My Trading Experiment: Is it possible to Make Money when No. of Losing Trades is More than Winning Trades?

I often hear this saying from trading gurus: You can still make money when the number of times that you lose is more than the times that you win! Does that sound like a snakeoil salesman? Actually, it is possible with proper money management.

Money Management

In order to make money when the number of my losses are more than my winners, I would need to apply the same risk reward ratio whenever I place a trade. This would require strict discipline and placing a stop loss and target price for every single trade.

Assuming I am willing to risk losing $150 in order to make $300 for each trade, my risk reward ratio would be 1:2. The table below shows how much money I could potentially make or lose if I apply the same risk reward ratio for a total of 10 trades. From the table shown, I am still making money if I lose 6 times and win only 4 times.

Risking $150 to make $300

So what does the colour in the table signify? In order to make money consistently, the trading strategy just needs to minimally hit the yellow band. Worse case scenario, out of 10 trades and I win only 3 times the overall lose would only be $150. Sounds good but is it really that easy?

1 issue which traders faced is commission fees. Basically, the more we trade, the more commissions we would need to pay. If we trade local stocks on a small account size, the minimum commissions for each buy and sell position could already take a huge chunk of our profits. Another problem with trading local stocks market is the lack of a good stock screener that is free of charge. The subscription fee for stock screener that we could customize based on TA and FA would take another chunk out of our profits. Ouch! Unless you have a great trading strategy which places you in the green band of the table, the additional fees may not be an issue. For the context of this post, I am referring to strategies that have only 50-50 chance of winning and losing, with occasions of  slightly higher or lower win-lose ratio. 

The Experiment

I have embarked on an experiment to test out if I could make money consistently even when there's a possibility that my number of losses could exceed my number of winners.

In order to tilt the odds of success in my favour, my risk reward ratio will be set at 1:2. 

Demo account will be used to isolate human emotions. The purpose of this experiment is to test out my trading strategy + money management strategy without factoring human emotions. In the event that the experiment fails and I could not make consistent profits, there will be no reason to trade using real money. The experiment will be carried out until end of the year.

Trading Instrument

So in order to trade using a small account size of say $5000, I need to trade an instrument that do not have high commission fees and provide a free platform which I could test out my trading strategy without risking any real money.

This instrument also has to be able make money irregardless if the market goes up or down. Both long and short positions need to be carried out easily.

I must be able to trade on a part-time basis.

Trade setups have to occur often such that I have to be able to make at least 10 trades per month. Why 10 trades? From the table above, I would still make $750 per month if only 5 out of the 10 trades are profitable. If my account size is $5000, the growth would be 750/5000 x 100% = 15% in 1 month. Actual gain would be 750/(150 x 10) = 50% in 1 month!!! Why 150 x 10? This is the actual amount that I am risking for the 10 trades.

Can you guess which trading instrument fit these conditions?

It is none other than Forex. I have a demo account with Pepperstone Group which I am using solely for experimenting strategies. 11th of July was the first day of the experiment. I have highlighted the trades which are valid for the strategy which I am currently testing. There is a trade which shows -15.00. I had keyed in the lot size wrongly. The loss should be -$150.

I had completed a total of 5 winning and 5 losing trades. After factoring in the commissions for the 10 trades, the overall gain is $734.05 in 1 month. Different brokers would have different commissions though. There are still 2 open trades that are currently running at the moment.

For the month of Aug, I will be using another demo account with a different broker. The account size would be exactly $5000. I would adhere strictly to the strategies that I had setup with this new account. 

To be continued ...

My Dividend Income for July 2017

It's the time of the year where I start tabulating how much income I would get from my investments.

Stock Portfolio (Cash)

My dividend income for July this year is lesser compared to last year. This is due to my recent cutting loss of M1. A company that I won't be missing.

Screenshot from Stocks.cafe

These are the companies that are distributing dividends to me in the upcoming month.

Frasers Commercial Trust - $304.34

Frasers Centrepoint Trust - $90

CapitaLand Mall Trust- $82.50

Cache Logistic Trust - $288

Duty Free International - $52.50 (recent addition to my portfolio)

Ascott Residence Trust - $399.36

Singapore Post - $25

Soilbuild Business Space REIT - $146.60

After selling off M1, Frasers Commercial Trust is currently my top holding, followed by Croesus Retail Trust. I will choose to receive cash rather than drip for FCOT.

Bond Portfolio (Cash, Unit Trust)

For the month of July, I am receiving $939.67 of dividends from my Bond investments. I would be getting this amount in the form of Units. My Units would compound over time and the dividend should gradually increase on auto-pilot. However, I will still be doing Monthly Switch from UOBAM United SGD into UOBAM United Asian High Yield Bond Fund. My Bond Portfolio is still on track to increase to $1000 of dividends per month by end of the year.

Total dividend income for July 2017 - $1388.31 + 939.67 = $2327.98

A Good Buying Opportunity for EC World Reit (The Negatives And My Verdict)? - Conclusion

Part 2 Link here

The Negatives

Most of EC World Reit's Properties leases have either Single to 2 tenants. In my opinion, this could be a risk. Even though, the occupancy rate could be 100% due to single tenant renting the whole property, if the tenants decides not to renew leases, the occupancy rate for that property could be also be down to 0%.

The lease expiry profile for FY2020 is too high. If a Master Lease tenant decides not to renew lease, we could see a significant drop in DPU. I prefer Reits with staggered lease expiry. Hopefully EC World Reit would make new acquisitions before FY2020.

As I have highlighted earlier in Part 2, EC World Reit is currently distributing 100% distributable income this year. The distributable income would drop to 90% next year. However, this could also happen to other Reits during their first year of listing where the distribution is 100% but drops to 90% later.

Last but not least, the Reit only started in 2016. There is a lack of track record for this Reit.

My Verdict

As I have mentioned in my older Post on EC World Reit, I have difficulty calculating the dpu of this Reit. Therefore, I would based the dividend yield on the information provided by the website. When the share price was $0.80, the yield was 7.6%. Current share price as at 21 July Closing was $0.77. Therefore current yield should be above 7.6%.

In my opinion, the positive points outweigh the negative points. At current dividend yield, this is a yield which I am happy with. I also feel there's still huge growth potential for e-commerce in China and other parts of the world. I boarded the boat last week while it is still in the port. 😀

Disclaimer: This post is not a buy or sell recommendation. Please do your own research and analysis before buying any stocks.

A Good Buying Opportunity for EC World Reit (The Positives)? - Part 2

Part 1 Link Here

There are things which I like and dislike about this REIT. Some of them I have covered in earlier posts. I would summarise the positives and negatives here. These are my own opinions. Please do your own research before making any buy or sell decisions.

The Positives

Sponsor is the majority stakeholders and current holdings is 41.7%. It is in Sponsor's best interests that the Reit continues to perform well since they own such a huge position.

Low Gearing as at 31 Mar 2017 stood at 28.6%.

NAV as at 31 Mar stood at $0.90. Current closing price as at 21 July was trading at $0.77.

EC World REIT will benefit from the Sponsor’s knowledge in logistics properties, port logistics and fast-growing e-commerce sectors, and its business networks. Even though I am quite wary of China companies, Forchn Holdings Group has been around for some time and having the relevant experience in Logistics Operations in China would be an asset to the growing of EC World Reit.

E-Commerce in China is expected to continue growing strong for the coming years.

E-Commerce in Hangzhou (where EC World Reit's Properties are located) is growing. Hangzhou is also the headquarter of e-commerce giants such as Alibaba.

The construction of a second channel to connect Hangzhou to Northern China will provide further growth. EC World Reit owns 3 ports in Hangzhou.

EC World Reit to expand beyond China?

Positive rental reversion for the 6 Properties are as shown above

Distributable income has been growing. However, do take note: Distributions from EC World REIT to Unitholders will be computed based on 100.0% of EC World REIT's Distributable Income for the period from the Listing Date to 31 December 2017. Thereafter, EC World REIT will distribute at least 90% of its Distributable Income on a semi-annual basis.

To be continued... (Conclusion Tonight)

A Good Buying Opportunity for EC World Reit? - Part 1

There was a selldown for EC World Reit last week. This caught my attention as this counter is under my watchlist. I also blogged about it previously.

Screenshot from Chartnexus. Huge selldown volume.

Using Spiking, I found out Fosun International Holdings sold a huge amount of shares on 19 July. This company is a huge stakeholder. Time to panic?

Screenshot from Spiking App

From SGX website, we could see Fosun is still holding substantial shares in EC World Reit. If it's the Sponsor or Management team selling the shares, I would be concerned.

The ceo of EC World Reit has been buying own company shares from the Market as seen below. I like companies where the Management team put their own money where their mouths are. They could be convincing shareholders the company is going to perform well during AGMs but if the ceo is selling shares, it's better to find the nearest exit. 

To be continued ...

I thought I was Walking on Sunshine but I got Sunburnt instead.

I finally got rid of my largest stock position this week. Sadly, it was at a loss and a huge one. My average purchase price was $3.08 and I sold at $1.92.

Goodbye, M1

Liquidating my M1 holdings is a no-brainer in my opinion. The strategic review did not produce any

positive outcome. I had to do a strategic review on M1 myself.

I believe there will be more bloodshed among the telcos. The impending threat from TPG operating as the 4th telco and MyRepublic as a Mobile Virtual Network Operator spells trouble for the current mobile operators. There will also be bidding wars for the upcoming 5G bandwidth spectrum. More cash to be burnt building the next gen mobile network. With all that in mind, I do not see any turnaround story in the shortterm for M1. I expect the DPU to continue dropping.

Let's take a look at who has been selling M1 recently. I should have followed Karen when she sold M1 shares in June. In my opinion, if the Ceo or Managment has been selling their shares, we better watch out. M1 Ceo has been selling M1 shares every year for the past few years.

Screenshot from Spiking App

The technical chart also looks really bad. Look at that huge red candle when the price gapped down after announcement of the buyout failure. Institutions/retail investors are dumping the stock!

Screenshot from Chartnexus

I have removed this company from my watchlist. Although I am an M1 subscriber and satisfied with the services, I am unhappy with the company as a shareholder. Before we invest in a company that we are familiar with, we should also look at it's future prospects. Don't try to catch a falling knife when situations are not looking good for the company. A storm could be coming instead of sunshine. Do your own due diligence before investing.

A Half-Year Review of My Stock Trades in 2017

This Post is a look at the current performance of stock trades that I had done in the first half year of 2017. The below screenshot show some of the company shares that I had newly bought or increased holdings.

Screenshot from Stocks.cafe

These are the companies which I increased existing positions: CapitaR China Trust, Frasers Commercial Trust, Ascott Reit and Starhill Global.

CapitaR China Trust

Stocks.cafe screenshot. Increased small positions through Scrip dividends without additional fees. 

Frasers Commercial Trust

My second largest holding after M1. Unlikely to add more through Scrip this year unless price drops to around $1.30.

Ascott Reit

Accumulated more Units through Rights Issue. I blogged about it in an earlier Post (link here).

Starhill Global

Bought 3000 shares when price drops further.

Newly Added Companies

I added these companies to my Portfolio this year. I am looking at averaging down on CSE Global which is down by close to -13% as at 30 June 2017. The current yield is also very attractive 6.40%. In fact, I accumulated 10000 more shares today (3/7/2017).

Companies Sold 

I also sold off 2 company shares during the first half of 2017. The first company shares that I sold was Suntec Reit. I actually bought it way before 2015. But I didn't keep a record of my purchase date so I just put it as 2015 in Stocks.cafe.

Suntec Reit

Another company shares that I sold was Mapletree Greater China Comm Trust.

 MGCCT

Higher Interest Rate

Due to my monthly transactions, I was able to earn higher interest rate of at least $70 per month from my DBS Multiplier account. 

DBS Vickers has also extended $5 trade rebates till end of the year (link here).

For those who open a new trading account now will also get first 3 trades free (link here).

For the record, I am not affiliated to DBS and not paid for recommending their services on my blog.

Upcoming Earning Season

Earning season is back in July. These are the companies that I would be watching out for their result:

Soilbuild Business Reit - 13 July

Frasers Centrepoint Trust - 

Cache Logistics Trust - 21 July

M1 - 18 July

Ascott Reit - 

Frasers Commercial Trust -

Capitamall Trust -

DBS bought 434.30K shares of Soilbuild Business Reit from the Market in June. Hopefully, there will be positive news about 72 Loyang way. The drawing down of security deposit from Technics to cover rental should have ended in May this year. I am expecting a decrease in dpu for the upcoming earnings result.

Screenshot from Spiking

Both M1 ceo and Temasek sold some M1 shares this year.

I am expecting slightly lower dividends compared to 2016 due to closing of Suntec Reit positions and poorer Soilbuild Business Reit's results. Although I added Capitamall Reit and Frasers Centrepoint Trust this year, these are smaller positions compared to Suntec Reit. I would accumulate if price goes further south below my purchase price for these 2 retail Reits.   

Hmm. $1700 - $1800 for this month possible?

My Dividend Income for June 2017

Time really flies. It's time to check the amount of dividends I had locked in/collected for the month of June. I call it lock in as the date is based on XD. I may not receive the amount in my bank acc yet.

Stock Portfolio (Cash)

Screenshot from Stocks.cafe

The dividend is from Greatview Aseptic Packaging Co. Ltd. The company is listed in Hong Kong and traded in HKD. The distribution amount is HKD840. Based on my average purchase price of HKD4.123 (inclus. fees), I am expecting a dividend yield of 5.58%  per year.

Bond Portfolio (Cash, Unit Trust)

Screenshot from Dollardex

I also received $887.59 in terms of Units for my bond portfolio. I did some more fund switches from UOBAM United SGD Fund into UOBAM United Asian High Yield Bond Acc/Dist. I found out UOBAM United Asian High Yield Bond Acc doesn't issue dividends whereas UOBAM United Asian High Yield Bond Dist does. I was actually mistaken that Acc issue in Units. Dist is the 1 that issues dividends in Units. However their performance is pretty much the same as seen below. I bought Dist too as it would be nice to see how much dividend I could receive each month. I am still aiming for $1000 per month from my Bond Portfolio by year end. I bough somemore yesterday again through fund switch as the fund drops by around 1% after I bought. I should see dividends coming in from UOBAM United Asian High Yield Bond Dist this month. If the price dips further, I will be able to accumulate more Units through dividend reinvesting. Switching itself would take a few working days to take effect. I should only receive dividends from my initial $10000 investment. Aug dividends would include the second investment I did yesterday.

Screenshot from Fundsupermart

Total dividend income for June - $149.08 +887.59 = $1036.67

Upcoming Blog Post: A Half-Year Review of My Stock Trades in 2017. Will be released on 3/7/2017.