Tag: trading

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Featured Trader of the Week: @skewwyookieson

Let’s give a round of applause to Mercurial for being this week’s Featured Trader! 

Mercurial has only been a member of the Investagrams community since 2020, but that hasn’t stopped him from becoming a very active member. He constantly shares his own views and opinions on his trades, and really anything happening in the markets.

A couple of weeks ago, Mercurial posted one of his trades in PSE:EMP. Emperador is a liquor company that mainly sells brandy products famously known in the Philippines for being affordable, but still great for hangouts. Mercurial saw an opportunity to trade a reversal, and his preparation and efforts paid off as PSE:EMP had a strong price run recently.

After a broad market sell-off, select stocks started to bounce back. PSE:EMP took a bigger beating than the rest as the stock experienced multiple days of big red candles. The downward momentum was very strong until price hit a brick wall at the 12.00PHP/sh support level. The stock then experienced an onset of buyers, forming what looked to be a reversal. Although it took a while after the technical pattern formed, PSE:EMP completed an inverse head and shoulders pattern and broke out all the way past 17.00PHP/sh price levels.

TECHNICAL STANDPOINT

In terms of price action, PSE:EMP came from a strong downward move. As the price was going down, traders started to wonder when the stock would bounce. After a long while, hope came when a bullish divergence appeared right as PSE:EMP right as prices came into the major resistance around the 12 peso per share area. As prices started bouncing back, an inverse head and shoulders was forming. Usually a sign of a reversal, an inverse head and shoulders is completed when the neckline resistance is broken. It took a while for the stock to really surge after breaking through the neckline, but the wait was worth it as the stock price reached levels as high as 17PHP/sh. This is the ideal target for PSE:EMP as this was a resistance level where a lot of trading volume occurred.

FUNDAMENTAL STANDPOINT

PSE:EMP is the liquor company of Andrew Tan’s Alliance Global Group. A staple in the Philippines, Emperador is well known for its product Emperador Light, an affordable brandy that is in almost every inuman in the Philippines. Aiming to grow bigger, Emperador is planning to go global as they will introduce their products to new markets. In order to fund their efforts, they will do a secondary listing, but on the Singapore Exchange, where they expect to raise up to PHP1.5B through proceeds.

What should be my next step?

As PSE:EMP is already at a big resistance level where a large amount of transactions occurred, many are already looking to lock in profits, or maybe even sell all of their shares. For those who haven’t gotten any shares yet at lower prices, it might be wise to wait and see how the markets will unfold in the coming weeks. As there are a lot of headwinds for the Philippine Stock Market, there is a lower chance for breakouts and surges to keep on moving in the same direction as compared to when we are in a bullish environment. The key behavior to look out for should you want to enter, or re-enter, in PSE:EMP would be to see how prices are reacting around the major resistances from PHP18.00 – 20.00. The best case scenario would be for prices to consolidate above broken levels and to possibly creep up higher in anticipation of the company’s foray into the global market.

Once again, KUDOS to Mercurial for being this week’s Featured Trader! Enjoy your 14-day InvestaPrime Access and continue to be an inspiration to the trading community.

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How to Find The BEST Stocks and Crypto to Trade

Planning is a very crucial task in trading. As they say, if you fail to plan, you are planning to fail. As a trader, you should always have a plan for any situation that may happen. Part of the planning process for every trader will always include looking for the best stocks to trade. You always have to find the best stock that fits your style of trading. It would be troublesome to go through each and every chart just to filter out ideal trade candidates. Luckily for us, there is the InvestaPrime ProScreener to help us look for the best trading opportunities. Using the InvestaPrime ProScreener will let us save a lot of time as it will do all of the screening and filtering work for us. It’s even easy to use! You just need to know what kind of trade you are looking for. Since stocks in a strong uptrend are the easier stocks to trade, let’s focus on finding opportunities for continuation pattern trades and momentum trades. 

Let’s go over how we can use the InvestaPrime ProScreener to make trading easier for us. 

  1. Market

Before you look for stocks or other assets that you would want to trade, you would first have to set which market you are looking to trade in. 

We offer our screening services across seven different exchanges:

  • Philippine Stock Exchange (PSE)
  • Singapore Exchange (SGX)
  • Commodities (CMD)
  • Cryptocurrency (CRYPTO)
  • Forex (FX)
  • New Year Stock Exchange (NYSE)
  • Nasdaq Stock Market (NASDAQ)

  1. Trend Parameters

You would want to use the Moving Average Parameters in order to look for stocks that are in a strong uptrend. An example of this would be to use these parameters: 

EMA 20: Moving Average above EMA 50

EMA 50: Moving Average above EMA 100

EMA 100: Moving Average above EMA 200

By using these as your parameters, you will be able to find stocks that are in a strong uptrend. When these moving averages are aligned, it means that traders invested in this stock are making money and the outlook is bullish for the near future.

  1. Value Average 

Aside from finding stocks in a strong uptrend, we also need to check how liquid these stocks are, or how much money is being exchanged. Value Average refers to the average total amount of money that goes in and out of a stock for a certain period. Although a stock may be in an uptrend, a low Value Average shows two warning signs. First, if you are investing a big amount, you may have difficulties selling later on if liquidity is low as you may find it hard to find buyers for your shares. Second, a low exchange of money within a stock may signify that there really isn’t that much interest for the stock as not a lot of people are trading it. Although liquidity isn’t that much of a problem in the U.S. and crypto markets, it is a necessity to look at liquidity when trading the Philippine markets.

To look for stocks that have shown to be liquid, an example would be to use these parameters: 

Value Average (20 Days): Value Average >= 5M

By using this parameter, you will be able to find stocks that have at least 5M worth of PHP or USD traded per trading session. 

  1. Fundamental Filters

Aside from Technical Analysis, Fundamentals should also be taken into consideration depending on the market that you would want to trade. For example, if you are looking for strong uptrending stocks in the U.S. market, then it would actually be ideal to look for high P/E stocks to trade. P/E, or the Price to Earnings ratio, is a measure of how cheap or expensive a stock is. Although it may be a common idea to look for cheap stocks, when looking for stocks in a strong uptrend a higher P/E ratio is actually ideal as you are looking for companies that are in their explosive growth stage. This means that their earnings are not yet there since they are still developing, but investors are already placing a premium for their shares as the future potential is too good to pass on.

An example of a Fundamental Filter for these kinds of stocks would be: 

P/E Ratio: Over 20

By using this parameter, you will be able to filter for companies that are being priced at a value a lot higher than its current earnings due to the potential of exponential growth.

These are actually just a fraction of what you can do with the InvestaPrime ProScreener. We have multiple screener filters that you can play around with in order to really find the best trades that you can take, from looking for stocks that are making new all-time highs, to being selective and minimizing your search to only select industries. 

When you launch the InvestaPrime ProScreener, we have pre-made screeners for different trader types and different needs should you want to use some of the screeners even we use for our trading. 

Want to know more about what we offer? Head on over to the InvestaPrime landing page to look at all the features that we provide to our subscribers! Start your FREE 14-day trial today.

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Why You Need to Journal Your Trades Now

First things first, how do stock traders journal their trades? A good trading journal has information about every single one of your trades. Journaling is something that needs to be done religiously whether it’s a profit or a loss since a trading journal is not something that you keep as a source of pride or proof of just your successes.

With that out of the way, here are some reasons to consider starting or continuing your stock trading journey.

Help Set Up Gradual Goals

A trading journal can help you set step-by-step goals to not put unnecessary pressure on yourself while you’re still in the learning process. It’s a great way for you to filter the goals you would like to pursue, how you will measure your progress, and what you can do in order to achieve those goals. With a journal, there is a visual understanding of what you need to work on if you want to hit your next goal and the goal after that.

Manage Risk More Efficiently

A lot of stock trading beginners don’t realize that their initial risk management technique costs them a lot of money. A trading journal can help you see where you might be making mistakes with the handling of risk. An example would be that you’re not taking a big enough risk to generate your target profit because you set the stop loss too close to the current price.

Assist in Working on Your Mistakes

“Failure is a great teacher and if you’re open to it, every lesson has a lesson to offer” – Oprah.

Keep in mind that all trading strategies will fail eventually so you must always strive in finding new ones to replace the failing strategies. A trading journal gives you documentation to help you review all of your trades to see where you went wrong and compare the performance of any two periods to see if you have experienced any improvement from assessing your mistakes.

Holds Accountability and Brings Consistency

For most traders, impulsive trades are usually the root of their losses. Having a trading journal means that you’re less likely to make trades that aren’t part of your trading plan because you review those impulse trades to help you be ready if the same scenario arises again.

Eventually, as you continue to use your trading journal, your bad habits will start to diminish and you’ll stop losing money because you’ll be able to see the mistakes that you’re making and make sure to try to avoid them in future trading sessions.

These are just some of the reasons why traders keep a trading journal and it could be beneficial for you too. Remember that to avail of the full benefits of a trading journal, you need to remain consistent in keeping a completely unbiased and comprehensive journal. The purpose of the trading journal is to help you review your weaknesses in your trading strategy and help you right those wrongs for future success.

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Unconscious Incompetence Stage: A Superhero’s Journey

This 6-episode series that I will be releasing in Investadaily will be about how we are progressing as a trader based on observations from the journey of high-level traders and by checking how they react in the social media. This is also based on the four stages of competence.

First, we will talk about the infancy stage or the Unconscious Incompetence Stage. I will be calling this as the Superman Stage. This is where most of the traders experience the beginner’s luck and the Superman Syndrome. This is not only experienced by new traders but also veteran traders who seek growth by either trading a new market or using a new strategy. Every time a trader tries something new, he/she will get back to this stage. The difference between a new trader and a veteran trader on this stage is how fast they can get out of this phase.

Common characteristics of traders on the Unconscious Incompetence stage

  • Superman Syndrome

In trading, Superman Syndrome is a highly deadly disease that will kill a trader’s port if not treated. This is where most of the traders vastly allocate their positions, leverage their port and focus on the rewards. They are on a high that they think they are invincible. Most new traders who gained from their first few trades have experienced this while others who have not, either quit or are still finding that euphoric feeling through adding more positions to their losing trades or overly sizing their positions to trending stocks without any plans.

  • Validation

The need to experience the profits and the validation to prove that what they are doing is right is what fuels them during this Unconscious Incompetence Stage. Since the experience is new, there is still doubt at the back of their mind and the only thing to create confidence is the validation from others that what they are doing is right. 

  • Highly Volatile Emotions

A trader who is extremely invested in a trading idea or, for lack of a better word, is head over heels in love with a certain stock is exposed to a very emotional ride. Traders who are constantly deliberating to every comment, group chat or any other type of social media is a big sign that they are still at the infancy stage. Even a superhero is awfully emotional when he is aware of his superpower, how much more a trader who experienced profits just by pressing that buy and sell button?

How will the Unconscious Incompetence Stage end?

Like in any movies, Superman will deal with many challenges including a face to face with Lex Luthor or worse, a comet of Kryptonite. The only to end this is when a trader experiences a big loss or a series of losses that will shatter his confidence.

Like a kryptonite spear piercing on their flesh, they will feel that burning sensation once they see their port turn from green to red. In the movies, we only see Superman win in the end but if you analyze the movie, there were a lot of Kryptonians who perished. Just like in trading, many will quit and will not survive but to win, one must also do what any Superhero did to defeat the enemy.

How to overcome the Unconscious Incompetence Stage?

If you have watched any superhero movies, most of the superheroes overcome their challenges by being humble, assessing what they did wrong and accepting that they simply do not know everything yet. Yes, NO ONE KNOWS EVERYTHING YET.

The problem of traders who are stuck on this stage is that they do not know what they do not know. This is because of Ego constantly whispering on their ear telling them that they are always right and that they already know everything about trading just because of one jackpot trade or a series of winning trades. Only by being humble and starting to understand the basic concepts of trading will traders overcome this stage.

If you are trapped on this stage, my proposal is to humble yourselves and focus on the basics. Even Superheroes need a break and learn the essentials in controlling their power. As Spiderman said, “With great power comes great responsibility”.

Contributor:

Full Name: Jan-Angel Echano
Investagrams username: @Soral

Channels:
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www.youtube.com/c/SoralTrading

About the Contributor:
A passionate trader who aims to share the reality, the HOWs and the WHYs in trading. My goal is to help traders and investors like me to continuously improve and refine our skills to the path of mastery.

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Do I Need a Trading Break?

When we want to do things for a prolonged period of time, it is necessary that we take the appropriate amount of breaks at the appropriate times. But how exactly would a trader determine when to take a break when the markets trade for 5 days a week? Before we move on to the “when”, let us first discuss the “why”. 

For starters, taking trading breaks is necessary for the long term sustainability of your trading. Let’s say that you are on a losing streak  and you are trying to decide whether to take a break or not. On the one hand, taking a break for one week will let you evaluate your system.

On the other hand, continuing to trade despite your losing streak might be what you need in order to end the streak. Although continuing to trade might sound like a compelling option, there is a possibility that you’ll end up with more losses thereby by lowering your spirits which eventually leads to the end of your trading journey.

Journaling

Now that we have established the importance of taking breaks, let us discuss exactly when you should take breaks. It is worth noting that these tips are only possible through journaling or the act of recording your trades. You can use anything from Investajournal to simply using a notebook to record your trades as long as the journal contains your entry and exit prices as well as your entry and exit reasons. Now that we have our journal, we must discuss two important metrics: VAR (Value at Risk) and Exit Notes.

Value at Risk

Value at Risk (VAR) is actually a statistical measure used by financial institutions in order to determine the risk involved in a certain portfolio. However, in the context of retail trading, VAR pertains to the amount that you are risking relative to the size of our portfolio. So lets say that you have PHP 100,000 in your portfolio, 1 VAR is equal to PHP 1000. This means that if a trade involves the risk of losing PHP 1000, then you are risking 1 VAR. 

So how can we use VAR to determine when to take a break? Well, it can be as easy as taking a break when you are down 10 VAR. This means that if your initial capital of PHP 100,000 has turned to PHP 90,000. This is the perfect time to take a break because it shows us that there is something wrong with our system. Losing 10% of your portfolio is not something that you should take lightly. This requires an evaluation of your system that usually entails virtual trading and continuous learning. 

Another metric that you can use is if you lose 5 VAR in consecutive trades. So if your capital is PHP 100,000 and you raise it to PHP 120,000 but lost PHP 5000 in consecutive trades (net PHP 115,000), then maybe there’s something happening to the market that requires you to adjust your system. In summary, you can either take a break when you’re down a certain number of VAR from your capital (regardless of win/loss ratio)  or you can take a break when you lose a certain number of VAR to consecutive trades. 

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Exit Notes

Aside from the amount that we gain/lose, we also have to look at WHY we lost/gained money. Basically, if you are losing for the same reasons (e.g. failed breakout, whipsaw) then maybe you need to adjust your system in relation to that.

An example is adding Average True Range (ATR) to your system to avoid further whipsaws. It’s easy to say that you don’t need to take a break to adjust your system but in reality, you cannot be objective with your trading setup if you have open positions.

Conclusion

It does not matter if you are a beginner or an experienced trader, everyone goes through losing streaks. In the end, we have to remember that bouncing back from losing builds character which is the primary tool that we need in order to find success. However, you do not need (nor should you)  bounce back right away. Oftentimes, a break is necessary in order in order to avoid making the same mistakes that brought us to our downfall in the first place.

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One Moving Average to Rule Them All

This post is a continuation to our first post about reading between the lines.

First, I’m going to tell you right off the bat after reading this you might get inclined to getting rid of the usual Moving Averages that you would use in your chart view. 

So instead of looking at all of these lines in one chart…

We’ll break it down into time frames using only one Moving Average. This way, you get a clearer picture on how you would approach a certain trade and you can confidently approximate how long you will hold on into that certain stock.

If you try to go back to the first picture of this post you would observe that each colored line is almost identical to each other. 

Why breakdown a chart into more time frames when the Daily is already enough?

I know some of you would already ask this question. Let me share to you a typical scenario that I would always encounter whenever I traded using only the Daily time frame. Some traders can fall for this trap as well.

The chart above is an example of a simple trend following strategy wherein you buy above the MA 20 (red line) and say you only have a risk tolerance of 5% to 7% per trade.

However in this case, the price broke down MA 20. But because the MA 50 and MA 100 are acting as a dynamic support and the last candlestick is giving you a hint of hope that it might bounce because of the wick, you suddenly decide to hold without realizing that you could potentially lose 8% to 13% in the process.

Aside from checking if your psychology would be alright with the scenario, you should also check if it’s worth the time to wait for your trade plan to materialize or should you move on and look for stocks with a trade plan that has a shorter time to materialize .

From a trend follower’s perspective, there are times where you’ll get tempted to hold longer that you lose your awareness that you are already beyond your risk threshold. The worst thing that you could do is cling to that false hope that the price would hold above your remaining moving averages

Should you want to proceed with fully immersing yourself in line charts with the possibility of “unlearning” candlesticks in the process (because yes they generate a lot of noise too if you think about it), then this guide is for you.

We will talk about the only Moving Average that you’ll only need especially if you’re the type who has the tendency of switching time frames — the 200 period average!

What time frames to analyze when screening stocks?

From a line chartists perspective, we approach moving average screeners differently compared to the candlestick chartists wherein they can just use the Daily time frame to plan their trades in most cases.

Also, there are times that we can get impatient whenever we look at a higher time frame praying that the price should move quickly.

If you’re looking at a Daily chart, align your expectation to that time frame and DON’T LOOK AT ITS BEHAVIOUR LIKE A 5-MINUTE CHART! (unless there is momentum)

To solve this time frame anomaly, we’ve tabulated these time frames to set your expectations as well as making your time frame jumping easier (more about this later) — and you don’t even have to show the other Moving Averages in your chart view as long as you memorize these by heart whenever you’re looking at a specific time frame:

Time frame (w/ SMA/EMA 200) Daily SMA/EMA Counterpart
2 hours 100
1 hour 50
15-minutes 20
5-minutes 10

So when filtering your stocks whether it be by 20-day, 50-day or 100-day moving average, you already have an idea which time frame to look at whenever you want to analyze some stocks regardless of the time objective. 

Personally, I don’t use the 2-hour timeframe or the 5-minute time frame but if your trading system involves using a Daily 10-period or 100-period moving average then feel free to use the time frames. 

Additionally, you will also have a rough idea of how long you’ll probably hold on to that position and yes, we also roughly estimated it for you so you know what to expect (at least based on my trading experience)

Time frame (w/ SMA/EMA 200) Estimated Holding Time
Daily Weeks to Months (or Years)
Hourly Days to Weeks
15-minutes | 5-minutes Minutes to Hours | Hours to Days

200 in action!

Let’s take a look at an example. Here’s a recent trade that I attempted using only the Hourly time frame with an EMA 200 and Parabolic SAR (also consult the estimated holding time and the expected Daily counterpart on the last table)

$PXP Hourly Chart w/ EMA 200 (EMA 50 view at the Daily) + PSAR

With my noted estimated holding time, I did not have to guess on how long I will have to wait for the trade to materialize given the conditions. 

But I know some of you will ask why I still entered despite the EMA 200 and PSAR showing downtrend signals. This is where the art of switching time frames comes into play!

I switched to a 15-minute time frame (or my “Daily MA 20 view”) to check if there is an early opportunity to enter the trade and I saw this PSAR made an uptrend signal which convinced me to enter.

Don’t worry about the time frame switching for we’ll cover it in depth in our next post. Anyway, going back to the trade, here’s what happened after a few days…

Yep that’s almost 100% gain because the stock went ceiling for a few days! And we only used the hourly time frame to create the trade plan. Here’s what my Investa Journal recorded.

Based on the journal data above, I only held the stock for less than a week which is roughly 4 to 6 days (at par with our estimated holding time expectations) for both my huge win and minor loss. As of this writing, My Portfolio 50K 2020 Challenge port is now up by almost 70%! 

One moving average is enough

Bombarding your charts with a lot of moving averages can sometimes paralyze your executions especially if you’re on the winning side of the trade and you become too complacent. With this guide, your expectations should already be set whenever you trade on your chosen time frame.

Stay tuned for the next post as we talk about my thought process on traversing properly through these timeframes.

Contributor:

Name: Marvin Alec Padua
Investagrams Username: @thetradingcomedy

Channels:
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https://micky.com.au/author/apadua

About the Contributor:

A self-proclaimed “Lazy Elliottician”, Alec is a former mobile app developer turned independent singer-songwriter and busker, who goes by the stage name “Alex Corner”. He has a couple of songs on Spotify and other music digital platforms. A self-taught trader, he also created his own trader persona – “The Trading Comedy”, where he documents his trading journey in the Philippine Stock Market and beyond. He is currently a finance writer for Micky News as well as a casual gamer and streamer.

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5 Common Reasons People are Afraid of the Financial Markets

The stock market is the ultimate equalizer of wealth. Various individuals who participate in the said market have made fortunes in trading or investing in this financial instrument. However, it is a fact that not everyone is profitable in this field.

Why is that so, you may ask? Various aspiring market participants head right into the markets without the proper knowledge in the said endeavor. 

Here are various reasons why individuals are afraid to invest or trade in the financial markets:

The Stock Market and other financial markets are for rich people.

Many people think that this endeavor is only for millionaires or whatnot, but in fact, it isn’t. You can place as low as 1000 pesos in the Philippine stock market in one of the best brokers here in the country. Although as a starter, it is best to place funds between 30k-50k to experience the market’s impact. 

Even if you don’t have enough money yet, don’t let that become an excuse. You can still practice trading or investing through Investa VTrade. It is a platform where you can enact your trades using virtual money. 

It is conventional wisdom that physical businesses are more resilient than allocating wealth onto the markets.

It is a fact that physical or traditional businesses create wealth. Although an additional stream of income through the financial markets, along with other investment vehicles such as fixed income assets, etc. is ideal to ensure our longevity in terms of finance. 

It isn’t easy to trade or invest in the financial markets.

Indeed, it is. It takes time to be resilient in this craft. The key is never to give up in this endeavor, despite the early losses you will encounter. Mark Minervini, one of the best traders in this world, only started to earn money from the markets after his 6th year in trading. 

It is an activity that also tests your emotional quotient. Trading the markets can be an emotional rollercoaster ride at first. Although, if you are committed to learning about this craft, such experience can be eradicated.

Learn how to Master Your Emotions while Trading. Click the photo to know more. 

Many individuals think that it is a quick-rich scheme; therefore, many individuals lost money in the markets, which has led to many people being afraid of investing or trading as they think that it is precarious. 

Engaging in financial markets involves risk. Although, entering the markets without the proper knowledge will amplify the risk embedded in the markets. An aspiring market participant should know what they are getting into, wherein the said individual should be committed to this lifelong activity where continuous learning must be applied. 

An aspiring market participant should only invest what they can afford to lose. An emergency fund is essential just in case a black swan event may occur.

If you are lost, and you do not know where to start, then the InvestaUniversity program is here for you! It is an online class program wherein the concepts of Technical Analysis, and Fundamental Analysis are taught for free. You can join HERE. 

It takes a lot of effort to excel in this endeavor.

Undeniably, an individual should pour their conscious effort and deliberate practice to being one step closer to becoming a professional trader or investor. This doesn’t mean that your eyes shall be glued onto your monitor screens 24/7.

An aspiring market participant should make hardcore preparations before the market opens. During market hours, the individual should only worry about their executions. Even Mark Minervini only spends 50% of his time in front of a monitor. 

In conclusion, it is not easy to make money in the markets. Trading is not for everyone, just like any other endeavor. It requires patience, commitment, and hard work, which may deter anyone who thinks that the financial markets are a quick way of accumulating wealth. Indeed, it’s all about sustainability in the long run. 

 

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