Wrapping What I Learned in Stock Market under Quarantine 2020

Malapit na GCQ, I'll wrap this up.

Buy low, sell high! The basic thing to do in stock market. But what people don't know is the importance of a current trend of a specific stock.

Stock Market Trap:

Hype from hearsay
F.O.M.O. (Fear of Missing Out)
Fake news
Good news causing a reversed price action
Market sentiments
Bull trap
False breakout
Fake projected opening/closing price
Big players do shaking off weak hands from time to time

Hype from hearsay can be a dangerous distraction with your trading plan. Discard what's not useful.

Fear of missing out emotional feeling can be a good ally if the momentum of the price action is continuous and has a confirmed trend.

Fake news can be derived from hyping others, encouraging them to buy for more volume regardless of the intention.

Good news can also cause a reversal price action for the current trend if majority of the market sentiment is against with the news. Reversed psychology can be visible.

Market sentiments according to investopedia, refers to the overall attitude of investors toward a particular security or financial market. It is the feeling or tone of a market, or its crowd psychology, as revealed through the activity and price movement of the securities traded in that market.

Bull trap may happen when someone initiated the buying volume but with the intention of selling off their shares in a short period of time. As I always say, "Don't chase without a solid base."

False breakout can be similar with bull trap.

Fake projected opening/closing price often happens starting 9:00am~9:14am. You can enter your buying or selling price between 9:15am~9:29am but once you have entered your price, it cannot be cancelled until 9:30am. Some wait for the end of the day "EOD" before deciding on the price action. Swing traders may be spotted intraday. The best volume always happen in the opening and closing.

Big players love to shake off weak hands from time to time in order for them to buy in bottom price of a stock again for another future profit taking. Some holders panic when they see a heavy sell off so they follow the trend, not knowingly that the big players who initiated the fear only wants them to go away and buy some other day. Who are the big players? Big institution and foreigns.

Best Strategy:

Learn the market cycle
Learn the market psychology
Reversed psychology
Discipline
Buy on pullback, but not in a continuous downtrend
Stick with own bias and trading rule
Planning the entry and exit (risk-reward)
Identify bearish and bullish engulfing patterns, top hammer, doji, morning star, evening star, gap up, gap down, retracement/correction, volume, who bought and who sold, who initiate the fear and price action, current trend, breakout, breakdown, consolidation period
Simple signal indicators: MA20/MA50/MA100, RSI14, MACD, VOLUME
The longer the number set, is the day the higher the time frame that you're looking using the indicatos in technical chart

How to Read Chart?

Length of the body shows who's in control (buyers or sellers)
Length of the wick shows the price rejection for the certain time frame that you're looking at
Ratio of wick to body whos the complete picture of what happened for the day

What to Consider Before Buying?

Identifying yourself as a short-term position trader, swing trader or long-term investor.
Familiarization with your online broker's platform.
Flooring price, ceiling price, 52-week low, 52-week high so you can estimate your buying price if you're still buying it in fair value.
Planning your cutloss, price entry and exit.
Current trend if it's uptrend, downtrend or sideways and basic signals in technical chart depending on your desired time frame. Day chart for short-term, weekly chart for medium-term, monthly chart for long-term.
Fundamental if the stock is really earning, improving and has consistent dividend payout (for long-term projection) if you're buying a winning stock.
Market sentiment for estimating the Volume and Price Action.
Knowing the Average Price and Board Lot of a stock.
8K buying rule is just for maximizing the charges and fees of a confirmed buy transaction but you can always buy depending on your budget.
Every centavo or peso counts!
Your cash flow if it's fit to enter a highly volatile investment (invest what you can only afford to lose).

2 Ways to Enter a Trend:

Pullback (but don't bid over cheapest price)
Breakout (but this can have a false breakout)

Actually, after you've identified on how to avoid all potential traps, how to read candlestick patterns, identifying buying and selling signals.. VOLUME and PRICE ACTION will always tell the story. Fortunately, hunch and emotional intelligence can be your life savior.

How to Outwit the Stock Market Price Manipulation?

Identify the ff.:

BULL TRAP = F.O.M.O. / PUMP & DUMP
FALLING KNIFE - never make a buying entry which confirms a downtrend reversal
HEAVY SELLING - wait for the exhaustion
PULLBACK - best to make a bounce play
RETRACEMENT / CONSOLIDATION - buy on support & sell on resistance in this level of base area
VOLUME + PRICE ACTION predicts the market's behavior

Tip: Identify the lower lows, higher highs, lower highs, higher lows to tell if the trend is bullish or bearish in your desired timeframe.

"The trend is your friend until it bends."

What's the Ultimate Reward in Investing?

Discipline that you can use in general living.
Capital growth that you can use as retirement fund that can also beat inflation than regular bank savings and other investing instruments available.
Where there is high reward, there will always be high risk.