NEPSE broke all-time high record, I booked a profit: NEPSE Trading Journey S01E07

Click here to access all the articles of My NEPSE Trading Journey Series.

An excerpt of the article I wrote for Sharesansar today:

“Just when people were beginning to think that nothing good could happen in the year 2020, NEPSE has delighted everyone.

The index closed at 1,893.24 today, which is the highest close in the history of NEPSE. The previous highest close was 1,881.45 on 27 July 2016. With this, NEPSE has entered a new land of uncharted territory. Any picture that the index paints from now on will be on a fresh, untouched canvas.

Note: Although I have listed reasons for selling each stock separately, the major reason behind me emptying my portfolio is the excessive bullish mania in the NEPSE index. Everything feels hyped up, and I do not feel so good about that.

1) 10.25% Profit in NHPC in 8 days

Bullish flag formation in the candlestick chart of National Hydro Power Company Limited (NHPC).
Notice the red bearish candles at the peak.

A neat bullish flag had formed in the chart over a number of days. Bullish flags are strong indicators that the uptrend will continue.

Thus, I bought a few shares at Rs. 117 on November 18. The stock then went up indeed. However, I was scared by the formation of the dark cloud cover after a few days. Thus, I sold today, i.e. November 26 at Rs. 129.

See, I am going to regret this decision if the stock follows the bullish flag signal and indeed go up. However, like I already said in the beginning of this article, I feel safer to stay on cash (and out of NEPSE) when I do not understand what is going on. Nevertheless, 10% profit in 8 days isn’t that bad.

2) 28% Profit in PRVU in 28 days

I bought PRVU on October 28. Volume spiked on PRVU on this day. Something was surely cooking within the investors. Chart readers do not need to understand the real reason. Many times, when the reason is out in the public, one will have already missed the train.

Charts are our holy bible. The chart was telling something was cooking, so I bought PRVU that day at Rs. 265 a share.

However, I learned from this trade that whenever a big move happens in a stock, investors get confused. Some even sell. Thus, the stock consolidated from the point where I bought. However, it did not fall decisively. So, I held on without selling.

And like I predicted, buyers started to come in from nowhere and took price higher. I was getting a handsome profit.

Candlestick chart of Prabhu Bank Limited (PRVU) showing where I bought and sold the shares.
Show me the money!

Furthermore, this trade also changed my perception of keeping a target. Before this, I had set a 15% target for every stock. If it gained 15%, I would sell no matter what. However, some stocks gain 50%, 70% in a single uptrend, so why get stopped out at only 15%?

Thus, I decided to only sell after the appearance of a sell signal.

However, this was my first time holding a stock for that long. Let me be honest with you – It is more difficult to hold on to a gaining stock than with a losing stock. I can now say this with experience. Haha.

Anyways, I sold PRVU at Rs. 340 today, i.e. November 26. I feel like I sold it prematurely. But a bird in hand is worth two in the busy, I guess. Profit of 28% in 28 days. I am happy with my performance, I should say.

3) Got out even from CZBIL

This stock was confusing. Unlike PRVU, CZBIL saw a volume spike AFTER few days of dividend announcement.

I forgot when I bought this stock because my broker failed to send me a text message after I bought this. My broker otherwise always sends a transaction history at the end of the day if I buy or sell anything. However, I reckon I bought this at around the time when I bought PRVU, or later.

I bought a few shares at Rs. 239.

Anyways, the stock was gaining until yesterday, which was the book closure date for the stock. Investors maintained till yesterday were entitled to get the 10% dividend for the fiscal year 2076/77.

Thus, since investors till yesterday will get dividend anyway, they will begin to sell from today. And they actually did. CZBIL had closed at Rs. 251 yesterday, but it opened at Rs. 235 today.

I was able to somehow sell all my shares at Rs. 240. Thus, I got out even, given that I bought at Rs. 239. I might lose a few hundred rupees on commission and all but I am fairly even, I should say.

Lost a few rupees trading Citizens Bank International Limited (CZBIL).

See, I was not going to write about this trade. No one likes to talk about their losses. However, the main reason why I document my journey is to keep myself accountable and stay humble on the ground. Although it hurts my ego to talk about my loss, this surely teaches me to stick to my strategy and not be an asshole.

Also, note that I will get the 10% dividend of CZBIL since I sold after the book closure date. However, I do not emphasize dividend so much because it takes a long time to have my bonus shares listed in NEPSE. I will rather put that money in other shares than to wait for the bonus dividend to come to my account and be tradable.

Wrapping Up

I document everything for my own sake. This really helps me keep things in perspective and be on track. Nevertheless, if you feel like you will enjoy connecting with me, see me on Instagram at @nepsetrader. I post cool stuff there and talk to as many people as I can.

I mean, come on, let’s all grow together when we can. मन त नेपाली हो नि।

Click here to access all the articles of My NEPSE Trading Journey Series.

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