Friday, March 20, 2020

The 100k Crash Course

This post is dedicated to all who are currently studying how to trade because they got their accounts burned when the dreaded bear came.

February 2020, the local market had been on a sideways-to-down trend - plays have become scarce and short-lived, and outliers are yet to be seen.

Meanwhile, global markets have been trending and the US market has been creating new all-time highs. I had the genius idea to create an account and go into global markets - because why not right? It's a buffet of opportunities, earning both ways across different instruments! Stocks, Commodities, Indices, Crypto, etc.


"Stairs going up, Elevator going down."

I remember hearing Javi (AKA Taylor) always say this line when it comes to bear markets - because it has always proven that FEAR is a stronger emotion than GREED. Allow me to help you visualize:

History is unfolding before our very eyes and we're witnessing one of the worst market crashes of all time. If you're a trader or forced to be a trader because of your baptism of losses, then this is the perfect time for you to study and learn!

Let me welcome you to my 100k worth Crash Course on how NOT TO Trade the Global Markets.

For this experiment, I deposited 2kusd or 100k worth of funds to learn how to day-trade and scalp. To give you some context on, here are 3 things you need to understand about me:

1. I am no scalper. I'm more of a swing/momentum trader and trend follower.

2. As I have stated many times before, I am a high-risk trader.

3. I have a solid 9-years experience in our local markets, but Less than 2 months in Global. I don't consider virtual trading as an actual experience.

It has been a solid one month since I have started learning and trading this account using real money (not just virtual/demo) and I've got to say, THAT WAS INTENSE!

Let me share you some of the key reflections and learnings I've compiled so far :

I. Progress takes time.

After a full month of obsession, holing up like a hermit, sleepless nights, and seeing no sustainable progress,  it got quite frustrating. I felt like I was back to square one.

They say it takes years to become an overnight success. You don't google on how to become a doctor and expect to be operating on your patient the next day. Even if you have a mentor, it will still take time for you to become good, more so if you wish to become great!

If you start to become frustrated, remind yourself of this and don't be too hard on yourself. Respect, Trust and most importantly, Love the process.

II. Learn before you Earn.

I'm managing 3 personal portfolios locally and all have had decent growth despite the choppy market. The 50k challenge I started in 2018 has now tripled in value thanks to the recent volatility plays.

Having success and a working system locally has led me to a path with ego and pride. The problem is, I brought those two with me in the Global arena and forgot that my priority was to Learn. Couple that with the expectation of people that I perform well has led to unnecessary pressure and a disaster.

As traders, our main priority is not to earn. Our priority is to take and perform our best-planned trades one at a time. Money is just a byproduct. 

This might be quite a challenge especially if you're in a state of Lack or Need of money as this will persistently blind you towards your goal. 

So if you're just starting out, it is important to find ways to detach yourself with the money in your account. It will help you make objective decisions. Think of your money as game credits - this mindset helped me when I was starting my trading journey.

III. Trading Mistakes Committed
(Notes to Self)

I'm learning from scratch. No mentor, classic trial and error.

Impatience and Switching Timeframes too Often

I look at daily and hourly charts for context or directional bias. After all, knowing the trend is the first step to becoming a profitable trader. All my entries are on the 5-minute charts. But I oftentimes catch myself switching timeframes more than I should. Gigil magtrade instead of waiting for perfect good entires that I switch to 1-minute or 15-minute charts just to force my buy/sell signals.

Since I'm learning how to day-trade and scalp, this demands a lot of attention from the market especially when I'm in a trade. Here's a problem I've identified: because there isn't a lot of opportunities in the local market, and there are TONS in global, I found myself trading non-stop - because whenever there's an opportunity that presents itself, I grab it. This is a form of a scarcity mindset - because the reality is, there will always be opportunities in the Global Markets.

This had led me to...

Trading even with the Lack of Sleep

When you lack sleep, you can take on larger risks. It's scientific. It's similar as to when you're drunk. Notice how most people are able to do batshit crazy stuff when they're drunk? Or how a single shot of vodka or tequila can make a person confidently say a wedding speech on the spot.

And after taking a few serious hits, this eventually led to...

Attempting to compensate for losses by Over-trading and Over-leveraging which I usually call Makabawi Syndrome

Over-trading is never good. As traders, we must learn to take quality trades, not half-baked ones. And the urge to get back the money you lost will become stronger the more you trade. A circuit breaker must be in place for you - a checklist that will tell you to stop and take a step back from whatever you're doing and purge. Because once you lose focus on your objectives, it's all over.

My leverage on 

Stocks : x2 - x5 
violated and did x10 to compensate

Index : x5 - x20 
experimented with x50, and when that didn't go well, did several x30

Commodities : x10 - x30 
there were instances where I had to do x50 with minimum allocation to compensate for the minimum amount required to trade the instrument.

Stop-loss levels were all set at invalidation points. The more volatile the instrument, the best that you lower your leverage and volume. 

Higher leverage would be ok when these two criteria are met:

A. Low market and instrument volatility - you don't want to be doing a x10 leverage and the instrument you trade usually gaps or does 10% swings. I recommend currency pairs, commodities, or indices that don't gap too much on the opening bell.

B. Tight cut loss levels - as long as you have tight cuts, you'll be fine. But if you want to have a wider margin of error, then lessen your leverage.

While these mistakes can be treated as isolated cases, usually one of these will cause another to show up. It's like late-stage cancer metastasizing throughout the body.

Yep. I thought I was way past this. But apparently not. 

Good thing I was at least aware of my negative state as I decided not to touch my Local portfolios. Because whatever current state of mind I have would eventually spill over to my other trading accounts. Be wary that you do not make this mistake.

Currently assessing if I would like to continue learning this strategy or just focus on my working ones.   

It's crazy to think that this 100k trading account has caused me more stress than my bigger ones where I would easily cut 6 figures if my stops were hit. And if I am this stressed out over a hundred thousand worth of tuition funds, how much more the people who are still invested in the markets with their hard-earned money, savings, and retirement fund? And If you're that person...

I'm sorry for your loss. 

May we all become wiser from our experiences. And while a great part of history is unfolding, remember that this too shall pass.

Sunday, March 1, 2020

Trading is like entering the Olympics

There are many ways to win a medal and you don't necessarily have to know and be good at every sport or category. You just need to be a master of one.

It is unfortunate that many people get into this industry without the right key objectives. The most common one is 

"To Make Money"

Not saying that it is wrong. That's the bottom line. It's the main reason why we are here. Pera! 

But the question is, "HOW?!" 

I want you to think of yourself as an Olympian from now on. An athlete gunning for Gold! Maraming sports na mapagpipilan diba? So choose ONE that you like and know the rules of that specific sport! You don't train to be a basketball player and then join the swimming contest right?

Consider your limitations as well. If you don't have any limbs, why the hell would you wanna join any martial art? If you still want to do it because you don't want to be confined into any form of "limiting beliefs" suit yourself and be a limbitless fighter! I'll be happy to create your poster.

Do note that I dislike people who are not coachable at may "mas magaling pa ako sa mentor" mindset. 

In trading, I like to categories the schools of thought or  styles into three:

Fundamentalists (FA) - those who heavily rely on company disclosures, micro and macroeconomics for their trading decisions.
Technicians (TA) - those who heavily rely on price action and patterns. 
Funnymentalists - those who are heavily reliant on TA [Tsismis Analysis] and FA [Facebook Analysis].

And in each category, there are sub-categories.

If I would liken this to the Olympics... It's like this:
Sports that deal with big balls (Basketball, Volleyball)
Sports that deal with small balls (Table tennis, Tennis, Golf)
Sports that prohibit the hitting of balls. (Martial Arts)

The ZFT system falls under the TA (Technicians) Category. The sub-categories available within our system are as follows:

Position Trading - where you accumulate at lower levels when everything is quiet and sell when prices mature.

Trend Following (TF) - where you trade/invest and ride established trends and hold depending on your selected timeframe (long term, short term, medium term)

Momentum Trading / Scalping - where you buy and sell during breakouts and short bursts of euphoric-price-action, usually closing the position within minutes to several days.

Swing Trading - the middle ground between Trend following and Momentum Trading. Countertrend trading (Reversals and Bounce plays) falls under this sub-category.

Each style differs from the other and each one has a different set of parameters and rules for it to be effective. Which also means, each style has its own strengths and weaknesses. Some are effective during bull markets when the general movement and sentiment is up, and some are effective during bear markets when the general sentiment is down.

And I'd like to reiterate that you need to find out which style suits you best depending on your limitations - like work or business schedule, lifestyle, risk appetite, capital, etc.
Turn your limits into your strengths but never be the limbitless trader. No one style is greater than the other.

Do know that there are many other sub-categories under TA like Elliot Wave trading, Ichimoku Kinko Hyo, and other fancy-sounding systems. And all of these WORK! Pag may nakipag away sa inyo at sinabing "mas maganda ang system namin!" I will automatically disown you for showing immaturity. 💪 

Do not compare yourself to other traders. Focus on your self and own execution because that's what matters - hindi ka naman kikita sa exeuction ng iba. Unless investor ka nila, now that's a different story. 😆

Sabi nga ni pareng Bruce,


First posted this in the new FB group I created recently for those who'd like to learn how to trade - (For Level 1 Traders). 

If you like to see the comments and discussions click here. (make sure you follow instructions, else we'll kick you out) The group isn't advisable for those who are already at level 2 or 3 - you might not get any value here.

For peer to peer discussion (please do this on the comments section of this post) : 

1. What have you learned and realized about this post? 
2. How are you feeling about your position now? Do you feel happy? Are you sad? Why? 
3. What will be your action items in relation to what you've learned?