InvestaDaily

Whether you’re a newcomer or a veteran in the markets, no one is excused from not having a trading plan.

As traders, we are operating in a boundaryless and limitless environment where we have the opportunity to create our own wealth and achieve financial freedom, but there is also the possibility of financial ruin. Not creating a trading plan can be one of the factors that can lead to continuous losses and forced trades.

It may sound cliche, the need to create a trading plan, this is something we’ve been hearing everywhere since the early stages of our journey. You see it in books, blogs, articles and you hear people talk about it in videos, seminars, and so on. The reason why it’s such a cliche, just like cutting your losses small and letting your winner run, is because that’s how it works and it’s about consistency over the long run.

ADVANTAGES OF CREATING A TRADING PLAN

Creating a trading plan allows you to mentally prepare yourself for what may happen in the coming days. Remember, you will need to create your trading plan for a specific stock at least the night before you plan to trade it. This is so once the times come when the price reaches your entry points, all you have to do is execute your plan. If you plan the trade on the spot, you’re basically making impulse decisions.

The only way to make a trading plan meaningful is to actually execute on it, there’s no point in creating a plan if you always bypass your own rules. Executing on your plan without reservation or hesitation builds discipline over time, and you will definitely need this if your plan is to stay in the markets for a long period of time.

Another thing you need to remember is to “plan your trade, and trade your plan.” If you don’t create a trading plan for a stock and it suddenly goes up 20%, even if it’s part of your strategy, you should have the self-control not to trade it. This will build the discipline to always scan thoroughly for opportunities the night before.

DISADVANTAGES OF NOT CREATING A TRADING PLAN

Now, what happens when you fail to create a trading plan? You get a lot of forced trades, unnecessary losses, and a ton of impulse moments which will lead to you making emotional trading decisions; and we already know that you shouldn’t let your emotions affect your trading.

Some of you may be thinking or have experienced first hand buying a stock that didn’t have a trading plan and having it go up 20%, 50%, or even more. But here’s the thing, do you want to be rewarded by doing bad habits? The market may bail you out a couple of times, especially if we’re in a bull market, but eventually, those who don’t do the right things will be humbled.

You will experience occasional equity spikes from a few lucky trades that go up significantly, but if you continue to take impulse trades then over time your equity curve will continue on its downtrend. The consistency all traders seek in the market will not come to you if you don’t have a solid plan to take advantage of opportunities. Trading success is not a sprint, it’s a marathon. You don’t have to be a millionaire next week.

HOW TO CREATE A TRADING PLAN

The following are the key points you will need in your trading plan:

1. ENTRY. This is the price where you will make your purchase. You can have more than one entry (buying in tranches).
2. STOP LOSS. This is where you will sell your position at a small loss at a predetermined area.
3. POSITION SIZE. This is how many shares you will buy.
4. TARGET PROFIT / TRAIL STOPS. This is a predetermined price where you will sell your shares at a profit. You can also set a trail stop to take advantage of bigger moves.
5. RE-ENTRY CRITERIA. Some stocks may stop you out, but this may just mean you’re a bit too early. Have a re-entry plan just in case the stock meets your buy parameters again.

CONCLUSION

There you have it! Mga ka-Investa, always remember that having the discipline to create a trading plan is a necessity for future trading success and consistency. At the end of the day, we need to properly prepare ourselves to take advantage of the opportunities in the market the right way to achieve consistency in the long term.

So, our extended community quarantine (ECQ) is extended for two more weeks.

How are you?
Still hanging in there?
Or cabin fever is starting to strike?

Staying at home is the sacrifice we can all do so we can save ourselves, our families, and our fellowmen from this distressing COVID-19. However, seeing the same walls and doing the same things for 24 hours, 7 days a week can take a toll on us, especially to those extroverts. So, how can we survive this new normal? How can we maximize our day so we can get out of ECQ with our minds still intact? Here are some simple ways on how to stay sane and productive during this crisis.

1. Wake up and get up

We are currently living in unusual and uncertain times, so congratulate yourself for simply waking up. If you want to take your day up a notch, get up immediately and stay away from the bed. Avoid scrolling through your newsfeed while in bed. Avoid answering emails while half-awake. The longer you are in bed, the more sluggish you will feel, and it will be so hard to jumpstart your day.

2. Have your quiet time

After moving away from your sleeping place, find a private spot to have your quiet time. You can meditate, pray, or read a book that can feed your soul. The world is currently full of anxieties, thus it is important that you get in tune with yourself before you face today’s challenges and discouraging news. It is also important to make gratitude a habit. Reflect on your life and look for things that you want to be thankful for. This simple practice will definitely help you find the bright side during these dark times.

3. Exercise

The Department of Health is encouraging us to work together so we can flatten the curve. But with our current routine of eat-sleep-repeat, it seems that we are fattening our curves! Thus, we need to get fit. Don’t worry about closed gyms. We can always get our fitness classes on Youtube. Thousands of mobile fitness apps are also available. Exercise is a good way to combat cabin fever for physical activity releases endorphins which gives us a happy feeling.

4. Take a bath

After sweating your heart out with your home workout, treat yourself to a nice bath. Relieve yourself from the summer heat while washing those worries away.

5. Cook great breakfasts and make good coffees

There is something about breakfast that is so comforting. A plate of pancakes, eggs, bacon, and one hot coffee can be your little hugs in these heartbreaking times. So, start your day with your favorite breakfast. You can feel energized while also getting comfort from a home-cooked meal.

6. Groom yourself

It is so hard to jumpstart our work from home (WFH) because we have that concept of our home being a no-work-zone. However, WFH is our new normal, thus we need to do our best to adapt.

One way of triumphing over sluggishness is power dressing. Make your home your workplace by simply wearing your office clothes. It may seem ridiculous at first, but it is an effective way to trick your mind into being productive and finishing your tasks for the day.

7. Get some work done

Now that you are done with your pre-work rituals, it is time to get actual work done. Before you fire up that laptop, make a to-do list first. This simple list can guide you throughout the day. It is an effective tool to stay on track and avoid the temptations of binge-watching on Netflix.

8. Take breaks

Be careful not to wear yourself out during ECQ. Our health is still our priority during these times. To avoid fatigue, try working on 30-minute intervals. That is working uninterruptedly for 30 minutes, take a short break, then continue again for 30 minutes until all items on your checklist are all crossed out. During breaks, stand up and do some stretches. Also, do not forget to hydrate yourself, okay?

9. Learn something new

It is so tempting to work non-stop during ECQ because our laptops are just an arm away. Notifications can ping anytime. However, we must set at least an hour to do something that is non-work related. Let’s take this opportunity to learn something that we are passionate about. What is that thing that you have been wanting to learn? What is that thing that would make your heart alive again?

Go online and you will see many institutions that are offering free lessons during the quarantine period. Study that musical instrument. Learn how to dance. Practice how to cook or sew. Make that furniture. Learn about the stock market. Now that we have all the time in the world, pursue the thing that you have been putting off for a long time.

10. Sleep

Though you are currently working from home, do not be pressured to be overly productive. Our sanity, our health, and our survival must be our priorities. After finishing all your tasks, do not be guilty to watch Netflix and chill. Or better yet, just sleep. Take this once in a lifetime opportunity to take back all those sleepless nights. Tomorrow is another day, another battle. But for now, enjoy your bed, have a peaceful sleep, and forget all the discouragements for a moment.

Make this extended ECQ worthwhile by joining in Investa Online Summit. Whether you want to learn something new or you just want to improve your investing skills, Investa Online Summit has invited top entrepreneurs and master traders to teach you on how to boost your income, how to build crisis-resilient businesses, and how to make winning trades so you can protect yourself and your family from market crashes.

Join Investa Online Summit now!
For more details, visit www.investagrams.com/investasummit

We hear it time and time again, “Busy ako eh, wala akong time para matuto mag-invest sa stocks.”

A familiar phrase to all of us traders trying to get our family, friends, or colleagues to begin their journey in the financial markets. I’m sure we know more than a handful of people who actually do want to begin investing, but their time really is a hindering factor towards their goal. Well, throughout the past few years we’ve been doing our absolute best to develop features that can solve this problem.

First, we started with the InvestaWatcher. We understood that not everyone has the time to monitor the markets because of either school or work responsibilities. This is a legitimate concern because if a stock you’re holding suddenly plummets and you’re not aware, you wouldn’t be able to cut your losses and protect your capital. In contrast, if a stock you’ve been watching for days, weeks, or even months suddenly reaches your entry price and you’re not watching the markets, then that’s a huge missed opportunity.

This is why we developed the InvestaWatcher, so you can receive real-time price and news alerts of the stocks you are watching. So whether you’re in school, work, or wherever you are, you will receive price and news notifications in real-time. We’ve helped a ton of people with this feature, but there was another problem to be solved. There were also a lot of people who didn’t have the time to go through all the stocks in our market during the evening to create a trading plan because of a lack of time after going home from work.

Second, we developed InvestaScreener. Going home after a long day can drain you to the point that many just want to spend time with their family and recharge their batteries, which is totally fair and understandable. However, due to this many are unable to prepare for the market the next day and create a trading plan.

This is the sole reason why we developed the InvestaScreener, so our users don’t need to go through a tedious process when creating their trading plans. You don’t have to go through all the stocks in our market; simply use our screener and enter your strategy to filter out the stocks that fit your parameters. A lot of time can be saved by using the InvestaScreener, and a lot of time has already been saved.

However, there are people who aren’t able to use the screener to the best of its ability. The usual reasons are they either don’t know how to use it, don’t have a concrete strategy, or are subjective when they do their screening. We identified the concern, and we began developing a solution.

This is why we created the InvestaPRO, to automate further the entire screening process. We developed an algo-based generated watchlist through our proprietary formulas to create an objective-based watchlist for everyone. We also developed a ranking system that scores the stocks based on the parameters, and of course, those at the top of the list are the high priority stocks to take a closer look at.

With the InvestaPRO we have greatly decreased the time needed to go through the screening process, all you need to do is pick a watchlist you would like to check among our pool of watchlists and see the results instantly. We created a few free filters so that all our users can experience InvestaPro for themselves, here you can filter out a few bottoming out and momentum names.

However, the premium watchlists are much more selective and make sure to get the best results. There may be times that the premium watchlists captures more stocks in the watchlist because of the additional filters, but it also makes sure to be selective and only choose the best out of the group.

As we continue to push towards our vision of impacting the lives of 10,000,000 Filipinos, we will also continue to strive towards a trading environment suitable for the ordinary Filipino. The Investa Team will continue to do its best to identify possible chokepoints that stop people from starting on their journey and find ways to solve the problem via real-time automation. Hopefully, the InvestaPRO has added value to your trading as well.

For those of you who are curious on how to access or use the InvestaPRO, you can view our tutorial here.

---

As we all know, the stock market is the ultimate equalizer of wealth.

Partaking in the financial markets, regardless if you’re a day trader or a long term investor, can multiply your wealth to levels you didn’t even imagine was possible. Well, if you do it the right way at least.

There have been countless traders who made their fortunes by trading the markets, but there have also been MILLIONS who have lost a tremendous amount of wealth through common trading mistakes.

Through time, there have been three bad practices that have led to the financial disaster of traders:

1. NOT CUTTING LOSSES
2. OVER SIZING
3. OVER-TRADING

 

In this article, we’re going to be focusing on the third one: OVER-TRADING.

We’ve all experienced this at some point in our trading journeys; you get a loss or go through a series of losses, and it’s getting on your nerves. You’re at a pretty bad drawdown for the month, but you can’t accept being in the negative. You feel the urge to begin trading even more, to churn the motor faster, to increase your position size per trade, every chart you look at shows an opportunity, you go for Grade C setups. You fall for the urge and eventually, end up losing even more.

Sucks right? We know, we’ve all been through it. The urge to want to gain back all the losses in a short period of time is a strong force that can persuade us to do things we know is wrong. Over-trading is also another form of revenge trading, but probably even worse. Of all the symptoms, the worst would probably be going for Grade C setups; meaning you trade stocks you normally won’t but nevertheless still go for it. When you’re unable to find Grade A setups, you start settling for low probability trades which will most likely just lead to more losses.

If you don’t stop there, it gets worse. You incur more losses from taking Grade C setups, so now you’re even more frustrated compared to before. You now begin to increase your position size in the hopes of getting one home run winner to regain all your losses. Sure, you may get lucky a couple of times. However, if you do this consistently over a long period of time, we all know it isn’t going to go well.

There’s a reason why over-trading is one of the culprits for the financial ruin of hundreds of thousands, if not millions, of traders, it’s because we all go through it at some point. And those who have the psychological fortitude and intense discipline are those who are able to avoid over-trading consistently. So now, what’s the best thing to do if you’re at a drawdown?

Mark Minervini, a well known Market Wizard, and Mark Ritchie II, respected Momentum Master, both agree that it’s best to lower down activity during periods of underperformance. The reason why it’s best to both decrease your churn rate and lower down your position size is because you’re in a losing streak because you’re most probably out of sync with the market. So the focus during these losing periods is to focus on Grade A setups with a controlled position size until you get the “feel” of the market back on your side.

In contrast, the best time to ramp up exposure and increase your churn rate is when you’re winning, also for the simple fact that you’re experiencing this winning streak because your strategy and psychology are at sync with the market. As if you’re sailing the open seas, you want the wind to be at your back. You want to be one with the market and be trading at the heels of previous profitable trades.

The logic here is you’re trading your most and your heaviest when you’re winning and you’re trading your least when you’re losing. Just like a basketball player having a good shooting night, it’s as if you’re shooting the basketball in the ocean, you can’t miss. However, when he’s having a bad game, he could always focus on other things like assisting the ball or rebounding. Same goes with trading, when you’re having difficulty nailing down profitable trades then the focus should be protecting your capital and confidence.

---

In one of our previous articles, we talked about how trading or investing in any financial market isn’t all about the potential upside. There is also the potential for major financial ruin if you’re not aware of the risks involved. If you haven’t read our article on the importance of risk management, you can access it here: The Importance of Risk Management. Now let’s learn an important part of risk management – Stop loss strategies.

To keep it simple, a stop loss is basically a point in a stock’s chart where you will cut your losses with no questions asked. It’s placed at a point where the trade idea is invalidated. We’ll give some examples so you can better visualize it.

Also, it’s important for you to know that there are only a few brokers here in the Philippines that offer an automatic stop loss order. So if your broker doesn’t have this feature, you will need to manually cut your losses so it’s important to find a way to keep an eye on the market from time to time throughout the day. So now the question is, what are some basic stop loss strategies you can use?

Basic Stop Loss Strategies

Percentage Stop Loss Strategy

This basically means you’ll cut a stock that is showing a loss once it hits your chosen % threshold. William O’Neal, the author of How to Make Money in Stocks and one of the greatest investors of our time, said that his max % threshold is 7-8%. Mark Minervini also shares the same sentiment. Here are some examples:

Price Structure Based Stop Loss Strategy

Whenever you’re buying a stock you usually buy on either a bounce of support or a break of resistance. So if you bought on the bounce of support, then your stops should be a few points below the support area. Conversely, if you bought at the break of resistance, then your stop should be placed a few points below the breakout point. If you don’t know the concept of support and resistance you can check out our YouTube channel where we discuss it in depth. Here are some examples:

 

Previous Candle Low

This simply means you place your stop below the low of the previous candlestick. This strategy is usually done by shorter-term traders in order to cut losses in a much faster way. However, you may be prone to selling a position prematurely by only using this strategy in all scenarios. Here are some examples:

That’s about it! So always remember, having stops in place isn’t enough to ensure that your losses don’t get out of hand. What’s important is being DISCIPLINED enough to sell the stock once it hits your stop loss, NO QUESTIONS ASKED! The three strategies above are just the tip of the iceberg when it comes to setting stops effectively. Now the rest is up to you to continue studying more you can about the markets and finding ways to continuously refine both your buying and selling strategies.

---