Funnymentals

There are two schools of thought in the stock market. The fundamentalists vs the technicians. In the past, my cyborg unit used to try it's hand in dabbling in fundamentals. 

It would wait or hope for corporate disclosures, earnings reports, news of acquisitions and buyouts. Even speculate on backdoor operations. All in the hope of catching the next big move. 

How it felt before while waiting for those disclosures 

Well, it was all a spectacular fail. Why? Because even if there were disclosures and others that did come out, my cyborg unit couldn't make heads or tails on what it all meant or how it would impact a stock's prices. I mean honestly, how many people out there really understand how all the computations or news will affect a stock? 

Would it be a sell on news? 

Buy on news? 

Or no reaction?

Just like playing heads or tails. 

I'm not saying that these do not work. There are people out there who make money being fundamentalists. Kudos to them! Unfortunately, I am not one of those people. So I switched tactics and learned how to be a technician. From one of the best. 

So after having been trained in the ZF system, the results were tremendous. Just being focused on the chart would tell you if there was accumulation being done or if a big move was imminent. How to set your own target prices or trail stops and more importantly, setting and following cutlosses.

Nowadays, whenever I see, hear or read about people trying broker analysis or stay up late to watch how the US index performs or even some who look at the prices of commodities like gold/nickel/silver etc or those who keep hoping for earnings disclosure, I can't help but feel that I made the right choice. Because why should I use up important energy and resources in monitoring too many things that are beyond my control? Looking and worrying about all those external forces each and every day could lead to analysis paralysis. 

So now I just stick to the charts. Sometimes it's the simple things that are the best. IT certainly helps this robot to power down peacefully at night. 

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