Sale of KeppelCorp Warrants, cessation of my short term trading for now

Today I sold off my KepCorp warrant for a tidy 4.37% after accounting for all brokerage fees. As I bought heavily into it, my absolute amount gained is pretty high. :)

Having said that, I bought the warrant on Wednesday and sold it off today. On Wednesday, I was showing a paper loss of about 8%, and today I realised a 4.37% gain. That's a 12.37% swing in just 20 hours of trading. What a difference a day makes.

I will be ceasing my speculation for now, at least until I am more familiar with Technical Analysis. Why do I say so?

1.) Playing with financial derivatives is very risky. As Warren Buffett puts it, "risk is not knowing what you're doing." I understand how warrants and options work, but maybe it's time for me to take a step back and understand more about TA and charting before I plunge into speculating again. Then, playing with warrants would be, by definition, less risky for me.

2.) The way I'm using TA is obviously wrong now.
Example in point:

My top earner: SembCorp Marine, which I held from 3/12 to 10/12, was in my understanding, bearing many traits of a bearish stock. In that period, RSI had negative divergence, MACD was showing negative divergence, PSAR was above the stock price, which were all bearish signs (or so I thought). Only Stochastics was showing an upward trend. With all the bearish signs showing, you'd expect the stock price to drop, but instead it rose slightly, and with my huge leverage, I earned a tidy sum.

My top loser, Neptune Orient Lines, which i held from 3/12 to 15/12, was in my understanding, bearing many traits of a bullish stock. In that period, PSAR was constantly bullish, MACD line was above the signal line AND both of the lines were above 0, Stochastics was showing blue line above the red, AND, both on an uptrend toward 80%, which I believed were bullish signs, and yet, the stock price dropped quite a bit, and I quickly stopped my loss. (which is a good thing, considering that I would have lost another 25% had I sold off today-NOL dropped again)

This leads me to the conclusion that:
1.) My TA is too simplistic and hence largely incorrect, AND/OR
2.) I'm interpreting the signs wrongly,
3.) I'm too caught up in the excitement and anxiety that I make rash decisions.

Hence, I will be ceasing my warrant trading at least until CNY. This is also to help me take a step back and not make rash decisions like buying warrants on a whim, and to analyse them closely before making a purchase. As I have been on leave the whole of last week, I've been waking up and reading the finance news before logging on to POEMS/sgx.com at 9am. Which is not a good sign.

I will also be using the few weeks to CNY to brush up on my TA, of which I am only somewhat familiar with MACD, Stochastics, RSI, Volume, Moving Averages, PSAR and Bollinger Bands.
I will of course look out for good stocks to buy. 
My current KIV Stock list:
1.) Dapai
2.) CapMallAsia
3.) SATS
4.) STI ETF (Thought I'm reluctant to buy into STI now, many of the stocks are pretty overvalued, like Genting, City Development, Jardine, DBS, Olam, SGX, ST Engineering and our favourite way to fly, SIA, with PE of 84x)
5.) First REIT (div yield of 9.5%)  


I have also just applied for an OptionsXpress Cash Trading account, which allows me to trade in the United States market with a MUCH lower commission rate (USD 14.95) than POEMS, and with no custodian charge.

I will be researching on the Standard and Poor's "dividend aristocrats", which are companies that have given rising dividends every year for >25 years running).
I am most interested in McDonald's, ExxonMobil, the Standard and Poor's S&P 500 ETF (Otherwise known as SPDRs-Standard and Poor's Depository Receipts) and of course, Berkshire Hathaway B shares.

Merry Christmas and a happy new year to all. :)

Emotions on the market

As per my previous post, I bought 2 lots of Cosco corp call warrants, which basically means im bullish on cosco. Today, however, cosco corp's share price dropped, at one point by 4 cents, which disproportionately affected the market maker's price of the warrant.

I set a stop loss target for myself at 38.5 cents. Reading alot of books, the authors all similarly and repeatedly hammer the point where you HAVE to bite the bullet and cut your losses. Today, i realised how difficult it is, the emotions that flow thru you when your own money is on the line.

Anyways, this can be construed as me paying tuition fees to Mr. Market for teaching me how to trade.

After all, you have to lose to win.

After a long day of trading, eventually cosco corp traded 1 tick down from Friday. (phew!)

Paper Losses and Warrants

In my fledgling investment hobby, I've made my first paper loss.

The loss is from Sabana REIT. This counter debuted on SGX at 1.00 and closed at 1.02, leaving me with a $30 paper loss (not including my brokerage fees). Oh well, there's still the 8% dividend to look forward to.

If Sabana rises to maybe $1.12-$1.13 (doubt it though), I will sell it off immediately. Reason being I'm not very sold on Sabana's parentage, which is Freight Links, and also the multiple restrictions on Shariah financial products, which is pretty cumbersome.

So for Sabana, my selling point will be $1.12 onwards.
I doubt REITS have a very low support level, since if it drops, the dividend yield is higher, hence the support level should be quite strong.

I also bought my first derivative product on POEMS today.
I bought 2 lots of "CoscoCorBNPeCW110530", KG6W, at $0.485, from the market maker. I was the only buyer of the stock today.
Reasons for buying:
1.) After reading Cosco's 3Q financial statement, it seems to be in a good position, with positive cash flows and increasing revenues and profits. They may also have a few big contracts which will hopefully increase their profit.
2.) 1 lot of Cosco cost $2060 today. Hence, by buying the warrant, issued by BNP Paribas Warrants, i gained exposure to 2 lots of Cosco for a mere $995 incl. brokage fees.


The warrants have an exercise price of $1.68, and is due to be redeemed on 30th May 2011. Warrant:Share ratio is 1:1, hence my break even price (after factoring in all costs including brokerage fees) is $0.51 per warrant. 


My short term view on Cosco is bullish, and hopefully I'll be able to gain some profits in the short term, hopefully before CNY.


The theoretical Delta for this warrant is 0.78, hence, for every 1c the counter moves, the warrant will move 0.78c. Hence, for my target profit taking level, Cosco Corp has to move roughly about 20.5 cents up.




If there's anyone reading, would you care to comment on my buying on this warrant?


Anyway,
Target Profit taking level: $0.65
Self Declared Stop Loss: $0.380 (21.8% away from my purchase price- at this price i will lose $260)