Author: Rainbow Coin

Revisit: How interest rate affects the market – a mathematical courtship

What would happen when the banks increase their interest rate? Here’s a very simple theoretical summary of the relationship between interest rate and securities.REITS might be adversely affected due to the increase in their debt’s interest (so they either have a higher sum to repay as a result or may cut down on borrowing for expansion). That’s why we always talk about NAV and gearing ratio when we look at REITs. On the bright side for those looking to get in cheap, REIT yield would increase when their share prices drop. To learn more about REITS, I would recommend these 2 blog posts by namely...

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Trade risk management – a lesson

My trading motto is “Be clear on my trade set-up and risk-reward, AND find out the catalyst for current stock price movements”. Finding out the catalyst, as what I have mentioned earlier, is keeping up with market news. When we talk about managing risk and using a risk-reward ratio, it is about HOW MUCH WE GAIN when we are right and HOW MUCH WE LOSE when we are wrong. Then we perform all that TA magic to find out if the ratio is satisfactory for us to enter a trade. To control how much we lose when we are...

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DEFG – Desire, Effort, Faith, Grit

I am only at the second chapter into Napoleon Hill’s ‘Think and Grow Rich’, the contents are so impactful that it took me into my reflective mode almost right away. “Desire” is a key word which appeared many times from the very first chapter and it resonated strongly with me as I recalled my childhood. I am born to Singaporeans and not born with a golden spoon, I think not even a silver spoon. I am born to a below-average family with my father working in a blue-collar job and my mother a homemaker. Life was simple, and I...

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High value is not the same as low price

There was a recent blog post by Seth Godin that describes value from a marketer’s perspective. Similarly, high value cannot be extrapolated from low price when investing. The lower the price of a stock, the harder it is to find value. I define what is ‘low price’ by looking at the price of a stock with respect to say other stocks within the same sector in the same time period. There is often a reason for every low price – especially if the price stays persistently low for years. It could be due to no growth or slow growth...

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Share Buyback – what it means and the implications

When a company initiates buyback of its own shares, the news is often received in a positive light – that the company deemed its current market share price as undervalued. Understanding the implications of share buyback of companies would help us make better investment decisions, as we seek to delve deeper behind the action and how it changes the face values of the various metrics. Does the company genuinely think that its share price is under-valued?  Does the company believe in its future earnings and growth such that it would rather invest in itself rather than invest elsewhere or...

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Warriors

The typical image of a warrior that comes to mind is a strong, glam-armorous, sabre-wielding figure. Successful warriors need to train hard (maybe have good mentors too). They need ample resources (for good weaponry and defences). They need the brawns and the brains. Not everyone have the aptitude and grit to become a warrior, even if one claims to have the ‘warrior spirit’. We can liken entrepreneurs to warriors – strong, glam-armorous, sabre-wielding… but more often the path to successful entrepreneurship is like this. . . . Not glamorous at all, right? They have to work harder than the farmers....

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Still in the secular bull market

No matter how I look at it, the trade war still didn’t dent the market enough. We are currently still riding the secular bull market from 2011/2012. Those who have accumulated by DCA would be very happy. Especially on the US index. Those who have been preparing for a bear market to kick in since a few years ago, have they given up or let their guards down already? STI – source: Yahoo Finance chart VOO – source: Yahoo Finance chart STI’s volatility was largely attributed to the swings in financial sector’s stock prices as they constituted a whooping...

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Still in the secular bull market

No matter how I look at it, the trade war still didn’t dent the market enough. We are currently still riding the secular bull market from 2011/2012. Those who have accumulated by DCA would be very happy. Those who have been preparing for the bear since few years ago have they let their guards down by now? STI – source: Yahoo Finance chart...

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My newbie trades review & tips for using SAXO

It’s been slightly over a month since I started out on my Jedi journey (here are my previous 2 trade-related posts – Pair trading adventure I & II). It has been a fruitful month as overall my SAXO account has some gains, thankfully, instead of having to pay ‘school fee’. Research and charting has been time-consuming and there were times when I “analysed till paralyzed” then decided to just sit on the sideline. I do mostly swing trades and typically closed them within a few days. As my positions were small, my commissions were a substantial portion (%) deducted from my trading...

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My newbie trades review & tips for using SAXO

It’s been slightly over a month since I started out on my Jedi journey. Here are my previous 2 trade-related posts – Pair trading adventure I & not-so-pretty Pair trading adventure II. It has been a fruitful month as overall I have made some gains – contrary to what I have expected of having to pay ‘school fee’. Research and charting has been time-consuming and could only take place quite late after work (US market opens at 9.30pm). There were many times when I “analysed till paralyzed” and ended up just sitting on the sideline. I do mostly swing trades...

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Alibaba in the limelight again

Alibaba’s Jack Ma to unveil succession plan next week, remain chairmanRead more at https://www.channelnewsasia.com/news/asia/jack-ma-retire-alibaba-founder-new-york-times-10696942 Alibaba Reveals Bigger Threats Than Trade War I am currently back to my ‘unorthodox’ pair-trading with Alibaba (BABA) and Weibo (WB). Had a short wild ride on Tilray couple of days back. It’s almost like smoking the last puff of a cigar before it crumbles – not talking about a value stock here, but an over-valued stock. My homework for the coming week is to consolidate some of my learning into a workable system and try to do some math. I realised that my total trading commission is...

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Alibaba in the limelight again

I am currently back to my ‘unorthodox’ pair-trading with Alibaba (BABA) and Weibo (WB). Had a short wild ride on Tilray couple of days back. It’s almost like smoking the last puff of a cigar before it crumbles – not talking about a value stock here, but an over-valued stock. My homework for the coming week is to consolidate some of my learning into a workable system and try to do some math. I realised that my total trading commission is a bit out of proportion versus my gain. As mentioned, CFD trade commission is a whooping $9.90 per...

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Pair trading adventure II

I burnt my finger on a punt trade (which did not originate from a pair trade set up). Ouch! A $100 lesson learnt – don’t directional trade without doing homework and sleep on it. My current pair trade is on two strongly correlated (>0.8) stocks. It’s fun to watch my how my trades are hatching daily and the tug-o-war. The two buddies looks like they are parting paths soon after a strong break out (upward) the day before. I hope they would play out nicely per my expectation e.g. don’t pull a DNA helix pattern on me. I think...

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Pair trading adventure II

I burnt my finger on a punt trade (which did not originate from a pair trade set up). Ouch! A $100 lesson learnt – don’t directional trade without doing homework and sleep on it. My current pair trade is on two strongly correlated (>0.8) stocks. It’s fun to watch my how my trades are hatching daily and the tug-o-war. The two buddies looks like they are parting paths soon after a strong break out (upward) the day before. I hope they would play out nicely per my expectation e.g. don’t pull a DNA helix pattern on me. I think...

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Pair trading adventure I

It’s been an exciting week doing more pair trading in the US stocks market and milking little gains from the market (I won’t wear a bigger hat than my head even on margin). The most volatile counter played, no doubt, is Alibaba and I am out of it. Just look at the long long candle yesterday, woah…. Invincible, no other counter can be its pair now. I know in one of my earlier posts I mentioned why I won’t invest in oversea market – then now I ate my words? It’s because 3 of the deterring factors are no longer bothering...

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