Why Patience is so Important as a Trader

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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)

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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. 🧠

10 Trading Tips for any strategy. (Thread)

1. Find a Trading Method That Fits Your Personality

Becoming a great trader is a process of self-discovery. It is very important to understand this from the get-go and start by finding a proven style, or methodology that jives with who you are.

2. Trade With The Trend

Did you know 3 out of every 4 stocks follow the direction of the general market? Anytime you are trading against the trend you are putting the odds heavily against yourself.

3. Stay With Your Trading Strategy After A Few Losing Trades

Next time you take a loss, try not to take it too personally. Sometimes you can do everything perfectly and you are still going to take a loss. That’s part of being a consistently successful trader.

4. Post Analysis Is The Secret To Success

By maintaining a trading journal and doing post-analysis, you can answer extremely important questions like…

What is working? What am I doing right?

What is not working? What am I doing wrong and how can I fix it?

How To Reach Peak Trading Performance (Thread)

Trading is you versus the Market. It’s a one on one battle with a system designed to take your money if you lack discipline and an identifiable edge.

To achieve success and be able to take on this opponent, you must conquer your own faults and work towards incremental improvement.

Learning to trade, analyze charts, and manage risk are skills that you can carry with you for a lifetime.

However before you can reach the performance phase and consistently capture alpha, every trader must go through learning phases.

Your journey begins as a rookie trader, thrust in the midst of a pitched battle between yourself and the market.

What to do if you are not trading well. (Thread)

Impatience and instant success are built into our minds from the get-go. We want instant wins and instant rewards.

This has as much to do with our psychological build-up as it does with the society we live in.

In this thread, we will cover:

What to do if you are not trading well.
How to stop the drawdowns when no progress is being made.
How to have a systematic process that protects you from yourself.

So what is it that drives us?

We all want the market to reward us for our hard work, the effort, and time we put into it.

We want input to equal output.

However, there is no such thing as input = output in trading.

Trading is about consistency, persistence, and hard work without the certainty of any reward.

An Introduction to CANSLIM (Thread)

CANSLIM is a growth stock investing strategy developed by William O’Neil.

O'Neil was the founder of Investor's Business Daily and in 1964 he became the youngest person to ever purchase a seat on the New York Stock Exchange at age 30.

O’Neil's success came from studying the greatest winning stocks of all time and the methods of the most successful investors of all time including Bernard Baruch, Jesse Livermore, Gerald M. Loeb, Jack Dreyfus, and Nicolas Darvas

From this research, he distilled 7 key characteristics which showed up again and again in the top-performing stocks of every market cycle.

Together they form the acronym CANSLIM

Current Quarterly Earnings Growth
Annual Earnings Growth
New Products/Services/Management/Price Highs
Supply and Demand
Leader Versus Laggard
Institutional Sponsorship
Market Direction

4 Simple Steps to Avoid Downtrends 📉 (a thread)

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1. Know the difference between an uptrend & a downtrend 📈📉

At TraderLion, we identify an uptrend as stocks/markets that trade ABOVE a RISING 21DSMA and 50DSMA.

A downtrend occurs when stocks/markets trade BELOW a downsloping 21DSMA/50DSMA.

Let's look at an example 👇

$QQQ from 2020 shows what an uptrend, downtrend, and even chop period looks like.

2. Know when it is really time to make money on the long side.

Swing Traders: when markets/stocks are above the rising 21D
Position Traders: when market/stocks are above the rising 50D

We can take this one step further by understanding what a Power Trend is 💪

The trend is really your friend when we have a Power Trend in the general indexes. A concept coined by the @IBDinvestors team, we must have the following:

✅ Low > 21ema for past 10 sessions
✅ 21EMA > 50SMA for at least 5 sessions
✅ 50SMA slope is positive
✅ Market closes up

3 Simple Steps to Quickly Grow a Small Trading Account

--- Thread 🧵 ---

1️⃣ Define a Repeatable Edge

A basis of any successful trading system is having an edge over a series of trades.

Without a well studied edge, you cannot succeed in the market.

Example of edges:

Trend system
* Trading during the power trend
* Trading stocks that are in uptrends
* Trading GROUPS that are in uptrends

High Volume Edges
* Highest Volume Ever (HVE)
* Highest Volume in > 1 Year (HV1)
* Highest Volume Since IPO (HVIPO)

2️⃣ Define Entry Tactics from that Edge

Once you have an edge, you need an entry tactic.

Entry tactics are repeatable and definable. You should know your entry and exit points before ever placing a trade.

Examples of entry tactics:

Trend system
🟢 Enter on two closes above a KMA
🔴 Exit on two closes below a KMA

High Volume Edge
📊 High Volume Close
📊 High Volume Support

Edges & Entry tactics have to be repeated CONSISTENTLY to reduce randomness when trading a small account.

The Best Resources on @YouTube for Trading 📈📽️

(Thread)

Other than books, video is a fantastic medium for traders to learn about different methodologies & techniques

In this thread I’ll be sharing my favorite resources.

Keep in mind I gravitate towards channels which focus on providing real value over entertainment.

TL We work hard to provide the best growth trading educational videos out there.

Concept videos, interviews, webinars & the archive of the 2021 Trading Conference.

16 Presentations from US Investing Champs & Hedge Fund



Mark has great webinar archives and trade walkthroughs. He also throws in a bunch of drumming and shooting in there.

I highly recommend you watch this webinar he did with @dryan310 multiple

Financial Wisdom

This channel breaks down concepts & summarizes trading books in a whiteboard style which is very entertaining to watch and makes the concepts easy to understand.

Great

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.

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.

There is only one proven way to prevent blowing up your account:

Setting Stop losses.

Properly setting & implementing stop losses will save you millions over your career.

Here's a top down guide with everything you need to know about Stop Losses, broken down step by step 👇🧵

In this 🧵, we'll cover:

· The Goal of Stop Losses
· How to Place a Proper Stop Loss
· Answers to Frequently Asked Stop Loss Questions
· General Guidelines to Protect Your Account

& tons of examples!

Let's jump in 💪

Overall Goal of Stop Losses 👇

The goal of a stop loss is to cap your downside while maximizing the upside from proven setups.

It is impossible to be correct on every trade you make, so it is very important that you implement stop losses to contain your losing trades!

Let's look at some examples to show you how important stop losses can be:

$PTON (Weekly!)
$TSLA (2020 B/O)
$NVDA (1999 IPO B/O)
$AMPH (Last Week's Action)

In each of the examples above, you could have used proper stop losses to capture massive upside gains & protect yourself from huge downside losses!

There is one simple habit that William O’Neil, Nicolas Darvas, and every other Market Wizard share that is the KEY to their success & outperformance.

The habit? Analyzing their trading through post analysis.

Here is our guide to doing post analysis like a Market Wizard.

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Post Trade Analysis (PTA) is one of the most important parts of any trading system.

It is the process of analyzing each & every one of your trades, highlighting:

✅ Setup/edge
✅ Market env. at time of trade
✅ What you do well/poorly

& more!

By the end of this thread, here’s what you’ll learn about PTA:

1. Non-negotiable Benefits of PTA
2. The most important metrics to look at
3. Letting results guide your trading
4. PTA Frequency guidelines
5. Top Trader Template
6. Secret Bonus Tip

Let's get right into it.

PTA Tip #1: Non-negotiable Benefits of PTA

By analyzing your trades, you are ensuring that:

· You will know what works best for you
· You will know what is holding your performance back
· You will know how to FIX your trading issues

& there's one more hidden benefit of PTA...

Analyzing who you are as a trader builds a foundation of CONFIDENCE.

If you are struggling with your confidence, there is no better place to start than taking a cold hard look at your results.

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

5 Ways Weekly Charts can help your Trading & Investing

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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

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.

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.

What is the biggest challenge that traders face?

It's not the market. It's not the competition. The biggest challenge traders face is themselves.

That's why we've put together this list of five short lessons that will help you overcome your next trading obstacle:

1. You need to be disciplined enough to wait for the perfect opportunity.

Successful Traders:

❌ They don't force trades or take unnecessary risks.

✅ They wait patiently for the market to provide them with a high-probability setup before entering a trade.

2. You need to only take calculated risks.

Successful Traders:

❌ They don't take irrational risks or blindly follow the herd.

✅ They make calculated decisions based on their analysis and plan.

3. You must be able to accept losses.

Successful Traders:

❌ They don't try to avoid losses at all costs.

✅ They know that losses are a part of trading and accept them as part of the process.

4. You need to have a defined edge.

Successful Traders:

❌ They don't trade based on hope.

✅ They have a defined edge that they execute repeatedly.