Bad Roll Day

For board game aficionados, there is what we call a “Bad Roll Day”. When the game gods and goddesses seem to have forsaken you as seen by how abysmal your die rolls are, especially when these rolls spell the difference between winning and losing, or more appropriately, between life and death.

Last weekend, I played a tabletop game with friends. Last weekend, I had a bad roll day. I tried to plan my every move according to the book. I took calculated risks and reasonable actions. But when it all comes down to rolling a die, ultimately, it is still a battle of luck. A die is the great equalizer in the game of cards and tabletops. And on that weekend, the dice were never in my favor.

Blank roll on three dice (green). Falcon taking the hits of the Imperial Tie Fighters.

Come the start of the trading week, I thought I have brushed off my bad roll day, left it on the weekend along with my sighs of frustration and occasional strings of expletives. But as it turns out, the market has another thing going for me. Some people have their winning streak, what I had was clearly the contrary.

Monday

I cut on a position I bought a week ago. It was supposedly for trend following. But the trend snapped before it had the chance to go any further.  *take 1 hit*

Tuesday

Quick trade on IMP. But on very little volume. Still, gain is gain so they say. *regain 1 shield*

Wednesday

Why did I ever think I could tsupit on BKR? I was one day late. Sold on -5% loss. *take 2 hits*

Thursday

ALT was on fire. Not the good kind. And it burnt my port along with it. *take 3 hits*

Friday

I stayed on the sidelines, watched two episodes of Sherlock and went back to the drawing board.

Three losing trades out of four. It was a little frustrating. I was waiting to board the emotional rollercoaster I knew would inevitably arrive along with the series of losses. But it didn’t come. Surprisingly, I was not as affected by them as I thought I would be. If anything, the losses motivated me to study harder, plan more thoroughly and execute better. Had it happened to me before, I knew my emotions would have gone berserk.  

Two things that have saved my life when the market tides tried to drown me:

1.  Discipline: Cut mercilessly. All ways, always.
2.  Risk management: The rule of thumb is to protect your capital. As Kap said it: Find a way to have an optimal position that will match the levels of risk at hand. Look for tolerable risks.

I was ready to accept that I had a bad roll week. But in a twist of fate, an unexpected message from a friend instantly negated all of my losing trades.

Six months ago, she stared at me blankly the first time I talked to her about the stock market, mutual funds and investing in general. I thought it was a hopeless case. But I went on babbling anyway. And look where we are now. 

I guess at the end of the day, it will never be about what we have. But what we do with what we have.

Fibonacci Retracements

The only thing I know about Fibonacci is that he was this Italian guy who discovered the sequence of numbers that mysteriously appears all throughout nature. It was aptly called the Fibonacci sequence.  And its relevance is mind-blowing. This video doesn’t even cover half of it. But it gives a pretty clear picture.

It was no surprise when I learned that Fibonacci was also used in technical analysis. After all, they did say it appears everywhere. I saw it in my charting software but I didn’t know how to use it. I was a newbie who was trying to make sense of all the lines, clouds and colors. But it was when I was researching about the Fibonacci retracements that I stumbled upon Zee’s blog. Very interesting, I thought after reading the entry about Fibonacci (Trading 101: Fibo). Interesting enough that I spent the entire afternoon, and a little after dinner time, browsing through his entire website. And the rest, as they say, was history.  

Two weeks ago, we started discussing about Fibonacci retracements and how to use them. It was one of the lessons I was looking forward to. I knew little about it. I was intrigued because I knew it was some of the mentors’ most favorite weapons.

To put it simply, Fibonacci shows the possible support and resistance areas.

HOW TO PLOT FIBONACCI:

On uptrending stocks,

1. Look for the lowest point before the recent run-up (100%)
2. Look for the most recent high (0%)
3. Identify in which level consolidation happens

The higher the Fibo level the stock consolidates, the better. It means that there is great pressure from the bulls to buy the price at a higher price than to let it dive into the abyss. 

Take these charts for example:

DD

Found support at 23.6% level, consolidates in that area

MPI

Found support at 23.6% level, consolidates in that area

JGS

Found support at 38.2% level, consolidates on and above that area

I see it as someone driving his new car to the countryside. At 200 kilometers, a new distance high for the car, he sees the gas indicator light up. He looks around and realizes he’s in the middle of nowhere. There weren’t any gas stations in sight, he doesn’t know how long the stretch of field goes and then he sees this:

He remembers he passed by one gas station not 10 minutes ago. He decides to retrace his route, and have his tank filled before he goes any further. And maybe even grab a bite. With his tank and belly full, he’s ready to continue the momentum and pick up where he left. And then maybe, just maybe, reach another distance high.

But what if the last gas station he passed by was an hour ago? He has no choice but to go back because he's running out of fuel. But if he goes back that far, would he still have the energy to continue his trip? Nakakatamad na mehn. Ganon din sa stocks. Napapagod din 'yan, parang puso. 

A few things to remember:

• The ideal retracement levels would be at 0-50%. Anything below that is more bear than bull.
• Consolidation at a certain level could take weeks to months. 
• When a stock consolidates on a level with a bullish bias (0-50%), there is still no guarantee that it will soar to the skies. It could, but it also could lose momentum just as much. This is the reason why it’s always better to buy on breakout.

But of course, if there is anything certain about the market it’s this: nothing is. So if the charts don’t go according to your bias, you know the drill. Do it without mercy. 

The Fear of Flying

The classes started on the 2^nd of May 2016. Along with The Purge, a trading ban has been implemented. Save for the Three Musketeers challenge, we were not allowed to trade. It was unclear how long the ban will be in place. Week by week, we watched as some stocks gained ground and took off, other times, we watched as they lost momentum and tumbled back to the ground.

It conditions your mind to be immune to the fear of missing out, Zee said when asked why the trading ban was necessary. Opportunities will always be there, the market will always be there even if you die in your old age, he added.

Like all the things in the ZFT system, it made perfect sense. I lost the most money on trades where I chased the prices because I had this fear. I look at the day’s top gainers and I have this impulse, this need to ride at every moving stock. More often than not, I find my port suffering the consequences. Meanwhile, the House of Z has proven that the system they use is versatile. Bear, bull, sideways, it has little regard to the overall market condition. The profits rush in as long as the system is followed. The fear of missing out has no place in a market where you never run out of plays.

A week ago, on Monday, almost two months since the start of classes, the trading ban has been lifted.

And then there were a series of wows and whoas.

I did not know how to feel. I could not wait to apply the lessons. But there was also more apprehension than I would like. I guess now that we're more equipped, there was an even greater pressure to do better.

That night, I made trading plans for the stocks that I thought were ripe for the picking. There were six stocks on my list and on each them, I plotted the entry point, the cut point, the size of the position, the buy below price and the nearest resistance. The following morning, I watched as three of the stocks from my list flew and went according to my bias. I watched, I watched and I watched. I could not press the Buy button even if I knew I should, even if I made post-its and Excel files about it. My eyes were glued to the ticker, my hands were frozen on my desk, my trading plan was shoved in the deepest recesses of my anxieties. It was a classic case of analysis paralysis.

It turns out though that I wasn’t alone. Most of my classmates experienced the same thing. How are your trades doing? Kap asked one afternoon.

"Hirap ako sa entry."

"Nakikita but di maka-commit."

"Same. Nakatulala rin ako."

"Undecided to execute."

It seemed like everybody suddenly turned into a wuss.

And of course, Kap was right. There was no action because there was zero conviction. We were like birds whose cages were finally opened. But instead of spreading wings, we stayed behind bars afraid of flying, afraid of falling. The fear of missing out has been replaced by the fear of trying.

I have cut three positions since then. They didn’t go according to my bias. But it was okay. I was putting into action what I have learned. I was sticking to the rules. I was learning by doing.

ZFT Profiles: MESINO

It has been exactly seventy-four days since The Gateway, the orientation for the incoming Subasta students. More than the excitement, there was the anxiety. It was looming, it was inescapable. Did I deserve the free slot? Could I prove that I do? Can I really do this? Questions that sojourned in my mind after the Gateway moderators bid goodbye. It was surreal. It was at this exact moment when a message popped up on my screen. It came from one of the moderators.

He might not be aware of it, but that little gesture was a godsend. I guess sometimes all we need are the little things. Someone who would wish you luck. A stranger who would tell you they trust in you. I didn’t know he was Mesino then, the Project Seed mentor who left his IT consultant job to become a full-time trader, whose favorite sport is football and who does his laundry at 1 in the morning. I'm planning to do trader profiles on the blog, I told him fifty days after the Gateway, can you be the first feature? Yes, he said. And he still doesn't know he's a godsend.

Let's start off with a very basic question, shall we? What do you think would solve man's existential dilemma?

Mesino: Finding purpose, ‘yung tipo na what you do every day you know na may bigger meaning siya. This was something that I've always been pondering about ever since. Kaya actually before pa, I was planning to go into teaching after I retire from the corporate world, which thankfully medyo na fast forward now that I am helping in teaching the ZF system with sina Boss Zee.

I didn't think you'd answer that question. It was meant to be a joke, an ice-breaker. Thank you for letting us in. What made you decide to leave your job and go trade full-time? Was there a eureka moment?

Mesino: I wanted to have ownership over my time. [There was] not really a eureka moment. I guess talagang ma-iinspire ka kasi with the people in the tribe, especially those that made it full-time like Boss Zee, Kap Kidlat. Kasi if they can make it why can't we diba?

What was the biggest challenge you've faced in your trading career?

Mesino: Just the usual, which is trying to meet your monthly quota. Medyo intense lang ‘yung pressure na alam mong wala kang ibang source of income except for trading.

So how did you overcome it?

Mesino: Trusting in the process I guess, kahit talo push (laughs). Pero syempre systematic na talo naman ‘yan, minimize losses, maximize gains. Plus being very kuripot (a.k.a saving up for a rainy day). Naging advice din kasi ‘to samin ni Kap. Minsan kasi talaga magkaka-dry spell ka sa trading so it helps na mag prepare ng buffer.

What is that one trade that when you think of, gives you butterflies in your tummies?

Mesino: Any trade na hindi ko sinundan rules ko - stupid/bobo moments eh. It just reminds you that trading is all about rules/discipline talaga.

Discipline beats genius so we’ve heard. May I know your overall port gain since you started trading under ZFT?

Mesino: ‘Yung usual na hirit nalang namin nina Henry: Talo na namin sweldo ng mga boss namin dati.

via GIPHY

Fair enough. I’m sure most people want to know: What are the chart indicators you rely on and why?

Mesino: Only RSI - keep the system simple. Tsaka siya yung bagay sa momentum trading eh. It's not about how many indicators you have but how well you understand/mastered the indicator and [how you] use it along with your price action analysis (para may idea ka paano possible na scenarios of the stock whichever it may go and prepared ka to react on the outcome).

Since you’ve mentioned that, could you share some of the things that you look for in a stock that will make you press that buy button?

Mesino: Simple confluences in the system - MAs, Darvas, Fibo, RSI.

If you have a friend who wants to get into the stock market, but has few lingering doubts about it, how would you encourage him/her? Or would you?

Mesino: Yeah, I'm actually always encouraging people to learn how to invest. Gumawa pa nga ako ng slides before about trend following sa blues tapos pine-present ko sa office. Show them the possibilities.

The House of Z has been known in giving back to the community, could you share the most memorable random act of kindness (RAK) you did?

Mesino: I guess those that are hands-on RAKs, where you actually get to interact with those that you help, like playing with the kids sa orphanages, etc.

What's a day in a life for someone like Mesino? Care to walk us through?

I'm an insomniac so I sleep around 3 or 4 am. I guess hindi ko na na-cure yung routine ko ever since. I usually wake-up 8:30 AM, trade 9:30 AM-3:30 PM, then secret na after (laughs). On days na may classes, teach/discuss sa Project Seed or Bastards.

Onto an important topic. Marry, Screw, Dump: Solenn Heussaff,  Jessy Mendiola, Ellen Adarna

Mesino: Dump Ellen, ayoko sa kanya (laughs). Solenn pang one night stand lang, too high maintenance I think. So I guess last choice si Jessy for marriage.

In the year 2021, where would Mesino be?

Mesino: Private fundie traveling the world. Naisip ko din mag RAK sa ibang countries. I have friends na ganun ginawa, like helping build schools sa Nepal, etc. Napaka-millennial cliché pero sarap mag-travel.

I judge a person based on their playlist. So allow me to judge you and give me 3 songs off your current playlist.

Mesino: Anything indie. Mahilig din ako sa Brit/Aus indie bands, over US.

Ayos. A fellow indie lover. So what are the top two things in your bucket list?

Mesino: 1) Travel the world 2) Make a mark/difference in the world

I’m more afraid, Mesino said, of not leaving behind something to remember me by.

I was thinking of focusing my questions purely on trading. But when someone decides to drop a statement like that, it’s hard not to want to get to know the person behind the trader. I wanted to get a glimpse of who he is, who the people in the tribe are, behind the charts, the price action, the gains. I found out, we’re in the market to make money, to ultimately have a good life, but some people don’t want their life to be just good, they want it to matter.