Finding Edge For A Bet

One can never be sure of the certainty of a bet’s outcome. However, one can increase the probability of winning the bet (i.e finding the trading edge) by looking at “supporting circumstances“.

Without dwelling into detailed analysis of the industry and company factors, let’s look at a possible bet – CB Industrial Product (or CBIP). This company was covered in an earlier posting. Let’s take a long position bet on CBIP. Continue reading “Finding Edge For A Bet”

What Is Your Current View On FBMKLCI?

Comments are welcomed. There is no single right or wrong answer about your view.

My personal view (purely personal & strictly a wild guess) is that something may come up in the month of August, which is traditionally a relatively “bearish” month.

0200I.MY.png

Today is the last day of June 2017. As per the above technical chart of FBMKLCI (as of 29 June 2017), there are few interesting observations that one should be aware of:

  1. FBMKLCI is trading closer to the 50D simple moving average line. If FBMKLCI index crosses below this support line, there is high likelihood that a downward bias may appear;
  2. The index is still trading on a higher high, higher low basis. Nevertheless, a drop below the level of 1,728 points will increase probability of a downward bias;
  3. Volume has been moderating, may point towards a weakening upward trend (and potentially a reversal in the trend);
  4. MACD line has trended below that of Signal Line;
  5. RSI has fallen below 50 (lacking of positive momentum); and
  6. Multiple sell signals are appearing in Williams R indicatior.

To sum up, there is a likelihood that the uptrend may be losing momentum and whether it will reverse its trend, this will depend on the price action of the index. It is crucial for FBMKLCI to maintain above 50D MA and 1,728 points in order to sustain its upward trajectory.

DISCLAIMER: THIS IS A PERSONAL BLOG AND SHALL NOT BE RELIED IN WHATSOEVER MANNER BY ANYONE. ALL ARTICLES CONTAINED IN THIS SITE ARE STRICTLY FOR INFORMATION AND ILLUSTRATIVE PURPOSES ONLY AND DOES NOT PURPORT TO SHOW ACTUAL RESULTS. IT IS NOT, AND SHOULD NOT BE REGARDED AS INVESTMENT ADVICE OR AS A RECOMMENDATION REGARDING ANY PARTICULAR SECURITY OR COURSE OF ACTION. SOURCES USED IN THIS SITE HAVE NOT BEEN INDEPENDENTLY VERIFIED FOR ACCURACY, COMPLETENESS AND TIMELINESS. YOU SHOULD SEEK INDEPENDENT AND PROFESSIONAL INVESTMENT ADVICE IN REGARD TO YOUR INVESTMENT DECISIONS. THE AUTHOR MAY HOLD POSITIONS IN THE SECURITIES MENTIONED IN THE ARTICLES

Testing My Bollinger Band

Testing my Bollinger Band (20,2.25) in R based on the following key parameters:

  • Test security : Maybank (Malaysia)
  • Test period: 1 Jan 2011 – till 23 June 2017
  • Bollinger Band parameters: n=20 days, sd=2.25
  • Single technical indicator test (Bollinger Band [with and without transaction cost at 1.0%] vs Buy & Hold Strategy)
  • Buy signal: when closing price (Maybank) crosses above the lower band
  • Sell signal: when closing price crosses below the upper band

MBB & BB

The summary of results are shown below. It shows that the Buy & Hold strategy appears to be more superior than of the Bollinger Band crossover strategies.

Results.png

Return Graph.png

MBB appears “too choppy” to use BB as trading signal. Too much noise created.  Need further fine-tuning & testing.

DISCLAIMER: THIS IS A PERSONAL BLOG AND SHALL NOT BE RELIED IN WHATSOEVER MANNER BY ANYONE. ALL ARTICLES CONTAINED IN THIS SITE ARE STRICTLY FOR INFORMATION AND ILLUSTRATIVE PURPOSES ONLY AND DOES NOT PURPORT TO SHOW ACTUAL RESULTS. IT IS NOT, AND SHOULD NOT BE REGARDED AS INVESTMENT ADVICE OR AS A RECOMMENDATION REGARDING ANY PARTICULAR SECURITY OR COURSE OF ACTION. SOURCES USED IN THIS SITE HAVE NOT BEEN INDEPENDENTLY VERIFIED FOR ACCURACY, COMPLETENESS AND TIMELINESS. YOU SHOULD SEEK INDEPENDENT AND PROFESSIONAL INVESTMENT ADVICE IN REGARD TO YOUR INVESTMENT DECISIONS. THE AUTHOR MAY HOLD POSITIONS IN THE SECURITIES MENTIONED IN THE ARTICLES

Back Testing A Simple Trading Strategy

Was backtesting a simple trading strategy using R based on the following key parameters:

  1. Selected security : Maybank (Malaysia)
  2. Time period: 1 Jan 2011 – till 23 June 2017
  3. Single technical indicator test
  4. Test 1 – Price crossover based on 50D Simple Moving Average (buy signal: buy when closing price of Maybank crosses above SMA, and sell when prices closes below SMA)
  5. Test 2 – Price crossover based on 50D Simple Moving Average (with transaction costs at 1.0%)
  6. Test 3 – Price crossover based on 200D Simple Moving Average
  7. Test 4 – Price crossover based on 200D Simple Moving Average (with transaction costs at 1.0%)
  8. Test 5 – Buy & Hold Strategy

MBB linechart.png

Note: Blue line (50 Day SMA) and pink line (200 Day SMA)

The summary of results are shown below. It shows that the Buy & Hold strategy appears to be more superior than of the 50D and 200D SMA price crossover strategies.

results

Transaction costs exacerbated the mediocre results of the two simple trading strategies 50D and 200D SMA.

Performance Graph.png

Next experiment – need to fine-tune the trading strategy (including use of multiple technical indicators), in order to outperform the Buy & Hold strategy.

DISCLAIMER: THIS IS A PERSONAL BLOG AND SHALL NOT BE RELIED IN WHATSOEVER MANNER BY ANYONE. ALL ARTICLES CONTAINED IN THIS SITE ARE STRICTLY FOR INFORMATION AND ILLUSTRATIVE PURPOSES ONLY AND DOES NOT PURPORT TO SHOW ACTUAL RESULTS. IT IS NOT, AND SHOULD NOT BE REGARDED AS INVESTMENT ADVICE OR AS A RECOMMENDATION REGARDING ANY PARTICULAR SECURITY OR COURSE OF ACTION. SOURCES USED IN THIS SITE HAVE NOT BEEN INDEPENDENTLY VERIFIED FOR ACCURACY, COMPLETENESS AND TIMELINESS. YOU SHOULD SEEK INDEPENDENT AND PROFESSIONAL INVESTMENT ADVICE IN REGARD TO YOUR INVESTMENT DECISIONS. THE AUTHOR MAY HOLD POSITIONS IN THE SECURITIES MENTIONED IN THE ARTICLES

A Simple R Script

Rplot.png

#Ken Utau Technical Analysis Script 2017
#https://myinvestjourney.com/
#initialising library files
library(quantmod)
library(ggplot2)
library(TTR)
library(PerformanceAnalytics)
# Get data
getSymbols(“KLSE%3AMAYBANK”,src=”google”)
# Delimit data range
mbb <-window(`KLSE%3AMAYBANK`[‘2011-01-01::2017-06-30’])
barChart(mbb)
# Bollinger Band
addBBands(n=20,sd=2.25)
# Moving Averages Covergence/Divergence MACD(3,10,16)
addMACD(3,10,16)
#RSI 
addRSI(n=14)

DISCLAIMER: THIS IS A PERSONAL BLOG AND SHALL NOT BE RELIED IN WHATSOEVER MANNER BY ANYONE. ALL ARTICLES CONTAINED IN THIS SITE ARE STRICTLY FOR INFORMATION AND ILLUSTRATIVE PURPOSES ONLY AND DOES NOT PURPORT TO SHOW ACTUAL RESULTS. IT IS NOT, AND SHOULD NOT BE REGARDED AS INVESTMENT ADVICE OR AS A RECOMMENDATION REGARDING ANY PARTICULAR SECURITY OR COURSE OF ACTION. SOURCES USED IN THIS SITE HAVE NOT BEEN INDEPENDENTLY VERIFIED FOR ACCURACY, COMPLETENESS AND TIMELINESS. YOU SHOULD SEEK INDEPENDENT AND PROFESSIONAL INVESTMENT ADVICE IN REGARD TO YOUR INVESTMENT DECISIONS. THE AUTHOR MAY HOLD POSITIONS IN THE SECURITIES MENTIONED IN THE ARTICLES

In Need Of A Sanity Check

UEM Edgenta has fallen to its low again today on 22 June 2017:

Edgenta TA.png

Fundamentally, does this make sense?

Based on historical EPS of Edgenta and earnings capitalisation method (shown below), I personally don’t see how Edgenta can go so low in terms of share price. But may be my assumptions are wrong or could there be some new developments that the market is totally not aware. Only time will tell….

Making Sense of Edgenta.png

DISCLAIMER: THIS IS A PERSONAL BLOG AND SHALL NOT BE RELIED IN WHATSOEVER MANNER BY ANYONE. ALL ARTICLES CONTAINED IN THIS SITE ARE STRICTLY FOR INFORMATION AND ILLUSTRATIVE PURPOSES ONLY AND DOES NOT PURPORT TO SHOW ACTUAL RESULTS. IT IS NOT, AND SHOULD NOT BE REGARDED AS INVESTMENT ADVICE OR AS A RECOMMENDATION REGARDING ANY PARTICULAR SECURITY OR COURSE OF ACTION. SOURCES USED IN THIS SITE HAVE NOT BEEN INDEPENDENTLY VERIFIED FOR ACCURACY, COMPLETENESS AND TIMELINESS. YOU SHOULD SEEK INDEPENDENT AND PROFESSIONAL INVESTMENT ADVICE IN REGARD TO YOUR INVESTMENT DECISIONS. THE AUTHOR MAY HOLD POSITIONS IN THE SECURITIES MENTIONED IN THE ARTICLES

Waiting For Brent To Tank

Latest news: Oil is trading in bear market territory, with prices falling to their lowest level this year as rising supplies threaten to derail an effort by some of the world’s biggest producers to bring an end to a three-year glut. Renewed concerns about growing production from within the Opec cartel and a reinvigorated US shale industry took global crude benchmarks on Tuesday to the lowest level since mid-November with Brent crude sinking to $46 a barrel. Prices at one point during the session were down more than 20 per cent from levels at the start of 2017. A decline of more than 20 per cent from the most recent high is typically considered a bear market. Crude has now erased all its gains since late last year, when Opec and other producer countries, including Russia, agreed to cut output by 1.8m barrels a day for the first six months of 2017. A decision in May to extend the original six-month deal for a further nine months has not helped lift sentiment as a growing chorus of traders and analysts question the effectiveness of the supply curbs.

Price of Brent crude on Tuesday

Brent crude, the international benchmark, fell 89 cents, or almost 2 per cent, to settle at $46.02 a barrel, the weakest level since November 15. West Texas Intermediate, the US marker, dropped by 97 cents to a nine-month low of $43.23 a barrel, down by more than 20 per cent from a February peak.

Brent Graph.png

Two questions – (1) where is the bottom for brent? (2) what would you do when Brent tanks to the bottom? Continue reading “Waiting For Brent To Tank”