I see some crazy things out there in this world. A lot of it from me! The other day I had some giant short on some event and I went out to the store to get things to make cupcakes to appease the bear god. In truth, this was just for fun. It was a day after I got a Fitbit and started tracking my calorie intake! Oops.
Other people have way crazier ideas. People think that the market somehow knows exactly what they’re doing. People trade the moon phases or other astrological events. Because some portion of the population trade these ideas, it can actually cause it to have some statistical correlation just from that. There is some interesting research on the lunar phases and the S&P, but the markets are so different today that I imagine that the correlation today is more from people trading the statistics of a simpler time than anything else.
Some of the trading concepts that seem more superstition are cemented as “truths” because people see things and make these trades. Elliot Waves, Wyckoff patterns, harmonic patterns, chart patterns – these are all strengthened by the fact that they were written down and shared, and if the fundamental reasons for their appearance has changed, the ideas are still traded and observed by humans, and so it contributes to the probability of these concepts playing out.
Opinions and cognitive bias were such a severe setback for me in my trading for a long time. I couldn’t dial into the way the markets were moving on the macro. It was too complicated and I didn’t have enough experience to be able to accurately predict pivots in the market, and while that’s changed, I do me best to ensure that I don’t trade ideas, I use the backdrop to check the weather, but I only trade the data.
Here is a good example: I have a short on BTC right now from just prior to the halving. While I know when the halving will occur, and can guess that it’s priced in, I have an expectation that BTC will fall, I try to play the position as though I don’t know which way it will go. I may chose to put a small piece of risk on to try for the break the direction I see is most probable, but all the weight goes on when it snaps and everything shows the signal in the data. I was sick so I didn’t put much weight on, I can barely think today. Ash reminded me too: “take it easy on the risk, you’re sick.” Pretty slick, right? That’s my player2!
So you can see the structure consolidates right into the halving. I should have cut profit right away, I looked at a half point of profit when I saw it break, but am expecting more continued selling. It’s an error to not cut profit there. That’s the sickness. With the short bias into the halving event as an overlay, we have to check for as many datapoints as we can find so I use Total3 as a purer picture of market sentiment and I actually trade Total3 more than the asset itself, just like VOLD/TICK, or orderbook/RVOL. This helps confirm you have the tailwind, and this is my style anyway. I always want to see everything lining up to know I can take almost no risk for huge reward. The BTC position I’m looking at about 24.5:1 RR and I have entered really hard on it if I was better put together. $500 of risk, if that trade plays the way I’m looking at it, would be $12k. Don’t need to make many trades like that, it’s worth the bet.
We need to be data-oriented. We have to trade on the data first. The macro and market structure play into those trades. If you can figure out the macro, and see the breadth moving the same way, and see the setup going the same way, you can take a big trade on that.
Edit: closed the trade for a fraction of a point of risk. No clarity so no play.
k-xs 
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