One Current Market Observation:
Understanding market structure allows one to better understand why certain moves occur. The recent $CRCL IPO is a perfect example of what happens when you mix a constrained float with market euphoria and options flow.
One Nugget of Trading Wisdom:
Most price moves aren’t fundamentally driven. In the short run, market structure, sentiment, and liquidity are all far more important.
One Reflective Question:
How can you find edge from structural inefficiencies? How might one take advantage of constrained floats, IPO allocations, short availability, index rebalances, SSRM, lock-ups, etc?
One 1%-Improvement Idea:
Playbook the last 50 hot IPOs. Look for common patterns on the first day of trading, the first week, as well as 6 months out around the lock-up. One obvious edge? Getting allocations to IPOs.
One Reading Recommendation:
Edge sounds like this intangible topic and many might be confused by this month’s theme. Edge from market structure!? This article does a great job of breaking down the many ways a trader can find edge and is worth a read for traders of all levels.
Forget outcome. Let’s get better this month.
