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.