Fish Felon wrote:Wow man, that's freaking bad ass that you're doing that well in the market. I've met multiple people that were day traders, just as clients of a business I was working for at the time. They were very well to do and living more than a'ight.
I've long since thought (before knowing) the market is a way to create wealth out of thin air, but I have no friggin' clue what the rules of the game are....or where to start in figuring them out. It sounds like you have.
Would you mind sharing more? I'm really interested in explaining what some of the markers are that you're looking for, even just a quick basic run down. Or a good place to start learning for myself...a recommended study guide if you will.
Hypothetically....let's say you sell your business this next year and are trading as your full time gig. Ten months from now there's a 2007-08 like crash, or correction to the market.
What's your contingency for that?
Thanks! So yeah, I even thought about possibly starting up another thread if people wanted to know more or were interested in following along. I'm not trying to brag or anything I just really really love doing this and so badly want to full time. I'm also not claiming to know all...but 90% of people can't even make a penny doing this and lose all their money in 6 months. That's a true statistic.
There's so much to go over I can't possibly touch on it all...but again the whole market is about manipulation and psychology/what other people are going to do. Nothing to do with a stocks financials, products...blah blah blah it's all a smoke show.
For instance...when a stock is falling huge...say down 70% on the year...most people look the other way, go what garbage, blah blah blah. When a stock is going down...that's when shorts cover and bulls start accumulating.
See...shorts need liquidity to sell into. When is there high liquidity to sell into? When there's positive news/prospects/stock price increasing. There's all sorts of retail bulls ready to buy shares cause oh my God, look at that great news! This stock is bullish asf. Shorts aren't shorting on the way down they short into the liquidity on the way up. And bulls start selling out positions as well so there's massive selling pressure. Once that pressure outweighs what retail can absorb, price starts falling
All of a sudden stock takes turn down and retail bulls go, oh just a little pullback all this great news it's gonna keep going up. I'll buy this pullback. They buy and add to their losses...stock keeps going down.
As the price slides...and retail bulls are going this is a POS why did I ever buy this I should just take my 50% loss...shorts begin covering and in the know bulls start buying(like shorts need liquidity on the way up bulls need liquidity on the way down to load), while still driving the price down. Eventually those retail bulls all sell out and the stock reaches capitulation, and the stock will start going back up.
I typically stay away from large caps as they are tightly controlled by institutions and algos that control price. The price movement isn't organic. It's AI. I focus mostly on small caps.
In small caps...there's whole bull/bear groups that basically try to burn each other by pumping either short of long...so you need to be careful and understand what orders going through are telling you.
My main rules:
#1 Everything is manipulation be skeptical and make your own assessments. People get all excited when they see their stock gets a price "upgrade". Do you really think these research companies are going to pay all of these people....have all this expense...to put this research out for free to the masses LMAO. Is that not the most ridiculous thing you have heard? They are driving liquidity and it's up to you to figure out why. Most often they were paid by somebody...a short focused fund...to drive liquidity for the fund to sell into.
#2 Keep losses small. It's incredibly hard to recover a 20% loss...takes a lot of winning trades. You need to nip it in the butt 3-5% loss max... automatically. Just hit the button.
#3 Small gains add up. There's times/stocks that you can go for those larger 10-20% gains, even higher. But 90% of the time you are doing great by taking 2-5% gains and looking for the next play. It's very very easy to take consistent 2% gains but everyone wants that 100% home run in one day. If you take 2 2% trades daily in 10k positions that's $400 a day 100k a year...thsts awesome. But so many go for that 100% run. So they hold something they shouldn't and a gain turns into a loss. This is the whole reason why every once in a while they will run stocks 100-800% in a day...so it's in the back of people's minds "maybe this is the next huge mover like that". Never give in to that mindset always lock gains
#4 position size. Never go big, no matter how much of a sure thing you think the play is. Especially with small/med cap stocks. These are garbage companies you can get hit with bad drug trial news, stock offerings, whatever. You never know. You are heavy in one trade and all of a sudden it drops 75%...you just blew up
#5 Always trade with a plan...never emotion. Once you figure out what you are doing, you need to trust in yourself and let the trade work. They can do stop loss raids to steal shares etc. Always trade based of what the price action/chart/volume are telling you...never emotion
As far as if we hit a downturn...I'd have to learn some new tactics...focus on shorting more. But there will always be pumps leading up to drug data releases for example, mergers etc. They always pump. And you can always short stuff. Trading would only be one aspect, I'd like to just flip houses by myself as well...on my own schedule with no customer. So I'd have that as well. But I'm pretty confident I'd be able to adjust and thrive. I think the biggest tell that I have a good grasp of this is that I have had several 10-20% downturns where I slip up and stop following rules...every time I buckle down and make it back. That consistency tells you the strategy is working if you follow the RULES
I'm in no way a certified financial planner and none of this should be used as investing advice. But for me this works.
If this does interest anybody, I'm more than willing to open a different thread and share more thoughts. It's fine if you think it's all blowing smoke as well I completely understand, cause for years I never trusted/thought I'd put money in the stock market
Far as my business, I own a water/fire damage cleanup franchise in homes and businesses, so basically the corp office is telling me my sales aren't high enough (I'm not making them enough money) even though I'm happy (thought this was my business I bought into lol?). With the pressure from our corp office... insurance companies...and customers....this in no way feels like I own a business any longer. I'm basically working for 3 bosses and only see the prospects getting worse and worse here. I saw this coming a year plus ago though, even told lanyard I was worried cause my goals weren't aligned with the corp office....well the result of that is coming to a head. So it wasn't necessarily a surprise but it still does piss me off