The strongest emotions every person could ever have are fear and greed and it is responsible for burning all the possible profits of a trader.

Yesterday’s Philippine Stock Exchange index (PSEi) closed at 6,884.38 or down by 116.76 points which caused panic and breakdown of some traders who do not have a common trait that all successful people share – RISK MANAGEMENT.

Trading without proper Risk Management can wash away all your hard-earned money or on lighter cases, extreme paper loss in your portfolio and it will leave you with a bad disposition and less confidence. You have to realize that before you trade in the stock market, you should have the following risk management traits every trader should have to protect your trading plan and support your strategy:

1. DUE DILIGENCE

Some of the traders are gaining profit because they are trading what is trending or active for the day – we call it as trend following in the world of stock market. Trend following or trend trading is a strategy which tries to take advantage of any short, medium or long-term moves that play out in various markets. But this kind of technique is risky if you do not have the proper knowledge and trading skills in the first place. It may sound like a broken record, but due diligence will allow you to gain essential information and vet out a possible new investment. As a responsible trader, you may want to follow these steps to give you a balanced overview of the pros and cons of your stock pick, and allow you to make a rational and logical decision:

• Read disclosures of the company from PSE Edge
• Be updated about the company’s latest news
• Monitor Financial Statements and Balance Sheets and asses Valuation Multiples
• Observe Management and Share Ownership changes
• Watch and learn from the Stock Price History

2. STOP LOSS

Don’t let your emotions overcome your decision. This is one of the problems of some of the traders and probably the most important aspect of risk management. “What if the market goes up?”, ”It’s a loss why I would sell it?”, “I lost a lot and I can’t go back now” – these are just some of the questions that traders are asking. A disciplined mind is very critical and having a stop loss let’s you take a manageable loss as compared to bigger ones. Limit the losses before it goes deeper. It lets you live to fight another day.

3. PROFIT TAKING

If you feeling greedy during your stock plays, the possibility of losing your supposed-to-be gains are at 100%. Why? Because you’re so eager to have a higher profit. It is like playing in the casino. When you won, that covetous part of human nature will tell you to stay for one more round and instead of taking home your gains, you play even more and hope that you will win over the coming games but often times, it will only bring you back to where you started – at zero profit standpoint. How to prevent this scenario? Set your take-profit (TP) order and don’t trade with your emotions. Trade with your head, not your heart.

4. POSITION SIZING

Position sizing is a part of your trading system that covers “how much” you wanted to trade at a particular time or scenario and determine the part of your overall account value that you will allocate to one trade. This system lets you not over-bet or under bet on a trade. It is essential to risk a certain percentage of your account on each trade. Never ever gamble more than you initially wanted to risk. It’s a matter of discipline that values your capital preservation.

5. EMOTIONAL CONTROL

When trading, the last thing you would ever associate with is human emotions. It is without a doubt this is the final component of our risk management traits and must be discussed. Simply put, if you don’t control your emotions every time you trade, then I assure you that you will do something that you might regret for the rest of your life and worst case scenario – wipe away all your equity.

According to financial columnist Jason Zweig, “Many of the world’s best investors have mastered the art of treating their own feelings as reverse indicators,” and we can only hope that you apply this too to protect yourself from sinking the edge. You need to know what are your own biases and shortcomings so that you can learn to avoid them.

Life is going to be difficult at times especially during the bear market, but is it really that bad? Maybe we could think about it the other way – it is the challenges we face that make us grow.

Take life head-on and gear up with your risk management strategies with confidence because your most significant accomplishments will come from overcoming the tough times ahead.

Ano nga ba talaga ang inflation rate?

Lahat na ata ng tao alam ang inflation rate dahil kahit saan makikita mo ang issue ng inflation rate dito sa Pilipinas. TV, Newspaper, Social Media (especially Facebook), Office, Schools and etc. Isa to sa mga major issues sa Pilipinas. Bakit nga ba ito naging issue? 6.7% ang current inflation rate ng Philippines (September 2018). Compare to 2.9% of 2017 it is really high. Ngunit ito na ba ang pinakamataas na inflation rate?

If we will compare the 6.4% inflation rate to 60+% inflation rate in late 1980s is it still bad? Diba, hindi na masama? Kung ganyan pa lang ang ating inflation rate as of today, ano pa ang magiging reaction mo kung ikaw yung nasa kalagayan ng mga tao noong 1980s?

Why our inflation rate is high?

Ang inflation rate ay pinaghalong international and domestic factors. Isa sa mga dahilan kung bakit mataas ang ating inflation rate ay dahil na sa “Oil”. Dahil wala tayong sariling production ng oil, lahat ng oil ay import galing sa ibang bansa at dahil din dito Philippines are forced to import oil. Isa pang factor nito ang “Weak Peso”. At dahil sa lahat ng mga import goods ang pinang babayad natin ay foreign currencies mas mataas ang nagiging cost dahil mahina ang peso. Isa sa mga domestic factor ay ang “Bigas”. But not only rice, by the way. Vegetables, Fish, Sugary Foods, and Corns. There are so many effect of the rapidly rising inflation rate so why don’t we start our own investments. Let us learn to have another source of income so our hard-earned money will not be put into waste because of this issue.

What are the effects of inflation rate to different class Filipinos?

It all affects us especially those who are minimum wage earner. Kung may 100 pesos ka ano na lang ang halaga nito? 93.6 pesos to be exact. What if kung ang sweldo mo ay 20,000 per month, ang halaga na lang nito ay 18,720. Sobrang laking bagay nung nawalang pera sayo ng wala naman pinupuntahan. Pare-parehas lang naman ng effect sa mga Filipino pero iba ang nagiging solution ng mga tao. Bakit ba sa bank nag iinvest ang karamihan sa mga Filipino kahit na ang liit liit na ng interest rate? Takot kasi tayo na magtake ng risk, pero hahayaan mo na lang bang talunin ka ng takot mo? Hindi ka magfoforward kung matatakot ka lagi.

Take the risk!

If hindi ka aalis sa comfort zone mo di ka din magfo-forward? For example ang comfort zone mo ay sa loob ng bahay nyo, bakit ka lumalabas? Hindi ka naman kasi mabubuhay kung di ka magwowork.

So instead of blaming the government why don’t you try to do some actions? TRY TO INVEST? TAKE THAT RISK!

If you will not try you will not know. Walang nag umpisa sa stock market ng hindi nalugi or nagkaron ng loss. If you fail wag matakot sumubok ulit but this time different process na or different strategies. Ang mali kasi satin we keep on expecting different outcomes but still doing the same strategies. We even emphasize the issue about the chili pepper or ‘sili’ na nag-viral recently imbes na maghanap tayo ng paraan paano mao-overcome ang ganitong scenario sa bansa.

Hanggang saan ang kailangan kong maging income para hindi ko na mapansin ang inflation rate? Yan dapat ang way of thinking natin. Dahil sa pag-blame mo sa government nauubos na ang oras mo. Why don’t you use your time in learning the stocks market.

“We cannot solve our problems with the same thinking we used when we created them.” ~ Albert Einstein

In failures you will learn so much.

Don’t look at the inflation rate as a burden but instead, use it as you inspiration.

Ilang taon na rin ang nakakalipas simula ng magtrabaho ako after graduation. I was a rising employee sabi nga ng boss ko. Dahil Developer tayo, maraming deadlines kaya laging overtime pero siyempre kasama na din diyan ang pakitang gilas. Bibo tayo dati eh! I sacrificed my life pati yung buhay pamilya ko makamit ko lang yung inaasahang promotion at mataas na sweldo.

Gigising ng maaga tapos magbbyahe ng isa o dalawang oras depende pa yan sa traffic, pero minsan kapag minalas ka, sira pa LRT, o di kaya, pang sampung batch ka na bago ka makasakay. Imbes na fresh ka pupunta sa work, mukha kang nalantang gulay at di naligo ng tatlong araw!

Yan ang mga bagay kung bakit madalas na akong mastress sa trabaho, tapos lagi pang nag-aaya sa labas mga tropa ko. Gastos dito, gastos don. Peer pressure! Paulit-ulit na lang ang cycle ng buhay ko at yung mga dapat sana na inipon ko na lang sa bangko, napunta lang sa wala.

Hindi naman ako mayaman, #feelingrich lang. Akala ko kasi, kapag may sweldo ka buwan buwan at konting ipon sa bangko na minsan eh nababawasan pa, okay na.

Ako ang ‘The Living Legend’ ng rat race story ni Robert Kiyosaki.

Alam mo bang dumating na din ako sa punto na na-experience ang tinatawag ng mga henyo na ‘mid-life crisis’, totoo pala yon. May mga hinahanap ako sa buhay na hindi ko na alam kung ano.

Until one day, I accidentally saw my high school friend somewhere in Pasig and with the usual gesture, napa-kape kami sa Starbucks, ako pa nanlibre. (Yamanin diba?) Nagtanong siya kung malaki daw ba sweldo ko. Ang malupit don, he even asked me “Do you know how to invest? Ang stocks hawak mo ngayon?” Natawa ko e, sabi ko “Bro, kape kape lang tayo, walang networking!” Dahil I have zero knowledge when it comes to investing, sinabi ko sa kanya na baka pang-mayaman lang yon. Well of course, I asked a few questions until that questions became a small training with him about investing in Philippine Stock Market.

I was lucky enough to have a friend na dedicated tumulong at ipaintindi sa kin and mundo ng merkado. He taught me how things work, how to start in investing and how to make my money grow. He also taught me how to open my account sa Investagrams so I could practice trading bago sumabak sa totoong laban. Para akong binuhusan ng malamig na tubig dahil sa edad kong to, ngayon ko lang nalaman ang ganitong mga bagay at nagkainteres kung pano i-value ang hard-earned salary ko.

Fast forward today, nagkaron na ng meaning ang buhay ko (Naks, parang Hows of Us moment lang nila Kathniel!). Malaking pagbabago ang nangyari, nabawasan na ang after-work parties, I allocated time to study more about investing in stock market at madalas ko na uli makasama ang pamilya ko. I’m no longer living paycheck to paycheck, and instead of splurging everything, kasama na sa budget ko ang savings and investment.

‘Pay yourself first’ – a cardinal rule to discipline yourself towards your future goals and financial freedom.

Develop the skills and the right mindset necessary.

Yan lang ang dapat mo gawin at paulit ulit na panghawakan, sabi nga nila, don’t give up. Change how you think and you’ll change the results.

Naka-relate ka ba? Kung oo, I hope my story could help to open your eyes and treat this as perfect time to change. Hindi naman mahirap mag-invest, dedikasyon at yung WHYs mo lang ang kailangan mo to shift your mindset and improve your life for the better.

Salamat sa pakikinig kaibigan,
Your Ka-Investa, #AnonymousInvestaTrader