Transcription
Hi, welcome back. In today's video, I'm going to show you, in my opinion, the simplest way to trade stocks and make significant amounts of money.
So, this strategy I'm going to show you is the one that I used to make sufficient money to quit my job, move to Brazil, and enjoy my life. I recently did a video explaining this strategy high-level and also why I moved to Brazil and what my life is like here in Brazil. So, I'll leave a link to that video in the description below.
So, in this video, I'm going to focus more on the details of the strat and explain exactly how I do it. Okay. So, my strategy, I would kind of call it long-term swing trading, or another name might just be "buy the dip" investing. I mean, you can call it various things. I mean, it doesn't really matter what you call it. I mean, the key thing is that you understand what I do in terms of what I trade. So, I trade stocks in the US, Europe, also Brazil, and I also trade some commodities and a couple of crypto as well.
Okay. So, the first thing I did was create a list of the stocks and the commodities and cryptos that I felt confident that if the price of these fell, they would recover one day. So, this includes companies like Amazon, Apple, Microsoft, um, Meta, which is Facebook, Nvidia, Al, non-tech companies like Berkshire Hathaway, which is Warren Buffett's company, Costco, the supermarket, and various other companies. The criteria I used to choose these companies are that these companies need to have strong, successful business models, good profit margins, I need to generate high free cash flow, have good cash reserves, and also have a a reasonable price earnings ratio. Maybe I can do another video kind of going into this in more detail, but basically, it's just a a big company that's successful, uh, produces lots of cash, and doesn't have a a crazy valuation.
So, then if there is a a general economic crisis or there's a specific problem with one of these companies, then they've got a resource and ability to survive that and recover in the future. So, let me just give you an example. So, if we look at Meta. So, Meta owns Facebook, Instagram, WhatsApp, and a couple of other things. And a really good website to use is TradingView. They give you a lot of information about the companies. So, here you can see some key facts about the company. So, first of all, it's a very big company, $1.4 trillion. So, that's a tick in that box. And then you can see here the price earnings ratio, which is 28, which is relatively high, but it's not crazy like some other companies. And maybe I'll do another video explaining what I think is a very high PE ratio and what isn't, but I'm not going to try and go into more details in this video. And then here to the right, you can see how much cash they have. So, they've got $58 billion of cash, so significant cash reserve. So, that's another tick in the box. And then here you can see a very simple chart just showing you revenue and margins. And here you can see it's performing well with a a blip in 2022, which we'll go into more details later.
So, in my opinion, you don't need to do lots of research. For me, just looking at TradingView and one or two other websites is sufficient, uh, for me to decide whether this company is something that I want to put on my list or not.
So, then once I created my list, it was just a case of waiting for an opportunity to invest. And I like to keep everything very simple. So, I said, if the price falls by more than 30% from the all-time high, then I'm going to look to start investing in the company. But I don't invest when the price falls 30%. I then start doing some technical analysis to find an entry point. Now, a lot of traders, they use very technical terms to describe the patterns on the on the price charts. So, if you want technical terms, uh, yeah, I use double bottoms, triple bottoms, inverse head and shoulders, and a couple of other patterns. In my opinion, you don't need to learn all that. I think you can keep it very simple. So, basically, what I look out for is that the price starts oscillating around a certain price level. So, it's kind of reached a support, and then I just wait for the price to start going up a bit, and that's when I enter and invest in the stock.
And then if the stock price falls further, I don't exit the trade. Um, so I don't put a stop-loss or anything. I just wait for the price to fall further, stabilize again, and then I invest more. So, I add to the trade. And then hopefully, eventually, the price reverses, and then I start taking profits once it's reached all-time high again.
So, let's have a look at an example. I'll use Meta again, a Facebook. Okay. So, this is the the share price of Meta over the last five years. So, you can see here 2019 until now. And this is the daily chart, which means that each one of these candlesticks, and I'll zoom in to show you them in in more detail soon, so each one of these represents one day. And up here, you can change charts. You can change to to weekly, monthly, or four hours, up to one minute, I think, or even seconds. But I use the daily chart to do all my analysis.
If we just quickly look at the charts, in 2019, the share price was going up. Then there was a dip, and that's when the pandemic happened. And then the price started recovering, and that was during lockdown when all the internet companies were doing well. But then at the end of 2021, the share price started declining again. And that was partly because the market in general declined, but then there were also specific problems with Meta. So, investors were worried about the fact that, uh, users for Facebook were going down. They were also worried about the fact that Meta were investing a lot in the metaverse, and investors didn't think that that was going to be successful. So, were various things specific to Facebook which also made the share price decline. And then at the end of 2022, that reversed, and you can see the steep recovery that happened afterwards.
So, I invested in Meta twice. One time in 2020, and then again in 2022. So, let's have a look at those in more detail. So, you can see the candlesticks in more detail. So, each one of these red or green candlesticks represents one day. And the red box here shows where I entered the trade, and the green is where I took profits and sold the stock. If we just put this line in here, we can see that the price fell 37% from the all-time high here, all the way to the bottom here. And so it fell more than 30%, and so I looked for an entry point to to buy the stock.
So, you can see the price declined a bit here, recovered, declined more, recovered, declined, and around here is when it reached minus 30%. So, down here is when I started looking. You can see here it went down here, bit up, down again, up again, down again. So, it was oscillating around this price point here. So, I saw that and went, "Okay, so if the price starts going up from this point, then I'm going to enter." So, then eventually the price went up. You can see the green candles here. Then it went down a bit again, and right here is where I entered. So, maybe I'll do another video going into the patterns in more detail, but just to keep keep it simple for this video, um, it was oscillating around here, then it started going up, and that's when I got in.
And to be honest, you don't actually have to do this technical analysis if if you don't want. You could just invest once the stock hits minus 30%, and then if it goes down further, then you invest again. I personally don't do that because I want to try and get a better entry point, but is possible to to do it that way and have make it even simpler.
So, then I entered here, and then it was just a case of waiting for it to go back up to the all-time high here. So, that's when I sold part of my investment. Then I waited for it to go up further, and then I sold the rest of it up here. So, that was my my first trade.
And then the price went up and up, and then it started declining again. This time it was a much bigger decline, fell by 75%, so a lot more. And so when it fell by 30%, which was here, so around here, so that's when I started looking at the stock again to find an entry point. If we look in here, we can see that the price oscillated a lot in this area here, and then started going up again, and that's when I entered the trade. But you can see that wasn't the right thing to do because the price kept on declining. But I didn't exit the trade. After that, I kept my initial investment. So, then I just waited for it to reach another good support. So, you can see here again, started oscillating a lot here, going up again, so that's when I entered another trade. So, just added to my investment again. That wasn't the right thing to do, went down further. But you can see that was quite a quick decline down, and then it recovered quickly. So, then I just waited it for to to hit a resistance support up here. So, then I entered again around here. So, in total, I entered three times. So, I had three investments in Meta.
Obviously, it's very important to manage your trades, so you know how much you should invest in each stage, so that you don't invest everything up here and then it keeps declining. You know, you want to decide on how much in total you want to invest in this stock, and then you want to split that investment so you can invest various times if it keeps on falling. And then after that, it was just a case of waiting for it to recover, and then for it to hit all-time high again, which it did here. So, I sold part of my investment here, and then I sold the rest of it up here.
And one thing to note about this investment is how long it took me to make money on this trade. So, I started back in, you can see here, 2022, and then I sold at the end of, yeah, the beginning of 2024. So, it took over a year and a half to to make a profit on this trade. So, you can see my trades aren't quick, they take a significant amount of time.
Now, the reason why I do long-term trades like this is because it fits into my routine really easily. So, when I started trading like this, I still had a job, so I still had a 9 to 5 job, so I couldn't do any short-term trades because I just didn't have the time. But I could still do these long-term trades because I mean, I just had to look at my investments and do a bit of analysis a couple of times a week, uh, for a couple of minutes, and that was fine. And now that I'm not working anymore, still, I only want to do these long-term trades because I don't want to sit at the computer every day and stare at share prices. No, I want to be doing other things, and I just now and again want to go and set the computer and and look and see if there any trades. So, that's why I do these long-term trades.
Obviously, there are many, many other traders who trade on much shorter time periods. So, I mean, there are many who trade on like, just the the one-hour chart, for example, or even trade on less than that, like the 15-minute charts. But for me, that just doesn't work, cuz I I just don't want to be staring at a computer screen every day.
And just to show you another trade that I did, so this is Bitcoin. So, this is one of the cryptos that I also trade, but only trade a very limited number of cryptos because it's high risk, and you never know whether the cryptos will just totally disappear. Bitcoin is one of them that I feel confident trading. And so, just to show you very quickly here, so back in 2021, Bitcoin had a big dip. So, I purchased it down here when there was significant support, and then took profits up here. Only took part profits here because I was expecting it to go higher, which it didn't do. So, then I held the rest of investment as it went down here. And then as it declined, I added to that investment here, here, and here. But it took a long time. So, this is back in 2021, 2022, and I only managed to take profits in 2024. So, we're talking two years here of holding this investment before taking profits. This is one trade I'm still in. So, I'm still holding Bitcoin here, waiting to take my final profits up here somewhere.
And then finally, I'll show you an investment which I'm currently making a big loss on, um, just to show you that I don't make money on every trade. I mean, I can still make money on this trade, I haven't sold it or anything, but at the moment, um, I'm making a big loss on it. And that is Alibaba. So, Alibaba is one of the really big Chinese internet companies. I kind of treat Chinese companies a bit like crypto in that they're very high risk, and there's a lot of dodgy ones. Having done research on Alibaba, I felt confident enough to invest in that. So, when Alibaba started declining here, I entered three times. But you can see it's still down here, and I'm still making a significant loss. So, let's let's see what happens this this one because it's a really big successful company. It's just that part of the decline here is political. So, there's political risk involved with this company. So, you never know what the outcome is going to be when politics is involved in it. But I'm not concerned because I've managed how much I've invested in this one compared to the others. So, I mean, the profits I've made from the other investments cover this loss here, you know, 100 times. So, it's not an issue. And this is always going to happen investing, you're not going to be 100% right all the time.
Okay. So, that's my investing strategy. Um, I hope you found it useful that I've gone into a bit more details here, gave you a few examples. But I didn't want to make the video too long, so I haven't gone into lots and lots of details, but I'll make further videos in the future. And in terms of how long this strategy took to generate enough money for me to quit my job, so it took around six years. So, I saved that money while I was working, I invested it in this strategy, and then within six years, I was able to quit my job.
So, if you like this video, please leave a like. Subscribe if you got any questions or anything, leave in the commentary below. So, thanks for watching until next time.