The one mistake I think I made is the fact that my 2nd and 3rd tier additions are bought too early. While these two tiers ideally load up on the support levels, the price I loaded wasn’t exactly optimum. Firstly, my 2nd tier is way to close to the initial loading position. This makes cost averaging quite crappy in my opinion. Since I am loading a counter based on the long term trends, the 2nd tier should rightfully be used to load on the price slightly above the long term support level (this happens in corrections) while the 3rd tier is to be loaded at levels way below the base support level. This will fully stretch my time horizon of my holdings, which might be a good thing. Secondly, the idea of holding free cash float is easier said than done. This is because it is difficult to identify when the opportune time to buy is. I have used up my cash float on buying my 2nd tier counters during the time when I thought the correction would be mild. This sell down taught me few valuable lessons. I shall list them even before the correction ended. The list will consist of those that I learnt in the August Correction as well. Mistake 1: Itchy Fingers The random buying I did during the crash resulted in a more painful cut loss. The counters I loaded were done on impulse as I thought it was the bottom of the correction. I made this mistake again with OKP currently but generally, at the moment, all my positions held have been carried out with thought. Mistake 2: Free Float Cash Management Free float cash is important at times like this. What I failed to do is to load the counters too early on (this is not an unforced error as it is due to my rules which are not analyzed clearly). At the moment, to free my cash float, I have unloaded STI ETF, Gold, and Lyxor China H. I really hate to do that, but I don’t have much choice. As a result, this leaves my portfolio heavily unbalanced as my “Tier 1” is too weighted. The adjustment is due to the funds available to act as Tier 2, even though they might not been sufficient. Mistake 3: Wearing too big a hat for my head It suddenly comes to a point that I began to predict price movement. What started off as casual predictions soon ends up with me holding those beliefs. As a mechanical trader, this is just wrong. If I think back the primary reason for being a mechanical trader, it is because I suck at analyzing the market and valuating of stocks. I know that this is something that I might only be above average at best but not exceptional. Which is why I decide to go the path of actuarial science, which is by no means easier but given the upward bias of stocks in the long run, it gives me avenue to hone this skill. Anyway, last week, several of my counters have hit the cut loss trigger, but due to my belief in the market, I decided to act against it. This is wrong, as I should have kept faith in my rules instead. But now at the moment, it has been so oversold that it does not make sense to sell now. Thus, it will be a lesson learnt if I am bailed out in the long run. But my faith in the economy (which is crap), has incurred in lots of losses. These losses are not only the losses incurred by the sale of counters but it also includes the loss of grabbing the opportunities of rebounding counters. Mistake 4: Identity Crisis? I would not have classified this as a mistake but felt that I had to blog it down so that I can remember. Past weeks, I have been discussing about the merging of funds. It is at this point, that I feel that incorporating fundamentals to my fully technical and mechanical trading to be a good idea. However, it turns out that it has resulted in an identity crisis. Suddenly, I do not know whether to hold or to sell as both schools follow totally different approaches. Thus like a fool, I’m stuck in the middle of nowhere. I will sort this out after my tests this month. Labels: NenixDreams Fund |
