Cut Loss on CapitaLand and CapMallsAsia: Reflections and what's next

I cut loss on Capitaland and CapMallsAsia this week. Capitaland at 2.82, CMA at 1.53.

I am not disappointed with myself for losing money; what really irked me was my lack of a cut loss plan.

Trading with limited capital; you have to take losses quickly and enter trades only when risk reward ratio is good. (i.e., buying at support, cutting immediately when it's breached, having a reasonable profit target).

I learnt two important lessons from these two trades.

Start off with CMA.

CMA was a short term trade. I bought it,  hoping to make a quick profit in the short run.
Bought close to support, 1.71, and support was at 1.68 at that time. Didn't cut until all the way till CMA breached it's 52-week low.

My earlier (losing) trades on Wilmar and NOL this yr, I cut loss 10c off and 2c off my purchase price respectively. Why? Bought close to support, when it was breached, quickly take losses.

This trade, I didnt have a cut loss plan and just blindly held on, thinking "it'll go up...it'll go up". Eventually, cut loss when the pain was too painful to bear.


For Capitaland, I bought it for 2 reasons: I thought it was fundamentally okay, I thought valuation was cheap. Fair enough.
I also bought it close to support of 3.08-3.11 at that time. (I bought at 3.15)

I didn't have a cut loss target for this- I made a fatal error in telling myself that Capitaland was for the long term, and I didn't have to have a stop loss.

The slew of bad news coming from MND and the Chinese Government is also bound to depress stock price across the board for property; I should have seen this.

Price is what we pay and Value is what we get. Cheap became cheaper. One advice I took to heart: "You can buy if it's cheap and reversing. You ALSO can buy if it's not cheap but going up. What you CANNOT do is to buy if it's cheap BUT not reversing."


Looking at the charts, I might have cut loss RIGHT at the bottom. CPL is at channel support and is likely to bounce off. Oh well, what's done is done.

That's my reflection. So what's next for me?

I've been on quite the losing streak; I think I've cut loss in my last 4 or 5 trades. All losses have been inconsequential except the CMA loss, and to a smaller extent, CPL. That was because I kept strictly to my cut loss rules. (Interestingly enough, all the stocks which I cut loss are trading at lower levels than where I cut them.) I will take a step backwards now, if there's a trade with high risk reward ratio (e.g. buying right at support and being able to cut within 2-3c, with price target of 10c), I will consider; if not, it'll be a time to cool off, observe the market and see where I went wrong.

I've had people advising me that with small capital, it's just not worth it to chase the 3-10% appreciation you typically get on your average trade. After all, 10% of $10,000 is just $1,000.
What people have been advising me to do, and which I think makes sense, is to wait for a huge correction, and then start buying slowly. (And sell slowly)

I'll take this period of time to think. A correction is underway, maybe there will be good bargains soon.

Bought CapitaMalls Asia today.

As per my previous post here, I've kept my eyes on three counters. The two commodity counters have since risen. I will still keep a lookout if they do reach my purchase price target again; if not, there will always be other trading opportunities.

I did, however, buy CMA today at $1.71. Like I explained in the previous post, CMA is at support at $1.70. Buying at support is a good idea.

Indicators show oversold condition for MACD and stochastics.
There was also muted selling today.

Immediate resistance is at $1.78 should CMA have a bullish inclination, and that is where I will sell CMA off. Should CMA see high volume breaking of that resistance, I will sell off at the next resistance at $1.84.

Breaking of $1.70 support will see downside toward $1.66. Should prices drop below $1.66 at high volume, I will cut loss.

Trading Ideas: Noble, GAR, CMA

Noble:

Dropped on high volume today despite having a new SWF buying over 50,000,000 units of Noble Group.

Strong support seen at $1.98 to $2.00 region, which coincidentally coincides with the lower channel line.

This one looks good. I will enter should prices drop to that region.


Golden Agri:

Another counter close to a strong support.
Strong support eyed at 63c.
Seems to be consolidating around 65c level.
Will consider entering should prices weaken to 63c


CapitaMallsAsia:

this one is another close to support.



Indicators wise, all three counters paint a similar picture:
- declining MACD, the latter two in negative region whilst Noble in positive region
-Bullish divergence for force index
-oversold stochastics.

Of these three, Noble looks the most compelling should it reach it's target price (Longer term picture is of an uptrend as opposed to downtrend for CMA). I will revisit them again if they reach target price...