HSI rallies 536 points

Overnight Dow Jones closed down 55 points. After closing down for five consecutive days, Hang Seng Index today turned around the trend and rallied 536.75 points, closed at 22888.92. The November futures opened at 22301 and ended up 546 points at 22905. 

For us who are active in the futures market, we think Hang Seng Index is range trading around 22400-22900. Risk is lower for day traders; for overnight traders, they are either making big bucks or having whipsaw. It is important to exercise risk and capital management when in the market. 

At the current market condition, we think every dips is a buying opportunity and we will not chase into buying any stocks if the price had gone up. If we missed it, we'll give it a go and treasure hunt again. If we have paper profit, we'll consider to sell it, or hold on to it. No matter how, we'll have an exit price in our mind. 

We decided to sell Convoy Financial Service (HK: 1019), as the rally had brought us 11% profit within days. We might have a bigger profit tomorrow or later, but who knows?! We are happy to cash in now and look for better opportunities. 

As for KLCI Index, the cash market closed at 1663.2 (-2.12) and futures closed +1 at 1652. Spot futures was traded between 1638.5-1660.5 (22). 

Buy and sell OR buy and hold?

Do you always ask yourself, what is the investment strategy before you buy a stock. Buy and sell once you see profit? Or buy and hold for more profits? Is this mid to long term investment? Or short term speculation? It is important to have a plan before we enter the market. This is because human tends to be emotional when in the market, driven by fear-when market tumbles; by greed when market soars!

In a volatile market like Hong Kong market, we always set a target price to take profit; or a cut loss point to protect our capital. Even in a bull market, the paper profit can easily turns into paper loss if there is no investment or trading plan. Therefore, it is important to have an exit price, to secure the profit, to cash in and to grow the capital.

Different market requires different strategy. In a less volatile market like Malaysia market, ongoing buy sell not only hard to generate profit, it is also drain our mental energy. We'll only become brokers' best friend-by generating more commission and income for them. Sometimes, buy and hold is more suitable in Malaysia market. However, market changed and different strategy need to apply in different market condition. We have to adapt to market changes and act accordingly.

It is always a right move to exit market when we see paper profit, lock in the cash into our account. This is what we thought. We sold Emperor Capital Group (HK:717), made 8% return in less than two weeks. Not a bad deal. At least, it is better than fix deposit rate in Malaysia which is around 3.10% per year. Meanwhile, we parked our capital into another financial service company, Convoy Financial Holdings (HK:1019), an independent insurance and MPF schemes brokerage firm in Hong Kong.

For Hang Seng Index, it closed at 22726.77 (-140.56) and spot futures closed almost day low at 22608, down 130. Range of the day for Hang Seng futures is between 22598-22951 (353).