Taking Losses - Qullamaggie: Stream 81 - 85 Review [Mar 2020]
A Review of Kristjan Kullamägi's Livestreams (Stream 81 to 85) - "Only hardships and setbacks are guaranteed in the markets, but it's how you handle it that determine your success."
Over the months I have gone through every stream that Kristjan Kullamägi (@Qullamaggie), a prolific momentum swing trader, has ever posted. Below I have categorized my notes into topics relating to his streams. Comments made by me, on my thoughts on a particular note, are italicized. I have noted an index of all current streams at the bottom of the post. If you want to start from the beginning of his streams see here:
![Kristjan Kullamägi (Qullamaggie): Stream 1 - Stream 5 [Oct 2019] - Notes](https://substackcdn.com/image/fetch/w_140,h_140,c_fill,f_webp,q_auto:good,fl_progressive:steep,g_auto/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2Fd4ff1b0e-6ef7-465e-83f3-4725f47a34b0_598x720.jpeg)
For reference, the chart below shows the overall market (SPY 0.00%↑) KK was trading in, at the time of the streams (March 9, 2020 to March 18, 2020):
The COVID-19 market crash is well underway!
Stream 81 ($TVIX INSANE volatility. Down $500K to…? Mar 9, 2020)
Market Sentiment:
Markets down halted! I don’t think I’ve ever seen a market halt before, a circuit breaker. That’s what markets do: They go from high volatility to low volatility to high volatility. It happens all the time. For example, in 2016/2017, we had mostly low volatility for almost two years, then a period of high volatility, then low volatility.
$SPY - Daily Chart, 2016/2017
Choppy Markets
These kinds of market conditions are really, really good if you can focus on the right things. If you’re a new trader you should probably stay away, just look at the action, watch, just observe. It’s very easy to get into trouble in these kind of markets. I’m now very aggressive because I have some big profit cushions from last week and the week before, I can afford to be a little bit aggressive. But new traders should just stay away or trade minimal, tiny, tiny size. I’ve seen this before early 2018 and also in 2015 and 2011, but back then I wasn’t really trading these things.
$SPY - Daily Chart, 2016/2017
Timeframes:
When I short stuff, I usually use lower timeframes. When shorting I usually don’t use weekly charts. But when I go long I use weekly charts all the time.
Position Sizing:
Dude, the first two or three years I traded, I struggled. Size or no size, I struggled with everything, so don’t worry about it. To use size, you need conviction; if you don’t have conviction, don’t do size. It doesn’t have to be more complicated than that. For the first three to four years, I only did day trading.
ETFs:
I trade ETFs all the time, but right now, with so much volatility, there’s no point in trading regular stocks because ETFs are better—they're the most liquid and have the most range. If you want to play the bounce, I think TQQQ is one of the best ways to do it.
Patience
It’s all a patience game, I have some really good entries on a bunch of things, and now I just have to wait for things to play out, and manage my risk from here.
Stream 82 ($TVIX still has 50% of downside! Mar 10, 2020)
Choppy / Down Markets:
Remember guys, after 2 1/2 weeks of insanity and literally 3-5 really good opportunities every day, now is the time to wait for things to settle, wait for things to play out. Every day is not created equal in the markets. Don’t do anything stupid, out of boredom.
Stream 83 (I’m turning BULLISH again on some of the virus names? Mar 11, 2020)
Swing Trading Wisdom:
Sometimes chasing strength is the best thing you can do.
It’s a patience game, it’s all about waiting.
Market Sentiment:
Markets haven’t been able to put in any kind of bounce yet (Mar 11, 2020), from these pretty oversold levels, so if anything could happen, we could easily take another dump. Look at the SPY weekly chart, the 200-weekly has been a big support level for the whole bull market pretty much, it could easily test this thing, and undercut it, so down another 5-10% easily.
$SPY - Weekly Chart
Stream 84 (A MILLION DOLLAR LOSS on $TVIX. – still up on the month. Mar 16, 2020)
Market Sentiment:
For my sake and for the sake of all the traders who are liquid right now, I hope we get a 1987 type of crash. Go down another 10/15% from here, in one or two days, that would be insane.
Trader Psychology:
I’m not a fan of all the trading psychology books. The thing is, if you have a successful trading methodology, a system that works, you don’t need any trading psychology. Just focus on the system, when it works, when it doesn’t work when you should push, when you shouldn’t push. Just focus on the setups and the systems. Develop something that works for you.
This is very similar to Lance Breitstein's reasoning why trading psychology isn’t the most important thing to focus on early on in your trading career. I recap on his explanation in my previous post below.
If you are scared, don’t trade. That’s a very sound strategy. There’s nothing wrong with not trading. There is nothing wrong with not trading.
Mental Attitude:
In trading, you always have to reframe things in a positive way, because you are going to have some incredible setbacks, all of us. The only thing that is guaranteed in the financial markets are hardships and setbacks, and it’s how you handle those that determine your future success. So that’s why I’m trying to reframe my big loss in a positive way.
Position Sizing:
Position sizing, well generally, intraday I can be heavy, I can have 50-100% of my account in a stock, I rarely do, but I always have stops in place, automatic stops.
Position Sizing Overnight:
But overnight, my rules are generally 10-20% of my account. I rarely do more than 20% of my account in any stock or ETF.
Pyramiding:
Yeah, I pyramid all the time, I always pyramid into winners, that’s how you build size in something, you don’t go 100% short out of the blue. No, you start in, as it starts working you lower your stops, you add more, then as it starts working you lower your stops, you add more. That’s how you do it, when I use size I always pyramid it, I never do it out of the blue.
No, I never average down. You should only average up, you should pyramid up not down, if you pyramid down you’re gonna blow up sooner or later, that’s just how it is.
Taking Losses:
Right now I’m not happy about it (taking a $1M loss), dollar-wise it’s the biggest but percentage-wise I’ve been through much worse. In my early days, I had instances where I lost a big chunk of my account in a couple of hours, so this is really nothing, you have to look at the positives, and the fact I’m outperforming 99% of all market participants. And I’m really certain the lower we go there’s going to be an enormous bounce, we just don’t know when.
$1 Million Loss
Choppy or Down Trending Markets:
Not a lot of things to do right now, everything is trading very correlated, there’s no point in looking at individual names at this point. Right now, in this kind of market environment, it’s more important to get the overall market direction right, rather than buying the right stock. So it’s better to do ETFs only.
Trading Books:
I have like a hundred trading books, these are the best: How to Make Money in Stocks: A Winning System in Good Times and Bad, Reminiscences of a Stock Operator, Market Wizards, Trend Following.
Stream 85 (Many large cap leaders down $35-40%+. Huge opportunity or a trap? Mar 18, 2020)
Swing Trading Wisdom:
I try not to speculate because I really have no idea about things like that. I just try to trade the price action.
Market Sentiment:
It’s just a patience game. I think there is going to be some incredible opportunity in the future, but right now it’s just about not doing anything crazy. I think once the market stops going down on bad news, or even starts going higher on bad news, that would be a good sign. Right now, the market takes a dump every time there’s bad news, and we really haven’t had any good news.
-F4VS
Index:
Stream 81 - 85 [Mar 2020] - Notes
Hi, what do you think about the Qullamaggie approach vs. Pradeep Bonde / Stockbee? I'm trying to learn an effective swing trading strategy based on charts, rules, price action, etc., to break my time-wasting addiction to watching YouTube stock tips vids about the hot stocks for the next month or year, etc.