Hang Seng Index Market Outlook 24-01-2010

The HSI had breakdown from the support level at 21000. Overall it has been a bearish week last week.

3 Months Daily Chart
On the daily chart, HSI was in a trading Channel between 21000-22500. It had just broken the support level at 21000. Its is possible that is will hit 20000. The current 3 months trend is sideway trend and possible break out from 21000.

1 Year Weekly Chart
On the weekly chart, the HSI is lying on the support level of 30 wk EMA. Meaning the current index is relatively undervalue or oversold. A possible big rebound will be on the way. The current 1 year weekly Trend is UP.

Overall the long term trend is UP but the current 3 month trend is sideway. I think the index will rebound very soon.


Article by
Trading Room
www.tradingforreal.blogspot.com

Wealth Creation

So what is wealth creation, it seems like very broad topic with many different paths and vehicles to wealth and abundance. With this article, I am going to simplified the road to wealth creation into three main paths and they are as follows:

1. Real Estate
2. Shares
3. Business

To me it is really that simple, that's the road to wealth creation. People create wealth either through Property, Shares or Business. With shares, I didn't intend to mean only the share market, but also the currency market, bonds market and commodities market. There is no true answer to whether one is better than another. You can achieve great wealth by just focusing in one of this field or you can choose a combination of all of them. For me, I have invest most of my capital in the share market. And when I have achieve enough capital gain from the market, I will move my capital to the Real Estate market. And business is something for me to consider later on. You might have notice I didn't include the word Job in the path to wealth. That is something everyone need to think about. To me I don't think the salary from the Job position will be enough to make me Rich. Quote from Robert Kiyosaki Rich Dad "Who is going to pay you 1 Million a year? What about 5 Millions a year? and What about 10 Millions a year?" So if you want to obtain great wealth, it is my opinion that you need to work on at least one of this field. Keep learning and reading about the field you choose to be in and keep taking action. Then great wealth will follow.


Article by
Trading Room
www.tradingforreal.blogspot.com

Market Review 17 Jan 2010

This is my first market review on this blog which I will talk about my opinion on the Hang Seng Index in general.
The overall market trend is UP and we are still in the Stage 2 of a bull market. On the daily chart, HSI had fall below the 30 day EMA indicating a pullback from the recent high. Which I expect the HSI will retest the 22000 level very soon. The closest support level for HSI will be 21000. On the weekly chart, HSI had fall back to the 13 week EMA. This MA should provide some support to HSI. The HSI is still well above the 30 week EMA which is at the level around 21000. The 30 week EMA is the key weekly moving average that we use to different between overall bull and bear market.


Article by
Trading Room
www.tradingforreal.blogspot.com

Return On Investment (R.O.I.)

I have used the term ROI on one of my option trade with BCM which you can see on the lower left corner. So what does ROI means? It means Return on Investment which is how much return you get from your investment compare to the capital you used as investment. Let say I invest $100 and my ROI on investment is 20% which mean I profit $20 from my original investment of $100. And on my BCM option trade, I calculate the ROI a bit differently. As every time I write a Put option, I always put up the capital required if my option does get exercise and I need to buy the share at that price. So for my BCM trade, my capital outlay will be $9 per share. That i will put is as my original investment. My return is -$0.03 when I closed the trade. So the ROI will be -0.03 divided by 9 times 100 which is -0.3%. Which is minimum compare to the potential profit I can get with Pacific basin stock. That's why I do the switch. "One of my opinion about wealth creation is you get to be flexible in your approach to investment. "

Article by
Trading Room
www.tradingforreal.blogspot.com

Investor VS Trader

So what is the different between an Investor and a Trader on the sharemarket. In my opinion is the main different between the two is the time frame. Usually trader will have a much shorter time frame on holding their trades compare to investor. When I meant short it can range from Seconds to days or at most a few weeks. On the other hand for Investor, their usually time frame is probably from months to few years or even a decade. In my opinion, it is easier to be an investor.


Article by
Trading Room
www.tradingforreal.blogspot.com

Pacific Basin 2343

Today the price of Pacific Basin went up to $6.3, which will give me a return of 6.3-5.35 = 0.95 or a ROI of 17% if I sell the stock today. Which is ROI of 17% in 2 weeks time. It is a very good profit. But I didn't sell my stock. My mind is telling me to sell it now and get the fast return which a quite a good profit. However I keep reminding myself that I am a Investor not a Trader. If I am a trader, I will definitely close my position. As an Investor, I buy the company share because I want to own part of the company. And I will hold onto it until it reach my target of $15.35 which might take 1-2 year or even more. Also the company is going to announce its 2009 annual result on the beginning of March 2010. My opinion is it will be a good result which I base my opinion on 1) the BDI index which had continue to be strong on the 2nd half of 2009 and also the high contract coverage with more than 90% for the year 2009. And for people with shorter time frame, I will suggest hold the stock until it announce it result. Another advantage as a investor is I also enjoy receiving dividend from this company. The dividend policy of this company is a payout ratio of 50%, which means they will give me 50% of there net profit. So the more profitable the company, the bigger my dividend payment.


Article by
Trading Room
www.tradingforreal.blogspot.com