Thoughts

Ray once says trading success = psychology X plan with an edge X money management, and he ranked psychology highest of all. (note multipication sign and not a plus)

psychology is the hardest subject of the three. and i shall not cover it since i am not gd in it but i guess that cover in the character. Money management is the next important factor of the three

Money management:
= Expectacy + Position sizing
= Winning Gains must exceed losing ones (Let winner run, cut loses) + risk/reward ratio should b 3:1.

Plan with an edge:
= conceptual analysis + technical analysis

1) Reversal Trades - The market moves to or just beyond the edges of a trading range (a consolidation area, the value area from the prior day), cannot sustain buying/selling interest, and falls back into that range
- Extreme outliner of bollinger band, most on

2) Breakout Trades - Here we have a situation in which the market is range bound and surges out of the range.Very often, there will be a catalyst for the breakout (economic news; earnings) and the move will be reflected by other trading instruments and/or asset classes.
- Enter limit order on consolidation date

3) Continuation Trades - Here we have a trend in place, the idea is to wait for a pull back to enter the trend. A good continuation trade can be thought of as a trade that has already broken above or below its recent pivot level, hit its resistance or support level relatively quickly, and now is positioned for possible moves to resistance2/support2
- Buy or sell on confirmation of reversal, continuation or breakout and not anticipation

Trade Management
- Buy or sell on consolidation pt or channel borders

Rules
1. Have a cutloss plan
2. Never trade with no plan

Victor Sperando - Trader Vic

Been reading his book, some principles to look up for, will publish on as I read along

Business Philosophy: Preservation of Capital to consistent profits to pursuits of Superior returns

Since we are in bear market, some interesting facts about it

There are 3 principal phases of bear market: the first represents the abandonment of hopes upon which stocks were purhcased at inflated prices; 2nd reflects selling due to decreased business and earnings, and the third is caused by selling of sound securities

Median extent of bear markets is 29.4% from 20.4% - 47.1%
Judging from Dow high of 14,160 on Oct11, median will be 10,000 from 7,490 - 11,328
Our Silly STI wil be from high of 3,900 on on Oct 11, median will be from 2,753 from 2,063 - 3,120

Hmm. of course, i believe our STI will be much weaker in terms of mkt cap and business functions, thefore the median wil be much skewed.

Median duration of bear markets is 1.1 yrs from 0.8 -2.8years
Juding from Dow break of 12,500 on 16thJan08, median will be Feb09 from Aug08 to Oct10

After extended bear swing, sec reactions are marked by sudden and rapid advances followed by decreasing activity and line formation to new lows

And about the bull for next time
Median extent of primary bull mkt is 77.5% increase in prices from the previous bear market low pt

Median duration of primary bul mkts is 2.33 yrs. 75% of all bull mkts in history have lasted more than 657 days (1.8 yrs), and 67% have lasted between 1.8 yrs and 4.1 yrs

Beginnings of bull mkts are virtually indistinguishable from the last secondary reaction in the bear mkt until passage of time

2. Secondary corrections retrace from 1/3 to 2/3 of the primary swing and last 3 weeks to 3mths and swifter and sharper than the movements of the primary trend

If 200MA flattens out followinga previous decline or is advancing and prices penetrate the moving average line on the upside, comprises a major buying signal

If 200MA flattens out followinga previous rise or is declining and prices penetrate the moving average line on the upside, comprises a major buying signal

When playing the short side near market tops, dun't short the strong relative strength stks nor weakest stks. Short mid-range relative strength, Time to short is after intermediate-term and long-term top.

Trading Rules:
1. Trade with a plan and stick with it
2. Trade with the trend
3. Use stop loss
4. When in doubt, get out
5. Be patient, never overtrade
6. Let ur profits run, cut your losses short
7. Never let a profit run into a loss
8. Buy weakness and sell strength
9. Be an investor in early stages of bull mkt, speculator in latter stages of bull mkts and bear mkts
10. Never avg a loss
11. Dont trade on the basis of "tips"
12. Always analyse your mistakes