About Stop Losses

Wise words... while it's from the context of forex, it will apply to stocks investing too:

The fluctuations that are of regular occurrence seen in the market is a constant battle between the buyers and sellers to take control and is just part of the game and therefore should be anticipated in each trade.

You must understand that you need to stop trying to time the market at the exact time a top or bottom will happen. 

Hindsight makes this approach seem ideal but the big problem with this is that hindsight does not make you money. We can all successfully pick these ideal zones after the fact, but how many of us are consistently really making money? How do we counteract the effect of these fluctuations that destroy the psychology of traders?

The answer is the correct usage of a stop- loss, position sizing, and pending orders. 

We are all greedy by human nature and adjust our stop loss to meet our larger lot size (positioning) inside the killing zone of the market (normal fluctuations). 

Use a position size & stop-loss combination that meets the 1-2% risk bracket and a pending order that gives you a better entry and more importantly lets you walk away from the monitors. Adjust your position size to meet a stop loss that gives the trade the room it needs to play out that if in fact gets trigger confirms your analysis was outright wrong.

Micromanaging the market fluctuations is detrimental to your well-being and truly halts your development as a trader. 

Do not risk money that determines if the rent will be paid this month and focus instead on becoming proficient in a proven strategy. Focus on acquiring capital, if that means getting a second job or cutting back on eating out largely depends on your individual circumstances, but once your proficiency meets available cash, it will be all worth it.

You need the right mindset and practice “perfect practice” because if you don’t, I guaranteed you the market will gladly begin take your money away.

A stop loss should be placed in a zone where the trade idea becomes invalid.

Most of the traders place their stop loss in a way to achieve the risk reward they want, and this is completely wrong.

Source: http://www.forexfactory.com/showthread.php?t=589024

Trades from 1 June to 22 July (Final Review on the Standard Chartered Trading Platform)

Code	Name	Shares	Buy Date	Buy	Stop Loss / Target / Sold	Profit / Loss	Days Held
3988.hk	BANK OF CHINA	1000	24-May	3	3.08	56.27	62
0933.hk	BRIGHTOIL	1000	19-May	2.28	2.35	51.26	67
2255.hk	HAICHANG HLDG	1000	9-May	1.73	1.75	6.40	4
1813.hk	KWG PROPERTY	1000	11-May	4.61	4.66	4.46	6
1150.hk	MILAN STATION	2000	11-May	0.84	0.73	-231.78	21
2014.hk	OZNER WATER	1000	18-May	1.19	1.23	29.33	68
2014.hk	OZNER WATER	2000	24-May	1.18	1.26	140.57	62
2014.hk	OZNER WATER	2000	8-Jun	1.3	1.3	-20.32	2
d1r.si	ARA Asset Mgt	500	9-May	1.235	1.26	9.50	2
bn4.si	Keppel Corp	100	19-May	5.27	5.35	5.38	67
1813.hk	KWG PROPERTY	1000	8-Jun	4.65	4.45	-235.05	14
1813.hk	KWG PROPERTY	1000	10-Jun	4.39	4.65	225.44	35
1813.hk	KWG PROPERTY	1000	16-Jun	4.24	4.65	385.89	29
1813.hk	KWG PROPERTY	1000	24-Jun	4.35	4.65	265.55	21
3988.hk	BANK OF CHINA	1000	23-Jun	3.06	3.2	115.28	28
3988.hk	BANK OF CHINA	1000	24-Jun	2.93	3.2	246.63	27
1150.hk	MILAN STATION	2000	24-Jun	0.71	0.86	287.35	20

Total Net Profit = HKD$1,434 (6.14% for the period).

After transferring all HKD from the trading account, I had a total profit of about $250 from my initial investment of $4,000.

Considering my first buy was in March, I am pretty pleased (and relieved) that I can proudly say I survived in this world of stock trading :)

Due to SC removing its no minimum commission practice from 1 August, I think that it will no longer be profitable to trade using its platform.

As such, I have exited all my trades and will be evaluating my next move - whether to invest more into forex or to trade using other platforms instead.

If you have any suggestions, I look forward to hearing from you too!

Results of my first foray into stocks trading - Pass *sort of*

After the minor debacle with Milan Station (1150.hk), I decided that it was a good time to take stock of what I've learnt so far over the last 2 months.

As such, my remaining open position with Shifang (1831.hk) was closed with a loss of HKD$26 and the total profit/loss was calculated.

Having started my first trade with Jimei (1159.hk) on 9 Mar and ending with Shifang on 29 April, I conducted a total of 13 trades (buy and sell) on 11 different stocks and had a nett profit of HKD$946.

While this is not a very big amount (when converted into SGD, it's about $167), but when compared with my initial capital of $3K, this gives me an ROI of 5.65%.

I've also just completed my prototype stock trading and evaluation system and will be testing it out in the next phase of my trading journey.

Stay tuned :)

Sold - Milan Station (1150.hk)

The bloodbath started as soon as the suspension was lifted...

Apparently, the controlling shareholder and the chairman of the company has placed at least 280 million shares and up to 375 million shares (which represents all his shares), representing 41.33% and 55.43% of the share capital of the company.

Consideration was $1 per share (Share was trading around 1.23 when it got suspended).

I nearly didn't want to put in my stop loss level but decided to do so half an hour before the market opened this morning. So, I got stopped out at a "better" price ($1.08), but still at a loss.

This trade reminds of my very first trade with Jimei (1159.hk) bought on 9 March just when I started this blog.

Total damage = ($1.16 - 1.08 x 2000 shares) = HKD$178.

Sold - Jiangnan Group (1366.hk) and Haichang Holdings (2255.hk)

Taking two small losses today as I just realised that both shares were trading in a symmetrical pattern.

Bought 2K of Jiangnan Group (1366.hk) at $1.35 on 14 April, sold on 27 April at $1.32. Loss of HK$79.76 (3%).

With almost $27M in OBV and the share trading in a symmetrical pattern, I anticipate that the price for Haichang (2255.hk) will be going down. So rather than take it when my stop loss level is reached, I decided to just take a small loss and exit now until a breakout occurs.

Bought 1K of Haichang Holdings (2255.hk) at $1.65 on 18 April, sold on 27 April at $1.63. Loss of HK$32.45 (2%).

Sold - Ozner (2014.hk) and China Sanjiang (2198.hk)

Got stopped out at $1.34 for 3K Ozner (2014.hk) shares (2+1 pyramid) today.

Profit of $139.26 (3.6%). I think I had tightened my stop loss levels a little too tight.

Sold 1K China Sanjiang (2198.hk) shares @ $1.42 as I thought MACD levels were heading south.

Yet, today's trading opened at $1.37 and hit a high of $1.55 before closing at $1.49 :( Bummer.