The market has been thrown into a big turbinal due to rates move (interest rate movement) on the back of reflation concern. In very layman's terms, the world's interest rate (America) is increasing on the back of the economy reopening and thus interest rate has been shooting up higher and higher every day over the past week. This raised concern that growth stocks or US equities might have overrun thus a bubble that caused the big retracement.
Personally, I also got hit quite badly and if the equities market doesn't recover, it might just undo my Feb gains. You can look at the figures below where I am only sitting around 700USD gains. I've also taken a few fallen knives.
However, I am still very bullish on the US equities market but I am not keen to add any more at discount due to my margin requirement. Honestly, I am very risk-averse as I've made quite a fair bit of money (more than what I expected).
I expect this hike in rates won't be sustainable and also money will flow back into equities eventually. The central banks across the globe are also putting in efforts to keep the rates low.. so this might help too. Generally, I feel that the economy is too bullish in its recovery.
Let's see how next month will go. I'm currently heavy on options.. hopefully, the market will recover.
Feeling sad.. ending the month with quite a severe loss.. I gave up about 1/3 gains in Jan.. (my first month). Honestly.. not losing money is a great thing and I actually reach where I would like my dividend gain to be this year without collecting any dividend yet..
I started to follow meme stocks.. and got a little over my head.. while I collected some decent gains.. I ended up in red for all my meme stocks.
This actually teaches me a lesson not to be too greedy and stick to the plan.. "be cautious when you're getting greedy" is really well said.
However, it still hurts seeing my performance dipped from ROR 59% to ~36%... but I'll trust the process.. and hopefully, maybe reach SGD12k by end of the year seems to be an achievable target.. this is my bottom line.. and hoping that with this.. I can be more satisfied with myself.. currently, I'm sitting at ~SGD3k up.
I foresee the start of Feb to be a tough month with meme stocks still being in the focus.. I might continue to follow some of the lower-risk ones that are not overdriven yet. But this also negatively impacts my medium-term trading & investment book since meme stocks actually feel like an asset class by itself and are negatively correlated to most stocks.
What's your take on this meme stock rush.. and how has your portfolio been performing? But I also see this as a bargain sale to buy some of the more solid names as they continue to dip.
Tiger Broker Jan 2021
I've been putting some part of my salary into Tiger Broker on a monthly basis.. As I've only recently started trading.. my trading book is really much smaller than my investment portfolio.. I plan to put all my investment funds into Tiger this year.. and diversify out of my Singapore Investment.
I just need to make sure there's a way for me to separate my medium-term to my long-term positions.
How was your Jan if you're in the stock market? Hopefully, I can have a similar performance for Feb and bring this to a good year.
I've actually decided to write on this topic at 4AM today.. but I prioritized my sleep and decided to do it after. This morning I saw that Seedly wrote on GME as well and it's quite extensive.. so if you want more info, do look up here.
I was actually losing my sleep over a paper loss of 30% on GME as I jumped in the train a little too high without knowing the stories.. and this is after some effort of averaging it down to make it more bearable.. however, last night's rally put me back neutral as I limit sell my position slightly above cost. I will be lying if I said that I don't regret selling there but then again I am glad I walked away from there in one piece.
Backstory
I hopped on to the band wagon to do some trend trading seeing the volatile in GME on Monday.. earned some fast cash on that day.. and saw it rallied past 150.. my itchy hand had the better control over my rational brain and it touched 159 briefly and came down. I tried my best to average down and ended the day with paper loss over 30%.. which was quite stressful.
GME War
I went on to read what started all these in the subreddit of r/WarStreetBets and it helped me through the tough day seeing how supportive the crowds are.
So long story short.. what started all these was hedgies were shorting the hell out of GME because they can.. while shorting you borrow stocks that you don't have to sell but you incur a borrowing cost. As of latest figures, we are seeing outstanding of ~138% of the overall stocks being shorted around USD20. One of the two prominent hedgies that are aggressive is Melvin Capital who have lost 1/3 of his AUM of USD12.5bn since the year start (many speculate is because of GME's movement on Friday). Which led to him getting bailed out by his old boss at Citadel for a USD2.75bn bail out (including Point 72's 750mio).
Where are we now?
GME closed at 147.98 (92.71% up on the day) and this is a whooping 685.46% up YTD. Many of the soldiers in WSB are looking at USD 4XX as a target.. but while many hold a meme optimism at USD1k. This is really interesting to see how it pans out especially since the big squeeze has yet to arrive considering that Melvin Capital gotten more capital to cover their bleeding~
I currently stand as a proud WSB soldier with ready-capital to buy the dip and hold for the team there! Won't be touching it if it continues rallying, but I will be glad for my fellow WSB who put in every single cents they can afford. Do look over to their reddit.. it is really supportive if you're bleeding on paper loss (which is unlikely at this point of time).
While many people seems to say one thing.. pls be careful that what they write might not be actually true but then again I wouldn't call this a "Pump & Dump" strategy.. as authorities aren't clamping them down.. and there're many valid reasoning behind this. I will continue helping the team over WSB with my small capital when needed because I like GameStop and by all means, this article is not a financial recommendation/advisory.
Interesting Highlights
Personally I feel that retail won't have the capability to win institutions usually.. but the hedgies have the cards stacked against them and this is a global movement with many strong support.
Michael Burry (star of the big-short movie)'s Scion Asset Management owns 1.7million shares at end of Sept 2020 which ballooned from 17mio to 250mio as of Tuesday close, putting it a 1400% up in 4 months.
Elon Musk tweeted "Gamestonkk!!" along with WSB's reddit link which helped GME jump further in after-hours trading.
Chamath Palihapitiya (billionaire investor) asked in Twitter for stocks recommendation, and if anyone convinced him.. he will dump a few hundred Ks into it.. while many from WSB try to convince him to bet on GME, the main pusher I guess was when Reddit's owner tweeted for the push! He ended up buying 50 Call options on GME with 19 Feb expiry and a strike of USD115 when the price was floating around USD90.. this puts the purchase around $125k... but seeing the stock so strong now.. he is definitely in a lot of profit.
Screenshots
I will try to share some screenshots that got me through and I thought might be interesting highlights in future posts. Can't seem to get the photos onto my work computer for that..
Conclusion
Ultimately.. this is not a trading strategy nor a recommendation for investing.. but is more of a movement for the usual me and you to get back at the hedgies who have been profiting at other's expenses. Do your own DD before hopping on anything! I will try to keep update on GME for sure..
As of writing. I don't hold any GME positions but queued a GTC order at lows to support the army! I can't wait to see how this pans out even if I am not holding anything!
Decided to touch on equities/stock options as I'm sure many people out there might not be clear or even know what these do. Personally, I've only known the concept of call/put options but in truth, I wasn't sure how traders make money from these or why they do it. However, I've started to trade US equities and options as well, so I thought of sharing my strategies as I go. As usual, I will try to go through these as layman as possible, else it'd be pointless for me to cover it and I should just paste some website link.. lol
Introduction
There're 2 types of options; the Call Option and the Put Option. Typically a Call option gives the holder the right to buy the underlying stock while a Put option gives the holder the right to sell the underlying stock.
Will like to touch on some terms widely used in options trading;
underlying; the underlying stock of the options
exercise; when the holder of the option decides to "execute" it
strike price; where an option will be exercised upon expiry if the underlying stock price reaches there
expiration date; the specific date when the option is rendered useless
styles; American (can be exercised anytime between holding and expiration date) or European style (only can be exercised on the expiration date), most widely traded contracts are American
contracts; per option contract represent 100 underlying stocks
premium; the price you pay or get for the option (easily mean the price of the option)
in-the-money (ITM); when the option gives you a profit when exercised
out-of-the-money (OTM); when the option doesn't give you any profit and if the exercise you lose money
expired; losing the contract without exercising
Call Option
Basically, it gives you the right to buy the underlying stock at the pre-decided strike price before the expiration date. If you sold a call option, you give someone else a right to buy your stocks at a certain price before the expiration date.
Traders buy a call option when they're bullish on the underlying. For example (figures used are est);
stock A is trading at 10USD, and you're bullish on stock A going higher and higher
trader A buys a call option at 12USD that expires in 2 months at 0.20USD/stock which puts the contract at 20USD (per contract = 100 underlying)
at the expiration date or close to, the underlying stock is at 15USD now meaning the trader is right on his call and the option is ITM
by exercising this option, you can own the underlying at 12USD despite that it is trading at 15USD where the trader can either hold or sell it for a quick profit
if the trader is still bullish, he will hold onto these stocks and wait for a good time to sell
if trader wants to book profit, he can sell at the market price of 15USD and you earn 3USD per stock making it a whooping 300USD
however, the trader has to deduct the premium he paid for the option which is 20USD.. thus the trader earns 280USD
if the stock price goes the other way or if it didn't hit 12USD, it will be expired (rationally, you won't exercise as you can buy the stock in the market for whatever price it is), so the premium is lost
A valid argument I'll hear is probably, why not buy the stock outright and if the stock didn't hit 12USD, you will still make the excess from where you bought it at 10USD.
However, it is a good way for you to bet on bigger stock price names such as Alphabet (GOOGL) trading around 1890USD or Amazon.com (AMZN) trading around 3292USD. You can bet on these names at a fraction of the cost.
Put Option
This is the opposite of the call option, it gives the holder a right to sell the underlying stock at a pre-determined price.
This is usually executed when the trader is bearish of the stock and thinks that it will go down.
stock B is trading at 10USD, and you're bearish on stock B going lower
trader B buys a put option at 8USD that expires in 2 months at 0.20USD/stock which puts the contract at 20USD (per contract = 100 underlying)
at the expiration date or close to, the underlying stock is at 7USD now meaning the trader is right on his put and the option is ITM
by exercising this option, you can sell the underlying at 8USD despite that it is trading at 7USD and the trader need to buy back the position at market
by exercising the option, the trader will have a negative 100 stock of the underlying which he will be required to buy to close it at 0 position
technically, the trader sold 100 stocks at 800USD but he needs to buy back at the market meaning paying up 700USD which puts his profit at 80USD (subtract the premium he paid for the contract)
as usual, if the stock doesn't hit lower than 8USD, the contract expires and the trader loses the premium
While in the call option, it is possible to hold the stocks outright as long as you can afford them but to do it similarly to bet it going down, you'll need to short the positions (meaning to sell stocks that you don't own). This will give you cash as technically you're selling.. but you will be subject to interest and fees for shorting the underlying as technically you're "borrowing" the stocks to sell now and buy back later to return it.
Summary
I tried to keep this as basic and as easy as I can share.. do ask me anything in the comment. I will be back to post more basic knowledge here (it also helps me to serve as a refresher to see how I am learning as well).
I'd like to post some widely use strategies and also my take on them.. and most importantly how I make money on a daily basis on Tiger Broker.
Hope everyone had a good weekend, and I'll be off polishing my work shoes.
In this post, I will be going through the brokerages/apps that I am using from day-to-day basis that aid in my investing/trading journey.
As I’ve shared that I started my journey in early 2018, and was also anxious on which platform should I take. My consideration was whether the platform can be reliable, efficiency, and easy to use. For most consideration, one can choose between a bank-backed and a normal online brokerage.
Bank-Backed
As the name goes, it is backed by a bank which mean that it is relatively safe as banks usually have a credit rating pegged to them, and in Singapore most banks that you see are having at least A credit rating. These brokerages are usually a subsidiary of our widely known local banks; DBS, OCBC, and UOB. Bank-backed brokers are usually less competitive, with most of them having similar fees structure and not as competitive as online brokerages. Usually people go along with these because of convenience, and if they are Treasures or high frequency trader, you get a better deal, else it is really expensive if you trade very small positions. Their IU/APP/API are usually less user-friendly and for example DBS Vickers struggle with large volume from what I hear from people, where its server tend to crash.
DBS Vickers
I use DBS Vickers when I started off mainly for convenience as I can still hold the money in my account, and it also satisfied my step-up requirement for higher interest back in the days. The fee structure is as below;
I still maintain my DBS Vickers account for my SGD Investment Book as transaction with DBS for local shares, it will be credited into your CDP which is deem much safer as you hold your stocks directly. Easily seeing from this, to make minimum commission (I reckon you are a small position trader like me, so ignoring the >50KSGD bracket), you’ll need to initial a position of at least SGD8,929 which puts your commission at SGD25.0012. Common sense, the less you invest, the more it will cost you. However, for recent times, there are cash up-front payments which means you must have the cash before you deal in that transaction, and this is really cheap at SGD10/trade before CDP/SGX fees. This puts the commission at 0.112% on the same value of SGD8,929 which is way less than half making it affordable. However, you’ll still be subjected to same commission when selling.
Online Brokerages
These are definitely the more favorable platform that Day Traders (or wannabes) use and these usually have much more competitive pricing along with better API/APP etc. However, you need to directly transfer fund onto these platforms, and these might have a small lag time so transfer ahead of your planned trades/investment. These can go as cheap as 5 free trades a month, or 1USD per trade for USD. Some examples that I’ve heard people use frequency are; FundSuperMart, Saxo Markets, TD Amertitrade, and Tiger Brokers
Tiger Brokers
While there’re many reviews on Tiger Brokers out there already, I’ll save my effort as you can easily read up on them by googling (as much as I try to help and share, this is not a review blog, nor I am sponsored by Tiger to write about them). This is probably one of the easiest online brokerage for Singaporean, your account gets approved within minutes if you use SingPass to sign up and for topping up, you can set up DDA with DBS bank (only DBS now) which enable your fund to be in your account within minutes as well! Aside from the low commissions, the top-up and withdrawal fees are free-of-charge! You can use my referral code if you’re keen to join Tiger Broker (Disclaimer, you get similar bonus signing up without any referral code as well). https://www.tigersecurities.com/accounts?invite=XFI1OW
Wrap-up Thoughts
My goal of the blog is to reach out to public audience, so I try to be as brief and as simple as possible. Hopefully this can help everyone get started. On another note, please do your homework before you engage in anything; just lost over 40USD over long/short trades on Tiger Broker.
I’m trying to cover all most basic stuff before going into some regular investing/trading tips that I use, if possible do leave comments on what you might be keen to hear about.
