Advice ko sa mga OFW Stock Traders at mga Empleyado sa Pinas na nagtitrade sa Stock Market.
Two things.
The first one is kapag may trabaho ka, you can use MAMA or ALMA or kung ano pa man na strategy meron ka but please use DAY na timeframe. Stay away sa lower than that na timeframe. It does not mean you are not that good of a trader, it only mean na you play the timeframe na in favor sayo ang odds.
The second thing is this. When you are a technical trader or you use TA to trade stocks COMPOUNDING is a bad strategy.
I will explain. Compounding is the process in which an asset’s earnings, from either capital gains or interest, are reinvested to generate additional earnings over time. Compounding is yung kunyare capital mo is 100k kumita ka ng 10% that would make your money 110k. E trade mo ulit kumita 5% so 115,500 pesos na pera mo. So on and so forth until maging billionaire ka.
Sa real fundamentalist/value investor, compounding works as we have Warren Buffet as a great example. He buy stocks cheap and wait for the business to realize its potential. It takes years/decades of holding.
Now balik tayo sa mga gumagamit ng TA sa pag trade.The chances of a technical trader to keep compounding his/her money to riches is next to zero. You will encouter losses along the way and it will eat up your profits if you keep re-nvesting your money back to your trading account.
Here is what you should do. I won’t sugarcoat anything. I will say it as it is. So may 100k ka as capital kunyare. You have a job at every month nagdadagdag ka sa trading account mo 10k from your salary. If you want to make it as a trader eto dapat ginagawa mo. You trade out of that 100k. Whatever kita mo doon ke 10k or 5k or 3k you need to withdraw it at ilagay sa separate account. Either sa savings account, sa pang longterm trading account or sa alkansya mo. Kung saan mo man gusto ilagay is up to you.
Then pagdating ng sahod lagyan mo 10k yung capital mo mula sa sahod mo so 110k na total capital mo. Whatever profit mo doon e withdraw mo ulit at ilagay sa ibang account or alkansya. Do this everytime you profit. This will make you earn more yet lose less. You can even do the math.
Let us say same lang ang percentage ng profit at loss mo pero palitan Profit ka 10% sa 100k that would make your money 110k. Loss ka 10% sa 110k that will make your money 109k wala pa sa usapan yung fees.This is not a theory. It is being used way before pa ako magtrade.
If you want a deeper discussion about this idea visit our Facebook group Trader’s Lounge and look for this on weekly lessons na topic. I also included my trading ledger on this lesson over there to support my claim.
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8 Comments
Rosell
Maaaaamm, hahhah (sigaw ulit, hehe sorry)
Thank you po sa pag post nito. Kahapon kasi when I was finishing my assignment as a TDS sabi ko if ever mgsstart na ako real trades e-rorolling lang pera ko pero now I realized na mali pala yun kasi may tendency na pwede ko din ma loss iyon. Wiw hehehhe thank you mam. #Realization101
mako solano
Thank you po sa advice!
Pink 5
Thank you sa advice na ito. I will try this one. At the end of the day ang gusto ko lang naman is to maximize profit and minimize loss.
Thank you GandaKoh!
eroll
better to backtest his idea, mamya sa kanya lng applicable and hindi kaya ng oras mo, bukod dun wala sya strategies or proof kung succesful nga ang ganto, maganda ibacktest and do the paper trade, reminder lng po Stock Market is Risky.
FRANCINE GRAD MONLEON
Risk management works well with compounding.
if i have that 100k capital i would allocate 50% of it per trade.
The Condition:
1. win BIG 10%+ = Sell
2. win SMALL 3%-9% = SELL
3. Breakeven = SELL
4. STOP LOSS at -3%
5. NEVER GO LOWER THAN -4%
Rules:
1. IF you hit BIG (great) then SELL or Trend Follow
2. IF you hit BIG but missed the Target price and went below 10% then SELL and consider it as SMALL win
3. if you bought it and price went up was not able to sell but went down to breakeven levels +/- 1% SELL
4. if you bought and did not follow your BIAS, price went down then STOP LOSS, Never hold it, Whipsaw if Whipsaw, fuck it and find new entry point.
Even if your win rate end up with just a measly 30% out of 10 trades you only won 3x and loose 7x
with avg wins of 10%
avg. loss of 3%
this would be how compounding should be done with a fix capital.
Starting Capital = 100K
WIN RATE = 30%
AVG WINS = 10%
AVG LOSS = 3%
Allocation = 50%
example:
ENTRY RESULT GAIN/ G&L % EXIT AMT. END GROWTH
AMT LOSS CAPITAL RATE
———————————————————————————————————————–
50,000.00 LOSS -1,500.00 -3.0% 48,500.00 98,500.00 -1.50%
49,250.00 LOSS -1,477.50 -3.0% 47,772.50 97,022.50 -2.98%
48,511.25 LOSS -1,455.34 -3.0% 47,055.91 95,567.16 -4.43%
47,783.58 LOSS -1,433.51 -3.0% 46,350.07 94,133.66 -5.87%
47,066.83 LOSS -1,412.00 -3.0% 45,654.82 92,721.65 -7.28%
46,360.83 WIN 4,636.08 10.0% 50,996.91 97,357.73 -2.64%
48,678.87 LOSS -1,460.37 -3.0% 47,218.50 95,897.37 -4.10%
47,948.68 LOSS -1,438.46 -3.0% 46,510.22 94,458.91 -5.54%
47,229.45 WIN 4,722.95 10.0% 51,952.40 99,181.85 -0.82%
49,590.93 WIN 4,959.09 10.0% 54,550.02 104,140.94 4.14%
End Capital = 104,140.94 or 4.14%
With the Strategy that you taught us if I am able to come up with a 70% Win Rate.
that means if im able to strictly implement the strategy where it is applicable and stop loss if the bias fails.
with that.
WIN RATE = 70%
AVG. WINS = 8%
AVG. LOSS = 3%
Allocation = 50%
I could end up with this result.
ENTRY RESULT GAIN/ G&L % EXIT AMT. END GROWTH
AMT LOSS CAPITAL RATE
———————————————————————————————————————–
50,000.00 WIN 4,000.00 8.0% 54,000.00 104,000.00 4.00%
52,000.00 WIN 4,160.00 8.0% 56,160.00 108,160.00 8.16%
54,080.00 LOSS -1,622.40 -3.0% 52,457.60 106,537.60 6.54%
53,268.80 WIN 4,261.50 8.0% 57,530.30 110,799.10 10.80%
55,399.55 WIN 4,431.96 8.0% 59,831.52 115,231.07 15.23%
57,615.53 LOSS -1,728.47 -3.0% 55,887.07 113,502.60 13.50%
56,751.30 WIN 4,540.10 8.0% 61,291.41 118,042.71 18.04%
59,021.35 WIN 4,721.71 8.0% 63,743.06 122,764.41 22.76%
61,382.21 WIN 4,910.58 8.0% 66,292.78 127,674.99 27.67%
63,837.50 LOSS -1,915.12 -3.0% 61,922.37 125,759.87 25.76%
End Capital = 125,759.87 / 25.76% I say not bad.
If I went ALL IN, with a
side note: computation with a fixed AVG Wins could be flawed but given if we consider that some of the trades could win 20% or more, well its just an example.
Nhellie
Gusto ko ito. Save more, and loss less. Magawa nga ito.
eroll
better to backtest his idea, mamya sa kanya lng applicable and hindi kaya ng oras mo, bukod dun wala sya strategies or proof kung succesful nga ang ganto, maganda ibacktest and do the paper trade, reminder lng po Stock Market is Risky.
Romaine Ryle G. Aquino
Thanks po sa idea na ito!