Saturday, May 23, 2015

Volume of Emotions





Great things start with small beginnings.


Most traders when starting out, make the mistake of trading 
with all they have, trading big or going all in - Instead of experimenting and starting small.

The path to a consistent, profitable system, always starts with
 experimentation. Because admit it, even if you read all those 
books and blogs, mimic your favorite guru, watch
 expert trading videos... 

Knowing...

 is very different from Doing.

One of the basic self-check, flow chart a beginner 
must have when trading is this.



It always starts with a trading plan.
And the emphasis is more on the volume of the trade
and your mental state if ever you lost the trade. 

Why?

Because the trader's mental and emotional capacity has an
interesting correlation to the volume of the trade.

Confused?
Here's an example.

Scenario 1:

You allocated 1/10th of your portfolio to DNL.
Whether you win or lose, this will probably be your reaction:



Nothing much really. Because the volume wasn't 
that significant to move your port to begin with.

----------------------------------------------


Scenario 2:

You allocated at least 1/2 of your port to TAPET
at the lows before it went sky high.



Your probable reaction?

#YOLO



You get a confidence boost - Feeling like some 
hero or tyrant that can conquer anything in the world.

----------------------------------------------


Scenario 3:

You went all in FNI because of strong FA and TA.
(Facebook Analysis / Tsismis Analysis)



Your reaction?



(Admit it... you sang that one out)

----------------------------------------------

Makes sense now huh?


Now when you document a trade, add up the numbers. 
And after getting a hefty sum of trades, review and look for 
the plays you are strongest and those that you are weakest.


(Sample Trade Stats)



This doesn't mean that you should stop trading the setups that you
 are weakest. But it should be a challenge for you to experiment
 and practice until you finally get your batting average 
into the green.

These numbers speak out to YOU. Think of the 'wins' column 
as confidence points. The greater the wins you have, the 
more volume you can allocate. The greater the losses 
you have, the lesser the volume you should commit.


When you gain confidence because of the numerous trial and 
errors, and when you can properly handle and tolerate losses to a
 certain degree of exposure, only then should you "up the dose."




Now why am I emphasizing on Losses? 

Because when I started out, I remembered and learned 
from my losses more than my winning trades.

Everyone loses. But the only time it truly becomes a loss, 
is when you don't learn from the experience.




31 comments:

  1. Thanks sir zeefreaks. Thank you for guiding us and for your will to stop/lessen the victims of other selfish groups. # Perseus

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  2. sir zee, im an avid follower of your blog and hope someday I can make you proud. naguguluhan lang po ako sa breakout plays ( seems to me kc un ung best play and na malaki risk/reward ratio). my question is, do you buy the moment na nagbreakout? or sa closing ng market? or do an intraday analysis (to determine the best entry for that day) once it touches the breakout within that day? most of the time kasi it's either too high (malayo na sa breakout point which is the right entry) or it's a fake (may whipsaw sa ending dahil sa mga bwisit na jockey) ? hope you can read this, and give me some advice on this one. I dont really like to post but just want to say Thank you sa lahat ng post m, I appreciate din yung cause na gnagawa m like giving back to charity.

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  3. I buy in tranches - during the breakout, during the retracement, when it consolidates at the high, and on the closing price of that day (to prevent fake outs)

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  4. thank you sir zee now almost clear na sakin , one last na lang po, with regards to ZS and AOTS. for ex,while reviewing a stock, and base sa analysis, the said stock has a potential to zs and AOTS anytime soon , nakaposition na po ba kayo before pa ng ZS? (say for example 1 tranche) or you wait for it to actually confirm itself. d ko kasi mahuli ung ZS eh. most of the time huli na. Thank you for your time sir zee.

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    Replies
    1. Hello po, I'm a newbie in trading po and trying to study different terms and strategies. Medyo wala po kasi akong mahanap ng clear definition ng AOTS and ZS. Ask ko lang po sana kung ano po yung meaning nun. Thank you in advance!

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    2. AOTS- Alignment of the Stars
      ZS- Zeus Strike

      Please check out previous blogs of the author.

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  5. Before the ZS, I most probably have a position already. If not, then I buy during the ZS. If the price action proves to be strong, I hold and wait for AOTS and trend break.

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    Replies
    1. thanks again sir Zee, wla na po ako question , sa ngayon practice and re read na ako. Thank you for your TIME.

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  6. Salamat po ZF sa mga blog mo. Malaking tulong po sa aming baguhan. Kailangan ko lang ulit-uliten na basahin dahil malalim :)
    Syanga pala, bakit di pwedeng mag-post ng comment gamit ang google account - curious lang po.

    Salamat

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  7. Boss, when you position meron ba kayong allotted deadline/timeframe na dapat gumalaw na or else ililipat mo na pera mo? Or do you wait for confirmation (either by getting stopped out or by the actual foreseen move) no matter how long it takes?

    ReplyDelete
    Replies
    1. Yes. I have a timeframe for my positions. UNLESS nakalagay sa sleeper port where I can just do a GTC and "come what may"
      Because time lost in consolidation is opportunity loss in other moving stocks.

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  8. Still reading and reading your blogs to get your message and advice to sink in, very profound advice and thoughts when I think about the wrong trades I made, even though it still pains me to reflect on my losses and stupidity.

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    Replies
    1. Sometimes pain is necessary for learning.

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    2. I couldn't stress this enough... (Y)

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  9. may link po ba kyo for sleeper type ng play? un ba ung ZS play? d ko ata mahanap ung sleeper type, basura plays bounce plays, borg lang po nakta k sa archive. galing nyo po, sir Z.

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  10. What is your criteria for ZS? Is it just the 20 and 50 MA crossing or do you check if it has volume?

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  11. What is your criteria for ZS? Is it just the 20 and 50 MA crossing or do you check if it has volume?

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  12. These are the type of post I like to read - like in your old blogs. Thank you for sharing wisdom.

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  13. What is ZS and AOTS, I've been reading your blog backwards and haven't come across this terms yet. Thanks.

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    Replies
    1. ZS =Zeus Strike
      AOTS = Alignment of the Stars

      There are several posts about it.

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  14. Just WOw! Im amaze on your trading plans sir!

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  15. so much learning in a simple but profound posts .... I couldn't thank you enough. The equivalent amount for this effort is not something that anyone can pay. High regard and respect to you Master Zee! Continue making a difference for you just did to me.

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  16. Thank you Sir Zeefreaks for writing this! You truly are awesome and one of the coolest traders ever!

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  17. How to spot before a zs occurs? If yu spot early will it turn out to be one?
    Tnx sir.

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  18. thanks boss, nag cconduct po ba kayo seminar oversea?

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  19. Hi Sir Zee (feeling close). I'd like to express my gratitude in reading your blogs. Thank you very much for sharing your experience and wisdom, it enlightens and brings back the determination I need to strive further. May God continue to bless you. Merry Christmas! ^_^

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  20. yup i sang the "This Port is on FAYA!" sa bitcoin

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  21. weh zeefreaks pasikat. patingan nga port mo! dami dami mo tinatype baka mamaya wala naman kwenta.

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  22. Just what I need ryt now! True enough sir zee. I learned more on that one losing streak I had this wk than those consistent small gains I had before that. Newbie here po and Im learning a lot just by reading your blog posts! Thank you po! Hope to meet you in person 😊

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