Tweet compilation: Strategy & Mindset
This blog post is a collection all of my tweets related to my strategy and mindset. It’s quick snippets of info that serve as good reminders for me. I expect to add to this post in the future.
Basics:
![Twitter avatar for @alphacharts](https://substackcdn.com/image/twitter_name/w_96/alphacharts.jpg)
Trend following:
- Don't need to know what'll happen in the future
- Doesn't take much time to implement
- Reduces risk, increases return
- Minimizes emotions, stress
![Twitter avatar for @alphacharts](https://substackcdn.com/image/twitter_name/w_96/alphacharts.jpg)
Price & patience is all you need:
1. Identify leaders (price)
2. Wait for bases to build (patience)
3. Buy the breakout (price)
4. Ride the trend (patience)
5. Exit on breakdown (price)
6. Repeat
![Twitter avatar for @alphacharts](https://substackcdn.com/image/twitter_name/w_96/alphacharts.jpg)
Horizontal lines on charts minimize biases
Weekly/monthly candles minimize noise
Aligning with trend gives risk management
Aligning with momentum gives alpha
Right mindset:
![Twitter avatar for @alphacharts](https://substackcdn.com/image/twitter_name/w_96/alphacharts.jpg)
Thank goodness I'm not wasting energy bottom fishing messy sectors (gold, crypto, etc). Thoughts & prayers for those that are.
![Twitter avatar for @alphacharts](https://substackcdn.com/image/twitter_name/w_96/alphacharts.jpg)
Lots of people seem to think doubling your money every year in stocks is doable. If so, you would turn $10K into $11 trillion in 30yrs.
![Twitter avatar for @alphacharts](https://substackcdn.com/image/twitter_name/w_96/alphacharts.jpg)
Imagine being one of those people citing ‘high valuations’ and redrawing a new, steeper resistance trendline each week.
![Twitter avatar for @alphacharts](https://substackcdn.com/image/twitter_name/w_96/alphacharts.jpg)
What that famous hedge fund manager or twitter guru is saying or doing means absolutely nothing. Learn to think for yourself, and keep it simple.
![Twitter avatar for @alphacharts](https://substackcdn.com/image/twitter_name/w_96/alphacharts.jpg)
Fundamentalists look for quality businesses, technicians look for quality setups.
The market is an endless opportunity stream. Never a need to force low quality trades.
![Twitter avatar for @alphacharts](https://substackcdn.com/image/twitter_name/w_96/alphacharts.jpg)
3 trading lessons
1) Simplicity. Follow leaders (don't fight the trend) and draw horizontal lines on their weekly charts.
![Twitter avatar for @alphacharts](https://substackcdn.com/image/twitter_name/w_96/alphacharts.jpg)
2) Patience. You only need 1-3 trades to have a great year. These are setups that leap off the page at you. Rest of time, OK to be in a regular boring portfolio waiting.
![Twitter avatar for @alphacharts](https://substackcdn.com/image/twitter_name/w_96/alphacharts.jpg)
3) Framing. Great question to ask: "What things would I be doing to deliberately lose money trading? How many of those mistakes am I currently doing?"
![Twitter avatar for @alphacharts](https://substackcdn.com/image/twitter_name/w_96/alphacharts.jpg)
I have no idea which trade/asset will be my biggest winner. All I know is
- Follow the leaders (momentum)
- Above line good (trend)
![Twitter avatar for @alphacharts](https://substackcdn.com/image/twitter_name/w_96/alphacharts.jpg)
Strong uptrends + tight consolidations = strong fundamentals & institutional ownership
Erratic trends with large drawdowns = opposite.
![Twitter avatar for @alphacharts](https://substackcdn.com/image/twitter_name/w_96/alphacharts.jpg)
Over long periods, commodities have chopped sideways while quality businesses trend higher. The latter is a bet on society, while the former is a bet against it.
![Twitter avatar for @alphacharts](https://substackcdn.com/image/twitter_name/w_96/alphacharts.jpg)
Wrong approach:
"It's manipulated"
"My model predicts that..."
"Heard on CNBC..."
"But what if the Fed..."
Right approach:
Follow the leaders
"Above line good, below line bad"
Keep it simple:
![Twitter avatar for @alphacharts](https://substackcdn.com/image/twitter_name/w_96/alphacharts.jpg)
Never understood why ppl deliberately make their lives more difficult by
- Focusing on ultra short-term
- Following news, seeking opinions
- Doing complex analysis
- Trading trendless markets when clean, strong uptrends exist
![Twitter avatar for @alphacharts](https://substackcdn.com/image/twitter_name/w_96/alphacharts.jpg)
Sentiment, seasonality, breadth, valuations can all take a backseat to price action.
A stock is undervalued and underowned if it’s in an uptrend.
![Twitter avatar for @alphacharts](https://substackcdn.com/image/twitter_name/w_96/alphacharts.jpg)
Who cares if it's a head & shoulders, cup & handle, or flying squirrel?
Above line = good; below line = bad.
Relative strength = good; weakness = bad.
No need to make things esoteric.
![Twitter avatar for @alphacharts](https://substackcdn.com/image/twitter_name/w_96/alphacharts.jpg)
In markets, you don't want to be too...
- dumb (chasing penny cryptos after a large move)
- smart (complex econometric models)
A lot of my friends - with no interest in markets - have done well simply holding stocks, real estate.
You can also read a 2-part summary of my trading approach here:
Important Disclaimer: This blog is for educational purposes only. I am not a financial advisor and nothing I post is investment advice. The securities I discuss are considered highly risky so do your own due diligence.