Monday, April 25, 2011

Cut loss or hold? + Updates

Haven't updated in a while...

Having be in shares for almost half a year, I think the most difficult decision to make as a young and new trader/investor is whether or not to cut losses on an under-performing stock. Personally, after attending a few more talks on technical analysis and discussion with my friends, I realized that my buying of SATS @ 2.87 was of a very bad timing and price. However, I was not receptive to the decision of cutting my losses till I see it slide all the way down to about 2.55 now. Thinking back, should I cut my loss? Some reasons I chose not to was that the company pays out regular dividends making it quite a stable company in my opinion and that I have the ability to hold on to the share for a longer term. In addition, the recent earthquake in Japan came at a poor time as SATS have just taken over TFK, a Japanese airline caterer. This is where I felt kind of confused. Would the money be put to better use than leaving it stuck at a paper loss?

Because of this I went to read up and had a discussion with a few friends. I believe the question can be answered based on one's chosen time period for trading, whether it is short, mid or long-term. Now, I categorize the shares in my portfolio based on whether it is a short, mid or long-term trade. SATS, being a share which gives out a stable yield, is, in my opinion, a mid-term share. Thus I decided to hold onto my current lots. Hopefully some of you who read my blog can give me some opinions? :)

Updates:
I loaded a few lots of Indofood Agri @ 2.19 just last week and I must say I'm still not experienced enough to decide on a good enter price. After entering at that price, the price bottomed out to 2.12 before rallying on thursday to close at 2.19 after a high of 2.21. Seasoned traders would have took and made a huge profit before good friday! Oh well, after every trade, I only become more experienced!

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