Oct 2007, I was back to Singapore. After all the starvation, hunger, malnutrition, I managed to save a sum of $$ to pay off my debts. Of course, like everyone else, I was very happy that I was not in debt anymore but at the same time I developed phobia for the stock market. My confidence was utterly shaken after all that bad experience on listening to all the news and tips which cause malaise to my trading. I decided to stop trading and find a good job so as to feed my family. I knew I need to crack the most puzzling jigsaw puzzle and riddle in order to make my millions, however I also knew my limits. To crack is one thing, I need to overcome my psychological barrier in putting $$ down to test it.
Summer 2008, I was introduced to technical analysis. That's where the transformation begun. Attached above were my early sketches. Luckily I still managed to keep a copy of all these records. There were more but I believe I had already deleted away. I remember my first stock I punted was First Resource with 10 lots and made like $200 in 10 -20 mins. Somehow I regained my confidence a little and went bigger, that's where mistakes happened and I could not recover. I was down -$2000 and refused to cut loss, my emotion got the best of me and when I finally threw in the white towel, the stock rebounded and I had to use my hard earned $$ to pay off the losses. Learnt a lesson never to double or triple up. One day, I saw on the internet that there was this guy who is superb in trading. I went and listened to his preview, without hesitation, I signed for his course not because he was good, but more of because he was honest. Honesty is something that cannot be traded for money and I needed that in a mentor.
So finally I acquired the necessary skills to trade. There I am again, punting with more refined skills. Drawing trendlines and using volume to decipher the market. Initially it was all great. It seemed like a magic when you put 2 trend channel together so whenever it hit the bottom of the trend channel I longed and when it hit the top trend channel I short. It's a no brainier work. The only caveat is that you need to keep drawing and shifting the trend channel as the market unfolds. My worst nightmare was about to begin and the fallacy of trendlines can be devastating if you draw wrongly. Below are a few points which I think trendlines failed me.
- When drawing a trend channel, I was only focused on that channel. Outside that channel was all transparent which caused me to overlook some of the other important facets in trading.
- When drawing a trend channel, everything else became laser focused into that channel which made me narrow and limited.
- It works like a magic at first, but subsequently, as some stock poised for a heavy breakout, those channels because utterly useless and complicated as shown above.
- There were too many lines that need to be drawn. It doesn't give me that confidence to go big when it hit the bottom of the trend channel and vice versa.
- It doesn't require much thinking which made my quest for the ultimate knowledge shallow.
After about 6 months to a year, I finally gave up. Why? Because some days I make and some days I lost, it doesn't give me consistency and confidence. What's the point of making $$ and losing $$ back to the market again? Another indicator was Volume. There wasn't high volume in the charts everyday which I was mechanically waiting for everyday. The key support and resistance level was just a quick guide with a horizontal line and many times if a stock is ready to rocket, it would pierce through that congestion area and break through all resistance. I failed terribly and almost decided to give up, thinking that trading doesn't suit me because I kept losing $$. But at the back of my mind, I knew that there must be something more than just trendlines, volume, support, resistance.
I was down with $30000 left. I also realized that if everybody in the world was using technical analysis, then everyone would see the same thing which I thought it wasn't a good thing. It's like the herd mentality. After all the losses and trying to recover my $$ back, I was very despondent, dejected and blamed myself for my actions. I decided to stop for a while and go into hibernation mode. As I went through that rough downtime, I came across Steve Jobs with his brilliant thoughts and vision. Till this very date, I still remembered he said: “Simple can be harder than complex: You have to work hard to get your thinking clean to make it simple. But it’s worth it in the end because once you get there, you can move mountains.”
I knew it wouldn't be so simple. So every night after work, I went training. I traded Dow futures with small lots and let all my close friends know that I was going to hack the stock market and make a comeback. The only thing I needed was time. It took me a while studying human psychology and philosophy. The biggest hurdle was to port what I thought was correct into the chart. It wasn't so easy as I kept trying and trading even though I kept losing. I was aware that I am a master of my own and I cannot rely on anyone because almost all of them were using technical analysis. I was also aware that I need to make it very simple (Steve Jobs quotes) so that I can perform quick analysis within a second and take action without hesitation. Finally after all that trading and experiment, I was left with my last $5000 which was make or break it. To make matters worse, 2008 was the year where the financial crisis created so much fear and uncertainty and I was scared to lose my job.
Once again, because I was left with $5000 and afraid of losing my job, I decided to take a 2nd hibernation period so as to clear my thoughts and rediscover myself better on what suited me best. Is it going to be swing trade, investment or short term punting? That's where my thoughts changed for the better, philosophy help changed my personality and character where I believed I finally found the holy grail without using any technicals, however I still need to fine tune it. My luck changed since then, 2009 was a year of stagnant, dull activity. Stay tune!
"The inner self is the true self. In order to realize our true self we must be willing to live without being dependent upon the opinion of others, Walk On!" Bruce Lee
Ronald K - Market Psychologist - The Big Speculator
