Valckrie

One of the biggest edges in trading/investing is extreme open mindedness. There are many well known human biases, but in general the restriction to seeing the market for how it actually is a human perception problem: - looking for rational reasons for why the market moves - assuming links between market pricing and “fundamentals” or “news” or even “events” that the demand/supply mechanism/nature of markets itself does not guarantee or even necessarily even try to reflect. - imposing linear extrapolation typically based on what’s been happening recently. General leak being “it’s over recently” so therefore it’s going to be more over. - there’s no “always” and there’s no “never” - the market is a proven chaotic system hence its behaviour is fundamentally unknowable. Once you accept that you can find freedom in that. Successful speculation is all about alignment, being in sync and confluence. Great planning, great visualisation of different scenarios, and when the market syncs up with them, you have the alignment to bet profitably. Because of the chaotic system thing, the properties of ANY sufficiently successful betting strategy must have; 1) capped downside / capped risk 2) plentiful buffer for margin of error and uncertainty : win rate dropping, a lot of run outs that go against you should not put performance into deep drawdown; worst drawdown at 30-35% max and worst 10-15% of drawdowns around 15-20%. 3) optimised for compounded wealth growth. Linked to (2), and also use bet sizing and take bets that score well from a Compounded wealth growth stand point. Eg coin flipping for half your account with 5-10% edge is the opposite of that.

What’s new in the market? On a down day like today, every swing trader is gloating on X about their tight risk management writing schooling posts to bagholders re how their risk management sucks. Meantime in June, swing circles were very quiet as majority underperformed while the low iq bag holder full ported recklessly and was up 1000%+ on obvious themes. Bagholders were very loud then. Now that we’ve capitulated on panic type volume and action, swing traders are proud of being in cash and are citing how broken leaders never come back or “take forever to” yet we have V-ed in tech and semis every time off every sharp panic bottom since 2020. (2022 was steady bear not panic). Literally see this cycle repeat few times every single year. While all this is happening, short setups are printing money, mean reversion intraday is printing money, aggressive intraday move 2 move trading is printing. Long setups have worked on gappers last few days. Those are all opportunities which have an objective quantifiable edge. Opportunity capture is the fraction of them one is able to capitalise on with appropriate size. Mean reversion bounce trade is a fat pitch likely incoming next. Also interestingly other parts of the market are showing noteworthy rel strength vs tech/AI trade. Theres tons to pay attention to in this market. High volatility creates opportunity. It’s never “truly over” and we’re never “so back” for too long lately. Only certain feature of reality is change and flow. Any take that imposes finality is a limited mindset. What’s unique about this latest episode is how much concentration in positioning and leverage had built up in specific equity factors, rather than the broad indices themselves necessarily and the ones that have been hot for too long lately. The latter tho as a general tendency is also nothing new in markets. Average stock 70% off highs even before this dump, and now AI and tech related investing factors fully rinsed of leverage with multiple long short funds rumoured liquidated, with bearish sentiment levels somewhat entrenched prior to this. Altho clearly that was not reflected in positioning until now. A highly competent trader is as dialled in as ever at this point in time, for both longs and shorts.