In Fiddler on the Roof, there is a scene where the lead looks up and talks to God.
I'd look up and say, "Am I really that stupid?"
And I seemed to hear a clear answer saying, "No, you're not stupid. You just have to keep at it."
So I did.
A market wizard named Michael Marcus converted a $30,000 initial stake to $80 Million dollars over a period of 10 years.
Here are 28 lessons he considers very important for anyone venturing into trading, from his experience.
In Fiddler on the Roof, there is a scene where the lead looks up and talks to God.
I'd look up and say, "Am I really that stupid?"
And I seemed to hear a clear answer saying, "No, you're not stupid. You just have to keep at it."
So I did.
There are key price levels like
- previous day/week/month highs or lows
- round number levels
where you can have 1:5 or more worth RR of trades if you place yourself right.
If it doesn't work out, you have to get out.
Doing this, you can make several hundred points, risking 1/3rd to 1/5th of what you make.
Cut down the number of trades you make.
The best trades are those in which all 3 things check out:
- Fundamentals
- Technicals
- Market Tone
Technicals - chart must show that the market is moving in the direction that the fundamentals suggest.
Market Tone - when news comes, market should act in a way that reflects the psychological tone.
If you can restrict your activity to only those type of trades, you have to make money, in any market, under any circumstances.
If you bet the same size when a trade meets all your criteria as with the trades that meet only one or two of your criteria,
you will remain an average trader.
- high probability
- fits all your criteria
you should bet larger than your regular trades that only fit one or two of your criteria for a trade.
Nowadays, the moment the market breaks a key chart point, it is perceived by a whole universe of traders.
Now, you almost have to be contrary.
What do you mean by contrary?
The problem is that once you have defined a trend and takena position, everyone else has taken a position as well.
You didn't have to worry about this before, there was always somebody left to buy due to slow information reach.
Now, everybody is just as decisive and as fast.
There has to be a particular imbalance in the market that overrides everything else for a trend to be sustainable and give a decent trend movement.
Another exception is if we were to enter a major inflationary/deflationary environment.
If you see a surprise price move against you that you didn't understand, it's better to get out and look for the reason later.
Whenever there's a limit up or limit down situation for days in a row, it's better to become very very cautious after the third straight limit up/down day.
When volatility gets crazy under such limit movements, it's better to get out.
You have to hone your trading skills and craft when the markets and the times are very good.
By the time market gets difficult again, you should have the knowledge and skills to navigate through the difficult market phase.
So, keep learning.
Whenever you're at the wrong end of a tail event, it's better to get out of your position first and think later.
What's bad can always get worse before it gets better.
To be in the upper echelon of super-successful traders, requires an innate skill, a gift of sorts.
It's just like being a great violinist.
But to be a competent trader and make money is a skill you can learn.
Always bet less than 5 percent of your money on any one idea.
Also be on the look out for correlation.
Correlated trades increase the risk with all else remaining the same which you don't want.
If you're long Brent Crude and long WTI Crude, that's the same idea with additional risk.
So, be very cautious and wary of correlation among your trades.
Always use stops.
Don't have mental stops.
Put them in the orderbook so that you commit to get out at a certain point.
Always pick where you will get out, before you get in.
If a position doesn't feel right as soon as you put it on, don't be embarrassed to change your mind and get right out.
If you become unsure about a position, and you don't know what to do, just get out.
You can always get back in.
Next day, things will appear much clearer and you can reevaluate your idea.
When you're in the trade, you can't think straight. You'll always be subjected to bias.
- Hold on to your winners
- Cut your losers
If you don't stay with your winners, you can't pay for your losers.
If you try to trade someone else's idea or method, you're going to lose.
Every trader has their strengths and weaknesses.
But if you try to incorporate someone else's style, you often end up with the worst of both styles.
In the final analysis, you must have the courage to hold the position and take the risk.
So, you're better off not be in that trade itself, in the first place.
Be very conscious of the idea that you have to listen to yourself only.
Take information from others without getting overly influenced by their opinion.
If it is not your own idea, it messes up your trading.
It has to fit within your trading framework.
You'll have to consider whether the market has already discounted your trade idea.
When the news is wonderful, and the market can't go up, you want to be sure to be short.
Also, if you find a common behavior between markets/products, you want to sell the one that is lagging as soon as it starts heading down.
Listening to experts can help only if you are listening to the right experts.
Most of these analysts or fintwit "experts" can't be a proper trader in a million years.
More money is lost listening to them.
So, do your own homework.
It's a foolish belief that there's conspiracy in the markets.
Market is bigger than anybody and sooner or later, it goes where it wants to go.
There are exceptions, but they don't last too long.
Gut feel is very important.
All great professional traders have it.
Also, courage. Courage to try, to fail, to succeed, and to keep going when things get tough.
If trading becomes all consuming, it is a torturous kind of excitement.
But, if you keep your life in balance, then it is fun.
All the successful traders sooner or later got to that point. They have a balanced life, and fun outside trading.
Eventually you wind up overtrading or getting excessively disturbed about temporary failures.
Fighting back by trading even heavier after you start losing NEVER works.
It's important to cut down very fast to the point of completely stopping if it gets bad.
Most of the time you'd be better off if you just stopped.
Never risk a blow-up.
It's important to recognise this pattern before you get into the revenge trading mindset itself and stop yourself at the first step itself.
Losing begets losing.
When you start losing, it touches off the negative elements in your psychology.
It leads to pessimism.
So it's important to give yourself time before you get back on the right track, and scale down your size and frequency of trades.
Many people make money fast and lose it even faster because they are trading too big.
It's important to trade the right way, the right size, to sustainably grow as a trader.
There's bigger edge in stocks that aren't dominated by the professional traders.
Relative strength tells you what a stock has already done.
When there's high relative strength, the stock usually has exhausted itself.
As your capital size gets bigger and bigger, it becomes difficult to trade as you have to compete in fewer and fewer markets with higher liquidity.
So, it's important to scale the good habits and cut down the bad habits which will highly impact you.
If you can trade one market, you can trade almost all the markets.
The principles are the same.
Trading is emotion.
It is mass psychology, greed, and fear.
It's all the same in every situation, every market.
https://t.co/F2rYftdwo3
A market wizard named Michael Marcus converted a $30,000 initial stake to $80 Million dollars over a period of 10 years.
— Shravan Venkataraman \U0001f525\U0001f680\U0001f4b0 (@theBuoyantMan) June 13, 2022
Here are 28 lessons he considers very important for anyone venturing into trading, from his experience. pic.twitter.com/67LcectZPe
Follow me @thebuoyantman to always be notified of my next thread.
More from Shravan Venkataraman 🔥🚀💰
Hedge Funds spend millions of dollars per year to access high quality financial datasets.
Retail sources cost anywhere from $5k-50k per year.
But, here are 11 data sources that have HIGH QUALITY and FREE data you can access right away.
🧵 👇
1/ Alpha Vantage | https://t.co/ExlS7Jdnsz
Provides real time & historical equities, forex, and cryptocurrencies data across 60+ exchanges.
They provide both intraday and D/W/M timeframe data.
You can also access economic & fundamental data for last 20 years through them.
2/ IEX | https://t.co/drqeoU8Ee1
Investors Exchange provides historical data going back upto 15 years for US equities through API access.
You'll need an API key in order to access the API.
3/ EconDB | https://t.co/6mZxDeaJfh
This website provides economic data and economic indicators for almost all the countries in the world.
You can search for your preferred dataset through their search engine here
4/ Quandl | https://t.co/fW4PEQaW66
Quandl has financial and alternate data across 50+ exchanges, from over 300 sources.
They also have information on capital markets, energy, shipping, healthcare, education, demography, economics and society.
Retail sources cost anywhere from $5k-50k per year.
But, here are 11 data sources that have HIGH QUALITY and FREE data you can access right away.
🧵 👇
1/ Alpha Vantage | https://t.co/ExlS7Jdnsz
Provides real time & historical equities, forex, and cryptocurrencies data across 60+ exchanges.
They provide both intraday and D/W/M timeframe data.
You can also access economic & fundamental data for last 20 years through them.
2/ IEX | https://t.co/drqeoU8Ee1
Investors Exchange provides historical data going back upto 15 years for US equities through API access.
You'll need an API key in order to access the API.
3/ EconDB | https://t.co/6mZxDeaJfh
This website provides economic data and economic indicators for almost all the countries in the world.
You can search for your preferred dataset through their search engine here
4/ Quandl | https://t.co/fW4PEQaW66
Quandl has financial and alternate data across 50+ exchanges, from over 300 sources.
They also have information on capital markets, energy, shipping, healthcare, education, demography, economics and society.
** MEGA THREAD ON Cryptocurrencies/Blockchain**
I wanted to know the best resources to learn about cryptocurrencies and blockchain for someone with zero knowledge. I asked Twitter, and Twitter answered.
This thread is a compilation of the best resources I was recommended. 👇👇
Let's start with ** BOOKS **
The first thing you should do before you pick up any book:
Learn about Bitcoin & Ethereum by reading the respective whitepapers.
- [Bitcoin white paper](https://t.co/cErOaFn6QL) by Satoshi Nakamoto
- [Ethereum White paper] (https://t.co/0g5kYCGJGq) by Vitalik Buterin
Even if you are not tech savvy, you can get a good grasp about how blockchain functions from these papers.
1) *The Basics of Bitcoins and Blockchains: An Introduction to Cryptocurrencies and the Technology that Powers Them* by Antony Lewis
This book covers topics such as the history of Bitcoin, the Bitcoin blockchain, and Bitcoin buying, selling, and mining.
It also answers how payments are made and how transactions are kept secure.
Other cryptocurrencies and cryptocurrency pricing are examined, answering how one puts a value on cryptocurrencies and digital tokens.
I wanted to know the best resources to learn about cryptocurrencies and blockchain for someone with zero knowledge. I asked Twitter, and Twitter answered.
This thread is a compilation of the best resources I was recommended. 👇👇
Let's start with ** BOOKS **
The first thing you should do before you pick up any book:
Learn about Bitcoin & Ethereum by reading the respective whitepapers.
- [Bitcoin white paper](https://t.co/cErOaFn6QL) by Satoshi Nakamoto
- [Ethereum White paper] (https://t.co/0g5kYCGJGq) by Vitalik Buterin
Even if you are not tech savvy, you can get a good grasp about how blockchain functions from these papers.
1) *The Basics of Bitcoins and Blockchains: An Introduction to Cryptocurrencies and the Technology that Powers Them* by Antony Lewis
This book covers topics such as the history of Bitcoin, the Bitcoin blockchain, and Bitcoin buying, selling, and mining.
It also answers how payments are made and how transactions are kept secure.
Other cryptocurrencies and cryptocurrency pricing are examined, answering how one puts a value on cryptocurrencies and digital tokens.
Have you ever had 4-5 profitable trades in a row, and you bet all your profits on your next trade feeling "in the zone" only to lose it all?
That's called as "hot-hand fallacy" bias.
I ran a poll recently to outline two classic biases we have as humans.
Thread below 👇👇
1/ *Hot-Hand Fallacy* first had its origin in the game of basketball.
If a player shoots few baskets in a row, people generally predict that the next shot will also be a basket.
This is ignoring the fact that each shot is independent of the ones that came prior.
2/ In this poll, 41.1% people voted that the batsman who hit 4 sixes in a row, will hit a sixer in the 5th ball also.
This is classic hot-hand fallacy.
Each ball's outcome is independent.
The probability is not 50% FYI (number of outcomes is not 2).
These 148 people who voted that the next ball will also be a sixer, did so because they believe that the batsman is on a hot streak, and that his streak would continue.
This is an emotional bias and is usually attached to human performance related events only.
3/ 45.3% (162) people voted that the 5th ball would be a dot ball, meaning the batsman wouldn't score anything.
These people displayed the classic "negative-recency" bias, which is also called the "Gambler's Fallacy".
That's called as "hot-hand fallacy" bias.
I ran a poll recently to outline two classic biases we have as humans.
Thread below 👇👇
Let's say you see a cricketer hit four 6's in a row.
— Shravan Venkataraman \U0001f525\U0001f680\U0001f4b0 (@theBuoyantMan) December 30, 2020
If you have to bet on the next ball's outcome, what would you bet on?
1/ *Hot-Hand Fallacy* first had its origin in the game of basketball.
If a player shoots few baskets in a row, people generally predict that the next shot will also be a basket.
This is ignoring the fact that each shot is independent of the ones that came prior.
2/ In this poll, 41.1% people voted that the batsman who hit 4 sixes in a row, will hit a sixer in the 5th ball also.
This is classic hot-hand fallacy.
Each ball's outcome is independent.
The probability is not 50% FYI (number of outcomes is not 2).
These 148 people who voted that the next ball will also be a sixer, did so because they believe that the batsman is on a hot streak, and that his streak would continue.
This is an emotional bias and is usually attached to human performance related events only.
3/ 45.3% (162) people voted that the 5th ball would be a dot ball, meaning the batsman wouldn't score anything.
These people displayed the classic "negative-recency" bias, which is also called the "Gambler's Fallacy".
![Peter McCormack [Jan/3\u279e\u20bf \U0001f511\u220e]](https://pbs.twimg.com/profile_images/1524287442307723265/_59ITDbJ_normal.jpg)
