Some Trading Insights

Apologies that I wasn't able to post anything last week.

I live a double life. The other life is that of excitement, espionage and entrigue hehehe.

Seriously, There were just too many activities at work that my personal time was spent on resting.

I wish I'd be able to quit my job and just focus my efforts on trading for a living. Supposedly, that's possible. Perhaps in a bull market, you can. But only with proper tools like Technistock. It's an expensive tool though as you are required to pay a monthly subscription fee. But it's well worth the investment for as long as you're running with the bulls.

When I was a subscriber in the past, I let my technical analysis lessons take a backseat and just focused on the price action and the buying momentum. I believe this is a technique called tape reading. I was able to trade with greater success.

Of course, being in a bull market certainly helps a lot.

Personally, even if trading for a living were possible, it's still better to have a regular source of income called a salary. Besides, if you're employed in a good company you also get some benefits like company health insurance and then some.

However, when you're working, you can't afford to trade, at least the short term trading sort. Short term, at least for me, are the trades you do in one day called day trading - you're in and out the same day - or those you hold on for not more than 3 days.

The reason why you buy these particular stocks is called "buying on breakout". You don't know the story or why it's going up but you just buy it because it's gone up substantially from its normal price range. Even if you have a crude charting tool such as the one in the PSE website, you can more or less gauge if it's a breakout.

Of course, you should not discount the other indicator - volume. Volume should also be higher than its usual volume. Both indicators - the price chart and the volume are all available in the website.

Breakouts last for not more than 3 days, as experience reminds me. There can be exceptions of course, but if I were you don't tempt fate and be content with your earnings. Greed kills. Really, it does.

You can still trade even if you're employed but you will have to trade the "big waves" so to speak. Since your work is 8-5, and trading hours is 930-1210, you can't possibly look at the ticker.

What you can do though is select a few stocks that you can monitor after office hours. Of course this goes without saying that you have some sort of charting software. You might try using the charting available at PSE.

By selecting a few stocks, you are focused in your approach. You know more or less when they hit their highs or their lows. This means limiting also your exposure to the stocks that you know. This requires the highest level of discipline as most, if not all, are always tempted to make a quick profit by trading speculative stocks.

Remember greed? Greed happens both ways - when you're holding on to a stock or when you're just about to get in.

Now if you don't have a charting software, the other alternative is to just read the newspaper. Look at the prices and what the index level is currently at.

Wait for that correction, it will necessarily come.

Then wait until the market index correction has been substantial, usually about 5% and start buying some quality stocks, ie the blue chip stocks. Remember, wave 1 = blue chips, wave 2 = second liners, wave 3 = basura stocks, wave 4 = it's your turn to wave goodbye (at least momentarily) to buying stocks.

While the index is down by "just" 5% the stocks may have lost even more. This is tricky though as you also have to know if the entire market is in a bullish, bearish, or sideway mode. Read the news, watch CNBC, watch Bloomberg. It takes some time but once you've watched them a couple of times you'll know if the market is in either one of those modes I mentioned.

I hope I was able to offer something new and useful to you. I also recently finished an article about investing in stock / equity mutual funds, so my mind has been lacking as of late with regards things to write about. Until then...