#05 – Trading In Consolidation Zone

This week, I have decided to trade in a consolidated commodity ; Platinum.

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As you can see on the Monthly Chart, market has a higher high and higher low ( conflict between two trend indication of a bear/bull market). What really got me interest in this commodity was the daily chart.

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Price action on the Daily Chart shows a “Textbook” bearish short-term trend where market is heading back to key level (seeking supply) and, that was what enticed me. Obviously, being risk conservative, I entered on a smaller time frame.

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On the 4 Hour Chart, market have shown sign of reversal as circled, which has led me to execute an order. The first trade made was caught up with a loss as you can see market has slapped me out. What led to my second entry was a Doji formed on daily while having another reversal pattern on 4hour. This time, after losing the first trade, I have decided to reduce my risk more by trading on the 1 hour timeframe.

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On the 1 hour chart, I waited market to show signs of exhaustion before placing an order. Ultimately my second order was executed with a 1:4 RR ratio. Currently, market is trading in its opposite short-term trend…. hopefully market rides the trend.

A winning trade doesn’t mean you’re good, A losing trade doesn’t mean you’re bad

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Timing versus Dollar cost averaging

Which method is the best?

Professional says theres no right answer. Why?

Lump sum investment benefits individual who posses great psychological skills (to hold through economical cycle), has a proven “edge” against the market (backtested) and the money to do so.

Dollar cost averaging benefits those whom has fear (Price,risk of making a mistake,etc), and lower capital

There are more than one perspective to determine the best, but ideally knowing who you are will best define your investment strategy.

Some perspectives for you to ponder :


Figtree Holding – What really matters in a Stock

Build Industrial and Commercial Facilities | Developments in China & Australia | Projects in Singapore, Malaysia, China

Comparison will be done with Green Build Technology (Y06)

1)  IDENTIFICATION OF COMPANIES THAT ARE UNDERVALUED.

  • Price to book ratio : 1.124 (12.4% below fair value) Y06 – 4.391
  • Price to earning ratio : 6.306 ( Below industry standard – 27.96) Y06 – 24.13

2)  LEARN ABOUT THEIR NUMBERS

  • Debt To Equity : 203.8% | 669%
  • Growth Performance : 57.15% (5 year growth)| 73.86% (5 year growth)
  • Dividend Yield : 3.89% [ 5 years] | 0% [ Doesn’t pay]
  • Current Ratio : 1.789 |1.182
  • Book Value per share : 0.1536 | 0.0533
  • Cash Flow per share : 3.46% of its stock price | 1.03% (Y06)
  • Below average management ability (No progressive Dividend Growth | Good net income/gross profit margin growth | overall Positive cash flow (super low) | High reliance on financing (Capital intensive industry) Screen Shot 2017-05-18 at 12.43.54 pmScreen Shot 2017-05-18 at 12.43.49 pm

3) TECHNICAL ANALYSIS

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Price action on the weekly chart shows that stock price is in a consolidation zone since 2014. A purchase of this stock would put you in a 1:0.5 RR ratio which is not quite favourable. A 0.5 take profit is due to the duration of this consolidation has been – making the trade highly weak on probabilities.

4) Would I be vested into it?

No!

Fundamentals

  • Weak current ratio especially with such a high level of financing
  • NAV is lower than stock price
  • Poor management ability

Technical

  • Poor RR ratios
  • Consolidating since 2014

“+1 Knowledge Point”

#04 – New Zealand Dollar

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Spotted a selling opportunity on NZD/USD

Monthly Chart shows clear sign of rejection on the bullish candlestick pull back by breaking its low (Previous month C.S). Overall market channel has been broken off in 2014 and has since been trending bearishly with confirmation in 2015.

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Spotted trend continuation pattern on the Weekly Chart, as candlestick broke of key price while making progressive lower highs and lower lows.

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Waited for Daily Chart to show a sign of trend reversal (the past few bullish candlestick). On Thursday, 18 May, market retest key level which led me to find potential trading entry on a smaller time frame.

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On the 1 Hour Chart, market showed a strong s/r line that span across 32 days. I’ve decided to wait for a clear rejection on that line and reversal. Market execution order has put me in a trade for a 1:4.56 RR ratio.

Hope you guys have gotten in for a better price than me:)

Growing wealth by being smart

It’s going to be close to a year of blogging and I cant explain how much i’ve gained from it.  

This blog post will be a short story of how I’ve became an investor

At age 21, I’ve decided that having an alternative source of income from trading is essential for early retirement. In order to get out of “the usual cycle of life”, I took an educational holiday to Bali for 30 days. In that 30 days, I spent 8 hours a day reading books on investing, 2-4 hours reading people thoughts/idea on achieving financial independence, 1 hour visualising how I would want my life to be and 2-4 hours trading.

When I came back, I created a list of what has to be done:

What I’ve learned so far is that it is not hard to be financially independent if you want to. You will be surprise by how much money is being wasted by the average Singaporean due to the lack of financial knowledge. (E.g choosing insurance/bank products , using cash, only investing when they got a lump sum)

p.s Currently, I’m stuck due to certain circumstances which is refraining me from achieving my ideal portfolio size this year but I know I’ll find a way out to reach my goal.

“Anyone can be smart if he/she wants to” – R.C

Telechoice International – What really matters in a Stock

Founded in 1998 | Personal Communication Services | Distribute phones of Huawei, Samsung, LG, Sony | Network Engineering Services | Info-Communication Technology Services | Operation in 6 Region

Comparison will be done with Memtech International Ltd (BOL)

1)  IDENTIFICATION OF COMPANIES THAT ARE UNDERVALUED.

  • Price to book ratio : 1.569 (56.9% below fair value) BOL – 0.73
  • Price to earning ratio : 15.417 ( Above industry standard – 14.5) BOL – 11.266

2)  LEARN ABOUT THEIR NUMBERS

  • Debt To Equity : 16.08% | 12.13%
  • Growth Performance : 3.06% (5 year growth)| 0.3956% (5 year growth)
  • Dividend Yield : 1.21% [ 5 years] | 2.81% [ Doesn’t pay]
  • Current Ratio : 1.68 ( 5 year history) |2.881 ( High Current ratio history)
  • Book Value per share : 0.1657 | 1.12
  • Cash Flow per share : 2.31% of its stock price | 15.41% (BOL)
  • Slighty below average management ability (No progressive Dividend Growth | Weak net income/gross profit margin growth | overall Positive cash flow (Low) | Poor asset managementScreen Shot 2017-05-14 at 2.37.49 pmScreen Shot 2017-05-14 at 2.37.45 pm

3) TECHNICAL ANALYSIS

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Monthly chart shows that stock is in a bullish trend as it continues to form greater highs and lows. Stock has been in trend since 2009 and recent low in 2015 is the invalid point of strategy. Additionally, stock seems to be really correlated to with global news (Bad thing). Current market entry will put you in a 1:1.3 RR ratio.

4) Would I be vested into it?

No.

Fundamentally:

  • Overvalued
  • Weaker in numbers compared to competitor (Current, DE ratio, Cashflow, Bookvalue

Technically:

  • RR ratio not in a favourable position for an entry.

Would you buy?

“+1 knowledge point”

 

#03 – Euro after Election

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Decided to hedge on Euro using the Major Pair (EURUSD)

Monthly chart indicates an overall bearish trend, where market is currently trading in key levels. Price has been trading in this range since 2015, trying to find a stronger supply of sellers.

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Spotted a trend reversal on the Weekly chart, as market broke of from the bearish channel with a bullish price action build up. Market making higher highs and higher lows.

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Spotted strong resistance level on Daily Chart created in early April and have decided that my buying level should be around that pricing levels.

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Spotted a nice price support on 4 Hour chart and decided to hedge it on a smaller time frame to reduce my risk amount.

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As market rejects the price level with a doji candle stick (1 Hour Chart), I’ve place an entry with a 1:5.4 RR ratio. I’m currently still in this trade. I would not be fixated on my take profit as I’ll would be ready for a potential reversal (false breakout).

Hope you caught this move too 🙂