Bonus Chapter

In this bonus chapter, I will share with you the resources I frequently use, that
might be useful to you too. It is a fine line between too little research and too much
research. Nobody can tell you how much is enough and only you know the answer.
Hence it is important for every trader to know themselves and the market to be
successful in trading.
As traders, we must be aware of the economic situation so as to have a general idea
on how the market is performing. This is so even if you are a pure chart technician.
Nevertheless, too much research will also make us confused and hence unable to
make a quick and sound decision. Then again, how much is enough?
To do honest, I do not have a specific answer to these, but it all depends on your
trading goals, personality and how much time you can or is willing to spend on
trading. No matter what, you must always obey and follow your trading rules,
coupled with good money management. Disregarding this is a sure way to fail in
trading!
Not only sharing with you the resources I frequently use, I will also share with you
a few simple yet powerful exit strategies. A good strategy requires a clear and
definite entry and exit criteria. You may enter a trade under perfect conditions, but
a poor exit can still cost you money. It is important that you have an exit strategy
planned even before entering a trade.
Believe you should understand by now that in trading,
you plan your trades and trade your plans.

Winning Exit Strategies

Always treat trading like any other businesses. Before starting a business, do you
not have an exit strategy to minimize damage in event the business did not work
out the way you want it to be?
Many traders keep searching high and low for a perfect strategy or system, hoping
to time the market correctly so as to make a perfect entry. Many fail to understand
that it is equally important to have a sound, tested and reliable exit strategy.
Just to clarify an important point: HOPE IS NOT A WINNING EXIT
STRATEGY!

As mentioned in my earlier chapters, many traders will hope and pray when price
trades against their favor. They will only cut-loss when the pain is too much to
stomach. This applies not only to losing trades, but to winning trades as well.
When in profit and signal to profit-take is given (example suppose to profit-take
when price reach previous high), most traders tend to be greedy, hoping to dig
more profits. What most likely will happen is that price makes a quick reserve,
wiping out their winnings and sometimes ending up in the red! What most traders
will do next? You are right, pray and hope the profit will come back. Once they are
lucky enough to eke out profits, greed comes into place again, hoping to win more.
This cycle will keep going over and over again and trust me that this can be very
draining in a long run.
It is very important to have an exit strategy in place even before making your trade.
There is an old saying Plan your trades. Trade your Plans.
Other than the exit strategies I introduced for swing and position trading, there are
also many winning exit strategies available and I will like to share with you some
in this section.

Important Candlestick Patterns

There are a few very reliable candlestick patterns which can aid your studies as
well as entry and exits decisions.
According to Investopedia, candlestick is explained as:
Candlesticks reflect the impact of investors' emotions on security prices and are
used by technical analysts to determine when to enter and exit trades. Candlestick
charting is based on a technique developed in Japan in the 1700s for tracking the
price of rice. There are many short-term trading strategies based upon candlestick
patterns, such as the engulfing pattern, harami, harami cross and evening star.

Bearish Engulfing

Bearish Engulfing Candlestick pattern

This is one of the candlestick patterns I would not want to miss. Bearish Engulfing
is a chart pattern that consists of a small white (bullish) candlestick with short body
and tail followed by a large red(bearish) candlestick that eclipses or "engulfs" the
smaller white (bullish) one.
Looking at the chart above, price is moving in uptrend and a bullish engulfing
pattern appears at the top of uptrend (circled in red). It is important that this pattern

appears when in an uptrend, instead of during consolidation or moving sideways.

Notice how the price moves thereafter.
You can see one more example of bearish engulfing from the chart below.

Bearish Engulfing Candlestick pattern

Bear in mind that the bearish candle should at least engulf the previous bullish
candle. Once again, this pattern is only effective when this pattern appears in an
uptrend.
When you spot a bearish engulfing pattern, it may give you a warning or signal to
exit your long positions.

Bullish Engulfing

Bullish Engulfing Candlestick pattern

Bullish gulfing pattern is very similar to its bearish counterpart, except that it
marks a possible trend reversal from bearish to bullish. Bullish engulfing consists
of a small red(bearish) candlestick with short body and tail followed by a large
white (bullish) candlestick that eclipses or "engulfs" the smaller red (bearish) one.
When you spot a bullish engulfing pattern, it may be a warning or signal for you to
close or cover your short positions.
For this pattern to be more reliable, it has to appear in a downtrend. I will not even
consider if this pattern appears in a midst of consolidation, like what you see in the
chart below.

Price in consolidation

Evening Star

Evening Star Candlestick pattern

Evening star pattern is a powerful and reliable pattern to lookout for. It is a bearish
candlestick pattern consisting of three candles that demonstrates the following
Characteristics:
1. The first bar is a large white candlestick located within an uptrend.
2. The middle bar is a small-bodied candle (red or white) or doji that closes above
the first white bar.
3. The last bar is a red candle that opens below or at the close of middle candle and
closes below the low of middle candle.
You can see more examples of Evening star pattern in the chart below.

Evening Star Candlestick pattern

Evening Star Candlestick pattern

When you spot an Evening star pattern, it may be a warning or signal for you to
exit your long positions.

Morning Star
Morning star is the opposite of evening star. It is a bullish candlestick pattern that
consists of three candles that have demonstrated the following characteristics:
1. The first bar is a large red candlestick located within a defined downtrend.
2. The second bar is a small-bodied candle (either red or white) or doji that closes
below the first red bar.
3. The last bar is a large white candle that opens above or at the close of middle
candle and closes above the high of middle candle.
You can see some examples of Morning star from the following charts.

Morning Star Candlestick pattern

When you spot a morning star pattern, it may be a warning or signal for you to exit
or cover your short positions.
Morning and Evening star patterns are hard to come by, hence do take action once
you spot it. Just like bullish and bearish engulfing, evening and morning star
patterns do not work when price is in consolidation. The preceding trend for
evening star has to be up and morning star has to be down, in order for the pattern
to be reliable.

Count Back Line Exit Strategy

Another exit strategy popularly used is the Count Back Line (CBL) strategy. The
CBL is widely used as a trend following tool, designed to identify a trend reversal.

It is believed that if the price closes below the 2 previous candles low, the strength
is weak (whether bullish or bearish). This could signal a trend reversal and it is a
good time to exit your trades.
The charts below illustrate how CBL is applied for bullish trades.

Count Backline exit strategy

1)

Identify the new high (including the candle shadow) as price progresses in
the uptrend candle #1

2)

Look for 2 previous candle low candle #2 is 1st previous candle low and
candle #3 is the 2nd previous candle low

3)

The stop-loss will be at the low of the 2nd candles low black horizontal
line

4)

Exit when price close on or below the stop-loss candle #4

The opposite applies for bearish trades, with examples below.

Count Backline exit strategy

1)

Identify the new low (including the candle shadow) as price progresses in
the down trend candle #1

2)

Look for 2 previous candle high candle #2 is 1st previous candle high and
candle #3 is the 2nd previous candle high

3)

The stop-loss will be at the high of the 2nd candles high black horizontal
line

4)

Exit when price close on or above the stop-loss line candle #4

Conclusion
I cannot stress any further the importance of having an exit strategy, even before
entering a trade. Having an exit strategy and following the rules/trading plan
closely is the key to successful and profitable trading. You may also need a
consistent exit strategy for good money management as well as position sizing
purposes (depending on your trading strategy).
Like any other strategies, it is not always 100% accurate. Despite this fact, you
have to follow the rules 100%! Although I introduced to you 2 commonly used exit
strategies, it does not mean they are the world best with 100% accurate. There will
be times where you exited as indicated by the strategys rules and the price decided
to continue its preceding trend direction. Do not beat yourself when this happen
and felt that you could have made more money if you did not exit. This is
dangerous as you may forgo exit strategies, thinking that you may make more
money this way. Never ever harbor such thoughts! You should nevertheless beat
yourself up if you do not follow your trading rules and practice good money
management. Do not think that the market and broker is out to get you and the best
way to counter that is to do without a stop-loss. Trust me, I am in this market long
enough to know that without the stop-loss, you will be out of the market soon!
Another way to overcome this is to exit your positions gradually, taking profits
little by little while protecting your winnings (shifting your stop-loss). This method
may or may not satisfy your trading strategy, but having a stop-loss strategy or
plan is very crucial in trading. Remember this and you will be on your way to be a
successful and profitable trader.

Learning Points

Plan your trade and trade your plan

Have an exit plan, even before entering a trade

Key Resources
These are some of the resources that I frequent. I find them useful to develop
myself as a successful trader. I am sharing these resources with you now and hope
you will find them useful too!

TradersGPS.com
I am now working with TradersGPS.com to make my system available on their
platform. There are online videos and a community which you can join.

CyberQuote
Established in 1996, CyberQuote Pte Ltd (CQ) provides a holistic range of
products and services in the area of financial technology solutions and financial
training.
CQ has experience and expertise in providing various IT solutions and services to
the stock broking and insurance industry. With more than 18 years of track record
in the financial industry, CyberQuote (CQ) has built a reputable name among the
financial players as a quality training institution.
CQ believes in the importance of equipping investors and professional traders with
the right tools to grow their investments.

Website: http://www.cyberquote.com.sg/intensive-mastermind-trader-immt/

InvestingNote
InvestingNote is a social network site that allows investors to share investing ideas
with other intelligent investors around the world. You can keep track of your views
on stocks using InvestingNote and develop your own investing/trading strategies
along the way.
InvestingNote is focusing on Singapore and US stocks at the moment.

Website: http://www.investingnote.com/

Shares Investment (Singapore)

Published by Pioneers & Leaders (Publishers) since July 1995, Shares Investment
(Singapore) has grown from strength to strength, garnering admirable reviews from
the investing public and luminaries in the financial industry. Notably, Shares
Investment (Singapore) enjoys the unwavering support from prominent local stockbroking houses, amongst many others UOB-Kay Hian, Phillip Securities, Kim Eng
Securities and DBS Vickers Securities in all accounting for more than 30,000
readers.

Website: www.sharesinv.com

ShareInvestor Pte Ltd

ShareInvestor is a financial internet media & technology company that own one of
the largest investor relations networks in Asia. ShareInvestor provides market data
tools and financial applications to institutional and retail investors.

Website: www.shareinvestor.com

Bloomberg
Bloomberg is one of the leaders in global business and financial information,
enabling customers to make smarter, faster, more informed business decisions.

Website: www.bloomberg.com

Thomson Reuters
Thomson Reuters is one of the worlds leading sources of intelligent information
for businesses and professionals.

Website: www.reuters.com

MarketWatch
MarketWatch, published by Dow Jones & Co., tracks the pulse of markets for
engaged investors with more than 16 million visitors per month. The site is a
leading innovator in business news, personal finance information, real-time
commentary and investment tools and data, with dedicated journalists generating
hundreds of headlines, stories, videos and market briefs a day from 10 bureaus in
the U.S., Europe and Asia.

Website: www.marketwatch.com

I3investor
The I3investor portal provides a platform for traders and investors to discuss and
collaborate with other investors online. The I3investor community generates over
50K comments and posts each month. One key feature of this site is the Price
Target, which shares with readers the target price of a selected stock or company.

Website: www.i3investor.com

Yahoo! Finance Singapore

At Yahoo! Singapore Finance, you can get free stock quotes, business news,
portfolio management resources, a currency converter, international market data
and many other financial news.

Website: http://sg.finance.yahoo.com/

Google Finance
Get updated financial news, company portfolios with stock screeners available all
in one place. You can even customize your dashboard.

Website: www.google.com/finance

Singapore Remisiers
Unlike other financial portals, this site has a forum that will allow only remisiers to
contribute their views and opinions of any nature relating to the financial industry,
or try to answer questions about specific stocks and/or its derivatives. This, in turn
is open to the public for viewing only. As such, the niche is to create a platform
where clients and the investing public can get an insight into what the dealing
fraternity has to offer in addition to those of other business institutions like fund
management firms, stock brokerages, exchanges and banks. Under the Research
tab, you can find many useful reports and researches which can be useful for your
studies.

Website: www.remisiers.org

Securities Investors Association (Singapore) or SIAS

SIAS is the largest organized investor lobby group in Asia, with almost 70,000
retail investors as members. It is run by a Management Committee comprising of
professionals who are volunteers. It actively promotes Investor Education,
Corporate Governance and Transparency and is the watchdog for Investor rights in
Singapore. To-date, SIAS has successfully organized over 700 investor education
programmes ranging from basic investment seminars for novices to certificate
courses for investment savvy investors.

Website: www.sias.org.sg

FreeStockCharts
This is the site where the charts are free, the data is streaming in real-time and the
features beat expensive trading platforms. FreeStockCharts.com has one goal,
which is to make you a successful investor in the stock market. Be prepared for
many "ah ha" moments as you begin this exciting journey.

Website: http://www.freestockcharts.com/

The Pattern Site

Thomas N. Bulkowski created ThePatternSite.com in November 2006 and by
March 2009, the site first received over 50,000 visits in one month and as of
January 2011, it has grown to over 80,000. In 2010, the number of visits peaked at
932,172 for the year. ThePatternSite.com has more than 650 pages of investment
information, including a daily blog and software, all for free.

Website: http://thepatternsite.com/

Investopedia
Investopedia is the largest website devoted entirely to education. Investopedia was
started in June 1999 as an unbiased source to learn about investing. This is a very
useful website you need to visit.

Website: www.investopedia.com

Singapore Exchange
Singapore Exchange (SGX) is the Asian Gateway, connecting investors in search
of Asian growth to corporate issuers in search of global capital. You can also check
for latest market information and price of local stocks here.

Website: www.sgx.com/

Poems
Phillips' Online Electronic Mart System, or more commonly known as POEMS, is
the pioneer for Singapore's online share tradingestablished by Phillip Securities Pte
Ltd in 1996.

Website: http://www.poems.com.sg

Technical Analysts Society Singapore

Technical Analysts Society Singapore (TASS) is a non-profit organization which
serves as a forum for traders and investors interested in using Technical Analysis
methodologies for their trading and investment. TASS is affiliated society of IFTA,
International Federation of Technical Analysts.

Website: www.tass.org.sg

Investing.com
Founded in 2007, Investing.com is a definitive source for tools and information
relating to the financial markets such as real-time quotes and streaming charts, upto-date financial news, technical analysis, brokers directory & listings, an
economic calendar, and tools & calculators. The site provides in-depth information
on Indices & Stocks, Commodities, Currencies, Futures and Options and Rates &
Bonds.

Website: www.investing.com

Next Insight
Next Insight covers selected briefings organized by listed companies for analysts
and fund managers. It does exclusive interviews with CEOs of selected companies
andwrites key content of clients' annual reports, including the financial &
operations review, as well as produce content for publications such as CFA
Singapore's newsletter. Not only do Next Insights provides and moderates a forum
for readers to discuss stocks, they have a Target Prices tab which shares targeted
price of selected stocks for readers reference.

http://www.nextinsight.net/