Trendline, Hang on, Let Go

The YouTuber Jack Angel mentioned in one of her post that she has been greatly influenced by another YouTuber Alex Onze on stock trading.

Alex Onze was among the first to used his mother tongue to talk/ teach about stock trading and there is Money Growers who brings a more aesthetically pleasing videos on trading.

In Alex Onze's early videos,

• he talked about plotting trend lines and identifying support and resistance. In an uptrend, he advises buy on support, then at sell on resistance. If you miss selling on the first time the price hit resistance, sell when it is at 50% between support and resistance..In a downtrend, after identifying support and resistance, same technique: buy on support and sell on resistance.
• he demonstrated that in an uptrend, once the supply is almost too much, avoid buying that stock; but in an downtrend, once the price drops so low it becomes a hot stock with tendency to bounce back; buy once initial bounce back is equal or more than 50% as the trend is the price will go higher

He goes on to say that there are 5 chart signals to use

1. Stochastic: 0-20%
2. RSI: below 30 and uptrend
3. MACD: flattening histogram and uptrend
4. Volume oscillators: more positive 20-50, the more the price drops; the more negative the price will climb up
5. Candlestick/ heikin ashi: candle body almost the same size or falling wedges, there is reversal to downtrend; in rising wedges, the trend is upward

His take on chart timeframe

• daytrader: 1 min to 5 mins chart system or 15-30 min chart system; others employ the 1 min-15 min-30 mins-1 hours then 4 hour chart system in the morning to check if the chart is bullish or bearish

Trend Following and Darvas

On a personal note, after learning about technical analysis, I have purge my stock to let go of the old mindset and apply the new effective system.

Time for execution. Practice and practice until mastery is attained. It will be "Plan. Execute. Reflect"

I decided to shift to reading the blog of another successful trader who has the setup I prefer: part-time and trend following. I got into that conclusion after I read about how much portfolio you should have to earn comfortable. Small trades for now when I haven't reached that desired portfolio.

It starts with a post on the career of Nicholas Darvas. He was a dance foremost then trader second. He was dancing all over the world when he earned $2 million. But his quotable quote includes: " I am the captain of my ship." And goes on to share who he relentlessly study until he got is own style.

Different trading styles and styles, Trading 212 shares on chart time frames

• for trend following: daily >> weekly >>3 to 6 months; low maintenance
• for breakout trader: 
• for swing trader: 3 every 3-4 hours
• for day trader: 10-15 mins char; requires more attention; high frequency trade

ZF shares that trend following

• easy to learn and master
• does not require a lot of indicators
• uses mainly 20/50/100 MA

Elements of Trend Following as derived from Ed Seykota

• initiation
• holding 
• liquidation

Pitfalls of Trend Following as shared by Kay Sebastian; she begins that it is not for everyone

• initiation
• good periods of the market has little movement and may bore trader
• never getting the earliest entry
• goal of trend following is to enter the trend not finding the lowest of lows
• holding
• getting stuck in consolidation; other traders like momentum are gaining more
• hanging on to large profits; when your profits, greed creeps in
• liquidation
• cannot sell at the highest level

Key to trend following

• asymmetric nature of trading; upside is way higher than downside
• trend followers manage their downside through position sizing and tight stop loss but trend follows do not set target prices