Categories
How to & Advice

What You Need to Know About Short Selling in the PSE

short selling in the philippine stock exchange

There has been news going around lately that the Philippine Stock Exchange (PSE) might finally allow short selling in 2018, resurrecting a plan that has been in the works since 2009. Whether or not the plan will push through is another story, but if it does, you need to be ready.

In this article, we’ll explain the basics of short selling, our advice, and how you can prepare yourself for the shake-up that might be coming in a few months.

What is Short Selling?

Short selling, also known as taking a short position, is when a trader sells a stock at a higher price before buying it at lower price—sell high, buy low. It’s just the opposite of taking a long position, where you buy low and then sell high.

Now, we know what you’re thinking. How the heck can you sell a stock before buying it??

The answer to your question is simple: you borrow shares. In other words, umutang ka muna. Sell those borrowed shares first. After that, you just have to buy shares to replace the ones you borrowed.

What Short Selling Means for PSE Traders

Most traders in the PSE always take the long position simply because it’s the only option available. For years, we’ve meticulously researched and developed systems to find and profit from stocks that are expected to increase in price.

We’re used to ignoring stocks with prices that are about to go down. After all, you can’t make money with those, right? Well with short selling, you can!

If you know how to use both the long and short positions, you can make money from stocks that are going up and from stocks that are going down!  You will essentially double your opportunities in the stock market. Of course there are also risks involved, but if you keep learning and stay disciplined then there’s no reason why you can’t succeed.

Our Advice

In the stock market, those that keep learning, trying new things, and improving themselves are the ones who succeed. None of us know for sure if short selling will really be allowed in 2018. But no matter what happens, you should still read about it and prepare yourself if you haven’t already.

Besides, you’re already doing the work anyway. The same research will tell you if a stock’s price will go up or down. Why not give yourself the opportunity to earn from both scenarios instead of ignoring half the opportunities?

We’re not saying you have to put 50% of your portfolio in the short position—not at all! After learning about short selling, you might even decide that it’s just not for you and that would be fine. But either way, you need to understand it first. Even if you don’t end up using it, you need to know what it is and how it affects other traders and the markets.

Try Before You Buy!

They say experience is the best teacher. So even before short selling is allowed in the PSE, you can already start practicing! See and feel what it’s like to trade from the short position using the Investagrams virtual trading platform. Just follow the 3 simple steps below to activate the feature:

Step 1: Go to your trade settings.

Click on your profile icon on the upper right of the homepage and select “Settings” from the drop down menu. When you’re on the Settings page, click “Trade” on the left navigation.

Step 2: Turn on the short selling feature.

Simply click on the toggle button to turn on the short selling feature. Your new settings will be saved automaticallly.

Step 3: Start trading!

When you go to your virtual trading account, you will now be able to choose if you want to trade from the long position or the short position.

Simple, right?

We hope this helped you understand what short selling is and how you can be prepared if the PSE allows it in 2018. If you have more questions, just leave them below!

For more investing tips and stock market advice, subscribe to InvestaDaily. You can also sign up for Investagrams to access free features to help you on your stock market journey.

Categories
Featured How to & Advice

Why 8,000 Pesos Should be Your Minimum Stock Market Investment

At one point or another, we’ve all wondered “What is the minimum investment needed in the stock market?” or “How much should I save before investing in stocks?”

Ever since online stock brokers became popular, it seems like the minimum required investment keeps getting lower and lower. That’s good, right? Well, not always.

If you’ve tried stock trading or know someone who has, then you also know that it’s hard to make money in stocks.

There are over 200 listed stocks in the PSE, and literally thousands of factors that could affect their prices. It’s hard enough just keeping track of everything, let alone understanding each stock well enough to make money!

We don’t need to make life harder for ourselves—but that’s exactly what happens when you invest less than 8,000 pesos in the stock market.

A TYPICAL SCENARIO

Nowadays, some brokers won’t require a minimum investment. Others have been also lowering the minimum amount required so that more people can start investing.

While it’s great that this lets more Filipinos invest in the stock market, there’s a scenario that often gets first-time investors off guard.

The typical scenario goes like this:

  1. Person A is interested in investing in the stock market. He finds out that the minimum investment is only 5,000 pesos. “Sulit na! Kikita naman ako dito,” he thinks to himself.
  2. Person A  invests the minimum amount and picks two stocks “para mas mababa ‘yung risk.” That’s around 2,500 pesos in each stock.
  3. After successfully buying the stocks, Person A checks his portfolio and “HUH?? Bakit loss na kaagad? Di pa gumagalaw ang presyo ah!”

That’s what happens when people don’t realize that there are fees every time you buy or sell a stock.

BEWARE OF FEES

Below is a breakdown of all the fees and charges included in every transaction:

Most of the fees are based on the Gross Trade Amount (number of shares x price), so the cost is always proportionate to your investment. For example, the PSE Trans Fee will always be .005% and the SCCP Fee will always be .01%. However, notice that the broker’s commission is 0.25% or 20 pesos—whichever is higher.

NUMBERS DON’T LIE

So what does this mean for retail traders? It means you need to avoid buying or selling anything with a Gross Trade Amount less than 8,000 pesos. Otherwise, you will be wasting money on higher commission fees and incurring unnecessary losses.

In the example earlier, Person A bought two stocks, each with a Gross Trade Amount of only 2,500 pesos. This means that Person A’s total commission fees would have been 20 pesos for each transaction, or 40 pesos total. That’s an automatic 0.8% loss on commission fees alone!

But what if Person A invested 8,000 pesos in just one stock? His total commission fee would only be 20 pesos (or 0.25% of 8,000). That means he was able to cut the commission fee in half and invest 3,000 pesos more!

CONCLUSION

We know that saving money can be very hard—especially if you have a family to support. 8,000 pesos is a lot of money after all!

But remember that investing less than 8,000 pesos, means you are losing more money even before there’s any price movement. You can definitely still make a profit, but it’s like stepping on the gas and break pedals at the same time. It will be harder to break even or make a profit.

Weigh the risks carefully before making your decision, and ask yourself: How confident am I that the (potential) profits will offset my (definite) losses?

Subscribe to InvestaDaily for more investing tips and stock market advice, or sign up for Investagrams to access special features to help you reach your first million.

Categories
How to & Advice Videos

Stock Market Basics: How to Read Stock Charts (Part 2)

In our first video, we taught you the basics of how to read stock charts. We explained candlesticks, trend lines, and support and resistance.

Now, we’ll dive deeper into support and resistance—the backbone of all price structure analysis methods in technical analysis.

Watch the video above to learn how mastering support and resistance can make you a more profitable trader. We’ll also teach you about breakouts, breakdowns, and role reversals—when resistance becomes support or support becomes resistance. This will help you predict the best time to buy and sell.

This video is in a mixture of Filipino and English.

Subscribe to InvestaDaily for more investing tips and stock market advice, or sign up for Investagrams to access special features to help you reach your first million.

Categories
How to & Advice Videos

Stock Market Basics: How to Read Stock Charts (Part 1)

Whatever your investing style, knowing how to read stock charts is a skill that is sure to help you succeed in the stock market.

Watch this short tutorial video to learn the basic ways to read a stock chart—including how to read candlesticks, identifying trend lines, finding the support and resistance, and spotting breakouts or breakdowns. All of these will help you understand charts better and make more informed trades.

Once you understand these basic concepts, go ahead and watch our video on How to Read Stock Charts (Part 2)!

This video discusses technical analysis concepts in a mixture of Filipino and English.

Subscribe to InvestaDaily for more investing tips and stock market advice, or sign up for Investagrams to access special features to help you reach your first million.

Categories
How to & Advice

Fundamental Analysis vs. Technical Analysis—Two Basic Methods to Conquer the Stock Market

In general, there are two sides when it comes to stock market analysis—fundamental analysis and technical analysis. Today we’ll discuss both methods and explain their advantages and disadvantages.

**Before we begin, you may want to check out these basic terms to help you understand this article better.

What are fundamental analysis and technical analysis?

Fundamental analysis a method of stock market analysis where investors study the intrinsic value of a stock (A.K.A. what it should  cost) based on a variety of factors. Decisions on whether to buy, sell, or hold a stock are based on comparing the intrinsic value to the market price. Fundamental analysis is generally less structured than technical analysis and is used most by long-term investors.

Technical analysis, on the other hand, is easier to apply to short-term stock trading. This method uses historical data on price, volume, and other statistics to predict future price movements. Stock charts are commonly used in technical analysis to track and analyze patterns that can predict price movement.

In reality, most traders will use a combination of these two methods. A general rule of thumb is that fundamental analysis will help you determine which companies to invest in, while technical analysis will help you determine when you should buy and sell shares of these companies.

So how do each of these methods work? Let’s take a deeper look.

How does fundamental analysis work?

In fundamental analysis, our objective is to assess the company’s performance and stability—basically whether it is a good business or not. This includes looking at financial statements, its performance compared to others in the same industry, news that may affect the company’s operations, and more.

When looking at the financial statements, one of the most important indicators is the company’s net income. We’re not talking about NGO’s or charities after all. In the stock market, a company needs to be making money to be valuable. However, you should remember that a company’s income only shows one part of the picture.

Using a combination of financial statements and news, you can answer more complex questions such as: Are the company’s expenses high compared to the industry average? What amount of its earnings are retained and reinvested into the company? Are they constantly improving their product or service? What are their plans for the future and will these plans increase or decrease their value? What risks are they taking are you willing to take on the same risk?

There is no single way to do fundamental analysis, but at the end of the day there is one question every fundamentalist is trying to answer: Is this a business that I want to put my money into?

How does technical analysis work?

In technical analysis, people focus more on identifying trends and chart patterns rather than the company’s intrinsic value. The underlying idea here is that a stock’s market value is not always determined by its intrinsic value. Especially in the short term, a stock’s price is mostly influenced by external factors such as market sentiment. Patterns and trends can be identified based on historical data, and this is what allows us to predict how sellers and buyers (read: supply and demand) will react.

There is a long list of tried and tested techniques for performing technical analysis, but there are far too many for us to cover in one article. Some of the most basic methods include:

  • Identifying chart patterns such as the cup and handles, head and shoulders, ascending triangle, etc.
  • Assessing the market sentiment based on price movement, volume, moving averages, etc.
  • Identifying and riding trends until your preferred indicators signal otherwise

Whatever your preferred methods for technical analysis, the objective remains the same: To capitalize on patterns formed by the unified emotions and reactions of market players.

So which is better, fundamental analysis or technical analysis?

While everyone has their own preferences, neither method is really better than the other. That’s why they both exist! Each method of analysis has strengths and weaknesses. It’s just a matter of finding your own fit.

If you want to invest long-term, then you might want to go for a more fundamental approach. You’ll have to do more work initially, but you won’t be as sensitive to the day-to-day price fluctuations. If you are able to buy an undervalued stock, all those ups and downs will still result in an overall price increase and profit for you.

If you’re going for a short-term investment, then technical analysis might be a better option. Because prices tend to fluctuate, patterns in price movement will more accurately predict the stock price tomorrow or next week. The emotions and reactions of market players have a bigger impact on short-term investments because there isn’t enough time for the ups and downs to average out—unlike in long-term investments.

In reality, most traders use a mix of fundamental and technical analysis to manage their portfolios. This allows them to see the complete picture and make more informed trades. Information, after all, is power. Nowhere is that statement more true than it is in the stock market.

Our advice?

The more knowledge you have, the better. Learning both fundamental and technical analysis will not only help you make better decisions, but also give you more confidence in yourself and your trades. This will prevent you from giving into hyped up stocks or selling your stocks too early because you doubted yourself. It will also allow you to start building your own stock trading system and strategy—the foundation of any trader trying to make money in the stock market.

Even if you eventually become a pure fundamental or technical trader, you won’t know which method works best for you if you don’t try them both first! You may even use one method to validate your analysis using the other. So give both methods a try, and tell us about your experience in the comments below.

Got any questions? Leave a comment below!

 

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Categories
How to & Advice

Basic Stock Trading Strategies for Beginners

We all know that there is money to be made in the stock market. Big corporations and retail traders make millions from the market every day! But how do they do it? And how can a regular Filipino do the same? Where do we even start?

The stock market can seem very complex, and sometimes it is! But don’t let that intimidate you. Just like with any other skill, you have to start with the basics first. Walk before you try to run. Keep making improvements, no matter how small, and you’ll reach your goals before you know it!

There are literally thousands of trading strategies being used around the world, but you don’t have to (and you shouldn’t) be using them all. Start with one simple strategy before trying more advanced tactics. Learn what works for you and what doesn’t, and slowly but surely you’ll see results.

In this article, we’ll help you take that first step by explaining some basic principles along with two simple strategies that you can use to start trading in the stock market. Ready? Let’s get started!

BUYING LOW AND SELLING HIGH: WHAT IT MEANS AND HOW IT’S DONE

When asked, “How can I make money in the stock market?” a lot of people say that “It’s simple. Just buy low and sell high.” Well, of course! No one is going to make money by buying high and selling low. That’s just common sense. But how can we buy low and sell high? There is no crystal ball to tell us what the future holds or how the market will move, so how will are we supposed to know whether the current price is low or high?

Well, the good news is that you don’t need a crystal ball or a time machine to see into the future—you just need to understand the concepts that trigger movements in the market. The better you understand the forces that shape the market, the more often your predictions will be right.

THE BASICS: SUPPLY AND DEMAND

In one way or another, everything that happens in the stock market is a result of supply and demand reacting to one another. There are a limited number of stocks, so if a stock is in demand and more people want to buy it compared to those who want to sell, then the price goes up. The opposite happens when more people want to sell and fewer people want to buy.

Think of it this way: A 1-pc Chickenjoy costs P89 right now. But what if that 1-pc Chickenjoy was the last one on earth and everyone wanted to eat it? How much would people be willing to pay for that? On the other hand, if there were mountains of Chickenjoy everywhere you look, would you still pay P89 for it? Probably not. It sounds funny, but the entire stock market functions on basically the same principle.

People want to buy and sell stocks for many reasons. Whatever those reasons are, they will cause either a stronger demand or supply. This will be reflected as an increase or decrease in price. So how does this help you see into the future? Simple. You just need to be able to identify the signals and triggers that indicate when a rise in supply or demand will come. All stock trading strategies, from the most simple to the most complex, are based on this idea.

BASIC STOCK TRADING STRATEGIES FOR BEGINNERS

Disclaimer: Before you read about the two basic strategies below, you should first understand the two schools of thought behind these strategies: Fundamental Analysis and Technical Analysis. You might want to first read about some basic stock trading terms here.

STRATEGY 1: VALUE INVESTING

Commonly described as “buying a business,” this strategy relies heavily on fundamental analysis. In this strategy, we assume that the market price will eventually become equal to the intrinsic value of the company. The basic principle here is to identify stocks whose market value is less than its intrinsic value. When you buy an undervalued stock and the market price corrects itself, that is where you make your profit.

There are many indicators and formulas people use to identify the intrinsic value of a company, but one of the simplest and most popular indicators is looking at the price-to-earnings or P/E ratio. To get the P/E ratio, just divide the price of the share by the earnings per share. Value investors will compare the P/E ratios of companies within or across industries to identify undervalued stocks. For example, if you see that the average P/E ratio for a company in the logistics business is 10 but one company has a P/E ratio of 5, then you may want to invest in that company.

There are many other indicators that you could use, but this is one of the most basic. Keep in mind however that a low P/E ratio is not always a good thing. Low prices could also mean there’s trouble inside the company, and that the value will continue to go down. That is why it is important to do thorough research after identifying potentially undervalued companies. As the name suggests, traders that use this strategy have to look for a good business with real value. Act as if you are becoming part-owner of that business, because that’s essentially what you are doing!

Other similar strategies that also use fundamental analysis are Growth Investing, Income Investing, CANSLIM, and more.

STRATEGY 2: MOVING AVERAGE CROSSOVER

On the other side of the spectrum, we have the Moving Average Crossover Strategy which an approach based on the principles of technical analysis. Here, we rely on patterns and data available in the market to predict future movements and make trading decisions. Your aim is still to buy low and sell high, but you are using different indicators and signals to do it.

To implement the Moving Average Crossover strategy, you simply have to monitor two moving averages: the 20-day moving average and the 50-day moving average of a particular stock’s price. If the 20-day average becomes higher than the 50-day average, it means that the price is going up and you should buy shares. If the 20-day average falls below the 50-day average, you should sell because it means the price is going down. Sounds simple, right?

Many find this type of strategy easier to implement because it is very objective and there is very little chance of becoming emotional. It also requires relatively less research compared to Value Investing, so it’s less intimidating for a beginner. However, you should remember that at the end of the day it is always good to understand the logic behind the numbers. The “rules” in any trading strategy are never fool-proof. There are times when they will be wrong, and understanding the sentiment behind the market’s behavior can only help you make smarter trading decisions.

If you want to learn more about technical trading, you can also review some basic concepts such as Support and Resistance, Candlestick Charts, and Trends.

Every trader is unique and must refine his or her strategy over time. Some traders have very complex strategies, while others prefer to keep it simple. As you execute your trades and test more strategies for yourself, you will find a unique style that suits you. These are some basic ones to help you get started, but remember that the most important thing is for you to simply START. You can read all the articles you want, but unless you try it yourself, nothing will happen.

Good luck on your trades and remember, we’re always here to help!

What are the best stock trading tips you’ve received? Share them in the comments below and let’s move forward together!

Subscribe to InvestaDaily for more articles like these, or sign up for Investagrams to access special features to help you reach your first million.

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News & Features

Making the Stock Market Easier with Investagrams

  • Many people think that the stock market is complex and that trading is hard. Maybe that was true before, but nowadays there are many ways to make stock trading easy and hassle-free. One way is to use the tools, services, and information here on Investagrams!

Here’s how we can help you on your stock market journey:

Learn using our free videos and articles


If you’re a beginner in the stock market, or even if you have no idea about how stocks work, we have learning modules that can help you.

If you’re starting from nothing, you can read the Investagrams guide on How to Start Investing in the Stock Market first. For concepts that are more advanced, like how to read charts and understanding moving averages, you can follow Investa Daily—your trusted source for investing tips and stock market advice.

Find your ideal stocks using our automated stock screener

Once you’ve learned the basics of stock analysis, you can start to develop your own strategies and trading system. Use InvestaScreener to quickly and easily find stocks that match your criteria. Filter stocks based on the 52 week high, support, resistance, and much more.


InvestaScreener is a powerful and flexible tool that will help you save tons of time and effort when analyzing stocks. With this powerful stock screener, you can do what would normally take hours in just a few clicks.

Practice using our virtual trading platform

If you’re excited to trade but afraid to risk money, don’t worry! You can practice with the Investagrams virtual trading platform. It shows real companies and actual price movements in the Philippine stock market. Why is that important? Because you get to practice under real market conditions,  and you’re prepared to jump straight into trading with real money any time!

Buy, sell, and manage your portfolio just like the real thing to test your strategies before putting real money on the line.

Monitor stocks and charts in real-time

Use Investagrams to get complete and up-to-date information on any stock listed in the Philippine Stock Exchange. Easily access all the numbers you need to make smarter decisions and better trades.

You can also study the price movements of your stocks using our real-time charting tool. Here you will easily be able to monitor the historical movement of price and volume, understand the context of supply and demand, and identify patterns that are forming in the market.

Stay up-to-date on the latest stock-specific news

Instead of spending hours gathering information from tons of different sources, now you can just look at the Investagrams News Feed. See all the business, economic, and stock-specific news organized in just one page. Not only will you save time, but you’ll also find it easier to monitor important news that could affect your stock picks.


You can even follow and interact with other traders on Investagrams’ social platform to see what people think and how the news may affect the stock market.

Save time with our price and disclosure alerts

We’re all busy with our lives, whether it’s because of work, school, or our families — we all know how important our time is. But becoming financially free is important too, right?

With InvestaWatcher, you can receive instant alerts whenever your stocks hit your buy point, target price, and cut loss level. You will instantly get notified when your stocks have disclosures such as the earnings report, company buy backs, acquisitions, and other important announcements.


The best part? You can receive the alerts everywhere — SMS, e-mail, in-app notifications, and even Facebook Messenger! Forget about spending hours monitoring the stock market and let us do the work for you.

Get help on-the-go with the Investagrams Facebook chatbot

Investagrams is fully integrated with the Facebook Messenger through the InvestaChatbot.

Just chat the Investagrams FB page to get instant information on the current stock price, news, financial reports, and more!

Improve your skills by joining events and competitions

Investagrams holds many competitions and on-ground stock trading seminars throughout the year. Follow our Facebook page for announcements, and join us to take your trading to the next level. Plus, we’d love to meet you!

Our mission is to make your stock market journey easier and, of course, more profitable. We’re always developing new features and services to serve you better, so keep checking back to see if we’ve added anything new! If you have a question or a request, just let us know in the comments below!

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