Important Personal Qualities

Many accept that trading is an endeavour between yourself and the market and there are many qualities or character attributes that successful traders have. Which ones are important to your trading success?

Let’s start with Perseverance. As Calvin Coolidge, the 30th President of the United States said in one of my favourite quotes, “The slogan 'Press On' has solved and always will solve the problems of the human race." Other similar terms include perseverance, commitment and determination. For traders, this provides us the ability to continue on in the toughest of times even when everything appears all too much. It is the edge that allows us to climb the walls that are obstacles when everyone else around us, turns away from the wall and does something else.

Another important attribute is humility. All traders enter trades that lose money – you can’t simply get every trade right. You will find the very best traders are very humble and they are the best losers. Successful traders never move stops and accept losing as part and parcel of trading. They are also not afraid to learn from others and admit they don't know everything.

Another one is patience. You are not provided with great trading opportunities every day and the best traders are patient enough to wait long enough for high probability trades to come their way. Financial markets are here to stay – they underpin the corporate arena in every country around the world, so they are not going anywhere. Trading success is not going to happen overnight. For most people, this is a life long endeavour so does it really matter if it takes you a few years to start trading profitably?

How about responsibility? Successful traders make their own trading decisions based on their own analysis and trading plan but more importantly don’t blame anyone or anything else when it doesn’t work out and they lose money in a trade. In a world nowadays where there is a clear trend of people looking for someone else to blame for their own actions, this is probably becoming less obvious. The key is to be an adult and take responsibility for your own actions – you are solely responsible for your own success and failures.

Successful traders are also conservative and very defensive. Even though their primary motivation is to make money (as it is for all of us), they adopt a very defensive mindset and focus not so much on making money, but moreso on protecting the money they have. This means they set and stick to stops and risk very little of their account on any individual trade.

With anything in life, confidence is important – trading is no exception. Confidence in your self and the trading plan you develop. One thing that will help with your confidence is your own knowledge and understanding of the markets, the products you are trading and various tools you use in your decision making. Most importantly however, competence yields confidence. If you are not competent at something, it is highly unlikely that you will be confident doing it.

There are many other attributes that could also be listed here to include emotional control and stability, organizational skills and honesty. There is no doubt that all of these are correct and valuable to possess, however I think there is none more important than discipline.

Discipline is the level of self-control you have. Trading all boils down to decision making and often the decisions that need to be made are difficult. Let’s consider the options we have. For any individual decision, there are often two options available to us. The first option is the decision that will make us feel most comfortable and the one that we really want to take. The second option is the one that follows our trading plan. Most often these will be two very different outcomes.

There is one thing that assists us to take the second option and not the first – discipline. I believe a key separator between successful traders and the rest, is they will act first upon their trading plan and not what they feel like doing. Most traders make the decision that makes them feel the most comfortable whether this is letting a loss continue or to cut a profit short in order to realise some money.

When they feel super-confident about a trade, successful traders don’t allow greed to consume them and commit more money into the trade. They trade according to their trading plan - they adhere to the money management rules in their trading plan.

Here is what happens … we have our mind set on long term successful trading however other things influence our actions/trading decisions like emotions, our short term needs and our present mood. These tend to overpower any long term goals we have, so we will often pursue short term pleasures and by doing so, avoid short term discomfort, at the expense of our longer term goals and rewards. It’s human nature.

Article by Stuart McPhee

US DJI - A little more room to move upwards

The uncertainty in the US economy because of fear of rising inflation resulted from increasing commodity price especially the crude oil has taken its toll on the US stock market. The heavily benchmarked US DJI has affected the performance of other markets around the world. After finding a strong support level at 11,700 points level, the DJI climb strongly upwards since March this year but found a strong resistance at 13,100 points level. A bearish reversal pattern (indicating toppish market) called a double top was formed at this resistance level and it was confirmed and the DJI is now at 12,307.35 points.

A strong upward rebound in the past two days may send a positive note to markets worldwide but the down trend resistance level is at 12,400 points, leaving it a little more room to move upwards. The DJI is not expected to break above this resistance because the momentum indicators like the RSI and MACD are indicating a strong bearish momentum has started to develop and may send the DJI to its main support level at 11,700 points in the longer term.

Article by Benny Lee

Thailand SETI - currently at a crucial Fibonacci retracement level

After a good up trend rally since January this year, when the SETI was at about 740 points, the SETI finally met its resistance at 890 points last month. Since then, the SETI slid downwards to 782.34 points today. This slide accounts for a 62% retracement from the up trend rally. Unlike other markets which have found may support levels during the downward rally, the SETI only found once in early June and the rally only lasted two days before the down trend resumes.

With the strong downward momentum the SETI is expected to slide further to test its main support level at 739 points. However, a slight technical rebound is expected immediately because the SETI is currently at a crucial Fibonacci retracement level (61.8%) and the Stochastic has indicated an oversold position and this is the second time the Stochastic crosses above its trigger line. The rebound may be short-lived as the SETI may find resistance at 800 points.

Article by Benny Lee

Hong Kong HSI - Heavily oversold

The China market, which heavily affects the Hong Kong market other than the US market, has been bearish since its peak in October last year and the index was slashed more than half and is expected to continue to decline, given its strong bearish momentum. The Hong Kong market HSI however has shrinked 30% from its peak in October last year. Earlier this March, the HSI made a good short term up trend run of 25% from 21,000 points to the 26,400 points resistance level. The HSI has then started to decline and is currently at 22,590.30 points.

Like the Thailand SET index, the HSI is currently slightly above the the crucial Fibonacci retracement level (61.8%) at 21,000 points and the Stochastic indicator, which is now below 10, is indicating that the HSI is heavily oversold. The HSI may continue to fall to test the support level at 21,000 points, which is the 61.8% Fibonacci retracement level. It may rebound from that level and the HSI may find immediate resistance (from the down trend line) at 24,000 points.

Article by Benny Lee

KL Composite Index - An immediate technical rebound is expected

The up trend rally since March, when the KLCI was about 1,200 points found heavy resistance at the 1,300 points level. The movement formed a toppish pattern called the double top or bearish reversal. It was confirmed when the KLCI broke below the double top formation neckline at 1,270 points and the tightening Bollinger Bands started to explode. The KLCI is now at 1229.35 points.

The KLCI is now slightly oversold in the short term as the Stochastic indicator has gone below the 30 level. An immediate technical rebound is expected but may face resistance at 1,250 points (which is the current down trend line support level). It is expected to continue its down trend because the momentum indicators, like RSI and MACD shows strong bearish momentum. Next support level is at 1,200 points. The 1,300 points resistance level remains the main resistance for the KLCI.

Article by Benny Lee

Singapore STI - All indicators are currently supporting the down trend

The STI found heavy resistance at 3,500 points level after rallying from its major support level at 2,750 points in March. The resistance caused the STI to pull back to close at 2,979.56 today. The STI which was between the short to long term averages weeks ago now goes back under the average and this indicates that the trend is continuing downwards and the momentum indicators are currently supporting the down trend.

Although an immediate technical rebound is expected because the Stochastic indicator is below the oversold scale below 30, the STI may find short term down trend line resistance at 3,160 points. If the STI is able to break above this resistance, then there is a high chance of it testing the major support level at 2,750 points.

Article by Benny Lee

When Trading, Keep Your Mouth Shut

In numerous traders clubs and forums, you will often find people who routinely disclose what positions they have and why. Often, the intentions of these people are innocent in that they want to help others to discover an approach that is going to work for them. They want to teach the recipients and empower them to learn more about trading. Sometimes, the person disclosing the information may have other intentions however there is always the chance that this could have a detrimental effect on the person disclosing the information.

They need to be careful that they don’t start believing too much in their position just because they have disclosed it to others.

At the best of times, taking losses can be difficult. It is probably the most single identifiable reason why traders fail. Taking a loss means that you must accept that you got the trade wrong and this can be difficult for a lot of people. Now that you have disclosed your trade to a group of people, it can make it even harder to accept that you were wrong and therefore close the trade when you should. Advocating the trade to others instils in you the positives of the trade and these may eventually subconsciously influence your decision to not exit the trade.

Traders should avoid discussing their open positions and their opinion on various potential trades because it may affect their objectivity when in that position themselves and make it harder to take a loss, even when that is their best course of action.

Confident traders rely on their own methodology and not what others are saying.

If you make a habit of discussing your open trades, there is a chance it will end up costing you money, especially if you repeat your opinions often enough, in that you might actually start believing what you are saying.

The same goes with tips. A common rule is to not give nor listen to tips. A trap that you can easily fall into with a tip, can occur when your position starts to move against you. You are more inclined to break the rules and not cut your loss because of the ‘reliable’ information you have heard about the security’s future. Have confidence in your own approach and never worry about tips of any nature regardless of whom they are from.

When you give a tip, and the position moves against you, it is possible to feel some obligation to stay in the trade because of the relationship you have with the person you gave the tip to. It is unlikely that you could face up to the person one week after the position was entered, and tell them that the tip is no good and they should exit.

In his book ‘Reminiscences of a Stock Operator’ (a fictionalised biography of one of the greatest market speculators, Jesse Livermore), Edwin Lefevre mentions how destructive tips can be to one’s trading. This is coming from a book that was first published in 1923 and is one of the most highly regarded financial books ever written. Back in 1923, tips were considered disastrous, so there is no reason to think that they are different today.

Trust yourself and have confidence in your own methodology.

Article by Stuart McPhee

Hong Kong HSI: Now in short term down trend

The breakout from the consolidation period two months ago was short-lived as the HSI went back in to the trading range which was between 22,000 to 25,000 points. The HSI failed to test the 27,500 resistance level since last month. It went as high as 26,377.99 points before closing at 24,383.99 points. The decline from the high ends the short term up trend as lower lows and lower highs are formed.

The RSI indicator is now below 50 and this shows that the bears are taking over. The HSI is now in a short term down trend. The HSI is currently at its short to long term averages (identified by 30 to 90 day moving averages). The ADX indicator suggests a strong momentum developing downwards. Therefore, we may expect the HSI to test the immediate support level at 23,000 points. Resistance level is lowered to 26,500 points from 27,500 points. By Benny Lee

KL Composite Index: Down trend reversal

The political scene seems to be more interesting than the financial markets, now with stronger opposition voice in parliament and new state governments trying to settle down. In the stock market, the KLCI went into a trading range last month. It did not even try to test the 1,340 points resistance level. The KLCI only managed to went to as high as 1,305.09 points since last month before settling at 1,261.82.



On the daily chart, the KLCI has formed a double top chart formation which indicates that the KLCI is now at a toppish position. The double top formation was confirmed when it broke its neckline at 1,270 points just a few days ago. The RSI indicator indicates a strong resistance and is now below 50, where bears are currently in-charge. The KLCI is now in a down trend reversal and is expected to test its immediate support level at 1,215 points, while stronger support level is at 1,150 points. Resistance is lowered to 1,300 points from 1,340 points because of stronger pressure downwards. By Benny Lee

Singapore STI: Heading South

The Singapore market was marred with uncertainty last month with the FTSTI struggling to test the 3,300 points resistance level. The FTSTI closed at 3,160.78 points after only managed to reach a high of 3269.88 points about 3 weeks ago and recently tested the support level of 3,100 points.


The daily chart pattern is forming (not completed as of today) a head and shoulders pattern. The head and shoulders pattern signals price has reached the top (in this case the short term trend). Momentum indicators like RSI and MACD are indicating weak momentum in the up trend and even the volume is declining. The FTSTI is expected to head south to test the immediate support level of 3,100 points and if this support level does not hold, the only technical support level is a psychological one, which is at 3,000 points. Resistance level remains strong at 3,300 points. By Benny Lee

Genting International Public Ltd Co. (Genting)

Genting is known for developing Resorts World at Sentosa, Singapore’s integrated resort in Sentosa island. Genting is an integrated resorts development specialist with many years of international gaming expertise and global experience in developing, operating and/or marketing internationally acclaimed casinos and integrated resorts in different parts of the world, including Australia, the Americas, Malaysia, the Philippines and the United Kingdom (“UK”).

Genting International is a 54.8 percent-owned member company of Genting Berhad and was incorporated in 1984 to invest in leisure and gaming-related businesses outside Malaysia.

For four years from year 2002 to year 2006, the share price for Genting has been in a trading range between SGD0.20 to SGD0.35 (Adjusted price data). Price started to increase aggressively at the end of 2006 after winning the bid to develop Singapore integrated resorts. Price shot up to SGD1.00 in just one month (January). That’s a 285% increase in a month. It went to a low of SGD0.60 one month later (February) before ascending again to SGD1.00 in April. Today its share price closed at SGD0.595.

Technically, the trend is still bearish but has found strong support in the SGD0.570 area. The strong support is identified when the price action in the past few months created a pattern called the inverted head and shoulders pattern. It is a pattern that indicates price has may bottomed out.

The increasing Relative Strength Index (RSI) indicator also shows that the momentum is skewed upwards. These indicators show a good potential for price of Genting to rebound upwards.

The neckline of the inverted head and shoulders pattern is at SGD0.63. The reversal is confirmed when price breaks above SGD0.63. The share price may find some resistance here as a common reaction to the trend line resistance, but price may continue upwards if it is able to stay above SGD0.63. The potential target from this pattern is SGD0.72. Major support level remains at SGD0.57.

Daily Genting chart as at 29 May 2008, using NextVIEW Advisor

Article by Benny Lee