Melynn - Investment Experiement
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Author - Melynn,
Melynn - Experiment
I have made a total of a whopping 6 trades today... A "career" record one day high for me... Nothing to be actually proud about. I made a substantial loss today but the silver lining is that I learned quite a lot from it and all these in my opinion, is best learnt through real life trading as a market participant instead of an observer as every decision made by the participant affects the actual outcome. Also, by involving real money, I will be affected by my own emotions like fear and greed which I hope I can eventually minimize or overcome them with my own system.
1. Stock Bought
i) Keppel Corp - Long (Listed in Singapore market)
ii) Keppel Corp - Short
iii) Kepeel Corp - Long
Covered the trade before making another one therefore a total of 6 trades were made.
2 Reason for making the trade
Similarly as yesterday, I thought the stock poses a high probability of breaking the "Resistant" as strong volume is present and in additional, its having a good intra day trend..
When the market moves opposite from my expectation, I covered my purchase by selling it at my stop loss limit and I thought the price will continue to plunge with the massive sell down therefore I have decided to make a "short trade", simply speaking sell before buying back.
The market moves opposite from my expectation again therefore, I covered my short sale by buying it back at my stop loss limit. Having a desire to recoup my loss, I bought the stock again seeing that the probability of breaking the resistance is high but it disappoints me again by moving further down.. Therefore at the end of day, I sold the stock at a loss.
3. Estimated holding period
1day .. Just trying out my system therefore does not want to risk too much by holding it overnight...
4. Entry Point
Purely technical again... Bought at point where volume increased and the resistance seems to be breaking.. Experimenting whether entry point is critical...
5. Selling Point
Set at a tight stop loss of 2% for each trade
6. How much was the stock sold
In total.. I made a loss of 10% of my total account today and total commission incurred is approximately 2% of my account...
Summary
I made all the trades today based on gut feel therefore I was very indecisive when I made the trade as fear and confusion has engulfed me. I was also quite nervous after making the trades where I consistently check the price every 5 min or so to ensure that I will be able to sell the stock at my stop loss limit. For my first purchase, everything went wrong as the stock moved opposite from my prediction and it only took about a hr or so to hit my stop loss.. Thinking that the price will recover, I was then pondering whether to hold on but in the end , I have decided to adhere to my system by selling off the stock.
To keep things short, from this , I think INTRA DAY trade is definitely not suitable for me due to the randomness and uncertainty. Also, I realized I don't have a proper risk management in place as my loss exceeds my profit greatly.. The commission incurred is also high therefore I think I need to lengthen my time horizon to minimize my trades...
From the trades made today, I realised I am still more comfortable with fundamental analyisis than technical analysis but I still think having a good understanding of TA can help to shed light on the human's psychology. It is important as investing is more of an art rather than science as people trade on their belief/perspective on the stock rather than fact therefore expectation will diverge from fact..
In my next experiment, I will try to blend fundamental and technical together to determine position sizing, entry point and exit point. Difficult and impossible as it sounds due to the different nature of each strategy but I will still give an attempt..
Result : -5.19%
i) Keppel Corp - Long (Listed in Singapore market)
ii) Keppel Corp - Short
iii) Kepeel Corp - Long
Covered the trade before making another one therefore a total of 6 trades were made.
2 Reason for making the trade
Similarly as yesterday, I thought the stock poses a high probability of breaking the "Resistant" as strong volume is present and in additional, its having a good intra day trend..
When the market moves opposite from my expectation, I covered my purchase by selling it at my stop loss limit and I thought the price will continue to plunge with the massive sell down therefore I have decided to make a "short trade", simply speaking sell before buying back.
The market moves opposite from my expectation again therefore, I covered my short sale by buying it back at my stop loss limit. Having a desire to recoup my loss, I bought the stock again seeing that the probability of breaking the resistance is high but it disappoints me again by moving further down.. Therefore at the end of day, I sold the stock at a loss.
3. Estimated holding period
1day .. Just trying out my system therefore does not want to risk too much by holding it overnight...
4. Entry Point
Purely technical again... Bought at point where volume increased and the resistance seems to be breaking.. Experimenting whether entry point is critical...
5. Selling Point
Set at a tight stop loss of 2% for each trade
6. How much was the stock sold
In total.. I made a loss of 10% of my total account today and total commission incurred is approximately 2% of my account...
Summary
I made all the trades today based on gut feel therefore I was very indecisive when I made the trade as fear and confusion has engulfed me. I was also quite nervous after making the trades where I consistently check the price every 5 min or so to ensure that I will be able to sell the stock at my stop loss limit. For my first purchase, everything went wrong as the stock moved opposite from my prediction and it only took about a hr or so to hit my stop loss.. Thinking that the price will recover, I was then pondering whether to hold on but in the end , I have decided to adhere to my system by selling off the stock.
To keep things short, from this , I think INTRA DAY trade is definitely not suitable for me due to the randomness and uncertainty. Also, I realized I don't have a proper risk management in place as my loss exceeds my profit greatly.. The commission incurred is also high therefore I think I need to lengthen my time horizon to minimize my trades...
From the trades made today, I realised I am still more comfortable with fundamental analyisis than technical analysis but I still think having a good understanding of TA can help to shed light on the human's psychology. It is important as investing is more of an art rather than science as people trade on their belief/perspective on the stock rather than fact therefore expectation will diverge from fact..
In my next experiment, I will try to blend fundamental and technical together to determine position sizing, entry point and exit point. Difficult and impossible as it sounds due to the different nature of each strategy but I will still give an attempt..
Result : -5.19%
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