POWER OF GIVING VALUE AND NETWORKS: Mentor introduced me to independent 7-fig futures trader, “CS”. Great trader, even better person, passionately looking to improve his game. He began texting me daily w smart Qs and I happily gave advice seeking nothing in return. 1/5
Before long he has me looking at some goofy stuff I don’t even know ticker for: /HO, /ZC, /6J. “Bro, you crazy” I tell him. Mostly helping him w selectivity: “no, not interested.” “No. No. No… Actually, that yen move is kinda interesting. You’ve got my attention now” 2/5
Two days later, Yen mega capitulates and I overnight became Lance-San, Central Banker of Japan. Immediately text him, I’m going huge in it. Trade ends up my biggest win of the month and makes me not even blink at my silly GME AH news rip. 3/5
And when I pulled over Fri to find GME had news, who texted me to make sure I saw since he knew I was short? None other than CS. So many ppl don’t help others selflessly. I sought nothing in return but a new friend - way underestimating that CS would level up my game as well. 4/5
You truly never know where value will come from; default to helping others while expecting nothing and you can only be positively surprised in return. So 🤜🤛 to my mentor and CS. 5/5
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MY FAV CONCEPT - THE BOBBLEHEAD CONCEPT 🤴! #1 lesson to my trainees. Every week you’d hear me chirp: “How bout you stop comparing pnl, instead focus on your bobblehead and get to work?” Fun personalized way to visualize the most important concept there is.
OLD MODEL = DAILY PNL OBSESSION = BAD! Focusing on pnl demotivates, misdirects, distracts traders. You will ALWAYS have neg days. Your neg days only get bigger! Obsessing w pnl, neg OR pos, does NOTHING to make you better. Zero effect on what matters, just wasted time.
NEW MODEL = DAILY EV FOCUS (BOBBLEHEAD 🫅)! Visualize a chart of your Daily EV w a bobblehead of you on it. Your SOLE GOAL is to move your little 🤴 higher (⬆️ long-term EV) each day. Forget pnl. Neg pnl, but got 1% better? Bobblehead ⬆️! Neg pnl so you ragequit? Bobblehead ⬇️.
1️⃣HOW TO FIX OVERTRADING: This is a trick question which is why this is such a common hard to overcome problem. Overtrading is NOT homogenous, many diff causes of overtrading which is why there is NO SINGLE SOLUTION. NEED TO IDENTIFY YOUR PERSONAL ISSUE AND ATTACK ROOT CAUSE. 1/
2️⃣OVERTRADING DUE TO BOREDOM? Create list of busywork and projects to do. Go for a walk or do trade write-ups. This is simplest case and not that common. One of worst is probably… 2/
3️⃣ OVERTRADING TO PROVE YOU ARE RIGHT AND SMART: Often these traders are opinionated, stubborn w views. Care more about market agreeing w them than making $$. Lacks clear playbook but churns it until “proven right”. Trader needs to divorce self from this view of trading. 3/
THE “RIGHT” SIDE OF THE V: such a powerful concept that many traders don’t conceptually understand. Just bc prices are same, doesn’t mean the e(v) in each moment is the same. Same prices on same chart can have DRASTICALLY DIFFERENT E(V)! (1/4)
Buying Point A you are fighting the trend. Your probability of success is lower as a result. Your risk is potentially uncapped w no obvious stop. If stock keeps going down your reward could become obsolete. I try to avoid buying here. (2/4)
Buying Point B your price is exactly the same. It might look like you’re making the same exact trade as person who bought Point A. But KEY DIFF = Point B is now going WITH the trend, Point B has defined risk w a stop at lows, and also a clearer idea of reward. (3/4)
1% BETTER IDEA 3/28: multi wins today! 1️⃣ Always planned on sharing these via blog im making, but idea per @Greenart76 (thx!), why not share via twtr? Accountability to self ⬆️. (Remember: I don’t trade actively anymore / I skip Fri+Sat / some ideas too personal to share) (1/4)
2️⃣ Flew redeye home last night. Need to avoid if ever possible in future. Split it into two flights when possible or 1st class is must. Not worth 0 sleep / impaired productivity at my level. (2/4)
3️⃣ Had value-add idea for startup I advise and also had huge surprise idea for getting trading community exposure to my performance/trading psychologist. This psych was one of my best 1% ideas back in 2020. More details to come. (3/4)
1️⃣ ONE WAY TO FIND THE BROKEN SLOT MACHINE: Ideally learn from other experienced traders. 100x easier. But if on own, find the stocks making the biggest intraday moves each day and reverse-engineer them. Maybe it was a move on the Fed or a headline or a low float breakout.
2️⃣ Categorize them. Build huge database in Evernote of similar instances from past and also future as they come (Fed moves, index additions, M&A, earnings misses) Why the moves? What are the variables? Volume? Intraday? Daily? News? Other nuances? What makes it better or worse?
3️⃣ Look for patterns, test hypotheses. Perhaps in this new market regime, strong closes get sold overseas in Europe and we gap down next day? Maybe oil breakouts tend to gain momentum due to all the gamma floating around? Does logic support why this edge might exist?
FUNDAMENTALS: YOU ARE ONLY AS GOOD AS THE STOCKS YOU TRADE! Stock selection is one of the most important skills there is. Universe of 5k+ tickers, reality is only maybe 20-30 have meaningful intraday edge any given day. 3-5 have extreme edge. 1/
I always say: “NEED TO FIND THE BROKEN SLOT MACHINE!” Dont care how good you are, If you sit me down @ most slot machines (tickers), I lose. To stand chance, need to find tickers w max edge. WHAT CAUSES EDGE? PRICE DISCOVERY!!! Ask self - where does max price discovery occur? 2/
SOME ANSWERS: IPOs, Breaking News / Earnings, Imbalances of Supply/Demand, Market Structure Inefficiencies. Ukraine war = whole market trying to handicap new paradigm for commodities/markets = EDGE! 3/