On-line trading on the Stock Exchange of Singapore (SGX) – The Experience

The Singapore shares suffered a steep decline since 28 February (Wednesday) and were still tumbling on the morning of 5 March (Monday).

I decided to watch the stock market on-line from home from mid-afternoon of 5 March. The reason is that I am looking at some specific stocks that provided good dividend yield track records. My feel at that time was that it was probably right to look at these stocks and buy at “bargain” prices, i.e. at a price that I think is reasonable based on the fundamentals of the company.

One such stock is CapitalMall Trust, a Real Estate Investment Trust, with dividend yield of between 3.479% to above 4% (depending on the share price at a particular time).

When I was looking at the price of this stock, it was trading at the last done price of $3.06. The intra-day low was $3.04. So I put in my bid at $3.06. Little did I know that the share was moving up rapidly after I put in a bid. I saw this right before my eyes on the computer screen. The speed of the on-line response was a sluggish, possibly due to the heavy volume hitting the SGX at that time. I then cancel that bid and put in a fresh bid of $3.10 and that was the price being asked by some sellers of the stock. I got the stock at $3.10. The price continued to move up and that was when I decided to stop looking at the stock market.

This is the life of on-line traders and it takes one to constantly monitor the market if you wanted to seek out “bargains”. It can be nerve-wrecking if you are not used to the speed of decision making.

Since then CapitalMall Trust has been trading at $3.60 this morning.

Some lessons learned.

1) If you have a full time job, you will not be able to monitor the stock market. It will not be right to use company’s time for personal matter.

2) The stock moved within the same day and there are intra-day high and low prices. It is hard to catch the low for the day or the high for the day depending on whether you are the buyer or the seller of the stock.

3) It is tempting to chase the stock that is going up and one must be disciplined to stop if the price has hit above your comfort level. Do not get into a gambling mode and not knowing when to pull back.

4) Decide on the value of the stock which you can bear before getting into the stock market. Look at the fundamentals of the company and do not be influenced by the short-term movement of share prices.

5) If you have a weak heart or high blood pressure, on-line trading can be too much to take.

Written on 3/9/2007 10:07 AM

Copyright © 2007, the author known as LKT in Singapore.

The material presented is intended to be general and written in layman’s language as much as it is possible. The author shall not be liable for any direct or consequential loss arising from any use of material written. Please seek professional advice from your financial advisor or financial institutions on material written covering financial matters.

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