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Wednesday, August 10, 2011

Taking a Break

Due to some personal reason, I will be taking a break from blogging. Currently my mind is being occupied by some other thing that I can't continue to write. Initially I wanted to totally stop blogging, but investment is something I like and I cannot let it go just like that.
Actually I also plan to publish out all the 52 series before I take a break. I almost complete all the articles and it just need some touch-up. But I just unable to continue.


Thanks for the support all this while.

Tuesday, August 9, 2011

52 Ways of Making Money in Stock Market - Part 25/52 - Program Trading

What is stock market program trading?
That means you can set your criteria AND an action. If your criteria is met, then the system will execute the action that you have set.

Different program trading can suite different strategy.

For example, sell 2000 LPI share at RM20.10 if it hit RM20.00. When LPI hit RM20, then the system will auto key-in to sell 2000 LPI for you at RM20.10.
If you decided to take profit and sell your LPI share at RM20.00, with this program trading, it will auto key-in for you and you don’t have to monitor and no worry that you will be late.

In some technical analysis, it will have bullish breakout if the price broke the resistance level. Example if the resistance level is RM1.00, then set the condition as buy 10000 shares at RM1.01 if it hit RM1.01.

Technical analysis may give you sell signal if it drop below $0.95. So, you set your criteria to sell when the price it below $0.94.

If you think that if Genting Singapore share hit S$6.00 and sure got a lot of buying interest in Genting Bhd share and is worth buying at RMX, then you can set this. Buy Genting Bhd share at RMX if Genting Singapore share hit S$6.00. With this, you no need to monitor Genting Singapore share price.


Sell ABC share at RM3.50 if it hit RM3.50. Buy ABC warrant at RM1.00 if ABC share hit RM3.50. You may want to switch stock or you may want to do arbitrage.

Benefit of program trading:
You no need to monitor the stocks.
Fast action. The system immediately auto key-in for you when your creteria is met. Without system, you have to manually monitor and I’m sure you will always miss it or late.

No emotion involve. Many people told me they have a cut loss plan but when there is a sell signal to cut loss, they refuse to sell because of emotion. In program trading, you can set your sell criteria and the system will auto do it for you, no emotion involve.

Risk
Price. Imagine you have set sell LPI at RM20.10 if it hit RM20.10. But although it hit RM20.10, but the buyer is at RM20.00 and seller is at RM20.10. You will be queing at seller side and your order may not be done and LPI may drop back to much lower level.


Imagine buy PChem call warrant at $1.00 when PChem share price hit $x. When Pchem share price hit $x, due to nearly to expiry date, PChem call warrant may trade at just $0.97. Your order of buying at $1.00 is higher than market price and you may lose out.


By the time your criteria is met, situation may be different. Imagine you have set a cut loss criteria, but the price didn’t drop and is adjusted lower due to bonus issue or rights issue, then it will trigger your sell order.

Sometimes especially in Bursa Malaysia stock market, many counters are illiquid or low volume. It can be easily being mark up or mark down the price. Therefore the price is not genuine and is just temporary. However, these price movement may meet your criteria and trigger your orders.

Very dangerous especially it is a program sell. Imagine many people have set program sell. If the stock trade at lower price, it may trigger some program sell and cause the stock price to trade lower. Then due to lower price, it may trigger other program selling and it just continue and continue.


It can be quite risky if we don’t know how to use program trading in Bursa Malaysia stock market.
Use it only if you are confident. Check with your remisier or dealer whether your trading program is workable or not. Only set on stocks that you are familiar or you are monitoring. Do not set too long of the program trading expiry date, situation can be totally different or there may be some corporate action.

Which Malaysia online system broker offer program selling?
Some is offering and I think soon all brokers in Malaysia will offer program selling.


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Monday, August 8, 2011

52 Ways of Making Money in Stock Market - Part 24/52 - First Day Trading Volatility

First Day Trading Volatility
During the First Day trading of everything (IPO, product, shares, etc), you may see big volatility. So, you may be able to capitalize on that.

The reasons why first day that is so much of volatility are:
1)There is no market price yet. People just don’t know what price to trade
2)People are not familiar with the new product
3)The prices that are allowed to trade are more than 30% limit up/down on the first day. If mistake happen, it can be bigger than normal day mistake.


On the listing day of IPO, rights issue, warrants, etc, people just don’t know what will be the market price. It can swing up and down drastically. You may want to do day trade, or que lower hoping that you may get it.


On the first day of new product, many people are not familiar and may tend to make mistake. You may want to key in orders that are far from market price and hope you can get it.


RISKS, LIMITATIONS OR DIFFICULTIES:
Because it is first day, you are also not that familiar.
No one really knows the market price. It can be much lower or much higher than the fair value given by analyst.



OPINION:
For those who are not familiar, the chances of making money from first day volatile is very slim. I have seen people make $100,000 just by placing a buy order at very low price, someone made mistake and he got it.

For those expert Day Trader, may consider it because the volatility and volume is there.



For more info on 52 Ways of Making Money in Stock Market……..


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Sunday, August 7, 2011

52 Ways of Making Money in Stock Market - Part 23/52 - Fast Moving Advantage

Fast Moving Advantage
This mean you are the first or among the first that buy the shares before others rush to buy it.

Example of situation is the company may have announced a very big project at 1.30pm. As you know many people are out for lunch or may not listen to news or surf internet. Many are not aware of the announcement, only small group of people.

Most probably there will be some buying interest but not that many. If you are aware of the news, you may buy it. When more and more people are aware of the news and buy it, you may be able to sell and make a profit.

Previously most news, announcement of projects, financial result are announced after 5pm. Then in the morning will appear in newspaper and everybody read it before market open.

Now the company can make the announcement during lunch break when most people are enjoying their lunch. Those who read it first will have a first moving advantage.

Another scenario is the stock price will go up when there is a buy recommendation by some popular blogs. These popular blog has no fixed timing to publish their article. They will publish at anytime. If you are first to read it, you may be able to buy it before others rush to buy it.


There are many scenario when you are among the first to know the news and buy the shares. Example it can be insider news or insider trading (illegal). If you are related to the company, then you may know the info faster than the public.

Another scenario is time zone. The company may win the project in India and is being announced during trading hours. Those who are following the development may be able to know before the stock gets suspended or news gets published.

Another scenario is you may be the first one that indentify the buy signal from technical analysis. I still remember my friend told me Taliworks has bullish break-out and then we bought and made money. Then after we have sold, Maybank publish it saying bullish breakout. We were among the first who bought it.


RISKS, LIMITATIONS OR DIFFICULTIES:
The price may not go up after the announcement.
The price may have gone up before you buy.
Not easy to be the first to know, unless you are related to the company or you really spend a lot of time following the company developments. Or you may always need to read the news and get updated info.



OPINION:
If you are retail investors, don’t spend time sitting in front of the computer keep waiting for news.
Opportunity comes when you are related or interest on that company where you are following the development of that company.
As for remisier, most client like fast money. They don’t like to hold shares. You may click on the news or blogs and update clients. They like to buy and contra to make fast money.

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Friday, August 5, 2011

52 Ways of Making Money in Stock Market - Part 22/52 - Technical Analysis


Technical Analysis
Rather than just depend on Fundamental Analysis, you can also make money from technical analysis, or chartist.

This technical analysis have different different types of method such as candlestick, MACD, money flow, trend line, Ichimoku, Bollinger Band, etc. Each method use different formula and data. After analyzing the data, it will tell you whether got buy signal or sell signal or no signal.

How it works? Buy when there is a buy signal. Sell when there is a sell signal.

Even if a stock is a very good fundamental stock, if nobody buy, the stock will not go up. Technical analysis will give you the signal when to buy.

RISKS, LIMITATIONS OR DIFFICULTIES:
Sometime they create conflicting signal. Some method may have buy signal, but some have no signal or even sell signal.
It uses a lot of “IF”. If it cross $5.00, buy, but if it drop back below $4.70, cut loss.
If it cannot break 1524.69 point, it will crash. If it drop below $1.27, sell.
If it drop below 1430, then the next support level is 1400.
I find that it has too many IF. IF here IF there. What is all these IF about?
IF IT DROP BELOW 1430, THEN THE NEXT SUPPORT LEVEL IS 1400. Means what? Can buy now? Sell now?

Your profit may be less because Technical Analysis ask you to wait.
Example now is $4.76. It says IF it breaks $5.00, then buy. So you waited and it breaks $5.05 and you buy it. Imaging if you didn’t wait, you already bought it at $4.76, but now you bought it at higher price $5.05.

Furthermore, Technical Analysis contradict with fundamental. This is because fundamental say when the price drop lower, the cheaper the stock and buy more. But most of the times, technical analysis give buy signal when the price has gone up, and the higher it goes, the more bullish signal it has.

Because many stocks lack of volume and the price can easily be influenced by small quantity of buying and selling, so the technical analysis can’t work. As you know in Malaysia stock market, most counters are lack of volume.

I think it is not easy to learn because not many people are using it. Not many means in terms of percentage. Most of my friends that invest in stock market, only a few use technical analysis.

Technical analysis need high discipline. It does not bother about fundamental. So when it is time to cut loss, many people refuse to cut loss even they have bought stock that have poor fundamental.

On 26 January 2011, got two popular Malaysia blogs both also using technical analysis, one said AirAsia can consider to buy AirAsia, one said cannot. How?

OPINION
I think you can learn on technical analysis and see whether it works. You can test out on historical prices before you really trade. Please remember to cut loss.
Some people suggested to use technical analysis with fundamental. Use fundamental to select stock and the timing is by technical analysis.
Anyway, I’m not good in technical analysis, I’m learning. You may want to seek advice from others who are experienced.


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Wednesday, August 3, 2011

52 Ways of Making Money in Stock Market - Part 21/52 - Initiate Coverage

Initiate coverage
I noticed that sometimes when a broker started/ initiated coverage on a stock, it tends to have buying interest and the stock will move up.

There are few reasons to this. Assuming I trade with ECM, and I only read newspaper and ECM research. One day ECM started to cover ABC stock and said is good Buy. I don’t know anything about ABC stock, but after read it, I like it and I buy. ECM also may have many customers doing the same.

Another reason is ECM research mainly is read by ECM customers. But sometimes if after they initiated coverage on a stock, the next day newspaper, online newspaper, business magazine may publish it with a title “ECM initiated coverage on ABC Stock with buy recommendation and target price of $X.XX”. Because many people read newspapers, that may creates more buying interest.

Especially during good market sentiment, people just need a bit of news to buy a stock. If you are ECM customers, you will have access to that research faster than the public.


RISKS, LIMITATIONS OR DIFFICULTIES:
The price may not go up. Higher chances of going up is only when market sentiment is good. Furthermore, the price increase may not be enough for you to take profit. And after a while, the stock may lack buying interest.

You also need to check whether the price has gone up before they initiate coverage. The day they initiate coverage, the stock may start coming down if previously has gone up a lot.

OPINION:
For me, I don’t buy base on initiate coverage, but I do notice that the stock will have buying interest after a broker initiated coverage. I will only buy if the fundamental are really good such as low PE ratio with high growth, etc. If the stock is good, and I read it on the day that broker initiated coverage, I normally buy it immediately before the public know. If I don’t buy, and the public know about it and the price jump, then I got no chance to buy.

But this normally happen if the market condition is ok. In bear market, no impact.

For more info on 52 Ways of Making Money in Stock Market……..


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Monday, August 1, 2011

Woman is like Stock Market, very Unpredictable

Why I say that? You look at the similarities below:

1) Fit your requirement, but just cannot
Woman: There is this lady, fit exactly with what you want. All your friends and relatives also like her and want you to go after her. But after trying for two years, still fail. Then she got a new boyfriend.

Stock Market: There is this stock, fit exactly what you want, low PE, high growth etc. All analysts ask to buy. You bought it and for two years never go up. Then the profit start to drop and the share price start to drop.


2) Everything started well, but unexpected things happen.
Woman: There is this lady, seems to like you and you like her too. Both of you have starting went out once or twice. About to start a dating or relationship. Then unexpected things happen. Examples, she may have to be transferred to outstations/ overseas. She may change job that makes things difficult for both of you to keep in touch. Suddenly decided to go overseas to study. Suddenly another man come into the picture. Her ex boyfriend wants her back, etc.

Stock Market: This stock is really good. Very cheap and fundamental very good. Volume already started increasing. All the technical analysis shows buy signal. Price started increase. All of the sudden unexpected things happen, examples Japan earthquake, 911, government impose a special tax, etc.

3) You thought she didn't love you, but actually she did
Woman: You plan to date this lady, but after much trying, you didn't get a very strong confirmation. You thought she didn't love you. You gave up. In order to forget her fast, you cut off the relationship. After 3 months you found out that she was actually love you too. But too late. She was hurt by you or she already got a new boyfriend.

Stock Market: You bought this stock, after some quarterly results, the stocks seems to be having no growth. You thought the stock cannot grow, so you cut loss. After 3 months, the company announce a very good result. You wanted to buy back the stock, but is too late, the stock price already shot up sharply.

4) Hint
Woman: You like this lady, and you always get hints that this lady may be interested in you. The way she smile at you. Always call you. Talk good about you. Go out with you alone. You thought she must be interested in you. You confess your love to her. But she tell you she does not love you at all. She will then tell that you misunderstood her. She will say she is kind to everybody. She treat you just like good friend.

Stock Market: You know this insider, he gives you tips. You thought that tips must be accurate. You bought the shares. But end up losing money. You then ask him why. He will then tell you all the excuses, examples change of plan, unexpected things happen, etc.


As you can see, woman is like stock market, very unpredictable.

I admit that stock market is very unpredictable. But we can still overcome it to make money, by using few simple strategies such as buying fundamental stocks, buying through a period of time, diversification and be patience.

But how to overcome woman, I really got no answer. I don't know what woman want.

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The information contained in this blog is my personal diary and has been prepared solely for myself. Without any previous reading material or discussion, by just reading my blog contents, reader may misunderstand the contents.
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