Pinoy Stocks Journal

5 TIPS and
TECHNIQUES
On How to Choose Stocks
That Will Give You
Good profit

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Thank you very much for downloading this tips. And congratulations, because our 5 tips are full
pack of information that will change the way you select stocks.

Look at the Stock’s Price History

Why bother checking the price history, you may ask. Because there is a saying that history
repeats itself.
Here is how you can use the stock price history to check if this will be your next winning stock.

Using the chart to check the company’s price history, you can possibly predict the future of the
company’s price. Let say the particular company's price was steadily going up for a year’s even if
it is small amount, it is good if you are aiming for long term like 5 years or more.
How can you say if its price is steadily going up? Simply check the stock chart. Chart will tell you
if the price is going up.
On the reverse side, what if company was losing its price for at least 6 months or more?
There is a possibility that this company can recover and go up again. Watch out for this company,
especially if more than a year or more of losing its price, there will be a great come back for them.
Believe me, it happened.
Let me give you an example using chart:

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Take a look at ABS at the above example. After losing from last quarter of 2003 to early of 2006,
the price came back.
The price was going up again. They recover its price from 12 up to 36.
That’s 200% price increase for one and a half year. Not a bad return, right?
And if you will observed, it happens again for the following years.

HINT: The price history repeat itself. You can see that in chart in most of the company. All you
need to do is to figure out the company’s price cycle.

Let me close this technique by quote from successful trader. Try to think it for a while and apply
to your trading strategy.
“Every stock is like a person; it has personality. I study stocks the way I study people. After a
while, their reactions to circumstances become predictable.” – Jesse Livermore

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 FACTS you need to know about RSI

Anyone who are in stock investing know about RSI (Relative Strength Index). If RSI is 70 or above,
it is what they called overbought, and if RSI is 30 or below, it is what they called oversold zone.
Most investor will say if RSI is low, buy it because the moment it will go up, the price will go up
also.
Question is, when it will go up and how long you have to wait?
Let’s take a look the below facts about RSI.
RSI is a measure of strength. It is the log of investors trust. If RSI is at 50 below or especially if
near and below 30, it has no strength. Investors are losing their trust to this company.
Stocks price on this level of RSI will probably go down or just sideways.
Try to think this, what will happen if you bought a share of stock of particular company when the
RSI is below 50 or in 30?
Let’s look at below example:

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The above is PCOR 5 year weekly chart. I have put box and colored on the RSI that are 50 and
below.
Take a look at what happen to the price during the time when the RSI is at inside the box or RSI
is at below 50. See that? The price are getting lower and losing.
From the price of 16/share on mid of 2013, it drops down to below 7/share on June 2015 (right
box).
Can you imagine if you have stocks like this in your portfolio?
I’m sure all of us don’t want to have that stock position that are declining its price for about 56%
in more or less 2 years.
I don’t want that also in my portfolio.
That is why I'm showing you this. For you to avoid losing that kind of money because we are all
in stock market to make money.

HINT: RSI of course is same with other indicator, it have down trend and uptrend. Watch out for
the steep up, and steep down trend.

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Again, a quote from successful trader. Try to think it for a while and apply to your trading
strategy.
“Speculation is nothing more than anticipating coming movements. In order to anticipate
correctly, one must have a definite basis for that anticipation.” – Jesse Livermore

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 TIP #3 – Read company news

Read company news daily. It will takes a few minutes only.

Make it a habit. Why? Because news can affect the company’s stock price.
It will cause to suddenly high in price or vice versa. Depends on how good or bad the news is.
One of the best source is the PSE edge website, you can view there the company disclosures and
its financial report.
Financial report matter off course because this will show how well the company performs for the
previous months or year. Just look for the company's quarterly and annual report.
This report will show you how much is the profit or losses of the company.
Also, if you have android or IOS phone, you can download the PSE edge in your cellphone for
your accessible convenient. It is great source for checking the company news, disclosures, etc.
Here are additional list of website that you can consider reading:
1. www.businessmirror.com.ph/
2. www.bworldonline.com
3. www.inquirer.net
4. www.interaksyon.com/business
5. Finance Manila - http://fm.advfn.com/ (you can also do charting here, what I’ve
most like there, is a list of company that have breakout in price, and also you can set
an alert for the price breakout)
Again, what I’m trying to point here is news affects the company’s price. If there is a bad news
about the company, price will probably go down, maybe not immediately but it will go down its
price for sure.
At least if not immediately, you have time to sell your share before you lose your money.

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 TIP #4 – Stock Selection Process

Your stock selection is important before buying your stocks. Let me share to you stock selection
process that can help you pick the winning stocks and avoid losing or stocks that lags only for a
week or month.

There it is:
First – monitor the daily Gainers, why? Because the potential stocks that we are looking for is
probably listed there. If it is listed in daily gainers for a day or more, it may be the one that we
are looking for. Your next winning stocks will starts here.
You can check also in Active stocks. If particular stock was in Gainers and Active, this is a good
sign that this stock have potential strength and will be your next winning stocks.
Second – from the daily gainers or active stocks, check their trend. If the trend is in upward and
meet your criteria based on you technical analysis, this is a good sign that this stock will be your
next winning stocks.
Third – monitor it, if it will go up for the next day, you can go and buy it.
Fourth – After you bought the stock, monitor its performance if it will be according to your
expectation. If not, make a cut loss according to your baseline and how much percentage you can
afford to lose. Sell it hen repeat the process.

HINT: Your broker issued technical guide. This is company list based on their technical analysis
whether stock is in up, down or sideways trend. You can use this also as one of your reference in
selecting your next stocks to buy.
If you want to watch this tip in video, here is the link: https://youtu.be/F2QmSAElAts

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Let me close this technique again by quote from successful trader. Try to think it for a while and
apply to your trading strategy.
“Good trading is a peculiar balance between the conviction to follow your ideas and the
flexibility to recognize when you have made a mistake.” – Michael Steinhardt

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 TIP #5 – Give time to the stock price to rest

There is no straight line in the universe, remember that. Don’t expect stocks price to steadily go
up straight in one or more weeks or months.
They need rest to gain momentum.
They need rest to start new momentum.
They need price consolidation.
Also, if the stock price was steadily growing up for a week or months, and if its price rested or
go below the last closing day, it is your opportunity to buy it again.
Because when they breaks out, it will continue to move high again.
Let me give you an example of what I am talking about.
Below is NIKL all time weekly chart.

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If you can see at the above example, while the price in in up trend, there are times that they
rested or go below the previous closing price (bar in red color).
After that, the price move again.
Hope you see it.

HINT #1: What do I mean by rest - the price closes below their previous closing or opening
price. This indicate the red line on the price.
HINT #2: Break out means today’s closing price is higher than yesterday’s closing price.

You are FREE to share this information. In this way, we can help our fellow stock market
investor and trader better choose their next stocks to buy.

To your next winning stocks,

Polunio

P.S. We used chart because it is easy to understand. Charts speaks louder than words.
PPS. - Find more tips on how to choose stocks that will give you good profit here:
http://www.pinoystocksjournal.com/ebook/SmartGuide.html

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