Stuck with Double Dragon

The Question

“Hello Sir Marvin! I’m stuck with Double Dragon, I bought at 78 Pesos and averaged down more at 70. I came in to trade without knowing anything about the fundamentals and technicals of the company and I just followed the tips of my friends in Facebook. What should I do now? It’s my first time to experience a loss this big, I placed over 350,000 Pesos total already. I wished I would have studied first before I bought. 🙁 I should not have listened to my friends and the hype. 🙁 I now feel sad that I have lost a lot of money already.”

Tina M., Milan, Italy

Study first and gain the conviction to trade

Hi Tina! Thank you so much for the email. Things like this are a bit sad. That’s why I always encourage people to read and study first before investing. The greatest place you can be when you trading and investing in the market is that you know what you are doing so that you do not rely on the opinions of others when you are investing. You don’t need to be an expert to do that but you must still devote some time to study. There are no shortcuts to wealth. I do not want this mistake to happen to you again. To the other readers of this blog, who are investing in the stock market and are relatively new to this kind of volatility, may Tina’s story be a message to all of you so that what happened to her may not happen to you. You will only go as high as the knowledge that you invest in yourself. Remember you are your greatest asset and to go up, you must build yourself in knowledge.

Bounce back and learn from your mistakes

With that said, thank you for the courage of stepping out and asking for help, Tina. Growth comes when we admit our faults and failures and try to learn from our mistakes. Do not let this one trade define you. Remember, you have your entire life ahead of you no one trade should define the course of your trading career. Think of trading like an NBA season, mistakes that you have committed at the start of the season you can still correct so that later on you can still win the championship! This is just like the loss of the Golden State Warriors today! Like them, you are still a champion, shrug it off and bounce back again!

I would suggest that you learn more of fundamental and technical analysis before you start investing and trading. I will share a bit of the technicals and fundamentals of DD in this blog and I hope this inspires you to help build your own technique in trading so you can move in and out of the market with confidence. My greatest dream is to see millions of Filipinos move into financial freedom because of the stock market! It can be done and it will be done!

Catch me in my live training events! (quick plug)

To those who want to take it a notch higher and want a good foundation in stock trading and investing. I would like to invite you to our live seminars in Metro Manila, Singapore, UAE, Qatar and New Zealand. The heart of why I do this seminars is I want to build a generation of Filipinos with the right foundation in stock investing. I want to bring smart investing to every Filipino around the world! This is my passion and this is what I want to do over and over! To bring more consumers to investors! We will be teaching different techniques from how to select the right stocks up to how to find the perfect timing in buying and selling stocks.

Stock Smarts Manila – June 18, 2016
Stock Smarts Singapore – June 25 & 26, 2016
Stock Smarts UAE – July 15 – 23, 2016
Stock Smarts Qatar – July 25 – 30, 2016
Stock Smarts New Zealand — August 5 – 8, 2016

So what’s happening to DD?

As what I always say, it’s not our job to forecast where the market is headed but rather to use logic and strategy to allow us to follow the trend or the growth of the company!

The drop continues

Yesterday, on our #StocksByRequest blog, I pointed out that DD was already under breakdown and it has reached a point where sellers are just now selling at will as a lot of investors have already positioned in lower prices. Like a meteor the stock has hit great heights but is now undergoing a very deadly drop. When it was at 80, investors were very optimistic that the stock will hit 100 but now that the stock is already down 37.3% from its highs, bargain hunters are now clamouring for the stock to go back to 25.

What should you do?

If you are a quick trader

‪DD‬ is a great example that if you are a trader you should use technicals to find strategic areas to sell and take profits. Technical analysis will not tell us to sell at the top but it will give us specific areas on where we could sell using logic and not emotion. As of this point, if the stock does not bounce back and the 49 level does not hold, the stock could further drop to 45 to as low as 37. This is why you should manage your trades well and use technical analysis to help protect your gains.

If you are a position trader

‪If you are a position trader and bought from the breakout from last February 2016, the stock is still relatively bullish over the long term and is just experiencing a pullback from the massive irrationality that happened the past few days. Your goal is to stick to your plan and sell when your sell signals are already rearing its form.

The stock will still remain bullish for the long term if DD manages to stay above 30.

If you are an investor

If you are an investor, it would be prudent on the other hand to use fundamentals to know if the stock is good, growing and reasonably priced. I cannot explain fundamental analysis in depth in this blog post to give justice on how amazing it is to help you select good and amazing stocks that are cheap.

Here’s the thing, even if DD has dropped already from 80-50 Pesos, the stock still has a very expensive P/E ratio. Though it has amazing growth prospects, 50 Pesos at this point is still expensive. It would be better to come in when the fundamentals are telling you that the stock is already cheap.

On my own opinion, the movement over the past few weeks should be participated more by traders and not investors and you should only come in again when the stock massively drops and goes to a cheaper valuation. For sure I will make a new post once that time happens. Remember longterm is a timeframe and not a strategy.

Hope this has helped you! I will try to give you more and more updates on this stock. God bless you!

‪Catch me live:

New Book and other books on Investing, Business and Finance.

I’m excited to share my latest book, Where Should You Invest? This will answer one of the biggest questions on the what, where and when you should invest on. I will also tackle the concept that there are certain investments that work well with others and some investments that don’t work well at a certain investment phases.

This is aimed to help investors have a holistic sense on how they can grow, maximize, and preserve their wealth!(Stock Smarts Book 4 is also coming this year) I also feature other books in my website with authors that I respect which have different expertise in Finance, Business, Investing and everything else in between.

For more details and to order: Marvin Germo Book Orders