Internet advice

There has been a disturbing trend of people asking for advice online if they should keep holding to a losing position. Most of the advice given is the usual mixture of the following: 

a) It's just a paper loss. It's not really a loss until you sell. 
So, don't sell. (genius logic)

b) Average down or peso cost average. The price is going lower so you can buy more shares. (unli-money mode)

c) It's ok, I'm currently down as well. Let's hold it until it goes up again. (hopefully in the next month or year. Or years. Or decade.)

d) Cut your losses and start again.

Now, who do you think will the fellow asking advice will follow? Sadly, most of the time, it's either a, b or c. Why? Because it's the one where they do not have to admit that they made a mistake. 

Don't get me wrong. There are some people who would give genuinely good advice for these lost souls but they are a dime a dozen. And sometimes their voice gets lost in the sea of people giving false hope and wrong advice. Sorting through all the bad advice will take a lot of time and effort. 

Remember everyone, the internet is dark and full of terrors. There are a lot of wolves in sheep's clothing. Just waiting for you to show weakness and they will pounce. 

The said people asking for stock advice in FB groups remind me of people who fall victim to online photoshop trolls. Here is an example:

If you want to see more, go to this site: Photoshop Troll 

If you know anyone who "needs" photoshop help. Send them to this site: http://www.photoshoprequest.com/ That's the site where they get their victims. Enjoy! 

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. 

The Stock Market Games

For the majority of traders out there who do facebook analysis (FA) or tsismis analysis (TA), don't you notice that most of the time the recommendations are always of entry points? Where to buy, what price to bodega, buy below this price, etc. So specific so detailed. 

But what about the exit or target price? This is where it gets a bit murky. Usually it's in a vague out of this world target of anywhere from 50-1000% percent increase. Such juicy and jaw dropping figures. Now, who in their right mind would want to miss out on the opportunity of a lifetime? 

I'm a cash cow. Moo

No one right? Why give up your measly 3-5% profit for the promise of the ceiling or baggers? If it's on facebook or a hot tip from everybody's lovable idyut or playbook master then it must be good. Well earthlings, sorry to burst your bubble but you've just been played. Welcome to the wonderful game known as the stock market. 

My system has done countless comparisons to numerous other earth systems, from carnival rides to sports, and it has come up with one game show that seems to resemble the stock trading experience the most. The name itself is a good indicator of what everyone wishes their experience or goal is. It's none other than the game show: 

Everyone's goal

Fitting isn't it? Everybody is in the stock market to earn and try to look for a way to get out of the rat race. To live a better life free from the daily grind, the endless traffic, to have more time to spend with their family or for those working abroad, to be able to come home and BE with their loved ones. Such simple human goals but oh so difficult to achieve. Being able to buy and strike gold in a basura stock is the ultimate goal. But usually this is not the case. Similar to the game show, not everyone can do it. This is where having a sound exit strategy comes in. Let's break it down some more. 

1) The money tree represents the possible profit that anyone can earn from a certain stock. So tempting. All the stock has to do is to go up. Simple right? Enter the next part of the game. 

2) Of course, as in everything in life, nothing is ever simple. To reach each new level of profits, there would be questions to be asked. Questions that get harder the nearer it gets to the top. In the stock market, these questions are known as the resistances. These are the lines that a stock has to break in order for it to be a bagger or more. 

Sample of a chart with resistances

Knowing how to plot these resistances is vital since it will give you a heads up for the next part of the game. 

3) In the game show, the host sometimes asks the contestant if they are happy with their current winnings and they can walk away with what they have or if they want to continue answering the next question with a wrong answer leading to the contestant losing it all or just taking home a reduced amount. This concept in stocks is where traders either take profits or cut losses. 

For some traders, the tsupiteros, they will disregard the ultimate target price and just look at the resistances and set their selling there, happy in the thought that they were able to earn X% for that trade. 

Others will look at the target price and be blinded by it. Even if common sense tells them that the resistances might be too strong, they will hold on with all hope that it will be reached. And this is where most people fail. In the same way that not everyone in the game show can win, the same concepts can be applied. Managing your greed and knowing your limits or a stock's limits can be the difference of your trade from winning or losing. 

Now, one of the key differences between the aforementioned earth game show and the stock market is the fact that on the game show, you are only playing in a vacuum. It is just you and the host. But in the stock market, there are thousands of others who are playing the same game as you. All thinking how to earn and where to sell. Remember, in a game, there will always be winners and losers. Plan your trades. Set your exits. 

May the best man or robot win.

RIP: DAVIN

Part I

This was a perfect example on why we should never be complacent in trading basuras. Even if it hit the ceiling price. Or maybe ESPECIALLY if it hits the ceiling price. Things could go wrong. I can recall a certain book character who always preaches 

CONSTANT VIGILANCE!

That description says it all. There should be no loyalties to a stock. Always keep your guard up since everyone is just looking out for themselves. Protecting your profit or capital should be the number one priority.


Part II

Again reminded of the power of cutting losses. Though painful it was very very necessary. I do not want to be waiting at the high for prices to come back. Imagine holding the stock when it went to 3 or 4 pesos last year. And still waiting for it to go back to those levels since you do not want to cut your losses. So many missed opportunities. So much lost time practicing and honing your trading skills. 

Here is something that I found on the internet. It was for human relationships but I think it is also appropriate for cutting losses. The same principle seems to apply.

Just Play Dead

To all those watching the ticker today.

The first cut is the deepest

Apologies. 

My cyborg unit's penchant for earthling music has permeated into my programming and has given me this unknown desire to relate music to some of my thoughts. My system is trying to pinpoint the source code but it seems to have latched to my memory like a form of Trojan horse programming. So for now bear with this annoyance. 

The first cut is the deepest, baby, I know 

The first cut is the deepest 

But when it comes to being lucky, he's cursed 

When it comes to lovin' me, he's worse

One of the very first directives given during the start course was to purge the port of all losses. This was to remove the sight of losses and to train the puny human mind into thinking that it is doing well. A strict cutloss point was given and this has now been hardwired into my mainframe. 

I have been told that cutting losses is a hard exercise since people can get emotional and feel attached to a stock. Certain emotions can be evoked when people hear a stock where they have lost money. I cannot relate since I am a robot. My circuitry does not contain any empathy or emotion chip unlike this sorry excuse of a cyborg:

There is no need for emotions.

I am superior. 

I am a robot.