Lessons from a master angler

The past holiday break, I've been binge watching the show River Monsters featuring Jeremy Wade. Take a look at his greatest catches here. 

What caught my robot senses, aside from the monster fish, was the parallels in his approach and methods to the way trading is done.

Each episode begins the same way, he goes off to investigate reports of a monster fish in some remote area and will go and try to catch it. He then does an immense amount of research before actually going into the waters to fish. He would ask the locals of the area and try to identify what kind of fish he is actually looking for so he can determine the necessary tools and techniques he would then use to catch the fish. 

The show focuses on just how much preparation is done BEFORE he even goes into the water to fish. What a revelation!

Applying this approach to trading, before the market even opens, the trader should have already done their research and have made their trading plans. Buy and sell areas/triggers, which stocks to watch, which stocks to avoid and so on. 90% of the work should have already been done beforehand so when the market opens, all they have to do is wait and execute their plans. The traders, like the anglers, will cast multiple fishing lines and see which one moves first. 

This has made me curious and I went to go look for other similarities between fishing and trading. 

Ah, TOTGA, the one that got away. Some people will always focus on the what ifs. What if they bought Y stock at X price and then it went up. Another thing, people usually want proof of your achievements, hence the term, pics or it didn't happen ;)

I've discussed this point previously. Just like the fishes in the sea, Ms Market will never run out of plays to give us. If you missed one play, just be better prepared so you can be ready to catch the next one.

Catch and release is a practice within recreational fishing intended as a technique of conservation of the fish. In the stock market, this is intended for the conservation of the trader. It just means you have to sell the stock or your holdings for you to profit or cut your losses. Unless, you want to be an investor in a company/stock then by all means just hold on to your positions.

Lastly, one other thing I picked up from Jeremy Wade is PATIENCE. Fishing is BORING. Each episode shown could actually have been 2-4 weeks of actual fishing. There could be days where he will catch nothing but he will still persevere. Confident in the fact that his approach and process is sound and it's the fish that aren't biting. He doesn't get frazzled easily and in the end, always catches his monster.

So I end this post with a video of the master in action.

Choosing the right mentor

Just like what a wise creature from a galaxy far, far away once said, there is always an apprentice and a master or mentor. That is the way things work in the universe, wherever you may come from.

In the current stock market setting, multiple mentors have come up in the hopes of guiding or showing newbies the way to profits or even just respectable trading. These mentors have come in all shapes and sizes. 

Given the variety of choices, how do you choose which mentor is the right one? Well, here is a simple analogy on how my mainframe chose to be mentored by the entity known as Zeefreaks. I'll make it easier for the basketball loving fans out there, let's say you were given a choice of being mentored by Gregg Popovich of the San Antonio Spurs or Phil Jackson of the Chicago Bulls/LA Lakers and now NY Knicks.

Here is a list of their achievements:

Gregg Poppovich 5 time NBA champion 3 time NBA coach of the year

Phil Jackson 11 time NBA champion 1 time NBA coach of the year

It looks like a tough decision huh? Like choosing apples and oranges as they say. One doesn't seem to be so different from the other. Both of them are extremely and highly qualified. Their achievements speak for themselves. So they passed the first criteria. Moving on to the next checklist.


Here is a list of their NBA tree (a list of general managers and coaches in the NBA who have trained with either one):

Gregg Poppovich

Phil Jackson

Click the images for a better view

As you can see, the NBA tree of Coach Pop is much more diverse and it's branches have reached to almost a third of the NBA teams. That is quite an achievement! As for Phil's tree, it doesn't look to have too many branches. There seems to be something that limits the passing on of his success to others. 

This trait is what my mainframe puts more weight on. A good mentor should not just be good and inspiring and all that. They should also be able to train people to replicate their success. For what is the point of following or learning from a mentor if you are left in the same state as you were in before following them. The best mentors should take you under their wing and help you to take flight by yourself. 

This is why I think the ZF system stands out from all the rest. There have only been several batches yet the number of successful students have been increasing with the passage of time. We may not have achieved ZF or Kap's level of consistency or foresight but we have all been taught to stand on our own. And I know for a fact that we will continue on our journey in the stock market. Some of us even turning into mentors for new batches as well. 

And that is the mark of an excellent mentor.

Of reversals and men

There must be a reason why so many humans are obsessed with stocks that are trending downwards. My mainframe thinks it must be human nature to always look for great bargains and discounts. 

For me, my scanner has always disregarded these submarine stocks (because of their propensity to dive) and tags them as "STAY AWAY". 

But to survive in the stock market, I have been doing massive reprogramming and analysis to try and incorporate strategies that will be able to make a conservative recommendation on these submarine stocks. Fortunately, Ms Market has been kind enough to provide several case studies for my system to practice. 

Here are several takeaways from my studies in trying to trade these kind of stocks:

- accept the fact that you will never be able to buy or find the exact bottom. This will help you sleep at night.

- always keep in the back of your mind that any upside movement or rally in the price is mostly likely to be JUST A BOUNCE. This cannot be stressed enough. This will help you to lock in profits and to avoid being caught holding the proverbial bag once the price hits major resistances and continues it's fall. In the off chance that it is a true reversal, you can always switch tactics to a breakout play.

To illustrate the second point, let's take a look at the following charts:

SSI

PLC

I have tried to make the chart as simple as possible. There are only a couple things to consider. 

1) iZS or inverse Zeus Strike - the moment when the stock broke the 100SMA. This signaled the start of the downward spiral. 

2) the blue 100MA line - as long as prices do not stay above that, the stock has not started a reversal. Don't try to be a hero and buy up a price all the way to the blue line. Let Ms Market decide the right time. 

Again, one factor for the stock to be considered a reversal, it would have to make a ZS or Zeus Strike (go above the 100MA line) and stay above it. Clearly, you can see that there is currently a strong downward direction in the price. SSI and PLC have shown only small bounces or rallies. A reversal isn't coming anytime soon. 

Learn to set your expectations to prevent further heartbreak and capital loss. The same is true for other stocks like MCP, BLOOM and of course, FNI. Don't let anyone tell you that they know a reversal has occurred. Chances are they are just saying that to sound smart. Learn to read and look at the charts. 

As for buy points for the bounces, that is still something that my system needs to determine with a high rate of accuracy. 

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.

Strong Hands Syndrome

Over the past weeks, I noticed something peculiar with my trades. Most of them had gains initially but once I sold them they were either below or near my buying points. Looks like my system needs some calibration on sell points. I've coined a new phrase for it, "Strong Hands Syndrome"

I'm gonna wreck your profits!

This is the opposite of the event called "shaking out the weak hands". Weak hands usually sell at the first sign of weakness then is left watching or having to buy higher when the stock rallies again. 

Having strong hands syndrome could also mean that you are a little greedy or too optimistic in that the stock will just go through previous resistances. Sometimes selling while the stock is going up is a good strategy. Have to remember that not all stocks go to ceiling or two. 

This has reminded me of a colleague who always says the following quote: 

That is to remind us that we should not be too hopefool* or greedy. Taking profits is never bad. What is bad is when the supposedly paper profits turn into smaller profits or even losses instead when we wait too long. The challenge is finding the perfect balance of when to take profits and when to hold. Maybe a combination of the selling on resistances and holding till end of the day is needed. I've retrofitted my mainframe to practice selling on resistances but it is a hard one to code. I need to collect some more data and integrate into my system. 


* term came from the same colleague

Cash as a position

Since the end of the course, I have realized that the amount of time that my position was in cash has been more than when I started the course. That is a difference of 4+ earth years as against about 2 months of informed trading. 

I credit this newfound respect for having a cash position to now having the patience and ability to wait for the perfect setups. The ones that will make the most amount of money in the least amount of time. My system has identified a couple of these setups and is already compiling a library for it. Being in a cash position has enabled me to act on these setups when they do mainfest. 

This is the exact opposite of how my previous versions was doing trades. My portfolio then was always holding stocks waiting for it to move up. Stocks like LC, BHI, ACR etc. Bodega moves as some would call it. Since I was already holding these stocks, if there was any other stock that made a big move within the day or week, I could just do nothing but stare and say what could have been or if only I had some cash. 

'Nganga' mode engaged

I am perfectly sure most traders out there have experienced that situation. Always thinking what if a trade was executed when it was going up. Or reached a certain level. Then it goes up again. Oh, so many possibilities! So much lost potential. Of course, the opposite is true. If a wrong decision was made, the appropriate cutloss action should also kick in. 

Another benefit of being in cash is your port will not be affected during red or bloody days when the big bad bear shows it's ugly face. You can just watch and sit still. Safe from the carnage. 

The power and flexibility of having cash could be likened to boxing. In the words of one of your early earth athletes:

This is how I view my portfolio right now. Always floating, waiting for the seemingly perfect or right setups. Then having the ability to strike with precision or going for the knockout blow. And that has made a world of difference. 

Q&A: ALL IN Mentality

Putting all your chips on the table

One of the more frequent questions that I get from PMs through Facebook is:

Is going all in part of the teaching of the course? 

Well, it was discussed briefly. It was not something that the mentors prodded or told us to do. But the philosophy of it was discussed. 

Here is just one robot's take on it. 

It takes a special kind of crazy to go ALL IN. Even more if it is in speculative or basura stocks. But I wouldn't have it any other way sometimes. Especially if my scanners are seeing that there is a perfect setup or there is an abnormally large volume of buying in one particular breakout. The sense of accomplishment in seeing your whole port, not just a portion of it, go up by X% sends chills even in my metal heart. 

Usually before going into an all in trade, my mainframe will do a quick checklist to make sure that going all in will not be disastrous.

• if the daily volume can accommodate the amount that will be bought or sold. Meaning, if I enter or exit the trade will it move the stock by more than one or three flucs? 
• where the potential resistance and supports of the stock will be. Making the needed calculations in real time might need some time, so doing the appropriate preparations and planning before trading starts is essential
• will I be able to monitor the stock movement all throughout the day? This is vital since basuras sometimes have very wild swings intraday. A perfect example and one of my batch's new mantra: REMEMBER DAVIN!

CAUTION: Going ALL IN is not for everybody. You must be able to execute your cut loss or stops without mercy. This will ensure that if and when things go wrong, you will not lose most of your portfolio. 

ZF course introduction

*this is to help the incoming applicants of the new batch to determine if they are ready for what will happen in the course

We exist for each other. But to the rest of the world, we are a myth. A work of fiction

This was part of the introduction to the course. Our identities were secret and only known to one another. A lock down was implemented that created a bunker type mentality wherein we had to depend on no one but ourselves. There was also one major course requirement that would be painful for some. Painful but extremely necessary. And this was just the start. 

Once the course started, here are some things to expect: 

During the course

• Lessons will come and come down HARD and fast. Expect to experience information overload multiple times in the course. Expect your mouths to drop in awe as well. Also, as in any other course, there are seatworks, practical exams, groupworks that you will have to finish in a short period of time. Expect sleepless nights especially for those with a tiring day job.
• The amount of dedication expected will be very high. 8pm-11pm M-F for 3 months will wear down on you earthlings. Even my neural networks bogged down at the end due to the amount of knowledge transfer.  Remember, the mentors are imparting knowledge and understanding that took years for them to learn and develop. And it will all be force fed to you. 
• There will be NO SPOON FEEDING. During the course all stock picks that you will make will just be your own. There might be pocket discussions on a hot or trending stock for the day but these are usually kept at a minimum. The mentors are teaching you how to fish so you will be able to make your own decisions after the course.

After the course

Interaction with the mentors will be kept to a minimum. Lessons are over so they expect you to have a higher understanding of what happens with Ms Market. Remember, she is not a forgiving master. The feeling of achievement when you are able to select a winning stock based on just the chart and not just on tips or rumors is one of the best feelings. 

If you still choose to take the red pill and go ahead with the course after reading this short primer, then I sincerely hope that you get accepted and you learn as much as you can. Get ready to get your mind blown. It will be one hell of a ride. 

The Simple Art of Doing Nothing

For the past few days there has been zero activity in my port. No trades at all. Maybe just paper trades or trades in theory. But actual ones, NONE. 

This is because of two things:

1) my hit rate for bounce plays is still not up to standard and though this seems to be the ideal time to test bounce plays, something tells me that bounce plays will not be normally strong during this time.

2) I have been trying to follow one of the stock mantras of our mentor, Kapitan Kidlat, who told us: 

go for easy trades. don't waste time trading hard trades.

This I am trying to apply and hardcode into my neural networks. If it is taking me more than a couple minutes to scan and analyze a stock and it's chart I would have to pass on it. 

In my previous versions, my cyborg unit would have probably made at least 5 trades during the same period of time. And it would probably burned through some more of the precious capital in the port. The need to make a trade just for the sake of trading is slowly being eradicated thanks to our system.

Think of it as alien robot zen. There will be a time for trading, when this has passed. And then we shall have our revenge. 

Just Keep Pounding the Rock

Salutations!

It has been 3 weeks since the end of formal classes. Surprisingly, it has taken longer than expected for my system to totally assimilate all of the teachings. Maybe it is also because of the timing of the market wherein all stocks seem to be more bearish than in the past. Fellow ASTRA Sextans has mentioned before that the market feels very similar to how it was before the recent crash in 2011-2012. Looks like his long range scanner is more attuned to the big picture since all indicators seem to be pointing to that direction. 

The weapons at my disposal, as discussed here before, have given varying degrees of success. The most successful as of now has been my sleeper cell attack. The success rate in spotting them has leaped by bounds. 

It started with one lesson by our mentor, Zee, on how he spotted the sleeper PPC, and applying his technique, my scanner was able to scan the following stocks before making their move: LRI, ABG, MAXS and of course, 2GO. I was only able to ride a little on LRI before the move since I was still refining my technique. The biggest regret was on 2GO since most of you know that it made a monster move. My scanner picked it up before it broke 7.00. But because there was no confidence in this weapon in my arsenal, I paid it no mind. A world of profit could have been at my disposal but alas, it was not meant to be. For now. The pattern and the technique has now been burned into my programming. I will act when I see it again.  

Currently burning into memory. 

There will be no mercy in the future.

Another weapon, the repulsor attack has been unkind to me. My scanner is still coming up short whenever it goes through the charts and sees red and downtrends. Fellow ASTRA Sirus has shown much promise on this technique. My system needs more tfine tuning and needs a further upgrade in speed necessary to spot and act on these kind of plays.

One weapon that I forgot to mention were the HULK stocks. Our mentors have reminded us that during our course we have encountered two HULK or borg stocks, POPI and DD, and we were still unsure of how to handle them then. Recently, stocks that have gone in HULK mode though have given mixed results. Again, this could be due to the overall nature of the market but stocks going on an all time high haven't been as strong as they should be. CROWN and 2GO were HULKs but they fizzled shortly after making new all time highs. 

With all the recent setbacks in trading it could be easy to say that I will get disheartened. Wasn't the course supposed to be the magic pill that will instantly transform all of us into Zeefreaks lite? Well no. We still need to practice and devote a lot of time to upgrading our scanners and our techniques. 

During these times I recall the mantra of the coach of my favorite basketball team, the San Antonio Spurs. It speaks of the process or the journey to success. 

taken from www.poundingtherock.com

“When nothing seems to help, I go look at a stonecutter hammering away at his rock, perhaps a hundred times without as much as a crack showing in it. Yet at the hundred and first blow it will split in two, and I know it was not that blow that did it, but all that had gone before.”

It speaks to how we should be relentless in our pursuit of success. Begin with the goal in mind. And just TRUST the process. Even if there will be no visible results in the short term, keep trying, keep going. For once you reach your goal, it will all be worth it in the end. 

Ghost in the machine

Apologies. This post is more of a rant. 

6.11.15

My scanner was impeccable. It was able to spot POPI with the perfect setup. Breakout from the all time high. I had positions at 1.23 and again at 1.30. With volume. Our mentors even gave us some ways on how to calculate the target price. The ones who were holding were all ready to go for the trade the next week. Then this happened. 

6.15.15

The day ended with it in the red. With volume. My system's trailing stops were hit. All was sold at 1.35. 10 cents gain for a day's hold. Not bad at all especially since it closed at 1.28 after going as low as 1.25. My scanner has now tuned it out and would check again once it was ready for a bounce. Then this happened. 

6.18.15

Now instead of being content with selling my position at 1.35 it looks like I lost 20+ cents. It looks like there will still be continuation tomorrow and it might eventually reach the target price that our mentors told us. So what happened?

This is what my makers call a 'ghost in the machine': 

When a software is made to complete a specific function, but a small percentage of the tasks to be completed have an unexpected result which cannot be explained. 

Again, my scanner was impeccable. After going through the required system diagnostics, the problem seemed to have occurred within my targeting system. It did not make the correct computations for the supports. This failure to compute did not allow my system to anticipate or see that the next candle after the fall was still green and did not go below the red candle's low. This pattern just confirmed that the uptrend was still intact. And what an uptrend it is. Along with most of my batch, we watch as POPI makes it's climb to new all time highs. Making mental calculations at the profits that could have been ours. 

This has been a harsh lesson on the power of supports, harsh but necessary. My neural network will realign itself and absorb this.