I started my first two weeks in stock market with so much hype, then I bought more that bring stress and sold and bought again bringing frustrations. However, there is no failure as I’ve learn so much from this experience. I told my friend about it and of course, the expected response is, he also made the same mistakes.
Buying Speculative Stocks
Before I started buying the actual stocks, I try to lurk around the Facebook group of swing traders where I can see them posting about portfolio gains and loss. However, most of them are just hyping about certain stocks. I don’t know what happened, but I decided to buy this stock at the current price! I did some very minor chart analysis and I thought it will go up. My wrong moves for this purchase are:
- Buying less than PHP 8k. Due to transaction fees, commissions and tax, you should buy stocks with funds higher than PHP 8k to maximize the fees. Fees usually are based on percentage, or PHP 20 whichever is higher, so PHP 8k ensures that you pay the fee based on percentage.
- Buying at the current price. I should have bought at a lower price, like a deal or no deal mentality. I have no idea about it that time.
- Finally, buying the wrong stock. I did no further analysis on that stock. It is just not a good stock at that time.
After my first purchase, I bought the same stock again at the lower price. I didn’t learn my lesson. Then I bought another stock suggested to my friend. I got bored with my first stock due to the price moving slowly downside, I sold it but during that day, the price rise up to my original purchase price!
Not only that, I bought again my first stock!
After some reflection, I realized that I have to let go of these stocks and trade better. So I sold these two stocks at a minor loss and planned my next move.
Using Recommendations from Experts
I’m already a member of the Facebook group for swing traders which also has a service that gives technical analysis on stocks and also gives recommendations. I know these recommendations cannot always be trusted, but if you can apply your own analysis on top of their analysis and recommendations, you can narrow down your options instead of having to find a stock to analyze.
Their website is Tsupitero.com which was originally a newsletter that is already running for more than a decade (how could I missed that!) and is written by experts in the trading market for more than two decades. I has the fundamental and technical analysis on their web application but my only interest is on the newsletter.
I signed up for one month as Gold user and planned to subscribe for one year later this month. The Gold plan gives 5 recommendations, so I can analyze just 5 of them and select the stock based on my preferred style of trading. I’m hoping for some positive results in the coming months.
Stick to the plan, do not chase the price!
Aside from the professional recommendation, I also planned my trading strategy on weekends and at nights. Of course, that’s the only way to do it. You have the target stock to buy or sell, you planned the entry price or exit price, you plan your stop loss strategy or you plan not to trade that week.
So there goes my plan, wait for the price to drop to the support level to buy it and sell it when it reach the resistance level. I also have a backup plan which is to be a position trader for this specific bank, actually my own bank, because their price is at the bottom and is oversold. It is a good time to buy it at a very low price.
On the first day of that trading week, I stick to the plan and didn’t buy anything. The next day, the same result, but this time, Tsupitero.com disclosed that he bought a big bank! Of course I know what bank it is! By the way, the newsletter comes at the end of the day, usually at 6-7PM. Therefore, I planned my entry for the next day for this bank, for the price of PHP 72.00.
I have placed my order the next day and watched the price in real time. The price go up, I got tense, I edit my order to PHP 72.20, it continues to go up so I edit again, 72.40, 72.50, 72.60, then I got mad I bought it at the current price at 72.95! I know I’ll regret this decision, so I closed the price monitoring, then I checked it at the end of the day. I closed at PHP 72.0! I even go down PHP 71.0 before closing!
Stupid trader indeed!
I learn a lot from that experience and I’ll try to control my emotions more next time. I know I made a little mistake, but I know I’m stick in the right position. This trade is going to take months before I can sell it, or maybe a year.
My next strategy is to have a mix of position trading (long term) and swing trades (short to mid term).
Tips to myself:
- Think of all funds that goes to stock as untouchable funds, meaning, do not every think of withdrawing them.
- Do not think of using profits to buy another stock. Just add more funds instead. You may sell it prematurely as a result.
- If you have no funds currently, so be it! Just wait until you have additional buying power.
- Stick to the plan! Deal or no deal!