A Thread on~ O V E R T R A D I N G

Sitting and observing the numbers flicker on the screen might be very exciting.

But have you ever felt like you might've done better? Or you're just too tired of waiting that you punch an order right in?

That's a Bad Idea.

So, Let's understand the reasons behind it and try to find a way out.

1. Not having a trading plan makes you clueless.
Your impulses start to take control of you.

2. Having a trading plan; But still taking impulsive/ random trades.
Because of adrenaline rush or gambling instinct.

3. Revenge trading
When you try to force a trade in order to recover from a previous loss.

Thread: Free Options Trading Course for Beginners with small capital.

Reference: Option trading marathon series, part 1 from Mr. Subasish Pani ft. @PushkarRThakur

Collaborated with @AdityaTodmal

1/ Trading journey of Mr. Pani

• He has an experience of 7 years.

• He has made a profit of Rs. 20 cr. over these years with a capital of Rs. 2 cr.

• However, it's not easy to make such profits.

• More difficult, is to retain those profits and build more on it.

2/ How he ventured to options selling

• He started with futures and option buying however after a certain point when his capital grew, he faced scalability issues and hence he resorted to options selling.

3/ Investing becomes imp once the capital grows:

• Since his trading profits have grown well, he has started investing (investing is always for LT).

• For folks who dnt have much info regarding investing can simply buy Nifty 50 stocks & keep rebalancing as Nifty 50 does.

4/ Covered calls strategy for the portfolio:

• Pledge the portfolio and receive margin ~80% which he would then use to sell OTM CEs of the stocks which are in his portfolio.

• This helps in generating fixed income from the portfolio.

thread

LESS IS MORE?

Fishing Opportunities

1. I'm reading the summary on the UK/EU trade agreement & have some concerns. It's not the full blown text, just an outline of the negotiated agreement so I may be needlessly cynical, we'll have to wait & see.

2. The 25% UK uplift of the value the EU member states catch in UK waters.

I see difficulties with this whichever way I try to spin it to myself:
a) The EU are reducing quotas in fishing waters for some species due to issues with sustainability.

3. So our uplift could cause over fishing of stocks in our own waters. The summary doesn't mention if/how EU access to our waters will be reduced?

b) But assuming the quotas are reduced in line with other member states waters, we could have a reduced income rather than uplift.

4. The 25% uplift is implemented over 5 yrs. So for the sake of argument let's assume it's 5% per yr. But if EU quotas are being reduced by an average of say 10% by weight, that 10% has a value attached to it & our annual uplift will be calculated in line with the lower quotas.

5. Although in theory there'd be a point in 2 yrs where our 5% increments would match the reduced EU quotas, the scientific advisers are calling for greater reductions in quotas to allow stocks to recover, so it's likely quotas will be cut again.

The largest wealth transfer in history.

Time for a thread 👇👇👇

Today’s mix of monetary and fiscal policies are having a very different economic impact then we saw post the GFC.

Back then, deflationary forces were exacerbated by a brutal wealth loss problem.

Especially the lower classes.

They lost over 84% of their net worth from '07-'11.

This time we are seeing the complete opposite.

Lower classes just increased their wealth at the highest annual amount in the history of the data.

In fact, the bottom 50% net worth not only increased but is now 77% higher than it was at the peak of the housing bubble.

If we zoom out, this is what the prior chart looks like going back to the 90s.

A THREAD on some insightful thoughts about Investing & Financial Independence by Rohit Chauhan (@rohitchauhan) Sir:

1/

The unfortunate reality of markets is that the last one to panic loses the most. So if you must panic, do it early or else don’t.

2/10

Investing is such a solitary activity where you are fighting your own bias and lack of knowledge; that it is amazing to see people argue and fight with others about the merit of their investment ideas.

Other than preserving your ego, what good can defending your ideas do?

3/

Thank god, my parents did not do a DCF on me like a lot of investors do in their analysis. Negative free cash flow during investment phase (school & college) & conclude my NPV was -ve. Good thing there is no way to short your kids. U are forced to be long & hope for the best.

4/10

It's a privileged life if one of the main worries in life is how to beat the market.

Less than 0.1% of humanity has this worry. It is the highest of high class problem.

5/10

25x is a good threshold for financial independence, where x is annual expenses.

Focus on fulfillment and not money beyond that. If you still chase money, then it’s not the money you are after.

You can get a sense for how much net stock @RobinhoodApp customers were buying from the size of capital RH just

The $1bn is to cover future possible activity, so it doesn't matter for looking backwards.

It does confirm that solvency concerns drove the restriction. You don't raise 1bn of equity to cover your tracks if nefarious, nor if the restrictions were a tap from regulators.

They drew $500-600m and presumably met their NSCC margin call with cushion. Say they posted $350m (guess - you don't draw $500m to post $62m and shut down trading methinks).

I did a quick guesstimate yesterday - 20m normal going to 200m on 4x VaR and 800m net unsettled buys of GME.

That ain't 350m. So either the size of GME buy and/or VaR multiple are ~2x that or DTCC demanded more than 10% margin on unsettled GME trades.

You can't get a tight range of what the net GME buy was outstanding without knowing more, but you can bound it - the net GME buy *10% < 500m so less than 5bn ... not v helpful frankly.

Education is an investment.

If you're coming to study in Canada, be proactive in choosing a program, especially if you plan to work in Canada

Research and check how relevant your program is

Below are the Top 10 Most Valuable Degrees in Canada according to Royal Bank of Canada.

This ranking is by highest average salaries compared to tuition costs

It is to give info on degrees with good returns on (education) investment

"No matter what program you choose in the end, with careful budgeting, planning & hard work, you can find success in any field." - RBC

1) Business/Management Sciences

The discipline is more tied to math than commerce and will teach students about theories and models in statistics and programming

It will also teach students how to apply the knowledge/skills to a variety of business problems.

This is in demand!

2) Petroleum or Chemical Engineering

They learn about subjects such as fluid mechanics, heat and mass transfer, and process modeling in order to design operations that will transform raw material into specified products for industries (oil and gas, pharmaceuticals, or energy).

3) Finance

Students who specialize in finance will learn how to plan, manage, and analyze the financial aspects of businesses, banks, and other organizations.

They will work as analysts in a variety of financial roles.

A surge of retail stock trading over the last year lit the fuse that sent shares of GameStop rocketing higher without a clear business reason, market watchers say, squeezing hedge funds that had bet against the retailer and other companies that were out of favor on Wall Street

What is going on? Here are some answers 👇

More individuals have invested in stocks during the COVID-19 pandemic, and experts cite a number of reasons, including lockdowns boosted savings, stimulus putting cash into people’s pockets and extremely low interest rates

Also, a proliferation of trading apps allowed anyone with a smartphone to buy or sell stocks for free. Retail investors’ participation in U.S. equity order flows increased to nearly 20% in 2020 from 15% in 2019, data from Swiss bank UBS showed

What has been the impact of this surge in retail trading?

Big U.S. technology companies were among the beneficiaries last year. Facebook, Amazon, Apple, Netflix and Google saw record inflows as their businesses benefited from lockdowns and their stocks soared

💵 With unprecedented stimulus and easy money policies from central banks, investors then shifted to smaller stocks, especially ones that got beaten down during the pandemic

1/ Equity crowdfunding or equity investment marketplaces failed. Full stop. Didn’t work.

Here is my synopsis on why the industry hasn’t taken off. Lots of reflection and painful lessons I hope others can learn from.

2/ Reason #1: The financial feedback loop for vc takes yrs. If you want one core reason the industry has not succeeded, it is this. Time between when an investor writes a check and gets confidence she should write again- is way too long to encourage repeat investment

3/ If you are ever at a YC event and some entrepreneur pitches you on a marketplace that helps private companies raise money…..ask how they will solve this issue.

[imagine being at a cocktail event again?]

4/ I missed this point when we started. Frankly the 60+ investors that passed on us also missed it- or at least it never came up as a key concern. Not once.

The difference between credit, with financial feedback loops that took days or months, and equity is huge.

5/ In private investments it is typically >5 yrs before you see the financial feedback. Win or lose thats a long time for most people. If you’re running a VC fund you’re making $ along the way with management fees, but angel investors….are just shelling out checks.

Friday Alpha!

Let's Talk $LRC

1/ #ETH fees are painful these days. Anyone who interacts with #DeFi has tears in their eyes when approving a transaction.

2/ Thankfully there are projects like @loopringorg that build the 2nd layer atop of which we can trade our magical tokens in a decentralized manner.

1/ Lessons From The Tech Bubble:

Last year, I spent my winter holiday reading hundreds of pages of equity research from the 1999/2000 era, to try to understand what it was like investing during the bubble

A few people recently asked me for my takeaways. Here they are -

2/ Every document hereon comes from my former employer Bernstein Research's internal research archive, which extend back to 1994

Unfortunately, they're not available to the public (even Bernstein's client website cuts off at 2003), but happy to give more details if necessary

3/ LESSON #1: Everybody knew it was a bubble

Unfortunately, the quip "it's not a bubble if everyone says it is" just isn't true

Investors were comparing the internet sector to tulip mania as early as mid-98. Bernstein held an entire conference on it in June 99!

4/ LESSON #2: Calling bubbles is easy, making money is hard

In truth, the hard part about the tech bubble wasn't noticing it. The hard part was timing it

Our equity strategist tried in January 99... he was off by 14 months (and another 30 point gap in value vs growth)

5/ LESSON #3: Nobody knew the bubble popped until months after it did

Nobody noticed in March 2000 when it finally popped. Our equity strategist (who bet his career on it!) didn't catch on until June

"Pets are family". Been tracking 13 stocks but only own $CHWY. I will add BarkBox, $STIC when it lists. The company has a valuation of $1.6B with $350M in revenue, profitable
Others: #PetsAreFamily
$CHD
$CHWY
$ELAN
$FRPT
$HSKA
$IDXX
$PAWZ
$PETQ
$PETS
$SPB
$TRUP
$TSCO
$ZTS

BarkBox is a monthly subscription box filled with dog toys and treats. Co. has 1 million + subscribers to its monthly box. Its sells its products on $TGT and $AMZN as well.
Founded in Dec 2011, by Matt Meeker, Carly Strife, Henrik Werdelin in New York.

One month your dog might receive a collection of treats and toys. BarkBox might send him on a journey through Chewrassic Bark. Each box contains two innovative toys, two bags of all-natural treats, a chew, and a specially curated item from the month's themed collection.

Every toy is designed by in-house industrial designers, made for the way dogs play and approved by the company's own test dogs. You can choose a one-month subscription ($29), six months ($25/box), or 12 months ($22/box).

BarkBox is very allergy friendly. Every BarkBox is free from corn, wheat, and soy, which greatly reduces the risk for triggering allergies and food sensitivities.
You can reorder certain items or purchase items from other collections online.

There is a money-back guarantee

This is your daily pension announcement. The Travis goes balls to the wall edition! It has been a busy week in pensions, so I will again dive into the dung heap with an open mouth. First up Mark (AIMCO Chair) makes a statement...#ABLeg #handsoffmypension

Read it carefully, because most of what he wrote is true.

"These factors define the success of the Canadian model of pension management." True. But he needs to acknowledge that ATRF had for generations contributed to the success of the Canadian pension model. #ABLeg #AMCOfail

The real humdinger is:
"The terms and conditions included in the Ministerial Orders are in the best interest of both AIMCo and its clients and clearly align interests."

Nope. That is why 0 out of 4 pension plans have signed an agreement. Take that to your MLA. #ABLeg #handsoff

The terms and conditions contained are egregious and irresponsible. They erode the responsibility of ATRF. But AIMCO doesn't give a shit because they knew if they run out the clock Travis will make it law anyway.

Mark knew that Travis is AIMCO's lackey. #ABLeg

Mark should have learned from his predecessor. Stay out of Alberta politics. Getting involved will lead to no good.

These investment management agreements need to be written on a commercially reasonable basis. Which would include the ability to fire them if required. #ABLeg

A thread on $TSLA / $TSLAQ the stock in 2020:
Don’t retweet this, @gordonjohnson19 would not like the unit of #Gordon to trend. /2

/2 Some of you may ask: “What is a #Gordon?”
This used to be easy to answer. @gordonjohnson19 was famous for his bearish price target on $TSLA: $ 87. Prior to the 5/1 split. /3

/3 His price target (one #Gordon) translated into $17.40 post split. That price target was supposed to be the real value of the stock, those targets are usually for a twelve month timeframe: @Tesla the company ~ 1 #Gordon. /4

/4 One #Gordon wasn’t meant to tell us by how much the stock would rise every 10 days in 2020, but it ended up doing just that: $TSLA started the year at $86.05 or $430.25 pre split. It ended the year at $705.67, hence went up $619.62 ($3,098.10) or 35.6 #Gordon. /5

/5 So on average $TSLA added almost 1 #Gordon every 10 days. That’s despite falling to it’s annual relativ low on March 20th. /6

How I Trade

Easy. I trade with the trend. Buy low sell high for up trends. Sell high, buy low during down trends. I don’t care about fundamentals. Often I don’t even know what sector the stock is in. Half my trades, don’t even know the name of the company.

I look at the setup. I look for skew. If a few other variables line up. I stalk it for an entry.

Then I use options to maximize my capital. I mitigate the risk with diversification.

How to spot the trend?

Let’s take a look at this chart. Now. Let’s trade it.

I have no idea how. There are no landmarks. It could be going up, or down, maybe sideways. If I have no clue where it’s going. How do I make a plan? Where do I enter? Where is the exit?

Elliott Waves Principle

Now this one. A simple fact. If you see a 1-2 setup. 3 is next. 3 runs fast and hard. Usually between 100% to 161.8% of 1. However if price break down below 2. This trade is invalid. We have to consider an alternative.

Can you manage a trade like this?

How long does it take to learn Elliott Waves?

Months probably years to be an expert in it.

Not that is not going to do you any good eh? Years to master something before making any money.

Good Saturday Morning Chart Fans!

Will I have to learn to draw vertical lines with no slope? Let's have a look!

DJIA Channel Check

Transports. Same pattern as we saw in the fall.

Utes.

SPX Channel Check

Robinhood sells your orders to Citadel. This controversial practice is known as "payment for order flow."

Like true scumbags, Citadel actually urged the SEC to ban this in 2004.

"Citadel Group urges the Commission to ban payment for order

"This practice distorts order routing decisions, is anti-competitive, and creates an obvious and substantial conflict of interest between broker-dealers and their customers."

"Broker-dealers accepting payment for order flow have a strong incentive to route orders based on the amount of order flow payments, which benefit these broker-dealers, rather than on the basis of execution quality, which benefits their customers."

"Furthermore, the parties making such payments (either voluntarily or through an exchange-mandated program) are forced to find other ways to recoup the amounts of such payments..."

"...whether through wider spreads or a reduction in other benefits that otherwise could, and should, be provided to customers."

Things I've learned trading for the past 4 years in no particular order while reflecting this Sunday on it all:

* It always goes higher than you expect it will.

* It always comes back down.

* It is very easy to make money in these markets. It is much harder to keep it.

* You will FOMO no matter how much you say you won't. Make sure you don't FOMO with everything and blow your account.

* You don't need some fancy indicator to be profitable. Get solid with a few (personally for me, Ichimoku and OBV are my favorites)

* Horizontal levels are more reliable than diagonal.

* Trade with friends. They'll tell you when you've fucked up and shame you for it.

* You can follow someone else's TA, but you better be able to tell if they're full of shit or not.

* Risk Management will ultimately lead to your success over time. Luck runs out.

* "As soon as you stop trying to get rich quick, you'll get rich quick."

* Beware of getting sucked into coin communities. They're full of hopium, bag hodlers, and outrageous price predictions. Echo chambers are dangerous.

* Always leave behind a small moon bag. Makes you feel better when it does another 10x.