Learning from history

SGX/RHB 2015 Malaysia trip (part 2: Kuching/Sibu)

It would be good if you would first read “Trading Edge” (16AUG) before reading this.

We all learn from history, which includes learning from other peoples’ experience/mistakes.

This is my second trip of a joint program by SGX/RHB to promote opportunities in futures trading, with SGX products, where I was invited to share my trading experience/knowledge to aspiring successful traders in Malaysia.

Before going there, friends told me must try “kolo mee” in Kuching, and Fu Chou dishes in Sibu, and that’s what I did – benefitting from others’ advice/experience.

The above good Sarawak food was a treat from the RHB managers of Sarawak branches, Roy, Martin and Grace.

I thank them for their warm hospitality, which added much pleasure to my short stay there in East Malaysia.

It was a more than 3-hour seminar in Kuching (6:30-10pm), and I gave a short break at 9pm, which made Roy kinda worried. He said it was a “mistake”, because people would leave during the break. I told him if I don’t get more than 50% returning for my talk after the break, I won’t come back again for seminars. I had more than 90% returned. Let me also express my heartfelt appreciation to my audience, for having the faith, and belief in me.

My Sibu crowd also stayed right through to the end (I was "made" to deliver this seminar in Mandarin), and my sharing topic is similar to that of Malacca/Subang, so please reference to “Trading Edge” article for topics covered.

I will not duplicate the posts from part1 trip here, but I would focus on some updates, as well as a couple of highlights I made during this recent trip.

This is how I started this round, by showing the above slide, with contrasting codes from 2 philosophers.

Those of you who share the same belief as the bottom philosopher (that we learn NOTHING from history) can STOP reading here !!! I believe in learning from history, which include learning from others’ successful experience, in order to short-cut our own learning curve (the top philosopher). Please read on if you share my beliefs.

{This is the only duplicate chart from part1}

During my Malacca/Subang trip, these 4 Asian markets (Thailand, Taiwan, Malaysia, Singapore Weekly chart) were in this state. To appreciate this post, you need to understand 1) My Emotion Lines 2) 20% of declaration of bear market 3) 4 season colors 4) Candle sticks PRICE ACTION of HAMMER 5) Combine the above (to get your trading edge) 6) Learning from history 7) Contrarian Approach 8) A PROFESSIONAL trader’s beliefs/mindset On 15AUG, these markets were sending out the following messages:

“ (1) We have started showing FEAR since some time ago, and is now getting “more and more fearful”. (2) If the fear continues to translate into more SELLING ACTION, it would hit the 20% mark, and will give an official declaration of entering bear market mode. (3) All these markets are in Winter season (the one hated most by investors), which means bearish, with momentum down." (8) So with these messages, how and what would a professional trader think, and do?

(5) FOLLOW the trend, which is DOWN, by focusing on SELLING, AS LONG AS market continues to display FEAR/weakness, and be aware of where the -20% target is, which could be a MAGNET, to attract the market there.

(5) When the market hits -20%, declaring bearish mode, be mindful of FEAR manifesting into PANIC.

How do you tell when market is about to hit panic bottom?

(1) Weekly Emotion Lines are wide apart, (4) and a panic move would first cause traders to DUMP their holdings (at market low), scrambling for exit, and you can see exaggerated selling in the chart.

When the final seller dumps at the “ultimate low”, professional buyers will enter the market, short-covering would also appear, and market would start to climb up steadily, creating a “long tail” to the candle stick, which is called a HAMMER. A Hammer formed AFTER A Panic move would typically defines a "CLIMAX BOTTOM" The above chart shows what happened on 24AUG (Black Monday), when Hammers are visible in ALL the SGX Asian markets during T+1 session (at night), on H1 TimeFrame.

From left to right, these SGX contracts are CN (China A50), TW (MSCI Taiwan), SG (SiMSCI), NK (Nikkei 225)

{This chart shows 4 Western markets, and 6 Asian markets, on Weekly}

The panic started on a “BLACK MONDAY” (24AUG) again, but by the end of the week, all markets recovered from their low, to form a Weekly Hammer.

The message is: FEAR ==> PANIC ==> recovery ==> [Hammer], therefore likely defining a “temporary end” to this downtrend.

{This chart serves to illustrate the movements over T & T+1 for SiMSCI, on M15 TimeFrame}

When PANIC is evident, a professional trader would stop (long-term) selling. The markets’ action is likely to retrace higher, or go into sideway range, to first digest this down move.

So start to follow intra-day price action, and start to catch swing trades (the arrows in the chart), to continue to … MAKE $$$

I was a trader, still am a trader, and will likely die a trader.

Although a big portion of my time now is devoted to doing seminar/training, putting on real trades is still a big part of my life. Despite my tight flight & seminar schedule, I had a chance to look at the market only on Monday morning (I flew to Kuching on Sunday night, after conducting a weekend course in Singapore). My Monday trading results were witnessed by my Kuching audience on Monday evening’s seminar.

My flight plan and schedule on Tuesday didn’t allow me to trade (woke up at 4:30am to catch 7am flight to Sibu), followed by meetings and seminar at night from 7-10pm.

I woke up equally early on Wednesday morning (4:30am to catch 7am flight back to Kuching, to connect flight back to Sing), but upon arrival at noon in Singapore, I had to “say Hi” to the market, at the same time, to take my humble income. The important point is … …

With a decent trade plan, the idea is NOT to catch the low, or to sell the high. It is to take set-ups with high probabilities of success, and to accumulate Daily profits, which will then become Weekly, Monthly, & Yearly income.

There are ALWAYS trading opportunities in the market, for the prepared mind.

I was doing this simple sum with my audience:

If you’re skilful enough to make S$1,000 a day on average, with 20 trading days in a month, you can command a S$20,000 monthly pay, which, for my Malaysian audience, would be equivalent to RM60,000.

Would you consider this decent “Trading for a living”?

There are multiple opportunities spanning across these markets, and SGX provides access to these Asian suite of products. I hope I’ve not given you the “wrong impression” that this can be easily achieved.

It will become easy, only AFTER you have put in the time and effort to develop the necessary skillset required to conquer the markets, in this highly demanding game, which includes developing the necessary strong mindset to CONQURING YOURSELF. However, it is definitely worth the effort, and the outcome experienced by a successful trader is extremely satisfying, both to the account, as well as to the being.

A Final code of advice:

The theme of this article is "Learning from history".

Based on this code by Douglas Adams, please do some reflection, on whether YOU HAVE the ability, OR the apparent disinclination to "benefit from history".