i’m a simple man. i see a 8% gap down in the most important company in the entire world and.. well, i buy.
maybe i felt inspired by stanley druckenmiller. earlier this morning there was a clip of him circulating on x about how nowadays, with the advent of ai and other things, traders cannot wait to trade with complete information.
“20-30% is all it takes before i put a position on. i’ll figure out the next 70-80% over the next couple of days.”
makes sense. speed is so important in todays market.. which is why it took me about 32 seconds to buy nvda’s dip this morning.
here’s my thought process.
what makes a great trade?
too many traders often mix up what makes a great trade from everything else they’re focused on.
a great trade is when you can stack odds in your favor over an observable time frame and execute for a profit.
that’s it. and that’s what i saw this morning in nvda.
first.. this squeeze in semis wasn’t necessarily out of the blue:
from our state of the market webinar this morning, traders loaded up more shorts in semis last week than they ever have ever in the history of .. ever.
if you read i finally didn’t lose last week, you know that markets don’t just serve underhand pitches to everyone once everyone gets on the same side of the trade.
they routinely screw as many traders over as possible. and that meant shorts getting blown out today. poetic.
secondly.. maybe it’s my cynicism. maybe it’s my contrarianism. maybe i’m just an asshole. i don’t know. but i see nvda gapping down on a news headline that he got honey pot’d by a chinese spy while the rest of the market absolutely rips and.. well, i think it’s just stupid.
i’ve been doing this for almost two decades now. i’ve seen a lot of stupid stuff. i saw a hot dog company rebrand as a blockchain company and 10x its market cap in a week. i saw kodak cameras leak a fake press release about developing a covid vaccine and jump 500% in a day. i’ve seen people bet their entire financial livelihoods on ripple! (too soon?)
but nvda.. the most important company in the world.. in the most important thematic trade on the street.. gapping down nearly double digits? i’m gonna buy first and figure it out second.
i’m not going to sit here and tell you that it’s going to shoot straight back to all-time highs by next week. i have no idea. but the simple fact that it..
held its 175 level for the 50th time
worked on filling its gap down
reports earnings next week
options chain completely discounted everything rational..
seemed good enough for me. i bought some call debit spreads at a 3:1 reward-to-risk.
if i’m wrong, i’ll lose a couple bucks. but if i’m right, i’ll make three times as much. and that’s good math right there.
you don’t have to be completely comfortable to win
if you aren’t constantly asking yourself why you’re in a trade.. are you actually even trading?
it happens to the best of us. but the best of us understand that feeling uncomfortable when we put a trade on is normal. it’s what we do after the trade that matters more.
do we stick to our process? do we respect our stops? or.. more importantly.. do we let the winners run? all of this can be extremely challenging in a world that constantly shouts tells you how stupid you are.
and believe me. i get emails from readers every week telling me how dumb my trades are. it’s part of the territory. it’s all good.
i put on one other trade today. if you want to know what that is, you can click here to watch the entire youtube video.
if you want to join tti and sit through our live coaching sessions three times per week, i’ll talk your ear off about risk-to-reward, finding opportunity in chaos, and managing your emotions while everyone else loses their god damn minds.
i guarantee you will learn how to find better trades. and hopefully make more money.
follow the money,
hamilton
founder, the trading initiative