Many new traders approach me asking how can they become profitable quickly, the key is to develop setup specific procedural memory.

To become a highly profitable active trader understand procedural memory. It is a memory about how to perform a process like swing trading . It is implicit memory and once developed is permanent.

Procedural memory is stored in brain as one schema. So a process involving say 20 steps like entry , exit , stops and so on is not stored as discrete unit but part of one process.

Procedural memory kicks in involuntarily when it senses need for it. If you are driving a car and car way ahead of it slows, you automatically respond. Same thing happens in active trading.

As a trader you need to develop a setup specific procedural memory. If you are trading momentum burst setup you need to develop procedural memory specific to that setup. That memory is very specific
to that task.

What is Relative Strength (RS) and how to identify it (Thread)

Focusing on stocks exhibiting strong Relative Strength is one of the keys to achieving superior returns. This is one of the core ideas of #CANSLIM

In one sentence showing RS means outperforming other stocks both during market uptrends and downtrends.

In this thread we will cover examples, how to spot it, and how to use it to make sure you are in the top stocks.

If you want to outperform the indexes, logic says you have to be invested in stocks doing the same.

First Some Basic Terminology:

RS Rating: @IBDinvestors Proprietary measure of RS scored 1-99. Stocks with an RS rating of 80 have outperformed 80% of stocks over the past year.

RS Line: The Line plotted by dividing each day’s stock price/ price of the SPX.

The value of the RS line itself does not mean anything, but the trend of this line is very important.

-Note RSI (Relative strength index) is something completely unrelated to the concept of this thread.

An Introduction to Price and Volume Action (thread)

An understanding of price and volume action is essential for judging supply and demand characteristics. This allows you to determine whether a stock is under accumulation or distribution and find proper buy and sell points

This thread is not about memorizing candlestick patterns, but instead understanding how supply and demand create patterns over and over again. The Stock Market is an auction, and the large buyers and sellers leave clues for us to find within price and volume.

Let’s start with one price bar. I personally use OHLC charts but feel free to use what makes sense to you, they each present the same information. A single bar can represent a minute, 15 minutes, a day, or a year. The higher the timeframe the more meaningful the price move.

I view each bar as a match of tug of war between the buyers and the sellers. Buying pressure tries to pull the stock price up while selling pressure tries to pull it down. The winner is reflected in the closing range.

A brief introduction to trading/investing for beginners and why you should start right now (Thread)

A goal of mine is to introduce as many people as possible, especially my own age, to sound methods of how to trade/invest for their futures. Despite the stock market being open to all, in practice, not everyone is taught the value of it or how to use it to build wealth over time

This thread will hopefully help remove the knowledge barrier of how to get started. It will cover briefly:

Why you should invest (Start now!)
What even is stock?
Roth IRAs versus Traditional IRAs
ETFs+ Mutual Funds
How to buy/sell individual stocks.
Types of Investing/Trading

Now before we go further, I am not a financial advisor, I am speaking from my own experience and there are significant risks with the stock market so please consult a financial professional before getting involved. Alright let’s get to it.

First, why should you get involved and start ASAP, like tomorrow. The simple answer is compound interest and time.

5 Ways Weekly Charts can help your Trading & Investing

📈📉 (Thread)

Weekly charts are a powerful timeframe, and regardless of your style, they can help you gain perspective on a particular setup and identify its potential

Using higher timeframes slows the action down and allows you to calmly analyze price and volume.

This will lead to better decision making.

For investors learning to analyze weekly charts and their trends can only complement your fundamental analysis.

For traders they are the "prevailing wind" and trading with this weekly trend will increase probabilities and help you remember to focus on larger patterns

1⃣ Weekly Charts show the True Trend of a Stock

Weekly charts eliminate a lot of the back and forth that occurs intraday and on daily charts. What is left is often a clear picture of the trend of a stock.

⬆️ Trending Up
↔️ Basing
⬇️ Trending Down

What is an Optimal Buy Point? (thread)

Your results as a trader/investor boil down to three statistics

Average Gain - Average % gain on winning Trades
Average Loss -Average % gain on losing Trades
Batting Average - % of trades that are gains

Like in baseball, you can find incredible success in the stock market winning only a handful of times out of ten. In fact a system that is profitable or break even with only a 30-50% BA is more robust and consistent

To establish such as system you need to manage the risk reward relationship (Average gain/Average Loss) so that you can survive winning only 30% of the time.

(I promise this is getting to optimal buy points shortly)

You should shoot for at least a 2:1 gain/loss ratio. 3:1 is even better.

With a 2:1 ratio you can loss 2/3 of the time and break even. With a 3:1 ratio you can lose 75% of the time

You can spend years looking for the best trading indicator.

Or you can just read this:

I've spent the last 7 years meeting the best traders in the world... and I realized they ALL use the same indicator.

The absolute best trading indicator in the world is your gut.

Like every indicator—before it can give reliable signals—it needs to be studied.

Your intuition only becomes finely tuned after a lot of trials and errors.

Let me explain...

First, we need to understand what intuition is. (that gut feeling)

As traders, intuition is how we make decisions without conscious thought.

Intuition grows (slowly) every time you see the same pattern unfold.

In other words, the more you trade, the more accurate your intuition gets.

Intuition is no different from muscle memory.

My biggest mistakes in the last decade & what I learned.

There are 2 types of Investors in the Market. Those who make mistakes & admit them openly while learning, and those who give the illusion that they never make mistakes. I want to be firmly in the former camp.

Here we go⬇️

Putting those mistakes/examples/lessons down again in the thread below for easy reading.

Note that the lessons learned are very subjective. They are not recommendations. It depends on each person's Portfolio goals & strategies.

OK let's go. ⬇️⬇️

1⃣ Mistake : Actions not aligning to goals & competencies.

Ex : Mainly during 2010-14 - Dabbling in cheap (low quality) stocks & Options (LEAPS, but w/o clearly identified catalysts)

Lesson : Make sure your process and actions are leveraging your interests/strengths and aligned to your Portfolio goals. For me, that was leveraging my patience and interest in quality Cos. Monitor & improve the process over time.

2⃣ Mistake :Confusing between Quality/Durability and Temporary Business momentum or ST stock momentum.

Ex : Buying GILD/SAM in 2016, PTON/FVRR etc in early 2021.

In the fall of 2018, I signed up for a class called "Introduction to the Stock Market and Technical Analysis" taught by Dr. Eric Wish

This class changed my life.

Here are 10 Lessons Dr. Wish taught me from his over 50 Years of Trading.

(Thread)

Before this class I had absolutely no knowledge about investing, trading, or how to read a stock chart

Today, trading & studying the commonalities between the greatest performing stocks is my passion, and what I’ve spent the past 1000+ days focused on

Now onto the first lesson

Financial Literacy

The first lesson Dr. Wish taught me was the importance of overall financial literacy.

Roth IRAs, interest rates, budgeting, building credit the right way.

You need to master money management before thinking moving on to trading/investing.

Overall Strategy

Throughout the class, Dr. Wish repeated his trading mantra.

As you gain trading knowledge and experience, you'll appreciate the simplicity and depth of this one sentence:

Determine the Market Trend

The vast majority of stocks follow the overall trend of the market. This is why the mantra begins with “In a Rising Market”

"At least 50% of the whole game is the general market."

-William O'Neil

8 ways to optimize your mind & body to get more done:

1. Stop Hustling

I know, Instagram told you to “grind”…

But Twitter is telling you to get some sleep.

If you want to be at the top of your game, you need a rested mind.

Lets make it easy for you...

Step 1: Go download the
@risescience app to figure out your optimal sleep schedule.

Step 2: Get the recommended amount of sleep for the next 7 days (no cheating).

Step 3: Every day at 11am, score your energy/productivity on a scale of 1-10.

Numbers won’t lie.

2. Eat to Work

Clarity of mind & sustained energy are superpowers for entrepreneurs, right?

Well, the food we eat directly impacts those variables.

Yet we still consistently make bad decisions around our meals.

Not any more...

Next time you sit down for a meal, open up your to-do list.

What do the next 3 hrs look like?

If it's a bunch of menial tasks, go ahead and eat the chips.

Otherwise, ask yourself:

"Do I really want to feel sluggish and foggy while I'm trying to write this proposal?"

Michael Jordan. Kobe Bryant. D Wade.

3 killers… but 1 man behind the curtain.

Performance coach & mindset engineer — Tim Grover.

I spent hours studying his stuff…

Here are 7 key lessons for developing killer instinct, dominating the competition & coming out on top.

👇

1 / Be Relentless

Success isn’t as complicated as most people think.

In fact, Tim boils it down to one simple trait: relentlessness.

For some…it’s innate. But for the rest of us, it’s a choice.

But what exactly does it mean to be relentless?

2/ Lose “Good Enough”

Over the years, MJ racked up quite a few championships.

But every off season he had one goal: to get better.

Why?

For winners, “good enough” is not an option.

Being relentless means committing to endless improvement —even when you’re winning.

Put it to practice:

Every time you achieve a goal, schedule a check in.

Ask yourself:
- Where did I fall short?
- What’s my next advantage?
- Where am I phoning it in?

Winners don’t get complacent with small victories…

Identify the next opportunity & pounce on it.

3/ Cooler, Closer, Cleaner

Grover has a simple framework for categorizing competitors:

1. Coolers: Avoid confrontation
2. Closers: Follow you into battle
3. Cleaners: Start the war, then finish it.

Metaphors aside, Cleaner’s win. And they win big.

Which one are you?

As Traders, Technical Analysis allows us to Judge Potential, Identify Accumulation, and Manage Risk.

It allows us to see through the noise and interpret price action.

Here is How To Read a Stock Chart For Beginners (Thread)

Let's start with the basics.

When you first pull up a stock chart you will see Price and Volume plotted versus time.

Each price bar represents one period of whatever timeframe you are on

Some people like candlesticks, I personally think Open/High/Low/Close (OHLC) Bars are more intuitive

For each bar/candle, the four important data points of each period are represented:

High
Low
Open
Close.

For each bar, we want to be able to determine whether buyers or sellers are in control and how much conviction they have.

To do this we use our tools: Price and Volume

Thing about turning a price Bar 90 degrees counter clockwise so the high is now on the left and the low is now on the right.

Then picture a game of tug of war with participants representing buying pressure on the left and selling pressure on the right.

As traders, we primarily compete with ourselves to honor our rules and execute our edges.

With money on the line, trading is an incredibly strenuous mental game where emotions can flare up leading to costly mistakes

The Importance of Mastering Trading Psychology.

(Thread) 👇

Trading Psychology or the Mental Game of Trading encompasses solving problems regarding emotions such as Greed, Fear, Anger, Confidence and Discipline.

Contrary to popular belief, having a strong mental game does not mean eradicating emotion.

Instead, it means learning to transcribe your emotions into data that you can use and analyze to connect past states to current ones.

Trading is a performance sport.

We execute at our highest ability when we can use emotions as fuel and for intuition but are not so dominating that they cloud our judgment.

Think about the best athletes in the world : Kobe, Jordan, Lebron, Messi, Ronaldo, Federer, Nadal...

They compete with passion, emotion. This drives them and they are able to unlock their full potential.

Top 7 Things You Must Do Differently to Achieve Massive Success as a Trader by Jesse Stine

(Jesse turned $46,000 into $6.8M in 28 months, netting him a return of 14,972%)

🧵👇

Learn How to Sell

🔹 "Most investors spend 99% of their time studying what to buy and when to buy it."
🔹 "If you don't become passionate about the art of selling, you might continually lose a majority of your gains."
🔹"Fear is NOT a profitable sell signal"

Focus on Weekly and Monthly Charts

🔹"Smart money billion dollar hedge funds and institutions base their buy and sell decisions almost exclusively on longer-term weekly and monthly charts."

To make big money, we have to know what big money is doing.

Wait Until Everything Lines Up

🔹"There's only one way to put yourself in a position to hit a grand slam. Wait, wait, & wait some more until most of the technicals line up in your favor. By waiting until EVERYTHING lines up, your odds of massive success go through the roof."

Invest on an Island

🔹"Ignore the noise and make your own decisions."
🔹"By eliminating all the 'noise', you open up the possibility of massive success."

Why Patience is so Important as a Trader

🧵👇

Have you ever felt like everyone around you is making money and you're not?

That's how I felt today after the market closed, while I was reflecting on my week.

In fact, over the past three months I've felt like this on multiple occasions!

If we look at my equity curve (EC), updated as of today's close, we can see multiple periods in which my account balance did not change.

8 Steps to building a Trading System (Thread)

🧵

Individuals must keep their personality, lifestyle, and risk appetite at the forefront of their minds when building their trading system.

In this thread we will break down the components of a successful trading system for consistent returns in the markets 👇

Components of a Successful Trading System

1. Market
2. Time Frame
3. Edges
4. Entry Tactics
5. Setups
6. Rules & Risk Management
7. Journaling
8. Post Trade Analysis

Let's discuss the first component, The Market.

The financial markets are divided into the following 👇

1. Equity
2. Bond
3. Futures
4. Forex
5. Commodity

Each market requires a different set of knowledge, skill, experience, and know-how.

Once you know which type of Market you want to trade, you must now choose your Time Frame.

Day Trade
Swing Trade
Position Trade
Combination of all the above

Time Frame often aligns with a traders personality, lifestyle, goals. 🧠

How Stage Analysis can improve your Trading & Investing 📈📉

Thread🧵

👇

Stan Weinstein's Stage Analysis offers traders a powerful methodology to identify trends in the markets while following strict risk management principles.

1/

First, let's review who Stan Weinstein is and his contributions to the market.

Weinstein is a veteran technical trader who has over 50 years of experience and now works as an advisor for institutional investors.

2/

Stan is well known for authoring "Secrets for Profiting in Bull & Bear Markets" which you can find at the link below.

This book is incredibly well written and gets into the nitty-gritty of his processes in the

So, what is Stage Analysis?

Stage Analysis is used to identify the longer-term trend of a stock or index. There are 4 different stages 👇

The Basing Area, Advancing Phase, The Top Area, and Declining Phase.

4/