Wednesday, 22 April 2015

Friday, 17 April 2015

Tuesday, 14 April 2015

Why Do 90% of Traders Lose Money?

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You've probably heard this phrase and because of that, you felt that the stock market is against you. There are so many books out there about investing, why is it that so many people still make losses in the long run?

In my opinion, the books out there can only teach you the technical part of trading and investing. Just like the stuff I am studying in school. Everything I learn is considered knowledge and information. But what sets you apart is how you use this knowledge and apply it to the real world situation.

Secondly, people let their emotions get the better of them. Trading has a very psychological effect on humans. Greed and fear of losses affect how we trade, but in order to make money in the stock market. We have to ignore those human instincts and stick to our individual trading plan.

Now I am not saying that if you are a emotionless trader, that guarantees profit. The market will against you and it will do it often. What you have to do is to limit those losses and in the long run, you should make a profit. Even if you don't make money in the first month, you have to keep trading according to your plan!

I say this over and over again because I feel that it is the single most important advice I have ever received.


Some people get emotionally attached to their trades. They feel that they have a need to be right and they cannot accept the fact that the market has not moved in their favour. I am guilty of this at times. Sometimes the trade setup is perfect but yet, when I enter, the market decides to go in the opposite direction leaving me stranded in disbelief. (That's why stop losses are important!)

The last reason why traders lose money is due to the fact that they believe trading is simply gambling. Making money is as simple as pressing buy and sell and hopefully they are right. If this is the mindset you adopt, I suggest you stop trading and start gambling instead, you can save the brokerage fee. 

Do not let the title affect you when you trade. Ignore this statistic and just remember to.. you guessed it. STICK TO YOUR PLAN.

As always, happy trading.

Cheers.

Saturday, 11 April 2015

What Is My Trading Strategy?

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I have received many question as to what is my trading strategy. Today, I will go through it while making sure that it is as simple to follow as possible. So without wasting any more time, here is my trading strategy.

First of all, I am looking for a reversal candle stick. More specifically, I am looking for a hammer, inverted hammer, shooting star or hanging man in the candlestick daily chart. I trade these as they seem to have the highest rate of success in my experience.

Here are some examples of how they look like.



I use screeners to look for them daily. Click here to see which screeners I recommend using. After identifying a chart with a hammer, I order 1 cent above/below the high/low of the candle (depending on whether it is a short or long trade) for the next trading day.

My stop loss will be 1 cent above/below the high/low of the candle as well.


Here's an example. The neckline will be where I enter the trade.

My take profit will be the previous high or the support/resistance.

After identifying, my entry, stop loss and take profit, I will also check the RRR ratio and see if it qualifies. Currently, I am looking for trades that are at least more than 1. If it does, I will enter the position.

This is the basic strategy I am currently using. I will post a more detailed entry about my strategy where I will discuss ATR and position sizing so stay tuned!

What are your trading strategies? I would love to hear from you!

As always, happy trading.

Cheers. 

Thursday, 9 April 2015

Losing Trade - M (NYSE)

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Yesterday I highlighted a shorting opportunity for Macys (NYSE).

The markets opened and it did hit my entry price. But the market went complete opposite of what I was expecting as seen below.


Making losing trades is part of trading. There will be no magic formula to guarantee 100% winning trades. Never allow your losses to affect how you trade. Sure, I might have lost some money, but there will always be another opportunity around the corner. But I am going to stick to my trading strategy regardless; and you should too.

As always, happy trading.

Cheers.

Wednesday, 8 April 2015

Which Technical Indicators To Use?

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I will be straight up honest with you. I don't use much technical indicators when I am deciding on which trade to take.

When I started out, I tried to develop the ultimate strategy that would have a high success rate. I went about studying different indicators, their purpose and limitations, and which one had the most success in determining the direction of the price.

But I found myself having a chart that was ineffective in telling me any useful information. Odd isn't it? One would expect more indicators to give more information, but instead, it seems to have diminishing returns after a certain point.

Let me show you an example.


Singtel (Z74) Daily Chart 

I've included some of the more commonly used indicators such as RSI, MAC, ATR, Moving Averages, Bollinger Bands and Ichimoku Kinko Hyo. Okay, maybe the last one isn't that commonly used. I was just trying to prove a point!

I used to look at charts like the one above and the problem was that I kept getting mixed signals. I kept changing my strategy to try to fit certain indicators into my plan only to be conflicted with another indicator that was telling me otherwise. 



This is what my charts currently look like. I use 2 indicators, mainly ATR (Average True Range) and Volume. The chart is cleaner, it is easier for me to focus on the price action rather than having a whole load of information which doesn't allow me to make a decision. 

Of course, these indicators are suited for my strategy and can differ from person to person. The point here is not to use the indicators that I use, but to stick to a few and be disciplined about it.

I will write another post as to why I use specifically ATR and Volume in another post.

As always, happy trading.

Cheers.

Tuesday, 7 April 2015

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