Equity stock market rallied for three continuous days after reaching recent bottom. As previously mentioned, some investors/traders find equity stock market attractive at current level. Some good news will spur the stock market to rally.
Since the stock market declined for an extended long time before the rally, the investment portfolio suffered quite an amount of loss. Therefore part of the portfolio holding was liquidated to reduce loss. The decision was made too early and thus reducing the capability to recover loss. Current portfolio still retains some long position holding. The gain would be higher if more risk were taken.
Recent transactions on the portfolio shows that the risk/gain scenario is not evaluated properly. During the market decline, the risk is underestimated and there is not enough hedging to offset the potential loss. During the rally, the confidence is hampered and therefore not realising most of the profit. To guess the equity stock market movement is not a easy task. However, the trading strategy should emphasize more on risk/gain evaluation than emotional behaviour.
It is cautiously optimistic on the market which is expected to gradually move up due to absence of selling pressure. The low trading volume in equity stock market indicates bullish and bearish day traders are competing while individual and institutional investors are waiting on the sideline. Most individual investors are waiting patiently for the ideal low entry point which may not happen. But some institutional investors are impatient and fuel the recent rally.
The driving force to advance the equity stock market further is still limited at this moment. And it is possible that it may be manipulated down by traders and market makers. The priority is to preserve the portfolio value and to take controlled risk as opportunity cost to make profit from market speculation.
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