A Hard Habit to Break

I recently met up with ex-office mates of mine from a previous life. We went to a karaoke bar, and (they) belted out some songs. One of his favorites was a Chicago classic, A Hard Habit to Break.
He doesn't read blogs (hopefully), and even if he does, he'll know I'm referring to him (Idol!).
The title here is a tribute to his voice, and a good segue to my favorite pastime - trading.

Trading is habit forming. This is a sentence a newbie trader should know.

I get up early in the morning, to look at charts, read the papers, talk to my broker, maybe even have my breakfast. All because trading is habit forming.

I stay up late at night, watching CNBC trying to decipher what is happening in the US market and what effect it will have on our local market 5 hours later. All because trading is habit forming.

I write extensively, trying to manage two blogs about investments (and the stock market too!). All because trading is habit forming.

I read books on trading, on technical analysis, none (yet) on fundamental analysis, none (yet) on trading psychology. All because trading is habit forming.

I talk to my friends about the stock market. I suddenly become wide awake when the topic suddenly drifts to the stock market. I talk endlessly about how wonderful a place the stock market is (most of the times). All because trading is habit forming.

I watch the stock market using my Technistock program through bullish, bearish and sideways times. All because trading is habit forming.

But I must forewarn some of you though, as Chicago will also tell you about the stock market:

I guess I thought you'd be here forever
Another illusion I chose to create
You don't know what ya got until its gone
And I found out just a little too late

This phrase is for the people out there who don't cut their losses, who think the bull run will be in eternal continuance, who think that JOH is a good stock. Please be careful. And I say this, because yes, you guessed it. TRADING IS SO DAMN HABIT FORMING!

The Weekend Factored!

I wrote in a previous entry that during weekends there is a flight of cash from the stock market, i.e. people are cashing in on their gains. There are many reasons, and two of them was :

3. The US factor. If you buy a stock on Friday, and then for some reason, the DOW corrected big time Friday night (our time), then you'd be hard-pressed to sell it come Monday.
4. Threat of coups, other circumstantial events that could suddenly spark a sell off

I wrote this October the 10th. Who would've known that on the 19th, Glorietta would get bombed, and the Dow would be bombed down by triple digits???

Now, it could have been an ominous statement or just coincidence.

I wouldn't have thought that anything of the 4th kind would actually happen. But it did. And that was a day when the market actually closed higher by almost 50 points, if memory serves me right.

For this long weekend, I'm still heavily invested. There are two major factors to consider for the next trading week, albeit very shortened.

1. A potential rate cut by the US FED
2. Continued earnings reports from both US and local companies

Today, I didn't follow my own rule of BEING VISUAL with my trading today and therefore lost out on Trans-Asia (Ticker: TA). When I last viewed it it was doing 1.78, I went out of my room for about 5-10 minutes. When I got back it hit 2.00. Crap.

The good thing is that I have DIZ. For my trade on DIZ, I relied heavily on my Technistock program. Angping (the brokerage) was accumulating the stock even during the days it was going down. I couldn't interpret the stock's chart but I decided to risk a little, given his success with GEMINI. So I just bought some, just a small position so it won't hurt if it went the other way. For whatever reason, it zoomed up to 11 today! I hope there's follow through buying on Tuesday. For this instance, I think I was a speculator, not a trader. Good thing I speculated right!

Have a great long weekend everyone!

The Mechanical Trader: Prologue

I am by no means an expert trader yet, it's something of a work-in-progress. I have some personal demons, conflicts, perceptions, misconceptions, emotions that I still have to deal with so I'm betting on a long position. Heh.

I'm currently reading a book entitled, The Way of the Turtle. It's a book I picked up somewhere. I'm a bookworm, as I would affectionately call myself. To others, it's probably and simply called, 'n-e-r-d'. I don't mind. I still have tons of reading materials to go through. Bill Gates is a nerd. A rich nerd. Nerds are in good company, yes? Take Warren Buffet, does he look like a jock to you?

The trading war you wage in the stock market is an alchemy of intellect, gut feel, and experience. Experience is the best among the three, however, it's still the most expensive. Since I have experience trading our market, albeit short compared to others, I've devoted myself to this thing called "continuous education".

I do my "continuous education" when there is nothing to trade. I still believe that everyday is an opportunity to make money. Proof of it was Monday. Those who had guts bought GEO at 2.30. PA at 0.18. Then sold on the same day for an 8% profit. Not bad for a day when the market closed down triple digits. I know this because I saw it with my own eyes. But me, well, I was more of on the safer side.

So far, I've read chapter 1 of the book. Honestly, I did not understand a thing. This is due mostly to the fact that the author, Curtis Faith, was talking primarily about futures contracts, something I have nil knowledge of. However, when chapter 2 came, I can tell you, that this is so far the most important and often quoted factor in trading FAILURE - human emotion.

I have a degree in Psychology. We humans have stereotypes, beliefs, and attitudes about everything. These are STUBBORN in nature and can be a blessing or a curse. In trading, it's most usually a curse.

I can go on and on and on like the Energizer Bunny about this so I'll keep it short. If you are of a trader's bent when it comes to the stock market (as opposed to being an investor), you have to be devoid of emotion. It is hard and near impossible. But as I read through the book, I'll share with you my take on the subject, my personal experience dealing with HUMAN EMOTION, as well as share with you key highlights from this jewel of a book.

See you in the next chapter!

Bloody Monday

We were down -3.98% today to close at 3,667.87.

If we breakdown a further 100 points, this could be a bad turn of events for the local market.

3,600 and 3,500 are very strong psychological support. A breakdown of these two, especially of 3,500 will just put the momentum to the selling side.

Today is just a knee jerk reaction of what happened Friday. However, the fundamental story behind equities, especially of foreign ones - don't look that good anymore. There are certain quarters saying that the global economy will likely slow down.

I won't post further. I think the market bleeding is enough, I won't let my fingers join in too.

Good luck tomorrow! (and tonight, for the DOW).

@(*#&$(*#&$(*&

I was going to post a stock I wanted others to read. I bought in already. Damn stupid *@#$&*(@#&$. I hope it's not a bomb or the Phisix'll get bombed on Monday. If the DOW manages to close high tonight, then we won't have to panic come Monday. It might actually be a good time to bargain hunt.

Read the latest news. *@#$&(*#&$

RSI: Really Something Indicator :-)

This is a story about RSI and how I bought in at a good price and sold out near the top on one stock - OV. This happened weeks ago. I held back on writing this one earlier because I wanted to focus on writing this one so you'd learn from my victory. I certainly learned my mistake with SINO though. The RSI was right, but I was the one who was wrong because I got in too early.

I figured since the market is probably now going to correct, it's best to stay on the sidelines, accumulate some cash then hoard up on stocks once we're back on the uptrend. Trading can be addictive, so learn to be patient. So given this rationale, let's go back to my story.

I bought this stock (Philodrill, Ticker: OV) sometime during the first week of October. I bought in at 0.28 because on that particular day I saw a lot of buying momentum going on. (I can't find my receipt so I don't know the exact date sorry!). Not only that, the seller's price was being bought up!

I went in, because the trendline was definitely intact (black bold line). I held it when it reached 0.29, 0.30, then 0.31. As the famous Ron Nathan once said - POP COLA (Prolong our profits, cut our losses aggressively). You can make money doing tsupita trades, but at the end of the day, you'll be costing yourself more because you're paying broker fees during every trade.



When it reached 0.31, I went back to the chart. Notice the bearish divergence of RSI vis-a-vis the price chart? Well I called up my broker, and then gave him the order to sell. My broker actually asked me why I wanted to sell it. Well looking back at it now, I'm just happy I gave that order.

After I sold it, (and as in most instances), it went up to 0.32. I thought for a moment my decision was wrong. So I said to myself, if I want to buy back, I'll wait for the next day and look at the behavior. Well the next day, it went from 0.31 to 0.29, and it's been downhill since. I'm looking to buy back soon. It's still consolidating at the 0.28 levels. It'll soon rebound I'm sure, especially now that oil has hit $ 88 a barrel.

So RSI, here's to you! Cheers!

So folks, the key learnings here are:
1. Keep an eye on only a few stocks. Don't mind if other stocks are making 10%, 15%, 50%. KEEP YOUR FOCUS!

2. Always, always, always, always, have a trend line. Remember history repeats itself, not only that, an uptrend almost always will continue unless there is a very strong and clear reversal sign.

3. Don't be greedy (I could have waited to see if it could make a higher high, but I chose to keep my profits. A guaranteed profit is better than a guaranteed sleepless night)

4. Have faith. This sounds religious, but you will learn eventually, that you must have faith in only two things - yourself and the chart. There will ALWAYS be intraday corrections. You didn't buy a stock to hold it for just one day right???

5. Don't just look at the ticker. Look at the stock review! Look who's buying, how fast the buying was, if the people are buying the seller's price or it's just being bought at market price. Look at the volume review - buy up vs sell down. My subscribed program, Technistock, has helped me a lot. This is the best subscription I ever had since FHM (haha just kidding), albeit a lot more expensive.

Remember, in the stock market, especially when it comes to trading, it's important to have VISUALS. This is also the reason I don't trade when I'm not in front of my computer. My confidence goes bearish.

6. Finally, if you are a trader, you must monitor daily, especially if you are holding volatile stocks. Volatility can be your best friend... or your worst enemy.

*** I know I promised I'll update this bland blog's look, I'll do so once I've come up with something. I really really like "The Stock, Stuck, Suck Report", but I have yet to make a good study/report hehe so I may need to change the heading for my blog soon. I'll still try to make reports so you can judge a stock for yourself :-) I'll also soon publish my "A Bandwagontrader's Guide to Making Money in the Stock Market" on this blog once I'm satisfied with my skills, and experience.

The Weekend Factor

I've only been (actively) trading at the start of 07. Recently, I've realized that on Fridays, there's either heavy profit taking or very minimal trading.

I attribute this to some of these factors:

1. People want to reposition their portfolios
2. They're happy with the gains they've made over the past 4 / 5 days.
3. The US factor. If you buy a stock on Friday, and then for some reason, the DOW corrected big time Friday night (our time), then you'd be hard-pressed to sell it come Monday.
4. Threat of coups, other circumstantial events that could suddenly spark a sell off
(FIRE SALE!)

OR...

People just want to spend their gains on the weekend.

During the great bull run of the first half, I was making money. But because I was making money, I didn't quite learn the fine art of doing cut loss. I made myself believe that hey, this is a bull market, it'll come right back up. 70-80% of the time, it was true. But after July, I've appreciated the importance of aggressively cutting my losses. BUT!, I only cut my losses for the following reasons:

1. If the stock I bought didn't go my direction, i.e. UP!
2. If my timing was wrong (my personal example is LND, I thought it was a breakout, but after revisiting the stock by viewing the RSI, it was at its resistance point! I immediately called my broker to sell it off at whatever price. Good thing I did that time. This happened late September).
3. RSI divergence (bearish). This third one has been a reliable friend of mine (except for SINO).

The question is, when do you say that you should be cutting losses already? It's a tricky question. Sometimes you see it on the chart, sometimes you don't. What I've learned so far, is that you somehow build instincts as you trade longer. You have to look at the buyers and sellers. Who is buying, and who is selling. Our market is such a small market, you know who's the players and who're the real "strong hands", in tradespeak.

For this long weekend, if you're a safe player, I suggest you just watch the Dow's performance over the next two days. If they make new all time highs, expect a spectacular run come next week (so hold on to your positions). If, not, the correction next week will be a good time for you to accumulate on good stocks. When I say good, it doesn't always mean blue chips. It could be basura stocks near their support lines and a good time to accumulate them at bargain prices.

I'll be busy in the next few days (as I've been these past few ones), so I won't be able to update this here blog of mine. I've no stock picks yet because recently I just rode the momentum of the buying and selling of stocks. Chart viewing was just to confirm if I should get in or out.

Good luck on this last quarter! This is the time to recover the losses (if any) we incurred last August.

Project Sino: Failure!

One word. Failure.

Failure sucks. It's so sucky that it can't get any suckier than this.

There was one key formula that I forgot to consider. One very important thing.

It's buying momentum. There is no clear measure, at least none that I know of, to indicate the velocity of the buying. I am 101% dependent on my program, Technistock. I am able to look at who is buying, and how fast the buying is.

The downside is that I have to be at my desktop to monitor everyday. Then again, being a trader, you really do have to monitor everyday.

I'm still exploring Technical Analysis. I've certainly found one tool that's worth using. I still believe in the RSI. I personally believe that I have to focus on what works for me. There are many stocks out there, and I also believe that you only choose stocks that you've had a big winning percentage with.

If you lost in one stock before, let's say for example, this one, SINO. Then the next time it shoots up, be wary and scrutinize the charts. Personally, I've never had any gain when I positioned with VUL. So I gave up trading on that stock (although I love the 10 year chart)

The good thing is that I was able to join the ride with PA. I hope you guys did too! :-D

Project SINO

Well today (October 4) SINO closed 0.44 still at the moving average. I checked on the weekly chart and it looks like it's going to breakout tomorrow.

I hope I'm right. The timing was too early on hindsight.

Our risks to the breakout will be a non-cut stance by the BSP.

Good luck to us!