Sunday, March 20, 2016

Traders are Alchemists

The proper application of alchemy requires not only a full understanding of chemistry and ancient alchemical theory, but also a sort of natural talent towards recognizing and manipulating the physical objects with energy, which require uncommon levels of intelligence and aptitude. Those remarkable individuals capable of studying and practicing alchemy are known as "Alchemists".

There are many paths by which alchemists can transmute the various substances of the world, with some alchemists being said to transmute by way of the Four Classical Elements (Water, Earth, Fire and Air) and some by way of the Three Essential Principles (salt, sulfur and mercury), but the basic tenet at the very foundation of all alchemy is that of Equivalent Exchange: "In order to obtain or create something, something of equal value must be lost or destroyed."

Alchemists are like traders.
They have specific masteries.
They have their own crafts they've worked on to perfection.

There are alchemists employed as part of an elite government mandated program. They're subject to the government hierarchy and must obey the orders of their superiors as well as devote themselves entirely to the protection, advancement and well-being of the nation as a whole. Their skills are to be wielded as an extension of the government's power as opposed to means toward individual or popular gain. They are entitled to the use of research funds, unrestricted access to classified documentation, and advanced technology.


There are those who were previously part of the organization. Got fed up. And later realized that it would be better for them to go solo and pursue their own goals. After sacrificing a number of innocent Ishvalans during the Ishval Civil War to create new stones in Laboratory 5, he fled the military with some imperfect stone samples. He settles down in a small country town where he uses his stones to heal the sick under the identity of "Doctor Mauro."


Then there are those who believe that the organization is rigged. That it takes advantage of innocent people. And that no one stands a chance, even himself. But he still goes against them. Specializing in liquid-based alchemy, the Freezing Alchemist is a former State Alchemist in the military who is currently trying to destroy Central.


There are others who learned and mastered a certain type of alchemy under the tutelage of one of the best. Flame Alchemy is the brainchild of the master alchemist Berthold Hawkeye, who had spent several years perfecting it before his death from illness in 1905. Believing it to be the greatest and most powerful form of alchemy possible, Hawkeye refused to pass on the knowledge to Roy, who was his apprentice at the time, and instead entrusted the secrets of his search for knowledge to his young daughter Riza - tattooing the perfected array onto her back as the only physical record of its existence.


But there are also alchemists who are egomaniacs. They could be so desperate that they are willing to sacrifice, not only their own resources, but also of others in order to achieve their self-serving goals. Tucker had gained a bit of notoriety and earned his State Alchemist's License by producing a chimera capable of human speech. Ed and Al begin visiting Tucker at his estate to pore over his library of texts and forge a bit of a friendly relationship with the Sewing-Life Alchemist.


There are people who devote a great deal of time and effort building up a legion of followers as a type of cult leader through the work of divine miracles to create an army of religious fanatics large enough to overthrow the Amestrian government and place him as the country's ruler. Newbies would think that this guy is the answer to their prayers. That his calls are divine and never wrong. They're wrong.


Self-taught alchemists are strong. Because there are no limits to what they can do but their own understanding of it. They don't work for anyone and are not affiliated to anything except their roots. They are masters of their own craft and have worked hard to get to where they are. As a former warrior of Ishbal, Scar is quite adept at hand-to-hand combat, boasting significant strength and stamina, remarkable agility and reflexes and deceptive speed. As a fundamentalist opponent of alchemy, Scar does not consider himself an alchemist in the traditional sense, but the strain of alchemy that his arm itself allows him to produce is powerful, advanced and unique.


They could be ordinary people doing extraordinary things. Izumi Curtis is a master alchemist and skilled martial artist living in the southern Amestrian town of Dublith where she runs a butcher shop with her husband Sig. Though she doesn't usually take on students, Izumi accepted Edward and Alphonse Elric's plea to take them on as her apprentices and instructed them in alchemical theory and martial arts for six months. In that time, she grew to love them as deeply as she would her own children, becoming a long-term source of guidance and support for the Elrics' future endeavors.


Some are deserving enough to be taught by really good masters. Having apprenticed under Izumi Curtis, Ed was taught to condition his body through regular workouts and sparring as part of her philosophy, "to train the spirit, first train the body." As such, his slight frame belies a compactly muscular build that, in addition to his naturally high energy level and endurance, fuels his considerable strength and agility. Due to Izumi's Spartan training, Edward has become a particularly competent hand-to-hand fighter, able to hold his own against armed opponents and even skilled martial arts practitioners. Besides that, his steel right arm and left leg augment his fighting strength by adding to his defensive and offensive capabilities as well as his speed.


There are those who can manipulate everything without moving or twitching a finger. The whole world would move with just one word from his mouth. Father was created from the essence of the Eye of God, and thus Father's shadowy actual form greatly resembles the Eye. Father inherited much knowledge from the Eye, and, when it comes to amount, only those of the Eye and Truth exceed his knowledge.


Then there's me.

A Lesson Without Pain Is Meaningless

Usually, I only take positions worth around P15,000 so that a 10% loss would only equate to P1,500. and I could move on easily to the next trade.

After a series of wins late February, I decided to increase my position size.


Instead of risking 0.50 - 1% of capital on my initial entries, I traded with 2% risk.

Needless to say, I at least doubled my size.

This is what happened:

MED : -10%
I bought this before closing at 0.63
Added more when it closed above 0.64 which was a resistance.
The day after, it closed at 0.58, I cut and lost 10%.

Where I went wrong:
2x recommended size.


CPM : -5%
I bought this because it was a Zeus Strike.
The day after, I sold it at 0.62 without waiting for the close.
I sold it because I wanted to buy something else.

Where I went wrong:
2x recommended size.
Buy signal was before closing. (almost End of Day)
Sell signal was before lunch. (price action not definitive)
I got shaken out by intraday fluctuations.


CYBR : Whipsaw
I bought this when it broke out of the 100ma and 200ma on the daily chart.
I waited for the close and added more.
The day after, I checked it right after the open and it was trading at 0.4600 levels.
I sold it.
After 2 hours, it's at 0.51 which means that it broke out of the 100ma on the weekly.
I bought it.
A day after, it closed at 0.49
I sold it.
Come Monday, I bought it again because it closed at 100ma weekly.
Tuesday, I sold.
What the hell just happened?

Where I went wrong:
2x recommended size.
Buy signal was End of Day.
Sell signal was intraday. (a few minutes after the open, price action not definitive)
I got shaken out by intraday fluctuations.


SUN : -8%
This closed at 1.05 on Friday.
I was so eager to have shares that I put an OH order at 1.07, just above the 100ma weekly.
Although the best entry would be at 1.02.
Monday's opening price was because of me.
I sold it after 2 days at 0.99 which was my cut point.

Where I went wrong:
Not waiting for the best risk-reward scenario.
Sell signal was before lunch. (price action not definitive)


After a few of these losses, my psychology became unstable.
I wanted to get back those losses so I traded with bigger sizes.
I looked for stocks that are moving up and bought them without thinking of the risks.

To top it all off, I was trading intraday despite the fact that I have sh*tty internet connection.

There are a lot of things going on in my mind right now.
Here are some of it.

I get whipsawed because I don't have conviction on my trade.
I don't have conviction on my trade because I have too much emotion.
I have too much emotion because I have too much size.
And too much size does not mean conviction.

I've also been thinking what would make me consider if what I'm feeling is whether the FOMO (Fear of Missing Out) or Opportunity Cost.

Then a youtube video lesson answered it for me.

"Fear of missing out is when you buy a stock without a cutloss point."

It totally makes sense!
This is just what I needed to know.
This will help me stop me from chasing those high-flyers and taking unnecessary risks.

My account just fell to 5 digits and I've lost a lot of confidence.


For now, I'll go back to trading the size I'm comfortable with and work from there.

I've learned a lot these past 2 weeks.

Nothing can stop me from being a successful trader.
One day, I'll look back at this experience and tell myself, "bobo mo! hahahah!"

Only time stands in my way.

Sunday, March 6, 2016

The Good & The Bad

Here are my trades for the past 2 weeks.

And I'll dissect them one by one.

Starting with my successful trades.

ANI:

I was waiting for it to break out.
Then, I went ALL IN.
I had conviction on this trade.
I had accepted that if I'wrong, I lose P4,400 with a cutpoint set at 4.78, just below the low of the day.

But I got it right.

However, I must say that I wasn't able to maximize my gains.
I got out with a +9.40% Profit.

Next trade: DD


Few things about this trade:
1. I bought near the top of the range which isn't really a good buying area.
2. I bought 700 shares only because I didn't plan on going heavy. Just a quick trade.
3. But because I had a tight stop at 24.60, I figured I could lose only P630 if I'm wrong.
4. I got it right.
5. I sold at the open last Friday because 30.00 should be both a psychological resistance and a technical resistance considering it's a whole number.
6. +15.29% Profit on this trade.

VITA:

I bought VITA at 0.67 with my recommended position size.
Then I added more at 0.66 (which is against my rule of averaging down).
Added more at 0.69 (because it did a Zeus Strike).
My target price is 0.77- 0.78.
It rallied.
Although it hit my target price, I sold everything at 0.75 with +11% Profit.


Now it's time for the unsuccessful ones.

MAXS:

PPC:
I sold half of the position to follow my recommended size.

RFM:
I am still bullish on this stock since it is still above the 100ma. However, other stocks are moving faster that I had to close this position. Would just wait for the 200ma breakout confirmation.

IS:
I f*cked up on this one. I was so bullish on the last candle before I bought that I put my order at 0.2300 and got filled at 0.2260. Right after that, it plummeted. It closed at 0.2140 and I still haven't exited.

If you would notice on MAX, RFM, and PPC, I didn't really get stopped out.
Instead, I sold because I was impatient.
This is one of my greatest trading problems.
Not letting the trade work.
Because of this, I just end up paying commission and lose money.

The IS trade is yet another case of impatience.
Not waiting for the best risk-reward price level.