Sunday, November 27, 2016

Personal Notes Series 011 : The Dissonance of A High Risk Trader

This word was something that hit me a few years ago when I was starting to rake in those profits from the market.


I have always made it clear to everyone that I am a firm believer in Technicals and Technicals only. Not to speculation, brokers or Insiders. And most specially not to Fundamentals. I have embraced this truth and will most likely die with it.

I am not saying that believing in Fundamentals or market insiders is wrong and that there is no money in it, because there is. What I am saying is that out of the 3 Truths I experienced, [Fundamentals, Technicals and Funnymentals] only Technicals has proven to be consistent in making me money in EVERY season - be it a bull, sideways, or a dreaded bear market.

(Exhibit A)


"Cognitive Dissonance"

This might be confusing for those who are new to it. So to further expound on this lovely term, I'd like to introduce Bob. (He's a bit shy)

Bob has been studying and trading the markets for a few years now. He believes that stocks with good fundamentals, when timed with technicals, will yield him a fortune in a relatively short amount of time vs if he only believed in one truth.

"Why not get the best out of both worlds, ya know what I'm sayin?"

So in August of 2015, Bob bought TEL on the grounds that it was fundamentally sound and that techincally, it was at good levels and holding supports.

On the next month however, TEL broke down from it's supports and hit Bob's technical cut points at -5% to -8%. He was faced with a dilemma. It's a good stock and it pays good dividends. In a fundamental perspective if the price goes any lower, Bob will greatly benefit from it because he would be able to buy more shares and that would translate to more dividends. But on the technical side of things, he had to sell because TEL was already showing signs of a downtrend. 

There was dissonance. A chaos and disharmony boiled within Bob. Does he hold or does he cut?

So he starts thinking about the time he spent researching about the company. He computes the tax and the paper losses he'll incur if he sells. And after eating his favorite happy meal, he came to a decision.

"I'll hold and average down. Someday, this will go back up. It is after all, a fundamentally good stock. Ya know what I'm sayin?"

In order for Bob to alleviate his anxiety and find peace within himself, he had to choose to firmly believe in one truth and in this case, it was Fundamentals. A year passed by and he found himself with deeper losses. But that doesn't affect him anymore.

You just cannot serve two contradicting truths. 

If you're still new in the markets, there will come a point in your trades where you will have to decide just like Bob.

"Will I choose Fundamentals? Or will I choose Technicals?"

Remember, there is no middle ground. And now that I think about it, this truth reflects a lot about life and the decisions we make.

"Am I still serving God or am I serving my own interests?"


  1. Thanks for the new post. It's quite a timely one. Just a few days ago, I tried serving two masters (an insider stock as well as the TA i got from your blog).

    I know now that as early as today with my small port. I have to firmly decide which master to choose, and be loyal to just one.



  2. Good read Sir Zee..probably the reason why my small port is down 20%..
    Thanks for this Sir!

  3. good read boss Zee... specially "Am I still serving God or am I serving my own interests?". got me thinking.... GODbless...

  4. Isa lang Masasabi Ko Goodluck Bob :) 5years 10 years or More... Funda pa more..

  5. the reason tel is going down is not because of technicals . its because of bad terible fundamentals at least in the near term . let me state a few . billion pesos of losses due to bad investment rocket internet . dwindling of income due to stiff competition . bad poor service , income from call and text going down bigtime due to facebook . viber etc etc . dividends going down bigtime due to dwindling income.

  6. eToro is the #1 forex broker for new and full-time traders.

  7. Sir what is the difference of fundamentals and technicals?

  8. This is a smart, well written piece. Thanks for the insights!=)

  9. this is exactly my story. learned the stock market in 2015, bought tel at 3.1kish realizing myself as an investor. was able to average it down to 2.1k but still finding my port -25% after 2 yrs. had the opportunity to average down more when it hit the 1.2++ level in december 2016 but could not take seeing almost 100% of my port in red, i didn't buy on that level and stopped averaging down. i'm still not purging tel but since 2017 i took the risk of trading. changed strategies and mindset like how traders see the market. it was the first time i'm seeing gains on my port on stocks i haven't heard of. i also learned the importance of cutting losses. though i haven't experienced losing like more than 50% of my port balance, overall, i'm still below breakeven since i joined the stock market. i still haven't experienced that bagger yet, but big thanks and so much respect to people like ZF and his tribe for generously sharing their experiences and techniques publicly (not to mention all their good deeds behind the scenes), i was able to study and put into practice their teachings. i'm still looking for that perfect trading plan that matches my schedule as i still can't be a full time trader. but i'm 100% positive that if ZF did it, i can also do it to my port. can't wait to be able to share my own success stories and start paying it forward. thanks for the inspiration ZFT, you guys rock! :) God bless you and the tribe!

  10. wow. hindi na naka recover ang TEL after nun P2800, umabot na sa P1200. FA didnt do well with investors