First trade ever

[Julia]

Well, put it this way: take a look at BNB and ABC Learning. You've got to work out for yourself whether you can see RIO going this way.

That's a reasonable point, Aussiest. Pretty hard to see RIO collapsing though.

I don't hold RIO but if I did, and it was part of a two year plan, I wouldn't be selling at this stage. That's just a personal view, not advice, yada yada.

In January 08 I sold my whole p/f. When I began to re-enter the market, I was able to buy again some of the stocks I'd sold at a much lower price.

So that's maybe something you could consider with your RIO.

This will be an unpopular comment, but with a long term view like 2 years and a stock as substantial as RIO, I'm not sure I'd be having a set stoploss.
For a speccie stock, yes absolutely, but a discretionary approach here doesn't seem unreasonable to me.

 

[skc]

This will be an unpopular comment, but with a long term view like 2 years and a stock as substantial as RIO, I'm not sure I'd be having a set stoploss.
For a speccie stock, yes absolutely, but a discretionary approach here doesn't seem unreasonable to me.

To me stop loss is for those who trade shorter terms and on technical analysis. It really depends on what got you buying in the first place.

If you are buying RIO because you believe in sustainable demand for commodity from China, then you should sell RIO when you no longer believe such demand exist. You should not sell RIO because they price has dropped, because the price level wasn't the reason you entered the stock.

But with this approach you must

1). Follow the stock / overall economic views closely
2). Have the ability / knowledge to interpret such news
3). Have the discipline to sell when your initial views are wrong
4). Not put all your eggs in one basket and keep appropriate position size relative to your whole portfolio

 

[So_Cynical]

Last year, i hear people saying things like "i have made many mistakes in trading this year." I wonder what a mistake is? a deviation from the techniques trades books describes or you can have a perfectly executed trade but its against market's movement. and that makes it a mistake?

lzen5 why did you think around $80 was a good price to pay for RIO?

 

[voigtstr]

I've just had a similar discussion with my wife re RIO. My small portfolio is a mix of two types of shares. Shares bought because they were trending over a long time and had demand from Asia for resources. And more speculative stocks (RCY, GRT, NRT are recent purchases/sales) based purely on what the chart was doing in the days leading up to the purchase.

I'd set a revised stop loss on RIO as it was trading up, and now its fallen past it, but for me at least there is still a market for what BHP and RIO are selling.

This is not financial advice, just random musings about what I'm thinking of doing, and I want to wait a few days and see if this over reaction about Obama and the banks will stop effecting our markets... Isn't it about time the Asian market was more important to us?

 

[Julia]

To me stop loss is for those who trade shorter terms and on technical analysis. It really depends on what got you buying in the first place.

If you are buying RIO because you believe in sustainable demand for commodity from China, then you should sell RIO when you no longer believe such demand exist. You should not sell RIO because they price has dropped, because the price level wasn't the reason you entered the stock.

But with this approach you must

1). Follow the stock / overall economic views closely
2). Have the ability / knowledge to interpret such news
3). Have the discipline to sell when your initial views are wrong
4). Not put all your eggs in one basket and keep appropriate position size relative to your whole portfolio

Great summary, skc. I agree entirely.

 

[lzen5]

lzen5 why did you think around $80 was a good price to pay for RIO?

the actual cost wasnt in my consideration. i just think that the future demand for iron ore is going to remain strong, commodity price is going to keep going up, aussie dollar should keep going up, more interest rises, good macro-economy stats from main iron ore markets. i think its a safe bet. I know if i dont do it now i am just never gonna do it. In Feb last year, i was in the same situation, having some spare cash, i had a choice whether to put it in the bank for 12 months or in the share market. i was thinking at the time:"hmm, i havent read enough about it yet to invest properly", and what a mistake that was. I so decided to finally take the plunge of faith now. i guess i have to start from somewhere and the economy outlook is definitely a lot better now than the same time last year. so why not. I understand i dont have the time or the energy to learn TA from scratch to estimate whether Rio at ~$80 was over-valued or not, so I planned to hold this one for 2+ years, and as long as it beats sitting in the bank i am happy. but by the looks of it now, in the bank would probably have been safer.

i still believe rio is going to see its 120+ days. but i definitely was freaked out a bit after a few days of successive loss. so i decide to discuss it here to see what other people think. and more importantly its going to be something for me to see in retrospect that how my level of confidence fluctuates with the market.

its like SKC has said i amd buying for the good outlook and i hope its the right decision. but i know i dont know everything and not everything goes by the textbook. never hurt to ask.

 

[So_Cynical]

the actual cost wasn't in my consideration.

Some may disagree with me (trendy's) but i think the price you pay for anything should always be an important consideration....the 1 year chart for RIO clearly indicated to me that 'around $80' was way to much to pay.

Over the last 12 months you could of brought RIO for anything from $38 to $80 and somehow you decided that it was a good idea to buy at the top of this range....there's nothing wrong with wanting a stock and believing in there story, however you choose how much you pay for that belief.

 

[lzen5]

Some may disagree with me (trendy's) but i think the price you pay for anything should always be an important consideration....the 1 year chart for RIO clearly indicated to me that 'around $80' was way to much to pay.

Over the last 12 months you could of brought RIO for anything from $38 to $80 and somehow you decided that it was a good idea to buy at the top of this range....there's nothing wrong with wanting a stock and believing in there story, however you choose how much you pay for that belief.

do you think i have made an mistake in trading?

 

[Aussiest]

do you think i have made an mistake in trading?

You may not have made a mistake in trading, but as Cynical suggested, you have probably paid too much for RIO, but who was to know the price was going to slip? It was probable that the market could have risen another couple of hundred points, in which case, your RIO would now be selling at around 90. You never can be sure.

I believe RIO will head back up to 100+ in the near future and i am sure the price will definately exceed 80 within the next two years. What's important for you now is to determine at what price you're likely to sell it (when it goes up) and under what conditions you would pull out. You'd hate to see it go to $120, then fall back to $90. Just my

Btw, i bought some RIO @ just under 80, for the same reasons you did. Probably a bit too soon, but i perceived that the XAO could sustain a move above 4850. Boy, was i wrong. Should be interesting to see how low our RIO go before it turns back up again..

 

[nulla nulla]

Minimum block of 7 shares at $78 + $30 brokerage makes $82.3 cost per share?

Virtualy needs to make 5% (to $87 ish) before he could sell and break square. I hope you're not planning on retiring soon. goodluck

 

[clayton4115]

out of curiosity is the poster still holding onto Rio

market looking very bearish looks like we could have months of falls

looking at the rio chart, we got a long way down

 

[matty77]

here is a tip:

1. Dont listed to media hype, the news, or any other flashy report that 'tells you' what the stock is going to be doing, ignore it, you are here for the long haul.

2. See point 1 - you are here for a 2 year investment, that means over a period of 2 years you will want the stock to go up - what is happening on a day to day basis with this stock is irrelevant, infact even weekly is pointless. My advise is that you check the stock price a maximum of every 4 weeks. Minute by minute analysis of a stock you have already agreed to hold for 2 years is a waste of time.

3. You dont need to worry about stop loss, even if RIO went down 25% today, it would probably make that back within 2 years.... good luck.

 

[waza1960]

Some Observations: If you were going to hold a stock long term a better option IMO would be to pick a high dividend stock with growth prospects.
If you believe the china growth story and its sustainable fine but I don't. If the S--t hits the fan and their property bubble bursts the Aus dollar and Commodity stocks will probably end up near their lows.
Remember commodity stocks are more cyclical than others its hard not to think that you bought near a high anyway my

 

[clayton4115]

looking at that chart its plain to see $80 is a high resistance level.

 

[Liar's Poker]

have been paying attention to the market for a while, havent read any books or anything, dont really know a thing about how the stock market works, finally decided to take the plunge today. bought some rio tinto for 80-something. just gonna leave it there for a year or two. hope I have made the right chioce.

After dropping approximately 14% in less than a month on your first trade, the worst thing you can do now is ignore your mistakes. I've quoted your mistake above so you don't have to spend any time looking for where it all went wrong.

Research, reasearch, research...

As they say, "a wise man learns from his mistakes" (and for other first time traders, "a wiser man learns from others mistakes").

 

[Julia]

After dropping approximately 14% in less than a month on your first trade, the worst thing you can do now is ignore your mistakes. I've quoted your mistake above so you don't have to spend any time looking for where it all went wrong.

Research, reasearch, research...

As they say, "a wise man learns from his mistakes" (and for other first time traders, "a wiser man learns from others mistakes").

Just to be clear here, are you suggesting that Izen should sell his RIO shares?

 

[Mr J]

Just to be clear here, are you suggesting that Izen should sell his RIO shares?

The only suggestion seems to be to do some work before taking action. I'd suggest close the RIO trade though, because we should not be in a trade if we have no informed opinion.

 

[surfingman]

When it comes down to it there is around $500 on the line here, you will pay more a very poor quality course.

I believe that the best way to learn is to do, by buying and watching and learning I think that is $500 very well spent if it was $5,000 it would be a totally different discussion.

A friend from work recently decided he wanted to start buying some shares I recommend exactly that spend $500 and start to learn he bought UNS and has watched it bounce around for the past couple of weeks while reading up on other stocks and asking opinions from others.

 

[nunthewiser]

would be watching for a technical bounce around right about here ....... re RIO .........nice low%loss on stoploss points if one was to consider a long trade entry.......

Could be wrong but it does provide a nice low risk/reward trade at this level and prime for a support bounce.

Will be watching for a doozy of a short entry if we break these levels tho.

Only my view from here.

 

[skc]

Minimum block of 7 shares at $78 + $30 brokerage makes $82.3 cost per share?

hehe you are right, it was 78, didnt really pay attention to how much , just thought:"hey, i might buy some stock today."....

You have already made $2!

I will pray that BHP have a second tilt on RIO for you.

For those who want to contribute to this thread... so context.

There is no confirmation one way or the other about the position size. $500 was only my speculation on how he could have bought RIO at $80 a share while it never traded at $80. For all we know he could have between $1 to $1B on RIO...