Friday, September 23, 2011

Trading 101: Moving Averages and Patintero




Trading or Investing in stocks is like playing Patintero. 
It's all about the lines.


Taken from en.wikipilipinas.org


When I started trading stocks, i didn't know anything about candlesticks or patterns. And though I did my best to learn them, as a newbie without a mentor, I got frustrated halfway. I tried listening to the words of the 'enlightened ones' or gurus - sometimes it helped, sometimes it didn't. 

Starting out, my only trading system was "Buy and Pray."
It's funny when I think about it now.

But hey. Later I found out a better way of trading - Following "The Lines."
And these lines became my trusted friends in trading. The Moving Averages.

These are my linemen. You can customize your linemen the way you want.

Red Line = 30 MA
Pink Line = 60 MA
Blue Line = 90 MA


In Simple words:
When your "linemen" are above the candles, the trend is down.
When your "linemen" are below the candles, the trend is up.


In Patintero, once a lineman catches you, you're out! Period.
In stocks, I can choose which lineman tells me when I'm out.


Example:






 Because No matter how fundamentally solid or trashy the stock, 
it is emotions that drive the price.


Additional Notes:

+ Moving Averages works well with Blue Chips, some 2nd Liners,
 but rarely on 3rd Liners (should be jockeyed).

+ When you use MAs, you need to have patience. 

+ My current linemen are 20/50/100 MAs.

+ "The trend is your friend."

+ Always consider how many of your linemen are on your side. 
Ask these questions:
x - How many are below/above the candles?
x - Which MA is bullish/bearish?

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82 comments:

  1. AnonymousMay 14, 2012 at 1:40 AM

    Di pa din ako marunong ng technical analysis. Hope one day matutunan ko din. Thank you at di ninyo pinagdadamot ang dunong ninyo. God bless

    ReplyDelete
    Replies
    1. UnknownFebruary 4, 2015 at 2:37 AM

      This comment has been removed by the author.

      Delete
    2. UnknownMay 12, 2018 at 7:15 PM

      I'm new to investing too! I've tried learning from blogs but what really helped me understand it is the learn feature in investagrams. Sign up lang kayo, it's free and legit. Madaming article na pwede basahin. For basic technical analysis eto po ang nagpaintindi sa akin. I hope this helps you too!

      https://www.investagrams.com/daily/2017/10/the-complete-beginners-guide-to-technical-analysis/

      Delete
  2. Paolo FelixJune 30, 2012 at 1:42 PM

    Hello Sir Z! Si tatandarin ito ng FM. I'm just wondering, paano yung set up ng MA, bakit 30/50/100 yung iyo? yung akin kasi default 20/50/100.

    ReplyDelete
  3. Zee FreaksJune 30, 2012 at 2:46 PM

    Tatandarin: I've already changed mine to 20/50/100 - Nasa Additional Notes Below this Post. :)
    But sometimes I use 30/60/90 For Blue Chips.

    ReplyDelete
  4. AnonymousJuly 4, 2012 at 6:18 PM

    why do you change the set up of MA? what's the difference between 20/50/100 and 30/50/100 or in my case the default of COL which is 32/65/130?

    ReplyDelete
  5. Zee FreaksJuly 4, 2012 at 7:57 PM

    ^ With 20/50/100 MAs, I can position and exit earlier than traders using 32/65/130.

    ReplyDelete
  6. AnonymousAugust 16, 2012 at 11:58 AM

    bat di ko mamapalitan ung SMA lagi bumabalik sa 32 65 130

    ReplyDelete
  7. AnonymousAugust 23, 2012 at 9:45 PM

    Change the number then press Enter. Do this for the 3 MAs. Then save your settings.

    ReplyDelete
  8. AnonymousJanuary 30, 2013 at 12:31 AM

    same here, as soon as i move the mouse, nagrereset sya sa default na 32, 65 and 130 :(

    ReplyDelete
  9. UnknownMarch 4, 2013 at 11:47 AM

    sir why do you want your sma3 at 100days, isnt it this is yourlast warning to exit? why not on 90 or lower?thanks.

    ReplyDelete
  10. Zee FreaksMarch 4, 2013 at 11:50 AM

    For blue chips i use 90MA.. But usually, i'm already out once 50MA snaps.

    ReplyDelete
  11. charmagneNovember 7, 2014 at 11:12 PM

    Thank you for these guides sir!

    ReplyDelete
  12. charmagneNovember 7, 2014 at 11:14 PM

    Hi sir! 2GO already broke above the linemen (i used 20/50/100) but the 20 and 50 MAs are still below the 100 MA. Must these two crossover above 100 first before it can be considered a buy? Thanks!

    ReplyDelete
  13. Zee FreaksNovember 8, 2014 at 1:14 AM

    2GO is an illiquid 3rd liner. MAs might not be a suitable guide for it.

    ReplyDelete
    Replies
    1. AnonymousOctober 15, 2019 at 9:06 AM

      sa mga illiquid stocks, ano ser Z ang suitable indicators or parameters to consider when to buy such stock? tulad po ng sabi nyo eh di pwede ang MA.

      Delete
  14. charmagneNovember 9, 2014 at 8:13 PM

    I see, thanks sir!

    ReplyDelete
  15. AnonymousJanuary 14, 2015 at 10:51 PM

    sir pano ba malalaman pag blue chips, 2nd liner at 3rd liner?

    ReplyDelete
  16. Zee FreaksJanuary 14, 2015 at 11:33 PM

    Hmmmmm.. Good Question.

    Index stocks = Blue Chips
    2nd Liners = Good fundamentals But Lacks Liquidity
    3rd Liners = Good/Bad Fundamentals. Very Low Liquidity

    ReplyDelete
    Replies
    1. FruitNinjaOctober 2, 2017 at 1:08 AM

      Hi Sir Zee,
      This is an old post but I hope someone can answer my question.
      May number of volume ba or category bago natin masabing 2nd Liners siya or 3rd Liners?

      Thank you very much

      Delete
    2. UnknownMarch 6, 2018 at 6:09 PM

      tignan mo sa pse edge ang market cap nya. 10billion below consider na 3rd liner

      Delete
    3. AnonymousMarch 23, 2018 at 5:58 PM

      im not sir ZF but what i usually do since ang means lang naman to be called 2nd liner is to be liquid, na hinde part ng index.

      so i screen stocks which are above their average volumes for the past 10/15/20 days.

      kasi nalala ko ang simpleng definition ni sir ZF sa liquidity is you can buy and sell shares easily, meaning hinde mo need magintay ng ilang minuto or oras para magmatch yung buy or sell mo.

      so far ok naman, I manage to filter alin yung me galawan (VUL, PXP, MRC, LR, etc)

      Delete
  17. AnonymousFebruary 2, 2015 at 4:00 PM

    thanks Sir Zee, this is very informative. although I have a little knowledge about it already, this still confirms everything and the settings is a first to me. great read :)

    ReplyDelete
  18. UnknownFebruary 2, 2015 at 8:48 PM

    Thank you, Sir Zee Freaks very helpful, just started to study technical analysis.

    ReplyDelete
  19. UnknownFebruary 2, 2015 at 9:12 PM

    thanks sir Zee I wish to join ine of your seminar

    ReplyDelete
  20. PatrickFebruary 3, 2015 at 8:51 AM

    Zee, I would like to ask if it is better use DAILY or WEEKLY movements?

    ReplyDelete
  21. Zee FreaksFebruary 3, 2015 at 9:10 AM

    Daily is better Patrick.

    ReplyDelete
  22. Newbie TechnicianFebruary 6, 2015 at 5:19 PM

    Hi Sir Z,

    This is extremely helpful information and clears the murky waters on my noggin' regarding MAs.

    BTW, how would distinguish the liquidity? is it the public float percentage? the lower the more illiquid?

    TIA!!

    ReplyDelete
  23. Zee FreaksFebruary 6, 2015 at 11:57 PM

    You can gauge if it is liquid enough by the monthly-weekly value turnover. If you want full liquidity just check out top active stocks. Most of those are blue chips.

    ReplyDelete
  24. UnknownFebruary 12, 2015 at 9:35 AM

    Hi ZF,

    What indicators do you use? I'm still a newbie and I use MACD, RSI, RVI, STS and Volume. Anything to add or remove? TIA

    ReplyDelete
  25. iamstupendousFebruary 16, 2015 at 7:34 PM

    might not be COL charts, and yet and still banging my head on the wall trying to search if this can be done in COL lol.
    Need to observe this MAs

    ReplyDelete
    Replies
    1. iamstupendousFebruary 16, 2015 at 8:17 PM

      derp, textbox pla yun. nebersminds

      Delete
    2. CarloMay 21, 2015 at 1:12 PM

      Hi ZF, thank you for sharing your great knowledge. I would just like to check what it means if the price went down again to the 100MA level after having a ZS yesterday. I entered X yestereday when I saw a ZS, but, as of this writing, its price went down back to the 100MA level. TIA

      Delete
    3. Zee FreaksMay 21, 2015 at 2:09 PM

      Not all ZS are sustainable. AOTS is much stable. Check link below.

      http://zeefreaks.blogspot.com/2013/03/zeus-strike-and-alignment-of-stars.html

      Delete
    4. CarloMay 22, 2015 at 11:34 AM

      Thank you! :)

      Delete
  26. palagOctober 23, 2015 at 12:12 AM

    Sir zee newbie lng po. ano po ung gamit nyong chart? dindownload b cya o yan ung sa col? thank you

    ReplyDelete
  27. MansaJanuary 12, 2016 at 2:21 PM

    This comment has been removed by the author.

    ReplyDelete
  28. MansaJanuary 12, 2016 at 2:24 PM

    Hello sir Z, do you use EMA for 20MA or 32MA? If yes which strings is technically OK with them?

    ReplyDelete
  29. Tender JuicyFebruary 5, 2016 at 11:15 PM

    Such a great example sir Zee.. it made it easier to understand for me. Thanks!

    ReplyDelete
  30. UnknownFebruary 17, 2016 at 6:25 AM

    Zee Ive learned a lot from this post.thanks!!more power

    ReplyDelete
  31. UnknownFebruary 17, 2016 at 11:12 AM

    I've started backreading your blog Zee! Thank you so much for the lesson!

    ReplyDelete
  32. TonyApril 12, 2016 at 6:25 AM

    Sir Zee Freaks, Thank you for your insights. It is very helpful. God bless po...

    ReplyDelete
  33. UnknownApril 21, 2016 at 11:18 PM

    Senpai read test apply repeat..2nd ulit hahaha

    ReplyDelete
  34. Juan MasipagApril 30, 2016 at 10:35 AM

    Salamat at may nagshare ng blog na to sa Investagram, been learning a lot. Masarap basahin dahil may mga pictures, inspiring ang mga figures at higit sa lahat malalaman mo na hindi pansariling kapakanan ang motive ng nagsulat. Maraming salamat sa pagse-share ng biyaya.

    ReplyDelete
  35. UnknownAugust 21, 2016 at 4:26 PM

    Sir zee, been backreading your blog the second time. Just have one question in categorizing the stocks. You mentioned that to gauge the liquidity of a stock, we need to check the monthly turnover. May I know po what are the ranges of value turnover to be considered as illiquid?
    Kasi napansin ko po usually tsaka lang lumalaki ang value turnover kapag matured na ang trend ng isang stock especially sa basuras. Or may na miss po ba ako and not getting the bigger picture?
    Tsaka once nacategorize na ang isang stock, do you change it from time to time?

    Thanks.

    ReplyDelete
    Replies
    1. Zee FreaksAugust 22, 2016 at 10:32 AM

      To simplify things, liquidity will now depend on your portfolio. If you can easily buy and sell the same stock within a day without causing wild swings above 3% then that is liquid.

      Delete
  36. Tiny bubblesNovember 9, 2016 at 10:44 PM

    Very informative! Thanks for sharing your wisdom to us. God bless.

    ReplyDelete
  37. AnonymousDecember 14, 2016 at 12:04 AM

    Hi sir, ano pong gmit nyong linemen sa 3rd liners. Thanks in advance

    ReplyDelete
  38. AnonymousDecember 15, 2016 at 8:31 PM

    Hello po, SMA = MA? Thanks.

    ReplyDelete
    Replies
    1. FruitNinjaOctober 2, 2017 at 1:18 AM

      I think pareha lang yan.

      Delete
    2. Arman OrtegaNovember 22, 2017 at 5:06 PM

      ang SMA and MA ay magka pareho lang sila..Both are moving averages.

      Delete
  39. AnonymousMay 23, 2017 at 11:02 PM

    Hi sir, how do you choose your 2nd and 3rd liners?

    ReplyDelete
  40. AnonymousMay 29, 2017 at 12:03 PM

    learned something just by reading the comments! Thanks!

    ReplyDelete
  41. RedSkiesAugust 2, 2017 at 4:19 PM

    Hi Zee,

    x - How many are below/above the candles?
    > HOW MANY DAYS/CANDLES DO YOU CONSIDER BULLISH BEFORE ENTERING/EXITING?
    x - Which MA is bullish/bearish?
    > HOW SHOULD WE INTERPRET A BULLISH/BEARISH LINEMAN? SAY, MA100 IS BELOW(I believe that's ZS in one of your system)... WHAT IF IT'S 20 OR 50?

    ReplyDelete
  42. GrafikistaAugust 17, 2017 at 5:53 PM

    Sir ZF ano ang gamit nio ngaun na MA's?

    ReplyDelete
  43. FruitNinjaOctober 2, 2017 at 1:19 AM

    Salamat sa Patintero. Laro ko to nong bata pa ako. LOL

    ReplyDelete
  44. UnknownOctober 5, 2017 at 1:19 PM

    Hi Sir Z,
    I'm just starting out with charting MA's in COL. Just want to ask what field setting do you use? Open, close, high or low price?

    ReplyDelete
  45. UnknownOctober 5, 2017 at 1:19 PM

    Hi Sir Z,
    I'm just starting out with charting SMA's in COL. Just want to ask what field setting do you use? Open, close, high or low price?

    ReplyDelete
  46. ryanJanuary 21, 2018 at 3:54 PM

    ano gamit nyo na chart sir wla kasi ako makit na MA sa COL chart po.

    ReplyDelete
  47. UnknownJanuary 31, 2018 at 12:39 AM

    Ngayon ko lng nabasa to and nde ako gumagamit ng MA. Salamat ir for putting it into simpler terms. Mabuhay ka Boss Zee!

    ReplyDelete
  48. Popoy ni bashaFebruary 7, 2018 at 5:06 PM

    Salamat!

    ReplyDelete
  49. YaznaIrajMarch 1, 2018 at 1:42 AM

    Thank you Sir ZFT, sa mga araw na nagsimula ako ng Trading. Buy and Pray, naka relate Hahaha Thank you Sir ZFT, more power... God bless

    ReplyDelete
  50. CMarch 22, 2018 at 1:45 PM

    thank you sir for your teachings

    ReplyDelete
  51. CMarch 22, 2018 at 1:46 PM

    thank you for your teachings sir zee

    ReplyDelete
  52. kellytopMarch 23, 2018 at 2:28 PM

    First time here sa blog nyo Sir Zee and I'm really thankful na nakita ko to! Still a newbie and been trading for 2 months pero mostly failed pa so I wanted to learn more. Sana maging profitable din akong tulad nyo one day! Thanks for selflessly sharing your knowledge!

    ReplyDelete
  53. UnknownMay 11, 2018 at 5:16 PM

    Hello SIr Z,

    nagsisimula pa lang po ako mag aral ng TA. Very Thankful po sa blogs nyo. Sir, I have a questions lang po, How can you identify of which MA is bullish or bearish po? Naguguluhan po kasi ako sir. Thank you po.

    ReplyDelete
  54. GeraldMay 14, 2018 at 8:49 AM

    Hello sir Z,

    I know this is an old post but I'm still hoping na masagot mo tanong ko. How about EMA? Why you are not using EMA? Salamat po.

    ReplyDelete
  55. Mike HingJune 15, 2018 at 7:58 AM

    Starting out, my only trading system was "Buy and Pray."
    It's funny when I think about it now. - Parang ako din Boss :)

    ReplyDelete
  56. UnknownAugust 14, 2018 at 10:44 PM

    Zee which is better to use EMA or MA 20/50/100? Thanks!

    ReplyDelete
  57. TeenWolfSeptember 19, 2018 at 4:12 AM

    Thank you Zeefreak... Ikaw ang super hero ko in Trading.

    ReplyDelete
  58. AnonymousNovember 5, 2018 at 10:07 PM

    This is informative although atleast we need to have trading experience to fully understand. I only understand it upon multiple times of reading your blog & watching moneygrowersph youtube. Needs chart also to crosscheck. Keep inspiring Lodi Zeefreak..

    ReplyDelete
  59. Jon SigurdssonNovember 28, 2018 at 6:39 PM

    Thanks for the guide!
    Trading Courses

    ReplyDelete
  60. UnknownFebruary 2, 2019 at 12:22 PM

    Patience is a virtue. ill try this.

    ReplyDelete
  61. UnknownMarch 28, 2019 at 4:03 PM

    Thanks for this! Learning and observing how to use this currently will be holding DM for a bit more since nasa baba pa mga line men :D

    ReplyDelete
  62. UnknownMarch 28, 2019 at 4:04 PM

    Ay wait pala why do you choose 20 / 50 / 100 or 30 / 60 / 90

    Ano po logic nang pag pili nang line men?

    ReplyDelete
  63. UnknownJuly 9, 2020 at 5:23 PM

    Currently reading all of your posts Date: 07-08-2020.

    Very informative thanks a alot!

    ReplyDelete
  64. GuadaJanuary 12, 2021 at 5:58 PM

    Please dont delete this. Just found it today and i feel like i am in grade 1.

    ReplyDelete
    Replies
    1. AnonymousAugust 14, 2021 at 9:59 AM

      haha same but actually binalikan ko rin to kasi this is simple as it gets

      Delete
  65. AnonymousFebruary 6, 2021 at 1:38 PM

    thank you sir in accepting me in the group! earning well already! worth it

    ReplyDelete

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