Today's corker uncrowded trade thanks to specialising
Earlier today I tweeted the following (you can click on the image to validate the AEST time stamp).
But I'll come back to explaining the trade shortly.
When I was trading on a desk among colleagues, we all benefited from the collaborative research, intraday monitoring and proprietary models we built in excel, enabling us to trade various instruments (yet still maintaining a core trading instrument).
Now that I'm trading as an independent trader, each day, I spend 45 - 60 minutes working through 6A and identifying my trade hypotheses for the day. I also need to allocate equal time to reviewing trading performance and trade statistics, AND I still need to give time to intraday trading.
For independent traders (who operate to generate cashflow) with only so many hours in a day to work effectively, we are at risk of being uncompetitive when we spread our limited resources across multiple instruments. Those with more significant resources take money from us.
On the surface, by sticking to one instrument, you miss out on the stunning performance of the latest stock/commodity/crypto to make the headlines.
But in reality, professional traders working within a team of traders don't get every headliner either. Plus, for all the winners, there are also plenty of losers. And let's not forget, we are in a bubble (12-year-olds are now giving stock advice on TikTok!).
On the flip-side, by focusing on one instrument, I have developed an edge. Right now, ever since Jan 15, the change of macro theme I recently wrote about is providing "uncrowded" trades daily. Watch any of the live trading footage I've uploaded and you'll always see real examples of uncrowded trades.
To summarise, to successfully trade across numerous instruments requires being associated with a group of successful traders to spread the load; from identifying new market themes to identifying which instrument provides the ideal trading characteristics, you can exploit.
There are exceptions, of course. I know a trader in Melbourne (I managed a portfolio for his father) who was doing five hours of research every evening and trading through the entire ASX session. He was exceptionally successful trading small-cap ASX stocks as a completely independent trader.
However, many of us (myself included) can't or no longer function at our best for twelve to fourteen straight hours a day.
So be realistic, do you currently have a network of colleagues and the infrastructure to support this approach? Or is the best use of your situation better suited to becoming a specialist in a specific area and honing that specialisation to the degree that you can identify what the majority who also trade that instrument cannot? (P.S. you make money in this game before the outcome is known)
So back to that tweet
Turning the short trade idea into an effective strategy including when and where to transact relied upon more current themes including:
only implementing on current "now" themes during ASX trading hours (themes change for Europe)
entering at custom setting VWAP (see image below) where sellers are in control
exiting on a calculated deviation from CME session VWAP
finesse transactions using intraday transitions in value
front run HFT's when taking profits
rinse and repeat
I documented all of the themes, from macro to micro, in my pre-market preparation. Members of the live trading masterclass received a copy. I also provided a detailed live narration of the dozen trades I've made so far today (with Europe still to come).
