BDO (BDO UNIBANK, INC. ) – DECEMBER 13, 2019 TRADING GUIDANCE FOR NEWBIES WHO NEED HAND-HOLDING WHILE LEARNING TO TRADE INDEPENDENTLY
BDO (BDO UNIBANK, INC. ) – DECEMBER 13, 2019
TRADING GUIDANCE FOR NEWBIES WHO NEED HAND-HOLDING WHILE LEARNING TO TRADE INDEPENDENTLY
Before preparing our Trading Plan let us first establish our Trade Setup. Since BDO is on an uptrend, we will again use Fibonacci Extension as explained in Chapter 1, Section 9 of my first book “”The Responsible Trader – a Thinking Person’s Guide for Trading the Philippine Stock Market.”
Fibonacci Extension is used to determine possible profit taking points in an Uptrend and in projecting probable points where the price could drop further in a Downtrend. For Fibonacci Extension we are looking at three points.
- The Point of Origin – this is where the price move has started and is called Swing Low in case of an Uptrend and Swing High In case of a Downtrend.
- The Point of Projection – this is the closest Swing High in an Uptrend or Swing Low in a Downtrend that is used as a basis for making the projection.
- The Point of Termination – Unlike in Fibonacci Retracement, where we end with the Swing High in an Uptrend and the Swing Low in a Downtrend, this time the point of termination is the closest Higher Low in an Uptrend and the closest Lower High in a Downtrend.
For BDO since the stock is on an Uptrend we use the May 15, 2019 Swing Low of 130.30 for our Point of Origin, the July 15, 2019 Swing High of 154.00 as our Point of Projection and the Oct. 2, 2019 closest Higher Low of 137.00 as our Point of Termination. You can click to see more information on checking accounts and other banking needs for your business.
STOCK CHARTS AND ANALYSIS – TRT PROCEDURES
FIVE QUESTIONS
The first part of our Stock Charts and Analysis is to answer Five Questions about the stock:
- What is the present trend and how strong is the trend?
The stock is in an Uptrend as evidenced by the stock making Higher Highs and Higher Lows. As a matter of fact, the stock is now on its 52-week High.
The stock is also in its most Bullish Orientation with the price above all the Moving Averages.
- Based on our Trading Strategy Map, at what Phase is the Stock in?
The stock is still on Stage 2 and making Retracements.
- Is there any Chart Pattern that will serve as guide for establishing our Critical Action Zones?
The Stock is making Higher Highs and Higher Lows. Resistance is at 165.00 and Support is 155.00
- Does the Trade Setup offer sufficient Risk/Reward ratio?
Yes. The set up offers a Risk/Reward ratio of 1:33
- Do we see any Trading Signal?
Yes. There is a golden Cross of the 15 EMA and 20 SMA giving Buy Signal and price action is above all the Moving Averages.
We now present our findings and observations.
POSITIVE:
- Buy signal as evidenced by the Golden Cross of the 15 EMA and 20 SMA.
- The stock is in its most Bullish orientation with price action above the 15 EMA, 20 SMA, 50 SMA and 200 SMA. This indicates that the stock is Bullish Short-term, Medium-term and Long-term.
- Heavy Buy Volume of 64% indicating stock has not yet reached the Distribution Stage.
NEGATIVE
1. NONE
After this, we identify the TRT CAZ (Critical Action Zones – Target Prize Zone, Buy Zone and Stop Loss Zone), use this as our basis for making our Trading Plan and formalize the Plan thru our TRT Swing Trading Worksheet.
TRADING PLAN
Based on this analysis, following is our Trading Plan
Target Price: P175.00
Buy Price: P160.00
Stop Loss: P155.50
Risk: (P160.00 – P155.50) = P4.50
Reward: (P175.00 – P160.00) = P15.00
Risk/Reward Ratio: (P15.00/P.450 ) = 3.33 so 1:3.33
Trading Capital: P1,000,000.00
VAR: 1% (1% x P1,000,000.00) = P10,000.00
Position Size: P10,000.00/(P160.00 – P155.50) = 2,222.22 shares
Position Size adjusted for Board Lot: 2,220 shares
Total Amount Committed: (2,220 shares x P160.00) = P355,200.00
Trading Capital used is P1,000,000.00. This is scalable up if you have more or down even if you have only P100,000.00 or less.
Good luck on all your trades.
=====================================================
In line with our VISION, A RESPONSIBLE TRADER IN EVERY FILIPINOS HOME, we aim to continue promoting financial literacy on the area of stock market trading and investing to our countrymen both here and abroad through the following:
1. We have successfully launched “Swing Trading with TRT – a Definitive Guide for Swing Trading the Philippine Stock Market” last September 2, 2019. This book is the second in our Responsible Trader Education Series.
You can download Chapter 1 and see the Table of Contents here: https://drive.google.com/file/d/1NZEABnQMiQ_zenEMs0lPFWweX4WBxBHg/view?usp=sharing
The first book, “The Responsible Trader – a Thinking Person’s Guide for Trading the Philippine Stock Market” provided all the basic knowledge that a trader needs to know in order to trade the Philippine Stock Market effectively and efficiently. The first book is about the basics. This second book is about the specifics.
2. The Book: “The Responsible Trader – a Thinking Person’s Guide for Trading the Philippine Stock Market” now earned the name “The Bible of Philippine Trading.” You can download Chapter 1, Section 1 of the book here: http://theresponsibletrader.com/the-responsible-trader-hope-for-trading-knowledge-test/. For those interested in the hard copy, please send email to: ninjatrader919@gmail.com Subject: The Responsible Trader – Hard Copy.
As requested by those abroad and those who want the book in digital form, we have produced an eBook version. For those interested please send email to: ninjatrader19@gmail.com Subject: The Responsible Trader – eBook Version.
The book can also be ordered online through our publisher, Central Book Supply. Just go to: http://central.com.ph/bookstoreplus then click Search – The Responsible Trader.
3. The Website: :http://www.theresponsibletrader.com where we publish our daily newsletter Top Ten Smart Money Moves, Stock Trading Lessons, and Inspirational Materials. (FREE)
4. The YouTube Channel: https://www.youtube.com/theresponsibletrader – where you can learn the course “Master’s Certificate in Technical Analysis” which was simplified in an easily understood manner. You can download these videos and learn them at your own convenient time. (FREE)
5. My Slideshare: http://www.slideshare.net/TheResponsibleTrader – where you can view and download copy of the Powerpoint Presentation of my TRT-POV (The Responsible Trader’s Point of View) of the videos posted in our Youtube Channel. (FREE)
===================================================
Good luck on all your TRADES today.
DISCLAIMER There is a very high degree of risk involved in TRADING. Past results are not indicative of future returns. Nothing contained in this newsletter constitutes a solicitation, recommendation, PROMOTION or endorsement of any security. In accordance with the Responsible TRADER’s Creed: I will never tell and you take full responsibility for all your TRADING results
NOTES: Please take note of the following changes. Effective August 6, 2015: 1. Caption Market Breadth has been changed to Total Traded Value to simplify the presentation. 2. Market Breadth is expressed in terms of Number of Advances and Declines. Expressing this as a Ratio by using the larger number as Numerator we derive the Market Sentiment whether Bullish or Bearish. 3. Based on Past three-year data of Average Total Traded Values, following classifications will be used to make the presentation more relevant to present times. a. Low – Total Traded Value less than PhP 8 Billion b. Medium – Total Traded Value Php 8 Billion but not more than P15 Billion c. High – Total Traded Value more than Php 15 Billion.
Starting with August 11, 2017 data we are including the Top Ten Gainers and Losers for a more comprehensive coverage of significant stock movements during the day.