The 99 Club

The 99 Club
Once upon a time, there lived a King who, despite his luxurious lifestyle, was neither happy nor content. One day, the King came upon a servant who was singing happily while he worked. This fascinated the King; why was he, the Supreme Ruler of the Land, unhappy and gloomy, while a lowly servant had so much joy.

The King asked the servant, 'Why are you so happy?'

The man replied, 'Your Majesty, I am nothing but a servant, but my family and I don't need too much - just a roof over our heads and warm food to fill our tummies.' The king was not satisfied with that reply. Later in the day, he sought the advice of his most trusted advisor. After hearing the King's woes and the servant's story, the advisor said, 'Your Majesty, I believe that the servant has not been made part of The 99 Club.'

'The 99 Club? And what exactly is that?' the King inquired.

The advisor replied, 'Your Majesty, to truly know what The 99 Club is, place 99 Gold coins in a bag and leave it at this servant's doorstep .' Done.

When the servant saw the bag, he took it into his house. When he opened the bag, he let out a great shout of joy... So many gold coins! He began to count them. After several counts, he was at last convinced that there were only 99 coins. He wondered, 'What could've happened to that last gold coin? Surely, no one would leave 99 coins! '

He looked everywhere he could, but that final coin was elusive. Finally, exhausted, he decided that he was going to have to work harder than ever to earn that gold coin and complete his collection.

From that day, the servant's life was changed. He was overworked, horribly grumpy, and castigated his family for not helping him make that 100th gold coin. He stopped singing while he worked.

Witnessing this drastic transformation, the King was puzzled. When he sought his advisor's help, the advisor said, 'Your Majesty, the servant has now officially joined The 99 Club.'

He continued, ' The 99 Club is a name given to those people who have enough to be happy but are never contented, because they're always yearning and striving for that extra one telling to themselves: 'Let me get that one final thing and then I will be happy for life .'

We can be happy, even with very little in our lives, but the minute we're given something bigger and better, we want even more! We lose our sleep, our happiness, we hurt the people around us; all these as a price for our growing needs and desires. That's what joining The 99 Club is all about.'

Morale of the Story People always have, what they need to have for a Happy Life. (Being content with what we have is an important key to lead a happy life)

Distinguishing Reversals from Corrections

Distinguishing Reversals from Corrections
(2)Volatility Expansion 1b - 1) as evidenced by a sudden volatility expansion, against the trend:
A sharp break against the trend with greatly expanded single-period range. This type of action may (but will not neccessarily) follow-through with a succession of similar periods. Often caused by unexpected news which is perceived as being significant by the market.
This type of action is "tough-to-trade" because it can be followed by further volatile periods in either direction.
Trading Rules:
If carrying a large long position : cut back to more reasonable levels immediately "at market".
Place a limit order to exit the balance of any long position and establish a relatively small short position 2/3 of the way back to the top.
Place a "stop" order to exit the balance of any long position (without entering a new short position) if the immediate down-move extends by a further 1/3.
Note: The odds that the limit price will be reached before the stop is hit are probably worse than even, but the potential recovered-profit to potential additional-loss ratio is two-to-one. This makes it the rational decision to take provided that the additional loss would not be excessive: hence the necessity to cut back immediately if the position being carried is unusually large (the basic rules on the determination of position-sizing are discussed below).
1b - 2) as evidenced by a sudden volatility expansion, with the trend:
A sudden acceleration of the existing trend with greatly expanded single-period range. This type of action may also (but will not neccessarily) follow-through with a succession of similar periods. This is usually the final bull-market buying-panic during the course of which the "last fool" finally gets into the market. This type of move can provide spectacular profits to those who stay with it but frequently reverses as brutally as it proceeds. Generally referred to as a "blow-off or "spike" top (or bottom if the chart is reversed).
Trading rules:
If carrying a position against the trend: Get out immediately. It is very occasionally appropriate to panic. this is one of those times. For survival it is very important to be amongst the first (not last) so to do.
carrying a position in line with the trend: place an "exit-stop" just below the start of the acceleration (above if the move is down), and follow the move up with a trailing stop (see below). You may be stopped-out well before the final top: but that is much better than watching a massive profit wiped-out by staying with the move to the top, and then staying with the following collapse. There is absolutely no way to judge in advance where a "mass hysteria" move will end. When people start confidently to predict that a price which has already tripled is going to re-double might be a good time to sell.
If not already carrying a position: Stand-aside (watch and weep).
Regards,

Market Variables : Direction, Momentum, Volatility, Liquidity

Market Variables : Direction, Momentum, Volatility, Liquidity
Direction : During any given time-frame a market can do one of three things : go up, go down, move sideways. Persistent moves in the same direction are generally referred-to as "Trends".
Momentum : Up and down-moves can be fast ("impulsive") or slow ("corrective" or "drifting") in nature (or in between).

Note: The most important aspect of "Momentum" is not any absolute measurement of its value, but whether it is constant or changing. the key questions (to be answered from direct observation of the price-charts) are:
Is the current price-move speeding up (in which case you want to stay with / get into it) or slowing down (in which case, consider taking a position against it)
Is the current price-move faster or slower than the immediately preceding move in the opposite direction (expect the on-going trend to be in the direction of the faster of the two).
Volatility : Can be low, with almost no price-swings away from and back to the underlying trend; high, with wide and erratic price-swings in both directions, or anywhere in between. Changes in volatility often signal changes in trend, often either in the form of either:
A sharp move against the direction of the current trend, or a reduction in activity and size of short-term price-swings.
Liquidity : Can be high, with thousands of transactions being carried out on a continuous basis; or low, with only intermittent price-quote updates and transactions. In general terms technical-trading is best suited to highly liquid markets because effective transaction-costs (bid-offer spreads and commissions) are lower, and large orders can be placed without adversely affecting the market.
All of these variables are directly dependant on the actions taken (or not taken) by the participants in the market : Technical Analysis is simply the observation of those actions, as shown on price-charts.
As stated above, technical trading is predicated on the proposition that the action of the market, which is the reflection of the sum of the actions of all participants, provides clues as to the most likely future evolution of prices. The clues are, however, frequently misleading (or mis-interpreted). This leads to the necessity for any successful trading strategy to provide in advance for the "avoiding action" to be taken to minimise the damage caused by bad positions.
Technical traders/investors take important decisions (risk their own and other people's capital) on the basis of very flimsy evidence: the direction prices are moving and the type of price-action. Successful trading is based on the following basic observations:
The current trend (up, down or flat) is more likely to persist than reverse.
The trend will be interrupted by corrections (counter-trend price-moves).
An accelerating price-move is likely to continue, a decelerating move is likely to reverse.
The direction of the next significant price-swing will probably be in the same direction as the stronger of the last two.
Minor supports / resistances to the current trend are more likely to break than hold.But:
Major supports / resistances are more likely to turn the market back than break.
Trend reversals are usually signalled by a clearly observable change in volatility (either a sharp break against the trend or its continuation at reduced momentum).
Notes:
Long-Term charts are reviewed only in order to observe major support and resistance levels.
Medium-term charts are reviewed in order to determine both the trend and intermediate support / resistance-levels.
Short-term charts are reviewed in order to evaluate current (and observe changes in) volatility and momentum.
Before amplifying the above statements and defining the terms used in detail, the following key points must be emphasised:
An "Investor" attempts to profit from major market swings which last many weeks / months (or even years). In monitoring his investments, and the general population of other investments into which he might switch, he should review monthly ("long-term"), weekly ("medium-term") and daily ("short-term") charts.
A "Position-Trader" attempts to profit from major market swings which last several days or weeks. In monitoring their trades, they also generally review monthly ("long-term"), weeky ("medium-term") and daily ("short-term") charts every day and with greater emphasis on the daily charts.
An "Intra-day Trader" attempts to profit from major market swings which last from minutes to hours, and always closes his positions overnight (or hands them on to a colleague in the next time-zone). In monitoring his trades, he should review hourly ("long-term"), 5-minute ("medium-term") and 1-minute ("short-term") charts.
That said, since price-charts are fractal in nature (ie self-similar irrespective of the time-frame being observed), there is absolutely no difference in the methods of analysis and decision-making to be applied. It is absolutely critical to success that which of these activities is being pursued is clearly understood and the appropriate actions consistently taken. Disaster frequently overtakes those who fail to take this simple but critical decision. The cynical definition of a "Long-Term Investment" is "A trade gone sour" ! (as when a trader buys a stock at 100, watches it go to 80, and then says "That's OK, it's a .........")

Regards

Role of psychology in trading

One of the most important skills for a successful trader is separating emotions from trading. In order to succeed, a trader must be abstract in their trading. For example, if you are trading your Profit and Loss balance instead of your chart, you will panic during typical price fluctuations, causing you to exit your trades early -- only to watch as the market then resumes its original path. Why? Because you are emotionally vested with your money. You are watching your Profit ticks up and then you are watching as your profit ticks down, against you, resulting in a negative balance. Emotionally, you have created the perfect roller coaster ride in favor of the markets. Although, you know, intuitively that markets will not go straight up, you have don't like losing money and, therefore, with the trade against you, you will exit if you can just "break even".

During your trading, remember these simple guidelines:
� Every trade cannot be a winner. Negatives trades are inevitable.
� The closer you are to the market the more negative trades you will have.
� Always start your trading day with a clear slate. What happened yesterday is past. Today is a new day.
� If you have had several consecutive negative days, take a break from trading.
� Having a trading plan instills confidence in you, your indicators, and your trading. Don't trade without one.
� Know at any given moment what the potential risk is. If you cannot tolerate the risk, then do not enter the trade.
� Remember, trading is nothing more than probabilities. Ask yourself what is the probability that this trade will work out?
� Keep a trading journal so that you can mistakes and correct them.
� Trade what you see on your chart -- not the opinions of newscasters, friends, newsletters, or your own. Regards,