How to Make Money in the Stock Market

Let’s just cut to the chase! You, amongst over 95% of traders, have been losing money because–frankly–you don’t know how NOT to, and you’re not willing to do all it takes to turn that around. It is quite easy to cast blames on everyone else, but yourself, for your shortcomings and why people are practically taking your money; after all, when you lose, someone is winning.

“The stock market is a device for transferring money from the impatient to the patient.”

– Warren Buffett

I’ll revamp that quote by one of the most prominent investors by saying: “The stock market is an institution where the more skilled traders and experienced are paid by those less skilled or experienced.”

This is essentially why you tend to find yourself in a hole–for you lack the skills pertinent to being a successful trader. The good news is that you can turn this around. You can acquire these skills by studying relentlessly (charts, indicators, SEC filings, news, support and resistance, etc), asking questions, taking time off trading, and practicing with a paper trading account. The problem is, people are hell bent on making money, but forget to realize that everything good in life comes with hard work. I’ve officially made a million in all of my accounts combined (in just 1 year), but that came with hard work. I speak of how I used to buy on huge spikes and then get caught with big bags simply because I didn’t cut losses fast nor even had the knowledge of what a stop loss was.

So, I stopped trading and started studying and learning the core things I needed to know to start making money. One important thing to know is that you should plan your week, as if you fail to plan, you definitely plan to fail. Part of planning your trading week could be setting a weekly goal. For example, if you have a $5000 account, your weekly (day trading) goal could be $400-$500 a week (divide that by 5, and that is your daily goal). One could achieve this by deciding to get out of a position after about 4-5% profit (or any other profit level), especially if you know that it gets you to about halfway to your daily goal. This would be particularly prudent when you didn’t chase the stock, for chasing without an exit plan (3-5% SL) is what leaves people with designer bags (bag holders). Little victories, especially if you’re not skilled enough, will get you far in the market.

Lastly, never average down on a losing stock, especially if that was never your intention; this is how a trade can become an unintended investment/long hold. Essentially, that’s you creating bigger problems for yourself. Instead, cut losses fast and learn from your mistake; this is how you’ll start profiting from the market. . . or at least, this is how you’ll stop losing.

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Cynicism and Procrastination: The Core Reasons Behind Stagnation

So, the real Uchiha is about to be unleashed, so buckle up–and oh, it’s tough love!

Before I dig deeply into the topic of discussion, I should mention that I quit my job about five months ago. I had a sweet job offer way before graduation from my undergraduate studies, and I couldn’t possibly even begin to talk about the elation and satisfaction that came with that. While an average person would be utterly complacent with the job, I was (and still am, of course) a different breed. Ever since my Junior year, I’ve always thought of ways to become wealthy; in fact, that led me into having multiple degrees in Mathematics and Economics, and even took on Computer Science, for I figured my pay grade would be commensurate with my skill set and expertise.

Long story short, in my quest to become extraordinary and, thus, wealthy, I started to take on new things. I always read that having multiple income streams or even having your own business is the way to go; some even concluded that having a skill/hobby that you love could make you a lot of money. So, I begun racking my brain in search of a skill (other than what I went to college for) or hobby I really liked. It was quite obvious–I loved to game. Particularly, I love to play FIFA on my PS4, so I found PlayersLounge where I played people for money (don’t judge me). This was my other income stream for a while until I came to the realization that I needed something more lucrative. That is how I found the stock market.

I can go on and on about this, but my drive, ambition, and optimism has made me over $500k in just five months (not trying to brag, please). In life, you are ABSOLUTELY in control of your financial well-being. Do not push things for later, do not deprecate successful people, especially the ads or posts you see on social media. You can’t become financially free if you’re a cynical person. Nothing good has ever emanated from procrastination, which is a line I borrowed from Tai.

This is just my daytrading account in 5 months (and lol, yes, the commission)

Take the huge step today, even if it means quitting your job, as I’m not a big proponent of doing what you don’t love. If you ever do decide to quit, however, be sure to have some money saved up. Anything is possible if you put your mind to it. I challenge you to go out there and really commit to changing your life today. Please, do away with cynicism and procrastination… DO IT TODAY!

How to Consistently Profit in the Stock Market

Whether you’re a rookie, an experienced trader, or you’re simply thinking about ways to enhance your trading and become more consistent, this post is for you. A lot of trading services–whether paid or free–teach about charts, indicators, scanners, etc., but fail to really expatiate on how to actually profit consistently. This is unequivocally the norm and incumbent with a lot of chatrooms, which begs the question: Why do most subscribers/members still lose a lot even with all these tips?

The answer to this may be quite subjective. It could be based on the individual trader and his/her ability to really connect the dots, or it could simply be as a result of misdirection or asymmetric (insufficient) information, where the chatroom or mentor fails to give out this information–or perhaps because they actually don’t know, hence, can’t inform others. Connectedly, a lot of self-proclaimed gurus aren’t profiting from the market neither; they make most of their income from their monthly subscriptions, hence why they hold back on posting screenshots of realized gains (not the account balance) or even offer practical tips on how to consistently profit.

Follow the steps below and watch your trading transform:

1. Protect your account at all costs
2. Figure out your trading style: day-trading vs swing-trading
3. Focus on more realistic gains, and steer clear of the home-run mentality
4. Study, study, and study

Protecting your Account

Your no1 most important rule is to protect your account/capital at all costs, for without that, you will likely not profit from the market. It is oxymoronic to think that you can be a consistent, profitable trader from the market if you can’t even protect your current capital. Sometimes the best attack stems first from a better defense. When you see that a trade is stalling or volume is dissipating, you should leave at your entry (or slightly higher, even if it means a small gain). You may also decide to place a stop loss if you’re a swinger and seldom have the opportunity to watch the stock. Ideally, a 3% stop loss would suffice, and this works particularly well if you buy near support.

Placing a stop loss on a stock you chased will likely burn you. Entry is EVERYTHING!

What is your Trading Style?

If you work for the most part of the day (or during market hours), your main focus should be on swings. While it could be tempting to day trade, if you think it would be rather elusive to sit there and watch the stock so as not to miss your exit, then stay away. Conversely, if you have the time to trade uninterrupted, then day-trading would be best (Ustocktrade or Robinhood for beginners/small accounts).

Focus on Realistic Gains

This is a common mistake by most traders–to wait on a 15%-50% spike in a stock price before selling; this is, in fact, wrong, as you will miss out on little victories that can grow your account over a period of time. I deem 3%-6% gain more realistic, so you SHOULD start scaling out/selling at that point. If you think the stock price might go higher, then leave some free shares to ride just so you can capture the rest of the move, thus extricating your FOMO (fear of missing out). The stock market isn’t a get-rich-fast scheme, so trade smart and lock gains early.

Study, Study, and Study!

To be very successful in life, it comes with hard work. The stock market isn’t any different, so be sure to always study. We have a lot of educational materials in our room (ClickHere), so learn new things every week. While we can alert high potential stocks, it is ultimately up to you to take charge of your trading, finances, and financial freedom.

 

 

Day-trading Recap for Feb 23, 2018

Today was a good day in the market, as the $DOW recovered nicely–going up by as much as 350 points. I made $8k+ in total, with majority of my wins coming from $LINU swing, which I had in my TD Ameritrade account. I alerted this play yesterday at $1.70, and we were able to sell around $2-$2.14. I also scalped $AAPL options again for about $1700 in my options account, Tastyworks. I made $3k daytrading in my Etrade account today, with majority of the gains coming from $ARDM, $HEB, and some from $OHGI.

I knew $ARDM would go because of the low volume pullback and the curling MACD. It also has multiple gaps to fill, so it’s very oversold at current level.

For next week, I fancy $LTBR, $RVP, $ARDM, and $IPWR for a spike. Will have more, of course, but these are the ones that are currently on my list.

Scanner Settings

While this blog post may not really benefit a lot of beginners, as having some tickers show up on the scanner doesn’t imply that said stocks will go up, I still think it can help you find highly profitable patterns and setups. One still has to do the technical analysis to be able to identify the best setups; after these setups have been identified, one would still need to know where to buy and sell.

I like bottom plays, and more recently, due to market being unstable, they’ve been the focal point of most traders as the low RSI gives room for a squeeze higher due to shorts potentially exiting their positions. Plays like $RMGN, $CCIH, $MYSZ, $OREX, $REXX, and $NURO all came from this scanner setup.

Bottom Play 

 

This is the scanner I usually use in scanning for finding bottom setups. Price being below SMA (20,50,200) is very key, for it allows only stocks that are undervalued and trading well below their major moving averages to appear in the scan results. I have this scanner setup in my finviz account, which is free to set up; all you need is a username and password.

Morning Watchlist

Although I have several ways, for the most part, this is how I come up with my watchlist for the next day. This scanner generally picks up stocks that had unusually high volume relative to their average volume. Relative volume is calculated thus:

RV = Current vol / Average vol

You could tweak yours to ‘over 1’ as opposed to ‘over 1.5’. I often alternate between between the two. Market cap of $300m or less essentially means that I get mostly penny stocks, as that’s what this screener is for–penny stocks. I have other settings for options traders, which I will share later. In coming up with the actual list, I peruse the list and use my candlestick analysis to gauge whether a continuation is likely.

Uptick Plays (uptrend)

This is pretty much the opposite of the first scanner setting. Most plays found here will generally be above their major moving averages, with said MAs forming support right underneath the candles (price). Understanding more about charts and indicators will help you better make the best out of this scanner.

I have one for my EMAs (exponential moving average), which is pretty much what I use. Since Finviz doesn’t have EMAs (only SMAs…simple moving average), I have my EMA version in my MarketInandOut account.

Day-trading Recap for Feb 22, 2018

Today was a good day, especially for my swings. Up overall $7k+  . . .$1600 in my daytrading account, Etrade,; $3k scalping $AAPL calls and puts in my options account, Tastyworks, and $3k+ in my swing account, TD Ameritrade, where I currently still have $LINU, $RCON, $RNN, and $NFEC. My daytrade profits came from playing $PRPO, $AKER, and $NURO for roughly $1600.

I particularly liked $PRPO because of the bottom chart pattern, which has been downtrending on very low volume. Because volume is necessary in validating every price action, I knew PRPO price action wasn’t validated, hence why I played it.

$PRPO

I did something different today, which was to scalp $AAPL calls and puts (multiple times), for market is very volatile, which is great for options traders. For tomorrow, my major watch are $LINU, $OHGI, and $RCON. I am particularly expecting a huge move in $LINU, as ER is next week. It ran over 100% on the last ER.

Day-trading Recap for Feb 21, 2018

Market isn’t back 100%, so I don’t put in more like I used to. . . average daytrading gain is around $3500 on a normal day. The FED minutes updates on interest rate didn’t help matters, as market dropped more right before close on interest rate hike. I played $PRKR, $CYTX, and $OHGI for gains, and I was about even on $RGSE.

Hoping for a bounce tomorrow, but in any case, we always find a way to profit even when market is rough. I’ll be watching $OGEN, $LINU, $CHCI, and $CAPR closely today, Feb 22.

Day-trading Recap for Feb 20, 2018

While the market ($DOW) was down about 240 points today, swings from last Friday came through (particularly $YTEN). I made over $2,200 in the swing account (TD Ameritrade, which is also my main account). In the daytrading account, however, I was still able to make $2,016. While I could have made more, I needed to be cautious and only play my top setups ($CHFS from $3.18 to $3.35, $REXX, $0.99 to $1.07 and $HEAR for a small profit). A few plays were flat, such as $SBOT and $SGOC, although I was able to make about $400 in $SGOC, whose setup I actually also liked. While $SGOC did go up, it was short-lived, hence why I group it into the “flat” plays category.

$HEAR 

The decision to play $HEAR was based on the above flag formation pattern, which in some sense worked out a bit, as it ran to $0.50. I believe the market being down affected it a little; however, overall, from when I posted this last weekend, it was a good play.

$REXX 

This was based on a MACD divergence (MACD indicator showing some positive signs even though price was falling) on a bottom and falling chart. CMF was pointing upwards, thus showing dissipating selling pressure. Share float is 8M, which is low, and short float is about 11%, so I figured we could squeeze out some shorts over 1.07 break, particularly.

I like $DSS, $PXS, and $RNN for a move tomorrow. I’ll be watching them closely.

Trading Psychology vol. 2: Adaptability to Change

“It is not the strongest of the species that survives, nor the most intelligent that survives. It is the one that is most adaptable to change.”    – Charles Darwin

On the last blog, I discussed the psychology behind support and resistance, namely: greed, fear, hope, and regret. This time, we’ll dig deeper into the very depths of the market and explore the psychology behind our trading habits, especially in a changing market. Trading psychology begins with one’s ability to become amenable and adaptive to change. Adapting to a changing market means being willing to change who you are, what you do, and how it is done.

Greatest Impediment to Adaptation

Generally, traders who have been more consistent in profiting from the market know how to further generate returns from the markets. As some of my blogs have shown, a lot of these trading ideas employ microeconomic principles (demand and supply), macroeconomics, and even fundamentals, such as company’s balance sheet, earnings report, and institutional ownerships. Others are more drawn towards a technical approach, such as the relationship or correlation found amongst predictors and market outcomes. It would be unwise, however, for portfolio managers to pursue macroeconomic concepts in markets that are engulfed by the effects of positioning; or momentum traders playing for breakouts in low-volatility markets. If the aforementioned scenarios were to be the case, the results would be wide-spread panics, frustrations, thus, a potential emotional interference with future trades.

This is pretty much how people lose money in a changing market where they have unequivocally failed to adapt to. By nature, and inherently as humans and traders, emotions often lead to functional fixedness. Essentially, this means that once we find a style of trading we like that works, we are oblivious and absent of all other alternatives. Shall I use myself as an example! In the bull market (especially this past month of January), I was particularly focused on breakout patterns like Ascending Triangles, Bull Flag Formation, Cup & Handle, etc. However, I soon realized that I wasn’t as good as I thought. The last week of January and first week of Feb were very tough for the bull market, as it took an ugly, bearish turn with the DOW dropping more than 2000 points. It was brand new for me, for I had never traded in a really bad market. So, I had to switch it up; I begun playing very oversold stocks that are bereft of selling pressure. I was essentially looking for really beaten, bottom setups that are now reversing because sellers are gone. I soon started to find success in those, especially in plays like $RMGN, $CCIH, and the likes. I also found $TVIX and $UVXY, which are ETFs that move oppositely to the $DOW. This means that when market ($DOW or $SPY) is going down, I can go long in $TVIX or $UVXY, although playing these require a lot of expertise and good timing due to the high volatility.

Remember that true change emanates once the accumulation of problems necessitates the reach for new solutions–a famous saying by B. SteenBarger. On my next blog (vol. 3), I’ll discuss about how you can build on your strengths to advance your cause and ultimately become more profitable than you currently are.

Trading Psychology Vol. 1: Support and Resistance

As hinted in my blog post titled “Demand and Supply: Trading Made Simple,” I’ll briefly go over the psychology behind support and resistance, and then continue further into the discussion of a more in-depth trading psychology. So, let’s get started . . . Support and resistance are created by greed, fear, and regret. As an example, say you buy a stock at $1 support and the price goes to $1.20, you refuse to sell because you think it would go higher; however, the stock price comes back down to $1 area, and now you’re filled with regrets for not selling at $1.20 earlier. Later, the stock starts to go back up, but this time, you hope to sell at $1.20 area, thus the fear factor, as you don’t want it to go back down like the previous time. When that happens, you (amidst of other traders) are creating resistance, which is where you have sellers (supply). It is where you have a selling climax, hence why the price tends to fall back down when it gets to that resistance point.

Now, what is the psychology behind support? The converse of the aforementioned is the case. Suppose you buy a stock at $1 again, and then you it spikes to $1.20, after which you sell. Your sole regret is that you didn’t buy more at $1, since you would have profited more. This is where greed kicks in. Quite unfortunately, the stock comes back down to $1, but because you saw how it moved the last time, you decide to buy a lot more at $1–that is you essentially creating support (demand) at $1 for that stock. We can take this a step further. Imagine that you have two groups–longs and shorts–and they have to decide on what price to buy a stock.

• Longs who are trying to buy at $1 support in anticipation of a move towards $1.20 resistance.
• Shorts who are shorting the stock from $1.20 resistance expecting a downturn or markdown to $1 support.

Both longs and shorts come together in creating this support, because longs are waiting to buy at $1 for a move to $1.20, while shorts are hoping to cover their short position at $1, meaning that they would have to buy back the borrowed shares at said price, thus creating more support. In vol 2 of Trading Psychology, I will go over adaptability to change and how it can make you a better trader.