Micro Stock Trader: Trading Strategy

Showing posts with label Trading Strategy. Show all posts

Tuesday, January 21, 2025

URC Closing Analysis – January 21, 2025

Today’s trading session saw URC closing at 66.00, maintaining its position within the 33% Retracement Continuation Zone—a clear indication that bearish momentum remains strong. Our Hybrid 10-Step Trading Strategy and Percentage Retracement Trading Strategy both suggested that the downtrend was intact, advising traders to sell or hold rather than buy.
URC stock closing analysis for January 21, 2025, marking the end of Phase 1 strategy testing.

Evaluation of URC Closing Chart (January 21, 2025) Using Our Hybrid 10-Step Strategy

Step 1: Identifying Market State & Trend Context

The URC closing price of 66.00 remains within the 33% Retracement Continuation Zone, confirming that bearish sentiment is still dominant.
Price remains below both key moving averages (200-MA at 97.79, 20-MA at 75.40), reinforcing a strong downtrend.
Decision: SELL bias remains intact.

Step 2: Position, Location & Key Retracement Zones

Price is hovering below the key support of 67.00 and near the hard stop-loss level of 65.50.
The retracement sweet spots at 67.85 and 68.75 suggest that the stock failed to reclaim these levels, further solidifying bearish strength.
Decision: HOLD / SELL if further weakness persists.

Step 3: Power Bars & Retracement Strength

The red power bars remain dominant, with today's candle closing lower than the previous day.
Volume remains elevated at 4.363M, suggesting continued selling pressure.
Decision: SELL bias confirmed unless a strong reversal pattern emerges.

Step 4: Entry Confirmation From Both Strategies

There was no confirmed breakout above key resistance, with price struggling near the retracement zones.
Decision: SELL bias holds.

Step 5: Tactical Stop-Loss Adjustments

The hard stop-loss remains at 65.50, and the stock barely stayed above it at closing.
Our earlier full exit at 65.85 was a defensive move to prevent further downside exposure.
Decision: EXIT if price fails to reclaim support levels.

Step 6: Color Change as a Secondary Confirmation

The absence of a strong green power bar means no clear shift in momentum.
Decision: HOLD until reversal confirmation.

Step 7: Profit-Taking Aligned with Retracement Targets

If shorting, partial profit-taking near 66.00 could be considered as a tactical move.
Decision: PARTIAL SELL recommended.

Step 8: Re-Entry at Secondary Retracement Pullbacks

Since 67.00 remains a broken support, re-entry is highly speculative.
Decision: HOLD, as risk remains elevated.

Step 9: Tactical Position Management

The 33% Retracement Continuation Zone signals further downside potential.
Decision: HOLD / SELL based on further price movement.

Step 10: Counter-Trend Trades Only When Retracement Fails

Given that price is still within the bearish zone, counter-trend trades are risky and premature.
Decision: HOLD / SELL unless a major reversal appears.

Final Trading Recommendation

HOLD / SELL: The bearish trend remains in control, and buyers need confirmation before considering entries.
Monitor retracement levels: If price fails to reclaim 67.00, downside pressure will likely continue.

This concludes Week 4 of testing our Hybrid 10-Step Trading Strategy—and despite a few questionable trades, the strategy has remained effective and reliable in guiding our decisions.

The Questionable Yet Justifiable 50-Share Purchase at 65.95

Despite all signals pointing towards continued bearish momentum, we made a 50-share purchase at 65.95 just after the resumption of afternoon trading—even after fully exiting at 65.85 before the mid-day break.

So, why would we make a move that contradicts both our Hybrid 10-Step Trading Strategy and the Percentage Retracement Trading Strategy?

While the decision lacked technical justification, we can stretch an explanation based on the following perspectives:

Strategic Experimentation with Controlled Risk
- We may have taken the position to test market reaction at a key psychological zone (near 65.50-66.00).
- The trade involved only 50 shares, making it a low-risk probe entry rather than a full commitment.
Emotional Bias and Market Psychology
- Sometimes, market instinct kicks in. A sense of overextension on the downside might have influenced the trade.
- A possible overreaction in price action after the sharp drop could have hinted at a minor bounce attempt.
Reassessing Market Momentum in Real Time
- While our strategies signaled a continuation of the downtrend, intraday market movements sometimes present temporary strength unseen in daily charts.
- A quick position might have been taken to assess price responsiveness at this level.
A Learning Opportunity for Our Trading Strategy
- This move allows us to test the effectiveness of our retracement rules in real time.
- Even flawed decisions contribute to refining our approach for future trades.

Market Recap & URC Trade Evaluation

URC’s Closing Price & Technical Context

Closing Price: 66.00, within the 33% Retracement Continuation Zone—confirming persistent bearish momentum.
Hard Stop-Loss Level: 65.50, which remains a critical risk level.
Resistance Levels: 67.85 and 68.75, which the stock failed to reclaim.
Volume: 4.363M, showing continued selling pressure.

Trade Execution Summary

We fully exited 300 URC shares at 65.85 before the mid-day break to protect our capital.
We later purchased 50 shares at 65.95 after the afternoon session resumed.
- This went against our strategy’s recommendation, as the bearish sentiment remained intact.
- However, the small size of the trade and market conditions made it a calculated risk.
- In hindsight, we acknowledge that strict adherence to our system should have prevailed.

Lessons & Strategy Adjustments

We should have followed our strategy without deviation.
Market instinct must never override structured risk management.
Controlled-risk testing helped refine our approach, but Phase 2 will be fully disciplined.

Transition to Phase 2: Expanding Our Trading Universe

With four weeks of testing behind us, we are confident in the effectiveness of our Hybrid 10-Step Trading Strategy. As we move forward into Phase 2, our focus shifts to applying the strategy across multiple Shariah-compliant stocks with absolute discipline—no deviations, no experimentation.

Phase 2 Trading Parameters

✅ Starting Capital: ₱22,200.00
✅ Stock Holdings: 1,000 RCR shares, 50 URC shares
✅ Current Portfolio Status: -₱1,516.07 loss
✅ Objective: Execute 20 trades following the strategy with precision.
✅ Key Principle: Strict adherence to the system—trade exactly as the strategy dictates.

Final Thoughts

Phase 1 of our testing process has proven our strategy’s reliability, and despite minor missteps, it has provided structured guidance in making disciplined trade decisions. Now, Phase 2 begins, and we are excited to see how our strategy performs across multiple Shariah-compliant stocks.

After 20 fully disciplined trades, we will assess our results and refine our approach as necessary. The next chapter of our trading journey starts now.

Disclaimer: This post is for informational purposes only and should not be considered financial advice. Always do your own research before making any trading decisions.

Given the weakness in price action and our strict adherence to risk management, we decided to entirely exit our 300 URC shares at 65.85 before the mid-day break, as the price approached our hard stop-loss at 65.50. Unfortunately, we were slightly delayed in executing our exit, reinforcing the importance of prompt execution in risk management. This decision was made to limit potential losses and reassess the market before considering any re-entry opportunities.

Lessons Learned and Strategy Reflection

In hindsight, our 90-share purchase of URC on January 20 was a misstep, as the sell signal did not materialize strongly enough to justify entry. Following our strategy more strictly would have helped us avoid unnecessary exposure. Additionally, our January 16 exit should have been a full exit rather than a partial one, as price action has confirmed continued bearish momentum. However, these experiences serve as valuable lessons.

This marks Week 4 of testing our Hybrid 10-Step Trading Strategy, and overall, it has proven to be an effective framework. Despite some execution errors, the strategy has provided structured guidance and risk management, keeping our trading decisions disciplined. We acknowledge our lessons and move forward with greater confidence in the system.

Justifying the 90-Share Purchase of URC Despite a Sell Signal

Mid-Day Trading Reflection: January 16, 2025 – Lessons from the Tactical Action

Disclaimer: This post is for informational purposes only and should not be considered financial advice. Always do your own research before making any trading decisions.

Monday, January 20, 2025

Justifying the 90-Share Purchase of URC Despite a Sell Signal

The WHY?
Final Thoughts: A Tactical, Speculative Play
In our most recent analysis of Universal Robina Corporation (URC) using our Hybrid 10-Step Trading Strategy and Percentage Retracement Trading Strategy, we reached a SELL or partial SELL conclusion. The closing price of PHP 68.80 was within the 33% Retracement Continuation Zone, which typically suggests that the bearish momentum is still in play. However, despite this assessment, we made a contrarian decision to purchase 90 shares during the run-off session. The question is: why?
URC Daily Chart Analysis as of January 20, 2025

1. Position Sizing for Future Upside

While our strategies indicated a SELL, we did not make an aggressive buy but instead took a small 90-share position. This allowed us to maintain exposure in the event of an unexpected reversal or relief rally without significantly increasing our risk.

2. Intraday or Run-Off Strength Consideration

During the run-off session, we observed subtle indications of buyer absorption at the lower price levels. This could imply that sellers may have exhausted their momentum, providing an opportunity for a small tactical entry.

3. Contrarian Play on a High-Risk Reward Setup

The 33% retracement continuation zone suggests that the downtrend remains active, but it also serves as an area where some reversal attempts may form. Taking a contrarian approach, we positioned ourselves for a possible counter-trend bounce while maintaining tight risk controls.

4. Preemptive Entry for a Possible Rebound

By entering at PHP 68.80, we positioned ourselves for a potential rebound toward the 20-day moving average (PHP 75.94) or the 66% retracement level (PHP 75.30). This trade assumes that a reaction to these levels is likely in the short term, creating an opportunity for a quick gain.

5. Global Market Sentiment: Trump’s Inauguration & Macro Considerations

In a few hours, Donald J. Trump will be sworn in as the 47th President of the United States. While this may seem distant from URC’s fundamentals, global market sentiment often trickles down to emerging markets like the PSE.

How Could Trump's Inauguration Affect the Market?

Risk Sentiment Shift – If global investors perceive Trump's policies as pro-business, risk appetite may return, benefiting emerging market stocks.
Currency Fluctuations – A potential strong US dollar policy may weaken the Philippine Peso, which could impact consumer goods companies like URC due to import costs. This uncertainty may have already been priced into the sell-off.
Trade Relations & Commodities – If the US focuses on trade barriers, global supply chains may be affected. However, this could also mean a temporary relief rally as markets adjust to the new administration’s direction.

Final Thoughts: A Tactical, Speculative Play

Despite our trading strategies signaling a SELL, our 90-share purchase was a calculated tactical entry. We viewed this as a speculative trade based on:
The potential for a near-term relief rally after market uncertainty fades.
A contrarian stance at the 33% retracement level, anticipating at least a short-term bounce.
External macroeconomic factors, including the impact of the US presidential transition on investor sentiment.
While our core strategies guide our trading discipline, market conditions sometimes justify small discretionary trades. This purchase is not about abandoning our strategies, but rather about adapting to real-time market conditions while keeping risk in check. If the price fails to hold, we remain ready to exit quickly with minimal losses, reinforcing our commitment to strategic risk management.
Mid-Day Stock Analysis: URC's Intra-Day Chart Under Hybrid 10-Step Strategy for January 20, 2025
Retracement Analysis of URC Downward Power Moves

Disclaimer: This post is for informational purposes only and should not be considered financial advice. Always do your own research before making any trading decisions.

The analysis presented focuses on three separate downward power moves of Universal Robina Corporation (URC), each of which underwent a retracement phase. The data table outlines key retracement levels and probabilities of rebound, while the accompanying retracement charts visually highlight these key levels.

Universal Robina Corporation (URC) stock chart displaying retracement levels and probabilities for August 2024.

URC stock retracement levels from the August 2024 power move, showing potential trend continuation points.

URC stock chart illustrating retracement levels for November 2024, including 33%, 66%, and reversal sweet spots.

URC stock retracement analysis for the November 2024 downward move, highlighting key probability zones.

Universal Robina Corporation (URC) technical analysis showing retracement levels from the January 2025 power move.

URC retracement probabilities for January 2025, emphasizing resistance and reversal areas.

Understanding Retracement in Trading

A retracement is a temporary reversal in price movement within an overall trend. In downtrending stocks, retracements occur as price moves upward after a significant drop before resuming its downward trajectory. Identifying retracement levels helps traders determine whether a pullback is a continuation setup or a signal for a potential reversal.

Key Retracement Levels:

100% Retracement (Origin/Start) – The beginning of the downward power move.
66% Retracement – The level where price has a 80% probability of resuming its downward move.
33% Retracement – A more cautious zone where price has a 50% probability of continuing downward.
0% Retracement (End of Move) – The lowest price reached in the downward move.

In contrast, a "Sweet Spot - Reversal Zone" lies in the 50%-75% retracement area, where there is a 60%-90% probability of a price rebound.

Micro Stock Trader’s Adopted Retracement Trading Strategy

Breakdown of URC's Retracement Levels Across Three Downward Moves

Trade Duration	5 Days (Aug 2024)	8 Days (Nov 2024)	4 Days (Jan 2025)
Start Date of Power Move	01-Aug-24	06-Nov-24	13-Jan-25
Origin Price (100%)	119.00	101.30	79.15
End Date of Power Move	06-Aug-24	14-Nov-24	17-Jan-25
End Price (0%)	98.10	78.65	67.80
Total Price Range	20.90	22.65	11.35

Retracement Probabilities and Key Levels

First Downtrend (August 2024)
- 100% Retracement: 119.00
- 66% Retracement: 111.90 (80% probability of downward continuation)
- 33% Retracement: 105.00 (50% probability)
- 0% Retracement: 98.10 (Potential reversal or continuation)
- Reversal Sweet Spot: Between 108.55 and 113.80 (60%-90% probability of rebound)
Second Downtrend (November 2024)
- 100% Retracement: 101.30
- 66% Retracement: 93.60 (80% probability of downtrend continuation)
- 33% Retracement: 86.15 (50% probability)
- 0% Retracement: 78.65
- Reversal Sweet Spot: Between 90.00 and 95.65
Third Downtrend (January 2025)
- 100% Retracement: 79.15
- 66% Retracement: 75.30
- 33% Retracement: 71.55
- 0% Retracement: 67.80
- Reversal Sweet Spot: Between 73.50 and 76.35

Key Takeaways from the Charts

Each retracement analysis provides the following insights:

First Move (August 2024)

The price never surpassed the 33% retracement level (105.00), indicating strong bearish momentum.
This failure to break above 33% reinforced the high probability of trend continuation, confirming the downtrend’s strength.
The move served as a bearish confirmation, signaling a low likelihood of reversal.
Short traders should have waited for a shallower retracement before re-entering, as the price did not show signs of a deeper pullback.
Long traders looking for a bounce should have exercised caution, as retracement failure at 33% often signals further downside.
Key level to monitor in future setups: The 66% retracement (111.90) was never tested, reinforcing that the bearish trend remained dominant.

Second Move (November 2024)

Price briefly reached the 33%-50% retracement zone before selling pressure resumed.
This created an ideal short-selling opportunity, as the probability of trend continuation remained high.

Third Move (January 2025)

This was a shorter-duration downtrend, with retracement failing to approach even the 33% level (71.55).
The narrower price range resulted in a tighter retracement zone, limiting opportunities for counter-trend trades.
Selling pressure was exceptionally strong, causing the price to struggle to find support before stabilizing within the 33% continuation zone and moving sideways.

These insights emphasize the importance of adjusting expectations based on retracement behavior, recognizing when deep pullbacks are unlikely, and aligning trades accordingly.

Final Analysis and Trading Strategy

The 33% retracement level served as a key resistance zone, as price failed to move beyond this level in both August 2024 and January 2025.
The 66% retracement level was never tested, highlighting the strength of the bearish trend and the absence of deeper pullbacks.
The failure to rebound beyond 33% suggests that counter-trend trades were ineffective, reinforcing the importance of trend-following strategies over reversal setups in these scenarios.

Trading Decision Points:

Short positions (continuation trades) remained valid even before reaching 66%, as price consistently reversed near the 33% retracement zone.
Long positions (reversal trades) lacked confirmation, as price never entered the 50%-75% reversal sweet spot, requiring traders to wait for a stronger bullish signal before considering entries.

This refined retracement trading approach helps traders capitalize on both trend continuation and potential reversals, optimizing trade setups while minimizing unnecessary risk exposure.

Disclaimer: This post is for informational purposes only and should not be considered financial advice. Always do your own research before making any trading decisions.

Mid-Day Stock Analysis

January 20, 2025

The stock market is a battlefield of buyers and sellers, with every price movement telling a story. In this mid-day assessment of Universal Robina Corporation (URC), we apply our Hybrid 10-Step Strategy to evaluate the stock’s performance and determine the best course of action for traders.

URC stock mid-day analysis showing trend context, key retracement levels, and decision points for traders.

Universal Robina Corporation (URC) intra-day chart analysis with key trend and price action

Step 1: Identifying Market State & Trend Context

URC is still in a downtrend, with recent price action showing a steep decline. A slight consolidation is emerging near a possible support level, but the broader sentiment remains bearish. ➡️ Decision: SELL bias, but monitor for potential reversal.

Step 2: Position, Location & Key Retracement Zones

The stock is below key moving averages, reinforcing the bearish outlook. However, there is a minor stabilization at a potential support zone. ➡️ Decision: HOLD (if monitoring for reversal) / SELL (if trend remains weak).

Step 3: Power Bars & Retracement Strength

URC’s recent red power bars indicate strong downward pressure. The emerging green candle is weak, failing to signal a strong reversal. ➡️ Decision: SELL (unless stronger green power bars appear).

Step 4: Entry Confirmation From Both Strategies

There is no confirmed breakout above resistance, and the small green candle suggests hesitation. ➡️ Decision: HOLD (for more confirmation) / SELL (if resistance holds).

Step 5: Tactical Stop-Loss Adjustments

For existing long positions, stop-loss levels should be closely watched. For short positions, a trailing stop-loss is advisable to lock in profits. ➡️ Decision: HOLD (if stop-loss is secure) / SELL (if price nears stop-loss without recovery).

Step 6: Color Change as a Secondary Confirmation

A minor shift from red to green is observed, but the lack of momentum weakens its validity as a buy signal. ➡️ Decision: HOLD (if waiting for confirmation) / SELL (if no strong recovery appears).

Step 7: Profit-Taking Aligned with Retracement Targets

URC hasn’t reached a major resistance level yet. However, partial selling of short positions can be considered due to the reduced downward momentum. ➡️ Decision: PARTIAL SELL (secure some gains on short positions).

Step 8: Re-Entry at Secondary Retracement Pullbacks

A potential buy entry exists if a strong bounce from support occurs. However, with weak buying pressure, re-entry is currently risky. ➡️ Decision: HOLD (until stronger confirmation emerges).

Step 9: Tactical Position Management

The market is showing hesitation, indicating a slowing down of the downtrend. For those holding short positions, partial profit-taking could be wise. ➡️ Decision: PARTIAL SELL (lock in gains).

Step 10: Counter-Trend Trades Only When Retracement Fails

Since the market remains in a strong downtrend, a counter-trend buy is only justified if a strong reversal signal appears. ➡️ Decision: HOLD (wait for further confirmation before a counter-trend buy).

Final Mid-Day Evaluation

HOLD: If waiting for a clearer signal before making a move.
PARTIAL SELL: If already in a short position to secure profits.
SELL: If downward pressure persists without signs of a reversal.

Conclusion

URC remains in a bearish state, and while minor consolidation is happening, it lacks the strength for a decisive reversal. Traders should adopt a cautious stance—monitoring for potential recovery while securing profits from short positions. The afternoon session will be key in confirming whether this level holds as support or if further downside is imminent.

Disclaimer: This post is for informational purposes only and should not be considered financial advice. Always do your own research before making any trading decisions.

Introduction

The recent price action of Universal Robina Corporation (URC) has drawn significant attention as the stock continues its downtrend. Using the Hybrid 10-Step Trading Strategy Checklist, we analyze whether URC presents a buying opportunity, a hold signal, or a clear sell indication based on its technical structure, price positioning, and candlestick behavior.

URC daily chart analysis indicating strong downtrend with key moving averages.

URC's daily chart as of January 17, 2025, shows strong bearish momentum.

URC Chart Evaluation Using the Hybrid 10-Step Trading Strategy

Step 1: Identify Market State & Trend Context

✔ Is the market in an uptrend? → ❌ No
✔ Is the market sideways? → ❌ No
✔ Is the market in a downtrend? → ✅ SELL
Analysis: URC remains below its key moving averages (20-MA at ₱76.37, 200-MA at ₱98.15), confirming a strong downtrend.

Step 2: Position, Location & Key Retracement Zones

✔ Is the price above key moving averages and near a support level? → ❌ No
✔ Is the price at mid-range with no clear trend? → ❌ No
✔ Is the price below key moving averages and near resistance? → ✅ SELL
Analysis: Price is trading far below both MAs, signaling continued weakness.

Step 3: Power Bars & Retracement Strength

✔ Are there strong green power bars near support? → ❌ No
✔ Are there strong red power bars near resistance? → ✅ SELL
Analysis: The chart shows dominant red candles, confirming selling pressure and a lack of strong buying momentum.

Step 4: Entry with Confirmation from Both Strategies

✔ Is there a confirmed breakout above resistance? → ❌ No
✔ Has the breakout failed with price moving downward? → ✅ SELL
Analysis: Recent price action failed to break higher and is continuing its downward movement.

Step 5: Tactical Stop-Loss Adjustments

✔ Is the price approaching stop-loss without recovery? → ✅ SELL
Analysis: No recovery attempts indicate a continued bearish bias.

Step 6: Color Change as a Secondary Confirmation

✔ Is there a shift from green to red near resistance? → ✅ SELL
Analysis: The price structure shows strong red candles, confirming continued downside risk.

Step 7: Profit-Taking Aligned with Retracement Targets

✔ Has price reached a major resistance level? → ✅ PARTIAL SELL
Analysis: If holding a position, partial selling can reduce risk exposure.

Step 8: Re-Entry at Secondary Retracement Pullbacks

✔ Has price broken below support? → ✅ SELL
Analysis: The break below ₱70 signals further downside potential.

Step 9: Tactical Position Management

✔ Is price hesitating at key levels? → ✅ PARTIAL SELL
Analysis: Reducing exposure is a logical approach in a downtrend.

Step 10: Counter-Trend Trades Only When Retracement Fails

✔ Is price still in a strong downtrend with no recovery? → ✅ SELL
Analysis: No reversal signals indicate further downside movement.

Final Decision: SELL 🚨

Why SELL?

✔ Market is in a strong downtrend with price below key moving averages.

✔ The price has broken key support levels, confirming further downside risk.

✔ Red power bars and strong selling pressure dominate the chart.

✔ No bullish reversal patterns are evident, making a recovery unlikely in the near term.

✔ Failed breakouts reinforce bearish momentum, indicating further selling pressure.

📉 Final Verdict: SELL before further declines.

Key Takeaways & Next Steps

🔹 Short-term traders → Avoid buying until a confirmed reversal pattern emerges.

🔹 Long-term investors → May consider waiting for stabilization before entering.

🔹 Existing holders → Should consider selling or reducing exposure.

🚨 Final Thought: Bottoming is a process, not a single event. Wait for bullish confirmation before considering a buy. 🚨

Disclaimer: This post is for informational purposes only and should not be considered financial advice. Always do your own research before making any trading decisions.

The Modified 10-Step Trading Plan has long been a structured approach for executing trades with precision and discipline. However, traders often struggle with identifying the best entry zones for high-probability trades. By integrating retracement trading principles, we can enhance the 10-Step Strategy with high-probability pullback entries, leading to better trade execution, risk management, and overall performance.

Understanding the Core Concepts

To merge retracement principles into the Modified 10-Step Trading Plan, it is crucial to understand the key market mechanics each method focuses on:

✅ The Modified 10-Step Trading Plan:

A structured step-by-step trading process.
Focuses on market state, moving averages, and power bars.
Includes tactical stop-loss management and counter-trend trading.

✅ Retracement Trading:

Based on pullbacks after strong price moves.
Uses probability-based retracement zones (33%, 50%, 66%).
Helps traders enter at the best possible prices instead of chasing breakouts.

By combining these two strategies, traders can improve trade selection, avoid poor entries, and gain better control over risk management.

The Modified 10-Step Trading Plan: Enhancing Risk Management and Flexibility

Micro Stock Trader’s Adopted Retracement Trading Strategy

The Hybrid 10-Step Trading Strategy

A More Effective Approach to Trading

The following table outlines the Hybrid 10-Step Trading Strategy, which retains the 10-Step Plan as the foundation but refines entry zones, profit-taking, and tactical positioning using retracement levels.

Step	Action	Key Considerations	Integration of Retracement Trading
Step 1: Identify Market State & Trend Context	Determine if the market is in an Up, Top, Down, or Bottom phase.	Use 20-MA and 200-MA for trend direction.	Check if price is in a single-bar or multi-bar strength move.
Step 2: Position, Location & Key Retracement Zones	Assess price position relative to moving averages and support/resistance.	Look for price above/below MAs and near key structural levels.	Overlay retracement zones (33%, 50%-66%) to refine entry points.
Step 3: Power Bars & Retracement Strength	Identify green power bars, narrow-range bars, and breakouts.	Look for strong volume confirmations in power bars.	Ensure power bars form within retracement sweet spots (25%-45%).
Step 4: Entry with Confirmation from Both Strategies	Enter only if both retracement levels & technical signals align.	Use breakouts, reversals, and moving average confluence.	Avoid trades if retracement exceeds 100%, signaling trend failure.
Step 5: Tactical Stop-Loss Adjustments	Place stop-loss at logical technical levels (recent swing low).	Adjust stop-loss dynamically as price moves in your favor.	Deeper retracements (50%-66%) require tighter stops.
Step 6: Color Change as a Secondary Confirmation	Look for color change (red to green) at support levels.	A color shift near a retracement zone strengthens trade conviction.	If price changes color beyond 66% retracement, trade cautiously.
Step 7: Profit-Taking Aligned with Retracement Targets	Execute partial exits at key resistance levels.	Lock in gains while keeping a core position for further upside.	Exit fully if retracement moves back to its origin (100%).
Step 8: Re-Entry at Secondary Retracement Pullbacks	Re-enter if price pulls back after a failed move.	Only re-enter at high-probability retracement zones.	Retracement to 33%-45% offers the best re-entry chances.
Step 9: Tactical Position Management	Adjust exposure based on retracement depth.	Reduce position size when risk increases.	Shallower retracements (33%) → Larger positions, Deeper retracements (66%) → Smaller positions.
Step 10: Counter-Trend Trades Only When Retracement Fails	Trade against the trend only under extreme conditions.	Use small position sizes and tight stop-losses.	If price retraces 100% and fails, look for counter-trend trades.

Final Thoughts

By combining retracement trading principles with the Modified 10-Step Trading Plan, traders can achieve:

✔️ Improved trade selection by filtering low-probability setups.

✔️ Better entries by waiting for pullbacks instead of chasing breakouts.

✔️ Enhanced risk management with tighter stops in deeper retracements.

✔️ More disciplined trade execution based on both market state and probability zones.

This Hybrid 10-Step Trading Strategy provides a structured yet flexible trading methodology that maximizes trend-following opportunities while minimizing risk. 🚀

Disclaimer: This post is for informational purposes only and should not be considered financial advice. Always do your own research before making any trading decisions.

Sunday, January 19, 2025

Comparing the Modified 10-Step Trading Strategy vs. Retracement Trading Strategy

As we refine our live trading approach under the Budget Ethical Trading Account (BETA), we are evaluating two distinct methods: the Modified 10-Step Trading Strategy and the Retracement Trading Strategy. Each approach offers unique insights into market behavior, risk management, and execution style. This post compares both models, highlighting their strengths, weaknesses, and potential applications.

A market chart illustrating key support and resistance levels, stop-loss placements, and tactical trading decisions under the Modified 10-Step Trading Strategy.

Modified 10-Step Trading Strategy: Key Support, Resistance, and Risk Management in Action

A stock chart displaying retracement zones at different percentage levels, highlighting trend reversal and continuation points.

Retracement Trading Strategy: Using Key Levels to Identify Trend Continuation & Reversal

1️⃣ Modified 10-Step Trading Strategy Scenario

🔹 Primary Focus: Tactical trading based on key support and resistance levels with strict stop-loss placement.

🔹 Entry Strategy:

67.00 as Key Support Level – Entry only if confirmed by a Green Elephant Bar with increasing volume.
71.50 as Hard Resistance – Immediate exit on approach unless volume supports a breakout.
65.50 as Hard Stop-Loss – Exit entirely if price falls below this level to prevent further drawdowns.
60.00 as Bargain Re-Entry Zone – Potential entry if price reaches this level and shows reversal confirmation.

🔹 Risk Management:

Volume confirmation required before any entry.
Stop-loss placement prioritizes capital preservation.
Focus on real-time decision-making based on price action.

🔹 Main Objective: Capital protection and execution discipline, ensuring the strategy adapts dynamically to real-time market conditions.

📌 Full Analysis: Modified 10-Step Trading Strategy Scenario

The Modified 10-Step Trading Plan: Enhancing Risk Management and Flexibility

2️⃣ Retracement Trading Strategy

🔹 Primary Focus: Retracement-based entry and exit levels using percentage-based zones to predict trend continuation or reversals.

🔹 Entry Strategy:

100% Retracement at 104.4 – Origin of power move (October 1, 2024).
75% Retracement at 95 & 55% Retracement at 88 – Trend Reversal Zones where price is likely to reject and reverse.
45% Retracement at 84 & 25% Retracement at 77 – Trend Continuation Zones, indicating where price could resume the downtrend.
0% Retracement at 68 – Current bottom of the power move, which is a potential reversal point.

🔹 Risk Management:

Focus on retracement levels rather than hard stop-loss points.
Entries and exits are predefined based on historical power moves.
No immediate reliance on real-time volume confirmation for execution.

🔹 Main Objective: Strategic swing trading using price retracements to identify optimal trend continuation or reversal zones.

📌 Full Analysis: Retracement Trading Strategy

Micro Stock Trader’s Adopted Retracement Trading Strategy

Key Differences Between the Two Approaches

Aspect	Modified 10-Step Trading Strategy	Retracement Trading Strategy
Trading Approach	Tactical, real-time trading decisions	Predefined retracement zones
Entry Criteria	Based on support/resistance levels & volume confirmation	Based on retracement percentages from prior moves
Risk Management	Hard stop-loss at 65.50, bargain entry at 60.00	No predefined stop-loss, relies on retracement zones
Focus	Active position management & dynamic adjustments	Swing trading with predefined reversal/continuation points
Main Strength	Adaptable to real-time market movement	Systematic approach using Fibonacci-style retracements

Conclusion: Which Strategy Is More Effective?

The Modified 10-Step Trading Strategy is ideal for traders who prefer active trading, risk management, and real-time execution adjustments.
The Retracement Trading Strategy is suitable for traders focusing on swing trading, predefined retracement-based entries, and trend-following.
Combining elements of both strategies can provide a more well-rounded trading approach, using retracement zones as guides while executing based on the Modified 10-Step strategy’s real-time risk management.

📌 Which strategy do you prefer? Follow our live updates as we test both approaches in the BETA Trading Account! 🚀

Disclaimer: This post is for informational purposes only and should not be considered financial advice. Always do your own research before making any trading decisions.

As we move into Week 4 of live testing under the Budget Ethical Trading Account (BETA), our primary focus will be enhancing downside scenario modeling and incorporating volume confirmation for support and resistance levels. Week 3 highlighted critical areas where our trading strategy needed refinement, particularly in identifying weaker support levels and anticipating breakdowns more effectively. This post outlines key adjustments for Week 4 to improve execution and risk management.

A technical analysis chart for URC in Week 4, highlighting key resistance at 71.50, support at 67.00, stop-loss at 65.50, and a bargain price entry at 60.00, with volume analysis to confirm trade decisions.

Week 4 BETA Trading Scenario for URC: Key Support, Resistance, and Risk Management Strategy

1. Strengthening Downside Scenario Modeling

Lessons from Week 3:

Our expectation of 77.07 as a strong support level did not hold, leading to a significant price breakdown.
We lacked a structured downside contingency plan, resulting in an overly optimistic market expectation.
Stop-loss placement worked as intended but could be further optimized to allow tactical re-entries.

Week 4 Adjustments:

✔ Model Multiple Downside Scenarios – Instead of relying on a single support level, we will create a tiered downside risk model based on past price action, volume shifts, and market sentiment.

✔ Define Alternative Support Zones – A structured approach will identify probable support levels at 67.00 (weak support), 65.50 (hard stop), and 60.00 (bargain entry).

✔ Tactical Stop-Loss Adjustments – Stops will be refined to protect capital while allowing flexibility for tactical re-entries if strong reversal signals appear.

Simulated Downside Scenarios & Tiered Support Modeling

We will now analyze three potential bearish scenarios to test our model’s response under different market conditions.

🔻 Scenario 1: Gradual Sell-Off & Controlled Decline

URC price slowly declines toward 67.00 with low-to-moderate selling volume.
At 67.00, if volume remains weak, we assume that the support level will not hold.
Price continues drifting downward, hitting 65.50, triggering our hard stop-loss.
If selling pressure persists, URC approaches 60.00, where we reassess for a re-entry opportunity.

Trade Action:

❌ No entry at 67.00 without volume confirmation.

🚨 Exit at 65.50 if downtrend continues.

✅ Consider tactical re-entry at 60.00 only if reversal patterns emerge.

🔻 Scenario 2: High-Volume Breakdown Below 67.00

Price reaches 67.00 but with high selling volume, confirming further downside pressure.
URC sharply declines to 65.50, showing no signs of reversal.
Further institutional selling drives the price toward 60.00 within a short period.
Support at 60.00 is tested, and volume increases significantly, signaling potential stabilization.

Trade Action:

❌ No entry at 67.00 due to strong bearish momentum.

🚨 Wait for volume stability at 60.00 before considering an entry.

✅ Look for a reversal candle (Green Elephant Bar) before re-entering.

🔻 Scenario 3: False Breakdown & Rapid Reversal

URC breaches 67.00 momentarily, triggering stop-losses from weak hands.
Suddenly, institutional buyers enter, reversing the price back above 67.00 with a strong green candle.
Buying volume spikes, and price recovers toward 71.50, testing resistance.
The stock consolidates between 67.00-71.50, forming a bullish structure.

Trade Action:

✅ Enter at 67.00 if strong buying volume appears.

✅ Hold position if recovery momentum continues.

🚨 Exit at 71.50 unless a confirmed breakout is supported by volume.

2. Incorporating Volume Confirmation for Support & Resistance

Lessons from Week 3:

Key support levels failed because volume did not confirm buyer strength.
High selling volume on January 14-16 reinforced the need for caution in calling support levels.
Resistance levels lacked momentum confirmation, making breakouts less likely.

Week 4 Adjustments:

✔ Confirm Support & Resistance with Volume Trends – Any support level must be validated by higher-than-average buying volume. If price reaches support but volume remains low, we will delay entries to avoid premature positioning.

✔ Monitor Institutional Selling Pressure – Large-volume sell-offs indicate stronger bearish control. If institutions continue offloading shares at high volume, we will adjust our trading expectations accordingly.

✔ Use Volume to Confirm Breakouts – Instead of assuming resistance levels will break, we will wait for volume-backed moves above resistance before committing to breakout trades.

3. Tactical Adjustments to Trading Strategy

Key Level	Week 3 Expectation	Week 4 Assumptions and Revised Strategy
77.07	Expected strong support	Removed as a key level; now an invalidated support
71.50	Resistance level	Hard Resistance. Exit immediately on approach unless volume confirms strength.
67.00	Expected to hold	Weak Support. Entry only if confirmed by Green Elephant Bar + volume increase
65.50	Not previously considered	Hard Stop-Loss. New hard stop-loss to prevent deeper drawdowns. If price falls below this level, we exit entirely to limit losses.
60.00	Not previously considered	Bargain Re-Entry. Strategic re-entry zone for bargain hunting. If the market experiences a deeper sell-off, this level may offer an ideal entry.

Final Takeaways for Week 4

✅ Downside scenarios will be fully modeled, including tiered support levels.

✅ Volume confirmation will be required for any support/resistance validation.

✅ Stop-losses will be strategically adjusted for better tactical positioning.

✅ Breakout expectations will be managed conservatively with volume analysis.

By implementing these refinements, we aim to make more data-driven trading decisions while reducing exposure to unnecessary risks. Week 4 will serve as a key test of our ability to adapt to changing market conditions effectively.

📢 Stay tuned for next week's trading recap and insights as we put these refinements into practice!

Disclaimer: This post is for informational purposes only and should not be considered financial advice. Always do your own research before making any trading decisions.

Pages

Tuesday, January 21, 2025

Contents:

Bearish Sentiment Prevails, Yet We Took a Small Contrarian Trade – Here’s Why

Step 1: Identifying Market State & Trend Context

Step 2: Position, Location & Key Retracement Zones

Step 3: Power Bars & Retracement Strength

Step 4: Entry Confirmation From Both Strategies

Step 5: Tactical Stop-Loss Adjustments

Step 6: Color Change as a Secondary Confirmation

Step 7: Profit-Taking Aligned with Retracement Targets

Step 8: Re-Entry at Secondary Retracement Pullbacks

Step 9: Tactical Position Management

Step 10: Counter-Trend Trades Only When Retracement Fails

Final Trading Recommendation

The Questionable Yet Justifiable 50-Share Purchase at 65.95

Market Recap & URC Trade Evaluation

URC’s Closing Price & Technical Context

Trade Execution Summary

Lessons & Strategy Adjustments

Transition to Phase 2: Expanding Our Trading Universe

Phase 2 Trading Parameters

Final Thoughts

Related Readings

Contents:

Mid-Day Break Evaluation of URC (January 21, 2025) Using Our Hybrid 10-Step Strategy

Step 1: Identifying Market State & Trend Context

Step 2: Position, Location & Key Retracement Zones

Step 3: Power Bars & Retracement Strength

Step 4: Entry Confirmation From Both Strategies

Step 5: Tactical Stop-Loss Adjustments

Step 6: Color Change as a Secondary Confirmation

Step 7: Profit-Taking Aligned with Retracement Targets

Step 8: Re-Entry at Secondary Retracement Pullbacks

Step 9: Tactical Position Management

Step 10: Counter-Trend Trades Only When Retracement Fails

Final Mid-Day Break Evaluation

Conclusion

Execution of Our Trade Decision

Lessons Learned and Strategy Reflection

Related Readings

Monday, January 20, 2025

Contents:

1. Position Sizing for Future Upside

While our strategies indicated a SELL, we did not make an aggressive buy but instead took a small 90-share position. This allowed us to maintain exposure in the event of an unexpected reversal or relief rally without significantly increasing our risk.

2. Intraday or Run-Off Strength Consideration

During the run-off session, we observed subtle indications of buyer absorption at the lower price levels. This could imply that sellers may have exhausted their momentum, providing an opportunity for a small tactical entry.

3. Contrarian Play on a High-Risk Reward Setup

The 33% retracement continuation zone suggests that the downtrend remains active, but it also serves as an area where some reversal attempts may form. Taking a contrarian approach, we positioned ourselves for a possible counter-trend bounce while maintaining tight risk controls.

4. Preemptive Entry for a Possible Rebound

By entering at PHP 68.80, we positioned ourselves for a potential rebound toward the 20-day moving average (PHP 75.94) or the 66% retracement level (PHP 75.30). This trade assumes that a reaction to these levels is likely in the short term, creating an opportunity for a quick gain.

5. Global Market Sentiment: Trump’s Inauguration & Macro Considerations

In a few hours, Donald J. Trump will be sworn in as the 47th President of the United States. While this may seem distant from URC’s fundamentals, global market sentiment often trickles down to emerging markets like the PSE.

How Could Trump's Inauguration Affect the Market?

Final Thoughts: A Tactical, Speculative Play

Related Readings

Contents:

Understanding Retracement in Trading

Breakdown of URC's Retracement Levels Across Three Downward Moves

Retracement Probabilities and Key Levels

Key Takeaways from the Charts

First Move (August 2024)

Second Move (November 2024)

Third Move (January 2025)

Final Analysis and Trading Strategy

Trading Decision Points:

Related Readings

Mid-Day Stock Analysis

Step 1: Identifying Market State & Trend Context

Step 2: Position, Location & Key Retracement Zones

Step 3: Power Bars & Retracement Strength

Step 4: Entry Confirmation From Both Strategies

Step 5: Tactical Stop-Loss Adjustments

Step 6: Color Change as a Secondary Confirmation

Step 7: Profit-Taking Aligned with Retracement Targets

Step 8: Re-Entry at Secondary Retracement Pullbacks

Step 9: Tactical Position Management

Step 10: Counter-Trend Trades Only When Retracement Fails

Final Mid-Day Evaluation

Conclusion