Form a wall

So.

Group buys. 

I've been hearing about it being discussed a lot recently. For the uninitiated, it means that someone will tell a group of people to buy at an identified support. Like a wall. 

In the NBA, it works. As seen here in this video clip below. Turn up the volume to hear the coach tell it to his players.

Defenders literally just made a human wall to impede the person who is inbounding the ball to see the person he's going to pass the ball to. Easy. 

Now, in the stock market, it's a little bit different and sometimes doesn't work. Let's say the people involved in the group buying are the nova corp ships in Guardians of the Galaxy. 

When the 'leader' of the group says, let's all buy at this price to support our beloved stock! 

We cannot let it fall! 

We will support it as only we can! 

They will form a wall, like this:

Pretty impressive huh? 

But in reality, if Ms Market really wants to break supports, IT WILL BREAK SUPPORTS.

The wall that they built can come crumbing down with just a simple selldown.

And what happens to the people in the wall? 

Instant investors or 'ipits' just like the unfortunate pilot in one of the spaceships. 

So. 

Going back, group buys. 

Obviously I'm not a fan. We do not advocate it in the tribe. It only appears that way sometimes because we all follow one system. And in the unlucky instance that we are unwilling members of a wall, we know how to eject or cut fast to lessen the risk. 

*I admit this could have been better executed by Money Growers with one of his patented videos + dubbing. 

Knowledge is power

Back in my formative years, saturday mornings were a time for cartoons. One of these cartoons were a group of soldiers who go out and try to stop an evil organization called "COBRA". After the cartoons they would always show an infomercial type short wherein they say this line: "knowing is half the battle"

The power in that short phrase has stuck in my neural cortex ever since. It has always manifested in one way or another as I went along in life. Knowledge is an incredibly powerful tool for anyone. It can get us out of more tight spots, hard places and other sticky situations that anything. It will also make us to be more independent since we won't need to rely on others to get by. 

The phrase can also be applied to the stock market. This was the reason why I sought to learn how to trade. I look back at my past and the constant reliance on the tips or analysis of others and remember how it was a big drain on my confidence and self esteem. I was always on edge since I didn't know when the tips or analysis would dry up or end. 

Choose your weapon

Back then I would think, if they could do it, why can't I? We are all looking at the same charts right? What secret have they uncovered that allows them to have more winners than losers? These questions pushed me to look for a better way, to acquire knowledge. I went to so many different seminars by gurus and other stock personalities yet there was always something lacking. There was always the impression that the things that they were teaching were only touching the surface of things. That it was all superficial. I know since after the seminars I would still be unable to read charts on my own after the said seminars. 

This all changed after I entered the zf course. The knowledge transfer that occurred there was incredible, mind blowing to say the least. The course dealt not only on how to look at charts but the whole package. How to deal with emotions, trading mindset, expectation setting. Being more disciplined and systematic. Such a stark contrast to everything that I went to before. 

Now, trading is a little bit easier. I've figured out that there is no secret or holy grail. It's all in the preparation. Knowing when to trade and when not to trade. Knowing when to buy and when to sell. Paying attention to the details so to speak.

It's awesome to know the power of charting. 

When used properly. 

For like any tool out there, when it is used improperly, it could mean disaster. 

See below :P

Running your own race

This quote has been something that our mentors has instilled within all of us during the course. I have always taken it to mean that our biggest obstacle to success is ourselves. 

In my previous posts, I have repeatedly said that you have to fit your trades to your profile. Make it fit to your lifestyle. To who you are. 

Well, recent events have made this very applicable and real to me. The little robot has started going to school and unfortunately the school schedule has absolutely wrecked havoc on my trading style. Since the class starts just before the time when humans need sustenance and ends sometime in the early afternoon and with the daily traffic, I have had to adjust, adapt, and innovate as a fellow tribe member has stated. 

At first, I thought it would be an easy transition. This past two months it really hit me that I can no longer buy at the close. Or even see what happens during closing. Checking the charts after trading is now a regular session of disbelief at seeing breakouts missed. Intraday buying opportunities that happen right before leaving for school have to be skipped. My system didn't want to have any lingering thoughts of buying super volatile stocks while driving on the road. 

So to compensate, I have had no choice but to change strategies. I went back to my notes and reviewed about trend following and sleeper plays. Being a mentor to bastards and the seed has also been a big help since it allowed me to get a fresh perspective on the power of MAs. Having had a coffee session with Zodiac's resident Dog was also very timely for it showed social proof that a different technique can still give massive gains. The only difference was time.

Time because...

- instead of being able to buy on the actual breakout, you buy in anticipation of the breakout. Your patience will be tested.

- your entries and exits are different from being an intraday trader. It means looking at the bigger picture. 

- instead of just focusing on the daily charts, the weekly chart now gets equal significance as well. 

- I would be at the mercy of forces that are not in my control.

This has been my first attempt at a TF trade. Not perfectly executed, but I think that it will do. 

MCP

But do take note, that I still try to keep up with a checklist of the intraday breakouts that did happen successfully. Which ones that were still caught by my scanners and which ones were missed completely. For at my core, I am still an intraday trader at heart. That is something that cannot be taken away. This is just a temporary setback. 

Going back to the previous analogy, this is a race that I intend to win. I imagine that we are all in a marathon, it doesn't matter how we reached the finish line, the important thing is we reach it. My circumstances might take me a bit slower than the others for now, but I will persevere.

For what does not kill us, only makes us stronger right? And being able to add and master a whole new weapon to my arsenal will only make my final form that much more deadlier. 

HOPE as a strategy

Such a simple word. But it can trigger such a mess of human emotions. 

A fresh start. 

A better outlook. 

A new beginning. 

A chance for a new day. 

Sounds so nice and dandy. All sunshine and rainbows. Well, sorry to burst your bubble, but it's not all that. 

HOPE 

It can also sometimes bring the worst out of humans.

Just remember, HOPE should never be applicable to the stock market. For this is not the place for your emotions. You have to be very objective in your buying and selling. Stick to your plan and execute. Hope should never be a strategy. For here, only the charts are your friend. 

Trader Profile: Trading Systems

Let's get this out of the way. There is no perfect system. No one size fits all. It's similar to the analogy of the education system as seen in the image. For further info on that do some searching on the web about the fish climbing up the tree analogy.

In layman's terms, it just means that a breakout trader's strategies should be different from an investor or a bottom fisher's strategies. When I say strategy, I mean the buy/sell points, holding period etc. The reason for choosing a system depends on multiple factors and you have to be aware of these factors before entering a trade. Here are a couple of things to consider:

Space & Time:

This refers to how much time you can spend looking at the market. Are you a full-time trader? Can you monitor during the whole day? If you have to work a day job then it would be more dangerous for you to buy very volatile stocks. Stocks that could swing from +/- 10-15% in a day. Can you take that risk?  

Another aspect of time is how long is your holding period? If you see 3-7% gain in your stock do you sell immediately to lock in your profits? Or can you still hold it in case it goes even higher in the coming weeks/months?

Risk Profile: 

This refers to how the way your brain is hardwired. When you see a stock going down do you see it as a buying opportunity or do you avoid it? There are players who are bottom feeders and are happy with a stock going down because they think that it is just retracing and they can get it for cheap or low risk.

The other side of the coin are the momentum players who would only ride stocks that are on the way up. Buy high, sell higher is their motto. 

One more aspect of your risk profile is how much are you able to put in one stock? Do you go all in (something I covered before) or place only 25% of your port in one trade? For those just starting and still finding their system or personality as a trader, I would suggest to place 10% or less in a trade. Just to have some skin in the game. 

Find your system

Going back to the earlier analogy, there is no one size fits all system. You have to stop and reflect on who you are as a person and a trader then make your system fit you. Don't compare yourself to how big someone else's gains are. You don't know their journey and how long it took them to get there. Focus on your own journey and one day you might be the one that others are looking up to. 

Bonus note: 

Just don't try to invert your charts. That is most definitely not a system. It's just pure and utter crazy talk. If it wasn't, then you should be able to see it in all respectable charting software out there.  

Beware the Siren's call

After browsing through human history, my mainframe was surprised to read about certain creatures in ancient stories.

"In Greek mythology, the Sirens were dangerous yet beautiful
creatures, who lured nearby sailors with their enchanting music and voices to shipwreck on the rocky coast of their island."

What is the significance of the sirens that my mainframe deemed it a worthy read? Well, it seems that sirens are still existing today, they just adapted to the times and come in a different albeit still deadly form. Allow me to elaborate. 

Tell me if you've heard this before, you're browsing the internet and saw something that caught your attention. Someone mentioned a stock will move in the coming days. It's your chance of a lifetime and they want you to get in on it. What luck! This guru just shared an insider secret and you're ready to go all in! Day 1 of 20. 100-500% increase here we come! 

Boom goes the dynamite!

Apologies for popping your proverbial bubble but always, always remember that there is a reason the target prices are out of this world. It's to lure the unsuspecting people and newbies out there. It's very similar to how a MLM or networking scheme works. Blind the other humans with massive potential gains yet don't telling them that there have to be casualties along the way.

Stock market trading is a zero sum game. For someone to earn, someone has to lose. The more people who will believe and sit on a stock because of the belief that it will reach a stated target price, the easier it is for the operators to get out alive. 

Sounds familiar? Isn't it just like the sirens luring sailors with their melodic voices huh? 

So watch out, that dream stock with the heavenly target price that looked so enticing might just come back to get you and drag you to the depths.