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Broke even last week after getting above $3k and then promptly dropping back down. The main challenge I have to overcome is the volatility in the market because my regular setups have stopped working. Well they kind of work, but I would have to increase my risk above my tolerance on such a small account because the volatility decreases my strike rate when I use tight stops. I'm working on overcoming this and in the meantime have been building strategies for the micros since a single is incredibly lucrative right now. Additionally, the fluctuating margins that Ninja is imposing prevents me from trading certain contracts at all. They're right to impose larger margins, but it doesn't help a speculator.
Nothing really report except that once the administration and fed have actively engaged the markets, the volume in the traded market has dramatically dropped off despite the wild swings that are still occurring as measured by Fat Tail's Relative Volume. Honestly, I'm not even sure how to read it. On an interesting note, I met a trader who traded beside KewlTech (as colleagues and not a teacher-student one). I know he's a bit of a controversial person, but da-yum do they make money when markets trend like this. I would honestly say that they're playing an entirely different game than 80% of the traders here--myself included. It's not necessarily the way they trade, but it's more at how they approach the market.
Can you help answer these questions from other members on NexusFi?
Feel free to correct me, but be on the look out for a relief rally in the coming days. If you believe in the market maker hedging theory, a large part for the massive dump is because of the massive open interest in puts. Because the market makers end up being short gamma, they are required to hedge due to being smart (and regulations) and they end up hedging in the direction of price. This means a shock to the system will cause a chain reaction that will spiral out of control as we've seen here. Alot of those puts expire on the triple witching which occurs on 3/20.
The other issue is the liquidity crisis that has plagued the bonds as the dealers are unable to provide liquidity due to the inability to leverage beyond a certain point again due to regulations. The regulations that were designed to prevent a financial crisis have created a financial crisis because of an external black swan event. Whether the regulations are good or bad is up to debate. As some of you may have been aware, the Federal Reserve issued Section 13(3) to re-establish the Primary Dealer Credit Facility. The Treasury department also hours ago approved the Money Market Investor Funding Facility. Simply put, the Federal Reserve is temporarily expanding money supply via (essentially) free loans via the Primary Dealer Credit Facility. The primary dealers pledge collateral and in return get loans from the Federal Reserve. The Money Market Investor Funding Facility allows the Federal Reserve to buy back safe investments (including bonds issued by the Fed) by loaning 90% of the price of the bond. These are 2008 powers that were activated during the financial crisis of 2008.
I thought I'd share my PnL. Here's a comparison (without fees) between my actual PnL versus my theoretical PnL if I didn't get greedy and take any discretionary trades. What. A. Difference. I'm unable to take any of my bread-and-butter trades because the volatility (and Ninja won't let me), so I've focused on perfecting my TA. It's much easier to see on my theoretical PnL where I realized that the volatility was killing my strategy and also where Ninja stopped letting me trade it haha. After reassessing my situation and realizing the volatility was providing outsize opportunities in other strategies, you can see how much smoother my PnL curve becomes. Traders who are scared of this market are the ones that haven't learned that our natural instinct is a weakness in the markets. People like to harp on about having a good Risk-to-Reward and this is the market. This Trending Market is where it happens. Regular grindy choppy sideways, perma-bull, market-maker-hunted-my-stop markets are where you have to play extra safe and are unable to get good ratios. Remember when a swing was 8 ticks? Don't get me wrong, my brain understands what a boon this is for traders, but my gut is constantly scared of this market.
