This is the video recording of the November 17th, 2022, Weekly Town Hall w/ Willie Delwiche.
11/17/22 2:00 PM ET [Read more…]
Expert technical analysis of financial markets by JC Parets
by Peter
This is the video recording of the November 17th, 2022, Weekly Town Hall w/ Willie Delwiche.
11/17/22 2:00 PM ET [Read more…]
So we were talking about a guy who’s apparently subsisting only on McDonald’s patties for the next 30 days. Just the patty — no bun, no condiments, no lettuce. He’s trying to prove some kind of point that it’s not McDonald’s burgers that are unhealthy, it’s everything else in a typical American’s McDonald’s order at the drive-thru window.
Ok. Whatever.
But all this “healthy McDonald’s” talk got us thinking about the even healthier looking chart of its stock $MCD in recent weeks: [Read more…]
I talk about “control” a lot in these letters – our want for it, and the harsh reality of the situations we face as traders.
To succeed long-term, I need to be ready for anything and accept whatever happens.
This is good advice for almost anything (but not everything) in life. And it is absolutely great advice for all my trading!
With proper planning, strategizing, execution, and risk management, I can put myself in a position to win, get lucky, or not lose too badly. These are the things I can control.
I cannot control what the markets actually do. Therefore, assuming I took care of everything above, I need to be accepting of whatever comes.
Accept it. It is what it is. My wanting it to be something else won’t change it – whatever it is.
Once I start personalizing everything, making it a referendum on my amazing intellect or my incredible stupidity, then I’ve lost all objectivity and any hope of rational decision-making goes out the window. When that is lost, it’s only a matter of time before the loss of capital follows.
If I put enough effort into controlling what I can control and putting myself in positions to get lucky once in a while (creating my own luck!), then I live a much happier trading existence.
That’s when trading is fun. And when trading is fun, I’m doing it right.
This week we’re looking at cement stock. After an underperformance, the strength is coming back to this industry group.
There’s a profound mental shift that happens when you flip from being in positions where bad luck could damage or ruin your trading account, to being in a position where the unexpected might actually make you a ton of money!
For options traders, an excellent example of these two positions is a short straddle vs. a long straddle.
In a short straddle, a trader is naked short an equal amount of calls and puts at the same strike and expiration. The PnL graph of a hypothetical 100-strike short straddle looks like this:
You’ll notice that as long as the underlying price (as displayed along the x-axis) stays +/- $20 from today’s price of $100, the trader will likely earn a profit as options expiration approaches.
Traders like these trades because they are high-probability bets, meaning that one has a better-than-average likelihood of earning a profit. Of course, when winning odds are favorable, the payoff usually isn’t all that high. And even worse, if the unexpected happens and a large directional move materializes, not only can you lose a lot of money, but your losses are theoretically unlimited. These losses also get increasingly worse (thanks to negative gamma) the further the market moves away from your short strikes.
I’ve been on the ass-end of moves like this before – and it’s never any fun. Ever. [Read more…]
“Why do you rob banks?” authorities asked notorious bank thief Willie Sutton.
His response: “Because that’s where the money is.”
We’re not planning on robbing anybody, but if today’s trade plays out like we think it can, it might feel like we’re stealing. Only, we won’t need to worry about the authorities coming after us, nor will we need to feel bad about it.
Our Analyst Willie Delwiche says that a basic requirement for many bullish ideas right now is that any stock or ETF in question needs to be above August highs. Anything below August highs is subject to a rude reversal. I’m on board with this line of thinking.
So, today’s trade is in an American bank that is above its August high and showing signs of wanting more.
Am I being creative with my trading?
Am I tinkering with new ideas, new money management algorithms, new mindsets, new products, new timeframes, or new workflows?
We don’t need to be trying all new things all the time. But spending time thinking about divergent ideas is a valuable practice.
When we exercise our creative muscles, we might find nothing other than a journey down an empty rabbit hole. But sometimes, we have epiphany moments that change the way we operate. These can be minor, value-added ways – or maybe even drastic, wholesale change kinds of ways. [Read more…]
The concept of “Tilt” is often discussed when things have gone awry. It’s usually associated with poor risk management and sloppy trading that has led to larger-than-expected losses.
You can no doubt find endless stories of traders in every timeframe who have gone on tilt and proceeded to wreck their month, their capital, and sometimes even their careers.
We’ve all experienced some degree of this in our own trading. It comes with the territory. It takes a rare human who possesses the mental fortitude to stay completely focused no matter what’s happening to their portfolio. Those people are out there – but they’re hard to find.
The downsides of going on tilt when our trades or strategies aren’t working out are fairly obvious.
But we rarely talk about when we go on tilt with a winning position! [Read more…]