Introduction

BAT price has fallen the past 3 weeks, and as a result, the i3forum is starting to gather traders looking to go long again.

From the comments, a few traders have started to go long, but to me, is a bit too early especially those who bought above RM8.

Two questions for reflection

If you are thinking to do the same, I have two key questions for you.

1. Is it wise to go long on a downtrend?  [Short answer:  No - more often than not, it's a terrible idea]
   
2. If you are a professional, is there a high odds strategy to win from the long side in a downtrend?  [Short answer:  Only if you are "accurate" enough in (1) entries AND (2) exits AND (3) have accurate position sizing AND (4) have the right trading psychological profile / "mindset".  Miss one of these 4 things and more likely than not, you will not make money long term.]

New Traders and Non Traders should avoid BAT

In general, new traders and investors are strongly discouraged from buying BAT - the long term downtrend is unmistakeable and there is a strong fundamental reason for this.  

Non-traders (those who cannot monitor markets, those who cannot sell or don't know when to sell) are strongly discouraged from buying BAT.

Nevertheless, in Bursa, there are always these "professionals" who likes to "time" their trades.  Buy when it's deeply oversold and then hope for reversion to sell at a profit.

The next question is how should a seasoned trader approach this?

Here's my spoon-feed to you, based on a simple strategy based on "back-testing".

From experience it is do-able but only for the very good traders who posseses these 4 criteria highlighted above. 

Here's the chart and the strategy that I am looking at:

So what does the chart says?

1. BAT has been falling the past 3 weeks, but the Weekly RSI indicator says NOT YET!
   
2. The strategy is quite simple - Go long only when the Weekly RSI is oversold - this means below 30 reading on weekly candles.
3. Past backtest showed 5 opportunities to go long.  In all 5 cases, it was a win.  But not all wins are easy to realize:
   1. #1 is quite easy to win if bought in the shaded boxes shown.
   2. #2 requires averaging down at lower prices and will result in a big position and later on big wins.
   3. #3 is hard to trade - must let go early and that's kind of hard to do because #2 if let go too early will cause regret.
   4. #4 is kinda hard to trade but after a few weeks must let go if didn't let go.  Scratch the trade if need be.
   5. #5 repeats #1.
4. The million dollar question now is will #6 repeats #2?
   1. If you are a disciplined trader - there is good odds that you will miss the trade and earn nothing.
   2. If the trading signal did not come and you missed the trade, the right mindset is to say "GREAT!  I followed my system.  Well done!"
      

Summary and Conclusion

1. In general, it is a terrible idea for investors to go long on a stock like BAT where its fundamentals continue to deteriorate.  Investors will do better buying an uptrending stock like banks in the past year.   MAYBANK, PBBANK, RHBBANK, BIMB, AMBANK and so many other banks have done wonderfully well!  All these bank stocks made recent highs that increases your portfolio nicely!
2. However, from time to time, Mr Market over-extend himself.  
3. One of these moments appear to be when Weekly RSI is below 30, at least since 2022.  (No trading strategy lasts forever.  Because of my action to share this with you, odds are high that going forward, this strategy will NOT work - this is the golden rule in trading.).
4. This means having the mindset of following your discipline.
5. This means do not take the trade if the condition did not eventuate.  Even if it results in missing the trade.
6. I will not help anyone who runs into trouble if taking this trade - you are solely responsible for your own trading and investing decisions.
7. The purpose of publishing this idea is to help struggling traders who has lost monies in BAT, who are thinking of going long, due to the recent activities in i3 forum on BAT.  The best thing when losing monies in BAT is to forget BAT and focus on other better stock ideas.
8. The key is patience and wait patiently for the "right conditions" - make sure Mr Market is over-extended, before taking the trade.
   1. If there is no entry signal, there is NOTHING to do.
9. And if you were to win this trade - do NOT thank me - it's your profit to keep.  This also means if you were to lose this trade - do NOT blame me - it is your loss to make up for it.
10. However, it is my thesis that says that if you can do all 4 things below, then odds are better than 50/50 that you will come out ahead.  It's a hard way to come out ahead, but do-able.  How?
    1. Trade small with correct position sizing (to allow you to average down like during #2 and to allow you to sleep well at night to follow your strategy) and 
    2. Time your entries perfectly (here when Weekly RSI < 30) and
    3. Time your exits well (here not allowing profits to turn into a big loss - a small loss or a scratch is okay) and
    4. Possess the right trading mindset.  What are some of these mindsets?  
       1. Market decides how much I win, not me.  (this means after doing the 3 things above)
       2. Market decides when I exit, even if it's at a small loss / scratch.
       3. If the entryt signal doesn't come and I miss a winning trade, I did GREAT because I followed my trading discipline.
       4. etc.  (after you've traded successfully over 1000 trades, you'll know what these rules are).
          

Hopefully, this chart and this article open your eyes to professional and disciplined trading.  Easy to read, very hard to do consistently over the next 1,000 trades.

Good luck!

Disclaimer:  I cannot emphasize more strongly that beginners should NOT attempt this trade.  As usual, you are solely responsible for your own trading and investing decisions.