Post #54: Short Play $CHP

chart by marketwatch.com

Latest: January 14, 2019
Price: Php 1.98
Conclusion: Cut loss hit (SOLD)

Latest: January 13, 2019 (10:40 PM)
Price: Php 2.03
Stop: Php 2.00

Update: January 8, 2019 (11:00PM)
Price: Php 2.14 (+7%)
Stop: Php 2.00

Disclaimer: This is only a stock simulation trade. Follow at your own risk. Proper risk management measures should be observed in every trade.

Post #47: End of May 2018 numbers

This is a bitter pill to swallow, but I have to accept that this kind of market is not really my forte. I'm down -10% YTD and in my opinion is experiencing a really bad drawdown. I'm focusing all my efforts now on risk management and keeping may capital safe.

With PSEi ranging between 7600 - 7800, I'm still very wary of putting a big chunk of my portfolio in positions. My risk management involves smaller sizing, smaller risk tolerance and tighter stops. I am hoping to see a clearer market trend when the index gets out of this 7600-7800 range, hopefully with an upward bias. Otherwise, for me it is either play tight defense or get out of the marekt entirely.

Post 46: Sample trading plan $TUGS (last update Feb. 23,2018)

Today, I am posting one of my trading plan. I was so focused on my trading and other stuff that I wasn't able to post something new here. So here it is, at least just to keep the blog updated.

This sample trade will also show how simple I do my trading.

I made a simple sketch below on how I'm gonna trade $TUGS.

This plan only includes my entry and cut loss price. For more details on how I sized my position and manage my risk, please read here. 

Please take note that I put a 20% TP only for reference (not actual), as I usually like to trail my stop so my selling price is not fixed. Read here why I don't like using TP (Target prices).

Want to know how I did last year? Read it here. 

I will try to keep this post updated as often as I can.

Notes: IMO, Immediate index support is at PSEi 8800, and anything below PSEi 8500 will cause me to lighten up my positions significantly.


Cheers.

Update: February 2, 2018

After seeing some strenght with the stock yesterday, I added $TUGS to my portfolio with an average price of P5.02/share. The breakout from an ascending triangle set up coupled with some significant increase in volume triggered my BUY signal. The stock reached it's 52-week high of P5.70 today but closed at P5.37 (+2.48%) mainly due to profit taking. I am currently putting my stop at P5.00. Next week, we'll see if the breakout is confirmed and the stock will start a new trend or if it is just one of those false breakout case.

Re: Index (PSEi). I'm glad the index went back above 8800 again. My stop will still be at PSEi 8500.

Update: February 13, 2018

So $TUGS broke its P5.30 resistance and is now at around P5.80. I moved my stop at P5.30 breakout point. I'm a a little uneasy that $TUGS volume is not increasing at this breakout, so I'll be watching this stock in the next few days to see if it will show life. I'm currently at approx +15% gain but I am willing to let the stock do its thing for now. Let's see..

Update: February 19, 2018 

chart by www.bigcharts.marketwatch.com

$TUGS showed some good price action today, reaching its 52-week high of P6.09. The lack of bigger volume is concerning though as it looks like it has no interest from fresh buyer to push the price higher. A breakout of P6.00, with volume spike, is an oppurtunity to add more position or even as an entry point for new buyers. I'll put my stop just below P5.50 as it will mean that the stock broke down of its trading range and might not be ready for a breakout yet. Profit at approx 16%.

Update: February 23, 2018

After almost 3 weeks of holding $TUGS I sold it with a meager profit of approx 8% when it hit my stop at below P5.50. The index is not really doing well below 8500, so I am expecting most of the stocks to correct as well. I believe trades should end either with a big profit, a small profit or a small loss; that's why I am putting a lot of emphasis on my trailing stops. Avoiding big losses is the key to longevity in the market.

$TUGS will remain on my watch list for now.

Cheers.

Post #39: Risk tolerance and position sizing

A lot of people have been asking me about position sizing and how do I manage my risk, so I think it is about time for me to explain it here.

To put it simply, it all starts with my risk tolerance. 

What is risk tolerance? For me, it is the percentage of my capital that I am willing to risk in every trade. 

I'm gonna give you an example to make it clear.

Let's say for example that  you have P100,000 starting capital. How much of it are you willing to lose in every trade you make? Is it P2000, P5000, or more? The amount is entirely up to you.

Let's say you are willing to lose only P2000 per trade. So your risk tolerance is 2% of your trading capital.

Capital = P100,000
Risk tolerance = 2%
Risk/trade = P2000

Let's do a trade example to make it more clear:

Supposed that you want to buy $STI at P1.80.
You also want to put your stop at P1.60.

chart from www.bigcharts.marketwatch.com

All you have to do is calculate how many shares you have to buy for you to be stopped at your 2% risk tolerance in case your trade goes wrong.

Let's do the math.

Total capital x Risk tolerance % =  Risk per trade
(P100,000 x 2%)  = P2000

Buy price - Stop loss price = Risk per share
(1.80 - 1.60 = .20 cents)

Risk per trade divide by(/) Risk per share = Position size
(P2000/.20 cents = 10,000)

It means you can buy 10,000 shares of $STI at P1.80 price with a stop loss at P1.60.

10,000 shares of $STI at P1.80 will be worth P18,000.

If it breaks its support at P1.60 and you sell it, it will total in cost at approximately P16,000.

(P18,000-P16,000 = P2,000)

You lost P2000, which is still within your 2% risk tolerance.

It is that simple.

Notes:

This is just an example, you can choose your own % in risk tolerance. You can even include broker commission charges if you want to be precise in your calculation.

It is advisable not to go beyond 2% risk tolerance to preserve your capital. This way, you can minimize losses even if you are always stopped out in your trades. As long as you keep winners run and stick to your cut loss discipline, you will end up on the profit side most of the time.  Besides, if you're always stopped out it means you need to work on your entry strategy.

You can add more position if the price of the stock goes up.

Always trail your stop. How to determine it is entirely up to you. You can use support and resistance, moving averages, Fibo retracement or whatever it is that works for you.

Hit me up for question.


Alex