[00:00:00] Okay, I want to talk today about specifics more about short-term futures trading, about fundamentals and technicals, and it's kind of a hard podcast for me to do because I feel like you need to deserve me over many months
[00:00:13] and have a lot of conversations with different contexts to for me to get these points out the right way, but I'll do my best to do it the way that I would like to do it.
[00:00:21] So price action is king, we know that and the longer you're timeframe the more important in the price action to some extent because during the day it's psychological warfare, it's people getting stuck and there's move big moves up and down
[00:00:33] and we have a leverage futures product. So people are having risk, you know, their risk is quick to get out they don't want to take big losers a lot of time so they're trading a little larger
[00:00:44] and for their account size versus like a stock position. And you're going to have a lot of whippiness you're going to have a lot of gunning stops out in the market, you know, having to get everyone out
[00:00:52] down before it goes up and vice versa and taking out key levels when you least expect it and all that kind of stuff. So understanding why someone might get stuck at a specific point in time
[00:01:03] is a really good skill to have if you want to trade bigger and survive and do well futures. And if you go into swing trading or something else, it's very different skill set like I do both
[00:01:12] and it's different, it's totally different and it took me a lot of years to kind of figure out the different approaches and understanding the catalysts and the trends of certain markets and when they're not behaving
[00:01:22] with it should and that leading to a trade because of it because people are stuck or whatever they don't see something that's changing. I think that's important in all markets all the time
[00:01:31] but it's specifically important even more so in a short term environment. So the S&P is kind of that ultimate arena for this because it's very psychological, how stock futures moved during the day. Sometimes though there's fundamental days
[00:01:45] and those are some of my favorite days because they're very hard to learn. They're more right brain to their more putting together pieces, understanding the catalysts of what matter now and the more well read you are, the more you understand kind of the different things in the economy
[00:01:57] and the different correlations then you can have a better understanding of following the technicals on those days because following the technical blindly is the suicide mission in a futures market short term because everyone can see the same thing. Everyone knows the patterns, right?
[00:02:11] And people even understand when they're failing that there's a trade the opposite way. So that's first order thinking that's simple thinking and it doesn't work big picture to trade larger because they're going to keep just getting you out of those trades
[00:02:23] because everyone's doing the same trades. So if you can wait for things to happen that are a little bit deeper like I think we're going to go down but I know there's been a big level up here last few days
[00:02:33] and we probably need to go up and get everyone out who has to stop over that obvious level and then we can go out. Things like that. So selling it after that happens and risking just a little bit more
[00:02:42] or if you get stopped out then when it comes back below the level and it starts to head down you start selling it again and things like that work better. And it's even better if you understand when fundamentals matter
[00:02:53] so the yield curve, the bond market, even that comment a couple weeks ago about the Japanese yield curve control them letting go of that is a big it's a decreasing global stimulus that's expected but they're going to do it a little sooner
[00:03:08] so we had a big down day that day. You understood that you could trade very aggressively in the direction of that trend a lot more aggressive than you would if you didn't understand that. So if everyone is let me just give you a general idea too
[00:03:21] recently I don't want to know as the last few months that inflation has been coming in lower. We've been rallying way in front of that right so now that the numbers are actually coming in lower
[00:03:30] guess what happens the market starts going down because everyone has probably bought at some poorer prices above 4,500 because they're comforted by inflation going down but the market already snifted out ahead of time
[00:03:43] so everything is moving ahead of the actual news. So you see that happened a lot on the actual news day too where
[00:03:52] you have the bond market so on a fundamental day like an FOMC day or a payroll day if the bonds have a really big move a lot of times
[00:04:00] a stocks will move the same way but if there's a true crisis day like a terrorist bombing then they'll often move opposite ways. So you have to understand when does it matter when does it not so right now since bonds are blowing out
[00:04:14] the third year bonds specifically is going down aggressively which means long term rates are moving up a lot and they're moving up fast so anything that quick rate move is tough on credit. It's think about businesses who need to borrow loans think about if you need
[00:04:28] to take out a new house loan how much more expensive it is so that hurts the stock market so a lot of times during the day if there's a very large moving bonds you can see stocks either collapse or everyone gets stuck selling stocks
[00:04:40] expecting them the collapse then we have a massive squeeze up and then we go down later in the day we actually go down sometimes on the Bob tick but it's because everyone got stuck first it's actually doing what
[00:04:52] it's supposed to but not the time you'd expect. You can't just jump the quotes right it's too easy it's first or thinking so you're always playing this game of saying okay well what's everyone else doing if I'm selling because
[00:05:04] I think apples that huge component and I think apples broke it technically is going to go down I actually don't want to sell the index when apple goes down I want to sell on the apple
[00:05:13] I want to be getting out of my position when apple goes down and selling my position when apple goes up because in some ways I'm whatever everyone else is doing I'm going to be on the other side of it because it's not going to work the way that
[00:05:25] it's never going to be clean cut that way you know what I'm saying so if I think that's the driver in some sense I'm looking for
[00:05:32] when that apple stock goes up and takes out stocks but I'm negative on it and looks like it's most bullish that's why I want to sell the index
[00:05:39] because my risk is probably either my idea is shot or my risk is very low at that specific point in time and that's kind of a feel thing for how you do that
[00:05:46] and a lot of times you take two or three shots smaller and cut your risk quickly and then maybe you get it on the third one and you add to it a little bit that's how I play things
[00:05:54] so what I've had a lot of success with lately is seeing that I know people are looking at the treasuries 10 year 30 year going down a lot
[00:06:03] and everyone says well crap if inflation is not a problem why is the bottom market continuing to go out why it's acting like we're going to need more hikes there's going to be more inflation coming so the market seems something maybe it's credit worthiness I don't know
[00:06:17] but the market the bottom market is is going the other way right now and what's starting to happen is people are stocks had a big rally so everyone's selling stocks on these
[00:06:26] bottom down to expect the stock market to go down and a lot of times it's just everyone just gets stuck and there's a big rally and then we peed around
[00:06:33] so you're just understanding all your doing is having an awareness of like this is a game of people getting trapped and I can see why and there might be trades on both sides for me
[00:06:41] to do that and I think the more you in some days and I was talking to a friend and he said well how do you know when to look at this it's like well when there's days where there's a really large move in the bottom market
[00:06:52] or a big number day or when the bottom market is making a new hire new low like over the last few days time to pay attention more different than middle of a trend and it's mature doesn't matter as much it's all about relative shocks and relative perceptions
[00:07:05] you know what I mean like a big moving oil through the highs is bigger than a big moving a little bit so like oil doesn't really matter right now for us
[00:07:13] but you know if oil goes to 120 it might start affecting the stock features more and that's something you have to watch people getting stuck chasing oil
[00:07:20] and it's going to hurt the economy so all that stuff it really matters and when it does matter and matters zero when it doesn't
[00:07:27] but as you trade in your career goes on you start figuring out when to zoom into these things and then you use your other skills that you have in tandem with the stuff
[00:07:34] and you can have a lot better time holding things and adding to things and understanding what's happening because you know where other people are getting stuck so I don't know how clear that is and I know that's not easy to pass on it's something you have to learn
[00:07:47] but it's kind of everything to me because that's how I look at things always looking at where is where people are wrong and why they're wrong
[00:07:55] what do they if I can see why they're doing something so for instance a big day a busy day where I have no clue why people are doing things
[00:08:02] it's kind of a hard day for me I could not do well or I can maybe find a little bit of money to make in the business but I'm not comfortable because I don't know what the hell's going on
[00:08:12] whereas in even slower day where I really feel like I understand why people are doing something and what's the reason if I think the reasons really stupid like stupid news event and morning or something like that like oftentimes you'll have surprise news like an hour before they open
[00:08:25] and we'll have a big move down on the open and then it'll go sideways for a while and slowly rally back all day and I like those days because everyone panicked because it was kind of recent news but they had time to sell it on the open right
[00:08:37] and everyone got used to it in the first hour they got used to it being down there and then at that point everyone had done their business and it just grinds back up because it wasn't really that big of a deal it was just a surprise
[00:08:46] and then it got comfortable and went back up and just being aware of like is this a surprise that matters usually the surprises they oftentimes don't matter they might matter more if the market is really one way for a while
[00:08:58] but it's it's paying we had an apple AI had buying a couple weeks or a month ago where apple was getting into AI and I kind of put a top end for a while
[00:09:06] that's classic stupid news trade you know we've been rallying a lot and we get a headline that apple is going to AI well of course they're going to be an AI right we don't
[00:09:14] that it's those are things you can take advantage of when you see that happen because you know that other traders are going to be buying that and they're going to get stuck
[00:09:21] and there's opportunity for you so thinking about why people are stuck and they can even get stuck on like think about when your trades don't work like what what are you looking at
[00:09:31] well others are looking at the same thing can you start to reverse engineer that figure out how to think about that so that that this is a very anti-fraudral way to think too in terms of surviving because
[00:09:44] this stuff is hard to program out of the market because there's surprise events there's changing correlations all the time and it's not easy for someone who's writing code
[00:09:53] to figure out historically or even the last few days or weeks how to handle some of these these confluence of events but as a human you can handle it
[00:10:02] and over many years of thinking about learning about these things you start to realize when to turn this on and off it's kind of like think about if you plan like a video game like Mario Carter something and there's a regular course and you're used to it right
[00:10:15] and in the middle of the regular course it's a five minute course there's a one minute course that's totally different you're literally getting out of your car and right over obstacles and getting in a fight with somebody then you go back to your car
[00:10:24] and if you get really good at driving the car then that's that right but if you're not good the other thing you could win the race and be an average driver of the car if you were really good at that one minute interval
[00:10:35] or you can you can handle it when the race because you understand how to change the game let's say that you don't know when that one minute interval is coming but you're what your prepared just which into it
[00:10:44] maybe that's a stupid analogy I don't know but I'm I think you get the point I'm trying to make is you have to know when to change gears you have it's not easy and no one's going to give you a roadmap for how to do it but you have to know that this is changing this is making the big move
[00:11:00] and it's important right now and you learn how to zoom into those things and likewise you learn when everyone's not trading the volumes are low
[00:11:08] and we're grinding up every day and slow you kind of stay out of there unless you have a strategy for that because it's not you're not going to this stuff that I'm talking about is not going to work as well
[00:11:16] because there's just not a lot of activity but when these things work they really work and the moves are very big and you have periods where I mean this is worth way more than a normal day
[00:11:28] so it's I mean for me these are some of my biggest periods that I've ever had 2008 2011 2016 all kind of crypto 2017 had some of this many times 2018 at the end of the year and they're very uncorrelated with other strategies of long only strategies
[00:11:47] it's a very different way to look at things so I think it's something that you can appreciate and an add to your trading and it's not it's not super straightforward which I like because it's probably going to last longer it's going to work better
[00:12:00] so that's kind of my my speed on that I had something else to add to them it's
[00:12:05] for looting me at the moment and I'll jump back on and make a attachment to this podcast if I remember it but I'm going to do another one in the motion next