Aloysius Chan's Blog

Observations The majority of traders and investors lost money on a consistent basis. The majority of traders had no intelligent and consistent plan to trade the market. In effect they were gambling. Playing tips. Playing hunches. Playing the favorites of the moment. Playing all kinds of tips—tips from analysts, friends, insiders. Shorting process Stock is borrowed from your broker for delivery to your account.  Later, you purchase stock in the open market and return it to your broker to pay back the stock you borrowed. This completes the transaction. Discoveries Only trade the leaders. Understand industry group movements. Top down trading. Set up the checklist. Track the industry group - they usually move together. Tandem trading - comparing between 2 stocks from the same group. Examine all 3 factors at the same time. Reversal and entry Continuation 

Broadening Bottom Compute the difference between the highest high and the lowest low in the formation. Add or subtract this value from the most recent minor high or low, respectively. The result is the target price for upward and downward breakouts. Once recognizing a broadening formation, buy after the stock makes its turn at the lower trend line. Place a stop-loss order 0.15 below the minor low to protect against a trend reversal. Sell short after prices start heading down from the top trend line. Place a stop 0.15 above the minor high to protect against an adverse breakout. Cover the short when price turns at the bottom trend line and starts moving up. For a downward breakout, cover as it nears the target price or any support level. Raise or lower the stop to the next closest minor low or high once prices make a new high (for long trades) or low (for short sales). If a broadening bottom shows a partial decline or rise, trade accordingly (on a partial decline, go long; on a partial r...