my simple trading system (09 DEC 2019)

this is my simple trading system which i found to work for me over the years ...

*my buy criteria: i buy when the following happens:

1. the macd histogram is below the 0 - line
2. if the current price is higher than the most recent price bottom
3. i buy on breakouts ONLY when adding to an ALREADY EXISTING position

*when do i sell? i sell when:

1. i cutloss just below the most recent bottom
2. my trail stop is hit (this means that my position is already net positive)

*what stocks do i buy?

1. index stocks
2. stocks that have a current story as disclosed in the edge website ...

*what do i do when i start buying a stock?

1. when i buy, i buy in tranches .... when i see a stock fulfilling my buy criteria .... i initially buy 1/3 or 1/4 of my allocation for a particular stock ... then i wait and observe ...
2. on subsequent days ... when the price of the stock advances... i add 1/3 of my allocation ....
3. i add my last 1/3 allocation when the stock advances some more ...

* what i don't:

i dont think in terms of/i dont use:
1. trendlines
2. channels
3. patterns (with certain exceptions)
4. fibonaccis
5. cost averaging
6. elliots
7. parabolics
8. retracements/dips
9. "bull'' or "bear" markets

i don't
1. like to catch falling knives
2. predict the future
3. set tps
4. do blind/naked trading: no plan, no trade (there are exceptions to this rule)
5. care about the dow nor the p6
6. daytrade (ok ... in exceptional cases ... sometimes i do daytrade)
7. shortsell
8. over analyse: i try to always remember  ... i make my money by trading ... not by analysing
9. like to keep things complicated nor think that the more sophisticated or more technical sounding the better
10. try to fool myself and be in denial when things dont go my way

* what is a "short term trend follower"

i have other rules but those are minor details na ... the ones above are my main rules ... happy trading! good luck!

stok tots: when do i enter a stock (updated)? (28 MAY 2017)

when do i enter a stock ....

i start entering a stock when (1) the macd histogram is below 0; (2) the macd histogram is rising; and (3) the price is rising; (4) then set the appropriate cutloss price  ..

when do i sell: updated (12 oct 2014)

i sell when

1. my trailing stop is hit (trailing stop is when the price is already above my entry price)

2. my cutloss price is hit (cutloss price is when the price goes down after i just entered a trade)

3. i have no cash and a speculative buy opportunity presents itself ...


links:   when do i buy?

when do i buy?: updated (12 oct 2014)

ive been reading my trading rules recently (my trading rules) ... thinking of simplifying it more ... and i think im ready to do it now ...

i START TO THINK of buying when ...

1. the macd histogram (daily chart)  is below 0 and has just changed direction (from pointing down to pointing up)

2. when the sts (daily chart) is oversold (sts < 20) and has just changed direction (from pointing down to pointing up)

3. when a speculative buy opportunity presents itself


links:  when do i sell?

how do i pick which stocks to trade: a redux (26 may 2013)

i was at a dinner hosted by a trader friend and his wife last thursday ... with another trader and two byutyus broker-analysts/traders  (i was asked by the host not to blog about the dinner .. ok cge then ... im not blogging about the dinner .. ill just write something short about that was briefly discussed .. hehe .. ) ..

you see, i was sitting across one of the byutyus broker-analysts/traders (byutyus na .. brainy pa) .. i forget now what we were discussing .. just that i somehow remarked that ... as a rule i only buy stocks that have ongoing stories attached to them ... especially those with clear dates by which certain things are supposed to happen .. these filters out most of the stocks and just limits my choices to less that five stocks at a time ...

as i was having coffee this morning .. i recalled that i blogged before something about how i pick stocks ... how do i pick which stocks to trade (07 sept 2012) .. and i guess id like to revise that list a little bit now based on last thursday night's chit chat  :

how do i pick stocks to trade (revised):

1. the company must be fundamentally sound
2. the chart must be showing my ideal set-up (the ostrich pattern) using my trading indicators (macd, rsi/sts)
3. the stock must have a current story i could ride on
4. the story must have a specific date by which time it will come into fruition

stok tots: entering a trade (28 nov 2012)

i just received this private message this morning from a member of the finance manila stock market forum ... tho im allergic to "pat in the bak congratulatory messages" (no offense meant to the pm sender), id like to quote it here as a post on how i enter a stock position ... nothing original really ...     

the private message:

Thanks for one of the best stock blogs shoyu... 

Others are just hyping their favorite ipits like this one or just further hyping a very oversold stock to prompt people to bring it higher so that they will maximize their profits. 

Pero iba ka sa kanila, you advocate the buy low/sell high discipline. I hope I can learn even just 20% of your skill hehehe....

Keep it up!

my reply ...

its all there in the charts ... the key is just to manage the risks ... the chart will show thru the macd (yung 3 macd indicators ko sa blog) if the bottom is more likely realized already .. then one can enter a small position .. 1/3 or 1/2 of one's budget for the stock .. so that if the stock goes further down (the bottom has not been reached pala .. only 1/3 of ur money is exposed .. and one can just execute one's cut loss ...

on the other hand .. if truly the bottom has been reached ... the price should advance ... then one can add another 1/3 .. .. adding some more as the price further moves up .. until ones full position is bought ... thus .. even before the macd buy signal has been generated .. one is already fully invested and ready to sell na to those who are just responding to the macd buy signal

tnx for reading the blog  

tho i dont believe in luck (kelangan kasi hard work and preparation) .. goodluck na den! 

back to: my trading rules

how do i pick which stocks to trade (07 sept 2012)

last saturday i attended a wealth securities seminar for newbies and prospective clients .. a friend of mine, a fellow blogger who works as a wealth securities analyst was one of the speakers ... and towards the end of the seminar, she introduced me to three attendees who she said wanted to meet me ... readers daw of my blog (wow .. i have 3 actual live blog readers! wooohooo!!) .. anyways we had an impromptu mini EB .. and i was asked how i pick the stocks i trade .. i evaded the question by replying to him with two of my stock picks for 2013 .. cirtek (chips) and pancake house (pckh) .. well .. i tot about it since and i guess its ok if i share or give an idea of how i pick the stocks that i trade .. so just to give it a structure ..  here it goes:

1. get stock ideas ... from:

- company news from online newsites
- pse website (company disclosures)
- fellow traders (financemanila.net ... chatrooms ... blogs (faceless trader of course tops my list)
- my broker (from inhouse rumours and other brokers at the trading floor)
- broker publications

2. read financial reports of companies with good stock stories from no. 1 ... classify companies into those with good fundamentals and those with bad fundamentals

3. check the charts of these companies .. classify into .. good charts .. bad charts

4. stocks with good fundamentals and good charts .. get included in the watch list ... these get priority 1 for trading (most of my trading come from this stock list)

5. stocks with bad fundamentals but with good charts ... get priority 2 .. these get traded when there is price action and volume

6. stocks with good fundamentals but bad charts ... get included in the monitoring list .. to be included later into priority 1 list when charts start to look good

7. stocks with bad fundamentals and bad charts ... get to be included also in the monitoring list ... until they get to qualify for either priority 1 or priority 2 lists

once i get to do these .. then i trade .. now .. when do i buy? see: when do i buy?

*always subject to change without prior notice :)


back to: my trading rules

my daily trading routine

1. pre-open

- open yahoo messenger
- read online news
- read pse website for recent disclosures
- review charts of monitored stocks
- check email
- check favorite blogs
- read financemanila.net
- join chatroom
- check pre-open postings (bid/ask)
- check latest account balance with broker ... ask for trading floor gossip

2. trading session

- trade :D
- check pse website for recent disclosures
- check financemanila.net for recent posts
- check online news
- monitor chatroom discussion
- check email

3. post trading session

- review trades/trading session
- read pse website for recent disclosures
- read financemanila.net for recent posts
- check favorite  blogs
- think about something to post in the blog/post it if there is
- join chatroom for post trading review
- check online news
- check email
- review charts/plan for next trading day

*subject to change without prior notice


back to: my trading rules

my trading tactics

 this is version 2 of my 21 march 2012 post (see: when do i buy - 1)

1. trading by indicators

1.1  buy when the following conditions exist (there are exceptions to this rule):

1.1.1 macd < 0

1.1.2 macd histogram < 0

1.1.3 macd histogram just changed direction .. . from negative/pointing downwards to positive/pointing upwards or ... when macd gives a buy signal

1.1.4  sts (at oversold levels) pointing upwards

2. range trading

2.1 buy when the price nears support (indicators 1.1.1- 1.1.4 need not be met .. e.g. macd may be > 0 ..etc.)

3. breakout trading

3.1 buy when the price breaches resistance (indicators 1.1.1 - 1.1.4 usually are not met as the price is already at its highest in the macd cycle (macd bottom to macd top) ... hence breakout trading is more risky compared to trading using indicators and range trading).

4. speculative trading

4.1 buy when a speculative opportunity presents itself (trading using 1-3 conditions do not apply) .. this is more like blind trading ... which i do only in very exceptional cases.


back to: my trading rules

when do i buy? - 2

a member of the finance manila stock market forum sent me a pm the other day ... here it is verbatim and my reply ... i tot it is a good follow up on an earlier post about when to buy ...


question: 

Sent: Tue Apr 03, 2012 10:35 am

Sir xxx,

saw from the blog that you guys are eye-ing AGI for a re-entry, may I ask what indicators you look at to confirm or at least to affirm yourselves that it is bound for a reversal already? I am looking at SMDC parang beat down rin sa kanya.

Thanks

reply:

hi ...

check this out ...

when do i buy?

http://1kagemusha.blogspot.com/2012/03/when-do-i-buy.html

if today agi closes green and tomoro another green day ... a small initial position may be establised the next trading day ... just set up ur cutloss price ... if u cant wait buy today a small position then just add as the price continues to advance. i always look at the macd and the histogram ... look at the macd today of agi ... if the histogram changes direction ... then u may buy ur initial position.

see agi macd last 10 feb ... then look at the price action after that ... thats what i look for when i buy my initial position ... gives me maximum profit possibilities

smdc's chart seems ok na for initial entry ... set ur cutloss point ... then just add as the price moves up until u fill ur target volume ... adjust ur cutloss as the price goes up.

goodtimes!

back to: my trading rules

what i dont (31 mar 2012)

i dont think in terms of/i dont use:

1. trendlines
2. channels
3. patterns (with certain exceptions)
4. fibonaccis
5. cost averaging
6. elliots
7. parabolics
8. retracements/dips
9. "bull'' or "bear" markets


i don't

1. like to catch falling knives
2. predict the future
3. set tps
4. do blind/naked trading: no plan, no trade (there are exceptions to this rule)
5. care about the dow nor the p6
6. daytrade (ok ... in exceptional cases ... sometimes i do daytrade)
7. shortsell
8. over analyse: i try to always remember  ... i make my money by trading ... not by analysing
9. like to keep things complicated nor think that the more sophisticated or more technical sounding the better
10. try to fool myself and be in denial when things dont go my way

 
*always subject to change without prior notice :)


back to: my trading rules

when do i sell?

i sell when ...

1. prices are near resistance (i dont use trendline resistance, just the regular resistance)
2. prices breach support (i dont use trendline support, just the regular support)
3. indicators (macd, rsi/sts) say the trend is down with maximum downside possibility and minimum upside reward.
4. my stops are hit
5. a speculative buy opportunity presents itself  and i have no more cash to buy it ... i sell a laggard.
6. i have already completely satiated my greed :d

*always subject to change without prior notice :)


back to: my trading rules

when do i buy? - 1

i buy when ...

1. prices near support
2. prices breach resistance
3. indicators (macd, sts) say the trend is up with maximum upside possibility and minimum downside risk
4. a speculative buy opportunity presents itself 

*always subject to change without prior notice :)


for version 2 of this post see: trading tactics

back to: my trading rules