Thread by @TradetheMatrix1

If you are short every single day, every ticker and sized you will need to develop good read on cycle flows to avoid heavy losses when strong cycle swipes in. Watching many traders over years this is pattern that happens due to over-exposure:

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Thread:
1.

If you find reason to be short on everything, it means you will also be then short things that will squeeze heavy. Lack of selectivity and over-engagement math dictates this will happen. This is where volatility comes into play and does the damage.

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As you get winners in weak cycles those are X amount of R units. When volatility expands in strong cycle and you stack just few surprising big losses it eats up entire weak cycle gains because you underestimated how volatility and non-vol adjusted sizing will impact you.

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Being short everything in low range means you also will be short on things that squeeze from tight range into massive expansion (PHVS 4s to all of sudden 12). It's that volatility expansion that brings biggest surprise factor.

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Have mentioned that in one blog article this low vol to high vol expansion in mid day on first few days of strong cycles is the real damage to short sellers, especially those who are short everything without specific setup identifiers. Up 50%? Good enough setup, short.

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You have to understand you are opening Pandora's box by being engaged on every ticker. The more engagement you have the higher your skill and read of market should be. This is almost a law not an opinion. Walk before run and no underestimation.

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This means if you do decide to have high engagement (and early) you need to understand your probability to walk into black swan is very high. So what are you doing ahead before it happens, are you really managing risk on every ticker as if it could be next black swan?

7.

You almost have to. This is why having exact setups, and always adjusting size and stop losses based on setups and having selective engagement decreases chances of shorting everything early and then hoping you aren't gonna get black swan-Ed.

8.

Very high engagement ratio without proper setups or solid market read always leads this route. Have seen this happening in FX markets, crypto, equities, it's the same. Been there done that, changed approaches, why? Because otherwise you have no control, it's tough to sleep.

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