Shark Investor Journal

It’s going down! Ternyata hari ini BUMI gagal menembus level 6.850 (mini-resistance).

Jangan dikoleksi dulu buru-buru karena dia akan terkoreksi lagi (walaupun sedikit), hingga mencoba level 6.350.

Download softwarenya di http://rapidshare.com/files/99381070/MetaStock_10_EOD.rar.

Ingat, download di atas adalah versi bajakannya. Saya tidak menganjurkan Anda memakai bajakan kecuali untuk tester saja.

Lalu baca cara memakainya di http://forum.detik.com/showthread.php?t=33137.

Install, copy crack, lalu jalankan softwarenya yang offline mode, kemudian update data menurut thread di atas.

Untuk mempercepat download, bisa juga pakai add-on firefox yang flashgot di http://flashgot.net/. Download semuanya dari Yung Darius (terima kasih Pak!) lalu langsung konversi menggunakan WinRAR, dan convert ke Metastock 10 sekaligus untuk menghemat waktu.

Jika Anda suka softwarenya dan memungkinkan untuk mendapat versi originalnya, segera beli.

This equation (from John Piper, The Way to Trade) hits me hard:

Simple Trading Rules + Human Brain = Chaos and Confusion

I found this on klubsaham.com’s forum in this link. The thread was created in October 2007, but I’ve tried to download “Bollinger on Bollinger Band”, and it works ok. So, please feel free to search through the links below. It’s in Rapidshare, so you can’t use any download manager. I don’t suggest piracy, so whenever you found the book that you’ve read here and you used, in hardcopy, please buy it anyway. upport the author. Consider this as the “tester”.

Make sure you check Alexander Elder’s books, “Trading for Living”, and “Come Into My Trading Room.”

It’s not only about picking up good stocks at the right price and the right time, it also involves minimizing your losses. Even, I think minimizing your losses is the top agenda of a trader. So, using margin in learning is totally unacceptable because it maximize your potential loss greatly. I know, it also doubles your potential income, but don’t put the cart in front of the horse. Minimize losses first, taking and preserving gains second. The only time you should use margin is when your trades is all in the safe zone (above break even).

The funny thing is that the risk is not inherent in the investment that is big, but the risk in the INVESTOR. With 80% chance of winning, if you always bet 200% of your Capital and risk 10% of it in a trade, well, in the not-so-long run, you’ll be wiped out.

So, knowing when enough is enough is much better than hoping for an instant millionaire streak. At the beginning of each month, set a target to yourself. For instance, I want to get 8% return monthly. I’ve gotten 10% return in each of the last two months. Lucky I guess. So after that, I take low-risk approach, meaning I’m in the market, but I don’t put my money in high-risk investments. Always watch the market, even if you’re not trading. Low-risk investments is essential. You want to spot it as soon as it is available. If you trade along with the trend, sooner or later, the wind will be in your side, just remember to take your profit while it’s still there, and run away when things do not seems right.

Put a maximum loss stop. Maximum of six percent per month and two percent per trade is good enough, but try to lower it. And never do revenge trading (no doubling-up after a loss), and no average down. Average in is okay as long as you know what you’re doing.

And stick with your guns. No trader should put their losing trades into “long term investment”. Cut loss! The first loss is the best.

So, after I loss six percent (but never experience that), what will I do? Quit trading and paper trade for the remaining month. When the month is over, I’m 94% cash, unlike any other trader that has only 50%-60% because their stocks stuck somewhere above.

After I win, what should I do? Go treat yourself! And continue trading with even lower-risk approach.

Confirmed that the volume is growing, and… the Bollinger Band is contracting. Expect a sudden surge in price soon.

Target price Rp.750, maybe more.

The market loves this stock (see the volume), so why don’t you?

BUY.

Stop loss at Rp.480.that the volume is or two weeks.a bit.

After going up for a week, today, BBCA lowered a bit, providing us with a good entry point.

Crossing SMA 5-20 and confirmed parabolic SAR make me rate this stock as BUY.

Target price Rp.3,500 in one or two weeks.

Keep your stop loss at Rp.3,000.

Look at the MACD and the price candlestick. The last bottom of MACD is higher than the previous one, while the last price dip is deeper than the previous one. It’s bullish divergence! The meaning is simple: someone is to scared and sell too many of this stock. It’s time to buy.

Target price somewhere around Rp.600 in 1 week until 1 month.

It was caused by GE (General Electric) because of disappointing first quarter earnings, news said (see my reading list).

When Uncle Sam is uneasy, what is the effect in our market? I don’t know, but having a stance of wait-and-see is better before you jump into a trade. If it’s me, I’ll look into the first 30 minutes of trading to see whether I should jump in or not. Remember, always protect your Capital.

Yes, I know it’s a downtrend. But even in a downtrend, there’s chances to buy if you care to look.

Now look at above chart. SMCB just wanted to rebound back to inside it’s 22-day Bollinger Band. And what’s more, look at the Stochastic (made with K=5 and D=3), it’s fast line (red) is above 15, and slow line (green) is below 15, saying “It’s time to buy me!”

Get a buy at Rp.930-950. Cut loss at Rp.850. Target price at around Rp.1,100.

Don’t be greedy, it’s a short-term swing, and remember, manage your risk. It’s downtrend, where a long position is much more risky than short position!

Today many of the stocks have ended their losing streak (all stocks in my watchlist are in green). But wait. I’m not saying that it is safe to do a shopping spree now.

However, I must say that LPKR seems to be a good buy after the last candlestick is closed in the opening of the previous day, and also notice the increase in volume today. It signals that more buyers are interested and willing to pay more. Moreover, the oscillator said oversold. Well, but the thing is, almost all stocks in oversold area now, and many (including myself) is in the safety of cash. Will we spend our money now? Or is it just a false signal?

This is risky, but we should manage risk by putting a reasonable stop to cut loss, like less than 2% of our Capital on stake in this trade.

The chart was made using IPOT with 22-day Bollinger Band (BB), 12/26/9 MACD (middle) and 12/3 Stochastic Oscillator (top).

Easy target price: Rp.780. (and a possibility to rally to Rp.1,000, but that’s another story).

If you follow my blog for a few days now (amid the volatility of IDX – but it’s better today), you’ve already now that my nickname (RevShark) came from the nickname of the author of a book published in 2007 called “Invest Like A Shark”, James “RevShark” DePorre. You can find glowing reviews for this book in Amazon.com. But, on the other side, you can also find the counter argument in http://stockbee.blogspot.com/2007/12/invest-like-shark.html.

I myself believe in mind over matter. It’s like the book “The Secret”, though I don’t read it or watch it’s DVD, just skim some of its pages, but I think I get the idea already. “Invest Like A Shark” is the book that have attitude. It may not dwelve deep in the technical analysis, but it provide a good beginning to start thinking about getting more education in the market. It’s the mindset that matters. You may have the best technical analysis, but if you don’t have the mindset to win, Mr. Market will chew you up. On the contrary, mindset without tools is also useless. But context is always better than the fills. If I fill myself only financial analysis, without the context of being an investor myself, my analysis will more or less very theoretical without first hand experience. But if I widen my context, I may get more headache, but I will grow better – financially and emotionally.

I was a fundamental investor by heart. I read a few books covering Warren Buffett (Buffetology, The Warren Buffet Way, his biography). I can even say that I know by experience what fundamental analysis (FA) entails and exactly how to value things. But, the argument presented in the book snapped my beliefs about investment and I started to think about technical analysis (TA). And guess what? TA framework is much easier than FA because the goal is easier to reach. FA’s goal is much much loftier than TA. I don’t think I want to wait five years for a stock that won’t rise ten times its current price and lose the chance to make money weekly and monthly.

And how can I “feel” the market if I trade few and long in-between? Active trading is constantly testing the waters. By constantly testing the waters, you’ll know which way to go and which way is no-go. People with TA is permitted to do swing (short-term) or trend following (longer-term). People with FA will wait three years to wait for the fruits of their investment – if they put their money in the right one and can only pray when their stocks go down. People with TA will cut loss immediately. People with FA will go to the financial abyss if they make a mistake.

Many of traders “forced” to be investors. Man, it’s like ashamed to admit your own mistakes. Some will get out fine, but many can’t stand the burden and cut loss at a very high cost.

That’s why staying power is important in any investment, whether it’s stock market or property, not only financially, but also psychologically.

JCI has dipped over my psychological level today. 2,180 (-3.10%)! I wonder what will happen tomorrow. But one thing for sure, many are losing money now, including myself. Right now my position is still floating loss, because my stop tends to be lower than usual, but if it get hit tomorrow, I’ll sell right away.

I was betting against the trend because of a strong technical signal, but apparently all the bulls are transforming into bears because of fear.

So, what should we do now?

If it’s me, after I cut loss, if it hit my stop, then I’ll look for another chance to enter, but not bottom-fishing.

It’s been a saying that bears like to slide in the slide of hope. So, let’s not hope much now. Accept that Mr. Market is very depressive, as well as many of the market participants. If it falls, let’s jump out and live for another day.

I never understand why reading the financial newspaper is almost useless in trading… until now.

Journalists and editors of financial newspaper tend to write objectively, but they are more likely to miss many moves. Why? Because they are not paid to be wrong. They are always right. That’s why they are so useless. By the time the newspaper print out that there’s a rally, the party have usually already finished. And then, we’re just starting to place our buys. Hmm… not a good move. Mr. Market may have already run far and get tired. We may end up, like they say “buy high”. And it leads to “sell low”.

On the contrary, by the time they say the market is falling, Mr. Market is already in the bottom.

Newspaper is useless in helping us catch a trend or avoid a fall.

So, what it leaves us to? Give the newspaper a headline scan, then back to the charts. The charts reflect the prices and volume – the real meat of the market. So, you should make a really good friend with charts and indicators.

Conservative target price of Rp.9,500. in more or less a week.

In the archives of Junior Trader Yahoogroups (http://finance.groups.yahoo.com/group/junior_Trader/), I found a good book called “Come Into My Trading Room” by Dr. Alexander Elder (author of “Trading for A Living”). You must register first to the group to get the goodies, but if you’re so willing to read it right away, someone has arranged it for you to download in Rapidshare.

Note: The file will stay in Rapidshare minimum about three months from today. If you read this post after the expiry date, just try the link, maybe it’s still active anyway.

There was a Wall Street analyst by the name of Joe Dominguez who saved enough money to retire at 31. He spent the rest of his life enjoying himself, doing volunteer work, and writing a book called Your Money or Your Life. I’d like to quote his words below.

“We aren’t making a living, we are making a dying. Consider the average American worker. The alarm rings at 6:45 and our working man or woman is up and running. Shower. Dress in the professional uniform—suits or dresses for some, overalls for others, whites for the medical professionals, jeans and flannel shirts or construction workers. Breakfast, if there’s time. Grab commuter mug and briefcase (or lunch box) and hop in the car for the daily punishment called rush hour. On the job from nine to five. Deal with the boss. Deal with the coworker sent by the devil to rub you the wrong way. Deal with suppliers. Deal with clients/customers/patients. Act busy. Hide mistakes. Smile when handed impossible deadlines. Give a sigh of relief when the ax known as ‘restructuring’ or ‘downsizing’—or just plain getting laid off—falls on other heads. Shoulder the added workload. Watch the clock. Argue with your conscience but agree with the boss. Smile again. Five o’clock. Back in the car and onto the freeway for the evening commute. Home. Act human with mates, kids or roommates. Eat. Watch TV. Bed. Eight hours of blessed oblivion.

And they call this making a living? Think about it. How many people have you seen who are more alive at the end of the work day than they were at the beginning? . . . Aren’t we killing ourselves—our health, our relationships, our sense of joy and wonder—for our jobs? We are sacrificing our lives for money—but it’s happening so slowly that we barely notice.”

What a wonderful words for singing my heart out. Just substitute the word “American worker” with “Indonesian worker” in the first line, and you’ve got the image of my life and many others living in Jakarta. And how sick I am of this way of living. How I dream of a freedom! As I figure out, the way to financial freedom goes through investment. There’s no other way as a layman, unless you pursue some other spiritual way. We live in a world controlled by money, soe need to master the money game to get out of the the game itself. Anyway, there are bills to pay monthly. By owning assets and making them work and grow to pay our bills, we can save our life to do more human interaction.

That’s why I enter this game.

My goals can be summed, in Dominguez words:

“You have enough for your survival, enough for your comforts, and even some special luxuries, with no excess to burden you unnecessarily. Enough is a powerful and free place. A confident and flexible place.”

The sellers have stepped in starting 10 am. Be very careful if you want to day trade today amid the volatility of IDX.

I may not like insurance like Prudential which a few of my friends ask me to join, but in business and stock trading, I feel that it is highly necessary to get an adequate insurance to cover further losses.

With the fall of JCI (Jakarta Composite Index) today to below 2,300 level, the movement in a few days will likely to go down further. For you who are reluctant to sell your stocks, I suggest that you consider the act of selling as a kind of “insurance”. Unlike large institutions, selling is cheap and easy to do for individual investors. If the market proves to be falling further, then your “insurance” will have done what it’s meant to do. It will cover your Capital from further losses. But, if the market is bullish again in these few days, then you can always buy those stocks that you sold, even if the price is higher than what you originally paid for. Consider that you have paid your insurance fee in that stock.

Insurance is always an annoying expense when you don’t need it, but if you need it, it can be lifesaver. And in this kind of unpredictable market condition, an insurance is badly needed. It’s always better to safeguard your Capital than betting it on a homerun. Yes, there’s always a possibility that the market will go up tomorrow, but I won’t count on it. One of the reason is that it has breach its support at 2,300, and is likely to fall more.

“The sky is falling!”

- Chicken Little

Half past today, the JCI is falling more than 4%. That is not a good signal for many investors, including myself. If it’s me, I’ll forfeit my entry to the market until I see something is going to the right side. However, falling prices may mean a bargain when things are on to the brighter side.

I suppose today’s and this week’s falling index is because of the effect from Uncle Sam and added with the inflation pressure.

Some stocks like BNBR, ELTY, and LPKR suddenly look attractively priced. Well, all the stocks look attractive now. But, there’s worry that the index will never bounce up. If that happens, however attractively price the stock is, it’ll never rise in value. And, I see little reason to buy them now with negative sentiment so high.

With IHSG going down and commodities so high, it might be that we are in the face of a recession. I hope that it won’t happen. But if it happens anyway, we can get out from the stock market (cash-out), or still profit from the fall. If you still want to play, you need a new rule. If we usually bet up, why don’t we bet down now. It may require a very different mindset and it is very difficult, but it is still possible. Although, some will warn you that these strategies is to be treated very carefully, as it is very dangerous and risky game to play with. But, if the bull is climbing, the bear is thrown out of the window. So, the profit can be even greater than a bull market (theoretically). Basically, in a bear market, we can do three things:

1. Short Selling speculative and growth stocks – buy stock you don’t own (borrow) at market price and return it later at lower price. (maybe you need to negotiate this to your broker first)

2. Buy put option (I wonder where I can find one here in Indonesia)

3. Trade range, not trend. This is like usual trade, but look for lower profit in ranges and trade more often.

Several articles can be found in these places:

1. How to Earn in the Falling Stock Market

2. Short Selling Stocks – When Bad for the Market is Good for you

3. Bear Market Trading Strategies – Brief Article

4. How to Trade Profitably in a Bear Market

5. Bear Market Etiquette

But remember, if you manage to get any profit from the fall, you need to donate a big chunk of it, since you’re profiting from the other investors’ loss. Still, this is a possible game to play if you really want to play.

Now let’s talk about how to avoid too many losses.

But, first of all, let’s admit that we’ll not always lucky. A beginner’s luck may run out anytime. Trading stock is about skill and luck. So, how to minimize losses? Use 2% rule. Never put more than 2% of your Capital in stake (to lose) in a position. If you have Rp.100 million capital, never put more than Rp.2 million in stake (to lose) in a position.

For instance, if I want to buy BNBR at Rp.500 now, I would not use more than Rp.5 million (5%) to buy 20 lots of it. Even if I cut loss in Rp.450 (which I doubt it’ll get that way), and I lose 10% of my money there, I still have my capital almost intact (99.5%). But if BNBR is moving upward, say to Rp.550, I’ll add my position with another Rp.5 million (5%), so there’s a total of Rp.10 million (10%) in BNBR now. And if it find a resistance somewhere, I’ll sell the Rp.550 position, and keep my “core” position, waiting for another entry point.

The problem is the “get rich quick scheme” that overruns most investors so that they forget to actually manage their money, and use loan to finance their gamble.

Using the 2% rule, I can survive the stock market for a very long time. You can be sure of it. Let’s say that I lose 10 times in a row, wouldn’t I still up and running? Imagine someone with margin betting 200% of his capital. If his stock loses 10% like mine, he’ll suffer 20% loss immediately. Five losses (not even 10), and he’s out.

Like my previous post, never try to strike a home run in stock market. It’s not that profitable to do so. And remember what we’re after in trading? Money. So, our initial money (the Capital) should be there and we must guard it with our lives. In a sense, it IS our life in the stock market. Without capital, however advanced your skill is, you’re out.

I’d like to add more food for thought. Still from the same guy. He said that most Asians like to live by the credo “Time is money.” From Indonesia, Singapore, until Hong Kong. Not really true. It’s even wrong.

Time is more important than money. Much much more, he said.

A very rich man with a yacht taught me his investment philosophy. He is a property investor, mainly working with resorts and hotels in Bali and Lombok. His investment philosophy can be taught using three principles:

1. Sunny side up. An investment should be packaged and offered complete with all the analysis.

2. Meat in the bone. You must leave room for your investors to profit.

3. Top of the pyramid. The higher the pyramid, the more profitable you are in the top.

Yes, he’s not into stock market. But, this three principles is good to remember should you find any investment opportunities. For me, stock market is only a temporary means to gain money. I’m a person who prefer cashflow. By the way, do you know how much his average profit is? Almost 1000% in 2-3 years! With $1,000,000 initial investment, that’s still a good hunt.

So, open up your mind.

" How to hit home runs: I swing as hard as I can, and I try to swing right through the ball... The harder you grip the bat, the more you can swing it through the ball, and the farther the ball will go. I swing big, with everything I've got. I hit big or I miss big. I like to live as big as I can."

--- Babe Ruth

In investment word: How to be bankrupt: Put all your money in a basket. Watch the monitor closely. Never let your eye wander even for a second. Use all your savings. I hit big or I miss big. I’m ending up in a big debt.

The book “Invest Like A Shark” clearly don’t suggest you to do this. In investment, don’t look for home runs, but try to stay as long as possible in the game.

Sometimes, a quote can be misleading.

Rabu, 30 April 2008

Selasa, 29 April 2008

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