Yesterday, I showed you how we earned approximately 25 percent on ISM.
Today, I’ll show you how we lose roughly 20 percent on the first round and how we earned nearly 50 percent on the second round trading Now Corporation (NOW).
Just when you thought that I would only want to raise the flag of my wins, here I am showing you how my data-driven forecast proved me wrong on the first round trading NOW. I’ll show you how it all started with some time-stamped screenshots from our Private Clients Forum where I guide our subscribers.
First, here’s the time-stamped screenshot.
Next, here’s the exact thing that I posted for our clients last September 24, 2018.
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NOW’s closing price is above the 10SMA and MACD is above the signal line already.
The Fast Stochastic already crossed above the Slow Stochastic. That’s a bullish signal for me.
With these buy signals appearing while RSI and Stochastic are in the neutral level, that supports the idea that NOW still has more rooms for a bullish price action.
Support is at 6.77 while resistance is at 8.05 as a precursor to 10.00
If you will enter a new position at 7.70 and sell at 8.05, that will give you an upside of 5 percent only.
If you will enter at 7.70 and sell at 10 (if NOW moves up to that level), that’s an upside of nearly 30 percent.
But I don’t advise setting a fixed price as your selling point. Use a TRAILING STOP LOSS instead.
For the new members here, please read Newsletter Vol 1. No. 13. I’ve explained this trailing stop loss in Filipino in that newsletter.
NOW’s daily volume is slowly moving toward its 30-day volume average. If the price continues to register a green candlestick and volume touches or crosses the 30-day volume average’s line, that will reinforce the bullish momentum of NOW.
Be extra careful, however. NOW has a HIGH RISK level due to its risk percentage of 73.53%.
NOW registered a Net Foreign Selling worth P1,094,062.00 as of September 21, 2018. On a 30-day trading period, NOW is on a Net Foreign Buying worth PHP2,307,340.00.
The month-to-date sentiment of the top 10 players of NOW remains bullish as their buying average is still close to NOW’s prevailing price at 7.70.
Trading participants of NOW with a 100% Buying and Selling Activity from Sep-03-2018 to Sep-21-2018 at 03:30PM:
12 out of 89 participants or 13.48% of all participants registered a 100% BUYING activity
5 out of 89 participants or 5.62% of all participants registered a 100% SELLING activity
Top 10 Players’ Buying Average: 7.6199
Top 10 Players’ Selling Average: 7.6678
The psychological average price of the top 10 players from Sep-03-2018 to Sep-21-2018 is from 7.6199 to 7.6678.
Trading participants of NOW with a 100% Buying and Selling Activity from Sep-17-2018 to Sep-21-2018 at 03:30PM:
19 out of 63 participants or 30.16% of all participants registered a 100% BUYING activity
8 out of 63 participants or 12.70% of all participants registered a 100% SELLING activity
Top 10 Players’ Buying Average: 7.2641
Top 10 Players’ Selling Average: 7.3407
The psychological average price of the top 10 players from Sep-17-2018 to Sep-21-2018 is from 7.2641 to 7.3407.
Trading participants of NOW with a 100% Buying and Selling Activity as of Sep-24-2018 at 01:52PM:
5 out of 24 participants or 20.83% of all participants registered a 100% BUYING activity
8 out of 24 participants or 33.33% of all participants registered a 100% SELLING activity
Top 10 Players’ Buying Average: 7.6268
Top 10 Players’ Selling Average: 7.6163
The psychological average price of the top 10 players as of Sep-24-2018 at 01:52PM is from 7.6163 to 7.6268.
The most active range as of the time indicated on the Price-Volume Distribution chart below is between 7.60 and 7.70.
The Disaster Happened
The disaster happened last October 10, 2018. NOW closed at 7.49 the previous day. Then, it dropped by more than 31 percent on October 10th.
Our entry price was somewhere around 7.60. Those who followed a 10 percent risk tolerance didn’t get the chance to sell at their ideal trailing stop loss around 6.84 because NOW opened at 5.00. Quite luckily, it hit an intraday high of 6.38 on October 10th. That made us quickly reduce our paper loss from a little over 30 percent to 20 percent.
Things happened so rapidly. We lost roughly 20 percent of our trading capital for NOW on October 10th.
This is a perfect example of how important it is for you to have the time to monitor the market if you want to venture into short-term trading.
Add to the pain the fact that there’s no stop loss feature in the Philippines yet.
Do you now understand why short-term trading is so demanding of our monitoring time?
Also, remember that I was so data-driven with my forecast on September 24th. Here’s the truth: no matter how data-driven you are, the market will still decide. But that’s not an excuse to base everything on instinct and to never have a data-driven decision anymore.
Data analysis can reduce but not eradicate risk. Acknowledge the Pacific Ocean-sized difference between those two verbs.
How We Recovered
I knew that traders were all on the lookout for rumors about the third telco company during that time. So I continued to monitor NOW.
In fact, I continuously posted daily updates of NOW on its thread in our Private Clients Forum.
NOW registered a green volume bar on November 8, 2018. While MACD was still below the signal line and the price was still below the 10-day moving average back then, pre-empting the confirmed buy signal works sometimes, but it’s too risky.
If you’re not a high-risk trader, I do not advise pre-empting confirmed buy signals.
So I posted an update on November 12, 2018. That was the day when NOW began to trade sideways near the then resistance at 3.12. Dilly-dallying near 3.12 lasted for 10 to 11 trading days.
Every day, I gave our clients the actively traded price points and the top 10 players’ buying and selling averages so they would have a basis where to park their buying price.
See the screenshots below. I can’t include all screenshots. There’s a lot.
When NOW went above 4.00, the volume started to weaken bit by bit. I also noticed that the price slid little by little.
For EquiPicks subscribers, being on top of each trader’s trailing stop loss is the first rule of active trading. No one can say, “Oh, I have no idea about this trailing stop loss,” because I issued Newsletter Vol 1 No 13. I wrote that newsletter in Filipino (Tagalog). I described what a trailing stop loss is and how it is computed.
Those who always apply a 10 percent risk tolerance for short-term trading must have sold their position between 4.00 and 4.05.
Those who re-entered NOW between 1.85 and 2.00 and sold between 4.00 and 4.05 earned roughly 50 percent.
All in all, those who played my trade setup for NOW on both rounds did not only recuperate from their losses on the first round but also registered a net profit of approximately 30 percent (round 1 losses – round 2 gains).
What’s the Lesson Here?
The profitability in trading is not about having zero losses. You can’t avoid losses. I can’t avoid them. In fact, avoiding losses is not my goal but minimizing them. At the end of the day, the goal is to have more wins and a few losses.
You minimize losses by being data-driven in all that you do. It also makes a lot of difference when you have a mentor who guides you.
Some of our clients can analyze on their own yet they still decided to subscribe to EquiPicks.
What do you think is the reason?
Aside from they want to have an access to my detailed and in-depth analysis, they want to exchange ideas and insights with me.
When two or more bright minds synergize, great things can happen.
I know my analytical style does not look familiar to many. Firstly, most of my tools are not conventional or classical tools that existed before I was born. I developed my own tools. Secondly, I have my own way of looking at data. I have my own framework.
I want you to know that all of these charts that I use, the ways on how to use them, how to interpret them, and how to use that interpretation to make a trade or investment decision are documented in our Quick Start Guide.
If you will only make time to read the Quick Start Guide without rushing, if you will only read my posts in the Private Clients Forum, and if you will only actively participate on discussions in the forum, you’ll be able to see things through my eyes in a month or two.
There’s a Private Clients Forum, anyway. If my simplified version is not simple enough for you, you may post your question in the Private Clients Forum.
Click here to subscribe to EquiPicks.
Do you have questions about this trade dissection of NOW? Please comment below.
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This article is good and sensible.
However, it downplays the emotion that makes up decision around stock trading. If for example I entered NOW at 7.50 and it goes down to 4.0 even if there is an article about trailing stop loss. I would not sell it at 4 bec human nature is to hope natataas and magrecover. I would not pin down my loss..Anyways for some who have the guts to sell it at 4 they accept the paper loss and make it realized actual loss of almost 50% and move..Imagine if 100K invested 53K na lang natira..
And then bumagsak ung NOW to 1.85 would you invest ung 53K to buy NOW again hoping that it will gain? . I dont think so maybe a “pro” trader will do..You will use it to but other stocks and not NOW
Anyways I did not trade NOW..I just illustrate what I will do when face with that situation..I also asked a friend and she answered the same.
Thank you for all your article I am reading them. I am not yet a premium member I will keep reading first and gain understanding..
Loss a lot in trading so need to study more..
Hi, Jaja. Thanks for your comment.
I would have felt the same had I been in your case. On the other hand, everyone was forewarned that NOW was a high-risk stock. The Risk Level chart was posted. That serves as a filter for our customers. They were given the opportunity to ask themselves, “Does the risk level of NOW match my personal risk tolerance?”
If their answer is affirmative, the idea is to buy in tranches only and not in a “one time, big time” approach. If the answer is a no, then, our customers may check the other stocks in our Short-term Trading watchlist. NOW is not the only stock in our Short-term Trading watchlist.
But after reading, hearing, seeing, and executing lots of trades for the past 18 years, add to that the risky business decisions I’ve made also, I’ve sort of mastered my emotions and psychology in making extremely high-risk decisions – and that includes trade and investment decisions.
One of the thousands of articles about written about the stock market is this article entitled “How Mastering Buyers’ Psychology Has Made Me a Profitable Trader.” Although I did not completely write everything I wanted to say about “mastering buyer’s psychology in trading,” you will still see how I tame my emotions by reading this article.
Experience and diligence in studying the stock market have helped me make extremely risky but data-driven trade decisions. I’ve failed a lot in doing extremely high-risk (though data-driven) trade decisions because my emotions got the best of me. Those failures paved the way for me to know how to win more and fail less.
We can never weed out our emotions in making trade decisions. That is not the goal. Emotions will forever be part of our humanity. The goal is to master our personal psychology. Once you’ve mastered your psychology, you’ve mastered the humanity’s psychology already. We all have common denominators in our emotions. That’s why I have this “pre-emption technique” when trading. I’ve mentioned this a lot in our Private Clients Forum. Our clients who are good readers are surely familiar with this term. When you have a good understanding of how the human mind behaves, you can somewhat anticipate its next probable move. When the chances are high for that “next probable move,” you can either move towards or away from that “next probable move” in advance.
Here’s what I suggest to every trade who is in the process of mastering his or her personal psychology.
1. Pick 3 to 5 tools that you can familiarize and master. Feel free to use existing tools or create your own like what I did.
2. Paper trade in the beginning. Do not use real money yet. Apply what you’ve learned using your chosen tools.
3. Build a strategy. Back-test or apply it to your paper trading practice.
4. Use a trailing stop loss. It PRESERVES capital, PROTECTS gains (if any), and PREVENTS unbearable losses. When you calculate your trailing stop loss, you will be humbled and disciplined to not enter the trading battle without asking yourself, “What is my risk tolerance percentage for this trade?” You will then realize that you have to check your reward-to-risk ratio. If the potential reward is bigger than the potential risk, then, at least you have a data-driven reason to do tranche-buying or test-buy.
Remember, a loss is less painful when you know that you made a DATA-DRIVEN and STRATEGIC trade decision than when you traded based on the “I think, I feel, I believe” precept.
I hope this helps, Jaja.