Recently, watching the market has made me like observing one thing more and more:
Who’s in a hurry.
That sounds a little strange.
Shouldn’t trading be about who’s buying and who’s selling?
But many times, what truly drives sharp price swings isn’t that everyone suddenly turned bearish.
It’s that some part of the capital suddenly has a reason they must sell.
It could be a stop-loss;
It could be leverage;
It could be a redemption.
Or it could simply be that at month-end or quarter-end, positions need to be rebalanced.
So you’ll notice that some sell-offs look especially brutal, but fundamentally, not much has actually changed.
As the price keeps sliding, sentiment gets worse and worse. Social media starts flooding with posts, and everyone starts discussing, “Has the logic changed?”
But if you look back a few days later, maybe nothing has changed at all.
It’s just that the batch of people who were most急（in a rush) has already sold.
I think this is quite important for the market right now.
Because as more and more capital participates, the short-term impact on price isn’t only about being bullish or bearish.
There’s another issue: do you have time to wait?
A long-term investor can accept a sideways move for half a year.
But a highly leveraged account might not even be able to wait two days.
If you’re bullish on the same asset, the final outcome can be totally different.
So when I see the market suddenly drop sharply now, I actually wouldn’t ask right away:
“Has something gone wrong with the fundamentals?”
First, I’ll check:
Is there any major change?
Is there forced capital exiting?
Is there concentrated deleveraging and clearing?
If none of that is present, yet the price suddenly shows large volatility, then it’s worth observing for a few more days.
Because sometimes the market isn’t expressing a new viewpoint.
It’s just cleaning out old positions.
That’s also why I’m increasingly of the opinion that liquidity itself is a kind of information.
Before many market moves truly begin, it won’t first tell you, “I’m going up.”
It may only make it less easy to fall.
Once the selling pressure is gradually worked off, that’s when the price starts to change.
So don’t always try to guess the bottom at the first moment.
Sometimes, when the most desperate sellers leave first, you may be able to see more clearly.
#TermMax @TermMax
Who’s in a hurry.
That sounds a little strange.
Shouldn’t trading be about who’s buying and who’s selling?
But many times, what truly drives sharp price swings isn’t that everyone suddenly turned bearish.
It’s that some part of the capital suddenly has a reason they must sell.
It could be a stop-loss;
It could be leverage;
It could be a redemption.
Or it could simply be that at month-end or quarter-end, positions need to be rebalanced.
So you’ll notice that some sell-offs look especially brutal, but fundamentally, not much has actually changed.
As the price keeps sliding, sentiment gets worse and worse. Social media starts flooding with posts, and everyone starts discussing, “Has the logic changed?”
But if you look back a few days later, maybe nothing has changed at all.
It’s just that the batch of people who were most急（in a rush) has already sold.
I think this is quite important for the market right now.
Because as more and more capital participates, the short-term impact on price isn’t only about being bullish or bearish.
There’s another issue: do you have time to wait?
A long-term investor can accept a sideways move for half a year.
But a highly leveraged account might not even be able to wait two days.
If you’re bullish on the same asset, the final outcome can be totally different.
So when I see the market suddenly drop sharply now, I actually wouldn’t ask right away:
“Has something gone wrong with the fundamentals?”
First, I’ll check:
Is there any major change?
Is there forced capital exiting?
Is there concentrated deleveraging and clearing?
If none of that is present, yet the price suddenly shows large volatility, then it’s worth observing for a few more days.
Because sometimes the market isn’t expressing a new viewpoint.
It’s just cleaning out old positions.
That’s also why I’m increasingly of the opinion that liquidity itself is a kind of information.
Before many market moves truly begin, it won’t first tell you, “I’m going up.”
It may only make it less easy to fall.
Once the selling pressure is gradually worked off, that’s when the price starts to change.
So don’t always try to guess the bottom at the first moment.
Sometimes, when the most desperate sellers leave first, you may be able to see more clearly.
#TermMax @TermMax