Last Saturday, July 22, hundreds of Pinoy stock traders attended the whole-day Traders Summit organized by Investagrams. Majority were millenials, so this gives me hope that the younger generation is more inclined towards money management, investments and personal finance.
Since the event is for decided stocks traders, not every learning below may be applicable for those who are more into stocks investing which is less active and longer term. I recommend the stock market to every Juan, but I also acknowledge the fact that not all can be stock traders, just like not all can be stocks investors. As to whether you’ll be a stocks trader or investor, it totally depends on you, your passion, your time, your patience, your OHA, among other things.
Here are some of my notes, learnings and quotable quotes from the summit. I will no longer mention the person who said it (I might misquote them or it might get taken out of context). Just remember that I’m not taking credit for all the notes below (except those those in italics which are my personal insights and comments). The rest are not mine but mentioned by one of the presenters, or used in their presentations. So credit goes to them, I just share my notes with you (just like how I share my lecture notes with my classmates), and for my future reference as well.
For your reference, here are the names of the presenters: Edmund Lee (Caylum Institute), Ves Cuyugan (Divergent Trader), Jem Francisco (CPA, Auditor), the anonymous Ichimoku (Fibonacci and Clouds), Andrew Montoya (full time engineer, breakout trader), Audrey Nunez (full time trader at 24 y/o), another anonymous Akiyo (DOTA player, breakout trader), April Tan (COL Financial), Jiego Mojica (BOH Society), and JC Bisnar (Imbang Klase, CEO of Investagrams).
- “Every Pro was once an amateur. Every Expert was once a beginner. So Dream Big and start now.”
- Making money is easy, keeping profits is difficult.
- The difference between extraordinary and ordinary traders is that extra. Put in that extra everyday. (As all of them did. Like the 10,000 hours concept from Outliers book. Need to log that 10,000 hours asap!)
- The bigger the dream, the harder the grind.
- Have the guts to be your best trader. Guts is never the absence of fear, but acting in spite of fear.
- Trade the market as it is and not the way you think it should be.
- Don’t dream of millions if your effort is just for a hundred pesos. Work hard for it, then your money will work doubly hard for you.
- Follow your trading rules if you’re short term trading. (The premise then is to have your own trading rules.)
- FTSR Framework (Fundamentals, Technicals, Sentiment, Risk Management) (also mentioned in COL Smart Investing)
- Fundamentals: FA is important even if Fair Values (FV) are actually probabilities, best estimates
- Technicals: price will always move ahead of fundamentals, understand human emotions, people expect that history will repeat itself. Price and volume as indicators of buying
- Sentiment: when market sentiment changes, Juan’s strategy should also change; learn to step aside if sentiments change
- Risk Management: Don’t be careless, one mistake can wipe out your portfolio; always have a trading plan: entry, exit, betting size; always know how much you’re willing to lose, experiment what works for you: portfolio level, cash position, value at risk (VaR), position sizing, stop loss, etc.
- Determine your time frame (TA vs FA)
- Look for possible catalysts: IPO? M&A, dividends, growth story / earnings, organizational change, global trends, regulatory changes
- Find the trend, the emerging pattern; sometimes you can see the trend but emotions can make you do the opposite; have conviction. Shakeouts make the weak hands exit, expect the unexpected
- Spot strong support and resistance (S&R), not an exact price but a level, a range. Use multiple time frames, S&R should be valid on multiple time frames
- Confirm the trend, S&R thru volume. Volume precedes price.
- Fibonacci retracements as leading indicators unlike others such as stochastics and MACDs which are lagging indicators
- Use of Fibo must be consistent. High and low must be plotted in open /close only or if including candle wicks, then always include candle wicks
- Don’t ignore long term trends, Fibo within Fibo is fine.
- Don’t use Fibo on short intervals, don’t use for intraday price levels.
- Higher time frames control lower time frames.
- 38.2% Fibo retracement is important to be reached, and if possible retested then hold
- Don’t be dependent on anyone’s analysis. (Don’t always ask your thoughts on stock XYZ?. Pang tamad yun!)
- Golden Ratio: 161.8. Breakout here, high chances of upward momentum.Failure to breach this, possible waterfall.
- Try a system or indicator for 6 months to check if it works for you.
- Like your favorite RPG game, choose a hero you’ll master and you’re comfortable to use: Find a system, don’t jump from system to system. Become a specialist
- Know your objectives for trading.
- You cannot win all the time: always practice risk management. Task is to get more wins than losses. Win big, lose small.
- Create a trading plan that works for you. Have a system. No need to watch the market all the time. If not part of your system, if not within your specialty, don’t trade.
- Use of screeners, filters in various online brokers or stocks apps.
- Plan your trade. Trade your plan.
- Fundamental analysis (FA) can improve your odds of success (you can use a bit of FA to choose which companies to buy, then technical analysis (TA) to time your entries)
- FA allows you to increase your position size (confidence in the company) and hold on to your positions longer (assuming fundamentals are intact).
- Ingredients for out-performance: cheap valuations, profits recovering
- Loss aversion: a losing stock position suddenly becomes a long term investment (again sounds familiar?)
- Bigger upside if you invest directly in the stock market but higher risks too compared to investing in managed funds.
- Set a target annually, like 20%. If you can’t beat 20% annually, better to give your money to fund managers
- Establish trading ranges, look at higher time frames like monthly and weekly to filter out the noise and volatility of daily price movement. Don’t assess higher time frames if they are not done yet, wait for the candle to finish (e.g. don’t assess at weekly candle but it’s only Tuesday, or quarterly candle but it’s only July).
- Have a process. Look out for leading sectors (e.g. compare 5D change vs 30D change), see leading sectors and within leading sectors, see leading names. Then assess each name.
- Establish support and resistance, get midpoint of S&R, then divide two halves further by 2. That way you have S&R, then 25%, 50% and 75% levels. (Alternative to Fibonacci)
- Always know your value at risk (VaR = %loss at cut loss * % of portfolio in that stock). Look at it as percentage of your total portfolio. If that money is lost, can you handle it and bounce back? For starters, you can divide your portfolio and just allocate 10% per stock. If a particular stock goes down by 10%, effectively your portfolio is just down by 1%. (Premise here is you have set your cut loss %)
- Look at the YTD scorecard. Look at how stocks have performed YTD and see if they still have room for upside. Don’t expect large caps to go up by 50% annually.
- Stock market is all about expectations.
- Investors tend to become traders as they find the returns slow. But when they suffer paper losses in trades, (unable to cut losses thru selling) they suddenly become long term investors again. (Sounds familiar?)
- Simplicity of trading plan and discipline are keys.
- Choose what works for you, not what works for others.
- One trade at a time, accept your losses without ego.
- Master FOMO (fear of missing out). There are market opportunities every day, there are countless opportunities to make money in the stock market, you don’t need to join all of them.
- Losses are twice as painful (psychologically) than gains but you have to cut losses.
- Greater fool theory: there will always be a greater fool willing to pay a higher price. (Don’t be the greater fool buying when every one else is selling!)
- Treat your portfolio like you’re running a business.
- Like any business, you need good processes, systems and monitoring.
- To succeed as trader
- Define yourself, your strengths and limitations
- Establish your system (one that works for you)
- Pre-acknowldege the risks before taking your trades
- Keep balance, make sure not one trade can make you bankrupt!
- Practice execution, develop and control your emotions.
- Look for way to improve every single time
- Rinse, repeat, refine
- Write down your trades and look back what you did right or what needs to be corrected / improved?
- Learn to cut losses. (See here why – hint: as your losses go deeper, the more it needs %wise to bounce back).
- Market is indifferent of who you are, it just rewards correct decisions. (Don’t take it personally.)
- Risk management first, profits second.
- There is no one way to make money in the market. There’s an infinite number of ways. There are many trading plans. Create your own.
- Hindrance: fear, we are addicted to our comfort zones but trading is a performance battle. Manage your fear, and your greed.
- Successful people take the maximum responsibility.
- Risk Management: if the worst happens, can I manage it?
- Tip 1: Live in the present moment.
- Tip 2: Avoid forcing trades: you are most powerful when you are relaxed; forced trades never work, let the market flow, keep your cool.
- Tip 3: Choose your thoughts. If you think the market is against you, then you have made it against you. Concentrate on what you want.
- You have what it takes to get started.
- We were raised in school striving for perfection, correctness, but in stocks trading, we have to let go of our ego and admit to our self that we made a mistake (Do not compound that mistake!)
Let this be our guide in the #PHStockMarket. Learn to cut losses, set stop losses, trailing stops. Best of all learn to move on. Accept the fact that you will lose money in the market to make more. Treat it as your tuition. Mistakes are normal. Sitting on it is detrimental. #InvestmentsForFilipinos #PinoyMoneyIQ #FilipinoFinancialFreedom #FilipinoFinancialLiteracy #PersonalFinance #FinancialLiteracy #PassiveIncome #InvestmentAlert #OFWInvestments #ExtraIncome #PinoyRaket
- Counterproductive money mindsets:
- We focus on results, not the process to get to such result
- We have a hard time acknowledging our mistakes
- We all want it quick!
- Train like an athlete. Even NBA players keep on training hard despite their international status.
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