My thoughts dump 2
Siddhu (friend) and his learnings: • What happened to siddhu was that he had 4,000 invested in Tesla but the stock suddenly plunged due to Elon musk's tweets. Then he waited for some time. Then again the stock rallied and this time he took a loan on the trading platform and applied stock options because he was sure this time that the stock will definitely rise, but it suddenly fell down again and this incurred a huge loss for him and he's still recovering from this loss. • So from his experience, what he understood is he may win with certain stocks and he may lose with certain stocks. But it becomes really difficult to consolidate those losses. So instead of doing this and getting stressed with stocks, he has learned to just invest in ETFs and take the guaranteed wins of say 10 to 15% every year. So basically now he is not going for the high winds and taking some hits. But he's happy to get an average return. • He said that companies with very high market cap like a trillion dollars cannot be influenced much by such whales. The market who can move a stock up and down by investing a lot. They basically try to fool the regular customer who is watching the moving candles and they tried to screw with them by doing the opposite. Observations: • I think the Germans and Europeans in general are very clever because their own companies don't have this pump and dump scheme like it happens in the USA. The economy here is quite stable. The stocks don't rise and fall like crazy. The social bracket is really good. People are safe with respect to their health and other insurances. So I guess that's why they come back home quickly around 2:30 in the afternoon so that they can go and invest in the US market. Also, I read that apparently Germans invest more in the US market than in their own market. So what this Germans did is kick away all the rich people from their country but they invest in news. • I mean why not have the work-life balance in Germany but make extra bucks by investing in the progress of USA. Let people in USA keep working hard for 2 hours 6 days a week. Taking all the stress. Germans will sit here and just invest in some ETF or in their industries and make some passive income. I think that's brilliant. • If you remember correctly, dad told me this long back that Europeans are the richest people because they have lot of investments in the US. But they also have a really good life and infrastructure. He said that the real rich people are in the Europe not in the USA. • I saw in some some YouTube video that Jim Simmons had 66 person profit per year for the last 30 years. Ray dalio had 13% and Warren buffet and around 20%. So the crazy genius algorithm which Jim Simmons and his company Renaissance technologies has could win 66% per year and it also did well during the 2008 financial crisis pandemic and so on. So if you think of Renaissance technologies as the asml or the size of semiconductor industry which have like total domination and Monopoly then his algorithm could be similar to this. • German stock brokers like scalable capital or trade Republic or any other broker don't even have options trading I had to find something outside Europe like interactive brokers to do option trading. This shows that options running is really dangerous and it's not that common in Germany. • Reddit doesn’t have millionaires replying about what to do in trading groups Domain knowledge: • One can take loan on scalable capital and invest in stocks. This is up to 40% to 70% of the portfolio value and a maximum of $100,000. • For the amount loaded into scalable Capital as cash one can earn four person interest •
Mindset: • If the stock market is something like a collective consciousness and if you assume that is like a another living organism, I think stock market is all about mind games. It's not about beating the system or beating the random work algorithm, but it's about beating the average person beating the collective consciousness beating the ETF index. • I think one could also interpret fantasy premier League or FIFA or poker or academia. In general. Everything is basically mind games because money success. Everything is relative. You just have to beat the other people. There is no proper upper limit. There is no ceiling. There is no theoretical maximum value to reach it's all relative value. • If you want to experience it, just do it for fun. Keep aside 2500 assume that they are the inflation bonus which I'm anyway going to get for this year from the German government. So use only this amount and blindly follow Nishant panth and see what is going to happen. Never touch your actual portfolio and just invest that in ETS. • Investing is about defense. Think in terms of Risk and reward not expected profit. This suits my personality because i am more like jose mourinho and rahul dravid. Strategies • Conservative: ○ Invest in tech ETF ○ Invest in ETFs s which might grow certain domains like semiconductors, cyber security etc • Aggressive strategies : ○ Pick one stock which you believe will grow and YOLO ○ Pick the top performer in an highly growing ETF ○ Pick two to five performers in a domain which you know will for sure increase in market cap. For example cyber security or semiconductors or AI • The most important things are ○ What to buy ○ When to buy • One guy suggest that a one should not do strategy hopping. Just stick to one strategy. And log your winners and losers and deeply understand why you want in your winners and try to repeat them. • KK say in his FAQ: only way to make good money is to develop your own strategy for which one needs to just look at the stock market for a very very long time. Look at the graphs and data and find a pattern yourself. AMD stock decision: January 2024 • As of January 2024 I got insider information from anirudh who is working at ZT systems in USA that they got a big order from AMD for manufacturing gpus and other computing and he predicts that the market cap in consumer gpus for Nvidia is going to reduce from 95% to 65% and AMD is going to capture that market. So the stock price of AMD is definitely going to increase. I was really tempted to take this thought and implement it and invest something like $25,000 into AMD stock basically go all in. • Let's say I go all in on AMD stock which is at 170 as of January 2024 and my logic is that it will grow at least until $350 which is like half the price of Nvidia now. Let's assume I am ready to invest. $10,000 . • Best case: if this logic stands then I can effectively double the investmen within 1 to 2 years. • Medium case: if I invest the same amount in an ETF growing at 15% a year then I will get double the amount in 5 years. • Worst case: Let's say this doesn't happen in the next 2 years and I lose like 20% of the value which I invested and if I panic and remove this money and invest in an ETF growing at 15% after 2 years. Then on the remaining 8,000 invested I will make $4,000 profit in the next 3 years. That means in total I will make $2,000 profit which is like 20% profit for 5 years. The downside for going all in on a stock, panicking and going back again to ETFs would be 80% of the initial investment that is $8,000 in this case for a period of 5 years. So jetzt really really important to beat the average and time properly. • Currently the NASDAQ 100 index s&p 500 index and the tech stocks are at an all-time high. Maybe my logic of buying AMD is right but the time is definitely not right because I will be buying them at a high AMD is at its 55-week high already at 170. Mean reversion trading: Nishant pant • Sidhu told me about this guy and I checked out his website, Twitter account and his YouTube channel. I also read the reviews for his book on Amazon and I looked into the one star and two star rated reviews. They say that the book basically has very basic principles in options trading and one guy commented that the parameter which he uses could be like finding a needle in the hairstack. • He has a book titled 25k challenge. Basically he went from 2.5 k to 25k within 1 year in 2019 using his method of mean reversion trading. I don't know if he got lucky because of that year before the pandemic where the market was bullish I don't know or maybe his technique actually works but he charges like $150 or $100 per month for all the insights on which stocks to buy and what to do with them etc • Apparently he studied all the option trading strategies in his early years. He did mistakes. Then he later realized that he should just stick to the simple methods. • I also learned that mean reversion trading basically says that a stock will always reward back to its mean. So what we do here is if it's having a positive standard deviation then you bet that it will come down to the mean and if it is having a negative standard deviation, you bet that it will go back to the mean. That's basically the Crux of it. But for this you may need a model which predicts how the stock will behave. That is basically the Crux. So I don't know if he has a random work model or arima model or something like that. Train on the stocks on which he gives opinion to people what to do, how to use the spread and so on. • He explained to me how mean reversion trading works and how Nishant makes money. I found the concept really interesting. Apparently he lost money because he entered into the market at the wrong time and he exited at the wrong time. Even other friends in the US incurred losses in the first few months. Dilemma: • I need to think really hard if options trading etc is my cup of :team. For me its not easy to follow a person like Nishant panth because I think I am really bad at controlling my emotions. And controlling emotions is really really important when you do such leverage trading using options. • I Will follow. Nishant blindly until I either make profit or totally lose the $2,500. Because this is similar to following people with fantasy premier League gurus. It's better to follow such gurus because they have a track record of winning in the past 2 or 3 years. That means they have a methodology. If I tweak the mythology and take my own decisions, then I may incor losses. This is exactly what happens when I also take my own decisions and don't follow the fantasy premier League. Gurus. Hard rules: • Control emotions : in order to do this I need to have a strategy. ○ People say that keeping your emotions under control is the biggest challenge when you do such a day trading or strategy trading. ○ People say that doing paper trading is completely different from live trading because our emotions coming to play and it's nothing like paper trading.
To Do: • Later create a separate folder for investing and separate Google Docs with headings like learning strategy resources etc and put these sections into separate documents. • FAQ of KK • Read about Future options • Reddit India Streetbets : search for bull call spread • Optionables youtube channel has three videos on bull call spread. Looks like really good videos. Watch them • Look at united states investing championship 2023 results. And in that list of winners some companies are giving monthly subscription financial-competitions.com • Tradelion oliverkell video • Tradelion vidoe: Mario's stamatoudis used KQ trading. Look into quallamaggie subreddit • Read all the charting techniques from bulkowski ○ Apparently his book has 100 charts and financial wisdom youtube channel has a video summarizing top-5 • Read books by Paul tudor jones. Also watch the video by financial wisdom on him. • The swedish investor on youtube has a great 10 hr video bookmarked in my youtube list
Resources- YouTube channels: • Options. Alpha • Zeroda University • Tackle trading : good video on when bull call debit spreads go bad • Be sensibull • Option trader : good video on Risk-Free bull call spread and option strategy with zero risk • Optionables : Has 3 really good videos on bull call spread. • Quallamaggie • Tradelion • Ashwath damodaran: really good at value investing principles • Financial wisdom YouTube: this website looks amazing. Watch all the videos and maybe also buy his PDF. He has really good tools for regular stock trading and stuff. • The swedish investor
Resources- Reddit: • Reddit India Streetbets : search for bull call spread • Algo trading • Options • Day trading • Thetagang - they take advantage of the theta parameter and do trading • Real day trading. ○ This subreddit looks really legit. No b******* people here and the WikiH of the subredded is freaking amazing. •
Resources- websites: • Stockbee Blogspot. Pradeep bonde: one of the mentors for kristjan Kullamaggi (short form kk) • Secretedge.us • United states investing championship 2023 results • https://optionalpha.com/education : Really really good website for understanding options with nice infographics and a clean website • Extradash.com this website also has some really cool explanations and blog posts.
Trading Strategies: • Swing trading using a dollar cost average type strategy in Forex and a reverse at target strat I use in my futures account.
○ I have been using the dollar cost average in forex for 7 years now, 5 live, 2 in demo... all of which have been profitable. ○ My reverse at target futures strat is fairly new. I have been optimizing it for the last year or so (testing data as I write this 😈)... ○ I am trading a small 25K funded account with Apex at the moment using this rat strat.
○ I believe many strategies work, I think the real trick is finding the one that fits your psychological profile. For me, dollar cost average is a perfect fit. Super consistent and easy to execute...great for the 9-5 worker. Try it in a demo account for six months, you will not be disappointed 👍 • 12-Month SMA approach by bulkowski: A reddit comment said this worked better than 200 MA etc • Indicator recommendation: confluence between 200-day MA, 15-day, MA and VWAP. • 200 20 on 2min chart (check the moving averages making millions question on algotrading bookmarks reddit link) • An interesting YouTube comment on paul todor jones video by financial wisdom. Someone uses 200 EMA and macd for swing trading and only enters the ma breakout when there's positive divergence in the macd. • Quallamggie: ○ https://www.youtube.com/watch?v=JNVA5cd_m7M ○ He says his biggest mistake is overtrading ○ He is not interested in trading options on big caps, but is more interested in finding small companies which increase like crazy. And he uses some filter to catch such companies. He says he sees lots of oppurtunities now a days. ○ He says trading in a bull market is the best way ○ He thinks its easier for small budget players like me to catch companies like DRCT, CCCC which have 10x’ed in few weeks (nov-23 to jan-24) • Stockbee: episodic pivots ○ https://www.youtube.com/watch?v=7osI-XkF3Uo ○ He says pivots which increase like 100s of percentages are quite rare and are found only twice or thrice a year after earnings are reported etc. Eg: Root Inc ○ Ones which increase 50% or so are more common ○
My research learning: • I looked into bulkowsky's website. It's called the patent site and it looks really good. He also has data on his own predictions for the s&p 500 now he makes it at the start of the year and he does it for the whole year. And if you look only in the year 2015 he predicted that it'll go up but it went down in all of the years when he said it'll go down it. Maybe it went much more down and when he said it'll go up it usually went up. So at least the directional correlation and correlation was correct in the end of the year but only in the 20 year 2015 he thought it will be positive but in the end of the year it ended up being negative. • On the Yahoo website I selected the interval as one day and used a moving average of 200 and a simple option. Or you can do select one month as the interval and do 10 as a period. That would be like 10 months and you can select a expansion, moving average or simple moving average or weighted moving average. Or you can even do time series protection. It's really good. There are many options. • I checked the what is happening for the 10 month moving average for s&p 500 and you can see that actually escapes the bear markets in 2008 and before that. I also looked into Bollinger bands and here you can also select the period for the moving average and also the standard deviation count 1 or 2. So you can use this Bollinger band or see if a stock has gone out of its range then it'll revert back to the range. • So I looked into the stock AMC which was this meme stock in In May 2021. Here because of the Reddit group AMC stock or Wall Street bets, the stock suddenly went above the 200-day moving average and also exited the Bollinger Bank and if you see if you got it when it exited the Bollinger Bank at $164 and if you sold it when it is just entering the band again at 519 equal I made $400 per share. So just looking at the bands is also viable strategy. You need cash influx to buy and sell at such Black swan events. • My previous mistake ○ If you look at my previous mistake of buying dogecoin USD on 17th May 2021, you will observe that I got the stock when it has made a crazy jump out of the Bollinger Bank on 10 th of May 2021 and it was already coming down and inside the band and when I got it on 17th it was already inside and after that it fell down and it never recovered again. So even if I followed a simple charting process like this, and if I had looked into 200 days moving average, I could have been saved if I just exited at the point when the stock entered that 2002 average and Bollinger plans for the same of 200 a little bit or at least saved myself from the dip. • If you look at the current stock price of Tesla as of today that is 12th February 2024 you see that it's at around 185 or dollars + that is way below the 200-day moving average which is around $230. So Tesla stock is obviously undervalued and it is going to go back to its mean value of at least 230 or even higher. But the question is when and how long would put your money into this and hold it? I guess that is why most of the people don't buy and also you don't know if it will further dip in value. But for sure it'll eventually go up and you could make a $50 profit on each share. So now I look at this situation. You know that The stock will eventually go up but the question is when. So that's why people buy this stock options and if someone beds that will go in one month or 6 months or 3 month with a put call then it's very risky because if it doesn't go then your stock option is expiring. It is a ticking time bomb and if you do like a bull call spread then you won't make much of profit. I think now I understand why the stock market is really interesting and also stressful. And since you know that you're going to get at least $50 profit from the Tesla still going up. If you buy now eventually let's say in x months but you won't have so much Capital because the stock value is around 180. If you want to make $5,000 with this trade then you have to buy 100 shares and which will cost you $18,000. Also it could be a very long term hold. • I think if you observed the moving average of Tesla stock and if you had bought the stock at around $30 in March 2020 and let's say I invested $25,000 that would buy me approximately 800 stocks.. and if I waited for the stock to come again below or close to the 200-day moving average of 196 in May 2021, then I would have made around $160 profit per share. That would translate to €13,000 of profit and if you put 25% tax on it, that's approximately $8,500. So just for the growth of Tesla, it's a bull run. I could have made $8,000 zero risk. Imagine if I had put 100,000 into this I could have made $25,000 approximately. That is a power of having capital and doing long holds and just watching charts. Imagine institutional investors who have virtually infinite money. No wonder they can profit a lot by investing in such moments and stocks. • If you do the same with the semiconductor ETF you could have basically double the profit from each share. It went from 60 to 120 over a period of approximately 2 years but still it's not bad and this shows why cash is King. • I think the graph of a stock market is a superimposition of some slow features and fast features and the momentum features and so on. Well I think this logic of momentum trading or swing trading might actually make sense. • You can select various technical filters in IKBR and select only stocks which have %volume change or %price change since start of day etc • I observed that for most of the stock, the prices rise by few % after market opens at 15.30. I think this is what 30 minute trader means.
My learning - Financial wisdom videos: • Trading strategy: This fellow says that in the below video if one looks at 10-month moving average and picks any stock like Amazon or very volatile Arc foundation by Kathy Wood or s&p 500 which is very stable over the period of 100 years, he found that it's a much better strategy to sell when the stock goes below 10 month moving average and buy when it goes about 10 month moving average compared to long-term buy and hold which many people do. The strategy is back tested 100 years and he has a really good video on it. This is freaking amazing. ○ To see the 10-month moving average, he asks to look at the monthly chart. Use monthly chart and use 10 period Moving average ○ https://youtu.be/aenu7yUxTr8?si=py7V1cVc7ZYfs_Ax • Paul todor jones video: ○ A newbie investor tells himself about the expected profit instead he should think in terms of risk and reward that should always be the story you tell yourself in the head ○ He also says that investing is all about defense not attacking and I think this perfectly suits my mentality. • Best trading strategy ever? ○ https://www.youtube.com/watch?v=vYK4wijPX3E