Aloysius Chan's Blog

Art of trading If the news is good but the stock plummets, buy the crash. Know yourself, know your trade. Revenge is never sweet. Triple your demo twice before trading for real. Don't lose your cool - always use a stop. Protect your capital - protect yourself. Averaging down is for losers, but averaging in can be the difference between success and failure. Tops or bottoms are only evident in hindsight. Turn happens only once but trend is continuous. The last 25% of the position can make a disproportionate contribution to your overall profit. Make your money work for you. Beat computers at their own game by using probative orders. Lessons from Dana  Look for 10 baggers (10x). Stocks have an upside bias. Stops should use time as well as price. Best trade setup is a disconnect between fundamentals and price. Lessons from Bob Booker Fit trading to your personality. Test everything. Don't fall victim to "possum trading". Lessons from Chuck Hays Know if you are better at be...

The longer the time frame the greater the significance of any technical signal. The amount of a security that changed hands in a specific area - the greater the activity, the more signficant the zone. The greater the speed and extent of the previous move, the more significant a support or resistance zone is likely to be. Examine the amount of time elapsed. Signficance of p rice pattern Time frames. Pattern fluctuations. Pattern depth. Diamond is a rare pattern and if formed right it signifies reversal. False reversals detection Low volume Three-bar reversal Pinocchio bar Outside bar More valid breakouts Exhaustion at support or resistance Two-bar reversal at adjacent trend line Strong leading volume

  Branches of technical analysis Sentiment indicators Flow-of-funds indicators Market structure indicators Trend Primary: 9 months - 2 years as a reflection of investors' attitudes. Intermediate: 6 weeks to 9 months. Short term: 2 to 4 weeks. Intraday trend: daily Secular trend: over a very long period. Peak and trough: the high and low over a period (most basic to identify trend) Dow theory The average discount everything The market has 3 movements Lines indicate movement Price/volume relationships provide background Price action determines the trend The averages must confirm False breakouts (whipsaw) Wait for 3% of the boundary to confirm the breakout. Saucer and rounding top ususally will go an complete arc. Outside bar (for reversal), e.g. engulfing Wider the bar, stronger the signal. Sharper the rally, more significant the bar. More bars encompassed, better the signal. The greater the accompanying volume, the strong the signal. The further the close price to opposite direction...

A break of resistance means a close above a resistance area. Reversal Hammer, hanging man, shooting star. Doji, dragonfly doji, gravestone doji, northern doji, southern doji. Spinning top: small real body. High wave: long upper and lower shadow. A doji means the market is in a stalemate and indecision, it become vulnerable to correction. Northern doji are most effective when the market is very overbought and the doji appears at a resistance area. Use doji with support and resistance or channel lines. A bullish or bearish belt-hold is important when they are near support or resistance. 3 white soldier or 3 black crow can be a sign of overbought and oversold.

Diversification has its fair share of rewards and risks which can make or break the company entirely. There are more sourceable examples that diversification benefits a company rather than costing the company. Even with proper calculations and plannings, diversification can be unforeseeable and that contributes extra risk to the company. There will be changes, could even be drastic ones to the already in place corporate strategy, management team, expertise, financial, milestones and many other areas. However, if the corporation is able to adopt and absorb these changes, there will be a long term reward awaiting them especially in this volatile market setting. Nevertheless, the market is always shifting and there are many replacements. The many factors revolving around human needs and wants causes the market to be unpredictable. With technology and more channels to consumers and customers, new businesses are aiming to be disruptive. Such businesses often eat into a huge chunk of the mar...

Market is a zero-sum game, the  $10 you win is the $10 lost from someone else. Slippage is the price difference when you enter or exit the market. Traders are looking for an edge over other traders. The strength of support and resistance increases each time that area is hit, the taller or greater in volume the support or resistance zone, the stronger it is. False breakouts can be seen by divergences between prices and indicators. The longer the time frame, the longer the trendline, the more contacts between prices and trendline = the more important and valid it is. Exhaustion gap is like a sprinter who run away from his pack but once they catch up he know he will lose, it is common for reversal. Major groups of indicators Trend-following indicators: MACD, MACD-histogram, directional system, on-balance volume, accumulation/distribution. Oscillators: Stochastic, rate of change, smoothed rate of change, momentum, relative strength indicator, elder-ray, force index, Willams %R, commodi...

There is no set amount of time to learn to trade. Trade for track record instead of big wins. Look at the chart consistently to look for opportunity instead of catch as catch can or waltz in like a gambler. Paper trading is necessary to test your discipline and if you are persistence to do your homework. Hardware is not as important as the driver of the vehicle. Do not trust daily advisory or blackbox signals. Keep a record of your trading history. Do not waste time with broker with trading system. Commit more time to the field you know than to look for greener passtures. Stay away from commerical tutoring and talk to experts instead. Be exposed to trading buddies or groups. Keep a trading checklist. Anyone can enter a trade but it takes knowledge and experience to manage the exit and risk. The more you trade, the faster you will learn. Create self-imposed limit by using money management. Trader with scientific background have good discipline but they tend to rigidity and arrogance. Ke...

EA automated trading using Martingale and Grid strategy If you have found this it is likely that you already understood what is this trading strategy. Basically the script will decide on a direction using previous high and low with relative strength indicator (RSI). Once the direction is decided, the script will make a order (either buy or sell) at the designated lots. Every time a trade is made, the script will calculate the take profit price point for all open orders to ensure profitability. If the first order hit take profit, the trade ends and the script will restart. Otherwise, once the live price hit the previous price + pip step, it will open a new trade provided if it is not within the same time bar. The newly opened lot will be in an multiplier according to the LotExponent. It will continue to open trade and draw down till the new take profit is hit. There are many variants of this script but I have simplified it to only 50 lines with the following benefits. If your server is ...

Step-by-step guide to install and setup remote MT4 in Ubuntu environment with the most affordable VPS. This post will show you how to install MT4 in Linux computer at a very affordable rate with the minimum steps. MT4 can run in a 10 years old computer meaning you do not have to subscribe to a fanciful VPS. Having said that, it is also important to understand what kind of script you will be running with your expert advisor. If it contains complex procedure and running higher IOPS, you may have to upgrade your VPS accordingly. Always have it tested on your virtual environment (e.g. Virtualbox) before hosting it online. Firstly, we will go through the minimum system requirement for MT4 that is to run in Linux environment: Windows XP (or Wine) 2.0 Ghz 1Gb RAM 10Gb HDD 1024 x 768 screen resolution 512 kbps internet connection 1Gb RAM is enough to run in Windows environment however it would be safer to allocate another Gb when it is requires an emulator which may not be as effective to ...

Moving average, MACD, RSI and Stochastics are all very outdated now. Extremely short horizon trading is more vulnerable to the differences between real-time trade decisions and postmortem evaluations. RSI Bearish divergence occurs when the market forms a new price high on close that is not confirmed by the indicator. It is not the only formula for developing positive reversal signals to reinforce and confirm the trend, but it is the only formula that tracks the ranges. Question before applying the indicator Does the indicator work well for any market in any time horizon? Is the indicator as useful in a rising market as it is in a declining market? Does the signal work equally well in times of low and high volatility? How much time after any signal does the market take to react? Is this a signal that has merit as a trading signal? Why does an indicator work and how do you increase the probability of its accuracy? Gann wheel calculation 45° = (√(x) - 0.25)² 90° = (√(x) - 0.5)² 120° = (√(...

Motive wave (1,2,3,4,5) + corrective wave (a,b,c) = cycle 1,5,21,89 + 1,3,13,55 = 2,8,34,144 Progression Bottom: question of existence, survival, depression, war, recession, "panic", limited wars, "bad news". Rebound: from undervalued levels, recognition of survival. Test of lows: same bad news. Powerful wave: best fundamentals. Surprising disappointment: best part of growth ended. Final advance: market performance improved, psychology creates overvaluation. Top: prosperity and peace appear, "good news". Technical breakdown: viewed as buying opportunity. Narrow, emotional advance: technically weak, selective, euphoria and denial. Worst of bear market: fundamentals.

Triplet of opacity The illusion of understanding. The retrospective distortion. The overvaluation of factual information and the handicap of authoritative and learned people. Blindness from black swan events We focus on preselected segments of the seen and generalize from it to the unseen: the error of confirmation.  We fool ourselves with stories that cater to our Platonic thirst for distinct patterns: the narrative fallacy.  We behave as if the Black Swan does not exist: human nature is not programmed for Black Swans.  What we see is not necessarily all that is there. History hides Black Swans from us and gives us a mistaken idea about the odds of these events: this is the distortion of silent evidence.make a distinction between positive contingencies and negative ones We "tunnel": that is, we focus on a few well-defined sources of uncertainty, on too specific a list of Black Swans (at the expense of the others that do not easily come to mind). "A bird in the hand is...