FREQUENTLY ASKED QUESTIONS

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QUESTIONS:
1. What are the two most erratic lines on your chart?
2. What is the principle behind your analysis?
3. Where did you learn all these?
4. How does a stock market price moves within the envelopes?
5. What if the envelopes are moving in different directions?
6. Out of curiosity, what is your personal motivation in setting up this website?
7. What happens when price hits the bottom of an envelope, and that envelope also hits the bottom of the envelope and that envelope also hits the bottom of a larger envelope?
8. How often is this website updated?
9. I still have some questions, how do I get in touch with you?
10. Are you doing some sort of forecasting/prediction?
11. Which is more accuare with this method, short or long term trading?
 
 
 
ANSWERS:
1. They are the high and low of the price during the trading day. An extreme of the day doesn't necessarily happen at the close. Sometimes it can be far off for a volatile stock. With my cyclical analysis, I like to see where the extreme is as that is typically when the turning points occur.
 
2. The heart of my analysis is cyclical analysis. This is based on the fact that stock price (including natural phenomena) happens in cycle. With this comes predictability. The challenge is coming up with a suitable mathematical model to objectively calculate this. With current technology, having this mathematical model reduces your chance of error, and the calculation for years of stocks can be done in seconds in a spreadsheet!
 
3. Internet and books. However, the most important details are usually not made available or obvious, perhaps for good reasons. At least it was not obvious to me! Hence it is up to the individual to solve the mystery or missing link.
 
4. Movement of the price is mostly restricted within a cyclic envelope. When it hits the top or bottom of an envelope, it will typically bounce the other direction. The envelope itself moves as well and is also bounded by a larger envelope and so on. An analogy is like the moon circling earth. It doesn't really circle our solar system unless earth itself moves around the sun. For a stock to make a long extended move, the envelopes have to make room such that the price does not hit the envelope, otherwise, the extended move will be put to a stop. In order to create this space, the envelopes have to move in the same direction with the price. Hence when you see the envelopes pointing to a same direction, you will likely have an extended move (and the most profitable one :)
 
5. The price will usually obey its boundary, set forth by the envelope. When you have conflicting direction, the cycle with the stronger magnitude will win. A crude way of assessing the magnitude of the cycles are by comparing the slope of the envelopes. Also if you have two smaller envelopes working in unison (moving in the same direction), the larger wave may follow suit if it is in the other direction, especially if its slope is not relatively big.
 
6. My personal motivation? A few reasons. Discipline is one. By setting up this website, I am forcing myself to regularly follow the market to a degree that I have significant clarity. Secondly, I will likely be involved in some sort of consultancy or advisory role in the future, this great website is then a good place to start it all.
 
7. If this happens, get ready to buy! This is a major market bottom. The logic also applies the other way around, when the top of the envelopes are hit, get ready to sell. The best way to do this is by putting a trailing stop loss order, or adjust your stop loss order frequently to chase the price. At this juncture, it wise to take partial profit as well to ensure that your winner doesn't turn into a loser.
 
8. Initially, my plan is to update this site once a week, but it looks like once a few months is more realistic.
 
9 You can send me a query or message via my feedback page.
 
10. The forecasting is merely an extension/extrapolation of the current trend. That is not critical atlhough can be useful. What is important is assessing the strength of the current trend
 
11. The analysis is most accurate for long term trading. For a more accurate short or swing trading analysy, you will need intraday chart.