Background – Turtle Trading
By the early 1980s, Richard Dennis was widely recognized in the trading world as an overwhelming success. He had turned an initial stake of less than $5,000 into more than $100 million. He and his partner, Eckhardt, had frequent discussions about their success. Dennis believed anyone could be taught to trade the futures markets, while Eckhardt countered that Dennis had a special gift that allowed him to profit from trading.
The experiment was set up by Dennis to finally settle this debate. Dennis would find a group of people to teach his rules to, and then have them trade with real money. Dennis believed so strongly in his ideas that he would actually give the traders his own money to trade. The training would last for two weeks and could be repeated over and over. He called his students “turtles” after recalling turtle farms he had visited in Singapore and deciding that he could grow traders as quickly and efficiently as farm-grown turtles.
Turtles were taught very specifically how to implement a trend-following strategy. The idea is that the “trend is your friend”, so you should buy if the latest closing price is breaking out to the upside of trading ranges and sell short downside breakouts. For example, one may consider this approach : the buy trade to be initiated on breakout on the new 40-day high, whilst the exit signal may be triggered by a close below the 20-day low.
What does the turtle say about SKPetro?
Using a price channel (20 day high, 20 day low):
As shown above, this clearly indicates that the closing price of SKPetro (as of 3 June 2016) had breached the upper band of 20-20 price channel, thus signifying a potential upward trend.
What do the other indicators say?
The other signals appear positive with:
1. 10D MA crossing above the 20D MA;
2. Breach of upper range of Bollinger Band;
3. Strong volume upon price breakout
Nevertheless, we may expect some resistance at RM1.74 and RM1.88 respectively.
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