When do I start getting back into the market?

Expected Value (EV) is a concept internalized and engrained in my process.

Some of the concepts he brushes over in the beginning (Risk Instrument/Environment, Reward Instrument, Probability Measurement/Lifecycle) are huge and take a few cycles, maybe more, to really fully appreciate.

My favorite way to use this concept is just to collect the best opportunities for the week. Then assume I take equal positions on all, would I have made money overall? Is it currently a positive EV market?

Step 2 is to check if I'm in sync with the market. Were the best names in my focus list? If they weren't, then EV would be discounted, so I need to reverse engineer those stocks to try and calibrate my stock selection with the market.

When these 2 factors (EV of best opportunities & my own stock selection) are in sync, then I will start getting aggressive in new positions! There are many nuances. Here are just a few:
- What entry tactic would result in the highest EV, if any? The tactics should be calibrated
- Are stocks making 20+% moves in 3-5 days? 20 because say you have a 3% stop and 3 R, then you screw up the sell
- Are there any common sectors among the list? Do you have a proliferation of setups in similar sectors
- Are there any technical themes (like undercut and rallys, pullback buys, buying into strength, bull flags, EPs, extended continuation setups, sht co small caps, Mega caps etc etc)
- Do you have a sense of the tempo of the market (2-3 day waves starting with leaders breaking out)
- Where are we in the cycle? after 4 months of chop into earnings season? or 3 months into an extended rally?

Stock Character - Your biggest advantage

"Look left" is common advice for day traders. What about Swing traders?

Here’s my varying perception + nuances + practical application

👇👇👇 Determine Character by:
1. Categories: What timeframe the stock offer linear moves
2. Earnings Character: How the Stock behaves during/between Earnings Releases

Simple but incredibly powerful

Proportionality

What's Strong vs Extended?

Have you ever looked at a stock & wondered "is this extended? or just very strong?"

Understanding price action proportionality will help you answer this question
👇👇👇 Every flag has a pole and base, delineated by frontside/backside

Proportionality refers to the behavior of price/volume of frontside vs the backside and assessing whether or not the stock is ready for another leg up

Learn Epidosdic Pivots (EP) FAST!
How does Qullamaggie make $100m from EP setups when the edge is SHORT?

This is my varying perception 👇👇👇

https://x.com/ConcretumR/status/1773696130984956344?s=20

Here are Q1 2024 gappers focusing on:
1. Theme
2. History of chart
3. Neglect
4. Swing Cycle

Sequential to get a feel for sentiment over time!

Momentum Trading Setups

How to build pattern recognition…Fast!

Step 1: Binge @Qullamaggies swing school ()

Step 2: Calibrate your eyes to quickly recognize setups (here's a cheat sheet)👇👇👇 Step 3: Familiarise yourself with all the different variations

Growth Stock HTF
- “classic” HTF showing consistent strength riding MAs up (20-30% per leg)
- Build ranges at recent highs
- Persistent volume
- Initial move triggered by catalyst like EP

The Momentum Stock Archetype
If you are a swing trader, the archetype for a stock that we trade:

1. Starts with an episodic pivot (by definition). If it holds and follows through, that’s First confirmation

2. Then the stock goes sideways for a flag. If the stock holds and flags, that Second confirmation

3. The breakout is the third confirmation (with more confirmation from followthrough etc etc)

At step 1, the EP, that’s where the positioning is most off balance and people rush to get in.

Every leg up from there, the stock supply/demand reaches more of an equilibrium and requires more skill/confirmation to trade.

If you have had a “don’t trade” market for a while, the positioning might be even more off balance. The reaction can sometimes be more powerful. This is because the best stocks need weeks and months to digest their big moves before continuing (maybe its a growth stock with real growth but price got ahead of fundamentals and we need a few quaters for fundamentals to catch up and confirm momentum was valid).

Pull up the best movers with earnings on the chart. You will see that most leaders make big moves, consolidate for a season or two, then make a new leg (NVDA SMCI). Only a select few make big moves season after season after season TSLA during covid and ANF recently come to mind. And majority go nowhere.

I think most experienced traders have been through a season where they wait to see the best EPs move with a few days follow through, then take the ones that come after but they miss the best ones only to vow to take all EPs they come across without confirmation next season! The image from the above post is from a study of George Soros, Stan Druckenmillers Mentor. This Sums up the archetype pretty well

https://x.com/rjparkerjr09/status/1359195533210968068?s=20

How I made 74% in February
(any why it won't happen again any time soon..)

Identify the short period within a 2-month bull cycle where you can break all the rules

Let me explain 👇👇👇

@USICOfficial @TraderLion_ Step 1: Identify the straight up market
The 2 month swing cycle is loosely broken into these sub cycles

In the attached thread, I explain subsets of the bull market and how to identify them

https://x.com/DolanVKent/status/1769254883583287650?s=20

Super-Cycles, Swing Cycles & Sub- Cycles
A simple 10ma>20ma indicator like this is a great starting point for Situational Awareness but can be improved with some nuance

Let me explain 👇👇👇

https://x.com/inninuM/status/1659541178180681730?s=20

Super Cycle Archetype
- ~ 7 year bull cycle occurs in ~3 legs, ending in a parabolic blow off
- ~ 2 year bear cycle reset the base count as excesses are worked off

Image shows 4 supercycles (grey, yellow, green blue boxes)

System Building

A market is just a group of 9000 tickers. How do we overlay mental models and some filters to build a profitable system that picks a handful of stocks?

Here are my thoughts 👇👇👇 High-level Objective setting:
- Gains are determined by stock selection
- Drawdown magnitude is determined by win rate & can be augmented by Situational Awareness (entry/exit tactics & progressive exposure)

My Background
Focussing on LEADERs has been a north star for my career.

I started out, at the bottom, as an engineer working for a HVAC subcontractor. I quickly realized that not only was I not working for the final boss (the builder), he wasn't working for the boss either! The guys in charge were the property developers. I got a job there but realized.... they still had to answer to the banks! Turns out Finance was the leader of the food chain.

Buffett was the wealthiest finance guy I could find so I dove down the value investing rabbit hole.

Mario is a stud. He made it look easy.

Really, why is trading so hard? If you’re not a practitioner, you won’t understand.

Here’s what you will never learn without experiencing it 👇👇👇

https://twitter.com/stamatoudism/status/1752649800166584792

1. Extreme tactics get rewarded. 2-3 swing periods a yr, 2-3months and there’re 2 weeks easy mode, usually near the end.

Imagine a market where over sizing and anticipation get rewarded so much that normal mistakes that would destroy you are drowned out

Weekly Summary Thread 2023 W48 - Down 6.3% realised. Up 9.7% Unrealised

https://x.com/qullamaggay/status/1728716519050531308?s=20