SGX Chart

I drawn some trendlines over system z chart. While the bigger picture is bullish (breakout major resistance), the minor uptrend channel is a broadening one (bearish connotations).

So how, real or fake setup?

Instead of basing trades on assumptions of what's going to happen, use actual price action. Technical setups fail at times, if not all chartists will be rich.. Time will be the harbinger of answers.

After entering a position, give the stock enough space to breathe using a sensible cutloss, instead of expecting instant profits.

Volatility

What are implications of a fast moving market? Over last two months, market has entered a period of high volatility. If this excitement does not subside, the following will happen when sell signals appear.

1. System will flash sell signal for shortterm traders. The high volatility represents swing-trading potential in both directions.

2. For longterm traders system will suggest wait for clarity after volatility subsides, before reversing march positions.

According to my research, over longterm, position-trading makes the most profits. But shortterm volatility could mean losing 50% of paper profits and still sit tight. Its hard, many would exit on 1 instead of 2.

Not suggesting practising one method will make someone more successful than using the other method. It all boils down to individual personality and attitude towards market.

Performance

System equity curves for a longterm index (DJIA), cyclical bluechip (NOL) and shortterm smallcap (AUSGROUP).

Using a proprietary trend following technique, system is able to automatically long during uptrend and switch over to short during downtrend. This helps a trader hold on to bull market gains while profiting from bear market.




Hopefully I am able to include pattern recognition in future, which can help the program reduce whipsaws during ranging markets and spot high profit-potential stocks.

Though system can give a trader huge gains,
very few will have the patience to trade it.

... average holding period for a trade is 3 months.

Fundamentals

Was reading technical paper for system z.

A thought simply come to me - there's nothing under the sun quite as fundamental to a stock than its price. Isn't it! .. fundamental analysis should be called advance analysis.

Market Myths

System is sitting tight on the buy calls posted to CNA in march, while I continue to post system's decision to hold (1 2 3 4 5). Those counters are now having 20-60% gains.

In my opinion, the number one reason why people lose in the stock market is they believe there are some methods which can predict the future for them. The number two reason is they expect easy and big profits from short term trading.

Let me debunk the myths. First, give up trying to predict the future. Prediction methods only give us a false sense of security which make us more confident than any speculator ought to be. This confidence in the safety of numbers will make losses. Second, the big money is made by sitting tight for long term, not short term like intraday or contra trading. The losses absorb by short term traders are paving the ground for huge jackpots by the long term trader.


System initiates those buy calls without doing prediction, adopting a long term perspective. There is nothing wrong in being human and exhibiting human weakness. Its all part of our nature. But alas, to profit from market we cant act like one!

Updated 14th May:
The counters are sitting on 40-120% gains. I am waiting to post sell calls from system signals. This may sound strange, I told others I'm waiting for price to drop to a level low enough, so that I can sell.