Melynn Investment Experience
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Author - Melynn,
Melynn - Experiment
1. Stock Bought
Ezra (Singapore stock)
2 Reason for making the trades
This trade is mainly of a speculation type and there's no actual reason why I bought this. It is more of a random entry. Thoughts which flow through my mind before making the trade is to try to ride the strong intra day trend and this was derived based on looking at the speed the sell bid is cleared..
3. Holding period
I intend to sell half of my positions within the clearing period(T + 5) and for the rest, I will set a cut loss at 3%. Eventually, I didn't stick to my original plan and sold them earning a total profit of 7%. Reason for not holding longer is because I am no longer comfortable holding such a larger position as I believe any type of negative news will trigger a massive selldown due to people taking profit from the recent surge.
This decision was made partially also because of the upcoming release of stress test results for US banks. Personally believe that a wave of bad news might be coming thus I would rather miss a profit than "blowing"(lose my capital) myself..
Points to ponder
- Am I risking too large of a position such that in the event a rare event happened , I wont have enough capital to pay up my losses. Some rare events might be stock suspension, bankrupt and etc.
I intend to sell half of my positions within the clearing period(T + 5) and for the rest, I will set a cut loss at 3%. Eventually, I didn't stick to my original plan and sold them earning a total profit of 7%. Reason for not holding longer is because I am no longer comfortable holding such a larger position as I believe any type of negative news will trigger a massive selldown due to people taking profit from the recent surge.
This decision was made partially also because of the upcoming release of stress test results for US banks. Personally believe that a wave of bad news might be coming thus I would rather miss a profit than "blowing"(lose my capital) myself..
Points to ponder
- Am I risking too large of a position such that in the event a rare event happened , I wont have enough capital to pay up my losses. Some rare events might be stock suspension, bankrupt and etc.
I have risked quite a bit for this trade without considering the worst scenario. This is a point which I need to take note of for my future trades.
The stock market direction throughout the day is generally based on economic indicators, analyst comments , interest rates and etc (in short it might be random) therefore a trade which has been doing well in the morning might rock in no time for some reason. All these risk is something I need to take note of for my future contra trades .
Risks can be mitigated by i) Tight stop loss ii) Try to ride the profit but sell half of position when the situation is favorable (like 10% profit)
Although I have made a relatively substantial profit for this trade, there are a lot of other factors which I overlooked like
1) Considering the worst scenario
2) Time horizon too short
1) Considering the worst scenario
2) Time horizon too short
One most important thing I need to remember is to always differentiate investments and speculation. Never mix them together by holding on to losing trades which are of speculative nature.
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