YouSaid · the spoken record

Simon Ree

lines on the record: 82
first: 2023-04-17
most recent: 2023-04-17
sittings or episodes: 1
sources: podcast

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“Yeah, so Jek Kundo is the martial art that Bruce Lee discovered. Bruce Lee is often referred to as the father of mixed martial arts. He started studying Wing Chun under Iman. He wasn't thrilled by some of the more classical aspects of that art. And so he came up with Jik Kundo, which is sort of an amalgamation of Wing Chun fencing and Western boxing, to put it simply. I've studied many martial arts over the years. Martial arts have been a part of my life for most of my life. And I love all martial arts, but Jik Kundo is the one that resonated with me and it's the one that I kind of took all the way and I became a certified instructor.”
2023-04-17 · Forward Guidance · Key Principles For Successful Trading | Simon Ree · IDENTIFIED FROM THE TRANSCRIPT
“Absolutely. I spell out the risk management protocol that I recommend. And if you follow that and you're consistent and you honor it and you follow it to the letter, your chance of blowing up is basically virtually zero. And then from then on, it just becomes again acquiring the skill of not losing money. And if you keep the reps up and you're not losing money, you will eventually become profitable if you follow the process”
2023-04-17 · Forward Guidance · Key Principles For Successful Trading | Simon Ree · IDENTIFIED FROM THE TRANSCRIPT
“Strategies that generate higher returns require more effort. Wall Street has been peddling this story forever that high returns, high risk equals high returns. But we need to think about what risk actually is. Risk is the possibility of losing, all right? So really what Wall Street has been telling us is if you want to maximize your chance of winning, you got to do that by increasing your chance of losing. And I would ask you, how does that make any sense at all? All right, I've got a different theory, which I talk about in my book. And I would postulate that if you want to maximize your chance of winning and getting great returns, you've got to do everything you responsibly can to minimize your chance of losing. And that's through high probability setups, proper risk management.”
2023-04-17 · Forward Guidance · Key Principles For Successful Trading | Simon Ree · IDENTIFIED FROM THE TRANSCRIPT
“It's just not going to move the needle for you. You don't have enough runway if you haven't got a large amount of capital.”
2023-04-17 · Forward Guidance · Key Principles For Successful Trading | Simon Ree · IDENTIFIED FROM THE TRANSCRIPT
“It really depends on an individual's objectives. So if you're a, let's say you're a long term buy and hold investor and The long term average annual return of the SP 500, it's approximately 10% per annum. And if you're happy with that return, then I think that approach is fine. But if you're going to earn 10% per annum forever, you either need to be young, you need to sort of be in your 20s and have that kind of 40-year runway for compounding to work its magic, or you already need to have a lot of risk capital. All right. If you're sitting there in your 40s or 50s and you don't have a million dollars saved up and maybe you've only got 10, 20,000 dollars saved up, 10% per annum, it just isn't going to move the needle. All right. So you need to do something else, whether it's trading or whether it's an online business or, you know, working a second job or whatever it is. Buy and hold investing, earning those sorts of returns.”
2023-04-17 · Forward Guidance · Key Principles For Successful Trading | Simon Ree · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, I mean, the Holy Grail is options volatility and pricing by Sheldon Natenberg. To me, that was the book that I made all of my guys read when they joined the desk. That will give you, you know, it's not a page turner, but it'll give you a very thorough grounding in things like implied volatility. And then the other book that I love is Trading in the Zone by Mark Douglas, which really deals with the mindset and the emotional control. Those things are so important as well.”
2023-04-17 · Forward Guidance · Key Principles For Successful Trading | Simon Ree · IDENTIFIED FROM THE TRANSCRIPT
“It's very high, and you read all the statistics about how 80% of traders lose money. And sadly, it's probably true. And I think it's because the barriers to entry to open a trading account are so low. You know, anybody with 500 bucks can open an options brokerage account. When you want to drive a car, you have to get lessons and you have to pass the test and you have to get a license. Can you imagine how many accidents there would be on the road if nobody bothered learning how to drive before getting in a car and driving one? But nobody makes you pass the test or get a license to open a brokerage account, which is why we see so many financial accidents.”
2023-04-17 · Forward Guidance · Key Principles For Successful Trading | Simon Ree · IDENTIFIED FROM THE TRANSCRIPT
“Amateurs make mistakes, you would never make, you would never have made that mistake. And it's just a risk if you don't know what you're doing. The risk of losing money trading if you don't know what you're doing is very large.”
2023-04-17 · Forward Guidance · Key Principles For Successful Trading | Simon Ree · IDENTIFIED FROM THE TRANSCRIPT
“Well, you know, Simon, I do have a pretty horrible experience with that. By pure luck, I happen to buy a very out-of-the-money put option on an individual stock that was very volatile in February of 2020, like late February of 2020. And It was a 20 bagger in terms of.”
2023-04-17 · Forward Guidance · Key Principles For Successful Trading | Simon Ree · IDENTIFIED FROM THE TRANSCRIPT
“A nice feeling Yeah, yeah, I'll scale out of positions. Usually if I'm up more than 100%, I'll take some profit. And then it becomes a roadmap. I'm looking at things like average true ranges. I'm looking at things like support and resistance, Fibonacci targets. All of those will go into my decision on where to come out of a position. When it comes to options trading, I'm actually a big fan of selling too early, right? I don't wait for the price to peak and then start rolling over because then you're just joining the queue of everybody else kind of rushing out of the theater that's on fire. I always like to leave a little bit of upside so that's easier to sell the position on someone else.”
2023-04-17 · Forward Guidance · Key Principles For Successful Trading | Simon Ree · IDENTIFIED FROM THE TRANSCRIPT
“What about reverse? Yeah, what if a position is working really well? Oh, if it doubles, I'm going to sell it all. Are you sizing down as the position goes up? And that's a nice feeling. Yeah, when you can sell something and you've only sold part of it, but you've already made money, you know, the cost basis.”
2023-04-17 · Forward Guidance · Key Principles For Successful Trading | Simon Ree · IDENTIFIED FROM THE TRANSCRIPT
“Never, ever, ever let it auction expire worthless. But what I'm really vigilant on is getting out of a position that isn't working well before it hits my OMG level, right? So if I see a moving average crossover, if I see a close below a 50 period moving average, if... If I see two consecutive closes below a 21 EMA and I'm in a long position, that's an early warning sign. I've sort of got my finger on the trigger and if the ATMA crosses underneath the 21 EMA, I'll get out of the position. And what about reverse?”
2023-04-17 · Forward Guidance · Key Principles For Successful Trading | Simon Ree · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, yeah, that's a good question. So I have what I call my OMG stop loss level. So if the option premium that I've paid decreases by 50%, I'm out of the trade no matter what. No questions asked.”
2023-04-17 · Forward Guidance · Key Principles For Successful Trading | Simon Ree · IDENTIFIED FROM THE TRANSCRIPT
“This is why it is so important to be able to identify high probability moments in time to put your cash at work. That's why I have a very high bar on trades that I take. I'm not. Taking craps. I'm not trading intuition. I'm not trading something because some Twitter handle said it looked like a good idea. I'm really, you know, I've done my homework. I've got my processes. And yeah, I'm not going to win every trade. That's for sure. Losses are part of the game. But so long as I win more than I lose and my winners are bigger than my losers, I can make decent money.”
2023-04-17 · Forward Guidance · Key Principles For Successful Trading | Simon Ree · IDENTIFIED FROM THE TRANSCRIPT
“And what is the sort of advantage of being long options? You know, said doing trades against a market maker, Citadel, if you're buying SPY call options struck at 400, Citadel is buying them. Typically the theory goes that people who sell options, there's a volatility risk premium that you're paying. You're paying a fee to get access to that optionality. How do you make sure that the gains that you get from options are greater than the fee that you get based on the volatility of his premium?”
2023-04-17 · Forward Guidance · Key Principles For Successful Trading | Simon Ree · IDENTIFIED FROM THE TRANSCRIPT
“I prefer to be long simply because it's an easier way to compound your returns. Being short options is fine and it's great in a high volatility environment, but I find I can compound my gains more quickly and more easily by being long, whether it's long naked options or long spreads.”
2023-04-17 · Forward Guidance · Key Principles For Successful Trading | Simon Ree · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, so Tower of Trading, it's available on Amazon. It's been a number one bestseller. And you can find more about me at TowerofTrading.com. That's T-A-O-O-F-T-R-A-D-I-N-G.com.”
2023-04-17 · Forward Guidance · Key Principles For Successful Trading | Simon Ree · IDENTIFIED FROM THE TRANSCRIPT
“Many, many hours involved in learning and practicing. But once, like when a golfer is grooved their swing, once you've kind of grooved your swing in trading, there's no reason it should take you more than about half an hour a day on average. Now, there might be days where it takes you an hour. There might be other days where there's nothing to do. It's just a quick review of your positions and it might take you two minutes. But if you use scans that provide you a short list of high potential candidates and it's just a case of reviewing the scan results and sort of reviewing the macro conditions once a week or over the weekend, it shouldn't be terribly onerous. In fact, I think it's a very, very time efficient way of making money.”
2023-04-17 · Forward Guidance · Key Principles For Successful Trading | Simon Ree · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, I would say learning it. There is definitely effort involved. And that's another reason why most people don't succeed, all right? It's because they don't put in the work in learning how to trade properly. So there is definitely...”
2023-04-17 · Forward Guidance · Key Principles For Successful Trading | Simon Ree · IDENTIFIED FROM THE TRANSCRIPT
“Sort of sectoral specific, but really what I'm focused on at the moment is earning season. Once we get to the end of that, it'll just be a case of taking a look at the broader markets again. Hopefully we've got a more defined trend established, whether it's up or down. I'm indifferent and we somehow move either to the one extreme or the other of the chop zone or break out of it. being in the middle of the chop zone is not as much fun as a trader like i said it's just a time to uh to pare back risk”
2023-04-17 · Forward Guidance · Key Principles For Successful Trading | Simon Ree · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, so at the moment we're sort of in the early stages of earning season. We've got obviously the major banks reporting some of the major banks reporting on Friday. I have not been buying bank stocks at all. The fact that banks got so hammered and didn't have a reversion to the mean is a little bit of a little bit of a warning sign for me. So I'm kind of ignoring the banks at the moment. But yeah, really for the next month or so, my focus will be on earning season, earnings trades are one of my trades that I like to do during earnings season where you kind of take advantage of the ivy rush and avoid the ivy crush post earnings. So that can work really well. I've got a couple of positions in some tech stocks that are showing good uptrends. I've got a bearish calendar spread on the queues just as a very, very gentle hedge at the moment. But yeah, nothing.”
2023-04-17 · Forward Guidance · Key Principles For Successful Trading | Simon Ree · IDENTIFIED FROM THE TRANSCRIPT
“I mean, that would never happen because there are so many thousands of different trading methodologies out there. But the fact is, as an options trader, you are nearly always going to be dealing with a market maker. And it's their job to hedge their risk. And so, you know, I don't worry about it. I just assume that they're doing their job. And if they're not, then it doesn't concern me. I mean, the way I think of financial markets is that there's trillions of dollars turning over every day. You know, it's like this river of abundance. And all I'm trying to do is just scoop my hand in and just take a little bit out for myself that basically nobody else would even notice.”
2023-04-17 · Forward Guidance · Key Principles For Successful Trading | Simon Ree · IDENTIFIED FROM THE TRANSCRIPT
“Of habit where you actually don't make money, you know. My perspective on this is I trade options almost exclusively. 99% of the time I'm trading with an options market maker, they're fine. All right. The citadels of the world are fine. I'm not worried about them. They make plenty of money. And if they're losing money on the other side of my trades, I'm not going to lose any sleep over that. market makers are fine.”
2023-04-17 · Forward Guidance · Key Principles For Successful Trading | Simon Ree · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, I don't think what I'm doing in the market is as noble as that. I like to try and help other causes with the money that I make. But to answer your question, it's an interesting question. I don't think it's an important question for traders to have at the front of their mind because it's probably not that helpful if you're this, if you're a kind, generous giving person and you're worried that the person on the other side of your trades is necessarily going to lose money. you might engineer a”
2023-04-17 · Forward Guidance · Key Principles For Successful Trading | Simon Ree · IDENTIFIED FROM THE TRANSCRIPT
“At all of your winning trades and all of your losing trades. And your brain will start to make connections that you probably can't even put into words. But by looking at what a winning setup looks like on a chart compared to a losing setup, you can start to build that intuition a little more quickly. Many of the lessons that the market will teach you from trading are very, very subtle. They're so subtle unless you're really looking for them and aware of the lessons, they can really pass you by.”
2023-04-17 · Forward Guidance · Key Principles For Successful Trading | Simon Ree · IDENTIFIED FROM THE TRANSCRIPT
“That's a really good question. Intuition will lead you astray. 99.9% of the time, if you've done less than thousands of trades, it takes thousands of reps to build that trader's intuition. Markets are actually designed to get you to an emotional state where you will do the wrong thing at the wrong time. You'll chase moves that are already underway. You'll sell out at the bottom because the losses are making you feel sick because you haven't managed your risk properly. Literally, markets are set up to do this. Unless you've got thousands of trades, thousands of reps under your belt and you've been consistently profitable, forget about intuition. One thing you can do, and one thing I share with my members to start building that intuition is whenever you look at a setup and whenever you take a trade, print the chart out. Print it out on paper, keep a record of it. And what you can do once a month, once a quarter, once a year, go through and look.”
2023-04-17 · Forward Guidance · Key Principles For Successful Trading | Simon Ree · IDENTIFIED FROM THE TRANSCRIPT
“Now, as a trader, you need to be able to admit that you're wrong and identify when you're wrong as early as possible. As I said earlier, to prevent a small loss from becoming a big loss. But people really struggle with this. They think, I'm not wrong. The market's wrong. That's a classic. Or, you know, I'll be proven right or sometimes just the shame or embarrassment of being wrong is too much. They stop looking at their brokerage account and their account just kind of withers away to zero in the background. There are not many avenues in life where you can be handsomely rewarded for being wrong 40% of the time, all right. But trading is one of them. And it's a big adjustment that people need to make if they want to be successful in this field. They've got to get over this fear of being wrong and of wanting to be right all of the time.”
2023-04-17 · Forward Guidance · Key Principles For Successful Trading | Simon Ree · IDENTIFIED FROM THE TRANSCRIPT
“Every time you made a mistake, you did something wrong, your parents would yell at you, you go through childhood and school life, your mates would make fun of you, you join the workforce, your boss is going to yell at you. And so you develop this habit throughout your whole life of just trying to not stuff anything up, just trying to avoid making a mistake at all costs because of the ramifications it has. And so we end up as humans, most people would rather drink bleach than admit they're wrong.”
2023-04-17 · Forward Guidance · Key Principles For Successful Trading | Simon Ree · IDENTIFIED FROM THE TRANSCRIPT
“So, I think that the. We've talked quite a bit about trend identification. We've talked about market analysis. We've talked about risk management. We probably haven't touched on mindset. And to me, Obtaining the correct mindset is the final frontier. For most traders, and it's what will keep an aspiring amateur from their dreams of making a living from trading. And some of the things that really trip people up when we talk about mindset are the desire to be right, all right? There's the old saying, do you want to be right or do you want to make money? People think that in order to make money trading, they've got to be right all the time. And I'm telling you, if you can be right 60% of the time, you can make a damn fine living as a trader. But the problem is from the time you were two years old”
2023-04-17 · Forward Guidance · Key Principles For Successful Trading | Simon Ree · IDENTIFIED FROM THE TRANSCRIPT
“Absolutely. Conviction is a word I don't like to use. I know, you know. Size up. I never bit the farm on a play. I will size down though when markets are choppy and not exhibiting strong trends.”
2023-04-17 · Forward Guidance · Key Principles For Successful Trading | Simon Ree · IDENTIFIED FROM THE TRANSCRIPT
“Right. And I'm just looking at a chart of the exponential moving average. And the point where it's the most below its moving average is the point where the put-to-call ratio was at the bottom. So you always get signals rarely send the same signal, right? Especially put call ratio in the exponential moving average almost never give you the same signal.”
2023-04-17 · Forward Guidance · Key Principles For Successful Trading | Simon Ree · IDENTIFIED FROM THE TRANSCRIPT
“Also complimentary to that would be things like new 20 day highs and lows, new 60 day highs and lows is the market showing strength. Is it breaking through these new highs or is it failing at them? And all of these will give me ideas as to how strong the trend is and whether we're seeing kind of failures at multi-day highs or whether we're seeing breakthroughs. And all of that gives a picture as to how strong the trend is. I'll look at things like breadth, things like the advanced decline line, percentages of stocks above the 200-day moving average, percentages of stocks above the 50-day moving average, all of these can give you important clues as to how strong the rally is as well.”
2023-04-17 · Forward Guidance · Key Principles For Successful Trading | Simon Ree · IDENTIFIED FROM THE TRANSCRIPT
“Okay, so the most important indicator for me at the moment is always moving averages because they just give you a really good read on short-term trend and also medium and long-term support and resistance. All right, so exponential moving averages can give you a really good read on what the short-term trend is doing and then your longer-term simple moving averages can act as levels of support and resistance. And they're widely watched by pretty much everyone in the market, whether it's self-fulfilling prophecy or not. I don't care. The fact is it seems to work more often than not. And that's what I'm focused on. Things that work more often than not. Secondary to that would be things like Keltler channels, you know, how far away from the mean is price.”
2023-04-17 · Forward Guidance · Key Principles For Successful Trading | Simon Ree · IDENTIFIED FROM THE TRANSCRIPT
“That's right But if the complementary analysis is screaming at me, you know, this market is overextended, sentiment is exuberant, the market is very, very long, even if the trend is up, that's when I'll start looking to fade the trend.”
2023-04-17 · Forward Guidance · Key Principles For Successful Trading | Simon Ree · IDENTIFIED FROM THE TRANSCRIPT
“And that won't last forever. But I expect that that correlation will remain for as long as we're in an inflationary regime. I look at things like HYG as a proxy for junk bonds. What a junk bond's doing, spread's doing. If junk bonds are rallying, that's a risk-on signal for equities. And the counter is also true. There's a whole bunch of market internal things I look at, like the VIX, the put core ratio, the SKU. There's a whole bunch of macro things that I look at. As I said, I don't trade based off any one of them, but they give me a composite picture of is the path of least resistance likely to be higher or lower from here.”
2023-04-17 · Forward Guidance · Key Principles For Successful Trading | Simon Ree · IDENTIFIED FROM THE TRANSCRIPT
“How do I assess market conditions? I mean, there's a whole bunch of things I look at. So I look at the major indices that the SP and the NASDAQ, the Dow, Russell 2000. I look at them across multiple timeframes. So I look at daily, weekly, monthly charts. I look at what the sectors are doing, you know, what's tech doing, what are semiconductors doing, semiconductors can often be a bit of a first mover. And then I look at a bunch of correlated assets. What's the dollar doing? What's dollar yen doing? What's Aussie Yen doing? What are bonds doing? There's been an important correlation between bonds and particularly the Nasdaq.”
2023-04-17 · Forward Guidance · Key Principles For Successful Trading | Simon Ree · IDENTIFIED FROM THE TRANSCRIPT
“Answer the second question first. So, what I'm basing that on is really just swing highs and swing lows so that price has memory. If the market gets up to 4,200, it's likely to struggle there for a period. And if it can break through, we could see some follow-on, some continuation to the upside. Similarly, if we get down to 3,800, that's likely to be a level of support if we break through that. The probabilities are we could see some continued selling. So it's really just looking at what Price has done historically to come up with those levels. These are not fundamental levels of S&P 500 earnings or anything like that. In terms of...”
2023-04-17 · Forward Guidance · Key Principles For Successful Trading | Simon Ree · IDENTIFIED FROM THE TRANSCRIPT
“How else do you assess current market conditions? You know, I'm thinking of the Jesse Livermore reminiscence of a stock operator. You always got to focus on market conditions, the modern way of thinking about this, talking about liquidity, a term that means many different things to many different people, defense balance sheet. If stocks markets go up, there's lots of liquidity. Why does stock market go down? No liquidity. It's very self-reinforcing logic. Although I have had some liquidity experts on the show who actually have made some very good calls, such as Michael Howell. But yeah, how do you assess current market conditions? Yeah. And when you say, oh, your base case is kind of chopped $3,800 to $4,200. What are you basing that on?”
2023-04-17 · Forward Guidance · Key Principles For Successful Trading | Simon Ree · IDENTIFIED FROM THE TRANSCRIPT
“But I didn't need to know that because all I was doing was just reassessing the evidence as it came in and trading accordingly. I'm not one to make big, bold predictions. I'm not going to sit here and tell you the S&P is going to hit 4,600 by December or 3,000 by December. I'm just interested in watching how things unfold and just following my process and taking advantage of those short-term moves.”
2023-04-17 · Forward Guidance · Key Principles For Successful Trading | Simon Ree · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, it was an exceptionally long way below. So there were certainly the stars were aligning for a major bounce. I'm not saying I called the exact bottom, but I was certainly bullish. In fact, I was bullish a little bit early. I got bullish a little bit about a week early and I was posting on social media and the insults that I copped at the time was really had to grow a lizard skin. Yeah, I could see that the market had reached a crescendo of panic. And at the very least, we were due for a sizable dead cat bounce. Now, I didn't know that it was the bottom and it was the start of a massive bull market.”
2023-04-17 · Forward Guidance · Key Principles For Successful Trading | Simon Ree · IDENTIFIED FROM THE TRANSCRIPT
“Well, the beauty of trading is you don't need to know, all right. All you're doing is. If your process gives you a probabilistic edge, you'll win more than you lose. And if your risk management is competent, your winners will be bigger than your losers. And that's how you make a living. Although at least that's how I make a living. So April 2020, as you can probably imagine, we had an extremely high put call ratio. We had an extremely high VIX. We had an S&P 500 that was several average true ranges below its mean. When I talk about the mean, I'm talking about the 21-day exponential moving average. And so kind of the stars were lined up really for a strong counter trend bounce there.”
2023-04-17 · Forward Guidance · Key Principles For Successful Trading | Simon Ree · IDENTIFIED FROM THE TRANSCRIPT
“Let's take April of 2020. I think the market bottomed March 23rd of 2020, the VIX had a top a few days prior to that. What was the mean then? Like you, I was there and very easy to be convinced by this is a bear market rally. It wasn't. It was the start of an epic bull market and everything. How do you know? You know, how do you know? Let's say April 2020. Why couldn't you said, Oh, the mean is 3,000? Things are getting excessive.”
2023-04-17 · Forward Guidance · Key Principles For Successful Trading | Simon Ree · IDENTIFIED FROM THE TRANSCRIPT
“Prices accelerated a long way away from the mean. The odds are the probabilities are that it's going to revert to the mean at some point. And the more stretched it gets, the more likely it becomes. And so then you might want to employ a mean reversion strategy where you're expecting a counter trend move back towards the mean. And then if prices just chopping around the mean are tougher environments to trade. And honestly, if I'm looking at a stock market that is just in a tight range of chop, generally I won't do anything on that index. What I'll do is look for individual stocks and sectors where there is a trend. And normally you can find a trend somewhere if the market might be chopping sideways. But the energy sector might be on fire or tech might be in a horrible downtrend. You look for somewhere where there is a trend.”
2023-04-17 · Forward Guidance · Key Principles For Successful Trading | Simon Ree · IDENTIFIED FROM THE TRANSCRIPT
“Price is only ever doing one of three things. It's either reverting to the mean. Accelerating away from the mean or chopping around the mean. So you need to be able to identify what price is doing in order to, I guess, make a call on what it's likely to do next. So if we're in an uptrend and price has reverted to the mean, what I'm generally going to look for is for it to accelerate away from the mean again. Okay, so that trend to kind of reestablish itself.”
2023-04-17 · Forward Guidance · Key Principles For Successful Trading | Simon Ree · IDENTIFIED FROM THE TRANSCRIPT
“This is a really handy tool to gauge market sentiment and positioning. So, right now that the put call ratio isn't telling us anything other than it's neutral. But if that white line continues to head towards the red line, you know, that could mean, you know, there's another three to five percent pop on the S&P. And if people keep buying calls into that, that will set us up for a nice reversal to the downside.”
2023-04-17 · Forward Guidance · Key Principles For Successful Trading | Simon Ree · IDENTIFIED FROM THE TRANSCRIPT
“Right. And the market you've got to remember is an equal opportunity dream killer. It will always try and exact the greatest amount of pain on the... Largest number of participants possible. So when everybody's long put core ratios below 0.8, be on alert for the market to peak. Now it's not a precise timing signal, but it's an important sentiment signal and it's something that I work in my framework. So I don't run out and start shorting as soon as the put core ratio drops below 0.8, but I stop adding long positions. And if I see any good counter trends, short setups, yeah, I start taking them. And the same when the put core ratio gets above one, that's when something bad has happened. Everybody's wet the bed. Everyone on Twitter is bearish. Anybody is talking about is how much lower the market's going to go. Well, guess what? Everybody's already short and the market is going to make the shorts feel some pain now. And that's usually when the market will put in a low. And yeah, I find that this is just one of many tools.”
2023-04-17 · Forward Guidance · Key Principles For Successful Trading | Simon Ree · IDENTIFIED FROM THE TRANSCRIPT
“When they're slow, they're buying more puts than calls. And so, yeah, white is that line and green is the S&P 500. So when you had that huge run-up into the summer, people started buying a lot more calls than puts and the buying pressure sort of was exhausted.”
2023-04-17 · Forward Guidance · Key Principles For Successful Trading | Simon Ree · IDENTIFIED FROM THE TRANSCRIPT
“So the green line is the SP 500. The white line is the 10-day moving average of the total, the combined put core ratio, which takes into account options positions in individual stocks and indices. And what it shows us, it gives us a guide as to how long or short market participants are through the options market. You look at that first big spike on the chart just to the left of center, sort of around August. Can imagine everybody's kind of seeing the market rally, and oh, this is fantastic. Oh, I've got to get involved. Oh, I've got FOMO. I'm going to go out and buy a whole bunch of call options. And what happens is the 10-day moving average of the put call ratio drops below 0.8. And that is a sign of excessive optimism. Everybody's long. And when everybody's long, guess what? The market tends to run out of buyers and it rolls over.”
2023-04-17 · Forward Guidance · Key Principles For Successful Trading | Simon Ree · IDENTIFIED FROM THE TRANSCRIPT
“I mean, positioning is of interest. If I'm long and I see that the market is long because the put core ratio has got below a certain level, yeah, I will stop. To me, that's a warning to don't add any more long positions. And in fact, the next couple of positions you add should probably be short positions”
2023-04-17 · Forward Guidance · Key Principles For Successful Trading | Simon Ree · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, like if Is everyone else is bearish? Everyone else's position bearish. How convincing is that is a bull argument in the short term, medium term, and long term? Short term, I guess it can be very effective.”
2023-04-17 · Forward Guidance · Key Principles For Successful Trading | Simon Ree · IDENTIFIED FROM THE TRANSCRIPT