Here is a video on this topic:
Stock selection is one of the most important skills there is–the universe of 5k+ tickers. The reality is only maybe 20-30 have meaningful intraday edge any given day, and only 3-5 have extreme edge. 1/
I always say: “NEED TO FIND THE BROKEN SLOT MACHINE!” I don’t care how good you are. If you sit me down at most slot machines (tickers), I lose. To stand a chance, you need to find tickers with max edge. WHAT CAUSES EDGE? PRICE DISCOVERY!!! Ask yourself – where does max price discovery occur? 2/
SOME ANSWERS: IPOs, Breaking News, Earnings, Imbalances of Supply and Demand, Market Structure Inefficiencies. Ukraine war = whole market trying to handicap new paradigm for commodities and markets = EDGE! 3/
I could generally tell if someone in my office was +/- simply by looking at their tickers traded. On slower days, if you didn’t trade ABC or XYZ, you’re screwed! What does that mean for you? 4/
CLASSIC LANCE SAYING: “STOP TRYING TO BECOME MASTER OF 10-J OFFSUIT! RELENTLESSLY STUDY THE POCKET PAIRS INSTEAD!” People put too much time on 51/49 games rather than all time studying the 90/10. 5/
I play the slot machines that are spitting out money that everyone can see. Others can pick up dimes playing 10,000 hands of 51/49. People ask did you specialize in one sector or tickers? NO! Recipe to fail. I sit down at the most broken machine each day which changes constantly.
Here’s a question from a reader – an example of a recently broken machine?
BABA/KWEB/PDD. Huge Chinese tech stocks and sectors dropping 10%+ per day. Analysts say it is uninvestable–bad news after bad news. Massive volume capitulation. The pendulum swung so far that odds of reversion become ever increasingly higher.
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