Transcript
Speaker: you
Speaker: Welcome to a new episode of the InSilico Terminal podcast. My guest today is StonkTrump and has actually been recommended by the first ever guest on this podcast. Maybe not like the first first ever guest because there are some secret hidden episodes that I've never seen the light of day. But the the first guest ever of this podcast was Pierre.
Speaker: And um that's why I thought I would heed his recommendation and get you on. Yeah, thank you for having me. I appreciate it. Yeah, thank you. Thank you for coming on.
Speaker: you maybe like tell me a little bit about yourself? I obviously checked out your your Twitter and stuff a bit, and I trust Pierre's recommendation, but um I don't know too much about you yet. So you're you're a trader?
Speaker: Yeah, so I mainly trade ah equities and options now, but I got my start in the crypto space. I'm class of 2018. So started um buying Bitcoin back then. And then around 2020, I transitioned mostly full time to um trading options. And so that's what I do now.
Speaker: How did you first get into trading or into crypto? You know, i had, before 2018, I had done just some sort of passive investing with, you know, just in my buying equity in my brokerage account and those kind of things.
Speaker: But I had been watching, you know, the crypto space, obviously. And, you know, when I saw the big drawdown from the 2017 top, I just kind of figured, man, this has got to be a buying opportunity. And of course that, you know, led me into the, you know, vicious 2018 hell cycle. But in the end it turned out fine. But at the moment, you know, it was kind of a ah rude introduction to crypto, but that's kind of kind of how I got started in that space.
Speaker: What was it like back then? Did you just like start buying Bitcoin support, other altcoins? Or did you get into BitMEX leverage trading? No, i you know I never really got into too much leverage, honestly. um I mostly just bought on Coinbase, to be honest. I've always been sort of a boring boomer.
Speaker: But, ah you know, so I, that's like in 2018 when I first started buying, that's in the US that's where you start buying, right? You just start on Coinbase. And so I mostly just started dollar cost averaging into Bitcoin.
Speaker: um And then later, you know, through couple years later, you know, I did get some really good buys in on like Chainlink and different altcoins like that off the ah COVID lows. So that turned out really well. But in terms of leverage, um I've never really messed with leverage too much in the crypto space other than just buying mean coins and that kind of thing. Yeah.
Speaker: So you were mostly an investor for that time. And then when when did you get more into active trading? I would say ah during COVID, you know, when everybody was locked down and I had lot more time to look at the screens.
Speaker: I remember in March of 2020, when we were near the COVID lows and I was watching the 500 chart. I just remember thinking, you know, there's no way they leave this down here. We have elections at the end of the year. Like, this is this has got to go back up into the end of the year. And so it wasn't even really so much of a technical analysis decision.
Speaker: it was just like a gut feeling, I think, that like, spy is way too cheap here. You know, and so I just remember buying like, you know, that was March. I remember buying like, I think it was September or October, 300 spy calls.
Speaker: And it, and from there, it just, you know, if you, if you were around that time, it just basically went straight up without barely any pullback. So that was kind of my first introduction to, ah to options.
Speaker: You kind of ever activated a memory of mine that from from back then because during COVID, um I don't know if I told told this story before or whatever, but like this is kind of how I got into markets or how I was first interested because I was very young at that point and then i always wanted to like get into stocks but back then it also wasn't as easy especially i guess if you weren't in the us so like i didn't really know how to open a proper brokerage account and i was just like turned an adult and stuff and um but then all these new brokers kind of came up so it was became easier and then i thought like hey like this is a really good time like i i should buy stocks now you know this is very scary i don't really know what is happening but like they're probably cheap i should buy them now um but i didn't have an account so i never ended up doing that
Speaker: And then I think I made an account in like later that year. So I guess around around September is is probably when I made my my stock account and I got some time, some money at the time from my grandma that she like just gave to me and I put it all into this account. And then at first I just like bought random stuff like ETFs and stocks, just some stock picking and then um I found what ah in in Germany there is not like these new brokers don't have options but they have something similar I don't know really know what the English translation is it's something like options
Speaker: um paper I don't really know what it's called but it's a bit like it's like an option but like a stupider product like options are just better and superior And obviously, also didn't really understand what I was doing. So I just I was also on Wall Street Beds at that time. And then through Wall Street Beds, I didn't really like my old job. I was just on Reddit the whole day, reading what all these people were doing. And then I was just like, OK, I'm just going buy some of these weird options products of random things. And then I lost my first couple of thousand for no
Speaker: no real reason and that was kind of like my introduction to to uh financial markets instead of just being smart and buying the covered bottom because i didn't have the access i like waited and then burned myself but i guess it led to where we are now so but ah how did how did uh trading keep going after that for you well it's it's been an up and down journey it's funny you talked about um the wall street bets um ah fiasco at back in 2020 I caught the bottom of AMC I'm looking at an old post of mine right now I bought let's see what the it was at like two dollars and I and i bought ah I bought five dollar calls and that was like you know that time in 2020 was so ridiculous and so crazy and I made a lot of money and then I think
Speaker: in 2022 once we got the uh you know we went into a bear market after that you know i gave a bunch back but since then i've been able to be you know consistently profitable which is nice how did how did your trading look like like do you just find the stocks that seem cheap to you or interesting and then you like buy longer dated calls is that still what you do or Yeah, um I'm mostly a dated call trader. I like to watch options flow um to give me an idea of where the money is flowing. And then from there, I pair i pair that with you know technical analysis. And if those two things look good together, then that kind of makes a good setup for me.
Speaker: Actually, another another funny side story interjection because I also bought, I didn't buy MC, but I bought GameStop. I remember reading the reading the original like Roaring Kitty post as he like made them back then. And I was like, yeah, this kind of seems like a good idea. So I just like, thankfully, only bought the normal stock.
Speaker: And then I remember because it's like, okay, I'm not going to dox myself here, but like it's close ah a date for me. So it's like, When GameStop happened, I remember at the peak, I was like break even on my portfolio with like all the the losses that I had from all the other soup so stupid stuff. But of course I was like, no, I'm not going to sell here. I'm like going to wait more. So I did end up making money from that, but I was still like down overall.
Speaker: um those those were very very funny times like back when when that was really a thing and and also like the delusions that it came afterwards of people just being like uh oh i know they became separate that they made and stuff and yeah they became cult members man yeah the amc cult is still alive i'm telling you I think the game's not probably as well. Probably, haven't checked it a while, but like the people were really like, yeah, like these institutions and the dark pools and all of that stuff is conspiring against us to not make this go up, but one day it's going happen.
Speaker: And I kind of bought into that at the time a little bit at least because I didn't really know better, but it is it is quite funny looking back in in hindsight. So um then I guess you you had some early success and then 2022 rolled around with the bear market.
Speaker: oh How did you handle that? Yeah, so I'm trying to remember what year. um Another big win of mine was silver, and I think that was probably just before 2022, probably 2021, something like that. That was another um sort of Reddit GameStop thing where you had the the silver squeeze, right?
Speaker: um And I think that was 20, yeah, 21, maybe January 21, somewhere around there. somewhere somewhere around there And I think I made, um think I turned like a 25, $30,000 call position into like 200 grand, right?
Speaker: And so, you know, that was like a big deal for me at the time. I think that was the biggest win I had ever had. And you know, went and bought a new car and like, you know, did all this stuff. And then, you know, hadn't I hadn't really gotten familiar at the time with like the way like capital gains taxes work. and You know, all those things like, hey, all this money I made this year, i got to make sure next year going to have to pay taxes on this. So ah I think during the 2022 bear market, I did um give some back for sure. But one thing I learned during 2022 was to...
Speaker: was to like follow the market internals a little deeper. So I started looking at like institutional positioning and paying attention to like when big institutions are get to like max short levels or max long levels. And that really helped me to sort of gauge the market in a bit of a more, oh I guess,
Speaker: a healthy way where I had a better risk tolerance and a better understanding of risk and where things were at sort of in the plumbing of the market. And I know like in 2022, around the lows, a lot of the, a lot of those signals started to line up. And then of course we saw 2023, you know, took off and left. And you know, if you, in 2020, it was just another like,
Speaker: good lesson of mine in terms of market psychology because in 2022, if you're around, everybody thought we're going lower and we're going into a recession. Like that was the, ah any analysts you talked to, any bank paper you read, everything was saying we're going lower, we're going into a recession.
Speaker: um And because of that, I mean that's when you get sentiment in the toilet, you know, you get everybody short, everybody max bearish, and that's when you have the best setups for squeezes and long entries. So um that was something that sort of added to my repertoire of trading tools, so to speak, and that's helped me a lot since to try to stay on the right side of things.
Speaker: Were you already full-time into trading at that point? um Well, i've I've done real estate investing, which has always given me some passive income. ah So I was maybe not completely full-time, but giving it a good amount of time for sure at that point. I see.
Speaker: Do you think that's something that helps you just to be more tune with the market? Like being there, having more time to really get into it? Opposed to someone that has like a full-time career apart from that?
Speaker: Yeah, I mean, think there's no there's no substitute for screen time, you know. I think that the more time you, like, just spend in the market watching how the market moves, you sort of get an intuition to what they do, you know. Mm-hmm.
Speaker: For example, like all the classic, you know, um, stop runs where they go to a ah big level that a lot of traders would think is support and they break through that level and cause people to panic and then reclaim it and, and send it from there. Like,
Speaker: That's easy to say on paper, but like if you haven't watched that play out over and over and over again yeah you know with your own eyes, then it can be a lot more emotional at the time. But after a while, you start start getting used to like, oh yeah, this is how this works. This is what they're gonna do. you know What sort of data points do you look at or like what what do you use to gauge institutional positioning and stuff like that since our listeners are mostly crypto people and I think at least from my I don't really look too much at TradFi stuff so I think the data is kind of different.
Speaker: Well, there's um there's several different um you know ways to access it. I have a Zero Hedge subscription, which allows me to look at um all the different weekly updates from the investment banks. So like weekly, I'll read like Goldman Sachs, Deutsche Bank,
Speaker: you know, JPM, all these different people, they put out updates every week that show what the positioning is looking like for different cohorts cohorts of the market. So you have like, for example, systematic funds, which are the non-emotional algo based trend following funds that just buy. This is the CTAs, right? CTAs, yes. They just buy based on rules, right? If it breaks this level, I sell. If it ah reclaims this level, i buy. you know It's simply rule-based trend-following script.
Speaker: And then you have also um discretionary investors, which would be like your headd fund hedge funds, you know people sitting behind a desk pressing buttons. um you know You have vol control funds, people that buy based on what the VIX is doing. So you have many different cohorts in the in the market that are that all have like historical ranges in their positioning.
Speaker: Right? Just like you would look at, say, a range on Bitcoin or a range on the S&P 500, where when it gets to the top of the range that's normally around where it tops, etc., you have these same type of ranges in institutional positioning.
Speaker: So, you know, historically when, when, uh, CTAs are max short, that means they don't have any more selling to do. That means that if the market continues down, they're likely going to do some buying because they're already max short. Yeah. So those kinds of parameters sort of give you a a sneak peek into what's going but going on behind the market and what really moves the market with these these different players that are buying and selling with size. And it's not always super useful. Sometimes it's just noise, but it becomes very useful at the extremes. yeah
Speaker: It actually makes a lot of sense, so you don't really have to to properly understand like, hey, what is what are all these institutions like particularly doing in their strategy? What are they thinking about? Just like looking at when their positioning becomes very extreme to like whatever side and there's there's a time to pay attention at least.
Speaker: Right, right. And, um, you know, I think it's, it's a lot easier to spot on bottoms because bottoms happen quicker. You know, tops are more, um, tops are more of a process.
Speaker: So, you know, maybe rather than a short signal, it might be more of a go cash signal or be cautious or reduce risk signal at the top. But at the bottom a lot of times, you know, I mean if you look at the V recoveries we got You know off the tariff lows in April and then again off the Iran lows um In March April of this year they both had extreme short side positioning, you know, and so When you get that extreme on the short side, that's when you get violent snapbacks
Speaker: Can you maybe like walk us through an example of a a trade that you maybe like have taken recently or whatever? like what What kind of data did you look at first and then how do you go about putting it on, sizing, executing?
Speaker: Well, um you know let's just take, for example, the the March lows. um with all the Iran fear and everything that was going on there.
Speaker: I think part of being a good trader is learning to ignore the noise, right? Because whenever whenever there's a major low in the market,
Speaker: the the low happens first before all the bad news finishes. Like the market is forward looking. So anytime if you're expecting, I need to wait out this Iran conflict, for example, to figure out you know if I'm gonna buy anything. you know I wanna be safe, i don't you know there's too much news hitting right now, it's all negative, gotta wait this out.
Speaker: If you think like that, then you're going to miss your entry. ah um If you're looking for you know optimal swing entries. And so it's always noisy at a bottom. you know The news is always the worst. In fact, when it's the worst is normally when you see a turnaround in the market. Because at that point, the market's priced it in already and it's ready to move on to an optimism outlook.
Speaker: um so the first thing you know when it comes to major swing entries for me especially in probably in trad fi more than ah crypto just because the news is so much more prevalent in equities is to sort of tune out the noise like you know, okay, so Iran may have been the reason we entered this correction, um but beyond that, there's really no need to constantly be watching the news channel unless you're just, you know, scalping off on the five minute off of news candles. Yeah. But, um,
Speaker: But once we start getting into that correction and everything's noisy and everything's loud, that's like when I say, oh like what I said earlier, to start looking at what is positioning actually telling me? Like what is happening here? Because once we get to a level of you know max short,
Speaker: To me, that kind of says we're going to have a floor somewhere around here. Now, it may you may not always catch the exact bottom, but if you can sort of assess, listen, I think the selling is mostly done, then that's where you can sort of discern that a floor is here or pretty close. Mm-hmm.
Speaker: So when we get to that kind of environment, um that's when I want to start, first of all, I want to start paying a lot of attention to the options flow to see if I'm seeing any big, for example, any big put selling on the indexes or any ah big buying in you know certain individual names.
Speaker: And for me, I like to start averaging in to dated calls. So, you know, give myself, if this, if I'm looking at this as a swing entry, I want to give myself at at least, you know, three, four months till expiry or longer, depending on what your risk risk preference is.
Speaker: And, just start building a position around that floor.
Speaker: Do you just like go long calls by themselves? I think it's called naked calls, is it? Yeah, mostly. Do you do call spreads or Not often, um just because I just try to keep things simple. I mean, for me, ah you know, I don't claim to be, you know, a market whiz by any means. I don't claim to be the smartest person. on the earth and it comes to markets but um you know i just try to think listen if i think something's gonna go up i'm gonna i'm gonna pick an expiry that makes sense to me and in in some ways you know an option is just like a levered position in crypto you know it's just giving you a little bit more juice to the long entry that you think is good
Speaker: Do you ever buy puts or you just like don't really play the downside and just go to cash? I do, but I try to be, I would say 80 90% long only just because I think that's more advantageous the way the stock market works. Yeah, that makes sense. I mean, if you just look at long-term charts, you know, it goes up into the right. And so,
Speaker: While you can get paid pretty well off puts, in my experience, you often gotta sit underwater for a while or you know you just, it's they make entries really hard. and So sometimes I've played puts and and gotten paid well sometimes I'll use them as a hedge you know if I have a pretty pretty good long exposure I'll buy puts as a hedge just to protect protect me from downside a little bit um but you know ultimately i think longs is where you get paid in the stock market do you mostly focus on indices or do you also play single name stocks
Speaker: ah Both. um Individual name stocks are kind of ah more my day-to-day trades. I like to play indices on like big swing points, you know, like major entries where I think, okay, this is like ah this is a a yearly bottom type of entry, you know, like we had in off the tariff lows or off these IRAN lows. I think then it makes sense to play indexes, but, you know, individual names are really where you can outperform the indexes. You know, you have to be a little bit more selective, but I mean, you just look at what the semiconductors did this year.
Speaker: You know, if you bought semiconductors you know, in April, you outperform the indexes by multiples, you know? So there's always there's always alpha in individual names for sure.
Speaker: How do you go about asset selection then in individual stocks? And there's like tons and tons and tons of stocks. do you know what to look at? For me, I look at the options flow um and I use the options flow pretty much like I would a scanner.
Speaker: So I scan through the flow on a daily basis and when I see ah different names that I think have good flow and have good charts, then I'll add those to my watch list. And you know, I i have you know tons of different watch lists that are just all based on flow that's come in either over the past week or month or however long. And so that helps me because the stock market is endless. I mean, there's so many names. How could you ever know? You know, so I need something to help me distinguish what's the right name to be paying attention to. Even if I don't end up taking the trade, at least it helps me to pull that ticker up on my, you know, on my screen and at least take a look at it. Whereas if I hadn't seen the flow, I might not have even ever known that stock existed, you know? Mm-hmm.
Speaker: How do you like structure your portfolio, kind of, I guess? Because it's it seems a bit different from how you do crypto stuff, mostly because you like use options. So like for for the one part, you can only really like lose your premium and not break the whole leverage position in your whole account. And then also, i guess there is a lot of, ah I'm actually not sure how how that plays out in real life, but I would assume there's a lot of correlation, especially like to the long, if you just like play trend following like long side stuff. um How do you manage your risk there?
Speaker: Well, I think you just have to, the first thing is ah you manage risk through your expiry date, right? So like I don't play short-term options just because it's way too volatile. So if you're buying ah you're buying options with time on them that don't expire for a few months or don't expire for a year, your downside risk is is much less. yeah And so it's easier to have like a a defined stop level on the chart and you know, hey, if that stop level is hit, maybe maybe my option's gonna be down 10, 15%, not the end of the world, right? But if I happen to catch
Speaker: a really good swing entry, entry even though those are those options are six months out, you know in a few weeks they could be up 100% if I caught the entry right. So that's the first thing is just making sure that you give yourself time.
Speaker: Other than that is just sizing in appropriately according to that risk. You know, the shorter the the shorter the expiry, the less size you should put in. The longer the expiry, the more comfortable I am putting some size in.
Speaker: um And for me, what's helped me a lot is just taking um taking profit along the way at um intervals based on premium increase rather than intervals just on the chart ah because options move so fast. that I want to be able to capture that profit as I see it. So oftentimes if I'm looking for a move that will take the options up, say 100%, you know, ah A to B move on the chart, maybe it would give me 100% premium increase on my options.
Speaker: I'm taking profit along the way at 30%, 50%, 70%, 100%, rather than waiting all the way until I reach the final TP.
Speaker: And the reason I do that is that that's a way of, ah as you're doing that, you're you're de-risking, right? So even if you have ah your directional assumption correct,
Speaker: Depending on how fast you get to that take profit point or how choppy it is along the way, your option and premium can can go back to zero. you know or Not zero, but go back to break even. So ah to me, it makes a lot of sense to take profit along the way at different intervals.
Speaker: And that's helped me to compound those gains along the way. So, you know, and it it helps me to have far less round trips, which is very common in the options world, you know.
Speaker: And a lot of times you might get a round trip and if you look back, you cut it at break even. And if you look back in two, three weeks, it turns out that the the trade worked, right? yeah But because you had still had full size on, you weren't you're just going to cut it when it gets break back to break even and not let it you know sit around there.
Speaker: But if you had already taken healthy trims at say 30%, 50%, and you are now in half of what you had originally, now you might let it sit around at break even for a little while and see what happens, you know? So you're able to de-risk that way.
Speaker: And also you're able to kind of compound gains, uh, within your portfolio, because for me, like options are not really a long-term investing,
Speaker: ah Tool i mean they can be if you buy like leaps for example like options that don't expire for a year out or whatever but for me when I see 50% 100% gain I'm gonna take that money so a lot of times even if I think this is a great swing tread up a great swing trade setup once i see that 100 gain i mean i'm out you know yeah and so that creates a compounding effect in your portfolio where you know you kind of have to keep rotating in and out of things and so that's where the flow helps is finding new names finding out where money is rotating to because you're maybe not just going to be sitting in one thing for six months like you would if you played equities or you know spot crypto you kind of out of necessity of taking the money while it's in front of you, you have to take it at different profit intervals and then look for the next trade, you know, do you give yourself kind of like a time expiry as well? Like if it gets too close to the options expiry itself, would you consider rolling the con the options contract over or you just saw like this hasn't played out now. So I'm out of the position.
Speaker: Well, i I normally don't really wanna get too close to expiry on my options just because you know i'm not I'm not really concerned with is the price gonna be at my target by expiration.
Speaker: I'm more concerned with what is the premium increase from when I bought it, right? so um you know if for example, if I bought something today and it doesn't expire till October, i'm I'm looking to probably be out of that option or at least most of it down to runners by September sometime. you know If I have a good entry, it shouldn't take forever. you know um And because the closer you get to your expiration date, options have something called theta, which works against you, which means for every day you get closer to your expiration date, your option goes down a little bit.
Speaker: So if you're in calls that have lots of time, the Theta doesn't really matter that much because it's only going down a tiny bit. But if you're in weeklies, every day that goes by, you know, that Theta is attacking your option premiums a lot.
Speaker: um And so to me, you never really want to get too close to your expiration date. You always want to have, you know, some time left before you get out. The only time I would let something run all the way into expiration is if I was like down to runners, you know, or a moon bag, as they would say in crypto, where I've already taken my money out and I'm like, hey, let's see what this thing can do in the next month, you know?
Speaker: What's the reason that you've never like ah ventured more into crypto as a whole since that's kind of like where you started and also what this podcast is mostly about? where you're not like why why are you why are you only focused on TreadFi and options and not slinging perps for other books? I mean, for me, like,
Speaker: I spend so much time and so much of my mental capital in trying to understand this market that it just seems like, you know, I kind of have to give myself a realistic expectation of how much I can handle, you know? And if I'm doing like one thing well, sometimes I don't want to confuse by myself by adding more, you know? and you know it's kind of nice to have my weekends off it's kind of nice for the market to be over at four o'clock yeah you know and i can kind of structure my day um regularly around that um you know also
Speaker: Crypto is is just, you know, I mean, I think I'm a pretty tech savvy person, but I'm also, you know, not, oh maybe not as tech savvy as some others. And crypto has a lot of complexity to it, you know. um There's always new things you need to learn, new exchanges, new methods, you know.
Speaker: So, and then, you know, taxes are very complicated and, you know. I spent a few years you know pulling my hair out trying to figure out how was going to file crypto taxes for 1,000 phantom transactions or whatever. oh yeah you know and It's like um TradeFi is just simpler. It's something I've come to understand. And also, they're now there's now options for being able to play crypto via TradFi, right? So in my broker now, I can buy calls on um be Bitcoin ETFs. I can buy Solana ETFs. I can buy, there's ah there's an ETF now that um that is related to hype. you know There's Ethereum ETFs.
Speaker: there's ethereum etfs there's There's all these kind of and then there's a ah ah number of different crypto related stocks like MicroStrategy or some of the Bitcoin mining stocks. So there's ways to get exposure to crypto still within the TradFi space and and not have to take money out of my brokerage and put it on chain, you know.
Speaker: It's actually quite interesting to hear these things from the other side, like the other perspective, because most of the people that I talk to and most of the people in crypto are kind of like... And meet me personally as well, we're like, hey, I already have all my money on chain and it's great that we finally have an option to like have it stay that way but we can also access the TreadFi products but it's kind of cool that there's also the the other perspective of like people that are only playing TreadFi that they also have way more access to crypto products without having to like bother with all the on-chain stuff and everything that that we are doing
Speaker: Yeah, I mean, it's just a different world, Ben. I mean, and I think it's just what you feel more comfortable with, you know? um Like, you know, I had a really good run on meme coins in, what was it, 2023 when Bowdoin went to a dollar? I mean, you know, I made a lot of money on that coin and it I had a lot of fun, you know? It was just, it was hilarious and it was such a fun time in the meme coin space.
Speaker: Um, but at the same time, you know, it, when you have a large position in a meme coin, like it's not easy to get out, you know, and then you, you know, on top of that, you have, you know, everybody watching your wallet and, you know, like, you know, and, and, and, giving you problems and all this stuff. And it's just like, you know, that's a very um nuanced sort of complex trading atmosphere where you have to like really know how to go about things, you know?
Speaker: when you're on chain. I mean you got to make sure your security protocols are perfect. You got to make sure that you're not clicking any weird links. You got to make sure that you're you know um using the right you know whether you're DCA buying or whatever through ah you know different platforms or whether you're full stack hitlering or whatever you're doing you know you have to have a strategy right like that's very specific to that environment of of on chain um and so and to me that is like constantly changing and evolving i mean i haven't really done much on chain since
Speaker: I'm sure if I wanted to go back now and you know deposit a huge amount, I'd have a learning curve just in the last two years of what has changed, what's the new exchanges, what's the new trending coins or whatever.
Speaker: And so for me, just trading within my stock brokerage is just a much more simpler, sort of predictable way to go about things.
Speaker: I just forgot what I wanted to ask actually. No, that was a good, I have a good question. I have a good question. So since you're mostly into stocks and TradFi, what do you think is something that um people that mostly trade crypto or like what are some of the things that people can learn from you if they mostly trade crypto? What are like crypto traders kind of missing or like what could they, could they add to their repertoire?
Speaker: Well, I mean, i think there's with so many, TradFi, perps available to crypto traders now. I don't think there's any reason that crypto traders shouldn't be following what's happening in the equity markets.
Speaker: You know, especially when you have, you know, i'm I'm sort of cycle pilled when it comes to crypto. i kind of believe in the four year cycle and think we're kind of in that part of the market right now where it's just going to be like annoying chop, you know? um And obviously there's, if you play all kind of different altcoins and things, there's always opportunity somewhere. But on the grand scheme of things, in a high timeframe perspective, if you have a situation where you know Bitcoin is going to be chopping around until October, maybe, um why not
Speaker: follow trade find markets and see if you can catch some opportunities and some markets that are really moving you know
Speaker: are there any other like particularities that you think uh people in crypto could learn more from or like just the way that they approach markets not just in what they look like but uh or what they look at but also in like the way that uh people trade markets like but crypto people are very
Speaker: uh short-term oriented compared to to what you have described so far well i think crypto traders actually can have an edge um in in trad fi markets because you're used to so much volatility you know like crypto markets have so much volatility and there's so many sweeps of liquidity and you know If you've trained yourself to be comfortable in those markets, to not you know feel like puking when you know they're sweeping the lows and being able to buy those kind of deviations and those kind of things, I think that kind of experience can really translate well into traditional finance markets because
Speaker: you know Especially now in these times, you know a lot of these stocks are moving more like a crypto would. If you look at some of these semiconductor stocks, they're up 10% one day and down the next They have these wild swings.
Speaker: And I think that type of volatility is something that crypto traders are more comfortable with and have sort of trained themselves on. So I actually think that they can have an edge where, you know, they might be buying when a lot of traditional finance guys are, you know, puking up their longs at the lows, you know? Yeah.
Speaker: i did The volatility has kind of become a little bit less nowadays, especially like in the bear market and stuff when there isn't that much interest. But I remember we always had like these memes of um when there was a 3% down day in TradFi on the S&P or whatever, that's already like a catastrophe and people are screaming for like recession and whatever. And we're like, oh, until it's like minus 10, we don't really pay too much attention. It's like the novelty say it's like the the first time. Yeah, exactly.
Speaker: Yeah, I think crypto crypto traders can definitely like have a lot more, are a lot more able to stomach the volatility that has been more common recently in Troutify as well. Yeah, for sure. And I think, I think that sharpens your, uh, your TA skills, right? Because, you know, you're forced into, you know, being a bit more disciplined on your entries. And so I think that can, that can definitely translate to, to, uh, the stock market for sure.
Speaker: Do you have any views on where we are in the market right now? Like, do you take stuff like, like macro and and narratives and all of that into account? Yeah. So, I mean, we're, we're in an interesting place right now because, um You know, a lot of people would say we're in a bubble, um but you also have robust earnings growth that's supporting that bubble, right? um So for me, the way the way I look at it to keep things simple is that I think a new bull market or a new bull trend started off of the the Iran lows in March and April.
Speaker: And so I try to look at things through that lens, you know. um we had We had a major correction off the tariff lows that was a 20% correction.
Speaker: um Then we had this digestion into the IRAN lows that was, I don't know, I think it was maybe, I'd have to pull up the chart, but it was probably 10% to 13% correction or something like that.
Speaker: um Right where we are now is sort of the first correction, major correction, that we're getting off of those IRAN lows. so although there's been a lot of heat in the semiconductor space like if you look at what's getting all the all the bear porn nowadays is in the semiconductor space right because you have a lot of these um semiconductor individual names down 50 off the highs i think uh
Speaker: SMH, which is like the semiconductor um ETF, is down 20% off the high. So technically in a bear market if it doesn't recover here, right?
Speaker: um But if you look at like the S&P 500, it's just sort of consolidating after a nice run up. Yeah. um You know, it's sort of just consolidating around its moving averages.
Speaker: It's sort of like a perfect picture of consolidation if you were to draw it, right? And so I always try to give the benefit of the doubt to the bulls just because of the way our markets work and in TradFi. And I think that, you know, while AI could be a bubble, quote unquote, I think it still has a lot of room to go.
Speaker: um And I don't know exactly what that, you know, what that looks like in terms of the the path of the chart. But I think it makes more sense to continue to look for bullish opportunities within that, um, within that general perspective that, you know, this is a technology revolution that we're undergoing right now. And you have to just sort of see that, you know, this has a lot of bullish potential.
Speaker: Now, with that being said, it's important to choose your your entries within that that bullish potential because, you know, even if you look at charts of past bubbles that went up, you know, 500% or whatever it might be, there's always brutal corrections and dips within that system, right? So,
Speaker: you know I think it's important to sort of recognize where we're at. I don't think that we're necessarily done. I don't think we're at a major top here.
Speaker: um But like for example, the S&P is up. it went up 20% from the lows. So that's probably your easy money right there that's already been made, right?
Speaker: So now you have this consolidation we're going through. It's gonna make things a little bit more difficult. It's gonna make things a little bit more challenging. And so, but at some point, I think it'll start to trend again. So I'm more of the mindset to just continue to look for opportunities, maybe de-risk some, in now that I know this you know this easy money has been made.
Speaker: But I don't think that that we're at a major top here at all. i think I think that we have some room to run still perhaps into the fall. you know Normally we always get a um a correction of some kind into like October yeah in TradFi. So I think that that correction will tell us a lot about um if this bubble is over or if it's popped. Because, you know, if we get, you know, a decent correction in October, but something that's not catastrophic, and that October correction can present a brand new buying opportunity, and maybe we get some of those institutional signals that we like to look at where everyone's getting max short into October and the news is really bad and the sky is falling, then maybe that'll set up for another big run, you know, into the end of the year. um
Speaker: So I think it it makes sense for me to just lean bullish and to just be wise with entries, but to look for a continuation of the trend when it comes.
Speaker: Do you have any ah concerns more short term when it comes to like the igan Iran war flaring up again? And also the recording this like one day before the the FMC meeting tomorrow and people are talking about surprise hikes and stuff like that.
Speaker: Well, listen, I mean, systematic risk exist exists, right? I mean, as a trader, you're never going to be in a market without risk. um I personally don't think Walsh is going to hike tomorrow. I don't think we're there yet.
Speaker: um I think the 30% odds of a hike are a bit high. Mm-hmm. um The Iran war I'm really not too concerned with just because to me the market has priced it in already.
Speaker: yeah I mean the lows that we were in in the end of March, that was the market pricing in the Iran war and we're since 20% off those lows.
Speaker: So to me, I mean, and you even look at some of the recent headlines. I mean, just look at a chart of the S&P 500. You know, it's in a... ah you know, it's in like a three, 4% range. So how much have these Iran headlines really moved the needle?
Speaker: You know, not much. So to me that, I think the market has sort of, um, familiarized itself with that conflict now. I mean, actually, uh, traditionally war is bullish. Um, you know, war stimulates spending and all these other things. So,
Speaker: I'm not really too concerned about that. What I get more concerned about is when I start seeing positioning max long. That's when I start getting uncomfortable. you know when every Not when people so are saying there's risk, there's problems, we're worried. That's not when I get concerned. I get concerned when everyone is saying this market is going to keep going up forever and you know, there's no sense in buying puts and, you know, just, you know, and you have kind of what we had a few weeks ago with like memory and stuff, especially when it just seemed, well, yeah, that's a very good point. I mean, if you look at the memory space, you know, um, that is a very good example of institutional positioning being, um, being overheated because let me see if I can pull it up on my Twitter. I had a good post about that. Um,
Speaker: The semiconductor trade, um, was the most crowded trade in the history of crowded trade. Really? That's great. Um, let me see if I can find it here. So, you know,
Speaker: they they have you know studies that follow what the most crowded trades are. So this was um June 17th. I was looking at this data and if we look at the SMH chart, SMH, which is a semiconductor ETF, topped on June on June 17th,
Speaker: so on june seventeenth I was looking at some data from um Bank of America. The latest fund manager survey from Bank of America found that semiconductors are the most crowded, most crowded trade since the survey started. oh whoa And looking at it at a graph, this went all the way back to like October of 2014.
Speaker: And it shows all the other crowded trades over the years. So like ah you had like long US dollar, you had you know long NASDAQ, long tech, long oil. Just recently you had long gold, you know when that was going parabolic. And long semis was more crowded than every single one of those trades since October 2014. And so what you get when you have a scenario like that is it doesn't matter how good the earnings are. And I think that's something that a lot of people in the memory, long memory camp didn't understand. You know, they're like, this doesn't make any sense. How is this down 10% off the highs when the earnings are so good? You know, the earnings continue to go up. They're making new deals. How is this happening?
Speaker: It's because um everybody that wants to own this stock already owns it. I mean, you have institutions, hedge funds, things like that. They have rules as to how much of a particular asset they can own, right? They can't have 100% their book in one stock. Who is left to buy it?
Speaker: So who's left to buy? i mean, retail? ah Retail's already in, you know, for the last two months buying these stocks. And so you get to a point where regardless of their earnings, regardless of how bullish the story is,
Speaker: They've just flown too close to the sun and when you start unwinding those kind of trades, you get the action that we see you know today where that's now down 20% off the highs in, you know what, a few weeks.
Speaker: um And the reason being is that everybody has to get out, right? it becomes It becomes sort of a snowball effect. where the lower it goes, the more selling you get because institutions are scrambling for the exits.
Speaker: And so, you know, that's the type of thing that gets me nervous in terms of, well, are we getting are we getting to a place where this is not sustainable? It's not, you know, worries about the Fed, worries about the war.
Speaker: It's what is positioning saying? how far into this trade are people. Now, the interesting thing about this whole semis trade is that, um you know, while semis were extremely crowded, some of the other areas of the market were not crowded at all.
Speaker: And so you had an opportunity for rotation. And that's why if you look at some other places in the market, like financials or biotech, some of these other areas,
Speaker: you can look and see like when semis topped, some of these other areas in the market were just shot out of a cannon because people didn't want to exit the market. It's a bull market.
Speaker: They just want to get in something that they're not concerned about. And so you get rotation. Where money is coming out of this most crowded trade ever and it's diversifying into other areas in the market and that's what um That's what happens in a healthy bull market trend is that even though some of these areas are topping Other areas are now catching up and so that's sort of the most bullish scenario when you have these overheated areas is that hopefully that that spillover to the broader indexes can be contained because there's rotation under the hood
Speaker: while we we're already talking about rotation I want to ask one last question sure most people are probably care about the most serious since we're all all crypto people and you've already painted a good picture for for the foreseeable future about stocks and all of that stuff but crypto isn't doing so well right now and you still maybe you're not a crypto focused trader but you're still a spot holder or or x spot holder what do you what do you think about uh bitcoin here or like crypto in in in particular where do you think where do you see it going
Speaker: Well, i'm I'm excited to start looking for opportunities to build crypto positions into the fall. um I just think that we're sort of in goblin town chop mode right now. you know I mean, if you look at if you look at the Bitcoin chart, we're sort of in this like you know, 15% range right now off the lows and there's been some constructive signs. um I mean it's looked good here for a little while and then it's sort of starting to come back down.
Speaker: um I think that we can kind of continue to chop around this area. The one thing that concerns me about getting long, um swing long with significant size crypto related stuff right now is that if equities have a big pullback into October,
Speaker: i just I just don't know that crypto has the strength to decouple from that. yeah And so when you have that sort of looming um on the horizon where let's say S&P breaks out and goes up another 10% between now and you know september Now you're in a place in equity land where many things are probably getting overheated and you're probably due for a significant pullback into that bearish seasonality window of September, October.
Speaker: And if Bitcoin has been sort of just ranging and maybe started peeking its head out of that range around that same time, do we really expect that crypto can fully decouple from equities if we get you know a nasty pullback into the fall. That's just, that risk there to me is just sort of um too much to stomach for anything more than short term trades at the moment. yeah But I do think that from a spot buyers perspective, starting to dollar cost average from now until, say, November probably turns out pretty well. You know, I think, I don't think Bitcoin's over. i think that um Bitcoin is going to have institutional demand again. We just kind of have to let the cycle play out, you know, and be smart about um how much we're dipping our toes into the pool right now.
Speaker: I think that's a good, good balance take, a good take to to end it on some hopium, not too much doom. um Thank you very much for coming on, unless you have any, anything else that you wanted to mention or...
Speaker: No, thank you for having me. It's been a pleasure. I really appreciate it. Same. So I hope everyone enjoyed this discussion and thank you everyone for listening.
