PEC was bought after sound fundamental and technical analysis. My efforts paid off as 2 days after I bought it at $0.655, the stock soared from a low of $0.64 to a high of $0.83. As I had confidence in its business (especially when PEC just announced that they had clinched a deal in Malaysia that is worth more than their market capitalization), I held on to the stock on faith that it can rise to a higher price.
However, the announcement by China on the reins in bank lendings caused all stocks to drop. PEC was rather resilient to the news and showed a strong support at about $0.78. However as time goes by, investors of PEC gave in and caused the stock to slide to $0.76 on 22nd Jan 2010.
From a technical point of view, stock price has fallen below the moving average of the bollinger band and STI dropped below the support of 2800 at the same time. Both indicators caused some panic in me. In fear that if I hold on longer, this might end up having the same fate as that of Golden Agri, that is to end up with lower profits, I decided to just realize my 15% profits now and then and just stay on the sidelines momentarily. A note to make is that after I sold it, prices rebounded back to $0.77 at the end of trading day.
My thoughts at that time: I am afraid that PEC may end up like Golden Agri, where I realized my profits only after much was "returned", hence I made the decision to end it there and then.
Lessons learnt: Make use of the principles of limit and stop losses to retain my profits. More importantly, always stick to the original plan!
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