Share Forum - Discuss JSE shares and join the Investor Challenge

Of course there is sentiment and momentum. Almost all markets have their own, driven by news stories on the one hand and given by MACD on the other. MACD by its nature periodically gives you positive and negative momentum, and the peaks and troughs are good indicators of the extent. Current sentiment around crypto is mostly bearish as regulators refuse to entertain crypto ETF's. What's really interesting is how much less convincing each crypto rally is nowadays. This has been a fascinating study of mass global Homo Sapiens greed in what has been the biggest speculative bubble to date. And yet something useful will still likely come out of it in terms of a few killer Blockchain apps, that will probably become household names in a few years time.

ZAR getting pummelled in overnight trade. At one point blew out to 15.50 but currently back around 14.50. Seems to be mostly emerging market contagion from Turkey. Man Financial saying risk of major sell-off escalating and only safe play is short end of treasury curve. Same strategy as Buffett lately. Take the 2% yield and preserve cash to buy in after the fall.

With today's uncertain financial markets we have no balls. Not even crystal balls to predict longer term movements. We have Nix. Nada. Fokol to go by. Look at the ALSI chart. So short term CFD's to the extent of scalping will or may be the way to go. For a part of one's portfolio. I am concerned at the tax implications though. Almost half would go to tax where investing will be about 13%.

Even with scalping you're trading against algos and bots who react in nanoseconds. Market patterns have changed noticeably over the last two years with the prevalence of long and short bots now. There's still the underyling upward surge of all the passive money simply being blindly thrown into the market every month but fairly soon people are going to start realising that it's not a one-way street anymore. The great unwind of passive money exiting all those tracker funds is going to be amazing to see. Not sure when it will happen (1 month, 1 year or 5 years) but when the momentum catches on it's going to be epic.

The bitcoin profile is in profit for the first time this year...

People love chasing it higher but it's getting a little top heavy now I reckon. This is a fascinating market to watch the ups and down of. Homo Sapiens pure unadulterated FEAR and GREED at its core. It's what we are as a species unfortunately.

Nice discount on my full tank of fuel!

Bit of a long way to go though, just to get cheap fuel. You chasing snow?

I prefer using Macci-D's vs. EMA's simply because it packs more info but is based on the same underlying assumptions. In my MACD below the red signal line is a medium-term momentum indicator and should be paid close attention to i.e. whether it's above or below the zero indicates the prevailing strength of the market. The blue line is a short term timing indicator.

So, I also would have looked to go short around 9:10 (my times below are UK times so 1 hour behind), with the blue timing indicator crossing down over the red momentum line. However, the red momentum line was still in positive territory so this indicates cross-current, choppy, sideways action.... better to sit on the sidelines. Around an hour later we get a nice cross upwards (blue line crossing up over red) and red is just inside positive territory still... would have gone long then. Another hour later we get a blue line crossing down over red, indicating more cross-current price action.... depending on your stop loss and take profit levels at that point, would have probably stuck with the long and rode out the bumpiness. Shortly afterwards we get another cross upwards to go concurrent to the upside... would have added to my long position etc.

Clearly it's easy to comment after the fact when you can see the resulting price action. However, I've found this combination of momentum and timing lines to be invaluable over the years. The key is to see how the red line is doing - positive or negative, and to not trade against that. Combine that with some basic resistance levels, bollinger bands to gauge market stretchiness / volatility, some basic and obvious trading mentality patterns such as bull and bear flags, and 50% retracements, and that's pretty much all I use these days.

Whatever edge you keep using, the key is that you stick to it and work on your discipline. Over the years I've found that is what will either make or break you as a trader.  And not caring about what happens once you've traded, stopped out or taken a profit. Amazing things happen when you just trust, set your stops and go walk the dog. 

My only thought on this is that it's damn close to scalping, considering your timeperiods. In my view that's best done by an algo / bot that watches the market every second. That's not a life, for a human at least, because at some point you need to eat, sleep etc. Also, you mention a stop loss but you are going to be in and out of trades very quickly based on your time periods. Can you get through the spread and take enough profit on your winning trades (50%), to beat out your losing trades (50%) with your stop loss? Do you adjust your stops and take profit levels with changing vol levels? If you say that you can do better than 50% wins over time then I lose interest right away because that's simply not possible, unless you're trading positive gamma which you need to pay a premium for. I will not trade on less than a monthly, weekly and daily chart all throwing the same signal, although I use a 30min and 5min chart to get my timing right.