Must Know #1 Risk Management = Emotional Management

Risk Management is VERY VERY VERY important. It is like the core of a building, and without proper risk management, your entire trading plan can fall apart.

A good risk management is like a chain, linked to your trading strategy, emotions, and decisions.

A poor risk management can affect your emotions by taking losses and being reluctant to cut them. It will lead traders/investors to make emotional decisions by taking small profits and holding on to big losses. In the long run, the return on investment is always negative.

Risk management will affect your discipline in trading strategy by exposing huge risks to cheaper stocks through holding more positions while entering lesser units for high-value stocks.

This will affect your trading return where your losses in penny stock are bigger than the profit in higher value stocks due to the profit/loss per 1 cent depending on the number of lots you bought.

You will start to question the trading strategy reliability even though you achieve 80% probability in your trade. But your profit is not enough to cover your losses.

Example: 8 trades with a profit of RM100 each = RM800 profit

2 trades with losses of RM500 each = -RM1,000 loss

Total loss = -RM200 loss

Must Know #2 The Pricing Mechanism in the stock market

The stock price fluctuated according to the "expectations" of the big boys. They want the price to go up and it will go up. If they want it to fall, they can dump the stock into the market to cause the price to fall. The fundamentals of a stock are just the second factor or "story" to support the big boys in getting more investors or traders to buy their stocks at high prices.

Many investors in the market do not know how stock market pricing works, including those who have invested or traded in the stock market for many years. Some people may know how pricing works in the stock market, but they don't know how to interpret it.

Many technical analysts in the stock market are able to understand the current market conditions and attempt to estimate future price movements from historical price and volume behaviour.

Their analyses often suffer from estimation errors. The reason is that the understanding of price and volume in technical analysis is distorted. This is why the more you try to learn technical analysis, the more confused you become. This is also why it is difficult for many investors or traders to understand the stock market.

Historical prices and volumes reflect true future price intentions. Every big boy in the stock market needs to accumulate stocks at lower prices in order to sell them at higher prices. However, the technical analysis of all indicators is delivered in the wrong direction, showing only actively traded stocks.

Technical analysis’s chart pattern, resistance line, support line, average price & volume indication are the ideas of big boys accumulating shares on the way up. That’s why resistance & support lines are thought to be the point where the big boys coming back in to mark the price higher.

When you really understand the operations of the big boys, you will find that the explanations of resistance and support lines in the technical analysis we have learned make no sense. Because the big boys profited by selling shares on the way up. That's why you'll find stock prices pull back, and when there aren't enough buyers lining up to buy shares, they'll raise prices again to attract more investors to their shares.

They will stop marking the price up higher when they have sold the majority of their shares & sell their shares out into the market with a gradual price down to avoid creating panic among the retail investors.

This is why you will find the previous resistance line turned into support or the previous low, as support can easily be broken. Because the big boys aren't accumulating stocks on previous highs or lows, they're selling!

Will they accumulate again at the support level? Of course not, and the reason is simple - why buy at a high price when you will sell it down to a lower price? After they and other investors sell everything, then they can accumulate at a lower price later.

In order for retail investors like us to achieve better investment returns from the stock market, we will need to understand how the pricing mechanism works again & stop using the old way to interpret it.

Must Know #3 The upcoming market cycle

When you're able to interpret the big boys' trading data, you'll know when the market is rebounding or crashing before the news and other retail investors who use traditional analysis.

You will be able to notice “abnormal market activity” before the market crash, by seeing many big boys creating pump-n-dump aggressively. The big boys are trying to reduce their position in the market by selling their shares out as much as they can. In order for them to sell their shares, they need buyers & the buyers are always the retail investors. Because the retail investors will not be so informative about the market. Hence, they can attract them to buy their shares by creating “POSITIVE” activity in the stocks such as marking the price up, creating false buying transaction with “changing hand”, right-hand buying from the left hand, left hand buy back from the right hand, or creates one of the retail investors’ favourite trading strategy, resistance/ chart pattern breakout. This is when you start to get confused about why your trading strategy is not working.

Churning price up to attract buyers before a price fall (end of July)

Churning price up to attract buyers before a price fall (end of July)

The advantage of not following the normal crowd in the market, it will help us to achieve better returns than the rest. You will be able to know the market is changing & react accordingly by reducing your position in the stock market & protect your investment from the bear market.

Must Know #4 How to Apply the right method in the right market cycle

Now that you know how the big boys work in the market, you know when prices are going up or down. Your trading will be more diversified, not limited to medium and long-term investment, you can use any trading method that suits the market. For example, reduce the risk of holding overnight in fragile markets through day trading. You can ride in a long or mid-term bull market when the market is recovering and the big boys are back in the market.

Also, you will never have the experience of not having an opportunity in a falling market. You will learn about the trading tools and methods available in the market in order to profit in a down market. Just like we did with index put warrants when the market crashed.

All 4 points above are easy to achieve with proper guidance once we have identified the problem. All we need to do is find the source of the problem. With experience training many investors in the market, we have noticed that most investors who have suffered losses in the stock market have common behaviours and small mistakes that they are unaware of. Identifying mistakes isn't hard, but we're often too distracted by the losses we've suffered at the time to correct them.

If you are trapped in the losses right now & you wish this will not happen again in the future. Check out our webinars on our website to get inspiration to improve your trading performance.

https://www.roundnsurge.com/events

Upcoming webinars:

Registration Link: https://attendee.gotowebinar.com/register/902857802328269070

4 Signs That You Are Lost in The Stock Market

This webinar is to help KLSE traders & investors to get back on track when they are feeling lost in the current market, with losses incurred after technical entries or buying at the low but the stock price goes down lower. Continuous losses & watching your profit turned into losses will lower investors’ confidence to trade.

If you are looking for an answer to get your trades back to profit & never loop into this losing cycle again, we will share with you the solution to your problem in this webinar.

After attending this webinar, you will know the habits that make consistent profit in KLSE & the trading analysis that allow you to make profits in every market cycle when you master it.

03 October 2022 (Monday) | 05 October 2022 (Wednesday)

08:30pm - 09:20pm

Easy way to learn how big boys accumulate shares: https://bit.ly/3AOhUz1

Website: www.roundnsurge.com

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About Us

Malaysia's stock market is a unique market; hence it requires a customized trading approach to tackle & swerve. Many existing traders in Malaysia apply a plug-and-play strategy from the overseas stock market, but it is not necessarily the best strategy to trade in KLSE. This is due to the difference in local and overseas stock market regulation and the size of market participants of institutional funds & retail investors.

“True traders react to the market.” is the backbone of our trading method. Our findings and strategies are developed through years of trading experience and observance of the operating style in Malaysia’s stock market.

Trading Account Opening

They are offering an Intraday trade brokerage rate at 0.05% or RM8 whichever is higher for day trading stocks RM 50,000 & above-transacted volume (buy sell the same stocks on the same day). Buy & hold at 0.08%or RM8 whichever is higher.

Open a cash account now at the link below:

https://registration.mplusonline.com/#/?drCode=R311

As Kelvin’s trading client, you will be exclusively invited to join Kelvin’s weekly webinar and telegram group. Click here to join.

For more inquiries contact him by email: kelvinyap.remisier@gmail.com or 019-5567829

If we have missed out on any important information, feel free to let us know and feel free to share this information but it will be much appreciated if you can put us as the reference for our effort and respect, thank you in advance!

This blog is for sharing our point of view about the market movement and stocks only. The opinions and information herein are based on available data believed to be reliable and shall not be construed as an offer, invitation or solicitation to buy or sell any securities. Round & Surge and/or its associated persons do not warrant, represent, and/or guarantee the accuracy of any opinions and information herein in any manner whatsoever. No reliance upon any parts thereof by anyone shall give rise to any claim whatsoever against Round & Surge. It is not advice or recommendation to buy or sell any financial instrument. Viewers and readers are responsible for their own trading decision. The author of this blog is not liable for any losses incurred from any investment or trading.