It is the end of the year & is a tough 2022 for many investors, trades frequently hitting cut loss, not able to take profit on time & profit turn into losses. Even for us, we don’t have much opportunity to go into mid term trade but rather many short term & day trades to maintain our returns in positive, +15.47%.
Part of the reason we did many short term & day trades is because the market cycle can only allow us to apply this trading method. Because you can’t hold long or mid term in this kind of market cycle, the stock price will show signs of big boys preparing to sell after it is pumped up. So it is lower risk in our opinion, to go for short term & day trade, rather than watching our losses going down with the market crash & hope the price will trend up in the long term.
Here’s a few highlighted trades we did this year to profit from the market crash & the mistakes that we shouldn't have made. We hope from our experience we can help investors to notice the mistakes & not repeat the same mistakes we made.
Biggest mistakes to learn from
The mistakes we find that are unacceptable are day trading 2 stocks at the same time on Aug 16th, with CNERGEN & TOYOVEN. We entered at the day's highest price for CNERGEN at 9:03 AM. Without noticing the transaction data shows the price peak is coming before our entry, because we were monitoring TOYOVEN at the same time.
Usually we won’t day trade 2 stocks at the same time, because we know that we can’t multitask to monitor the transaction data which are flowing every few seconds, this will slow our decision making for exit.
Which is exactly what happened to us on 16th Aug, where we didn’t get to exit TOYOVEN at the break even when the transaction data was showing signs of price peak. Because we were reacting to CNERGEN cut loss. At the end, both are at the losses with CNERGEN losing 5 cents & TOYOVEN losing 3.5 cents.
Moral of the story : Never monitor stocks in day trade, it is better to have lesser losses than losing double.
Best Trade : Turn potential losses into profit in market crash
Towards the end of July, we find most of the big boys in the market are doing aggressive pump-n-dump like what they did in May. This shows the sign of the market going into another round crash soon.
So we shift our trades from buy-low, sell-high to sell-high, buy-low. Rather than short selling individual stocks, which only gives us 1 day holding period (market may not react to sell down so soon.). We look for indices’ PUT structure warrants that allow us to hold for a few months before the structure warrants expire. [If you are new to structure warrant, you may watch this explanation video in our YouTube channel : https://youtu.be/2n3-D6c2nP8 ]
At that time we chose Hang Seng Index put structure warrant due to high fluctuation & the structure warrant price will be more sensitive to the underlying HSI. But most importantly, we saw the Hang Seng component stocks are showing the same sign of pump & dump with low intention to support the stock price. So we made a trade on HSI-HEU on July 29th, a put structure warrant price that will go against the index.
The trade was closed on September 19th because HSI-HEU is getting close to its expiry date in November. If we hold until October, HSI-HEU value will start falling more aggressively because of the time decay. This is the nature of any derivatives, given the underlying assets price remain constant, example in this case is Hang Seng index move sideways. HSI-HEU value will decrease when it gets nearer to the expiry date.
So we took the profit & avoided the potential cost of time decay on 19 September. Securing a gain of +11.5 cents, returns in value is RM 4,600, a 20.35% gain. We didn’t choose to roll over the position ( trade another HSI put warrant that has a longer expiry date. ) is because we started to see trading opportunities in KLSE & move back into trading stocks, which also means the market is going to bottom soon.
Although we are not able to catch the whole stretch of price down in HSI, at least we can make 20% profit when the market is falling & not lose -20% in the down market.
Some ideas to select structure warrant for indices : You will never know how long the index is going to react to the big boys final sell-off. So always look for a structure warrant expiry date 4 months away from the day you hedge on the market fall or up.
Overall this year we can still maintain our portfolio returns in positive & outperforming the market despite the market being bearish. With FBMKLCI down from Jan opening 1,553.64 to 1,472.61 on 5th Dec 2022, down -5.22%. While FBMACE down -16.26% & FBMSCAP down -2.72%. It is a tricky market for many investors to trade or invest this year, because the analysis that we commonly know is not efficient in down markets. This causes many investors holding on to losses easily up to -30%. While we are still able to achieve 15.47% since the last update of our portfolio, which is above the average in KLSE.
2022 is ending soon, although we are not sure the market performance of 2023 will be. But looking at our performance, timing of entry to the right trades, & being able to identify the big boys' next moves, we can still maintain our positive returns even in uncertain markets like 2021 & 2022. Because our job as an investor or trader is to identify the market trend & take advantage of it with the right trading method.
Let’s prepare for 2023 with the right analysis & trading strategies to improve your trading returns with our approach in our upcoming webinar.
Trading Plans That Will Helps You To Outperform KLSE in 2023
To make profit in the stock market can be simple if you know how to follow the big boys. You can achieve returns that can easily beat the market indices with the understanding of simple price & volume analysis and good trade management.
Day 1 : Understanding the big boys manipulation
Day 2 : How to identify trend changes with simple price & volume.
Day 3 : Types of trading method for different trend
11 DEC | SUNDAY 7:30PM
12 DEC | MONDAY 8:30PM
14 DEC | WEDNESDAY 8:30PM
Registration link : https://www.roundnsurge.com/events
This blog is for sharing our point of view about the market movement and stocks only. The opinions and information herein are based on available data believed to be reliable and shall not be construed as an offer, invitation or solicitation to buy or sell any securities. Round & Surge and/or its associated persons do not warrant, represent, and/or guarantee the accuracy of any opinions and information herein in any manner whatsoever. No reliance upon any parts thereof by anyone shall give rise to any claim whatsoever against Round & Surge. It is not advice or recommendation to buy or sell any financial instrument. Viewers and readers are responsible for their own trading decisions. The author of this blog is not liable for any losses incurred from any investment or trading.