𝞂 The Ultimate Trading Mind Map 𝞂
➠ 3-Part Series
OI Macro Options Daily subs know that I manage to come up w/trade ideas several times per week.
Week in, week out.
But how do I never run out of ideas?
By leveraging our Ultimate Trading Mind Map.
This is the process ☟
➠ Part 1
𝞂 The idea here is to walk you through the following:
Analysis of opportunities → idea generation → risk management scenarios → trade execution
➠ ANALYSIS FOR IDEA GENERATION
1) FUNDAMENTAL ANALYSIS
Time horizon = 1y up to 5-10y
Trade ideas from this analysis tend to be long only, for asset allocation purposes, and/or as a vehicle to drive up pension fund value.
Analysis can include:
𝞂 Valuation Model: This can be cashflows, EPS projections.
𝞂 Macro Data Trends: Trying to model the economies.
𝞂 Thematic: Longer-term structural themes (i.e., AI, Robotics, 3d Printing, etc)
𝞂 LT Growth/Innovation/Disruption: Companies and/or assets with long-term growth profile.
☞ Park your $$$ and come back in 10y ☜
Time horizon = Variable
The trading style here can go from short-term, such as days to hours (not my preference)…
…up to medium-term, such as weeks to months.
This sort of trend following or ‘swing trading’ is where I feel more comfortable.
Analysis can include:
𝞂 Charts/Indicators: Bollinger, #RSI, Structure…
𝞂 Momentum: What’s the realized order flow like?
𝞂 Mean Reversion: Rubber band-type effect, the more it stretches, the snappier the return to equilibrium.
𝞂 Statistical Arbitrage: Algo activity has eroded most of it
3) CATALYST/EVENT-DRIVEN ANALYSIS
Time horizon = Timing Around Event Date
My preferred strategy for trading event vol is through options pricing.
𝞂 Specific known event – #Inflation data.
𝞂 Earnings announcements – $AAPL #earnings.
𝞂 Elections/politics – US election, Brexit.
𝞂 Central Bank meetings – #FOMC, #ECB, #BOJ.
𝞂 Once you know your target asset, time horizon, and what’s driving your idea, then you need to incorporate…
➠ #VOLATILITY & SCENARIOS
𝞂 You need to be aware of where volatility is and has been recently.
From here, you can try to think of realistic scenarios for the asset at hand.
Of course, within the time horizon tied to the idea that we established earlier.
The type of things you are going to be looking at include:
𝞂 ATR/#ImpliedVol – Is the market realizing on future vol expectations?
𝞂 #Bollinger: Where spot is vs. average vol of that asset
𝞂 #Fibonacci: Levels of confluence/importance to be aware of
𝞂 #TailRisk: Events that may derail your scenario in the horizon you are looking at
𝞂 #ElliotWave: Where are we in perceived pattern structure?
𝞂 Big Picture Trend: Zoom out to weekly/monthly and see where the asset has been and is potentially headed.
These are just a few items I use most heavily.
After I do all that, then I move onto…
☞ I’m afraid you will have to until tomorrow for the rest of the Ultimate Trading Mind Map goods! ☜
Have you seen enough and already know you need our trade ideas and Ultimate Trading Mind Map in your life?
You’re in luck.
Use the link in my Twitter Bio and then enter code RV2023 at checkout for a free month of everything Options Insight has to offer!
Have questions for me about the mind map?
Let me know in the replies!
Or better yet…
➠ Come ask me in person this Thursday from 11am ET – 12pm ET during our Options Insight Live on Twitter Spaces!
You’ll also be able to hear from our special guest…
@RealVision’s very own – @AshBennington!
We are pumped to have Ash join the convo, so be sure not to miss what’s bound to be an outstanding chat.
See you there!