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Trading on breadth - Adv/Dec NHNL McClellanSumInd
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lorong8
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05-Feb-2013 01:11
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Trade Like a Casino Hello, Once every year….our bosses call us up…demanding to know what we have achieved in the past year…so to dictate how much performance bonus we get…. Then you start to see the balls carriers have already accumulated some political points….hahahah …………. Yes, Mr CopyKat strikes again…the title’s stolen from another book’s title…  http://eservice.nlb.gov.sg/item_holding_s.aspx?bid=14159434 The current bullish run looks unending (yet)…I was waiting for it to end in Jan so I can make a quick review of the trades in 2012, ending with the last long trade established in Dec12… Never mind, I will try to do a cut off on 31Dec12 then. I follow closely to the turtles rules (wtf?….I know I know….) and the 5 guiding questions to formulate a disciplined approach (or a trading system) to trading. 1)Markets – What to buy or sell 2)Position Sizing – How much to buy or sell 3)Entries – When to buy or sell 4)Stops – When to get out of a losing position 5)Exits – When to get out of a winning position Here a brief outline. I trade short term trends. Prefering liquid counters that moves well with the market. I use a volatility based approach to limit losses, so in a way, it limits how much I can buy per counter. How much to risk per counter is based on historical backtested maximum drawdown. I also use market breadth to be my guide on market sentiment, or conditions, or trend, to decide and time when enter or exit the market. Hey, I just answered all the 5 questions
Additionally, sometimes we often a a bit hand itchy, wanting to buy more…”buying the dips”…. I like alexander elder’s triple screen method….so I use it when the trend has been fully established and well on the way. So that’s why you see the triple screen suggestions and musings in jan, way after the initial trend was established (for me….) in dec… With all the above guidelines that I adhere to….I give myself slightly better odds in the equity markets…thus… trading like a casino….  http://cimtr.files.wordpress.com/2012/12/breadth05dec.jpg Green meant market breadth turned bullish and can look for entry, and red meant no long bullish (ie trading range or down), so can look to exit and stay cash. Anyway, here goes… the 1st 6months, Jan to Jun 2012 1st Window Early Jan 12 – Late Feb12  http://cimtr.files.wordpress.com/2013/02/jan12_long1.png  http://cimtr.files.wordpress.com/2013/02/jan12_long2.png  http://cimtr.files.wordpress.com/2013/02/jan12_long3.png Market breadth was up in early Jan12, and went down in late Feb12. We concluded with a net gain of $15,616 from a pseudo $250k capital. Swee huh.. 2nd Window Mid Mar12 – Early Apr12  http://cimtr.files.wordpress.com/2013/02/mar12_long1.png  http://cimtr.files.wordpress.com/2013/02/mar12_long2.png  http://cimtr.files.wordpress.com/2013/02/mar12_long3.png March trade was negative. Down $2,624 to $12,974 for 250k cap. Pui! But a losing trade does not mean a bad trade, a good training and reminder when to cut loss when market sentiment is bad…and stay in the side lines…. No need to tell you what happened to our markets from Apr 12 to Jun 12 huh? Dun remember? … “Sell in May and go ….” sheeesh…cheesy. Ok continue tmr for jun to nov cheers |
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lorong8
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02-Feb-2013 01:34
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…It never was my thinking that made big money for me. It was always my sitting… J.L. … Eh siao lian eh, you say loon I loon ah? Knn like that I sibei no face leh! What’s the rationale man? Ok wait, you see this….like magic show… using the US market as an example, we use market breadth (MSI) as our guide to market conditions… http://cimtr.files.wordpress.com/2013/01/msi-ma-dj.png  You see, everytime the blackline goes up, the market goes up…when it comes down, the market goes down….better still, see the blue line? If the black cuts the blue upwards…higher chance of successfully joining the trend…if it cuts down…better take profit and stay cash… Eh siao lian eh, then knn, u see august 2012, up down up down up down, lose until buay jin choo man…like that how… Oh, that is whipsaw…common la…there’s a way to manage it…that one we leave it for another day ok? Now just stay with the flow… Eh siao lian eh, so since december till now, cannot sell, now can still buy more? Ah…let me tell you something…
Ok la….Eh siao lian eh…knn, you always quote this Jimmy Lapa Mo… Diam la. ——————————– This was writen with the following Chino Moreno tune humming in my mind My Own Summer (Shove It) – Deftones |
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lorong8
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30-Jan-2013 13:30
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The art of Looning What is looning? Or what is loon? Loon is to endure. Perhaps not so apt to what I want to lead to....but wtf....wth.... Endure is to “hold it there” according to all my sadistic army sargeants... and I vowed never to be like them...and I succeeded! So many of my trainees appriased I was their best sargeant...or sargeant major...cool huh? Eh where the f**k im going man.... The worst looning...is when you are losing. Dun ever loon when you lose. If you have a lmited capital...just like yours truly...you only have 1 chance...1 credit... no 'u u d d l r l a b select start' in trading.... (not the deftones song...I like deftones....i like my own summer....i like the riffs). So dun ever loon when you lose. Here's a chim way to look at looning when you (r) losing. 
All you need is 1 big one, and you ….die. No top ups. No replay. No continue. You lose half your money, you need 100% gain to get back. Humungous effort. And that's for a single trade. If you are staring at the table and think of your trading system...then you should think about your maximum drawdown. It's similar, but a bit different. But there's one good time to be looning. When you are right. People have been looning...since 100yrs ago when they are right. “Yeah right...." Really! http://www.jesse-livermore.com/the-complete-trader.html Turkey: " Why, this is a bull market!" Elmer: " I know this is a bull market as well as you do. But you'd better slip them that stock of yours and buy it back on the reaction. You might as well reduce the cost to yourself." Turkey: " My dear boy, if I sold that stock now I'd lose my position and then where would I be? And when you are as old as I am and you've been through as many booms and panics as I have, you'll know that to lose your position is something nobody can afford not even John D. Rockefeller. Now is the time to loon...cos the market sentiment is positive. Then again, this is only valid for short term trend trading...for me. cheers |
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lorong8
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25-Jan-2013 15:16
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Hello! Sitting still and riding a profitable position in a up-trending market, and yet at the same time trying to dismiss profit taking temptations is one of the most endearing trait of profitable trading. It’s tough man I tell you. (Like your sergeant telling you diamond push up, down and hold it there…knn…) Riding the trend, keep your winners…etc..these words aren’t just popular in recent times…there were already saying these about 100yrs ago… http://www.jesse-livermore.com/the-complete-trader.html I personally use market breadth as a gauge for market trends. Right now, it’s positive
This week, market normalcy set in and we were able to see our pseudo portfolio claw back more gains after the property curbs (we are so short term sighted huh? seems like no one is talking much about the 5% tax thingy now….) Market breadth (or sentiment, or condition, interchangeably, according to my current mental sentiment, or condition) is still positive, and with rising prices confirming the current rather bullish environment. As usual, the portfolio is still intact and we still hold long positions until conditions start to deteriorate enough for us to turn defensive or take profits and stay in cash…. 
be safe! cheers:) |
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monk999
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09-Apr-2012 12:57
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lol. correct trading is not about being right all the time. it is about minimizing risks and losses.
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lorong8
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09-Apr-2012 12:23
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Hello, Market sentiment seems pretty bad now, I would think it is best to withold any buying, and try to reduce any short term positions. stay cash is best... The weight of evidence for me is based on market breadth. You must try to have a logical basis for your trading system, not just depend on tips or whatever is fashionable right now, that wold be a shakey basis for your trades... There no need to be buying or in the market all the time ok? Oh, and there is no need to be right, even most of the time. Trying to be right most of the time, boasting about our profits and keeping quiet or plenty of excuses for our losses does us no real help at all... [IMG]http://i41.tinypic.com/5fkpat.gif[/IMG] [IMG]http://i43.tinypic.com/1zmnfvm.gif[/IMG] be safe cheers |
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lorong8
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17-Mar-2012 11:21
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STI nearing R& S line :) [IMG]http://i39.tinypic.com/33ystb7.gif[/IMG] |
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lorong8
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07-Mar-2012 15:59
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Hello! I would like to take this moment of negative sentiment and volatility to further on the thoughts on risk management. There are 2 main components I would like to share. Trading opportunity, and risk management. If you at the below chart and the accompanying blue line chart (this tracks market breadth, which tracks all the traded counters, as compared to the STI Index, which tracks 30 stocks). You will notice that there are times when it is good to trade/buy, and there is a good time to sell or stay cash. There are periods of low risk and high risk. There is no need to trade all the time. (my bosses will probably kill me for this, haha) [url=http://www.freeimagehosting.net/ofmol][img]http://www.freeimagehosting.net/t/ofmol.gif[/img][/url] Right now, the blue line has dipped below zero, ie, trigger a sell/stay cash call. Im not gazing into a crystal ball. The " tape" says sell. The rationale is more counters going down vs counters going up. Simple. There's no point buying at the wrong period on a super low valued stock, low price to book ratio, excellent earnings, darling of the analysts, media...when the share price is plunging... I dont care if the company produces rocket spare parts for NASA's Jet Propulsion Lab, or the company produces broomsticks from recycled wooden planks, if the market is positive, most stocks will go up, vice versa... I follow trend, or " the line of least resistance" (from my hero, Jesse Livermore). There is a time to trade, and there is a time to go fishing. (Also from Livermore) Risk management, for me encompasses having stop loss and position sizing to match it. This is a simple table on risk management. We should focus on risk, as it is the factor we have the most control over, not profits, which we cannot predict or control. [url=http://www.freeimagehosting.net/8r81h][img]http://www.freeimagehosting.net/t/8r81h.gif[/img][/url] Lets say we have S$100,000.00 capital. And we risk 1% per trade, or S$1,000.00 This means we will lose a maximum of S$1,000.00 per trade, thats all. Let see Wilmar. The volatility is 0.232. Meaning, on average, it moves S$0.232, 99% of the time. If it moves beyond S$0.232, it means something is wrong or very good. So we will put a logical cut loss at S$4.92 – S$0.232 = S$4.688 If Wilmar plunges below S$4.688, something is very wrong, we dont want this stock anymore. Never mind whatever the news out there, just get out. Its ok to be wrong, just dont stay wrong. (see citigroup chart below) Number of stocks to buy is Risk divided by the volatility. S$1,000.00 / 0.232 = 4,310 or 4 Lots. If you bought 4lots at S$4.92, and cut loss at S$4.68 you only lose S$960.00 So you have now managed risk! By having a stop loss, and position sizing in place! Do the same for other counters. This method makes sure you trade with equal risk spread throughout your portfolio, instead of “blindly” buying 5lots of everything or allocate S$10,000.00 evenly to all etc.... See the below Citigroup chart...how long will it take for it to rise back to USD550? Beyond our retirement age probably. There are many other ways to place stops and calculate the corrsponding position sizing. If you buy on the dip, the the low of this dip is your stop out point. If you buy on support, or breakout of resistance, then somewhere near this S/R line will be your stop out line. If you trade chart patterns, the moment the price plunge and breaks the chart pattern, that's the stop out point. This below chart, 2906 is somewhat a good S/R line. You can buy a breakout here. [url=http://www.freeimagehosting.net/roh47][img]http://www.freeimagehosting.net/t/roh47.gif[/img][/url] Zooming in. Look at the horizontal line first. 2906, that's our original S/R line. On 03Feb12, price broke up, so you buy at around 2923.43, stop loss will be just below this S/R line, near 2905 or 2900. So how much to buy? S$1,000.00 / (2923.43 - 2900) = 1000/23.43 = 42units. Simple? [url=http://www.freeimagehosting.net/t3kim][img]http://www.freeimagehosting.net/t/t3kim.gif[/img][/url] Now, let's say we trade dips. buy on the dips/ buy on the pullbacks, heard that before? The dip happened on around 27Feb12, and on 29Feb12, it showed renewed strength, as indicated in the Stochastic dipping into oversold and bounced up, plus, MACD dipping negative and tick up. The low of this dip is 2946.095 (cut loss) and entry on 29Feb12 will be around 3000.00 So, how much to buy? S$1,000.00 / (3000 - 2946.095) = 1000/53.905 = 18 units. Simple? So, why do we focus on stop loss and position sizing? Its about this cheesy quote " cut your losses short and let your profits ride" . We just ride the trend, and let the market decide on the profit. We mitigate risk, by controlling the factor that we have most control over....why...it's risk! Hands up, who, or anyone you knew, held on to some stocks right now, that you/they refused to sell, because the extreme loss is too painful....or you subscribe to this " I have not sold, so I have not lost yet" I do not proclaim to be a stock market expert, but seriously, I have seen/come across too many people reaching the trading risk of ruin far too often. I myself am 100% guilty too. But, I learned from it. Have you? By buying a stock and trying to hold till proper valuation, is willing the market to adhere to your view, and react according to your expectation. The market is a reflection of human emotion conflicted, profit focus, hesitate at decisive moments, fall prey to groupthink and most of all.... irrational. I rather follow price....it's this factor that you buy and sell for a profit, isnt it? Ask yourself, do you want to be right, or do you just want to make money? There is seriously no need to be right, even most of the time. Whipsaws do happen. (Being Right or Making Money - Ned Davis, another hero, haha) Remember, its ok to be wrong...just dun stay wrong! (this is a quote from one of my hero - Greg Morris) Happy trading, and did I mentioned this? Focus on risk management! cheers (the above is purely mine personal opinion, you do not have to agree with me a single bit) |
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lorong8
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05-Mar-2012 11:28
Yells: "cimtr_wordpress_com" |
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Here's the " pass" for triple screen, " buying on the dip" . Weekly chart MA up & impulse pass> > either 1 of MA or MACD ticks up. (even though I add 1 more oscillating indicator, stoch to do filter...and this fails as it is ticking down now...) http://www.freeimagehosting.net/1yb9t This is daily, also pass, dipped into the value zone (between 2 MA) plus pass on MAcd ticking up (impluse). http://www.freeimagehosting.net/7w7s7 Of course the buy signal was last week. On hindsight, there was a also a screaming buy based on a bullish macd divergence (see 28Nov vs 20Dec). I kinda follow breadth data nowadays, so, breadth wise, was a screaming sell last week. I sold, what I have bought on 11/12Jan. erm...even vol also plunging... http://www.freeimagehosting.net/w2e3p Market looks weak (can change in a bat of eye lid though..hehe, Im not concerned about being right, Im more concerned about risk management and making money, market opinion are just that...an opinion.) so I personally dun like to see people buying into this " dip" ...better wait for a confirmation first. So, this is a personal market call: Sell/Stay Cash As emailed out last week, there's a way to sell (trailing stop) if the stock you are holding is still trending up. About 40% of the pseudo portfolio is still in trend as of today http://www.freeimagehosting.net/wkbtk Good luck! Focus on risk, not the profits. It's the only factor you can have some control over... *this is a duplicate post from singstocks |
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lorong8
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17-Feb-2012 12:11
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lorong8
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03-Feb-2012 12:51
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Hello! Here's some good reading materials on the thoughts of Jesse Livermore (i know! ....again???!!! hahaha!) You dun have to trade all the time http://www.jesse-livermore.com/ Its a bull market...so sit tight! http://www.jesse-livermore.com/the-complete-trader.html You only know the bottom after it has bottomed, and you only know it was a top after it has topped out (so quit trying to find the bottom and top!) http://www.jesse-livermore.com/trading-rules.html Wait for the best time to buy, best price to buy, and then wait for the best time to sell, best price to sell (not buy when u think its cheap, or dun buy becos u think its too expensive) http://www.jesse-livermore.com/stock-timing.html An update via email few days back, which I regurgitate somewhat in the prev post.
So there you go, it can be done. Go long when the market is positive, you will find it easier to make money. (About 18mths of data showed 7 long trades, including the present one, with 1 loss. Double it up if trading short side. It's 14 trades, 2 loss) Most stocks will trend up when the market direction is up. Stay cash or short when the opposite happens. And take action quickly, dun delay, it will give you enough buffer " profits" to stick with the prevalent trend and enable you to sit tight and ride out the " noises" .
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lorong8
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31-Jan-2012 13:07
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Sitting Tight
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lorong8
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17-Jan-2012 15:34
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lorong8
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20-Dec-2011 10:19
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hello! i hold the position until the sentiment changes. it can be 1day or so far, up to about 2mth plus etc :) |
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timqoo
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19-Dec-2011 12:57
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bro lorong huat, you hold your shorts for more than a month? | ||
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lorong8
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19-Dec-2011 12:44
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lorong8
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12-Dec-2011 15:12
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lorong8
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02-Dec-2011 11:44
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lorong8
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04-Nov-2011 13:44
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yes, market sentiment is still positive. even though mon & tue really tested my discipline n resolve. my opinion was to take a trailing stop exit...but the indicators are still positive...so phew! and a big " m****e finger" to the greek PM, mr egomaniac. the sti is still on a weekly rally, breadth is still hot (haha!), daily chart shows a good buying opportunity (a dip, just passed, still not too late) ---------------------------------------- No, its not the bear market.....yet! You can see the STI index making a higher high and higher low (the blue circles)....a basic requirement for a positive uptrend....and it is still intact. Unless it breaches and breaks below the white horizontal line. I am still positive on the market. It's not my opinion, it s from " reading the tape" of the breadth indicator. (see prev email screen shot). So there is actually an opportunity to " buy on the dip" when prices dip further a bit and then start to rise. This has to coincide with a uptick to the stochastic and macdH indicators. The new stop out (stop loss) level will be this new (future) dip. I come to it it it comes. If not, and the market plunges, then I will let you know to go cash or not :) [IMG]http://i40.tinypic.com/2i8c2dc.png[/IMG] Remember this? M1 is still not triggered. RMG is already out. Other than Singtel....all are at breakeven or still making money.... :) Finger crossed for tonight's Ben's news announcement on the FOMC meeting outcome. cheers! ------------------------------------------------------- So now, wed's now can be considered the dip, and u can put your stop near this low (STI: ard 2750 level). If you check out most counters, they will most likely show the same senario as the STI index now. Now this is not a recommendation to trade these counters and moreover, i have long positions in some of them...here are some counters that behaves " STI-Like" (dun just take my words...go on, open their charts and open sti, do a comparison) CityDev F& N OCBC OLAM Singtel (losing the correlation soon) Ezion MapleLog 1stRes & of course the ETF la cheers & happy trading :) this is a duplicate of my post in singstock |
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lorong8
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28-Oct-2011 15:15
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Hello! Below are 3 charts. Top is the STI index, below 2 is a visual representation of 2 types of breadth data i use to gauge when is a good time to enter and exit market. I use the weekly chart oscillator indicators to verify, and then choose the most liquid and leading sectors, plus strong trending stocks vs the STI to go into. I will not post the counters I have chosen as I am trading them and i dun wish to be seen like im giving tips. those in the email list...i will explain why rmg was a silly mistake...I will use the STI as a trading counter to illustrate. This is from my previous post. [IMG]http://i53.tinypic.com/30u5wmd.png[/IMG] You will see that this backtesting was based on the middle breadth indicator. Check out the entry dates with the moment the graph reading reaches positive, and the exits will be based on the moment it dips [IMG]http://i43.tinypic.com/c6ce8.png[/IMG] So now you can see why I am very positive now :) Incidentally, the bottom one based on backtesting has more trades & whipsaws, but generates better returns as it rides the trend longer. You can check with the weekly charts' oscillating indicators, you will see similar results too. What Im trying to show is...there is a time to enter & exit the markets, and there is a time to stay cash. There is no need to trade all the time. I use this to see when is a low risk (low risk is not = to no risk!!!) period to enter the markets where there is positive market strength. You can see why I post go cash in early august...becos the breadth data has gone really negative. best wishes to your trades :) this is a duplicate of my post with singstocks |
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