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Discussion in 'The Trading Floor' started by nottibird, Sep 28, 2013.

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  1. nottibird

    nottibird Moderator

    Oct 25, 2012
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    What is the Difference Between Cash Account and CFD Account

    When it comes to risk, there is no difference between trading with CFD and trading with Cash Account (CA). Whether you buy with
    CFD or CA, to make money, you must buy low and sell high. If your stock is suspended and worth nothing becoz the company went
    bust, whether you had bought with CFD or CA, the result is the same --- you lose everything. Buying a stock using CFD does not put
    you at a higher risk than if you buy it with CA. Buying with CA also does not give you an advantage over buying with CFD.

    But there is a difference. The difference being that when you buy a stock, you need not put up 100% of the value of the stock. You only
    need to put up a certain percentage of the stock value which is usually 10% or 20%. This is called the margin. Index stocks are usually
    at 10% margin up to a certain number of shares. For example --- the 1st 160 lots of Stock X is at 10% margin. Then from 161st to 300th
    lot is at 20%. And so on. The Broking House (BH) will decide how many shares at which percentage of margin. Non-index stocks usually
    start at 20% or 25% margin.

    When you buy a stock, you provide the margin. The balance is funded by your BH. It is like a loan to you to enable you to buy the stock.
    Becoz it is a loan, there is an interest charge which for IG is at 2.5% + 1-mth SIBOR. There is no interest charge if you sell your stock on
    the same day. Interest is levied for overnite positions only and is deducted from your account daily until you sell your stock.

    If you intend to buy a stock to hold it for months or years, you should NOT use CFD. The interest charge can add up to quite abit and add
    to your transaction cost. Use CH to buy a stock which you intend to hold for months or years. Use CFD to buy stocks for short term trading.
    If you become stuck and end up having to hold the stock longer, that' s a risk of trading CFD traders accept.

    Trading with CFD offers traders one very big advantage which CA traders do not enjoy - low transaction cost. A CFD trader with IG pays
    0.1% of transaction value as com. That' s all. No clearing fee, no SGX data fee and no GST. For CA traders, they pay anything from 0.18%
    to 0.5% as com. Plus add to that, they pay clearing fee, SGX data fee and GST. The difference is a lot. So much so that a CFD trader can
    run with 1 bid but a CA trader will need at least 2 bids and sometimes 3 to 4 bids just to breakeven. The difference in their trading account
    can be very startling.

    Another big advantage enjoyed by CFD traders is that they can SHORT a stock and hold for as long as necessary for that stock to fall. Then
    buy back at a lower price to cover that SHORT position to make the difference. A CA trader cannot do that. If a CA trader SHORT a stock,
    WIN LOSE or DRAW, he must buy back on the same day to cover that SHORT position or SGX will impose a penalty. This penalty is at 1%
    of transaction value or $1000 whichever is higher. SHORT positions which are covered on the same day does not incur interest. Interest is
    charged for overnite SHORTs only at 2.5% minus 1-mth SIBOR. This interest is deducted from your account daily. There is also a borrowing
    costs for SHORT positions held overnite becoz IG needs to borrow shares for you to meet your SHORT positions. Borrowing costs varies
    from stock to stock but the amount is affordable. This borrowing costs is also deducted from your account daily.

    So in terms of the risk of buying stocks, both CFD and CA have the same risk. But in terms of advantages, CFD offers the very important
    advantage of lower transaction cost and the ability to profit from a falling market by SHORTing stocks.

    There is one more very, very big advantage a CFD trader enjoys --- leverage. But a word of caution. Leverage is a double-edged sword.
    It can amplify your profits. But when things go south, it can magnify your losses too. Let me illustrate.

    Let' s say Stock X is trading at $2.00 and the margin is 10% for the 1st 350 lots. And let' s say a trader has a trading capital of 100k. To
    make it easier, let' s ignore commission in this illustration.

    If a trader with 100k wants to buy Stock A using CA, he can buy only 50 lots. Old school of thinking --- 1 lot is 1000 shares. If Stock A rises
    to $2.20 in a bullish market, this CA trader will make 50 lots x 20 cts = 10k.

    But a CFD trader with the same 100k capital... at 10% margin, he can buy 150 lots bearing in mind the one-third rule. The margin for 150
    lots is 150000 x $2.00 x 10% = 30k. If the stock rises to $2.20 in a bullish market, this CFD trader will make 30k.

    Same stock. Same amount of capital. Same market conditions.
    CA trader makes 10k with 100k capital.
    CFD trader makes 30k with the same 100k capital.
    But if the market turns against you and the stock falls by 20 cts...
    CA trader will have a paper loss of 10k.
    CFD trader' s paper loss will be 30k.

    That' s why leverage, ie. the ability to trade with borrowed money (borrowed from your BH) is a double-edged sword which can cut
    a bigger slice of the cake for you OR cause you to suffer bigger losses. There is no free lunch in the stock market. Higher risk comes
    with higher gain. Just know what you are doing and if you accept that that' s the way the world works, then do it and live with the result,
    good or bad. Trading is a business and when doing business, there is always risk. You just have to manage the risk.

    The challenge here is to learn when to use leverage and when not to. And also when to use leverage to the max to Ka Ka HOOT
    when the market presents you with a Golden Goose opportunity to make big profits. Traders who are disciplined love CFD. For
    disciplined traders, CFD enables them to do a lot of the trades which are otherwise impossible. To trade 325 lots in SingTel using cash,
    you need $991,250. How many traders have that kind of money? But with CFD, you can trade 325 lots with a capital of only $99.125.
    And it empowers CFD traders to make big money when those juicy opportunities come by. If you have been in the market long enough,
    how many times have you wished you had more capital when those great buying opportunities came by? Well, CFD is the answer.

    Just becoz you have a credit card does not mean you go out there to spend irresponsibly till you burst your credit limit, right? Same for
    CFD. Just becoz you have it doesnt mean you will buy stocks indiscriminately till you max out your leverage. As long as you are a
    disciplined trader and you dont overtrade, you wont find CFD a curse. If like most CFD traders here, you use CFD to get more mileage
    out of your capital and also to take advantage of lower transaction cost, you will find CFD a blessing.
  2. nottibird

    nottibird Moderator

    Oct 25, 2012
    Likes Received:
    How much you can trade will ultimately depend on how much funds you have to provide for margin. It is not x1 of your funds.
    If margin is 10% for all your trades, how much max you can theoratically trade is x10 of your funds. But we shouldnt do that.
    We should always observe the one-third rule so that we dont inadvertently overtrade. Trade up to max one-third of your funds.
    Keep one-third for com, interest and to average down. Keep the last one-third as your reservist commandos to mount Search
    & Rescue Missions to bring back your boys trapped behind enemy lines. This one third rule is just a guide. For some of you,
    you may find that a 20%-40%-40% formation is better. Meaning fight with up to 20% of your troops. The next 40% is for com,
    interest and averaging down or averaging up and the last 40% is for Search & Rescue Missions. No right no wrong here. Use
    a ratio which works best for you. But for this ratio to make sense, your ratio can never be say, 60%-20%-20% becoz if 60% of
    your troops become prisoners of war, it is going to be very, very difficult for the remaining 40% to save the trapped 60%.

    Whatever your ratio, it is very, very important that you have one. And have the discipline to stick to it. Becoz only when you do
    not overtrade that you can sleep soundly and spend quality time with your loved ones. You want trading to be fun, profitable and
    enjoyable. Not stress you, wreck you up and turn you into an irritable spouse, parent or partner.


    To make money in the market, we need to get 2 things right --- Stockpick and Timing.

    Stockpick... we discourage trading in pennys. We go for index stocks which never fail to make a come back. We call them
    Sure Come Stocks or SCS for short.

    Timing .... this means 2 things.... (1) Direction - to go LONG or SHORT.... and (2) Selecting an entry level.
    Whether LONG or SHORT.... we need to know a stock well. So before we attempt to trade a stock, we spend some time to study the
    stock first...get to know it....get to know its Bawu so to speak. This includes getting to know our neighbours. Who are our neighbours?
    Everyone else out there who is trading the same stock. What these neighbours they trade and how big they trade as well as
    how fast they trade affect the price action of the stock. When we know the stock well and get to know the neighbours, we have a rough
    idea when and under what circumstances that stock is attractive to trade. This is called the Set Up. Once we know what the Set Up of
    the stock is, the next thing is patience to wait for the Set Up to appear and when it does, we move in to make the trade.


    " sometimes i trigger happy....especially when 2 -3 of good returns... u know the control part missing...."

    Yes bro. That' s the danger when we have a winning streak. Once we start to...
    Be complacent and ignore our trading rules which have served us well...
    Feel invincible...
    Think that we have made money and hence can afford to lose it and so we go bigtime in our next trade...

    That will be the time when Mr Market will remind us that he, not us, is still the boss in the stock market and
    he will teach us to write out and spell the words........ BE HUMBLE.


    My own conclusion from years of watching the market --- there is no co-relation between married deals and the direction of the stock.
    I will put the issue another way --- can we make use of married deals to predict the immediate direction of a stock?
    My answer is NO.
    That' s why I dont bother about married deals.
    End of the day I still look at the intraday price action only and view it in the light of what the stock has been doing over the last one
    to four weeks with more significance attached to what the stock has been doing over the last one week than in the previous week
    and on top of that, more significance to what the stock has been doing over the last 3 trading days compared to the 4 trading days
    before that. And dont look at the stock in isolation. Most of the stocks we trade are market followers, not leaders. So what the rest
    of the broader market is doing, is also important. When you trade stocks which operate in tandem with other stocks, look at those
    other stocks as well to get a feel of the market. For example, the Musketeers move in tandem most of the time. So when two of
    them starts to make a move to the upside, we know there is an 80% to 90% chance the other two will likewise follow and make a
    move to the upside.

    Sometimes you may find certain " trading stocks" also moving in tandem. Put all these stocks together in your Watchlist so that you
    can see at a glance whether they are all rising or falling together. This " moving up or down together" phenomenon can change over
    time and so will require updating. For example, at one time, I noticed that these 5 stocks do more or less move up or down together:

    ST Engrg

    So when I trade them, I look at what the others are doing. Becoz they usually move in tandem in the same direction, it helps to look
    at them to give you a more accurate reading of their direction.

    And ofcoz we also need to look at market leaders --- the banks. They do lead the market up or down and we respect that and use
    that info to help us read market direction. Unless there is a change in market conditions which justify a departure from this rule. For
    example, following a surprise after-market announcement of more property cooling measures, we know for a fact that on the next
    trading day, banks and developers will get hit. And when it happens, the rest of the market may not necessarily fall in tandem with
    the banks. Especially if these other counters have recently bottomed out and started rebounding.


    You just asked the one million dollar question --- is it accumulation or distribution.
    Experience and gutfeel says I dont think it is accumulation.
    Smart money usually accumulates low, not high.
    Besides, the condition on the ground was sweet for them to drop... (1) XD ler... (2) Interest rate hike coming... (3) Next reporting
    season another 2 months down the road... and so smart money could have depressed them first to force weak hands to throw
    and run. Then smart money starts the LOW. That' s usually how they do it. Not push the price up and then
    accumulate at the HIGH. Push the price up and block it to prevent it from coming down whilst they distribute at the HIGH...that
    one makes more sense. Which is why experience and gutfeel says more likely distribution than accumulation.
    But we can never be certain until the price has moved quite a long distance one way or the other by which time much of the meat
    is taken off the table by the more aggressive traders who dare to frontrun and move in earlier.
    Since not sure, then I obey another one of my Rules of Trading --- " When in doubt, do nothing."
    So I have been largely a spectator in the Musketeers. I did not open any new positions.
  3. nottibird

    nottibird Moderator

    Oct 25, 2012
    Likes Received:
    Newbies Should Learn How To Read Charts And Some Basic Technical Analysis (TA)

    A shy newbie lizard asked me:

    1. Is there any App he/she can get charts?
    2. What is the fastest and easiest way to learn how to reach charts and technical analysis?
    3. How do we pick which stocks to play?

    I replied to this newbie lizard. But on second thoughts, I believe posting my reply here will also help the other shy newbie lizards who
    had similar questions but did not ask.


    To learn how to be a better trader, you definitely need to learn some basic technical analysis (TA) ...meaning how to read charts.
    And TA is not really difficult. Just stick to the basics and keep it simple but enough. No need to use all the indicators out there. Just
    need to use what are most widely used by traders. In the past, to learn TA, you will have to do legwork to go to a library and go look
    for those books and read from here and there. It is not enough to read from just one author. It is better to read from many authors so
    that you get a balanced view and from there, you can draw your own conclusions which view to subscribe to. Today, with the internet,
    searching for info is a breeze. But you need to put in the effort to search and read.

    Charts... the most commonly used are candlesticks. Google japanese candlesticks and read any article written for beginners to get
    a quick overview on the basics like what does green/red candlesticks mean? Some charts use black/white instead. Understand how
    to read candlesticks as a starting point.

    After that, learn to read charts. Again, start with the basics... like what type of a chart it it a daily chart, weekly chart or 1-minute
    chart? A daily chart means every candle represents one day of trading. A weekly chart means every candle represents one week of
    trading. A 1-min chart means every candle represents 1 minute of trading. And so on.

    Then there is time-frame... is it a 3-mth chart...6-mth chart...1-Yr chart...2-Yr chart...5-Yr chart and so on. A 3-mth chart means the
    chart is showing you what the stock has been doing for the past 3 months. And so on.

    After that look at Moving Averages. There is Simple Moving Average (SMA) or Exponential Moving Average (EMA). Google both to
    understand what it is. The most commonly used SMA or EMA are the 20-day, 50-day and 200-day. Again Google for it.

    After that, go on to watch the videos posted below.

    I reproduce a post which I wrote sometime back for newbies like you...

    To do better in this game, every trader or investor should know how to read candlestick charts and should know some basic TA.
    For those newbies who are not familiar with TA and FA, TA stands for Technical Analysis. FA is Fundamental Analysis. Google
    both FA and TA and you will get a definition of what they mean. My knowledge of charts and TA is actually very basic. Yet it is
    enough for most purposes to get by. Which is why I strongly recommend that you learn some basic chart reading and TA. That
    way, you can read the charts I post and understand what I mean when I talk about Moving Averages and trendline support and

    To learn chart reading and TA, there is absolutely no need to spend money to sign up for a course. Everything I have learnt about
    TA and chart readng, I learnt on my own by watching videos and reading articles online. For those newbies who know nothing about
    candlesticks, watch this video to learn the basics of candlesticks. After that watch the next 2 videos to learn about the 20-day Moving
    Average and the 200-day Moving Average. Do pay attention and listen up. Becoz the knowledge you acquire is yours for life and
    once you know these simple concepts, you will find reading my charts and my discussions on Moving Averages etc more meaningful.
    You wont feel so lost. And you will be able to connect with what I say, better.

    I am recommending these 3 videos becoz after watching them, my interest in TA blasted to the Moon and I was spurred on to learn
    more and more by reading and watching more of his videos as well as the videos of other professional traders. You can find tons of
    them on Youtube but be selective in what you watch. Many of them are boring becoz the voice of the person is boring and the way
    he presented his video is boring. So be selective and skip the boring ones until you find one which suits you.

    I cant post these as a link becoz they wont work. So you folks have to copy and paste on the address bar of your web browser to
    bring you to the video. v=kSLvzRgKbGY

    How do we choose which stocks to play?

    Simple. We go where the money is.
    I now reproduce a post to a bro here sometime in Feb 2018 about this subject.


    To the question..." What affects stock prices?" ... my answer will be...

    1. The monkey (if there is one in the driver' s seat).
    2. Prevailing sentiments.
    3. Technical Analysis.
    4. Fundamental Analysis

    ........ in that order.

    And my experience tells me that 100% of the time, it is the 1st 3 which determines the immediate direction of the stock.
    I have not come across a situation where the 1st 3 were not in play at all and the stock moved soley based on FA.

    For me, FA tells me which stock can play and which stock...dont LONG them....only think of SHORTing if want to play them.
    For eg. Noble, Ezion, Hyflux.
    As for those stocks which FA says can play, that doesnt mean just go in and buy. Need to see if it is a good time to buy.
    Becoz there is a difference between " a good stock" and " a good stock to invest in" .
    Take SGX. Her Low Tide is $7.00. Her High Tide is $7.70.
    If there is EXTENDED PLAY on the upside, then can see $7.71 to $8.00.
    If she Tua Khee Seow... $8.50 also possible.
    If there is EXTENDED PLAY on the downside, then can see $6.80 to $6.90.
    If she Tua Lau Sai... $6.60 also possible.
    Is SGX a " good company" ? Answer is YES.
    Is SGX a " good company to invest in ? Answer is YES if she is trading at $6.60 to $7.10. But answer is NO if she is trading at $7.70 to $8.50.
    So this is where FA tells me SGX is a stock I can go LONG in but Monkey Analysis, Prevailing sentiments and Technical Analysis tell me when
    is a good time to LONG.

    I know of one guy who loves to look at very quiet, very unknown and very illiquid counters to invest in. Once in a blue moon, he will pop
    in to share about a particular stock. He will say things like he likes that stock becoz the CEO is a man of vision and he has a strong team
    with him to take the company forward. He would add that he believes when that company' s earnings start to rise, the rest of the market
    will then see value in this very unknown company and that' s when the company' s stocks will fly. In my heart, I told myself... " And it may
    never happen at all in the next 10 years or ever" . You see, what this guy sees in the CEO or his team or the business model of that company,
    or the goods and services produced by that company....even assuming all of what he said are true... will do nothing to the stock price simply
    becoz the market dont give a shit to what we think. The reality of this game is that if no monkey is in your stock, no matter how good the FA
    of your stock is, your stock is not going to move. When you buy and I buy and all the retail players in Singapore put together all buy, all that
    we will do is to produce a small little blip on the screen. It wont move the stock price an inch.

    That guy calls his method ........" Value Investing" . But what if you are the only guy in the whole wide world who sees value in this company?
    Then you will have to buy from yourself and sell to yourself. Will that move the stock ? If the stock dont move, can you make money ?
    And let' s say you park your hard-earned money into 10 of such so-called " value stocks" .
    And if you are lucky, one of them moves. The other 9 continues to remain in hibernation.
    Like that, can make money?
    Now, I am not saying this guy is wrong. Different strokes for different folks. To each his own.
    But what I am saying is that when I do my stockpick, I go where the money is. I dont look for a quiet and illiquid stock and go ahead
    first, ie. frontrun everyone else and chope a place there first in the hope that smart money will also take notice of the stocks I have
    chosen and agree with my analysis that that stock is a value stock and come in to buy after me.

    For me, the truth...only the truth...the whole truth ...and nothing but the truth about this game is...if you want to be successful, you
    MUST go where the money is. And the money is where there is a monkey. Period. If there is no monkey but the stock enjoys a wide
    following of fans consisting of fund managers, institutional investors, retail investors and retail traders, then find out where the High
    and Low Tides of the stock are and move with the tide.
  4. nottibird

    nottibird Moderator

    Oct 25, 2012
    Likes Received:

    When you want to buy or sell and you dont want to want to do your trade immediately, do NOT use DMA.
    Use OTC. Becoz it makes no difference to you. Your trade will still be done if you use OTC. But if you use DMA to take
    from the sellers (instead of queue at the BUY price) or to throw to the buyers (instead of queue at the SELL price), you
    will sabo the rest of the bros and siss here. Let me illustrate. I am doing this becoz oldbirds need to be reminded and new
    arrivals do not know what we are talking about.


    Yes, makes no difference to the person who is buying at the SELL price or selling at the BUY price.
    But it may make ALOT OF DIFFERENCE to everyone else here.
    Imagine SEX is trading at 7.59 : 7.60 and everyone here is waiting to take profits.
    Imagine from 7.50 to 7.58.... every level have only 3 lots buying.
    But at 7.59, there are 30 lots buying.
    Imagine I have 30 lots to sell and I use DMA to one shot throw all 30 lots to the buyers in the queue.
    This will bump the price down to 7.58 : 7.59 and before you know it, other traders out there from elsewhere will throw quickly
    to the 3 lots buying at 7.58 and before you can react, the price has retreated to 7.50 : 7.51. Now, isn' t that sabo-ing everyone
    else in our thread? It makes no difference to me to use OTC to throw 30 lots at 7.59. My trade will be done. But the BIG difference
    to everyone else is that those 30 lots buying at 7.59 will still be there after I have used OTC to close my position. And the bros and
    siss here can, if they want to, also use OTC to sell at 7.59 to close their position. Using OTC to sell will not affect the queue in the
    cash market. Imagine there are only 20 lots buying at 7.59 and here, all of us have a total of 100 lots to sell. By using OTC to sell,
    all of us can sell 100 lots at 7.59 even though in the cash market, there are only 20 lots buying. Becoz when we use OTC to sell,
    our trade will not affect the queue in the cash market. Likewise when we buy. Use OTC if you are not queueing. Let' s all take care
    of each other. Thank you.
  5. nottibird

    nottibird Moderator

    Oct 25, 2012
    Likes Received:

    Be disciplined at all times. Stay calm.
    Take a break for a few days from trading if you have to.
    When I say take a break, it does not necessarily mean you switch off the PC and walk away.
    You can still watch the market. But dont be so quick to rush into your next trade. Watch but dont trade. Take a break in that sense.
    Why? Becoz you have just taken a loss. And you do want to be clear in your thinking when you make your next trade. The reason
    for making your next trade must be becoz you know a stock very well and you know what the set up is for a high probability trade
    and that set up has appeared. This must be the reason why you trade. And not becoz you are angry and fed up and you want your
    revenge. The market dont give a damn how much you lost and how angry and fed-up you are. And the market is certainly not afraid
    of you and wont feel the least Paiseh to take more of your money away from you in your next trade. That' s why you need to remain
    disciplined at all times and to maintain a clear right-thinking mind when you trade. If you are all choked up with emotion and frustration
    now and you go into the market right away to make your next trade, chances are you are not thinking clearly and are trading out of
    revenge. Which is the wrong thing to do. So if you have already done that and your order is not filled yet, you may want to withdraw
    them first.

    Dont chase your losses.
    Have a clear and good trading plan and win slowly and steadily. And in time, you will see your capital coming back.
    Trade to win based on a good set up. Not based on a burning desire in you to want to win your losses back and win quickly.
    Becoz if that' s your mindset, you are at risk of jumping into trades which are at best 50 : 50 only.
  6. nottibird

    nottibird Moderator

    Oct 25, 2012
    Likes Received:

    The other day, someone asked whether it is possible to open a new position to hedge using DMA instead of using Deal Ticket
    with the force key. I did say YES, it can be done. This is how you do it. Please read every step carefully. Do the wrong thing
    and it will close your existing position unintentionally.

    The convenient way is to use Deal Ticket (yes...OTC)... check the force open box and do the hedge.
    To do it by DMA without closing your existing position, follow these steps and read very carefully.

    1. Click on your existing position in your OPEN POSITION FOLDER. Bring out your DMA ticket.

    2. Key in a price which is your comfy price to close that position. If your comfy price is too far away, the system will not accept
    the price. Then amend the price to nearer the current price but far enough not to be hit. Send your DMA order into the order
    books of the market. Once accepted by the system, you will see that DMA order working for you in your WORKING ORDER
    FOLDER. When you see that, it means your existing position is now "locked" by that DMA order which means the only way
    for that existing position to be closed is if that DMA order is filled by the market.

    3. Next, click on that same counter from your WATCHLIST. Bring out the DMA ticket. Key in the price you wish to hedge.
    Send the order into the market. If accepted, you will see it working for you in your WORKING ORDER FOLDER.

    When your DMA Hedge order is filled, it will be a new position. It will NOT close your existing position. Once your hedge is done,
    you can withdraw your DMA order for your existing position.

    If you have more than one existing positions, you can "lock" them in the manner described above one at a time. Or you can click
    on "Aggregate View" so that all your existing positions will be amalgamated into one position. Then click on this one amalgamated
    position to put in a DMA order to "lock" this existing position. Check your WORKING ORDER FOLDER to see that your DMA order
    to "lock" is there. After that then proceed to place your DMA Hedge order or orders.

    The above method can be used for both LONG and SHORT positions. When you do hedging, check and double check your orders
    to ensure you have the BUY & SELL direction right before you send in your order.
  7. nottibird

    nottibird Moderator

    Oct 25, 2012
    Likes Received:

    When you trade or invest, never fall in love with a stock or hate it. Whether we buy stock A or stock B, we are here for the money.
    We have no personal interest to see either company grow to scale new heights or to become an industry leader the way a founder
    of the company would. We are simply here for the money. That' s all. That being the case, stocks are to be treated like workers.
    When you place money with a worker, you expect him to put your money to work to make more money for you. Those workers
    who outperform will get a higher allocation of your funds. Those who underperform will see you pull out your money from them
    and they will be out of work.

    Stocks are like vehicles.You use them to help you to get to your destination. If you happen to be in a slower moving vehicle and
    you see other faster vehicles overtaking you from behind and speeding ahead, you disembark from your slow moving vehicle and
    hop onto a faster moving vehicle. And if the vehicle you are in has broken down and is lying stationary at the road shoulder or
    worse, the brakes have completely failed and it is rolling backwards down a hill, you need to jump out of that vehicle whilst you
    still can before it crashes into a tree or goes down a ravine.

    Just becoz stock A has lost money for you does not mean you must die die make stock A make back the money for you. Becoz
    stock A may not only be unable to make back the loss, it may continue to lose more of your money. So, dont hate a stock such
    that you insist that it make good whatever loss it has made. You are here for the money. You have lost a certain sum of money.
    Your immediate objective now is to make back that money. Can stock A do that job? If there is a better stock out there which
    can do the job better, then you, as the owner of the capital, must pull out whatever is left of your capital in stock A and give it
    to the stock which can do the job better. Pulling out your capital from stock A will also mean taking a loss. That' s a temporary
    pain. It is one-off. The moment you put the remaining capital in stock B and it starts to make money for you, you will immediately
    feel much better and in time, you will reach breakeven and recover all your losses. But if you dont pull out your capital and you
    continue to rely on stock A to perform a miracle, chances are stock A will continue to roll backwards down the hill and eat up
    more and more of your capital. It is pure mental anguish to see your capital diminishing day after day. When your money is on a
    weak stock, your money is like a piece of ice cube -- it melts away and become smaller and smaller.

    There are some stocks in our STI which never fail to rebound, rain or shine. These stocks will follow the broader market sentiments
    up and down and ride on the crests and troughs of market cycles. If you buy such a stock at the wrong time and it goes down, you
    can hold and LOON and wait till the broader market makes a U-turn. Your stock will follow the market cycle and come back up again.
    And your boat will float again with the rising tide. But there are also stocks in our STI which fall and fall and never recover. One day,
    they will stop falling. And then hover down there and be forgotten by the market. There, they will join the ranks of the illiquid stocks -
    the desert of our STI. A desert because nobody goes there.

    This is her 10-Yr chart.


    This vehicle lost its brakes and has been rolling backwards down the hill ever since 2011. The constructon of the descending
    staircase started some 7 years ago and construction is still ongoing. Despite falling for 7 years, there is no sign of the staircase
    landing on the ground floor. On hindsight, those who cut their losses in 2017 are glad they did so and wish they had done it earlier.
    But better late than never. And those who cut their losses in 2011 would have re-invested their remaining capital many times over
    between 2011 and 2018.

    So guys, remember this when you play this game - Never Love Or Hate A Stock. You are here for the money. Not for the stock.
    The stock which can make the most money for you, gets the job.
  8. nottibird

    nottibird Moderator

    Oct 25, 2012
    Likes Received:
    SJ Version...


    Yes guys. I suggest you sit down and think seriously about how to work towards that goal.
    You really really need to do this if you are serious about quitting your job to do it full time.
    Going full time is a commitment and one which for some of us, there is no turning back
    becoz your previous job is not one that will wait for you. Somebody will fill that vacancy
    and you may never find another similar one. If you are self-employed and without overheads
    to worry about, then that' s different. Examples of self-employed jobs where you can drop
    anytime and restart anytime are insurance agents, property agents, private tutoring, taxi
    driver, driving instructor, tennis coach, swimming coach, etc. But not if you are a Regional
    Sales Manager or IT Manager. Finding back such a job takes time and your next one, if you
    find it, may not be as good as the previous one.

    As I was saying, going full time in the market is something you really really need to plan for
    to make it happen. If you dont plan for it, it becomes just an airy-fairy vague idea you have
    about going full time which you hope will one day happen but you are not doing anything to
    make it happen and to happen earlier. Finally if it does happen, it is becoz you were retrenched
    or you have reached retirement age and trading full time becomes the next natural thing to do.

    How old you are is not the issue. There is no such thing as too young or too old to go full time.
    But how many long term financial commitments you have, is an issue.

    Home Mortgage loan.
    Car Loan.
    Renovation Loan.

    If your spouse' s income is sufficient to take care of the above, then it helps. If it isn' t, then you will
    have to keep on working to pay off more of those loans and bring them down to a level where your
    spouse' s income is able to take care of them.

    To have enough to cover your monthly expenses, how much do you need? We call it X.
    To be able to make X per month from full time trading, how much trading capital do you need?
    Going thru this exercise will force you to work out how much trading capital you need to have
    before you feel comfortable and confident that with it, you can consistently make X on average
    month after month. Only if you give this very serious thought and do the Math that you can come
    up with a figure.

    Once you know how much trading capital you need to kick-start your full time trading career, you have
    a target to work towards. Then you can start budgeting and be more conscious of your spending habits.
    You will be more mindful of how you can stretch your dollar when you spend on necessities and how you
    can cut down or remove spending on luxuries. Becoz you are on a mission. A mission to save up as much
    as possible and within as short a time as possible to accumulate enough bullets and torpedoes to form your
    trading capital.

    But go through the exercise... you must. Otherwise, trading the market full time will just be a desire...a dream.
    But will not happen sooner. Unless unpleasant circumstances force you into it.
  9. nottibird

    nottibird Moderator

    Oct 25, 2012
    Likes Received:
    Stocks Which Rises Or Falls Half Cent To 1 Cent

    Tell you all what. All of you go scan the market and see if you can find stocks which behave as described below.

    Sometimes, a stock can rise half cent to 1 cent every day or every other day. The stock moves so slowly that it may not appear to move
    at all. But on closer examination, it does move. But very slowly. Maybe even by only half cent a day. But it moves half cent every day. Or
    every other day. This type of stock, after 1 month which is about 22 trading days, you realise it has moved 5 cts or 8 cts or 10 cts.

    Meaning, if you buy 100 lots and hold for 1 month or even for 2 months for it to move 5 cts to 10 cts, you can make anything from $5k to
    $8k to $10k. And without having to do much. No need to jump in and out many times. Just ride it only. Macam like passive income lidat.

    Likewise, there are stocks which fall half cent to 1 cent every day or every other day. They do the same thing as the above stock but in
    the other direction -- fall. And after 1 month, you realise that the stock has fallen by 5 cts to 10 cts. If you SHORT 100 lots of such a stock
    and ride the position for 1 month or even 2 months, you can collect passive income of $5k to $8K.

    There are such stocks described above. The challenge is to find them. And that is why I am getting everyone to chip in. Coz many pairs of
    eyes working together can produce better results mah. So get going, everyone. Cho Kang ! Cho Kang !
  10. nottibird

    nottibird Moderator

    Oct 25, 2012
    Likes Received:
    Here' s some simple Step-By-Step Rules of Trading to get newbies started...

    1. Pick a Sure Come Stock to play. Sure Come Stocks are those stocks, usually blue chips, who always never fail to make a
    comeback when they fall.
    2. Pull out her 1-Yr Daily chart to see whether she is on an uptrend or downtrend or moving sideways.
    3. Observe her Price Action during market hours to see if there is a Monkey in the driver' s seat.
    4. If there is a Monkey, ascertain if it is a Bull Monkey, Bear Monkey or Katek Monkey and follow the Monkey.
    5. Always trade in the same direction as the Monkey. Never trade against the Monkey. Unless you want to lose money.
    6. If there is a Monkey and you place your bets in the same direction as the Monkey, you have a winner.
    7. Take profits periodically and in any case, take all your profits when the Monkey leaves the driver' s seat. Becoz there is a
    90% probability the stock will reverse direction once the Monkey has left.

    8. If there is no Monkey in the stock but yet there is considerable price movement, then most likely, that stock is driven by a
    strong following of funds, institutions, retail investors and short term traders. In which case, ascertain if the price is doing a
    Higher High Higher Low pattern or a Lower High Lower Low pattern or moving sideways within an upper and lower range.

    9. If the price shows a Higher High Higher Low pattern, BUY ON DIPS. SELL ON RALLY. Then BUY again when the next
    dip (or PULLBACK) come and go. And SELL when the next rally fizzles out and dies off. And repeat this process until the
    Higher High Higher Low pattern is broken.

    10. If the price shows a Lower High Lower Low pattern, every rebound is a Dead Cat Bounce and when it ends, the stock
    will head back down to make a New Low. In this scenario, a CFD trader can SHORT when every Dead Cat Bounce fizzles
    out and dies off. Then follow the stock down to make a New Low. When the stock stops dropping and threatens to stage
    another Dead Cat Bounce, COVER your SHORTs to take profits. Then follow the stock as it rebounds and wait for this
    bounce to fizzle out and die off first. Then SHORT it again. And repeat the process. Until the Lower High Lower Low price
    pattern is broken.

    11. If the price action shows the stock is moving sideways within an upper and lower range, identfy the parameters of that
    range and BUY AT SUPPORT, SELL AT RESISTANCE. In addition for CFD traders, they can do a SHORT AT RESISTANCE,
    COVER AT SUPPORT. Trade the range until the stock makes a breakout on either side.
  11. nottibird

    nottibird Moderator

    Oct 25, 2012
    Likes Received:
    Risk Management --- Do Not Overtrade

    If you have 100k and you buy 100k worth of stocks, say your margin is 10%, the House will set aside 10k of your capital as margin.
    The other 90k will remain in your account to pay for commission and interest charges which will be deducted from your account at the
    start of each day. Let' s say the market moves against you and your stock falls as a result your position has a paper loss of 2k, your
    House will set aside 2k from your account to serve as the paper loss. Should your stock price recover back to your entry level, your
    House will then return that 2k to your capital and your paper loss will disappear. So even if your stock falls by say 50%, there is enough
    money in your account to be set aside to serve as the paper loss. Becoz you did not buy stocks beyond the value of your capital.

    However, if you have 100k in your account and you buy stocks to the value of 200k, then at 10% margin, 20k will be set aside as
    margin for your positions. The remaining 80k will be used to pay commission, daily interest charges, borrowing costs (if any) and to
    cover your paper loss (if any). If the market moves against you and your stocks fall by say 50%, that means your 200k worth of stocks
    is now worth only 100k. And your paper loss is 100k. Since out of your capital of 100k, you have set aside 20k as margin leaving 80k
    to cover commission, interest charges and paper loss, you wont have enough money. Your paper loss alone is already 100k. In such
    a situation, your House will ask you to top up your account to meet the shortfall. If you are unable to do so, your House can close some
    of your positions so that your remaining capital is enough to cover your paper loss. This is the only risk you need to manage when you
    trade with a CFD account. The risk of not overtrading beyond your means. Which is the same when you trade with a cash account.
  12. nottibird

    nottibird Moderator

    Oct 25, 2012
    Likes Received:
    Whether DMA & OTC Affects The Queue In The Cash Market

    It is very important to have DMA in CFD trading. Most Houses offer DMA. City Index and CMC Markets do not have DMA. So forget
    about these two. Dont even need to consider. Coz no DMA means you cannot participate in pre-opening and pre-closing sequences.
    And this is the time when you can buy or sell stocks at juicy prices.

    OTC which means Over The Counter is a default feature which all CFD Houses have. DMA (Direct Market Access) is a feature that
    most Houses offer except for City Index and CMC Markets. There is no maintenance fee for a CFD account. Whether you trade or not,
    the account comes free. At IG, your CFD account comes with OTC by default. If you want the DMA feature, you enable your account
    by activating it. There is a fee to activate DMA. It is $60 per calendar month. But if you do at least 4 trades in that month, IG will give
    you a full rebate of that fee. Doing 4 trades a month for a trader is easy. BUY is one trade. SELL is another trade. Plus instead of buying
    20 lots in one trade, just do 4 trades of 5 lots each. The minimum com for cash account is usually $25.00 per transaction. At IG, it is only
    $15.00. As IG' s com is 0.1% of transaction value, to avoid minimum com issue, each trade should be at least $15,000 in value.

    It is important to have both OTC and DMA so that you can use either tool to help you achieve your objective depending on market conditions.

    When you buy or sell using OTC, if you dont want to wait, you can do your trade straight away by buying at the current SELL price or by
    selling at the current BUY price. The ticket looks something like this:


    Say we are talking about Ascendas and she is currently trading 2.69 : will see Ascendas on the ticket and 2.69 will appear
    in the SELL box and 2.70 will appear in the BUY box. There is another small box in the OTC ticket for you to key in the number of
    shares you want to buy or selll. Just point your cursor at the BUY or SELL box and click and your trade is done. A window will pop
    out to inform you your trade is confirmed and details such as stock name, number of shares, price and date will be shown. IG will
    also send me an email to confirm the trade. It looks like this.


    If you dont want to buy at the current SELL price or sell at the current BUY price... if you want to buy at the current BUY price or sell
    at the current SELL price, then you must key in a LIMIT or STOP order which means BUY and SELL respectively. So using the Ascendas
    example above where the current price is 2.69 : 2.70... if you key in a LIMIT order (which means to buy) at 2.69, when will your order
    be filled? When the price in the cash market slips to 2.68 : 2.69. You see, you gave IG an order to buy Ascendas at 2.69. In the cash
    market, people are already selling at 2.69 when the stock is trading at 2.68 : 2.69. So IG must fill your order. Otherwise it is foul play.
    Likewise if you key in a STOP order (meaning to sell) at 2.70, your order will be filled when the price in the cash market moves up
    to 2.70 : 2.71. IG will have to fill up your order to sell at 2.70 if in the cash market, people are already buying at 2.70.

    When you use DMA to buy or sell, your order goes into the same queue as in the cash market. Your order is filled when the queue
    reaches you. Just like for a cash account trader. You dont have to wait for all the buyers or all the sellers in the queue to be cleared
    before your order is filled. BUY or SELL, you queue. And you are filled when it is your turn. If your CFD account does not have DMA
    either becoz it is not offered by the House or becoz you did not activate it, then you cannot join the queue. You will have to use an
    OTC ticket to key in a STOP or LIMIT order and your order will be filled only when the cash market is buying at your price or selling
    at your price. There are times when becoz new buyers or sellers keep joining the queue in the cash market non-stop, buyers or
    sellers are never completely cleared and the price dont move up or down by 1 bid. In such an instance, the only way to have a chance
    of filling up your order at the price you want is to join the queue. But you can' t join the queue if you do not have DMA. And so in the
    end, you will have no choice but to buy at the current SELL price or sell at the current BUY price in such a situation.

    One very, very important advantage of having DMA is that you can participate in pre-opening and pre-closing sequences. If you have
    been in the market long enough, you will know that good trading counters like DBS... they do gap up or gap down alot alot at times
    during pre-opening and pre-closing sequences which allow you to key in a DMA order (if you have DMA) to buy or sell to take full
    advantage of those gap-ups or gap downs. Never mind if you dont know what I mean. You will know what I mean going forward as
    you observe more and trade more. This is what a DMA Order looks like.

  13. nottibird

    nottibird Moderator

    Oct 25, 2012
    Likes Received:
    Difference Between OTC & DMA

    When I place a trade, I can use a DMA ticket or an OTC ticket. If DMA (Direct Market Access)... whatever I do will affect the
    queue in the Order Books in the cash market. So if I queue to BUY say 200 lots, the BUY queue in the cash market will increase
    by 200 lots.

    If I use an OTC ticket, then it is between me and the House. Whatever I do will not affect the queue in the Order Books in the
    cash market.

    I can use DMA to open a position and later use OTC to close it. Or vice versa.

    Being able to use an OTC ticket (not available to a cash account trader) gives me one advantage. And it is quite a major advantage.
    Say you want to sell 20 lots of SIA but there are only 5 lots buying at 10.10... 5 lots at 10.09...5 lots at 10.08 and 5 lots at 10.07.
    If you dont want to wait, you will have to sell 5 lots at each level from 10.10 to 10.07. You wont be able to sell all 20 lots at 10.10.
    Unless 20 buyers appear at 10.10. Using an OTC ticket, I can sell all 20 lots at 10.10. How?

    When I sell using an OTC ticket, my action does not affect the queue in the cash market.

    Say the price is now at 10.10 : 10.11 with 5 lots buying at 10.10.
    I can use an OTC ticket to sell 5 lots at 10.10 and IG will accept my order and close my trade at 10.10 right away.
    As this trade does not affect the queue in the cash market, after I have sold 5 lots at 10.10, in the cash market,
    the price will still show 10.10 : 10.11 with 5 buyers at 10.10.

    So what I do is I use an OTC ticket to sell 5 lots at a time for another 3 times. As long as the price in the cash market
    is still at 10.10 : 10.11, IG will accept my order to sell at 10.10 and close my position right away.

    And that' s how I can so to speak beat the market and sell 20 lots at 10.10 even though there were only 5 lots buying at 10.10.
    Same thing when it comes to buying. I can buy more lots than what is being sold in the cash market by using the same method.

    And that is how OTC offers me a distinct but important advantage which a cash trader cannot have.
  14. nottibird

    nottibird Moderator

    Oct 25, 2012
    Likes Received:
    One Third Rule

    If I have only $5000 in my CFD account, then I cannot make a trade which requires a margin of $3500.
    This is not the right way to use a CFD account.
    As a rule of thumb... just thinking loudly... use one third of your capital for trading.
    Keep one third to average down.
    The remaining one third is to buffer paper loss and to pay com and daily interest.
    If you have $5000 in your CFD account and you make this trade of 20,000 x 1.75, then you need to have a tight cut loss.
    Every 1 cent drop means your paper loss is $200. Your remaining capital is less than $1500 (becoz com is already deducted when
    you buy). If the price drops by 7 cents... that' s $1400 and you will have to cut to close this position to avoid a margin call.
    But if you have $15,000 in your account, then no issue. You can make this trade and feel very much more at ease becoz
    you have enough capital to Tahan a pullback in the price. And most likely, the stock would have rebounded before you use
    up your capital.
  15. nottibird

    nottibird Moderator

    Oct 25, 2012
    Likes Received:
    When Your Capital Is Stuck And The Situation Is Hopeless

    When your capital is stuck in a non-performing stock, your troops become prisoners-of-war held in bear prison camps.
    They cant fight for you whilst they are held captives. You need to free them first. There will be casualties during the
    rescue attempt to free your troops from bear prison camps. But if you dont take the pain and rescue what' s left of
    your troops and you wait on, with each passing day, more and more of your troops will waste away due to torture
    or starvation and by the time you finally muster enough courage to admit that the situation is hopeless and you
    should cut, very little of your troops are left to be rescued. Do it early when the situation is hopeless. Re-arm your
    returning troops and they can fight for you again.
  16. nottibird

    nottibird Moderator

    Oct 25, 2012
    Likes Received:
    Newbies Should Learn Some Basic TA And How To Read Charts

    To do better in this game, every trader or investor should know how to read candlestick charts and should know some basic TA.
    For those newbies who are not familiar with TA and FA, TA stands for Technical Analysis. FA is Fundamental Analysis. Google
    both FA and TA and you will get a definition of what they mean. My knowledge of charts and TA is actually very basic. Yet it is
    enough for most purposes to get by. Which is why I strongly recommend that you learn some basic chart reading and TA. That
    way, you can read the charts I post and understand what I mean when I talk about Moving Averages and trendline support and

    To learn chart reading and TA, there is absolutely no need to spend money to sign up for a course. Everything I have learnt about
    TA and chart readng, I learnt on my own by watching videos and reading articles online. For those newbies who know nothing about
    candlesticks, watch this video to learn the basics of candlesticks. After that watch the next 2 videos to learn about the 20-day Moving
    Average and the 200-day Moving Average. Do pay attention and listen up. Becoz the knowledge you acquire is yours for life and once
    you know these simple concepts, you will find reading my charts and my discussions on Moving Averages etc more meaningful. You
    wont feel so lost. And you will be able to connect with what I say, better.

    I am recommending these 3 videos becoz after watching them, my interest in TA blasted to the Moon and I was spurred on to learn
    more and more by reading and watching more of his videos as well as the videos of other professional traders. You can find tons of
    them on Youtube but be selective in what you watch. Many of them are boring becoz the voice of the person is boring and the way
    he presented his video is boring. So be selective and skip the boring ones until you find one which suits you.

    I cant post these as a link becoz they wont work. So you folks have to copy and paste on the address bar of your web browser to
    bring you to the video.

    index=3& list=PLMI3L_Wx4fO4VwhXTFaxhjVGg-Kzmt8AV

    index=5& list=PLMI3L_Wx4fO4VwhXTFaxhjVGg-Kzmt8AV

    index=8& list=PLMI3L_Wx4fO4VwhXTFaxhjVGg-Kzmt8AV
  17. nottibird

    nottibird Moderator

    Oct 25, 2012
    Likes Received:
    Difference In Price Action Between A Bear Monkey Divesting & A Katek Monkey Shorting

    The question to ask now is --- what type of monkey are we looking at?
    A Bear Monkey who is just divesting.
    Or a Katek Monkey who has targeted this counter for SHORTing to profit from her fall.
    There is a difference in the way the 2 monkeys sell.
    A Bear Monkey will sell sensibly.
    A Katek Monkey will sell senselessly.

    Sensible selling mean sell without depressing the price by too much...and this naturally mean to have pauses
    from time to time to allow bargain hunters and funds to come in to support the price and bounce it up a little.
    Then the Bear Monkey can resume selling at a higher price and get back more capital. That' s the big difference
    between a monkey selling shares he already owns and a monkey who is SHORTing. A monkey who is divesting
    will want to sell at the best price he can get. The better the selling price, the more capital he gets back. That' s why
    he sells slowly. He will from time to time wait for buyers to come in to support the price. Then he sells to them. Which
    explains why the price cannot rise but at the same time dont freefall rapidly either. Instead, the price simply sinks lower
    and lower which translates into a " Slowly Bleed To Death" price action.

    A Kartek Monkey on the other hand, will do the opposite. It does not benefit him to see the price sink slowly. Conversely,
    it benefits him to see the price take a steep dive. Becoz he is SHORTing. The lower the price is, the higher his profits. So
    what a Kartek Monkey will do is he will collect lots of SHORTs quietly first. Then when he is ready, he will suddenly whack
    the price down rapidly by say 5 to 8 bids. This will immediately put all his SHORTs done higher, deep in the money. After
    that, what he does is he will collect more SHORTs at that 5 to 8 bids lower level to accumulate another round of SHORTs
    there. Then when ready, he whacks the price down by another 5 to 8 bids. At this point, he will cover back some of his
    SHORTs to lock in profits as well as to recall capital to whack some more. When he covers, the price will bounce by 2 to 3
    bids but usually not more than that. Why? Simple. The Kartek Monkey is covering - he wants to make the most money
    possible. Keeping a lid on the price is key to him making the most money.

    Now, when he covers, the price will rise 2 to 3 bids and this will lure bargain hunters out to join the BUY queue thinking
    that the stock has bottomed out and is rebounding. And this is precisely what the Kartek Monkey wants - more buyers to
    join the queue. Why? Becoz he is still SHORTing. To SHORT, he needs buyers. And so the next thing is the Kartek Monkey
    whacks the price down again by another say 5 to 8 bids and then takes a pause. From there, he covers some of his SHORTs
    again to book profits and to recall capital to play this game. When he covers, again the price will rise by 2 to 3 bids. Retail traders
    will once again join the BUY queue lured by the expectation of a rebound. When ready, the Kartek Monkey whacks the price down
    again and the whole process is repeated.

    When he comes to the last part of the game, the Kartek Monkey will usually depress the price by alot alot to give it a final
    whacking. This will give him more room to cover at a good price becoz in this round of covering, he will be covering all his
    SHORTs as he is ending the game of musical chairs. When he covers, the price will rise. As this is the last round, he wont
    care by how many bids the price rises becoz he is covering all his SHORTs to run road and he already earlier on whacked
    the price much lower to provide a buffer for him to do extended covering during which the price will rebound by more than
    the usual 2 to 3 bids. That way, he will be able to cover every single piece of his SHORTs at a profit.

    We will have to watch the price action closely tomorrow to see if the selling continues tomorrow and if so, whether the
    selling is sensible or senseless.
  18. nottibird

    nottibird Moderator

    Oct 25, 2012
    Likes Received:

    I see. Ya...10 lots is about the minimum size to trade CCT so as not to have a minimum com issue.
    What I am about to say is not just for trading CCT but for all Sure Come Stocks.
    A trader who has an army large enough to enable him not only to average down 20 times but also to
    average down pyramid style, ie. buy more as the price dips, is very well positioned to win every war.
    If cannot do 20 times but can do 10 times is also a reasonably good position to be in.
    If cannot do 10 times but can do 5 times is also okay. Except that it calls for more patience on the part of such a
    trader to spread out the BUYs further apart so that he dont run out of ammo before the stock runs out of bottoms.

    If the limited size of his army allows the trader to buy once and after that average down only one to 3 times, then
    in order not to be OUTPLAY OUTWIT & OUTLAST by the market, this trader must have tons of patience not to average
    down too soon. In my opinion, one way such a trader can improve the outcome of his trades is by waiting for his stock
    to actually stage a U-turn first. Then buy more to add to his positions. Not second guess the market and pick a bottom
    for the stock. Becoz when we try to pick a bottom, maybe only once or twice we get it right out of 10 times.

    As for me, there are two ways I can play this game. One way is to pick say 5 good counters to go LONG when they have
    gone thru alot of beating and have retraced/corrected to a strong support level. Then I buy. And if I am wrong and the stock
    continues to fall, I wait for the stock to fall to another support level. And when the stock shows signs of rebounding, then I
    buy again to average down. And if wrong again and the stock falls further, I repeat the process.

    Now, if I do that for 5 counters and my timing is quite okay in that after averaging down 1 to 3 times, all my stocks find their
    bottoms and U-turn back up, then I will do very well. The profits will be massive and multiplied by 5 counters, I will be feeling
    on top of the world. But what if my timing is not so good and my stocks do not find their bottoms within 3 times of averaging
    down but 5 to 8 times? This brings us to the next question - do I have an army large enough to support a campaign involving
    5 counters where I can average down by as much as 5 to 8 times?

    If the answer is YES, I do have a large enough army, then I can do it this way. Fight 5 battles at the same time and if necessary,
    add more positions to average down 5 to 8 times.

    But what if I dont have a large enough army to fight 5 battles and I still take on 5 counters? On those occasions when I am lucky
    and my timing is right, I will win all 5 battles and enjoy that feel-good sensation. But if my luck runs out and my timing is bad, not
    having the ability to keep averaging down as well as to buffer my mounting paper loss will mean I will have to cut some of my
    positions. If my stocks continue to take a much deeper fall than I expected, I may even have to cut all my positions when I run
    out of capital to buffer the paper loss. And once I am in such a position, ie. I cut all my positions and took a very huge loss of
    say 30% to 50% of my capital, trust me, my mental state of mind will be one which is very badly shaken and demoralised. I will
    lose confidence in myself. And I will be very afraid to trade again, let alone buy back those very same stocks which I have cut.

    And the way the stock market works is that very often, when a trader does not cut his losses and he LOON on and on and on
    and finally when Beh LOON leow coz no capital leow or no mental strength leow and he cuts, the stock has actually bottomed
    out or is about to bottom out. The next thing is his stocks...those very same stocks which he had just cut and he is still reeling
    from the effects of losing 30% to 50% of his capital... all start to rebound. Now, realistically, do you think that trader will have the
    confidence and the mental strength to buy back all the stocks which he had just cut? And more often than not, all his stocks will
    continue to rebound over the next few days or weeks and eventually reach that trader's entry price. And beyond. But for this trader,
    having cut and taken the loss and not having bought back his stocks, the fact that all his stocks rebounded and CHEONG to the
    Moon is totally irrelevant to this trader.

    Now, to lose...and to lose big this way is really, really very needless and very sad. Becoz you lost not becoz you picked a bad
    stock...........or becoz your stock died and failed to rebound. No...not at all. Your stock is a good stock. And your stock did rebound.
    But you still lost and lost big only becoz you over-committed yourself by taking too many positions such that you were unable to
    keep averaging down to OUTPLAY OUTWIT & OUTLAST the market to hold on to your positions long enough to see your stocks

    Back to my discussion.

    So if I do not have an army large enough, I cannot and should not play 5 counters at the same time. So that I dont put myself in a
    position where my 5 stocks havent rebounded yet but I have to cut coz I ran out of capital to LOON on.

    So what do I do? That brings me to my Option 2. And which is dont play 5 counters. Play just 2. Or even just 1. So that I can mobilise
    my entire army to fight that 1 or 2 battles. And I will have enough troops to keep averaging down not just 5 times but 10 times or 15 times
    or even 20 times during which my stocks will surely find their bottoms and rebound even before I have used up all my capital. Yes, to make
    big money from 5 stocks, if you pull it off, will see your wealth grow exponentially. But if you dont pull it off, you may lose a large chunk of
    your capital and suffer a big dent in your confidence and morale from which you may take a very long time to recover from. To make big
    money from just 1 or 2 stocks, will take a longer time to grow your wealth. But it is a much safer route and puts you at a much lower risk
    of losing a large chunk of your capital. Yes, it will take longer. But it will get you there. And when it gets you there, you will have a larger
    army by then. Spend a few years using the safer route to build and enlarge your army first. With a larger army, you can then take your
    game to a level higher to play 5 stocks at the same time. But this time, with a larger army big enough to play 5 stocks at the same time,
    you need not cut and you have the capacity to OUTPLAY OUTWIT & OUTLAST the market.
  19. nottibird

    nottibird Moderator

    Oct 25, 2012
    Likes Received:
    I wrote this on 19 Jul 2017 and posted at the main thread...

    "Noolah. I was thinking what to do next time if this forum becomes so quiet that no point I carry on just to talk to myself.
    You see... every forum will face the same problem - which is people come and people go.
    People will go. And stop posting. Even stop coming. How many of our regulars here have stopped posting?
    Whether they still come here to read regularly or not... I dunno. Coz if they dont make some noise to make
    it known that they are here, as far as I am concerned, they are not here. Last time the old forum format I can
    see who are here. Their usernames will show up at the bottom of this page. But now with this new forum software cannot see leow.
    So who are here doing the lizard thing... cannot see leow. I can only see based on the people who post here.

    Now, if we get new members... then its okay. Got come got go. Those who come replace those who go.
    And we can still have a meaningful group of people here to talk stocks and talk kock.
    But to get new members...for an unknown forum like ours... I have to do marketing - go to another forum to set up booth to conduct roadshow.
    And which is tough. Tough becoz it means I have to spend some time there to post to get an audience first. Before I can sell this forum to them.
    Posting requires lots of effort and time. And it is not easy to tell the folks there about this forum becoz the software there will soon catch up with
    what I am doing and shut me out by disabling my account. That's what happened to me at ShareJunction. And doing marketing is a tough job.

    Not easy to get people to come. Some came...looksee looksee...and then left. I think its also largely becoz we dont play pennys here. Most
    novice traders want to make alot of money with very little money and within a very short time. So they play micro pennys. Which we dont do here.
    They see us talk about blue chips they SIAN leow and never come back. But pennys is something which I personally will not want to play. Neither
    do I know how to take the lead. Will end up leading people to Hor-Lan only. Whereas blue chips... I know that with the right strategy coupled with
    LOON kungfu, I can lead people to victory.

    If not for the last roadshows conducted at the now defunct Channel NewsAsia forum and ShareJunction, this forum will today consist of only Dai Lole,
    angang, richman, Koala, Starshine, and myself. All the others... Mei, plutus, oppa, Pegasus, ahwee, kruz, goldi, sotong, l0vely, $warrior, cfd...etc etc
    were all from Channel NewsAsia forum and/or ShareJunction forum. Imagine without these "imports" from CNA and SJ, how quiet this forum would
    have been in the last 3 years.

    So what happens if one day, these imports also stop posting completely? Then 2 options for me. One is continue to post here and talk to myself.
    The other is to close shop here and go to Shareinvestor to start my own Homepage and shift house - move The Trading Floor to there and continue
    my chicken run and ostrich run discussions there. I understand that in a stock forum, there is policing. Cannot talk dirty cannot post notti pictures etc etc.
    But in my own Homepage, I get alot more leeway. The usual out of bound markers...race, language, religion and nudity will still apply. No problem with
    that. Its the same here. But notti talk and notti pictiures I can do it in a Homepage. And there. I dont have to worry about marketing. SI will do the marketing.
    I just focus on sharing and collecting eggs only. But that is a last resort. Anytime, I still prefer to have our own forum - our own place... a place we can call home.

    Just looking ahead and thinking of what I can do if you people also stop coming. But goes on here."

    Hope that day wont come. Coz there is no place like home.
  20. nottibird

    nottibird Moderator

    Oct 25, 2012
    Likes Received:

    There are 3 things a trader who wants to be successful should learn to do :

    1. Train yourself to find the bolas to add positions when your stock has bottomed out and U-turned back up
    or has topped out and has U-turned back down.

    2. Whilst waiting for the price to reach your home run target, train yourself to profit from your stock by doing
    chicken runs at the sides. Just becoz you are holding a stock longer to score a home run, it does not mean
    you cannot also do chicken runs with it.

    3. Another thing which a trader who wants to be successful must learn to do ... is to HOLD your winning positions
    longer when conditions are favourable and calls for the trader to ride his positions for more upside.

    The usual set up when conditions are favourable for a trader to hold his positions longer to maximize his profits is when a good Sure Cum
    stock falls and falls due only to weak sentiments (not due to a sudden deterioration in its fundamentals) and then makes a U-turn when
    sentiments improves and turns positive and the price action tells us that bears have turned bull to buy and bulls have turned even more
    bullish to add. In the past, when I buy a falling stock which is on its way down, I languished whilst it was still finding its bottom. Then one
    day when the stock turned and started to rebound, my focus on grabbing the lifeline thrown to me overshadowed and blinded me to quickly
    seize the opportunity to get out. As a result, when the price rebounded to 1 or 2 bids above my entry price, I threw back and took the 1 or
    2 bids happily. Every Platoon I had committed into the fight at various entry levels, I was happy to take 1 or 2 bids from each Platoon. When
    the price had rebounded to above the highest of my Platoons, on hindsight, I realised I could have made 4 or 5 or 6 times more if only I had
    held on to all my Platoons right until the price recovers to above my highest Platoon. So after learning this lesson many times, I decided to
    bite teeth and squeeze balls and teach myself to hold on and dont sell too early when conditions are favourable for me to continue to ride on.

    And that was precisely what I did in January 2017 when I held on to all my positions in CapitaComm to hitch a ride on the monkey who was in
    the driver's seat for Dividend Play. I remember Mei and bro oppa were with me in that trade. Both of them took profits chicken run style on the
    way up. What they did was what I used to do. But that time round, I didnt. I had to cross nipples and tie myself to my toilet bowl initially. But after
    getting the hang of it, I discovered that I could do it without requiring a Chio Bu to tie me to her bed anymore. For the 1st time ever, I experienced
    riding on a winning position ostrich run style and it was exhilarating to see my paper proftis go up with each passing day. Enduring the intermittent
    pullbacks during which I saw a couple of thousands shaved off from my paper gain, was part and parcel of the game. It is inevitable to do Tango
    becoz stocks do not move up in a straight line. Had I taken profits chicken run style, I would have made around 3500 eggs from that trade. Still good
    money. But becoz I wanted to force myself to learn how to ride a position when conditions are right, that ostrich run yielded 14,688 eggs. That's 4.1
    times more !!! So this is what a trader must learn to do - resist the urge to take profits and ride your positions for more upside when conditions are right.

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