Almost everyone knows by now that investing is a great way to grow your wealth. However, the biggest barrier for most people is often not knowing how to invest their funds. Luckily, there are Mutual Funds. Mutual Funds are a great way for people with no experience to start investing. Among the different assets, it is the easiest one to invest in. Let’s dive into what they are and what you need to learn first before you get started.
Mutual Funds
Mutual funds are issued by investment companies regulated by the Securities and Exchange Commission (SEC). There are different kinds of Mutual Funds. There are some that invest solely in stocks, while others focus more on fixed-income assets. They can also be categorized based on if they invest in the local or global markets. In fact, some go as far as to state whether they invest only in specific industries, or if they invest in the broad market. The easiest way to figure out the details of a specific fund is to read their Fund Methodology. From there, you can figure out if you’re interested to the fund or if you’d prefer something else.
NAVPS
Aside from a fund’s methodology, you also have to keep track of the funds value. The NAVPS, or Net Asset Value Per Share, refers to a Mutual Fund’s market price. When you invest in Mutual Funds, you will be buying shares of the fund. The NAVPS serves a function similar to a stock’s price. With this you can determine how the fund has been performing, and you can keep track of how your investment has faired moving forward.
Where do you find the NAVPS?
Usually, NAVPS is often reported at the end of the day by your broker or platform.
For example, in the InvestaPH platform, you can look for your fund of choice to figure out its NAV.
Why are Mutual Funds a good investment?
Mutual Funds have a low barrier for entry as it only requires a small amount to start. In addition, incremental top-ups also only require a small minimum a mount. For example, investing in a diversified Mutual Fund allows you to stay invested in a bigger group of companies while enjoying tax-free profits. On the other hand, individually investing in these companies by yourself would cost you more commissions and taxes, along with a bigger investment minimum.
Mutual Funds also save you the effort of having to research on your own. Since a professional fund manager takes care of this, you don’t have to worry about making decisions and executions. All you need to do is find the fund that fits you, then invest in it.
Are mutual funds safe?
Like all other investments, mutual funds are subject to losses as well. However, the goal of a mutual fund is to build or protect wealth in the long-term. Losses are unavoidable in the short-term, but most of the time you can bank on the experience and knowledge of the investment companies to make the right decisions and do what’s best for your investment.
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An alpha way for charting technical analysis! Let’s give a round of applause and congratulate our featured trader of the week @alphatraderph!
Alexander Elder once said that “The goal of a successful trader is to make the best trades. Money is secondary.” In the case of @alphatraderph, he believes that an entry of trade using TA is a very must as it helps him to be more successful in terms of trading accuracy.
@alphatraderph has been a member of the Investagrams community since Aug 2018 and has been very active and sharing his trades recently.
A couple of weeks ago, our featured trader posted his technical analysis on $VUL. A hot stock in the local market and a key player in the mining industry locally. $VUL recently broke its resistance at the 0.89-ish area.
(Sequence 1)
As the stock recently reached a 52-wk low at 0.76-ish area. @alphatraderph charted its support, volume, and resistance, on the chart, bound for a breakout in its trendline as he believes in its technical analysis. @alphatraderph felt an opportunity to have a good entry near the support and HOLD for a while.
TECHNICALS OF THE TRADE
In sequence 1, our featured trader charted a cup and handle for a further breakout. Furthermore, $VUL broke its trendline at the 0.89 level and as of August 26, 2022, closed at 0.96. Thus, the stock recently reached the 0.98 area and is bound for a retest in the 0.89-0.92ish area. After breaking out at the 0.89 level, VUL’s volume surges along with MA. On the other hand, others are falling and consolidating. VUL is showing strength in terms of volume as it continues to retest after breaking out the resistance area. It came from a 52-wk low of 0.76ish before surging and breaking the 0.89ish and 0.93ish area, respectively. There could be a retest in the next few weeks for this stock to retest in the next resistance area at 1 PHP per share and above. Technically speaking next resistance of RRHI is the 1 level onwards. Furthermore, VUL will retest whether it will break out at a 1 area or be back at the bearish side at 0.89-ish, 0.76-ish, and below area.
(Sequence 2)
@alphatraderph was confident that this stock would further go up as he charted a cup and handle indicator in which it is bound for a breakout or surge in the stock. He also charted that VUL will go up and will retest as he indicated support and resistance in the sequential posts he made. He charted a good entry near the 0.81 area. He is also observing the movement of VUL. Further to that, he is planning his trades carefully and aligning them with TA.
FUNDAMENTAL CATALYST
VULCAN INDUSTRIAL AND MINING CORPORATION is a company that finds, develops, and produces oil and gas reserves and other mineral properties. The Company is also a participant in several service contracts, mineral production sharing agreements, and geophysical survey and exploration contracts entered with the Philippine Government, through the Department of Energy.
As of August 26, 2022, the VUL closed at 0.96. VUL remained speculative as it has a negative return on assets amounting to -476.97%. However, $VUL has been a trend recently, and the volume from the locals and foreigners is increasing. It is still unknown whether $VUL will rise further or fall back. However, the Philippine Government has recently been focusing on the new regime of fiscal policy for the mining sector. This will further be speculative depending on the fiscal policy that will be passed as law. Thus, it is best to observe $VUL and plan a good entry and exit as VUL and other mining stock companies will further be speculative. In addition, the Philippine Economy is expected to rely on the mining sector to further collect funds from this industry.
(SEC17Q 1Q2022, VulcanMining)
(Sequence 3)
WHAT SHOULD BE MY NEXT MOVE
As the stock recently breakout from 0.89, it would be wiser to observe and wait for what $VUL might do next before jumping in. This stock is speculative since the industry right now is a much more focused industry by the national government. In terms of trading, the demand from consumers is continually growing. However, it’s best to wait for a consolidation, pullback, or a good entry near its support for a better risk-to-reward ratio. It would also be advisable to trade lightly and in tranches given that we’re not yet out of the woods.
Once again, KUDOS to @alphatraderph for being this week’s featured trader! Enjoy your 14-day InvestaPrime Access and continue to be an inspiration to the trading community.
Invest to build a better future and learn continuously to improve yourself.
Join our #InvestorDay 9.9 and get a chance to win LIFETIME ACCESS to our InvestaFest premium recorded videos and have the opportunity to learn straight from top traders, entrepreneurs, industry leaders in the country!
To join, simply: 1. Download Investa app 2. Complete application 3. Invest for as low as Php 1,000.00 to claim your 150 raffle tickets
You can invest as much as you want on or before September 9 and claim unlimited raffle tickets!
Similar to how doctors have X-rays and MRIs, tools are also needed to navigate the markets. Among the different methods traders and investors can use, technical analysis is the technique not known to many of the masses. Despite this, it has still proven to be a powerful tool as many of the great traders across history have used it in their own unique ways.
What is technical analysis?
For those unaware, technical analysis is basically the study of price and volume in order to understand where prices might go in the future. Through the use of charts and indicators, traders and investors can assess what they need to do.
The beauty with technical analysis is that it lets traders creatively pinpoint how demand and supply will play out in the market. It might look intimidating at first, but reading and plotting charts out isn’t rocket science. You just need to learn the foundations and know how to apply them as your trading system progresses. However, as with all techniques there are some common mistakes that are often made. Here are some of them and how you can avoid them to really make the most out of your trades.
Common Technical Analysis mistakes
Using too many indicators
When people first employ Technical Analysis in their trading, most think of the same image: a chart full of lines and indicators. Often taken from media, people often have the idea that using charts require the use of complex drawings and the like. However, this is very far from the truth of what effective Technical Analysis looks like. When using Technical Analysis, you have to remember that indicators are only tools. In the end, you are the one that tries to identify what the market’s current situation is. Indicators only serve as helpers in helping you figure it out.
For example, using a chart like the one shown might make you look cool to non-traders, but will it really help you? Professional traders often have two or three different indicators, but you need to realize that each one serves a purpose. Adding indicators should serve the purpose of making it easier for you to gain crucial information. If an indicator you added does little to help you analyze the market’s condition, then maybe its time to take it out. Remember: price is king and volume is queen. Indicators only exist to serve these two..
Not understanding the foundations of Technical Analysis
Somewhat related to the overuse of indicators, traders often fail to understand the foundations of Technical Analysis. Although the basic tennants are easy to learn, only a few master the concepts. It’s not uncommon for the basics to be rushed in order to go towards more exciting and advanced theories. While learning advanced concepts can be helpful, the basics will always serve as the foundation for progress. For example, if in the act of learning complex patterns you start to become unaware of supports and resistances, start thinking twice on how you should proceed.
How basic a chart looks like doesn’t determine the potency to make a profit. In the end, its a better understanding of price action that allows traders to use charts to the fullest.
Lack of flexibility
Understanding patterns of behavior within the market is the core of technical analysis. In a sense, we go through the history of the markets in order to understand how it might move in the future. However, as Mark Twain famously said: “history doesn’t repeat itself, but it rhymes.” A common pitfall in using technical analysis is that traders think the market will react in the exact same way as before. Although the markets behave the same way even as time passes, patterns won’t exactly replicate one another. Flexibility is needed in order to adjust to the small changes that occur in how prices move. People often rely too much on the possibility of a pattern happening again in the exact same way. So much so that opportunities are lost, or trades fail.
In the example above, if a trader were to rely too much on the pattern that retracements occurred at the 100-day exponential moving average, then he or she would’ve missed the chance to make a profit on the latter rally.
Biases
The problem with biases is straightforward. One example is when a trader starts to favor a stock above the rest, every signal starts to become bullish. There are many kinds of biases than the one mentioned above. Each one just as dangerous as the other. Having biases takes away a traders ability to objectively analyze the market.
Take a look at the picture above. Are you bullish or bearish? Once you’ve made your choice, read the next line.
The chart shown above is the $PSEi weekly chart inverted upside down. Disregarding the color of the bars and looking only at how the chart has formed, can you still give the same answer before you found out? Different biases will incur different problems for traders. However, the generalized solution to solve biases is to become as objective as possible in your decision making process.
Ignoring macro conditions
Lastly, a fatal flaw that many encounter is failing to recognize macro conditions. Discounting macro events, many traders, especially beginners, fail to even chart indices as part of their planning process. Looking at the price action of individual stocks and other assets is important. However, you need to realize that how the broader market moves will impact the behavior of whatever your trading. Often times, extreme moves in the stock market index or other benchmarks will cause the strongest price action patterns to fail and even reverse the trend.
At the very least, make sure that you’re always aware of how market benchmarks/indices are moving. They will help you determine if its time brace your portfolio for an upcoming sell-off. Of course, they will also let you know when its time to start aggressively buying your top picks.
The journey ahead
In your trading journey, you will encounter many unique styles of trading. Each one often different in some way to another. Even if two traders use technical analysis and use the same indicators or patterns, nuances will still be spotted. The most important thing you need to remember is that you need to find a style of trading suitable for you. You need to establish your own understanding of the market that will help you create a process in making trading decisions. When you find one, make sure that you master it first rather than seeking other ways to trade. As the saying goes, “I fear not the man who has practiced 10,000 kicks one, but I fear the man who has practiced one kick 10,000 times.”
Invest to build a better future and learn continuously to improve yourself.
Join our #InvestorDay 9.9 and get a chance to win LIFETIME ACCESS to our InvestaFest premium recorded videos and have the opportunity to learn straight from top traders, entrepreneurs, industry leaders in the country!
To join, simply: 1. Download Investa app 2. Complete application 3. Invest for as low as Php 1,000.00 to claim your 150 raffle tickets
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Congratulations to @marketpainterph for being the featured trader of the week!
@marketpainterph has been sharing his thoughts consistently in the Investa community ever since August 2020 and has been very active recently.
A couple of weeks ago, our featured trader posted his technical analysis on $BDO, a hot stock in the local market and banking company led by the SM GROUP. $BDO was charted by @marketpainterph predicting that $BDO was bound for a breakout.
As the stock recently retested at around 110, @marketpainterph charted its support, volume, resistance, trendline, and RSI on the chart. @marketpainterph felt an opportunity to have a good entry near the 1st wave at 110-112 area.
TECHNICALS OF THE TRADE
Technically, $BDO bottomed at 110 are which was also nears its 52-wk low. After following the elliot wave prediction, it seems that the stock breakout at the 114-ish area, volume was still strong as BDO is one of the leader in the local stock market. BDO will now have to face resistances at the 130 and 135 levels as it tries to continue its uptrend. BDO is showing strength in terms of RSI, Volume, MA, and Net Foreign Buying (NFB). As per the prediction of the featured trader, it will consolidate first and retest before breaking out to 135+ level.
FUNDAMENTALS BDO is led by the SY GROUP, a prominent family in the country and a diversified holdings firm focused on real estate, telecom service, banking, malls, and others. As such, the stock is heavily affected by how the financial market moves. Although interest rates remain high, the main driver for the stock right now seems to be the overall bullishness of the market as a whole. Given that BDO is the biggest bank company locally, it has a market capitalization of 559 Billion PHP. This stock is driven by the support of its parent company and the diverse businesses and affiliated with SM group.
WHAT SHOULD BE MY NEXT MOVE
Should BDO start to consolidate, a good resistance to break could be 132 as a lot of supply currently resides near that area. Once broken we could see BDO continue its rally.
As the stock continues to move, it may be wise to wait for a better entry point before putting on a trade. As always, make sure to adhere to your systems and set-ups even if the market is bullish.
Once again, KUDOS to @marketpainterph for being this week’s featured trader! Enjoy your 14-day InvestaPrime Access and continue to be an inspiration to the trading community.
Invest to build a better future and learn continuously to improve yourself.
Join our #InvestorDay 9.9 and get a chance to win LIFETIME ACCESS to our InvestaFest premium recorded videos and have the opportunity to learn straight from top traders, entrepreneurs, industry leaders in the country!
To join, simply: 1. Download Investa app 2. Complete application 3. Invest for as low as Php 1,000.00 to claim your 150 raffle tickets
You can invest as much as you want on or before September 9 and claim unlimited raffle tickets!
The average trader and investor often look toward the stock, bond, and forex markets when diversifying their portfolios. Although these markets often serve the needs of these market participants, there is another market that institutions often turn toward if they want to either make speculative bets or further diversify their portfolios.
The commodities market is where raw materials and primary products are exchanged. Commodity markets can include physical trading of the commodity itself or contracts to the rights of the commodity itself. It also has a lot of inherent volatility. This, along with having a more extensive history to study, lets commodities serve as great investment vehicles for institutions.
Let’s take a deeper look at the ins and outs of commodities.
Types of Commodities
There are three types of commodities. First are the metals. These are further divided into two categories. The non-precious metals category consists of easier-to-find metals. This would include iron, steel, copper, and other metals that aren’t hard to get. The other metal sub-category is the precious metals category. This would include popular metals such as gold, silver, platinum, palladium, and other harder-to-find metals. The second type is agricultural produce. This would consist of coffee, cocoa, wheat, corn, meat, livestock, and others. The last type is energy, which consists of oil, natural gas, and other resources used for energy generation. Among the different commodities, oil serves as the most liquid commodity due to its widespread use in everyone’s day-to-day life. This is followed by natural gas and the precious metals gold and silver – popular inflation hedges.
Importance of Commodities
Aside from trading and investing purposes, the commodities market is widely used by producers and consumers to handle their operations. Aside from being able to obtain larger quantities of the raw materials needed, the commodities market also allows them to hedge their inventories or produce. For example, if a large producer of wheat were to forecast that the prices of their inventory will fall in the foreseeable future, they can opt to hedge their inventory. This would be done by shorting wheat contracts. This would theoretically let them enjoy a price lock in their product. If wheat prices were to fall, they would sell the inventory for lower but it would be offset by the profits from the shorted wheat contracts. In fact, McDonald’s chicken nuggets only came into existence because they were able to hedge against potential volatility in poultry with the help of Ray Dalio.
Economic Analysis
Commodity prices also play a role in economic forecasting. It can serve as valuable data for inflation research and can be used as a measure of economic change. For example, if an analyst forecasts that the price of metal will surge due to a lack of supply, then they would have valuable information on a specific factor that can affect the economy. Oil also plays a huge role in analyzing inflation. Most of the time, big rallies in oil lead to rising inflation for majority of countries.
Commodities Market and Globalization
The further development of the commodities market has also played a big role in globalization. As the interconnectedness of countries is growing, faster and more liquid transactions are needed. The commodities market has made it easier to obtain raw materials for cheap from countries that specialize in its production.
For example, Taiwan is a good exporter of semiconductor all over the world. While China specializes in exporting raw materials such as steel, iron, and etc. Thus, every country play a vital role in terms of commodity as they are trading goods for its common good. It allows individuals and entities to forecast as well regarding the prices of each commodity whether in agricultural produce, energy, or metals.
Spot market, Options market, Futures, and Derivatives
In the commodity market, the spot market simply means buy and sell at a certain price with an immediate delivery, as is. In terms of option market, the option market gives the holder the right but limited for buying and selling (trading). On the other hand, future market is an auction market in which participants buy and sell commodity and futures contracts for delivery on a specified future date. Lastly, the derivatives market is the underlying asset that are based from the futures market or options market.
How commodities can be a part of your own portfolio
Even though mostly institutions take part in this market, everyone has the capability to also trade and invest in commodities. All you would need to do is find a platform and create your account. Once you create and fund your account, you’re free to do all kinds of trades across various markets. Of course, we recommend that you have a strategy first before investing serious amounts into commodities. If you want to learn more about trading, head on over to Investa University!
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