Twenty-Eighteen

Happy New Year!

I've only been actively trading since May of 2016, on the grand scheme of things, I haven't really been in the market for very long. But I have to say, 2018 has proven to be the most challenging market condition I've had the pleasure (and displeasure) of trading. Much as it was the year of challenges, it was also the year of learning. 

It's true that hardships are the ultimate muses for self-analysis and that they will always be part of our evolution as traders. I'm sure there are more to come, I really wouldn't have it any other way.

Here are a few of my 2018 trades. Happy dissecting!

ATN was my biggest missed trade for 2018. Missed trade because although I got to profit from it, I did not get to ride the entire trend. It was my setup, by all means, I should have been in that trade far longer than I was. This was when I realized how difficult it is to shuffle back and forth from a momentum mindset back to that of trendfollowing. My default is, of course, trendfollowing. But considering the market condition then, where plays expire within a day or two, I had to adapt and learn how to let go of trades quicker, hence, the shift to momentum. Then here comes ATN, I traded it with a momentum objective and failed to switch back to TF although the stock was already showing signs that it could do a monster rally. 

I get quite a few messages regarding EOD trading, almost always coming from traders who are also working full-time, so I decided to save this particular trade for documentation because aside from it being my worst cut for this year, it is also a stark reminder of one of the disadvantages of end-of-day (EOD) trading.

My goal year-to-date gain for 2018 was set at 150%. Sadly, I fell 50% short of it. I ended the year at 100.03%, major thanks to BCOR for the December push. Still quite a feat for me considering I had way lesser trades this year than in the past years. 2018 was a lot of things but most of all, it was a reminder that we will forever be students of the market.

Trade Dissection Tuesday

While I was organizing my baul, I was feeling a little generous and thought I'd share a couple of my past trades. Who knows, maybe we could do this once a month?

Trend-following may be my bread-and-butter, but I do some momentum here and there, too. It was only when I discovered my niche that I had even the slightest right to venture out on other plays. In fact, most of my trades this season has been quick plays.

The market has been tough as of late, but those who stay in the game are tougher than the rest.

ISM

JAS

LR

The Old Has Gone, The New Has Come

To all of us lucky enough to witness a new year, hello. And may we not waste this blessing. 

I've promised some of you that I will collate some of my trades in 2017 for your dissecting pleasure.


Trend-Following

ANI was sold on the same day of the snap.

This GERI trade was the only time I went all-in on one stock and would be probably be the last. I realized that my heart just couldn't take it yet. This snap was taken at the highs, but I was able to sell this on EOD at 1.69, 45%.

Notice the time of the snap, 2:41 AM? I went to bed right after and slept like a baby. Little did I know that come sunrise, COL would royally screw up its clients. Ito yung sinumpang araw na 'yon. A little past 9:30 in the morning, COL just flat-out froze, along with all my hopes and dreams. Meanwhile, PXP was dropping like waterfalls. Sold intraday at 8.55, 51%.

MAC Round 1. 

MAC Round 2. 

MAC Round 3.

MAC Round 4.

I just had to milk it. This stock is a trend-follower's dream. I wonder if 2018 would gift us with another one like this. 

Swing

Initially had a TF objective, but the set-up did not materialize. Sold intraday.

Again, this was TF material but the stock showed signs of weakness and I normally would ride it out but my AEP was high. It couldn't take the beating. You know what they say, last one in, first one out. 

ANI was also a supposed TF pero mabagal pa sa pila ng MRT on a rush-hour. There were other good setups materializing at that time so I had to sell the laggard to make room for a faster horse. IDC, sold intraday via minute charting. 



Re-entered IDC during a quick consolidation. Sold intraday. On hindsight, I should've trend-followed the heck out of this stock. I would have had less stress and bigger profits. Hindsight is always 20/20 they say. But here lies the beauty of keeping a trading journal, you get to answer the questions: What did I do right? What did I do wrong? What could I have done better? So many traders take this practice for granted and fail to realize that this is their missing recipe to improvement. 

Had to sell intra because I won't be able to check the market the entire day, and I didn't trust MJC's volatility enough to leave it unmonitored. 


Jerk (also swing but bought on EOD, sold on the following day's open, still a work-in-progress)

Ceiling play.







Here's to all of you employees out there asking if profitable trading is possible while you're maintaining a full-time day job. I ended 2017 at 112.84% while fully-employed, rotating between the day shift and the night shift every 2 months. It was NOT easy. I've been very familiar with sleepless nights, an almost-declining health and a sub-par work performance. Don't get me wrong, I did not neglect my responsibilities. I was still doing pretty solid at work, just not as much as I used to. When I decided to make trading my priority, I had to accept that my job had to take a backseat. No one can serve two masters at the same time, after all. 

So yes. You can trade while you work. But you have to be prepared to make the sacrifices. 

We Went Out on a Fridate

A typical Friday in the metro:

• Even more intolerable traffic where every hour becomes a rush hour
• Deadlines, deadlines, deadlines
• Often a payday, other times a petsa de peligro
• Millennials going: “Let’s tonight?” “G!”
• People feeling like they’re licensed to have a much-deserved night out, or for others, a night in

A typical Friday in the market:

• Profit-taking here and there
• Positioning for the following week’s spotted plays

December 9, 2016 (Friday)

But today is not a typical Friday. We battle the same traffic, we meet the same deadline. But today, we do it not for ourselves, but for people we do not even know. Today, our ports are placed on auto-pilot as we planned to meet up with a few kids and hope to give them a morning filled with laughter, surprises, sunshine and rainbows. 

Today, we shared the spirit of giving.

It was to be our batch’s first RAK (random act of kindness) and we decided to spend it at a Gawad Kalinga compound south of the metro amongst thirty little rascals. 

So let me tell you a story about the day six people made a fool of themselves. 

The walls of the room were adorned with the children’s artworks, an end-table housed various trophies, bookshelves lined up the corners. It looked just like your usual classroom. But sitting on the floor were the kids with their expectant stares fixed right in front of them. This was when a familiar upbeat music wafted through the stereo. And suddenly, awkward limbs were flying in every direction. Some of the kids laughed, others looked on with a mix of amusement and confusion. We didn’t know how to dance, surely we didn’t know what we were doing. It was mighty embarrassing, but we grooved to the music anyway—whatever would break the ice, whatever would make the kids give even just the hint of a smile. 

This Friday, we tell ourselves, is not about us.  

Her name is Jessam, she is 10 years-old. My favorite dessert, she said, is chocolate cake. When I grow up I want to be a doctor. A year younger than Jessam is Clarenz. This Christmas, he smiled shyly, I just want new clothes. To his left is Gabby, who is almost 3. She had curly hair and expressive little eyes. She would nod when she likes something, frown when she doesn’t, and cry out when annoyed.

And there were dozens more we met, who welcomed us with such warmth and energy that we felt like little kids again. The games got a little competitive, the lunch was well-awaited for and the gift sharing was such a joy to take part in. There were toy bags for the children and food packages for their families. It was almost noon and our program has not ended yet. The room had little ventilation, the air feels stuffy. We were starting to get drenched in sweat, but we couldn’t care less. Watching them get excited opening their presents, hearing their thank yous and seeing smiles plastered on their faces make it all worth it.

So much has been said about giving. We watch as some give as much as they could purely out of the abundance of their hearts, others do reluctantly out of perceived responsibilities. And just as much, we see those hide their skeletons under the pretense of selfless giving when really, all they want are recognition and bigger egos.

Whatever the reason may be, the Lord has said:

“Every man shall give as he is able, according to the blessing of the Lord your God which He has given you.” Deutronomy 16:17.

Just as we love because God first loved us, we give because He has first given us.

Please Bear With Me

The predator is back and we are all its prey. 

There are quite a few things that this market is teaching a neophyte like me:

1. Pick a set-up and be great at it.

Unless you're Sherlock Holmes, you can't master every play in the book. So you choose one and you study like hell to perfect it.

I am far from perfecting mine, but I have always leaned towards stocks that show forceful momentum and so I have always been a breakout trader.

What is a breakout trade?

Once a stock touches its resistance, it can do one of three things: breakout, consolidate, or untog.

Breakout

Conso

Untog

I buy on breakout because it signals a strong momentum. When resistances are broken, the stocks are free to fly as a bird. Until of course, they encounter another resistance, and the process would then repeat: breakout, consolidate or die.

Think of the stock that's about to breakout as the "unstoppable force" and its upcoming resistance as the "immoveable object."

An unstoppable force and an immoveable object both cannot exist at the same time. It’s a hoax. For better or for worse, one of them has to give way—and you better be ready whichever one chooses to.

When Hillary ran to be the first woman leader of the free world, most journalists, artists, people of color, and women were behind her. After all, she was running against one of the most misogynistic bullies the modern world has ever seen. The polls predicted her win since day one. She has her faults but she has it in the bag, the analysts said. She showed so much force and momentum, it seemed as if America would finally have a Madame President.

But alas, the glass ceiling was reinforced with white supremacy stronger than steel beams and she failed to break it. It’s THE immovable object, and Hillary was stopped short. Maybe it's not yet time, maybe the world is not yet ripe for a breakout. One day, the glass ceiling will be shattered. Until then, life goes on and we move on.

And we hunt, and we study, and then we study some more.

2. But learn to go out of your comfort zone.

I started dabbling in stocks May of last year, but I only actively traded January of this year. My trading career is as old as the fetus in my neighbor’s 9-month old belly. But as a fetal trader, this is the most blood I’ve seen. So many plays with a promise of ever-after, only to end in a break-up shortly thereafter. 

On a market condition like this, ang hirap maging breakout trader. Breakouts turn into fakeouts. You press buy today only to cut your losses the day after. It was a little disappointing.

So how about we try expanding our horizons? I tried looking into sleeper plays, or studying more about bounces. I don’t have a decent batting average on those plays. But just because I’m not good at it, doesn’t mean I can’t be. The market is giving us a chance to grow. We take it and break, or we take it and be better.

3. Curb your expectations.

During and a little after the ZFT course, my biggest port movers were the ones I did not put target prices on. It was position trading. I used trail stops on them instead allowing my profits to run as much as it could until the chart says stop. 

MAs as trail stop

But these past few months has taught me that setting target prices is wiser on a market season such as this. I’ve had pera-na-naging-bato-pa moments because I expected the market to adjust for me. The market never adjusts to anyone. And those are moments I’d rather not relive. Ang sakit eh. Setting target prices (TP) means protecting your profits on a season where plays expire in a day or two. 

But as in all things trading, TPs should be reasonable. Why did you set your target on a certain price? Does it have a technical basis? Or feel mo lang?

4. Set tighter cut loss points.

These days, I let go of positions the minute they reach the -2% mark. It’s a personal preference and it’s an awfully tight cut loss point, but I just don’t trust the market enough to let my losses turn into bigger ones. As a result, I've had whipsaws more times than I could keep track of. I cut positions a day, an hour, or a few minutes before they fly. And I'd be lying if I said I was immune to the inevitable headshake and to thinking sayang. But such is the price we pay by following the number one rule in trading: always protect your capital. 

There are days when I’d think, “I should have held on a little longer.” But then there are more days when I’m thankful I cut as early as I did, “buti na lang.” It might have been a bad entry, an incorrect bias, or whatever it is that colors your port red, make sure to let it go fast.  

I don't know if it's just me, pero 'di ba mas masarap matulog kapag walang pula sa port mo?

5. Choose your battles wisely.

Cash is also a position. This has been played like a broken record. But it’s something only a few people understand. Traders have an itch that they can only scratch by hitting the Buy button.  I’ve been a victim, I probably still am, and so are a lot of people. It’s what makes us lose money; getting into war you never prepared for.

You don’t have to buy one stock every day or even have one every week. Maging maarte ka, maging choosy ka. Look for the outliers; those that turn green in a sea of red, those that rally when all the other stocks are rolling down the hill. But if something moves and you want to press the Buy button, ask yourself first: Is this the fear of missing out? Is this according to my trade plan? If you've prepared for it, then please by all means, go get it. Otherwise, sit back and enjoy the show.

Be on the defense when the market is charging on the offense, because the market always wins. 

A Big Missed Steak

Back in the corporate world, I have a quota of 18 cases per day. I close more than that and I get an incentive. I close more than that, pwede ng pumetiks. Quotas keep us aligned on the trajectory we place ourselves in. They keep us focused, motivated. But the best part? They keep us rewarded once they’re hit.

Here in the trading world, I set my quota to +10% overall port gain per month, or in a different perspective, +2.5% per week. Sounds doable, no? If achieved, it would mean that I could double my capital in 10 months’ time. And in a year, a profit of more or less +120%. I don’t know about you, but that seems like a pretty sweet deal to me. But if I was being completely honest, I wasn’t confident enough I could deliver. I trust in the system. I’m just not sure I trust in myself as much.

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August. Officially the first month we were left to our own devices. I got my eyes on my monthly goal. But there was a constant question of: could I or couldn’t I? I have written about my August travails on a prior post and I do not wish to be redundant. To cut the story short, I managed to bounce back from the losses and end the month with a +15.1% gain. Beginner’s luck? Probably. But what the hell. I was ecstatic, mainly because I proved to myself that I could do it.

September. I was stuck in the hellish metro traffic. I was running late for my doctor’s appointment but I couldn’t care less. It was just the second day of the month and I was already up by +6.67%, just 3.4% short of my monthly quota. Thanks to this baby:

Five days later, I was up by +8%. It was just the first week. 

Oh sweet heavens. Is it still beginner’s luck? Or am I already getting the hang of it? 

HAH! The dream. What I would give to say that I am. 

The fairy tale ended quicker than HiddleSwift called it quits. You know what they say, if it’s too good to be true, it probably is. So one fateful day in September, FOOD was on the table and everybody was on a feast. 

It was a similar play to MED. And so due to my prior win and what I thought was a high probability set-up, I went heavy on FOOD. The most volume I’ve ever put in a single trade since the course. The problem with FOOD though, once you've consumed too much, you're sure to spit it out one way or another. 

For the drunkard and the glutton will come to poverty, and slumber will clothe them with rags. Proverbs 23:21

How befitting.

So yup, that's a -17.94% loss. The system says sell at the open in a situation like this. There was a way to stop the bleeding from becoming a full-blown hemorrhage. But I didn't react when I should. Instead, I fell in a state of catatonia. I was stunned, maybe I was in denial. And it proved very costly. All my September gains wiped out in a single trade. There's the market always looking for ways to humble people down. 

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It's the end of September. I took a little trading sabbatical after that FOOD poisoning. And unless the only stock I'm holding performs a miracle and shoots up to the ceiling by Friday, I know I wouldn't be able to meet my monthly quota for September. But I guess it's okay. We learn our lesson and we move on. We live to trade another day.