Top 40 LongSpeculative little long trade here to the swing high. Stop at/below LOD. Good risk-reward.
J200 trade ideas
5 Important Trading Protection LevelsREMEMBER
No matter what stock, index, Forex or other markets you’re trading, every trader needs 5 protection levels.
Stop loss to stop yourself from furthering losses
Time stop loss to get you out of non-performing trades
Adjusted stop loss to lock in profits when the market moves in your favour.
Risk % per trade to only lose a certain amount of your portfolio
% of Drawdown before you HALT trading – when the market is not in a favourable environment to your strategy.
Short and sweet but VERY powerful to apply to your trading.
Do you have any other protection levels?
JSE ALSI 40 is a mess - Bearish bias to 63,460Yep, the JSE ALSI 40 is in yet another Twilight Zone.
We see sideways motion, prior downtrend and there are sideways indicators.
The bearish bias part of it is that price is below 200MA.
The RSI is showing lower highs (Bearish divergence).
We also see low volume on the buying side.
More importantly, we have a flat monday with no conviction...
And if the price does break below the Symmetrical Triangle, we could see downside in the week.
The target could be very well to 63,460.
Here is your weekly wrap up.
The U.S. stock markets mostly closed higher, with a significant highlight being the S&P 500 surpassing the 5,000-point level for the first time.
The growth was driven primarily by big tech companies and a variety of sectors including software, semiconductors, communications, media, regional banks, trucking, apparel retailers, auto suppliers, and Chinese tech stocks showing notable performance.
Conversely, sectors such as real estate, energy, food & beverage, cruise lines, and casual diners lagged behind.
Microsoft stood out by achieving a 1.6% rise in its shares, which boosted its market capitalization to $3.125 trillion, marking the highest valuation ever for an American company. Additionally, the yield on the 10-year Treasury note closed at 4.166%.
In europe:
In Europe, equity markets ended the day lower, with technology, media, and healthcare sectors leading the gains, while food & beverage, real estate, and utilities faced declines.
General indices:
Market performance indices closed as follows:
S&P 500 up by 0.57%,
Dow Jones Industrial Average down by 0.14%,
Nasdaq up by 1.25%,
FTSE 100 down by 0.30%,
DAX down by 0.22%, and
CAC 40 down by 0.24%.
Asian markets
Asian equity markets saw minimal activity, with most closed for the Lunar New Year holidays.
However, there was a notable increase in holiday travel activity, with Xinhua reporting the addition of 1,873 passenger trains across the railway network on Friday.
Markets such as Nikkei, Hang Seng, and Shanghai were closed, while the ASX 200 saw a modest increase of 0.19%.
In South Africa
In South Africa, the Johannesburg Stock Exchange (JSE) closed lower, primarily dragged down by the resources sector, which fell by more than 2% due to weaker metals prices.
The precious metals and mining sector saw a decrease of 2.22%, although industrials managed a modest gain, supported by solid performances from companies like Bidvest, Naspers, and Richemont.
The yield on the 10-year government bond closed at 9.955%.
Thank you for reading and enjoying the daily wrap up and analyses we provide to Trading View for you!
Are we in LAZY FEBRUARY traders? Q. "I heard that there is a phenomena called “Lazy February”. Could you explain why it’s called that and what I should watch out for as a trader?”
A. I have not heard that term in eons! Here’s my 10 cents on how Lazy February got this name.
Short month effect
February is the shortest month of the year.
And because so much happens in February, many investors like to play it safe and observe.
Most investors tend to wait for March when the markets have chosen a direction, earnings are out, taxes are paid and they are ready to invest again.
Year-end position squaring
Traders often close out their positions at the end of the year right through to January.
And this is for accounting, performance evaluation and tax purposes.
This process is known as "position squaring”.
But the big influencer is tax.
Closing off the tax year
In many countries, February is a time when individuals and corporations start preparing for tax filings.
And this can influence investment decisions which can lead to either selling their positions or adjusting their portfolios for tax efficiency.
After February and going into March, we should see a higher volume of buying and investing in the markets.
Earnings season
February is also known for major earnings releases – Especially in the U.S.
Investors during this period prefer to watch and observe. This way they’ll be able to see the forecasts versus the actual results.
Once the numbers are released, that’s where they’ll have more of an idea of what they want to invest in and what to buy or sell in March and the coming year.
JSE ALSI waiting for a direction to break out of The JSE ALSI 40 continues to move in some form of Symmetrical Triangle.
And it's been doing so since September 2023.
Right now the price is below the 200MA which does indicate a BEAR market. However, when you see the 200MA, it's been moving sideways, which does not give the indicator it's reliable signal for a trending motion.
And with the price near the apex, means a breakout is imminent.
If we look at the international markets like the Dow Jones and S&P500, they've hit all time highs. And as you know, the international markets are leading indicators which could mean we could see JSE ALSI breaking up and also heading to all time highs.
The first target will be set to 73,637 and the next is the moon.
So yes, my bias is bullish in Q1 - 12024
JSE ALSI 40 poised for upside this year - Target 84,298TECHNICALS
Symmetrical Triangle has formed on the daily since I would say 10 August 2023.
There are good technical signs that a breakout to the upside is imminent.
First we have a long term upward range from 2020 which the price continues to bounce off the uptrend.
Second we have a trending 200MA which the price still needs to break above as it's been in a pathetic sideways range for the last year.
JSE traders know what I'm talking about.
But once we get that breakout, we could see a target of 84,289
FUNDAMENTALS
Index Rebalancing and Convergence
There's a note on the JSE’s planned index harmonization which could affect the ALSI and Swix indices, aiming for a convergence by March 2024.
INDEX PERFORMANCE
This adjustment might influence the index's composition and performance, potentially affecting investor sentiment positively depending on the specifics of the harmonization.
This can increase investor confidence in the index as a benchmark, potentially leading to more investment in products tied to the index, such as ETFs and mutual funds.
BALANCE EXPOSURE!
Also there could be better balance exposure across stocks or sectors, reducing volatility and appealing to risk-averse investors.
EXPLAINED: Odd Lot Offer EasilyWHAT IS AN ODD LOT OFFER?
An odd-lot offer is a financial transaction.
It is where a company offers to buy back small quantities of its shares from shareholders who hold fewer shares than the typical trading unit.
Usually it’s under 100 shares.
In the context of stock markets, an “odd lot” refers to a number of shares that is less than the standard trading lot.
Here are the key points about an odd-lot offer:
Target Audience:
Aimed at shareholders who own fewer shares than the standard trading unit (commonly 100 shares).
Purpose:
Typically initiated by a company to reduce the number of small shareholders and simplify its shareholder structure.
Offer Terms:
The company specifies an offer price at which it is willing to buy back the odd lots of shares. This price may be at a premium to the current market price.
Voluntary Participation:
Shareholders are not obligated to participate; it’s a voluntary decision on their part.
Cost Reduction:
Companies may implement odd-lot offers to reduce administrative costs associated with managing a large number of small shareholders.
Shareholder Choice:
Odd-lot shareholders can decide whether to sell their shares to the company at the offered price or to retain their shares.
Tax Implications:
Companies may structure odd-lot offers in a way that has specific tax implications for shareholders. It’s common for the offer to be treated as a return of capital rather than a dividend.
Approval Process:
In many cases, such offers require approval from the company’s shareholders, often obtained at a general meeting.
Let’s use an example with City Lodge in 2023.
1. What’s Going On:
As of October 16, 2023, there were a bunch of small-scale shareholders in City Lodge, each holding fewer than 100 shares.
These investrs are referred to as “Odd-lot Holders,” which make up 58.22% of all City Lodge shareholders.
However, when you look at the total shares they own, it’s just a tiny 0.06% of the market.
Now, managing these tiny portions costs a lot, creating a headache for everyone.
2. The solution
To solve this issue, at City Lodge’s board of directors are suggesting an Odd-lot Offer.
This means they want to buy back the small amounts of shares from these Odd-lot Holders, making life simpler for everyone involved.
3. So what do these Odd-lot holders get?
If you’re one of these Odd-lot Holders, you get a chance to cash at a price that’s 5% more than the average value of City Lodge shares over the past 30 days.
It’s like a special deal, and you won’t have to pay any fees to make the transaction.
4. How it works
To make this happen, City Lodge needs approval from its shareholders.
They discussed it at the Annual General Meeting on November 23, 2023.
If the plan gets a green light, Odd-lot Holders can decide to sell their shares at the offered price or keep them.
5. The tax story
They considered the Odd-lot Offer isn’t a dividend but more like a return of capital.
This decision has some tax implications, so they suggest you chat with your tax expert for the details.
City Lodge wants to simplify its shareholder list, and if you’re an Odd-lot Holder, you have a choice to make – take the deal or keep riding the City Lodge wave.
Does that help and did it help you?
Technical Summary: JSE Mid & Large CapsTechnical Summary: JSE Mid & Large Caps.
Ascertain which regime a share is trading in.
The readings are subject to change as the price action develops.
Oh no Mr Market not this shenanigan again! We've started off the year of 2024 the same way we started in November 2022.
In a sideways range with a high of 75,000 and a low of 63,000.
This is very disappointing and tough for position and swing traders who mainly focus on the JSE stocks.
What can we do this year to help ride up and down the range? I can give some ideas but it's up to your trading personality and risk profile how to go about it.
Some ideas are.
1. Lower your risk and reward price expectations.
2. Look into intraday trading the JSE ALSI 40
3. Make use of the trailing stop loss more
4. Risk less per trade when the market is really just volatile
5. Diversify into other markets and bite the bullets
So, analysis wise I guess the JSE will want to go back to 75,000. Any trader can see a rectangle and guess the range movement for the year.
What are your thoughts?
What we really need is a breakthrough and a breakout.
Traders Don’t Fail – They QuitIt’s been a very tough year for swing traders.
Go long the market drops. Go short the market rallies.
Don’t do anything and you save from the burn.
But in the bigger scheme of things, it looks like we are in an accumulation phase.
The accumulation phase is a period in which smart money (informed and experienced traders or institutional investors) is believed to be accumulating a particular asset while it is still relatively undervalued.
This phase occurs before a notable uptrend or bullish move in the market.
Key characteristics of the accumulation phase include:
Sideways Movement:
Prices move within a trading range, often forming a base or a consolidation pattern.
The range represents a period of equilibrium between buying and selling forces.
You can see the JSE ALSI has been in a tight range this entire year.
Decreasing Volume:
Volume tends to decline during the accumulation phase, indicating a decrease in overall market activity.
Lower volume signals that the asset is not attracting significant attention from the broader market.
There have not been huge orders on the JSE ALSI like other years. It could be because there are LESS investors buying shares and more going into derivatives and margin trading.
Or because they are worried about the state of the economy with load shedding, foreign direct investments pulling out, the country being rated down or people fleeing the country.
Smart Money Accumulation:
Informed traders or institutional investors quietly accumulate the asset during this phase.
Their accumulation is not typically evident in the overall market activity due to the relatively low volume.
Now with December, we could see investors piling into trades from their bonuses, offsetting taxes, preparing for the next year or with optimism with the festive season.
Transition to Markup Phase:
After a sufficient accumulation, there is an expectation that the asset’s price will break out of the trading range.
This breakout marks the end of the accumulation phase and the beginning of the markup phase, characterized by a sustained uptrend.
So, my hopes and bets are UP.
I think once we break out above the range, we could see the JSE ALSI rally a good 10 -20%.
But geez, we need strong catalysts to kick in.
Even if it’s international markets helping us run up with Dual LIsted companies or America’s leading influence.
What are your thoughts? You think we’ll get our long waited for rally?
Traders and investors who stay in the game will reap the rewards.
Patience is a trader's virtue.
Impatience is the reason why traders quit. They don’t FAIL – THEY QUIT.
5 Non Trading Activities to Success…While charts, trends, risk and reward are our daily companions.
Let’s not forget that life’s full of exciting opportunities beyond the trading desk.
We are human at the end of the day.
And you also need to consider extra elements that will help you propel towards success.
Let’s get into the 5 Non trading activities you need to act on.
Healthy Lifestyle: Trading, Eat, Rest, Gym, Repeat!
Who said trading is all about staring at screens and analyzing numbers?
It’s time to inject some energy into your life!
A healthy lifestyle isn’t just about balance sheets; it’s about balance in everything.
You need to take your vitamins, eat healthy, feel great, hit the gym, go for a run, or channel your inner yogi.
The adrenaline rush from trading pairs perfectly with the endorphin high from a good workout.
The healthier you are, the more sharp your mind will be.
And this will get you to think straight and control your emotions better.
Besides, you are what you eat and what you do.
Mindful Meditation: Zen and the Art of Trading
Mindful meditation isn’t just sitting and going OOOHHM….
It’s for all successful entrepreneurs that deal with daily stresses and risks.
Sometimes you just need to take a breather, clear your mind, and get your mind and thoughts in order.
Whether you meditate, do self-hypnosis or just do deep breathing exercises – this will help you to be a more calmer and clearer thinker as a trader.
When you find your inner peace in your mind, it will reflect on your trading and results.
Continuous Learning
Trading is an ever-evolving game, and the most successful players never stop learning.
I’ve read maybe 200 books on trading in my life and I don’t even think that’s nearly enough to learn everything about the markets.
It’s always crucial for you to dive into new strategies, explore market trends, and devour financial news like it’s the hottest gossip in town.
You need to find yourself in the trading journey. This is a self introspection adventure that is forever going.
Stay curious, stay hungry for knowledge, and watch your trading game reach new heights.
Strong Networking: Bulls, Bears, and Bros
Trading might be a solitary endeavor,.
But success is a team sport.
It’s important to build a network that’s as strong as your risk management skills.
Sign up to trading events, courses, books and programmes.
Connect with fellow traders, and remember, it’s not just about what you know; it’s about who you know.
Your next big opportunity might come from a conversation over coffee rather than a chart analysis session.
Time Management: Trade Like a Pro, Live Like a Boss
In the world of trading, time is money.
But beyond the trading hours, master the art of time management in your personal life.
Schedule downtime, enjoy hobbies, and spend quality time with loved ones.
A well-balanced life isn’t just about maximizing profits; it’s about maximizing joy.
Efficient time management is the key to becoming a trading rockstar without burning out.
So, trade smart, live well, and let success be your favorite trend!
FINAL WORDS:
I trust this has given some food for thought.
That trading isn’t just about technical work. It’s also about inner work.
Work on yourself and become the true trader you aspire to.
Let’s sum up the 5 Non Trading Activities to achieve better success.
Healthy Lifestyle: Trading, Eat, Rest, Gym, Repeat!
Mindful Meditation: Zen and the Art of Trading
Continuous Learning
Strong Networking: Bulls, Bears, and Bros
Time Management: Trade Like a Pro, Live Like a Boss
Why Markets Will Always Change – 9 ReasonsThe only thing constant about financial markets is that they change.
And since 2007 or so, with the higher availability of trading different instruments and markets world-wide.
And not to mention, the ability to go long (buy) and go short (sell).
Yes, these everyday possibilities were difficult to find and trade back then.
Now I’m speaking my age in the markets. But it’s important to know, the algorithms are changing the game every single year.
As long as you’re a trader you need to be able to learn, grow, adapt and evolve with every changing markets.
Let’s go into details about WHY the markets are changing…
New and Old Traders (Volume and liquidity)
Traders are the lifeblood of financial markets.
They come in all shades of experience, net worth, strategies and diversity.
Each new trader and investor, brings fresh perspectives, risk appetites, and systems.
And when they execute, it causes a ripple into the market ecosystem.
Similar to the ‘Butter-fly effect’ where one tiny flutter of the wing can cause weather disturbances which could result in a hurricane.
This blend of old and new creates a constant state of flux, volume, liquidity and adds their unique touch to the market canvas.
New Market Information (Local or international)
Information is the bedrock of trading decisions.
In today’s hyperconnected world, news, data releases, and geopolitical events can instantaneously ripple through markets.
Whether it’s an unexpected earnings report, a geopolitical crisis, FOMC or Central Banks decisions, or a technological breakthrough (like AI).
This new information triggers a financial market reaction.
New Micro, Macro, and Fundamentals (Unrelated to charts and price)
Microeconomic factors include things like: individual company performance.
Also think of corporate actions such as mergers and acquisitions. These will also reshape industry landscapes and impact stock prices.
Fundamentals include any internal news related or announcement event that is NOT related to price and volume action on a chart.
While macroeconomic indicators include: GDP growth with money tightening and injection controls.
While Central banks’ decisions on interest rates, inflation rates and monetary policies influence borrowing costs, investment decisions, and market valuations.
These also play a pivotal role in market dynamics.
As these factors evolve over time, they influence market sentiment (how investors feel on what to buy and sell)
And this obviously drives price movements.
World Economic Info (Major changes happening)
Globalization has interconnected economies in ways unimaginable just a few decades ago.
On the one hand we have 6 more countries joining BRICs. Which is showing the political war and dynamic change between the East and the West.
Economic trends in one part of the world can have far-reaching effects elsewhere.
Trade agreements, currency fluctuations and Forex wars, and shifts in supply chains impact various sectors and industries.
And this can also lead to a change in market price, volume and conditions.
Also, when one event kicks in there is a domino effect.
And this can trigger a cascade of events that reverberate across financial markets worldwide.
Sentiment (How the overall feeling is)
Psychological factors like fear, greed, and uncertainty can drive sudden market movements.
Market sentiment is often reflected in buying and selling volumes.
When investors and traders are feeling optimistic and positive – they buy and hold.
When they are feeling down and negative (about positions) – they sell and short.
High volume with buying or selling can indicate strong conviction – for other investors.
While low volume might signify uncertainty.
This ebb and flow of market participation led to constant changes in market trends and patterns.
Then there are other reasons that financial markets are constantly changing including:
Technological Advancements (At an accelerating rate)
As the world evolves and technology compounds at unprecedented levels, we will see innovations in:
Trading platforms
Algorithms
new instruments & markets
high-frequency trading
New AI related trading bots
Better chart pattern recognition plugins
Improved automatic trading developments.
And emerging technologies can change existing business models in a way they can make them obsolete to totally transform them.
These will all influence market behaviour of demand and supply with investors and traders.
Which will cause a shift and change in price and volume.
Regulatory Changes (Boring but inevitable)
Also, rules.
Rules, regs and legs are always updating and changing.
This will also alter trading practices, liquidity, price movement and market structure.
Political Uncertainty (Fun times ahead for the world)
The rate the world is separating and joining forces in all different ways, there is change coming to the financial markets.
With the EU having control over 27 countries economies.
With BRICs adding another 6 countries to theirs.
With other countries breaking away from the US dollar.
While other companies and countries are switching and adopting more to crypto and AI.
The very foundation of politics and control is changing under our very eyes.
And this will definitely have a major shift in economic directions as well as on the markets.
Natural Disasters and health disasters (Brace yourself and keep your masks)
From Global Warming, to less resources available to mind.
From catastrophic events, floods and droughts.
These can all disrupt supply chains, impact production, and affect the prices of commodities and goods.
And then financial markets and prices, will all be affected.
And what about pandemics?
If we have another COVID-19 type event, this will once again create rapid shifts in consumer behaviour.
And this will have a major impact and ripple throughout companies, industries, countries and essentially the world markets.
FINAL WORDS:
You can clearly see, why financial markets will always change.
And as markets continue to shift and adapt, the only constant is change itself.
So it’s our job to adapt or die.
Embrace it, learn from it, love it and enjoy the process along the way.
It means, this journey and income generating source will NEVER get boring.
It can ONLY get better (well we can be optimistic to think that).
Let’s sum up why the financial markets landscape will always change…
New and Old Traders (Volume and liquidity)
New Market Information (Local or international)
New Micro, Macro, and Fundamentals (Unrelated to charts and price)
World Economic Info (Major changes happening)
Sentiment (How the overall feeling is)
Technological Advancements (At an accelerating rate)
Regulatory Changes (Boring but inevitable)
Political Uncertainty (Fun times ahead for the world)
Natural Disasters and health disasters (Brace yourself and keep your masks)
WHAT ARE Fakeouts, Shakeouts and Whipsaws?YOUR QUESTION ANSWERED!
What on earth are Fake outs, Shake outs and Whipsaws?
After this you will know…
Fake-out:
(When the price makes a false breakout of a chart pattern)
A fake-out occurs when the price of a market appears to break out of a certain chart pattern.
This could be a trendline, support, or resistance level.
But then quickly reverses and retreats back within the pattern.
Shake-out:
(Where the market is highly volatile and the price moves to levels that hits their stop losses and gets traders out of their trades)
A shake-out is a scenario where the market becomes highly volatile and the price moves rapidly to levels that trigger the stop-loss orders of many traders.
Stop-loss orders are pre-set risk levels at which traders automatically exit their positions to limit their losses.
A shake-out is designed to “shake out” weak or inexperienced traders from the market.
When stop-loss orders are triggered, it can create a temporary spike in the opposite direction of the prevailing trend.
Once these traders are “shaken out,” the market might resume its original trend.
You’ll see this most commonly with low liquid, high volatile markets like Penny Stocks or Penny Cryptos.
Whipsaw:
(This is where the market will change its most prominent direction within the day).
Whipsaw refers to a situation where the market quickly changes its direction within a relatively short period, often during a single trading day.
This can cause confusion and losses for traders who are caught off-guard.
Whipsaws can occur due to various factors, such as sudden news releases, economic data surprises, or changes in sentiment.
They are characterized by sharp price movements that can make it difficult to make accurate trading decisions.
Whipsaws are especially common during periods of high market uncertainty or when there’s a lack of a clear trend.
Let’s create a quick summary of the three:
Fake-out:
(When the price makes a false breakout of a chart pattern)
Shake-out:
(where the market is highly volatile and the price moves to levels that hits their stop losses and gets traders out of their trades)
Whipsaw:
(This is where the market will change its most prominent direction within the day).
If you have any trading question let me know in the comments
#TOP40 South Africa 40 finds support@ trendline + Horizontal supNote how the trendline that has formed has had its 3rd successive touch with a reversal candlestick. Each turn off support has created strong upside price action the following day. The level where the top40 found support is even more significant as the 67500 has been a massive change of polarity on many occasions through the second half of 2023. The bulls have their work cut out for them as the failure to hold price above the 200dma was not a positive development. However in the short term, i think we can retest 69300 and maybe 70 000 but ultimately a close and successive days of trading above 70k is needed for bulls to sustain momentum and drive the market higher.
JSE ALSI Target set to 80,000!As expected, the JSE ALSI consolidated a handle and the price broke up and out of the brim level.
This aligned with the upside of the Santa Claus Rally along with the resource rally.
We also have the January Effect that will continue to push the price up.
We have an aggressive entry on the longer time frame, and others will wait for a pull back to the brim before buying up.
So the target remains at 80,000.
SANTA CLAUS Rally in 2023 for JSE ALSI 40?Will we have a Santa Claus rally this year?
Statistics say, it is likely but let's start from the beginning...
The Santa Claus rally is when stock prices, both locally and globally, tend to go up and end the year on a positive note.
Now, why does this happen? Here are some ideas:
Holiday Cheer:
During the holiday season, people generally feel more optimistic and positive.
The festive mood can rub off on investors, making them look at the market with a brighter outlook.
Positivity often leads to more buying, which helps the rally.
Tax Time:
Toward the end of the year, investors and fund managers review their portfolios for tax purposes. This is when you'll see them selling stocks to get some tax benefits.
Once they sell, they use the money to buy other stocks, thinking those will do well in the coming year.
This buying spree lifts stock prices and pushes up market indices.
Bonus Spending:
Investors often use their year-end bonuses to buy stocks. More buying means higher demand, and you know what that does – stocks go up!
While it's a bit speculative, nothing says Santa Claus Rally like charts showing off holiday cheer.
The JSE has seen gains in 14 out of 20 Decembers!
Take a look at the JSE-ALSI stock market chart since 2003. Each December is marked with a vertical blue line, showing how it performed:
That's a 70% win rate with positive gains in 14 out of 20 Decembers, accumulating a total of 38.72% gains.
So, chances are, buying this Christmas might be a good idea, especially after a sideways year for the JSE ALSI.
5 TRADING PROTECTION LEVELS - NB*REMEMBER
Every trader needs 5 protection levels.
Stop loss to stop yourself from furthering losses
Time stop loss to get you out of non-performing trades
Adjusted stop loss to lock in profits when the market moves in your favour.
Risk % per trade to only lose a certain amount of your portfolio
% of Drawdown before you HALT trading - when the market is not in a favourable environment to your strategy.
These are the control factors to manage your portfolio with better direction and management.
What other protection levels do you apply?
The 12 Dangers of Trading DoubtDoubt is danger.
It’s a big enemy for trading.
And it’s something that is innate, which is hard to escape from.
It leads to you to miss opportunities, destroys confidence, clouds judgement and keeps you stuck in a rut.
When you are infected with doubt, this can infiltrate even the most experienced traders.
This article delves into the various dangers of trading doubt and how to overcome its destructive effects.
Missed Opportunities
When doubt creeps in, traders often find themselves hesitating or second-guessing their decisions.
Once you feel hesitation, you’ll miss great opportunities.
Winners will be left on the table.
All because you doubt it’ll go your way and that the markets are conducive.
If you want to stop the doubt you need to act swift and make decisions within three second.
1, 2, 3 – ACT!
Loss in Confidence
Without confidence, you’re going to doubt.
You’re going to question your skills, strategies, and abilities.
As confidence dwindles, you’re going to feel strong fear, panic and worry.
This will lead to irrational decisions driven by emotions rather than logic, rationality and sound analysis.
Change Your System
Even if you have a winning system.
Doubt could cause you to abandon it.
You might already be thinking of finding another.
Looking for better parameters.
Adding extra elements and variables.
This constant tinkering will prevent you from fully realizing the potential of their proven trading strategy and approach.
This is a time game. Not a week, not a month. Noth even three years.
Your trading success will come from being consistent, persistent and consistently applying a well-defined strategy over time.
Search for “Better”
You might even doubt trading all together.
You might have lost a bit of money and now you have this desire to make it back.
So you’ll look into gambling, sports betting, Amway or any other scheme instead.
But you’ll most likely be disappointed. Because everything worth doing well for reward, consists of elements of risk and time.
Don’t Take the Trade
Your finger could be between three stone walls.
Or your finger could be 1 mm from the button.
If you have doubt with your trades, this will paralyse you to enter a trade.
This hesitation will lead you to:
Miss trades
Miss profits
Interfere with the system
Lose confidence
Exacerbate panic and fear
This will only set a precedent for you to do it again.
It’s a bad habit that can destroy you as a trader.
Don’t Follow Criteria
Doubt can lead to a disregard your essential rules.
You might:
Get in at different levels
Move your stop loss further away
Close prematurely for tiny profits or
Take a trade that does NOT match the criteria.
If you question the trading validity of your criteria, this will turn you into an undisciplined and unsuccessful trader.
Overtrading
Once doubt sets in – so will mania.
And to break away from doubt, you take on a dangerous path.
In an attempt to overcome doubt, you might start overtrading or revenge trading.
This is where you’ll enter too many trades in quick succession, without following any criteria.
Emotional Roller Coaster
Doubt is not just feeling lazy.
It actually comes with feelings of frustration, anxiety, and self-doubt dominating their thought process.
This emotional turmoil can cloud judgment and lead to reactive rather than rational decision-making.
Analysis Paralysis
When doubt takes hold, this is where you might go all out with indicators, parameters and price action elements.
This will lead you to excessive analysis.
You’ll continuously seek more information before making a decision.
This analysis paralysis can cause a couple of issues.
It can overcomplicate trading
It makes back and forward testing almost impossible
The variables can cause conflict with each other.
Your charts will look like Christmas trees
This can lead you to miss trading opportunities and an inability to take action.
Inconsistent Results
Consistency is key in trading success.
Doubt-driven decisions can lead you to inconsistent results.
You’ll have your journal with how the trades were SUPPOSED to go.
Versus how you made them go.
And this will make it challenging to gauge the effectiveness of a trading strategy over the long term.
Psychological Toll
Doubt is a constant battle.
If you have this, it will infect your mind it will take a toll on your mental well-being.
It can lead to stress, burnout, and even health issues if you don’t fix them.
Loss Aversion
Doubt can cause a psychological bias known as loss aversion.
This is where traders become will focus to avoid losses rather than maximise their gains.
This mindset can hinder traders from taking necessary risks to achieve substantial profits.
Focus on cutting small losses and banking small profits and you’ll have a recipe for disaster.
It’s time to build your confidence
This will come from working on a trading journal, risking less and building a track record.
Over time, the doubt will creep away and the certainty will override.
Let’s some up the elements of doubt for a trader…
Missed Opportunities
Loss in Confidence
Change Your System
Search for “Better”
Don’t Take the Trade
Don’t Follow Criteria
Overtrading
Emotional Roller Coaster
Analysis Paralysis
Inconsistent Results
Psychological Toll
Loss Aversion
Worship the 200MA with the JSE ALSI 40 - But we will break up!The JSE ALSI 40 once again tested the 200MA.
It then retreated back with its tail between its legs.
However, the drop has not been aggressive and big. So we can make an assumption that this is a current dip that will cause a rounding bottom.
If this is true, it will complete a Cup and Handle formation. And when the price breaks above the brim level we could see 80,000 on the cards.
With the Santa Claus rally and positive sentiment with the interest rate hikes being halted in the US and the weakening dollar - It looks like we will continue to see its rally.
Happy to be in the markets during this time. But if there is ONE lesson to take in, worship the 200MA to determine the CURRENT trend.
Break above 200MA and it's a slay up from there.
Tough year for JSE ALSI Positions TradersIt's been a very tough year for swing traders.
Go long the market drops. Go short the market rallies.
Don't do anything and you save from the burn.
But in the bigger scheme of things, it looks like we are in an accumulation phase.
The accumulation phase is a period in which smart money (informed and experienced traders or institutional investors) is believed to be accumulating a particular asset while it is still relatively undervalued.
This phase occurs before a notable uptrend or bullish move in the market.
Key characteristics of the accumulation phase include:
Sideways Movement:
Prices move within a trading range, often forming a base or a consolidation pattern.
The range represents a period of equilibrium between buying and selling forces.
You can see the JSE ALSI has been in a tight range this entire year.
Decreasing Volume:
Volume tends to decline during the accumulation phase, indicating a decrease in overall market activity.
Lower volume signals that the asset is not attracting significant attention from the broader market.
There have not been huge orders on the JSE ALSI like other years. It could be because there are LESS investors buying shares and more going into derivatives and margin trading.
Or because they are worried about the state of the economy with load shedding, foreign direct investments pulling out, the country being rated down or people fleeing the country.
Smart Money Accumulation:
Informed traders or institutional investors quietly accumulate the asset during this phase.
Their accumulation is not typically evident in the overall market activity due to the relatively low volume.
Now with December, we could see investors piling into trades from their bonuses, offsetting taxes, preparing for the next year or with optimism with the festive season.
Transition to Markup Phase:
After a sufficient accumulation, there is an expectation that the asset's price will break out of the trading range.
This breakout marks the end of the accumulation phase and the beginning of the markup phase, characterized by a sustained uptrend.
So, my hopes and bets are UP.
I think once we break out above the range, we could see the JSE ALSI rally a good 10 -20%.
But geez, we need strong catalysts to kick in.
Even if it's international markets helping us run up with Dual LIsted companies or America's leading influence.
WHat are your thoughts? You think we'll get our long waited for rally?
Traders and investors who stay in the game will reap the rewards.
Patience is a traders virtue.
Impatience is the reason why traders quit. They don't FAIL - THEY QUIT.
Until then trade well...
T
JSE Technical SummaryTechnical Summary as of yesterday's close.
Readings for:
Oversold
High bullish momentum
Strong
Neutral
Weak
High bearish momentum
Oversold
JSE ALSI ready to rally once price breaks 200MA then 76,185Cup and Handle has formed on JSE ALSI.
The price broke above the Brim level, came back and tested the support showing upside is on the cards.
7>21
Price remains below 200MA but as I like to say, the more it tests it the more likely it will break above like thin ice.
Target remains at around 76,185
The only constant with trading the markets is...The only thing constant about financial markets is that they change.
And since 2007 or so, with the higher availability of trading different instruments and markets world-wide.
And not to mention, the ability to go long (buy) and go short (sell).
Yes, these everyday possibilities were difficult to find and trade back then.
Now I’m speaking my age in the markets. But it’s important to know, the algorithms are changing the game every single year.
As long as you’re a trader you need to be able to learn, grow, adapt and evolve with every changing markets.
Let’s go into details about WHY the markets are changing…
Since around 2007, the landscape has undergone significant transformations, driven by several key factors that shape the dynamic nature of these markets.
1. Globalisation and Technological Advancements
Traders now are able to gain access to enhanced connectivity, facilitating participation in markets worldwide.
They also have amazing trading and charting platforms like TradingView.
This increased speed of information dissemination and transactions has a profound impact on market dynamics. And this helps contribute to the perpetual state of change.
2. Diversification of Instruments and Markets
The availability of diverse financial instruments, ranging from stocks and bonds to commodities and cryptocurrencies, has expanded trading possibilities.
Each year we seem to have more assets, markets, instruments, structured products and choices.
It's building into a trading universe in a way.
And each market possesses unique characteristics influenced by distinct factors.
This diversity introduces complexity to trading strategies. And this requires traders to navigate a broad spectrum of instruments with different behaviors.
As long as there are new and improved assets, the markets will always change.
3. Long and Short Positions
Unlike in the past, where shorting certain markets proved challenging, the ability to go long (buy) and short (sell) has become more prevalent.
This flexibility allows traders to capitalize on both upward and downward market movements.
With the ability to go long and short a variety of markets, this is changing the financial landscape of the markets.
Price action no longer moves in a Zig Zag 45 degree motion.
There are more dips and rallies without strong trends, like in the past.
All because of the intrciacies of long and short positions also adds intricacy to risk management strategies. talking about algorithms.
4. Rise of Algorithmic Trading
Algorithmic trading has emerged as a game-changer in financial markets.
This involves using computer programs to execute trades based on predefined criteria.
The influence of algorithmic trading is profound, contributing to increased liquidity, faster execution, and the development of innovative trading strategies.
As algorithms evolve each year, they continually reshape the dynamics of the trading landscape.
5. Market Participants and Strategies
The composition of market participants has evolved, with institutional investors, hedge funds, high-frequency traders, and retail traders all playing pivotal roles.
All of a sudden we've seen a spike in the new trend of trading with Smart Money Concepts and Inner Circle Trading, in the last two years.
These changes in the behavior and strategies of these participants can swiftly impact market trends and volatility.
The influx of retail traders, facilitated by online platforms, further adds new dynamics to the markets.
So once again, the only constant for traders is the change that is taking place in the financial landscape and market universe.
Traders who evolve, adapt, acknowledge and respond effectively to the perpetual state of change are better positioned for success in this dynamic and challenging environment.
