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. :)

Cutting Losses and unpredictability of stock market

This morning, I FINALLY cut my loss on NOL. Sold off my warrants at a 20%+ loss, wiping out all my SembMar + Coscocorp warrant sales on Monday, and still incurring $20 loss.

It was a good thing, as the market took a turn for the worse in the afternoon, had I not sold my stake, I would have incurred another 10% extra loss. big phew.

 I'll just take the $20 as a lesson learnt on not buying at the resistance and to watch the market makers' pricing on the warrants for at least a day or two, AND to buy In The Money(i.e. worth something) Warrants to be safe (since after all I'm still a novice)

Anyway today I bought a large stake in KeppelCorp's warrants issued by Deutsche Bank. I "amalgamated" my buys, which means I only pay 1 brokerage fee even thought I bought the warrants at 3 different times. I bought twice in the morning and once in the afternoon, averaging my cost price and achieving a decent price on it (considering I can't predict the market with much accuracy). My average cost price was $0.355/warrant, and last done price was $0.335, which means i lost $20 on each lot of warrant I bought, not including brokerage fees. Nevertheless, I've come to realise that I will ALWAYS lose on the first day of buying, simply because of the volatility of warrants, brokerage fees and the spread. Anyhow, I still believe KeppelCorp is on an uptrend, and my target period to sell the warrants are before CNY, when they still have 3/12 to expiry.

Petrobras is about to annouce the winners of it's rig tenders, and KeppelCorp, together with Jurong Shipyard(subsidiary of SembcorpMarine) are strong contenders. Hopefully, Keppel wins a contract which boosts it's stock price in the short run, and makes me some money in the process! Keppel today was a victim of the market, along with most of the other STI component stocks, in the huge sell off in the afternoon.

Looking at chart nexus, Keppel Corp's charts don't look too good; hence I will set a tighter stop loss for this warrant. KepCorp fell at a moderately HIGH volume of 7.83 Million today, and the MACD line diverged even more from the signal line today, plus, Blue line in Stochastic dropped even further from the red, and is inching it's way toward 50%, which is not a good sign.

KeppelCorp DB eCW110530
High: $0.375
Low: $0.325
Close: $0.335
Effective buy price: $0.355
Break even price: $0.361
Profit taking level: $0.40-$0.43
Stop Loss level: $0.310 (13.85% loss)

Greed and Fear

This morning, one of my warrant's underlying, SembCorp Marine, powered thru and went up to 5.1++. My warrant therefore moved up to 0.500, 25% more than my purchase price of 0.400. At that price, I would have had earned 300+, a 20+ % return in less than a week. However, greed got the better of me and I decided to wait for SembMarine to rise even more. Unfortunately, it went down all the way to yesterday's closing price of 5.08, leaving me with alot less profit. This has taught me a valuable lesson, to be disciplined not only in stop loss, but also profit taking target. once I have set a profit taking level, I should stick to it, and not hope for better price, since i am, after all, speculating.

Oh well, hopefully sembmar will rise to today's level and I will take my profits tomorrow. =)