when not to trade. - TRUE!!! stop the pinas market na! transfer na!

31. Never allow fear or greed to consume your trading. - very true.

32. Trust your setup. - paulit ulit siya ah.

33. One last time: PRICE, VOLUME, SUPPORT and RESISTANCE - haha. paulit ulit.

34. Stocks do not go up or down in a straight line. - yes i know.

35. Study past market winners and losers -- Correct!!!!

updates

2008-04-27T23:12:00.002+08:00

Great stuffs to read:
1.) TraderMike's analysis on what happened last Apr 24 (Adam and Eve Reversal)

You can also just check for the definition of A&E reversal from the site here

2.) HK market continues to rally. 267 stock pick is now 37.50 (It had done a powerful move last week.) For any readers who have followed, I believe you have 20% profit to credit yourself. Take profits. Target was more than reached. Good job! Still, I would advice good position sizing. Perhaps doing this would have given you a hefty 5% profit (if you placed 25% of ur portfolio.)

Nevertheless, for all the traders in pinas, go to HK or US markets (its doing a bearmarket rally. minsan lang to kaya take advantage.)

3.) My personal apologies for not being able to update this blog. Many events have happened the past week. whether its financial markets or in my personal life.

so there.

in any case , I'll try to write anything on top of my mind when i have time.

Still my best recommendation is to follow brett steenbarger always. He writes excellent posts and gives a lot of links to great traders as well:)

byee

i'll try to post my daily HK picks....when i can.

-nix

HK Market BREAKOUT Today

2008-04-23T17:50:00.002+08:00

I'm sorry about the sad state of the Philippine Market. However, there really are other markets that can be traded.

HK Market just made a breakout today.

Issues in the property sector were up 30% (example 1207 HK).

My HK pick of 267 Citic pacific is now doing HK$36. Entering at 33.05 (Mon) would have earned a decent 10% and looks to go higher.

The steels had a run as well. (347 is now at 19 coming from low 17s just Mon). Money can be made. Find it elsewhere. Either trade the US or the HK market. Quit pinas for now.

nuf said.

Good trading to all!

-Nix

Excellent Quote from Brett the Best

2008-04-20T21:57:00.002+08:00

I hope this summarizes why I love the market (or I think I do.)

It takes a relentless pursuit of excellence to become excellent: that is what I learned from my performance research. You can only sustain such a pursuit if you truly love what you're doing; if it captivates your very being. If you're not relentless in your pursuit of trading success, perhaps it's not that you need discipline or motivation. Perhaps trading is not the domain in which you were meant to excel. What my daughter Devon taught me is that somehow, somewhere there is a kind of productive activity you were meant to do. And when you find it, you will be relentless, because you want to be doing nothing else.

Excellent Posts:
http://traderfeed.blogspot.com/2008/04/few-trading-psychology-observations.html
http://traderfeed.blogspot.com/2006/08/what-trading-teaches-us-about-life.html
http://traderfeed.blogspot.com/2006/12/three-relentless-steps-you-can-take.html

All for love

2008-04-20T21:06:00.001+08:00

All for love a Father gave
For only love could make a way
All for love the heavens cried
For love was crucified

Oh how many times have I broken Your heart
But still You forgiveIf only I ask
And how many times have You heard me pray
Draw near to me

Everything I need is You
My beginning, my forever
Everything I need is You

Let me sing all for love
I will join the angel song
Ever holy is the Lord
King of Glory King of all

Oh how many times have I broken Your heart
But still You forgiveIf only I ask
And how many times have You heard me pray
Draw near to me

Everything I need is You
My beginning, my forever
Everything I need is You (x2)

All for a love a Saviour prayed
Abba Father have Your way
Though they know not what they do
Let the Cross draw man to You

Everything I need is You
My beginning, my forever
Everything I need is You (x2)

God Values Money More than You

2008-04-20T16:50:00.005+08:00

I went to church today and I had to write about the sermon our pastor Don Huan told us.
The following things are the best lines that had me reflect.

1.) Are we hoarding God's resources?
2.) Stewardship is the use of God-given resources for the accomplishment of God-given goals. -Ron Blue
3.) Happy is harder than money. Anyone who thinks money will make them happy, doesn't have money. -David Greffen (one of the billionaires who was a co-founder of Dreamworks)
4.) The only investments I ever made which have paid constantly increasing dividends is the money I've given to the Lord- J. L. Kraft
5.) The power of money and wealth to corrupt is so great that the giving away of it is the only way to counter its driving force.
6.) When Rockefeller (the greatest billionaire of his time) was asked "What would satisfy a man?" He replied: "It takes a little bit more than what he has." ---> In short, man will never be satisfied.

The basic gist of the whole sermon is that :
1.) If we think that only we value money, we're wrong. In the Bible, there are 16 out of 38 parables where Jesus talked about stewardship (his intended use for money.)
2.) God values money more and this is clearly seen by the fact that there are twice more passages in the Bible that discusses about stewardship (money management) than faith and prayer.

---> In a nutshell, God is teaching us that money is valuable but He is also practical. We are merely stewards to accomplish His goals. We shouldn't ask what we give but what we keep because God is merely entrusting His resources to us. As the title of Pastor Huan's sermon today suggests, use wealth to gain friends in heaven.

My personal reflection:
I perhaps have a lot of hopes in my life but if there is one thing that God made me understand today, it is that I don't trade for myself but I trade and use my talents and the resources He gave me to further His goal. That is to let people trade their ways to financial freedom and use that freedom to continue to hope and lead us to create a better world. Because money can never satisfy. :)

-Nix

Price Gaps and learning about discipline

2008-04-20T14:04:00.004+08:00

I copied the following youtube links from Jeff White (Stockbandit.net).

They are good trading videos which highlight why we dont chase for price gapups, but instead wait for it to retrace for a while and make a good retest (and better entry point) to trade in the direction we want. :)

Trading Videos:
1.) Trading Price Gaps - http://www.youtube.com/watch?v=QDEMW-bpIE8
2.) Making Money from Mediocre Trades- http://www.youtube.com/watch?v=k6pJjZ7ljVk

Great advice from Jeff White when it comes to price gaps:

---> The market has expended quite a bit of energy getting to where it will open this morning and chasing prices doesn't seem to make sense. Keep an eye on the 0ne-minute chart for entry levels or just stand aside.It is better being on the sidelines and wishing you were in than it is to be in and wishing you were on the sidelines.

My personal experience/opinion:
I agree with Jeff White's quote that its better being on the sidelines and wishing you were in than it is to be in and wishing you were on the sidelines. In short, its better to lose the opportunity than to lose your capital.

I recently am reading Marty Zweig's 1990 book "Winning on Wall Street" and what struck me with his introduction is his story on how he profited from the great crash of October 1987. What I admire about his story is that the reason he made money was in being realistic and being defensive.

Below is an excerpt of his story:

I figured that if a break of the magnitude of 1946 or 1962 evolved, the puts would have climbed sufficiently to protect the 40% or so long positions we held (whose risk was also limited by stops) and would have even provided a moderate profit. If I were wrong, the puts would have produced a mere 1% loss for the portfolio, which might have been offset by gains on the stocks if the market had risen. Remember, I was not positive. I was only dealing in probabilities.

The upshot is that the market walked right into the buzz saw of 1929. From the August 1987 high of 2722, the Dow collapsed to a closing climax low of 1738 on Oct 19, a plunge of 36.1%. That nearly equalled the 39.6% wipeout in 1929 down to the Oct 29 climbax low. As a result, the puts, which were bought at 2.375 in late September, soared in price. I began selling them in pieces as the market crashed. Beginning on October 15, we sold in 5 bunches over the next several days at prices of 9.25, 19.25, 54, 86.50 and finally on October 20, we sold the last at 130. The weighted average profit on the puts was 2075%, which added about 20.8% of value to our overall portfolio, and more than offset the losses of about 7% on our remaining stocks which were stopped out. (By the close of October 16, the portfolio was down to just 8% invested in stocks.) As a result, our portfolio gained 9% on Black Monday.

________
If you had been reading the above story, his puts gained an astounding 2075%! He however realized only a gain of 20.75% because he only put in 1% position in the stock portfolio. Most people would think he was nuts for not having added more puts considering that he had a "feeling" or he was being lead by "market indicators" that market seemed to be weakening.

He writes the following statement:
"If I were a genius, I would have sold everything before the break and made zillions. But that is not reality. Reality is cutting risk to the bone when the indicators weaken, hoping that you can make a few bucks when conditions are good, and praying that you'll survive crashes, plagues, and earthquakes long enough so that someday you'll see the pleasant light of another bull market and have some money left to play it."

____________________________
NOW THAT IS WHAT I CALL SUCCESSFUL DEFENSIVE MONEY MANAGEMENT.

Hope we all learn from the great Marty Zweig's experience:)
We should never try to hit for homeruns in the market. We don't bet big if we don't know how we control our risks. We try to inch our ways in little bits and pieces. I'm happy with my 11.11% gain in my first HK trade but its effect in my account was only 1.7% (due to my 15% position.) This is totally fine because had my trade gone adverse, I would have lost only a maximum of 2%. This is what money management feels like, and this is what trading is all about.

Im happy that Im finally learning.

Good trading to all!

-Nix

Intermarket Analysis -Great stuffs to share

2008-04-20T09:24:00.005+08:00

Intermarket Analysis is Important

Brett offers great advice especially in teaching his readers that intermarket analysis helps.
Even if you don't trade currencies or US, Nikkei, HK or other emerging markets, its important to learn how the big guys are doing.

Read these posts on Intermarket Analysis:
1.) http://traderfeed.blogspot.com/2008/04/currencies-interest-rates-and-stocks.html
2.) http://traderfeed.blogspot.com/2006/11/trading-market-by-knowing-who-is.html

"If you focus only on *your* market, it's easy to get run over when the big money managers act on a theme you don't even see. If you start thinking like the pros, you may just start trading like one." - Brett

I added a friend's blog - http://crossmarketstrader.blogspot.com/
I've been reading some of his posts and I say that its a great reading to start your day.

If you prefer to watch videos: Brian from Alphatrends has made it very easy and his opinions are good.
His opinion on April 18,2008 -> ttp://www.youtube.com/watch?v=qYlCOnn0Xog

Basically, the gist is: we have the bulls in control for the moment but we are already overextended. If you have to buy, wait for any retracements. There are some overhead resistances at 48 (for the ETF of S&P500). We're about 5% from there. It would be great to see a few pullbacks to retest first before proceeding to those resistances.

We have also finished the inverse head and shoulders pattern in the US indices. To see the actual charts, just check the video:)

-Nix

Biggest Rally to come this week and HK stockpick

2008-04-20T00:00:00.002+08:00

Been quite a long time since I last posted here. Sorry, been quite busy these few days. Anyway, I posted the snapshot of the map of last Friday's US market action because its so green! It's such a great inspiration. What I like most about what happened in the US markets is that DOW finally crossed over the 12800 resistance. So this time, any pullback is a good correction to accumulate. If you have shares, be greedy enough to sell them at about 5% this week, above last friday's close (for certain volatile stocks such as say MEG.)

My HK pick right now is just a quick brush 267 and from technicals alone. What I noticed with 267 HK or citic pacific is that it tested the level of 31.30 for three times already and succesfully bounced from there. Since the US markets traded very well last Friday, I'm hoping that 267 HK will make a retest of the low and make a good bounce these few days.

My preferred entry is really to be as close as possible to the support of 31.30, to cut below its previous low on perhaps 29.15, (the very long red line last Aug 27,2008.) with a target price of 35. I'm making the position size as small as possible so that I can know the whole move of the stock without getting lots of shakeouts.

Disclosures:

Holding 17HK@18.06 and 202HK@.089 and .090

Bye:)

Happy trading!

-Nix

Why I'm in this business

2008-04-07T11:03:00.002+08:00

Because, it only takes a second to realize how exciting this all is.

well there must be plenty of reasons...but for now, that one liner should suffice.

________________________________________________________

And I realized that if there's one thing I can't live without: It's gotta be the internet!

I'm such an information junkie.

Okay moving on...

Free is a hard price to beat :)
Check out what's up for your picking.

Headturning articles:

Jim Cramer- exposing how he actually manipulates stock plays. Very solid and exclusive content. Read here. Videos are also linked inside the article.

The Clean Energy Myth- From time magazine, did you know that filling up an SUV tank worth of corn based ethanol could feed us for our corn harvests in a year?

Feeding the world these days is big business: If you read the article I posted above (The Clean Energy Myth), you'll understand that the incentives today are in conflict. Killing the forest has become more "money-making" than preserving it. Know the law of supply and demand right? Well basically, the reason why we're all experiencing high consumer inflation is basically lack of food resources. All the arable land are being converted to bio-fuel fields. So is it any wonder why agri stocks such as POT (Potash), MOS(Mosaic) and Monsanto are all hitting new highs? Well technicals would work but all I'm saying is.. its not just speculative money moving these stocks. Catalysts are there and.. starvation... boy! Time magazine writers put the article in the right way: Biofuels have got to be the worst crime in humanity. Disguising alternative fuels as a solution to the oil crisis, now we've got ourselves food inflation.

Well, maybe I'm just a pessimist?

Cool site:

Twitter.com - i LOVE Twitter coz I get stock updates from great US traders that I want sent to my mobile or IM (googletalk) for free. (250 FREE SMS messages in a day). It's like Chikka + Blog+ YM :) Sign up and add me.

my username is : fromlonevoice

I don't twitter as often though. Make sure you follow my favorites: Brett Steenbarger and Timothy Sykes. Pretty useful especially if you trade US markets. Heck, that's fine. I don't trade US markets either but reading what's on their mind should provide you ample knowledge already. Best of all.. It is FREE! delivered to your mobile.

Cool Download:

Market Talk:

The indices remain stuck in a holding pattern.

Choppy trading over the next day or two has led to a downside edge once the market is 3-5 days out from these bars. Combined with the low VIX and the overbought readings of some indicators, caution seems warranted here.

Perhaps those uncomfortable with directional bets in the current market might prefer to use options and bet on a reduction in volatility.

Trading is not difficult because it blends action and inaction. It is difficult when we view trading through the lenses of firemen, creating both adrenaline spikes and boring interludes.

PCOMP Observations:

Volume has dropped each day.

Philippine stocks showed strength while consolidating on top, with good volumes:
--> FPH, BPI, BDO, GMAP, FLI

May look attractive at particular buy points, currently in most actives list:
--> MEG, FLI

Fishy
--> PSE

Want to Read:
1.) How to Grow a Super Athlete
2.) How do they make Atheletes

need to sleep. bb

- Nix

The Trend is our friend but he is a fickle friend

2008-04-03T00:16:00.006+08:00

PCOMP is in a short term uptrend. We finally moved with the 32 day moving average. As can be seen from the PCOMP daily chart, the volume is just okay but at least our MACD is higher than the 0 line. We are in positive territory. Also, unlike the RSI and price being divergent in the short term rally last February 2008, the price and the RSI right now have went in the same direction and is higher than 50.

Intermarkets analysis also confirm this uptrend. The US indices right now are higher than the 50day moving averages. The corrections have been healthy pullbacks and should be seen as window opportunities to enter instead of fear. Maintain your risk/account ratio of 2% and risk reward ratio greater than 3 for higher batting averages. Tradermike.net already has it in his blog if you are lazy to look for yourself.

If you also look at commodities, they're all making a sell signal giving us a more sustainable rally this time. Try checking the charts to confirm this for yourself:)

The trend right now is with the bulls. However, he's a fickle friend. He may give a few pullbacks here and there. Just stay on top of your noses.

Here's my stock picks and pricks (those I chose which were wrong):
Stock Picks

1.) AC - Looks like a possible breakout that will test next resistance at 450

Volume - Greater than average by 100%
Price Line-Big White Candle closing near the highs of 420
MACD- made a cross signal and is above zero line
Stochastics - Made a cross signal

Preferred entries: Hope there's a chance to hop in this train at below 420 (any pullbacks) but if not, then 422.50 will be the cheapest play around here.

Target price: 450
Cutloss price: 397.50 (A break of 400).

2.) MWC - Doji pattern, above moving averages of 32,65,124. Volume is greater than average by about 30%, MACD cross buy signal, STS cross buy signal.

Entry: 17.75/18
Target price: 19/19.25
Cutloss: 17

3.) ICT - Just read A bull in a bear market's analysis. It's there already.

Stock Pricks (They hurt like cactus.)

1.) NI - The stock seemed to have been toppish. The volume surge the past days werent warranted. As you can see, the stock cannot go higher than 14.75 pesos anymore. Volumes have declined tremendously, stochastics also gave a sell signal. Even if MACD is at the positive zero line. There's no reason to cling to this stock when there's so much action elsewhere.

Recommendation: Cut your loss if you have any shares. Sell it down if need be.

2.) CMT - this stock is also toppish. The resistance comes at Php1.00, volumes are very low despite the 72 point surge of the PSEI. Stochastics also tell us a sell signal.

Cut your losses

- Nix

FINVIZ - Such a wonderful, organized site for US Market

2008-04-02T23:30:00.003+08:00

Great Link:

I came across this site from tradermike.net who got it from thekirkreport.

Finviz- It's a site that you can use as a tool so that you can visualize where the volumes are, where the price increases are etc. It's essentially a market heat map. They also have features like a Volume map, screens, filters, astig. I haven't traded any US markets yet but seeing this, HEAVEN. It's the shizzle. Makes looking for charts easier. EXPLORE this site.. macocoolan kayo. promise.

In fact, I'd post this as a recommendation to "emulate" and copy for the further improvement of an online site...so that active traders can easily spot the unusual volumes, and where the gains in the sector can be found. moneyflows for pinas. Sana HongKong may ganito rin. :)

-Nix

Stories that can be related to Trading

2008-04-01T17:54:00.005+08:00

Quotes/Articles I came across that can be related to trading:

1.) Life is like a buffet.

There are many things you want to achieve; thousands of things. They all look so exciting. You want to conquer them all. You can’t wait to accomplish everything, but you only have so much time, energy and brain power.
What do you do now?

You need to take one bite at a time.

Focus on what you have in front of you now. To truly enjoy the food you can’t put too much in your mouth. Your stomach needs to slowly digest it. Focus on one dish at a time and get the most of each dish.

To truly enjoy your amazing life journey, you need to focus on and pay full attention to what you have in front of you right now. Allow your mind, body and soul to completely submerge into this one thing. Allow yourself to get the most out of it. Allow yourself to truly taste it.

When you finish the first dish no one will stop you from getting your second, third or fourth servings. Get one thing done and then come get your second serving as soon as you can.

2.) Value – slipperiness of that classic economic concept

Just as we can measure happiness, love, wealth by the degree to which we have lost them, value works in the same fashion.

The only value of any importance is the value that someone else places on a stock at any given point in time.

Maintain a healthy emotional detachment from the stocks you buy and be ready and willing to get rid of them at the drop of a hat.

3.) Chris Ferguson Poker Rules:

To ensure that I keep my bankroll intact, I've adopted some key rules:
I'll never buy into a cash game or a Sit & Go with more than 5 percent of my total bankroll (there is an exception for the lowest limits: I'm allowed to buy into any game with a buy-in of $2.50 or less).
I won't buy into a multi-table tournament for more than 2 percent of my total bankroll and I'm allowed to buy into any multi-table tournament that costs $1.
If at any time during a No-Limit or Pot-Limit cash-game session the money on the table represents more than 10 percent of my total bankroll, I must leave the game when the blinds reach me.
It ensures you'll be playing in games you can afford.

These rules also prevent you from being completely decimated by a bad run of cards.

Stepping away can give you a fresh perspective and heightened motivation to play well when you return.

4.) Medium-weak hands on the river

Here's a play I see again and again. Bad players make it. Good players sometimes make it. People with WSOP bracelets even make it occasionally. And each time I see it, I just scratch my head. Maybe you make this play and can help me understand it.

I'm talking about betting a medium-weak hand on the river.

There are only two reasons to bet the river. The first is to bet for value -- a bet you make when you expect to win even when you get called. The second is to bluff, when you're hoping your opponent will fold a winner. Your strongest hands work as value bets, and your weakest hands work as bluffs. The problem with these medium-weak hands is that the hands your opponent will lay down here are losers anyway, and the hands you get called by almost certainly beat yours.

No one likes to face the hard choices, and it's often a good idea to avoid them when possible, but this particular pre-emptive strike gives too much away. Throwing away money isn't a rational response to the fear of decision-making.

5.) The wisdom of the cockroach.

The cockroach has survived a longer time span, and a wider variety of harsh environments, than humans could ever match. It is one of the creatures man cannot wipe out no matter how hard he tries. And yet, the cockroach's key risk management strategy is embarrassingly simple... simpler, even, than putting in a stop loss. The deeper point is that simple equals robust; by refusing to get fancy, and sticking with the tried-and-true, the cockroach ensures its reign as champion survivor. Bookstaber uses the cockroach (and other examples from nature) to argue that we, too, should consider cutting back on our excessively specialized ways. The cost of a rough-edged strategy is forgoing excess profits in accomodative environments... but the benefit is increased likelihood of survival in a much wider range of environments, including the truly harsh ones.

"liquidity is a coward" as the old saying goes, always running away when you need it most, strict disclosure rules would likely make bad market conditions worse at the least opportune times.

Two groups in particular may be left smiling at the end of this book -- value investors and trend followers. In both the theory and practice of their normal operations, value investors and trend followers intuitively embraced Bookstaber's message a long long time ago, favoring longevity and robusticity over the temptations of adjusting to the moment. It is perhaps not surprising, then, that value investors and trend followers are arguably the most profitable market participants by far on an absolute-dollar basis, hauling in hundreds of billions in profit over the course of many decades. They are champion survivors too... with a touch more class than the cockroach.

6.) Losses

a.) There are many reactions to unanticipated losses: cut them quickly, ride out the storm, even double up the bets. Each of these sometimes works and sometimes makes the situation worse. Only after reading all the permutations and outcomes can you understand the stark choices posed as the disasters unfold. The players are neither idiots nor geniuses, they are smart but ordinary people, facing understandable human dilemmas.

b.) Human nature is such that very often things have to go from bad to worse to bloody awful before the necessary paradigm shift happens.

c.) When there is no more they can reasonably bare, then they do have to pass some of the burden down the chain.

Against this backdrop of uncertainty, the story is causing even more concern perhaps than it is elsewhere. Things are changing alright, but let's not panic. One rotten link and the whole lot could collapse in a heap. And who's at the bottom, pressed by the weight of the forces above and gasping for air? You?

d.) The beauty of trading is that it doesn’t just create great wealth, it also teaches us great lessons. And, teaching those lessons offers a greater high to which profits alone can never compare.

Good Links:
* An Online Newspaper - The Newsflashr site Very useful service, for catching patterns in global news.
* Streetstories - News and information on great traders and hedge funds

-Nix

Phisix Breakout and Stock picks

2008-03-31T23:06:00.004+08:00

I posted Phisix Daily Chart (Zoomed), Phisix Daily Chart (Zoomed Out) and Phisix Weekly Chart so that we can understand the picture of today's markets better.

Short term: We just broke out the downtrend channel indicating a possible short term reversal. Where then will we encounter resistance? Zooming out, we see 3031.

Medium Term: 3031 might be a resistance we have to take out and we will then proceed to a larger rally ahead of us. We can then use the height from 3031 to the low of about 2772 which gives us a short term target price of (3031-2772=roughly 260 pts) or target of 3290.

Long Term: Weekly chart, we are just lying at the 130 week MA and have just bounced from there. Our long term outlook is still positive however, the support lies at a little above 2500 so there are still downside ahead. Caution is advised.

We have to see what happened also at the US indices to confirm this breakout.

_______________________________________________________

Stock Picks:
1.) AC - lower low, higher MACD, white bullish hammer last March 28 with significant volume. See chart.

2.) AP- Looks to make a symmetrical triangle. A breakout with significant volume is a good entry point. Support point of the symmetrical triangle lies at 4.70, breakout point of symmetrical triangle is at about 4.90 Wait for significant volume to arise before entering.

3.) CMT- Parabolic Trigger signal, buy cross signal, diminishing volume through the box consolidation and seeing volumes emerge again. Higher RSI but still not overbought.

4.) NI
-Looks set to breakout of its box pattern and coupled with Parabolic trigger buy signal, above average volumes, RSI going higher, Doji pattern forming a higher low from yesterday.

Notes: Picks were chosen based on possibility that they have yet to rise because most banking stocks like BPI, BDO have already increased significantly. EDC has increased significantly as well. Stocks in this list are "forecasted" to trade higher in the coming days.

-Nix

Bull-Bear Crucial Decision this Monday

2008-03-31T09:11:00.003+08:00

We are very near the resistance lines. Monday will be crucial, if we go lower from the resistance lines, better be liquid, if not, we may be in for a short term rally.

Why I am still buying a few stocks here in PH

2008-03-29T02:32:00.002+08:00

I just have to clarify myself. I might have mislead people in this blog. A few days back, I said I'm liquid and that I have learned my lesson well ---which basically means, for the time being, I'm not trading any stocks.

However, that changed (actually Monday)- March 24,2008. - based on charts.

In any case, I believe it's quite difficult to really make a stand that is so grounded when the charts are telling that a short rally may come in. I know I said I won't be trading dead cat bounces but...if the bounces are good enough for my minimum risk/reward trade of higher than 1:3, and if I position my sizing well into the 2% maximum portfolio fluctuation, I'm willing to trade.

There. Its just that the scales have tipped so fast that I had to change my position.

Am still bearish in this market...in the meantime... Any resistance is going to be used as a selling point. I just had to adapt my trading strategies. As much as possible, I'm planning to study and practice other markets aside from Phil.

Disclosures:
I have AC in my portfolio at price of 390.

-Nix

AC Alert and Market Post Analyses

2008-03-28T23:33:00.004+08:00

Lines I Liked:

1.) What's noteworthy isn't who made it, but how they got there.-Michael Moe
2.) When wrong, admit it. The worst thing to do is rationalize a mistake. Be intellectually honest. Make decisions based on current facts, not what you had thought to begin with.-Michael Moe
3.) Be passionate about investing but dispassionate about the investment.-Michael Moe
4.) Don't trade when you can't afford to lose.-Michael Moe
5) Longterm investment success results from the strength of the investment strategy, rather than the individual wins and losses. - Hildy Richelson
6.) I just wait until there's money lying in the corner, and all I have to do is go over there and pick it up. - James Rogers
7.) If you can't take a small loss, sooner or later, you will take the mother of all losses - Jack Schwager
8.) Everybody gets what they want out of the market. - Ed Seykota

A Short Personal Reflection:
It's been a quick ride down and up, with little to show for it except some market experience. James Rogers tells us the wisdom of patience, and trading only when the odds of profits are with us. Richelson asks us to fine tune our trading system, our strategies. He emphasizes looking at the big picture of our strategy instead of the individual wins and losses. Ed Seykota reminds us that the market is a what you see what you get kind of person. If we have lost our discipline, market gives us what we deserve. Jack Schwager warns us on our inability to cut our losses short. Michael Moe shows us that trading involves losing. We have to face those facts, and be dispassionate with our investments. He also tells us that, who made millions in the stock market isn't important, it's how they became that's most important. So lesson is to learn that system. Whether you are a technical purist, a hardcore fundamentalist, or a hybrid of the two, augment and personalize your system to fit those that work in the market.

(I'll write my investment philosophy in the next posts.)

Market Post-Analyses :

Don't Fight the FED: The key to the rally was the Fed's determination to stem the downward spiral, and that should never be underestimated.

This week, we've seen many stocks that were extremely oversold that had gone ripe for a rally.

It's worth noting, that missing an opportunity is as bad as being on the wrong side of the trade.

So let us learn from what had happened and what worked

FGEN, FPH, MEG all rose pretty well this week as well as most banking stocks such as MBT, BPI, BDO and NRCP. Gains were as high as 30% and as low as 5% minimum for a week or less' trade. By the way, TEL shot up to 2805. Remember I bought TEL at 2610 last week? Am I spiteful? Kinda...but the lesson was I should have bought when I knew I was already wrong. I was late in buying into this market at around Tuesday so I only rode the FPH rally.

If you checked the charts I mentioned above, they all exhibited bullish divergences.

Lower lows, higher MACDs.

The key here though is liquidity. These stocks have done better than other companies in their respective sectors mainly because people are more interested in them as can be seen with the large volumes accompanied with them. For those who have observed the markets, when ALI went below 10 pesos, trading at prices of 9.4, 9.5 etc, most of the buyers were local domestic houses while most of the sellers were foreign fund houses. We've seen ALI go up to 11.50 this week and retreating to close at around 10.50, nevertheless it still made a good run up.

Stock Alert (3/28/08 -BUY: AC)

Preferred Entry: 382.50<=AC<=390

Cutloss: AC<=380

Reward; 425,430,450

On March 28,2008, there was an increase in the volume of AC, Volumes were at least 50% higher than normal average indicating a possible intermediate bottom. From charts, it closed at 392.50, formed a white bullish hammer. Risk Reward Ratio is good as the cutloss in price is a break below previous low of 382.50 (which by the way was retested as a support today) by the market. This has formed bullish divergence for quite some time now (2 weeks in the making). When foreigners finish their selling, this is bound to trade higher. RESPECT YOUR SUPPORTS. Remember, you shouldn't trade if you don't know how to cut your losses or follow your trading rules.

Bear Market Trading/Investing:

1.) Investors could tactically profit take into strength but position to buy back on weakness. Into any strength, investors need to position for profit-taking as markets recover.

Market Insights:

The recession call in the US is almost a consensus call now. That being said, quarter to quarter economic contraction in the US is likely to be limited to the first two quarters, with a gradual recovery thereafter. There are credible reasons to suggest some kind of bottoming and recovery in the second half:

Fed funds cut by 300bp bringing real rates to zero, and discount rate cut by 375bp
ABCP and MBS accepted at discount window
Paulson interest rate freeze program
New liquidity facilities for banks – TAF, TSLF
Raising of conforming loan limits
‘Project Lifeline’ to halt foreclosure on mortgages
Extension of credit to primary dealers
OFHEO eases Fannie and Freddie’s capital requirements and permit them to expand mortgage portfolios.

-will post the chart of AC and other good stocks to buy (if there are any)-

- Nix

Eternal Pessimists

2008-03-24T22:30:00.001+08:00

"I have found that the greatest traders are the ones who are most afraid of the markets." ~ Mark Weinstein

The thing with this insightful quote tells us that whenever we trade, we always have to envision the worst possible case to happen. We always have to be eternal pessimists. We always prepare for the worst scenario to happen.

Astig na resources- Wii!

2008-03-23T02:01:00.002+08:00

http://www.cs.cmu.edu/~johnny/projects/wii/

Watch this guy:)

-nix

The Art of Self Mastery and Betting on Human Instincts

2008-03-21T15:20:00.004+08:00

If you know the enemy and know yourself, you need not fear the result of a hundred battles. If you know yourself but not the enemy, for every victory gained you will also suffer a defeat. If you know neither the enemy nor yourself, you will succumb in every battle.- Sun Tzu

______________________

Sun Tzu emphasized the importance of self-mastery in winning wars. Trading is a means of self-development. The reason why trading may be one of the most challenging of all human endeavors is because you begin to know yourself in a way you didn't use to think. You begin to know your deep seated egos, and you begin to know who you really are, your strengths and your weaknesses.

When I think of all the practice hours on the basketball court working on dribbling, rebounding, passing, defending--and when I think of all the practice time in scrimmage getting plays down pat--I realize that game time is just the tip of a large learning iceberg. Trading truly is the only performance domain I know of in which a majority of participants expect to spend less time in practice than in actual live performance. No wonder so many lose money.

If I were a beginning trader and knew what I know now, I'd realize that trading is no less of a business than opening a store or a doctor's office. It requires talents, developed skills, and a clear plan for success. It requires adequate capitalization, and it requires a firm ability to limit overhead during the early, lean years. Fantasies are exciting, but there is so much more to performance success in any discipline.

-Brett Steenbarger

_________________________________

Why do no trading coaches talk about those personal tragedies and losses? Why don't the stories of the vast majority of traders ever grace the pages of trading magazines and trading books?

I think I know the answer. It's because people don't want to admit that they're wrong. People would rather wait time immemorial rather than to accept their mistakes. But this is essentially what sets apart the great traders from the ones who continually lose their stake. Remember the adage "Cut your losses short, let your profits run." It is so simple in words but is so difficult for people to do.

When I started trading, I told myself that cutting losses would probably be the rule that I can clearly adhere to. Knowing and doing is quite a different thing. When time came to cut those losses, it was a hard thing to do. I'm happy that I have finished cutting them all now but I also realized that I never knew what I was capable of until that time came.

So many traders encounter the same thing. As they say, what is most personal is also most universal. The deep-seated difficulty of cutting losses early on goes against the human nature because we tend to hope when we should be fearing. We tend to fear when we should be relaxing. Greed, hope, fear. These are primordial roots of mankind. This is why technical analysis rooted in human behavior can so easily be used as a trading tool because humans never seem to change. If there's one thing we can bet humans in the future will be doing, they'll be continuing to hope when they shouldn't be. That's why technical analysis is so profitable. Instead of relying on company disclosures, relying on the human market habits have become more superior.

It got me into reflecting not just about trading but about other things. I was in a conversation with an old friend about a theory that good students actually want to be teachers had salaries not been an issue. The reason is because good students have become good students primarily because they've benefited a lot from their teachers, that they want to share that same passion with others who are willing to learn. It's no mystery why teachers can play favorites at times. That's coz they might see themselves in that same eager student. With that positive reinforcement, the good student becomes even better... and so on.

Why did I have to tell in this blog about that theory? Well, it is this.
When you're passionate about something, you want it to grow. You want that something to remain living even when you're dead. You want to find people who share the same passion. You want to teach people. You want to infect others. Remember the saying, loving can never be selfish? Well, i paraphrased that but I think readers get my point.

If we love someone, or something, we are hurt most by it and we are deeply affected by it.
Conversely, we are also passionate about its growth within individuals. My philosophy teacher once told me that love is actually synonymous with growing or something like that.

Great businesses, great trading performances are not done by a lone hand. It's a very difficult process doing everything by yourself.

That's why this blog is a thank you to all the peers that I have who have been an encouragement to me to not back down despite losses. Trading is a process. Trading inevitably will include losses. Life is Life. We cannot be successful overnight. We cannot build Rome in one day. What we can do is we bounce back. We learn our mistakes. We grow what we love.

My special thanks goes to Grapebunch of Absolute Traders and everyone in that community.

Thanks.

- nix

Misunderstandings to be clarified

2008-03-20T13:16:00.009+08:00

This is just to list down the things I wrote in this blog that could have been misunderstood:

On March 17,2008 article entitled "In the utter annihilation..."
1.) Let me clarify that the contrarian attitude for a day was all verified using technical indicators. It was a very difficult risk/reward trade. It depends on which system you trade. I've learned my errors. I knew that I traded it and the risk/reward was too slim so the next day I sold it all at market open. bought at 2610, sold all shares at 2660 but not all was sold there. Because the market had little takers, 80% was sold at 2660, the rest had to be sold at 2640. There was no good money to be made. I learned not to play with the Philippine Market anymore as there's bound to be more losses trading deadcat bounces than earning decently.

On the blog
2.) I wrote a blog primarily to help myself. It is not in any way for anyone to trade on their own. It's a blog, a rant for myself. I appreciate comments so that I can learn to correct my mistakes.

3.) I learn better through criticisms so I'm thankful for them.

On money management
4.) I've yet to provide myself a decent track record. I am still a newbie. I started trading exactly just last July 11,2007. I only learned Technical Analysis December 2007. I am no one to listen for any trading advice. I am in a continuous learning phase. I appreciate people who have decent CAGR track records to actually help me out, books/blogs that offer their trading wisdom etc.

On a comment
5.) Anonymous: Thanks for pointing out the contrarian article. I rarely get to update my situation kasi. I think it may be partly due to non-updating that may give way to lots of misunderstandings. Sorry about that. And yes, it rarely pays to be a contrarian because it only happens very few times. This is the reason why I also exited the position immediately.
I was also willing to sell lower than my cutloss point if I had to. That to me is trading discipline.

To defend Jesse Livermore, he's not perfect. Yes he made his mistakes. He blew his fortunes out and learned from them. He regained them three times i believe. I dont think Jesse was a contrarian though. The reason why he shorted one day before the October 1929 incident, it was all based on technicals. I also know of someone (let us keep him anonymous) who greatly told his friends to sell USD at 52 pesos. People laughed at him. See the peso now? 41 something? Let's say it goes to 44? Still far from 52 right? Reason? Technical Charts. Rounding top kasi eh. In a way, it seemed as though he was a contrarian but it was all technicals.

I know that the comment was there to help me. You meant good. :)

Hope to get to know you better. You seem to know better so I hope to learn from you. If you could probably just tell me who you are, so I don't have to guess. You know how to find me. Thanks.

-nix

Confessions: Too Full, Learning to Become Empty

2008-03-19T07:30:00.004+08:00

Reflections from Henri Nouwen:
Mark 10:21

Jesus asked the boy's father, "How long has he been like this?" "From childhood, he answered."

It may come as a shock, but we are often too full of ourselves, too preoccupied with our own activities and too full of our own plans and desires. Even our activities on behalf of others can often reflect much of our own need for fulfillment or recognition. And our relationship with God frequently pivots around our own prayers, needs and projects. We are therefore persons without space and room and consequently lack flexibility and manoeuverability.

We therefore need to be, as it were, pried loose from ourselves. Henri Nouwen, in speaking of prayer as a way to solitude, challenges us to be willing to open our tightly clenched fist and "give up our last coin". So often we receive nothing from our spiritual exercises because we have not created any open spaces in our lives. We are too full. We may want to receive, but we certainly do not want anything to be taken away.

God can hardly fill our hands with the good things of his love and grace while our hands are full with our own things. Therefore in our search for inner peace and strength, we need to learn the gentle but difficult art of relinquishment as much as we need to seek God's empowerment.

____________________________________-
I inserted the above reflection because it's a lesson not just in our approach to God but also in trading.

When we become too preoccupied with our own trading performances, with trading signals, trading techniques, we lose the equation ; we lose the big picture.

Trading the markets is, was and will be just a simple thing. It's just our emotions that get us carried away. We can trade deadcat bounces etc. We are fooling ourselves aren't we? Are we better than the market? The market is ALWAYS RIGHT.

If we keep things simple, just following the guidelines of the three tenets of technical analysis, that would have saved us and made us lots of money.

Keep Things Simple:
1.) Prices discount everything - Just follow the price. It is ALWAYS RIGHT.NEVER WRONG.
2.) Prices move in directions - Trends
3.) History repeats itself. - All based on Human Market Psychology-

If I were to apply this to God, then that would have to be the only 3 commandments of trading.

So anyway, we just have to accept the losses.

I'm just a normal and average trader ok? If the things written in this blog was interpreted differently by people, that I trade using FA...no I don't.

I trade technicals. Fundamentals are just my filters. Its a complementary tool for me.
For technical purists, I am not in conflict with that. Everyone has their own system.

To me personally, TA is superior to FA. FA is a stock screen filter. You cant be able to mine through so many charts everyday. You need some filters. That's FA. Again. this is an opinion and just an opinion.

Since October, there shouldn't have been any trading done in the Philippines. It should have all been in cash.

Trading is a marathon, not a sprint. - O' Neil

Everyone loses money. Great traders learn from them.
It's a journey to knowing yourself better, on how disciplined you really are.

-Nix is now liquid.-
-She has also learned her lesson well.-
-Do your own studies, develop your own trading systems and stick with them-
-Always keep an open mind.-

Lone Voice

HK Market views are all forwarded to Absolute Traders' Newsletter.

Just hit the jackpot

JustPutting It Out There , chart from BessLevin

Wall Street Crisis Not Quite 1929

The greatest trade ever made -so far-

On Plungers, High Rollers and Graveyards

Great shows to watch (non-trading)

HK Daily Picks- 08-21-08 (2600)

HK Daily for 08-20-08 (2866,203)

Hong Kong Daily Outlook for Aug 19, 2008

HK Daily for 08-18-08

HK Daily Outlook for August 15,2008

HK Stock Picks for 08-14-08 (2600,2866,323,1200)

Hang Seng Market Overview for 08-13-08

HK Daily and Stock Pick (1200) for August 13,2008

Gamecrab

Learning to cut losses

Greed is Good

Stars Who Walked Away From Mega-Hits

Quit Talking, Start Doing- IBM

Another one of those days...

Senseless post beware

Taken from Baricaua's blog : Life is a gamble

Excerpts from Bo's Book on Hidden Addictions

Position Management, Market Psychology and Trading Rules

Marc Faber's Reading Guides

Standing BESIDE the shoulders of Giants

Managing those 4 Fears

Great Stuff for training your mind to be a winner

7 Habits of Ineffective Traders and How to Learn From Them

Aftermath of the Downfall.

Always Remember June 27, 2008

Timeless Rules for Profitable Low Risk Trading

hk spreadsheet as of yday june 18 2008

different kinds of worries

Risk Control Guidelines, Handling Losses, Discipline

scatterbrain on the loose..things that need to be done

on trading's purpose, and some cool stuffs i heard/read

Art of Uncalculated Risk

This should be called lonely voice.

The Faces of Success

So Right but so f*cking wrong time

When you're feeling so blue...and frozen

Quicksands and Second chances

lessons I learned on trading warrants

Just a rehash from Brett the best: Eternal Truths of Trading Success

Random Thoughts

ramblings, corporate bonds, iphone and oracle of omaha

Every abundance creates a new scarcity

Most Attractive Buy List: 991 and 836

Read everything, but accept nothing.

updates

HK Market BREAKOUT Today

Excellent Quote from Brett the Best

All for love

God Values Money More than You

Price Gaps and learning about discipline

Intermarket Analysis -Great stuffs to share

Biggest Rally to come this week and HK stockpick

Why I'm in this business

The Trend is our friend but he is a fickle friend

FINVIZ - Such a wonderful, organized site for US Market

Stories that can be related to Trading

Phisix Breakout and Stock picks

Bull-Bear Crucial Decision this Monday

Why I am still buying a few stocks here in PH

AC Alert and Market Post Analyses

Eternal Pessimists

Astig na resources- Wii!

The Art of Self Mastery and Betting on Human Instincts

Misunderstandings to be clarified

Confessions: Too Full, Learning to Become Empty

Just
Putting It Out There , chart from Bess
Levin