TradeVSA Digest Week 2 Nov 19, 2018
Editor Commentary:
VSA 101 – Everything You Must Know About VSA
Who Invented VSA?
There are three big names in VSA’s development.
– Jesse Livermore
– Richard Wyckoff
– Tom Williams
Jesse Livermore spoke of a theory based on market manipulation. He also worked his theory in his legendary trading career. However, he did not pass down concrete trading methods. His legacy is that of a trader and not an educator.
Richard Wyckoff was much more interested in education. To find methods that work in the markets, he interviewed top traders including Jesse Livermore. Wyckoff proposed the idea of a “Composite Trader” that embodies the entire market. He used the “Composite Trader” to explain the market phases of accumulation, markup, distribution, and markdown.
Neither Jesse Livermore nor Richard Wyckoff used the term “Volume Spread Analysis”. It was Tom Williams who used the term to describe the methods he built based on the Richard Wyckoff’s ideas. Tom Williams’ books and software has helped to propel the concepts of VSA among traders.
Stock Trade Idea
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Profit from Pullback Strategy after Shake Out – Ranhill Holdings (5272.KL)
Case Study
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Trading with the Smart Money – DRB-Hicom (1619.KL)
Video Tutorial
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18 Line Change
Check your emotions at the door
“Success in investing doesn’t correlate with IQ … what you need is the temperament to control the urges that get other people into trouble in investing.” That’s wisdom from Warren Buffett, chairman of Berkshire Hathaway, oft-quoted investing sage and role model for investors seeking long-term, market-beating, wealth-building returns.
Free Book
How I Trade and Invest in Stocks and Bonds
by Richard D. Wyckoff
2011 Reprint of 1922 Edition. Full facsimile of the original edition, not reproduced with Optical Recognition Software. Richard D. Wyckoff’s writings never grow old. This book was originally published in 1922; it is still timely. Wyckoff’s modus operandi was to have a small trading account (“not over five or ten per cent of my loose capital”) and invest its profits into income-paying securities with the potential to appreciate in value. Wyckoff justified the size of his trading account psychologically. “There is a much greater satisfaction in operating with a small amount of money for various reasons: It makes you more careful, because, having set yourself to the task of realizing a large profit on a limited amount of operating capital, you plan your moves shrewdly and do not take risks such as you would if operating with more money.” (pp. 42-43) And then there’s the emotional high of seeing outsized returns on a percentage basis. Chapters Include: 1. My First Lessons in Investing and Trading 2. Profitable Experiences in the Brokerage and Publishing Fields 3. Why I Buy Certain Stocks and Bonds 4. Unearthing Profit Opportunities 5. Some Good Experiences in Mining Stocks 6. The Fundamentals of Successful Investing 7. The Story of a Little Odd-Lot 8. The Rules I Follow in Trading and Investing 9. Forecasting Future Developments 10. The Truth About ‘Averaging Down’ 11. Some Definite Conclusions as to Foresight and Judgement 12. Safeguarding Your Capital 13. How Millions are Lost in Wall Street 14. The Importance of Knowing Who Owns a Stock
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KLSE Market Update
Bursa Malaysia KLCI Index
On 2018-11-16, KLCI is trading at 1706.38 and change % from last bar was 0.71 %, (+12.17, RM 1694.21). And the market is currently also 3-Month low. This market condition is considered to be very bearish for stock counter KLCI. This bearish condition is despite, KLCI has strengths in the background in the last 30 bars. There are 8 SOS. KLCI is in RED HeatZone. This mean it’s trend may still be Down or LIKELY continue to go Lower. Wait for bar confirmation Line Change (LC) for trend reversal @ 1719.73 or higher for KLCI.
As this market is possibility moving to Stage 2: Mark-Up with decreased volume in previous bars before 2018-11-16. Watch for more sign of strengths bar with increased volume as uptrend confirmation @ 1719.73 or higher.
SGX Market Update
Straits Times Index
On 2018-11-16, STI is trading at 3083.6 and change % from last bar was 0.95 %, (+29.07, RM 3054.53). And also 3-Month low. This market condition is considered to be slight bullish for stock counter STI. STI has weaknesses in the background in the last 30 bars. There are 4 SOW. SGX STI HeatZone just turn GREEN Bullish (from RED). STI is in GREEN HeatZone. This mean it’s trend may still be UP or LIKELY continue to go Higher. Wait for bar confirmation like Line Change (LC) for trend continues @ 3089.82 or higher.
NYSE Market Update
Dow Jones Industrial Average (DJIA)
On 2018-11-16, DJIA is trading at 25,413.2 and change % from last bar was 0.48 %, (+123.9, 25,289.3). And also 3-Month low. This market condition is considered to be bearish for stock counter DJIA. DJIA has weaknesses in the background in the last 30 bars. There are 5 SOW. DJIA is in GREEN HeatZone. This mean it’s trend may still be UP or LIKELY continue to go Higher. Wait for bar confirmation like Line Change (LC) for trend continues @ 26,161.5 or higher. This market is moving sideway prior before 2018-11-16. Watch for more sign of strengths bar with increased volume as uptrend confirmation @ 26,161.5 or higher.
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