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things every retail investor/trader should know
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elfinchilde
Elite |
31-Oct-2008 14:00
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x 0
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carry looks to be unwinding. currencies v volatile now. 80 pip swings up and down on the UJ for past 45 min. to take care on afternoon session. may be v volatile if carries over into equities. | ||
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elfinchilde
Elite |
30-Oct-2008 17:05
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x 1
x 0 Alert Admin |
thanks CWquah for helping out. :) yuppers. dividend play strategy: you are buying in for the dividend (CD), you sell XD. the hope is that the fall is less than the dividend payout. And no, it's not an 'automatic' adjustment. there are some counters which do not fall XD either. A better strategy for good counters actually is this: 1) Buy 1/2 of your intended lots CD. preferably before the run up period. (there tends to be a run up a week or so before the div payout date, usu the px of the div. eg, if dividend is 5c, you'll see px of stock run up before that by more than 5c. you want to get in before the px runs up.). 2) Take the dividend. 3) DCA in at the low XD. the other 1/2 of your funds. 4) Stock goes up to CD px, sell all. So this way, you lock in dividend returns plus some capital gains. Note that you can only do the above for good blue chips and FA stocks. and pls pay attention to current climate as well. it is NOT a guarantee that the price will go back up to the CD price. hope this helps. cheers! |
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cathylmg
Elite |
30-Oct-2008 16:01
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x 0
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I think it also depends on market sentiment. If market is inclined to moving upwards, most shares will tend to resist gravity. IMHO.
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waverly
Member |
30-Oct-2008 15:54
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x 0
x 0 Alert Admin |
Hi CW Thanks for reply. Yes i meant during the cum-dividend period In other words, the stock price does not necessarily drop after the ex-d date by the same amount that is distributed as dividend? I thought I read somewhere that the price automatically adjusts downwards, so that people who buy the stock after the ex-d date are paying the same price as those who got the stock during cum-d, no arbitrage is possible. but from your reply, you suggest that the stock px might hold after ex d. So essentially, you are saying this strategy is really just gambling? ie not certain how the stock px moves after ex d |
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CWQuah
Master |
30-Oct-2008 13:30
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x 1
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Waverly, I think when you mentioned "I know some people buy stocks during ex-d to get the dividend..." you mean they buy during the CUM-DIVIDEND period. Buying a stock when it has gone ex-dividend does not entitle the new shareholder to dividends. It's a potential trading strategy only because, OCCASIONALLY, some stocks drop less than the magnitude of the dividend per share after ex-dividend. So they make the difference between the dividend and the price drop upon ex-div. If it's a good company to invest in, the odds are buying strength remains even after ex-d (especially for blue chips that have a good record of giving consistent dividends even in bad times). Nevertheless, this is no guarantee of a profitable trade as market movement in the short term may still work against ex-div punters.
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waverly
Member |
30-Oct-2008 13:17
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x 0
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hi, was just wondering if anyone here can explain how dividends dates are used as a trading strategy. i know some people buy stocks during ex-d to get the dividend. however, usually after the ex-d date, the stock px drops by the amount of the dividend. why do people buy during ex-d then? why dont they wait until after the ex-d when the stock px falls to purchase the stock. would appreciate some basic education on strategising on dividends. abit lost in this aspect |
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trader88.sg
Veteran |
30-Oct-2008 09:28
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x 0
x 0 Alert Admin |
Did not receive your PM leh.
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elfinchilde
Elite |
29-Oct-2008 22:14
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x 0
x 0 Alert Admin |
yup trader88. range play of consolidation mode. if ranges aren't wide enough, it's no go for play. mail you privately. cheers! |
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iPunter
Supreme |
29-Oct-2008 21:59
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x 0
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It's hard to tell what a new economic order will do to a stock/financial market... |
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trader88.sg
Veteran |
29-Oct-2008 18:02
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x 0
x 0 Alert Admin |
Elfinchilde, It could be signs of the arrival of prolonged sideway market. |
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novicex
Member |
29-Oct-2008 15:41
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x 0
x 0 Alert Admin |
thanks for the explanation elf :) |
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elfinchilde
Elite |
29-Oct-2008 15:38
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x 1
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board shakeout. shortterm direction is unclear, though the mid/longterm direction is still the same. whipsaws either way will kill. it's a very tightly controlled game to shake out both longs and shorts. even the warrants aren't reflecting sti movement any longer: market makers skewing the picture. best to stay flat if you're not in. fyi only, caveat applies. |
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elfinchilde
Elite |
27-Oct-2008 17:04
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x 1
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reposting the last part from my latest blog post here. for those fretting about their losses. in case the big picture has been forgotten. http://elfinchilde.blogspot.com/2008/10/course-updates.html (full post for the interested) ------------------ personally, for me, nothing beats the live experience. more work, perhaps, but when you are there, live, living and breathing the market, you fully understand it from its basic principles, and you can react accordingly in any given situation, rather than relying on a computer system, which will invariably fail: because how can artifical intelligence map the entire depth of the human soul, its shifting, complex topographies of emotions, intellect and creativity? so for those staring at losses now, relax. Money is important, yes, but it is not the entirety of life. Rather be a person rich in friendships, experiences and all the intangibles that make life rich, than a lonely person in a huge mansion with nothing but fistfuls of dollars, with no real friends, and whom everyone deserts in times of trouble. the richness of your life is not measured in the numbers of your portfolio but by the number of your friends who will come to your aid, freely, without question, when you are down. the market is a game. and as Benjamin Graham says, Mr Market is your slave, not your master. Always, you control your reactions to the game; so never let it become the be all and end all of your life. Because in the very big picture of life, this is just a passing dream. Engage in it, but have the ability to disengage, too. cheers from an elf! |
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baseerahmed
Master |
27-Oct-2008 16:36
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x 0
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Elfinchilde Thank you ! : ) | ||
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elfinchilde
Elite |
27-Oct-2008 15:33
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x 0
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baseer, the carry happens all the time: it is on-going. some borrow, others return. think of the yen as a bank, basically. anticipate the unwinding: when the charts show the UJ is going down. esp when weekly/monthly uptrend lines are broken. CWQuah, yah. the upslope line is very important. and we've broken it. haha. the bull run from 1998 is over for the STI with friday's break. and yea, just did the STI chart and about to post on my bloggie... concur on the 1515 level; i have it on mine as 1478-1518. :) expecting to hit it tmrw when we play catch up. THe DJIA is the significant one. if we break the 8,000 (or 7,9xx, to be precise), it's a break of the uptrend from the 1940s. off to do a bloggie now. cheers! |
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baseerahmed
Master |
25-Oct-2008 14:13
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x 0
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Elfinchilde : Thank you very much for explanation on Carry Trade. Let me re-rephrase my original questions : (1) how often does this Carry Trade happen ? (weekly, monthly, anually? ) (2) how does one anticipate the Carry Trade (news, econ calendar, BOJ interest rate announcement ?) Sorry for troubling you again.  |
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baseerahmed
Master |
25-Oct-2008 14:08
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x 0
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these are some snippets i found googled under "Carry Trade Explained " from various websites to get a rough idea : ===================== What is all this talk about the “Carry Trade”? Everyone keeps on talking about it but what is it? What does it mean? Well, it’s not as complicated as one could think. Basically, the concept revolves around a play on currency yields. It consists in borrowing a low-yielding currency and investing the amount in a currency that is offering a higher yield; the yield difference representing your gain (minus tax and commissions). An example of this could be to borrow 1,000 Yen and convert them into USD and then use them to by a USD denominated bond. Assuming that the bond pay 5% and that the Japanese interest rate is at 0,35%; you would stand to make a profit of 4,65% (as long as the exchange rate stays the same). Furthermore, using a common leverage of 10:1, this would mean that you would stand to make a profit of 46,5%! Easy money? Well, we should all know that potential returns are always related to the amount of risk you are taking on. If you decide to execute this kind of trade, then it means that you are makanig a bet on the exchange rate direction but please remember that depending on the amount of leverage you decide to use, gains AND losses can be very substantial. http://www.articlesbase.com/investing-articles/carry-trade-explained-209166.html ===================== There's so much talk about the Yen carry trade lately, especially because many think it's coming to an end. But all this depends on the interest rate decision coming from BoJ (Bank of Japan) Wednesday, 21 February 2007 and BoJ governor Fukui's speech right afterwards. I'm sorry I can't give you an exact hour for this interest rate announcement, but BoJ doesn't always give reports as important as this one to the public at an exact time to prevent excess volatility into the market. The outcome is very important to everyone trading forex. http://dailyfx.blogspot.com/2007/02/yen-jpy-carry-trade-explained.html |
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CWQuah
Master |
24-Oct-2008 19:43
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x 0
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Good charting. The upward slope line is a very critical support. Watch for it. Tech levels of interest (if there's any left...) - 1573, 1550, 1515 (the more significant level), 1487, 1429.
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elfinchilde
Elite |
24-Oct-2008 18:25
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x 0
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just to complete the lesson, cos esp for newbies, while learning, it's easier to see with benefit of hindsight than when the process is ongoing. tho the aim for a trader is to be able to extrapolate beforehand, the past is important, since once learnt, you can apply the patterns looking forward next time. so that when the same setup occurs, you know that with greater probability, more often than not, it'll happen one way. http://elfinchilde.blogspot.com/2008/10/false-rebound.html --on thursday this was what i had posted. today's action shows precisely what a false rebound means, and why, if your aim is longterm, you'd not take a false rebound no matter how tempting it looked thurs afternoon. (the low of course, fell lower than expected. my mistake for not doing the recalculation sooner. updated sti charts posted today.) have a good weekend all, and don't fret. since whether you worry or not, the market's still going to move anyway. so if worrying doesn't help, may as well save it. |
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elfinchilde
Elite |
24-Oct-2008 16:49
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x 1
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zillion, thanks. :) it's perhaps less the actual period of time but more the consistency of practice. how close are you to the market; how much of a realist are you (ie, do you actually see what is happening, or are you only seeing some ideal in your head, that 'it is a good stock', 'it will go up/down' etc.) a lot of discipline; perhaps the most disciplined of the fields to survive in, since this is a job with no safety net. (not a gahmen job. haha.). where your greatest demon is yourself, really. the rewards are there however, if you dare to take the risk. singaporeans need to get over their mentality of always looking at reward only and not at risk. i've more or less been trading for 10 yrs already. but went fulltime only this year. so i practically live and breathe the markets (not just stocks). i do find it boring to just trade tho; which is where teaching gives more intangible satisfaction.  afterall, what's the hurry in making all the money all at once, and neglecting to live, forgetting about the ppl who care for you. Quality, not quantity of life is impt.
baseer, how often does what happen? the carry breaking? lk at your UJ 4H chart, from 0000 EST. what do you see. :) i'm personally holding an EU short from 12815; locked in the UJ short from 9620, entered again just now at 9409. just fyi only ah. caveat applies as usual. watch for final bell throwdown on stocks. margin calls for a lot today. and that's a wrap up for the day, folks! 
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