AYALA LAND INCORPORATED (ALI) is on a roll enjoying active trading this week at the Philippine Stock Exchange. SmallCOST took advantage of this and made a trade ourselves. Details of the transactions can be found in the Weekly Stock Trading Journal section.
Emotional trading
Examining the emotions involved in our decision to trade at this time, we have to admit it is largely motivated by the urge to play the stock market rather than the more logical goal of earning a decent profit. We would strive to veer away from this tendency the sooner the better.
Yet knowing the allure of placing the order, whether to buy or to sell, and the excitement of learning the immediate result of the trade relative to the closing prices, we know it is a difficult habit to break.
Ayala Land
On the 10th week of the current year, we closed our outstanding position of 100 shares of ALI which we recently bought the week ending February 06. In the process, we had a net gain of 49 pesos.
Trading at the marginal level of one board lot, we have no alternative but to split our gross profit with our online broker BPI Trade every time we trade. The solution therefore is to achieve the minimum value of 10,000 pesos for every transaction to spread the cost.
Our tendency to trade without much consideration to profit led us to purchase 100 shares of ALI this week at 11 pesos a share. A good volume of shares changed hands at this price in the past few days, so we thought we could do the same and grab our portion.
Anchor position
We are thinking of considering this board lot of 100 shares to be our anchor position. This means we would perish the thought of ever selling this position whatever happens to the market price of ALI. Let us see if we could hold on to this state of mind for as long as we can. (smallCOST could not and sold the stock on Week 16).
Stock trading game
The rest of our capital, we would use for position trading. We have a starting capital of 5,000 pesos. This means we still have nearly 4,000 pesos to play around with and place our bet on whatever stock we think would give us the best return, blue chips or no blue chips.
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