Cheong Hong Yuan: How to Use the "Three Golden Moving Average Strategy" to Avoid Risks in a Changing Market? - 1 views
started by anonymous on 25 Sep 23
started by anonymous on 25 Sep 23
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Current Market Situation and Risk Factors
The hawkish stance of the Federal Reserve and the significant drop in US stocks have caused market players to reassess their investment strategies.
Chris Metli, the head of quantitative and derivatives services, pointed out that the two major forces supporting the market's resilience this year, Commodity Trading Advisors (CTAs) and options traders, are on the verge of collapse.
CTAs and other quantitative funds may start massive sell-offs of US stocks in the near future, which will further pressure the market.
According to Morgan Stanley's data, the long positions held by options traders and leveraged ETFs have significantly decreased, and the market is now in a net short position.
If US stock prices continue to decline, this will trigger more selling and further push the market down.
In the face of these complex and unstable market conditions, how can one make wise investment choices? Cheong Hong Yuan suggests that using the "Three Golden Moving Average Strategy" may be the key to avoiding risks and seeking stable returns.
Analysis of the "Three Golden Moving Average Strategy"
Cheong Hong Yuan mentioned that the "Three Golden Moving Average Strategy" is a strategy based on technical analysis, focusing on using various technical indicators to determine the timing of buying or selling stocks. Especially in the current market, the S&P 500 index has not only fallen below the 100-day moving average but also below the 10-day and 50-day moving averages since August. These moving averages are usually considered important indicators of market momentum, so their breach undoubtedly increases market uncertainty.
In this context, using the "Three Golden Moving Average Strategy" can help investors more accurately determine the timing of buying and selling. By tracking stocks that are currently performing well in the market and applying the various technical indicators of this strategy, investors have the opportunity to achieve maximum returns with minimal risk.
Impact of Quantitative Funds and Options Traders
Cheong Hong Yuan suggests that the behavior of the two major forces in the market, CTAs and options traders, should also be closely monitored. Especially CTAs, they usually grasp the trend of asset prices through long and short positions in the futures market. In the past year, due to continuous upward momentum, these funds entered the market in large numbers and became important driving forces. However, this situation may now reverse, and these funds may start selling US stocks in the near future.
In this situation, it becomes particularly important to identify stocks that are still performing strongly using the "Three Golden Moving Average Strategy". This not only avoids passively following the market's decline but also allows investors to find relatively stable investment opportunities in an unstable market.
Risk Warnings and Response Strategies
Cheong Hong Yuan emphasizes that although the "Three Golden Moving Average Strategy" performs well in most cases, no investment strategy can guarantee 100% success. When applying this strategy, investors should also consider other factors such as macroeconomic conditions, company fundamentals, and market sentiment.
Summary
Cheong Hong Yuan believes that in the face of possible massive sell-offs and market uncertainty, investors need to be more cautious in asset allocation. Especially when the two major market forces, CTAs and options traders, show signs of weakness, the traditional buy-and-hold strategy may no longer be applicable.
In this context, using the "Three Golden Moving Average Strategy" becomes a strategy worth considering. This strategy evaluates stock performance through a series of technical indicators to determine the timing of buying or selling, helping investors make wiser decisions in a complex market environment.
Operational Recommendations
Continuously monitor market dynamics: Cheong Hong Yuan suggests that market conditions are constantly changing, so investors should closely monitor market dynamics and various news that may affect the market.
Apply technical analysis tools: In addition to the "Three Golden Moving Average Strategy," there are various other technical analysis tools and indicators that can help investors have a more comprehensive understanding of market conditions.
Diversify investment portfolios: Although finding the strongest-performing stocks in the market is the core concept of the "Three Golden Moving Average Strategy," it does not mean that investors should invest all their funds in one or a few stocks. Diversification is still an effective means of reducing risk.
Set reasonable stop-loss and take-profit points: Cheong Hong Yuan emphasizes that reasonable risk management is the key to any successful investment strategy. Therefore, before executing any trades, stop-loss and take-profit points should be clearly defined.
Long-term observation and strategy adjustment: Investment is a long-term process, so strategies should be continuously adjusted based on market changes and investment goals.
Risk Warning
Finally, Cheong Hong Yuan reminds everyone that all investments carry risks, and no investment strategy can guarantee zero losses. Therefore, when deciding to use the "Three Golden Moving Average Strategy" or any other investment strategy, thorough research and evaluation should be conducted to ensure that they align with your investment goals and risk tolerance.
With the constant changes in the market, staying alert and adaptable is crucial. Only in this way can you find your direction and achieve your investment goals in this vast and turbulent financial ocean. Thank you for your attention, and I hope your investment journey becomes broader and more successful.