Something Weird Just Happened....

I started my trading career in early 2016, right as VRX was collapsing (S-O to people who remember Valeant Pharmaceuticals), and at the time, I knew basically nothing about the markets. My first ever trade was a junior gold miner called "Vista Gold Corp", (Still around as VGZ), and I remember being bitten with the trading bug the instant the stock shot up and I didn't need to take a part time job to afford stuff during the fall term of college that year. I destroyed a couple of trading accounts in the months following, making absolutely every rookie mistake in the book, but ultimately I got lucky and put every penny I had into Ethereum when it was $7.50. That turned out to be the best decision I've ever made, and it singlehandedly allowed me to create my own path, ultimately eschewing some soul sucking bank intern/associate job, instead starting at a salaried trader role at a Proprietary Trading Firm here in New York.

Knowing what I know now, I think I got very lucky early in my career (aside from being - basically - first to crypto) in one particular aspect of the markets: Equity Trading Volumes. Volume and volatility are the lifeblood of proper traders, and trading is HARD, or at least much hard-ER, when those market elements aren't present or are being actively suppressed. I was able to cut my teeth in 2016 when the markets were still rather volatile, trading volumes were high, and implied asset correlations were low. In other words, I learned on easy mode. If you take a look at the chart above, you will see that for nearly the entirety of Donald Trump's Presidency, equity trading volumes have been VERY, very low. Imagine every year being like 2020 in terms of action - that's how it was back in the day, & more. In 2017, the largest drawdown SPY had was less than 4%. 4% in the current market is 3 day's ATR.

I bring this chart to the reader's attention for three reasons. First, if you are someone who has given up on equity trading because it's been hard, come back! The water's fine. Traditional technical swing/day trading works a LOT better when volumes are high. It's likely that whatever you've read in a textbook and has failed the last 4 years has been working well this year. Second, trading volumes are in secular decline. This isn't good for active managers / traders, as it means that real market participation is declining and the majority of money is being sucked into passive vehicles - a bearish trend for hand trading to be aware of. Finally, the period from the election in 2016 until March of this year was an abnormality. Things will rebound, and while it's unlikely we will see another 2020 anytime soon, keep your head up! it's unlikely we will see a trump-presidency market type for a long time. Alpha-generating opportunities are abound right now, and you should be taking advantage of that. Extended bouts of volatility may return :)

Cheers!