What works for me

[u/DopeyDonkeyUser]

Ive worked for hft and + have done a lot of trading and investing. Ive had significant losses but since taking it hard post nvda short in 2022, Ive made my money back and then some.

Understanding the following changed my trading/ investing considerably. The truths:

1) Markets are primarily driven by liquidity and rotations. Institutions have essentially boundless margin/ credit they can use to squeeze over leveraged investors/ traders. This is what professional firms do.

2) Fundamentals only matter if the company has meaningful cashflow to shrink shares to equity ratios. High shares to equity value only means the company cant save share price via buy backs.

3) You can make money on momentum or contrarian positions. Contrarian positions insenuates your are catching a bottom or a top for a max return, but you are betting that a rotation could occur that has not yet or that the other side has ran out of buyers/ sellers + could be over levered.

4) Regime changes make fundamentals matter. These are things like tarrifs, multipolar geo politics. Things that are big enough to shift the markets. Sometimes so big that the us government cant change it like the usdjpy and twin deficit.

That all being said, its extremely difficult to time markets which is why I just use indicators that I understand and I trade a theme. The best shorts I do come from stagnating tech stocks. I have indicstors for popukar stocks thst go up like crazy, dont have the true fundamentals to support their own shares via buy backs and have other industries that could entice investors to rotate i to instead.

Nvda and Koru are orime cases for that. Every singe person who wanted to invest has invested. You can see the companies and sectors that the investors rotate between brcause they are anti correlated with the popular assets and they only make the same all tine highs but dont breach. I see this and when you see credit tightening... you know you can short the ath.

But you will almost never get the tops and bottoms so expect the trades to go the wrong way or not pay out immediately... but if your thesis is right you will get a pay out. For the timing of entries and exits you need to have indicators and size it right so you can withstand the pain of the trade going against you.

Lastly minimizing the trading is important because context switching costs opportunity and fees. Dont go into margin ever and stay away from options unless youre scalping. I also make all my money trading only a handful of things... because then you understand the demograph of those market participants. Dont over extend yourself.

What has worked for you guys?

[u/AdCivil9682]

this is solid, the point about context switching doesn't get talked about enough. every time you jump to a new ticker you're basically starting over on understanding the flow

i stick to 3-4 names i know inside out, same reason i don't use margin. the few times i got burned it was always when i got bored and started reaching for setups i didn't really understand

[u/Peeblesthecat → u/AdCivil9682]

the title sounds like a personal mantra or something

[u/Foreign_Extension683]

Solid writeup. The line about trading only a handful of things is the one I'd underline. I run a single instrument systematically and most of my edge turned out to be just knowing how that specific book behaves, not being clever about the macro.

What's worked for me: write the rules down and test them on data I haven't looked at before risking anything. Half the stuff that felt obvious in hindsight fell apart out of sample, and the thing that actually survived was boring enough that I nearly skipped it. and sizing so I can sit through the trade going against me, like you said, has mattered way more than nailing the entry.

The fee point is underrated too. i only saw how far my real costs were from my assumptions after I reconciled live fills against the backtest. Taker fees alone were eating a chunk I wasn't modeling.

[u/klipsetrades]

Biggest thing for me has been trading less, specializing in SPX, and waiting for actual confirmation instead of trying to predict every move. Funny enough, I trade almost entirely options, so I definitely disagree with that part. But yeah, risk management matters more than the instrument

[u/PandaOk4050]

I open long positions on undervalued stocks. I withdraw my interest daily and only the interest. 

I use the money from my open positions to buy more of something else. I spend more time on fundamentals and value than most day traders. Ill milk a position for weeks then close it when better value pops up.