It’s very common to hear that the first step to financial freedom is saving. Easy enough to say, many are still having difficulty into walking into the path of financial journey.
“Mag-ipon ka lang, tapos invest!”
It’s not the same ride for everyone of us. We all have different privileges in life. We all have different risks. Fundamentally, everyone needs to know that we need to minimize expenses, and maximize savings. Is that possible? Yes, it is!
What’s your current state right now? Tipid-tipid din kapatid. That’s right! However, in reality, these things are difficult to handle; expenses here, liabilities there, payments are everywhere.
Look into the world with the lens of saving and investing. Without any savings or extra money, investing will be difficult. The purpose of saving is to be financially free, and to live tomorrow without doubts in expenses or even emergencies.
Take it or leave it, it’s easier to spend than to save. Think of your future, or even the people around you. Sometimes, life would only give you enough money to survive; it’s difficult to even support those who are in need or even get what you need. Improve on that and get to your starting line, be a game changer!
Saving is not all about getting a portion of your money for your emergency funds or even getting what is left. It’s also about spending wisely.
If you are having difficulties in saving, you might want to try this as well. There are various applications for budgeting that are currently emerging. What is good about the applications are being free and convenient. You might be asking what change could it bring for you to try the applications such as GCash, Shoppee, Lazada, or PayMaya, if the only thing it brings is a change of payment or transactions.
These applications are not just for your convenience in shopping. It offers so much more than that! Try and download these applications in your gadget, and try to scroll on it. These apps allow the user to use discounts, rebates, promos, and even free shipping.
Interesting, right? Hearing these things would not only make your shopping fun, it could also help you a lot in your finances. You can either avail the promos, use free delivery coupons, or even your vouchers. Besides buying on sales and bundles, these things would help you save up. Especially that now is the time to use online platforms for your necessities.
Now, this is only one of the many things you can do to save ad spend wisely. You could also try exploring on more ways how to spend wisely such as using online banks for your payments or even choosing to cook at home than call on Jollibee delivery.
As long as you have the heart to manage your finances, continue to have that discipline in managing your finances. Remember, your future is also your responsibility; the first step to create a better future for you and your family is to be well-informed and guided with how you follow your finances.
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As the local index broke out of the 6000 levels in confluence with the 100-day moving average, several names have emerged, and one of which is a blue-chip company. Golden Bull (@johngranda) successfully spotted one of those potential leaders — Jollibee Foods Corp, or $JFC. This trader is an active member of the Investagrams community who endlessly provides his analysis and insights focusing on the local market.
As seen in the pattern of the said stock, it exhibits a VCP pattern. Mark Minervini coined the said pattern in his book “Trade Like a Stock Market Wizard.” This means that the said pattern displays contraction in its volatility from its previous data to the following or present data. Moreover, it consolidated for six months, which solidifies that its breakout of the underlying base may be robust. Indeed, the bigger the base, the higher in space.
Example of a VCP Pattern
Moreover, Golden Bull (@johngranda) also mentioned the importance of also looking into moving averages as it is a form of support and resistance levels. In the book of Jason Cam named “The Trading Code,” the author explained that moving averages could be used as dynamic support and resistance. It is dynamic because merely moving averages are moving each day due to its statistical formula. Static support and resistance levels, on the other hand, are only not moving and are horizontal, just like the blue rectangle box that is representing the resistance of the underlying base in the figure above.
It is safe to say that $JFC has broken out of the pivot high of the underlying base in confluence with the 200-day moving average. Breaching the 200-day moving average is crucial as it is in a long-term horizon, which ultimately makes it more significant than that of the 20-day, 50- day, and 100-day moving averages.
A breakout of the 150-peso pivot area was an ideal buy point as it was the confirmation of the ascending triangle breakout accompanied by massive volume. It is a low-risk, high-reward trade, as the stop loss levels for the said breakout point is around 144 (-5%), and the take profit areas could be the structural resistance at 180 (19%). As of this writing, the stock ended the trading session strong. Let us see if another constructive base will be formed to place our ideal 2nd tranche.
The said stock needs to break and sustain the 180-peso levels to assert its dominance further. Although we can also expect the displayed name to pullback on the old resistance turned to new support in confluence with the 200-day moving average. At the very least, the 150-peso levels should hold. It is also expected that since the $PSEi is increasing, $JFC should, and it is a bluechip stock.
Congratulations to those who were able to maximize the momentum of $JFC. Lastly, kudos again to Golden Bull (@johngranda) for sharing his execution. Your FREE 1-Month InvestaPRO access is on its way!
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For most people, the moment they start learning strategies and demo trade here and there, they can’t wait to put their money in their brokers ASAP.
But another question arises…
“Should I trade with the extra money?”
“I don’t have any source of income, how should I get capital?”
“Should I go all-in with my savings to trade the stock markets?”
So, in this guide, I’ll be sharing with you different ways on how you can start (and grow) your trading business.
It doesn’t matter whether you are a student, an employee, or an already consistently profitable trader.
But first…
Let’s be clear
If you want to start a trading business because you need to pay your lifestyle, or immediately want to replace your full-time job…
Then I highly suggest you don’t, as the worst time to start a business is through desperate times.
Yes, having a business can give you exceptional rewards, but it does not guarantee you a fixed income all the time, or even a return of investment.
Which is why trading is a business that should not be approached with an employee mindset.
But if you will approach this trading business in such a way that you’re…
going to build a personal and financial empire, instead of trying to survive
acting from your vision instead of your fears
ready to learn the skills needed (and to pay the price) to become an exceptional trader
Then I can almost guarantee you that you will enjoy this amazing journey of a lifetime.
So let’s start…
#1: Your Most Supportive Investor
This may not sound like a grown-up move but they can be your #1 supporter and first investor even if you don’t have any track record.
But you have to let them be aware that trading in the financial markets is not a get rich quick scheme.
So never make promises or guaranteed returns to them. Another thing that you should do is to show them that you are going to trade the markets with a plan and not just enter and exit randomly.
Your trading plan may constantly change as a newbie, but let them know that you are not starting with “lack” as this is good for you and your “investor” Finally…
Make sure they won’t sacrifice important payments or be in debt to give you capital.
Because IF the worst happens, you don’t want your decision to trade the markets affect your whole family.
Next…
#2: Using Your Hard-Earned Cash Properly
As an employee, it’s easy to say that you should save money and invest extra funds.
But trading is not just a side hustle or a part-time job, it is a business that requires commitment and energy.
So one thing you must do first is to…
Build a safety net
You must have a 3-6 month emergency fund in case something happens, and eliminate consumer debts.
Because the last thing you ever want to do is to trade because you need to pay the hospital bills or pay your debts as it puts your mind in an environment where you will be forced to perform and expect guarantees in the market.
Have a budget plan Always remember that a budget plan is goal-oriented.
So there’s no such thing as a fixed rule or percentage on managing your money, it is up to you!
But having it will always set your priorities straight, fulfilling responsibilities and personal goals at the same time.
As an example, you can allocate your monthly income to the following • 25% = Needs/Expenses • 25% = Wants/Self-Investment • 15% = Passive investing • 35% = Trading capital Again, this is just an example.
So you want to ask yourself what you want and adjust the percentages accordingly.
Overall, I want you to know that what we are doing here is to put you in the right environment to trade.
Moving on…
#3: Taking Your Trading Into The Next Level
I highly suggest that you choose this step once you have found consistency in the markets, and not when you’re just starting, but here are some sources you can consider…
1. FTMO (Paid):https://ftmo.com/en/welcome/#objectives You must complete their challenge of profiting at least 1% and not lose more than 1% within 30 days You can get funded up to $100,000 but this will depend on the challenge FEE you will pay
If you are someone who trades the forex markets as a momentum or day trader, then this is for you, as the challenge and time required is quite short. 2. PSYQUATION (Free):https://psyquation.com/ To qualify, you must have a PQ score above 75 with a 6-month track record on their platform.
You can receive funding up to 150,000 AUD and 20% of profit is yours, all you need to do is to use your trading capital and build a track record.
Again, if you are someone who trades the forex markets, then this is for you. 3. FUNDSEEDER (Free): https://fundseeder.com/home It is a platform led by Jack Schwager, but conditions and funding amount is not disclosed.
You can also trade any financial markets in the world with their accredited brokers, so if you are someone who trades global markets, then this is for you.
Now…
The reason why I mentioned that you should only choose this step if you’ve already found consistency is because pursuing institutional funding or managing other people’s money with an inconsistent and self-destructing trading habit is like pouring fuel over a fire.
So if you haven’t found consistency within yourself yet, then the chances of you finding consistency with other’s money are unlikely.
Finally…
Bonus: Controlled “Tuition” Fee
If you want to start your trading journey with having “low risk” and “high reward,” then this method is for you. Let me give you an example…
If you are dedicating a ₱100,000 trading capital to trade the markets, only put ₱20,000 (20%) on your trading account as you start trading. Once you gain consistency in the markets and not lose everything for the first 3 months (depending on trading style)… Place another 20% of your initial budget capital into live trading. If you mess things up early but only put 20% of your budget into live trading, then you have experienced a learning opportunity (the reward) at a low cost
On the other hand, if you managed to allocate 100% of your capital budget, then you’ve reached the stage of consistency that’s above the majority! Remember, confidence comes from competence and something you must prove to yourself gradually.
So…Which Option Should You Pick?
Overall, every person is unique and has different circumstances.
So, you can choose an option on how you can raise capital, and then improve on it, or tweak it in a way that’s appropriate to your situation.
With that said…
What are the other ways on how you can raise trading capital (legally)?
Let me know in the comments below.
Contributor:Jet Toyco
Investagrams Username: @Jet_Toyco
About the Contributor:
Jet Toyco is a private executive trading coach and a systematic trading portfolio fund manager at TradingwithRayner.
He is also a public helper of the trading community that is always open to questions anytime to give the knowledge people deserve at no cost, and no hype.
Even though several market leaders have emerged in the local market, multiple of which have also appeared in the US stock market. As the said market contains approximately 7000 stocks and its status quo for being the so-called “giant” of all stock markets, there is inevitably a higher chance of spotting leaders in the global landscape.
For our featured trader for the week, we will be showing you how she was able to spot Nio, Inc. or $NYSE: NIO. CorruptedVodka a.k.a. @corruptedvodka, is an active member of the Investa Community who continuously spreads his knowledge, insights, and expertise in the global markets, including the US stock market and cryptocurrency.
She got the trade idea using Elliot Waves and classic indicators such as EMAs in AOTS condition, RSI (14), ADX. Her notable post highlighted the importance of analyzing a stock’s DNA. CorruptedVodka stated that, based on its historical data, the said stock is volatile and prone to shakeouts given the wicks embedded in several of its candles. Moreover, an all-time high stock would most likely present bearish divergences, although let us remind ourselves that in a trending price behavior, the RSI (14) tends to exhibit false readings.
The key to trading volatile stocks is to check volume behavior along with its price movement stringently. As you can see, there were several fakeouts in the said name, although it is observed that those fakeouts were accompanied with below-average volume.
A breakout of a pivot high with an enormous volume of an underlying base supported with dried up volume is imperative for any market leader. All-time high stocks are perfect for traders who are equipped in being a swing or position trader with a trend following approach.
It was a low-risk, high-reward trade, as a triangle pattern presented itself at around the $11-$15 areas. It allowed purchasing at the breakout of the said base around the $15.7 with a quick cut below its corresponding candle right below the $15 area (5-6%).
If the said market participant missed that, another opportunity represented itself as the said stock created another triangle pattern around the $16.5-$20. A market participant can choose to execute the trade at the breakout of the latest base at around $20.5 with a quick cut below $19.3 (-6%). Selling into strength (selling on the way up/while it is easy) and into weakness (the breakdown of a, for example, a pre-determined Moving Average) is fitting since this is an All-Time High stock.
It is ideal for $NYSE: NIO to continue hovering above the $20 structural and psychological support levels to further assert its dominance. Moreover, the company shows massive potential as it is allegedly the direct competitor of Tesla Motors Inc., which is owned by Elon Musk. Despite that, market participants should always adhere to their respective setups. Price is king, as they say.
It is challenging to trade all-time high setups in the US stock market as various market participants’ opinions may cloud an individual’s judgment. The bottom-up approach lets you spot resilient names without being discouraged by other traders’ views along with the US indices. Traders must rely on their analysis and bias while being openminded by acquiring things with a grain of salt concerning vital information regarding an asset class.
Congratulations to those who were able to maximize the technical swing of $NYSE: NIO. Lastly, kudos again to CorruptedVodka for sharing her execution. Your FREE 1-Month InvestaPRO access is on its way!
Have you ever experienced a losing streak which ultimately depleted your confidence in trading the markets? There is also a similar situation that is as dreadful. It is when you experience a winning streak that ultimately makes you overoptimistic.
The Superman Syndrome enables you to feel like an eternal being thinking that the trader possesses a tremendous control over their next trades. The trader starts to execute setups that are not in conjunction with their trading system. As if the market participant deems that their future trades would be mostly right. The trader feels that they can bear with the extra losses as they have gained a significant hedge through their previous gains. The Superman Syndrome enables impulsive decision making through overtrading rather than being in Zen through being selective in their stock selection.
It is also as bad as feeling lost and being diffident on your next trades. Thinking ahead that their next trades will be losers. An individual would find it difficult to execute a trade given the bias that is circling in their head. Being too defensive will hinder an individual from amassing the full potential embedded in the financial markets.
Having confidence in trading is a key aspect to achieve success in the financial markets. However, a market participant should not be reluctant nor conceited when it comes to their trading psychology.
It is best to take a breather whenever you score huge gains and winning streaks to reset your urges. This also applies when your money is on the drain after a losing streak. As they say, trading is 80% psychology and 20% methodical.
Being in Zen while being free from external negative energies that could disrupt your trading is a non-negotiable aspect of this endeavor. Being in this type of state enables the trader to stay in the flow. Traders who are at peace tend to make themselves available on the endless streams of opportunity that the market is offering at any given moment.
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Possessing the urge to revenge trade or to trade impulsively due to the Superman Syndrome must be treated instantly. The same goes with being hesitant due to losing streaks. It pains to be in an emotional rollercoaster while pursuing this type of endeavor. As they say, you attract what you are.
To learn more about trading psychology, I highly suggest reading the book called “Trading in the Zone” by Mark Douglas. It is a trading psychology book that will enable you to master the market with the proper discipline, confidence, and attitude.
Before entering the level 10 in a game, the player needs to start at level 1. Before even the famous Shakey’s or Mang Inasal have started, they have started small too! And just like any other investor or trader, everyone starts with the foundation of the basics in technical and fundamental analysis.
Winning in the stock market is a process. It is never just a one-step win or even a trade with 80,000 pesos gain. Everything starts with a good foundation of financial literacy, and this starts with the basics in technical and fundamental analysis.
Now, what’s in it for you to understand the basics? Understanding each concept of technical and fundamental analysis will help you assess the stock you are about to pick. It helps you gain more wisdom on how you should understand the stock market and the company on various perspective, just like how you would choose between wearing a casual or formal attire. Analysis provides information that will help you interpret the structure of the company or even understanding the figures on the financial statements.
As an investor, you must know the intrinsic and true value of a stock. You must be able to determine if the value reflects on the stock prices. Of course, who would like to buy a 500 pesos worth of ground coffee without knowing its history, background, and components! This is the reason that you should invest in knowledge on analyzing the stock market.
Fundamental Analysis
Fundamental analysis is not just defined to be any fundamental, basic, or elementary education. Understanding the component of fundamental analysis would help you asses the quality, profitability, sustainability, and growth of the company.
Start from a top-down approach, in which you would start analyzing information from general to specific. Now, how are you supposed to win the basics in fundamental analysis? Remember the acronym FLIGHT! And now we are boarding to our destination, the fundamental analysis
F stands for Financial as your Language
English and Tagalog are not enough in understanding the stock market. Make finance as your language.
Why? So that you can understand the financial characteristics and financial statements of the company you are about to invest into. Now, making finance as your language does not solely mean accounting or computing. It also helps you understand underlying factors and signals such the news and press releases of the company. Assess the valuation, earnings, and growth, of the company to know the financial health in terms of assets, obligation, ratios, and cash flows.
L stands for the Law of Demand and Supply
Math? Stock Market? And now Economics? Yes! You see, if there are sellers and buyers, there is a demand and supply in the market, and this makes the stock prices rise and fall. Take note that when the stock goes uptrend, there are many buyers. Otherwise, there are many sellers.
I stands for Intrinsic Value
Always keep it in mind that you would want to buy a stock which reflects its value on the stock price. To know this, you must check the Price-Earnings ratio of the company and compare it among its peers or company of the same industry.
G stands for Growth and Good Investment
The relationship of the price and value also leads to quality of growth and goodness of the investments. In order to know the quality of the company, you must check on the high-quality rate of the company’s value on the financial statements (balance sheet, income statement, cash flow) and financial ratios (liquidity, operating, valuation, common size, solvency).
Never just check on one part of the structure! You must check the signals and be able to determine if the company is under too much debt or is it well operating on its finances.
H stands for Historical Performance
It is a must to check on the historical performance of the company to check whether or not they are growing. Ask yourself if it is the company you are willing to place your money into for a certain period.
T stands for Think not Trend
Never invest on a stock just because it goes trending or your friends tells you so. Think wisely and analyze the company’s stability and development. Remember being famous or big does not necessarily mean it is good investment.
And now we are unto our next destination, technical analysis. Now, let’s READ!
Technical Analysis
R stands for Reading Charts, Lines, and Patterns: Market Structure
Understanding the different charts, trend lines, and candlestick patterns will help you understand the market structure. With these visual representations, you can slowly begin to determine if the stocks are going uptrend, downtrend, reversal, or sideways.
E stands for Evaluation with Indicators
Now, in technical analysis there are various indicators. However, you must begin with learning the concepts then applying each and checking which one would fit your strategy as a scalper, day trader, position, or swing trader.
You must first understand the concept of floor price and the floor ceiling, also know as the support and resistance. Why? Because this will help you understand the breakouts and breakdown with the candlesticks,
You can also use the RSI, to know if the stocks is overbought or oversold, or the moving average to know the buy signal. There are various purposes of indicators. But most importantly, this will help you enter and exit the market on a great time.
A stands for Assessing yourself
Assessing chart movements is useless if you do not have risk management and control over your emotions. As Alexander Elder quoted, “the markets are unforgiving, and emotional trading always results in losses”, and I guess you wouldn’t want that either!
D stands for Don’t forget to read and do a strategic application
After all these points to remember, always enjoy learning and re-learning over and over again.
Charlie Munger: The game of life is the game of everlasting learning. At least it is if you want to win.
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Being an Independent Operator is a skill that seems difficult to do for most aspiring traders. The ability to cancel the noise regarding various opinions from fellow market participants is essential to being profitable in the years to come. Craving for the insights of other traders towards your trade selection is not an ideal way of amassing consistency in the long run.
The late Jesse Livermore, one of the best traders in the world, also succumbed to the opinions of others back in the day. This shortly led him to financial ruin. As he exclaims, the markets are never wrong, only opinions are. Furthermore, the late Nicolas Darvas also experienced something similar.
After developing the Darvas Box system, there was a phase in his life where he moved next to the office of one of his brokers. This led him to jive in with rumors, opinions, and insights with regards to his stock selection. After both critically acclaimed traders experienced turmoil, they started to commit to the golden rule of deciding their stock selections by themselves.
Source: QuotesonFinance.com
Even if these events happened sixty to eighty years ago, it is still relevant up to this day. These events still happen in the trading community today. People pushing their thoughts in social media, people debating about their stock picks, people telling the community to ride in the stock as it reaches the moon. Unfortunately, this is inevitable.
The financial markets will never change so long as human nature never changes. Given that it is predominantly humans who trade the markets, the behavior of which will always be in accordance with human nature.
Source: Steve Burns’ Twitter Post
If you crave and rely on another person’s bias towards a stock or any asset class, how can you become an independent operator? It is a fact that everyone is unique. We have different perceptions regarding a subject matter.
Avoid being succumbed to rumors and opinions about the markets. I am not saying that we should not seek individuals who are better than us to guide us in our journey, what I am trying to say is that you have to learn how to take things with a grain of salt. Seek knowledge and insights on HOW TO DO IT ON YOUR OWN. Just as in life, you cannot long for your parents’ guidance forever.
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