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Wednesday, January 5, 2011

Hesitancy cost me 12.5% instead of 5%

I bought a CFD on Keppel Corp a few days ago which netted me roughly 5% over 3 days. Expecting a retraction, I sold off the first CFD at $11.48 and placed an order for Keppel at $11.40 again, which was filled about 20 mins before the market closed yesterday.

Looking at Keppel Corp's chart, it recently broke out of a multi week consolidation phase, and I bought the first CFD during this breakout. Sold off yesterday (4/11/10) at 5% profit over 3 days from 31/12 to 4/11.

From the chart, the Stochastic (which after analysing a few charts, incl. Wilmar and Sembcorp Marine, seems to be the most accurate indicator predicting the pullbacks and breakouts, crossed over yesterday, and I vowed to myself that I would sell it off immediately today. Unfortunately, Kep Corp opened at 11.42/11.44 today, which I was hesitant to sell off at, preferring to wait for a tick or two up. As you can see from the chart, Kep Corp dropped all the way and it triggered my stop loss at $11.30 (so important for CFD's) and I sustained a 12.5% loss of capital.

It could have been worse as Keppel Corp dropped further to $11.24/$11.26 soon after.

Well that's too bad for me and a lesson learnt.

I will still be monitoring Keppel Corp and taking a position once the uptrend has resumed. 

2 comments:

  1. There are two ways to learn a good lesson: one way is to learn it through the hard way by getting yourself hurt badly or the other way to learn it through the soft way by understanding why the other guy was so badly hurt.

    Take care!

    ReplyDelete
  2. Hi createwealth,

    my positions are miniscule, as I'm still learning. thanks for the encouragement!

    ReplyDelete