Chat With Traders 286 · Jason Shapiro - Overcrowded Trades: What Everyone Else is Not Seeing
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Aug 28, 2024 
Jason Shapiro, a seasoned trader known for his contrarian strategies, returns to share insights from his 30 years in the industry. He explores the profitability of consistently going against the crowd and how market positioning and sentiment guide his trades. Shapiro dives into the dangers of overcrowded trades, adapting strategies during market volatility, and the psychological elements affecting trading. He also analyzes the current market dynamics, including euphoria versus bearish narratives, and the implications of financial risk shifts from banks to governments.
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Contrarian Trading Philosophy
- Jason Shapiro's trading philosophy is contrarian and counter-trend, focusing on market positioning and sentiment rather than price.
- He identifies overcrowded trades by analyzing market positioning, looking for extreme long or short positions.
Successful Yen and Franc Trade
- Shapiro successfully caught the dollar short trade in early May by observing record crowded short positions in the Japanese yen and Swiss franc.
- He emphasizes that catching the underlying driver of market moves, like the yen carry trade, is key, even without direct stock market trades.
Identifying Crowded Trades
- Crowded trades are identified in the COT report by long bars indicating heavy short positions by speculators.
- These situations offer high probability turning points, especially with a trigger like an interest rate move, leading to stop-outs and big moves.