How do I start Trading Stocks?

This is a question I always get from everyone I know who's interested in learning about stock trading in the Philippines. I'll share what I know about the Phil Stock Market and how to trade it.

I've actually began my adventure from learning about financial planning before trying to master stock trading. I have to insist that everyone learn this first. It will lay down your financial foundation and protect you from your inner greed. Everyone has one.That's also the reason why not many succeed in stock trading.

 

Let's begin by reviewing the basics. I have an article on this somewhere on this blog. Oh well, let me

 

1. Insurance - Protect the goose which lays the golden eggs. No goose, no golden eggs. Of course, that goose is  you. When the unforeseeable happens, you should also be ready for the defense. We all die, we all can have accidents. No one is exempted.  Only immortals don't die. You should prepare for this just in case.
 

2. Debt management - To maximize growth, eliminate negative interest-bearing instruments first. Debt. You can't grow a 20% annual interest investment with a 36% yearly interest of debt. Eliminate debt. Otherwise, the negative interest on your credit card will just eat up whatever you earn from investments.
 

3. Emergency fund - This should be 6 months to one year of living expenses (depends on where you are). In the Philippines, we compute it to be 6 months. How does this work? When you get laid off or if your business loses money, you still have some money to recover from such a disaster. It will cover your expenses while you look for a new job or start a new business. It will also cover other "emergencies" like medical expenses when necessary. This way, you don't have to apply for more debt or touch your investments.
 

4. Investments - mutual funds, ITF's, stocks, etc... This is mostly done after you have covered the first three.
So please keep these in mind before going into stocks. 

Here are useful news resoureces.

For news (they serve as catalysts):
 

http://business.inquirer.net/ - and other local business news sites are ok.
 

For international news, I use the following:

http://www.bloomberg.com/
http://www.cnbc.com/
http://www.thestreet.com/

 

 International events have an impact on investor/trader sentiments, and can be used as signal for entry/exit  points while trading.

 

 There are two major philosophies in trading. Technical and Fundamental analysis. Technical analysts follow price movements, chart patterns, etc... to determine valid entry and exit points while trading. Fundamental analysts need to know what caused these price movements and gauge if the current stock price is cheap or expensive based on business fundamentals. One of the most famous and successful user of fundamental analysis is Warren Buffet, one of the world's richest men. He's known to have built his wealth purely from investing in stocks.

 

If you want to learn technical analysis check out these links I found on the web.

http://www.informedtrades.com/trades.php?page=school
http://www.swing-trade-stocks.com/
http://thepatternsite.com/

There are more but these are the coolest ones.

For the Philippine Stock Exchange and PSE graphs:
http://www.pse.com.ph/

There's even a cool Pinoy Community with seasoned traders, brokers, or fund managers willing to help out.
You can check from the Online Trading and Brokerage Feedback Topics for advice on which
companies you can use.

http://financemanila.net/ - the forum is where most of the veteran traders hang out

http://www.traderspizza.com - another nice forum with its own gurus as well.

http://tsupitero.com/selection.htm - the broker (you can find his profile on this page too) he hangs out at financemanila.net as well

I only use BPI Trade but they said COL is better (they have their own graphs and tools). I might shift to COL as soon as I get back to the Philippines. If you want to open a BPI Trade account, ask the nearest BPI near you on how to open one.

 

Below is Citiseconline's website.

https://www.citiseconline.com/


Of course we can then chat, and share trades and learn which are possibly good ones or not. 

 

Good luck on your trading!

Quotes from Reminiscences of a Stock Operator

I did precisely the wrong thing.  The cotton showed me a loss and I kept it.  The wheat showed me a profit and I sold it out.  Of all the speculative blunders there are few greater than trying to average a losing game.  Always sell what shows you a loss and keep what shows you a profit.

If all I have is ten dollars and I risk it, I am much braver than when I risk a million if I have another million salted away.

I’ve got friends, of course, but my business has always been the same – a one-man affair.  That is why I have always played a lone hand.

What beat me was not having brains enough to stick to my own game – that is, to play the market only when I was satisfied that precedents favoured my play.  There is the plain fool, who does the wrong thing at all times everywhere, but there is also the Wall Street fool, who thinks he must trade all the time.  No man can have adequate reasons for buying or selling stocks daily – or sufficient knowledge to make his play an intelligent play.

It happened just as I figured.  The traders hammered the stocks in which they figured would uncover the most stops, and sure enough, prices slid off.

For one thing, the automatic closing out of your trade when the margin reached the exhaustion point was the best kind of stop-loss order.

The game taught me the game.  And it didn’t spare me rod while teaching.