Does your strategy work?
Here are 3 trading approaches that have helped me to achieve financial independence.
I would learn this if I started trading from scratch in 2023.
Thread 🧵
Here are 3 trading approaches that have helped me to achieve financial independence.
I would learn this if I started trading from scratch in 2023.
Thread 🧵
Finding a working strategy is challenging.
But it’s definitely possible.
And it just takes time to find something suitable.
If you don't want to YOLO your life savings into OTM SPY puts or load it in some low-cap shitcoin either, then consider learning something new
But it’s definitely possible.
And it just takes time to find something suitable.
If you don't want to YOLO your life savings into OTM SPY puts or load it in some low-cap shitcoin either, then consider learning something new
Disclaimer
Right now, algorithms are doing most of the dirty work for me.
However, I started as a day trader, and these strategies built my foundation.
Here are my top 3 trading approaches.
I’ll explain the basics now and will be covering more soon.
Not financial advice.
Right now, algorithms are doing most of the dirty work for me.
However, I started as a day trader, and these strategies built my foundation.
Here are my top 3 trading approaches.
I’ll explain the basics now and will be covering more soon.
Not financial advice.
All of them work well on both the #StockMarket and #Crypto market.
However, I find it easier to implement them in crypto trading.
1. Scalping with DOM (Beginner)
2. Smart Money Concept (Advanced)
3. Pairs Trading (Pro)
However, I find it easier to implement them in crypto trading.
1. Scalping with DOM (Beginner)
2. Smart Money Concept (Advanced)
3. Pairs Trading (Pro)
1) DOM Scalping
My crypto trading journey began with #scalping and it was a great choice.
It is beginner friendly and has a steep learning curve.
Great to build a foundation for further development.
The main idea is to execute very brief trades, usually within one day.
My crypto trading journey began with #scalping and it was a great choice.
It is beginner friendly and has a steep learning curve.
Great to build a foundation for further development.
The main idea is to execute very brief trades, usually within one day.
Ideally, you want to know the basics of Technical Analysis.
Support/resistance and volume analysis will be enough at the beginning.
The main scenarios to look for but not limited to are:
- Pattern breakouts
- Falling knifes
- Front-running huge limit orders
Support/resistance and volume analysis will be enough at the beginning.
The main scenarios to look for but not limited to are:
- Pattern breakouts
- Falling knifes
- Front-running huge limit orders
Why scalping?
1. Ideal to trade volatility
2. This approach is insanely flexible
3. Mastering it can bring very good results no matter of market condition
4. Easy to set up a trading terminal
Having understating of this strategy will shift the way you look at the price.
1. Ideal to trade volatility
2. This approach is insanely flexible
3. Mastering it can bring very good results no matter of market condition
4. Easy to set up a trading terminal
Having understating of this strategy will shift the way you look at the price.
Scalping can be highly profitable.
Obviously, profit figures will vary on many factors, such as market conditions, your personality, and risk management.
And of course, I’ve been lucky enough to use it during the greatest bull run in history, so I had a good PnL.
Obviously, profit figures will vary on many factors, such as market conditions, your personality, and risk management.
And of course, I’ve been lucky enough to use it during the greatest bull run in history, so I had a good PnL.
How to Scalping?
Proper scalping requires the Depth of the Market (DOM) tool.
It gives you so much more visibility for every single stock/coin.
Just because you can see:
- Order flow
- Limit orders
- Volume clusters
- Overall activity
Proper scalping requires the Depth of the Market (DOM) tool.
It gives you so much more visibility for every single stock/coin.
Just because you can see:
- Order flow
- Limit orders
- Volume clusters
- Overall activity
There is plenty of good DOMs for free
- CScalp (my fav)
- Quantower (beast)
- TigerTrader (have to register with their ref link)
I used to stare at it for hours and even now get back to it once in a while.
It can give you an advantage in trading if you know how to use it.
- CScalp (my fav)
- Quantower (beast)
- TigerTrader (have to register with their ref link)
I used to stare at it for hours and even now get back to it once in a while.
It can give you an advantage in trading if you know how to use it.
Nothing is perfect, so let's talk about…
Disadvantages:
1. It’s time demanding and you have to sit at your computer for a long time.
2. Takes a while to get used to working with DOM.
3. Can lead to burnout, since you trading all day long.
Disadvantages:
1. It’s time demanding and you have to sit at your computer for a long time.
2. Takes a while to get used to working with DOM.
3. Can lead to burnout, since you trading all day long.
I treat it as a deep dive into the markets
If you are in a college/university or have spare time, this will entertain you for a long time.
But if you working full-time and looking for a side hustle, then it might be hard to implement as it requires your commitment to the craft.
If you are in a college/university or have spare time, this will entertain you for a long time.
But if you working full-time and looking for a side hustle, then it might be hard to implement as it requires your commitment to the craft.
2. Smart Money
If you don't see yourself sitting 5-6 hours a day in front of your computer, then this might be a better approach.
It gives you more understanding of price action.
Have you ever wondered why your technical analysis doesn’t work?
Well, I’m about to explain.
If you don't see yourself sitting 5-6 hours a day in front of your computer, then this might be a better approach.
It gives you more understanding of price action.
Have you ever wondered why your technical analysis doesn’t work?
Well, I’m about to explain.
Smart Money refers to capital that belongs to the largest and smartest players in the market.
Those are all market makers, institutional investors, funds, etc.
Smart Money Concept (SMC) - is a set of tools that lets you track the action of players in the market.
Those are all market makers, institutional investors, funds, etc.
Smart Money Concept (SMC) - is a set of tools that lets you track the action of players in the market.
Why SMC?
Perhaps many of you have heard that 95% of traders lose their money in the market and this is certainly true.
That leaves us with 5% that actually earn in trading.
The main goal is to track down those big players and make money with them.
Perhaps many of you have heard that 95% of traders lose their money in the market and this is certainly true.
That leaves us with 5% that actually earn in trading.
The main goal is to track down those big players and make money with them.
SMC is based on price action.
It can improve your trading and understanding of a market, so as not to end up in the "pocket" of larger players.
It is similar to technical analysis (TA) as we are analysing the price chart, but it's a little bit different.
It can improve your trading and understanding of a market, so as not to end up in the "pocket" of larger players.
It is similar to technical analysis (TA) as we are analysing the price chart, but it's a little bit different.
Not everyone is aware that TA is commonly used to “milk” retail traders who don't know how to use it.
And I’m not saying that TA is bad, but showing the dark side.
It is a great tool for planning your trades and making forecasts, but it doesn't always give you a broad picture.
And I’m not saying that TA is bad, but showing the dark side.
It is a great tool for planning your trades and making forecasts, but it doesn't always give you a broad picture.
Incorporate TA with SMC and you might see a bit more than other regular traders.
When I started to implement these concepts in trading I already had enough experience in scalping and it was a natural transition.
When I started to implement these concepts in trading I already had enough experience in scalping and it was a natural transition.
It answered a lot of the questions which I had when I was scalping.
And I’ve seen many traders learning it after scalping for 6-12 months.
It doesn’t have to be a standalone trading strategy.
Incorporate it into your trading analysis or at least be aware of it.
And I’ve seen many traders learning it after scalping for 6-12 months.
It doesn’t have to be a standalone trading strategy.
Incorporate it into your trading analysis or at least be aware of it.
How to SMC?
You can start by simply searching “Smart Money” in Indicators on TradingView
There are a few good ones and with experience, you can detect patterns yourself
Then get familiar with acronyms such as BoS, CHoCH, OB, Breaker and etc.
Practice and learn how to use it.
You can start by simply searching “Smart Money” in Indicators on TradingView
There are a few good ones and with experience, you can detect patterns yourself
Then get familiar with acronyms such as BoS, CHoCH, OB, Breaker and etc.
Practice and learn how to use it.
Disadvantages.
Not even all Smart Money traders are able to earn money due to:
⁃ Limited understanding of certain instruments
⁃ Inability to control emotions
⁃ Absence of risk management
⁃ Banal lack of experience
Not even all Smart Money traders are able to earn money due to:
⁃ Limited understanding of certain instruments
⁃ Inability to control emotions
⁃ Absence of risk management
⁃ Banal lack of experience
Even though those limitations apply to any strategy, I decided to put them here.
Don't forget that not all “Smart Money” are also going to make money either.
Big players also make mistakes and there is always a bigger fish, isn't it?
Don't forget that not all “Smart Money” are also going to make money either.
Big players also make mistakes and there is always a bigger fish, isn't it?
Also, it can be leading to a problem of looking for meaning when there’s none
Same as with the application of TA and Indicators, as sometimes it gives you a feeling of unreasonable confidence.
Don't overcomplicate things
If something doesn't feel right, it probably is.
Same as with the application of TA and Indicators, as sometimes it gives you a feeling of unreasonable confidence.
Don't overcomplicate things
If something doesn't feel right, it probably is.
3) Pairs Trading
Also known as a market-neutral strategy.
One of my favorites when it comes to statistical arbitrage.
I can try to explain cointegration, stationarity, ADF test, etc.
But I won't and cover it just briefly, as there are plenty of good in-depth materials online.
Also known as a market-neutral strategy.
One of my favorites when it comes to statistical arbitrage.
I can try to explain cointegration, stationarity, ADF test, etc.
But I won't and cover it just briefly, as there are plenty of good in-depth materials online.
I don't like to make bold statements but...
... this gets really close to the “holy grail” in trading.
In short, certain 2 or more assets can fall into a particular state (cointegration) that their price movements are interrelated.
They have a tendency to mean-reverse.
... this gets really close to the “holy grail” in trading.
In short, certain 2 or more assets can fall into a particular state (cointegration) that their price movements are interrelated.
They have a tendency to mean-reverse.
The strategy involves taking a long position in one security and a short position in a cointegrated pair.
You profit from the price spread between the two.
And that's where crypto comes in handy.
The market as a whole has a correlation coefficient of 0.9-0.95 most of the time.
You profit from the price spread between the two.
And that's where crypto comes in handy.
The market as a whole has a correlation coefficient of 0.9-0.95 most of the time.
High correlation doesn't necessary lead to cointegration.
But it definitely helps.
The market is full of inefficiencies which creates insane arbitrage opportunities.
The reason is that it focuses on statistical arbitrage which is a powerful approach when it comes to trading.
But it definitely helps.
The market is full of inefficiencies which creates insane arbitrage opportunities.
The reason is that it focuses on statistical arbitrage which is a powerful approach when it comes to trading.
Out of all these 3 strategies, this would my top tier
I say that DOM Scalping and SMC lets you build a “foundation”.
Pairs Trading will be “the walls and a roof”.
Automate it and you got yourself a fken mansion with a spa and a helipad lol.
I say that DOM Scalping and SMC lets you build a “foundation”.
Pairs Trading will be “the walls and a roof”.
Automate it and you got yourself a fken mansion with a spa and a helipad lol.
How to Pairs Trading?
Ideally, you want to have a few things:
- Software that will find pairs for you
- Platform where you can open those trades easily.
- Risk manager tool.
There are not that many available tools online, so our team did the best decision possible.
Ideally, you want to have a few things:
- Software that will find pairs for you
- Platform where you can open those trades easily.
- Risk manager tool.
There are not that many available tools online, so our team did the best decision possible.
We created all of it from scratch...
And that immediately leads us to a few problems.
It might be hard for a retail trader to get access to all those necessary tools.
And that immediately leads us to a few problems.
It might be hard for a retail trader to get access to all those necessary tools.
However, its high barriers to entry don’t mean that the strategy can't work.
Advantages:
- Positive expected value
- Highly flexible
- Neutrality to market risk
- Great performance in sideways and consolidations
Advantages:
- Positive expected value
- Highly flexible
- Neutrality to market risk
- Great performance in sideways and consolidations
But it all comes at a cost.
Disadvantages:
- Relatively high barriers to entry
- Requires complex infrastructure (or at least some software)
- Difficulties in identifying suitable pairs
- Risk management issues
Disadvantages:
- Relatively high barriers to entry
- Requires complex infrastructure (or at least some software)
- Difficulties in identifying suitable pairs
- Risk management issues
Those are strategies I have tested and practiced myself.
Do your own diligence.
It is easier to change strategy, rather than change yourself.
So, you have to find a strategy that suits you.
It has to sync with your personality.
Do your own diligence.
It is easier to change strategy, rather than change yourself.
So, you have to find a strategy that suits you.
It has to sync with your personality.
And don't forget that trading psychology is just as important as the strategy you use.
It's crucial to stay disciplined and not let emotions mess with your decision-making.
Obviously, this is just a fraction of what there is important to know.
Practice makes it better.
It's crucial to stay disciplined and not let emotions mess with your decision-making.
Obviously, this is just a fraction of what there is important to know.
Practice makes it better.
If you've made it this far, just know that you are a legend.
It was not easy making this thread.
And I appreciate your attention.
What strategy did you like the most?
Also, let me know in the comments if you want to see a comprehensive guide for every single strategy.
It was not easy making this thread.
And I appreciate your attention.
What strategy did you like the most?
Also, let me know in the comments if you want to see a comprehensive guide for every single strategy.
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