My romance with Technical Analysis

I have learnt about the stock market since I was young. My father used to be very active in the stock market in hoping to earn more money for the family. It was unfortunate that his techniques were that of a lay man who bought on rumours. He ended up losing quite a bit to the market.

I have never actively participated in the stock market until I was 30. My first experience of the stock market however, dated back to 1994 when the company that I worked at that time got listed. I was offered 3 lots of the Aztech's share at around SGD0.89, I took it up. Not knowing what to do with it, I held on to it regardless rain or shine. I never sold the share when it peaked at SGD1.80 but eventually at a price of SGD0.40.

I have not gone into the stock market for 2 reasons. One, I have no money. Two, I did not know how to play as I have no idea how to predict the market. My opportunity of participation came after returning from my secondment in China, I earned quite a bit, and that entitled me to invest my money.

I was also a member of the biggest club in Singapore, the Social Development Unit (SDU). It organized activities for single university graduates. One of the activity that I participated was about the Singapore market. It was here that I met my master in Technical Analysis, Mr Leong Ying Yong. He was humourous in presentation with charismatic personality. His picture of Singapore's future was actually akopoliptical, in fact, I was depressed for 2 weeks after attending his seminar. Someone in the audience proposed to him to start a class on Technical Analysis. He took on the challenge, and I joined the class.

I fell in love with Technical Analysis almost immediately. It looked so simple to me and I managed to"master" the skill in a very short time frame. In fact I was one of the three most promising students of his. The trick with Techncial Analysis is the ability to recognise patterns, which happens to be my field of expertise. Being a comic reader, looking at pictures and figuring out what it mean is a second nature to me.

The three of us felt very invincible after the class. We discussed the technical set up of companies to see which one woudl be the best bet. All these while I continued to trade but without a single success, I never did wonder why it did not work for me then.

Eventually we chanced upon this stock Asia Food and Property (AFP). We determined that it would go up to USD0.35 (it was @0.22). I started to go in with 20 lots with intention to contra. The move did not realised and my time was almost up. So I intend to renew the stock with buy and sell 20 lots at the same time. Some how after one or 2 renewal, I stopped selling when I bought new shares. I eventually ended up holding 120 lot of this share.

Then came this faithful day when I went to Malaysia while still holding the whole lot. I remembered it very well because it was also the same day of market correction, the correction was similar to that of the recent one. AFP dropped to USD0.15! The effect of devastating and I was daze for days. The plunge not only wiped out all my earnings from the China secondment, it also put me in debt.

I told my broker who was also the wife of my master that I would not be able to pay her back on the losses. It was to my surprise that she instead asked me to enter 1 Lot Creative Technology. She told me then that there was virtually no seller in the market with the stock priced at SGD15. I also took up her advise of opening a trade loan account as well as credit account to get finance assistance.

Within 3 days of buying Creative, the share went up to SGD25. The earning did not actually cover all my losses but it at least reduced my debt to only SGD7,000, which I paid up. I still hold on to the credit account up till today although I seldom use it, it just act as a reminded of my SGD17,000 losses. It was a lot of money considering that I only have SGD12,000 in my bank account.

How has Technical Analysis failed me? Actually it was not Technical Analysis at all, it was me who was responsible. Technical Analysis is only a supporting tool to improve my accuracy in reading the market and stock. It does not in anyway guaranttee success and wealth.

What have I missed out that caused me to fail in my trade? It is obvious now that I have not been fully attentive in class. My master have more than once caution the class to " play with your system, not with the market". I did not understand what it meant then, but it is now strongly echoed in me.

I have to device my own system to trade and have the discipline to follow. This include not being affected by the market move, but only to listen to my system. Technical Analysis is an equipment being installed into my system, it makes up only part of the whole system which I use.

My master also told the class to play within our means. If we don't have the fund to play, don't play. It is important as it safeguard the long term survival. Over exposure will only means a quick death.

I held on to my secret for close to 9 years. Only in recent months that I have the guts to bring it up to my father. He was very understanding, but he told me," don't tell your mother about this." This is one thing that I make sure I follow.