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Trade_the_Matrix Profile picture
@TradetheMatrix1
May 1, 2023 • 7 tweets • 2 min read • Read on X
Every setup/patterns performance is quite different in weak or strong cycle. Different enough that it impacts edge to high degree.
#smallcaps #trading

Thread:
1.
For example parabolic squeezes they just don't happen in weak cycles. In strong cycles you will have few of them and one of those will be picture perfect one. Significant "show up" rate difference for pattern between the cycles.

2.
Type1s in weak cycles don't squeeze past HOD much usually. Even if they do the price returns to prior HOD level soon. In strong cycles they often squeeze way past. To think this doesn't affect your risk management on short trades is mistake.

3.
Distributions show up in all markets conditions. But it's follow-through rate that changes big time. In strong cycles you get a lot of fakeouts. Support breaks but then reclaims fast and distribution turns into semi type4. This impacts shorting edge.

4.
Nobody wants to hear that adjustments to trading approaches are needed due to cyclical changes. Everyone wants to trade like zombie or AI same style through entire year and then wonder "hey why are there cyclical slumps in my performance?".

5.
Even if you do adjust it will still be struggle for some time because it's a skill that is learnt over time but at least that way you are under control somewhat. More than praying for "crazy" period not to show up again ever.

6.
Since most of us on retail side have relatively weak edges (low positive margin) any adjustment made well adds and matters at the end. Because cyclical market changes wash out the positive edge expectancy the most on setups/patterns, more than anything else.

7.

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More from @TradetheMatrix1

Trade_the_Matrix Profile picture
Apr 23, 2023
Tracking cycles is the most helpful method in any market including #smallcaps. No indicator or single point reason will ever provide as much clues as cycles recognition can. Here are some tips on daily routines for tracking:

#trading
1.
Start tracking tickers performances.
-EOD close green or red
-intraday range % max

Note down are closes and ranges expanding/improving or decreasing for tickers on the day.

2.
Every strong cycle begins the same way. There is uptick for three days on stronger green closes (vs where gapping tickers open), ranges expand by 30-50%.

Tracking uptick/downticks in cycle flows every 3 days (if significant) can provide insight before things explode.

3.
Read 17 tweets
Trade_the_Matrix Profile picture
Apr 18, 2023
Behavior of #smallcaps is significantly different between strong and weak cycles. One has to track the cycles accurately because expectations can shift so much that any mistake made in strong cycle can get multiplied many times if risk is not respected which is common.

1.
For example there are no strong AH runners in most of times except in strong cycles where big % AH runs are common. You only have to make one mistake of being sloppy on swing shorts without being aware of how cycles impact you and it can be enough to give back plenty gains.

2.
There are no type4 patterns or fake breakouts reclaims to high degree in most cycles except in strong cycles. Which means that one has to be extra careful shorting breakdowns or rejects above HOD there.

3.
Read 6 tweets
Trade_the_Matrix Profile picture
Apr 2, 2023
In small European country you are being told that "Americans" are nothing special. You are being told there is no answer to why the US supremacy exits.
But over time one collects some answers. As objective person who never kisses anyones behind:

1.
Specialization. Tip of the spear. Looking at the (US) nation or individuals on average there isnt that significant difference (if at all), but there is far higher amount of knowledgeable and innovation/specialization focused individuals in US than what you notice localy.

2.
In modern economy, being first is very big advantage. Biggest markets are all about being first recently. Specialization+exploration which is much more expressive with US comes clearly through and the advantage it delivers. If you lack exploration you cant be first.

3.
Read 8 tweets
Trade_the_Matrix Profile picture
Mar 21, 2023
Here is why you should learn about functionality of risk-ON/risk-OFF in #markets no matter what asset class you decide to #trade:

1.
It gives you foundations to good expectations. There is one pool of global capital that moves in and out of the risk offense or risk defense mode. You should know in what mode market is today to begin with and how it impacts your selected ticker of the day in focus.

2.
For example, if you decide to long equity ticker under severe selling pressure like $FRC the risk-ON flows have to cooperate, else your chances of longs working are going to be by default much smaller. The riskier the asset and the more liquid the more you need risk-ON mode.

3.
Read 11 tweets
Trade_the_Matrix Profile picture
Feb 4, 2023
The game of extracting cents and why behavioral analysis matters:

#smallcaps #trading

Thread
1.
Because the ranges are often limited the RR is tied and limited too. The weaker the cent range the less RR by default. If you try to place two, three, four+ trades on single ticker that impacts you. If you take only single big swing trade it doesn't.

2.
Many traders try to extract multiple separate trades from the movements of single ticker. This exposes you to behaviors. The weaker your read is the more you are impacted over long run negatively. Low RR trades and weak read leads to difficulty.

3.
Read 13 tweets
Trade_the_Matrix Profile picture
Feb 3, 2023
Good question from fellow trader:
"As you gain more experience how are you avoiding overcomplicating things?"

Short answer: constant displacement.

#trading
Thread:
1.
My aim over years has been to always seek for more efficient behavioral analysis tools and approaches that improve upon prior ones used. This means constant research on what to improve and optimize. Adding some improvement to watchlisting/planning/expectation weekly.

2.
Displace. Old methods are refined and improved or somethimes completely thrown out due to weak efficiency. That's ok. We all make mistakes by falling into perception some tools are much more accurate than they turn out to be half year later.

Key is:Don't just add. Displace.

3.
Read 7 tweets

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