Trading Strategies for

the Smart Investor

PRESENTED BY:
JUANIS BARREDO
VP SALES & CUSTOMER SUPPORT
COL Financial Group Inc
Trading Strategies for the Smart Investor

Trading is a Discipline: Planning the trade

Preparation: Know your arena
1) Evaluate the Big Picture
2) Fundamentally Qualify your Picks
Methodology: Choosing what is right for you
1) Buying and Holding
1) One Time, Big Time
2) Cost Averaging with an added twist
2) Timing Markets
1) Trading Trends (Up, Sideways, Down)
2) Consolidations & Area Patterns
Execution: You are what you do
1) Right mind right action
Trading is a DISCIPLINE!
Trading is the discipline of utilizing market
timing gauges to determine entry and
exit strategies with the mission of
improving profitability over time
Investor buys stocks and holds them
for the long haul as encouraged by a
business potential value
Trader buys and sells stocks based
on set rules or a specific plan of entry
& exit aimed at generating better
rewards and by tightly managing risk
Preparation: Know your craft, know yourself
If you know the enemy and know
yourself, you need not fear the
result of a hundred battles.
Sun Tzu, The Art of War
Evaluate the Big Picture
Choose your battles! Always look over Macro environment to see
whether it provides you a position of Greater Advantage!

BULLISH Sentiment
Aggressive
Credit Widening/ Posturing
Expansionary

BEARISH Sentiment
Defensive
Credit Tightening/ Posturing
Contractionary
The Bull and The Bear Cycle
Fundamentally Qualify your Prospects
Identify superior business prospects

LOOK FOR G-E-M-S-S

Know your companys Story

G E M S S

Growth Earnings Management Superior Strong

Industry Visibility Credibility Products/ Balance Sheet
Services
Fundamentally Qualify your Picks
Pick up GEMSS at inexpensive prices!

SEEK THOSE THAT SHOW VALUE

Buy growing companies below intrinsic (Fair) value

Expensive
(Lighten or Wait for Better Prices)

Cheap
(Accumulate)
Data is available online!
Read up and review the essentials remember the Price is Right!

Fair Value
Market Price

Investment Guide
Company Reports

Source: COL Financial Research

Methodology: Choose the right path for you
A man who does not plan long
ahead will find trouble at his door.
Confucius
Method 1: Buying and Holding
It never was my thinking that made the big money for me. It
always was my sitting My sitting tight! -- Edwin Lefvre
[Jesse Livermore] Reminiscences of a Stock Operator

Advantages Disadvantages
Easy to Implement Open to Heavy Losses
No need to Time Subject to Risk Tolerance
Efficient in terms of Cost/Taxes Miss out on other Opportunities
1) Cost Averaging
Strategy: Invest a fixed amount of money every period over time.

Month 1
6
Buy Php5,000 worth of stock
ABC at market price

5
Month 2
Buy Php5,000 worth of stock
ABC at market price 4
You get buy
more shares
when prices
Ave Cost per Share are low, less
Month 3 3 when prices
are high!
Buy Php5,000 worth of stock
ABC at market price
1 2 3 4 5 6 7 8 9
Month
1) Cost Averaging with an added twist
Strategy: Invest a fixed amount of money every period over time.
But now continue to do so only as long as prices stay
below your fair value or below a discount to its fair value.

Price of ABC Fair Value Buy Below a 15% discount

8.00 10.00 (Buy) 8.60 (Buy)
10.10 10.00 (Stop) 8.60 (Stop)
9.50 10.00 (Buy) 8.60 (Stop)
8.50 10.00 (Buy) 8.60 (Buy)
2) One Time, Big time
Strategy: Buy in Lump Sum and wait for the pot of gold.

Advantages Disadvantages
Easy to Implement Open to Heavy Losses
No need to Time Subject to Risk Tolerance
Efficient in terms of Cost/Taxes Miss out on other Opportunities
Put money to work now No large sum to invest?
Method 2: Timing Markets
Technical Analysis is the study of price movement of any type
of security pictured into a graph or chart, for the purpose of
spotting & following price trends

Bar Charts Candlestick Charts

High H High H
Close Close

O O
Open
C Open C
Low L Low L
1) Trend Trading
Markets only have 3 directions: UP, DOWN, SIDEWAYS

Up Down
Higher-Highs Lower-Highs
Higher-Lows Lower-Lows

Sideways
1) Trend Trading
Building blocks of a trend = SUPPORT and RESISTANCE

Support is a price point underneath a market that shows heavy buying

(Demand)
Resistance is a price point above a market that shows heavy selling
(Supply)

Resistance Resistance

Support Support

Trade Idea: Buy near support and Sell close to resistance.

1) Trend Trading
Trends are followed and gauged by the use of Trendlines

Sell Trendlines

Buy
Hold

Buy

Trade Idea: Buy and Hold up trends; Sell them when the trends reverse
2) Consolidations & Area Patterns
Rule of Thumb: it takes time to move a price a certain distance
any exaggeration must be paid for by an correction in time or price
50
(1) Consolidation in Time
45
(Magnitude)

40

35
Price

(2) Correction in Price

30

Time 25
(Duration)
Trade Idea: Dont buy too far up & away from your Trendline!
2) Consolidations & Area Patterns
There is Gravity in Markets!

Overbought!
= Corrections &
Consolidations

Trade Idea: Take some profits on Overbought conditions

 2) Consolidations & Area Patterns
A winding period is necessary to re-stimulate a markets potential

Area Patterns are temporary

consolidation shifts that can be
Range Traded while the range lasts
and as long as the range size permits
for profitability.

A Push Out above an area pattern:

Breakout = Buy
A Push Out below an area pattern:
Breakdown = Sell

Take Note: The Size of a pattern may

dictate its potential move.
Applying the Trade Concepts:
Remember follow the trendline
Execution: You are what you do
Knowing others is intelligence;
knowing yourself is true wisdom.
Mastering others is strength;
mastering yourself is true power.
If you realize that you have enough,
you are truly rich.
- Lao Tzu
Right Mind Right Action
A traders hand is crafted like a sword heated, hammered, folded,
then cooled to harden

1 Always have a trading plan

Know your Entry and Exit condition
Estimate your Downsides & Upsides (Risk at Support/ Reward at Resistance)

2 Treat trading like a Business

A business needs to be built on planning, research and strategies
Devote time, study, & practice and Expect pitfalls along your campaign, learn
and improve on it
Watch your capital like a hawk

3 Dont let emotion get in the way

Always know when its time to stop
Scared money does not make money
 Thank You!
For more information about COL
Financial, our Seminars and services,
Please visit our website at
www.colfinancial.com
Address:
COL Financial Group Inc.
Customer Service Email: 2403-B Philippine Stock
Exchange Centre, Exchange
helpdesk@colfinancial.com Road, Ortigas Center, Pasig City,
Metro Manila, Philippines
Support Line:
(632) 6-515-888