WealthEsteem.org :: Psychology of the Deal

Update 31 July 2009: I may have a solution, stay tuned and comment below if you want this. Alternatively use my contact form.
Update: This RSS feed has been pulled while goosmurf works out a different way to achieve this.

goosmurf has created a brilliant RSS feed of ASX Company Announcements where you can specify the company codes that interested you. So if you want to track just the announcements of, say,BHP Billiton (or your own portfolio) you can add the ASX codes to the feed address and just get just those announcements.

Now there are quite a few RSS feeds of all ASX announcements available elsewhere, but  don’t want to track all 1600 ASX company announcements. This is the first RSS implementation I’ve found to let me track just the companies I want.
There are also webbased and email alerts out there, but I was looking for an RSS solution.

Well Hartleys is no more (unless you live in WA). Bummer really, as they were my full service broker and that’s how I did my options trading. I can move either with my broker to a new firm or go fully on-line and use Commsec.

Full service brokers are good for after-market trades and occassional heads up calls. I value being able to buy stock at 4:30 in the afternoon, but I’m not keen on their commissions. So the deal must be worth it. Heads-up calls are normally marketing guff designed to drum up business. I don’t like them too much but I have made some money thanks to them.

I’ll set up an account at the new brokerage but will trade options via Commsec (that’s assuming I like Commsec’s options trading interface). I’ll let you know when I do that. Meanwhile I have a huge stack of forms to fill in for the new broker

I haven’t noted a few trading attempts that didn’t come off recently. Mainly because I was too busy to write something that didn’t happen. With hindsight I think that was slack — trades that don’t come off are still an attempt to trade.

As BHP fell to $9.07 (1 April) I put a buy order to close my BHP April 9.73 calls. I bid $0.02 but they found support at $0.03 (remember I’m buying so it didn’t reach my offer).

My broker called me Monday (7 April) to regret not getting out at $0.03 (April calls have been firming since). I was a little frustrated, my strategy allowed me to pay $0.03. If I’d closed out I could have written a new call for $0.20-$0.30 premium. I wasn’t too fussed as I’m still in profit.

Today BHP April 9.73 calls closed at $0.05, so I think they’ll expire worthless. Sure I missed an opportunity to trade and gain about $0.25 before commissions. However thou shalt not overtrade has been tatooed under my eyelids.

Andy, my full service broker called me today. There must be something about having an unused margin facility that makes these guys nervous . Anyhow he gave good spiel so I thought I’d give it a go.

Andy’s 5 good reasons to buy BHP under $10.00

Following brokers tips is not the way to riches, but if you don’t take some of their tips they might stop calling. Not necessarily a bad thing that – but I don’t trade full time so things that save me time are good.

A broker from my past called me. He’d changed brokerages with the closure of Barton Capital and asked me if I had a full-service broker. I said I’d give him a go.

Full service brokers can be useful in the following areas:
1) Trading out of market hours;
2) Accessing research;
3) Short selling and derivatives;
4) Margin facilities are easier to set up;
5) Learning something about the markets or getting a perspective from other markets;
6) Potential access to lucrative IPO’s and capital raisings (don’t hold your breath).
7) Easier execution of orders.

Now these benefits come at a cost:
1) 1.1% brokerage rates are up to 10 times what I pay;
2) He wants to sell me stuff;
3) The risk I may start thinking he knows something.

Anyway, in July he casually mentions writing a covered call over margined CBA as it goes ex-dividend. I’m told CBA normally runs into the dividend. Could give a 20% return.

Hey I know the theory but never tried it. I’m in!

Sadly it all got too hard to do in the time available. But the research I’d done exposed me to CBAIMG. Similar outcome, and a chance to play with instalment warrants as well. Why not?

I get in on 12 July at $5.56.

The roller coaster takes off. It’s up 10%, it’s down heaps. The dividend covers most of the down-side. So I set my stop-loss at 10% below ex-dividend.

It doesn’t perform as expected. Am I really surprised? No and that was ok as I didn’t mind holding CBA longer term if required.

Anyway it comes back over the last little while. I start crunching numbers and realise that I could get out for a net 3% gain on a 2 month holding. That’s fine in my book.

Today CBA runs like crazy. By the afternoon, Dow futures are down 74 points. I’m expecting the All Ords to get caned tomorrow if the Dow bleeds.

Time to POP the chute – out at 3:55pm at $5.35. Add in $0.82 fully franked dividend and I’m up 8.8% after brokerage before tax and interest. Not bad for two months and a deal that didn’t go as planned.

Lucky first foray?

Stuff happened (in an earlier version of the website) and this diary was lost. I’ve rebuilt the trading history from my records (and a backup) but have don’t have all the reasoning. Often on the losing trades that follow there was a day or two when the sell target was reached, but I didn’t have the sell order in because I was too busy. Live and learn.

My strategy is to buy at 2.5% off the previous peak close which was 15.66 on 7 January. After that trade the market fell to 15.15 and bounced there for a while. I was preparing a top up order at 15.17 when my team leader came by for a chat. By the time the chat was over the market was back to 15.25. Missed opportunity.

The ride has been chaotic over the last few days. But the profits are good.

By way of clarification I pay $31.90 per transaction through Quick.Broker on a $25,000 parcel it represents less than $0.04 per share (counting buy and sell commissions).