Friday, April 11, 2008

Review of trades this week (7-11 April 2008)

1) Ferrochina

On 7th April, bought 5 lots at 1.44 on breakout of symmetrical triangle and previous high of 1.43 on 2 April 2008.

Long
Entry price 1.44
30 day ATR 0.1
1.5X ATR30 0.15
Cut loss stop on 1.5ATR30 1.29
Recommended cut loss 1.29
Loss on recommended cut loss -798.3836535

Target price 1.66
Profit on target price 1045.058855

Reward/risk ratio 1.308968252

I started learning how to use POEMS Pro Trader this week. And successfully used it to buy Ferrochina using the Stop Limit function.

Ferrochina was sold when it hit 1.30 on 10 April 2008. I had placed the stop at 1.30 and the limit at 1.29 although the actual intended cut loss was 1.29! Learning point noted that for stop limits the appropriate way to set it would have been Stop = 1.29 Limit = 1.28 or having the stop and limits the SAME. However having them the same would mean if there was a gap my order would not go through.

Profit/Loss = -$755

Learning point : Stop should be the actual cut loss price and limit is 1 bid below it when using Stop Limit function on POEMS Pro Trader.

2) Fibrechem

On 7th April bought 10 lots of Fibrechem at 0.805. This was an aggressive buy which should not have been made on hindsight. Must learn to be more patient and disciplined in timing entries. I had missed some entries on Friday and was ruing those misses hence went in on this trade based on breakout of 3 day previous high of 0.79.

Long
Entry price 0.805
30 day ATR 0.06
1.5X ATR30 0.09
Cut loss stop on 1.5ATR30 0.715
Recommended cut loss 0.705
Loss on recommended cut loss -1053.523309


Target price 0.95
Profit on target price 1387.792446


Reward/risk ratio 1.317286892

Last closing price 0.76

Paper loss = -$513

Learning points : MUST BE PATIENT AND TIME ENTRIES PROPERLY. Need more work on this aspect.

3) COSCO

On 10th April 2008, bought 2 lots of COSCO at 2.84. This is a punt. 2.81 was the previous 9 month low made in March. Hence a punt at 2.84. Price had dropped due to COSCO announcing that they had ONE contract cancelled. COSCO Vice President insisted that the cancellation was due to COSCO being unable to meet the clients change in requirements rather than a credit problem. However the manner in which they made the announcement as a subparagraph in their announcement of securing new contracts suggest they were trying to cover something. Further more the work was supposed to have been started in June 2007, so why wait till now to announce this change? Analysts fear that COSCO will have more cancellations and as a result Citigroup lowered COSCO's target price to 2.70.

It is yet to be known whether this would be an over reaction by sellers/shortists or whether it is indeed true that COSCO has many problems ahead.

2 factors that make me feel it is an over reaction are as follows :

1) While COSCO did announce the cancellation, they did secure new contracts

2) COSCO directors had bought the shares from the open market 2 weeks ago. And they continued to buy this week

Finally, COSCO will be having their AGM on 15th April 2008 (Tuesday) where they will announce their results. I am sure there will be clarification on this issue by then.

Long
Entry price 2.84
30 day ATR 0.24
1.5X ATR30 0.36
Cut loss stop on 1.5ATR30 2.48
Recommended cut loss 2.78
Loss on recommended cut loss -159.8411916


Target price 3.2
Profit on target price 677.1813528


Reward/risk ratio 4.236588491

I have yet to decide if I will keep these 2 lots or cut it fast and swift. It looks like on Monday there will be a big sell down in Asia after what happened on Wall Street on Friday. However the AGM on Tuesday might clear up many things (which I am expecting it will).

Last closing price : $2.93

Paper profit = $133.


Up to date balance of realized profit/loss = $2038 - $755 = $1283


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