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 Post subject: Re: My Library
PostPosted: December 29th, 2018, 4:55 pm 
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How To Ensure Your Order Is Filled During Pre-Opening/Closing ("PO/PC")

The PO/PC Software is programmed to obey the following Rules:

1. No buyer will be matched at a price higher than his BUY order.
2. No seller will be matched at a price lower than his SELL order.
3. Buyers offering to BUY at a price higher than the indicative price will be matched first.
4. Sellers offering to SELL at a price lower than the indicative price will be matched first.
5. The final matched PO/PC price will be the price which will match the most number of orders.

If say the indicative price is $10.00 and there are more buyers than sellers, all the sellers will be
matched at $10.00. But not all the buyers will have their orders filled. If say there are 100 buyers
at $10.00 but only 80 sellers at that price, only 80 out of the 100 buyers will be matched at $10.00.
The remaining 20 buyers will see their BUY order "Not done". So in this example, if you are a buyer
and you want to be matched, be the first 80 buyers in the queue at $10.00. If you are the 81st
to 100th buyer, you will NOT be matched. Becoz there are only 80 sellers at that price. So how to
ensure that you are the first 80 buyers in the queue at $10.00? By offering to BUY at $10.01. That
way, you will jump the queue and be matched ahead of all other buyers who offered to buy at $10.00.
Likewise, a buyer who offers to buy at $10.02 or higher, will be matched ahead of you becoz he is
offering a BUY price higher than yours.

Using the same above example, if there are 80 buyers and 100 sellers at $10.00, all the buyers will
have their BUY order filled. But only the 1st 80 sellers in the queue at $10.00 will be matched. The
remaining 20 sellers will see their orders not filled. So if you are a seller, do not be the 81st to 100th
seller in the queue. Offer to SELL at a lower price, say, $9.99 and hope to be matched at $10.00. By
offering a lower price, you will jump queue ahead of all other sellers who offer to sell at $10.00. And
a seller who offers to sell at $9.98 or lower will jump queue ahead of you.

As the indicative price do change whilst PO/PC is in progress right until the cut-off time, you need to
keep watching the indicative price to see if you need to increase your BUY price or lower your SELL
price to ensure that you are ahead of the queue. Of course, you must be mindful that you could end
up being matched at the price you offered and you will have to live with it. So if the indicative price
keeps moving and is beyond your target price, you will have to stop chasing it.

Quite simple, isn't it? Now you know how it works. [​IMG]

_________________
My Rules Of Engagement:
1. I trade via CFD and I can run with 1 bid.
2. As I MUST react to ever changing market conditions, I may open/close my LONG/SHORT positions before my posted upside/downside targets are reached.
3. Dont follow me.


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 Post subject: Re: My Library
PostPosted: December 29th, 2018, 4:56 pm 
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Joined: August 25th, 2011, 12:19 am
Posts: 2414
What is the Difference Between Cash Account and CFD Account

When it comes to risk, there is no difference between trading with CFD and trading with Cash Account (CA). Whether you buy with
CFD or CA, to make money, you must buy low and sell high. If your stock is suspended and worth nothing becoz the company went
bust, whether you had bought with CFD or CA, the result is the same --- you lose everything. Buying a stock using CFD does not put
you at a higher risk than if you buy it with CA. Buying with CA also does not give you an advantage over buying with CFD.

But there is a difference. The difference being that when you buy a stock, you need not put up 100% of the value of the stock. You only
need to put up a certain percentage of the stock value which is usually 10% or 20%. This is called the margin. Index stocks are usually
at 10% margin up to a certain number of shares. For example --- the 1st 160 lots of Stock X is at 10% margin. Then from 161st to 300th
lot is at 20%. And so on. The Broking House (BH) will decide how many shares at which percentage of margin. Non-index stocks usually
start at 20% or 25% margin.

When you buy a stock, you provide the margin. The balance is funded by your BH. It is like a loan to you to enable you to buy the stock.
Becoz it is a loan, there is an interest charge which for IG is at 2.5% + 1-mth SIBOR. There is no interest charge if you sell your stock on
the same day. Interest is levied for overnite positions only and is deducted from your account daily until you sell your stock.

If you intend to buy a stock to hold it for months or years, you should NOT use CFD. The interest charge can add up to quite abit and add
to your transaction cost. Use CH to buy a stock which you intend to hold for months or years. Use CFD to buy stocks for short term trading.
If you become stuck and end up having to hold the stock longer, that' s a risk of trading CFD traders accept.

Trading with CFD offers traders one very big advantage which CA traders do not enjoy - low transaction cost. A CFD trader with IG pays
0.1% of transaction value as com. That' s all. No clearing fee, no SGX data fee and no GST. For CA traders, they pay anything from 0.18%
to 0.5% as com. Plus add to that, they pay clearing fee, SGX data fee and GST. The difference is a lot. So much so that a CFD trader can
run with 1 bid but a CA trader will need at least 2 bids and sometimes 3 to 4 bids just to breakeven. The difference in their trading account
can be very startling.

Another big advantage enjoyed by CFD traders is that they can SHORT a stock and hold for as long as necessary for that stock to fall. Then
buy back at a lower price to cover that SHORT position to make the difference. A CA trader cannot do that. If a CA trader SHORT a stock,
WIN LOSE or DRAW, he must buy back on the same day to cover that SHORT position or SGX will impose a penalty. This penalty is at 1%
of transaction value or $1000 whichever is higher. SHORT positions which are covered on the same day does not incur interest. Interest is
charged for overnite SHORTs only at 2.5% minus 1-mth SIBOR. This interest is deducted from your account daily. There is also a borrowing
costs for SHORT positions held overnite becoz IG needs to borrow shares for you to meet your SHORT positions. Borrowing costs varies
from stock to stock but the amount is affordable. This borrowing costs is also deducted from your account daily.

So in terms of the risk of buying stocks, both CFD and CA have the same risk. But in terms of advantages, CFD offers the very important
advantage of lower transaction cost and the ability to profit from a falling market by SHORTing stocks.

There is one more very, very big advantage a CFD trader enjoys --- leverage. But a word of caution. Leverage is a double-edged sword.
It can amplify your profits. But when things go south, it can magnify your losses too. Let me illustrate.

Let' s say Stock X is trading at $2.00 and the margin is 10% for the 1st 350 lots. And let' s say a trader has a trading capital of 100k. To
make it easier, let' s ignore commission in this illustration.

If a trader with 100k wants to buy Stock A using CA, he can buy only 50 lots. Old school of thinking --- 1 lot is 1000 shares. If Stock A rises
to $2.20 in a bullish market, this CA trader will make 50 lots x 20 cts = 10k.

But a CFD trader with the same 100k capital... at 10% margin, he can buy 150 lots bearing in mind the one-third rule. The margin for 150
lots is 150000 x $2.00 x 10% = 30k. If the stock rises to $2.20 in a bullish market, this CFD trader will make 30k.

Same stock. Same amount of capital. Same market conditions.
CA trader makes 10k with 100k capital.
CFD trader makes 30k with the same 100k capital.
But if the market turns against you and the stock falls by 20 cts...
CA trader will have a paper loss of 10k.
CFD trader' s paper loss will be 30k.

That' s why leverage, ie. the ability to trade with borrowed money (borrowed from your BH) is a double-edged sword which can cut
a bigger slice of the cake for you OR cause you to suffer bigger losses. There is no free lunch in the stock market. Higher risk comes
with higher gain. Just know what you are doing and if you accept that that' s the way the world works, then do it and live with the result,
good or bad. Trading is a business and when doing business, there is always risk. You just have to manage the risk.

The challenge here is to learn when to use leverage and when not to. And also when to use leverage to the max to Ka Ka HOOT
when the market presents you with a Golden Goose opportunity to make big profits. Traders who are disciplined love CFD. For
disciplined traders, CFD enables them to do a lot of the trades which are otherwise impossible. To trade 325 lots in SingTel using cash,
you need $991,250. How many traders have that kind of money? But with CFD, you can trade 325 lots with a capital of only $99.125.
And it empowers CFD traders to make big money when those juicy opportunities come by. If you have been in the market long enough,
how many times have you wished you had more capital when those great buying opportunities came by? Well, CFD is the answer.

Just becoz you have a credit card does not mean you go out there to spend irresponsibly till you burst your credit limit, right? Same for
CFD. Just becoz you have it doesnt mean you will buy stocks indiscriminately till you max out your leverage. As long as you are a
disciplined trader and you dont overtrade, you wont find CFD a curse. If like most CFD traders here, you use CFD to get more mileage
out of your capital and also to take advantage of lower transaction cost, you will find CFD a blessing.

_________________
My Rules Of Engagement:
1. I trade via CFD and I can run with 1 bid.
2. As I MUST react to ever changing market conditions, I may open/close my LONG/SHORT positions before my posted upside/downside targets are reached.
3. Dont follow me.


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 Post subject: Re: My Library
PostPosted: December 29th, 2018, 4:57 pm 
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Joined: August 25th, 2011, 12:19 am
Posts: 2414
How much you can trade will ultimately depend on how much funds you have to provide for margin. It is not x1 of your funds.
If margin is 10% for all your trades, how much max you can theoratically trade is x10 of your funds. But we shouldnt do that.
We should always observe the one-third rule so that we dont inadvertently overtrade. Trade up to max one-third of your funds.
Keep one-third for com, interest and to average down. Keep the last one-third as your reservist commandos to mount Search
& Rescue Missions to bring back your boys trapped behind enemy lines. This one third rule is just a guide. For some of you,
you may find that a 20%-40%-40% formation is better. Meaning fight with up to 20% of your troops. The next 40% is for com,
interest and averaging down or averaging up and the last 40% is for Search & Rescue Missions. No right no wrong here. Use
a ratio which works best for you. But for this ratio to make sense, your ratio can never be say, 60%-20%-20% becoz if 60% of
your troops become prisoners of war, it is going to be very, very difficult for the remaining 40% to save the trapped 60%.

Whatever your ratio, it is very, very important that you have one. And have the discipline to stick to it. Becoz only when you do
not overtrade that you can sleep soundly and spend quality time with your loved ones. You want trading to be fun, profitable and
enjoyable. Not stress you, wreck you up and turn you into an irritable spouse, parent or partner.

------------------------------------------

To make money in the market, we need to get 2 things right --- Stockpick and Timing.

Stockpick... we discourage trading in pennys. We go for index stocks which never fail to make a come back. We call them
Sure Come Stocks or SCS for short.

Timing .... this means 2 things.... (1) Direction - to go LONG or SHORT.... and (2) Selecting an entry level.
Whether LONG or SHORT.... we need to know a stock well. So before we attempt to trade a stock, we spend some time to study the
stock first...get to know it....get to know its Bawu so to speak. This includes getting to know our neighbours. Who are our neighbours?
Everyone else out there who is trading the same stock. What these neighbours do...how they trade and how big they trade as well as
how fast they trade affect the price action of the stock. When we know the stock well and get to know the neighbours, we have a rough
idea when and under what circumstances that stock is attractive to trade. This is called the Set Up. Once we know what the Set Up of
the stock is, the next thing is patience to wait for the Set Up to appear and when it does, we move in to make the trade.

--------------------------------------

" sometimes i trigger happy....especially when 2 -3 of good returns... u know the control part missing...."

Yes bro. That' s the danger when we have a winning streak. Once we start to...
Be complacent and ignore our trading rules which have served us well...
Feel invincible...
Think that we have made money and hence can afford to lose it and so we go bigtime in our next trade...

That will be the time when Mr Market will remind us that he, not us, is still the boss in the stock market and
he will teach us to write out and spell the words........ BE HUMBLE.

----------------------------------------

My own conclusion from years of watching the market --- there is no co-relation between married deals and the direction of the stock.
I will put the issue another way --- can we make use of married deals to predict the immediate direction of a stock?
My answer is NO.
That' s why I dont bother about married deals.
End of the day I still look at the intraday price action only and view it in the light of what the stock has been doing over the last one
to four weeks with more significance attached to what the stock has been doing over the last one week than in the previous week
and on top of that, more significance to what the stock has been doing over the last 3 trading days compared to the 4 trading days
before that. And dont look at the stock in isolation. Most of the stocks we trade are market followers, not leaders. So what the rest
of the broader market is doing, is also important. When you trade stocks which operate in tandem with other stocks, look at those
other stocks as well to get a feel of the market. For example, the Musketeers move in tandem most of the time. So when two of
them starts to make a move to the upside, we know there is an 80% to 90% chance the other two will likewise follow and make a
move to the upside.

Sometimes you may find certain " trading stocks" also moving in tandem. Put all these stocks together in your Watchlist so that you
can see at a glance whether they are all rising or falling together. This " moving up or down together" phenomenon can change over
time and so will require updating. For example, at one time, I noticed that these 5 stocks do more or less move up or down together:

SGX
SingTel
Capitaland
ST Engrg
Wilmar

So when I trade them, I look at what the others are doing. Becoz they usually move in tandem in the same direction, it helps to look
at them to give you a more accurate reading of their direction.

And ofcoz we also need to look at market leaders --- the banks. They do lead the market up or down and we respect that and use
that info to help us read market direction. Unless there is a change in market conditions which justify a departure from this rule. For
example, following a surprise after-market announcement of more property cooling measures, we know for a fact that on the next
trading day, banks and developers will get hit. And when it happens, the rest of the market may not necessarily fall in tandem with
the banks. Especially if these other counters have recently bottomed out and started rebounding.

---------------------------------------

You just asked the one million dollar question --- is it accumulation or distribution.
Experience and gutfeel says I dont think it is accumulation.
Smart money usually accumulates low, not high.
Besides, the condition on the ground was sweet for them to drop... (1) XD ler... (2) Interest rate hike coming... (3) Next reporting
season another 2 months down the road... and so smart money could have depressed them first to force weak hands to throw
and run. Then smart money starts accumulating....at the LOW. That' s usually how they do it. Not push the price up and then
accumulate at the HIGH. Push the price up and block it to prevent it from coming down whilst they distribute at the HIGH...that
one makes more sense. Which is why experience and gutfeel says more likely distribution than accumulation.
But we can never be certain until the price has moved quite a long distance one way or the other by which time much of the meat
is taken off the table by the more aggressive traders who dare to frontrun and move in earlier.
Since not sure, then I obey another one of my Rules of Trading --- " When in doubt, do nothing."
So I have been largely a spectator in the Musketeers. I did not open any new positions.

_________________
My Rules Of Engagement:
1. I trade via CFD and I can run with 1 bid.
2. As I MUST react to ever changing market conditions, I may open/close my LONG/SHORT positions before my posted upside/downside targets are reached.
3. Dont follow me.


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