Learn to listen to the markets and do not impose your own will upon them.

- Linda Raschke.
Every successful trading strategy has the same essential starting point: minimizing risk first, looking to maximize gains only after risk has been defined and controlled.
It is important to initially trade a new concept or strategy on paper. Only by seeing a pattern over and over again will you truly feel comfortable with it. You must believe in its ability to repeat itself.
If a pattern does not make sense to you, don't trade it. If you don't have a 100 percent belief in it, you will not be able to overcome losing streaks.
All you need is one pattern to make a living! Learn first to specialize in doing one thing well.
Your biggest enemy in trading is going to be a directional bias, an opinion about market direction ... whether yours, a broker's or a friend's. Shut it out! Learn to concentrate on the "right-hand side" of the chart-in other words, on the pattern at hand.
All it takes is getting sloppy once, or experiencing the "frozen rabbit syndrome" in a bad trade, to undo the efforts of the previous 20 trades. Placing initial protective stops must become a habit that is never broken.
In trading, you should take advantage of extremes in price action, high volume, and liquidity. When you learn to seek out emotional extremes in the marketplace, you naturally become good at finding good setups to trade.
Stay in one time frame! Yes, it is important to be aware of the big picture, but it should not affect where you get into or out of a trade or how you manage it. Don't turn short-term scalps into "big picture" trades.
When in doubt, get out! If the market goes dull and quiet after you enter a trade and makes no progress in the direction of your entry, do not wait until your stop is hit. Just get out! Seek a more active market or better trading opportunity.
Don't trade in quiet, dull markets. Dow, Livermore, Rhea, Taylor, Gann-all the greats say this over and over. There must be activity and liquidity in order to trade profitably.
If the market offers you a windfall profit on a trade, lock it in! (Windfall means a much bigger profit than anticipated.) Take profits on half or all of the position. Trail an extremely tight stop on any balance!
Important-if the market starts to move parabolically or has a range expansion move, take profits on the entire position. This is very likely climax!
A range-expansion move is a very large trading bar caused by the last of the market's participants (the emotional latecomers) dog piling into the market. When this last group of traders has entered, there is nobody. left to come in to continue to drive prices up or down.
'When the ducks quack, feed them." In other words, when everybody wants something, that's probably the perfect spot to sell it to them. The price has already been bid way up. Emotions drive the markets to extremes, and these extremes are the ideal spot to exit our trades.
If there's a trend following strategy with a very low win rate (say 27-35%), meaning a lot of false breakouts, playing those false breakouts would yield a much higher win rate, while protecting yourself with tight stops during actual breakouts. Mean reversion idea in there.

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More from @theBuoyantMan

27 Oct
Interpretation of Financial Statements - preliminary filters.

1. Looking for sustainable competitive advantage:

When looking for sustainable moat, you wanna see consistency - in earnings, in having low debt, in having growing earnings, low spending in capital expenditures, etc.
The longer the company has existed, and if it sells you the same product for years (like Coca Cola), it reduces production costs and other costs (R&D, Training, marketing) slowly as the company ages.

When costs are reduced, margins and profits increase.
2. What to look for in an income statement:

Let's take a look at Apple:

i) You want to see earnings grow at a steady pace. Take a look at the net income below. Image
Read 25 tweets
27 Oct
How to calculate average points per trade of a system:

Assume only 5 trades (for illustration purposes) in the system:

Trade 1: +300 points
Trade 2: -180 points
Trade 3: +70 points
Trade 4: -130 points
Trade 5: +100 points
- Total points made: (300-180+70-130+100) = 160 points
- Average points per trade: 160/5 = 32 points.

So, when I say in the example (in the thread linked above) that the system makes on average 200 trades a year, and 29-30 points per trade in BNF, what do I mean?

Average points made per trade in BNF over the 200 trades.

That's what I mean.
Read 6 tweets
27 Oct
If you really want to learn from someone on social media, you don't have to pay for their courses or any special access programs.

Like Ekalavya, you can consume with intent whatever your self-assumed Guru puts out in the form of content.
When you use a bit of common sense, reverse engineering, and connecting the dots as a practice with all that they post, you can figure out with 95-98% what they do, how they do it, why they do it, etc.
When I initially started moving towards systematic trading, I read all of @madan_kumar's tweet threads, blog posts, zerodha qna interview and its comments section, his threads on traderji forum, etc. Those have the best insights most of which he likely condenses in his workshops.
Read 10 tweets
26 Oct
Independent theaters are going to survive Covid better than the franchises like Inox and PVR.

Independent multi-screen, privately owned theaters are likely to be self-owned(including building) by the owner group and must have contained the damage during covid early on.
Theaters are going to co-exist with OTT. The side-effect of OTT would be a slight/marginal reduction in piracy.

But people are never not going to go to theaters. A movie like Interstellar, Tenet, Endgame, Fast and Furious 7, Kaithi, etc., deserve a theater watch.
So, theaters are here to stay. Just that, I feel that independent and privately owned theaters have a far better chance of survival than the publicly listed franchisee type theater groups. Interesting times ahead to be witnessed.
Read 5 tweets
26 Oct
Most people who quit their job essentially as an act of showing middle finger to their bosses, and start a business don't realize that they are focusing on short term pain and ignoring the long term pain that running a business is.
Starting and running a business, especially as a middle-class first generation entrepreneur is not easy. If you do it only because you hate your current boss, a couple years down, the entrepreneurship world would eventually teach you working for your former boss was way better.
Pride, vanity, and moments of impulsiveness, focusing on stopping the short term pain - all these block your long term visibility, and gives you tunnel vision. This makes it very difficult for you to assess if your decision is one that's coming from a place of emotion.
Read 4 tweets
25 Oct
Last i checked, this strategy had the comments in the screenshot. Currently, I can only see the comment from the Tradetron founder.

Did the comments get deleted? Or did the original commenter delete the comments? Not sure.

But anything with respect to Tradetron, be cautious.
While I am all excited for legitimate algo-trading platforms which will aid retail trader in execution, the rampant allowance of anyone to create a strategy and manage people's money is dangerous.
While 99% of the SEBI registered or certified people aren't really any good, that's at least a good place to start to weed out the scammers and those without a skin in the game.
Read 6 tweets

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