4 Simple Steps to Avoid Downtrends 📉 (a thread)

🧵

1. Know the difference between an uptrend & a downtrend 📈📉

At TraderLion, we identify an uptrend as stocks/markets that trade ABOVE a RISING 21DSMA and 50DSMA.

A downtrend occurs when stocks/markets trade BELOW a downsloping 21DSMA/50DSMA.

Let's look at an example 👇

$QQQ from 2020 shows what an uptrend, downtrend, and even chop period looks like.

2. Know when it is really time to make money on the long side.

Swing Traders: when markets/stocks are above the rising 21D
Position Traders: when market/stocks are above the rising 50D

We can take this one step further by understanding what a Power Trend is 💪

The trend is really your friend when we have a Power Trend in the general indexes. A concept coined by the @IBDinvestors team, we must have the following:

✅ Low > 21ema for past 10 sessions
✅ 21EMA > 50SMA for at least 5 sessions
✅ 50SMA slope is positive
✅ Market closes up

The Best Resources on @YouTube for Trading 📈📽️

(Thread)

Other than books, video is a fantastic medium for traders to learn about different methodologies & techniques

In this thread I’ll be sharing my favorite resources.

Keep in mind I gravitate towards channels which focus on providing real value over entertainment.

TL We work hard to provide the best growth trading educational videos out there.

Concept videos, interviews, webinars & the archive of the 2021 Trading Conference.

16 Presentations from US Investing Champs & Hedge Fund



Mark has great webinar archives and trade walkthroughs. He also throws in a bunch of drumming and shooting in there.

I highly recommend you watch this webinar he did with @dryan310 multiple

Financial Wisdom

This channel breaks down concepts & summarizes trading books in a whiteboard style which is very entertaining to watch and makes the concepts easy to understand.

Great

3 Simple Steps to Quickly Grow a Small Trading Account

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1️⃣ Define a Repeatable Edge

A basis of any successful trading system is having an edge over a series of trades.

Without a well studied edge, you cannot succeed in the market.

Example of edges:

Trend system
* Trading during the power trend
* Trading stocks that are in uptrends
* Trading GROUPS that are in uptrends

High Volume Edges
* Highest Volume Ever (HVE)
* Highest Volume in > 1 Year (HV1)
* Highest Volume Since IPO (HVIPO)

2️⃣ Define Entry Tactics from that Edge

Once you have an edge, you need an entry tactic.

Entry tactics are repeatable and definable. You should know your entry and exit points before ever placing a trade.

Examples of entry tactics:

Trend system
🟢 Enter on two closes above a KMA
🔴 Exit on two closes below a KMA

High Volume Edge
📊 High Volume Close
📊 High Volume Support

Edges & Entry tactics have to be repeated CONSISTENTLY to reduce randomness when trading a small account.

Building a Daily & Weekly Routine Workflow to Increase Profitability

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The stock market is one of the most complex systems in the world, with parts that change every single second.

As individual investors, we need to bring a level of consistency to our system that can prevent us from feeling overwhelmed.

Routines offer this consistency.

As a retail trader/investor, you must have a set routine for your daily review and weekend review.

This is non-negotiable if you want to outperform the market or increase your current levels of profitability.

In your Daily Routine, you should review the following 👇

🔹 General Markets
🔹 Current Positions
🔹 Emotional Review
🔹 Focus List
🔹 Summary

General Markets (10 min)

The goal is to identify if the wind is at our backs.

You should note whether there has been a recent cluster of accumulation/distribution, where price is with respect to the KMAs, & the index's relationship to the highs.

A Guide to Position Sizing

--- Thread 🧵 ---

To perform in the market, position sizing needs to be the main focus.

This is what ultimately separates the good from the great.

It will make no difference on your account if you have a 100% gain in a name with only 1% of your equity.

It will make a huge difference on your account if you have a 100% gain in a name with 20%+ of your equity.

There are 2 consistent ways to position size in the markets 👇

1️⃣ Position Size Based on Risk
2️⃣ Position Size Based on Number of Edges

1️⃣ Position Size Based on Risk

Before you take a position in a stock, you must know how much you are willing to lose on a trade.

We recommend never risking more than 1% of your overall account equity on any single trade, especially if you are in the consistency phase.

8 Chart Patterns by William O'Neil

Let's break them down one by one🧵

Perhaps the most famous basing pattern found in the market is the Cup with Handle pattern.

✅ Chart resembles a cup with a handle
✅ Base length: Minimum 7 weeks
✅ Base depth: 20-30%
✅ Buy point: high of the handle
✅ Handle length: 1 week
✅ Handle depth: no more than 15%

There is also a Cup without Handle pattern.

✅ Chart is just a cup, no handle
✅ Base length: Minimum 7 weeks
✅ Base depth: 20-30%
✅ Buy point: High of left side of cup

The Double Bottom chart pattern is also very common & is one of the most powerful patterns to learn.

✅ Base resembles a "W"
✅ Base length: Min. 7 weeks
✅ Base depth: < 40%
✅ Buy point: middle of "W"
✅ Second low must undercut first low

The Flat Base pattern is another well known structure coined by William O'Neil.

✅ Base resembles a shallow consolidation
✅ Prior uptrend must be greater than 30%
✅ Base length: Minimum of 5 weeks
✅ Base depth: < 15%
✅ Buy point: High of structure

10 Trading Tips for any strategy. (Thread)

1. Find a Trading Method That Fits Your Personality

Becoming a great trader is a process of self-discovery. It is very important to understand this from the get-go and start by finding a proven style, or methodology that jives with who you are.

2. Trade With The Trend

Did you know 3 out of every 4 stocks follow the direction of the general market? Anytime you are trading against the trend you are putting the odds heavily against yourself.

3. Stay With Your Trading Strategy After A Few Losing Trades

Next time you take a loss, try not to take it too personally. Sometimes you can do everything perfectly and you are still going to take a loss. That’s part of being a consistently successful trader.

4. Post Analysis Is The Secret To Success

By maintaining a trading journal and doing post-analysis, you can answer extremely important questions like…

What is working? What am I doing right?

What is not working? What am I doing wrong and how can I fix it?

An Introduction to CANSLIM (Thread)

CANSLIM is a growth stock investing strategy developed by William O’Neil.

O'Neil was the founder of Investor's Business Daily and in 1964 he became the youngest person to ever purchase a seat on the New York Stock Exchange at age 30.

O’Neil's success came from studying the greatest winning stocks of all time and the methods of the most successful investors of all time including Bernard Baruch, Jesse Livermore, Gerald M. Loeb, Jack Dreyfus, and Nicolas Darvas

From this research, he distilled 7 key characteristics which showed up again and again in the top-performing stocks of every market cycle.

Together they form the acronym CANSLIM

Current Quarterly Earnings Growth
Annual Earnings Growth
New Products/Services/Management/Price Highs
Supply and Demand
Leader Versus Laggard
Institutional Sponsorship
Market Direction

What to do if you are not trading well. (Thread)

Impatience and instant success are built into our minds from the get-go. We want instant wins and instant rewards.

This has as much to do with our psychological build-up as it does with the society we live in.

In this thread, we will cover:

What to do if you are not trading well.
How to stop the drawdowns when no progress is being made.
How to have a systematic process that protects you from yourself.

So what is it that drives us?

We all want the market to reward us for our hard work, the effort, and time we put into it.

We want input to equal output.

However, there is no such thing as input = output in trading.

Trading is about consistency, persistence, and hard work without the certainty of any reward.

How To Reach Peak Trading Performance (Thread)

Trading is you versus the Market. It’s a one on one battle with a system designed to take your money if you lack discipline and an identifiable edge.

To achieve success and be able to take on this opponent, you must conquer your own faults and work towards incremental improvement.

Learning to trade, analyze charts, and manage risk are skills that you can carry with you for a lifetime.

However before you can reach the performance phase and consistently capture alpha, every trader must go through learning phases.

Your journey begins as a rookie trader, thrust in the midst of a pitched battle between yourself and the market.

How to deal with Deep Red/ Reversal Days (Thread)

Often when the market is extended, we can get a quick reversal to the downside with little or no warning.

There are two main ways these days can go.

We can have a steady selling day with key stocks losing pivots or we can retrace, reverse and then finish strong.

When the market starts showing signs of accelerating distribution during the day, and leading stocks are suddenly down 5+ %, emotions and panic can quickly cause you to ignore rules and make non-systematic decisions.

Below we will cover how to prepare for this event and manage it objectively.

It’s key to understand that emotion can never be eliminated from your trading, that isn’t the goal and is not achievable.

Don't lose today planning for tomorrow.

Don't join the pack –– Lead it.

10 Stoic principles that will immediately change your life: 🧵

On Wealth:

We all want more.

More things, more money, more prestige...

Whatever 'it' is, we never seem to have enough.

But what if we measured wealth differently?

Not by what we don't have, but by what we don't need?

True wealth is found in wanting less, not having more.

On Truth:

Too often we become set in our ways.

We believe our opinion is right, and are unwilling to consider alternate perspectives.

Have an open mind.

Be willing to change.

He who thinks he knows everything knows nothing.

On Control:

Some things we can change, some we cannot.

The secret to happiness lies in the ability to differentiate between the two.

Ask yourself:

Do I have the power to change this?

If so, get to it.

If not, move on.

On Looking Back:

Quit living in the past.

I've been guilty of this, as I'm sure you have as well.

Stop worrying about what could have been or what you should have done.

Start new. Start fresh. Start today.

What's done is done, but the future has yet to be written.

10 common mental errors that derail decision-making:

Survivorship Bias

History is written by the victors.

But in studying and learning from "survivors”—and systematically ignoring "casualties”—we create material distortions in our conclusions.

We overestimate the odds of success because we only read about the successes!

Naïve Realism

Humans generally think very highly of themselves.

We tend to believe that we see the world with perfect objectivity.

We also assume that people who disagree with us must be ignorant, uninformed, or biased.

This error sits at the core of many societal problems.

The Dunning-Kruger Effect

Humans are notoriously incapable of objective evaluation of their own competency levels.

People with a low ability at a task are prone to systematically overestimate their ability at that task.

Example: Everyone is a genius in a bull market.

Loss Aversion

Humans tend to prefer avoiding losses vs. achieving gains—the pain of losing something is more powerful than the pleasure of winning it.

We will typically do more to avoid losses than we will to seek gains.

We systematically overvalue what we already have.

Thanks to the modern-day lifestyle, everything seems to be a source of stress. From mundane daily activities like driving, shopping, cooking to others like socializing and holidaying (holiday stress is real) can be a source of stress 🧵(1/13)

And then there are other serious sources of stress—work, relationships, health, wealth etc. Whether you like it or not we live in environments that have a lot of stress triggers for a variety of reasons (2/13)

Each time you stress over something, it affects your health including your heart ❤️‍🩹— that’s not a good thing. Last week was bad, 2 of my close friends suffered cardiac arrest in part due to the immense work-related stress they were under (luckily one of them survived) (3/13)

This just made me realise—once again—that nothing is more important than good health and leading a stress-free life (4/13)

The key to leading a stress-free life is to get rid of all the unnecessary sources of stress, which we artificially impose on ourselves. No points for guessing - active trading is one. Active trading is a serious source of stress, and unfortunately, no one talks about it (5/13)

Thread: Pivot levels

Trading based on Pivot levels is one of the popular approaches. Both short-term and intraday traders track Pivot levels to identify support and resistance levels in any instrument.

Let’s discuss how these levels are calculated.

The pivot calculation method considers the previous day prices to calculate the support and resistance levels.

There are seven levels marked on the chart when we plot Pivot as a tool.

There is a Pivot level, 3 support levels (S1, S2 & S3) & 3 resistance levels (R1, R2 & R3).

We have four prices for any trading session - Open, High, Low, Close.

They give us the important information about what happened during that session. Levels is calculated using the High, Low & Closing price of the previous day. Let’s understand Pivot calculation with an example

The difference between high and low is a range of the day.

High – Low = Range
In our example, range of the session is 10 points.

105 – 95 = 10

Mid-price of the session is average of high and low price.

The Mid-price in this case would be 100.
(105 + 95) / 2.

Mid-price is average of range of the session. How about including the closing price to this calculation?

If we calculate the average of High, Low and Closing price - we get the Pivot point.

(105 + 95 + 103) = 101 is the Pivot level in our example.

What do the world's greatest leaders know about the power of persuasion that you don't?

THREAD: How you can unlock the ability to change anyone's mind.

Let's get smarter... 👇🏻

1/ As far back as the mid 300's BC, humans were fascinated by the power of persuasion.

In light of this, Aristotle developed what is known as the "Rhetorical Triangle."

A framework for persuading any audience using 3 simple appeals:

•Ethos
•Pathos
•Logos

Let's dig in...

2/ Ethos (Ethics / Character)

The first of the 3 appeals, Ethos speaks to the perceived character of the speaker.

In order to persuade anyone to do anything, they must first believe you are a credible and trustworthy source.

How do you accomplish this?

3/ Establishing Ethos: (1)

•Language: Choose verbiage that is fitting to the subject matter and audience you are trying to persuade.

•Pedigree: Do you have specific credentials or education relating to the topic being covered? If so, make it known.

👇🏻

4/ Establishing Ethos: (2)

•Rapport: Your audience must feel as though you are "in sync."

You understand and can relate to their feelings or ideas.

TL;DR

•Choose the right language
•Communicate pedigree
•Build Rapport

Trust becomes a byproduct.

Let's see an example 👇🏻

One cold email can change your life.

Here's how to write a great one:

I’ve sent (and received) a lot of cold emails—some great, some not.

What I've learned: a cold email success is never an accident.

The features of a great cold email:
• Short & Sweet
• Personalized
• Credentials or Social Proof
• Create Value
• Clear CTA

Let's cover each:

Short & Sweet

If you're sending a cold email to someone, remember that the person receiving it probably gets a lot of these.

They don't have time (or energy) to read through long and winding notes.

Keep it short and sweet.

Space out the text to make it optically inviting.

Personalized

No one likes a generic email—it's auto-deleted 99% of the time.

Personal touches make all the difference.

A few ideas:
• Reference a book they love
• Mention a podcast they were on
• Compliment their work

Make it clear you didn't send out hundreds of the note!

Credentials or Social Proof

Infuse credentials or social proof—i.e. reasons the person should take you seriously.

Don't be humble—let it shine.

What have you done or created that is interesting or notable? Who has engaged?

Show them they would be crazy to ignore your email.

15 of the smartest things ever said: 🧵

“We are what we repeatedly do, Excellence is therefore not an act but a habit." –Aristotle

"Look at a day when you are supremely satisfied at the end.

It's not a day when you lounge around doing nothing; it's a day you've had everything to do and you've done it."

–Margaret Thatcher

“Nearly all men can stand adversity, but if you want to test a man’s character, give him power."

–Abraham Lincoln

"It is impossible for a man to learn what he thinks he already knows."
–Epictetus