Sunday, April 30, 2017

Picking an Indicator

Choosing an indicator is like choosing your own stock. This should be easy to understand, easy to process, and you can always relate it in the price action. This should be also relatable to your mistakes and is the closest one where price action and the basics of your indicators meet.

How did I come up with my indicators?
I came up by using different indicators I used RSI, Ichi Moku, Moving Averages, Bollinger, MACD, Aroon and Price exhaust. When I see a laggard one with price action I throw it out. RSI is somewhat the same in Price exhaust but Price exhaust is more of a pictorial innovation of RSI. I can see the momentum, the trends and the chance where I can buy on pullback and where I can lock in profits while RSI only tells the overbought and oversold levels of the stock. It made me get whipsaw a lot of times the reason I eliminated it in my system.

The next indicator I saw is Aroon. Most people say that this is the most laggard indicator but when you look at it on the monthly time-frame this is the fastest to recognize that the stock has already made it's bottom and an uptrend is coming. Aroon is also connected on the mistakes I did on the past where I always chase the price and in the end the stock will consolidate and that is where my discipline in only buying the pullbacks where established. Buying the pullbacks for me is the most valuable lesson I have learned in the market. It gives you more confidence in your trading, it let's go of all those nervous emotions you have inside of you, and it gives you a higher percentage profit than buying the breakouts.

The main indicator I use is moving averages or the Guppy Multiple Moving Averages plus bollinger. I can easily distinguish the trends, the Golden and Death Cross, the Alignment of the Stars, and the phases of where the stock is already. The phases includes of reversals/start of a new trend, if price action is trying to break out or break down. If the bollinger is on a squeeze for a long time. I also use the GMMA as my main supports when I am buying a pullback of an uptrend stocks. In buying you need to be more disciplined, you need to wait for the right time to enter, you need to enter while the stock is quiet and not on an outrage. When an uptrend stock is causing fear then that is the right time to enter. Buy when others are fearful as what Warren Buffet always say. The market is more of a battle of the mind! You need to have a strong mind to win this market!

You should know the uses of your indicators their strengths and weaknesses if you want to build your own system. I cannot share you the secrets of these indicators since it is my holy grail and once a system spreads the system will lose it's value. So I encourage everyone to look for your own combination of indicators that will help you in building your discipline in entries and exit, a way to eliminate all the emotions in trading, and be more confident with your trading career.

Wednesday, April 26, 2017

How to spot a bagger?

A bagger is a low risk high return investment. You can gain a minimum of about 300% on it. We will study how a bagger is spotted earlier and how the waves of a bagger was made. In PSE a stock with volume doesn't go up without a reason. There will always be a reason for it. Someone already knows it before the retails do. And those are the operators. Why a sleeping stock rises it is because someone is accumulating earlier. Once you spot that join them in the accumulation. Always by the pullbacks. You can range trade or you can sit on it, it's up to you.

Here are the examples how we spot a bagger!



1.) Using the Aroon indicator. At .087 Aroon Up Already crosses up that is the signal that this will be a bagger in the long run.

2. ) Using the bollinger. The bollinger is squeezed and prices have ranged in a long time.

3. Volume: An unusual increase in volume especially if an illiquid stock is trading at P10 million and up is no joke. There is really something happening on this stock. A shake is imminent to make the weak hands jump and they can get the shares in a lower price once more. The selling with low volume is an example of that. The operators need to sell down the stock to have money for buying up the stock again and so the cycle continues.

In this set-up you can see that There are still 5 months consolidations that happened in the stock. There can be two option either hold or lock first the profits before coming back while putting your money in a faster horse during the time of consolidations. In this consolidations the operators are accumulating slowly they are waiting for traders to be impatient to shake them out so they can gain the traders shares in a lowest price possible

When to sell:


We get ready to sell when the monthly is already exhausted. That is the time we need to be super careful. After selling you can accumulate again at the lows. The lowest it gets by this time is at .1220 you can collect and wait for 5 mos cosolidations or you can either time and get in when the stock is moving already. It will be upon you if you are a sitter or a timing trader.

Wednesday, April 19, 2017

Common Mistakes you are doing but you can't notice it

In Trading mistakes are common to traders. As human we are prone to errors and mistakes. Here are some common mistakes traders mostly commit:

1. Excitement: Yeeeeyyy! I just learned that if you invest you will get rich. I need to buy my favorite stocks. You used all your money to buy all those famous company without thinking of the trend, the time, the cycle, the business. All you know is that they are blue chips, or they have good management, or you are using the product, or you know the owner. After some time you noticed that the stock market is a cycle just like gardening there is a time for planting, a time for waiting and a time for harvesting. If you got it all mixed up then you're doomed but if you are lucky and you got it right then good for you but you might also be doomed if you committed the next mistake.

2. Overconfidence: Wow! I always win! You think of yourself as a genius. You think you will never go wrong. You jump over a stock thinking that whatever you do you will win the trade because you are a genius. Sometimes fate will really pull your feet down and show you that you are just lucky. Without having the proper discipline you might win some but you will lose more. Treat a winning trade like it was nothing and a losing trade like it was just a part of the game. Always remember that tomorrow is another battle, another trade and we do not know what will happen. Will the odds be with us or not? After all with overconfidence lots of mistakes will come because you are not in a proper mindset.

3. Addiction: An overconfident trader not on the proper mindset will fall in this. They will never notice that they are addicted already. They sell earlier because they want the hang of trading and not maximizing the profit at all. They thought they are winning but not considering proper position size, risk management, and not having a system. They just trade because they want excitement. Trading is really a boring one if you are not bored then maybe it is addiction that is causing you to lose more money than earn more.

4. Over-leveraging: This can also come with overconfidence and addiction. You think you are great that you can trade money you don't own. You think your funds are unlimited because you can just order and order whatever you want without planning how to enter, where to enter, when to enter and when to cut your losses. When you are on the process of addiction you will tend to just borrow and borrow until someone will stop you and ask you to pay all your losses and that is the only time you will realize that you are one fucked up trader.

5. Revenge trading: Once you are at a loss you want to have your revenge. Everybody wants that right but the question is Is your mind in the proper mindset. Do you have a plan to do that. Did you learn from your past mistake or you are still in denial that it was not your fault? If you still don't get it then what you have to do is to stop trading. Stop thinking of having your revenge! Your revenge should be sweeter and comes with a proper mindset. You should already be disciplined to do that. Cause if you will force yourself on getting even then all you will commit are more mistakes. For example you will average down on your chosen stock when it shows that it is a complete downtrend when what you should do is to cutloss. You will cutloss an uptrend stock because your entry is wrong instead of buying more. You see stocks is more of a strategic battle. It has no right formula so you need to be adaptable and can formulate any strategies that can help you win the battle.

6. Laziness: One of the sins of traders is laziness. They are so industrious on the wrong things. Industrious with facebook analysis, industrious with becoming close with the gurus, they thought they are privileged that these gurus are whispering them to buy a stock that they are actually selling. I've got a friend which was personal messaged by a well known guru to buy this stock. Wow! A famous guru pm'ing me I'm so blessed is what newbie might tell to themselves. Then boom it went down 50%. It's good that he just bought a little of that or else he might have lost his hard earned money. Don't put your stock tips on a certain person or guru you need to have due diligence as well. Even if you are paying a subscription you also need to check what you are going into. Learn to check the charts first. Learn about moving averages to know where the trend is going. Use short MA, medium, and long to develop your trend.

7. Not handling emotions properly: Emotions are innate to us we are only humans so how do we mitigate this fear of losing, fear of entering, greed, euphoria and the likes? We need indicators. We need to understand the meaning behind those indicators. You need to have confidence on your indicators. You only follow what your heart and instinct is telling you. Only YOU not your friend or other traders in the stock world. If someone sells you need to check your system if it really is a sell or not. You don't have to follow them because you don't know the reason why they sell. They might have seen another opportunity and you don't even know how to trade that other opportunity. Just stick to what you already studied you don't have to do what other's are doing. Just be yourself whatever system you are comfortable with!

You are the only one who knows yourself well. You need to accept the reality that the fault lies withinYOU. Stop pointing fingers and make excuses. The only time you will become a matured and disciplined trader is when you opened your eyes and identify all of your mistakes. The moment I have realized all my mistake is the moment I gained back what I loss and I have more winning trades than my losing trades. Polish your trading style. Learn some indicators that can improve your discipline. Always trade with the right mindset. Stop being impulsive. Have a set of rules that can help you with your buying and selling and coming back whenever you have realized a mistake. Then you're all set.

Tuesday, April 4, 2017

Position Sizing

Position Sizing is one of the important factors in your trading and investing. How many positions should you hold? How much cash should you just leave as your position? How do I allocate my funds on my positions. Do I buy one time big time or do I buy on tranches?

First of all let's look on how many positions is applicable for a starting trader. For a starting trader with P100,000 fund. I would ask you to focus on one position first. Why? Newbie traders coming in the market has still excitement on them. They want to put all their money and buy all the stocks they know and make their portfolio looks like a fund manager portfolio. They believe that they need to spend all their cash in just one go so that they can leave it overnight and tomorrow they might see their positions gain already. Of course when they woke up the other day it is the opposite of what they thought. Then they go to forums or groups show their port and ask the big question WHY?

Why? Well as a newbie first of all mistake you did is buy without a plan. You entered because you see the hype on a group where in those posters are full of euphoria and happiness that their stock has risen. Avoid those emotions. The market has no need for emotions and those celebrators are just mere noise. They will post chart that will tell you that the RSI is still pointing up even when it's already at 100 and at the overbought levels. Of course it was intended for you the Newbie who doesn't know what you are doing in the market.

So how do you avoid it? As a newbie position sizing comes from your confidence in buying the stock. If you do not know the stock you can either just wait for another opportunity and just leave your cash hanging. After all cash is a position too. What if you really want to risk? Then buy some boardlot of that stock and risk on. Buying the boardlot will cost you some commission costs but will also save you when it comes to danger. Always put in mind how new you are in the market and that you don't know anything yet. Be practical. Better safe than sorry.

Next for newbies are if they want position or long term stocks. I advice that you buy on tranches. If you want to buy now of a certain stock test it first. Newbies most of the time has no idea on support and resistance so it's better to test first your chosen stock so when it goes down you can still buy more. For example you want to go to DD and you have a P100000. At the current price of 54.10 you are not sure if it is a good buy. Then buy for 10000 first. After that the price fell at 53.35 and it looks strong then buy another P20000. Leave the P70000 for future use. The next day DD went up to 55 you can see that your stock is really strong. You can either buy your P20,000 to put in DD at those range especially if it just went up on that day. It means that the price reverses and the movement is good. What will you do with the other half? You can use the P10000 of it for trying to swing on some shorter term stocks. The P40000 is just a reserve to save you on whatever might happen in the long run. After all cash is a position too.

What if I am not a newbie. I have an experience already and I know some technicals? How will I do my position?

For those with experience and system you can put 50% position, 30% swings, and 20% cash. You can use the cash on day trading or scalping if you found a momentum stock. But make sure if things go wrong cut! That is meant to be your saving grace when a trade goes wrong. Like how newbies bought in tranches it is advisable for experienced traders to buy on tranches too cause the market is not predictable. You might think that it is already the bottom or the support but then it isn't. Unless you are the one who goes all in on a trade and has a cut loss plan then it is also still upon you. Different strategies for different people.

Although there is a saying that Wise men say only fools rush in yes there is really truth on that. If you are lucky then you will be happy with your gains but if you are unlucky then it might really hurt especially if you don't know how to cut.

For larger capital you can have 2-3 positions. Why few position? We need focus on our stocks. The higher your focus the more you can take care of your stocks. You can also do some exit strategies the best. Also you will have conviction on your chosen positions. Also have cash that you can hold so when your stocks dip you can still add on your positions and if you have seen a momentum opportunity you can easily play it without looking for loosening some cash on your positions.