Monday, February 10, 2025

Being Desperate

“Most people overestimate what they can achieve in a year and underestimate what they can achieve in ten years.” - Bill Gates, Tony Robbins,.....

The market will seek out your weaknesses, find them, and test them.  One of those weaknesses is desperation.  Especially for full time traders.  When you have to make money, then you are trading from a weakened position.  Its easier to succeed when you want to make money, but don't need to make money.  

I've noticed that I've usually traded better when I've been winning than when I've been losing.  Its because losses affect your mindset differently than wins.  After losses, most traders, including myself, want to recover those losses quickly to get rid of the negative emotions that come from losing.  The bigger the loss, the stronger the urge to recover losses quickly.  This means trading from a desperate position, which is a position of weakness.  

After wins, most traders are not in a hurry to get into the next trade, because they already have a feeling of satisfaction from recent wins.  The bigger the wins, the stronger the feeling of satisfaction and the less urge to rush into the next trade.  This is trading from a position of strength, with no desperation.  

When you are not desperate, you don't take marginal or negative EV trades.  You don't sacrifice the optionality that cash provides by being stuck in those mediocre to bad trades.  When you have free cash, you have the option to take advantage of good opportunities that come along.  Just by not being a desperate trader, you can take advantage of more good opportunities because you aren't stuck in mediocre to bad trades.  

This is why I've noticed a streakiness to the results of not only my trading, but other peoples' trading.  The psychological aspect of this game is extremely important.  But since its so vague, and hard to quantify, it is underestimated and often ignored.  When I first started in this business, I gave little thought to psychology and emotions and mind control.  Its only after several years of experience and observation that you realize how psychology is such a huge part of the game.  

Becoming a full time trader is hard because of the need to make money.  Trying to make money in the markets is similar to trying to get a loan at the bank.  When you have enough money and don't need to make money, then it becomes easier to make money.  When you try to get a loan at the bank, its much easier to get a loan when you have collateral, i.e. real estate, to put up to get a loan.  If you have nothing, the bank doesn't want to lend to you.  If you have a lot, the bank will want to lend to you.  

If you really need to make money from trading, its hard to not  be desperate.  When you have lots of expenses, and no income except from trading, its nearly impossible to trick your mind into thinking from a position of strength when you are in a position of weakness.  Its why those that do make it as full time traders are mostly young traders, who don't have families, who have fewer expenses, and less to lose when blowing up.  The nothing to lose mentality actually can reduce the desperation of having to win.  And if you add risk management to that, then you have a chance to make it in the long run.  

Nothing noteworthy in the COT data or the put/call ratios last week.  Asset managers made small reductions in net long positions in index futures, and dealers reduced some of their net short positions.  Bond yields have stabilized around 4.5%, which is good news for risk asset holders.  It looks like we got the fear based bottom in both bonds and stocks in January after the hotter than expected NFP number along with the pre Trump inauguration jitters on tariffs.  

Last week began with tariff news at the start of the week, and ended with tariff news at the end of the weak.  These headlines ignite 1-2% moves, but they don't last.  The more often you get these headlines, and the more predictable they become, the less they will move the markets.  It appears a lot of selling was front run on Friday afternoon ahead of the potential announcement of reciprocal tariffs.  If tariffs are the worsㅅ thing that can happen to this market, then that's not really bad news.  Tariffs are easily taken off, and their effects are overrated.  Especially if you get all those tax cuts that Trump is looking for.  

Still holding a small long position, not looking to make any big moves here, in this narrowing range.  Although if I didn't have any position, would be taking a long position on any tariff fear induced dips this week.   

59 comments:

OL DAWG said...

Long TSLA 3/14 380 calls 13.50

OL DAWG said...

Long more TSLA calls 11.85

OL DAWG said...

sold TSLA calls 12.45

OL DAWG said...

Long DECK 3/14 160 calls 7.09

OL DAWG said...

Long TSLA calls 12.2

OL DAWG said...

sold EIX calls 1.42 big loss

OL DAWG said...

Long more TSLA calls 9.35

OL DAWG said...

I think QQQ may get to 530 again and maybe SPY maybe back to 605 near term but as for ATH I feel now it's going to happen sometime maybe next month. I feel that this congestion will resolve itself to the downside first now.

Market Owl said...

The next move out of this SPX 5950-6120 range will be a false breakout or a false breakdown. I would short 6150+ or buy 5920+ if it happens within the next month.

OL DAWG said...

The strength of this market is really surprising. I change my stance. I feel QQQ is going to go 535 to 538 now on this move up. Really no catalyst for the market to be making ATHs right now.

Anonymous said...

Crazy how the hot inflation number was ignored. We may be setting up for a big fall in coming months

Market Owl said...

I agree we are setting up for a big fall in coming months. But its going to take some time as we build up potential energy by going sideways and sucking in more inflows from investors.

Anonymous said...

Another hot inflation report today and market ignoring. Might nit be months but weeks

OL DAWG said...

Sold TSLA calls 10.25

OL DAWG said...

Long HIMS 3/14 52 puts 6.85

OL DAWG said...

Sold HIMS puts 7.225

OL DAWG said...

Long TSLA 3/14 340 puts 13.9

OL DAWG said...

Sold TSLA calls 14.10

OL DAWG said...

Long TSLA 3/14 370 calls 14.95

OL DAWG said...

sold TSLA calls 15.70

OL DAWG said...

Long QQQ 3/21 525 put 7.67

OL DAWG said...

Long TSLA 3/14 370 calls 14.83

OL DAWG said...

sold TSLA calls 13.88

OL DAWG said...

Long 3/21 55 HIM puts 8.4

OL DAWG said...

Long 3/21 225 PLTR puts 7.73

OL DAWG said...

sold HIMS 8.53

OL DAWG said...

Long 3/21 TTD 80 calls 5.4

OL DAWG said...

sold TTD calls 5.6

OL DAWG said...

Long TSLA 3/14 370 calls 14.77

OL DAWG said...

sold 1/3 DECK 5.6

OL DAWG said...

sold TSLA calls 15.22

OL DAWG said...

Long AMD 3/14 110 calls 5.7

OL DAWG said...

sold AMD calls 5.80

OL DAWG said...

Long HIMS 3/21 55 Put 8.07

OL DAWG said...

out rest of DECK calls 5.9

OL DAWG said...

Sold HIMS puts 7.25

OL DAWG said...

Long more PLTR puts 6.60

OL DAWG said...

Long 3/21 HIMS 60 puts 9.8

Market Owl said...

Looking at HIMS and PLTR, it looks like the Reddit apes are running the asylum. These sucker moves often peak in the middle of opex week, as the Reddit degens sell their calls before expiry and force dealer delta hedge selling.

OL DAWG said...

sold HIMS puts 9.28

OL DAWG said...

Long BABA 121 2/14 calls 1.00

OL DAWG said...

sold BABA calls 1.45

OL DAWG said...

wow same day expiration options. Only play before 10 am and risk only the amount you want to make.

OL DAWG said...

Long BABA 122 puts 2/14 .90

OL DAWG said...

sold BABA puts .65

OL DAWG said...

Long RDDT 2/14 192.50 calls 2.85

OL DAWG said...

sold RDDT calls 4.15

OL DAWG said...

Long BABA 2/14 124 puts .93

OL DAWG said...

sold BABA puts. 71

Anonymous said...

@marketowl

Anonymous said...

@marketowl how would you play pltr. us aid it may peak in 120/130 range but I still added some shorts around 110 with puts for feb/march/may and jan 2026 - so far been brutal. wonderign if should add or get out before they announce another contract and this hits 150

OL DAWG said...

Long more QQQ 525 3/21 puts 6.04

Market Owl said...

If PLTR goes to 130 next week, I will consider putting on a small put position for long dated expiry options. It is taking longer than I expected to get to 120-130 range, so its looking less like a blowoff top and more like extreme strength. Long term, I am very bearish on the stock, but short term, I would be patient when adding to puts.

OL DAWG said...

NDX futures opened at an ATH of 22154.60 and promptly sold off. Significant?

Market Owl said...

I wouldn't put any significance on small moves in the overnight session, especially on a 3 day weekend.

Anonymous said...

Is the mqrket closed monday??

Market Owl said...

Yes, US cash bond/stock market is closed today.

Anonymous said...

Thanks. I am getting addicted. Nice break day but was kind of looking fwd to markets opening 🙊

Market Owl said...

I know the feeling, being addicted to markets. Nothing beats the thrill of the game. But I like taking a break and enjoying the weekends where I can put my mind off markets and relax.