In the beginning of NOV, SGX approached me again, to do another retail seminar scheduled on 01 DEC 2015.
*** "Again" because I've been running such seminars for them, both locally, and overseas.
This time round, the topic is not on Index trading, but Currency Futures, to promote SGX's suite of Currency products. Specifically, they wanted me to talk about the USD/CNH (Dollar against RMB) pair.
They have also requested me to show an example of an intra-day trade done on this contract, which, for various reasons (based on MY own training rules), I declined.
One of the reasons why I don't show intra-day trade during a 2-hour seminar is, you have to understand the foundations, and a whole hosts of other rules, before you can understand the reason(s) why I might be doing what I'm doing, on an intra-day trading basis, and therefore will definitely lead to endless questions, that cannot be adequately addressed, within the seminar time frame.
Hence, I chose to illustrate the very very basics of Technical Analysis, which is the sole weapon which I use, in making trading decisions.
Let me bring you back to the day of the seminar (if you were there, you should recall this).
I shared with my audience one evergreen way of identifying trend, based on Dow Theory, by taking note of whether market is showing higher highs/higher low (UP trend), or lower highs/lower lows (DOWN trend).
I searched the charts of the USD/CNH movement, over a period of 10 years data, to tell me the current trend of this contract. I believe you are able to see the down trend (lower highs), followed by a trend change since the beginning of 2014 (higher lows).
You can also look at this chart, for a zoom-in view (source: Bloomberg), showing the recent 5 years data, derived from the USD/CNH price traded in SGX.
Of course, I was "expected" to give my view of the currency direction.
I qualified, first and foremost, that I'm not a fundamentalist, and therefore would not cover Fundamentals.
However, based on higher highs/higher lows since 2014, current trend is up for USD/CNH pair, meaning the CNH would weaken against the USD, and this is further confirmed by the devaluation of the Yuan by the Chinese central back in AUG.
I need my TA to confirm the fundamentals, when this move brings the pair to new "higher highs".
After the AUG spike, USD/CNH started retracing down, in this uptrend, when H4 chart starts to show lower highs/lower lows. This retracement ended in mid-OCT, when market turned around to trade with higher highs/higher lows again. When the market confirmed breaking above the green dotted line, my analysis was for the contract to revisit the top green line again, inline with her current trend.
That was what I shared with the audience group in the SGX-Auditorium that night, on 01DEC (Tues), with this additional "feature":
For as long as market stays above green dotted-line, use my 2 pairs of MAs to guide your trade towards upside target.
Last night 11DEC (Friday), ten days after my presentation, my target is reached, and that would have completed a trade set-up.
By this time, if you think I'm writing this to tell you how good an analyst I am, you have missed the whole point.
Of course, I am good, but as a trader, not as an analyst. I'm trying to hammer home a few non-violate rules as a professional trader:
1) Follow my 2 Golden Rules of trading (applicable to investing too)
i) Find out where the trend is heading, and whether it is starting, or looks like ending/reversing
ii) If wrong, cut loss, knowing very well trading is a PROBABILITY game.
2) Based on the Golden Rules, Plan DEEP.
Have a systematic way to determine "D"irection
Have a systematic way to decide on how you wish to "E"nter the market
Have a consistent way to "E"xit the market, which includes SL (Stop Loss) Exit, as well as TP (Target Profit) Exit
Have a structured way to determine "P"osition Sizing
3) When I said I don't use Fundamental Analysis, I DON'T USE Fundamental Analysis, and I showed my audience in 30min some basic ways I used (and am still using) some basic evergreen TA methodology, that has lasted the test of time. It worked, it is still working, and I have full faith it will continue to work. And you are witnessing the result of this "wonder", over a 10 days period, from my seminar date, to TP reached.
If you wish to ask me, how then we, or our students, carry out intra-day trade. Please read my next article titled : "What is a Star Bucks (SB) trade ?"