The famous stocks that many new investors and traders will invest or trade will always be a few big companies such as Public Bank, Hong Leong Bank, Maxis, Maybank, Axiata, Nestle, Digi, British American Tobacco and so on.
But often these counters are pricing at the high side which many traders are unable to afford to trades. Of Cause investing for long term is not an issue. Because is like a savings to investors.
What about those who what to earn capital gain and extra income from the stock market by trading?
There are 1000 over stocks listed in KLSE for you. From RM 0.05 up to RM 150. But if our capital is small stocks pricing RM 2 and above is not in our options, because the price is too high for us to gain short term profit to cover the brokerage cost and other misc cost.
One of the common ways that you can use for trading stock selection is Technical Analysis (TA). It has been in the market for many years and everyone knows about it, even the big boys. We have met many traders who have been using TA says the earning is not effective, have profit but the ups and down is too huge and often wipe out majority of the profit in 1 down turn.
Here is the problem for us to look into it. What are the problems in TA?
• Big boys know what you are looking at and create false entry signal such as breakout or support rebound with reversal confirmation.
• Purely based on HOPE in every trades : Traders don't know how to react to price changes after entry but they can only Hope for the price to hit profit target and hope it will not hit their cut loss.
• Fail to react on fail push up stocks and hold on the profit which turn to losses. Or did not realized the trade is not going to make it hence, can not cut loss early with a smaller cut loss.
Basically you can see the traditional analysis problem is based too much on hope. That's why many traders who look into this analysis for more than 10 years are still not sure what the market is doing and most of the time can't retained their profit when market is down.
Let's us show you an example of our previous trade.
For example, in Technical Analysis you have resistance breakout stock, entry will based on the resistance breakout with high volume. In the above case, SKPRES 7155, by following TA entry rules, you entry price will be at RM 1.41 (Above the Red Line) because it broke the resistance at the red line and trigger entry. Then you start to set your take profit point by measuring the distance from the bottom of the sideways to the resistance (the red line) is the expected profit that you will get. For this case it will be using 1.40 - 1.24 = 0.16. Therefore, TA profit target will be RM 1.56. Now if you set a cut loss point at RM 1.35, the price will hit your stop loss and you have to cut loss.
Yes, you might say you will change the cut loss point to lower, but how do you know in what circumstances that you need to change the cut loss? And adjusting it to lower point is exposing yourself with more risk! And most of the time you will not exit at the reversal point because you have an expected take profit point which is RM 1.56 and you will HOPE and wait the price to hit your take profit target.
Now you will realize there are many questions are not solve to help traders to understand the price movement.
That’s why we look into big boys and developed our own analysis, Operator Analysis, to solve the questions of how to listen to the big boys and follow them.
You can see from the image above, our entry is lower than the TA entry and the exit is right on the top and before the price turn south with a huge plunge. By using Operator Analysis in this trade, you make profit but TA have to cut loss, because they hold on to it.
Based on above examples, don’t you felt that the stock is trading you instead of you trading the stock?
What will a True Trader do?
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Operator Intention
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Operator Analysis
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Traditional Analysis
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Start Pushing @ RM0.86
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Monitor big boys, shows signal they want to push up
and move in with them |
Wait for Breakout at RM 1
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Attract traders in with Resistance Breakout for distribution
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Still have intention to push up to attract buyer, hold
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Enter & set profit target at RM 1.50
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Avoid normal trader selling, dump in small bulk before reaching normal trader’s profit target.
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Take profit at RM 1.2
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Praying to hit profit target
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Huge throw out
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Looking for other stocks
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Wait & See, still have profit
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Share price down to RM 0.96
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–
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Wait & See, haven’t hit my cut loss point.
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Share price plunge to RM 0.88
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–
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Wait & Pray, hope it will go back to breakeven
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Can you see the difference now?
There are big boys in any forms in every financial market. How far the price can go it determined by the big boys, not us nor the previous price level, even with a good fundamental counter they need the force to push the price up. In order to put yourself at lower risk and maximizing the profit, we should follow them.
Here are some trading record we have that we can exit at a profit timely before the stock turn south.
MEDIAC 5090 : If You Listen To The Market, You Can Avoid Going Into Losing Trades
MEDIAC is one of the recent comment we made that the price will not maintained at the high side the next day and it will close at a lower price.
To many traders out there will see this as a flag breakout with volume, looks very bullish for them, but when we look into details with our operator analysis. We find that the day with the flag breakout is purely to attract buyers in.
That's how we can avoid getting stuck in a losing trades with our self developed Operator Analysis.
Here’s the video link we shared about MEDIAC : https://youtu.be/jMMqQd7bIuQ
KPSCB 9121 : When You Understand The Operator, Higher Can go Higher.
At the time we enter KPSCB the price already up 14.15%, 0.075 sens up! Most of the traders in the market will not dare to move into stock that move up more than 10% in a day, because THEY “THINK” the price is too high. You can say we are crazy, but we still move in because we “LISTEN” to the market, we react to what the market tell us, we see the big boys have intention to push higher.
The next day we took a 30% profit from KPSCB. Why we take profit at this level? Because we listen to the price and volume movement again and it tells us that the price is not going to push higher. Up to date the price is at 0.535, if you were to feel greed and hold on to it, all your profit will turn into losses.
BSLCORP 7221 : Protect Your Profit from Turning Into Losses
We see something is not right the next day after our entry around 11am. In the 5 mins chart above shown that the big boys are throwing shares out, immediately we exit with a small profit 0f 1.5 bids.
Listening to the market is important, many traders in the market are still unable to do this. Or they think they are listening to the market with technical analysis, but if you look into it, there are still many times you have to rely on HOPE in all your trades execute with Technical Analysis.
Find out more about how we track big boys effectively in our Facebook and YouTube Channel :
This blog is for sharing our point of view about the market movement and stocks only. It is not and advice or recommendation to buy or sell financial instrument. Viewers and readers are responsible on your own trading decision. The author of this blog are not liable for any losses incur by any investment or trading.
