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Last 2 cents:
When things felt difficult for the past 2 weeks but you saw indexes at highs, and you log onto X and have a bunch of people only sharing hindsight setups it makes you think something is wrong with you when in reality something was wrong with the market.
This happens over and over it’s the market cycle. If you think this type of distribution is going to disappear like nothing happened that is very very unlikely.
Today confirmed just how weak the market was and the weakest markets have the biggest bounces.
After today we are going to have very convincing bounces and they will suck you in before another day like today shows up.
There are going to be big bounces, and you’re going to scroll X and see a bunch of people sharing winning trades.
Dont underestimate how hard it is to resist that. Don’t take this action lightly and on the next bounce think it’s time to make $ back and let your guard down.
Most importantly do not believe what you see on X and think someone else has a secret and they are killing it… why can’t you?
Get rid of the make it back mentality because if you think you are in a hole now it will only get deeper.
Be safe…. have a plan… keep your guard up. Know what needs to happen before the market deserves your risk… it’s not going to be a bounce.
When things felt difficult for the past 2 weeks but you saw indexes at highs, and you log onto X and have a bunch of people only sharing hindsight setups it makes you think something is wrong with you when in reality something was wrong with the market.
This happens over and over it’s the market cycle. If you think this type of distribution is going to disappear like nothing happened that is very very unlikely.
Today confirmed just how weak the market was and the weakest markets have the biggest bounces.
After today we are going to have very convincing bounces and they will suck you in before another day like today shows up.
There are going to be big bounces, and you’re going to scroll X and see a bunch of people sharing winning trades.
Dont underestimate how hard it is to resist that. Don’t take this action lightly and on the next bounce think it’s time to make $ back and let your guard down.
Most importantly do not believe what you see on X and think someone else has a secret and they are killing it… why can’t you?
Get rid of the make it back mentality because if you think you are in a hole now it will only get deeper.
Be safe…. have a plan… keep your guard up. Know what needs to happen before the market deserves your risk… it’s not going to be a bounce.
I’ll add my worthless 2 cents:
The way the market has been acting for the past few weeks is not healthy. There’s moments where the action gets good and it looks like it may be risk on but it doesn’t last long.
This type of action isn’t sustainable and is how the market acts near the end of uptrends.
I wouldn’t short the market here because we can keep grinding higher for longer than I can imagine… timing is very difficult… plus I’m a bull at heart I don’t like to go short anyway.
Forgot who said it but “the market can act irrational longer than you can remain solvent” or something.
Things can always change and we see a big improvement in the health of the market where it actually starts acting like it can sustain a big new trend but this action that we’ve experienced over the last month is nowhere near healthy.
I’m not complaining either. Been trading a long time…. this is just how market cycles work over and over again.
I would love to see risk on action that sticks and changes my opinion but I’m aware that how things have been acting is what you see near the ends of trends.
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The Trader's Handbook - 648 ratings and 4.8 average rating.
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Some day we will do an update to this book to make it even better.
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Every year there’s 2-3 positions that make up the bulk of my performance. An eye opening trade review for me was noticing that my biggest drawdowns ALSO come from those same 2-3 positions.
The aha moment for me was the most important improvement to make was managing those 2-3 better. Working on better environmental awareness, better exits, and keeping more from them.
The aha moment for me was the most important improvement to make was managing those 2-3 better. Working on better environmental awareness, better exits, and keeping more from them.
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Nick Schmidt retweeted
Now that we saw the market drop 4% in a day with a few pod shop liquidations, we can now circle back to the point I was making in this post, the majority of the street was NOT betting lower, it was and still is the complete opposite!
All the horrible sell side data in the weeks prior were talking about how hedge fund exposures were “LOW” and how short based bets were super high lol.
Dive into the thread. It should serve as a good learning lesson.
All the horrible sell side data in the weeks prior were talking about how hedge fund exposures were “LOW” and how short based bets were super high lol.
Dive into the thread. It should serve as a good learning lesson.
Everyone who keeps sharing these short interest charts is missing the flows behind them. Most shops are not taking outright short bets. This is another effort to ease margin requirements across the street: banks providing balance sheet for more speculative bets are asking clients sure.
The sequence on the street looks like this:
HF manager: “I want more margin.”
Bank: “Things look risky in public AI bets, and we’re already lending a lot against private AI bets. For some clients, we’ll extend more financing, but only if they add more short exposure to improve their collateral scores.”
HF manager: “Okay, I’ll short more stock against my main bet.”
That is how you end up with short exposures that look astronomically high while many end users remain heavily long tech. The additional shorts are supporting the financing of their main bets.
Which also tells the bigger story on why raw equity financing rates haven’t blown out the way they did ahead of the big SpaceX IPO in June, despite the fact that lending is slowing.
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Nick Schmidt retweeted
$MU weekly chart model book
Officially closed my $MU trade today.
+155% over 2.5 months that moved my entire account +40%.
I'm not calling a top... so far looks like it can be healthy base building, but I gave too much $ back this week overall and am not willing to give up any more.
Best thing for me here is to move to cash, reset mentally and re-sync so I don't give back more from the best 2 month stretch of my career!
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