| But don't tell that to Fred Tam, fund manager and major shareholder of
P.I. Capital Asset Management and principal of the trading support firm
P.I.Capital Research Services, both located in Kuala Lumpur, Malaysia.
"I analyze some 1,000 [securities] a night, and if I do it on
three time frames, it amounts to 3,000 charts a night, "Tam says.
" I do it without fail, every night."
Tam didn't enter the industry with the
same focus, though. Trained as an accountant in the United Kingdom, Tam
returned to Malaysia and found work-crunching numbers for a trading firm
in 1979. On his off time, Tam
tackled Japanese candlestick charting techniques on Japanese markets, such
as red beans and maebashi dried cocoons.
Without a solid reference, Tam terms his early efforts
"incomplete." Then he bought a book that demonstrated a four-,
nine - and 18-day moving average crossover strategy.
But the parameters were too tight for the volatile markets Tam was
following. "In
short, I did not know the importance of pre-testing an indicator's
effectiveness before [using] it for trading," he says.
Then Tam discovered Welles Wilder's book New Concepts in Technical
Trading systems. Empowered by
a range of new analysis tools, Tam set off to develop a winning system.
Balking at the prices of computers and software in those days, Tam
settled for using a hand-held calculator to compute indicator values,
which he plotted on hand-drawn charts.
After trying a few other analysis programs in the late-1980's and
early 1990's Tam came across Supercharts in 1993 at an industry conference
in Anaheim, Calif., and was hooked by its charting and custom indicator
capabilities.
Tam sticks with a chosen few
indicators, primarily moving averages, momentum, the relative strength
index, stochastics and moving average convergence - divergence.
He analyzes every stock or futures contract on three levels: daily,
weekly and monthly. When one
or more indicators show confluence across all time frames, Tam will look
to trade in the direction of the long-term trend.
He uses short-term tools for timing. "I
also make use of classic chart pattern[s]....,
looking for significant
patterns like ascending triangles, symmetrical triangles, inverted head
and shoulders, saucers, support and resistance, volume, etc.," he
says.
Relying on such a broad suite of
indicators and requiring stringent agreement across so many time frames
allows quality, not quantity, to drive Tam's trading.
One trade that reflects this concept is a particularly successful
one that Tam executed in U.S. soyabeans at the height of the Mississippi
floods in 1992. "
The method I used was a simple triple screening of the stochastics
indicator... and the chart pattern of the moment of entry was a potential
ascending triangle breakout, " Tam says.
"In the next two days, the market went limit-up twice and I
[got] out with a $920,000 profit [on 500 contracts].
This goes to show that we do not have to trade everyday.
Look out for a good trade, get in fast and get out fast."
His
use of computers allows Tam to rely on such trades, which don't appear
often in individual markets. Without
the ability to scan so many markets quickly, Tam would have to adopt a
more frequent trading strategy. But
with the nature of the Malaysian markets -- since launching his fund, he
has stopped the overnight trading of U.S. markets --Tam is confident he
could pull it off. "Malaysian markets are highly technical," he says.
"A technical trader would like to trade the Malaysian markets.
They exhibit trends that every technician would love to ride along
with." |
