Monday, June 24, 2013

What have we learned so far from the Correction!

Have we learn something in this correction. A month ago, we notify our client to exit ''some'' of their position, as much as 30% of the portfolio in the stand of managing their RISK due to market behaving abnormally.

1)First thing we learn from this Correction is ''Market did give a sign when it is going into a correction'', ''A big correction usually start from a small drop''. A correction is a period where stock market stop rising. Normally after a period of uptrend and for the past few years, it takes at least one month to recover. After recover, market went higher, hence most people usually wait for a correction to come and they buy more during this period when price is falling. However what we do is completely different from most people. As a trend follower we only start buying when price start rising and mid term trend change.

2) We dont stay Long in this correction period, instead we should have Short position for most of our counters.When market turn up again, we will go long again.

3) When market start falling, many people will try to find out the news of WHY it is dropping, the main reason which what i always tell my client is ''People are selling'' and if the price move alot, These people are the big boys.

4) Time to learn shorting? During the past 1 over years we have been preparing our clients to use CFD, just incase the bear strike. In current event, Shorting tend to be more profitable and you can also hedge your portfolio if market tank further. Now is still not late to learn shorting if you are going to remain to trading for the next 10-20years.

5) Believing you are ''Right'' can be very expensive. I see people turn profit into losses when the trend changes. and the loss just turn bigger. E.g believing we are in a bull run, believing market will rebound, believing the stock is already at a critical support. A better way is to believe in a system or strategy(regardless u are using TA, FA or Trendfollowing) that can tell u an entry and exit rather than our own judgement. Most importantly is to be consistent of what we are doing, so from there we can tune it to trade better. If u are doing discretionary trading, just make sure u have stoploss + a weekly/monthly risk budget so u wont gamble too much away.

6) Lastly, our Emotion. If you are going thru a tough time now, try to Feel what you feeling now. Write it down so next time u know how to handle this. Don't give up on learning how to beat the game, today if you are losing, somebody out there has made Your money. =)

Again.. this is NOT a Buy/sell call Just a review, just show some chart for ur information.
 Supergroup recently call for exit,
 Ezion fall 7% today, actually on last thursday our system call for exit and you should have exited this trade on last friday.
Osim up since last year September, this is one good demonstration of winning big. Since Sept 2012 this counter rise from $1.32 till  $1.95 on Friday. This trend took profit with 47% gain.
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