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00:00Hello everyone. For the longest time, I thought smart money. By smart money, I mean the big banks,
00:04the prop test traders, the hedge funds. They probably are using some kind of ultra sophisticated
00:09PhD level black box model to make money, right? I'm sure some of them do because we've seen this,
00:13right? They use, they've got huge quant teams and army of analysts and algorithms that they claim
00:18that could give NASA a run for its money. But here's a twist. When I got to know a few
00:23folks
00:23who actually worked at these prop tests, senior analysts who sat at the war rooms of India's top
00:27institutions, what they actually told me blew my mind. They weren't always doing something
00:31hyper complex. In fact, a lot of the money they made came from doing very simple things,
00:36but things they do really, really bad, right? And today, I want to share one of those strategies
00:41with you. This is something that I call pre-results training strategy. It's very simple, it's repeatable,
00:46and it's surprisingly effective if you do it right, right? So I'll be doing a multi-part series on this
00:51topic. And in each episode, I will cover one of the smart money secret strategies. And in this first
00:56episode of the smart money secret series, let's dive into the pre-results training strategy.
01:00So let's get started. If this is your first time here, welcome. My name is Vivek and I'm a
01:06financially independent algo trader. This channel is all about building a community of algo traders.
01:09We discuss everything about algo trading using Python, building and backlisting trading strategies,
01:13market updates, and much more. Please do visit our community website fabtrader.in. Also,
01:17do check out my other YouTube channel, Fab Wealth, where I talk about my own financial
01:20independence journey and shared tools, methods, and strategies that help me achieve my financial freedom. Thank you.
01:29As usual, the details that I'm going to be talking through is part of the blog article that I've
01:33already written. So you can access this blog on our community website fabtrader.in. And if you go
01:37into stories, you would find this blog. Before we begin, let me set some background. I'm sure you
01:43agree there's always been a big gap between the smart money people and the small retail traders like you
01:47and me. The big banks and the smart money folks have three unfair advantages as far as I'm concerned.
01:51One is they have this massive network across the country. So they get to know information even
01:56before it hits the newsstand. Second thing is they have deep access to forward-looking information.
02:01Using the network that I just mentioned, they get to know information like future expansions of the
02:06company and the other plans that the companies have. Typically, these are information that are not
02:11readily available to the retail traders ahead of time. And the third advantage is the army of analysts
02:16who keep crunching data around the clock. That's one of the biggest strengths as well. So let's face
02:20it, we can't compete on scale with them. But I got lucky. I happened to meet a few people who
02:26worked
02:26inside two of the prop disks in the country. And these institutions are pretty big and they really
02:31move serious capital. To be fair and to keep my friend's identity private, I'm not going to be naming
02:36them. So what happened is after I met them in a convention where they had approached me personally on
02:41some work relating to the algo trading. Over the years, we became very good friends and we often
02:45discussed markets. And that is when I picked up some nuggets of wisdom from them. And it is during
02:50this time that I learned this strategy. It's called the pre-result strategy. And the best part is you
02:54and I, even as retail traders, can use it without needing any special tools or insider access.
02:59You see, these institutions usually start building positions before the results are announced.
03:03They don't wait for the headlines. They act before the crowd. So here's how we can also follow their
03:08breadcrumbs. You don't need really a lot of things. All you need is just curiosity, consistency,
03:13and a willingness to follow some simple steps that I'm going to explain right now. So let's see how
03:17this strategy exactly works. As usual, I want to point out that this is not an investment or a
03:21financial advice. This is done purely for educational purposes. And as it is, it's very highly risky to
03:27just start using the strategy in real world without proper research or backlisting from your side.
03:30So again, this is meant for educational purposes only and not an investment advice.
03:35Let's now jump into the action strategy itself. The strategy is pretty straightforward. It only has
03:39just five straightforward steps in it. Step number one is that you start tracking the upcoming
03:44results, right? So 10 days in advance, 10 to 15 days in advance. So if you ask me how to
03:48do it,
03:49there are a number of ways you can actually get the upcoming results, quarterly results from corporate.
03:52So one of them is to go to the NSE or the BSE websites. There's a separate page called the
03:56corporate
03:56announcements. I'd already done a video on this one where I've built a Python screener, which will
04:01fetch all the upcoming corporate announcements and then give you that list. So I'll put a link to
04:07that particular video. And if you want, you can automate this particular process where you can
04:10scan automatically, you know, announcements that are due for the next 10, 15 days and have it maybe
04:14send an email or send it to your Telegram channel so that you can automate this particular process.
04:18For people who don't want to automate it, want to do it manually, there are a number of websites that
04:21offer the same information. You can manually check them from time to time. One of the websites that I
04:24like personally is Sensible because the data is very clearly laid out there. So you can use one of those
04:29resources available online. I have a general appeal to make. Close to 80% of the people who watch my
04:34videos don't seem to be subscribing. As you're aware, this community is just one person initiative
04:38dedicated to help people on their fire and well-building journey. Running and maintaining
04:42this community takes time, effort and resources from my side. One way you could support this community
04:46is by subscribing, liking and also sharing this content with your friends. This will motivate me to
04:50do more such videos and keep this community alive. Thank you. The second and the most crucial part of the
04:56process is that once you have the list of companies that are going to be announcing their results in
05:00the next 10 to 15 days, now it's time to find out what the overall market mood is and what
05:04the news
05:06around it. The way you can actually do it is, usually people go into websites and search for it. It's
05:11not
05:11a very reliable source as far as I'm concerned and that's what I've been told also by the PropDisk guys.
05:16What my friends told me is that the news websites are not reliable because some of those articles are
05:20planted intentionally to misguide. So the things that I've been told and I usually follow are these
05:26three YouTube channels. You could also look at other ones, but these are the ones that I used to use.
05:30So what you're looking for is that search for the companies in question here and find out what
05:34exactly they are talking about. The key things that you need to look for is just the positive
05:38sentiments that comes out of the video. It has to be majority sentiment, it has to be positive.
05:42That's very, very important. How you can find out is they typically use words like expect to beat
05:46estimates, strong revenue growth and all that. So you need to get that vibe that it is
05:51majority positive and even if you get a say some sort of a mixed or a negative thing,
05:54then that particular stock is not for you. You just have to skip that trade.
05:58And the third step, which is also very, very crucial. This is one thing that the big bank guys
06:03look for is that they want to actually see a big correction in the price, you know, 10 days,
06:0715 days prior to the announcements being made, because these guys look for a healthy dip before
06:11they invest anything. That's what sets us apart, right? I mean, typically these guys want the lake to dry
06:16up so that they can go in and fish, swoop the entire fish in. Whereas retail traders, we look for
06:20a lake that is
06:21brimming with water and then we go and sit with our fishing rods and try to fish of one or
06:26two
06:26fishes out of the big pond. That's not how they operate. They want the price to go down. They
06:29want a healthy correction to happen before they start investing. So all you need to do is just
06:3315 days prior to the announcement is made. You've made sure that the overall sentiment is very positive
06:38in the market. And number three is that the third important, most important non-negotiable item is
06:42that you have to see a healthy correction happening in that stock. And only if these two conditions are met,
06:48then this particular candidate becomes ready for trade. With all the necessary conditions in place,
06:53typically we go by 10 days prior to the results date and then hold on to that position. In terms
07:00of when to exit, you typically exit, for example, if the announcement is happening tomorrow, you exit
07:04by end of date today. That's how it happens. Or if you want to hold it for a little bit
07:09longer,
07:09mostly the announcements are made post-lunch. So you can actually hold it until noon next day.
07:13But I would suggest that one day prior, this is probably the best way to get out.
07:18If you haven't joined our Telegram group, please do so. I share market insights,
07:22algo trading tips, and new video notifications. And this way you can stay up to date with our
07:25community news and events. The strategy rules feels a bit confusing. Don't worry,
07:30I'll explain it on a live chart. This is Solex Energy. This red line here is where the earnings
07:34announcement data is. And then 10 to 15 days prior, we typically start our journey. We look for two
07:39specific conditions. One is you check the YouTube channels that I just talked about,
07:43find out what the overall sentiment is. And if the sentiment is positive, that's first criteria
07:47checked. The second criteria that you need to look at is there needs to be a proper correction
07:52happening prior to this. In this case, the price correction has already happened close to about 30,
07:5535%, which is really good. So with both the conditions set, we make our entry during the 10 days
08:00prior the earnings announcement is made. And then you see this rally happening. And we typically get out
08:06on the day prior to the announcement at this point in time. And then as you can see,
08:10on the announcement day, the price starts falling. So this is the result day, and this is where the
08:14reversal happens. So this is the alpha that we're trying to catch. And in this case, I believe it is
08:19about close to 35% rally. And if you ask me, what is the psychology behind it? Typically, the retailers,
08:29they look at the results, and they look at the rally. And this is where most of the retail
08:34traders enter. And this is what happens to them, right? Whereas the smart money already is, you
08:38know, they basically play on anticipation, they entered at the right time, and they made full use
08:42of this. And what the retail traders are only doing is providing liquidity for the smart money to get
08:46out, right? They're all buying the retail, the smart money is all trying to dump the shares. And you
08:51know, the retail traders, most of them, they buy and provide liquidity for them to get out.
08:55So that's why it's usually said that the smart money sells the news and retail traders kind of buy the
09:00hype here. And typically, that's what happens to most of us, right? So what some of the some of
09:06the questions that might come up is what if the you know, the stock continues to trend and go up,
09:09right? It might, but we try and avoid that. Because in most cases, the 90% of the time,
09:13this is what happens. In a few cases, for example, if you've observed Bajaj Finance recently,
09:17when the old market was, it was a bear market, Bajaj Finance alone was the lone stock that kept on
09:22going.
09:22And even if you look at their announcement date, even post announcement, the stock started rallying
09:27much further. But you know, the exceptions don't become rule. This is the rule that is you you
09:31try and get out the day before the announcement is made. You know, that increases your chances of
09:34winning. Similarly, there are a lot of profitable strategies post results as well, I will try and
09:40cover them in the future videos. If there is enough interest for this video, there's enough engagement,
09:44then I'll probably, you know, do those videos as well. At least there are about two or three different
09:48variations of the strategy where you could do some trades post results as well, which is very
09:53profitable equally. So I'll cover them in the future. There are a couple of things that you
09:57should avoid as well. Do not use the strategy on the public sector undertaking stocks. There are a
10:02number of them, although they post good results, it's highly risky to trade on those ones. Because
10:06as you know, you know, these are controlled by regulatory changes and announcements from government.
10:10So things change very drastically whenever a policy announcement is made. So trading on these
10:14ones 10 days prior to the announcement is always very risky. Similarly, the second category of stocks
10:20that you need to avoid is once linked with the commodity, you know, while individual companies
10:23can do well, and then one global announcement or news could really derail all your profits. So you
10:28need to stay away from commodity-linked stocks as well. Let me just recap what I just covered here.
10:32Three key things, right? Number one, while retail traders react to the headlines, smart money is
10:36already halfway to the next trade, right? Number two, the edge isn't in chasing news items, right? It's
10:40basically anticipating it, right? Number three, it's an understanding expectations, watching for
10:46accumulation and exiting before the hype really sets into the market, right? So those three things are
10:50what you need to take away from this video. At least that's what I learned from my prop disc friend.
10:55And honestly, I'm grateful that he shared this particular secret with me because it completely
10:59shifted how I look at results season. This is just one of the smart money strategies. I plan to cover
11:05the rest of the ones in the series. If you found value in this one and want to learn more
11:09ways to trade
11:10alongside institutions and not behind them, then definitely please hit your like button,
11:14subscribe, and also stay tuned for the next one. Until then, keep it simple, stay curious, and
11:19remember smart money doesn't always move fast, it just moves early. Thank you. If you genuinely found
11:24this video useful, please consider subscribing and liking the video, and I will see you soon
11:27in another video. And until then, take care and happy trading.
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