Once there was a dog which woke up early morning and stood outside his master's house to catch a glimpse of the first sunshine. It was not very much the sunshine itself that beckoned the dog to this daily ritual but the effect that it had on him as the sun cast the shadows of trees. The dog was mesmerized by the shadows that it barked, jumped and ran circles around any shadow it fancied. But as the sun rose into mid-day, the shadows became shorter and shorter until they were all gone. Tired of all the chasing, the dog would retreat into his master's house to eat. Once re-energized, the dog was all ready for the afternoon show when the shadows reappeared on the opposite side. The dog ran outside the house and watched as the shadows slowly formed as small gray extensions that grew longer as the sun moved further west. Thinking that the shadows would continually grow, the dog was overcome with excitement that it barked, jumped and ran circles more than it did in the morning . But as soon as the night claimed the day, the shadows dissipated into the darkness. Disappointed, the dog retired into his master's house, his energy spent. As he lay down on the mat, the dog was thinking, "Tomorrow will be another day. The shadows will be there and I will be there too to give the chasing."
When I was new in stock trading, I traded like the dog in the story - I was chasing shadows. When I saw prices going up, I would be excited to buy these stocks even at higher prices thinking that these would continue to rise. Of course, they did rise some more making me froth with excitement at the prospect of hitting it big. I would jump off my seat and pump my fist while shouting, "Yes! Yes! Yes!". I was my own cheering squad possibly rivaling the UP Fighting Maroon PEP Squad in energy and spirit. Our helper and my mother-in-law must have thought that I had gone nuts and possibly may still be thinking the same until today.
Even when I saw a 5% or an 8% net gain already, I decided not to sell the stock. "Single digit gain is for beginners.", I would say to myself. What I wanted was double digit gain past 20%. But then all of a sudden the tables turned. The stock price suddenly went downhill catching me off-guard. I snickered at all those "tsupiteros" or day traders who secured their profits early as small-time profiteers. As the body of the green candle got smaller, I summoned all courage and hopes that it would go up again when all the "tsupiteros" had their fill. But in many cases, it did not. The green candle not only grew smaller, it turned into a red candle that grew longer and longer in the afternoon as bearish mood set in. Many more jumped ship but not me. Like the dog in the story, I chased prices going down and rationalized it as cost averaging. Did this strategy work? Well, yeah it did in a few cases but it did hurt my portfolio in a lot of times more.
There are two lessons that can be learned from this story. One is to never chase the price - either going up or down. Second is to secure profits early. These two lessons served me well very recently. On October 18, 2012, YEHEY debuted in the stock market by way of introduction and opened at 150% strong over its par value of P1.00 per share. Within 10 minutes, its stock price rose to a mind-boggling intraday high of P4.50 per share. It was a stock on steroids driven by the market in ecstasy. I held my guns silent that day never touching it from its holster already feeling uneasy at how it moved. Seconds later, YEHEY's stock price plummeted like the man who skydived from the edge of space and closed at only P2.70 per share. In the next three days, YEHEY stock went from one red candle to the next and closed at P2.25 at the end of trading on October 23, 2012 lower than its opening price on its maiden day. I could only gasped at how many traders were trapped but I survived because I did not chase the price that day.
I also learned to become a "tsupitero" by taking profits early. I now understand where these guys are coming from. The old saying, "A bird in the hand is better than two in a bush." now sounds truer and more personal. Very recently, I bought and sold three stocks within a day - GREEN, BLOOM, and COAL that I feel I am becoming like a certified tsupitero.
Today, like the dog in our story, I still wake up and excitedly wait for the market to open. The excitement is building up every passing minute and explodes as the market opens at exactly half past nine. The difference is that I no longer jump off my seat and pump my fist. I just cheer online with my newlyfound friends. And I wish to add, there is no more chasing shadows for me. And I hope you don't too.
When I was new in stock trading, I traded like the dog in the story - I was chasing shadows. When I saw prices going up, I would be excited to buy these stocks even at higher prices thinking that these would continue to rise. Of course, they did rise some more making me froth with excitement at the prospect of hitting it big. I would jump off my seat and pump my fist while shouting, "Yes! Yes! Yes!". I was my own cheering squad possibly rivaling the UP Fighting Maroon PEP Squad in energy and spirit. Our helper and my mother-in-law must have thought that I had gone nuts and possibly may still be thinking the same until today.
Even when I saw a 5% or an 8% net gain already, I decided not to sell the stock. "Single digit gain is for beginners.", I would say to myself. What I wanted was double digit gain past 20%. But then all of a sudden the tables turned. The stock price suddenly went downhill catching me off-guard. I snickered at all those "tsupiteros" or day traders who secured their profits early as small-time profiteers. As the body of the green candle got smaller, I summoned all courage and hopes that it would go up again when all the "tsupiteros" had their fill. But in many cases, it did not. The green candle not only grew smaller, it turned into a red candle that grew longer and longer in the afternoon as bearish mood set in. Many more jumped ship but not me. Like the dog in the story, I chased prices going down and rationalized it as cost averaging. Did this strategy work? Well, yeah it did in a few cases but it did hurt my portfolio in a lot of times more.
There are two lessons that can be learned from this story. One is to never chase the price - either going up or down. Second is to secure profits early. These two lessons served me well very recently. On October 18, 2012, YEHEY debuted in the stock market by way of introduction and opened at 150% strong over its par value of P1.00 per share. Within 10 minutes, its stock price rose to a mind-boggling intraday high of P4.50 per share. It was a stock on steroids driven by the market in ecstasy. I held my guns silent that day never touching it from its holster already feeling uneasy at how it moved. Seconds later, YEHEY's stock price plummeted like the man who skydived from the edge of space and closed at only P2.70 per share. In the next three days, YEHEY stock went from one red candle to the next and closed at P2.25 at the end of trading on October 23, 2012 lower than its opening price on its maiden day. I could only gasped at how many traders were trapped but I survived because I did not chase the price that day.
I also learned to become a "tsupitero" by taking profits early. I now understand where these guys are coming from. The old saying, "A bird in the hand is better than two in a bush." now sounds truer and more personal. Very recently, I bought and sold three stocks within a day - GREEN, BLOOM, and COAL that I feel I am becoming like a certified tsupitero.
Today, like the dog in our story, I still wake up and excitedly wait for the market to open. The excitement is building up every passing minute and explodes as the market opens at exactly half past nine. The difference is that I no longer jump off my seat and pump my fist. I just cheer online with my newlyfound friends. And I wish to add, there is no more chasing shadows for me. And I hope you don't too.
