Sunday, June 7, 2020

ASTRA Reports: Average Trade Value

The ASTRA System provides a report called the Average Trade Value (see here) which ranks the stocks with the highest 5-Day Price-X Moving Average. This enables us to dilute those stocks that are being hyped for a day or week only to mess unaware investors and traders. There are two versions of this report. The Top 100 (ordered highest to lowest) which are stocks ASTRA wants you to focus on, and the Bottom 100 (ordered lowest to highest) which ASTRA recommends you to avoid. This report is all about trend and by trend, we mean not just by volume but by overall trade value.

Volume vs. Value
So why do we say value? well simply put, in stocks, value means more than volume. You can tell me you bought a thousand shares of stock X for 10 Pesos and sold it twice the amount and earned you another 10 thousand pesos. I on the other hand bought 100 shares only of Stock Y costing 1000 pesos and sold it also for twice the amount. it gave me 100,000 more. so who earned more or made more noise that day? me because I made more value. The same in stocks, a penny stock stating it made billions of volume traded the day means nothing as it will not impact the PSEI unlike the big transaction value makers. and the more transactions they produce, the more popular they are.

Form your Basketball Team
I love explaining things as a game! Everything to me is some form of game that has rules, players (actors), rewards and punishments. So I will explain the game play in the most relatable game to us Filipinos... BASKETBALL! So! you own a basketball team and you need at least 5 players to handle different positions. You will also need some bench players in case they are tired or retiring. You will also need to draft some new candidates who will join your team.

  • Form a portfolio of 5-10 stocks
  • The main 5 active stocks should always be unique. This diversifies your portfolio in case a specific industry you focused into fails.
  • Unlike real basketball, your bench players are not inactive. Let's just say they are "training" or being warmed up. These are stocks not in the buy and hold but more of those sleeping "potential stars". If they go down, usually you use Double Down Cost Averaging
  • Draft 5 stocks that are not part of your portfolio and monitor them. When they are ready, replace an aging, declining or dead stock in your portfolio.
  • Do not exceed 10 stocks, you cannot monitor them all or trade fast enough when you see all become bearish at once. This will cause you to panic specially with the crappy services most of our trading platform offers (see here for my take on the PRO's and CON's of the 2 platforms I use as well)

You can choose your best stocks from the Top 100 list. I do not recommend anything beyond that specially the Bottom 100 List. But if risk is your play style and you have more tools in your arsenal that gives you that edge then go for it! Me however, I am highly concerned into trends and thus even limit my draft picks to the top 20 only. This means I tend to miss out potential 1-day 30% growth or double your money events from more volatile and emotional stocks. however it protects me from those "lose half your investments in a day" kind of stocks as well.

Caveat: You can have zero active stocks as well. specially in bear markets. It's up to you if you do not follow the rule of having your 5 to be unique. You can have 2 forwards, 3 point guards at the same time... I mean 2 logistics and 3 banking stocks  at the same time but note you open yourself to risk if the industry overall falls together.

No comments:

Post a Comment

The PSE is being hacked by "Market Hackers" and YOU are one of them!

So if you've read my previous blogs on the matter, you should have known by now that while we do play the market, we believe that is a R...