Today's trade -- BIDU

I had fun today day trading BIDU and felt I learned a little bit. I shall write more about this later today.

BIDU had a good ER Thursday after market close (beat estimate in revenue and profit). Shares advanced as much as more than 20% after close (109.37 to 131.xx). It gapped up Friday morning with an open price of 130.42 and went up to as high as 132.8 in the first hour of trading. But it was overdone. Based on the historic price movement before/after ER for this one, I just don't think that it will stay above 125 for too long or to make a new 52-week high this fast. This is my number 1 reason. My number 2 reason is observation from the post-ER price movement from AAPL and GOOG. They had some similarities with BIDU. One may argue that AMZN run crazy after its ER. But I think AMZN is not comparable with BIDU because (1) BIDU does not have a high short ratio as AMZN does so a short squeeze is unlikely. (2) it is obvious from the graph after the first half hour that they are not alike. (3) different business and different expectation.
Thirdly, the big market is so different from several months ago. It is over-extended and much more careful. The days are gone for a crazy price movement to the upside for a Chinese Internet ADR.

I shorted it once it is confirmed to go down without even thinking of setting up a stop limit on the upside to cut loss in case it goes against me. To be safe, I did not use margin for this trade. Looking back the chart, I feel so sorry for my poor DT skills. But I endured the rebound in the early afternoon session and managed to make a 2% gain thanks to the reasoning and a little bit planning.

Patience is a virtue of good investors

For so many times, I hear people and myself complaining and crying over the spilled milk, the inertia of our holdings, taking profit too quickly, and cutting loss just before the turnning point.

But patience is a virtue for all the good investors. The term investor is so different from the term trader. Traders only care about the momentum in a day or several days to several weeks. Investors normally have a much longer time horizon.

I am constantly questioning myself. Am I an investor or a trader? Do I want to be an investor or a trader? I think I must make clear of this so that I could deal with the short term volatility with calm and patience.

Take TCM for example, I bought at 9.98 a while ago. The newly IPOed Chinese medicine stock went down to as low as 9.21 after my purchase, making a paper loss of 7.7%. But does this matter if I believe it is a fairly valued stock? However, my patience runs out before the dawn came, I set a sell limit of 9.98 to get out even. This morning, analyst initiated coverage and rated the stock "sector outperform" and the stock went up to 10.05 instantly. My shares are gone leaving me with yet another lesson of the importance of being patient. Well, the positive thing is that I did not cut loss early this time, right?

April 25, 2007, Wedensday

The bull had its moment today when Dow closed above 13000. I missed the opportunity in the morning to load HSC at the 49.7-50 range, even though I saw the rebound signal and realized it is very likely to go up considering the very bullish big market. My fear was based on the yesterday's big volume drop from 51 to 50. The stock went up to 51.4 for more than 2% gain for today.

DT, April 24, 2007, Tuesday

BIDU has a pre-ER run today. I think this is quite predictable as speculators come on board to bet for the volatility around this ER. GOOG's ER definitely has some influence on BIDU as people are expecting a good ER from BIDU too. For DTders, it is not hard to spot this one if it is on their watch list.

SINA has a high correlation with BIDU, so I checked SINA too. From the intraday chart, the turn around signal at $32.05 is quite clear. However, SINA lost the momentum in the afternoon. I have been watching SINA for a while trying to find an entry point for swing trade. I am not convinced as a buyer for SINA at its closing price of $32.34 since the downtrend seems in place for this one.

April 24, 2007, Tuesday

TXI, IBM reported ER, stocks up. Semiconductor and technology sector picks up with the leadership.
As I was trying to build my intermediate holding position gradually, I added 100 share of OVTI today at $13.93 after seeing the big green bar of buying activity. Turned out to be a bad entry point as the price went down from there and closed in red at $13.56. Once again, I feel it is better to load at the last half hour of the trading hour if I plan to hold this for some time.
Now I have 400 shares of OVTI with an average cost of $13.50. Hmm.

ok, this is it.

From this day on, I shall record every action and reflect upon it at this blog. I need to keep honest so that I could learn from my mistakes, for which I have paid about 18% of my trading capital in the past six months since I opened my trading account (50k to 41k). Don't know if that is normal or not for a newbie. But I really felt frustrated, especially when I looked at the index over the past six months. I was beaten down like a dog.

My first goal for the remainder of this year is not to lose anymore. Yes, not to lose anymore.