Understand that when price ranges in a consolidation, it’s basically temporary value acceptance by both buyers and sellers. Volume at price (horizontal volume) within a congestion should reflect a bell curve volume node.

Current positions in the market, a bunch of shorts/inverse longs

With the prevalence of AI, it is not about having technical skills anymore. You can now create anything with just creativity and ability to think out of the box.

Luck only exists in the realm of small sample sizes.

The best trading system is not the one with the highest absolute return, but the one with the best risk-adjusted returns. The maximum expected drawdowns of your system should be within reasonable bounds because having to crawl out of deep drawdowns is psychologically unbearable.

Trend-following nature of the markets tend to mean that there is some form of long-range time dependency, where daily price changes are not independent from one day to the next. Knowing this means that you should have also flexible position sizing in accordance to trends.

When one hedge fund began deleveraging, then same-type hedge funds are likely to experience the same hit to their portfolio.

Fears in the markets are self-fulfilling. When people are scared that the markets are going to tank, they preemptively sell which creates a contagious spiral. This is also the reflexivity theory exposited by George Soros.

“Volatility was low because the world was awash with wild money; but abundant liquidity was giving the false sense that stability was due to some magical structural improvement in the financial system” - Quote from “More Money than God”

Learn to recognise the signs of turn, or momentum shifts. For e.g. big wide spreads, huge volume corresponding with opposing big moves, loss of buyers at supports.

Crowded trades work when there’s constant stream of capital flooding into the same trades, however once the capital influx abated then the day of reckoning arrives.

That’s part of the reason why momentum traders look for initial momentum move from a stock before they start looking to buy the stock as it pulls back to KMAs, consolidates or form a flag.

It wouldn’t make sense. Except when you are in a good position to take profits, which means you have accumulated early prior to the ignition move (commonly known as breakout) Understanding the fundamental underpinnings of KMAs acting as support will give you greater confidence

Early in a trending move, we would like to believe that majority of the sellers are profit-takers and not actually efficient market making (shorts trying to pull price back to “value”). Does it make sense for you to sell near the KMAs when you know it’s possible support?

Key moving averages only work when there’s an ignition move away from a long consolidation. Think about it. Why would stocks randomly bounce from a key moving average? If everyone understands that KMAs is possible support wouldn’t it get arbitraged away eventually?

“In stable times, arbitrage could pay off well: You needed a program that bet on price anomalies disappearing. In unstable times, arbitrage was dangerous: you needed a trend-following program”

So when big players influence the media to promote a stock, they know small players will cooperate (buy) and consequentially they will defect (sell for example, vice versa). This course of action is well documented in game theory experiments such as Prisoner’s Dilemma.

Reverse mapping this logical train of thoughts, we can deduce that players’ decisions are greatly instigated by media influence. Those who have control over media creates certainty for themselves by influencing players decision and they tend to be defectors by game theory logic.

If a player buys the stock but other players are selling, then the buyers gets punished in the form of capital loss. However, in such an uncertain environment, they do not know what the rest of the players are doing. Big players know this, so they stir players’ perceptions

In the stock market, the dominated strategy is to buy as there is generally more buyers than people trying to sell/short. However, the buyers will also think about what the other players are perceiving (whether others are more likely to buy or sell).

Game theory emulates any social interactions in a multi-player dimension. For example, each player has two choices, to defect or to cooperate. In similar sense, we can treat stock market players decision to buy (cooperate) or to sell (defect) as scenarios to analysing game theory