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For the fourth time this month I’m netting on my position. But unlike the rest three which I ended up profiting, this one ended up with break-even (it’s actually a loss if I calculate the brokerage fees). Today’s trade gave me an important concept of Indonesian market (or maybe even the whole financial market):

• Never hold a position imminent before a big announcement. Bernake’s end-of-month announcement on The Fed interest rate hike is awaited announcement and I should’ve known better not to hold any position (be it long or short) near the date. The market reaction could go either way after it and before it the market will usually be stagnant
• Never enter your trade under 10AM. On my experience, 9.30 - 10.00 AM is usually a price shapping process. You look at the high - low between that time frame and trade if, and only if, the price breaks the high low in 9.30 - 10.00 time frame. If it goes lower, go short because the price tends to go lower. If it goes higher, go long because the price tends to go higher.
• If there’s already one or two companies from the same sector profiting an enormous gain, do not buy any stock from that sector (unless there’s a positive sentiment of the sector of course). If you do, you will find the stock hard to sell higher because the market already focused only on the winning stock (which keeps going higher)

For those of you who don’t know, netting means you buy a stock with a borrowed money from your broker. Instead of keeping the stock for several days or weeks (or even month), you immediately sell it on the same day. This means that you can buy stock valuing hundreds of million of rupiah with zero investment (you read it right).

You also have to sell it on the same day so that you are not charged for interest on borrowing the money hence your return is infinite (because your investment is zero) but so does your risk. It’s pretty much like day trading but you don’t need to have a margin account.

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