"Market timing is very important in the stock market because trend is crucial. If you trade against the trend, you are in essence working upstream. Thus, in bullish markets we trade the long side more aggressively. In bear markets, we go short and trade counter trend rallies long. We don't mind staying on the sidelines and being in cash for extended periods if it makes sense."

"As for market timing methods, we use a series of technical indicators. For example..on the KLSE Composite we look at a longer time frame on the daily and weekly charts, using a setting such as 13-34-55."

A lesson from the bear market is the importance of trend analysis. Fighting the trend can be very frustrating. For his long-term view, he uses a weekly chart of the MACD with settings of 13-34-55. This can works well where there is a strong trend.

"Someone once said that trading is 60% mental. One of the things we focus in our trading is positive mental attitude. Being a trader is more than a job - it is a personal journey that will take you to the depths and boundaries of who you are. I liken it to the qualities of a successful athlete. Trading requires commitment, persistence, and practice, practice, practice."

"But more than that, it is a brief in one's self. We need to clear negative mental habits and reprogram ourselves. The use of positive affirmations helps us believe in ourselves."

We often focus too much on strategies and indicator analysis and not enough on the psychological factors of trading. You often get what you believe. If you are in a slump and believe you are going to buy at the high or sell at the low, then that's what will likely happen. Conversely, if you have a positive attitude you'll see greater success. It's OK to sit on the sidelines in a bad market. It's also OK to sit on the sidelines if you aren't emotionally ready to trade.

"Losing teaches us discipline. If all our experience in the market occurred during a long, bullish trend where it is easy to pick winners, we would begin to believe that this is an easy game to play. We would be totally unprepared to react to the inevitable correction. We would be totally unprepared to deal with a down market. We would not have the discipline to practice market timing, group analysis, and stock selection. And we would not have the discipline to exit when the market, and our rules, tell us to exit."

We have all taken our jumps over the last few years. We can benefit from this by learning from our mistakes.

"A lot of people get into scenario building. They might examine what they perceive to be fundamental data and then make evaluation judgements.. On the other side of every trade is somebody who is equally convinced that it is going in the opposite direction. Who is right? The market is. The market is going to do what it wants regardless of your convictions."

It is easy to form an opinion on the market and then run an analysis to simply support your opinion. That leads to mistakes. Your view of the market should be a result of your unbiased analysis. The market will then tell you if your analysis was right or wrong.

"Each evening I prepare for the next trading day by first looking at the market and determining if it is in an uptrend, downtrend, or is moving sideways. I look at the volume to determine if there is conviction in the movement, and trendlines to determine if the short-term movement is just beginning or nearing an end."

"These different strategies can affect the risk and return profile of the system, and should be matched to the traders' style and the amount of time they have available to monitor the market."

Applying a trading approach that fits your personality is critical. A strategy that works very well for one person may not work for another person. If you apply a strategy that doesn't fit your emotional makeup, then you'll end up leaving the strategy after its first drawdown.

"Big money is what moves stocks. These days, I go long and short and primarily focus on technical analysis and limiting drawdowns."

The importance of limiting drawdowns was revealed during this vicious bear market. In many cases, the tortoise beat the hare.

"There are a lot of people who wish they had gotten out of the stock market - or at least lightened up somewhat - before the recent collapse. Lots of things go in cycles in the market. When I started out in the early 1980's, market timing was a bg deal. By the end of the 90's you were considered a fool if you tried to time the market. By then, the question was not 'should I be in the market', but 'how do I make the most money?' Now market timing is enjoying renewed interest."

Everyone knows now what it is like to go through a crisis in the financial markets, but what makes them happens? And how do you know when the crisis is really over? For examining what's behind the drastic ups and downs in the markets, there's no better piece of literature than Manias, Panics, And Crashes: A History Of Financial Crisis by Charles Kindleberger. The book contains an analysis of financial crisis since before the South Sea Bubble in the 18th century, up to the East Asian crisis in the late 1990s. After rwading this book you'll understand that manias, panics, and crashes are not uncommon. Each major upswings and crisis has a common thread. In my opinion, Manias, Panics, and Crashes should be required reading for anyone who has any interest in the financial markets.

Charles Kindleberger died on July 7, 2003, at the age of 92. His name will always be remembered in the financial community. Although we will not know Kindleberger's thoughts on the dotcom bubble and the crash that followed it, his contributions give us an insight to its causes. Kindleberger states that markets are generally rational but that sometimes external shocks initiate a mania, which in the most recent case was innovation. The big question now: Have the excesses of the bubble been erased? There's no evidence of it so far.

For good reason, everyone is anxiously awaiting a long-term upward trend that will provide plenty of trading opportunities. This is why trends such as the one that started in March of this year had so many traders hopping on board who hoped to make up for their losses, if nothing else. When you see such a trend begin to form, you want to identify it in its early stages, jump in, and be ready to exit if it shows of reversing. One indicator you can use for this is the index of chart sentiment, and another useful indicator is the classic MACD.

It takes time to recover from a market bubble, and although we will not hear the trusted and experienced views of Kindleberger, his insights into past bubbles can give us an idea of how long the recovery period may last before a rally is here to stay.