Sunday, October 25, 2015

Deadly Mindsets that Traders Commit

Is it normal to lose in stocks? Yes.

This is the hard truth of the markets. From market 
veterans to newbies, everybody loses.

If winning 5-6 digits of profits was normal, majority of the people
 wouldn't dismiss snapshots with huge gains as heresy. 

Talk to those who worked as brokers and they'll tell you 
how unfair the world is.

But majority would easily accept a 6-7 digit loss because that's 
how the norm is. And there's a ridiculous culture of embracing 
this truth instead of fighting it.

Like when you fail in your tests and 
immediately look for your "buddies"

But while everybody has their fair share of losses, not 
everybody stay as losers.

Allow me take you to another wonderful experience in
 appreciating renaissance art and the truths of the stock market.
Today, I'd like to talk about the Common Deadly 
Mindsets that Traders Commit.

"Expensive vs Cheap" Mentality

You buy 100k Shares of Stock A for P0.10 
Instead of Buying 1,000 Shares of Stock B for P10

A lot of people fall for this one early in the game. Buying one stock
 over the other because it looks cheap price-wise.

Take this for example on FNI vs NIKL. Both are said to be 
Nickel stocks. And since FNI looks cheaper than NIKL you buy
10k worth of FNI shares on October 22.

Next day, NIKL rallies and FNI fizzles.
Your FNI's worth is now almost a hundred less.

If you only chose the more "expensive" NIKL you'd 
have gained five hundred more.

So what's the point of you having millions of shares on 
a stock but fails to show you a profit?

It's just showing off without having real substance.


Now a lot of people would also dismiss the idea of buying
 at All Time Highs (ATH) because of statements like 
"I've never seen this stock this expensive before!" 

I'm guessing some of these people have 
been telling that to URC since the 20s.

And a lot of people would nonchalantly buy stocks that have 
fallen 20-50% from their highs because "It's on SALE!"
Who doesn't love a good Sale?

I hate to break it down to you buddy but 
the stock market ain't like the Malls.

FNI MEGASALE at 2.55 you say?

 The reality is, there is no such thing as a cheap or expensive stock.
Only Winning or Losing stocks. 

"Paper loss lang yan!" Mentality

The non acceptance of a loss. This is the most common phrase you
 will hear when people cannot accept a loss. It's a way of fooling
 yourself to the reality that you lost your hard earned money
 - and that if you go long term, you'll be fine.

A lot of people would use the W. Buffet quote 
to defend their paper losses:

"Rule no 1: Never Lose Money
Rule no 2: Follow Rule 1" 

Well guess what?

You aren't lolo Buffet who was already a 
#richkid when he said that.

And this is usually the root cause of the next Deadly Mindset..

Averaging down and the Bodega Mentality

While this strategy works fine with those with lots of money
it isn't necessarily so with those with just a few

If you have less than 50M in buying power, why would you buy the
 downtrend when you can buy trending stocks that would actually
 grow your money? You don't have to always suffer first before 
you make profits.

And so whenever you feel like buying a down trending stock, 
may you always remember this image:

Now what happens when you combo the last two deadlies?

You'd probably end up having this Wrong Mindset:

"It's too deep to cut!" Mentality

Have you ever had losses that reached more than -30% 
in your port? Painful right? 

"But maybe. Just maybe" you think to yourself, one day, you will
 be liberated from all this pain and some magical rally would
 happen. It's possible. And out of your desperation you do a lot
of meaningless stuff like research about the company you 
'invested' in. Hell, you even know the name of the CEO's dog!

You also believe whatever the Gurus say even though you 
know deep within yourself that what they say is crap.

You had a lot of opportunities to cut your losses.
 So why didn't you?

I'm pretty sure your losses didn't grow as it is overnight

It's hard to swallow a loss. But what's harder to swallow is your 
pride and ego. If you only admitted that you were wrong, 
non of these terrible things would happen. 

So cut when it's still early and remember:
 your pride, ego, and laziness won't feed you.


To end this post, they say 99% of the people who traded and
 invested in the stock market lose. And only 1% thrive.

So If you want to be part of that 1%, 
then don't do what the 99% is doing.

Friday, October 23, 2015

Excerpt : Sessions with Eques (Batch VII)

10:24PM PH Time

Condition your minds that you are no longer a civilian. 
You're no longer a TAPper. No longer a newbie. You have skills. 
You're already here in the ZFT program and that means you'll 
get what it takes to survive this market.

You will continually be trained to be the best.
And when I say this, I expect that you will double or triple 
your efforts in learning this craft.

In your spare time, you make trading plans, you look at charts. 
Eat charts for breakfast, lunch, dinner.

And hopefully when all this becomes muscle memory, that 5, 6, or
 7 digit profit from stocks you've always wanted will become 
more of a reality than fiction.

May the trend be with you.

Class dismissed.

Monday, October 12, 2015

Fickle Gurus

We should thank them. 

They're making us rich while providing us with entertainment.

Saturday, October 10, 2015

Personal Notes Series 002 : Life and Trading

Sometimes it scares me when I'm able to shut down my emotions
 when trading. When I win or lose to the extreme, like you know
 (6-7 Figures) in a day, and it doesn't faze me one bit.

Trading is a lot like life.

And there are times when I think that if I've fully integrated the
 system completely in my life, I might come to a point wherein 
my relationships and the people I meet would just be like 
stock-picks. That If a relationship goes bad, I'd simply
 "cut my losses" and move on. Or If a relationship doesn't 
go anywhere, I'd just sell and realize my "commission losses."

Last night I was able to talk to a few traders. They told me their
 story about how their group were hyped into buying a stock, got
 ipit, and are just waiting for it to go up. They've been holding the
 stock for almost a year. And a beautiful bond was created.

I was once In a trading group and had multiple 
experiences like this.

The root cause of all of this, why people in a group-buy don't sell
 and move on, isn't because of the stock or the hype - But the trust
 that was built in the corporate decision of buying the 
particular stock.

"Nagbenta ka na ba?" 
"Tiwala lang"
"Aakyat na yan"
"Buying pa ako"

These are the phrases you commonly hear when you 
group-buy-and-hold a stock.

If a stock is going down (or up) and you sold earlier without
 notifying or consenting with your group, there's fear that you have
 betrayed the goodwill of what your group started. You feel like if
 you sell, the relationship with your group, your bond, 
might somehow be broken.

"What? Nagbenta ka na? Traider! (Traitor + Trader)"

Then you don't get to be part of the core group anymore
and you're like...

"We rise as a group, we fall as a group"

What couldn't be more noble?

But this is the stockmarket. Not life. It's your money, not their's.
 We have to understand that we are responsible for our own actions.

So if you decide to sell. Don't feel guilty.

"Cut loss lang. Walang personalan."

We should draw a clear line. A distinction of the 
realities of Life and Investments.

And even if I say that Trading is a lot like life. It isn't so that we
 should cut loss our non performing or losing relationships. 
For these things should be cherished and worked out.

I thank God for keeping me sane. That even If I have lost hundreds
 of thousands and even millions, I can still give praise and
 appreciate the little things in life.

For not many are able to do so - especially the rich.

I'm not completly detached from money. I'm getting there. And I'm
 glad that it's only God who can satisfy me. For life is more than
 riches, wealth, and power, but of purpose.

Friday, October 9, 2015

Buy, Sell, Repeat.

Trading Log 10.9.2015

Sidenote: Wildest port swing on record.

Who would have thought that after hours of steadily building the
 chart and momentum, it would suddenly drop like a hot potato 
in just minutes?

Just like that. All Gone.

Shit happens. And whether we like it or not, we just have to 
accept the fact that we can't win every trade. We cut our
 losses and carry no emotional baggage.

Yes we may cry and grieve for the loss. But that feeling should 
be gone before the day ends. Same thing when you win big - All 
flowery feelings out of the window before you hit the hay.

Such is the life of us high risk traders.

Buy, Sell, Repeat.

End of Log.