Investagrams has a full suite of indicators for traders using technical analysis. Among them, the Average Directional Index (ADX) is a commonly used indicator. Trading with a strong trend lowers risk and boosts possible profits. Since the ADX can serve as the best trend indicator in many situations, it can be very useful for traders. Let’s deep dive into the details and use cases.
WHAT IS THE ADX?
Sample ADX graph
The ADX is an indicator that tries to quantify the strength of a trend. This is done by quantifying how much price ranges are expanding to one side. The indicator turns this into a number that we see on a scale from 0 to 100. It’s important to note that the ADX is non-directional. Meaning, it will only tell you how strong a trend is but won’t tell you in which direction.
READING THE ADX
The ADX can help you distinguish if the trend is fit or not for trend-trading strategies. For example, any reading below 20 would tell you there is no trend. It wouldn’t make sense then to use trend-follow strategies. A reading between 20 – 25 could tell you that there is a budding trend. While any reading 25 and above would indicate the presence of a clear trend. In these situations, you should be looking for continuation chart patterns.
$ACEN had low ADX readings while it was in a long consolidation. Once an uptrend started, ADX readings spiked.
When determining trend strength, the ADX line’s direction is also crucial. A rising ADX would translate to a trend gaining more momentum. Whereas, a falling reading means that the trend is weakening. A common misconception here is that a falling ADX translates to a reversal of the trend. However, in reality, it only really means that prices are pulling back. Hence, the trend losing some momentum. The rule of thumb here is that as long as ADX is above 25, you can still consider the current trend to be strong.
While $MAC’s ADX fell significantly, this was only due to its retracement. The trend was still strong and the stock continued on its uptrend.
USING THE ADX INDICATOR
While using the ADX would mostly be for identifying the existence and strength of trends, this can still be a very powerful tool within trading systems. For example, breakouts are easy to identify, but often times these breakouts can fail to advance. However, you can use the ADX to help you find legitimate breakouts. If it gives you the signal that a trend is present, then the probability of a continuation is strong.
Likewise, you can also use the indicator to identify if prices are just ranging. Breakout traders tend to have trouble in ranging environments. Although easy to avoid in theory, in practice ranging environments often cause traders to experience a “death by a thousand cuts.” When the trend has slowed and is entering ranging conditions, the ADX will give a signal. A reading below 20 will clearly indicate that prices are now just ranging. As such, it would be wise to switch to different strategies more suited for range trading.
LAST REMARKS
Generally, the ADX can be treated as a “supporting” indicator. The readings won’t give you buy and sell signals. However, it amplifies the signals you would get from other techniques. A significant advantage for traders is the capacity to find and measure trends. Being able to do so lets you identify which strategies will work best. It will also help you figure out when to be aggressive, and when to stay on the sidelines. Remember, trading is all about risk management and optimizing your risk to reward.
Want to learn more techniques and strategies to help you build a crisis-proof system? Check out the Investa Summit 2022: Opportunities in Crisis! Our world-class and industry-leading speakers will be giving you in-depth experiences and lessons on the bear market we’re facing, and how we can find opportunities moving forward.
Jodee a.k.a. @batangtrader29 takes the spotlight for this week’s featured trader as he shares his knowledge to us on stocks from the PSEI.
In a quote by Charlie Munger, he says “The world is full of foolish gamblers and they will not do as well as the patient investors.” By exercising patience, you can avoid responding rashly and making choices that could reduce your chances of gaining money. Additionally, it gives the market’s ups and downs ample time to balance themselves out, ideally leading to earnings that are satisfactory to you. Let’s take a look at how @batangtrader29 uses this to his advantage.
@batangtrader29 gave his thoughts on $ALI and the potential course it might go after price action reached the demand zone.
During this specific trading period, @batangtrader29 has plotted out a rising wedge pattern which typically indicates possible breakdowns in price action. We can also see an RSI, a momentum indicator, closing in its oversold levels (around 30) which typically means a stock is undervalued. Moreover, it also means that it can be a perfect opportunity to buy. The two green boxes that we can see in the chart are known as the demand zone, meaning it is the price area wherein traders usually buy. The 3 gold lines are known as the golden zone which are considered key retracement levels for a stock or an index.
TECHNICALS OF THE TRADE
Technically, $ALI at the time was gaining a downtrend momentum. Five days after his initial post, @batangtrader29 has replied in the comments about where he expected the price to go. Because price has reached the demand zone, he expected massive buying actions around that area. Moreover, if we take a look at the RSI, it is below 30 meaning that it is a great opportunity for many investors to buy. Lastly, if we take a look at the chart pattern, we may notice that it is currently forming a double-bottom pattern. This usually means that there is a huge chance that the price will bounce right back up.
With all the information gathered and collected, @batangtrader29 was able to successfully make a good trade. He was able to achieve the forecast of meeting the rising wedge target as well as the demand zone reaction with bullish divergence. This earned him around 14% – 16% in total gains.
FUNDAMENTALS OF THE TRADE
The first batch of charging stations will be made available in Ayala Land Malls and Estates, according to Ayala Land Inc. ($ALI), which is currently preparing to expand them out across the country’s residences. According to reports, $ALI and the energy platform ACEN Corp. finished baselining their greenhouse gas emissions, including Scope 3 emissions in their value chains.
WHAT SHOULD BE MY NEXT MOVE
In the daily timeframe, $ALI seems to be heading towards a resistance at PHP26. While indicators may seem positive, it is best to wait for the breakout. This allows you to properly execute a trade while at the same time, reduce the risk of having a loss. Moreover, it is best to keep a look out for disclosures on updates about their existing and current projects.
Given this, it is preferable to set aside some cash to buy and hold this stock for the long term.
Additionally, given the state of the market, it would be prudent to buy the dips without expending too much of your money. Always conduct your research and keep abreast of news that is relevant to the stock you have chosen.
Once again, KUDOS to @batangtrader29 for being this week’s featured trader! Enjoy your 14-day InvestaPrime Access and continue to be an inspiration to the trading community.
The Investa Summit is here, this time to help you weather the storm in the markets. Top financial and business experts from all around the world are gathered to share investment principles, strategies, and tactics with digital audiences at the Investa Summit.
This year, we decided to match our theme with how the markets have been faring over the year. As the global economy has been rocky, we felt that we can provide the most value to the audience by setting the theme to finding opportunities within a crisis. Despite the gloomy investor sentiment throughout the year, opportunities will always be there. The Investa Summit serves as a way for traders and investors to learn how to prepare themselves to catch those opportunities.
Organized by Investagrams, the Investa Summit this year will be held online on November 25 to November 27. This year’s Investa Summit brings to you a star-studded lineup of speakers featuring:
Jack Schwager, Author of Market Wizards
Jared Tendler, Bestselling Author & Mental Game Coach
Tom Basso, Market Wizard
Mark Yusko, CEO & CIO of Morgan Creek, Managing Partner of Morgan Creek Digital
Akio Kashiwagi, Founder of MoneyGrowersPH
Lawrence Lee, President & CEO of CTS Global
Edmund Lee, President & CEO of Caylum Trading Institute
Javi Medina, Managing Director and CIO of BIM, Founder of Open Journal
Emmanuel Onuoha, Founder of Openwaver
More speakers will soon be announced as Investagrams wants to bring the most value it can to its audience!
“Based on the performance of stocks and even cryptocurrencies over the year, it was obvious for us that the traders and investors of today need knowledge and wisdom that will help them get past hurdles in the markets.”
Joanne Marquez, Investagrams’ Marketing Head and Project Head for the Investa Summit
Joanne also shared that bear markets are always where skilled traders truly shine. Spotting key opportunities during bear markets takes a lot of skill and discipline, which are honed through studying real-life experiences. Thus, she hopes that the wisdom to be shared by the speakers will allow the attendees to learn a thing or two and hopefully help them through the bear market we’re facing.
Investa Summit 2022 is being organized by Investagrams, the leading social-financial platform and mobile app in the Philippines founded by three Filipino millennials namely JC Bisnar, CEO; and Airwyn Tin, CTO. The platform offers virtual stock market trading, analytical tools, market education, and a social network to empower traders and investors of all levels in order to help you keep on top of the global markets. The Investa Summit is another step in the company’s goal of increasing the number of Filipinos who invest in the Philippines to 10 million.
Continuing Investagrams’ mission to equip millions of Filipinos with strong financial education, the Investa Summit gives you all these quality lessons and insights.
Now only one question remains: Are you willing to learn how to spot opportunities in crisis, and improve your trading system to flourish through bear markets?
Tickets for the virtual summit start at only P999. For more information, you can head over to the landing page to view all the details: https://www.investagrams.com/InvestaSummit/
If you haven’t noticed yet, Investagrams has a POWERFUL technical analysis indicator that can help you take the next level: the Volume Profile indicator. While other indicators often boast complex formulas, the volume profile is very simple. It shows you the volume of shares traded per price level. However, don’t let its simplicity fool you as this tool can be very useful. Let’s take a deeper dive into this indicator.
HOW DOES THE VOLUME PROFILE INDICATOR WORK?
As was mentioned, the volume profile shows you how many shares were traded per price level. By clicking the convenient button, you can have the indicator show up whenever you want. When used, information is displayed to you through a histogram as seen below.
This indicator lets you see levels where buying and selling are more intense. Once you find out which levels encountered heavier buying/selling, you should know that these areas should serve as more prominent support and resistance levels. As a rule of thumb, prices often don’t have trouble going through areas with little activity. On the other hand, prices will often have trouble going straight past areas with a lot of traded volume.
WHAT DATES DOES THE INDICATOR USE?
What makes Investagrams’ volume profile indicator unique is that it can dynamically adjust the range it tries to profile. Generally, the indicator will calculate the volume per price on only what’s being shown.
For example, here we can see that the chart only shows candlesticks up until August 16. Thus, the indicator will show you the volume by price for trading activity from that date until the current date.
If you zoom out up until the June 20 candle, the indicator will adjust to that date. It will then show you the volume by price for trading activity from the new date until the current date.
Same with zooming in, the indicator will always adjust accordingly depending on what’s shown in your chart.
USING VOLUME PROFILE TO THE FULLEST
Volume profile is often used in conjunction with other indicators and chart patterns. Through the volume profile, chances of success are amplified since you can identify which support and resistances are more important.
SAMPLE TRADE USING VOLUME PROFILE: $EMI
Let’s look at how volume profile can make even simple supports and resistances more effective to trade with.
When the Philippine stock market index came falling, many stocks fell victim. Emperador was one of the stocks that were heavily affected by the market sell-downs. However, as always whenever big sell-downs occur you can expect to see at least a quick bounce play.
As you zoom out you start to see support levels that you can choose. But, which ones should you use as entries and cuts? And, which levels should serve as your targets? As you trade more and more, you’ll most likely encounter times wherein charts are confusing given that there are a lot of levels to choose from.
For the example of $EMI, the volume profile tells you that 12 – 12.8 was a major level for the stock. You would also see clearly that your biggest target would be around 17.5 since most of the volume traded was there. The initial smaller target would be around 16.6 as it would be the closer significant level. Although 15 could serve as a technical target too, the volume profile would show you that the market takes little interest at that price level.
Prices would eventually break past 17.5, but selling at that level would still give you a 40% profit. Of course, using the volume profile won’t make your predictions correct all the time. However, it will most definitely help raise the probability of success.
@amadeus024 takes the spotlight for this week’s featured trader as he shares his knowledge and insights on stocks from the PSEI.
In a quote by Naved Abdali, he says “Once you have a plan, always invest within the boundaries and parameters of your plan. Never bend your rules to accommodate your guts.”. The main benefit of technical analysis is that it aids investors and traders in forecasting market trends and making trading and investing decisions based on the study. Watch as @amadeus024 uses this to his advantage.
@amadeus024 gave his thoughts on FCG and the potential course it might go after completing the shark pattern harmonic about 11 days ago. Additionally, given the current status of the market, @amadeus024 was able to predict where the price might go.
During this specific trading period, @amadeus024 has plotted out a simple support line in the 4-hour time frame. We can also see an RSI, a momentum indicator, in its oversold levels (below 30) which typically means a stock is undervalued. Moreover, it also means that it can be a perfect opportunity to buy. But what is most noticeable in the chart are the red lines that form M. This is what is referred to as a harmonic pattern, which aids traders in identifying pricing trends by projecting upcoming market movements. In order to spot possible price shifts or trend reversals, they use Fibonacci numbers to generate geometric price patterns.
TECHNICALS OF THE TRADE
Technically, FCG at the time was gaining an uptrend momentum. First, let’s look at its RSI which is at its oversold levels (below 30). In most cases, traders would want to buy around that level as it typically means that the stock is very undervalued, allowing traders to buy the dip. Let us also take a look at the MACD, a trend momentum indicator, which has also crossed towards an uptrend movement. As for its support, the price has just managed to bounce at the 0.50 support level, allowing @amadeus024 to grab the opportunity to buy. Lastly, the formation of the Bullish Harmonic Shark Pattern. This pattern typically indicates an uptrend movement and combining our previous indicators, it is no wonder why @amadeus024 predicted the price to pump.
FUNDAMENTALS OF THE TRADE
Yesterday, October 13, Figaro Coffee announced that its overall first-half audited financial earnings were up by 80%. The firm achieved top-line sales of P2.43 billion, an increase of 80% from the same period last year, and a net income result of P198.2 million, an increase of 111% from the same period last year. Gross margins were reported to increase from 44% to 49% by utilizing economies of scale and cost efficiencies. As a result, it saw a 64% rise in operating income and a 13.5% return on equity. A P0.01936 per share first dividend, payable on November 21, 2022, was also declared. A total of 90 million pesos was allocated in all.
FCG looks to be doing well in the daily timeframe as all indicators show bullish momentum. Moreover, positive disclosures and sentiments about the company have just been released recently such as the declaration of cash dividends. An increase in revenue, gross margin, and net profit, not to mention the plans of expansion, are also one of the key factors which make this stock good in the long run.
With all this considered, it is best to allocate some cash to buy this stock and hold it for the long run.
Additionally, it would be advisable to buy the dips without spending too much of your funds under the current market condition. Always do due diligence and stay up to date on news that is pertinent to the stock you have selected.
Once again, KUDOS to @amadeus024 for being this week’s featured trader! Enjoy your 14-day InvestaPrime Access and continue to be an inspiration to the trading community.
In celebration of World Investor Week and Investor Protection Week 2022, Investagrams and the Securities and Exchange Commission (SEC) bring you the SEC Investa Cup!
Here’s your opportunity to learn more about the stock market, trade your way to the top, and win awesome prizes. This competition is OPEN TO ALL and will run from October 17, 2022 to November 9, 2022. Take a look at the trading rules and mechanics for the SEC Investa Cup 2022.
Trading Rules and Mechanics
1. Registration. The first 200 free users on Investagrams to register can join the competition for free. Once the 200 slots have been filled, the registration will be closed for free users. InvestaPrime subscribers can join the competition for free at any time up until October 17, 2022.
Important notes:
– Verification of ID is required to join the competition room. Please submit your Valid ID here.
– Only one (1) entry and account per person is allowed.
– If you have more than 1 account to join the competition, all accounts will be immediately DISQUALIFIED.
– You can change your Display Name, Username, and Profile Picture until THE DAY BEFORE the competition starts. Once the SEC InvestaCup begins, the system will not allow you to change the above-mentioned anymore.
2. Platform. The participants of SEC InvestaCup will use the Virtual Trading Platform of Investagrams which tracks the real-time stock price movements in the Philippine Stock Exchange (PSE). The system automatically calculates transaction fees to make it more realistic.
You can access the platform through the web, or download the app on Google Play or App Store.
3. Goal. The goal for the SEC InvestaCup is to trade your account for the whole competition period and aim for the highest profits. The participants with the highest rankings while playing within the rules will be recognized as winners.
4. Starting Capital. Each participant will start with PHP 100,000.00 virtual money to trade.
5. Trading Hours. Weekdays from 9:30AM – 3:00PM. You can’t trade during off-hours and on weekends.
6. Tradable Stocks. Participants can only trade the listed tradable stocks for this competition. The tradable stocks are filtered by our system and qualify as liquid and actively traded stocks. You will be able to access the whole stock list once you are added to the Competition Room. The initial tradable stocks list will be posted over the weekend before the competition begins.
Penny Stocks will NOT be included in the list of tradable stocks due to their susceptibility to rinse and repeat abuses. Stocks that have come from PHP 1 levels and close at .99 or lower by the end of the week will be taken out of the list. This is to avoid any rinse and repeat abuses and deductions/disqualifications.
7. Diversification. To promote diversification and risk management, maximum exposure in a single stock can only be 1/3 or 33.33% of the portfolio. This requires the participants to buy at least 3 different stocks should they want to fully invest in their portfolio. The system won’t allow you to allocate more than 33.33% in a single stock.
8. Buying and Selling Conditions (For LONG positions) Participants now have two options when transacting. The first option is to transact using the current price of the stock and use market orders to buy and sell specific stocks at their real-time prices. The second option is to transact using our CONDITIONAL ORDERS. By using Conditional Orders, you won’t need to watch the market the whole day in order to transact in the market, you can now set AUTO CUT LOSS, AUTO TAKE PROFIT, and AUTO BUY ON BREAKOUT. You can also set these orders to GOOD TILL CANCELED so that your order will remain active until your buy/sell price is hit. Watch this tutorial.
Buy – You can buy the same stock multiple times within a day.
Sell – YOU CAN SELL THE SAME STOCK SIX (6) TIMES PER DAY.
In one stock per day you can sell TWO TIMES (2) at a PROFIT.
In one stock per day you can sell FOUR TIMES (4) at a LOSS. (cutloss)
9. Holding period for all stocks. We will be applying the twenty (20) minute time lock for taking profits to ALL STOCKS to avoid widespread and rinse-repeat trades. There will be no time lock or restrictions when selling at a loss.
10. Revision of Tradable Stocks. Investagrams and the SEC Team has the right to remove any stock from the list should it suddenly become too illiquid, abusable and/or delisted. Furthermore, Investagrams and the SEC Team may also add new stocks on the tradable list as new stocks become more active and tradable in the market. All changes will be announced before implementation.
In such cases that a stock is to be removed, we will follow this process:
Investagrams shall notify all the participants via the Investagrams Platform before the market opens.
If you still have the stock in your portfolio, you can sell it at any point in time at your discretion.
11. Initial Public Offering (IPO). All upcoming IPOs that will happen while the SEC InvestaCup is on-going will be added on its SECOND (2nd) trading day.
12. On Dividends that will be given during the SEC InvestaCup
Stock Dividends that will be released by a company will be credited at the MORNING BEFORE THE MARKETS OPENS of the ex-date. Please note that stock dividends will cause price adjustments, so be aware if a stock you’re holding will release stock dividends.
Cash Dividends that will be released by a company will NOT be credited to your total equity as the current system is still not able to credit cash divs.
13. On SRO that may happen during the SEC InvestaCup
Stock Rights Offerings (or SRO) is offered to existing shareholders of a specific stock to purchase additional shares at a price lower than the current market price in addition to their current shares at hand.
SRO’s can be deemed good for longer-term investors. However, in the short term, may POTENTIALLY lead to a possible decline or gap down in the stock. So it’s important to always be aware of this.
Participants in the SEC InvestaCup will not have an option to purchase additional shares from the SRO.
14. For stocks that will be detected by our WIDE-SPREAD DETECTION SYSTEM (WSDS). The Wide-Spread Detection System’s main condition is that the first (1st) best bid and ask should never be more than 2% at any moment during open market session.
Fig 1. Real-time Market Depth / Orderbook showing the first (1st) best bid-ask data.
Example: $ATN (Refer to Fig. 1)
Given:
1st best bid = 1.11
1st best ask = 1.14
Formula:
X = (1st best ask – 1st best bid) / 1st best bid
Condition:
If X is greater than 2% then WSDS detects that the stock is wide-spread and can be abused.
Solution:
X = (1.14 – 1.11) / 1.11 = 0.02700 x 100% = 2.70%
Verdict:
Since X is greater than 2% then the stock is wide-spread as computed by the system.
The participant will be given a prompt that the detected stock is not tradable upon executing a buy or sell transaction.
The stock will again be tradable once the system detects that the spread of the 1st best bids/asks are below 2%.
15. On Trading Abuses.
Day trading opportunities on natural market moves are normal, but please take note that Investagrams and the SEC Team will be on full-guard against participants that abuse illiquid opportunities. We want our winners to show real trading skills that are applicable in the PSE. Abuse of intraday spread trades will NOT BE TOLERATED. These rules are set to protect against the usual ‘rinse-and-repeat’ abuses that are mostly used in virtual trading competitions like this.
Read more about ‘rinse-and-repeat trading abuse’ here and why this is not characteristic of a realistic trading strategy.
Any participants that have more than 10% of their profits from rinse-and-repeat wide spread, illiquid and other abusive trades will be penalized or DISQUALIFIED depending on the severity of their offenses. We will be able to validate this through our data and algorithms that verify the historical transactions of each participant.
Any form of hacks, cheats, and abuses shall not be tolerated and will have corresponding repercussions. Suspicious behavior that may not be specified in the rules may also be flagged as ‘abusive’ trading behavior. Warning shall be sent after Investagrams has reviewed and confirmed that the actions are against the integrity of the competition. All trade records shall be verified and those who fail to follow the rules will be disqualified.
Participants will only be given ONE (1) warning, any participant who has constantly repeated any abusive trading behaviors (whether illiquid stocks, system abuses, loophole abuses) will instantly be DISQUALIFIED. Investagrams and the SEC Team has the right to review any suspicious activity, and if the behavior is deemed inconsistent with real life trading then the said participant shall be disqualified.
Questionable Transactions. Questionable transactions will be cross-checked through the buy and sell transaction time and the traded stock. Stocks that have more than 2% consistent gaps in the one (1) minute timeframe within the transaction period shall be deemed invalid and Investagrams and the SEC Team has the right to deduct the profits from the said transactions. It is normal to trade natural intraday moves and gaps can really happen, but if a participant is constantly trading stocks that have gaps within one (1) minute timeframe and their profits from these kinds of scenarios make up more than 10% of their total profits, then he/she will be automatically disqualified.
Fig 2. Example 1 for one (1) minute time frame gaps with buy (green arrow) and sell (red arrow) transactions
16. Trading halt. Stocks that are on a trading halt will not be tradable during the halt and will be tradable again during the announced lifting time.
17. Participant rankings. This is constantly updated every 10-minutes and automatically ranked by Investagrams system according to net profit gain/loss.
18. Deliberation period and the announcement of winners. At the end of the competition, at least one (1) week deliberation period shall be given to Investagrams and SEC’s team of moderators to verify trades and the confirmation of winners. The participants with the highest net profits will win. The resulting Top 1 to 10 participants after deliberation will be announced as the official winners.
19. Unexpected events. In the case of an unexpected event that interrupts the operations of PSE or the system of Investagrams, the competition shall be frozen and paused. Further notice shall be given and trading will resume once everything is back to normal.
20. Modification and adding of rules. Investagrams and the SEC have the right to modify the rules of the competition and add protective measures against any future abuses that may arise to ensure the integrity of the SEC InvestaCup. Announcements shall be made if there are any changes. Rest assured, we prioritize keeping the competition as FAIR as possible to all participants.
21. Ignorance of the rules is no excuse. All participants are expected to have read and understood the rules and mechanics of SEC InvestaCup. These are published for the participants’ information and protection. Ignorance of these rules and mechanics is not an acceptable excuse for violation.
22. Sponsors. Apple is not involved in any way in this competition. The sponsor(s) is/are solely responsible for providing the prize(s) listed herein. The prize(s) won are not apple products, nor are they related to apple in any way. The responsibility of organizing this competition and distributing the prize(s) are the sponsors’ responsibilities. Apple does not sponsor this competition in any way.
23. Joining the SEC InvestaCup means that you agree with all the clauses mentioned above.
The economy is currently in a bad situation. During the past 3 quarters of 2022, the PSEI and S&P 500 dropped nearly 16.71% and 23.64% respectively. If you want to track these markets, you can head on over to Investagrams. Both local and global equities sank deeper into bear market territory as investors fear rising interest rates and possible recessions which could devastate the economy.
Investors start to feel concerned and stressed about what to do given the current market conditions due to the abundance of FUD and the accompanying market volatility. For many investors, especially those who are just getting started, this is challenging. Nevertheless, it is wise to remember that market crashes are among the best times to buy. During a crisis, stock prices are much lower, allowing you to stock up on reliable investments for a discounted price. You will then benefit when the market eventually recovers.
What’s Going on in the Local Economy?
The USDPHP exchange rate has reached a record high and is still rising. On September 27, the exchange rate rose to PHP59 to USD, decreasing its value by almost 14% so far this year.
The International Monetary Fund anticipates that the Philippine economy would grow more slowly this year than initially expected as a result of the global economic slowdown and tightening financial conditions (IMF)
The IMF predicted that the economy will grow by 6.5%, which was less than its earlier prediction of 6.7% but still in line with the 6.5% to 7.5% growth objective set by the Philippine government. The economy was predicted to grow by 5.0% next year, which was unchanged from its July prediction but significantly less than the 6.3% growth predicted in April.
Inflation in the Philippines exceeded the central bank’s comfort zone of 2% to 4% for the period of January to August, averaging 4.9%. In order to battle inflation, the Bangko Sentral ng Pilipinas (BSP) has hiked interest rates a total of 225 basis points, raising the policy rate (PHCBIR=ECI) to 4.25%.
What’s Going on in the Global Economy?
It was projected that the global economic recovery from the pandemic would continue in 2022 and 2023, aided by advancements in the endeavor to vaccinate everyone around the world, supportive macroeconomic policies in the main nations, and favorable financial conditions.
However, the war in Ukraine will slow global growth and exacerbate inflationary pressures, creating a fresh negative supply shock for the world economy. The impacts of the war will be felt in many different ways and are likely to change as the fighting continues.
According to the WTO, when growth slows in major economies for various reasons, demand for imports is anticipated to decline.
High energy costs in Europe as a result of Russia’s invasion of Ukraine will reduce consumer expenditure and raise manufacturing expenses.
The tightening of monetary policy in the United States will have an impact on spending in industries where interest rates are significant, such as housing, automobiles, and fixed assets.
Along with sluggish external demand, COVID-19 breakouts and production interruptions are still a problem for China.
Overall energy price increases in August increased by 78% from the previous year. Food costs climbed by 11%, grain costs by 15%, and fertilizer costs by 60%.
In recent months, a lot of currencies have depreciated against the dollar, which is another factor raising the price of food and fuel.
History of Bear Markets
Bear Markets are a normal thing when it comes to the world of investing. Before the Covid-19 crash, there were multiple instances of bear markets in the economy.
Take for example the stock market crash of 1929 which started the great depression. Stocks started to decline in September of that year, but in late October, on the 28th and 29th, there was a nearly 13% decline and a further almost 12% decline, respectively. Black Monday and Black Tuesday are widely recognized as the worst two days in history.
A few weeks later, the Dow experienced a 50% decline in value and started a protracted bear market. The market hit its absolute bottom in 1932, falling a startling 89% from its high.
One recent example would be the 2008 “Subprime Mortgage Crisis”. This collapse was the greatest since the Great Depression because of banks’ lax lending policies for mortgages. Government bailouts, new money injections into the economy, and historically low interest rates all contributed to the recovery.
The market did not recover for about 17 months. When it did, it began in 2009 and continued all the way to 2020, becoming one of the longest and most successful bull runs in history.
Bear Markets are an Opportunity
Bear markets are scary, and are probably one of the worst fears for some investors. However, as we take a look back at the history of bear markets, we can see how drastic the returns were for those who bought during the dip.
Profiting from bear markets may lower your costs and increase your return on investment. Because drops are a natural part of the market’s rise and fall, they typically bring opportunities.
History shows that bull markets always come after bear markets. This allows you to benefit from them especially if you are just starting out in the world of investing and have a long-term vision.
Take for example Oil tycoon J. Paul Getty who abided by a simple business formula: “Buy when everyone else is selling, and hold on until everyone else is buying.” Getty purchased Pacific Western Oil Company and shares of TideWater Associated Oil Company, the country’s ninth-largest oil company. Five years after buying Tide Water shares for $2.12, they were worth more than $20.
Long-term benefits from bear markets can be achieved by developing a mindset similar to that of Getty. Although they might be unsettling, downturn markets often give investors opportunities. You can uncover possibilities to make profitable investments or, at the absolute least, keep the ones you already have if you know where to search.
What can we learn from the Investa Summit
“Whether you have a small amount of money or a big amount of money, it really boils down to the financial values and the foundation of the person”, Javi Medina.
The Investa Summit brought together a unique group of speakers who are market experts, professional and institutional traders in their field, and people who have actually changed their lives through trading the stock market, Cryptos, and much more.
Talks about market mindset, mentality and psychology were one of the highlights of the event as we are currently facing an economic crisis. Those who are able to access the Investa Summit may apply the lessons learned from the resource speakers into their own trading plan.
“What’s required for you as a trader is obviously a high level of discipline in order for you to succeed”, Edmund Lee.
While in the bear market, it is not easy for traders and investors to keep a calm mindset. Expand your knowledge about the market and learn new earning opportunities to help you maximize your profits in Stock Market, Cryptocurrency, and Global Markets! We have invited top experts in the finance industry to give you valuable insights and tactics to help you achieve financial freedom.
Subscribe to our Newsletter
Join our mailing list for investing tips and stock market advice to help you reach your first million.
