Dr. Alexandra Elder

Dr. Alexandra Elder whom write the popular trading books " Trading For a Living", "Come to My Trading Room" in town over the weekends, below are some of his sharing.

The "3M" in successful trading
Mind, Method, Money

Ocean of ignorance
We live in an island of knowledge and surrounded by an ocean of ignorance. As our island of knowledge expands, our boundary of ignorance increases too. The more things we learn, the more things we find that we do not know or understand. There is no way one can totally understand what the market is doing.

Elephant vs. Rabbit Hunting
I'm not claiming one style is better than the other, but one must find a method that is comfortable to execute. I'm a rabbit hunter – someone who trades in and out within a short period of time, taking smaller profits as compared to someone who trades for a longer time frame. I don't try to catch big trends like an elephant hunter. I am happy with a rabbit.

Keep a journal
The trading journal is necessary for a trader to improve his skills. He should grade his results in 3 areas.
Buy Grade (high – buy point) / (high – low). More than 50% is considered a good buy
Sell Grade (sell – low) / (high – low)
Trade Grade – how much of the moving envelope range did you capture? 30+% = A. 20-30% = B. 10-20% = C.

Learn to Survive First
As a newbie, the most important thing is learn how to survive. The two causes of trader's mortality are

1) a single disastrous loss
2) numerous small losses that add up to disaster
To survive, a trader must apply the 2% and 6% money management rules. Never risk more than 2% of your capital per trade and never risk 6% of your capital for your entire position. In other words, if you risk 2% per trade, you can only get into 3 trades.

Technical Analysis
There are 4 styles in trading
1) Insider trading
2) Fundamental analysis
3) Technical analysis
4) From the gut
FA cannot determine the waves of optimism and pessimism of the market participants. TA on the other hand is the reflection of psychology of the crowd. Dr Elder finds that TA suits him the most. Fundamental analysis may take a long time to realize profits. For example, Boeing had orders fully booked for the next 6 years but its stock price still fluctuates day to day.

Separate the Analyst and the Trader
In big institutions, there are analysts and traders. The analyst will plan trades while the trader will execute them. As an individual, you have to be the analyst and the trader. However, you can only be either one at any one time. Be an analyst outside trading hours and make your plans and decisions without emotions. During market hours, be the trader and execute the trade plans accordingly. The trader must adhere to the trade plan faithfully.

Why do people lose money in trading?
Many people traded out of boredom. A typical trader is a college educated 50 year-old who finds his work boring and mundane. He wish to trade his way out of the current lifestyle. He is trading for fun, and not for money. This is why most people lose, because they are simply engaging in the activity for pleasure. There are two objectives in every trade
1)To make money
2)To become a better trader.

Focus on Trading not Money
Although one of the objectives is to make money, one should not focus on how much money is made or on the Profit and Loss statement. The analogy given was about the medical doctor who runs a clinic. If you ask him how his business is doing, he would roughly estimate the number of patients he have seen. He is not going to say he had made $x amount of money. Focus on trading quality.

" 炒股必胜法”

How the German Bailout Greek

It is a slow day in a little Greek Village . The rain is beating down and the streets are deserted. Times are tough, everybody is in debt, and everybody lives on credit.

On this particular day a rich German tourist is driving through the village, stops at the local hotel and lays a €100 note on the desk, telling the hotel owner he wants to inspect the rooms upstairs in order to pick one to spend the night.

The owner gives him some keys and, as soon as the visitor has walked upstairs, the hotelier grabs the €100 note and runs next door to pay his debt to the butcher.

The butcher takes the €100 note and runs down the street to repay his debt to the pig farmer.

The pig farmer takes the €100 note and heads off to pay his bill at the supplier of feed and fuel.

The guy at the Farmers' Co-op takes the €100 note and runs to pay his drinks bill at the taverna.

The publican slips the money along to the local prostitute drinking at the bar, who has also been facing hard times and has had to offer him "services" on credit.

The hooker then rushes to the hotel and pays off her room bill to the hotel owner with the €100 note.

The hotel proprietor then places the €100 note back on the counter so the rich traveller will not suspect anything.

At that moment the traveller comes down the stairs, picks up the €100 note, states that the rooms are not satisfactory, pockets the money, and leaves town.

No one produced anything. No one earned anything. However, the whole village is now out of debt and looking to the future with a lot more optimism.

And that, Ladies and Gentlemen, is how the bailout package works.

What Does the Chart Tell Us?

Global Business Cycle:

What Does the Chart Tell Before Earthquake

Sendai earthquake caused the Japanese stock market Nikkei 225 lost more than 16% or 1649 points. On the hindsight, one can avoid the gigantic loss if he were to follow technical analysis rules strictly.

Take a look at below chart, on 10 Mar--one day before the earthquake, Nikkei already broke its triangle and horizontal support-- 1st selling signal. The next day 11 Mar, Nikkei opened gap-down, and technical rebounded--2nd selling signal. The earthquake happened only at 2.46pm(JST), 14 mins before market close. If one to follow rule to cut loss once break support, the aftermath loss--cruel pain in next days could be avoided.

A Silent Day

I don't have much to say now, market very quiet, STI no upside momentum. Biosensor has been frying to top volume...

The Big Picture

Hi everyone, what a relief holiday yesterday right? As we escaped the possible drastic selling off impact from the Wall Street.

Let's take a look at Straits Times Index, it's down a bit in the last four trading days. But overall the uptrend is still in good shape. It's a nice uptrend with nice pull back. This is what I can see from the chart now, though that many bearish sounds around... I'm waiting for a rebounce to get in. Simple it is.

SIA Engg

Here I have a pre-earning play, SIA Engg is going to pay out six cents dividend which expiry date is on 16 Nov. The chart looks nice. I'm going to exit before its expiry date for short term profit.

Commodities Going Strong on Weak Dollar

I have all my support and resistance levels in below charts:

ADR Start Trading on Fri 22 Oct

This is a big one-- ADR will start trading tomorrow, I feel excitement. I can trade one of my most favorite counter Baidu.com (BIDU) at SGX now.

Understanding ADRs – Starting Friday, Singapore investors can trade American Depository Receipts, or ADRs, on the Singapore Exchange (SGX) during local hours. The ADRs were first introduced in the US to facilitate American investors to buy and trade shares of foreign companies that were not listed locally. Typically, an investment bank would purchase a bulk lot of shares either from the company or the market, re‐bundle them and issue them on the US stock exchanges. ADRs are eligible for dividends, though they carry no voting rights. The initial 19 ADRs to be quoted on SGX will be fully fungible with their counterparts on NASDAQ within 24 hours, making this a 24‐hour continuous trading platform. The ADRs will be quoted in 10 shares per lot and denominated in US$. With SGX hoping that such trades will take off in a big way, investors may be rewarded for venturing into uncharted waters to meet the first wave of excitement sweeping up.

Few Longs

They Are Energized.

More of this Kind of Set-up

SATs as posted in previous post, worked very well yesterday.

To put it simple, this is what I'd like to see before initial a trade:

1. Above the MAs
2. Consolidation near the MAs.
3. A breakout.

Bullish Set-ups

STI hit new record high since May 2008 at Friday with closing at 3130.9. A big thumb up for those who participated in the bull run. In the short term, many stocks are poised to move higher.

It's a Beautiful Friday

After my "No Ego Please" which is two posts back, I received few phone calls and emails from my dear readers. Thanks for your concern. I appreciate it, don't worry I'm in good shape again today, STI turned its head upside with 33.27 points gain. What a day!

It's normal to have drawbacks in trading, with five steps forward and three steps backwards still make you profit. The challenge here is how to reduce the backward steps as less as possible, say, to two steps or one step? This touched on how one account really can grow fast and big.

I've done for today. Genting is fighting back, and CDL Htrust, Tiger Air, PEC, Kepcorp, Sembcorp, kepland...think the blue chips will come on to the stage next week.

Have a nice weekend! See u again.

No Ego Please

Market just closed. That's it for today, and I just want to have some reflection here.Trading isn't fun for the past few days. I feel the pain in my heart. It's the ego and discipline dragged me down, and I gave back all my profits made previously... market is harsh and unfogiving. I have to say I will be a much successful trader if I follow all the rules strictly. Maket is always there and it doesn't care whether I win or lose, I have a long way to go.

Tomorrow should be a good day. Wilmar, SPH, SIA Engg, and Capitamall moved up before closing.

Talk to you again.

Speculation and Trading vs. Gambling

I'm reading this interesting article and think it's great to share with you. Please read it to the end. Seriously.

When does trading become gambling? There is a very thin line. I maintain that most traders ARE gamblers. They use markets as a substitute for a casino. Here are some of the sign posts that you have crossed the line. I love Jeff Foxworthy so I will steal his "you just might be a redneck."

1. IF you enter trades without a clear trading plan, you just might be a gambler.
2. IF you trade just to be trading, you just might be a gambler.
3. IF your bored and enter a trade, you just might be a gambler.
4. IF you look at potential profit before assessing potential loses, you just might be a gambler.
5. IF you have no impulse control, you just might be a gambler.
6. IF you have no methodology, you just might be a gambler.
7. IF you rely on others for your trading decisions, you just might be a gambler.
8. IF you do not take full responsibility for your trading outcomes, you just might be a gambler.
9. IF you increase your risk due to losses, you just might be a gambler.
10. IF you do not use stop losses or do not adhere to them, you just might be a gambler.
And my all time favorite
11. IF you get an adrenaline rush when your entering trades, you just might be a gambler.

In summation I would like to say that I do enjoy casino gambling as a form of entertainment. I strive to over come the house's edge when I do gamble. Gambling is entertainment and trading is a business and should be approached as a business enterprise. IF your using the markets as a gambling outlet, be my guest. Traders that approach trading with a positive expectancy WILL take all your money. They will send you stumbling out into the night, cross-eyed and mumbling to yourself. Be smart. You can either feed the trading gods or feed your head. Do the work and get educated before risking one thin dime. Employ laser like focus in your trading and use iron discipline. The end result can be well beyond your wildest expectation.

The Unexpectable Run, Left the Miserable...

The Hustle and Bustles

Ah, the joys as a broker...

I haven't done any posts for yesterday the whole day, as something was bugging me while I need to settle a mistake contract. My responsibility as a broker...lucky it has been settled already. What I want to share with you is be extremely careful with the positions you are holding, never have short selling in your cash account.

The market has been zig-zag around for the past three days. It maybe disappointed most of the bears--market just refused to go lower. Most of the blue chips are kinda of side way, doesn't move much. My bias is still to upside more than downside. If you have been here for long time, I'm a bull. I focus on long side in most of my trades. Well, doesn't mean bears can't make money, still remember the saying" Bulls make money, bears make money, pigs are slaughtered"? I'm in bulls camp.

Indoagri is one of few stocks I'm looking at, don't know why it dropped from 2.39 few days ago to 2.26 now, while its peers Olam, Noble, Straitsasia are performing well at the same time. Below is its live chart now, hitting its 200dma and horizontal support level, if I'd agree to average down, it must be under this kind of condition.

That's it for now, trading isn't that fun lately. So I'm not feeling particularly chatty. I'll post again what to look out for coming week.

Just Some "Food for Thoughts"...

Now I have this habit to blog something for you guys everyday ...it apparently becomes one of my major daily tasks. Sometimes I have to really dig my head to think what to write. A day like today is boring enough...there is no National Day rally at all. Maybe Wilmar is the only representative, it has rallied up by 20c now.

And here is my lunch today to celebrate long weekend, Prime Rib from ASTONS.

I took below pics few days back when we had dinner in my colleague Tar Ng's house, really enjoyed the home-made western food by his maid, the cooking and serving standard is as good as premier hotel.

Especially the 21 years-old Glenlivet. Yummy....!