THINK in PROBABILITIES
SGX/RHB Malaysia trip (part 4: Terengganu/Kuantan) I've just completed my 4th part (FINAL STOP) of the SGX/RHB jointly organized event, to introduce offshore trading products to the Malaysian traders (or aspiring traders).
I departed Singapore on Friday 12:50pm, returning on Saturday at 2:20pm, so I'm away for only less than 26 hours. That would also mean my travel schedule is really tight, especially when my departure flight to KL was delayed, which threatens the possibility of missing my connecting flight to Terengganu. Fortunately, everything turned out fine, and I wish to express my gratitude to transportation arrangements that was made to help me get around (thanks to JG, Ian, Erica; and Nazrin, Billy and Mr Siow), as well as the evening dinner to taste Terengganu's nasi briyani.
It was an early drive from Terengganu to Kuantan, which gave me the opportunity to catch the sun rising from the South China Sea, something which you don't get to see if you're always travelling on the West part of West Malaysia. And it's worth the morning call.
I've decided on the theme "Think Probabilities" to wrap up this 4-part journey, so to follow the flow, please read:
"Trading Edge" (16Aug) "Learning from history" (11Sep) "How to use Common Sense" (26Oct) The market would either go
i) UP, ii) DOWN, or iii) Sideway. When we feel "certain enough " about a high probability direction based on knowledge & experience, we put on a (high probability) trade, and DEFINE OUR RISKS, period.
There is NO certainty, only probabilities. Whether the trade turned out to be profitable, or loss, it's "over", once it's over. Move on to find the next high probability trade.
I shall re-enforce this concept by revisiting the market since AUG, when I started my first trip of this program. Just before I visited Malacca/Subang, market condition was such (refer to chart). And with EmotionLines opening wider (in Fear emotions), under Winter season, chances are market direction favors Down. [Think Probability]
When EmotionLines are wide opened (downside), Fear eventually developed into PANIC. The way to tell (with HIGH Probability) that market has likely bottomed is to look at Price Action. Among the different Price Actions, a candlestick HAMMER is a common occurance, with high probability too. When Weekly Hammers are formed across ALL markets on 28Aug, market is sending out a message telling us that the chances of going down has greatly diminished [Think Probability] That would leave only 2 other likely scenario:
1) V-shape recovery, or 2) Sideway market, with upside bias
I went to Johor (my third trip) to do my sharing with RHB traders/clients under this market condition (refer to chart). It is already evident that market has been trapped in a Sideway range, with upside bias (probability played out). My EmotionLines are now in the process of "being squeezed", which is a further evident that market direction is likely to favor upside, with potential of being Sideway with upside bias [still Thinking Probability]
By the time I did my final stop in Terengganu/Kuantan, my 4 Western markets, together with NK & CN, are all trading at their 3-months high. The other 4 markets, TW/SG/KL/SET, on the other hand, are showing more Sideway tendencies.
A closer look at these 4 markets are suggesting "more Sideway" tendencies, when they are attempting to further squeeze the Daily EmotionLines. [Again, Thinking Probability] It's time to exercise patience, and "open up our eyes to listen" to the market, to see which Emotion (Greed or Fear) the markets would subsequently be screaming out to us, before placing the next High Probability Trade. (on the Daily picture)
While looking at all these indices, don't forget SGX provides the whole suite of Asian index futures, where you can gain access, to participate in the index of your choice. Do understand the detail contract specs before you participate, though. For instance, since 02Nov2015, SiMSCI has changed her contract specs, by downsizing to half. So it's more affordable now to the smaller account holders, as the margin is reduced accordingly. Find out from your broker, or visit SGX website for further details.
Whatever the bigger picture TopDown Analysis is, there is always easy-to-approach intra-day trading strategies. For example, my Sniper Trader would look for reversal signals at levels, and take a trade with SIZE, riding a trade from "level-to-level". And that could be more profitable than catching and riding a big trend with ONLY ONE contract. This method is taught in our Sniper Trading courses, and it's called a "StarBuck Trade". In the near future, I would be writing another article on what a SB-Trade means, so do look out..
Finally, the best slide to summarize my theme is non other than this one ... Please read until you understand why those who seek certainty would almost always end up in doubts. Therefore, continue to THINK in PROBABILITIES, and ALWAYS place stop-loss to limit your risks, however "sure" you think you are. Be a PROFITABLE, and HAPPY TRADER :) TY