Visit our COVID-19 site for latest information regarding how we can support you. For up to date information about the pandemic visit www.sacoronavirus.co.za.

bs-regular
bs-extra-light
bs-light
bs-light
bs-cond-light-webfont
bs-medium
bs-bold
bs-black

Community


Share knowledge. Ask questions. Find answers.

Online Share Trading

Engage and learn about markets and trading online

Advice

Reply
ZerOgravity
Contributor
So i started my trading account with 80k. After last year it was 50k. So i decided to trade warrants to see if i can improve my portfolio. I bought call warrants SB BIL SBN, SB Sol SBD, SB IMP CO, SB AGL CE. today my portfolio is 30k. I feel like calling it quits but I would like your guys advice. I know that no one knows the future but I feel like I dont have the skill or that skills cant be learnt to trade this market with some decency. Should I throw more money at it , wait for a rally and exit or just cut my losses and never look back ?
0 Kudos
31 REPLIES 31
Not applicable
do you have a TA programme? did you go on all the TA courses brought by OST for free, after you've done that and you still do not know what you are doing then you can call it a day for now leave your money in the OST account you'll be earning 9.23 % by just being there.
0 Kudos
Not applicable
Throw more money at it pretty much sums up your trading approach. I'd suggest Emperors Palace. R10k on 17 neighbours, R10k on the streets (bet on black), and R10k on Zero. Thats called "hedging". Or you could take some time to educate yourself and formulate a trading plan of action. Rule#1: Read! Rule#2 : Read. Rule#3: If unsure, refer to Rule#1, and if still unsure, refer to Rule#2. No need to jump in simply becoz theres money to be made; theres also money to be lost, as you evidently found out. As Simon always says, Trade To Trade Well.
0 Kudos
dilligaff
Super Contributor
At the risk of stating the obvious, which most of my fellow forumites don't do....
You seemed convinced that all your stocks would go up, and they haven't, whilst many pundits continue to argue that most global markets have more downside...
And warrants expire, whereas underlying stocks can be held 4eva if you wanted to....
So now wot...
0 Kudos
theyoungster
Super Contributor
an good portfolio should look as follows 40% cash earning interest 40% long term quality shares, with the idea of gaining from the dividends and not worrying about the capital growth to much 20% trading accout, whether it be a forex, cfds,warrants,ssf..ALSI contracts in times like this you could use your cash from dividends&interest to average down your quality long term shares and if you successful with trading use that money to buy more quality shares This is my opinion, its a pity big financial institutions dont make people attend a full set of courses before they are allowed to open an account
0 Kudos
Not applicable
ZeroGravity, you may have reached a point in investment circles called Risk of Ruin (http://www.investopedia.com/terms/r/risk-of-ruin.asp?partner=todn). I don't want to offer advise on how to proceed here, except that your situation is very well explained in 'Trade your way to Financial Freedom' by Van Tharp.
0 Kudos
nala
Super Contributor
Hi zerogravity- did ever invest in shares-like long term shares ; what made you start trading ; did you go for courses; if so which ones;i go for all sbk courses repaetedlly as i live close by the venues and still am unsure about trading- i sometimes feels its for big funds etc- where tey play with other people money- but when it comes to there owm money would they trade the same way ? After attend sbk courese for 3 years i am still not convinced about trading.They seem to give us stategies that are meant for fund manager which will not be suitable for the individual . Your 80k is nothing amongst the big players-hedge funds -corporation- etc.i feel i still need anothe r 3 years to be convinced as i realise that is a business for life why rush
0 Kudos
PaulC
Super Contributor
Its a really ***** feeling. Ive almost gone bust 2x and the third time I seem to be keeping my head above water. What am I doing differently? Well I read and have a better idea of geopolitics. Ive also narrowed my share list. I stick to gold and oil and from time to time ill take a punt on AGL / BIL (currently -15k on AGL you think id learn). Sure you can read books like trading in the zone and attend the courses but what I found worked is I learned from my mistakes. They say the markey will find your weakness and exploit it and it does. Ive started to learn patience and when I have the SMALLEST doubt I dont place the trade. In a nutshell look at yourself. The fact you went to warrants tells me you wanted to use leverage to try quickly make your money back. Set a realistic target of growth (10, 20, 50% a year or Rx / month of your lumpsum) Greed will eat you. Hope thats of some use. - Paul C
0 Kudos
ZerOgravity
Contributor
Firstly thanks for the advice, it is always a bitter pill to swallow when you have to look at yourself critically. However I have made every effort to learn more about trading.I have a day job but I try to read trading books/articles whenever i get a chance. In addition to this I diligently follow financial reports, fin24, business day etc. What I have learned is that the news only reports information (today the market is up/tomorrrow its down) and I use it only as guide together with Std technical reports to make decisions. But it seems like no one really knows whats going on so in order to grow your capital at some point you have to take some decison. 80k can sit in the bank but it wont make you rich -it just beats inflation. Ultimately if we have small cap portfolios we have to grow it somehow thats why i ventured into warrants? Is intuition ,knowledge on geopolitics enough to do modern trading? It seems like the classic textbook principles dont apply. where do i look now?
0 Kudos
nala
Super Contributor
Risk of ruin. What does it mean.The probability of a individual losing sufficient trading or gambling money( known as capital base) to the point at which continuing is no longer considered and option to recover losses. Risk of ruin is calculated by taking into account the probability of winning ( or making money on a trade) the probability of incurring losses, and the portio of a individual's capital base that is at risk. Also known as' probability of ruin' .I nvesto peadia says - Risk of ruin need not result in bankruptcy( although it often does) ,but rather the point at which continuing on would be unwise.It signifies a risk more relevant in trading and gambling, where there is a high probability of losing an entire bet or trade. Hope it put things in perspective Ogravity
0 Kudos
Not applicable
read 'Trade your way to Financial Freedom'. You really do need to get your head around portfolio size, risk vs reward, entry and exit strategies. Even the best technical analysts get it wrong 50% of the time, and there are very few unit trusts in the money today. Everything carries risk, even your cash in the bank (ask any Argentine or any number of depositors in banks that have collapsed). You have to take a position on something - sometimes you will be right, sometimes you will be wrong, just make sure that when you are right, you let it ride and when you are wrong, you fix it quick.
0 Kudos
nala
Super Contributor
go the slow way invest your last 30k over 5 long term stocks and maintain your interest.rember trading is about fear and greed that is where you should reeducate yourself - how do i develop fearlessness and patience and courage
0 Kudos
Not applicable
I think we need to take Zero G's personality and desires into consideration here. I dont thing he will be content to stick his remaining 30k into blue chips in a bear market and wait till the end of time to get a return.... Here is my 2c... Trade futures, dont be afraid of shorting, especially in this environment. Trade only the most active shares in the sectors you look at. START SMALL (ie. 2/3 contracts on a R70 share) and select a tight stop (maybe R1000). Trade with multiple timeframes and the allshare trend in sync. Maximise your probabilities. Add to winning positions and drop losers when stop is hit or even sooner if price/volume doing something strange. Be dynamic and strict with this. No exceptions on losing trades - cut them and learn from it. Take profit only when you believe the trend is over and do not take profits prematurely even if you give some back. Dont feel like you need to be in the market all the time. Pick your opportunities carefully. Record all trades and review often.
0 Kudos
_nova
Super Contributor
Zero, only you can decide whether its balls to the wall time or not. If it's any consolation I'm pretty sure every forumite has taken the big lick at some point. I've done it no less than 4 times (3x on FX and 1x when, wait for it, I shorted the TOP40, no stops, and averaged down with 70% of my kitty at 17000 around Jul 06). Talk about feeling stupid and deflated! That TOP 40 warrant wiped me out and I had to start again. The first step is get over it, the money's gone, move forward. You gotta get rid of the emotion first before you even think of another trade. If anything I'd guess you were trying to pick bottoms on a short term chart. If you'd looked at long term charts you would have seen the trend is south. Rule is that if you go long in a bear you set tight stops. Most important is the question: Why did you do these long trades? Post your reasons and maybe some of the more sage and experienced traders will give you advice.
0 Kudos
ZerOgravity
Contributor
Well thanks for the advice guys and the motivation. Jonno I wouldnt mind trying SSF but I remember the first presentation by Std Bank in which caution was advised regarding trading SSF.For now i think i have to get bigger balls to deal SSF in this market but i appreciate your advice and will choose it as a last resort. I think my reasons for trading warrants is that it allows money to be made on both sides. Using the fluctation and monitoring the volumes together with key information (eg obama rally, bad press,etc) I made the warrant trades.I agree we are in longer down trend however the way I think about it is that - if this was my real job I would still have to show some of profit at the end of every year. Now I am not aiming to be a guru but atleast be able to use TA and fundamentals to predict some trends. else whats the point. I might as well go play roulette. The warrants course advises to be original when choosing warrants , i tried that , predicting in advance and then we had a massive dec/jan rally.I then watched volumes to check for manipulation but So far I have always been on the opposite ends of the trade and the stop losses are wiping out the capital....
0 Kudos
asylum
Super Contributor
I have never traded warrants only ssf what put be off warrants is that if you do make a mistake (and lots of people gonna tell you, you should cut your losses before that happens, but as we all know it still happens) warrants expire worthless at least with ssf you can roll it over as many times has you like as long as you have money to back up the ssf losses, i took a long ssf position on absa awhile back and was down about 80k yes i should have cut losses long ago but did not,so i just kept rolling the ssf over and finally made up the 80K loss and 16k profit, but now i cut my losses long before that happens.
0 Kudos
Not applicable
I think you've highlighted a danger in trading SSF's Asylum, in that a trader unsure of his position and being beaten by the market, my continue adding to his losing position hoping that at some point in the future, when the market turns, he will recover his losses. The flip-side of your argument about why you choose SSF's over Warrants is that at least with a warrant, if you're wrong, and you will know soon enough that you are wrong, you hit your stop-loss, pick up your pants and hopefully live to trade another day. With SSF's, your pants stay on the floor while you keep looking around you for spare change in every other orifice now that your pockets are empty. Staying in a losing trade simply because you believe the market will turn at some point is not only dangerous, its also the worst possible theory to have in your trading *****nal. Im glad you recovered sufficently to make a profit though.
0 Kudos
Shard
Super Contributor
Ask yourself this, have you learned from what you did. Then ask, is what you learnt worth it? If the value of what you learnt is greater than 50k invested at the risk free rate, use say the MM return on money in your Trading Account lets make it 55k for simplicity. So is what you learnt worth 55k? If not, I'd say you need to think long and hard before giving it another go. PS I lost everything I made in 2007 last year, and for what I learnt, it was very much worth it. Was my first time in that sort of a market and I wouldn't have got out what I did by sitting on the fence.
0 Kudos
Not applicable
Three things you gotta know: What your entrypoint is; at what point you will exit (either to take profit or on stop loss); and what your risk exposure is - never take geared instrument trade - whether ssf, warrants, waves, or whatever, without knowing how much moolah you are in for. This last is why a small loss can become a huge hole in your bank balance. The first two are easy - like the dudes say, do the courses (the lunch is pretty darned good too, usually). The last - well, its yor ass - keep it covered.
0 Kudos
Not applicable
Asylum, how long did you hold your SSF position for until you recovered? if you were rolling over, then it must have been at least 6 months. Now as a trader you are not taking your opportunity costs into account. Your capital has been tied up in a risky margin call all that time, whereas you could have exited the trade, shorted the stock, gone long at the low and be sitting with a much better profit. Also, way up hat trading cost (SSF commissions, rollover costs, time decay, etc) vs a much simpler approach for your strategy - borrowing against the bond and buying hte shares direct
0 Kudos