The 100k Crash Course

This post is dedicated to all who are currently studying how to trade because they got their accounts burned when the dreaded bear came.

February 2020, the local market had been on a sideways-to-down trend - plays have become scarce and short-lived, and outliers are yet to be seen.

Meanwhile, global markets have been trending and the US market has been creating new all-time highs. I had the genius idea to create an account and go into global markets - because why not right? It's a buffet of opportunities, earning both ways across different instruments! Stocks, Commodities, Indices, Crypto, etc.

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"Stairs going up, Elevator going down."

I remember hearing Javi (AKA Taylor) always say this line when it comes to bear markets - because it has always proven that FEAR is a stronger emotion than GREED. Allow me to help you visualize:

History is unfolding before our very eyes and we're witnessing one of the worst market crashes of all time. If you're a trader or forced to be a trader because of your baptism of losses, then this is the perfect time for you to study and learn!


Let me welcome you to my 100k worth Crash Course on how NOT TO Trade the Global Markets.

For this experiment, I deposited 2kusd or 100k worth of funds to learn how to day-trade and scalp. To give you some context on, here are 3 things you need to understand about me:

1. I am no scalper. I'm more of a swing/momentum trader and trend follower.

2. As I have stated many times before, I am a high-risk trader.

3. I have a solid 9-years experience in our local markets, but Less than 2 months in Global. I don't consider virtual trading as an actual experience.

It has been a solid one month since I have started learning and trading this account using real money (not just virtual/demo) and I've got to say, THAT WAS INTENSE!

Let me share you some of the key reflections and learnings I've compiled so far :

I. Progress takes time.

After a full month of obsession, holing up like a hermit, sleepless nights, and seeing no sustainable progress,  it got quite frustrating. I felt like I was back to square one.

They say it takes years to become an overnight success. You don't google on how to become a doctor and expect to be operating on your patient the next day. Even if you have a mentor, it will still take time for you to become good, more so if you wish to become great!

If you start to become frustrated, remind yourself of this and don't be too hard on yourself. Respect, Trust and most importantly, Love the process.

II. Learn before you Earn.

I'm managing 3 personal portfolios locally and all have had decent growth despite the choppy market. The 50k challenge I started in 2018 has now tripled in value thanks to the recent volatility plays.

Having success and a working system locally has led me to a path with ego and pride. The problem is, I brought those two with me in the Global arena and forgot that my priority was to Learn. Couple that with the expectation of people that I perform well has led to unnecessary pressure and a disaster.

As traders, our main priority is not to earn. Our priority is to take and perform our best-planned trades one at a time. Money is just a byproduct. 

This might be quite a challenge especially if you're in a state of Lack or Need of money as this will persistently blind you towards your goal. 

  

So if you're just starting out, it is important to find ways to detach yourself with the money in your account. It will help you make objective decisions. Think of your money as game credits - this mindset helped me when I was starting my trading journey.

III. Trading Mistakes Committed

(Notes to Self)

I'm learning from scratch. No mentor, classic trial and error.

Impatience and Switching Timeframes too Often

I look at daily and hourly charts for context or directional bias. After all, knowing the trend is the first step to becoming a profitable trader. All my entries are on the 5-minute charts. But I oftentimes catch myself switching timeframes more than I should. Gigil magtrade instead of waiting for perfect good entires that I switch to 1-minute or 15-minute charts just to force my buy/sell signals.

Since I'm learning how to day-trade and scalp, this demands a lot of attention from the market especially when I'm in a trade. Here's a problem I've identified: because there isn't a lot of opportunities in the local market, and there are TONS in global, I found myself trading non-stop - because whenever there's an opportunity that presents itself, I grab it. This is a form of a scarcity mindset - because the reality is, there will always be opportunities in the Global Markets.


This had led me to...

Trading even with the Lack of Sleep

When you lack sleep, you can take on larger risks. It's scientific. It's similar as to when you're drunk. Notice how most people are able to do batshit crazy stuff when they're drunk? Or how a single shot of vodka or tequila can make a person confidently say a wedding speech on the spot.

And after taking a few serious hits, this eventually led to...

Attempting to compensate for losses by Over-trading and Over-leveraging which I usually call Makabawi Syndrome

Over-trading is never good. As traders, we must learn to take quality trades, not half-baked ones. And the urge to get back the money you lost will become stronger the more you trade. A circuit breaker must be in place for you - a checklist that will tell you to stop and take a step back from whatever you're doing and purge. Because once you lose focus on your objectives, it's all over.

My leverage on 

Stocks : x2 - x5 

violated and did x10 to compensate

Index : x5 - x20 

experimented with x50, and when that didn't go well, did several x30

Commodities : x10 - x30 

there were instances where I had to do x50 with minimum allocation to compensate for the minimum amount required to trade the instrument.

Stop-loss levels were all set at invalidation points. The more volatile the instrument, the best that you lower your leverage and volume. 

Higher leverage would be ok when these two criteria are met:

A. Low market and instrument volatility - you don't want to be doing a x10 leverage and the instrument you trade usually gaps or does 10% swings. I recommend currency pairs, commodities, or indices that don't gap too much on the opening bell.



B. Tight cut loss levels - as long as you have tight cuts, you'll be fine. But if you want to have a wider margin of error, then lessen your leverage.

While these mistakes can be treated as isolated cases, usually one of these will cause another to show up. It's like late-stage cancer metastasizing throughout the body.

Yep. I thought I was way past this. But apparently not. 

Good thing I was at least aware of my negative state as I decided not to touch my Local portfolios. Because whatever current state of mind I have would eventually spill over to my other trading accounts. Be wary that you do not make this mistake.

Currently assessing if I would like to continue learning this strategy or just focus on my working ones.   


It's crazy to think that this 100k trading account has caused me more stress than my bigger ones where I would easily cut 6 figures if my stops were hit. And if I am this stressed out over a hundred thousand worth of tuition funds, how much more the people who are still invested in the markets with their hard-earned money, savings, and retirement fund? And If you're that person...

I'm sorry for your loss. 

May we all become wiser from our experiences. And while a great part of history is unfolding, remember that this too shall pass.

Baptism of Fire

There was this certain gentleman who messaged me one sunny afternoon. Let's call him John. 

The man started investing in the second half of 2009 when the stock market was starting to recover. It was the best time to invest. John was a fundamentalist and a farmer by profession and understood the concept of the seasons. He was taught that farming and investing are very much alike - That just like farming, it takes time before you can reap your harvest. It was the best time to buy long-term investments.

 Several years later, he was able to grow his investments from 6 to 8 figures. Now that's a lot of zeroes! But as he continued with his story, John said he was lost on his investments and needed help. He explained that in the past 5 years, his investments stopped growing and even eroded chunks of his profits. 

All these years he was loyal to his stocks, which has now become a big fund, and was rewarded handsomely. But this time, his loyalty was being tested.

John confessed to lightening his positions in the first quarter of 2018 to buy his new set of "investment winners." A few months later, he found himself in a slump - His fund almost halved.

"-40% na ako sir. Ano gagawin ko sir Zee?"

It was his first time to experience such a terrible thing in such a short amount of time. And to make matters worse, he took a substantial loan to add to the losing position. What happened? What was the cause?

As I started to probe, It seemed that John discovered Facebook Trading Groups like how Magellan "discovered" the Philippines.

And the rest was history.

This was the exact moment John knew, he f****d up.

He thought he was a fundamentalist. But he wasn't. He thought he was because he got lucky. He was a speculator but didn't realize it. Because a true fundamentalist wouldn't be fazed by bear markets.

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Many traders who start out are like John. I was also like John. A few jackpot trades and we think we can trade for a living - until the season for bears come.

For those of you who seek the truth, here it is:

The market rewards us for the discipline in our trading system, not the loyalty to our stocks.

If you consider trading for a living, then you should ask yourself during a bear market when things are in chaos and the atmosphere is filled with fear. Not during times when the fields are green. If you can confidently tell yourself that you'll be alright with utmost certainty, then 

You 

Are 

Ready.

This is the ultimate "litmust" test. This is every full-time trader's Baptism of Fire.

 Because if you have the ability and the belief that you can build even in the harshest environments, then you will definitely thrive when the good times come.

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It's a bear market. Are you ready to go full time?

What the FAQs

Disclaimer : The post you are about to read is my personal opinion and may not necessarily represent the truth of others. I am a high risk trader that loves volatility. This is my truth and you are free to disagree with me. 

1. What are your top trading tools and indicators?

In ZFT, we only use Moving Averages (MAs), Darvas Box Method, Fibonacci and the RSI (Relative Strength Index). Many might be surprised how we only have these four in our arsenal. 

"So you telling me, yan lang? Wala bang secret indicator?"

"Well, Wala!"

I'm not saying other indicators aren't going to make you money. I'm saying mastery is key. A person who has an understanding and can use 10% potential of 10 different martial arts will never match up to a person who has a 100% mastery over one technique.

2. How do you buy and what time of the day is it best to buy stocks?

Whatever the setup or play, I always buy in tranches - 3 tranches to be exact : Before, During, and After breakout point. The volume for all three can be equal or different depending on your risk appetite. The tranches can be done in weeks, several days or all in one day.

Here are some related posts to this topic

http://zeefreaks.blogspot.com/p/the-trend-followers-guide-to-money.html

http://zeefreaks.blogspot.com/2016/10/the-trend-following-astronaut.html

http://zeefreaks.blogspot.com/2016/04/bodega-and-law-of-equivalent-exchange.html

This is a good risk management strategy as it can minimize potential losses in case of a fake-out. This would also maximize your time and lessen your opportunity loss when your current stock hasn't broken out yet with your initial tranche while other stocks are moving. Wouldn't it be such a shame if you were fully committed on a stock that isn't moving and suddenly a super play appears?

As for when is the best time to buy, that would depend on your risk appetite. 

If you are a risk-taker, have the time, then buy during the intraday breakout and cross your fingers the trade won't explode. If the breakout happened in the morning session, expect a lot of price fluctuation and get ready to cut loss when necessary. If the breakout happened in the afternoon, there's a good chance momentum will continue until market close. 

The safest to buy is during the matching or run-off at 3:15-3:20 PM since at that point, the possibility of a whipsaw is close to none. Only problem is if prices have already gone beyond your levels of comfort. If that happens, then just say NO to that trade.

I personally buy sets of my tranches between 2:30 - 3:20 PM since this is the time where prices would likely show their true intentions - whether they would like to break-out, break-down or stay boringly put.


3. What is the difference between cutting losses and executing trail stops? How and when do you set these?

In a nutshell, trail stops are there to preserve your gains while cut points are there to protect your capital.

If you owned this port, what would you do?

Read more by clicking on this link.

If you have Questions that aren't in this post (click here), feel free to post it on the comments.

The Victim Mentality

I remember this one late afternoon when I was still a 1st grader. My tutor asked me why I flunked my exam. I told her "Hindi kasi ako nagcheat, yung mga classmates ko, lahat sila nagcheat."  I still remember that very moment because deep inside, I knew I was wrong and it was such a lame excuse. That instead of admitting that I didn't study for it, I put the blame on everyone else. 

The Victim Mentality - "I can give you a hundred reasons why it isn't working, and not one of those involves me." This is the very reason why a lot of people stay as losers in life. 

I guess it's human nature. 

Side comment : Some say this could be the reason why a lot of women can't make up their minds when choosing what to eat. Last time they did, they doomed humanity.

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Many pursue trading and investing because they believe it can be their ticket to financial freedom. Oh you've heard the countless stories of successful people in this field, so you try it out. Maybe you'll get lucky. But most probably you won't. If the stock market was an easy game, everybody would be doing it. But it ain't.

At this point, you've come to realize that you need to make a decision. How badly do you want to pursue this idea of freedom?  Well, here's an acid test for that : If you find a single excuse not to win in this game.

"I'm too old.

"It's too complicated."

"The market is rigged."

"I don't have insider information."

"My work schedule doesn't allow me."

"I have too little capital."

"I don't have a mentor."

If you want to be a success, stop with the excuses. And give yourself a chance. When was the last time you were so passionate about flying with your ideas that you forgot about the fear of falling?

How to Trade and Travel

A common misconception about trading the markets is that you always have to be on the watch.

Prices trade and react within a certain range during consolidations. And depending on the setup and kind of stock, this consolidation phase could take a few days to several months or even years.

Here's the 1 year chart of ION for example. It has been on a long sideways movement after its explosive 4 week rally.

If you bought the hype of the "Experts" and are still holding and watching the stock day by day, you'd probably look like these fellas...

Timing is everything.

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I travel and take vacations a lot. And I usually trade with huge positions which when I think about it... is scary. This usually would render me unable to check the charts and be on my full battle gear. Unless of course I bring with me my loyal workstation like on this photo below.

But having to monitor minute by minute when trading is a lie. If you have day job, working on a project or travelling, you only need to monitor and trade when the stocks in your watch list or port are on the verge of breaking out or breaking down. 

Sounds impossible huh? 

But let me enlighten you to the 3 steps that have helped me trade while on the go.

1. Creating a trading plan.

Everything should be accounted for. 

A. The kind of setup and play you're going for - where you determine if you're in it for the short swings or the bigger waves and if the stock you plan to enter is volatile or not. 

B. Entry price, cut loss levels and trailing stops - the very fundamentals of trading. 

C. Time stops - where you sell your position if it doesn't move within a given time frame of your trading bias. Nakapag move on na lahat, ikaw nalang hindi. #whogoat.

Many traders fail in this area. Having no regard to any of these elements render trades incomplete and dangerous - a trip to hell if you may. One should also be prepared for every scenario so you won't panic like sell short or buy late when momentum and volatility comes in. 

2. Planning ahead and working with what you have.

You need to be aware of your environment and available resources. If you're working or visiting in an area that has no internet or if you do not have the resources to trade like a laptop or a mobile smart phone that can access the internet, then do not trade!

I usually just use my prepaid smart phone when on the go and register to internet promos to avoid getting billed a fortune. Internet speed is pretty fast and just right for trading depending on your location. For Globe users, here's the code. Thank me later.

If you have a live broker, make sure to give them careful instructions on how to execute your trade. If you have siblings, teach them the basics of buying and selling. If you have a dog, train the mutt to trade.

3. Alerts and Trigger Points.

Now all you have to do is to set your trading alerts. I use a mobile app for it (PSE Watch). I heard Investagrams also has this feature. Thank you app developers for making our trading lives easier!

From here, you have to determine your trigger points for the stocks in your watch list. What is a trigger point you ask?

A Trigger Point is a Darvas concept (Click here for a detailed post) that goes like this : when certain support or resistance levels are reached and breached, rallies happen. Simple right?

Trigger points can be both objective and subjective.

Okay for this blog post to have sense, here's an example of my recent trade while on the go...

IMP 

Type of Play : Sleeper

Time Stop : 1 Month

Entry Points : 13.8-15

Trigger points : 

14.4 - 16.0 (Momentum)

12.9 - 12.8 (Cut loss)

I bought IMP on July 15, 2016 in anticipation of a mini ZS - 50MA.

I was prepared to wait for a month and buy more shares using the GTC feature (buy order valid for 60 days) while setting my trigger points at 14.4 - 16.0 range, which would alert me if momentum has come in and 12.9 - 12.8 levels for me to Cut loss. 

If the price doesn't touch any of these trigger points, I would not be notified. Ever. And to emphasize on the beauty of this simple statement, just imagine those mornings when you were woken up because breakfast was ready vs those mornings when you were woken up and had to wait for your mother to finish cooking while sitting on the table.

So while still on vacation that Monday, I received a message notifying me that my triggers were hit. 

And since momentum has come, all I had to wait for was the day's close before checking my port and planning my next move.

Port looked like this by the end of the day.

Two Sleepers, 3 for TF. No Tsupitas.

With IMP's ceiling move, it was time for me to plan my sells.

Under normal circumstances, you could just use the Off-Hours Order feature to execute your buying or selling for the next trading day. 

But since this stock went ceiling and you can't place sell orders above the ceiling price, I had to execute my sells at the pre-open of the next trading day. For IMP, I had to make sure to sell the next trading day after the ceiling candle as per my trading rules on these kinds of volatility plays.

If it didn't go for a ceiling, I could have opted to use the GTC feature for selling and set them on and near IMP's resistance levels.

 And Viola! A half bagger trade. 

 EZ. GG.

Additional Notes :

I seriously did not expect this to happen while on vacation. ZFTs should ask me when I'll take my next vacation. Alam na.

And I'm sure you trolls are gonna ask... 

...Among other technical questions. 

Please spare me your messages. Don't be lazy and read this blog from cover to cover.

Study. Execute. Reflect.

Personal Notes Series 004 : Life of A High Risk Trader

There are days when i wake up in the morning late, like 9AM 

and feel the want to work and dress up like a proper gentlemen 

with a suit and tie, but then i go "what the hell" 

...then end up just wearing the tie.

#buhaytrader

#nakedtrading

Trading is a craft that pays a lot when mastered.

And Full time traders are a mystery to many. Aside from being a

 fraction of a fraction in the general populace, civilians don't see

 them much, and when traders do show up in public, some 

don't talk much about their trading lives. Maybe some people do. 

I don't know.

So what's it like being a full time trader?

I am but one sample. So don't take my word for 

what you are about to read. 

Here are my top pros and cons of going full time in this industry.

(Pros) # 1 

You own your time.

No schedules. No deadlines.

Imagine all the trips! The leaves you can take. And you 

get to decide when to take a break from that break!

Bliss. You get to do what you want, when you want. 

And that is the kind of freedom almost everybody wants. 

(Pros) # 2 

You can work anywhere as long as you have 

internet and your workstation (or smartphone).

Work on the go? No problem! 

PD : I've traded on a public jeep, bus, van, ship, even on a 

plane! (until it took off and cut my internet signal)

#QUEHORROR

And just imagine having a peaceful, non toxic, no traffic to work

 environment. You could even swim and trade at the same time,

 just buy a waterproof smartphone so you can stupidly show off 

how flexible you can be while getting the job done. 

(Pros) # 3 

You set the pace

No constant external and annoying force telling you to finish 

something before the deadline - then adds more load to the pile. 

Of course there's that pressure from within, telling you to earn, 

and to trade. But that's a whole lot better than a naggy, 

bossy boss right?

It even gets awesome when you hit your personal profit 

quota that's good for months or even a year.

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Now for my top Cons of being a full time trader.

(Cons) # 1. 

Too much time on your hands.

Yes you've got the freedom to do whatever you want at any time. 
How is it bad you ask? Well, you get used to it and it gets boring
 after a while. At some point you'll be surprised when one day you
 find out that you actually HATE holidays and moments when the 

markets are closed for some reason.

It's like a love and hate relationship. Like when you were in 

 school and you can't wait for the sem-break. And when that break

 finally arrives, you go... "now what?" and suddenly miss school.

Your friends and family would think you've gone crazy for loving
 Mondays and hating Fridays. But that's just how it is with you. 
It's your passion. You just can't wait to trade.

(Cons) # 2. 

The Temptation of Creative Procrastination.

I've already mentioned in my previous posts how lazy I am. 
That instead of investing or doing something worthwhile, I tend to
 procrastinate. Of course, studying charts, patterns, and back testing
 are all part of my daily routine. But What else are you going to do
 with all that time that's not market related?

Being lazy in this industry can be devastating to 
one's health and lifestyle.

There were times in my trading life when I'd just sleep after 

trading hours. Maybe play one PC game I like. Browse Facebook. 

Unproductively surf the net. Watch a whole set of TV series. 

Then repeat the whole cycle next day.

And as for exercise? 

There was a season In my trading life when the time and effort I 
spent walking from my trading room to the kitchen, to the dining
 area to have my meal, then back to my room was 
my "form" of exercise. 

I wasn't just good at procrastinating. 
I took it to a whole new level.
I was a master of it. 

WAS!

Alright Alright. Sometimes it still is.

And you'll have so much wealth in your port, 

it will spill over to your body as well! 

I tried to gamify my life and at one point, i finally reached

 the "Bio-Armor" achievement - by not taking a bath for 5 days. 

Uhgr. I might say more things I'd regret... The point is, you have to

 pull yourself together and make an effort to develop 
good habits, proper time management and discipline. 

(Cons) # 3. 

Abnormal or Dead social life.

After a while, it gets lonely.

This is my main frustration as a trader. I feel like nobody 

understands me. The experience of gaining and losing in the

 market is just too hard to comprehend for the average person 

who has little to no idea on how the markets work. 

I've got no boss, so I can hardly relate anymore to civilian boss 

related rants and jokes. And if ever I pull one out, they'd just brush

 it off since they've heard it like a thousand times already. 

When I try to reach and hang out with my non-stocks buddies, It's

 different. I've got time. They don't. And this becomes a big issue. 

The trips I want to take, the length, and how I take it has become
so different, you'd instantly become the odd one out. 

I guess it's kind of better because It doesn't kill off your

 relationships the fast way like some networking "businesses" do.

#FRIENDSHIPOVER

Most people think that we create money out of thin air just by

 sitting and clicking some buttons. And that's that. No wonder most 

think it's a Scam. It's sounds too good to be true. A dream. 

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Fitting in society would be one heck of a challenge. I have learned 

not to demand from my civilian friends. Because sometimes when I

do, I get that

"Oh I'm sorry we're not like you!" card.

I believe trading the markets is one of the most strenuous things a person can do. Not only will you have to work hard burning the late night candle, but you will also have to sacrifice a lot - even some relationships. It is definitely not for the weak. But to those are brave enough to accept the consequences and challenges of taking this path. The rewards are truly fulfilling - that is, if you survive. 

How about you? What are your Pros and Cons?