We are familiar with many great resources out on the web. But one of the most overlooked resource you should consider tapping on is your brokerage service, which you probably are paying for without realizing so. Often taken for granted as a mere channel to transact, most brokerage houses provide many value-added service that could help your investments and trade process.
Here are two secrets that you probably did not know (if you are relatively new to share investment and trading):
Know Your Counter Party
Did you know you could check who is your counter party when you make a trade?
Most brokerage accounts allow you to see who is the counter party, usually the brokerage house that executed the trade on behalf of the client.
Here are two examples from LimTan platform.
Sell order for CapitaMall Trust – Counterparty is JPMorgan
Sell order for SingTel – Counterparty is JPMorgan
Notice the counter party is JPMorgan who serves predominantly institutions. That could serve a tell-tale sign that the fund houses are accumulating their positions in these blue chip counters (if you are selling your shares into their 'hands' or vice versa, when you make a purchase, you bought from them). It could be an indication that buying pressure is could be sustained for a period of time. This information is important in my mosaic trade planning which I discuss more about here.
Of course, this is no sure fire way to make profit. Neither do you need to panic when your counter party is a foreign institution. Foreign fund houses can be wrong and had been wrong at many times (or perhaps serve a diverse group of clients that has differing view of the market or for that matter, different broad global plan). Nonetheless, that bit of information helps you to paint a more complete picture of the market (hence my belief of Mosaic approach - bits of information to form a, hopefully, more accurate overal picture).
Break up your trades without additional cost
Stock prices, especially blue chip stocks can fluctuate over a large range within a day. Because it is not possible to capture the precise high or low in the day, one possible approach is to average your trades by spreading them throughout the day.
When you are accumulating a certain stock, say OCBC (SGX: O39), you don’t necessary have to buy them all in one breath.
Here’s an example how it benefits you. If you want to invest in 1000 shares of OCBC, instead of rushing to buy all 1000 shares at $8 in the morning, you could break up your order into 2 queue orders. 500 shares at $8 in the morning and 500 shares at $7.60 in the afternoon. Your average buying price in this case is only $7.80, a whopping $200 saved.
As long as you complete your trades within the day (on the same side, i.e. either buy or sell), you only need to pay 1 commission charge!
Brokerage houses compile the orders by the end of the day before charging your trade commission. So long as the trade is done within the day, you will be able to transact at as a single trade.
If you’d like to learn more about finding your edge in investing as well as to get updates on what is happening in the Singapore stock market, consider joining my exclusive group for regular and timely updates on the market.