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Category: Stocks and shares
  1. What causes the price of a stock to go up or down? How come even though the buy queue is higher than the sell queue, the stock doesn't move up in price?
  2. What is the trading hours of Singapore and HK bourse?
  3. What actually happens when I buy a stock?
  4. What is the x you see just before market opens and after it closes, when looking at the sales and transactions for the day?
  5. I have been using X brokerage firm and now I’m using Y brokerage firm. I bought some shares using X firm, so does the shares that I bought with X be transferred over to Y? If I sell my shares using Y does it constitute a short sell?
  6. What is contra?
  7. What should I do when I receive the thick annual report every year? Do I have to do anything about it?
  8. How do I apply for rights? What are the options I have? (PART 1)
  9. How do I apply for rights? What are the options I have? (PART 2)
  10. How is the opening price of a stock determined?
  11. Why is it that when I queue to buy at price of $0.50, but when the current price of the stock reaches that, I still haven’t bought my stock yet? Is it because of queuing?
  12. Hi, I am a newbie to share trading and I understand you have come out with a checklist to analyse share. If you do not mind, can you please share/email the checklist to me? Thank you very much



  1. What causes the price of a stock to go up or down? How come even though the buy queue is higher than the sell queue, the stock doesn't move up in price?
    I'll give an example.

    Buying vol | buy price | sell price | sell volume



    say initially its 520 | 0.770 | 0.775 | 330



    This means that there are currently pple waiting to buy 520 lots at 0.770 and pple waiting to sell 330 lots at 0.775. The key word is waiting, because the buy/sell queue are waiting queue.



    If you want to buy 5 lots at 0.770, you join the queue at 0.770, the quotes becomes



    525 | 0.770 | 0.775 | 330



    If I want to sell 10 lots at 0.775, i join the sell queue and the quotes becomes



    525 | 0.770 | 0.775 | 340



    Notice that up to now, the price didn't move at all. Now if I'm sick of waiting and i'm in a hurry to sell off another 10 lots, i dun sell at the sell price, i sell at the buy price. Immediately i jump the sell queue, quotes become:



    515 | 0.770 | 0.775 | 340...price drops to 0.770



    Same thing for buying up. If someone is too eager to buy the stock, he wants to get in 10 lots at 0.775 to jump the whole buy queue, here's how the quote look like:



    515 | 0.770 | 0.775 | 330.... price increase to 0.775



    Basically it's the enthusiasm of buyers to bid higher price that drives the price up, and the desperation of sellers to sell at lower bid that drives price down, not the buy and sell queue.

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  2. What is the trading hours of Singapore and HK bourse?
    Singapore opens at 9 am to 1230pm, break for lunch and resume the afternoon session at 2pm to 5 pm. Hong Kong opens at 10 am to 1230pm, opens again at 230pm to 4 pm. Do take note that if you use most of the 'live' prices for HK stocks, it'll lag by at least 5 to 15 min. Yahoo! finance lags by as much as 30 mins to 1 hr. The livest live price can be found from the following sites:

    a. Live HSI charts - This one is good as it even has charts and is detachable



    b. Real time HSI forex gold - this one is not real time, but it's not laggy, good enuff for me.



    c. HSI stock quotes - this one is straight from the horse's mouth, so to speak. Too laggy for me



    The only free HK live price I know from brokerage is from dbs vickers. But it has it own set of problems...

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  3. What actually happens when I buy a stock?
    After you buy a stock, we don't have to pay for it immediately. The day that the stock is purchased is termed T day. We have to pay the stock by T+3 (or T+4, T+5, depending on your brokerage firm or broker). This means that we have to make payment by transaction day plus another 3 market days (market days exclude public holidays and weekends).

    For example, if I buy on Thurs, I have to pay on T+3, which is next Wed. If payment is not received on end of T+3, the brokerage will sell off your shares. After payment is made, the scripts will be electronically transferred to your central deposit account (CDP). If you have an online password with them, you can check their website and you'll see your shares there. You'll also receive those irritating perforated pieces of paper (two of them!), saying that you made a transaction with your brokerage firm and another saying that the CDP received the shares.

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  4. What is the x you see just before market opens and after it closes, when looking at the sales and transactions for the day?
    The x at the opening and closing is the pre-open and pre-close matching respectively.

    For pre-opening, it's basically for those orders that are keyed in before the market is opened AND are transacted. What happens is that there are buyers who bid for a price and sellers who ask for a price. There is some formula to calculate these two bid/ask price, and this calculated price is the opening price of the stock. If there are a total of 10,000 buyers and sellers matched, then you'll see 8:59 x 10,000.



    Same thing for pre-close matching, but this time the calculated price is actually the closing price of the stock.



    Do not mistake the x when market is open for trading for pre-close/open matching, they are not. These x are married deals, a different ball game altogether. Married deals are private deals with a willing buyer and seller, so the price are decided between the two parties and are independent of the bid/ask quotes you see currently on the screen. Married deals are important, esp if the volume for the transactions are huge - usually indicates to me that institutional buyers are buying/selling.

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  5. I have been using X brokerage firm and now I’m using Y brokerage firm. I bought some shares using X firm, so does the shares that I bought with X be transferred over to Y? If I sell my shares using Y does it constitute a short sell?
    The answer depends very much on whether the shares you bought with X firm are deposited in the central depository (CDP). It will be, after you made payment by T+3 days. If that is the case, the shares you bought have nothing to do with X firm anymore, so you can very well sell the shares using Y firm or any other firms. It will not be a short sell.

    If you buy shares using X firm, but within T+3 you sell it using Y firm, then you have an open position with X and a short position with Y. You still need to pay for your shares plus brokerage with X before the shares will be transferred over to CDP. In the meantime, you have to cover you short position with Y by buying back within the same day of transaction, otherwise you will be subjected to SGX buy back.



    If you buy shares with X firm, paid for it by say T+1, then sell it by T+2 using Y firm, then I’m also confused! To be sure, check CDP website to ensure that the shares you paid for are already deposited inside before selling using Y firm. Life’s too bland for you? haha!



    Do yourself a favour, keep a good transaction record of which shares you buy, T+3 payment date and with which brokerage firm.

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  6. What is contra?
    When you buy a stock, you normally have to pay on T+3. T+3 means that transaction date + 3 more market days (public holidays, sat, sun not counted as market days).

    E.g. If I buy on Thurs, T+3 is actually next Tues.



    If I managed to sell off the stock I bought before T+3, that means that I don't have to pay any capital upfront and get the difference between the price I bought and the price I sold. This is called contra.



    Usually contra are for short term traders, who goes in and out within the T+3 days. Those who contra all the time will also whack huge lots (more than what they can afford to pay) since they don't have to really pay for the stocks upfront and they are going to sell off before the T+3 date, regardless of profit or loss.



    Just be careful if you buy more than what you can afford...If the stock went down, you might have to hold or sell at a loss. Not advisable, unless you're a good chart reader who knows when a stock can make spectacular gains all within T+3.

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  7. What should I do when I receive the thick annual report every year? Do I have to do anything about it?
    The thick annual report consists of a few important information that any serious investors need to pay attention to. Firstly, it gives a snapshot of how well the company is doing in that financial year if you look at their financial statements. Secondly, the chairman/CEO will have give his/her message to shareholders, detailing the next year’s direction, a summary of the company’s performance and generally what to expect in the future. Lastly, there will also details of where and when the annual general meeting (AGM) for the company is taking place. The AGM is a meeting where shareholders and the directors will meet once each year to pass resolutions regarding the company. Examples of such resolutions include approval of director’s fee, re-election of directors, approval of dividend payout, rights issues, etc.

    You can choose not to go to the AGM and missed communicating directly with the directors (and the free food) and instead appoint a proxy to vote for you on your behalf. OR you can totally choose to ignore the AGM.

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  8. How do I apply for rights? What are the options I have? (PART 1)
    If you flip the OIS (offer information statement and look for the section under “Procedures for acceptance, payment and excess applications by entitled depositors” under the Appendix section, you can see that it’s all spelt out clearly for all the possible cases you can imagine.

    I’m only going to go through the basics. There are two main ways to subscribe for your rights:



    a. acceptance and application by ATM of a participating bank


    b. acceptance and application by CDP


    First before choosing either options, look at the mailed Form A - white form (ARE for rights shares) or green form (WEWAF for rights warrants). Pay attention to the number of rights shares/warrants provisionally allocated – that is the amount that you are allocated, so you can choose to take it all up, partially, not at all and/or apply for excess. Find out how much you need to pay for and how much you need to pay if you want the excess rights.



    If you go by ATM, it’s the easier option. Just go to the ATM screen, click on other transactions, then look for something like “ESA – IPO applications”, then find the company that is relevant. You’ll be guided to type in the amount of rights that you wish to accept out of the allocated (e.g you may be provisionally allocated 5000 rights but may want to accept only 2000), plus another separate screen where you’ll be guided to type how many excess rights you want to subscribe. Then you’ll come to a screen where they will tell you how much you have to pay. Make sure this screen you check carefully before pressing. I know for DBS you need to pay a service charge of $2.00, not so sure of other banks.



    If you applied through ATM, then do not send any forms! It’s done – just wait for them to mail you how many excess rights you’ve successfully got and how much you applied for.

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  9. How do I apply for rights? What are the options I have? (PART 2)
    If you’re going through application by CDP, then you have to fill form A (the coloured forms). There’ll be instructions to tell you how to fill but I’ll run through a little. First, delete away the I/We* and my/our* that you see accordingly. Then look under Registration – and fill in quantity (the number of rights shares/warrants) you accepted, calculate and fill in the amount payable to CDP (multiply the quantity by issue price per share/warrant). Fill in the number of excess rights you wish to apply and repeat, total it up and sign below.



    Next go to the bank to get a cashier’s order or banker’s draft (it’s just a cheque that is issued by the bank – you have to pay the bank a certain fee in addition to the amount for their services) with the following written – “CDP – XYZ RIGHTS ISSUE ACCOUNT” and crossed “NOT NEGOTIABLE, A/C PAYEE ONLY”. On the reverse side, write your name and your securities account number. Finally send the banker’s draft/cashier’s order and the form A to the enclosed envelope mailed to you. Affix your own stamp!

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  10. How is the opening price of a stock determined?
    This is done by matching the highest bid price and quantity with the lowest ask price and quantity until a common price is met. For example:

    BUY


    100,000 1.10

    90,000 1.09

    80,000 1.08

    70,000 1.07

    60,000 1.06

    50,000 1.05

    40,000 1.04

    30,000 1.03

    20,000 1.02

    10,000 1.01


    SELL


    10,000 1.00

    20,000 1.01

    30,000 1.02

    40,000 1.03

    50,000 1.04

    60,000 1.05

    70,000 1.06

    80,000 1.07

    90,000 1.08

    100,000 1.09

    200,000 1.10

    300,000 1.11

    400,000 1.12


    the 100,000 @ 1.10 BUY will match with 10,000 @ 1.00, 20,000 @ 1.01, 30,000 @ 1.02, 40,000 @ 1.03 from the SELL



    the 90,000 @ 1.09 BUY will match with 50,000 @ 1.04, 40,000 @ 1.05 from the SELL



    the 80,000 @ 1.08 BUY will match with 20,000 @ 1.05, 70,000 @ 1.06 from the SELL



    Finally 70,000 @ 1.07 BUY will match with 10,000 @ 1.06, 60,000@ 1.07 from the SELL



    Hence, the opening price will be 1.07, with the buy queue of 60,000 @ 1.06 and the sell queue of 20,000 @ 1.07

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  11. Why is it that when I queue to buy at price of $0.50, but when the current price of the stock reaches that, I still haven’t bought my stock yet? Is it because of queuing?
    I'll give an example.

    Say for company A, you'll see the quotes as


    B vol, Buy price, sell price, sell vol

    10, 0.775, 0.780, 12


    You queue to sell at 0.780, 5 lots. You'll see the quotes as


    10, 0.775, 0.780, 17


    I want to buy 2 lots at 0.775, the quotes become


    12, 0.775, 0.780, 17


    Basically you join the queue to sell at 0.780 while i join the queue to buy at 0.775. Let's say you're impatient and wanted to sell immediately. So you sell another 5 lots at 0.775. The quotes become


    7, 0.775, 0.780, 17


    TAKE NOTE: I didn't buy anything as my queue is not up. Unless another seller sells at 0.75, 6 lots - i'll get 1 lot (order partially filled). If sells at 0.75 for 7 lots - i'll get 2 lot (order fully filled).



    Same thing goes for buying. If I can't wait, I'll just hit 2 lots at 0.780. THe quotes change from


    12, 0.775, 0.780, 17 to


    12, 0.775, 0.780, 15



    Did you manage to sell? No, unless someone buy up 0.780 for another 15 lots, then your order will be fully filled.

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  12. Hi, I am a newbie to share trading and I understand you have come out with a checklist to analyse share. If you do not mind, can you please share/email the checklist to me? Thank you very much
    Hi, I don't have a checklist to analyse shares, I'm afraid. I do, however, have Peter lynch's checklist. It's here: http://bullythebear.blogspot.com/2008/05/checklist-stocks-in-general-pe-ratio-is.html At most it's a guide, I doubt it'll really help in anything. I suppose most of the checklist comes from reading books yourself and seeing which fits into your personality. I get my trading ideas from charts and from other blogs, if you want to know.
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