This High-Risk Trader Found The Indicator That Made Him Consistent
Aug 27, 2023
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A momentum trader shares his journey of making over $1 million with technical indicators, but losing big on naked options. He discusses balancing technical analysis with news catalysts, memorable trading experiences, and the importance of learning from losses in trading.
Importance of adapting trading strategies to prevailing market conditions for success.
Significant losses emphasize the need to avoid high-risk trades and prioritize risk management.
Finding balance between trading, family life, and diversifying investments for long-term stability.
Deep dives
Oversold Bounce on Canopy Growth Options
In 2018, during the MJ market sell-off, a key trade involved oversold bounces on Canopy Growth. With a substantial account nearing seven figures, the strategy was to play weekly call options. The preparation involved scouring the strike prices and then executing fast at market open. Despite the significant position, there was confidence in the trade due to prior successful setups and conviction in the bounce potential. This move resulted in substantial gains, although some were later given back when the expected bounce did not yield the extended follow-through.
Transition to Scalp Trading
Transitioning from swing trading to scalping was noted towards the end of 2020 post full-time job exit. The shift to day trades like scalp trading was facilitated by greater availability to focus intensely on shorter time frames without distractions. This allowed for a more precise and quick-paced trading approach suitable for the market dynamics.
Adapting to Market Environment
Adapting trading strategies to the prevailing market conditions was highlighted by a year-long bearish position in 2021, where bear trades dominated. Despite accurate predictions, the following year's bullish market posed challenges, showcasing the need for flexibility and strategy adjustments to align with changing environments. While experience had its advantages, the necessity to evolve strategies remained crucial.
Level Two and Time in Sales Usage Decline
Engagement with level two and time in sales dwindled post-2020 due to challenges in finding pertinent and reliable information amidst rapid market changes. Increased reliance on volume, price action, and other sources like dark pools and options flows helped navigate changing market dynamics more effectively, reducing dependency on level two and time in sales tools for trade decisions.
Trading Lessons Learned from a Major Trading Loss
The podcast episode delves into a significant trading loss experienced by a trader. The trader recounts an instance where a risky trade on GME led to a substantial loss, emphasizing the importance of never writing naked options and always having a hedge in place. Despite past successful trading experiences, this loss served as a pivotal lesson in risk management and avoiding high-risk trades. The trader reflects on the emotional impact and the necessity of maintaining a balanced emotional state, especially during periods of extreme market volatility.
Transitioning to Family and New Ventures
Following the tumultuous trading event, the trader discusses a shift towards family priorities and new business ventures. Balancing trading with family life and business ownership, the trader finds solace in gardening as a form of relaxation. A new pickleball business venture is on the horizon, focusing on indoor pickleball facilities due to the sport's rising popularity. This shift represents a move towards diversification and long-term planning beyond the high-risk nature of trading.
Keith, a momentum trader, has been trading for 14 years. He once used technical indicators and overnight gap-ups to make over $ 1 million profits in one trade. However, he also had the most unexpected story of how a trader lost 7-figures by writing naked options puts.
Leave a comment if liked this episode with Keith, the technical trader!
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