Another Example on How I use Stage Analysis to decide to buy or short sell?

By staging a stock into each cycle whether it is up, sideway or down. You can immediately know how to trade off this stock at the lowest risk.

But how? Simple, looking at the chart now, will you short a stock at Stage 2? Will you buy a stock at
Stage 4? So does that solve your problem by not getting you into the wrong stage of trading.

Let say that you bought a stock at Stage 2 and price is too far out from the moving average (black line),
don't worry, most mistakes made at Stage 2 will be forgiven. Why? price will pull back to the moving average to consolidate strength for the next higher upmove above the previous peak that you have entered.
As long as price continues to track along Stage 2 trend channel, don't worry pal.

If for me to trade any stock, it will be very near to the channel base with progressive volume coming
in to support the price trend. Buy when the stock is quietly moving up the channel. If it appears in the
Top Volume of the day, risk maybe getting high and I may not take a trade.

A sample of my classic Entry and Exit as shown in the chart below:

Notice: How the Propiertary Blue Diamond appeared along the base channel to trigger "Long

order" for me?

Why and When will I take Profits out from a Stock?

On 21st March, Blue Diamond,"Go Long" was triggered and I was supposed to take a trade the next day.
Due to the heavy workload in my current new Job as IT Presale Consultant, I just got it missed and took
a trade two days later on 23rd using my IPhone. Frankly speaking, I love to trade with Poems Mobile.
It is so handy and I can take a trade even when I am in the toilet, travelling to client's place. Once a trade is
transacted, I will immediately recieve an email to my inbox, what a great technology we have today?
If you are looking for a reliable remiser from Philip Securtiy, I can recommend my current broker who is responsive and man with integrity.(note, I have no referral fee at all. I have introduced at least 5 friends
who are new to trading to open an account with him). He will send his analysis often and I feel that it is
good for newbies.

Come back to the above chart, so I took a trade on 23rd March and I shared with friends around me through sms or whatsapp. The reply from most of them were "wa..so expensive stock and have gone up
alot already, don't think it will go up soon, better buy yang zi jiang, cosco or nol, cheaper leh".

Well, it really doesnt matter what the price of the stock is, what really matter is if the stock will move higher
from my entry level to make profits for me even it is expensive.

So I replied my friends " do you want to buy stock that is getting cheaper each day or getting more expensive each day to make a profit?" and the reply  was "the stock has to be expensive after purchase inorder to make a profit" . HAHA.... Then I said, "In this case, then why want to look for stock that is getting cheaper now or moving down the channel? and the usual reply would be "oh, because it is more affordable and I can buy more lots instead."

Frankly speaking, this is what I have heard over and over again from any friends who do not trade well or make some decent profits over a period of time. Many of them are in the state of confusion because most
of them want to buy stock that is getting cheaper each day and hoping for profit one day.

For me, I love stock getting more and more expensive each day especially in STAGE 2 and CLASS A stock.. So what is ClASS A, B, C and Stage 1,2,3,4 then... Below is an extract from my ebook written in 2003 title "Personal Trading System" to share what is CLASS A and Stage 2.

If you have joined the SGtrader's Trading Group, you will be taught this vital skills to survive in the market.

Class “A” stock

-        stock continues to trend higher after breakout. No known near term resistance.

-        risk is low and reward is high as price just starts to move out from base.

    

-        price is trending above 200MA (MA commonly used by fund managers)

-        breakout volume must be at least twice the average and the spread is equally wide.

STAGE 2: Advancing Phase

-        ideal stage to buy, stock swings out of its long term base, starts to trend higher.

-        profitable breakout usually occurs with large volume. 200MA turns up shortly after 
   breakout provides confirmation of strength

-        investors buy stock on the initial breakout or on the last pullback towards the
    breakout level. This is a 2nd chance to take advantage.

So Come back to the chart again, when combine with Classification of Stock and Stage Analysis with my
propiertary trading system, it becomes clear to me if I am riding the right stock with the right stage to make
an income. Base on the last two trading days, expert indicators "lack of demand" triggered twice. When
cluster of indicators appear consecutively, it has to be respected with full attention.

So how am I going to handle this situation when my trading system is sounding that there is weakness in
the current uptrend? I respect and follow the order by setting yesterday's low as the trigger point for me
to exit and take profit. If tomorrow onwards, price starts to fall below 04/04 low $5.92, I will walk away happily with what I have made within 10 trading days. Don't grin over too little profit made, just take what the market give me. Nothing is for sure in the market, we are dealing with probability. Stay healthy and be happy.

Cheers

Combining Stage Analysis, SGtrader's Channel Trading & Expert Indicators - High Probability of Success.

     Stock Market goes through four stages of cycle, stage 1 - 4 with each stage plays an important part to
     the type of trading strategy to use and take advantage of the stage. This teaching is made popular by 

     the   author of " Secrets for Profiting from Bull and Bear" by Stan Weinsteins.

    

     When I first came across this book, it was doubtful with the title which began with "Secrets". Many
     authors like to use this strong word to attact readers to pickup their books and hopefully buy them. 

    Nevertheless, I picked up the book, scanned the front and back cover for more information and then
    the contents. As I read the book, I immediately knew that this could be the book that could assist me to
    break down the stock movement into stages and if I could use the right strategy for each stage, I should
    be ok.

    So I bought the book and treated it like a bible, I read and read each time when I had time until I
    understood the author's intention.

    I started to employ stage analysis to the charts in 2003 and was able to detect each stage as the
    Market unfolded. This is really an amazing skills to have. By staging the stock correctly, I am able to
    identify the accummulation, advancing, distribution and declining stages without any difficulty. The
    best of all, stage analysis prevents me to Sell Short a stock in Stage 2 Advancing Phase or Go Long
    in Stage 4 Declining Phase. This knowledge has kept me out of trouble by knowing which stage to
     apply the correct  trading strategy.

    Beside apply my own propiertary indicators and trend channel to a stock chart, I make use of stage    
    analysis as a qualifying criteria to pick up which stock to trade out of the hundreds. If I am planning for

    a "long trade", only stage 2 will be considered, if I am planning for "short sell", only stage 4 will be
    considered.

    With this method, I have less chance to make mistake trading in the wrong direction and improve my
    odd of success.

     Below is a sample chart on how I stage a stock for trade consideration.

How the RTD Function in MSexcel work in Real Time Portfolio Management?

Good Day Traders

For those who have just joined the SGtrader's Trading Group,  you should have recieved an email to where you can download a sample of my Real-Time Portfolio using MSexcel RTD function. It is simple to use and manage.

Think Simple. Dont complicate a simple task into complicated issue. Just like many traders who

like to have more than 4 TA indicators in their stock chart. Many a time, each indicator will contridicate

each other and it does more harm then help. I do not use any of them now after I start to learn to read bar by bar which is the only leading indcator you can think of. Others are just derivatives of price and volume.

Cheers

How to determine Risk & Reward for every trade?

Above is a usual trade setup uses by me to perform Risk to Reward analysis before I press the button to
buy or sell.

With a customized riskcalculator that I have programmed many years back, assisted me to determine
if the risk is worth to take or just let it go instead.

What make a good trader is nothing more than the tools he uses to trade the market. With simple
tool like this calculator, once can easily walk away from lousy deal,instead look for another stock
that presents better returns although there is no guarantee to win in trading. But we close the gap
up to make a good trade.

As you can see in this calculator, I have the cutloss level just beside the target level (near term resistance)
where I make this the 1st priority in any trading. Always determine where will be the cutloss, so that
you can easily obtain the risk and reward ratio at the end of the calculator. With this estimation of
the risk that you have to take inorder to recieve the rewards, you can easily make a quick decsion whether
to take the trade or just leave it along.

Many times, when we found a stock that is trading with excessive volume and has been trading higher for
past few days, we may have the urge to jump into the stock without analyzing chart on the possibly near
term resistance or support. With this risk calculator, you can easily enter the buy price (support level) and
sell price (near term resistance level) and cutloss (below recent support level). Once you have all these
data key in, you can check the risk to reward ratio if it is still a good trade.

Never rush to buy a stock that has been in the top volume for days. Nothing is free as this could be a trap
setup by the professionals to trick the herd to go long so that the professionals can transfer their holdings
to the weaker buyers. Once the transferring is done, the stock will continue to move higher for the next few days but without volume to support this upmove, so the stock start to tumble down like a stack of cards.
Dont be greedy, just be patience in trading. Always buy at channel base where the stock is quiet and unnotice by majority where there is sign of accummulation from the professionals. Such indicators in my system to determine this strength is as follow:

Test Base - professionals are probing the base, if the next bar shows successful test, the price will go higher
Reduced Selling Pressure - after a big sell off, market starts to cool off slowly and move sideway, reduced selling pressure is witnessed as any selling has been absorbed by the professionals so that they can stage an upmove in the near future when the catalyst for a bullrun is present.
No Supply - selling has reduced significant and if there is no selling, stock will move sideway or uptrend.
Markup - price is marked up to trick shortists to cover their shorts, usually a "V" up move.
Demand coming in - professionals are coming in to buy  up with average to high transaction volume.
Bottom reversal - price reversal from bottom, forcing shortists to worry and cover shorts
Climatic action - heavy transaction volume at the lowest low but close higher near the day high, the professionals are finding worth in the stock and decide to absorb all selling and push price higher instead.

These are just some of the indicators that I have created by examing the demand and supply of the
market.

A good reference site to learn more about the price and volume action is the popular "tradeguider" video
from youtube. Where the professionals are telling the truth about the market.

How to Swing Trade Effectively?

Many of the traders are unable to trade well or make unnecessary mistakes during hunches. If I tell
you that I do not watch the stock price every second, you may not believe it. 

Staring at the real time price(bid & ask) each second can cause severe heart attack and lousy trades.

Imagine that you come across a stock in the top 20 volume and price is moving up. You decide to open
the real time time and sale to see each transaction done. Every uptick in price makes you excite and lure
in to the trade which you have not done any analysis before hand. So you bought it in the morning session and watched the screen until market close. You felt like a champion that you had picked a steal from the market and money should be attracted to you soon.

Wait, second half of the session opened and Futures markets were down. Suddenly the local bourne
started to take a turn and STI index went from +30 pts to -50, now you were caught as the stock that
 you bought earlier started to pull back to it's open price and now you lost 5cts a share. How could this happen?

How could the market being superb positive in the morning, now turning negative in the last trading session?
so what should I do now? should I sell away the stock or wait for another day and hopefully the price would go back the bought price so that I could even out and exit.

What a emotion roller coaster? from winning to losing within a day? Must be bad luck.

Above is a typical scenerio experiences by many including me as well.

Is there a better way to trade and not to worry about daily volatility and able to sleep well each night?

Yes for me, from the above diagram. "Buy zone" is the area where I will go long base on price and volume
action to confirm a trade. Once in the long trade, as long as price is not below the "sell zone", I would
keep the stock and let the stock to wiggle its way up the channel.

So when I will start to seriously look at the stock? when it is in the upper channel, "sell zone", where I may decide to take profit due to confirmed weakness base of price and volume analysis.Or price has traded
below the "buy zone" and I would cut loss and wait for the next opportunity to re-enter or go for other stock
that is exhibiting strength to move higher in the "buy zone".

To summarize, when a stock is in either  "Buy zone" or "Sell zone", will I be interested to check the chart to identify potential strength or weakness.

When stock is in the "Do Nothing Zone", basically I will let the price to meander along the channel and do not bother by its activity each day until the price comes to the extreme ends (buy or sell zone)

New Scanner Picks up Stock for Shorting!

A new scanner that is coded to scan for weakness two days earlier and get you to watch out for the next two days price action. When "lack of demand" or other expert indicators such as go short, supply coming in or
top reversal, this may be a golden opportunity to go short sell with high probability setup.

Below is the stock that is picked up by the scanner on 15/3/11 closing price.

Above is the weekly chart, looking where the new expert indicator appeared "Look for No Demand for Shorting", we need to wait for the next two weeks trading session to reveal possible weakness.
Indeed, after the expert indicator triggered a week earlier, subsequent week triggered "Lack of demand",
This week as long as price is closing below the 50% level of the previous bar "Lack of demand",
short sell is recommended.