Trading Q&A

Dearest all,

You may join me at http://www.chartnexus.com/forum/index.php

to discuss abt trading and technical analysis. It's so much easier for me to reply to all of you . : )

No one will be left alone!

These are the things you should possess if you intend to profit from the market.

1) Trading plan
2) Psychology
3) Money Management





Without any of the 3, in the long term, you will lose money!

15 Jan 06, 11:05Cancerian: Poems, UOB, DBS Vicker etc. Looking into opening up an online account, who's better? Your advice pls. Thks.

Ans: I have no idea because i only use iocbc. The only thing u should compare is their brokerage. Do not be afraid to ask them. I'm sure they are desperate to have you as a customer.

15 Jan 06, 01:04jq: this is not a trading question but i ask anyway: why you put "sponsored by ChartNexus" at the left side? are you working for them?

Ans: I am not working for them. Rather it's a partnership where I help to provide feedback to them on their software and other potential areas of cooperations.

13 Jan 06, 18:24Archer: refering to ur 11th Jan posting..what do u mean by weakness..how is it shown on the charts...how do u detect bear strength in them ?

Ans: You can find the answers in my Digest 2 posted on 7th Jan 2006, i explained that.

8 Jan 06, 19:42Cancerian: Hi Decipher, what's your sequence of tools use in your analysis work? Trendline first to determine general direction and then candlestick or pattern for micro analysis to determine entry or exit? Pls

Ans: In this order hor, market direction >>> sector in play >>> see how leaders are doing >>> look for chart formations >>> Use technical indicators to confirm

8 Jan 06, 18:38learner: hi Decioher, sorry i am not sure if the questions that i posted have been ask before. Btw your knowledge is learned from books, practise or course?

Ans: I based on the books i read and my own experience in losses! it's so painful to lose that i avoid the same mistakes. You can view the books i read by clicking on my picture.

8 Jan 06, 18:36learner: If it is making new highs, how we know when to get out? I get out of celestial too early after holding for 2-3 months. It could be right or it may be wrong, i dont know.

Ans: I always say no one can sell at the exact top. When you buy a share, make sure u have all the exit plans ready. When triggered, just sell. You will not be so sad now if Celestial do a U-turn where many penny shares are so fond of doing. keke

8 Jan 06, 18:35learner: What is your breakout strategy? By volume on resistance? How is it validated or invalidated? What software you use to detect the breakout?

Ans: Learner, there is no way breakout is 100%. Some fell back into trading range. However, a breakout from a nice chart formation should be more successful. Software? I use chartnexus! :D

8 Jan 06, 18:32learner: How do you spot distribution?

Ans: Distribution happens when volume is high for a few days and yet price didn't go any higher. It can be further confirmed by reading the time and sales. You will notice more selling than buying despite price staying firm.

6 Jan 06, 17:16ck: it is clear tat we're in the bull now.. but wat is a signal for u to sell?.. TA wise? or market sentiment?.. how to judge? cos most stock are showing overbought but still continue to rally..

Ans: A very good question. After strong rally, stocks will definitely sucuumb to profit taking. The question is when! I use T.A to take my profits when I see weakness in the stock. Things like, hitting resistance, volume declining despite closing higher in price, huge volume yet price is unable to close higher than previous and finally price close lower then previous on a high volume. Remember, it is almost impossible to sell at the exact top. To sell somewhere close to the top is good enough. If you took profit too early, nevermind! Just be patient and wait for the next opportunity. Why risk the paper profit for that extra few bids up which could never happen?

5 Jan 06, 01:11ermmmm: u mentioned u r a local, do u mean SGX local or just a local resident...??

Ans: I'm a Singapore citizen. I have a job full time and trading is my part time after my office hours. In Singapore, everyone is looking for an opportunity to earn that extra dollar. I happen to find my way from the stock market. I'm pretty sure i'm not the only one around. : )

5 Jan 06, 01:03pp: what is 'distribution'?

Ans: Distribution happens when smart money who have bought enough at the low price began to sell their holdings when the price is high. It is very important not to buy at distribution!

4 Jan 06, 19:21Sianz Sianz: Hi, Decipher, may i ask what's that QuickPick List you created? The price stated is it the target price?

Ans: Quick Pick list contains stocks that have unusual volume traded as compared to their average daily volume. Most likely something is brewing from within. If you read through my archives, you can find that i'm always complaining about how stocks moved up alot before the company make any news. So it's worth to look at these stocks before the news is out. The price stated is current price and not target price.

Happy New Year to all! This will be a profitable year for all! Huat ah!! :D
Trading is often a lonely game, no one around us can understand the ups and downs we are facing. Especially when I first started out, i got teased by my losses and my wins were discounted as lucky. I really was very frustrated and decided to get good at trading. Sound familiar? If you are in my situation, welcome aboard! Let's learn together! :D

If you know of any friends who will find the content helpful, please forward my URL to them.

1 Jan 06, 02:21tom: Not really a question here, just a compliment. I think you've been a great help to everyone, dude. I'll be getting the books for some fundamentals. And i hope you keep it going!

Ans: You bet I will keep it going with people like yourself so supportive! Thanks! : )

30 Dec 05, 23:06Archer: u keep on saying about psychology ...can u enlighten me on ur methods employed by u to make money in the market...?

Ans: Archer, my psychology can be followed or even read from the archives at GrowMoney Blog . Yes, to all new to trading, understand psychology first even before you begin. Atune yourself to losses and read all the trading books you can find. If the trading system confuse you, read the psychology part of the book. That's how I improved. Everyone should have a different set of methods to overcome your psychology in trading. Let me give you an analogy, given your favourite food right in front of you and you are hungry, what would you do to not eat the food? Psychology in Trading is such. You must be able to separate your yourself, your mind from the market as and when you want. Also, you must be able to sell and not hold in hope when you know it's time to cut loss. You should also sell when you have profits and not be greedy to hold out for a larger profits. Of course, buying and selling decision should be followed with trading system. I was so engrossed in trading that I almost lost my girlfriend. This is how important psychology is to me as I began to understand trading everyday. Sometimes i wonder, isit because of my massive losses when i started trading woke me up and all the psychology bits and pieces fall into place. I meant, can psychology really be taught without personal experience? All the painful losses came back to me everytime a similar situation appeared and that allows me to avoid dubious trades. So if you just started out....do not focus on profits, instead, trade small and understand the game. As you get good at getting it correct, I GUARANTEE you that profits will come to you. My logic is, if I am still learning, why should I risk so much capital? Everyone has to pay "tuition fees" to the market as they learn, why not make yours a cheap one?

29 Dec 05, 22:59marc: Hi Decipher, i saw your charts but i do not know how to decipher whether it is up-trend or a down-trend. Any simpler ways to understand your charts? Thanks!

Ans: Marc, I do not chart downtrend chart. : ) This should save you the trouble. haha However if I do chart downtrend, I will show it clearly. Otherwise, it's uptrend, be it short term or long term.

29 Dec 05, 12:52Archer: how much will it cost to buy from Amazon..apart from the price of the book...the cost of shipment , handling ,etc to Singapore?

Ans: I bought mine from Singapore hence am not aware of the handling charges. Why don't you ask amazon?

28 Dec 05, 12:02Quest: how do you conclude if gap covering is a bearish or bullish or neutral sign? if a chart gapped downwards but was quickly covered in the next few days, is it a bullish sign?

Ans: Gaps are overeactions to news. First understand it's psychology. When it gaps up, a huge crowd of buying power occured, they helped pushed the stock up. Very bullish indeed. But it will also mean it will run out of buyers sooner. In Singapore's market, intra day trader will contra. And when contra period is up, profit taking will take place and the stock will retrace. Infact, some of the retracement will close the gap. We must then look at the volume at which the gap is closed to determine if the move is completed and exhausted. I prefer stock not to gap up and instead, edges up steadily and slowly with very slightly more buying then selling triggering a very balance demand and supply situation. If everyone wants to buy and no one selling to them, what will happen? They will turn into sellers themselves.

I'm so sorry guys for not attending to this site for a long time. After coming back from Genting, I was busy catching up with my work and most importantly, my trades!!! I thought I saw opportunities and started to focus on my trading instead. This is also one reason why you should digest my growmoney blog on a daily basis. I'm a local and i make mistakes as well as profits. Let's learn together!

22 Dec 05, 22:03sonjoy: can i say that your quick pick list does not meet your "chart formation+vol= breakout" strategy?

Ans: Yes sonjoy, i provided the list for those who wish to know what are the stocks to look out for in my opinion.

20 Dec 05, 20:26Archer: at what time do u do u read all this questions and answer them....?

Ans: Archer. I tried my best to do it whenever i'm free or when the market is quiet. When you don't hear from me, I must be busy trading. : ) But minimum will be on a weekly basis.

20 Dec 05, 20:14Archer: what book should one get fimilar with to understand ur breakout method...ur one book..maybe "Bible" for breakout that u would say " I swear by it !" , that I could read for understanding ur method

Ans: I wish it's that simple. It's a combination of 3 books which i felt most useful and it's in my Growmoney Shop. You can either get locally or thru amazon. Do not focus on trading system. Psychology is the most important! It's the driving force behind any trading system!

20 Dec 05, 20:11Archer: can u expain/elaborate with charts what is higher high higher low..er..something like that...that which u look out for when determining a breakout?

Ans: You can see my charts at growmoney blog. Normally I will mention. but to put it in words, it's a "W" with the right side of the "V" higher than the previous one.

19 Dec 05, 23:55Her: Thanks for the reply, Decipher. But what is chart formation? Sorry, I'm really very new to this.*blur*

Ans: Her, I can't posibly list all chart formations here without diagrams. However you can do a google search for it. I prefer to explain why chart formation is important to me. Chart formation reflects the buying and selling of the stock. Consolidation....distribution... a proper chart formation will gives me more confidence to buy it.

19 Dec 05, 23:47Archer: i notice u use RSI more often than MACD or stochastic..is this true..what indicators do u rely on for breakout?

Ans: I use RSI alot however I also used MacD Histogram on the weekly chart to determine the major trend. As for Stochastics, I am not using anymore as my current breakout system does not require it.

19 Dec 05, 23:43Archer: are u refering to cup and handle and double bottom as chart formation ? what other (list of ) formation are there to look out for?

Ans: I basically look out for every chart formations I knew. The list is very comprehensive. You may think i'm boasting. But it's the truth, I been reading charts for the past 2 years daily and somehow all the practises had given me the ability to spot formation easily today.

19 Dec 05, 23:02Archer: Thanks for the prompt reply. I need a lot of 'hand holding' !So, can u elaborate ur method with some illustrations please? U mentioned about Cosco . now 2.17 .when break out?

Ans: Cosco is behaving oddly and currently had rebounded off it's 200 moving average at 2.08 support. I intend to write a book on what work for me. Hence I will not elaorate too much online now. :P

19 Dec 05, 17:07Archer: Newbie to this field. Eager to learn how to trade shares. Wants to know how to spot breakout . How did u arrive at the list in the quick pick? Thnx

Ans: There are many forms of breakouts. While I did not learn about the rest, the 2 breakouts i studied in details are as follows:

a) Breakout of 20 days high, 50 days high.

b) Breakout in terms of price difference as compared to previous session with volume more than 25% or 50%. The % is determined by you as you grew more experienced and tune it to capture more accurate breakouts.

19 Dec 05, 13:08sonjoy: The X-pert from Chartnexus not easy to use.

Ans: Please contact the support team from Chartnexus. They are a friendly bunch of people and will be happy to help.

19 Dec 05, 11:45Her: Decpher! How do you spot a breakout before it breaks out? I still cannot figure it out! Help! Thanks!

Ans: I do not spot a breakout before it happens. Normally, i will spot it after it has done so or sometime right before the market close at 5pm. For me, Chart formation + good volume == breakout!