Thread by @team3dstocks

the easiest way to find big supply/demand imbalances is to simply look for scenarios where a big investor or group of investors are stuck with LARGE (ideally losing) positions that they cannot easily close out.

https://twitter.com/raptorx409/status/1404168813545934848

u have to understand that not everyone trades with 100 or 1K shares like most newbies. So not everyone can get in and out of trades easily. so when a LARGE trader (or group of traders) is stuck, their #1 goal is no longer making money, it's finding liquidity to get out.

So this creates a scenario where the moment they get liquidity (ideally near their breakeven price), they'll take it without question. The more of them are stuck, the more they'll clog up the bid or ask (depending on if it's a bear or bull), creating an imbalance.

Example, trapped shortsellers will almost ALWAYS look to cover on fast pullbacks to their breakeven area, and trapped bulls will almost always look to sell on fast bounces to their breakeven area. it's just human nature. it will never go away as long as the markets exist

anyone who's ever held a large losing position will tell u the same: when the stock finally pulls back to ur breakeven area, u're no longer trying to make money. u're just trying to get the fuck out of that trade, happy to lose far less than what ur unrealized loss originally was

that's why when shorts are fucked I wanna long every dip that holds.

that's why when longs are fucked i wanna short every bounce that rejects.

This is obviously the layman version but it's a great place to start looking for easy, reliable, & consistent setups/trade ideas.

Another way to find easy S/D imbalances are overextended stocks. if a stock makes a HUGE gapup or a huge parabolic move, bulls are DEEP in the money. once the momentum stops, eventually theyll all look to take profits at once, competing with shortsellers on the offer or bids

They obviously cant all get filled at once (ton of supply, not enough buyers), so the stock gets crushed as they pound the bids.

I can go on & on but u get the point. No matter which way u look at it, trading is all about profiting from imbalances. FIND them.

#BearTipOfTheDay