Trailing Stop loss.

The most underrated yet most important tool in trading.

A Tattoo has been posting selective screenshots of my Tweets to this followers to showcase how I do not know how to use RSI.

While he runs his shop showing other people down, here are the basics for the wise:

1) RSI above 70 gets into overbought zone but it's the crossover from

the 60s to the 70s that gives the maximum thrust.

2) Daily RSI gives a good thrust but that can stay short-lived. It's the weekly/monthly RSI crossover into the 70s that provides a more sustained thrust

3) During the weekly crossover, daily RSI might reach astronomical levels

Many a times into higher 80s or early 90s. So in a shorter time frame this daily RSI would try to correct but since the weekly RSI is getting stronger, these dips would be shallow and short-lived and price would try to move higher again.

You would have seen such a behaviour in Wockhardt. Price hit a 20% and then went another 10-12% higher which heated the daily RSI and the price corrected sharply on day 3.

4) But because the weekly RSI was getting a crossover into the 70s, price reversed quickly to hit 10% more.

5) Now when this weekly RSI becomes heated, that is when the price might make a medium term top. Again, if the monthly RSI too gets a crossover into the 70s then the stock can continue to perform well for a few months till the monthly RSI gets heated.

It's the weekend!

Grab a cup of coffee, in this thread I will explain

1. What a cash flow statement is?
2. What does it tell you about a business?
3. How to analyze one?

Examples included various Indian companies.

Let's dive right in.

Cash flow statement is a financial statement published by a company every quarter and annually.

It comprises of all transactions that a company does in cash or cash equivalents.

*Cash equivalents are other liquid assets that can easily be sold for immediate cash.

This is what a typical cash flow statement looks like

Cash flow statement is important as it gives you transparency into how the company utilizes its cold hard cash generated by the business.

Because we are following actual cash, there are very few accounting tricks that can be employed in this section.

A cash flow statement has three main parts:

1. Cash Flow from Operations (CFO)
2. Cash Flow from Investing (CFI)
2. Cash Flow from Financing (CFF)

Let's dive into CFO in detail.

*CFI and CFF will be covered in a separate thread

Pyramiding 2.0

A thread-

What is pyramiding?

It is simply adding to your winners.

Why use pyramiding?

1. It makes your winners bigger than your losers.

• Because you are adding positions when your trades are going your way, you are increasing your gains but your losers will be small comparatively.

2. You lose less during Draw-down time ( it saves you from losing big during whipsaws )

• Many times when the market is in sideways mode, Entering a trade with full risk might not be the best idea.

• So, you test the waters with a small position first, it could be ⅓ or ¼ of your total risk.

• So if the Breakout fails or whipsaws come, then you will only lose a small part of your overall risk.

• Then when position starts to go in your favor you can add to it.

3. It helps you to concentrate on a few trades,

They say that don’t put all your eggs in one basket, but don’t put them in too many either.

• See, Everyone can see charts and find breakouts, pullbacks etc.

The Batteries of Life - II

There are four aspects of you — life force, body, intellect, emotions. Each has a battery. How do we keep it energized all the time?

A thread 🪡

1/ Life force - Gratitude

When you’re grateful for the life you’ve, for the people and things you’ve, you will appreciate them and be compassionate to those who have less.

Be thankful. Always. For every little thing.

2/ Body - Sleep, nutrition, physical activity

Being sleep deprived and eating junk/exotic food foreign to one’s land has become fancy these days.

Please respect your temple and worship it - not through external makeup but through internal health.

3/ Intellect - Creation

Your intellect thrives not when it endlessly consumes but when it creates. Engage in solving problems and express yourself through arts.

Channelize your intellect’s power through focused work or it’ll cause trouble for you and others.

4/ Emotions - Friends and family

We aren’t isolated beings. We need people to share our time, love and affection. The “independence” modernity preaches is nonsense because it has only resulted in loneliness and depression.

“Nosy” people who care are much better than loneliness.

The Batteries of Life

Imagine each aspect of you — the life force, body, thoughts, emotions — has a battery. Knowing when they are charged, recharged, and discharged is the key in using them effectively.

A thread 🪡

1/ Which battery is low?

Are you hungry? Overworked? Stressed? Uncomfortable?

When there’s a lull, assess what causes it. More than one battery can be low at the same time.

2/ Why is the battery low?

Were you already tired or is what you’re doing now tiring you out?

Identify whether the battery was already low before the lull or if the current situation is discharging it quickly.

3/ What can recharge the battery?

Do you need coffee? Walk? People? Silence?

Having identified which battery is low and why, look for opportunities to recharge it. Also, avoid situations that discharge it quickly.

4/ Is the battery used meaningfully?

Are you tired because you exercised or because you stayed up late binge watching?

Use your battery to do what enhances your well-being. Otherwise, the battery’s health will be compromised over time.

1/ Thinking in Bets: Making Smarter Decisions When You Don't Have All the Facts (Annie Duke)

Thread

"World-class poker players taught me to understand what a bet really is: a decision about an uncertain future."

https://t.co/Nr2zCrVve3

2/ "We can get better at separating outcome quality from decision quality, say “I’m not sure,” learn strategies to map out the future, become less reactive, build and sustain pods of fellow truthseekers, and recruit our past and future selves to make fewer emotional decisions."

3/ "Mistakes, emotions, losing—those things are all inevitable because we are human. The approach of thinking in bets moved me toward objectivity, accuracy, and open-mindedness. That movement compounds over time to create significant changes in our lives."

4/ "Most people didn’t want to give Carroll credit for having any reason at all for his call. Why did so many people so strongly believe he got it wrong?

"In four words: the play didn't work.

"He had control over the quality of the decision but not over how it turned out."

5/ "Hindsight bias is the tendency, after an outcome is known, to see the outcome as having been inevitable. When we say, “I should have known,” or, “I should have seen it coming,” we are succumbing to hindsight bias: an overly tight connection between outcomes and decisions."

Are we Inherently Risk takers or Risk averse?

A thread-

You might have heard this word “Mental capital”

What does it mean actually ?

In the context of markets, It's the Risk that our mind is able to digest seeing the P&L.

If we breach this ceiling of Risk ,Our mind goes berserk, and we are not able to take rational decisions.

So can we increase this Mental capital level?

Let's dive into my story of how My mental capital levels changed over time, that will answer the question that are we inherently Risk takers or Risk averse.

When I started trading a few years back, with about 3 lakh capital, I was not a greedy person, and I had limited expectations from the markets.

Like every other beginner, First 1.5 years were great, made a lot of money,

which I wasn't even expecting to make, turned that 3 lakh to more than 12+ lakhs in that period.

This was only possible by taking huge leverage, which i didn’t know at that time was a big mistake i was doing.

Ikigai is a powerful concept for finding purpose and clarity to unlock growth in your career, startup, business, writing, or relationships.

A thread on its meaning and how it can change your life...

Ikigai is a combination of the Japanese words “iki” (or “life”) and “gai” (a term to describe value or worth).

It roughly translates to “reason for being.”

It is all-encompassing - it is not simply about work, money, or success - it is about the full scope of your existence.

Ikigai is the point of balance and harmony in your life and work.

It is found at the intersection of:
(1) What you love to do
(2) What you are good at
(3) What the world needs
(4) What you can be paid for

Importantly, it is at the nexus of passion and practicality.

The concept of Ikigai can be traced back to 12th century Japan, but its exact genesis is unknown.

It gained a mainstream following after Dan Buettner’s famous 2009 @TEDTalks on his research on @BlueZones (regions where people live longer than average).

In his research, Dan Buettner found that purpose and fulfillment led to improved longevity.

Put simply, embracing the concept of Ikigai contributed to enhanced health (mental and physical) and longer lifespans.

Why It's Hard To Run Profits And Limit Your Losses-

A thread-

In trading one of the important things we learn is that we should cut our losses short and hold on to the profits.

Most of us plan to implement the same from the next trade.

BUT!

When we take the trade, If the trade goes in profit we panic more then we would have panicked if the trade would have gone wrong.

Strange right, why would someone panic if the trade is going in profit.

New traders may not go through this emotion as they may have not gone through the Fear which a little more experienced (still not profitable) trader goes through.

Let’s name this little experienced trader Rahul.

So, lets say Rahul takes a trade, he buys Reliance at 2000, with SL at 1980.

He is ready to “ FOLLOW THE PLAN” of holding the profit and exit if trade goes wrong.

Now, Reliance goes to 2010, Rahul is happy, panicked, Feared.

@Traderknight007 Where can i read all of your threads?
Is there a thread that links to all threads?

“In search of the holy grail”

A thread-

Holy grail- A strategy Which can make money all the time.

After going through two phases of a traders journey, the initial success phase, and Only why do i get loss phase, Traders enter the third phase -

THE SEARCH FOR THE HOLY GRAIL PHASE.

This phase has no limits, It can end in 1 month and it may not end till lifetime.

What exactly is this phase?

When a trader covers all the basics, they know how to lower their losses, they know the power of risk management.

And few of them may even develop their edges and systems over time.

But after some time, they feel that they are doing something wrong and there is more to trading than what they know.

THEN COMES THE HOLY GRAIL PART-

Few of them start to Read more books about trading,finding articles about “How to win 100% of the time” and listening to Youtube videos of few big traders who make big in trading.

Phenomenal article/compilation on "The Biggest Mistakes Investors Make". h/t @manualofideas @JMihaljevic 👏

cc: @dmuthuk @Gautam__Baid @saxena_puru

My fav pts in the thread below

Lot of great points on the importance of having a strategy, process, discipline, patience, self-reliance, awareness of risk, biases/emotions, learning from mistakes & more.

More ⬇️

Some more ⬇️

The last year has delivered great results to many Portfolios but Market conditions are always changing and it's important to ensure the Process and Portfolio are built to withstand whatever the Market throws at it in the short-term and sustain & succeed for the long-term.

If you’re after a way to supercharge your learning and become smarter, the Feynman Technique might just be the best way to learn absolutely anything. Devised by a Nobel Prize-winning physicist, it leverages the power of teaching for better

The Psychology of Human Misjudgment is the magnum opus on why we behave the way we

This is the fully updated and revised talk and the only place on the internet to find it.

Published with the written permission of Charlie Munger and Peter Kaufman.

Summarized "Can you make big money in micro-cap stocks? Learn from Ashish Chugh" talk between @hiddengemsindia and @varinder_bansal

Ashish Chugh's journey:

Engineer by education but never had interest in software and started career with DSP Merrill Lynch.

He was working from 1993 to 2003, and in 2003, he decided to start full time investing.

First understand your capacity:

Would you be able to hold the stock when it falls 40%?

Understand yourself and know your temperament

When there is panic in market, these stocks become illiquid and even small selling damages the stock price.

One must have a contingency fund with themselves.

If you don't need money till 3 years from stocks then micro cap is fine.

He avoids leverage as if a situation like Mar 2020 comes you would be forced to sell your quality stocks to cover the margin.

Advises not to get into margin trading funding.

You would need some years to understand which style suits your temperament.

He himself realized that micro-cap world suits him after 8-10 years.

Ten quick reasons why I❤️$TWLO & plan to hold for a long time to come.

1⃣ Primary service (CPaaS) is a critical & growing component of Digital Transformation. Being able to effectively reach Customers in whatever channel they prefer is a must.

2⃣ Highest mindshare and best in class for CPaaS.

3⃣ Plenty of organic growth left.

4⃣ Usage based Revenue model in exploding use-cases is great.

5⃣ ~140 DBNE, one of the best in SaaS

6⃣ Great top line growth for few more years, and margins trending in the right direction.

7⃣ Huge base of Customer count, with no concentration risk.

8⃣ Smart acquisitions, not empire building. SendGrid and Segment are all great additions.

9⃣ Evolving into an overall Customer Engagement Platform with more touch points, opportunities of engagement and optionality.

🔟 Oh yeah most importantly, Jeff Lawson and Mgmt Team are awesome at vision and execution. 🔭✅

I always remind myself of this old illustration of mine about the Mobile/Web/API economy.

Stocks will go thru phases of under/over valuation. When the best Co's in the biggest trends are executing well, I prefer to keep thesis simple (but updated).

(Not a rec, do your own DD).

The Eisenhower Decision Matrix is a powerful tool for prioritizing your time and unlocking growth in your career, startup, business, relationships, or life.

A thread on how it works and how it can change your life...

Dwight D. Eisenhower was an American military officer and politician.

He was a five-star general in the United States Army and the first Supreme Commander of NATO.

After his military career, he was elected as the 34th President of the United States, serving from 1953 to 1961.

In both his military and civilian careers, Eisenhower stood out for his prolific productivity.

His secret?

Eisenhower observed that people often confuse the urgent with the important. He did not.

"What is important is seldom urgent and what is urgent is seldom important."

The Eisenhower Decision Matrix is a visualization tool that forces you to differentiate between the urgent and the important.

It allows you to prioritize your time accordingly and unlock new productivity and growth.

Let's cover the basics of how it works...

First, we have to define "urgent" and "important."

An "urgent" task is one that requires immediate, focused attention.

An "important" task is one that promotes or furthers your long-term values, goals, or principles.

Remember: Tasks can be both urgent and important.