What type of market is most confusing? Sideways? Uptrend? Downtrend? From my attention on my clients trade, most of them not doing well in "V" shape market. "V" shape market can happen when market up sharply 1st and then turn in another way sharply a while later or vice versa. I can found that in "V" shape market, most of the investors are easily buy at the high and eventually end up cut loss at lowest price when the market turn too fast until they cannot response it. So it is not surprising for investors to lose 2 times in a "V" shape market, so a very well defined trading plan is is necessary to avoid such a tragedy in your trading.
Today FKLI shows a very good example for "V" shape market. On friday, our FKLI was closing at 1076.5 and our market was gap up for 2 points and all the way up till 1082. I strongly believe at 1080-1082 range, there are nobody dare to go short, because at that time, the market was showing strength plus the regional holding quite well for that moment, so long is more preferable than short. As a result, when the market retrace to 1076-1078 level, investors are more willing to buy at this range price, because they think the market are strong and lower to buy is much more safer. Unfortunately, the FKLI start going down all the way once break 1076 and the day trader that doing long start questioning is it they long at too high and I'm sure most of the day trader that don't have any trading plan are cutting their position when market hit 1071 level.
When market is hitting the lowest 1070.5, it immediately bounce back all the way to 1080.5 . Can u imagine hows the investors that long at 1076 and cut loss at 1071, I'm sure only for those investors that didn't keep track on the market so closely can avoid cut loss at the lowest. In addition, it is even worst for those investors that cut loss at 1st then try to turn short at 1071. This is not a tragedy for long investors only, the same goes to short investors that wait patiently and didn't short at 1080 but some of them might try to short at 1071-1073 and try to imagine their feeling and reaction when the market is bounce back to 1080.5.
As u try to see from the point of view of investors, this can explain why "V" shape market is the most confusing and end up everyone long at high and short at the low. It is very hard to see an investors able to catch every up and down for today, provided this investors only setting 8-9 points profit taking, other than that, for those able to did it, I would said that their market sense very strong, I give my salute to them. To avoid such a disaster happen, i would like to suggest investors to use pivot points to identify the potential resistance and support so that their trading can run according to plan, worst come to worst the capital are protected with reasonable stop loss.
The potential support for today market was at 1070 while resistance at 1079.5. This indicates t investor can always play at the support and resistance level with 3-5 points cut loss. For example, when the market is drop from 1082 to 1073 that time, investors can try to long at 1070-1071 while stop loss put at 1068-1067 or maybe short stop at 1068-1067 and once the short stop hit, put buy stop at 1071. Always try to play around the support and resistance with cut loss, it sometimes can save the trouble stucking in "V" shape market.
For tomorrow trade idea, my resistance level was at 1079.5 while support at 1062.5. If let's say the market go down some more, i will not go for long if the market maintain at 1055-1060 level, i will long when the market move above my support points, try to long at 1063-1064 then put at sell stop at 1059-1060. Remember never long at the lowest, because we will never know where is the lowest, let the market prove where is the low then we only go long. Hopefully I'm correct tomorrow.
Today FKLI shows a very good example for "V" shape market. On friday, our FKLI was closing at 1076.5 and our market was gap up for 2 points and all the way up till 1082. I strongly believe at 1080-1082 range, there are nobody dare to go short, because at that time, the market was showing strength plus the regional holding quite well for that moment, so long is more preferable than short. As a result, when the market retrace to 1076-1078 level, investors are more willing to buy at this range price, because they think the market are strong and lower to buy is much more safer. Unfortunately, the FKLI start going down all the way once break 1076 and the day trader that doing long start questioning is it they long at too high and I'm sure most of the day trader that don't have any trading plan are cutting their position when market hit 1071 level.
When market is hitting the lowest 1070.5, it immediately bounce back all the way to 1080.5 . Can u imagine hows the investors that long at 1076 and cut loss at 1071, I'm sure only for those investors that didn't keep track on the market so closely can avoid cut loss at the lowest. In addition, it is even worst for those investors that cut loss at 1st then try to turn short at 1071. This is not a tragedy for long investors only, the same goes to short investors that wait patiently and didn't short at 1080 but some of them might try to short at 1071-1073 and try to imagine their feeling and reaction when the market is bounce back to 1080.5.
As u try to see from the point of view of investors, this can explain why "V" shape market is the most confusing and end up everyone long at high and short at the low. It is very hard to see an investors able to catch every up and down for today, provided this investors only setting 8-9 points profit taking, other than that, for those able to did it, I would said that their market sense very strong, I give my salute to them. To avoid such a disaster happen, i would like to suggest investors to use pivot points to identify the potential resistance and support so that their trading can run according to plan, worst come to worst the capital are protected with reasonable stop loss.
The potential support for today market was at 1070 while resistance at 1079.5. This indicates t investor can always play at the support and resistance level with 3-5 points cut loss. For example, when the market is drop from 1082 to 1073 that time, investors can try to long at 1070-1071 while stop loss put at 1068-1067 or maybe short stop at 1068-1067 and once the short stop hit, put buy stop at 1071. Always try to play around the support and resistance with cut loss, it sometimes can save the trouble stucking in "V" shape market.
For tomorrow trade idea, my resistance level was at 1079.5 while support at 1062.5. If let's say the market go down some more, i will not go for long if the market maintain at 1055-1060 level, i will long when the market move above my support points, try to long at 1063-1064 then put at sell stop at 1059-1060. Remember never long at the lowest, because we will never know where is the lowest, let the market prove where is the low then we only go long. Hopefully I'm correct tomorrow.
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