Yesterday, I contemplated life. I thought about how we make plans and wait for the stars to align before finally living. I thought about how we rarely enjoy the fruits of our labour because we learnt to manage while coming up. 🧵

Moving from a scarcity to a prosperity mindset is difficult. It's why we keep reserving things for visitors and keep waiting for vacations before resting. It's why we accept less than ideal love and learn to compromise the sacred.

So, yesterday I decided to do something about the restlessness in my spirit. Something symbolic.

I discovered I typically sleep on only one side of my bed. It's a habit I picked up because I prefer being near the door. I chose to sleep in the middle instead and to "spread out". To use my multiple pillows instead of one.

Rather than start the day in my study, I drank coffee on my balcony, as I gazed at the beautiful mango tree in this thread. I realised there are chairs I've never sat on in my home and so, I sat on them.

0/ We've highlighted FinTech infrastructure co's like BR, FIS, JKHY, MA, V, ICE, NDAQ, etc. as companies w/ a variety of moats that have led to dominant mkt share & outperformance despite being 50+ years old on avg.

$FISV had their investor day yesterday and laid out the why.

1/ $FISV highlights the fact that they have #1 market share in core accounting processing for $1-$50B FI’s; they are doing $1.0B in global e-Commerce revenue, and have more than $30B available for capital allocation over the next 5 years (read more M&A for FinTech co's)

2/ They have global reach with clients in more than 100 countries, more than 1,000 products & services, 10,000+ FI clients, & 6M merchant locations.

All while being #1 as a core account processor, merchant acquirer, bill pay, P2P payments, etc...

3/ This business model + market positioning has led to incredibly strong outperformance since inception ~35 years ago with cumulative $FISV shareholder returns of +42,171% vs. the $SPY at 3,327% & Nasdaq at 4,355%.

4/ $FISV has grown via a series of acquisitions over the past 30 years most recently the $22B tie up w/ First Data.

They highlight the progress on the deal & new goals post integration.

M&A is a skill & FISV has it financially; tech integration leaves something to be desired

Many traders have no consistency when sizing their positions.

The pros have this down to a science.

Here's my dead simple, 3-step guide to position sizing (and to outperforming 99% of other traders in the process):

Step 1:

Define how much of your account you're willing to risk per trade.

Personally, I never risk more than 1% of my account equity.

If I have $100,000 account, I will never risk more $1,000.

This ensures I will never blow up my account on one single trade.

There are successful traders who risk 2-3% of their account per trade, but I find it most calming to risk 1% or less.

The first step in this process is completely up to you - only you can dictate how much risk you can tolerate.

Step 2:

Look for entries & exits that are within 5% (preferably less) of each other.

This means if I buy a stock & have a 5% stop loss, I can put a 20% equity position on & still be risking 1% of my equity.

Your account will thank you w/ 20% in a stock that goes up 100%.

Step 3:

Position size using this formula:

Total equity (100%) / Trade Stop Loss %

So, if your stop loss is 4%, here's the math:

100% equity / 4% stop loss = 25% Equity Position Size

(assuming 1% equity risk).

Here's another hypothetical calculation:

It's Sunday morning and I'm grumpy 😑😑 and bored 🥱🥱

Why you ask? It's the weekend, everybody loves the weekend. Time to chill and relax and unwind!!

Yeah talk to a Trader!! We hate weekends and Love Mondays 😂🤣😋

So anyway, my threads on real life practical trading seem to be helping you guys and getting lots of good questions

One which I'm getting asked a lot and a traders biggest dilemma is "WHEN TO SELL"!!

I mean we first look thru a 1000 charts, then we select one to enter, get the entry correct nd wowza it's moving in th right direction nd we're in some profits

Shud be super happy rite?

Unfortunately that's a traders worst nightmare!! Why you ask? Cos goddamit when do we sell?

If we sell too early we risk losing big profits

If we wait too long it might just reverse and we lose most of our profits and most likely even end up in a loss

If we do nothing then our blood pressure goes up cos hey we're traders and that's how we are 😋😋

So here's a "DEEP DIVE WITH DEEPS" on "When To Sell"

** Took me several days to come up with this catch phrase for my learning threads. I hope you guys like it

The insights of the Austrian School of Economics will prove invaluable to investors navigating the distorted global economy of 2021.

This 18-tweet thread walks you through the definitive guide "Austrian School for Investors" by @scholarium_at, @RonStoeferle and @MarkValek.👇

1/ The roots of the Austrian School can be traced back to its founder Carl Menger, whose 1871 book Principles of Economics provided a new foundation for economic theory and solved the age-old "Paradox of Value".

From Menger's work we can derive 4 pillars of Austrian Investing.

2/ 1: The Subjective Theory of Value recognises that value is not determined by any inherent property of a good, nor by the amount of labor necessary to produce it, but by the importance an acting individual places on it for the achievement of their desired ends.

3/ 2: The Law of Diminishing Marginal Utility recognises that as more units of a homogenous good are acquired, the utility derived from each additional unit declines.

This wide-ranging insight helps explain important economic phenomena such as the historical emergence of money.

4/ 3: Methodological Individualism is the principle that economic phenomena result from the actions of individuals.

Collective magnitudes like “the people” cannot act, & therefore cannot be treated as ultimate causes.

Austrians are cautious in their use of economic aggregates.

To be a good public investor, you don’t need to be a genius or own a crystal ball but you do have to make a few big calls.

2/ In my case, I started in January of 2000, was up 20pct after the first month, and thinking this was pretty easy. Then the nasdaq dropped from 5000 to below 1000. That was a proper wake up call!

3/ I only made 2 big calls in the first 10 years or so but those were enough. If 90pct of your book goes up 8pct/year (historical public returns) and 10pct doubles, then you are up twice as much as the market and that’s a big number as it compounds.

4/ My first big call was recognizing the bubble in 2000. It took me 12 months but I was ready for 2001/2 once I understood how the excessive financing of dot.coms would eventually affect hardware and semiconductor companies. Seeing how the cobweb ties all the players was helpful.

5/ I missed the rally post 2003 but then stumbled on Apple computer in 2007. At the time I was very annoyed because I had dismissed the iPod and the stock had moved from $25 to $100 (or $1 to $4 post 28-1 splits)

This year, my trading income crossed ₹3CR in profits.

It took 300 days, no big drawdowns & operated at a 86% win rate percentage in weekly.

Here are the 6 steps for you to do great in trading:

Hope it's helpful to someone.

[🧵 thread]

Collaborated with @niki_poojary

1/ Learn Price Action

First of all, you need to focus on learning about price action.

If you do so, you'll be able to understand the big player's footprints better which is critical to know as we can side with them to make profit.

Better to be with them than against them.

2/ Journal your trades

Journaling will change your trading forever.

Why? Because you will precisely know where you are going wrong and whether you keep repeating the same mistakes.

You'll also know in which market you perform the best and in which type of markets you don't.

3/ Avoid losing more than 2% on a trade

I have seen many traders including the really good ones as well, where one big loss will spoil a month or two of their trading year.

The loss becomes so big to overcome that more mistakes are made.

So don't go in a big loss itself.

4/ Think only from a buyer vs seller point of view

You should know who is in control, a buyer or a seller not in options but in futures.

Also understand, at which points do these traders usually tend to give up.

Can take trades confidently and aggressively then.

How to manage risk in Option Selling?

10 frameworks to improve your risk management in 1 month:

Collaborated with @niki_poojary

In this thread you'll how to manage risk with:

1. Directional markets
2. Range-bound markets
3. Mtm stop loss
4. Booking profits
5. Overnight hedging
6. Event Risk
7. Position Sizing
8. No leverage
9. Reducing positions when wrong
10. Calculating risk upfront

Let's go ↓

Directional markets:

There is no point in the market being directional and you adjusting a non-directional trade.

As a general rule, you should only adjust once or maximum twice and then give up on firefighting.

Then you should side with a directional move.

Mistake of a non-directional trader:

Non-directional traders face heavy losses in directional markets.

If you are able to limit your losses in such scenarios, your risk management will improve.

The "I can adjust any move" mindset has to vanish for this to improve.

Big Range:

Moves in a big range are usually violent, and this is where non-directional traders lose money despite the fact that they are correct in assuming that the market is range bound.

Level-based stops work best in such an environment with reduced quantities.

1/ A primer on how I achieved end to end automation via algos.

First up, Why?

Trades execute the moment your setups trigger. No hesitating/panicking/worrying/overthinking when you need to take a new trade daily. That's why. Also, spend less screen time going fwd.

2/ How long for the whole process?

3 to 4 weeks for your easier/easiest strategies if you have some (bare minimum is enough) amount of coding experience. Even basic experience writing loops helps the process.

3/ Honestly tho, like seriously, can we do this in under 4 weeks? Yes, for simple strategies that don't use too many indicators. You can slowly build your other strategies later on once the simpler stuff is up and running.

4/ Costs involved:
- Zerodha API subscription (2k per month).
- Historical data subscription (2k per month). You can unsub after the first month if you don't need it.
- Udemy course (Price keeps changing but it's 490/- right now).
- AWS (Free tier for the first year)

5/ What language?

Python as it is relatively easy with a lot of inbuilt libraries. C++ is better and faster I'm told but it's not like you are running nanosecond HFT strategies with your peasant like retail capital.

THREAD: STOP UNDERVALUE THE PRIVATE INVESTORS

The misunderstanding of private investors - primarily known as amateur investors when talked about - done by media and professionals is too much.

Are you ready? Hope you will enjoy this one and bring your voice into the debate👇👇

1/x

Are private investors just a bunch of happy gamblers who should let the “real deal” aka professionals invest for them instead? Idk, maybe, maybe not. Peoples own choice, right? But I have an opinion about how media undervalue private investors.

2/

There are many smart persons out there, which have a great skill to hold the same (or more ) knowledge and understanding than professionals.

Why? Because the world has developed so much and the information-level have changed💨

3/

Earlier on you would not get access to accounting; it could be sent by Bloomberg terminal, send by post and even cost money. Now every accounting for every public company is available for free right after disclosure.

4/

Professionals had exclusive access to the board, and even the founders, the professionals had access to industry experts and could connect the dots faster.

Now every interview with the company, blog post by an industry leader or a Q&A with founders is available realtime.

THE ONE WHO STAYED BEHIND

Dimitar Berbatov & Christiano Ronaldo played for Manchester United in the 2008/2009 football session.
That was the only season both players were on the books of Manchester United at the same time...

Berbatov said of Ronaldo; “I was lucky to play alongside Ronaldo for a season. He was 100% professional, on the training pitch & off it.
I don't remember him ever being late for training...

He was always preparing in the gym, after training he would stay & do extra work like working on his shooting, then he would go swimming & go to the gym again…”
The club had strict training sessions. The players had to fit into the training schedules to stay fit & competitive...

They all wanted to excel.
They stuck religiously to these training schedules.
Their lifestyles- their training, eating, drinking, sleeping- everything was under scrutiny.
They were professional athletes, their physical fitness was very key to their success...

So they aligned themselves to these rigid training schedules.
when the training sessions were over, the players would leave for home.
BUT RONALDO WOULD STAY BEHIND!
He would train more.
He would practice more.
He would go swimming to tone his muscles more...

1/ What Happens with More Funds than Stocks? (Madhavan, Sobczyk, Ang)

"Funds differ meaningfully in terms of individual stock holdings, and we examine the factor exposures of the typical fund and the cross section of holdings of different funds."

https://t.co/d6vU4Fgszg

2/ * Data on fund holdings are from Morningstar
* Sample: Jan. 1, 2007 to Dec. 31, 2018
* Only funds with at least 80% of holdings from the Russell 3000 universe are considered
* Mean AUM-weighted expense ratio for mutual funds (ETFs) is 70 bps (14.2 bps) as of Q4 2018

3/ "The holdings of ETFs and active mutual funds across U.S. stocks can be efficiently summarized by approximately 10 canonical funds.

"There is more commonality explained by the first few canonical funds for active mutual funds than for ETFs."

4/ "Commonality among equity mutual funds has remained approximately constant, but there has been increased dispersion in ETF offerings.

"We see no apparent rise in concentration or crowding for mutual funds over the period from January 2007 to December 2018."

5/ "We examine commonality in active mutual funds in Morningstar style box categories. While Value and Blend commonality has remained roughly constant over the period 2007-2018, Growth funds have exhibited a marked increase in crowded positions."

Some thoughts on tick data for long to medium-timeframe trading

1/n

First, let's get the facts straight.
Other timeframe traders (investors) can be visible on micro timeframe data but micro timeframe traders(locals) cannot be visible on other timeframe data(>daily)

So obviously if you have the access then the logical choice is using micro-timeframe data (tick).
Theoretically sounds great but practically if you're hunting for a pattern that goes beyond days or weeks in tick data then it requires huge data to evaluate such patterns.

The workaround is to compress the tick data based on information gain rather than transforming the data based on a fixed timeframe like 1 m 15 minute and then do the evaluation.

Remember the timeframe is just for our convenience so we can read the market induced information. There is no magic timeframe and if it exists then it most likely a curve-fitted one. Ofc that's my own observation and not a ground truth

Everything that I’m about to say is coming from someone that has been in the investment management industry for well over two decades now and knows the inner workings of trading and compliance. I also worked for Morgan Stanley early in my career.

1/15

As a registered representative who is fully licensed by FINRA, SEC, and other regulatory agencies, we are tasked with ongoing education, the bulk of which deals with compliance, anti-money laundering and other kinds of malfeasance that may occur while working with clients.2/15

The recent trending of #HunterBiden’s name on Twitter got me thinking back to when #LaptopFromHell was the big story. Some of the material that was released included investment/banking statements that belonged to him. The BD that custodied Hunter’s account was Morgan Stanley.3/15

This is not a conspiracy theory. I’m a believer that there’s truth and then there’s a not quite the truth. Now, every year I must attend a few Anti-Money Laundering (AML) courses to stay current on my continuing education. This is a BIG FUCKING DEAL in the investments world. 4/15

Rarely trust what you hear and always verify everything...including this tweet. MS’s internal trade review desk and other compliance groups SHOULD HAVE FLAGGED Hunter Biden’s accounts for suspicious activity. As far as we know, they didn’t. Why???

5/15

Despite DII selling since Sept 2020, markets have continued to move up due to continued FII participation.

Demand recovery is still uncertain and uneven. Complete opening up of economy leads to the risk of a second wave.

COVID- A disguise in blessing. COVID has taught many businesses how to curtail expenses and improve margins.

"China +1" Theme can be a good opportunity for India

Capex Cycle Recovering

THREAD

Goldman Warns If The Short Squeeze Continues, The Entire Market Could Crash (Zero Hedge Premium)

Last Friday (Jan 22) we advised readers who thought they had missed the move in Gamestop (they hadn't), to position appropriately in the most shorted Russell 3000 names:

which included such tickers as $FIZZ, $DDS, $BBBY, $AMCX, $GOGO and a handful of other names, as it was likely that the short-squeeze was only just starting.

We were right and all of the stocks listed above - and others - exploded higher the coming Monday,

and all other days of the week, with results - encapsulated by the WallStreetTips vs Wall Street feud - that have become the only topic of conversation across America, while on WSB the only topic has been the phenomenal gains generated by going long said most shorted stocks.

To wit, the basket of top shorts we compiled on Jan 22 has tripled in the past week.

And while some are quick to blame last week's fireworks on the "dopamine rush" of traders at r/wallstreetbets who seek an outlet to being "copped up with little else to do during the pandemic"

while also blaming widespread lockdowns and forgetting that it has been Bloomberg that was among the most vocal defenders of the very lockdowns that have given us the short squeeze of the century), the reality is that at the end of the day