Friday, January 19, 2007

Portfolio bleeding: TR = neg $7.5 k

I bought some call warrants for hsi today after hsi opened. I don't dare to buy before market opens because I've seen too many days where hsi broke expectation and trade in the opposite direction before. So, I'll play safe.

I bought 10 lots at 0.64 and another 10 lots at 0.625, averaging down to 20 lots at 0.6325. Detected some weakness so I sold when I just break even at 0.640, getting some small profit of $60. It rose much higher than that, but it's okay. At that point in the time, the bull don't seem to be strong, so I'll rather not hope and get my profit off the table first.

Bought more sti puts at 0.055. How long will it run up? For this week, I think it rose up 4 times, only 1 day down day.

STI still looks extremely bullish. What's more incredible is the surge in foreign funds coming over. But the problem is if they leave, they are also going to cause a major crash. Looking at stochastics and MACD, seems like we have reached a peak, so might see some correction next week, not those small small ones that we've seen this for this week. Whether we have a CNY rally depends a lot on how other bourses are doing, since STI have no backbone, always following others.

This week's portfolio is not good at all, cut loss on a couple of trades, lost money on my warrants too. But the thing that still makes me happy is that I'm actually less adverse to cutting losses now, which is a good thing. After i've learnt to stop my losses when I found out my analysis is wrong, I will then be able to hold on to profitable trades and minimise my wrong trades. Good in the long run.

As a record, fabchem, which I've cut losses at 0.625, fell to 0.6 today. Ellipsiz which I've cut at 0.765 remained the same. HSI warrants which i've cut yesterday at 0.155 fell to 0.150. The prices I've quoted is the closing price. So you see that if I didn't cut my losses early, I either sitting on a stale trade with my money stuck there, or I'll have lost more. Last time I kept thinking that paper losses is not real losses, that means that if I didn't sell off my losing trade, I haven't lose any money at all. But I realised it's all wrong! Holding onto losing trades damages your mentality, it's like having a tumor. Every day you are just going to wonder if this stock goes up to that level which you've bought, if not, you gave a sigh and then hope tmr will be better.

Seriously I've been through all these hopes and expectations. For me, it's different now. I will not hesitate to cut losses if my analysis is wrong, if my stop loss is triggered, even if later on the stock rose after I sell. In the long run, I believe this approach will help me grow my portfolio of good stocks which I will hold for mid-term.

Last thing, I thought longcheer today have a chance to break 1.26 resistance but it didn't do it convincingly. It went up to an intra-day high of 1.27 but came down to 1.23 now. Looking at the charts, it seems like it is undergoing accumulation. On up days, the volume is huge, on down days the volume is light. Very good sign indeed.

I'll write my reflections for the week next time.