Do you know what separates professional traders from losing traders?

Here's my answer and it's not what you think...

#1: Think independently

If you want to succeed in trading, you must have the ability to think independently.

Instead of asking “what” or “when”, learn to ask:

Why.

By asking why questions, you’ll come up with a hypothesis to your questions which brings me to...

#2: Willing to get your hands dirty

Just because you came up with a hypothesis, doesn’t mean it’s correct.

That’s why as a professional trader, you must validate your trading ideas.

You must get your hands dirty and do the work like backtesting and forward testing.

#3: Have the right expectations

Most new traders enter trading with the wrong expectations and end up quitting trading altogether.

The truth is…

* You won’t make money every day

* It’s not a get-rich-quick scheme

* Learning curve is steep

#4: Manage risk like a pro

No strategy works all the time, that’s why you manage risk all the time!

You can use stop-loss, options, position-sizing, etc.

A losing trade must be managed so it feels like an ant bite—not a shark bite where you lose a chunk of capital.

Today, four trade associations filed a lawsuit in federal court against Maryland's newly passed tax on digital advertising services.

My colleagues and I review the case in a new piece:

As a reminder, the new law imposes a gross receipts tax ranging from 2.5% to 10% on revenues derived from digital advertising services in MD. The tax applies to companies with global revenues from all sources of $100 million+, and no deductions for expenses are permitted.

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The tax must be paid on a quarterly basis throughout the year, with the first payment due April 15, 2021, and fines and penalties for failure to file up to five years’ imprisonment.

Connecticut, Indiana, Montana, and Oregon, are also considering new digital tax legislation.

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The lawsuit filed today in federal court challenges the Maryland legislation on several grounds:

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One is that it violates the Permanent Internet Tax Freedom Act (PITFA). Signed into law by President Obama in 2016, PITFA bans state taxes that discriminate against interstate commerce.

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One of the many paradoxes of trading in markets is that - for a given period of time - strategies that are ‘right’ in the broader time context can be absolutely catastrophic in other times. Indeed, careers of one or two currently lauded by FinTwit and the wider financial media

were made by doing exactly the wrong thing at the right time for just long enough before the cycle changed back again.

* The market constantly changes its reward structure (i.e. what approaches it rewards)
* It can be relied upon that the variance exhibited in the future on

data that does not yet exist will exceed that which is observed on historical or contemporary data.

With these two points in mind, it is no wonder that the overwhelming majority of the ‘turtles’ do not make it to the sea from their hatching places. (To take from the great

Dennis/Eckhart experiment of the early /mid 1980’s)

The ‘turtles’ I refer to are new entrants to markets with outrageously good technical qualifications.

I believe that as a member of rare club of quant traders who have traded in three consecutive decades I have earned the

right to say that our education standards for preparing people for markets has shifted way too far towards the ‘edge’ being related to manipulating large amounts of data quickly rather than actual alpha.
This is why 99/100 advertised ‘Quant Trader’ roles - to the extent that

Stocks to Watch 2021 - Full Analysis Blog Thread

$TDOC* $PINS* $CRWD* $FSLY* $NET $APPS $DDOG* $U $PTON $ROKU* $ZM* $DOCU $CRM $UBER* $ABNB

* = Stocks I own

https://t.co/XrJo0vxb13

Detailed analysis for each individual stock is within this thread, via screenshot from the blog

1) $TDOC - $199.96

2) $PINS - $65.90

3) $CRWD - $211.82

4) $FSLY - $87.37

Thread:

"When is Alt Season?" is a question we all ask a lot so let's take a look at a possible scenario that could answer that question.

The last real alt season occurred directly following the Dec. 17, 2017 $BTC ATH.

IMO we need Bitcoin to make a real run before it brings back the dumb money.

The previous Bitcoin run up began approx Dec. 16, 2016 when it broke its previous high and began a journey into price discovery. Let's compare that to now. We just poked through to a new ATH the other day, but the journey is just beginning. In 2016 alts didnt immediately go nuts

when btc entered price discovery. There are windows of alt movements during a larger bitcoin move where you get mini alt seasons such as June-July 2017 and most recently, May-Aug 2020. These are just periods where Bitcoin ranges and lets alts move.

So, what started the '17-'18 season then? Well, that's easy. FOMO

That FOMO didn't begin until roughly November of 2017, 11 months AFTER Bitcoin entered price discovery.

And the mania didn't begin until early December 2017 almost 1 year after Bitcoin entered price discovery.

In this #IPO frenzy market, lets talk (Thread) about some basics around
-Angle/VC/PE
-Allotment process
-IPO Funding
-Grey Market

Hit the ‘re-tweet’ & help us educated more investors (1/n)

Why do companies come out with an IPO?

(a) Funding needs
- Business expansion plans
- Debt payoff

(b) Non-Funding requirement
- Enhancing corporate stature
- Exit options to large investors like the VCs & PEs (2/n)

While most of us believe IPOs are for funding requirements, you deep dive and understand it’s more of an exit channel for large investors (VC/PE). Let me explain the same concept from a start-up's perspective (3/n)

If u r starting off ur entrepreneurial journey & need capital, how do u raise funds?
-Self Funding
-Friends & Relatives (F&R)
-Bank Loan
-Angel Investor
Angel investors r the 1s who invest @ the idea stage & PE/VC who invest in the growth phase of the company.(4/n)

- Self funding can be the best option but everyone’s not prepared
- F&R I wish helped
- Bank loans need collateral and
- Angel investors invest only when they see scalability in the business and hence a belief that they will get their investments back. (5/n)

1) The Larger Impact of the GameStop Investor Wars

"The fundamental issue currently being fought over is who gets to have a role in determining financial value, access and

BREAKING: The EU and UK have agreed a trusted trader scheme that would mean exemptions from tariffs for up to 98pc of goods flowing between Great Britain and Northern Ireland from January 1, @rtenews has learned.
The other 2% wd potentially avail of rebates from any tariffs.

2/ Tariffs would mostly only apply if no free trade agreement is concluded between the EU and UK.

Both sides have also agreed that agrifood products coming from GB to Northern Ireland will be exempt from requiring export health certificates for a period of at least three months

3/ These have proved the biggest concern for UK supermarket chains in NI, who rely on large and mixed consignments of food coming from GB depots.
Export health certificates can cost up to £200 per product and need to be signed off by a designated veterinary inspector.

4/ It’s understood the issue of how supermkts will comply with EU food safety rules could be dealt with through a UK commitment - possibly a declaration - that it does not intend to change its food safety rules from Jan 1. At that point the rules will be the same as the EU's.

5/ The trusted trade scheme would be subject to a review, or sunset clause, three and a half years after the Protocol comes into effect, according to an internal EU briefing

You're about to invest in the next biggest company to list on the stock exchange. You dream of a luxury island & a private jet - but you end up eating canned food instead.

Here's a guide to the insider secrets of IPOs [Thread]

Hold on, what is an IPO? Indian Police Officer?

No, it's an Initial Public Offering

It's when a private company issues stock to the public to raise capital. Facebook, Airbnb & Apple are IPO companies

It's not just US companies. I worked on IPOs in London, Johannesburg & Lagos

"The Roadshow/ Marketing"

The IPO process can be long!

The company hires a few investment banks to go out & sell the story to investors. Think of it as a series of dates. Do you tell her you leave towels on the floor on the first date? No.

Investment banks sell the highlights

Pro-tip: NEVER invest into a company purely off the company roadshow materials. Having spent hours curating these docs - the wording is ALWAYS massaged.

Your go-to is the prospectus - the Bible for an IPO

Here's the Airbnb prospectus - check it

What should I be looking for in the prospectus?

Just like your cheating ex - don't focus on what he's saying, focus on what isn't being said.

- Forecasts: always take these with a pinch of salt
- Key risks: dry but important
- Why we need the money: MOST IMPORTANT!

Subjectivity in risk management --

I would like to briefly talk about risk mgmt in this thread (something that is not talked about much anywhere else)

The whole question of risk management is far from an objective subject.

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One need at least one subjective piece of the puzzle to put it together, and that is an individual’s acceptance to risk.

Now that is subjective, meaning there is no rule that says how risk averse you should be. That is an integral part of your emotional makeup 😊

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The problem is, human nature does not operate to maximize gain, but rather to maximize the chance of gain, i.e., maximize the # of winning trades & minimize the # of losing trades.

The result is, not only is risk controlled, but profitability is also controlled 😆

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In other words, playing it safe can be just as bad as taking too much risk, because you are not optimizing your winning trades nor the days with extended ranges.

Sure, it's possible to develop trading idea based on tick charts(scalping) that will on average be profitable

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However, the average profits on individual trades from such methodologies are microscopic, and the trades they generate are so many that it not reasonable to scale up these strategies.

Dont even get me started on costs and slippages here 😊

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A small thread on momentum investing and how I practice it.

I use the Nifty 500 universe for selecting my momentum stocks. Nifty 500, as the name suggests, has 500 companies in it. WRONG !!!! It actually has 501 companies. Yes, I double-checked 🙂 So, these 501 companies is

my talent pool (if you will) from which I select the 50 best candidates that I want to bet my money on.

Ok. So, exactly, did I go about doing that.

Step 1: Start with Nifty 500 universe (501 companies)

Step 2: Eliminate all those companies which have a listing history of

less than 1 year. This eliminated 25 companies (see table).

Step 3: For the remaining 476 companies, I computed their last 12-month rolling price returns (meaning, comparison of their price as on March 31, 2022 as compared to that as on March 31, 2021, and then computing the %

gain that each of those stocks have earned. I found out the following:

a) Average return of all the 476 companies was 43.27% (meaning if their average price as on March 31, 2021 was 100, then their average price as on March 31, 2022 was 143.27)

b) Out of these 476 companies

140 companies, gave a negative return.

c) Out of the balance 336 companies, 46 companies gave single-digit returns

d) Out of the balance 290 companies, 101 companies gave a return between 10-30%

e) Out of the balance 189 companies, 55 gave returns between 30-50%

Knowledge sharing initiative Book 1 : "Mastering the market cycle" by @HowardMarksBook

This incredible book focuses on understanding why periods of recessions & growth occur frequently wearing lenses of all mkt participants-the economists, the investors & the regulators.

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The book tries to explain the human tendency of extrapolating the recent past and the imbalance in defining risk at the time of bear & bull markets. It is this tendency that drives booms & busts.

Here are the Important learnings from the book: 👇

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1. Every Asset class goes through a cycle - Up & Down this book teaches why such Up & down occur how to spot them & how investors can improve their returns.

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2. Its extremely difficult to forecast Macroeconomic variables like interest rate, inflation, GDP etc there's a reason even Central bankers & Presidents of the country fail consistently at the same

(4/n)

3. In down cycle as prices fall odds are in favor of investors & hence we should invest more & Vice Versa
4. Experienced investors–like everyone else–don’t know exactly what the future holds but they do have an above-average understanding of future tendencies & probabilities(5/n)

As part of our Knowledge sharing initiative by @FinnacleAcademy and @Investmentbook1, here we are on our post 2 with some of the most important key takeaways of the book “Masterclass with super investors” by @vishalmittal22 & @basrars

Here we go! (1/n)

Masterclass with super investors is one of the best books covering the investment strategies & journey of renowned domestic investors. Our summary has been segregated in 2 parts, A) Common traits in investment ideologies of these stalwarts B) Investor specific key takeaways (2/n)

A)Let's look at a few common points in these Stalwarts' investment ideologies 1)Invest (higher % of portfolio) when you have conviction backed by sound logic 2)You need to be bullish on India to make investments in Indian cos. bcoz majority of Indian cos. are domestically focused

3. New Bull markets have new leaders when a bull markets ends the stocks which have gained the most falls the most 4. The entry price that you pay for a company should be very cheap so that even if your assumptions go wrong in future you don't end up losing money (4/n)

5. We get attached to stocks which have given us a lot of returns in past even though in current & future expected scenarios they seem overvalued 6. Focus on art of disciplined selling-it's imp. to have a sound selling mechanism just buying at right price wont create wealth.(5/n)

1) Let's talk about my favourite video platform Bilibili. What is it, what it isn't and and how it makes money. It's been called the Chinese YouTube that that framing lacks imaginary.

The $bili stock also 5x in 2020 - who knew weebs could be so lucrative

2) Grossly simplified, it's the Chinese equivalent of Youtube. Except it's not. It's like if Youtube, Twitch, Steam, Patreon, TokyoPop and Netflix had a CRISPR-baby, and that baby was a weeb, but that weeb is also super down with Chinese Gen Z

3) Bilibili was founded in 2010 by avid Anime, Gaming and Comics (AGC) fan Yi Xu from a frustration that the mainstay Chinese anime platform kept crashing with no consistent access to his beloved vocaloid Miku

4) Serial entrepreneur Rui Chen went from an angel investor to CEO, having obtained Yi Xu's trust by correctly identified the origin of Bilibili as from the anime "A Certain Scientific Railgun". Anime knowledge is life.

5) Currently it's the biggest mainstream portal for the Chinese Gen Z with user-generated video sharing, live streaming, mobile gaming, online comics and event ticketing. It’s also diversified its content coverage with coverage on beauty, e-sports, pop culture and many others.

#FranklinTempleton investors - our primary objective should be to safeguard our investment and not punish FT. Litigations will and should continue. But trying to teach FT a lesson by voting NO is shooting ourselves in the foot!!! Fire sale will destroy our investment

#FranklinTempleton investors - FT is anyways under a scanner. They cannot escape if they are doing anything wrong. But if Funds re-open , no one can save us and we will be doomed by our own choices

#FranklinTempleton investors - I know that everyone that FT has cheated us by illegally winding funds, however the point is that if we reopen now - everyone will redeem and it will be a panic situation where everyone will loose. A better option is to let the funds wind up orderly