Beauty in simplicity: TBGI

I like to keep things simple. 

Whenever people ask me how I make my plans, on my buying and selling points, they would always be surprised by how simple it seems. Usually there are just one or two trigger points that I watch out for. 

You can see it in the charts I post. Minimal lines. Just one or two boxes at most. Sometimes none at all. Seeing too many lines just gives the impression of clutter and gives me a mental image of limiting a trade. Not giving it room to make it's move.

Yes, my plans are simple. But that does not necessarily mean that it is easy to implement. There is a big difference in the two. 

Take for example my recent TBGI trade. 

This entered into my personal scanner when it was making a tight range as shown in Figure 1.

Figure 1

My plan was just to buy when that yellow box breaks. So on Aug 2, I bought at around .58-.59 and had to cut when it didn't follow through at the end of the day.                  

So I adjusted my plan as shown in Figure 2. This time I moved the buying area to .60 since that was the high of Aug 2. 

Figure 2

So on Aug 3, the stock made a nice strong move again. I followed my plan and bought my shares at the .6 breakout point. All in one big tranche if I remember correctly. There was sufficient volume per fluc to accommodate a good enough size.  

Figure 3

When it closed strong but below the recent high of .66 I made a mental note to sell at .66 on the next day. That is unless it made a strong move and made a breakout above it. Happily it made a gap up move and I just switched tactics to trail stops. Keeping in mind that there was a bigger resistance at .84, I wanted to see if it had enough strength to reach and break it intraday. 

If it only made a breakout of .84, I would have added a new milestone of having a 7 digit day change in one port. But alas, it wasn't meant to be. I sold most of my shares at .78-.79. Not bad for a two day hold. 

Caution is Essential

The past few months there has been a drought in breakouts. The usual breakout trader would be very very hard pressed to make some money. 

However, the market has given several wonderful bounce play scenarios. Granted, the bounce plays we are currently experiencing are very different in structure from the usual bounce plays. Those bounces came from a recently concluded super play or parabolic play vs the ones now which are in a downtrend. So the two bounce plays have vastly different rules on how to play them.

The previous paragraph highlights one of the more important things that most traders overlook when buying or selling stocks. The proper identification of plays will help to temper expectations. Bounce plays in an uptrend will always have more strength vs bounce plays in a downtrend. The same is true for breakouts. This is key in making successful trades.

Here are some recent examples:

DD 6/22/2018

This previously much loved stock has fallen into hard times in the past year and a half. It has been stuck in a slow downward spiral and has been looking for a significant bounce. For chartists, one reason for this could be because the prices were far from any strong supports. (Figure 1)

Figure 1

Now on this particular week, it suddenly picked up it's freefall to oblivion. It broke down from S1 and was going to hit S2 and maybe S3 as well. My sensors were screaming for me to place some orders since the opportunity was too good to pass up. 

Since S2 and S3 were also very near psychological supports of whole numbers, 21 and 20 respectively, this could be a good signal for bounce players to get in. During the morning, S2 seemed to have held and was showing that just maybe the selling was over. Several tranche buys were deployed near S2 and conveniently eaten up.

Figure 2

At the end of the morning session, the price rebounded very well and was moving according to plan (Figure 2). Since it already went up by a good percentage I set my initial tranche sells at 24, 24.5 and 25. In the afternoon session, only a partial shares of 24 were hit and the price seemed to be going back down. In normal instances, I would have held and waited EOD to see what would happen. But since the little robot's school already started again and her schedule has me away from the keyboard from 2pm to 3pm on this particular day, I had to make a change in strategy and changed my exit to a tactical one. 

Again, my confidence in these kinds of bounce plays is not that high yet so I cannot risk leaving my positions open especially when I cannot monitor them. So I sold it all at a much smaller gain than the one posted above. 

MWIDE 07/18/2018

This stock has been in a choppy uptrend and finally made some waterfalls since June. On this particular day, much like DD, it increased it's breakdown speed and even made an iZS on the weekly. However, it was seen to hit a particular support area as seen in Figure 1.

Figure 1

For me, this was a good place to put in my first tranche buy. Also, one scenario that my central processing unit came up with was it might make an iZS intraweek but close above the 100ma by end of week. Not a bad return if that does happen right? 

What more if it reaches the 20ma daily? Or even the 50ma weekly? Those are just some of the scenarios that were in my plans. Pretty good RRR I'd think.

Unfortunately, like the DD trade, I had to sell early because of the little robot's schedule. Though I wasn't able to maximize the profits on this trade, everything still went according to my scenario planning as seen in Figure 2.

Figure 2

Some people might say that I should have taken the risk and held on to my positions in the event that my plan did push through as what happened in the two instances. Yes, that could be true, but in the current market and my current situation, I was more inclined to err on the side of caution. 

These were new plays that were being incorporated into the system and the learning part was the most important thing for me. Any potential profit lost was acceptable since my processors need to get the required reps first to fully integrate it in my system.

Added bonus is having the peace of mind that I wasn't risking a lot while I couldn't monitor the stock movement properly. 

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! 

A Tale of 2 Traders: SSI

This is a story of two traders who bought a stock. This story is completely true. The names have been changed to protect the identity of the buyers. 

Once upon a time there was a stock IPO. This certain trader, YP, loved the fundamentals of the stock. He thought the owners were reputable people and their name recall would carry their stock to the moon. YP knows Alpha is a technical trader, though has no idea that Alpha is ZFT trained. 

We begin our story sometime in back in July or August of 2015, YP would ask me from time to time what I thought of SSI. 

iAOTS with no sign of support

When it went back to the IPO price. I said, sell.

When it went to 6. I said SELL.

When it went to 5. I said SELL.

When it went to 4. I finally asked, why are you asking me for my advice if you're not going to listen? The chart is telling me there is no support or reason to buy yet. 

The only thing that he said was that he's already in too deep and would rather just become an investor. He still believes in the owners. That the owners won't let the stock be down for long. 

Fast forward to now, about a year and a half since that time. Finally, SSI looks to be showing some signs of strength. Slowly it seems to be on the long road to recovery. 

By my rough estimate, YP's average should be somewhere around 7-9 pesos. So from about a 60-80% loss, it should be now down to about 40-50%. Not bad. (Pardon my math, despite being a robot and a trader my math is very very bad)

As for me, I bought SSI using nothing but charts and was able to be up by a good amount. The road to breakeven for him is still ongoing. If ever it gets there for him, I'd like to believe that I'll be there cheering him on since I would have made another entry for SSI.

I hope that this story could be used as a sort of caution for people to stop loving a stock. Because it might be too late for some to realize that stocks won't love you back. 

Trend Following: LIHC

Trend following. You hear or read it often but ever wonder how it is done? 

Let me try to give a short walk-through on how my neural networks implement a trend following trade. I will be using my latest trade, LIHC as an example. 

The first thing to remember in doing a trend following trade is to watch your entry point or your average price (AEP). The ideal entry is to get in before or right at the start of the trend. How to do that? Read up on the boss's blog about ZS and AOTS. For LIHC, this was easy to spot since it also coincided with a multi year breakout. 

Next comes the hard part. The holding time. 

To get a better idea, watch this. These are the survivor endurance challenges. Where you have to outlast your competition for the chance of a bigger prize. 

For this example, the contestants have to hold their arms up or else they will get splashed with paint. The host can tempt them with some small reward in exchange for stopping out. Or if they get tired, they can just put down their arm. 

To put this in perspective, the rewards or the exhaustion of a person could be compared to someone selling at a certain target price or resistance. 

Or maybe if the chart or price action looks weak. There is nothing wrong with selling at those points. As long as you follow your plan then go ahead. 

For me, I do not set target prices. I'd rather set trail stops. If the price goes down a certain point then that is when I sell. That point could be a previous resistance turned support, the previous close, a MA getting broken. It doesn't matter that I wasn't able to sell at the top. The important thing is I was able to ride the bigger move. 

Another thing to consider when doing trend following trade is fighting the urge to move to the flavor of the day or the week. Like the bear in the GIF below, it's human nature to want to sell and then move to the faster moving stock. For this LIHC trade, there were several missed trades, CPG, BLOOM, FNI, STI, PPC, WEB to list a few. 

But in reviewing my past trades, it was my inactivity that has given me bigger gains. Focusing on just a few trades a month has helped me to reach my quota or targets. My system is not really built for tsupita trades. That mindset or strategy has yielded a bad win/loss ratio over time. The losses negate the wins or just at breakeven. Plus the added mental stress of having to look for good trade setups everyday. 

In reality, I am lazy. I'd rather make just a couple of trades a month then to trade multiple times a day/week. This fits more to my trader profile right now as well since I cannot be in front of the computer the whole day anymore. 

screenshot date was close of 11/25/2016

Not bad for a one month hold don't you think? One trade for the whole of November. Do take note, actual selling was below 1.5 today 12/2/2016. Wasn't paying too much attention to the movement since I was busy doing other things. 

Anatomy of a port snapshot

We've always said that the stock market is a game or contest between yourself and hundreds of thousands and even millions of traders out there. In this dog eat dog world, you will need every advantage to get ahead. And you will need all these little things since they will add up. 

One of the best ways to improve your trades is to document them. This is one of the secrets that differentiate an average trader from a good or even great one. 

Taking port snapshots is one way for us to be able to grade ourselves in this game. Think of it as our report card to check our progress in our trading journey. Like an iceberg, the port snapshot is just the culmination or the result of our hard work. 

What you don't see is the work and difficult times that we had to endure to get to the level of achieving those port snapshots. 

The port snapshot can tell if we did enough preparation and legwork in doing our trade plans and if we were able to execute properly on these said plans. It can tell a lot of things if you only know how to look hard enough. 


Let's take a look at the most common components of a port snapshot:

STOCK NAME/CODE - This shows that out of the 200+ stocks out there in the PSE, a trader is able to identify which one would make a possible move. A port doesn't need to have too many stocks in it to earn. Contrary to popular belief, too much diversification is not good for your investing/trading. 

PORTFOLIO % - Sometimes a 100% allocation does not mean that the trader went 'all in' with no money left to spare. Maybe the trader just saw that this was the only stock or setup worth trading and only used a portion of their port allocation there. 

Nevertheless, the higher the allocation, the higher the conviction of the trader in that stock. 

AVERAGE PRICE - The entry price of the trader to the trade. If all buying was done in one tranch then this should be on an ideal breakout point and easy to trace. If buying was done in tranches, the aep should only be slightly higher than the ideal breakout point.

Having a great AEP shows the precision of the trader's entry. It can also usually show the trade profile of the trader. A bounce player or tsupitero or a position trader. 

CURRENT/MARKET PRICE - The exit price of the trader to the trade. The trader could have set GTCs and sold at this particular price. 

PERCENT GAIN/LOSS - Similar to the current/market price this can be treated as the final grade of the trader for a particular trade. Again, they could have sold here using GTC or sagasa sell. 

BLACKED OUT PORTIONS - This is usually for security reasons to protect the trader. But some traders out there would rather not have any blacked out portions and are secure enough with themselves that they feel it's not necessary. Kudos to them. 

See the many possible stories in one port snapshot? Learn to read between the lines and maybe it can help you to improve in your own trades. 

This is the beauty of people posting port snapshots, it can serve multiple purposes. One is to prove that it is possible to make it in the market. Another is to show that we walk the talk and don't just post analysis on a variety of stocks. First and foremost, we at the tribe are traders. We do this for a living and to earn. We want to prove to others that it is possible to trade full-time. That it is possible to survive without relying on tips and analysis of others. 

Keep this in mind next time you see someone post a port snapshot out there in the world wide web. Don't just admire or be jealous of the gains. Stop and try to dissect it. That might help tremendously in your own trading. 

It is possible to live the dream. You just need to work for it. 

So to all my fellow traders out there, cheers!

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

New programming upload: One Day Reversals

It's been a while since my system has had new programming uploads. This one has been a long time coming to say the least. My trading profile has always been about breakouts and uptrends. For me, it's always so much easier to trade from strength to strength. 

But to focus on just your strengths is a mistake since you will leave a resource left untapped. And there is so much potential in bounce plays. This has been one of my goals this year. To try and assimilate bounce plays into my system. 

To do this, I went back to the charts. Reviewing past discussions and lessons. Analyzing where I went wrong and what held me back from execution. 

So I started with just paper trades here and there. A lot of mistakes were made and adjustments were in order. Some extra calibration was needed. Some more reps were needed. 

Finally, this past month I think I have successfully integrated and passed the one day reversal technique. Here are some of my results.

DD trade. Textbook one day reversal. 

APX trade. This one I was not able to maximize due to scheduling difficulties. But for me, the important piece was the execution. Never mind the lost profit because of the way it behaved after. 

That's one kind of bounce play that I can safely say is already in my arsenal. Here's to adding some more bounce weapons in the future.

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.