Swing and position trader for 25+ years. Finding simplicity amid chaos. Uncomfortable truths found here. Owner: https://xitter.cf/t.co/7VGLgI90D6
Joined November 2008
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Environment > Setup
Like most things, this can mean something different to everyone.
Here's what it means to me:
First, I define 'Environment' through price action. I don't use multiple breadth measurements, momentum indicators, sentiment etc etc. I rely on PRICE and PRICE only.
Second, what 'Environment' am I looking for? I'm looking for an environment that is conducive to MY style - and I'm someone that exploits trends through swing and position trading. I don't care if it's a great day trading environment - I'm not a day trader.
So what's my key ingredient? FOLLOW THROUGH. Period. In a conducive environment I'm seeing clear follow through in price action - leading names trending on key SMA's and being quickly supported on pullbacks. Breaks above trendlines or pivots that see follow through the next session, for example.
What are the key ingredients of a POOR ENVIRONMENT for my strategy?
1 - Multiple material opening gaps in both directions
2 - Multiple material intraday reversals
3 - Weak / Ambiguous mid-term trend structure
4 - News Driven Price action
The result is LACK OF FOLLOW THROUGH. Names will break above a trend line or a pivot and almost immediately reverse.
Each of the above items is base solely on PRICE action. They are easily identifiable to anyone with a cursory understanding of price charts and don't require the extra ambiguity of indicators, oscillators etc etc etc.
Fighting a poor environment by constantly engaging 'setups' will reduce your probability of success. It's that simple. Conversely, I want to hit the gas when follow through (as evidenced by price action) is strong. In a strong environment with robust follow through even mediocre setups will move in the direction of the trend.
Simple concept. Simple process. Over 27 years of trading I have found VERY few things more impactful to my returns than getting aggressive in a 'strong environment' and backing off during a 'poor environment'. Focus on impactful decision.
Social Media is a great place to argue with strangers about the Kelly Clarkson / mechanical singing bird debacle (if that’s your thing), but it is NOT where you go to refine - and REPEAT - a personal process built on introspection and discipline. That only happens in silence.
To some silence is uncomfortable, maybe borderline terrifying. You’re alone with yourself. Uncovered. Raw. No distractions to hide behind. No avoiding a confrontation with your own thoughts, memories, fears. Just the weight of your truth filling in the space around you.
For others it’s vital. It’s where we refresh. It’s where we find solace in whatever hard-earned clarity we’ve found. It’s an anchor in chaos.
You can learn a lot in silence.
Matt Petrallia, CMT retweeted
Often your best course of action as a swing / position trader is to do nothing. In an environment with no follow-through: do nothing. In a conducive environment with plenty of tailwinds: let your open positions work, i.e. do nothing. Reframe your mindset to embrace this simple concept.
Matt Petrallia, CMT retweeted
Spend more time risking nothing, and less time risking more at the right time.
Being in the market for as little time as possible can be a goal in itself. The default state for many always seems to be nearly constant active engagement.
But why? It’s part of the whole action = progress misalignment. Turn it upside down.
Make as much progress as possible being in the market as little as possible. Make your risk count. Stay out when the environment is anything less than ripe for your style.
Of course, like most things, it’s much easier said than done. But even identifying this as a goal can be powerful.
If you stare at charts and / or scroll twitter all day long you are inviting overtrading with open arms. It is that simple.
Matt Petrallia, CMT retweeted
Most think scrolling social media is somehow helping them (or they at least want it to be). More information, more ideas, more input. But in reality it’s likely the biggest distraction keeping you from doing the actual work - the things that move the needle.
Most don’t need a new strategy or tactic - certainly not more opinions.
Most need to actually follow the simple strategy they already have. That can only come from you. Face it head on or it never changes.
Staring at your screen all day WILL make you trade MUCH more than if you check-in at set times. If you are a swing / position trader looking to catch and hold bigger moves, excessive screen time is your enemy. It tears you from your strategy. You WILL overtrade.
The trap of more screen time = doing more 'work' = more progress, is easy to fall into. But it's a misdirected belief that's usually the result of two main things:
1 - Careers / jobs that imprint the action = progress mindset deep within us
2 - NOISE: social media, news, the 24/7/365 barrage of input we endure. Scroll social media and find each tick narrated for you. Someone is always doing something and desperately trying to draw your attention to it
The result is an urgency that completely undermines a simple longer-term strategy. Most don't even give thought to this - though it's a dead-simple concept. Cut down your screen time, lower the noise, focus on signal. It's 100% within your control. It WILL change your entire process for the better and move the needle more than the action you're chasing.
When a clear character change like Oct 10th or June 5th happens, what usually follows is more wide and loose, gap prone, ranging chop. Expect more of the same as ranges develop. That INCLUDES bounces that can suck you back - it invites revenge trading.
It’s the environment that’s changed.
You never time it perfectly but you get much better at spotting and ‘feeling’ the change, then acting accordingly. Not much moves the needle more than being vigilant about the environment.
Trading IS Discomfort
What tears us away from our simple trading plans is rooted in discomfort. Often deep discomfort. We ‘know’ what we ‘should’ do, but we simply don’t do it.
Holding for a bigger move? DISCOMFORT
Selling INTO strength? DISCOMFORT
Taking small losses over and over? DISCOMFORT
Sitting out in a poor environment for your style? DISCOMFORT
You will never eliminate the discomfort - it IS trading. But you can recognize it and manage it. This requires WORK through self awareness and years of identifying where and when you, personally, get most uncomfortable.
Make no mistake. It’s the hard part of trading, what moves the needle, and it continues for a lifetime.
Silence is an edge.
Silence the distractions.
Silence the doubt.
Silence the opinions.
Silence the things that pull you away from your simple strategy.
Silence is powerful and you control it completely.
I repost my own posts a lot. Most of them about dead-simple concepts like following your trade management plan, the importance of environment, 'knowing your dance partner', crystallizing your simple strategy etc etc
Why?
Because trading is repetitive. My process is repetitive.
It's not about trying to find something new to say 12 times a day to please Elon's algorithm.
It's about ACTUALLY following your simple plan.
It's about ACTUALLY repeating your process over and over.
Most will focus on near-term results instead of process.
The great irony is that only when you truly focus on process can you make progress.
A constant loop of results-driven reactions leads to style drift and endless lack of clarity.
‘Bad’ result -> Change Process -> Try again.
Should be:
‘Bad’ result -> Repeat Process -> Try again.
Once you’ve found a repeatable, clear strategy and process, the results actually come from the repetition, not constant searching and noise.
Process > Outcome
Matt Petrallia, CMT retweeted
The four dead-simple ingredients of a poor environment for my simple trend-following style:
Environment > Setup
Like most things, this can mean something different to everyone.
Here's what it means to me:
First, I define 'Environment' through price action. I don't use multiple breadth measurements, momentum indicators, sentiment etc etc. I rely on PRICE and PRICE only.
Second, what 'Environment' am I looking for? I'm looking for an environment that is conducive to MY style - and I'm someone that exploits trends through swing and position trading. I don't care if it's a great day trading environment - I'm not a day trader.
So what's my key ingredient? FOLLOW THROUGH. Period. In a conducive environment I'm seeing clear follow through in price action - leading names trending on key SMA's and being quickly supported on pullbacks. Breaks above trendlines or pivots that see follow through the next session, for example.
What are the key ingredients of a POOR ENVIRONMENT for my strategy?
1 - Multiple material opening gaps in both directions
2 - Multiple material intraday reversals
3 - Weak / Ambiguous mid-term trend structure
4 - News Driven Price action
The result is LACK OF FOLLOW THROUGH. Names will break above a trend line or a pivot and almost immediately reverse.
Each of the above items is base solely on PRICE action. They are easily identifiable to anyone with a cursory understanding of price charts and don't require the extra ambiguity of indicators, oscillators etc etc etc.
Fighting a poor environment by constantly engaging 'setups' will reduce your probability of success. It's that simple. Conversely, I want to hit the gas when follow through (as evidenced by price action) is strong. In a strong environment with robust follow through even mediocre setups will move in the direction of the trend.
Simple concept. Simple process. Over 27 years of trading I have found VERY few things more impactful to my returns than getting aggressive in a 'strong environment' and backing off during a 'poor environment'. Focus on impactful decision.
Matt Petrallia, CMT retweeted
Think Like a Trader. Not Like a Follower.
In collaboration with @KynaKosling
🔗tinyurl.com/2sxrd477
Be brutally honest with yourself:
Have you ever made or changed a trading decision based on something you saw on social media or financial news? Did an external input make you deviate from your plan?
My guess is that every single trader, at some point in their journey, failed this litmus test.
Someone else’s opinion stopped you from following your strategy.
Maybe it’s a big account tweeting that they closed their position, so you also closed yours — even though your plan was to hold the name until it closed below a key moving average.
The outcome is irrelevant; this is entirely about process.
🔗 tinyurl.com/2sxrd477
Matt Petrallia, CMT retweeted
Do you have trouble holding a name for a big move as it rides a key SMA?
SOME IDEAS THAT CAN HELP:
1 - Sell an initial partial INTO strength. This will de-risk your trade and give you the psychological edge of having taken a small profit, making holding less daunting.
2 - Review past leaders and momentum names. See how the strongest trending stocks tend to ride a key moving average for MUCH longer than you might expect. Use the “replay” function on TradingView, or similar. It helps you internalize that the daily “emotions” in strong trenders can be a rollercoaster despite what is an obvious clear, simple trend in hindsight. Risk happens in real time. This simple exercise can help internalize what is “normal” in a trend, even in huge movers. Prove to yourself how stocks move. AND it doesn’t require 10,000 hours of blood shot eyes staring at charts. You don’t have to ignore your children and your spouse. Just spend some time on it. Have a life. That’s the point.
3 - Know in your bones that you WILL NOT catch the top. Your job is to catch the meat of the move, not an exact bottom or an exact top. Those trying to catch a top are just guessing, nothing more. Be at peace with this. Let the market decide and let a key SMA be your guide. Your observations in step 2 will help with this.
4 - Size smaller until you can condition yourself to follow your simple trade management plan; a close below a key SMA for example. Smaller size reduces the emotional swings. MAKE yourself follow the plan. Get yourself used to how you feel on pullbacks as well as how you feel when the trend continues and you haven’t closed out the trade. Size can come later. Train your brain first.
5 - Mix swing and position trades. This helps lessen the “rollercoaster” and smooths your equity curve. For me, having some swing trades that I sell INTO strength helps me hold the names I’m really trying to ride for bigger moves. If my entire account is in position trades the emotions are heightened; the drawdowns more intense. Mix the two to suit YOU. PERSONALIZE. It’s your chance to work with your own strengths and weaknesses. Everyone is different.
Less is more when holding for a bigger move. Less button pressing. Less micro-managing. Less intraday screen time. NO intraday charts - more WEEKLY charts. Let the trend work for you without succumbing to constant noise and action on social media.
You either follow your simple trade management plan or you never truly had one to begin with.
No webinar, interview, podcast, substack, headline, book, tweet will ever change that fact. It’s you vs you.
Most think scrolling social media is somehow helping them (or they at least want it to be). More information, more ideas, more input. But in reality it’s likely the biggest distraction keeping you from doing the actual work - the things that move the needle.
Most don’t need a new strategy or tactic - certainly not more opinions.
Most need to actually follow the simple strategy they already have. That can only come from you. Face it head on or it never changes.