On Process

Had a flat week this week. Not my best trading period in terms of idea velocity, quant signal generation or monetization of earnings season.

Wanted to do a bit of reflection of 1] what my overall goals is here 2] what am I doing wrong right now 3] what is my plan for improvement

Overall Goal

Simply stated, I want to quantify George Soros’ theory of reflexivity. We’ve never seen more bubbles form and bust in short periods than we have in current markets, and I believe this is inextricably linked to the interconnectivity between the options markets, retail trading apps, and digital advertising.

Bubbles are a direct refutation of the market efficiency hypothesis on which the foundations of global capital markets are built. Failure to understand them will have dire implications for society over time, in my view. There will be a generational crash, and in the aftermath – there will be a call for those who studied the madness to speak. I’d like to present my findings then.

So long term, I want to advance society’s understanding of reflexivity and bubbles. Near term, I want to monetize this understanding to prove the validity of my views both to myself and future practitioners.

What I am Doing Wrong Right Now

The biggest problem with my trading is that I am used to a framework of “make money however possible”. I often find myself speculating on real world phenomena in addition to fake or narrative driven phenomena.

I believe that this is suboptimal. Even if I make money on betting on “the real world”, this money is dilutive to my overall goal. It is best thought of as “Low multiple revenue”. The bar needs to be much higher for taking on low multiple revenue in terms of weekly/ daily profitability.

I do think it is valuable for me to immerse myself in markets and their short term movements as these movements help calibrate longer term trends. Thus, I would like to move my “real world” trading to a much shorter time frame, focused on foreign exchange and liquid macro instruments. Likely managing risk on a 8-12 hour basis there with quant overlays.

Swish method

The swish method is a way to contextualize a changed behavior.

Do not: write thread about the fundamental value of oil. Do: find 2 month call option on oil meme stock assuming there appears to be measured accelerating investor demand

Do not: talk about geopolitics on Twitter Do: trade futures/ fx on geopolitics and write about it here

Do not: take big sector bets on Twitter do: invest in NFTs, Gamestop, AMC call spreads with a process

What is my plan for improvement

Dumbing it down - FX and futures for each session (US and combined Asia+Europe). Newsflow sensitive. This keeps you glued to the market. Obviously should align with your macro indicators / discretionary views. This is where “reality” comes into play. Keeps you grounded.

No more reality in long term discretionary. People don’t want to learn about reality they want to trade bubbles. That is the very definition of a bubble. Publicly, you need to invest in the absurd.

That means crypto. That means electric vehicles. That means gamestop and AMC. That means equity options. It won’t be easy but I don’t think people are here for normie long/short equity analyst mode. Why the fck would you tweet about that anyways? If you’re going to lean into what you’ve done, lean into it, or get out. And if you make money entering the Citadel - and ppl grasp that we’re in a bubble- that itself is a reflexive study. It’s far more differentiated, interesting and useful for the long term goal.

Being concrete – the goal by Monday is to

  1. Harden infra build for FX/Futures. Keep that on your website to “be in the flow” / also for your own track record
  2. re investing in the absurd key incremental features are the options curve visualizer / moving risk reward into 3d as opposed to 2d. should move the “non earnings vol” meme stock definition into prod

What are success criteria?

  1. Idea velocity investing in bubbles - equity options and crypto. PNL, and engagement. Target 1.5 sharpe, 2 ideas /week. 70%+ CAGR. Ideal end state would be a “meme fund”
  2. Consistent high sharpe PNL from systematic / discretionary macro overlay trading (grind). Taget 3 sharpe