Tuesday, December 09, 2008

Burning questions answered

Today i shall share answers to the burning questions on my recent trades because i have at least 3 friends who asked the same questions. So I thought i might as well share why i did what i done.

Capitaland: Firstly i must admit my entry price was a big big mistake. If you look at the chart, i was buying in the middle of resistance and support. From general market movement, the possibility of breaking to the downside wasn't great, hence my view was Capitaland's support should hold. Hence i hold onto Capitaland and went short Ascendas reits, SIA engrg and Amazon Inc. Today Capitaland went up and was within 5 cents to my entry at 2.74 but SIA engrg and Amazon stop loss were triggered. Only Ascendas reits went lower near closing. With 30 mins to closing, I close my capitaland position for a loss and keep my ascendas short. Question number 1, why did I square off my long position despite the possibility of the market may head higher? The primary reason being, I didn't get Capitaland at a good price, look at my entry, it sucks big time and look like an amateur trade. So why did i buy in the first place? LAZINESS! I casually looked at the market and "think" it may head higher. That's why you see why am i suddenly so active in blogging and trading. I forgotten a simple fact, to make money, efforts must be there. How to retire young if I trade on laziness??? Secondly, Dow has been up for many days and trading near resistance. Probability of a retrace is higher than a rally. Hence if Dow pulls back, high chance Capitaland may open lower with the possibility of closing higher. This will give me a better chance to buy lower. Infact i am waiting for intra week weakness in an uptrend. on the indices. That to me is the safest time to buy into stocks. Avoid stocks trading too near to resistance. Hence market gives me a chance to run at small loss, i gladly take it.... because....read on....

My ascendas reits short is sitting on a 17 cts profit. If Dow goes down tonight, tomorrow it will open lower and trade lower. Judging from the volume today... MASSIVE selling. It is a bad sign for more downside to come. Then it became simpler. Because with such a massive selling, it should continue tomorrow, if it recovers tomorrow, i will anticipate a bear flag/pennant, if it does, it offers an excellent opportunitiy to add on to the shorts. Otherwise, i'm content to see it heads lower. With capland's long squared off, this is where my profit will run.

My stop loss for SIA Engrg and Amazon inc was triggered. No regrets as this is good loss. Both counters went significantly higher after my loss was triggered. Even as of now, with Dow and Nasdaq trading significantly lower, Amazon is still above my selling price. SIA Engrg is worth to follow because it's at this resistance level that i cannot resist. Furthermore, fundamentally... what's there to rally about?

So nett nett did i make money? As of now, YES! small though... i am not complaining because i could have lost more on the silly capland trade which i shouldn't have taken. Hence to have traded out of trouble and end up with a small profit, i am content. Now with only a profitable short position, i am hungry for the next trade.

I am looking for intra-week weakness to long in a bullish uptrend. For this to happen, i must see support and selling well absorbed.

No results from strategy screening. I heard some graduates have been complaining about no results from screening. The rules are stringent which means, higher probability. If anyone wants signals everyday, it means everyday i can have a rule that screens out more than 20 stocks and of which only a handful will be right. This kind of strategy will result in alot of small losses and then a few big win. Not many people will have the apitude to stand those small losses. How about you win lose half the time but when you are right, you make more? Which one in the longer term is beneficial to the psychology and the pocket? You reckon.

DISCLAIMER: The contents in this website are for fun reading and must not be taken as a buy or sell advice. You must do your own analysis on top of my postings. By reading this blog, you agreed that i am not responsible for your trading.