As I have mentioned before, common sense and logical thinking are important to study the psychology of market participants in a stock. I am sharing my common sense and logical thoughts on what I think the smart money would want to work. Let's imagine I am a leader of a professional team in the stock syndicate, and I have knowledge on technical and fundamental analysis, and I know psychology of the 95% crowd and ordinary investors and traders. The following process would be what I would want to follow to make big money from a stock:
My Action Plan as a Fictitious Market Maker
1. I would choose a stock that is small cap or mid caps with low price that will attract ordinary small investors or traders, but would not the of interest to foreign funds or big institutional funds. I have to do some studies on the fundamentals on the industry and growth prospect, and I will ensure that my risk of accumulating the stock will not be high with reasonable fundamental, so that even if the results do not turn into my expectation, I will not be losing much. Low price also helps my team to accumulate more in quantity. I may need financiers like funds to make up the huge capital required for the syndicate plan.
2. I would choose a stock in a popular sector to be a target of the syndicate play.
3. I would prefer to choose companies that I may know the insiders for news, as news are the baits for the 95% crowd. At least I would like to know the earning forecast and likely deviations, and that may be a source of news to catch the attention of investors.
4. I would prefer to have a few friendly brokers to provide me information of the market participants on the stock to know who are the possible likely professionals, if any, involved in the stock. But as a professional, I would not interfere with other smart money in their syndicated stock, and I would think the same understanding of others smart money will be followed. We are all making money from different stocks and not to interfere to compete for the same stocks.
5. After choosing the target, the information connection, and getting capital prepared, my team of professionals would start to accumulate slowly the targeted stock with many accounts under many brokers. I have to be patient as the stock is not noticed by traders. I may buy and sell in small quantity, just like a retailer, but I will not want the price to go up. I am prepared with the required capital to be tied up for months to accumulate what I want to accumulate.
6. When I have found that the supply had dried up, I will mark up the buy bid to get more. I will do the buying and selling too in gradually increasing volume, but the buying will be more than selling to accumulate. I am accumulating to absorb selling from waiting weak holders who have locked in a narrow price range for a long time.
7. I will test the supply again and accumulate again, and I would be able to see supply and demand since I am on both the ask and bid queue in the trade. I would want to make the chart looks good to catch the attention of inexperienced technical traders.
8. I will collaborate with insiders and/or my brokers who could also syndicate team members, as brokers will be the beneficiaries of my play by getting lots of commission out of the syndicated play. Their analysts will prepare to write rosy report on the company's earnings and any good news that the company wishes to release to catch the attention of the 95% crowd.
9. Then I will intensity the market action with aggressive volume of buying and selling, pushing up the price a bit more on the way to absorb selling by weak holders who bought and hold for a long time, waiting to sell, I will be still accumulating at this stage with buying more than the selling to churn up the volume, thus the volume will be seen to be increasing more rapidly, but I will be the net buyer of the day, accumulating stocks from the weak holders. .
10. I will continue such distribution activities or buying and selling and distribution of my holdings every day, maintaining the high volume, and marking up the price. But I would also create pullbacks to avoid the price from moving up too fast and too high, because I still want to collect more from weak holders, as well as releasing some to new comers.
11. When I have collected enough, I would ask the brokers to release their rosy research reports to catch retailers attention
12. With the release of the good reports, I will continue to mark up the price sharply with active buying and selling, but I will sell more quantities than my buy volume to feed new investors, and I will be distribution my shares during the active trading session.
13. I will continue this distribution activities trading with progressively higher prices, especially at the times of overall bullish market and good news creating an crowd euphoria whereby the crowd do not want to miss the boat. I am making in the buying and selling, as well as pushing up the price to distribute my shares for more gains from the huge inventory to meet the demand of the crowd.
14. When the right time and price that I decide that it is time to let go, I will have a huge sell down at the peak with heavy demand from the crowd with a big price and volume spike. But I still have quite a lot of remaining shares
15. I will not be buying anymore, but continue the sell down, attracting those who are averaging down and those who think that the stock is cheap. Without my buying activities, the price slowly declines with decreasing volume, as I slowly or quickly dispose the rest of my shares with the mark down prices. But those marked down prices were still above the price that I accumulated giving me handsome gains.
16. When I have sold all of my stocks, I gain a lot from this play, and will look for another target to repeat my adventure, letting those innocent investors and ignorant traders holding their shares with hope that one day the price will go up to the level of the peak. I have not breached any law or regulations getting my gains.
17. I will move on to the next target to bait the 95% crowd who likely will not learn a lesson, and the cycle repeats. As long as investors in the crowd does not learn a lesson, and as long as there are ignorant traders in the market, I will continue to thrive as a syndicate player.
My additional comment:
I do not lose anything by sharing what I think, and I may be wrong in my imagination of the scenario which is likely happening in KLSE. But this is the trading psychology that I will be using to invest in my own stocks to detect what the smart money are doing - by looking into their minds and psychology of the crowd. Readers do not need to believe me, and I would not be able upset the plans of the market makers by what I write, because I am merely their follower, and I may be wrong. There are not many people reading this post, and some who read this may not understand what I am talking about, and some of those who understand may not believe me, and some of those who believe me may not read the chart well enough to catch the activities of the market makers. So these exciting market activities by market participants will stay on and on, with the 95% being the prey of the market makers, while I will follow their tails to make a bit of money.
Sun Tzu says:
"All warfare is based on deception"
My Action Plan as a Fictitious Market Maker
1. I would choose a stock that is small cap or mid caps with low price that will attract ordinary small investors or traders, but would not the of interest to foreign funds or big institutional funds. I have to do some studies on the fundamentals on the industry and growth prospect, and I will ensure that my risk of accumulating the stock will not be high with reasonable fundamental, so that even if the results do not turn into my expectation, I will not be losing much. Low price also helps my team to accumulate more in quantity. I may need financiers like funds to make up the huge capital required for the syndicate plan.
2. I would choose a stock in a popular sector to be a target of the syndicate play.
3. I would prefer to choose companies that I may know the insiders for news, as news are the baits for the 95% crowd. At least I would like to know the earning forecast and likely deviations, and that may be a source of news to catch the attention of investors.
4. I would prefer to have a few friendly brokers to provide me information of the market participants on the stock to know who are the possible likely professionals, if any, involved in the stock. But as a professional, I would not interfere with other smart money in their syndicated stock, and I would think the same understanding of others smart money will be followed. We are all making money from different stocks and not to interfere to compete for the same stocks.
5. After choosing the target, the information connection, and getting capital prepared, my team of professionals would start to accumulate slowly the targeted stock with many accounts under many brokers. I have to be patient as the stock is not noticed by traders. I may buy and sell in small quantity, just like a retailer, but I will not want the price to go up. I am prepared with the required capital to be tied up for months to accumulate what I want to accumulate.
6. When I have found that the supply had dried up, I will mark up the buy bid to get more. I will do the buying and selling too in gradually increasing volume, but the buying will be more than selling to accumulate. I am accumulating to absorb selling from waiting weak holders who have locked in a narrow price range for a long time.
7. I will test the supply again and accumulate again, and I would be able to see supply and demand since I am on both the ask and bid queue in the trade. I would want to make the chart looks good to catch the attention of inexperienced technical traders.
8. I will collaborate with insiders and/or my brokers who could also syndicate team members, as brokers will be the beneficiaries of my play by getting lots of commission out of the syndicated play. Their analysts will prepare to write rosy report on the company's earnings and any good news that the company wishes to release to catch the attention of the 95% crowd.
9. Then I will intensity the market action with aggressive volume of buying and selling, pushing up the price a bit more on the way to absorb selling by weak holders who bought and hold for a long time, waiting to sell, I will be still accumulating at this stage with buying more than the selling to churn up the volume, thus the volume will be seen to be increasing more rapidly, but I will be the net buyer of the day, accumulating stocks from the weak holders. .
10. I will continue such distribution activities or buying and selling and distribution of my holdings every day, maintaining the high volume, and marking up the price. But I would also create pullbacks to avoid the price from moving up too fast and too high, because I still want to collect more from weak holders, as well as releasing some to new comers.
11. When I have collected enough, I would ask the brokers to release their rosy research reports to catch retailers attention
12. With the release of the good reports, I will continue to mark up the price sharply with active buying and selling, but I will sell more quantities than my buy volume to feed new investors, and I will be distribution my shares during the active trading session.
13. I will continue this distribution activities trading with progressively higher prices, especially at the times of overall bullish market and good news creating an crowd euphoria whereby the crowd do not want to miss the boat. I am making in the buying and selling, as well as pushing up the price to distribute my shares for more gains from the huge inventory to meet the demand of the crowd.
14. When the right time and price that I decide that it is time to let go, I will have a huge sell down at the peak with heavy demand from the crowd with a big price and volume spike. But I still have quite a lot of remaining shares
15. I will not be buying anymore, but continue the sell down, attracting those who are averaging down and those who think that the stock is cheap. Without my buying activities, the price slowly declines with decreasing volume, as I slowly or quickly dispose the rest of my shares with the mark down prices. But those marked down prices were still above the price that I accumulated giving me handsome gains.
16. When I have sold all of my stocks, I gain a lot from this play, and will look for another target to repeat my adventure, letting those innocent investors and ignorant traders holding their shares with hope that one day the price will go up to the level of the peak. I have not breached any law or regulations getting my gains.
17. I will move on to the next target to bait the 95% crowd who likely will not learn a lesson, and the cycle repeats. As long as investors in the crowd does not learn a lesson, and as long as there are ignorant traders in the market, I will continue to thrive as a syndicate player.
My additional comment:
I do not lose anything by sharing what I think, and I may be wrong in my imagination of the scenario which is likely happening in KLSE. But this is the trading psychology that I will be using to invest in my own stocks to detect what the smart money are doing - by looking into their minds and psychology of the crowd. Readers do not need to believe me, and I would not be able upset the plans of the market makers by what I write, because I am merely their follower, and I may be wrong. There are not many people reading this post, and some who read this may not understand what I am talking about, and some of those who understand may not believe me, and some of those who believe me may not read the chart well enough to catch the activities of the market makers. So these exciting market activities by market participants will stay on and on, with the 95% being the prey of the market makers, while I will follow their tails to make a bit of money.
Sun Tzu says:
"All warfare is based on deception"
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