If you want to learn about the Philippine stock market and how to trade stocks, then this article is for you. I’ll share the simple techniques that worked for me over these years.
First, let me tell you my story. I started trading five years ago as an OFW. Living and working in a known financial hub country, I found myself surrounded by folks glued to their smartphones looking at colorful charts while riding the train, tram or bus every morning. As soon as I get into the office, the usual subject of office pantry discussions were cryptocurrencies especially Bitcoin, latest news on the financial markets and private equity world (my officemates are mostly ex-Wall Street traders, bankers and VCs. Coming from a third world country, it was a totally new experience for me which I must adapt to.
Fast-forward to today, I am now back in the Philippines. The knowledge and skills that I learned are something that benefited me. People who know me say that they envy what I did - I grew my savings as an OFW by investing and trading stocks back home and as a result, I've manage to afford, every now and then, those lavish vacations here and abroad with my family. I bought a condo unit too, a brand new SUV, renovated our new house, and invested in some small businesses.
How did I do that? By doing simple trading techniques. I have five simple techniques in stocks trading that you can surely rely on too. Here they are.
Buy at support, sell at resistance
If you are new at trading or even if you are a veteran trader, the concept of support and resistance will always be the simplest yet most important one. Those are the two points where you can make money. From the stock chart, know where the buying pressure is (i.e., the price point where people usually buy a stock) designate it as your support. The resistance is where the selling pressure is (i.e., the price point where people normally sell a stock) can be found. Very simple as it seems but there’s a lot of people who still violate this basic rule.
The relationship of volume and price
Stock trading is just like buying and selling in a crowded market. There will be buyers and there will be sellers. If a certain commodity is low in supply but high in demand, then the price will go up. On the other hand, if a certain commodity is high in supply but low in demand, then the price will go down. Depending on the mood of the market and the needs of the buyer, volume and price can go up and down.
The same principle applies to the volume of a certain shares of stock being traded in a given period and the price in which traders are willing to buy and sell the stock. The higher the demand to buy a stock, the higher the share price would be. The higher the demand to sell a stock, the lower the share price would become. The news, events and fundamental changes in the industry or company that will have an impact on the earnings of a company, can also trigger the movements in price and volume of the stock.
The trend is your friend
Imagine yourself in the middle of a crowd of billion people. You are being drifted to the direction of the crowd. You are a powerless tiny being in the middle of billion others. The stock market behaves similarly. No matter where your want a certain stock to move in terms of price, if the market says otherwise, then you have no choice but to give in to what the market wants. If you insist and resist the crowd’s direction, expect you’ll get hurt or worse, be dead. Note that an uptrend is an uptrend so don’t get short. While a downtrend is a downtrend so don’t get long.
Resist the FOMO
There’s growing bunch of traders out there who pride themselves as technicians as they claim to have read hundreds of trading books, attended a bunch of seminars and brag about their set-ups and snapshots of their portfolios in some online groups. But when a certain stock that is not in their trading plan suddenly rallies, they usually act like idiots because of the ‘Fear of Missing Out’ (FOMO). You don’t want to be called an idiot, right? So, stick to your trading plan no matter what. If you missed a good stock, there are hundreds if not thousands of other stocks to choose from next time. Do your homework and stick to your plan. That’s how you attract those profitable trades!
Protect your capital
The reality in business and in life is, we need money to have more money. You cannot earn the money you don’t have. Do not bet too much of your portfolio for something that you haven’t calculated the risk yet. Risk management in trading means protecting your capital from getting wiped out by either cutting your losses when the market is heading the opposite direction or sealing your profits in accordance with your plan and walking away right after.
Greed is one of the emotions that is common in anything that deals with money. Don’t trade your peace of mind for the false hope of you are going to make a lot more money by staying in your stock position.
Remember this, the only thing in this world that cannot be taken away from you is your skills. Coming from a very poor family, it worked for me very well and I'm confident that it'll work for you too. It is the knowledge and skills that I learned which helped me to go places, met famous and respected personalities and helped me to somehow live a comfortable life.
It’s never too late for you too. With a lot of online tools and apps around us, it’s just a matter of starting to learn how to start your journey. Let me help you through this online stocks trading course.
- Master Siopao
About Kasiopao PH
Kasiopao PH aims to democratize education for Filipinos. It teaches Filipinos financial education, skill-building and entrepreneurship.