The mkt is dynamic and changes always, don’t just cp MM’s strategy. Maybe you should take profit early, maybe you
should step back VCP BO bc of poor mkt. My biggest problem to trading the domestic mkt the past two years.
《澄明之境》提到四道防线，最外围的关宁锦防线是仓位控制，极致就是不交易、不参与，仓位为 0，也就是最好
的风控是不要轻易参与，最好的风控是不轻易入场。只参与 A+ setup，并且市场配合，走出很多 follow thru 的情
况下。
做任何事情要獲得成功，最重要的就是要「避免愚蠢的錯誤」
。其實避免愚蠢比尋求卓越更容易。一旦我們阻止了愚
蠢，卓越就會隨之而來。
"Breakout edge never goes out of favor but you need a good market that is trending."
Keep an eye on your expectancy - if you start feeling like you're getting beat up, probably time to step aside.
the famous 3Ms of trading - mindset, market, and method
Not having much follow thru is also an indicator of weak.
You can't just trade patterns in a vacuum and expect to make money.
nextbigtrade
Trading is a unique endeavor where “working harder” can be extremely counterproductive.
Instead it’s better to focus on odds of success, which vary with market conditions.
Limiting participation to when the odds are high is better than “working harder”.
AsymTrading@AsymTrading
A good setup is just one piece of the puzzle. You need to consider the broader market context, the riskreward ratio, and your position size. It's not as simple as "good setup, buy." If it were that easy, we'd all
be millionaires.
Another problem with hypothetical gains being the basis of your risk is the market character changes. This can expand
or crush your real average gain. Maybe you were getting 3:1 or 2:1 on average during a decently trending market.
This kept your head above water and profitable.
However, when the market becomes choppy or downtrending, things don't follow-through as easily. Moves are
more shortlived and don't go as far. If you continue to base your risk on expectations of 3:1 or 2:1, but the
market isn't offering those kinds of rewards on average, again, it's wishful thinking to keep trading as if the market
cares about your profit objectives.
You have to ask yourself "Is the risk I'm taking commensurate with the rewards I'm actually accruing?" If over
the last 5 or 10 trades, your average gain has collapsed, likely due to changing market conditions, it's foolish
to keep banging your head into the wall taking "high R:R" trades.
Yeah your risk is still in check, but your reward side has totally changed. Even if you keep the risk side static, the
reward side is changing whether you want it to or not. Basing trading on hypothetical rewards without keeping
tabs on real rewards chews traders up when the market isn't so favorable.
Zanger: “As the stock breaks out I might test the water on it and buy 30 – 50% of the position that I really want to
buy. So if I want to buy 200,000 shares of a stock like a Google, I would buy 70,000 to 100,000 shares of the stock and
see how the stock reacts then I may wait an hour or two and see how the stock is moving. Then, as the stock
continues to move up with heavy volume and is not timid making new highs, I might add another 30,000 to 40,000
shares up to 75% of the position that I want. I may wait 4-5 days to see how the stock acts and then add the final 25%
1
of the position I want.”
Great insights, Ted. Post-analysis is a gold mine of learning that many don't take advantage of.
As a long-side trader I want the market in a persistent uptrend for the next 20 years. The market hasn't, doesn't,
and will never work that way. This is seasonal work - seasons of feast and seasons of famine. The bitch of it all is
we don't know how long either will last.
Renzo
@Anjing6798
Mate, the market monitor, the version you developed is insanely good. I've adapted it a touch but essence is true to
the original. Filling it out and watching the numbers & colours change has become part of my daily routine. Couldnt
operate without it. Breathe in breathe out.
AsymTrading
@AsymTrading
Glad it helps. I have the "real" dashboard that I rely on, but many ppl don't have TC2000 or the ability to replicate it.
I've found it helpful to go back and analyze the ebb and flow of the numbers related to the market trends
and my expectancy outcomes.
Goverdhan Gajjala
@gov_gajjala
The biggest lesson in my career:
Trading less = earning more.
As the week begins, I like to remind myself that if the setup isn't A+, then it isn't a setup.
It is so easy to get caught up in overtrading and see mediocre setups eat up an account due to a lack of patience.
As Jessie Livermore said, “Money is made by sitting, not trading.”
The true winning trades will show themselves. Developing the strength to wait for the optimal setup is an art that
must be practiced every single trading session.
Q：How often do you see A+ setups in a week? Also if you only buy A+ setups, what would be your batting average?
A：In bad markets, maybe 1 or 2 in a week. There are times I didn’t see any couple of weeks. But in good conditions,
there’ll be 1 everyday.
Q：How do you handle it when you scan many very similar patterns at the same time and you can only choose one
or two patterns out of many similar patterns? Thanks.
A：That only happens when the market is very strong. I’ll pick the best looking setups with great volume in such cases
and leave the rest. Trying to trade everything leads to FOMO for me.
——————————————————————————————————
I'm a very visual person. While models aren't perfect, they are a great way to capture key concepts in simple ways,
making it easier to communicate these concepts to others.
A lot of traders hyperfocus on the setup and spend almost all their time and energy on it. Setup is certainly important,
but the success of a setup is influenced by much bigger factors that directly impact the odds and probabilities of that
setup working, not just on one trade, but over series and runs of trades.
A setup that ignores the cyclical nature of the markets is a setup bound for trouble.
A setup that ignores basic risk management, expectancy management, and drawdown management is a setup
bound for trouble.
Focus on setups all you want, but if you don't put them in the proper context of the bigger picture, good luck with
2
any long-term success.
——————————————————————————————————————
https://docs.google.com/spreadsheets/d/1U1hxDFaF5hhBF4_OYiDZjyJx90o68wqjbHokU1S0F3w/edit#gid=12994158
0
Continues to be a tale of two tapes. Generally, Mids and Smalls lagging while large caps in tech, healthcare, RE are
moving higher. I personally don't like the wedging/grinding action of the $IWM $MDY - breaking recent lows of this
bear flag has us down to the 50-day or lower. Still playing cautiously and taking my shots as I see them until some
of this weakness clears up.
上午 7:31 · 2024 年 1 月 11 日
https://docs.google.com/spreadsheets/d/1U1hxDFaF5hhBF4_OYiDZjyJx90o68wqjbHokU1S0F3w/edit#gid=12994158
0
Market assessment: Mixed bag o' bullshit
Indices mixed, breadth overall negative, but large caps not; healthcare leading sector, but others in down trends
(lacking one or both checks means 10 and/or 20 EMA is downsloping)
Tread with caution. This isn't the broad-based rally we ended the year with.
上午 5:25 · 2024 年 1 月 10 日
https://docs.google.com/spreadsheets/d/1U1hxDFaF5hhBF4_OYiDZjyJx90o68wqjbHokU1S0F3w/edit#gid=21817402
6
Markets don't go up on hopes and dreams. It takes persistent buying that outpaces selling over days, weeks, and
months to drive trends. When the average stock is hitting new recent lows and the average sector is rolling down with
downsloping 10/20 EMAs, it's not a great kind of momentum market. My motto in shit markets is "do no harm."
3
For some reason, people think that the starting point for risk management is cutting losses. The starting point of
risk management is first, do no harm. Avoid trading environments that aren't conducive to your method, churning a
bunch of losses and doing unnecessary damage.
https://docs.google.com/spreadsheets/d/1U1hxDFaF5hhBF4_OYiDZjyJx90o68wqjbHokU1S0F3w/edit#gid=12994158
0
Strong close from the indices yesterday and everyone is all of a sudden bullish. Two comments:
1) I'm more concerned with being a few days too early than a few days too late. I can't recall how many times
in the past I excitedly put on positions thinking the correction was over, only to be eating losses a few days
later. The market often rallies enough to get people excited, set the trap, and then fuck them over.
2) The main reason I'm ok being a few days late is I'm a swing trader. As I highlighted the other day, there are
multiple "action zones" where I can get involved. There will be a hundred setups and many opportunities
available once we truly bottom out of a correction. there's not one stock that will "make my year". I will take
several hundred trades. I'm not in a rush.
As I've said ad naseum, listen, don't listen. It's your money. I'll do what I think is best with mine and we'll all be just
fine.
下午 7:14 · 2024 年 1 月 9 日
Stock Traders Weekly
@StockTradersOS
New traders take note of this post, don't skip over this. It may sound simple buts its a golden nugget piece of advice
from @AsymTrading . The No. 1 skill to master as a stock trading is knowing when to trade or simply wait for
your edge in favorable market conditions (as long as it takes). @PradeepBonde has been using situational
awareness for years and deserves a lot of credit for pioneering this concept. I developed my own operating system
4
to remove the stress of needing "to know" when to trade. Its either red or green, go or no-go, hard penny or easy
dollar as @markminervini would say. I recommend every swing trader study and learn to do the same, it will reward
you for years to come as you grow and scale your account.
True. My best risk defense is the entry. Cutting losses comes in second.
In these sorts of neutral zones, where the mkt could either break up or break down, it’s often not prudent to assume
which way it will go. I hope we break out to the upside. I want to trade and have a lot of opportunities. But I have no
control whatsoever whether this happens or not.
For a vast majority trying to "make a living trading", they'll never make enough to pay themselves regularly, especially
if they act like it's a job, rather than seasonal work.
I think identifying crap market and great market is easy but its a rangebound whipsaw action which bleeds traders.
AsymTrading@AsymTrading
Not planning on doing much today. With the market in its current state I’m absolutely in no hurry. If a trader can
make 10, 20, 50%+ in the one or two windows a year while doing no harm otherwise, what more do you need?
A lot of wisdom in this clip:
“If I had to start again with a small account I would definitely swing trade. I would do 3-5 to 10 day type swing trading.
Compound it very fast, long short. I wouldn’t day trade and wouldn’t do long term swing trading like multiweek or
multi month swing trading.”
“Trade the highest ADR highest momentum stocks long/short. That’s where the best edge is.”
“Successful trading is about so many things: having a profitable setup, knowing when to trade that setup, position
sizing, risk management. If you have risk management but you don’t have an edge, a profitable setup, don’t
understand when that setup is not in favor, risking 1% on a trade isn’t going to save you. You will blow up.”
MarkMinervini
This afternoon, we closed out some of our mega cap longs and a few others that were highly profitable. They're acting
very strong, but we have big gains and I like to get out on the way up. Sold $NVDA, $META, $GWRE, $CAMT. Trimmed
$NFLX, $GOOGL, $RMBS, $VMC. Still holding a good number of names, but most of them are profitable and we are
effectively free rolling breakeven or better stops. Stock like $CW, $EYPT, $LBPH, $UBER, $LULU we are still holding.
Even a few lower RS names like $TJX, $HUBB and $URBN. All our general market models remain bullish. Some rotation
likely coming soon.
上午 12:40 · 2024 年 1 月 25 日
AsymTrading@AsymTrading
Sometimes I wish I could just turn my brain off. It’s 1:30 in the morning and I’m wide awake thinking about trading,
thinking about work, thinking about my dissertation research design, thinking about my family. I have so much to be
grateful for - it’s a blessing to be awake and so deep in life that one has so much to think about.
gov_gajjala
Rather than from a book, I would recommend looking and analyzing the charts every day. Ask questions like 1. what
made this price go up this high? 2. What happened before the price went up? 3. What happened when the price sold
off? etc.,
Keep doing this analysis on the big movers that day and over a period of time (months/years), you'll develop chart
pattern setups which you can take action next time before a big move happens. All the best!
Miss_Low_Risk
My trading has six pillars. All EQUALLY important.
5
Simple acronym is: CPEESS
I know if I lack in ONE of them my WHOLE trading WILL fail. But if I stick to ALL of them ALL THE TIME success is an
UNAVOIDABLE consequence.
I didn’t get ANYONE for free, I struggled with ALL of them..
There was at least one depression and one account blow up per letter until I got it....
The hard part was NOT to understand the letters rationally. It was to BRAINWASH myself to
REALISE/ACCEPT/INTERNALIZE/FEEL the letters so they became AUTOMATIC SUBCONSCIOUS ACTIONS....
AsymTrading
Trading is always about balancing tradeoffs and risk vs reward. These two images are why I'm in the camp of "I'd
rather be a few days late than a few days too early". (And when I talk about "late", I'm not talking about buying late
and chasing individual setups past a proper buy point; I'm talking about the general market conditions)
The first image shows the probability of loss streaks based on different win rates. Imagine the left side is a sliding
scale, where "a few days too early" is situated among lower win rates and "a few days too late" among the higher win
rates.
The risk of being too early is overall things are still in the low win rate category, strongly increasing the chances of
long runs of losses, should you start putting out a bunch of trades. The risk of being a few days late is you might miss
a few of the initial breakouts, but no harm no foul.
The problem becomes when a trader keeps on trading, even after conditions are poor, they start running into
several compounding problems. One, their existing positions start to roll over and stop out, causing drawdown
off the top. Second, new positions start to create new losses and this turns into runs of losses as batting
averages start to tank. This "churn" leads to larger and larger drawdowns.
Every false rally the trader gets sucked into, only to puke out positions a few days later, only exacerbates the drawdown.
It's only after the market gets back into a backdrop of higher win rates, good follow through, and smaller loss runs,
where the trader can make the progress necessary to recover the drawdown and hit new equity highs.
This is why it's far more important to control the drawdown and reduce damage than it is to be "early". As Livermore
said, "One of the most helpful things that anybody can learn is to give up trying to catch the last eighth – or the first.
These two are the most expensive eighths in the world."
AsymTrading
Think of a poor market as a weight around the ankles of the market and stocks while they try to swim. Sure there are
some stocks that will hold up and be able to swim under this weight, but many stocks will quickly sink. Even the stocks
that are able to swim initially, the longer the conditions are poor, more likely these stocks will eventually succumb to
the weight.
AsymTrading
These three images condense decades of trading wisdom, strategies, and tactics from some of the best traders, past
and present. Trade long in an "easy dollar" environment and go to cash in a "hard penny" environment. Avoid boom6
bust cycles. Simple, but not easy.
7
No Kreskin
Everyone tells you that you should stop trading during a weak market but the more I trade, the more I learn that you
should stop trading during a weak market.
AsymTrading
rofl. well said, my friend. i learned the hard way that you should stop trading during a weak market. and then i learned
again and again and again. And when I try i again, guess what I learn? that you shouldn't trade in a weak market.
AsymTrading
I'm firmly convinced that the root of most traders' struggles is not understanding when their setup works and
when it doesn't. I mean like truly understanding - not just lip service or a surface understanding. They will grind
themselves to a pulp in a hard penny market and then when an easy dollar market comes, they fail to take advantage
of the favorable conditions.
As Mark Douglas spoke about in the video I posted earlier, traders gravitate towards the concept of technical analysis
and repeating patterns. What traders don't pay attention to is, despite the fact that these patterns repeat, the
outcomes of the patterns aren't consistent. This is a critical point he makes and is the exact mental mistake traders
make - they understand that certain patterns repeat and this is what gives them the structure to trade from, but they
miss the point about the outcome changing.
What changes the consistency of different patterns? Usually, it's changing market conditions. Traders mistakenly
believe they can trade the same setup over and over again and get the same outcomes. What this does is make
them overly confident in good market which sets them up to get destroyed when the conditions change. This leads
to a loss of confidence in their method or system. Then when the good market conditions return, they are gun shy
and miss a lot of great trades because they are still reeling from the ass kicking.
Slowly they start to build more confidence as the trend continues, just in time for the market conditions change again.
Or they engage in system hopping or endless parameter fiddle-fucking and optimization. Ask me how I know rofl.
Because this was me for years and years.
How does a trader fix that problem? It might sound like a "no shit" statement, but don't trade when the market
conditions are poor. I'm a long-side trader. I know for a fact, based on a lot of experience and study, that when
the market conditions get choppy or down trending, the once plentiful and amazingly productive setups that I trade
become a train wreck. So I've learned to step aside and not get run over. Does that mean the setup stopped
working? Yes, for now and I have to respect that. But I know based on history, my favored patterns will come back
again and again, like a perennial plant.
At the end of the day, for swing traders, you MUST get follow through for days or weeks after entry to pay for the
many small losses. If the environment isn't conducive to follow through, then it doesn't matter what you hope or want.
Know your setup intimately enough to understand when they are in season and out of season. Think of your setup
like a perennial plant - even though it comes back season after season, it still has a period of time when its dormant
and a time when it's growing and blossoming. If you expect you perennial to be "in season" year round, you'll be very
disappointed to find out it doesn't work that way. Neither does trading.
Amen! I learned in 2023 that my setups aren’t for all seasons.
By far the most difficult part of trading (IMO).
My final thoughts on this thread while I'm thinking about it. Traders don't understand when their system works and
doesn't work because they don't really understand the source of their edge.
As I outlined before, in most swing trading systems, the source of edge is:
8
1) Large profit factor (avg win vs avg loss), so win rate doesn't matter as much
2) High win rate, so the profit factor doesn't matter as much
3) Balanced profit factor and win rate; this is the typical 2:1, 50% win rate kind of trader
For all three of these, in swing trading, turnover is also important. The more you can turn over this edge, the more
money you'll make in a swing cycle.
I know my system. I fall into the large profit factor camp. Historically, my batting average ranges from 20% or
so in a poor market to upwards of 60% or so in a good market. If that sounds like a big fucking range, it is. Since
I know I can't rely on win rate to make money, then I have to rely on profit factor. This means, for my system
to work, I MUST get trades that follow through for days or weeks on average. These large profit factor gains
are the source of my edge and I need to find them over and over again.
What don't I get in a shit market? A lot of follow-through. And even if I happen to catch a few that do follow
through, the amount of damage I take trying to discover these winners has my win rate so low, that these few
winners often don't pay for the multitude of losers. That's why you have to track your expectancy over different
cycles. You have to understand the ebbs and flows of your system.
You have to understand your system's source of edge - and just as importantly, what is detrimental to that
edge. If your source of edge is large profit factors and follow through, you don't get that in a poor market. If
your source of edge is win rate, you don't get that in a poor market. If you source of edge is balancing both, even
still, this becomes quite a challenge in a market where both the win rate and the profit factor craters. And finally,
turnover, as a source of edge, you don't get as many setups overall, so instead of turning over profits, you end up
churning a bunch of losses. That's not the turnover we're looking for.
What is your system's source of edge? What conditions are detrimental to that edge?
Goverdhan Gajjala@gov_gajjala
Goverdhan Gajjala
@gov_gajjala
TRADING: AN ANALOGY OF DRIVING Scenario: The plan is to take my family with me, and reach a destination as
quickly as possible. Traffic = Market conditions; Family = Capital; Destination = Financial Freedom. Google maps
shows different routes to reach the destination (different styles of trading: plz refer to magnitude vs duration post of
mine). A route option can be faster but requires tolls (short term momentum trading but volatile/risky). Another route
might be slower due to traffic (market conditions) and have no tolls (swing trading). Another route might be a lot
slower and I have no idea if I'll reach my destination at all (investing..LOL)! Even though I want to reach fast, I still have
to stop at the red lights, wait until it turns green (trade only when I see a green signal of my setup and stop/wait as
long as no setups [red signal]). Once I see the green signal, then I start slow (progressive exposure) and if traffic
(market) permits, I pick up the speed (progressive exposure/go big on easy setups). If I've to take a yield turn at some
intersection, I'll apply brakes (reduce risk) slowly and I will have to stop and wait, watch for no traffic (favorable market
conditions), then only start slow and pick up the speed once comfortable (increase risk if doing well). It's all about
slowing down and stopping when I have to, and hitting the gas wherever I can but still driving under speed limit (risk
management). If I don't follow traffic rules (no discipline/patience), I'll get honks, traffic tickets (drawdowns) and might
crash my vehicle as well putting my family in danger (blowup of account). I can't control the traffic (market). I just have
to react to it accordingly. I don't race with other vehicles (don't compare with other traders' styles), as their
comfortability, priorities and destination might be different. The bigger the family (capital), it's safer for me/family to
take the slower routes, but for a small family like mine, I prefer the faster route even though it is risky (volatile). With
my discipline and experience, I have confidence and experience that I will be OK driving in such conditions. P.S. Please
forgive me and ignore this ranting if it doesn't make sense :)
If the trade is hesitating to go in my direction, I cut it out. I am fine choking the trade as if my initial setup analysis was
9
right, it shouldn't hesitate to move up fast. I'll wait for another one. Out for breakeven and the price went way too
below. Glad that my risk management saved me.
Q：How do you implement progressive exposure into a trade ?
A：By sizing down if I am in drawdowns and sizing big if my account is at all time highs, Sumit.
My position size depends on where my equity curve is. If I am in drawdowns, I reduce risk. If I am at all time highs, I
increase risk and try to size up. Progressive exposure!
No trades today. The most important lesson I learned last year was to "trade less!!" Put your money at risk only when
the chances of success are high. Make your trading as boring/waiting as possible. Day trading is not trading every
day. It's the opposite.
Sharing today's loss trade. As you can see, I am only good at cutting losses quickly :) Everything else, I struggle, it's
not easy.
Analysis: small caps stock, history of previous runner, it showed strength now and then, volume picking up, showed
chances of squeezing up. If this has worked, it would run 100%+ easily.
Risk management:
In trading, just cutting losses quickly is not the only risk management.
The bigger risk is not working on your playbook setups, not taking your A+ setup trade, or taking that random
B/C grade trade, or letting your losers run, or not letting your profits run, or giving all your profits back, or not
working on your mindset etc., It’s everywhere and trading is all about it, nothing else.
If you don’t have an edge/playbook go to setups, everything you do is a risk and as Mark Minervini says, “respect risk,
always!”
MANAGE YOUR RISK WISELY!
I usually try not to trade the first 15 mins after market open.
My position size depends on where my equity curve is. If I am in drawdowns, I reduce risk. If I am at all time
highs, I increase risk and try to size up. Progressive exposure!
I take a bottom up approach. Since I do day trading, the stocks and their setups come first. That said, even in the long
side momentum world, there will be cycles/phases which we need to be aware of (situational awareness as Stockbee
Pradeep explains) and trade accordingly. For example, I do not see many runners past 2 weeks. I am trading light and
some days, no trades at all.
No trades today. The most important lesson I learned last year was to "trade less!!" Put your money at risk only when
the chances of success are high. Make your trading as boring/waiting as possible. Day trading is not trading every
day. It's the opposite.
MoneyTradeEdge | Better Thinking Better Trading
Trading is your work.
1) Show up every day
- Plan
- Study
- Practice
2) Trade your system
- Execute
- Win / Lose
- Execute again
3) 10x your skills
- Record mistakes
10
- Get feedback
- Improve
4) Become successful
- Win
- Leave 9-5
- Freedom
It's a business, not an hobby.
初云大数据：
当你的老仓盈利的时候，你就乘胜追击加大仓位，当你的老仓当日出现回撤亏损的时候，你这时候就停止开新仓，
控制仓位。
-----------------------------------------------------------------------我自己长期泡在市场，不交易就不习惯，这肯定是万万不行的，这是我的账户单边下降的主要原因。克服玩的思维，
专注于赚钱，在对自己有利的地方下注。
trading 很难，想要在其中胜出，你必须在自律和耐心上有优势。
一个网友：In the small room, on my desk there is a large sign with the words "Sweet fruit only comes to those who
are patient and disciplined". Before opening any entry, I always read this sign three times.
When the tape is dominated by distribution and there are few stocks in buyable position, I treat all rallies during
a correction as nothing more than counter trend reactions. The market must prove itself to get my hard-earned
capital at risk. Getting the lowest price is never my goal... I want the right price, and I'm as patient as a cheetah stalking
a gazelle.
Trading is a business and competition of discipline. Instead of trying to make the most money, focus on having
the most discipline. Master that, and the money will follow.
-Discipline is the holy grail for sure.
-Absolutely! Discipline is the secret sauce in trading – it's like the north star guiding you through the market's twists
and turns.
Make it your compass, and watch the profits chart their own course!
-Even though we are all competing against each other, the actual competition is one we are all having against
ourselves.
The competition is: who can master their mind better than the other person?
You MUST "earn the right" to play larger, starting with small "pilot" buys and only increasing overall exposure and
position sizing on the heels of traction.
Steve Burns:
In ONE WORD, what prevents most people from being profitable in the stock market?
MM:
Very interesting (and surprising to me) that only a small percentage said "discipline."
2023 年 12 月 14 日
Sold our $LEN and $DHI at a nice profit this morning. $LEN may pop on earnings tomorrow, but I decided to take the
sure profit and get out while the getting is good. Also trimming some of our other profitable names that are extended.
This allows me to hold partial positions through pullbacks with stops fully "financed" - effectively eliminating risk while
banking some coin.
The market - along with many stocks - is getting extended and due for a pullback. If the indexes run up from here, I
would definitely use the strength for selling into. With that said, the popular averages are indeed overbought with
sentiment starting to get overly bullish. And while short term, this could limit the upside, longer term it's a sign of
strength and bullish.
Favorable seasonality and a recent dovish "lean" by the FED will likely put a floor beneath the market. Pullbacks on
the $SPY should be contained to 3-6%. With the market starting to broaden out, I wouldn't get too caught up in trying
11
to figure out where the "market" is going to go next. Personally, I'm taking a bottoms up approach focusing on
individual stock setups, buying the breakouts, and trimming based on individual sell rules, not a top down or macro
view.
With the market improving and setups proliferating, it's a great time to join our winning team. Make 2024 your best
year ever. http://minervini.com
Hi mark, huge fan. Both stocks lack fundamentals in terms of earnings and growth. Do you still buy stocks with flat
earnings as long as the price action is good?
Sometimes yes. But the chart has to be really strong. Without fundamentals, I usually will just short trade the ideas.
Precisely how I handled the Home builders.
Life, by default, is designed to make you quit and question your commitment and your character. It takes vision to
accomplish something great because nothing great happens quickly, and nothing great comes without pain and
struggle. Stock trading is no different. In fact, it's one of the most difficult.
The key to getting through the tough times is to mentally bring the future prize and the goal into the present
moment as often as you can, and more importantly, the feeling you will have when you succeed. Bring that
feeling into the present moment. Close your eyes... see it, feel it. and smell it.
Every day, repeat... "I am capable. I will do what it takes. Every misstep and every day that passes puts me closer
to my goal. Every day, I'm learning. No one is going to deny me success. Only I can deny myself. Only I have that
power, which means I have the power to stay, endure, and ultimately conquer. Because I am willing to do what it takes
and persist unconditionally, success is certain."
You can do it!
To get big, consistent returns, you must, at times, trade concentrated positions. As a result, you must manage risk
tightly and never ever average down because eventually you will hit a losing streak or scale up at the wrong time, and
the risk of ruin WILL get you. It's math, folks... backed by 40-years of real-life trading success. Those who disagree are
those who have either got lucky, haven't been trading for very long, or have only produced inconsistent, inferior
returns.
What is the #1 trading mistske you make most often?
Take profits too soon
Give back decent gains
Fail to religiously cut losses
Trade too big
Trade too small
Lack of patience - FOMO
Can't pull the trigger or hesitate
今天谈谈控制回撤
你没有过硬技术和操盘感觉，你是菜鸟，那没什么可控制的，就是输，希望输慢点就行。
如果你盈利好，十之八九这个阶段大盘也非常好，涨势如虹。明白吗？涨过头，就是收割期，当你很容易赚，表明
也要结束了，要警惕性。
所以，要在平衡期去参与强势股，在强市场只做好一只强势股，千万别换。
大盘三上而竭，阶段就平衡了，要注意收工，等下一波（就是大跌一下换个节奏）
还有就是，你总会有一个时期感觉错乱。别破罐子破摔，赌气一通乱来。要停手。
希望你有悟性，运气好活下来。
12
Great thinking comes before great trading or great anything! Where the mind goes... everything follows. This 👇 will
get you thinking better 💯 guaranteed. Mindset is the real key to success.
Yesterday, markets rallied strongly across the board following the lower than expected CPI data. Headline CPI inflation
moderated, led by falling gasoline prices. Core inflation also slowed, but underlying pressures are still elevated and
above the Fed’s target. The report makes further rate hikes unwarranted, but still supports restrictive-for-longer Fed
policy.
The small caps led as the Russell 2000 closed higher +5.44% which is the strongest single day in over a year. The
Nasdaq and NYSE both had strong accumulation days closing +2.37% & +2.14% on well above average volume.
Breadth was also encouraging as advancers outpaced declining issues by better than 9:1 on the NYSE and
greater than 3:1 on the Nasdaq.
We also had advancing volume increase by more than 10:1 on the NYSE and nearly 4:1 on the Nasdaq.
New 52 highs/lows also started to register the highest reading since the summer,
The percentage of stocks above their respective 50-day moving average surged higher.
The improvement in breadth means that there is the potential for an expansion and proliferation of buyable stocks.
During the past couple of weeks, we've been adding select names. Yesterday had a number of stocks gap through
pivot points as the overall market gapped higher. The indexes are getting extended and overbought. Longer term
this is a positive. In the short term, we may need to digest the run up.
上午 1:12 · 2023 年 11 月 16 日
This is where traders get frustrated and break discipline... when the indexes take off but there are few stocks to buy.
You MUST learn to get off the indexes and stay tuned into the individual stocks. Don't let the indexes pressure into
breaking discipline. Until stocks offer buy points based on your own criteria... YOU WAIT! And, even when they do,
you MUST "earn the right" to play larger, starting with small "pilot" buys and only increasing overall exposure and
position sizing on the heels of traction. Be patient and exercise discipline. That's how you trade like a champion. I
assure you, champion output will ONLY come from champion input.
Yes, you can look back in hindsight and see all the things you could have done, but risk is managed in real time. You
may get lucky and even get by for a while being undisciplined, but it's just a matter of time before it all goes down
the drain if you are undisciplined and try to take the seemingly "easy" or obvious road.
If there is one thing I've learned after 40-years in this business, it's this... what takes you to the promise land easily,
takes you to hell hard. Only those who manage the downside last in this business. You MUST create your own odds
by cutting off the left side of the bell curve, which results in asymmetric leverage. In the short run, it can be frustrating.
But in the long run, it works... and the real frustration comes to those who blow their accounts up chasing the market
instead of letting the trades come to them.
This post is more valuable than most can or will likely appreciate. I built a 40-year career and a fortune on it.
下午 11:02 · 2023 年 11 月 6 日
- by Mosaic Asset@MosaicAssetCo, Agree you can’t give into(屈服于) FOMO right here.
A pull back or some sideways trading would help a lot of bases keep setting up.
If we are starting a new uptrend, there will be lots of opportunities ahead.
- The market will always present opportunities, but only those who wait for the right ones, according to their strategy
and risk management principles, will thrive in the long run.
- Discipline, Consistency, and Patience are what separate the champions from the rest.
- In the small room, on my desk there is a large sign with the words "Sweet fruit only comes to those who are patient
and disciplined". Before opening any entry, I always read this sign three times.
13
- I finally got this...you need to play the stocks, not the market. (it's sounds simple, but it's deep)
- Thanks Mark, one of the best posts! The concept is simple, but the implementation is extremely difficult. It took me
years.
Yesterday, the market followed through for a second straight day with advancing stocks outpacing decliners by better
than 7:1 on the NYSE. Volume swamped down volume by 8:1. This is definitely a step in the right direction and
increases the odds that the correction may be over.
The ingredients for a bottom are coming together. Sentiment is bearish, the market indexes are following through
after a good-size correction, and we are heading into a seasonally strong period. Now, all we need are some stock
setups... which will differ depending on your approach.
I took a couple of pilot positions. If we can hold and gain some traction from individual breakout names. I'll likely add
more exposure. One day at a time, one step at a time... incremental changes.
下午 10:51 · 2023 年 11 月 3 日
When the tape is dominated by distribution and there are few stocks in buyable position, I treat all rallies during
a correction as nothing more than counter trend reactions. The market must prove itself to get my hard-earned
capital at risk. Getting the lowest price is never my goal... I want the right price, and I'm as patient as a cheetah stalking
a gazelle.
- Sometimes no trading is better than losing your hard-earned capital.最外围防线，0 仓位。
- Beware of fomo. This tweet supports me to spend time studying previous trades and improving my patience. Thank
you
- Thank-you so much for this invaluable & timely post Mark! I am constantly challenged by my desire to get back-in
when as you say, a few stocks set-up or rally and I experience FOMO. Your post reminds us once again to be
disciplined and not be tempted until the mkt proves itself.
Do you want to know how I became a massively successful stock trader? While my friends were out doing stupid
shit at night, I was home pouring over stock charts and company fundamentals until the sun came up the next morning.
While my friends were buying fancy cars as soon as they started making some good money, I was saving and building
my trading account. While my friends were buying beer and party with their money, I was spending mine on attending
seminars and buying books. Work your dream and invest in yourself.
I want to make clear that I think we are in a correction within a new bull market that started off the lows in October
2022. But my opinions do not drive my trading... sound principles and managing risk in real time does. The current
tape is bearish and I have no idea how much the market will correct, or if it will bottom tomorrow. Fortunately, I don't
need a crystal ball and I don't need to pick bottoms to be a highly profitable trader. With few stocks meeting my
criteria and a market that is clearly under distribution, I have been forced into cash months ago and will hibernate
until conditions improve. This is nothing new or different than what I have been doing successfully over my 40-year
trading career. I'll let the Monday Morning Quarterbacks and the pundits spew their worthless opinions in hindsight
while I continue to make millions in real time.
上午 1:10 · 2023 年 10 月 28 日
A video from George Soros:
One of the best pieces of trading advice you will ever hear. 👇 I've termed it
Progressive Exposure.
When things are working -> add exposure.
When things are not working -> decrease exposure.
14
The amount of time you spend on something affects your subconscious imprinting; the more you repeat something,
the more likely (you improve the probability) that you will do it again. When you fail over and over again, you become
an expert at failing.
一定要进行正确的连续，走出恶性循环。
Qullamaggie once talked about how he was really good at finding winners, but not so great sometimes at holding
them. This resonates with me because I tend to have the same problem.
Stock selection and entry aren't really something I struggle with IMO. Neither is cutting losses. I don't do these
things perfectly, but I have no problem finding movers.
While it used to be rare to find myself in really big winners,
I do it quite frequently now. It wasn't rocket science or even a significant change in my trading style. it was more of a
mental shift in understanding what a "good" stock is - a stock is only good if it's going up and doing so very quickly.
That's the best, most efficient place to put my capital for maximum upside.
It's the profit management and trailing side that I have a horrible track record with. I put quotes and things out there,
not because I've perfected these things. I'm constantly making mistakes and kicking myself in the ass. And if I'm being
honest, most of the time I'm kicking myself in the ass, it's for one of two reasons - getting into a stock "early" and
getting out too early.
Sometimes I'll try to get into stocks pre-market, when volume is already kicking into gear. This works sometimes, but
more often than not, I end up in a shit position that I'm having to dump near the open or with a bad fill. The other
problem, when things look "extended", I often sell some or all of the position, only to look back a few hours or few
days later and see I missed a huge move in a stock I was already in. Happens far more often than I care to admit.
I'm not saying I do everything wrong and I've certainly had a great trading year overall. But there are a lot of things I
could have done better. Kristjan talked about how he'd probably be up a lot more every year if he didn't overtrade
poor markets. I'd be up a lot more yearly if I trailed and maximized my winners. It's one thing to intend to trail with
a specific MA or technique, but wholly another to actually execute this when things are zigging and zagging.
I often think it's a size issue. Even though a 20-30k position is only 5% or so of my funds, having multiple positions
gyrating around, especially in the high-octane shit I like to play in, can be a little nerve-wracking. Sizing up has been
one of the harder things for me to do mentally, which has probably hampered my performance.
In the same regard, looking at profits in dollars instead of percents also affects my ability to actually hold a position
through its full unfolding. There's a point where mentally I'm saying "it's up enough" and then find excuses to cut
and run. Again, this isn't what I'm supposed to be doing, but it's a definite mental hurdle.
It's something I'm "working on" to fix. Maybe I need a shrink rofl. Armchair warriors with something to say, you should
be concerned with your own demons.
What is the death for most traders?







Not being able to control emotions! The strategies are easy, it is the mentality. After 5 years of active trading and
now after locking on my strat am dealing with the mentality of it.
Ego and revenge trading.
Drawdown
Emotional control in live market. Period.
Lack of risk controls
Impatience and poor risk management
FOMO and risk management.
15
The worst thing you can do in a winning streak is to increase your position size because sooner or later, you will have
a losing trade.
Your risk management should always follow the same principles, even if it means that recovering from a few losses
takes a bit longer.
Successful traders have big egos, but when they come to their trading platform, they don’t let it come in the way of
their decisions. When their trade idea is wrong, they accept it, take the loss and move on to the next trade. Profitable
traders do not personalize losses.
PBInvesting
@PBInvesting
This is my A+ Setup.
This Setup has made me THOUSANDS (I Trade it Every Day) and I am going to give you guys all the details about it
in this thread
Drop this thread a LIKE and follow me for more educational breakdowns!❤
In this thread I go over 3 different parts of the trade 👇
1. The Larger Time Frames matched with Lower Time Frames
2. Indicators and Retests
3. Execution and Risk
Lets get into it!! (Dont forget to like and RT the first tweet also follow me for more)
1. An A+ Setup is when the larger time frames are matching with the lower time frames.
On this setup the Daily Time Frame was SUPER Bullish (Bullish Piercing into ATH)
And when a setup has a bullish daily timeframe into an ATH (Clear Skies for a breakout) it is a TOP WATCH
1. Lower Time Was Bullish also which lines up with the higher time frame 👇
On the 5 minute we had a rejection candle off open which signals a big resistance. We then cleared the high of the
resistance indicating a break of structure.
Then we created a BULLISH FLAG
2. Indicators and Retests
With this Bullish Flag at ATH and with a break of structure to the upside we want to look for a Key Level and VWAP
Retest.
We got the retest and I entered on the VWAP Retest Lined up with the Key Level Resistance Level REtest (From first
rejection)
2. Indicators
I then used the 9 EMA which indicated to me on the New High Of day that we were extended.
So since we were extended I exited my position at a SOLID Profit.
Right after I exited we had a red candle which was pretty interesting that I read that before it happened.
3. Execution and Risk
On this trade specifically I should have held my runners with a stop, but the market lately has not been a hold runners
type so I didnt.
My Risk was a 5 minute candle close under VWAP and my Target was NHOD.
This was at least a 1 to 3 Risk to Reward Trade
3. Execution
Here is timestamps of this trade 👇
If you want these trade ideas, join the waitlist in my bio. My discord is currently closed but for future updates on
openings you need to be on the waitlist in my bio
This Thread took me over a hour to make and I hope you guys enjoyed!
If you did make sure you LIKE and RT the first tweet and Follow me to learn more!♻❤
16
Also Follow me on IG for exclusive educational content (I am more active on there) https://instagram.com/pbinvesting/
AsymTrading@AsymTrading
No but that brings up a great point and distinction. Initial stop loss and average stop loss are two very different
things.
My initial stoploss might be 10-15%, depending on the volatility of the stock and a logical stop placement. If the stock
rolls over right out of the gate, then I'm out the full 10-15%.
However, what often happens is, as the stock moves out of the gate, it'll form intraday higher lows on the hourly.
Often times by moving my stop to the first higher pivot low, now maybe the stop is at 5% or breakeven plus.
So while my initial stop tends to be wider - maybe 10-15% - when things average out, it's usually a much smaller
number like 8-10% or less.
AsymTrading@AsymTrading
We're in the first week of a new trading year. If 2023 didn't go well for you, it's ok. As long as you have capital, you
have a chance. But it's incumbent upon you to fix the problems of yesteryear and not repeat them this year. Don't
intend to do the right thing - actually do the right thing.
If you had problems with risk management, fix it. If you had problems with overtrading in a poor market, fix it.
If you didn't track your trades, fix it. If you don't have a setup and you're "system hopping", fix it. If you take 5
trades in a day when your plan was to take 2, fix it.
You are the only thing standing in your own way. It's you against you. It's not bad luck. It's not the market. It's you.
You know what helped me the most? Learning how to walk away from my screen and let my plan work. Enter the
position (according to my plan of course), set my stop and walk away from my computer (not for hours, but for a
while). Was this hard? Hell yes - probably the hardest thing. I couldn't actually do it at first. My anxiety would be so
high, I couldn't stand it.
But doing this enough, I learned a valuable lesson. The market and my stocks will do whatever they're going to do,
whether I'm there or not. They'll go up, down or sideways, whether I'm there or not. Some will go down and stop me
out. Some will go up and trend higher. All me being there did was give me the urge to fiddle with things.
The other thing that helped me was to stop "trying to make money". That sounds counterintuitive, because aren't we
all trying to make money? What I mean is, me "trying to make money" was the root of a lot of bad habits and
impulses. I'd oversize, overtrade, take profits early, and a host of other things.
Stop trying to "make money" and start executing your plan. If that means you trade half or a quarter size of what you
normally do, then cut it. If that means risking $10 on a trade instead of $100, then do it. Trade small enough to where
it almost feels meaningless. It dampens the urge to "make money" and allows you to focus on execution. Eventually,
once you've proven consistency and built confidence, SLOWLY increase your size until you get to the next point where
you start getting uncomfortable. There's a point, trust me.
Skill development is underrated because traders are trying to "get rich". Develop skill, patience, and discipline and
the money will come and maybe you'll eventually get rich. Don't develop these things and you'll never get rich.
Be a slingshot. For a slingshot to propel forward, it first has to take a step back, build up energy, and then release
forward. Take some time to consolidate, build skill, and develop yourself. It might at first feel like you're falling behind,
but you're just building up energy that will propel yourself forward.
Trading is hard. These graphics will make it easier:
17
18
AsymTrading@AsymTrading
"I use more generous stops when the environment is bad. This keeps me in the trade for longer, prevents me from
putting more exposure and saves me from "death from a thousand cuts" in bad environments."（凌迟）
Totally agree with this. As I've stated ad naseum - the best course of action is not to trade. But the points you make
are consistent with my experience as well. With a clarification - giving stops more room also means smaller positions.
People get wrapped around the axle with someone advocating wider stops, as if that means using the same position
size with wider stops. That's just stupid. No one is advocating increasing the loss amount.
But my vast experience using wider stops in tougher markets is exactly what you described. It prevents you from
churning your account with rapid-fire trades (losses) - something that happens a LOT with the tight-stop crowd and
keeps the win rate from completely cratering - something that also happens with the "must get tighter" crowd.
reading list
People asking about a reading list. If I had to go back over 20 years to my new trader self, some (not all encompassing)
suggestions:
1) I love trader interview books like Market Wizards and The Best (and more recently Momentum Masters). They
show a newer trader there's more than one way to trade that leads to profitable outcomes. You learn about different
traders, different timeframes, different asset classes - their backgrounds, thought processes, methods, etc.
2) Some good trading psychology books are a must. A lot of good trading is tied to discipline and patience. The ability
to be discipline and patient is all about you and your mental framework. Books like:
19
"Trading in the Zone" by Mark Douglas
"The Psychology of Trading" by Brett N. Steenbarger
"The Inner Game of Trading" by Robert Koppel and Howard Abell
"Mind Over Markets" by James F. Dalton
"Trading to Win" by Ari Kiev
A lot of the trader interview books go into the psychology of trading, which is another reason I love reading them.
This is critical stuff and you have a lot of work to do on your psychology. Yes, you.
3) Risk Management is the most important part of trading. It is the biggest theme and cliche of just about all top
traders for a reason. Don't gloss over this.
"The New Trading for a Living" by Dr. Alexander Elder
"Trade Your Way to Financial Freedom" by Van K. Tharp
"Trading Risk: Enhanced Profitability through Risk Control" by Kenneth L. Grant
"The Real Holy Grail: Money Management Techniques of Top Traders" by Eddie Kwong
"The Nature of Risk: Stock Market Survival & the Meaning of Life" by Justin Mamis
Considerations
1) Reading a wide breadth of trading methods is great for exposure, but there is one clear downside. One reason I
struggled as a newer trader is BECAUSE I read so many different things. At first it's extremely confusing because there
are 100 different ways. So like a scatterbrained newby with no concept of risk management, I tried to do a lot of things
without really understanding how to do any of them well. It was a recipe for blowing up multiple times in several
different instruments.
2) Reading about the massive wins of top traders is an amazing motivational tool. Stories of greatness from guys like
Zanger, Minervini, Kacher, Morales, Boucher, Livermore, Qullamaggie, and many others kept me going during some
really hard times in my trading. But I came to understand, many of these stories of greatness and massive
outperformance were directly correlated to the market conditions at the time. If you don't understand how
market conditions affect different strategies, then you'll foolishly believe you can achieve their massive returns, even
though you're current market environment might be completely different. Conditions matter.
3) I'm a big proponent of studying expectancy profiles. As you study all of these top traders, think about all of the
things I've discussed with expectancy. Why is their method successful? What is the biggest source of their edge.
Sources of edge are usually one of a few things:
o They are able to find and ride massive winners, so their accuracy isn't as big a concert for them.
o They are very accurate and precise with high levels of accurate, so getting big winners isn't really a concern
o They balance finding decent-sized winners with a decent win rate.
o The fourth is turnover - the more you can turn your edge over the more money you'll make
Just as important, I want you to understand what is the biggest threat to their methodologies. If your source
of edge is finding massive winners on the long side, guess what you don't get a lot of when the market is
downtrending? If your source of edge is accuracy on the long side, guess what you don't really get in sloppy
volatile markets? If your source of edge is turnover, what if you get burned out and can't execute? There are a lot of
things that can affect your edge, from the cycling of your edge to your ability to execute that edge.
4) Eventually you have to pick something. As you're reading these traders, you have to either copy them to the best
that you can or hone in on some kind of confluence among their strategies. One of the reasons I trade the way I do
currently is because there were many many traders exploiting the same phenomenon. The more I kept reading about
them and realizing these guys were essentially identifying and exploiting the same thing, the more I understood that
was the direction I needed to go. Don't go down some rabbit hole of a system that you can't actually implement.
————————————————————————————————
What have I learned by studying some of the best traders of the last 100+ years?
20
1) There are many paths to positive expectancy.
At the end of the day, expectancy is a formula with multiple variables that can be manipulated. If the win side minus
the loss side is positive, then you make money, regardless of the specific manipulation of the variables.
Are there optimum ways or better ways to do things? Sure, but optimum doesn't stay that way for long, since the
conditions change over time as cycles ebb and flow. What's "optimal" for the last few weeks won't necessarily be
optimal for the next few weeks.
You can be the Walmart of trading, with super small profit margins and high turnover. Or you can be the Jaguar of
trading, with super high profit margins but low turnover. Both make money.
Most swing trading is actually like Spirit of Halloween. There are periods where there's a frenzy of activity and the
merchandise is flying off the shelves. And other periods where it's not worth your time to even have the store open
because it's dull and not profitable.
You can even have your average loser larger than your average winner if your win rate is sufficiently high enough. If
your win rate is, say, 70%, you can average $100 wins and $200 losses and still make money.
(70%*100)-(30%*200) = $70-$60 = $10
Do this with high enough frequency and you can make a LOT of money with a pitifully low profit factor. This requires
precision and very high win rates, but it's possible.
2) There's no "right" way.
Anyone who pretends there's only one way to trade or that things HAVE to be done a certain way is stuck in their
dogma. That's why I laugh when someone claims things MUST be done this way or that. This ignores basic math.
There are tradeoffs and balancing acts to everything, in life and in trading.
In "Layman's Guide" Dave Landry talks about how he's worked with many traders over the years and said that all that
stood between them and profitability was widening their stops a bit (see attached image). Imagine the disbelief
and pushback he got from them.
At first, when I was wrapped up in my own dogmatic belief that tight stops were "the best way", this didn't make any
sense to me at all. But when you understand expectancy variables and different ways to manipulate them, then it's
easier to move past your own dogma.
That's why I harp on the "tight stops" dogma. IF it's working for you, great. I'd suspect most people who rigidly hold
onto this belief aren't profitable or they are only profitable during very narrow windows, after which they churn away
whatever they made.
3) Market conditions matter.
The longer your timeframe, the more general market conditions matter, for all the reasons I've discussed before.
Most swing to intermediate term traders either fall into the low win rate, high profit factor camp or the moderate,
moderate camp.
This generally holds true because of the tradeoffs that must be balanced. In either case, profit factor matters and
profit factor of a setup is directly tied to how much the average stock follows through.
In strong markets, where follow-through on average is great, it's not hard to get a decent profit factor. You can even
get away with being sloppy and amateurish during, when everything is going up and the market is much more
forgiving. This is often the time when traders think their approach is bullet proof, but often it's the market, not you.
In a choppy or downtrending market, when the market is in a bad mood, these minor mistakes that were forgiven
during the bull market are paid for dearly.
Once you understand the "normal" expectancy profile in good conditions, next you need to understand the effect
market conditions have on your system. Once your expectancy goes negative, it doesn't matter what you want or
think or assume - you're losing money and you need to take actions to protect yourself.
Trade smaller, trade less frequently, or don't trade, but continuing to beat your head against a poor market
while running a negative expectancy is just foolish and destructive.
21
——————————————————————
Another useful exercise during downtime is playing with expectancy profiles. Yeah, I know - probably the most
exciting thing other than getting your peepee touched.
Expectancy is ((win rate * avg win size) - (loss rate * avg loss size))*frequency
Profit factor is avg gain/avg loss
It's important to know your setup or system's normal profile and what it looks like under different market conditions.
Three general profiles lead to profitable outcomes:
1) high win rate, low profit factor - think day trading or very short-term swing trading
2) low win rate, high profit factor - think Qullamaggie or Zanger or position/trend traders or O'Neil-ites
3) moderate win rate, moderate profit factor - think Minervini with his 50% win rate and 2:1
Before anyone jumps into stupid mode, these are just generalizations. There are many profiles one can build, which
is why there is so much variation in approaches when you start studying traders. The point is to know YOUR system
or methodology's general numbers. This is the starting point. If you don't know your numbers or the "truth of your
trading" as Minervini says, then you're trading blind.
Why does it matter? Because your setup's expectancy profile changes as the market changes.
The problem I see all too often, is universally preached tight stops. This inherently puts a system or setup in the "low
batting average, high profit factor" camp. This isn't a bad thing necessarily - Qullamaggie often talks about a 20-30%
win rate or less - and in a decent market, mind you. But his winrate is this low BECAUSE he uses extremely tight stops.
And this profile works for him BECAUSE he catches very large profit factor wins.
Traders trying to emulate him often have a worse batting average combined with the fact they don't know how to
generate large profit factor wins. They traffic in shitty, low ADR, do nothing stocks and/or they mismanage the good
trades and never take full advantage enough to get the high profit factor needed just to make money.
With a 20% win rate, you need a 4:1 average profit factor just to break even. 25% win rate - 3:1. That's not even making
money - that's just breaking even. How many of you are coming anywhere remotely close to that, in realized average
profit factor?
This brings me back to my point about tight stops and shit markets. In a shitty market, the batting average will be
even worse. What traders do, because they are told this is the best thing to do, is tighten stops. This sounds good
in theory, but it makes the worse win rate even worse. So what happens, they get chopped to pieces.
They go from:
(30%*$200) - (70%*$50) = $60-$35 = $25
thinking tight stops will look like:
(25%*$200) - (75%*$30) = $50- $22.5 = $27.5
But in reality it ends up like:
(15%*$150) - (85%*$30) = $22-$25.5 = -$3.50
Tightening stops in poor conditions has a disproportionately negative effect on the win rate, which ends up making
the outcomes even worse. Even in this example, tightening the stop resulted in a 5:1 profit factor, but at the cost of
a massive reduction in win rate.
Why does this happen? It concerns the influence of market conditions on your expectancy variables.
In a strong market, both your win rate and average gain naturally go up because everything is trending up.
Your stops get hit less often, and your stocks follow through better. You're able to capitalize on these periods
and be profitable because you have a sufficiently high profit factor and a decent batting average.
However, in a choppy or weak market, both your win rate and average win size will decrease. Adverse events
can also make your average loss size go up, even if you stick to your 1% loss rule. Gap downs and steep selloffs, common in poor news driven markets, can introduce slippage and large unexpected losses, which affects
your average loss size. Also the increased volatility sees price swing around wider than usual, increasing
stopouts.
22
You get a double whammy of lower win rate (from increased stopouts and volatility) AND lower profit factor (from
the avg stock not following through). Tightening stops even more in a poor market, thinking that will "increase your
profit factor", doesn't play out.
As I keep preaching, I chose to stay out in poor conditions. But beyond that, I'm more in the camp of wider and
smaller, because of the fact that this isn't my first rodeo and I've played with these numbers many many times.
If the system starts here (using the same numbers above):
(30%*$200) - (70%*$50) = $60-$35 = $25
In a shitty market:
(25%*$150) - (75%*$50) = $37.5- $37.5 = $0
By using slightly wider stops, my batting average will still drop, but not as much as using ultra tight stops. Also my
average win might be lower as well because I'm using wider stops and smaller positions. In this example, the avg
win was reduced and the profit factor went from 4:1 to 3:1.
But when the numbers are crunched, because the win rate didn't crater, the system is able to at least keep its head
above water.
If the win rate craters, then a slight reduction in the average loss by tightening a stop doesn't really help. And you can
only tighten a stop so much. What are you going to do, have a 1 or 2% stop? Good luck with that.
Again these are generalizations and examples. I'm sure there will be some naysaying. That's fine. I don't really care
tbh. You can chop yourself to pieces in a shit market for all I care. Go ahead, buddy. It's all yours.
————————————————————————————————————
Yeah not trading or heeding the losses and reducing damage is the obvious answer, but this thread is for those that
can’t help but overtrade, which is probably most reading this.
For #2 Trading wider in a poor market doesn’t imply taking bigger risks. There’s a natural sizing down and a usual
slight increase in batting average. That doesn’t mean you’re going to make money, as stated up front. There’s only so
much you can squeeze the stop before there’s a significant disproportionate negative effect on the BA.
There are multiple way to manage an expectancy profile. Most of them will lose money on the long side in a poor
market. Trading tighter is almost universally preached and most traders get chopped to pieces do so. I always advocate
sitting on hands.
——————————————————————————
If you haven't traded through enough corrections, the general theme is traders are happy in the morning and pissed
off（激怒） by the afternoon. Or they wake up pissed off and get more so by afternoon. Corrections offer enough
glimmers of hope to suck ppl in before moving lower.
——————————————————————————
One of Kell's top 10 principles is "It's better to be out wishing you were in, than in wishing you were out."
My major concern at this point isn't "catching the bottom" - it's making sure the dust has settled and the wind is at
my back, not in my face.
As Zanger said, once you've played this game long enough, you learn not to put your hand in the fire when the
market is in a mood. I spend too many wasted years playing that game. Y'all can have all that nonsense if you want.
——————————————————————————
If you want a useful activity to do during down time, go back and study the last 10 or 15 times the $QQQ went
from uptrend with upsloping 10/20EMA to rolling over. Study the price/volume action and general tendencies.
How long did the correction last? What did the price/volume action look like during the correction? Red bars
vs green bar action? What did the bottom look like? Was it V-shaped or rounded? What were the signs the
correction was over?
What you'll probably find is that no two corrections unfold exactly alike, even if they look similar near the start. This
should also be a good indication that anyone claiming they "know" what will happen is full of shit and you should
probably unfollow them. You can, however, glean useful tendancies and themes by studying them.
23
——————————————————————————
A lot of wisdom in this clip:
“If I had to start again with a small account I would definitely swing trade. I would do 3-5 to 10 day type swing trading.
Compound it very fast, long short. I wouldn’t day trade and wouldn’t do long term swing trading like multiweek or
multi month swing trading.”
“Trade the highest ADR highest momentum stocks long/short. That’s where the best edge is.”
“Successful trading is about so many things: having a profitable setup, knowing when to trade that setup, position
sizing, risk management. If you have risk management but you don’t have an edge, a profitable setup, don’t
understand when that setup is not in favor, risking 1% on a trade isn’t going to save you. You will blow up.”
Continuing to trader under hostile market conditions is how even the best traders inflict severe damage to their
accounts and mental state.
https://docs.google.com/spreadsheets/d/1U1hxDFaF5hhBF4_OYiDZjyJx90o68wqjbHokU1S0F3w/edit#gid=12994158
0
Downsloping MAs and weak internals. Let the undisciplined and overactive traders lay the groundwork for your next
upswing.
Look in the mirror and repeat: "I won't become a profitable trader until I understand the damage I can cause in
a poor market."
Weak markets are characterized by weak opens that get weaker, strong opens that close weak, and tepid up
days on weak volume. Not every single day, but in general. This is just supply overcoming demand. Likely we'll
bounce off the 50-day, but until I start seeing some higher lows building on the intraday charts, we're in catch a falling
knife mode.
下午 7:39 · 2024 年 1 月 5 日
——————————————————————————————————
People like to spout Qullamaggie, but then ignore most of what he says, while cherry picking what they want to hear.
He "doubles" and "triples" his accounts during the uptrends. As he says, the "big money" is during these momentum
markets. He also laments（痛惜） his overtrading and unnecessary losses trading long in poor markets. Otherwise,
he's shorting or playing EP gaps.
Sure, his approach as evolved over the last few years. It's harder to trade 100 million than it is 1 or 5 million. But most
of us don't have 100 million and most of us should study his trading when his accounts were much smaller.
He didn't trade flags all the time and often spoke about the dangers of doing so. He also balanced this out with
shorting and other strategies. People that try to "trade through" a shit market on the long side don't have the discipline
or resolve of Qullamaggie and have no business trying to do so.
It's also not necessary. If you can "double" or "triple" your account in the one or two good periods a year, what the
hell else do you need? You'll be far outpacing the indices with a minimal amount of exposure.
——————————————————————————————————
If you insist on trading long in a poor market, at least don’t go full ret@rd. Here are a few ways to reduce the damage
(I won’t say make progress because you probably won’t):
1) Trade smaller. Even if you go from 1% risk to .5% risk, you can still do a lot of damage.
2) Trade wider. Some advocate tighter stops in a shit market. This is a great way to get chopped to pieces.
3) Scale in. If you want to “test the waters”, do so with a partial and only add if the stock is working. Refer to point 1
on the risks.
3) Wait longer. Much of the slop and reversals happen in the first 30-60 mins. Just by waiting and watching, you can
let others get fucked up while you eat popcorn.
4) Reduce survivorship bias. Just because you can find one or two that worked doesn’t mean there’s not 8 or 9 that
looked identical and didn’t work.
24
5) Track your expectancy. The numbers don’t lie. If your expectancy is negative and you’re churning money, it doesn’t
matter what wishful thinking you have.
6) Don’t trade. Always a great choice. Wait for an easy dollar market. You’ll thank me.
I can warn you all day, but you’ll have to experience it yourself. If some of the best swing traders in the world with
decades of experience can’t make progress on the long side in a poor tape, what makes you so bold to think you can.
There’s a reason every top swing trader worth their salt has some sort of market timing or market awareness gauge.
It influences every variable of your expectancy.
——————————————————————————
There's no timeline to profitability. Many traders think if they just stick with it long enough, they'll wake up in a year
or two and be making money. Unfortunately, it doesn't work like that. The timeline will take as long as it takes for you
to learn some key lessons - however long that takes. It could be 6 months or a year or 15 years. Some traders never
"get it".
Zanger and Qullamaggie blew up multiple times in the beginning. Minervini went 6 years without making a cent. I've
spoken openly about my 15 years of wandering in the desert before finding my way out. Some people get it after a
few years. I certainly didn't get it very fast. Is that embarrassing? Sure it is. Did I lose a lot of money? A ton.
In many ways, I believe the smarter you think you are the longer it will take. That probably explains why it took so
long to get my head out of my ass. The reason I post Matt Petrallia's risk management > market environment >
setup is that I spent 15 years with this formula completely reversed.
I spent almost ALL of my time on the setup because that's what different "gurus" told me I should do. I tweaked and
fiddled and made more indicators, indicators of indicators, blackboxes, spreadsheets, backtesting algos, optimizing,
etc etc etc. I paid little heed to risk management and market awareness.
The reason risk management > market environment > setup is because if you don't manage risk and don't heed the
market conditions (or understand their influence on your setup), it doesn't matter what setup you trade. You'll lose
whatever gains you did make and probably then some. ALL setups have periods of over/under performance.
Make sure you put things in the right order or you'll blow up or spend many many years spinning your wheels. It can
take 1 year or it can take 10 years. It's up to you. But you'll learn the lessons one way or another.
Both books "HOW TO MAKE MONEY in stocks and Secret of profiting in bull and bear market" emphasis the
importance of market direction
——————————————————
The MLB farm system analogy is an apt representation of the trading world. Just as in baseball, where countless young
kids start with dreams of making it to the big leagues, many individuals enter the trading world with hopes of striking
it rich. But as the levels progress, the competition gets fiercer and the challenges more complex.
In the trading world, the primary school phase could be likened to those who've just started to learn about the stock
market, perhaps buying their first shares or dabbling in small trades. As they progress, akin to moving from high
school to college in baseball, traders might start to study more complex strategies, delve into technical analysis, or
even begin day trading. However, just as many high school baseball players never make it to college ball, many traders
drop out at this stage, overwhelmed by losses or the sheer complexity of the market.
The minor leagues in baseball, from rookie ball to Triple-A, can be compared to the intermediate stages of a trader's
career. Here, traders have a good grasp of market fundamentals and might even have developed their own strategies.
They're making consistent profits, but they're not yet at the 'big league' level. Just as minor league baseball players
have honed their skills but might lack the final touch to make it to the MLB, these traders might be missing advanced
risk management techniques, emotional control, or that intuitive feel for the market that sets the best apart.
Reaching the pros in baseball is akin to becoming a top-tier trader. These are the individuals who not only have
a deep understanding of market mechanics but also possess an intuitive grasp of market movements, a strict
discipline, and an unwavering risk management strategy. They've faced slumps and losses, just as a pro baseball
player has faced slumps and injuries, but they've learned from them and come out stronger.
25
In both baseball and trading, reaching the top echelons requires more than just skill and knowledge. It requires an
indefinable "something" – a combination of passion, resilience, intuition, and perhaps a bit of luck. But one
thing's for sure: just as not every college baseball player makes it to the MLB, not every trader becomes a market
wizard. It's a journey of continuous learning, growth, and perseverance.
This isn't to deter anyone - it's just the reality. I was basically stuck playing "rookie ball" for 15 years. I couldn't seem
to get my head around the importance of risk management and market situational awareness. I got getting clobbered
again and again. Eventually I got out of this phase and moved up to the upper levels of minor league ball. It doesn't
have to take 15 years. Some people just "get it". I certainly didn't.
At this point in my journey, I feel like the last stage keeping me from that "pro" level of performance is patience.
When the iron is hot and the market is good, I don't fully take advantage of those windows. Yes, I perform very well
and I can beat the market averages consistently, but that "super performance" has tended to allude me. In some
ways, it's my lack of patience to trail things for big moves or maybe add to winning trades properly. I have a handle
on risk management and market awareness. I know how to spot setups and find the "frisky stocks" in the leading
groups.
Honestly, I feel like I have all of the tools right now to reach that next level. I know, given the right market backdrop,
I have the right method and the right mindset. I'm still working everyday to reach that next level. One day at a time,
one trade at a time.
————————————————————————————
Qullamaggie: "If you can't go a few months or a few quarters without making any money, you shouldn't go full-time."
I don't think many people understand how much money is required to trade full-time and live comfortably just off
your profits. And as Kris indicates, there are long periods in trading where you won't be making money. It's no different
than running a business. If you burn through all your cash during slower periods just keeping the lights on, you're not
going to be in business for long.
For some reason, people think they will be trading full-time with $20k in their account. It's just not realistic. Don't quit
your day job just yet, Sparky. As Qullamaggie also says in the video, "With swing trading, you can have a job. You
don't have to sit there non-stop. You can work. You can have a part-time or full-time job. You're going to end up
making much more money than from day trading."
As someone with a full-time job, this resonates with me. I make over $12k a month after taxes. Once my after-tax
trading profits exceed this amount on an annual basis consistently and I could "go a few months or quarters without
making any money", then I'll consider the tradeoffs of job vs no job. I'm getting close to that decision point if I use
conservative estimates. I'm already there if I use more liberal ones.
But even still, my trading takes maybe 30 mins a day total - most of that is scanning and analysis. I might spend 5
mins a day total in the act of "trading" - putting in orders, moving stops, etc. It sounds like a dream to "trade fulltime", but most people saying that hate their job and just view trading as a way out. I get that.
To me "trading full-time" sounds incredibly boring. I'm certainly not going to sit there and watch paint dry. That's why
I've structured my trading the way that I have. I don't want to act like it's a job that requires me to be glued to the
screen for hours a day. I'd rather get on with other things that are impactful and meaningful in my life.
That's not to say that I'm not passionate about trading. Anyone who's followed me long enough knows that my
passion for trading runs through and through. But I also have been doing this long enough to understand the nature
of trading (at least the way I approach it), under the shiny veneer and rainbows.
@bo_yoder
I’ve been trading full time since 1997.
Good reading is in reality horribly tedious and boring.
You’re literally sitting there waiting for others to make mistakes and offer you a price that delivers you an
26
advantage.
I was so lucky to have discovered I loved writing and teaching early on.
Working with clients and researching and learning while I wait for opportunities has been the greatest gift of my
career.
I’ve basically lived the life of an artist with a rich patron and it has subsidized me to become a renaissance man.
I laugh when get challenged with the “if you’re so good why teach?”.
It shows their total inexperience and ignorance.
Only the foolish losers have an intense and thrilling experience as an active trader.
All the pros I’ve known with more then 10 years under their belt have deeply intense hobbies and other interests
to enrich their lives and pass the time while they wait for things to cycle and set up.
————————————————————————————
Ivanhoff: Doing the same thing in trading will give different results
Mark Douglas: You need a strategy with an edge, but the outcome of that edge occurs inconsistently.
Trading is hard because there are dichotomies you must balance that require mental and emotional gymnastics.
Traders must have a methodology that they consistently apply that provides an edge over a series of trades. This
consistency provides structure and confidence in their methods.
At the same time even if nothing about the strategy changes, the outcomes will change. This is because the broader
conditions strongly influence the win rate and profit factor. While outcomes of individual trades can’t be known, you
can certainly see this influence across runs of trades. This is undeniable.
This causes traders to lose confidence in their method. The mistake traders consistently make is they start fiddle
fucking with their system and “optimizing” parameters. This might work for a while but then as the market changes,
so too does the outputs. So the trader ends up in an endless circle jerk, always behind the power curve and chasing
their tail.
How do I know? Because I did this over and over again for the better part of 15 years. At some point I started to
realize I had a pretty good system - it wasn’t perfect but it was good enough. The problem was understanding when
that methodology was in sync with the market or out of sync.
So I stopped trying to change and optimize my system and approached trading from a “principles first” perspective.
I started to focus on momentum, trend, volatility, price/volume - the exact same things all of my trading heroes
focused on regardless of their individual trading nuances.
I focused on risk management>market conditions>setup, a simple heuristic Matt Petrallia posts sometimes. Tweaking
your system over and over again is fucking useless if you don’t have a concept of risk management and market
awareness. You can take that to the bank.
————————————————————————————————————
I thought it would be cool to capture Maslow's Hierarchy comparison in an image. Hope you enjoy:
1. Risk Management (Physiological Needs): Like our need for food, water, and sleep, risk management is about the
essentials for trading survival. It’s not merely about setting stop-losses; it’s also about understanding the ‘nutrition’
and ‘rest’ your portfolio needs. A well-balanced ‘diet’ of risk and drawdown management strategies and a ‘restful’
approach to not overtrade are crucial.
2. Market Situational Awareness (Safety Needs): Building on the base, a trader needs to establish a ‘safe home’ in the
market. This means recognizing when the market ‘weather’ is stormy and when it’s calm, much like we seek shelter in
adverse conditions and venture out when it’s safe. This level is about finding security in the midst of market chaos. It’s
about understanding when the hunting is productive and when it’s fruitless.
3. Strategy Execution (Love/Belonging Needs): Just as we seek connection with others, traders need to ‘connect’ with
their strategies on a deeper level, almost like a partnership. This isn’t a superficial connection but rather a profound
understanding and ‘relationship’ with the strategy, knowing when it works, when it doesn’t, and feeling a sense of
‘belonging’ in the market ecosystem.
27
4. Analysis (Esteem Needs): Here, the trader’s ‘self-esteem’ comes from within, driven by the internal validation of
seeing strategies succeed and the ability to pinpoint and learn from failures. Recognition might also come from the
outside in the form of respect from fellow traders, but the core is self-respect through self-improvement and achieved
results.
5. Mastery: In this highest state, just as humans seek to fulfill their potential, traders seek to fulfill their ‘trading
potential.’ They can intuitively sense shifts in market momentum, are in tune with their emotional and psychological
state, and can express themselves through their unique trading style. It’s the trading equivalent of finding one’s ‘calling’
and expressing one’s innermost capabilities.
Qullamaggie: "Look, at the end of the day, if the market is going up, if stocks are going up, your job is to be long.
Once the moving averages turn and your stocks fall below the 10 and 20, your job is to be in cash. It's not more
difficult than that. Focus on what you can control. Everything else is just noise." https://youtu.be/b3KVfgPTQDY
Qullamaggie's quote provides a simple yet powerful insight into successful trading. Let's break it down.
Follow the Trend: If the market is going up, your job is to be long. This is fundamental. Don't fight the trend; ride it. If
stocks are trending upward, that's where you want to be positioned. It's that simple. Don't try to predict tops or
bottoms; you're not a fortune teller.
Use Moving Averages as a Guide: When your stocks fall below the 10 and 20-day moving averages, consider moving
to cash. Moving averages are a great tool to help you determine the direction of the trend. They can act as a support
or resistance level, and when the price falls below these levels, it might be an indication that the trend is weakening
or reversing.
Keep It Simple: Don't complicate things. Keep your strategy simple and easy to follow. You don't need a dozen
indicators on your charts. In fact, too many indicators can lead to analysis paralysis. Stick to a few key tools and use
them effectively.
Focus on What You Can Control: You can't control the market, news, or other traders' actions. What you can control
is your own actions and decisions. Focus on that. Have a clear plan for each trade, including entry, exit, and stop-loss
28
levels. And stick to it.
Ignore the Noise: There's a lot of noise in the market – news, opinions, rumors. Ignore it. Stay focused on your strategy
and what the price action is telling you. Don't get swayed by the opinions of others. Trust your analysis.
Risk Management is Key: This quote doesn't explicitly mention risk management, but it's implied. By moving to cash
when the trend reverses, you're protecting your capital. That's crucial. Never forget that the first rule of trading is to
protect your capital.
Be Disciplined: This might be the most important lesson. Discipline is what separates successful traders from the rest.
Be disciplined in following your strategy, managing your risk, and ignoring the noise. It's not always easy, but it's
essential.
Remember, trading is not about being right all the time; it's about making profitable decisions over the long term. So,
keep it simple, follow the trend, manage your risk, and stay disciplined. The rest is just noise.
Qullamaggie: "You need to have market awareness, very important, you just can’t keep doing the same thing over
and over again, it’s not that easy as good setup buy, no, you have to be aware of the market conditions."
I've repeated these same statements from Qullamaggie, Zanger, Minervini. etc. This is critical stuff folks. Many of you
brush these quotes off or think somehow you're smarter than the market and smarter than the experiences of traders
with decades in the trenches. You're not. Sorry to poke holes in your bubble.
Market Awareness: You can't trade in a vacuum. You need to understand what's going on in the market. Are we in a
bull market, a bear market, or a sideways market? What are the dominant themes driving the market? You need to
have your finger on the pulse of the market. Being ignorant is not an excuse.
Adaptability: The market is a dynamic beast. It's constantly evolving and changing. What worked well last month may
not work today. You need to be flexible and adaptable. If you keep doing the same thing over and over again, the
market will chew you up and spit you out. Don't be a one-trick pony.
Beyond the Setup: I see some of you getting fixated on a single setup or pattern. You think you've found the holy
grail. Newsflash: there's no such thing. A good setup is just one piece of the puzzle. You need to consider the
broader market context, the risk-reward ratio, and your position size. It's not as simple as "good setup,
buy." If it were that easy, we'd all be millionaires.
Critical Thinking: Don't be a sheep. Don't blindly follow someone else's trades or ideas. Do your own analysis, think
critically, and make your own decisions. Be accountable for your trades, whether they're winners or losers.
Continuous Learning: The market is a harsh teacher, and you're never done learning. Keep studying, keep improving,
and keep adapting. If you think you know it all, the market will quickly humble you.
I'm not saying this to discourage you. I'm saying this because I want you to succeed. Trading is a tough business, and
it requires a tough mindset. Be disciplined, be adaptable, and stay aware of the market conditions. That's how you
survive and thrive in this game. Now, let's get back to work - doing nothing right now - because the conditions
indicate that. Studying is great and crucial. Overtrading is not.
@SamWu13
Minervini mentions vacuum trading. Don’t care the index is rally or follow through day, only trade when the stock
meet the setup criteria.
@AsymTrading
He also has a market timing model. Most ppl that ignore the broader conditions won’t do well.（这不正是我这
两年的问题吗？）
————————————————————————————————
Profitable trading starts with a question:
Is the current environment conducive or destructive to my trading setup?
This requires you to:
1) Have a setup in the first place
29
2) Consistently trade that setup
3) Study and understand that setup intimately enough to know under what market conditions it works and doesn't
work
4) Have the discipline to do nothing during the periods when the setup is out of favor.
————————————————————————————————
https://docs.google.com/spreadsheets/d/1U1hxDFaF5hhBF4_OYiDZjyJx90o68wqjbHokU1S0F3w/edit#gid=12994158
0
Downside deterioration expanded today across sectors and market caps. Remains a risk-off environment.
I didn't become a profitable trader until I understood the damage I could cause in a poor market. It took me 15
years and numerous boom/busts to understand the lesson.
Look in the mirror and repeat the following: "I won't become a profitable trader until I understand the damage
I can cause in a poor market."
————————————————————————————————
Instead of thinking you'll "make something happen" in a poor tape, a better course of action is to have the patience
to wait for a constructive tape. Easy dollar versus hard penny, as Minervini says. Except people trying to make "hard
pennies" end up losing dollars.
Some people go from 1% down to .5 or .25% or up to 2% when the market is hot. It's a personal preference. I chose to
do nothing, rather than modulate risk up and down. At my age, I'm more interested in consistency rather than volatility
in my returns.
You have to earn the right to size up you risk.
————————————————————————————————
Dan Zanger in Momentum Master:
“Observe and live in the firestorm of the market for a few dozen years, and you’ll learn not to stick your hand in the
fire when you see it. I got burned too many times to forget what “chop and slop” truly means, whether long or short.
Market behavior follows distinct repetitive patterns that teach clear lessons, so when you see a market starting to act
badly, you’ve learned instinctively that it’s time to back off for the required weeks or months. During that time you
don’t go on vacation and turn your back on the market; you still need to be watching the market every day so you’ll
know when it has calmed down and is back to normal. Diligence even during a choppy market is part of good timing.”
Key Takeaways:
Avoiding Participation in Uncertain Markets: Zanger underscores the importance of recognizing and sidestepping
tumultuous market periods, suggesting that both bullish and bearish positions can result in losses when the market
lacks a clear direction.
Understanding Market Corrections: He alludes to the dual nature of market corrections – they happen both in terms
of price fluctuations and time duration. It’s essential to comprehend that such corrections, especially their temporal
aspect, can often be longer than most anticipate. This can be particularly challenging for traders eager for continuous
engagement.
Continuous Learning and Preparation: Even if one refrains from active trading, Zanger advises continuous market
observation. Such periods offer opportunities to refine one’s strategy, observe resilient stocks and sectors, and analyze
historical market data. This proactive approach equips traders for success when favorable conditions return.
The Cyclical Nature of the Market: Timing is everything in trading. Good timing doesn’t just mean knowing when to
enter or exit a trade but also knowing when to sit on the sidelines and observe. This demands continuous attention
to the ebbs and flows of the market cycles. As Ivanhoff said, there are times when everyone is a winner and times
when everyone is a loser. Recognizing the difference and adjusting accordingly is the key.
——————————————————————————————
There are four basic ways breadth of new highs and new lows can move:
1) NH expanding, NL contracting, NH>NL (uptrend)
30
2) NH contracting, NL expanding, NH>NL (uptrend momo waning)
3) NL expanding, NH contracting, NL>NH (downtrend)
4) NL contracting, NH expanding NL>NH (downtrend momo waning)
In bifurcated markets, you'll see some sectors in an uptrend and some in a downtrend at the same time.
This is obviously a similification, but these are generally how breadth of NH/NLs or up/down momentum unfolds and
what they indicate.
https://docs.google.com/spreadsheets/d/1U1hxDFaF5hhBF4_OYiDZjyJx90o68wqjbHokU1S0F3w/edit#gid=12994158
0
Broad-based selling in most sectors. 3 out of 4 indices losing a check mark. The market was a bit frothy end of year,
so not super surprising tbh. The next week or so will be telling whether buyers can step up and support or if the
weakness expands and gets worse. Either way, I'm not going to stand in the middle of a bull/bear food fight and try
to find out.
2024 年 1 月 3 日
————————————————————————————————
Signs of weak market:
1) The number of stocks hitting new lows out paces the number of stocks hitting new highs. This NLs number expands
while the NHs number contracts consistently.
2) The number of stocks expanding to the downside outpaces the number of stocks expanding to the upside.
Upside moves are muted and lesser in number, while downside moves are more pronounced and greater in number.
3) Distribution in the indices. Often indices will open higher only to reverse and close lower on higher volume. Churn
or down closes on higher volume is a sign of distribution. Continued distribution without accumulation is often a bad
sign.
4) Increased breakout failures. Stocks will breakout and suck many players in, but then fail shortly thereafter. The old
"suck and fuck" - but not the kind you want.
5) Increase breakdowns. Stocks will break down through recent pivot lows, thus creating lower lows and eventually
lower highs. This is the definition of a downtrend. Also key MAs, like the 10, 20, and 50-day will start to slope
downward as stocks break through them and start to "live" under the MAs without enough buying demand to keep
them above.
6. Negative expectancy. Probably most importantly, your expectancy goes to shit. In weak market, you get
slapped with a double whammy. Not only does your batting average go into the tank, but your average winner
shrinks considerably since stocks aren't really following through as strongly. Also, negative surprises tend to
proliferate, so you often get downside gaps and increased slippage to boot. If your last 5-10 trade expectancy
suddenly turns negative, that's a great canary in the coalmine that things are not what they were.
This isn't an all encompassing list, but is a useful guide. The more of these show up, the more defensive you should
be. Particularly the last one. We get paid from the outcomes we're actually producing, regardless of any of the prior
5 occurrences. However, the chances of you outsmarting a poor market are slim to none. In all likelihood, you'll just
do a lot of damage trying.
————————————————————————————————
In a solid market, you want the NHs to outpace the NLs and the up momentum to outpace downside momentum. In
essence, I want the left number to be higher than the right number on this chart. This indicates strong demand and
constructive price action in the average stock.
I also want to the upsloping 10/20EMAs on the index/sector charts, indicating predominate positive trends, which are
great tailwinds for stocks in general and stocks in those sectors.
It's only one day of 2024, but already seeing negative action stacking up. Breadth/momo flipping negative, losing
some checkmarks on index/sector charts. While short-term weakness is ok, continued weakness with an expansion of
negative indicators is typically not. Something to keep an eye on for the active long-side trader.
31
——————————————————————————————————
If you take care to study top performing traders, don't just pay attention to their super performance periods. Take
particular note of what they do in poor market conditions. There's a reason they all have "market awareness" types of
tools. There's a reason they adjust strategies or sizes or just chose to sit out.
Regardless of the swing trader you study, they understood the influence the broader conditions have on their
expectancy. They learned the hard way, often through very painful losses, that the market doesn't care about what
you want or need.
You must always adapt and align to the current market conditions. It'll never happen that the market adapts to your
wishes, wants, desires, or needs. The sooner you understand that, the better positioned you'll be for success.
——————————————————————————————————
A trader who fails to prepare is preparing to fail.
Weekends are when I focus on self improvement. While the markets are closed, I take time to review everything that
went right, and wrong, during the past week, with simple tools:
I use Thinkorswim's OnDemand feature to replay my past trades, and missed opportunities, and I record them with a
screen recording software (I use Camtasia). I store those trades in Google Drive so that I can go over and learn from
them.
I will journal my past week's performance, helping me to prepare a game plan for the coming week.
Have a great weekend everyone.
——————————————————————————————————
My goal in swing trading isn't to make a steady return. The market doesn't work like that. As Dave Landry rightfully
pointed out, swing trading is streaky, meaning a majority of profits will often come over short periods of time.
This means there will be a positive skew during some periods and a negative skew during others. All trading
approaches go through periods of outperformance and underperformance - your job is to know your method
intimately enough to know which period you're currently in.
As Oliver Kell said in Victory in Stock Trading: "It is very unlikely to put up the same return each month. You may have
5% months, losing months, or 60% months. The goal is to avoid major setbacks and let compounding work for you
through the year so you can finish strong."
If the market rallies, on average, for several weeks several times a year, your job is to be heavily long during those
good swings and do little to nothing during the tougher periods.
Let's say the market rallies for 6-8 weeks and then goes into a sloppy choppy period for 6-8 weeks. Your goal should
be to make 20, 30, 50% during that good period. When the trend transitions, you'll often not know about it until
after you've experienced some turbulence. Your expectancy will probably have turned negative over the last 5-10
trades and the weight of evidence of your market monitoring approach will likely have done the same.
Traders shoot themselves in the foot by not knowing how to back off. If you make 50% during a good period and then
draw down 20-30% during a trend transition, then you've made almost no progress at all. To make matters worse,
traders will continue to fight the trend and grind their accounts. How do I know this? Because my dumb ass did it
over and over and over again for years and years.
Be a pig when it's time to be a pig and be a chicken when it's time to be a chicken - and most importantly, know the
difference.
——————————————————————————————————
I'm not posting these videos because I believe the market is going to crash. I have no idea what the market will do
over the next several weeks and neither does anyone else. But I know through many years of experience that my
long-side methodology doesn't fare well in a choppy or downtrending market. It's about understanding the
possibilities and potential scenarios and then letting the market tell you through its price action.
Ivanhoff has several great ebooks that offer impactful insights for a minuscule price. One of the biggest "ah ha"
moments I've had as a trader was from a simple, yet profound image in his book. I realized the reason I struggled
32
for so long was because I was the typical "boom & bust" trader. I knew how to boom, but couldn't help but bust
in the poor times.
It was then that I learned that the secret sauce to profitable trading wasn't just making money, but more importantly,
it was keeping it. If you make 100% one year and then lose 50% the next, you're back to square one - zero gains. That
doesn't seem fair, but that's trading math for you. Risk management and drawdown control then becomes priority
number one. Risk management might sound cliche, but there's a reason top traders drone on about it.
——————————————————————————————
Qullamaggie: "If you have patience during base building periods, then you can profit a lot once the bases have been
built."
——————————————————————————————————
Understanding historical trends and patterns is crucial in momentum trading. It's the foundation upon which we build
and refine our strategies to exploit market edges. But remember, while you're deep into this important exercise, it's
all too easy to let certain biases skew your thinking.
Think about it: In momentum trading, we often focus on stocks that have historically performed well - those that
showed strong trends from our hypothetical buy points. But, as you dive into this stock-by-stock historical analysis,
be mindful of the biases and assumptions that can creep in.
Survivorship Bias: This is a sneaky one. You might find yourself focusing only on the stocks that 'made it' and ignoring
those that didn't because they're not in the spotlight. This tunnel vision can paint an overly rosy picture, leading you
to underestimate risks and overestimate potential returns. Remember, every failure has a lesson that could refine your
strategy.
Confirmation Bias: It's human nature to favor information that backs up our existing beliefs. But in trading, this can be
your downfall. Ignoring market signals that contradict your strategy can lead to missed opportunities and lingering in
losing positions. Challenge yourself to consider all data, not just what supports your viewpoint.
Hindsight Bias: Ever looked back and thought, 'I knew it would happen'? That's hindsight bias. It tricks us into
overestimating our predictive abilities. The market is complex and often unpredictable, so don't fall for the illusion
that past events were always obvious.
Overconfidence Bias: Confidence is key, but overconfidence? That's dangerous. Believing too strongly in your
predictive prowess can lead you to take excessive risks. The market has a way of humbling even the most confident
traders, so balance confidence with caution.
Recency Bias: It's tempting to give more weight to recent events. However, focusing too narrowly on the short-term
33
can lead you to overlook long-term trends and historical data, which are vital in momentum trading.
Gambler’s Fallacy: Don't fall into the trap of thinking a stock is 'due' for a win after a losing streak. The market doesn't
work on 'due' - it's not a game of chance but one of strategy and analysis.
Herding Bias: Following the crowd might feel safe, but in trading, it can lead to buying high and selling low - the
opposite of a successful strategy. Be wary of market trends that lack solid analysis.
Now, how can you avoid these pitfalls?
Broaden Your Analysis: Look beyond winners. Understanding the full picture, including underperformers, gives a more
balanced view.
Systematic Approach: Adopt a rule-based strategy to analyze movements, both historical and current. This helps
reduce emotional bias and brings discipline to your trading.
Stay Neutral: Don't just root for your strategy to win. Evaluate all signals - the good, the bad, and the misleading. It's
crucial to know if your edge is real.
Regular Reviews and Adaptations: Markets change their character and mood, and so should your strategy.
Continuously assess whether your go-to strategy is effective in the current market conditions and adjust as needed.
Trading Journal: Document everything. This isn't just a record; it's a tool to identify patterns and biases in your trading
decisions.
Awareness and proactive steps are key to overcoming biases. By adopting these practices as a momentum trader, can
make more informed, objective decisions. Remember, the market is a tough teacher, so stay alert, adaptable, and
always willing to learn.
————————————————————————————————
https://docs.google.com/spreadsheets/d/1U1hxDFaF5hhBF4_OYiDZjyJx90o68wqjbHokU1S0F3w/edit#gid=12994158
0
Interest rate-sensitive areas like energy, materials, real estate, and utilities are under some pressure going into yearend. In the last quarter, when things "should" have rolled over, they didn't, speaking to the resilience and demand.
We'll have to watch and see if this continues into 2024.
While the $QQQ had a pretty steady year, the mid and small cap space was far choppier.
As Uncle Dave Landry said in his excellent book "Layman's Guide to Trading Stocks": Swing to intermediate-term
trading can be skewed, streaky, and depends on the market to persist in its trend." That is one challenging aspect
of trading in general and trend-following more specifically - the market is always changing character.
Choppy sloppy periods condition traders to trade profits quickly. When the trends return, it's easy to miss that streaky
persistent directionality because you're still in "protect profits" mode. The market has a great way of lulling traders
into a sense of confidence with specific methods over a certain period of time, only to change and render that method
void or diminished.
上午 2:32 · 2023 年 12 月 31 日
———————————————————————————————————
Q: Did taking quicker profits benefit you in 2022 though? Every time I had gains during that period they were
given back trying to hold for the longer move.
A: Yeah it’s true. Taking profits quickly in 2022 was probably one of the main reasons my long trading was
profitable. It probably conditioned me for 2023 in bad ways
Qullamaggie once talked about how he was really good at finding winners, but not so great sometimes at holding
them. This resonates with me because I tend to have the same problem.
Stock selection and entry aren't really something I struggle with IMO. Neither is cutting losses. I don't do these
things perfectly, but I have no problem finding movers.
While it used to be rare to find myself in really big winners,
I do it quite frequently now. It wasn't rocket science or even a significant change in my trading style. it was more of a
mental shift in understanding what a "good" stock is - a stock is only good if it's going up and doing so very quickly.
That's the best, most efficient place to put my capital for maximum upside.
34
It's the profit management and trailing side that I have a horrible track record with. I put quotes and things out there,
not because I've perfected these things. I'm constantly making mistakes and kicking myself in the ass. And if I'm being
honest, most of the time I'm kicking myself in the ass, it's for one of two reasons - getting into a stock "early" and
getting out too early.
Sometimes I'll try to get into stocks pre-market, when volume is already kicking into gear. This works sometimes, but
more often than not, I end up in a shit position that I'm having to dump near the open or with a bad fill. The other
problem, when things look "extended", I often sell some or all of the position, only to look back a few hours or few
days later and see I missed a huge move in a stock I was already in. Happens far more often than I care to admit.
I'm not saying I do everything wrong and I've certainly had a great trading year overall. But there are a lot of things I
could have done better. Kristjan talked about how he'd probably be up a lot more every year if he didn't
overtrade poor markets. I'd be up a lot more yearly if I trailed and maximized my winners. It's one thing to intend
to trail with a specific MA or technique, but wholly another to actually execute this when things are zigging and
zagging.
I often think it's a size issue. Even though a 20-30k position is only 5% or so of my funds, having multiple positions
gyrating around, especially in the high-octane shit I like to play in, can be a little nerve-wracking. Sizing up has been
one of the harder things for me to do mentally, which has probably hampered my performance.
In the same regard, looking at profits in dollars instead of percents also affects my ability to actually hold a position
through its full unfolding. There's a point where mentally I'm saying "it's up enough" and then find excuses to cut
and run. Again, this isn't what I'm supposed to be doing, but it's a definite mental hurdle.
It's something I'm "working on" to fix. Maybe I need a shrink rofl. Armchair warriors with something to say, you should
be concerned with your own demons.
———————————————————————————————————
Livermore: “Men who can both be right and sit tight are uncommon. I found it one of the hardest things to learn. But
it is only after a stock operator has firmly grasped this that he can make big money.”
Being right and sitting tight are difficult because both require patience and discipline, something most traders lack. It
takes patience and discipline to "buy right" - waiting for a low risk, high reward situation. Even after buying right, the
next hurdle is "sitting tight", which also requires patience and discipline.
If you're struggling in trading, many times it's rooted in either not buying right (which I define as the right stocks at
the right time in the right kind of market) or not sitting tight (which I define as giving the stock some room to trend
for as long as it trends). It's easy to let fear and greed mess up the best-laid plans.
———————————————————————————————————
Most technical analysis methods are rooted in one or more of the 4 key "principles of price action".
1. Markets alternate between range expansion and range contraction. Markets are dynamic entities that oscillate
between periods of range expansion and range contraction. This cyclical behavior is rooted in the principle that prices,
more often than not, tend to move within defined ranges. Recognizing the current range and anticipating the
subsequent one is pivotal for traders. This understanding allows them to position themselves advantageously, whether
they're aiming to capitalize on breakout opportunities or seeking to trade within the confines of a range.
2. Trend continuation is more likely than reversal. Another foundational belief in trading is the adage that "the trend
is your friend." This underscores the principle that trend continuation is generally more probable than a trend reversal.
Essentially, if a market is moving with a discernible trend, be it upward or downward, the safest assumption is that this
trend will persist. However, the challenge lies in discerning when this trend might be on the cusp of a reversal, as no
trend lasts indefinitely.
3. Trends end in one of two ways: climax or rollover. Trends typically culminate in one of two ways: either through a
dramatic climax or a more subdued rollover. A climax, particularly a buying climax, is characterized by a frenzied rush
where buyers, driven by a mix of fear of missing out and exuberance, are willing to pay almost any price. This surge
of buying eventually exhausts itself, and with no buyers left, the market can experience a sharp decline. Conversely, a
35
rollover is more subtle. It's when the momentum behind the buying or selling gradually diminishes, leading the trend
to fizzle out rather than abruptly end.
4. Momentum precedes price. Furthermore, the principle that "momentum precedes price" is crucial. It suggests that
before a significant price movement occurs, there's often a discernible surge in momentum. This initial burst, or
"impulse" move, can serve as a precursor or early indicator of a more sustained move in that direction. For traders,
recognizing and acting on these momentum shifts can be the key to capturing profitable opportunities in the market.
The reason I primarily trade ADXpress and ADXtender patterns is because they are based on 3 out of 4 of these key
principles. The scans target stocks that have expanded in momentum (rule 1 and 4) and pulled back/consolidated
(rule 1), and then I buy breakouts for a possible continuation (rule 2). Rule 3 comes into play when it comes to
trailing or taking profits.
Trading doesn't have to be complicated. Why not base your thinking and strategy on core principles observed for
over 100+ years?
——————————————————————————————————————
In recent years, the more I focus on price, volume, volatility, momentum, and trend and ignore nearly everything else,
the better my outcomes. All the indicators I use merely help me understand these 5 components. The less I care
"why" something is happening, the better my outcomes. The more I react to what I see rather than guess what will
happen, the better my outcomes.
I would say of these four principles of price, expansion and contraction takes the top spot. Why? Because expansion
encompasses the rest. When a stock goes into an expansion phase, price expands, volume expands, momentum
expands, volatility expands, the trend goes up.
Likewise, when a stock that was expanding enters a contraction phase, everything contracts. Volatility contracts,
volume contracts, momentum contracts, the trend goes sideways.
Where do I look to enter? When the stock that was expanding, that then starts to contract - starts to expand again! I
want to be there looking for a place to enter at the beginning of this reemergence of expansion - not during the
contraction and certainly not days and days after. From that temporary rest or pause phase, the stock starts to expand.
Like . Price expands, volume expands, volatility expands, momentum expands.
This expansion and contraction is like the momentum stock breathing in and breathing out - inhale, exhale. My only
goal is to read this expansion and contraction, understand where we are in that momentum cycle, and position myself
accordingly.
Are we at the beginning of an exhale? Or at the end, after all of the energy has been expended? Get into stocks
near the beginning of an expansion phase or the resumption of an expansion phase after a contraction.
————————————————————————
Qullamaggie: "It's better to sell 10% late than 100% early."
Good trading is hard because it goes against human nature. There's a persistent urge to get in "early" before
everyone else. The thinking is, if I get in early, then I'll get the highest amount of reward, should it take off. Often, all
getting in "early" rewards a trader is sitting in a stock going nowhere, tying up capital. Theoretically, you can get the
highest reward to risk, but many times, this doesn't play out in practice, often negating the perceived edge.
On the other side of the trade, traders have a persistent urge to sell early as well. Once profits are shown, they are in
a hurry to "lock in some gains" before they disappear. Often, especially in an uptrending market, this does little more
than leave a lot of gains on the table from perfectly fine trades. Even Qullamaggie said one of the reasons he
switched from day trading to swing trading is because of the fact that strong swing trades rally for days and weeks.
It's easier and more profitable to ride these multi-day trends than to jump in and out constantly.
Both of these urges to be early violate trend principles. Getting in early, before the trend is evident and getting out
early before the trend has actually turned, mutes the power of trends that we are trying to catch in the first place.
Listen to Uncle Dave Landry: You MUST catch a trend to profit, regardless of timeframe or strategy.
————————————————————————————————————
36
It’s the last trading week of 2023. Unlike 2022, which was characterized by a prolonged downturn, 2023 was the
opposite, giving persistent rally for most of the year.
If your trading didn’t go well this year, it’s often due to a mismatch of your strategy with the broader conditions.
Perhaps the 2022 bear had you still carrying a bearish mindset or maybe you were skiddish with longs, taking profits
too quickly or not trailing properly.
Whatever the outcome you have to honestly assess your results, find your major demons, and work next year to
vanquish them or reduce their impacts.
I know for me, I probably could have trailed better. Early in the year I was far too quick to take profits, conditioned by
last years short lived rallies. That caused me to leave a lot of profits on the table - perfectly fine trades but not
maximizing the trend. I also churned a fair amount of commissions in futures.
Spending 21k in commissions to make $10k or so in profits isn’t good business math. The downside stretches from
last year were more long lasting and meaningful, whereas the resilience of the trend this year caused a lot of turnover
without much in the way of profit.
Fortunately despite being less than perfect, there were plenty of long side profits and opportunities to take advantage
of so overall I’m happy with my results. There’s always something to improve and work on. Your trading should be
reflective and iterative. Otherwise what are you doing to suck less?
R: Definitely got married to a bearish view in 2022. I’ve divorced that just in time to flip at the top and marry the
opposite and get fucked differently
————————————————————————————————————
Stockbee: "As a swing trader, if you regularly buy stocks up 3 days in a row , you are likely to sooner or later blow up
your account."
You want to trade momentum moves near the start of the potential move. Every breakout trade you take should be
put in context of where things are within the momentum cycle. If you take a typical momentum cycle, there are only
a few places where it makes the most risk/reward sense to place trades.
Maybe you're trading day 1 of an impulse/gap/expansion move. Maybe it's the day 2 follow-through. Maybe you're
trading a breakout from short-term 1-5 day pauses after the initial impulse. Maybe you're trading breakouts from
flags/pennants/triangles that form later in the cycle and take several weeks to form.
Outside of these four key action areas, there aren't a lot of great zones to play breakouts on momentum stocks. You
certainly don't want to be trying to trade breakouts from intraday patterns if the stock is already up 3-5 days.
——————————————————————————————————————
I didn’t start making money consistently until I stopped trying to play both sides; stopped trying to trade a bunch of
strategies at the same time; stopped trying to trade every instrument available; stopped trying to trade all the time in
every market.
I trade the same few setups over and over again. The same exact ones that I drone on about. I trade the long side of
stocks. When conditions aren’t conducive to long-side trending and follow through, I do little or nothing. While I do
short futures during poor markets, I can’t say I’ve ever achieved the same returns that I get in stocks being long only.
Usually I just end up churning a lot of commissions. While this might seem like a really high number, as a percentage
of my accounts it’s not crazy. But if I’m not seeing a commensurate return for those fees, then as a business expense
it’s far too high relative to profits.
I make far more in stocks for far less commissions. As I look over my yearly results, overall things are great, but I’m
keen on the fact that my futures trading has been a far greater expense than is worth the time and return. So likely
next year I’m just going to go straight stocks and only long, while I work on the futures or just decide to quit them for
good.
————————————————————————
"Never forget that in order to profit from a trade, you MUST capture a trend."
"Most seem to have to go off to chase rainbows and empty promises before they get it." Dave Landry
37
@TFollowingMoron
https://davelandry.com/10-ground-rules/
I can't tell you how many times I've veered off（转向）course, chasing rainbows and shiny objects, only to return back
to the fundamental principles that matter and make an impact on results.
Regardless of your timeframe or trading strategy, the stock MUST trend to make money. Even if you are trading mean
reversions and reversals. The stock HAS to move from your entry point higher (or lower if you're shorting) for you
to profit. It can't be any other way. Therefore trend and follow-through are the fundamental requirements of profits.
You can be religious about cutting losses. That's great. Trading is certainly a two-sided coin of risk vs reward. But if
you don't actually catch trends and follow through regularly, you'll never actually make enough profits in excess of
your losses to make it worthwhile. Many people hyperfocus on defense, but have a terrible offense. Ultimately, the
only reason we're trading in the first place is to make money and you can't make money without trends and followthrough.
This seems like a no-shit proposition, but you'd be surprised how many people don't actually understand this simple
point. You can tell this by how they trade. They fight trends, try to pick tops and bottoms, don't trail positions to ride
a trend, cut winners early, let losers run, etc, etc. etc.
Anytime you're struggling, review your trades and honestly ask yourself if you're using the power of trends to your
advantage, or are you constantly trying to outsmart them?
————————————————————————————————
"If it's not your experience it's not your truth." - Thomas Cambel
This is such a true statement in so many ways. People can read and watch videos, be told something countless times,
etc, but they only have a surface understanding of the lessons. But without experiencing something, they have have
no deep understanding. It's not their truth because they lack the actual experience. This is one of the biggest
disadvantages newer traders have - they just haven't seen and experienced enough.
Over the last 21 years, I have traded through multiple bull and bear markets. I've seen nosebleed drops, nauseating
months of chop and slop, climax runups, and everything in between. I've tried almost everything I can think of to
navigate poor markets. Tighter stops vs wider stops, all in vs scaling in, tighter trail vs wider trail, trying short selling
to offset the poor long trading, etc etc etc etc etc. Despite my best efforts, I just could not find a way to trade
these conditions consistently. I would just end up frustrated, demoralized, and busted over and over again. I
would grind away whatever progress I did make in the prior uptrend - in some cases grinding it all away and
then some. Just a yoyo, rollercoaster of an equity curve. Over and over again.
Eventually, (after literally 15 years of going through this pain) I just said "screw it" - I'm just going to sit on my hands
and let everyone else get fucked up. I was so tired of getting screwed and wasting all of the gains and a lot of
time and energy. That doesn't mean I don't trade ever in a correction or choppy mkt - but instead of continually
pushing, I either don't trade or I trade so little it's almost meaningless. It's more to keep a pulse on things. Make small
donations to the mkt to keep me from doing great damage. Even though I know the odds are against me and I won't
get to much progress, it tames my urge to "do something".
That urge never really goes away fully, but you have to live with it and minimize the damage. Like you know Mr. Hyde
is still there and he's part of your psyche, but you take away his power to destroy you. It's really the hardest thing
I've had to learn - how to live with those urges, but take away their power. But you have to do it.
If it's not your experience, it's not your truth. Gain experience and trade with real money. You'll only get so far with
reading and being told things - you have to experience the mkt and all of the nuances of trading. At some point, the
things I talk about will resonate with you and it'll become your truth as well.
————————————————————————————
Having traded both stocks and futures for quite some time, I've come to realize they're really different animals. You
just can't expect to apply the same strategies to both and see similar results, despite what those trading courses might
promise. It's one thing to show a couple of impressive charts in a book or online course. But it's a whole different ball
38
game when you're actually in the trenches, executing hundreds or thousands of trades in real-time. Here's why I think
they're so different:
In the world of futures, you're dealing with just a handful of tickers. This means nearly everyone's eyes are on the
same few symbols. When that happens, you often see a bunch of orders piling up at key points, leading to some really
choppy intraday price action. Market makers love this. They play around with pivot highs and lows, triggering stops
and then quickly reversing the trend. And since futures commissions can be high on both the buy and sell side, brokers
make a killing each time traders are forced to enter and exit positions.
Now, compare that to stocks. You've got thousands of tickers to choose from. It's much harder for market makers to
play the same games, and the intraday movement tends to be a lot smoother. Plus, with most brokers charging little
to no commissions on stock trades, there's less financial incentive for them to play these fuck fuck games. Not to say
this doesn't happen, but there's less incentive now than ever before.
Another thing about trading just a couple of tickers in futures is that you might start forcing trades when they're not
really there. You're staring at one chart all day, and if nothing's happening, you might jump between different time
frames, desperately looking for a trend. It's easy to fall into this trap if you're fixated on a single ticker.
But in stocks, with so many options, you can spread your bets a bit, as there might be 2 or 3 stock breaking out on
strong volume. Sure, this could lead to overtrading, but for me, it's more about putting a few feelers out in different
stocks and seeing what comes back. It keeps me thinking about probabilities, rather than trying to force something
to happen with just one ticker.
And then there's the 24-hour trading in futures. Some see it as a plus, but I find it more of a hassle. It's great that you
can trade almost any time, but it also means there's never a break. You're always on call, watching your positions,
which can be really draining.
Lastly, leverage is greater in futures, often with only needing 20% margin, which allows one to amplify the potential
returns. Greater leverage isn't necessarily a good thing and doesn't always lead to higher returns. Mark Minervini
proved this point when he, as a straight stock trader, far outperformed those trading stocks, futures and options. If
you look at the annual USIC returns by group, this trend plays out year by year almost every year with few exceptions.
Why don't the leveraged asset classes demolish the stock traders in real results? I've wondered this year after year
when I see the final tallies from each group and see the stock class consistently outperform. The assumption that
leveraged futures trading will outperform stocks just doesn't seem to align with real-world results.
Before the idiots start to retort about this that or the other institution - I'm talking about private individual traders,
not hedgefunds or other institutional players. I'm also talking about consistency - not some cherry picked examples
from the 1980s during the commodity bubbles.
These are my experience and observations actually trading these instruments for 2 decades, so my opinions are fairly
biased. You're free to have your own opinions of futures (or currency or bitcoin or options) - if it works for you great.
I'd be willing to bet my accounts that they haven't worked for you like you assumed they would. More likely, you're
churning a lot of commissions and making the broker rich or you've blown up your account multiple times trying to
make things happen.
——————————————————————————————————
Which of the setups I described do I play? All of them. It depends on where we are in the broader market cycle.
In the initial stages of a rally, you're not going to get a ton of traditional flag breakouts - those tend to come after
the first leg of a rally and then after the market has consolidated for a few weeks. It's no different than other longer
patterns like cup and handles and VCPs. They come out in droves near the beginning of a move, but are scant
near the end of rallies, when the rally is growing long in the tooth.
Day 1 kinds of moves can happen just about any time. Many are news-driven moves, which is what causes the gap
or the massive expansion bar on high volume. Patterns that form on Day 2-5 will tend to come off of these primary
ignition bars. But again, you want to trade the pauses and pullbacks near the beginning of moves. If the stock
has already rallied for several weeks and you just not trade a 2-5 day range breakout, then be prepared to get
39
stopped out a lot and not have much follow through.
In trading context means a lot. Where is the pattern forming? Is it coming out of a longer-term base or downtrend?
Is the rally already very extended? You can't just trade patterns in a vacuum and expect to make money.
——————————————————————
https://docs.google.com/spreadsheets/d/1U1hxDFaF5hhBF4_OYiDZjyJx90o68wqjbHokU1S0F3w/edit#gid=12994158
0
Large caps showing some negative pressure for the first time in more than a month. Increased distribution in the
indices combined with deteriorating breadth/momo something to keep an eye for.
40
If you don't have TC2000 and want to make your own free breadth screen, you can easily use finviz. There are
options for 20 and 50-day high/low. You can scan for stocks within 0-5% of their 20-day high/low and then go
sector by sector. There are lots of options. You can even split screen and have the highs on the left and lows on
the right (like I have in the picture) to make it a little quicker to get through the 11 sectors.
—————————————————————————————————————
I keep hearing this comment that "breakouts have stopped working". That's completely ignorant of history.
Breakouts will never "stop working". If that was the case, I'd be in a world of trouble, since I almost ONLY trade
breakouts. Do they go through periods where they aren't as effective? Yeah absolutely. In downtrending or choppy
markets, breakouts are tough - that's why I have the discipline to stop trading or trade very little in these conditions.
If I continued to bang my head against the wall by not understanding when my core setup doesn't work, then maybe
I'd think "breakouts have stopped working" too. This is a key idea behind any setup that traders just don't seem to
understand. EVERY setup or method goes through periods of underperformance and outperformance. You have to
know your setup enough to understand when it works and doesn't work...and by extension, not be a dumbass when
it doesn't work by grinding your account away.
It also depends on your timeframe. I trade intraday "breakouts" on EPs all the freaking time. OMG, mind blown. It's
not an either/or proposition. Please stop going around thinking that "breakouts don't work anymore" or that Kristjan
said they don't work anymore. In fact, that's not what he said, if you go back and watch the video. He just said EPs
have been working better - which after a year and a half of bear bullshit, of course that's the case. He even had a few
BREAKOUTs in his portfolio.
Please stop hyperfocusing on things that are not true and biasing your opinions on
half-baked listening and observations.
————————————————————
Watching hundreds of hours of Tiger Woods playing golf and spending 1,000 hours at the driving range won't turn
you into a PGA tour player. Watching Messi and Ronaldo's greatest goals repeatedly won't make you a professional
soccer player. Shadow boxing night after night won't turn you into a professional boxer.
In the same vein, watching hundreds of hours of Qullamaggie streams won't turn you into a top trader. Doing 1,000
41
hours of analysis on "5-star setups" won't automatically turn you into an eight-figure trader. If analyzing setups
and crunching numbers was the ticket to riches, there would be far more rich quants and data scientists.
**queue up all the angry quants who pretend their number crunching has gotten them anywhere in trading
Practicing and consistently getting the fundamentals right is critical to success. But there's an extra kind of "it" factor
that's necessary for greatness. This isn't a new argument. Even back in the day, the famous "Turtles" experiment of
nature vs nurture were pitted against each other. Some traders just "had it" - others, no matter how much you gave
them the answers to the test, they still failed. It's not all about rules and strategy - there's a psychological and mental
component that isn't as quantifiable or trainable.
This is a long way of saying that the 10,000 hours of practice is required. You must get the fundamentals down. Every
great trader I've ever studied who was worth their salt was almost obsessed with trading and did a PhD level
deep dive into the markets, stocks, and trading. But even this isn't a guarantee of success. You have to pull a
lot of pieces together into a cohesive system - the famous 3Ms of trading - mindset, market, and method.
https://synapsetrading.com/money-method-m
One of my most "viral" posts, if I've ever had one. I'm not a professional trader. I'm just a normal dude who, through
decades of grit, trial and error, and determination, finally managed to put all the pieces together and trade profitably
and consistently for the last 6 or so years. I'm like the super old dude at the MLB farm, who grinded his way from
the lower minors to the upper minors. All the talented youngsters are like "who the fuck is this old dude?"
I didn't get things quickly or easily. My way isn't the only way and I certainly don't have everything figured out. But
I've found a combination of risk management, trade management, setup and process, and market awareness that
works for me.
I don't peddle courses, books, or trading services. But there are plenty of "gurus" out there who pretend to be
profitable and give the impression they know what they're doing. They charge a lot of money for courses, books, and
services - but really they're just selling hope to traders trying to make it in the markets. Be careful out there and be
mindful of who you take advice from.
————————————————————————————
I'm quite possibly the worst trader that has ever lived. In more than 20 years of trading, I've blown up multiple times
- some of them with one trade gone wrong - others with a Martingale death spiral from hell. Options, futures, currency,
stocks - you name it, I've probably blown up or done incredibly stupid things with it. It was never due to a lack of
knowledge. I've always been a steadfast student of the mkt. I've studied many of the greatest swing and position
traders of the last 100+ years. I've studied and tried just about every indicator out there and made more "indicators
of indicators" than I care to recall. All in an attempt to give me some sort of "certainty". But in reality, all they ended
up doing was giving me a false sense of confidence.
What turned things around for me that last 5 or 6 years to profitability?
Understanding that the mkt doesn't care how smart I think I am.
Understanding that I'm not the one in control - the mkt is.
Understanding that trading is about odds and probabilities, not certainties.
Understanding that mkt environment is one of the most important parts of trading edge, especially for swing and
position traders.
Understanding that I can do the exact same thing and get different results - not because my system changed, but
because the mkt conditions changed and I must change with them.
Understanding that one lapse in judgement, one revenge trade, one oversized position can set me back days,
weeks, months or years. Just one. I've literally had periods where I flawlessly traded for months and months and
then let one wayward trade wipe out all of that progress. Happened so fast it made my head spin. You have to apply
discipline and risk management on every trade, not 99 out of 100.
Trading is not easy, simply for the fact that it's not fair. The odds are stacked against you - financially, psychologically,
mathematically. Even losing trades aren't fair - the simple fact that losing 20% requires to to make 25% just to get
42
back to even shows the geometric degrade. The fact that one trade can doom you. The fact that someone like Jesse
Livermore, regarded as one of the most talent traders in history, ended up ki!!ing himself after too many blowups.
Most turtles never make it to the ocean.
This is a long way of saying to stick it out, if you have the willpower to do so. Your journey from suck to profitability
doesn't have to be as painful and long lasting as mine. If you do the work and improve your trading over time and
honestly look at and assess your results, you'll be surprised that one day, it'll all come together. You'll realize how
far you've come.
A：I only "quit" about 15 times. That's all rofl
Q：Great job sticking to it Paul, most people would’ve given up after 5 years of unprofitability. You are a different
breed
A：A high paying job to keep refunding my account and a stubborn attitude to never quite.
Tune out the noise. Have a structural, repeatable model that you're following. When the pivot highs (point 2) get
lower or stay the same, while the pivot lows (point 3) start stairstepping higher, look for the breakout. Buy the damn
thing and set your stop.
Quit hand-wringing about being right and just execute quality setups. In a good market many, many of these will
work and follow through and you'll make money relatively easily and quickly. In a poor market, not so much. Easy fix
- execute these trades repeatedly in a good market with solid risk/trade management and do nothing in a poor
market.
Zanger: “As the stock breaks out I might test the water on it and buy 30 – 50% of the position that I really want to
buy. So if I want to buy 200,000 shares of a stock like a Google, I would buy 70,000 to 100,000 shares of the stock and
see how the stock reacts then I may wait an hour or two and see how the stock is moving. Then, as the stock
continues to move up with heavy volume and is not timid making new highs, I might add another 30,000 to 40,000
shares up to 75% of the position that I want. I may wait 4-5 days to see how the stock acts and then add the final 25%
of the position I want.”
I think this Zanger quote is instructive for several reasons. Regardless of how long someone has been trading, there's
never a point where you "know" what a stock will do. If Zanger "knew" what the stock would do, he certainly wouldn't
be "testing the water", waiting to "see how the stock reacts" and using words like "may" and "might".
When you put a trade on initially in a new position, the point is to get information - feedback - from the market.
Are you getting negative or positive feedback? If you're getting negative feedback, then don't make things worse. If
you're getting positive feedback, keep going with it, maybe add to it. None of this involves knowing, but putting
your line out there and getting feedback - and then basing your actions on the feedback you're getting.
Traders are so wrapped up in being "right", when the best in the business are wrong a LOT. The best in the business
use a lot of words like "if" and "maybe" - much like a poker player, they plan for a variety of scenarios that could
unfold, but are in the present moment about what is actually unfolding. There's a big difference in mindsets "knowing"
what a stock will do versus anticipating what it might do and reaction to what it actually does.
One Comment：I've come leaps and bounds since I started using test positions in low-risk areas and waiting for the
right feedback before scaling up. That way, if I get the wrong feedback, I'm out with a much smaller loss. I also keep
my avg cost safely below the current volatility zone
When I'm assessing stocks to buy, it's not just about how well the stock goes up. Yes, that's important, but another
critical factor is how does it handle selling.
Just as important as it is for stocks to make new highs intraday, it's just as important that they make higher lows.
Higher lows shows absorption of supply at higher prices. It shows that buyers are willing to step in and support
prices.
It's the combination of higher highs and higher lows that shows continued demand for a stock - not just a flash in the
pan, but continued demand. Higher highs and higher lows isn't just a basic building block of trends, it's literally the
visual representation of demand overcoming supply. Imagining this interplay between buyers and selling, demand
43
and supply, can be helpful for guaging which stocks are worth looking at and which aren't.
Imagine a business that didn't keep up with its books. Didn't track inventory, overhead, or sales. Didn't analyze costs.
Didn't fire non-performing employees. Didn't scout for talent. Didn't assess trends and what's working and not
working. Didn't understand seasonality and changing sentiment.
Yet this is exactly how most people run their trading business. They do a bunch of random things, don't track any
of it, and somehow think they'll have a profitable business. When they're losing money, they are so out of touch
with their numbers, they can't even begin to diagnose where to start.
They let their bad employees (stocks) run rough shot over their business and even throw more money at them. That's
like giving a bonus to a poorly performing employee. Then they fire their best performing employees (stocks) by
cutting them when they just got going, rather than giving the bonus to them and milking their abilities.
Treat your trading like a business. That doesn't mean you'll get consistent success up front, but as you learn over
time from success and failure and improve different areas of your business, you'll stand the best chance of survival.
Folks, if you're not tracking all of your trades, then you're completely missing out on one of the best trading tools in
existence. If you're losing money consistently, how the hell are you supposed to move forward smartly when you
have no understanding of your own outcomes? If it's embarrassing, own that shit. Running from it doesn't make it
better. Gambling and hoping won't turn you into a consistent trader. If you don't have time to log your trades, there
are trade tracking programs. If you can't afford that, do it by hand. If you don't feel like doing either of these things,
then maybe you shouldn't be trading. This is a business and you have to treat it like so. Otherwise, don't expect
anything other than gamblers' results. Be the casino, not the gambler.
track all your trades - entries, exits, average gain, average loss, win rate, loss rate.
—————————————————————————————————————
Another problem with hypothetical gains being the basis of your risk is the market character changes. This can expand
or crush your real average gain. Maybe you were getting 3:1 or 2:1 on average during a decently trending market.
This kept your head above water and profitable.
However, when the market becomes choppy or downtrending, things don't follow-through as easily. Moves are
more shortlived and don't go as far. If you continue to base your risk on expectations of 3:1 or 2:1, but the
market isn't offering those kinds of rewards on average, again, it's wishful thinking to keep trading as if the market
cares about your profit objectives.
You have to ask yourself "Is the risk I'm taking commensurate with the rewards I'm actually accruing?" If over
the last 5 or 10 trades, your average gain has collapsed, likely due to changing market conditions, it's foolish
to keep banging your head into the wall taking "high R:R" trades.
Yeah your risk is still in check, but your reward side has totally changed. Even if you keep the risk side static, the
reward side is changing whether you want it to or not. Basing trading on hypothetical rewards without keeping
tabs on real rewards chews traders up when the market isn't so favorable.
这就是为什么不断 review 自己的交易，拿到当前实际的动态的 RR 如此的重要。hypothetical rewards vs real rewards
Gamera：
Exactly this I've preached about before. People don't know the % probability of the trade working i.e. they don't actually
know their R:R. "The good R:R close to support" fantasy. Yeah good luck with that if it's on bearish structure with like
a sub 10% probability of working.
—————————————————————————————————————
Risk and reward is a two sided coin. I often see traders posting this that or the other about how they’re taking great
R:R trades. What they’ve done however is taken a fixed risk against a hypothetical gain.
This is obviously the way things are supposed to start in a trade. We can’t know the outcomes and reward ahead of
time, after all. The problem becomes the theoretical reward side they based that risk upon doesn’t come to fruition.
We get paid on real gains, not hypothetical ones. If you’re basing your risk on a 3:1 or 2:1, but you’re barely getting
1:1 or 1.5:1 on average, then your expectations aren’t aligning with reality.
44
To average 3:1 or 2:1, you have to be getting 3, 5, 10R gains on the regular. Not every trade but interspersed with the
small gains and scratches. Minervini talks about this in his books.
Risk should be a function of real average gains, not theoretical. People get this backwards and start with “risk first”
and hope for gains, rather than honestly assessing their real gains and making risk a function of their actual gains.
You can’t base your risk on nonexistent gains that on average don’t come. That’s just wishful thinking.
Aristotle: “We are what we repeatedly do; excellence then is not an act but a habit.”
Trading consists of pulling together different aspects a plan - risk management, trade management, market awareness,
setup, etc. - into a cohesive system and having conviction not in individual stocks, but in your system providing
positive expectancy over time.
Excellence in trading, then, isn’t about perfection. It’s about consistently doing more of what works and less of what
doesn’t, so that the sum total of your positive habits has greater weight and impacts than the sum total of your
negative habits.
Anyone who has followed Qullamaggie for any length of time has heard stories of his struggles with overtrading in
poor markets or his occasional massive equity swings from ill timed shorts. Despite these occurrences, the sum total
of his trading habits leads to very positive long term results.
In following a trading plan it’s much like following a diet plan. There are aspects of adherence and the impacts of
non- adherence. For example you can follow the diet strictly 6.5 days out of 7, every single week. But if in that half
day of noncompliance, you crush a whole pizza and case of beer, it doesn’t matter if you were consistent most of the
time. Those “just this once” moments can sideline an entire plan.
In a similar vein, if I’m not as adherent to my plan, but the impacts of that noncompliance is minimal, then these sorts
of lapses in judgment, while not necessarily a great thing, aren’t show stoppers. Referring back to qullamaggie, he is
self aware enough to realize he has a hard time not trading even if he knows it’s not a great environment. But he
counteracts this urge by trading much smaller to minimize the impact. He knows his demons and takes away their
power.
Excellence is a habit - doing more of what works and less of what doesn’t. It’s not about perfection but it’s a sum total
of all our actions, both good and bad. Make sure the things that work, you do them more and bigger. Make sure the
things that don’t work well are done less and smaller and aren’t having major impacts on your bottom line. If you
have major demons robbing your profitability, acknowledge the problem and work to minimize its impact.
If you're banking on being right all the time, I think you don't understand trading and odds. There's a reason Zanger
suggested "buying 5 or 6 of the best breakouts you can find, cutting the ones that don't follow through and doubling
the ones that do". There's a reason Qullamaggie's win rate is 30% or so. There's a reason many top traders advocate
scaling into positions with a small portion of the intended position and only adding more IF the stock is moving as
intended. There's a reason top traders use the word "if" a lot.
Does any of this sound like they bank on being "right"? I hope the answer is obvious. Trading is about taking a
pool of stocks with "potential" and quickly assessing which ones are moving from potential energy to kinetic energy.
Potential doesn't always lead to kinetic - like a boulder sitting on a hill, something has to push it and get it in motion.
Once in motion, it's really hard to stop.
Trading, in essence, isn't about being right, but about being present for opportunities. You have to throw your line
out to catch a fish, but that doesn't mean you'll catch a fish everytime you throw your line out. If you expect to catch
a fish with every cast, you're going to be greatly disappointed.
Kind of like catfishing with 5 or 6 rods out. You have no idea which rod will catch a fish, even though you're using
the same bait. You might be waiting and fishing for hours before anything happens. You often have to rebait and
recast, as little shit fish steal your bait. Even if you get something on the line doesn't mean it's a big one. And even if
you hook a big one, that doesn't mean you're going to land it.
A lot of trading is having reasonable expectations. It's an odds game, a numbers game. You have to make yourself
available for opportunity, not guarantees. Put yourself in the right places, in the right stocks at the right time, and
45
hold on for the ride of your life.
——————————————————————————
Narrower participation in a rally doesn't mean everything is going to just fall apart. It means you need to get far more
selective on where you chose to trade. In a broad-based rally, you can almost throw a dart and make money. In
narrowing rallies, it's important to be in the right groups or you'll get chopped to pieces with sloppiness and higher
failure rates.
——————————————————————————
Some of my favorite Dan Zanger Interview quotes:
“I test the waters on a lot of stocks that break out, and I probably sell at least 50 percent of them either a minor gain
or loss because they aren’t acting the way I want them to. It’s just like fishing — you never know when you’ll get a big
fish on the line. One thing is certain — if you don’t step in and buy the stock on the breakout, you won’t have a chance
to know what you’ve got. So I do a lot of fishing.”
One of my rules is to only own stocks that are bid up aggressively, as that’s a strong sign a stock is going much higher
and is far less subject to failure.
“And typically it’s the drawdown in your portfolio that tells you not to trade. Getting to the point where you can say,
“This is a bad market; stay out of it” and avoid taking the drawdown — takes a long time.”
"Certainly, you always want a good price," Zanger said. "But I'm swinging stocks that are making $3, $6, $10 moves in
a single day; I'm not going to worry about 50 cents."
“I look for a stock that’s moving up, the one that makes the biggest gain of the day and then wait for it to give me a
beautiful pattern.”
“If you want this lifestyle and the rewards it can bring, it will take time and heartache before you can put it together.
And spotting a correction and being ready to go to cash is top priority for surviving.”
“Many people have sent me pattern recognition software that they have setup on various soft ware platforms such as
TradeStation, or some other software. They run all these scans and here are all these patterns. They come up with all
these patterns, but nothing moves. So, you really have to find what moves and then find the patterns that they create.
I have initially miss the first move of a stock, but I will track it for a month or two waiting for something to set up as
opportunistic to buy either a breakout to the upside or a potential sell to the downside”
“When the institutions are buying the stock en masse on volume I will buy the stock too. When I see a stock beginning
to move on heavy volume, I will be a buyer with the other institutions. Volume is extremely important. It fact it’s
everything.”
“This is a big fallacy for people who are trying to trade off of chart patterns. They think that patterns are the new thing
(deleted) and that is a no fail system. Patterns just give you a leading indication of which stocks are ready to move.
Be prepared for the failures. Be quick to cut your losses. When they really start to move big with big volume you need
to really step into the stock heavy”
“As the stock breaks out I might test the water on it and buy 30 – 50% of the position that I really want to buy. So if I
want to buy 200,000 shares of a stock like a Google, I would buy 70,000 to 100,000 shares of the stock and see how
the stock reacts then I may wait an hour or two and see how the stock is moving. Then, as the stock continues to
move up with heavy volume and is not timid making new highs, I might add another 30,000 to 40,000 shares up to
75% of the position that I want. I may wait 4-5 days to see how the stock acts and then add the final 25% of the position
I want.”
“I would always check out of a stock that was not going anywhere and go right into another one that’s moving up
and I still do this pretty much today”
“I like to trade the leading groups of the market at the time. Groups vary and every market move sees a different set
of groups on the move. It really depends on the trends and themes of the time and those are the ones that I focus
on.”
“Volume is really the only thing that I watch. I look at the chart patterns. Sometimes a stock has the right pattern, but
46
then can’t get going or when it does it’s a slow mover. And the problem generally lies in volume or overhead supply.
The stock that decides to go somewhere is the stock that has the highest percentage change in volume. I key in on
volume and the percent change in volume. Really, volume is my main focus during the day”
“Some stocks may be up 5 bucks in one day, however that may just be a one day wonder and that is the end of the
move. I want to make sure the stock is a consistent mover before I buy it. You basically have to be a stalker, keeping
after them for long periods of time. Sometimes stocks start their moves up at the start of a market correction and will
come down. It takes a long time to track stocks and wait for them to setup for the proper time. So that’s how I find
my stocks by letting the market tell me which stocks it wants to move up.”
“This is really just a numbers game and you need to be in the right stock(s) that move. For example pick out five or
six stocks when they break out. The ones that don’t move up strongly sell and double up on the powerful movers.”
“I started with a small account because I was blown out of the water at least three times before I got the hang of it.
The key is not getting blown out so you can keep as much trading capital a possible. Then, when you enter a strong
bull market, you have the cash, the chart reading, and hold on for the ride of your life.”
“No one ever told me what a market correction was or that it could wipe me out as a margin player or that these
market corrections come about twice a year. I made a quick 400% in my first bull market and then about three or four
months later a correction set in and I pretty much gave back all my gains during this time. That was lesson number
one. Lesson two was never believe in a stock and lesson number 3 was never g ‘all in’ on a single stock”
“I’ve still very much a momentum trader and I expect a big move each and ever time I enter a trade. I have no patience
for slow moving stocks so if the stock does not move rapidly, I pretty much move to the sidelines and wait for one
that does. I must admit, I miss many big movers that are slow movers for this reason.”
“The lesson is not trade bear markets and you’ll not lose money”
“Whipsaws in a choppy or weak market are by far the most frustrating. They can eat a momentum trader alive”
“I want to find the market leaders, the up and comers and I only trade them. If it’s not moving higher, I’m not interested.
Why buy a stock that will go up $5 or $10 if you are lucky when there are stocks that will move $30 - $50 in the same
time frame?”
“I have not changed my trading style at all during bull markets such as the one that began in March 2003. What has
changed is that I now understand what a major bear market is all about and the devastation that a once every 30 or
70-year bear market can bring. I can assure you that when the next big bear comes around I will be out on my yacht
in the Mediterranean or the Caribbean and not trading the market at all. I will say that one must experience every
trading situation and market condition to be able to fully take advantage of current circumstances, and I’m now fit to
take advantage of being out of the market when the next bear comes around.”
“There is nothing better than to look at a ton of charts every night. This will hone your skills on identifying chart
patterns faster than anything else out there today. In fact, I would say that if it weren’t for this tool my learning curve
would be years behind. There is no substituting this feature or the time necessary to learn pattern analysis”
“I’m looking for stocks that make big moves so when I see a stock up $3 or more on heavy volume day in and day
out, I add it to my Tag List. Most stocks that I load in die shortly after this initial move, but often reemerge for a second
move up later and I want to be there when they do that. The only way to do that is to track all of them every day so
that you are ready to grab them when they move”
“It’s more than just price patterns; it is the combination of patterns and price action of the stock during the day plus
the strength of the groups that these stocks are in that makes my stock selections so powerful.”
“One of my favorite patterns is the Bull Flag pattern. This is a continuation pattern and for the most part a stock has
already broken out and has succeeded since the breakout. A Bull Flag occurs after a rapid and fairly extensive advance.
After a nearly vertical move, the stock fluctuates sideways in a narrow range. The completion of the pattern occurs on
a break above the consolidation, ideally on heavy volume”
“I did a tremendous amount of experimenting, which cost me a lot of money in losses. I had to constantly go back to
the drawing board and figure out where I went wrong. I found that I was buying stocks that were below their
47
descending trendlines or that had just broken down below their support trendlines. I spent over 10 years and probably
20 to 30 hours a week constantly plotting my mistakes on a chart. I was buying based on emotion. Over time, I learned
how to buy stocks at the correct time rather than relying on emotions.”
“Market timing is key to making large returns in the stock market. Buying stocks when the market is near the top after
a lengthy run will cost you dearly”
——————————————————————————————————————
“Yeah, I want to be a profitable trader.”
This is what most people say to themselves. And that’s where it stops - a distant idea. They don’t make a plan, they
don’t track their trades, they don’t do the work. They lazily watch a couple of tutorials and “get rich” videos from gurus
who aren’t even doing what they claim in the videos. They look for shortcuts and put in half-hearted effort.
They don’t actually like trading. They don’t actually want to deal with the process of becoming a profitable trader.
They just like the idea of the end result - freedom, money, clout, etc. If you don’t make a plan, do the work, and enjoy
the process, you’ll never make it to distant idea of what you thought you wanted but aren’t willing to work for.
When you're lacking motivation, remind yourself: discipline now, freedom later. The labor will pass, and the rewards
will last.
——————————————————————————————————————
IMHO, Professional Trading Strategies by Jared Wesley, is one of the most complete day trading resources I've
encountered over the years. The course explains things in a very logical and concise manner.
When discussing gaps, a few important items are discussed:
1) Context. Not all gaps are created equal. You want gaps with shock value, either changing a long-term trend or
gapping over long areas of resistance.
2) Gap Attributes. You want to assess the quality of the gap. Is it gapping over wide-range bars and
pivots/consolidations? Is it gapping "too much" or "just enough" to clear the prior resistance? Is it showing relative
strength?
3) Entry. Gap quality determines the aggressiveness of the entry. The higher the quality, the quicker one would look
to enter. The lower the quality, the longer you wait and look for signs of confirmation first.
Essentially, the higher the gap quality, the more aggressive one can be. This is similar to Qullamaggie's concept of
5-star setups, however Wesley actually quantifies the quality of the gap by putting the gap in context. The goal is
to match your aggressiveness with the quality of the gap to increase accuracy and output.
One reply:
This spot on. At my former employer, a large-cap growth manager, we conducted an extensive study on whether we
should buy significant gap-up openings. In short, the longer a stock had been in a downtrend (expectations reset),
the greater probability of success.
对应到 VCP 越久，BO 成功概率越高。
——————————————————————————————————————
Warren Buffett said there are innovators, imitators, and idiots. This holds true in trading.
Most idiots don't know they are idiots and think themselves to be innovators. Take it from an "innovator" who came
up with all kinds of novel and innovative shit that was absolutely useless when held against the turbulence of time in
the market. I was the emperor with no clothes, only I was too naive to realize it at the time. That's what happens when
smart people think they are smart.
I'm now a shameless imitator. I've devoured the teachings of countless traders before me and I stand on the shoulders
of giants. Nearly everything I do currently has foundations in the teachings I learned from traders like Qullamaggie,
Zanger, Darvas, Landry, Boucher, O'Neil, Raschke, Cooper, Kacher, Minervini, and many others.
That being said, where one becomes a true "innovator" is when they take that base knowledge and then, through the
grit and grind of experience, backtesting, and iteration, improve upon, advance, and enhance that imitated knowledge.
They make it their own and become a master of their craft. The student has become the master and that doesn't
48
happen overnight.
Don't reinvent the wheel and don't be an idiot posing as an "innovator", thinking that innovation in and of itself means
performance. Most inventions that never see the light of day or survive the mettle of the real world. Imitating real
success is your greatest shortcut. Taking the lessons learned, experiences, and deep insights of those who have lived
in the trenches, along with your own learning, analysis, study, and iteration, will be your quickest springboard to
success.
——————————————————————————
To all things there is a season, even setups. If you don't have strategies with deep, timeless roots, you won't know
what to do when the spring turns to fall and your flowers are no longer in bloom.
——————————————————————————
Avg Per Trade Expectancy =
(avg win% *avg win size)-(avg loss% *avg loss size)
Traders hear over and over again about risk management and loss cutting. Many traders are beyond the amateur
mistakes of oversizing and not cutting losses. In fact, they do a pretty good job of containing the right side of the
expectancy formula. Yet, they struggle to make progress.
So what do they tend to do? They try to further squeeze the right side of the formula. "I need to get my stops tighter"
or "I need to take my losses even quicker". While this makes intuitive sense as a way to get a better R:R - having a
3% stop theoretically improves the numbers vs having a 5 or 7% stop - what they fail to realize is there quickly comes
a point where squeezing the stop and loss size has very negative unintended consequences.
Let's say you do manage to decrease your average loss from 5% to 3%. What is the tradeoff to get there? If saving
2% comes at a cost of dropping your win rate by 10-15%, then that tradeoff doesn't make mathematical sense. Sure
you got a better average stop loss, but it didn't make your expectancy any better. In fact, it made it much worse.
Continuing to look for ways to further decrease your avg loss (trying to "improve the R:R) has seriously diminishing
returns. I feel like many people focus so much on the right because their left side numbers (win rate and avg gain)
are horrid. Improving the left side deals with things like stock selection, stock/market timing, patience, adding
to winners, trade management.
If you're in the wrong kinds of stocks, you'll have a hell of a time getting your average gain very high. Traders flock to
"safe" stocks and then wonder why they never seem to even beat the market averages.
Trading requires you to take your losers fast and your winners slow. This requires a great deal of patience, which most
people don't have. Most people are good at loss cutting because that take no patience at all.
It takes patience to wait for the market to go from poor to constructive. It takes patience to wait for a pattern
to properly form. It takes patience to not sell the stock when it's up 5%. It takes patience to wait for your trail
to get hit. It takes patience to properly add to a stock, methodically trail your stop, and manage a position.
If your average loss is contained and you don't struggle with loss control, yet are are still failing to make progress,
then the answer isn't to get tighter and tighter. This will backfire on you - I promise. The answer is to focus on better
stocks, focus on only trading in constructive markets, focus on timing and patience, focus on managing your
trades, focus on adding to winners. This improves your batting average, improves your average gain and boosts
the left side of the expectancy formula to push you past a stable right side.
下午 7:28 · 2023 年 12 月 13 日
Dam this resonates with me. Trading US market from australia, basicaly asleep for the whole trading day which has its
pros and cons. Have had really tight stops and discovered that it just hasnt been working for me. Have moved to
having wider stops with less micro managing
————————————————————————————————
Some Of My Favorite Quotes On Stream From @Qullamaggie
"Big money is made in a good few month swing trading environment. Patience is the name of the game."
"Best stocks surf moving averages, get tight, and then breakout. Best ones show relative strength and can’t go lower
49
even if indexes go lower."
"No substitute for going in depth and studying traders, setups, and markets."
"The biggest drawdowns always happen after big runs. If you don’t have a drawdown that means you aren't taking
any risk and not making any money."
"If a stock gaps up with massive volume and breaks the opening range highs you better pay attention."
"Markets only trend 1/3 of the time."
"Need to get feelings out of your trading so you don’t randomly sell things."
"If you sell stuff too early in a hot market then you retire 10 years later."
"Spot opportunity when the market is having a down day. Market tells you what stocks wants to go up and
they will yell at you. You have to listen to the market."
"An edge is being able to shut off when market is closed and be complete focused when the market is open."
"Its the same cycle over and over again. Same patterns over again just different players but the game doesn't change."
"Never just sell everything into strength. Better to sell 10% to late than to early."
"Recent IPO breakouts can be very powerful. Usually low float and very exciting business."
"Momentum cycles. First leader. Secondary leaders. Third leaders. And then the shittiest stocks of all start ripping."
"Always need to buy something that has a reason to go up. Sector, theme, earnings, EPs."
"Breakout edge never goes out of favor but you need a good market that is trending."
"Open mind is important and go to where the money is going. Always be flexible."
"Way easier to make money on the long side. No reason to be a short seller. Markets are driven by momentum.
Shorting and researching shorts is such a waste of time."
"Biggest problem people make is they think too much. Solid plan and setups and think less. Will be way more
profitable."
"All about small losses and big wins. Don’t get into the cult of being profitable everyday. Need some home run trades
and small losses."
————————————————————————————————
Scaling into positions makes a lot of sense. A lot of successful traders have used scaling and pyramiding (read: doesn't
buy the position all at once) with great success.
Dr. Kacher, of the pocket pivot fame, said he buys 50% of his position on the breakout, adds 25% if the stock closes
strong, and adds the rest later in the stock's move.
Zanger: A big stock that trades 2-3 million shares per day can make moves of 3, 4 or 5 points per day without breaking
a sweat. These are the stocks I really like to key in on. As the stock breaks out I might test the water on it and buy 30
– 50% of the position that I really want to buy. So if I want to buy 200,000 shares of a stock like a Google, I would buy
70,000 to 100,000 shares of the stock and see how the stock reacts then I may wait an hour or two and see how the
stock is moving. Then, as the stock continues to move up with heavy volume and is not timid making new highs, I
might add another 30,000 to 40,000 shares up to 75% of the position that I want. I may wait 4-5 days to see how the
stock acts and then add the fi nal 25% of the position I want.
Livermore would establish 20 percent of his planned position on the first purchase, 20 percent on the second position,
and 20 percent on the third position. He would wait for a confirmation and then take his final position of 40 percent.
The first probe or transaction is crucial; it is the key to this technique. After the first transaction, do not make a second
until you have confirmed that your judgment is correct. When the stock has moved in the direction you expected it
to move, and you have a profit, your judgment has been confirmed.
O'Neil would use a % rise from his entry to add more, adding less each purchase on the way higher.
https://investors.com/how-to-invest/
——————————————————————————————
That's the whole point and benefit of adding.
Let's say I get 100 shares at the breakout at $100 with a stop at $97 or $300 risk. Maybe the stock runs up to $105
50
and then pulls back to $103 intraday. If it holds there and I add 50 shares at 103.50, I now have a position size of
150 shares (instead of the original 100) with an average cost around $101. I could put my stop at $101 for a
breakeven (risk free) trade on a position that's 1.5 times my original position. Or I could put my stop at the intraday
pivot low at $103 for a worst-case +$300 instead of the original $300 risk.
You're using profits to finance additional risk. Minervini talks about this concept in his books.
——————————————————————————————
Absolutely love the back and forth about scaling and adding. This is what trading should be about. Weighing the pros
and cons and improving over time. A couple of things (this is a long one):
It may seem like semantics, but typically, scaling/pyramiding often refers to entering your initial position in pieces. For
example, if your intended position is 1,000 shares, buying this in pieces at different prices and/or times is typically
"scaling" into a trade. In my earlier post about Livermore, Kacher, and O'Neil, what they describe can be considered
scaling.
Adding, on the other hand, is typically adding more to a "full-sized" position. Let's say you already have your 1,000
shares "full" position, but then the stock pulls back and bounces from the 10-day or consolidates and breaks out from
a mini-flag. Buying the bounce or the secondary consolidation could be considered "adding" to the position. Some
traders often treat this secondary buy as its own "new" position, even if it's adding to an existing position. So the stop
and management of that added-on piece almost because like a new position, rather than managing the position
based on the "cost basis" of the entire position.
The other point is - these two things aren't mutually exclusive - you can scale in AND you can add. The failure rate
of breakouts can be very high, so you can scale into the initial breakout - thereby minimizing the impact of the failed
breakouts - while pyramiding more money into the ones that don't fail. If those same stocks offer secondary buy
points from pullbacks or other consolidations without violating your 10 or 20-day trail, you can add more to that
winning position.
All of this sounds complicated, so what's the point? If we go back to the expectancy formula I always discuss, the idea
is to skew the math in your favor.
(win rate * avg win) - (loss rate * avg loss)
Let's take KK's trading as a notional example. He talks bout how his win rate tends to be 30%, for instance. Obviously
this number changes with market conditions, but for the sake of the example, let's say it's 30%. This means that 70% of
his trades stopout for a small loss and 30% go on to be small or large winners.
Because of his tight stops, many stopouts happen on day one or day two of entry. So, knowing that 70% of the trades
will stopout, how does one minimize the impact of the expectancy formula's right side (the loss side)? Well, most
people would say, "make the stops tighter to make the losses smaller". Sure, this is one way to do it, but there's a
point of diminishing returns. There's a point where the stop is so tight that you're just chopping yourself out of
perfectly fine positions on normal intraday fluctuations.
And by further extension, you can't have a stop at zero %
loss. So there's a point where you can't make the stop tighter.
Ok, then what about the loss rate - can you improve that? Well, you can only trade breakouts in good market
backdrops, but even then, the batting average will only improve so much. Breakouts + tight stops will inherently lead
to a poor batting average. It's just the nature of the beast. Ok, so we're screwed then?
Well, not quite. What if your average loser was half the size - not because you used a minuscule stop, but because
you only put half of the position on. This is where scaling is powerful. In trading systems that have a high win rate,
scaling doesn't quite make sense. Why not just put the whole thing on? However, in low batting average systems
(like KK's), where you'll most likely get stopped out on day one or two based on averages, then scaling in makes a lot
of sense. You're minimizing the damage on these losers not by arbitrarily trying to squeeze the stop loss to death,
but by letting the losers reveal themselves and dealing with them with a small loss.
After dealing with the losers, if we flip back to the left side of the expectancy formula (the winning side), we're left
how to maximize the winners. If 20-30% of the trades ultimately account for 80% of the profits, why not skew this even
51
further? The more money you scale into these potential winners, the larger of an impact they will have overall. The
thing is, you don't know ahead of time which ones these will be. You're essentially feeding more money into the stocks
that show promise while minimizing the impact of those that don't. This strongly skews the expectancy variables in
your favor.
I won't pretend this process is clean, easy, and without problems. There are certainly ways you can fuck this up. But,
that being said, the best way to squeeze the loss size of the expectancy formula is to ensure they have the least
amount of money in them, not by arbitrarily trying to devise ways to get tighter and tighter stops (which has serious
diminishing returns). Also, since a small portion of your trades will likely account for the bulk of your profits, the best
way to milk these winners out is to give them more money and ride them for all they're worth.
——————————————————————————————
https://docs.google.com/spreadsheets/d/1U1hxDFaF5hhBF4_OYiDZjyJx90o68wqjbHokU1S0F3w/edit#gid=12994158
0
4 of 11 sectors hit new highs today - 7 of 11 did not.
This once broad-based rally is getting thinner in participation, with a growing number of areas showing waning
breadth and momentum. Keep an eye on your expectancy - if you start feeling like you're getting beat up,
probably time to step aside.
——————————————————————————————
Some traders advocate for ultratight stops in order to maximize position size. While this makes intuitive sense and
can work for some traders, for a vast majority that try this approach, all they end up doing is getting chopped to death
on every wiggle and frustrated.
This is especially true for breakout traders, where breakout success rates can be pitifully low. I'm talking 40% win rate
or less. Sometimes much less - Qullamaggie has been doing this for a long time and talks of a 20-30% win rate. Most
can't psychologically handle such a system and inadvertently sabotage one or more aspects of it.
One thing I always suggest for those getting frustrated with trading is to "start small and wide and get bigger and
tighter". This means start with some fraction of your intended position size, let's say half or a third, with a wider stop.
I'm not talking stupid wide, but outside noise and volatility.
Now, I'm assuming you're starting point for the breakout buy is sound (good market backdrop, solid setup, etc). There
will be some level of backing and filling, even on breakouts that follow-through. Having a mindset that breakouts will
just blastoff and never look back isn't steeped in reality. A vast majority of your trades won't do this, even if they are
perfectly fine trades.
As the stock backs and fills to logical points, makes higher lows, and makes higher highs intraday, you'll get additional
opportunities to fill out the rest of your position.
To act like adding to positions is dangerous and that you MUST get your entire position at exactly one spot is rooted
in dogma and preconceived notions. There are obviously ways to screw this up, but starting small and wide and
getting bigger and tighter on the heels of success will ensure you have much larger portions of capital in things
working and smaller portions in things that just roll over and die on the breakout (which a lot will do). Your batting
average might not end up significantly higher but your profit factor will be much higher - and this will push you over
the line to positive expectancy. Don't knock it til you try it.
One Comment:
"starting small and wide and getting bigger and tighter on the heels of success will ensure you have much larger
portions of capital in things working and smaller portions in things that just roll over and die on the breakout (which
a lot will do)"
> This comment is so true that it is worth repeating!
————————————————————————————————————
Trying to "get rich" in trading is probably one of the surest ways to make sure you don't get rich. While anyone can
point to a few traders like Zanger that pushed margin and leverage to make huge returns, those same traders also
52
blew up multiple times and had massive equity swings. They all adopted a more reasonable approach after realizing
the dangers.
Start small, build trading skill, and scale up as you confirm you can maintain positive expectancy and control
drawdowns through multiple up/down cycles. At first, it should be mostly about learning, not about earning.
I didn't boom/bust because I'm stupid. I blew up repeatedly in the beginning because I lacked emotional regulation,
risk management, and sit-out power.
————————————————————————————————————
People get so wrapped around the axle with indicators, but indicators are just tools to assist you. If you strip away
all the indicators and just have price and volume, you should still be able to trade your method. I can trade the way
I trade with no indicators at all, or I can use a multitude of different indicators and arrive at very similar conclusions.
I tend to use bollingerbands, moving averages, ADX/DMI, and volume buzz.
Not because I need these things to
trade, but they are certainly useful. Rather than eyeballing 2,000 charts, I can intelligently use these indicators to pull
out the specific kinds of situations I'm looking to exploit. Could I manually thumb through 2,000 charts? Sure, I could.
In fact, I did that for many many years. I would review several hundred charts every single day and probably 1,000+
on the weekend.
Do I need to do that every night now? No. If I can smartly cut 1,000 charts down to 100, why would I not do that? At
this point in my trading career, I know exactly what I'm looking for. At the end of the day, it's not about the indicator
(which is just a derivative of price and volume). It's about understanding why you're using the indicators and what
they are assisting you with. I use indicators to gain efficiencies in my trading process - not as if they are some
magical instrument that tells me how to trade.
Dave Landry's concepts of slope and daylight are super easy to understand and see on a chart. When I'm looking for
setups on the hourly chart, I want a strong upslope of the 10/20 EMA and separation between them. This is no
different than what the ADX indicator is doing - a strong green over red DI, with an upsloping ADX is indicating the
same phenomenon, just using different tools.
Whether using daylight and slope or ADX, these sorts of "first leg up" situations tend to be my starting point. Why?
Because this is the strongest evidence of consistent demand. Remember, we want to trade stocks that are showing
demand, because this continued demand creates follow-through from our entry and this is what pays us. Once in a
stock, we're literally relying on the demand of others. It doesn't matter if I demand a stock or think it's good. I get
paid by other people wanting that same stock and continuing to push it higher and higher.
This should seems like a "no shit" concept, but people don't actually understand this to be the case by how they trade.
They will buy a do nothing stock showing zero demand, because of the story or "the potential" or some other random
reason. And then they sit there with dead money. This is a huge opportunity cost, especially in strong markets when
there are stocks actually showing demand.
Find stocks that have shown slope and separation in their 10/20 EMA, ideally with strong volume signatures as well.
These stocks should be on your radar while you wait for an entry, whether you use some sort of pullback technique
like Landry, or some sort of higher low flag/wedge/triangle/VCP like Qullamaggie or Minervini.
上午 12:29 · 2023 年 12 月 11 日
——————————————————————————————————
The funny thing is - most traders I talk to don't even care about "super performance". Yeah there's the get rich quick
crowd, for sure. But that's not what I get from most of the people I interact with on a daily basis.
Most traders want to stop blowing up. Most traders want consistency. Most traders want to make progress. They
aren't interested in winning the lottery. Sure they hope it happens to them and they'll be wildly successful, but in the
back of their mind, they just want to make progress to show themselves all the time and effort is worth it.
I don't want people to follow me because I made thousands of percent in a few years. I want people to follow me
because I've done everything wrong in the book. I've blown up multiple times. I've struggled and toiled. I perservered
and grinded my way to profitability after working through many psychological impediments.
53
I don't pretend like I have it all figured out and I certainly have things I'm working on. But I've figure out how to be
consistently profitable. I've figured out how to consistently outperform the market in good markets and protect myself
in poor ones. I've figured out how to compound my money and protect my family's wealth.
Maybe I never become a Qullamaggie or a Minervini. Not everyone is meant to be Tiger Woods or Messi or Lebron
or Musk or any of these 1% of the 1% of the 1% people. That's a whole level of talent and mindset and skill that most
never reach. I just want to live a life well lived.
Steven Goldstein
@AlphaMind101
I’ve not found a tweet from this account yet, that I don’t like .
——————————————————————————————————————
One of the fastest ways to grow as a trader is to log and review your trades – both the wins and the losses.
You will learn from the wins whether you got lucky or did the right thing.
If you did the right thing, the review will further imprint into your memory the chart pattern and action that you need
to take to repeat those trades.
More important is what you will learn from the losses.
You need to determine if the loss was a proper or improper loss.
An improper loss is when you make a technical mistake or incorrect decision.
You might have taken a trade without all the trigger criteria being met.
You might not have adjusted when you were supposed to, or adjusted too frequently, Or did not exit the trade when
you were supposed to.
Or a whole list of other reasons.
https://optionstradingiq.com/review-your-trades/
$SPY $AMD $AAPL $AMZN
——————————————————————————————————————
Don't just understand what makes your strategy successful - also understand threats to your strategy.
I'm a long-only swing trader - I have moderate to low win rates and moderate to high profit factor. This biggest
threats to my methodology are downtrends and choppy markets. Why is that?
If I know my edge is tied to multi-day runners and maintaining a low to moderate win rate, then choppy and
downtrending markets are a direct threat to this. In a downtrend, long side win rates collapse and average gain shrinks
considerably. In choppy markets, win rates are also significantly affected and follow through is difficult.
My goal isn't to "trade through" these conditions - it's to identify them as early as possible and adjust my trading
accordingly. My market awareness weight of evidence isn't designed to "time the market" more so than it is to
recognize the conditions that lead to a deterioration of key expectancy variables (like win rate and stock
followthrough), so I can adjust to the conditions, rather than trying to force my method on the conditions (this doesn't
work well by the way).
上午 1:08 · 2024 年 1 月 31 日
——————————————————————————————————————
Momentum trading is about identifying stocks that are currently moving in a strong direction and jumping on board
to take advantage of that trend, usually after a brief pause or consolidation. However, it's not just about spotting
winners. It's equally, if not more, important to analyze both the trades that worked out and those that didn't. This
includes understanding false positives and false negatives, which can significantly impact your trading decisions and
trading outcomes.
False Positives are situations where a stock appears to be breaking out of a valid setup, so it seems like a good buy,
but then it quickly loses momentum, and the price drops, leading to a stopout.
False Negatives, on the other hand, occur when a stock doesn't seem to have as much potential and is overlooked,
but then it starts to perform exceptionally well. Missing out on these can mean missing out on significant profits
54
because the initial indicators did not seem promising.
An essential aspect of improving as a momentum trader is reducing common biases, such as survivorship bias.
Survivorship bias is the tendency to focus only on the successes while ignoring the failures. In the context of trading,
this might mean only paying attention to the trades that have done well in the past and ignoring false
positive/negative signals. This bias can skew your perception of what strategies are truly effective, as you're not getting
the full picture.
Post analysis is critical to understanding proper setups, but, if you only study the stocks that have had significant gains,
fail to fully understand and learn from the ones that didn't do as expected or were missed in your scans. Understanding
why certain trades didn't work out is crucial for refining your trading strategy. It helps in recognizing potential red
flags in future trades and reducing similar mistakes. You'll never fully eliminate false positives/negatives.
Incorporating this broader perspective helps develop a more balanced and informed trading approach. Recognizing
and learning from both your winning and losing trades, while also being aware of biases like survivorship bias, can
help you make better decisions. This holistic view allows traders to refine their strategies, making them more aware
of the complexities of the market and ultimately leading to more consistent success.
——————————————————————————
That which gets tracked and measured gets improved. If you aren’t tracking and analyzing your trades, I’d be willing
to bet you aren’t improving.
——————————————————————————
Marios Stamatoudis
@stamatoudism
My interview will soon be up on Traderlion's YouTube. Here is my performance in 2023 and some key takeaways:
1. I always prefer the turtle race.
You don't need 50%-60%-80% months to achieve good performance. Maintaining small drawdowns and not putting
pressure on your account during 'unfavorable' periods for your system/setups is more than enough.
2. I treated USIC like I would treat my year if I had not joined the championship.
Trading is an ongoing multiyear process. The championship only lasts for one year. It's not like you go back to default
settings after that. My focus was on my process, not solely on my ranking. Trust me, I would be happy if I had the
same returns and ended up 20th this year.
3. You do not need to be heavily on overnight margin to achieve triple-digit returns.
I rarely used overnight margin because most of the time I had not 'earned' the right to do so. Just let compounding
do its work. The cushion I had from the first three months and stepping on the gas pedal during favorable periods,
along with compounding, enabled me to reach triple-digit returns even if around half of the months I was nearly
breakeven/drawdown.
4. You don't need to be perfect.
I missed many great opportunities this year. I made many mistakes. The V-shape recovery in November caught me
off guard, and I was underexposed to the market. I could have done better in November and December and many
other months. Still, I was able to do well.
55
——————————————————————————
Remember:
1. Sit on your hands when you don't believe the opportunity is high probability
2. Step up when you believe it is. No fear. No hesitation. Follow your process. Expect nothing
3. Trade the market, not your P&L, not your emotion
4. Always be seeking improvement
——————————————————————————
Qullamaggie: "The setups are timeless absolutely, but you’ve gotta identify when the setups are working and not
working, that’s the hardest part, learning the setups is the easy part, you just have to put in some effort and you can
very easily identify a 5star setup from a 3star setup. A beginner doesn’t see the difference but you put in a bit of effort
and you will see the difference. But identifying periods and actually not trading during unfavourable periods
that’s the hardest thing, that’s my biggest weakness overtrading, it’s very natural to start looking for trades when
there’s not many good setups, especially coming off a period when there’s been good setups non stop, it’s a little bit
hard to me to adapt sometimes, I keep pushing even when I shouldn’t, my returns would be much bigger if I didn’t
do that."
Just because a setup appears, doesn’t mean it’s the right time to trade. Market conditions can drastically change
how a setup plays out - whether a breakout will likely fail or not and the follow-through afterwards. For instance,
during high-volatility periods, even the best-looking setups can fail.
Humans are wired to 'do something' especially in professions like trading where rewards (profits) are directly linked
to actions (trading). This can lead to the urge to make a trade even when the odds are unfavorable.
After a successful streak, a trader might feel invincible and might be tempted to keep pushing after the easy money
is gone. Conversely, after a losing streak, they might attempt to 'make up' for losses by trading more, often
leading to further losses. The dreaded death spiral drawdown.
Trading is hard - probably one of the hardest things you'll ever try to be successful at. Even someone as successful as
KK has to deal with the temptations and emotions of trading even when the odds aren't really there. He has
obviously mastered this aspect, but 99% of the rest of us still have work to do.
Don't seek out nuanced, flash in the pan setups. Seek timeless market structures and setups that have stood the test
of time and have occurred throughout history. Understand setups based on supply and demand fundamentals (that
never change) instead of random ass indicators and niche tactics. That way, as indicators come and go, you still
know what you're looking for and it'll still work.
I don't think people talk enough about addictive personality disorders and how this impacts trading. I honestly believe
this is one of the reasons I struggled for so long in the beginning of my trading and how some of these behaviors still
linger to this day, though not as impactful.
56
Individuals with addictive personalities are more prone to developing habits that can lead to addiction because they
often seek out activities that provide immediate gratification or a thrill, much like the instant rewards gambling or
high-risk trading offers.
People with addictive personalities tend to have certain traits that make them more susceptible to developing
dependencies, including a tendency towards impulsivity, a high need for excitement, and a low tolerance for stress.
These traits can drive the pursuit of activities that promise quick, intense rewards, leading them into cycles of behavior
that are hard to break. In the context of trading, this might be an irresistible draw to the volatile, fast-paced
environment of momentum trading, where the promise of rapid gains is tantalizing.
The gambling mindset is characterized by a belief in luck or chance as the primary determinants of success, often at
the expense of rational decision-making and strategy. Traders caught in this mindset may overlook the importance
of research, market analysis, and disciplined trading plans, instead relying on gut feelings or the thrill of the gamble.
This approach to trading amplifies the risk of substantial losses, often mirroring high stakes of gambling.
The connection between addictive personalities, gambling mindsets, and trading mistakes is tightly woven through
the shared themes of risk, reward, and compulsion. Individuals with these traits or mindsets are more likely to engage
in trading behaviors that prioritize the potential for immediate, high returns without adequately considering the risks.
This can lead to a cycle of repeated mistakes, where the individual continues to engage in risky trading behaviors
despite negative outcomes, driven by an underlying need for the thrill of the trade or the win.
In both cases, the psychological underpinnings involve a potent mix of thrill-seeking, overconfidence in one's ability
to win or beat the market, and an underestimation of the risks involved. The allure of "beating the market" can be
particularly seductive, as it promises not only financial gain but also a sense of superiority and validation.
Understanding the interplay between addictive personalities, gambling mindsets, and trading mistakes is crucial for
individuals seeking to navigate the financial markets successfully. By acknowledging and addressing these
psychological aspects, traders can develop more disciplined, rational approaches to trading that prioritize long-term
success over the fleeting thrill of high-risk bets.
That's not to pretend like this is easy, any more than it's easy for an alcoholic to stop drinking or an addict getting
one more hit. But it's necessary for long-term survival. Otherwise, you end up with cirrhosis or dead on a corner
from an OD.
I wish most trading platform had "circuit breakers" that traders could set up that would force them to adhere to their
plan. I know some platforms have this, but most don't. There's financial reasons for this - brokers LOVE overtraders
and compulsive gamblers - they make a ton of money from them.
So that leaves it up to the trader to be self-disciplined. I remember when I had a problem with overfiddling with my
stops. My solution was to set my stop and walk away. This was incredibly difficult to do but was vital in helping me
understand, once and for all, the market will do what it'll do, whether I'm there or not.
For the problems I mentioned earlier than I'm grappling with, a simple solution for me would be to not log into my
charting platform or my trading desk until 15 or so mins after the open. The premarket and gap problems I've faced
would almost instantly go away with that one fix.
This is really hard to do because one of my habits, for a long long time has been to log in pre-market and "see what
the market is doing". But what this does is immediately put certain stocks in my view - stocks gapping up - stocks
running premarket on high volume. So, like a moth to a flame, I immediately start looking at these shiny objects and
looking for a way in.
Even though in the back of my head, I'm literally telling myself not to do it, I will still sit there and find a way
in. I'll change timeframes, I'll give the patterns more leeway - something, anything as an excuse just to put the
trade on. So before the market even opens, sometimes I'll find myself having already traded a few times.
Again, this is literally the definition of addiction and compulsion - knowing it's wrong and unhealthy and doing it
anyway. It's something I've struggled with my whole life and I'm sure some psychologist out there would point to my
childhood - and they probably wouldn't be wrong.
57
====================================
The greatest method for mental clarity in stock trading is to have 100% cash. The next greatest method is significantly
reducing your trading size, almost to where it feels meaningless. Trade small, find your groove. Then and only then
do you scale up slowly.
All the successful traders I personally know are internally driven, their need for trading success is personal ego
challenge. They want to prove to themselves their own ability and when faced with challenge or setback are able to
quickly change their process or tactics. They do not do mindless hard work.
Be content with inactivity. A+ setups don't come every day.If you desperately seek action, you put yourself at a
disadvantage.
3 Key things you can do when waiting for the market:
1⃣ Review the W1, D1 charts and Economic calendar.
2⃣ Journal missing and losing trades. (Get ahead)
3⃣ Make a guide or gain even more clarity on conditions that showed up this week.
Waiting for high probability conditions is no excuse to slack off, push it!
58