Matt (Trading Equilibrium)¶
Primary Mentor
This is a paid service I follow every day - very important for my trading development.
Matt's Core Strategy¶
Setup Criteria¶
| Element | Description |
|---|---|
| Range Contraction | Look for tightening price ranges |
| Inside Day | Stock having an inside day (check using inside day indicator) |
| ATR | He doesn't care about ATR |
| Familiarity | He trades names he is familiar with |
| Daily Routine | He goes through a list of stocks everyday to find his setup |
Risk Management¶
Quick Exits
He exits very quick - even before 1R if his call to take an entry is wrong.
Average Loss
Matt's average loss is -0.43R
Gap Handling¶
Premarket Gaps
I think he respects a premarket gap-up (not crazy ones before or after earnings, but normal ones within 2-4% range).
Key Insights¶
Price is King¶
On Indicators
https://youtu.be/ff27yMrnFyw?si=JVGV9z8gAV9EZ8g_
"Price is the only real thing. All indicators are lagging and should be used only to understand the past trend to get a sense about future.
Lagging indicators shouldn't be used as a buy trigger... but could be used as a sign to go long."
Options Strategy¶
Aggressive Tactics
Uses options as aggressive tactic to make money during bull market.
Learning Approach¶
How He Started
He joined 10 paid services when he initially started just to see what people were doing.
Difficult Markets¶
Precious Metals & Commodities¶
Choppy Markets
Q: Do you find that Metals or other commodities groups usually mimic the market choppiness or are they a whole different beast and kind of behave on their own?
Matt's Answer: "Precious metals and other commodity stocks are almost always choppy no matter the environment. A very difficult space to trade in my view. Just like any other stock, if the market overall swoons lower everything can get taken down. I think the move into precious metals this morning reflects the 'staglationary' thinking - sticky inflation mixed with a slowing economy (weak GDP print). PCE tomorrow will obviously be very important."
Matt finds it difficult to trade in precious metals and energy market due to their choppy nature.
Stock Picks & Observations¶
VRT¶
Industrial Play
VRT is the nvidia of industrials.
Taking Partials¶
Taking partials at 1-1.5R and whether to enter a stock after it has already moved up a bit on the day:
Gap Risk Lesson¶
Real Gap Risk (Aug 5, 2024)
Matt takes gap ups or downs seriously:
"For those that have a trading 'born on date' after COVID this is a great lesson in real-time gap risk. Gap risk is a very real thing and must always be considered. Clearly gaps like this are not common but I've seen plenty of them over 25 years."
(On Aug 5, 2024 when SMH gapped in negative direction significantly)
Matt's Daily Process¶
Daily Routine
"Hi Amir - that's exactly what the daily videos show. They are my daily process:
- Top down analysis
- Reviewing relative strength in sectors / industries / stocks
- Recent earnings and news
- Establishing a focus list and identifying actionable names (when warranted)
- Reviewing each open position and total open risk
Each video IS my daily routine - with extra 'rants' :)"
Textbook Setup Example (Aug 16, 2024)¶
Perfect Setup Analysis
"Setups don't come more 'textbook' than this one in EXEL - but I post this as a question to ask yourself.
Are you more comfortable sizing a 'perfect' setup like this in a biotech name you may never have heard of before, or in a name you've been following for months / years?
A worthwhile question to ask yourself and you may learn something from your answer. Part of the 'know your dance partner' concept."
Setup Elements¶
- Down trend line with more than 3 touches
- Close to one week but not quite yet
- Reduced volume
Later Update¶
Rate Cuts Impact¶
Small Caps vs Mega Caps
Rate cuts usually help small caps more than mega caps.
"Mega-cap tech weak today as well as small caps stand to benefit more from rate cuts (but we've also known that for a long time). My instinct is that mega-cap techs waiting on NVDA as well."
(There was JD Powell news confirming rate cuts in few months)
Questions to Ask Yourself¶
Matt's Philosophy
"I am not telling you what to think, I am telling you to think."
Before Trading¶
Think through before following your itchy trigger fingers - especially when you take trades when indices are down 4% and VIX at 0.
Combat Your Inner Junkie
Combat your inner junkie by truly understanding your strategy.
Self-Assessment Questions¶
- Are you chasing action?
- Are you thinking you want to involve in every move the market makes?
- Or are you following a consistent strategy?
Pre-Trade Checklist¶
Simple Questions Before Every Trade
- Do you have a consistent strategy?
- Do you understand your strategy?
- Is it a setup? What is the basis for me to take this trade?
- Does me taking this setup make sense?
- What am I looking for to actually happen? Does it make sense?
- Is it worth opening risk now - to reasonably and responsibly make a difference?
- Is it worth my time?