Author: Investa

We are now living in a world where technology is essential, where every part of our daily lives is associated with the science of this craft in one way or another. Aside from technology, people are also obsessed with convenience and how to make our lives more comfortable, and this is where the use of credit cards comes in.

Let’s take a look at how we do shopping nowadays — instead of bringing lots of cash when we go to the malls, credit cards are often used to purchase items – you simply give it to the cashier, swipe it, and then voila! New purchased item is now yours without the need of taking cash from your wallet or withdraw cash from any atm machines.

To some, credit cards are more of a status symbol than a necessity. People love to flaunt their fancy cards because they believe that these cards symbolize their luxurious lives — the more cards they have, the richer they are. However, credit cards are not really a status symbol nor a sign of wealth. In fact, almost everyone (even those who are in the ordinary or middle-class level) now owns a credit card.

Credit cards are becoming an instrument of debts because of the “buy now, pay later” marketing schemes that are very appealing for some. For average people, they usually think that credit cards can help them on their financial struggles because they can use it to buy things that they cannot afford for the moment. In reality, if they don’t use it wisely, they will be suffering from more debts due to credit card charges and interest rates.

Although credit cards will help you in terms of convenience of fast payments, easy access, security purchases, rewards, and even build your credit history, there are still some instances that having a credit card is unhealthy and not recommended. Here’s why:

Disadvantages of Using a Credit card

Ease of Payment

Since you pay with a credit card, you might have the comfort of spending over time because there’s no actual cash involved whenever you pay and the reason why this is a disadvantage is that you might probably spend more of what you can afford. Credit card is a source of debt and its primary goal is to encourage people to spend the money that they don’t have. People tend to buy things that are really unnecessary. We’ve been there, done that right?

Interests

One of the most common disadvantages of using a credit card is the interest rate. If you do not pay in full, credit card companies can charge you a huge amount of interest on every balance that carries each month. This is how the credit card companies get money from you and also the reason why people suffer in debt. However, you can avoid this kind of scenario as long as you pay the debt in full amount listed on the credit card bill before the due date.

Card Theft

Credit card fraud and/or identity theft is on the rise as scammers can easily get your personal information physically (skimming or stolen) or from phony calls, emails, wi-fi hotspots, and websites as long as you are not careful enough of your credit card information. Credit cards are usually the target of scammers that’s why it is advisable for you to check your cards regularly to make sure all transactions are legally done from your side. If in case you discover any unauthorized charges, you should immediately contact your bank or the credit card company to report the misfortune and immediately change your online password and/or pins.

Impulsive Buying

Impulsive buying is when a person buys whatever she wants without planning it in advance. This act is driven by emotions and whenever we decide to do an impulse transaction, we justify our decisions with retroactive logical justifications (right after buying transaction has already taken place). For some, a ‘little credit card theraphy’ can seem like a harmless action but it can be more harmful than you think as you might be dependent on your credit card as your way to solve any financial problem or celebration reasons that may occur. If you have fallen into this habit, you’ll be soon spending beyond your means.

Late Fees

It is the amount paid by consumers when they failed to pay before the due date or when they pay less than the monthly minimum payments. It is advisable to pay in full to avoid late fees or if you cannot afford, you can at least pay for minimum amount for each month. These late fees can add up and can give more debt to a consumer if not taken care of as soon as possible.

Conclusion

Before engaging yourself with a credit card habit, make sure that you are capable of paying for it and you are smart enough on how you will use it. Credit cards are financial tools that give convenience to its owner, you can benefit from it when used responsibly; however, if cards aren’t used wisely, this can be a source of a problem and a huge financial burden.

Always remember what Uncle Ben always tell to Spiderman — “With great power, comes with great responsibility.” Instead of buying things, learn how to save for the future. After all, a good investment can lead to a good life. You can buy anything that you want if you learn how to save and invest now.

If you are working full time, becoming a trader is quite a challenge.

Do you consistently fail to sell at your set stop-loss because you were doing something outside the market? Have you missed on your reversal and bounce plays many times already? Are you always not able to catch up with the latest news and disclosures?

Most part-time stock traders in the country don’t have the luxury to monitor their positions while they are working on their day jobs. On the other hand, students who also trade stocks need most of their attention directed at their subjects and professors while the market is open. People on vacation also share the same difficulty as they can’t have their eyes glued on their phones or monitors during market hours. Because of these reasons, we might miss out rapid changes that take place during the opening hours of the market.

Every second counts for us traders and having an alert system for stocks will help us save time and money as this will allow us to respond to any price movements as they happen real-time. Given that almost all stockbrokers in the country do not feature stop-loss orders, this would be a godsend to those traders who are dealing with cutting prices or stop-losses. We need not to stare at the glaring screens of our electronic gadgets every minute just to be able to catch up with price movements.

That’s where the InvestaWatcher comes in.

Since 2016, the InvestaWatcher has helped countless of local retail traders with their trading executions. No longer is it an excuse to miss out on a breakout play that could’ve netted you 10% plus gains in one day because you were too busy with something.

Here are the advantages of having InvestaWatcher as part of your trading journey:

• Pick 30 stocks to add to your watchlist
• Set up your entry, target, and cut loss prices
• Add short notes to remind you of your trading decisions
• Remain updated with the important news of your stock picks such as corporate news, announcements (for example – mergers and acquisition, buyback, etc.), quarter and annual results
• Choose how you want to get your alerts — via Investa Platform, FB Messenger, SMS, or Email
• Get price and news alerts in real-time

Steps to add a stock to the InvestaWatcher

Option 1. If you’re using the InvestaChart and you want to add the current stock that you’re looking at:

1. Click the “Watcher” tab on the right-hand side of the chart under “Tools”.
2. Select the “eye-like” button or the “plus sign” beside the “Watcher Setup”.
3. A small tab like the one below will show up where you’ll input necessary data.
4. An alert will be sent to you as it hits your set prices (Target and Cut Loss) or when it releases a news/disclosure.

Option 2. If you’re anywhere in the Investagrams’ homepage:

1. Select the blue navigator below beside your account’s default picture then choose “Watcher”.

2. You’ll be taken to the InvestaWatcher’s main tab where you can add stocks and setup alerts.

3. A small tab will pop-up like the one below.

4. An alert will be sent to you as it hits your set prices or when it releases a disclosure.

The InvestaWatcher will alert us through email, sms, or even in our Facebook Messenger accounts. So, it basically covers all the channels needed to alert you.

As a trader, we know the amount of effort we put in our trading plans. But a well-baked trading plan won’t necessarily grant us the reward we’re looking for, execution serves as a bridge between our trading plan and the market. Actually getting in the swing and the huge moves of the stock we want to trade in the most precise way is tougher than creating a trade plan, given outside variables that might affect the way we execute our trades.

We might be patting ourselves in the back when the stock we made a trading plan for actually went upwards. But our goal in the market is to make money consistently. With the InvestaWatcher, our executions will be better, more efficient, and precise.

For more information about the InvestaWatcher, click here.

As a trader (or investor), your job is to sift through companies listed in the stock exchange and weed out all the companies that do not fit our strategy to create a watchlist of companies that do. That’s how we find stocks that give us the opportunity to generate income.

There are currently over 200 plus publicly-listed companies in the Philippine Stock Exchange (PSE). Now, whether you’re an investor or a trader, the mundane task of sorting through these companies (one by one!) can be a lot tiring, as you can imagine. Thankfully, we’ve already been lightyears away from the stone age-like activity of screening companies one by one. We can now use a screener that has virtually every parameter we need.

If you’re someone who has a day job or is still a student, then using a stock screener is just for you. Using a screener that can scan through various parameters from the PSE stocks, from blue chips to your favorite “basura” stocks (3rd liners/small caps), screening stocks won’t have to be too tedious nor time consuming.

A common question non-market participant asks investors/traders is how they can find stocks to buy. Both investors and traders have their own strategies in screening for their stocks. They’ll be explained as follows.

How to Use a Screener?

Investors who use fundamental analysis need their ratios. They need to invest in financially sound companies that will do well in the long run. They want to buy stocks that are undervalued and sell when it’s overvalued.

Here are the ratios available for fundamentalists:

• Earnings per Share % (EPS %)
• Return on Equity (ROE)
• P/E Ratio (Price to Earnings Ratio)
• P/BV (Price to Book Value Ratio)

They could also use descriptive parameters such as:

• Sector – Financial, Property, Mining, and Oil, etc.
• Price – Prices relative to stocks in the PSE
• Change Percentage – Price changes from its previous day’s close

The following examples highlight how a fundamental investor can utilize InvestaScreener:

Looking for undervalued companies? Here we’ve easily found 42 companies that are deemed undervalued using the P/E Ratio as a parameter.

Investors can also mix it with other fundamental parameters accordingly with their strategy.

They could also filter the screener to only display a specific sector given other fundamental parameter they have entered. In the below example, we used P/E <10 in the financial sector.

They could also filter stock picks with a technical filter. In the below example, we filtered stocks that are in their long-term uptrend while trading below 15 times their earnings.

For traders, screening stocks have never been easier. Here are some filters that you’ll probably need the most:

Trends – Short-term, Medium-Term, Long-term
Basic – 52 Week High (Low), Volume and Value Averages, Date % (Yearly, Monthly, Weekly)
Indicators – Moving Averages (simple and exponential), RSI, DMI, Bollinger Band, and many more

And arguably one of its coolest filters:

Candlestick Patterns – Shooting Star, Hanging Man, Inverted Hammer, etc.
Candle Types – Green, Red, or Doji closes
…and many others! (Once you are subscribed to InvestaScreener+)

Let’s say that you want to trade stocks that are on a short-term, medium-term, and long-term uptrend, you could easily find them using the screener. See sample below:

Let’s try screening stocks that closed with a doji (a candlestick pattern that opened and closed at the same price in a specific timeframe) candle.

Highlighted by the eclipse in the charts below are the doji candles. Using 4 multiple charts, we displayed the first four stocks based on the above results of  InvestaScreener. We can see how accurate and easy it is to screen through all stocks in the PSE with just a few clicks of a button.

Other things you could do with the InvestaScreener:

• Setup EOD Alerts – A text message or an email will be automatically sent to you
• Save your own filter setting – No need to enter your filters one by one. You could also set multiple screener settings if you trade multiple setups

If you find a hard time balancing your personal life with trading, then it’s highly suggested that you use a screener as it will save you a tremendous amount of time. Screening precedes buying and selling and all the other parts of a trader/investor’s system. With the usage of a screener, you’re more likely to ride stocks that fit your strategy.

Click here to access InvestaScreener

One of the most commonly used technical indicators across all markets is the Relative Strength Index or RSI. Developed by an American technical analyst named J. Welles Wilder, the RSI is a momentum oscillator (whereby oscillators are the most common type of a technical indicator) used primarily by traders to identify the speed and change of price action. The standard setting for the RSI is the 14-period average that oscillates between 70 (cross above is the overbought region) and 30 (cross below is the oversold region). RSI can be used in any timeframe relative to your trading objective.

For those who are puzzled as to what the RSI is, a simple analogy for it is a car’s speedometer. Say you’re driving down South Luzon Expressway (SLEX), the minimum and maximum speed for a car is 60kph and 100kph, respectively. Let’s consider the minimum and maximum speed limit as oversold and overbought. When you go over the speed limit of SLEX, say you’re going 160kph, you’d still be able to go from point a to point b, but the risk of getting apprehended or a vehicular accident is now doubled, if not tripled. Same goes on with RSI, when you entered/bought stock in the overbought region, say in the 90 levels of the RSI, the odds of the stock pulling back is high (meaning it will depreciate in price value due to profit-taking overwhelming buying). So, it’s more likely that you’ll end up in a loss rather than a gain.

The RSI is often used for the following reasons:

• To identify overbought and oversold conditions
• To spot classic and hidden divergences (bullish and bearish)
• To serve as a leading indicator to generate buy and sell signals

Overbought/Oversold Conditions

The chart below shows you the overbought and oversold levels of the RSI (14-period). A stock can proceed to go lower than the oversold line (30) or higher than the overbought line (70) depending on the speed of the movement of price.

The RSI readings below show that a stock can proceed to go over or under overbought and oversold regions and still go into the same direction.

Overbought conditions can be used as a signal to trim down your shares when you are in gain to cash-in some of your profits. It can also be used as a possible signal that a pullback is about to impend. So if you’re the type of trader who’s good at pullback setups, then this may be of use to you.

Oversold conditions, meanwhile, can indicate a possible exhaustion in selling. This is where traders who trade bounce plays sometimes look at when they identify their trading setups.

Note that it would be unwise to passively buy stocks just because they’re oversold or to automatically sell all your position when it’s overbought. Always be systematic when buying or selling so that you won’t let greed, fear, or hope, take over your trading.

Divergences

A divergence indicates a possible change or reversal in the underlying trend. It happens when price is not “in-sync” with momentum. Divergence is not limited only to the RSI as this could also be seen in other indicators such as Moving Average Convergence/Divergence (MACD) and the Commodity Channel Index (CCI), to name a few. When divergence is found in a higher timeframe (like weekly, monthly), it’ll give a much stronger signal.

There are two types of divergences: the bullish and the bearish. When looking for the latter, search for lows. For the former, look at the highs.

Bullish Divergence

A bullish divergence (positive divergence) happens when price makes a lower low whereas the momentum indicator makes a higher low. This means that there is a high probability that selling-pressure is weakening and buying (demand) could soon take over.

After Metro Pacific Investments Corporation (MPI) generated a bullish divergence using the RSI (14) in the 1-hour timeframe, it went on to break the previous high around 4.65/sh and then created a higher high around 4.75/sh. It also created a higher low in the few candlesticks. The bullish divergence signified the change in trend, from a downtrend to an uptrend, for MPI.

Below are a few more examples:

Bearish Divergence

A bearish divergence (sometimes called as negative divergence) happens when price makes a higher high but the momentum indicator makes a lower high which means that the buying momentum was not strong enough to warrant a new high. It could be an indication that buying is waning down, and profit-taking is imminent.

Divergence can be as subtle as the one you can see below. The angle of the slope line may not be as angled as the previous charts you saw. But if you observe closely, the exact RSI reading of the high on the left (RSI = 92.3651) from the high on the right (RSI = 91.4676), it would show that it indeed made a lower high. And as you can see on the right side of the chart, the stock went on to start a downtrend (series of lower lows and lower highs).

Hidden Divergences

Hidden divergences are different from classic divergences. The latter indicates that there could be a reversal (uptrend to downtrend or downtrend to uptrend) to the underlying trend, whereas the former could sign as a continuation in the current trend. The theory of “buying the dips, selling the rallies” may be utilized here.

Hidden Bullish Divergence

Hidden Bullish Divergence often found during retracements in an uptrend. As you can see in the chart below, San Miguel Corporation (SMC) is in an uptrend when the hidden divergence is spotted during the pullback in price action. The concept of “buying the dips” can be used here.

Hidden Bearish Divergence

This type of divergence tells us that there is a strong likelihood that an underlying downtrend will continue. Holcim Philippines, Inc. (HLCM) shows us how this works. We can see that price action made lower highs whereas the RSI created a higher high, an indication of a continuation of the downtrend. The concept of “selling the rallies” can be used in this regard.

Potential Buy and Sell Signals

The RSI can be used to generate entry and exit signals if coupled with other indicators such as the MACD or even just price action itself. If you backtest the divergences above and have a proper grasp of candlestick patterns and support and resistance, then you may utilize the RSI in your favor. It will help you craft your trading techniques so that you would be able to develop your own system to trade the market.

If confused, always remember:

• A bullish divergence (price action gives a lower low, momentum indicator shows a higher low) indicates a reversal from a downtrend. Look for the lows here.
• A bearish divergence (price action makes a higher high, but momentum indicator creates a lower high) indicates a reversal from an uptrend. Search for the highs here.
• A hidden bullish divergence signifies a continuation in an uptrend. Observe the lows here.
• A hidden bearish divergence suggests a continuation in a downtrend. Spot for the highs here.
• Classic divergences are a possible reversal of the underlying trend.
• Hidden divergences are a possible continuation of the underlying trend.

In conclusion

At first, it would be difficult to understand the RSI especially the signals it gives off. It is essential to train your eyes as you progress in technical analysis because it will help you handle future market opportunities, so there’s no reason to rush and get impatient. You won’t be able to memorize all these jargons in one read, so take notes, backtest, and be patient.

Trust in the process as trading is a journey! ?