Tuesday, October 23, 2007

I learned that I learned nothing about TA (technical analysis)

STI did pretty well, riding upon the back of Dow's performance last night. Dow was up 44 pts, helped pretty much by the fact that tech stocks did a rally. All riding on the back of Apple's solid results. HSI did a reverse of what happened yesterday, it went up 1000 pts. Remember I said about Jakarta dropping around 4%? Today it went up 4% too. STI went up 52 pts (1.45%) to close at 3695 with a volume of 2.1 billion.

Basically back to square one. Really? Not so. I think underlying strength must be strong so that most indices can bounce back to pre-sell level within a day. Remember the saying that bulls climb up the stairs but bears jump out of the window? Didn't happen this time - both bulls and bears took the escalator. So though prices went back to the same level, the sentiment might have changed. The charts for most stocks did look better now.

I shall refrain from commenting about prices of stock. Rationalising the up and down of stocks is getting pointless to me. When stock A goes, maybe they announce new contracts. When stock A goes down, investors took profit. Aiya, all nonsense...the real cause of the price action of stocks cannot be determined. It might even be a multi-variate problem instead of just one single factor, so what's the point of rationalising the movement? For all I know, it might even be just random noises that have no reasons at all. Realising the target price, support/resistance and trend is good enough for me to decide what to do.

There's be a definitely change in this blog. I'll be studying hard on fundamental analysis next to improve my base knowledge. Of course I'll blog my insight here as part of my journey. I'll probably never throw away technical analysis - it works just as well. Haha, it'll be learning new things again :) Just take a look at those newbie TA charts that I had when I first started my blog - it's quite different from what I had nowadays.

One thing I learnt is that the more I learn about TA (technical analysis), the less I know about it. Haha, I used to be so obsessed with all sorts of cross-over and all the funny indicators strictly. But the more I use them, the more I realise I don't know anything. From basic support/resistance and trendline, I ventured to funny oscillators and indicators and candlesticks, then I went back to the basic support-resistance-trendline-volume analysis. The simpler the better, really no need for those very complicated stuff. THAT is, I think, the journey that I went through. Though the results are the same (I'm still relying on those support/resistance) but the big roundabout journey makes ALL the difference. Somehow, knowing that you don't know anything makes me feel more confident and more open-minded.

Oh, I also used to read a lot of broker's report and HAD to read the newspaper for insights. It's like if I didn't read the latest news or had the latest broker's report, I felt unsafe. I remembered my confidence in my analysis depends on whether any brokerage report had around the same thinking. I scoured the newspaper for the latest stocks to buy, read The Edge magazine for the latest stock analysis, read all the forum people commenting in cna forum. Aiya, bullshit lah. No need all these. Doesn't make much difference in my trading profits. Might even make it worse actually.

I think I've grown to be less speculative for sure. I basically lost my risk appetite, haha :) I think I'm moving towards the right direction.

Dow is green green at 70 pts up now, Europe all green.


Noob-trader said...

LOL it seems that i am going through the same rountine.... Part of Learning curve to reach your stage ba...