Full Price Action Course in this thread 🧵

This course is worth 50k

Collaborated with @AdityaTodmal

1/ How to read Candlestick:

Green/Blue candle indicates buyers candle & red candle indicates sellers candle

2/ 24 candlestick patterns explained

3/ Price Action (PA) trading:

PA helps to predict market movements by spotting patterns or ‘signals’ in the price movements of an underlying market.

Learn different price action strategies

4/ How to plot Support &

How to save tax when income is above 50 lakhs?

Here are 9 benefits of trading in a corporate account: 🧵

Collaborated with @niki_poojary

1. Make a Pvt Ltd Company.

Form a company with family members and trade under it. The family members should be directors of the company. Will explain why later.

Why form a company?
You will only need to pay 25% flat tax. Individuals have to pay 30% tax above 10 lakh profits.

2. Surcharge Benefits:

You will be charged a lower surcharge in a corporate account.

Check the picture below:

Total Tax Outlay:

The total tax outlay for individuals is 30% plus surcharge. If you really earn a lot (10 cr +) then you will be paying 42% tax.

Whereas in a company you'll be paying a maximum of 28% tax.

This is how rich people save a lot of their money by paying low taxes.

3. Expenses can be deducted.

All expenses can be deducted from a company account.

Companies:
1. First make a profit.
2. then deduct the expenses
3. & Pay tax on the remaining income

Individuals:
1. First Profit
2. Then Pay tax
3. Expenses with whatever is left.

So let’s begin...
Taking a look at this screenshot from overlyzer (https://t.co/5OcOhoBSj1).

Home gameplay was at 9% while Away team gameplay was at 21%. With field pressure at 5%.
So I will explain what I do in situations like this.

1: I must get myself familiar with the https://t.co/zCVZOTCf9u

Teams playing, by checking them out using either Sofa, FlashScore etc to know the stronger team.
So back to the screenshot(s)... With #AwayTeam taking the lead already, game play @45mins was poor, but #AwayTeam was still dominating the game... When you have a graph like this,

Quick events to look out for:
*Corners.
*goal kicks.
*fouls.
Now if you are opportune to be watching the game live or using any other form of virtual/3D view, it should be an added advantage to help you predict better. (I will do a video explaining all this later 🤞).

Best Markets to look out for while using @overlyzer for inPlays.
*1stHalf correct score.
*Team to score next goal.
*Team to take next corner: Use both team pressure and game/field pressure to determine this.
*Foul/Card market.

When you have a balance graph like this, it means both teams r making sure they don’t get penetrated. This is perfect for correct score market and under goals market. But you will have higher odds for Throwing and goal kicks under quick events. Try it.

@RaoulGMI Good Morning! You asked what is happening to #Gold and #Silver. This is my take - a summary of the governing Thesis on https://t.co/1Cy03QuMgb for a long time! Hope you can use the input! 🙋‍♂️🙂

Since ~2000 we have been in Kondratiev's Winter. A period where GLOBAL DEBT causes low and falling growth rates. Central banks try to counter this by printing money (Monetary Stimulus). However, Deflationary forces from debt causes deflations to unfold - despite extreme measures

To the frustration of Central Banks, they cannot create inflation despite extreme money printing. They stimulate by infusing money into the system but cannot make the money circulate. Velocity drops dramatically. What they miss...You cannot solve a solvency problem with Liquidity

Despite Central banks efforts (especially since 2008), the above creates a DEFLATIONARY ENVIRONMENT! This can be observed across #COMMODITIES. Declining despite Money Printing...?! Now - nothing lasts forever.... and suddenly we will see the KETHCUP effect of their rogue actions

#Commodities give the major picture of where we are in the INFLATION-DEFLATION cycle! We are close to bottom (of Ending Diagonal) but not there yet! ONE MORE DEFLATIONARY BUST before MAJOR SECULAR BOTTOM! Why BUST....? Because of #Covid19 2nd wave!

When you hear the phrase "free market," you probably think of "a market that is free from regulation" but that's the opposite of the phrase's original meaning!

1/

Adam Smith used the term to describe a market that was free from "economic rents" - money earned by owning things, rather than doing things. Smith recognized that markets attract parasites - "rentiers" - who seek to drain wealth by "investing" rather than building and doing.

2/

Which meant that, in the absence of muscular state intervention, markets would become less and less free - more and more dependent on the whims of rentiers who used money to breed money by creating toll-barriers between parts of the productive economy.

3/

For Smith, markets were only free if they were regulated. But that's the opposite of the way that we talk about free markets today. Today, a free market is a market where you are free to collect rents - passive income from owning things, at the expense of people doing things.

4/

This is true in so many metaphorical ways, but it's especially true when we're talking about actual rent - actual homes that people need to survive and produce, whose primary role today is to serve as an asset class to be maximized, not a basic human right.

5/

Circle of Competence 101:

@SahilBloom x @jackbutcher

↓

1/

A Circle of Competence is the set of topic areas that align with a person's expertise.

If the entire world of information were to be expressed in a circle, an individual's Circle of Competence is the small sub-circle that represents their expertise.

2/

The idea surfaced in the 1996 BH annual letter.

"You don’t have to be an expert on every company...you only have to be able to evaluate companies within your circle of competence. The size of that circle is not very important; knowing its boundaries, however, is vital."

3/

A Circle of Competence is built over time.

It is built through experience, reading, dedicated study, and effort.

It is dynamic, not static.

It can expand as you deepen your knowledge in new areas. It can contract if you fail to nurture your existing areas of expertise.

4/

To engage this mental model in your life, there are two key processes to go through:

(1) Identify what falls within your circle
(2) Identify the boundaries of your circle

(1) is all about figuring out what you know, while (2) is about humbly admitting what you don’t.

Elon Musk's plan for Martian indentured servitude for those who can't afford to travel there is typical of the profound failings of capitalism in terms of planning and a great example of why I hate "free market space colonization" in science fiction media. #WiP #TTRPG

You see, he doesn't imagine or question "what comes next", or if he does, he doesn't talk about it because he knows that people would immediately crucify him.

Mars, or any planet that isn't terraformed, is completely or nearly completely reliant on imports to survive.

Food, water, medical supplies, replacement parts, construction materials, the lot. So what happens when an indentured labourer pays off their indenture? Where do they go? What can they do? They're trapped on a world where they have no power and their access to resources is...

...dictated to them by the powers who have the wealth to import those resources. They aren't going to get a slice of land. They can't homestead. And do you honestly think that Lord of Mars, Elon Musk is going to hand out those resources? Hell no! No capitalist would.

Why? Because there's no profit in it. At best, they might extend a huge loan to let them set up in a fashion that keeps the now "free" labourer beholden to them. And it's not like the labourer can leave either. Trips home aren't going to be free, and that's a feature, not a bug.

1/

Get a cup of coffee.

In this thread, I'll walk you through the importance of understanding *correlations* between bets.

For example, a portfolio of *correlated* stocks can have very different performance characteristics compared to a portfolio of *uncorrelated* stocks.

2/

Imagine we put $100K into a stock.

In the next 1 year, the stock could go down 30% (our worst case scenario).

Or it could go up 50% (our best case scenario).

Or it could give us a return somewhere between these extremes.

Say all such returns are equally likely.

3/

A "probability density diagram" can be used to visualize such scenarios.

On the X axis, we take all possible outcomes (in this case, -30% to +50%).

And on the Y axis, we plot the likelihoods of these outcomes.

Like so:

4/

Take any 2 outcomes on the X axis -- say, R1 and R2.

Now, calculate the area under the probability density diagram between R1 and R2.

Our probability of getting a return *between* R1 and R2 is exactly this area.

Like so:

5/

This is called a "uniform" distribution -- *all* returns between -30% and +50% are *equally* likely.

But we can also imagine other "non-uniform" scenarios, where *some* returns are more likely than others.

Here too, probability density diagrams can help us.

A few examples:

7L for the day.
Capital deployed 1.5 Cr

My 🔟 Biggest Investing Mistakes 🧵

1⃣Only looking at the share price

I bought penny stocks at the start

My logic: 100 shares of $1 stock > 1 share of $100 stock

WRONG!

The price of 1 share is meaningless!

What matters is how great the company is!

2⃣Only looking at dividend yield

I bought stocks with 10%+ yields

My logic: 10% yield > 1% yield

WRONG!

The dividend got cut and the share price dropped -- a double-whammy!

A high yield is Wall Street's way of saying "this yield is not sustainable, watch out"

3⃣Selling a great stock early

I bought $DXCM in 2007 for ~$6

I sold it 1 month later after a 15% gain

Current price: $412.58

I was in a rush to take profits, so I missed out on HUGE upside

If the opportunity is huge, hold!

4⃣Not buying a great stock due to valuation

I've made this mistake over and over again

I didn't buy $ZM at $80 because the valuation was "insane"

Current price: $455

If you like everything about the company except the valuation, but some

Even if it's just a little bit

AN IMPORTANT THREAD 🧵👇

What is Ascending Triangle ??

A Detailed Thread on Ascending Triangle as continuation pattern with graphical examples.

Retweet to help others and beginners and if you want it every weekend !
@caniravkaria

1) Ascending triangle occurs after Bullish trend which shows continuation in the prevailing trend.

2) It can be assumed as tug of war between Strong bulls and cautious bears which is clearly evident.

Ascending Triangle as breakout continuation pattern 👇

3) It's a continuation pattern / an indication of continuation of bullish trend which depicts continuation in the up move.

4) It's key feature is its rising support and flat resistance which signifies power of bulls over bears. simply put, buyers are wining the battle.

5) It's the most commonly occuring pattern in classical patterns.

6) it can occur as clear breakout Ascending Triangle or Pullback Ascending Triangle.

Happy reading !

Ascending Triangle as pullback continuation pattern 👇

The Baltimore Stockbroker Parable

How one stockbroker managed to achieve a 100% success rate in predicting stock movements

/THREAD/

1/ One day you receive an unsolicited newsletter from a stockbroker in Baltimore.

It contains a tip that a certain stock will soon rise sharply.

A week passes, and as he predicted, the stock goes up.

2/ The next week, you get another newsletter from the stockbroker, this time with a tip about a stock that will fall.

And next week, the stock craters.

3/ Ten weeks go by, and each week you receive a tip about a stock that will go up or down.

Every time the prediction comes true.

4/ On the 11th week, you get a solicitation to invest your money with the Baltimore stockbroker for a hefty commission, justified by his successful predictions.

That sounds like a great deal, right?

The four stages of markets-

1. Accumulation
2. Markup
3. Distribution
4. Decline

Thread-

1. Accumulation phase-

This phase starts after the completion of a downtrend.

In this phase the furious selling activity of downtrend comes to a rest.

During this phase there is a gradual shift from sellers to a more neutral environment .

Institutions starts to show interest in stock, Because they can not buy the stock in one time ;they buy it slowly over a long period of time.

Sometimes it takes years for a stock to come out of this phase.

The easiest way to recognize if a stock is in this phase is that the Longer term moving averages will start go decline even when the stock bounce higher.

This shows that there is indecision and there is no powerful force present In the stock at this time.

But, Its super risky to buy in this phase because it can also be a second distribution zone , and the stock may again go lower in many cases.

The first signs of an accumulation zone is the stock will try to make higher lows and try not to break the swing lows often .

The more right you are about your trade setup, the less likely you are to get filled

By extension, getting filled actually lowers the Bayesian probability that you are right

Should I sacrifice some RRR to get filled more often?
The eternal dilemma of contrarian trading

I haven't seen this tradeoff articulated on CT. Allow me to explore this, starting with an example of trading with limit orders:

Suppose that for a given setup, price hits target before it reaches invalidation 70% of the time. Great, right? But getting filled is not guaranteed.

Scenario 1: If 100 out of 100 limits get filled, expected hit rate is 70%
Scenario 2: If only 40 out of 100 limits get filled, expected hit rate is 25%

Both scenarios have 30 losses in expectation, but the hit rate in the first is >2x better simply because more trades were taken

Then we have RRR. Setting entries closer to invalidation increases RRR but decreases the probability of getting filled, since entries are further away from the current price. And as above, getting filled less often results in a lower hit rate. So RRR trades off against hit rate.

Where to place the limit orders though? The optimal place to enter maximizes the EV of the setup, where

EV = hitrate * avg_win_R + (1-hitrate) * avg_loss_R

So we want argmax(EV), and we can compute this by seeing how hitrate and avg_win_R affect the EV of the setup.

50 rookie mistakes to avoid as a stock market beginner - a thread.

1. Watching CNBC and acting on the recommendations provided by the "analysts", "experts" and "fund managers" who appear on TV.

Remember, most of them don't even beat the benchmark index on an annual basis.

2. Giving too much importance to Moneycontrol articles and recommendations. Moneycontrol profits off of noobs. They depend on you to make their money. They get paid by buy side firms who want to dump their positions, and sell side firms whose clients want to sell.

They also get paid to propagate rumours (albeit subtly) about stocks that the buy-side firms want to buy (albeit at lower prices) and sell-side firm clients want to buy. So, if you see a recommendation on moneycontrol, that marks the distribution phase (most of the times).

3. Listening to colleagues, friends, and family on what to invest on, where to invest, what stocks to buy. Usually these are also people who have no real expertise, but started a year or few months ahead of you. They only talk about their winners, you get very excited.

4. Listening to social media "experts". People on Twitter, Youtube, etc., even if they look like they are trading crores, or managing hundreds of crores, have different reasons for trading/investing in something. Typically, following them is the path to the butcher's shop.

Objectivity- Undistorted by emotions or personal bias.

What is objective Trading?

Trading in which decisions are taken on pre-decide rules, decisions in objective trading are not decided by Feelings or opinions.

What is subjective trading?

It is discretionary trading, in which one uses his intuitions and Analysis to take trading decisions.

Is one superior to other?

The rules in a mechanical system are going to be decided by you, the plan is going to be made by you,

the positions sizing and all other aspects are going to be made by you.

So your psychology is going to filter the information coming towards you, even in a mechanical system as well as in discretion.

WHATS THE USE OF OBJECTIVITY-

I am a Discretionary - Rule based trader.

So, I take trades based on my analysis, my entries are discretion based, but the exits , position sizing and Risk management rules are pre decided.

WHY USE SUBJECTIVE TRADING?

The biggest benefit that objective trading do is that it makes the chances of you thinking less during the time of taking an execution decision.

As a beginner trader you will not have much experience, and you will inevitably do a lot of mistakes.

1/12 Valuing a Disruptive Businesses: Naked Wines ($WINE) Case Study. In my intro last week, I promised examples of using ROIIC & reinvestment rate to value disruptors. $WINE is an eComm D2C wine model with SaaS-like outcomes. EXCELLENT DISCLOSURE makes it a good case study

It began as an online wine retailer with many SKUs/low loyalty, but then pivoted at a pivotal moment when a top exec realized a cohort of consumers were super loyal – those that enjoyed supporting independent winemakers. @_inpractise Feast your eyes on this glorious disclosure:

Naked Wines is forecast to report approximately zero EBIT this year. As we will see, the company is not worth zero, nor does it mean Value Investors are allowed to cavalierly toss it in the “too hard” pile. Here’s a way to value Naked Wines with discipline:

Variable (1): $WINE discloses Standstill EBIT, boosted by COVID. Loyalty of $WINE’s “angels” makes EBIT stickier than some other eComms. Astute SaaS observers will note revenue retention (I assume ~78% on avg) is below B2B SaaS (95-130%). My standstill NPV implies 6.3x EV/EBIT.

Variable (2): A disclosure triumph. If slides could talk, “we reject simpleton requests to under-invest & produce 123% IRR for shareholders that truly like value creation.” Value investors, note what the V stands for in LTV. PV it. I assume payback holds 5 yrs, then slow decay