Lessons from a private trader 2

Consolidation price patterns

BB are big investors, while the rest of the investors are known as retail investors. When these BB do want to invest, their amount will be millions and be vested into stocks for a period, buying in smaller volume within a price range. This price pattern should be able to identifed using TA, when price hovers between the resistance and support level for a period of time. For more details, you have do more research.

Once this amount has been vested, they will make entry into the mkt with a larger amount to cause a spike or large increase in the share price. With crowd effect, retail investors will soon follow, driving the share price up. Once the price has soar to the price the BB has expected to sell, its about time for retail investors to time their exit also..as the price will plunge back down...

1 lession i learn is to sell your shares when it appreciate..haha..but not blindly holding on to it unless you are a long time investor.

% to cut loss vs % to break even

Have a rule to cut losses, dont be afraid to do that as holding on to the stock in a down trend for a long time, will be harder for you to break even.

If you loss 15%, you need additional 15% to break even, and more than that to earn a profit. If you cut losses eariler, you be able to break even quicker.

Generally, it take a shorter time for a share price to wipe out its paper profit than it take to increase.

Shorting in bear mkt

In a bull mkt, one can buy low sell high, in a bear market, one can sell high buy low. The latter can be done using CFDs. Do check with your local brokages as how it will be done. Do note that each have its risks such as knowing what price to cover back. Warning: Dont do naked shorting...its illegal.

Question: I recall a friend ask if he trades intra day, one will not have to monitor the long term charting trend. Yesterday i got my answer to his question:

A breakout in the trend for a longer time period holds more significant and shorter trends will generally be following the patterns of this longer trend.

Reason: From a longer trend, one can idenified the number of times a zone has been able to halt rallies and reactions and the length of time that has elaspes since the zone was previously attack. Thus knowing the breakout point in a longer time trend is more significant, allowing pre anticpating of the coming trend to be more accurate

Reference:Martin Pring's: Introduction to Technical Analysis and a mix of my own interpretation.