Friday, October 2, 2009

I cut all !!!

Oct seems to be a really bad month to trade..in just 3 days all recent gains last month was gave back. I have been telling play the range, don need to cut but at this point i feel its all different from the previous corrections.

Firstly, breakout supports for most small caps were broken. When support is broken, this is the time you have to take care. For me my trading time frame is not really long the most I can hold for 1 month or slightly more like i did for CH offshore..however when I was holding CH, the support was not broken then and maybe it was backed by good fundamentals. This time small caps that broke up retraces fast and breaking their first break up support and then towards their next support which was also mostly broken.

The selldown was broadbase, and Dow weakness yesterday brought forward big caps to also dip together. I just don`t feel good. My priority was to preserve the little profits I have and its a good time for me to rest and break away from the market, waiting for a better time to re-enter.

Although I have realised 10k of losses, I believe this is only temporary as I will be back when I re-enter my positions at a better time and price. The bottomline on why i sold was to preserve my capital and I cut at that point to prevent any further losses. Some cuts are not necessary but I do so to replan my strategy and trading methods. Totally away from the market can make me execute my plans better later..?

One sign to note was Monday, when STI was green we already saw a broadbase dip on small caps. We can use this infuture as a signal to alert us.

I could have earned much much more, but I am also glad that I did not lose all back to the market. It all a learning process. Learn from others and adapt into your trading style, learn from your mistakes and reflect to the key of success. Control your emotions, think of your risk management and do not overtrade. This are some of the things I would also think through during this break. Remember the market is always there.

The recent weakness in small caps indicates play is over? the major correction has started? Nobody knows.

Finish my rubbish? just a review on the STI monthly charts and please take note of the setup pattern at 50% fibo level. At this point the last candle is only 2 days old so things may not be as bad yet but please do watch it closely...anyway its just a point to note