Tuesday, July 10, 2012
The risk of call-warrants : GasM-cd
Someone in my stock-watch group asking me if 0.11 is REALLY a sell when I asked the group to sell. Hey, that is about 20% profits in a day, ok? Please sell. Never be too greedy in punting into these very risky CWs. Do read my previous post of GasM-cd vs GasM-ch when someone logically asked me(in the comment) why I went for cd instead of ch. He has valid reasons(premium etc etc) but this is a short punt for me, anyway.
YL : Trading Call Warrants
One day in our Tratles’ group chat box I do remember asking Mr. CP Teh to open a class on trading call warrants since there were many interested parties. Mr. Teh said that trading call warrants were risky and did not want to encourage greed.
Recently in the group chat box Mr. Teh made a call on GasM-cd and I was one of those who took the trade. Enter at 0.095 and exit at 0.115 the next day and made a handsome profit. Looking at the chart today draw me a “Blank”. What do you expect to see with only 13 days of data and a spread of only 6 ticks between the lowest and the highest price? One day it was 0.09, next day went up to 0.115 and 2 days later back to 0.09. Like they say “fast and furious”.
How does one trade/analyse such a stock? Using FA or TA? Or by intuition developed through years of observing the movements of call warrants which is difficult to explain and cannot be taught. Unable to understand the charts of call warrants and without the experience to anticipate its moves, it will be like flipping a coin to me. No edge. Therefore risky and I will never touch call warrants on my own. Curious to see how our teacher’s trading plan for call warrants look like. Thanks Mr. Teh for the call on GasM-cd, I owed you one.
The above is shared with our tratle's group by YL, an experienced investor in markets. He is from my latest cohort-6. Err ... no, I do not write those lines above by myself nor I asked anyone to point out my trades shared with my group.
Anyway, what is interesting to me is to mention RISK. I always start my trading classes(from cohort-0 to cohort-6 so far) with telling everyone HOW many in KLSE or markets losing money!! Yes, by understanding WHY majority out there losing money ... we could analyse those mistakes they done objectively and critically, and coming out with a defensive system, to protect us. Yes, it is RISK MANAGEMENT.
You see, with 80-90% of those out there losing money(many of my tratles joined my trading classes after losing money previously too) ... it just shows RISK is very high being in market!! So, I placed rules to reduce the risk.
rule #1 : Knowledge and Experience.
Increase you knowledge and gain experiences. Without there, you stand no chance ... I repeat, no chance. You may profit well now, but in long run, you have 80% chances of losing back and more to the markets. Yes, Mr Market will not let you go ... until you decided to QUIT and get youself totally out of markets!! It is very unfortunate that MAJORITY falls into this category. Simple to explain ... they are ignorants, clouded by GREED.
It is still my advise to my whole group NOT to follow my very RISKY trades. One could get badly burnt. Increase your knowledge ... it will takes a newbie about 3-5 YEARS to get the feel of markets ... and from there, learnt some lessons about trading. Without that experiences, there is no way or no chance for any newbie to beat the market. We simply can't.
Conclusion : Do not trade something you could not understand. Take time to learn. Move from simple blue-chips then as knwledge&experiences increase ... go to mid-cap before talking about risky penny stocks. Perhaps, slowly learn about warrants. Trading warrants are VERY risky. I am talking about companies' warrants such as SPSetia-wb, Harta-wa ... not call-warrants. It takes to next level of skills and experiences to get a good trade. I am not going to explain Gas-cd ... it was a pure punt and I was lucky to get away with it and hope many in my groups will NOT take such a risk anymore.
I will not mention CWs in my groups anymore, seeing that will create GREED. We could not consistently profit from GREED. We could easily blinded and all those concepts I am trying to share could easily bounce off the greedier-ears.
I will share with my tratles-group how to trade warrant ... one day ... when they are at least 1-2 years with me.
Trade at your own risk. Understand RISK ... understand yourself. Everyone's risk appetite is different.
Good morning ... it is 4.45am, I need to get back to my sleep.
p/s : YL, yes ... you owe me a drink, ok? haha
OneRepublic - All The Right Moves
In all the right moves I m making, I have made many more wrong moves, mistakes, blunders ... those are needed to give me the experiences!