Investodor Blogs

The similarities between music and stocks: our Q&A with a professional guitarist

05-08-2017 11:55 AM | By Investodor

Meet Mike DiBari. Or also known as @TradingLicks. He’s a professional guitarist in Cambridge, MA home to Harvard and MIT. He shreds any stage he steps on. Jazz, funk, blues, he jams. There’s more to this story, too. You won’t meet many people like DiBari. He’s also a trader. And he’s even developed his own trading indicator called the TVO System. The stock market is filled with interesting people and in this quick interview DiBari shows us how music and stocks connect. What similarities do you see between the stock market and music? Markets are like music in that by nature they have a predictable ebb and flow. For example, the 4 stages of a stock market cycle (optimism, euphoria, hope and despair), circle around much like the common verse/chorus/verse/bridge/chorus form in many musical compositions. Understanding the predictable nature of music makes learning how to play it much easier and the same goes for the stock market. Also becoming a great musician requires a lot of time and patience, and there are many hours of practicing (in the “woodshed” so to speak) before you can expect to perform well in front of an audience. When I set out to design a trading strategy, I follow the same methodology. You need to put many hours into studying and backtesting before you can expect any method to perform well for you. What is your favorite genre to play on the guitar? Do you have a favorite song? Blues is my favorite, but I also enjoy traditional swing and bebop jazz. What makes all those styles so fun for me to play is that I get to improvise. It’s a risky business sometimes, but nothing beats the thrill of performing on stage, not knowing exactly what you’re going to play next, and then hitting it just right. I also grew up with rock music, playing stuff by The Stones, The Who and Led Zeppelin, and even ventured into punk and alternative rock at one point. A band I was in once played a club in Boston on the same bill as the Smashing Pumpkins (they were a new band at the time and they actually opened up for us). There are so many incredible songs on my list, but if I had to choose, my favorite would be “We Can Work It Out” by The Beatles. The genius of the Lennon/McCartney collaboration is at it’s best on that one. The Fab Four is still my biggest inspiration next to Freddie King and T-Bone Walker on the guitar. What came first: music or the stock market? How did you get into the markets? I’ve been playing guitar since I was in grammar school, but I first got interested in the Stock Market after seeing Eddie Murphy and Dan Aykroyd in “Trading Places” (and after that Kevin Bacon in “Quicksilver”). Both of those movies made it seem easy enough, so down the line it left me thinking, I can do that. I looked into opening an online trading account a year or so before the financial crisis, and luckily, procrastination saved me from what could have been a pretty bad first investment. Eventually I did get around to opening that account, and in 2010 I started swing and day trading stocks. I had some winners and losers, but it was mostly a struggle. A few years later after whittling away over half of my capital, I decided to come up with my own approach. That’s when I came up the idea for the Total Volume Oscillator (TVO). The TVO is pretty cool. It’s awesome you made your own indicator. What sparked that creativity and what does it measure? But you also don’t have to give away all your secrets. Thanks Stefan! The idea came out of the necessity of the simple fact that other price indicators didn’t work, and believe me I tried them all. The time I spent searching was eating into everything I was doing; my relationships, music, you name it. I had to do something to keep my life from slipping away. I was trading all the time thinking that it would improve my skills, but it only made things worse and I finally had the guts and the sense to walk away from it for a while. It was then I realized that none of the strategies I followed had any backtesting to support their merit. After finally running some of my favorite strategies through extensive backtesting, I was surprised to find that even the most respected and widely used price indicators failed to deliver much accuracy or any substantial gains historically over time. Then I had the idea that maybe price was actually the problem, so I started backtesting only volume data. The results were like nothing I had seen before. Using only end-of-day advance/decline data, I was able to form an oscillator that represents a picture of accumulation and distribution in the market. And because volume is a leading indicator, TVO often shows this happening long before anything related to price. What has the TVO become today? Also how do you use your blog and website? Great name in TradingLicks btw. Glad you like the name! When guitar playing rivals trade licks, it’s like a musical conversation or a call and response if you will. Between the bears and bulls, the markets have that same kind of rivalry, and it’s a good thing because there has to be some kind of balance. TVO started out working well but mostly on longer time frames, so I came up with 2 shorter term indicators; the Heat Gauge (HG) and more recently the Issues Oscillator (IO), to balance things out across the spectrum. Traders can view the status of all three indicators at the start of each trading day at MyTradingLicks.com to get a read on how the market is now behaving and where it’s likely to go next. There’s also a buy and sell mode posted that we call our General Investment Strategy that traders can use as a guide for how to manage their positions. Members of the site get much more as they have access to our specific options strategies and trading signals. They also get a pretty cool position size calculator that takes all the guesswork out of how many options contracts to buy. What is your primary strategy today? Options? Stocks? Long-term? To keep things simple we only trade options on SPY. There’s never any lack of liquidity and slippage is minimal. One of the things I realized a while back is that stock picking and timing the market do not mix very well together. You can have a great read on market direction, but if you’re in the wrong names of equities, it won’t help one bit. And the levels of volatility are so varied across the board of most stocks that it’s nearly impossible to backtest and come up with any kind of reliable system results long-term. The “focus on one thing approach” with SPY options goes along well with the whole philosophy of tuning out the noise and other factors and honing in on just volume and market internals. It also keeps you away from the screen and helps keep your emotions in check and your stress level low. It’s been working for almost 3 years now, so we’re sticking to it.

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Update Regarding the CloudFlare Security Incident

05-08-2017 11:53 AM | By Investodor

Today we were informed by one of our vendors, Cloudflare, that they discovered and quickly fixed a potential security threat that affected many popular apps and sites, including StockTwits. We take security seriously, and while Cloudflare has assured us that it’s extremely unlikely that any user passwords were compromised, as precaution we urge you to update your StockTwits password in order to ensure that your StockTwits account is secure. If you have any questions or need any help please contact [email protected]

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The Cashtag Awards: The Stock Market’s First Award Show

05-08-2017 11:52 AM | By Investodor

Someone had to do it. The stock market needs its own award show. What was the chart of the year? 🚀 Who was the best trader to follow? 💰 What was the most outrageous call? ‍❗️ The list goes on. It’s almost remarkable no one has done this yet. But here we are. Swooping in to save the day. We’re going to bring you something incredible. Our plan is to give awards to the best people, companies, and stock market moments of 2016. Introducing the first-ever Cashtag Awards, taking place in New York City on March 30th. As part of Stocktoberfest East, the Cashtag Awards will combine social media and finance. Sit back, relax, and keep reading to see who’s been nominated. The ceremony will be hosted by Josh Brown and Howard Lindzon. Here are the finalists for each award category. They were voted by the community, and curated by a panel of judges. Let’s go! The Greatest Chart of 2016 When you think of 2016, what is the one chart that comes to mind? What was everyone sharing? A. S&P 500 Futures crash but then pop on the night of the election (remember this night? And how everyone felt?) B. $NVDA climbs more than 300% in 2016 and its market cap goes from $15 billion to $60 billion (NVIDIA in December) C. DryShips $DRYS spikes more than 1,000% in just a few days and creates pure market mania (yes it went from $3 to $100) D. Bitcoin climbs back above $1,000 (and what a year it had) Honorable mention: FTSE hits all-time highs after Brexit, Brazil Bovespa doubles from start of year to end The Most Talked About Market Story of 2016 There were some memorable moments in 2016. But let’s take a second to pick THE single moment that made the crowds go wild. A. The Trump Rally B. Brexit and its impact on the world C. The scandal and crash at Valeant $VRX D. Twitter $TWTR buyout rumors Honorable mention: Negative interest rates, the rally in semiconductors, the crash of Deutsche Bank The Content Crusher: Best Financial Blog of 2016 There are some great financial blogs and writers on the Internet. Who was your favorite in 2016? A. Matt Levine (Bloomberg View) B. Urban Carmel (The Fat Pitch) C. J.C. Parets (All Star Charts) D. Michael Batnick (The Irrelevant Investor) E. Morgan Housel (Collaborative Fund) F. Tadas Viskanta (Abnormal Returns) Honorable mention: Eddy Elfenbein (Crossing Wall Street), Jesse Felder (The Felder Report), Cullen Roche (Prag Cap), Ben Carlson (A Wealth of Common Sense) Financial Twitter Account of the Year If you’re on financial Twitter, who did you enjoy following and interacting with most? They made you laugh, made you share, or always had something interesting to talk about. A. @Stockcats B. @MichaelBatnick C. @Jesse_Livermore D. @WuTangFinancial E. @RampCapitalLLC F. @TheStalwart G. @Katie_Martin_FX H. @CarlQuintanilla StockTwits Person of the Year Who was your favorite person to follow on StockTwits in 2016? Did they produce great charts? Trade ideas? Pick your favorite. A. @CharlieBilello B. @HitTheBidRadio C. @JBoorman D. @JackDamn E. @HarmonGreg F. @AndrewNyquist G. @AnneMarieTrades H. @AlphaTrends Honorable mention: @Chessnwine, @CrossHairTrader, @Jlyonsfundmgmt, @TraceyRyniec, @DanZanger, @FinanceTrends Best Investment Fund or Advisor Use of Social Media Social media is getting really important. Especially for the investment industry. What firm or company did the best job in 2016? A. Ritholtz Wealth Management B. Pension Partners C. Bespoke Invest D. SentimenTrader E. AQR and Cliff Asness Honorable mention: Hussman Funds, Fabian Capital, JBL Wealth Advisory, Cambria Investment Management, 361 Capital, New River Invest StockTwits Rising Star of the Year New traders and investors are joining the markets each day. But only a few consistently grow and rise to the top. Who did that in 2016 on StockTwits? A. @ATMCharts B. @EvanMedeiros C. @Callum_Thomas D. @Trading4Living E. @1SimpleTrader F. @QuothTheRaven Honorable mention: @EveryTimeICash, @TXPlunger, @Sjosephburns, @OMillionaires, @Hedgopia, @SharePlanner The Best Stock Market Bot of 2016 Tell us who you think built the best stock market bot. A. @SwingTradeBot B. @TradeIdeasQuant C. @EstimizeNotify D. @Quantocracy E. @AlpacaAlerts F. @StockNews Honorable mention: @EarningsCast, @MarketCharts, @Zquant The Most Outrageous Market Call There were some outrageous things said and done in 2016. A. Carl Icahn buys $1 billion in futures on the night of the election (story here) B. Bill Ackman stays long Valeant (story here) C. Dennis Gartman says, “Sell The World” in June 2016 (video here) D. RBS says, “Sell Everything” in January 2016 (story here) E. Barron’s releases a cover that says “Here Comes $20 Oil” (cover here) The Market Meme of Year What meme was used the most in the stock market? A. Crying Jordan B. BTFD C. The 3:30 ramp D. Anything “Dow 20,000” Hat E. “To The moon!” F. Make (add anything stock market-related) Great Again! G. Under Armour and the Steph Curry 2’s Honorable mention: Galaxy Note 7 explodes, Apple kills the headphone jack, Chipotle e. Coli jokes, Ken Bone Chart Artist of the Year Who creates the best charts each day and week? It’s time to give the best chartists on social media some recognition. A. @AllStarCharts B. @KimbleCharting C. @Jlyonsfundmgmt D. @TraderStewie E. @CharlieBilello F. @JeffMacke G. @PeterLBrandt H. @MarkNewtonCMT I. @JohnKicklighter The Best Use of Social Data What company is using social media data the best to create interesting tools for journalists and market participants? A. Bloomberg B. TickerTags C. LikeFolio D. Social Market Analytics E. Buzz Indexes F. PsychSignal Best Stock Market Coverage What is the publication you turn to most for investing information? A. Bloomberg B. Investor’s Business Daily C. Business Insider D. Yahoo Finance E. Reuters F. MarketWatch

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