Thread by @team3dstocks

Ive obsessed over this stock shit for years, and all those years of research, tracking, observing and trading have shown me that there are 5 undeniable and timeless truths about traders (smart money vs dumb money).

Here are the top 5 facts, use those to sharpen your trading:

🎖1 - Discipline

Starting with the most obvious one, if u already read my tweets.

Smart money are knowledgeable & disciplined.

Dumb money are (contrary to popular belief) knowledgeable enough to make money, they just dont have the discipline to STICK to what they KNOW works.

⌚ 2- Doomed to fail

Dumb money are only patient when they're losing. In short, they take profits on winners WAY too fast, but hold on to losers WAY too long. small winners, HUGE losers.

Smart money spend little time on losing trades but milk the FUCK out of winning trades.

📈 3 - Always late to the party

Dumb money buy the highs of parabolic moves and sell the lows of capitulations.

Smart money does the EXACT opposite & take profits (or short) at the top of breakouts & buy the bottom of panics. Simply put, dumb $$ fill the orders of smart money.

And this brings us to point 4

🤼‍♂️ 4 - Balance

For every buyer there must be a seller. This is common sense. Supply vs Demand. Therefore, smart money & dumb money CANNOT be on the same side of the trade. If EVERYONE is long, THEY ARE SHORT. if EVERYONE is short, they MUST be long

This is SO simple yet so many ppl fail to grasp this: It's not about being right on the direction of the stock, it's about being on the RIGHT team. B/c u can be right about the direction, but if dumb $ joins u on that trade, smart $ HAS to move the stock in the opposite direction

📊5- Indicators & timeframes

Dumb 💵 use small timeframes & endless indicators

Smart 💵 use large timeframes & few indicators (the big picture)

Dumb 💵 focus on price 1st. Smart 💵 focus on volume & liquidity 1st, price 2nd. b/c they know that price cannot move without volume

An example of this can be seen in the type of questions smart vs dumb money ask themselves when looking at a stock

Dumb 💵: "what's the price? what's my beef jerky indicator doing? what about the superswole indicator? what's that one doing? fuck it the stock is going up, im in"

Meanwhile Smart 💵 looks at the same stock & ask:

who's currently long the stock?
who's short?
who's trapped with size & is most likely to panic or get margin called?
how much demand is on the bids & below?
how much supply (or dilution) can be expected?
what's the avg range? etc

Now of course, smart money also has access to inside information and a bunch of other shit that YOU or the avg joe doesnt have access to, so that gives them an "unfair" advantage. But that's PRECISELY why ur job is to simply follow their footsteps and stop trying to be a hero.

Anyway I promised i'd stop at the top 5 facts, so the thread ends here. I can share the rest of the differences between the 2 groups, but those 5 differences are the most drastic.

So study yourself & ALWAYS make sure u're not the sucker at the poker table

#BearTipOfTheDay