Morning ... it is Friday. DOW gained the most last night ... 396 points and we shall see BULLISH sentiments back to KLSE? Unfortunately, I m still in cash-position, not taking the risk.


Recently, we seen many tech-stocks rallying ... some at new high while others rebounded so well from the bottom. Vitrox breakout RM6.80 sharply and we are seeing new high now.

Today is a long day for me ... with A-level exams nearing, I would have three tuition-classes, then will attend a 'workshop' before meeting few trading-kaki for our monthly coffee-meet.


BIMB's formed a very strong hammer back then in early Feb 2016 ... I bought into her. Now, to tackle few issues : Did I buy into large position? did I hold till up 20-30%?

So ... whether we buy Vitrox uptrending and breakout ... or BIMB when it dived for technical rebound ... it doesn't matter much. It is the understanding of RISK that separate most of us. We have different risk-appetite. And our risk-appetite also depends on our knowledge and experiences.

Well ... that is what trading or investing is all about : RISK MANAGEMENT.

No need to argue if TA vs FA ... or what have you.



So ... it is not that we cannot chase Elsoft up ... but the RISK is high at current level. If we are not trading but ...so-called investing, buy-hold ... we can buy some now and buy more during pullback, right?

Whichever way ... it doesn't matter what we know ... it is still what we do that matters. It is what we do ... remember that. Everyone can talk-big ... but when it comes to DOING, it takes courage and experiences to guide us ...

Emotion-control is one of the critical trait in trading. Do not get emotionally involved with our trades, easier said than done ... especially if we bought 'huge'.

Let's say we have RM50k in our trading account ... if we are to use RM10k ... that is 20% of our funds ... but if we are buying RM40k ... that is considered as huge as it is 80% of our funds. So ... position sizing is very important when we talk about PROFITS. If a person told you he just profited 30% in trading XYZ ... asked him : how large is your position size? Most likely, they wont tell you the truth.


Back to the hammer-BIMB ... nice one. I did not buy HUGE. I did not hold for a year, 30% profit.

See the issue ... we know BIMB = Bank Islam ... we know strongest hammer = strong buy, yet we do not have a conviction to buy HUGE. Say ...80% of our funds and hold till it gives us 20-30% profit (in a year ,  30% profit is considered excellent).

RISK MANAGEMENT basically means ... how much are you going to allow yourself to lose if the trade goes against us?

Cut-loss small ... let the profit runs ... another easier-said-than-done issue which MOST will not talk about.

----to be continued ---

TEH