my daily trading

When We Can Do Speculation?

2007-04-11T22:56:00.000-07:00

Most of all do not understant the basic of speculation...they think gambling is the same as speculation...no it is not the same thing...many times I tried to explain it...but no one...still cannot understood....

Today, I will try explaining it more simple...

To speculate you must need all of this condition below, before you can decide to speculate on it (whatever your media : it can be property, cassino games, business, sport or securities).

First of all, you need the condition that has the probability in your favour. You must has an edge to describe the condition when the probability moves on your side. If you play coin toss, there will not have speculation criteria except gambling, because your probability cannot exceed 50%.
And on cassino house it is very difficult to find the games that has probability in your favour.

Second, it must has a projection profit larger than the risk. I will call something as speculation if it could reward me $3 againts the risk of $1. But It always a gambling if you migth have a reward $1 million and also you migth loose it $1 million.

This is the basic of speculation. Very simple but many of us ignore them...so why we always see someone who never wants to play any card games in his life (because he said it is a gambling and i'm a businessman) but do gambling in his business many times before he bankrupt.

Betray My Friend

2006-08-04T18:16:00.000-07:00

The trend is your friend, don't you ever betray him. It is true...I just have a bad days on friday..I have to call it as Friday the forth. But the problem is I betray my only friend in the market - TREND - and it cost me. Actually, I just tried to make some improvisasion on my trading style. I tried to fade the trend movement as soon as my analysis said that the stock is overbougth. It was not hurt my bottom line too deep because I closed the position soon but it gives me a pretty lesson. It is better to use every overbougth signal only exit your position, not for taking a new position whenever the trend is not on your side.

Basic Trader Character

2006-08-01T03:58:00.000-07:00

I just want to share something that I learnt early in my study about trading and investment. The first book about Technical analysis that I read is "Technical analysis explained", written by Martin J.Pring. The book is not good as the others that I read after that. I found that book on my campus library (actually this is the only technical analysis book in my campus library, what a shame?).

As a novice, It was hard for me to grasp about technical analysis from that book. But I found only one interesting topic in that book. The topic looks like as something that has nothing to do with technical analysis – the main reason that I read that book – because it is printed on the preface chapter. Later on in my development process, I found it as very important topic in trading and deeply explained on the other books. It is just about important character that trader must has and develop. Even though it is only a preface by Mr.Pring, I have a lot of interest of this phrase.

Patience, discipline, and objectivity.

It only contains of three words, but it explains what you must develop to be a great trader. Some people have this trait as a nature, but fortunately it can be learned and developed.

Breaking News

2006-07-31T18:35:00.000-07:00

PT Telekomunikasi Indonesia six months to June results:

Sales - 23.99 trln rupiah vs 19.38 trln
Opg profit - 10.81 trln rupiah vs 8.09 trln
Net profit - 5.82 trln rupiah vs 3.80 trln
EPS - 288.71 rupiah vs 188.66

PT Medco Energi Internasional (MEDC.JK) said Tuesday its that first-half net profit rose 15% on year because of higher commodity prices. Net profit between January and June rose to $55.09 million from $47.75 million a year earlier. The gas and oil producer, which is controlled by the Panigoro Family, said its net revenue rose 26% on year to $372.03 million. The increase in net revenue was, however, offset by operating expenses, which rose 32% on year to $59.45 million. The company didn't say why its operating expenses escalated. As of June 30, its assets were $1.76 billion, compared with $1.40 billion a year earlier. Its short-term debts totaled $170.06 million, compared with $154.46 million a year earlier.

Market History in July

2006-07-25T21:07:00.000-07:00

Do you know that in the big market panic of 1907, J.P.Morgan personally implored Livermore to stop selling-short, stop pounding market into oblivion. Livermore himself made 3 million dollars in that panic. It was on October 24, 1907…when there wasn’t a single bid for all stocks in the market! Think of it! Imagine if it happen this day…:)

Note : For my audiences, see also the others interesting topic next month. I will post the series of Market History on monthly basis.

Investor, Speculator and Gambler

2006-07-24T22:19:00.000-07:00

What is the difference? Very interesting question, isn't it? it is a trivial question, but sometimes a lot of people can not answer it.
Investor, speculator and gambler - all of them - are player in all market. But their population is not the same one to another. It is like a pyramid, with gambler is on the base and investor on the edge of it.

Let's start with the top of the pyramid first.
In my opinion investor is the man who can differentiate between value and price. They focus on the difference between value from its price. They know exactly how to differentiate whether this goods are undervalued or overvalued. Investor also has a great skill, knowledge and access to every information they need to analyze. They will scrutinize every piece of information, so they can come into the rigth conclusion about the value.

On the other hand speculator and gambler is the population that is out of investor. They don't have any knowledge to do as good as investor. They are only the follower, but there is a big difference between gambler and speculator. Gambler is the man who neither have a knowledge as an investor and want to use their brain. Otherwise, speculator knows their limitation, and try to get their opportunity by anticipating the unbalance situation. They will use their eagle eye to watch every signal of the bias in the market and then move with the bias direction for their own opportunity. Sometimes they are very opportunist. They admit for their knowledge limitation, so they always put on the higher respect for every risk they encountered.

If i may describe this situation as an warehouse auction ...the investor is the buyer who search - by her knowledge - for the low price item but still have high value either now or in the future. And the speculator is the one who only buy for the items that will increase in value, because there is a sign that public demand will increase dramatically for that items.
Which style do you choose?

Breaking News : Jul 25 2006

2006-07-24T18:57:00.000-07:00

Date : Jul 25 2006, 08:33
Title : News Story
Header : Taipei shares higher in early trade on Wall St bounce; techs in focus

DJIA 11051.05 +182.67 +1.68%
Nasdaq 2061.84 +41.45 +2.05%
S&P 500 1260.91 +20.62 +1.66%
FTSE 100 5833.90 +114.20 +2.00%
Xetra DAX 5578.05 +127.04 +2.33%
2-Yr US Treasury 100 2/32 -1/32 yield 5.09% +1.3
5-Yr US Treasury 100 18/32 flat yield 4.99% 0
10-Yr US Treasury 100 20/32 flat yield 5.04% 0
USD/JPY 116.69-73 +0.51% 116.92-116.15
EUR/USD 1.2630-34 -0.61% 1.2707-1.2611
AUD/USD 0.7543-48 +0.23% 0.7550-0.7502
USD/JPY 1M Vol 8.15/8.40%
EUR/USD 1M Vol 7.50/7.80%
AUD/USD 1M Vol 8.10/8.20%
Comex Gold $613.20 -$7.00 $615.80-$602.50
Nymex Crude (NY) $75.05 +$0.62

ASIAN OUTLOOK:

STOCKS:
Asian share markets are set to head higher after news on mergers and
acquisitions and on corporate earnings sent U.S. shares sharply higher
overnight.
However, crude oil futures in New York topped $75.00 a barrel last night,
partly on the back of a gasoline rally triggered by a growing raft of
refinery outages.
Among metals, Comex gold futures were knocked down to a three-week low in
New York amid fund liquidation and a firmer U.S. dollar, but they did
recover some losses by the close. London Metal Exchange copper prices were
stronger by the kerb as prices responded to concerns over supply
disruptions. LME aluminum and zinc benefited from consumer buying, while LME
nickel rose strongly on the back of another drawdown in stocks.

FOREX:
The dollar gained during a quiet New York session as investors took
profits on last week's falls.
The correction comes ahead of a host of data this week in the U.S.
Investors are awaiting June existing home sales tonight, the Fed's Beige
Book tomorrow, and June durable goods orders and new home sales Thursday.
"It's really the housing data and getting a cue on the housing sector that
is going to be pretty interesting," notes Alan Ruskin, head of international
strategy at RBC Greenwich in Conn.
More importantly, however, will be the release of the U.S.' second quarter
gross domestic quarter data Friday, which is expected to confirm a slowdown,
albeit an orderly one, of the economy.
The German IFO index will likely be the most important data in the euro
zone through the week, particularly ahead of the meeting by the European
Central Bank on Aug. 3.

BONDS:
U.S. Treasurys have provided little direction for the region's bond
markets, settling flat overnight.
"We saw some selling that met buying and it seems the market is finding
its range," said Kevin Flanagan, fixed income strategist at Morgan Stanley
in Purchase, N.Y. "At least for the next few days this pattern should hold,"
he added.
In trade last night, odds of a 25-basis-point Federal Reserve rate hike in
August were around 42%. Such a stance leaves the market vulnerable should
forthcoming data surprise to the upside and suggest a rate increase next
month is more likely than not, says Flanagan.
Japan's Ministry of Finance will auction Y800 billion worth of 20-year
JGBs today. Analysts expect the coupon for the bonds to be set at 2.3%,
unchanged from the previous June issue.
"An issuance of Y800 billion per month is quite a lot, so we're worried"
whether the bonds will attract enough investor demand, says Takafumi
Yamawaki, a bond strategist at Morgan Stanley Japan.

Where will TLKM go?

2006-07-23T19:21:00.000-07:00

Today is an ex devident for Indonesian Telecomunication (TLKM). Occording to past experiences it will correct as much as the devident. But let's see the range that TLKM has been building since the last downtrend in the end of March. It range contract from (7700 - 6700 range) towards (7450-7000 range). The volatility continue to contract...keep open our eyes for the big swing. But the important question that must be answered is : Where will it go? No body knows....eventhough we have strong support in 7000. But we just can predict that TLKM ready for the big swing in the next market movement.

Speculation

2006-07-22T22:40:00.000-07:00

"The game of speculation is the most uniformly fascinating game in the world. But it is not a game for the stupid, the mentally lazy, the man of inferior emotional balance, or for the get rich quick adventurer. They will die poor", Jesse livermore(1877-1941)

Speculation is a business. It is not the same as gambling. Why?...Let consider this...Stock market, forex, bonds, property and also a business itself is just a medium. It similar with the card games, sports or horse race...you can choose it as a media for gambling. The result is depend on how you do it. As a gambling or a business?

There a lot of people who do common business just as a gambling, they do it without business plan, no protection on their risk. Their orientation is only with the profit and run it as long as they have a gut. For example... In my country, before economic crisis in 1997, we can count by hands how many business spend their cost on assurance. But fortunately, business environment has less risky than financial market. The inventory damage, store burnt out, flood and economic crisis is not frequent occasion. And lack of knowledge and preparation - run it as a gambling - can be solved by friendly environment in running time as learning curve evolved. Unfortunately, we have different story on risky medium as stock market. You can’t run it as a gambling, you will die poor. In high rewards but high risks environment, you must strict with your discipline to run it as a business. You must let some of your profit for minimizing your risk. A trading plan is a must, manage your risk with strict management. You must have sound basic knowledge before you start. You must act as a Marco Polo...must imagine your clear map, your master plan...before you sail, even though with the change of environment, finally you do different way and destination. But you cannot get your dreamland if you don't have a pre-map…a master plan. You must share much of your time to development process. Everything is changing, like on business….and you as a business man must have to evolve also.

Finally i just want to say that, speculation is the hard business...because it has a curse for having more risky environment than any business…but certainly it has a good rewards too. We can illustrate opportunity that speculation offered as a boxing world champion. They can make fabulous money if they do it right and become on the top…but become a world boxing champion is not an easy task. There is a lot of pain and risk (death) till they get there...So when one of their son say that he want to be like his father...they will say, "If you like boxing, you do that...but if you only like the money forget it...there is more less risky job out there, such as a singer and basketball that will bring you to rich...but once again if only you do that with your love."

No pain, no gain!
It is the same as speculation and other business. If you do it as a gambling – just rely on your guts, feeling, “modern fortune teller” and pick your stock as you pick the horse on race – maybe you will be a millionaire in a short time, but not longer from that you will destroy your self.
DO IT AS A BUSINESS!