Wisdoms of BSKL (Advice from Kan-Pai to So-High)

An interview with an insider trader Eric 'Waka-Flocka' Andre reveals some secrets and wisdom in trading. Believe it or not, it's up to you.

 Malaysian market

*Less opportunity to make money in Malaysian stock market as it is a closed market, as if it is not linked to world market.

*When all the media and agencies say the market will rebound soon and the base is still strong, that is the time be afraid.

*The secret of the share market will never be revealed in any newspaper, company announcements or blogs.

Malaysian companies

*Many Malaysian listed companies practice creative accounting, so be careful.

*Although a counter has a strong background, it still needs to follow the general economic climate.

*If the owner of the company own more than 60% of the share, the price will be very hard to go up.

*Let's take Public Bank as an example. The price flied from RM 14 to RM 20. Do you think it is because of Public Bank's good earnings? Nah, it's because they want to implement Rights share at RM 15.

Trading strategies

*Before a counter is suspended, better to sell first then buy back later to reduce the risk after resume trading.

*Once a counter is suspended, you don't know for how long. 1 month? 3 months? 1 year? Your hard earned money will be frozen in the counter and if the counter is delisted, you will be totally at lost. If you bail out before it is suspended, you can use your capital to buy and profit from other counters. Once the suspended counter resumes trading, you can trade the counter. You may profit less, but your risk is very much reduced.

*Sell when market drop, then buy back when the market is on its way up.

*I won't buy and keep a counter for 1 - 2 years because there are so many counters to make profit from.

*When the market is in a downtrend I will sell all my positions even though I have holding power. I won't spend time waiting and suffering the downtrend for months or years and miss a better buying price. When the market starts to uptrend, I will follow closely as it can go back to downtrend.

*Don't only look at the volume when trading.

*Share consolidation means exit.

*The trick is to figure out the best entry price

*Follow the big shareholder, they dump you dump, they buy you buy. Don't get distracted by any announcements or whether the business is growing or not.

*It's a break support / resistance game. Buy when break support on way up.

*If you think buying at the lowest price can maximize your profit returns, then you have a totally wrong mindset!

*Even though you have small capital, you can pick 20 sen stock or 50 sen stock or 1 Ringgit stock, it doesn't matter as long as the stock can make you profit. Yes, you can buy 10 sen stock with more quantity, but if the price does not go up, why are you wasting time and resources on this stock? More quantity but no upward trend also no use.

About cutting losses

*When your counter lose 10-15% of its value, cut loss.

*You need to have patience but at the same time, you need to learn how to cut loss rather than be patient and wait for a very long time!

*When the time comes, must cut loss. You cannot be influenced by any company announcement, making you think the price will go up.

*Escape = cut loss.

*Learn to cut loss and be within reality. Don't daydream and hope the price will go up when the price is not moving at all or worse, falls deeply downwards. Wake up from daydreaming!

*Since I graduated with a triple PhD and 5 Post-docs from the share market, my dictionary just have the phrase "Cut win" and no "Cut loss" since.

Speculator action

*Although a counter is making profit, but it won't move. The reason is many punters were trapped at a higher price a few years ago and still holding their shares, so speculators focus on other profitable counters.

*A counter does not rise due to market weakness, but rather the counter is not in the speculator's list. Let's say Perwaja is in the speculator's list, so the price of Perwaja will rise even though it is a loss making company. If it's not in the list, then it will sleep even though it is a profitable company.

*A set target price (TP) is only for the speculator, not the retail investors.

*It is not the speculator who is clever, but it is you who has no knowledge in trading. So the speculator can always buy at a lower price, and sell at a higher price, to you.

*The speculator gives you the chance to buy, or else, you can't buy. It is not how much you want to earn, but how much the speculator allows you to earn.

*The counter's price might not reflect the company's profit. It can be a profitable company but the price goes down. It is not 1+1=2. It is what the speculator wants it to be.

*If you can answer these questions, you pass the noob trader exam. Who buy those shares? How many shares are left in the open market? How many shares do the speculator posses?

*When they plan to push down the OR price, at the same time they must push down the mother share and warrant, so the OR price will drop.

*A 40% profit is very good for the speculator.

*Normally I don't set TP, I just follow the speculator, at what price they want to stop.

*Actually setting the TP is of no use as the speculator can stop the game anytime. So how to set TP?

*The speculator control the price between 0.395 - 0.43. The speculator can dispose all their shares in this range because so many support lift of PN17. But they can also collect in this range too. I sell my shares at 0.425 and bought at 0.395 and sell again. Repeat until the price breaks support or resistance price.

*How do you know if the big shareholders sell their shares if they don't make any announcements?

*Usually the big shareholders will buy before you buy, and sell before you sell.

*There are 3 billion shares. How many are in the speculator's hand? How many shares are left in the market for you to buy?

*When the speculator throws so many stocks, you should not pick them up. You are influenced by the announcements and believe the business will grow and prosper. You already lost in the mind game.

*Speculator lets you buy then push the price down. Repeat this until you die. Be very careful.

*Many So-High ask, "Master Kan-Pai, how to beat speculator?" I said "So-High, no need to beat speculator, must learn how to share profit with him!"

*People always make silly mistakes. They always proclaim "This company makes profit!" "This company is cash rich!" "This company has good future!". All this talk is to prevent the price from going to 0.05. Actually the price can drop to the lowest level possible, depending on the operating speculator.

*In the market, there is no oversold or overbuy, it’s up to the speculator whether he wants the price to go up or down.

Trading philosophy

*I treat trading as a game, and money is just a figure for me. If I'm on the right course, I will gain and not suffer. Suffering and loss is only for those who are on the wrong course.

*Skill, knowledge and emotional control must come together in stock trading. If lacking any of the three, you will suffer in the near future. Many world class bond manager lose to their emotion even though they are very skillful and knowledgeable.

*In trading, you can't even have 1% emotion and wishful thinking (hoping) as this will cut you from reality. No matter how skillful and knowledgeable you are, if you can't control your emotions, your skill and knowledge will be the same value as zero. So the hardest thing to train is the control of the mind and emotion.

*Smart investors will look for better entry price.

*Trader 'A' has 30 years of experience in trading but only trade one counter per month. Trader 'B' has 10 years of trading but involved in 20 different counters every month. Who is the better trader? Answer: 'B'.

*When you know what price is the lowest, then of course you will know what price will be the highest. Just like you know which is left, then you will know which is right.

*Do the right decision win money, do the wrong decision lose money.

*When you trade based on luck and prayers, you are already a loser.

*I'm always happy because my counter's price always follows my plan.

*The term 'holding power' can make you become stupid.

*I'm not saying that having holding power is wrong but it will make you become stupid. This is because you will not be willing to learn. You just buy and keep, so what is it that you have learned? The contra players actually are more skillful and knowledgeable to 'play the game' if they put some learning effort into it compared to the 'holding power' investor.

*Keeping the stock for a long extended period of time is not effective trading, but many of the retail investors are doing this.

*How many percent do you expect to win from your capital?

*I keep in my mind that in order to win in trading, all must be under control.

*All counters in the share market are just 'tools' in my eyes. Tools for printing more money.

*All the charts are created to distract and manipulate you since 50 years ago.

*"Be careful to win money"

*I'm in the market not to buy cheap stock or good stock. I'm here to buy the RIGHT stock.

*You play in the market not to buy cheap stock. You come to win money.

*I just swim behind the shark. No matter how big the shark, how tricky he is, I just follow it closely. Simple.

*I asked 1000 retail investors on how they choose a stock. "Why did you buy this counter?" I asked. Nobody gave the right answer, all transactions just based on pure luck and hearsay.

*When you don't know where the risk lies, you will be killed in the next second. Share market is a very dangerous and risky place unless you come very well prepared.

*There is no stupid or clever in the stock market. I'm just worried of something about the counter which I don't know.

*Don't think too much, be simple.

*I have no favorite counters. I just think of which counter can make money for me. This is my 100% concern.

On specific stock action revelations (how to take profit/support/resistance)

*It's a show

*If tomorrow break 0.38 , no more show

*If can't break 0.14 to 0.145 , no show

*If can't break 0.065 to 0.07 , no story

*If doesn't break 0.39 downwards, still safe. If break 0.39, trade at your own risk.

*Buy 0.09 , sell 0.105 (1.5 sen profit)

*Buy 0.08 , sell 0.095 (1.5 sen profit)

*Buy 0.21 , sell 0.235 (2.5 sen profit)

*Entry price 0.185 , sell 0.22 (3.5 sen profit)

*Buy warrant 0.05 , sell 0.065 (1.5 sen profit)

*3 weeks time to gain from 0.115 to 0.17 is too long for me.

*I buy 0.07 and sold today 0.11