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Dear Subscriber,

High frequency trading has now entered the world of commodity and futures trading. According to my assoiate who is a market maker for CPO and CI futures, HFT is dominating these contracts. To survive as a short term trader you must be fast and smart as you are competing against super computers and programs designed by Goldman Sachs, JP Morgan and other big guns.

There is a HFT programn called the whale which can hold a financial instrument within a tight range for days or can suddenly break a market by 10 % or more in a matter of minutes. Protective stops in this environment mean nothing. Disciplined, careful and knowledgeable technical traders with high end software are no match with the whale.

To be successful as a trader, my advice is to look at a different time frame such as daily/ weekly/ monthly and choose shares which offer value and are fundamentally solid with good dividend payments. Avoid contra trading or intra day trading.

Consider investment trading which is using Volume Spread Analysis to time your buying. combined with investment grade shares.

This is what we teach in our volume spread analysis course.

Hold for the long term.

The whale visited Gold on Wednesday. Here are some comments by David McAlvany, a gold dealer from Colorado, USA:

As it turns out, it did. Gold fell some 90 dollars in total, breaking a few one-day records in the process, which the CNBC/ Bloomberg and CNN took pride in reporting. Rumor has it that some 31 tons of gold were sold on the Chicago Mercantile exchange. Shortly thereafter, debates over why gold fell and not stocks or bonds became the topic du jour on most financial talk shows. To that, we would suggest that in the absence of additional money printing AND a rotational benefit from stock/bond markets, a funding deficit was, by default, produced in the metals. That is to say, once again the Bernenk was successful in convincing the markets that the U.S. is recovering nicely without inflation – essentially praising themselves for a job well done. However, taking into account the economic issues at hand, we suspect Bernanke and CNBC will not be bragging for much longer.

We also might add that as Americans continue to find reasons to sell gold, others continue to accumulate it at their expense. ETF holdings (globally) increased by 32 tonnes (or 70.6 million ounces) in February, while on Thursday (following the 90 point drop), India saw physical gold inflows three times the normal average (and the strongest volume since September) – according to UBS sources. That said, a psychological beating has been taken in the metals which can take some time to repair. The silver lining in these recent consolidations (selling sprees) is that they serve as a “coiled spring” when future catalysts for advancement re-emerge.

Our KLSE / SGX portfolios continue to perform well. GAB, Amway, YTL Power, Sing Tel recently declared dividends. Nestle was a nice surprise announcing a RM 1.25 tax exempt payment. With QE in Japan, ECB, UK and backdoor QE in the US via the IMM , I feel confident in our investment strategy.

I am not afraid of the whale. In fact, he is my friend. Make him yours by not playing in his ocean.

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