Lazy Beach - Boracay, Philippines photo by Fr. Noel Azupardo
Want to learn to trade? Let’s go to the beach! Trading is like being one with nature, following the rhythm of the waves. Last week there was a big surge in the markets, coming from build-up in positivity about European debt. I took 800% profit in one of my trades (7.5c became 60c), however, there was a position that was also in danger (my Covered Call — I sold a call at 85c that went to 1.22c). But then I thought, after the “party” over the EU deal, as what had happened before in the markets, there is usually a pullback, some say due to profit-taking, or further scrutiny over whether the deal is actually going to work! Anyway, I told myself to stay calm, follow the plan.
Now the tide is turning. Market is flat the next day after the 340 points surge. Now, we have stocks falling as much as 150 points — why? The EU deal required banks to take a 50% writedown – this means Greece used to owe them $100, they are “forgiven” the $50 so that means those who they owe money to are going to lose money. And for one particular company, MF Global are going bankrupt.
US Market will definitely lead Australian market — and monitor my STOFY7 to buyback at cheaper price.
Today I will be watching the market with great pleasure …. er, guilty pleasure.
Read about my original trade on the covered call here.
