Thursday, February 14, 2013

Trading 101 : Osmosis




On this post, I'd like to emphasize on money management and
 diversification when dealing with 3rd liners.

But before that....




This game is really kick ass!
Extremely Fun when played using Pads.
Here's a link if you want to try it out


Quick definition of Osmosis.

Definition taken from : http://www.merriam-webster.com/dictionary/

Totally related to trading right?
Well.. not really.. But if you played the game, 
you'll get what I mean. Hopefully. Hahahaha



Anyways, 

When buying 3rd liners, assuming the chart 
is good and all, make sure you study its liquidity.  
You don't want to be buying something you can't sell.

So Ask yourself this question:
"If i put in X amount of money in stock Y, 
would I be able to sell it with ease on the same day?"

If your answer is YES, then you're one step 

ready to make that trade.



Moving on...


I usually keep 1 to 4 Trending Stocks - all with almost the same trade value. 
And when a stock is ready for profit taking, I sell all, if not some of it and 
transfer the funds to the remaining three stocks or add to a new stock position.

Sometimes I go over 4 stocks, but when I do, 
I switch and sell the weakest of my holdings and go 
back to the original 4 or less.. 

Focus is extremely important. 

Just imagine if lets say, you have 10 basuras in your port,
all with equal value, then suddenly a wild bear appears! 



"Imma eat yea alive biotch!"

And the worst part is, your broker... let's say.. just out of total "randomness"  
House 203 would have one of those "stroke moments" during market panics.

What do you do?


Imagine the pain...


So as much as possible, keep or buy only what you can manage.


"Okay Zee Enough with the talk". 
I get it. You want results.

Here ya go...



This is the Unshaded Version of 


Port as of 1.20.2012


Port as of 1.24.2012


Port as of 1.25.2012



Port as of 1.26.2012

 Port as of 1.27.2012


 Port as of 1.30.2012


 Port as of 1.31.2012




Here are my other trading rules:

On Cutting Losses:
Don't let a loss reach -4%
Cut before it reaches that level.

On Taking Profits:
There are no Target Prices,
Only Trailing Stops.

On Trading A stock:
Trade with bias. If a stock does not 
move according to your bias, Sell.

I also get this question a lot, So i'll just Include it here:
"What is my average holding period?"
4 Trading days. Or until a stock's uptrend snaps.



And If I'm dead sure of a killer trade? 
I never hesitate to go All-In!






Happy Valentines Everyone.




36 comments:

  1. Sir Zee, no second thoughts before cutting losses?

    ReplyDelete
  2. how do you keep the discipine of trading just 4 stocks when your stocks are not moving and the other stocks are?

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  3. how do you find it? like example Geo. It wasnt trending but the other day it went up then today and yesterday you cant find any action

    ReplyDelete
    Replies
    1. Here ya go: http://zeefreaks.blogspot.com/2011/09/basura-plays.html
      Use it well.

      Delete
  4. Thank you so much

    ReplyDelete
  5. sir, tama ba intepretation ko for WIN
    bought on 01.20 nega
    sold before 1.24
    bought on 01.25 and sold on the same day?
    GREAT POST and good profit from LMG ;). Btw, what made you pick lmg? do you trade full time?

    ReplyDelete
    Replies
    1. I'm not so sure. I don't remember the Details.
      And yes. I trade full time. :3

      Delete
  6. Great post. Thanks for sharing that. When you said you never hesitate to go all-in, do you sell your other 3 positions and consolidate it in that 1 stock even if the other are trending strongly as well? Also when you play basuras, should I consider if there is a story behind the price movement or I just need to look at the charts?

    ReplyDelete
    Replies
    1. Yes. "All in" as in sell everything to buy just one fast stock. Just like APM when it was just starting. Re basuras, never listen to market noise (rumors/news) it just clouds your judgement.

      Delete
    2. Nag all in ka sa APM? Im sure you made a killing there. So you just look at the charts? Alright thanks cuz I dont hear much of rumors anyway so reading the charts and applying your strategy suits me fine. Cheers!

      Delete
  7. sir zee, how do you set stops? sorry sa noob question.

    -ged

    ReplyDelete
  8. Setting stops - you can do this mentally - Not sure if there are online brokers here with that feature.

    Maybe this could come in handy: http://zeefreaks.blogspot.com/2012/10/apm-rise-of-borg.html

    ReplyDelete
  9. Thank you for the link Sir Zee. I tried searching what you mean by borg plays before in google but didn't find it. Careless of me not to backtrack through your previous posts! I couldn't help but giggle after I read the Borg's ever famous line. :D

    ReplyDelete
  10. Sir, how do you predict the stocks? which is more reliable if you're a day trader, fibonacci or support and resistance? and lastly when do you sell if taking profits? Newbie here. Thank you!!

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  11. ^ Combination of the two + MA (moving averages). I sell when my stops are hit. You might want to read my previous posts.

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  12. Sorry for sounding stupid, If you see a stock that has a good balance sheet and pays dividend but is dropping, should i not enter it because the company is earning? I mean that is when the price of the stock is low for you enter?

    ReplyDelete
  13. Patrick, I post this as a Trader and not an Investor. If I WERE an investor then I might just buy stocks in your said parameters.

    ReplyDelete
  14. Good Evening po Sir Zee,
    I believe you are still using COL Financial as you broker.
    Do you use the Traditional Broker?
    Or do you just use a browser in buying and selling stocks?

    The "NO stop loss/ cut loss" is the only thing really hindering me in trading basuras.

    COLFinancial network stability. Recently it is very lag. Upon hitting the buttons, minsan, wala na ubos na volume.hehe so cry na lang ako sa gilid. LoL By the way, I am using Chrome/Opera/Firefox with Globe (these could be a problem as well regarding lags).

    Or do you have any tips and tricks for "faster" execution (aside from just getting a traditional broker)?

    I hope I am not asking questions that are "secrets" to your trading success.hehe I am pretty sure you are protecting it carefully :)

    Maraming salamat po Sir Zee! :)

    ReplyDelete
    Replies
    1. I have one account in Timson. But my bulk funds are still with COL.

      For me, you don't need to really have that fast of a connection unless you're trading basuras or if the price of your stock is nearing it's stop. You just have to think 5-10 steps ahead of the crowd.

      Delete
    2. Maraming salamat sa pag reply po sir Zee :)
      I never thought you would reply to me this quickly considering I am just a nobody. LoL! :p

      Actually my plan is to trade basuras and apply what you have written here. Still waiting for COL supports reply regarding my question about the fees if I opt to go for there traditional brokers (the Cut Loss is really important to me as Globe sometimes is slow, Colfinancial as well and most of all - power interruptions in my area).

      I am currently reading your blog from September 2011 and I am still at Feb 11, 2013.
      I am taking down notes (THANK YOU VERY MUCH! dami kung natutunan! (= )
      Honestly, got me inspired when you said I read from your FB "if you are just hardworking enough and read my blog post - you can trade the way I trade". Not really exactly the lines you said. That is why I am doing this. Thank you po Sir!

      Delete
    3. The Trader Investor sir wag ka bibili ng stocks ng GLOBE para makabawi ka sa kanila sa di pagbibigay ng magandang service sa area nyo ­čśé­čśé­čśé

      Delete
  15. Sir what do you mean by trade with bias?

    ReplyDelete
  16. Looks like PHES was a high conviction stock for you at that time. What happened eventually?

    ReplyDelete
    Replies
    1. a.k.a. jockeys shaking out freeloaders, is there such a thing?

      Delete
  17. Sir, can you elaborate what you mean by "make sure you study its liquidity". Sorry for questionaing I'm a newbie.Can you give an example?

    ReplyDelete
    Replies
    1. Liquidity is the volume traded. If it is liquid, that means lots of funds and people trade it. If it is illiquid, it means less people trade it (and usually has high volatility)

      Delete
  18. Sir this is my favorite post in your blog. I am amazed how you move your funds around to make a killing. Brilliant strategy. Hoping to learn your technique. Still on practice mode at the moment. Thank you sir for the inspiration.

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  19. congrats Boss ZEE!!! no 1 ka na sa Trading Cup ng Investagrams!!! 09-28-2017

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  20. ngayun palng ako nag start sa trading, learning alot from old post, and was able to attend a zft session. Thank you po

    ReplyDelete
  21. Thank you for imparting your ideas with us. I am now doing the same. Medyo naging cautious lang ako after masunog long time ago. Now, I'm back after 2 yrs. Hungrier but cautious. Lurking in your wall learning your ways and unlearning the old ideas I have.

    Salamat

    ReplyDelete
  22. Hello po Sir, Zeefreaks!
    not sure po kung nashare nyo na ever, pero nagiinvest po ba kayo sa blue chips? or stick lang talaga kayo sa trading with 2nd and/or 3rd liners?

    meron po kasi akong JFC and ALI currently.. balak ko po habang nag-aaral ng trading, hold ko lang sila. then kapag po sobrang confident na ko to swing/day trade, iniisip ko po kung dapat ba ilet go ung blue chips.

    Thank you po in advance for answering. ^_^

    ReplyDelete