Jimmy Balodimas is one of the successful traders from a New York-based securities and index trading firm who uses a very interesting trading strategy. Most traders hesitate to go short in a rising market, but not Jimmy. Jimmy does not use fundamental analysis in his trading. The reason he doesn't use fundamentals is because they don't match his trading time. He buys when the market is bearish and sells when there is a simple rising rally. He has never had a losing year in his entire trading career. Many people would be amazed at how he can make consistent profits by constantly trading against the trend. In 2011, when crude oil prices were rising due to the conflict in Libya, and the stock markets began to panic, then he began to sell crude oil futures.
Prior to the heavy selling, the stock market had been in an uptrend for three months. Balodimas felt that the stock market had been rallying too long and he kept going short while the market was making new highs. When the market began selling due to falling demand for oil, his positions began to turn into money. The reason for his entry with short orders was that the market had gone up easily the week before and was short of supply. He received confirmation from the sentiments of other stock market traders, which were never different from his own. He watched TV and read newspaper articles to gauge the mood of the currency and stock markets. At the beginning of his trading career, he had more scalping positions, but now he has become a more mature trader. Most of the time he opens orders early to make sure he has the right trading strategy, he starts with low volume orders.
He mostly finds solace in situations that unnerve many stock traders. Whenever the market moves in his direction, he closes some of his orders so that if the market reverses, he will have orders open with less volume. He does this even if he believes that the market will move in his favor at the expense of higher margins. Not all trading firms will suit this strategy, but since Jimmy has proven to be consistently profitable, he has been given more leeway. Jemmy has been in the stock market for a long time and now his trading has become very mechanical and his intuition has become very strong. For example, Jimmy bought a stock that was trading at $35/share, a few days later it dropped to $19/share, and his average price was around $22/share. He bought shares for seven hundred and fifty thousand dollars and lost about five million dollars during this transaction.
His boss was very concerned about this, but he convinced his boss that he knew what he was doing. The price traded near his stop loss but didn't touch it and moved above his average price. The next day, he closed all his positions right before the market crashed, and ended up having the most profitable month of his career. The reason for the deal was that the massive selling that took place in two hours signaled a panic in the market. Jimmy had many positions that caused him to lose a lot of money, but he didn't capitulate. Balodimas was influenced by the movie Wall Street when he was in high school to start trading. He started working for a stockbroker when he was in high school and took a month-long trading program taught by Simon Long. His hard-working parents were immigrants and inspired him to learn how to make money.
After the course, his friends got into the banking industry, and he went to trade in a prop firm that specialized in the stock market. It was in this firm that he learned to keep track of open positions and daily profits and losses. The reason why he is so successful is because from the very beginning of his career he focused all his attention on successful trading and sacrificed most of the things his age group was doing at the time. As an exception, he once suffered a seven million loss on a developer's stock in a month, but broke even three months later. During the dot-com stock bubble, he sold during an uptrend. It was irrational to him that the markets had risen so much in such a short time, and his intuition told him to sell. During the dot-com era, risk was reduced by selling technology stocks rather than Internet stocks, which were more volatile, and the markets had a habit of opening much lower, which gave him the opportunity to adjust his open orders.
Because hedge funds have become so dominant in the stock market than they were in the early 2000s. He noted that stock markets are unlikely to open significantly lower than the previous day's close. Jimmy's stock trading strategy is to never buy and sell the market at the same time, but accumulate small profits over time. Jimmy admits that he is not perfect and is sometimes tempted to try and milk the market in one trade, but he is constantly working to suppress that feeling and control his emotions. He is used to looking for long-term trends rather than short-term trends because he believes there is a lot of noise in short-term market movements. As Jimmy enters higher time frames, he is sometimes out of money in the long run. He can quickly enter and exit positions on smaller time frames to reduce losses. For example, suppose the market is up five percent and he sells nine million shares, but could end the day in a profit thanks to the small positions he took during the trading day.
When he was a beginner trader, he had stocks that he liked to trade. But as he matured in stock trading, he didn't care where he made his money. He invests money where there is an opportunity to earn. He prefers to sell rather than buy, because he feels that there is more hype in short positions, and it is difficult to maintain energy in price growth. Jimmy divides stocks into those he wants to go long and those he wants to go short, and then waits for trade signals to enter. A trading signal can present itself as a price change in a group of stocks. For example, car tire stocks were on his shopping list and other auto parts stocks were in an uptrend. But the share price of car tire makers remained unchanged as stock volume surged ahead of the earnings day he saw. This trading strategy allows you to position yourself as a bull.
Jimmy's strategy requires him to constantly monitor stock prices, especially when he is scalping. He does not plan to become a full-time stock trader in ten years as he explores other lines of business such as film production and technology. The way Jimmy trades involves considerable risk and requires the individual to know what he is doing, as well as having sufficient trading experience and patience. Balodimas teaches us to always be able to adapt to new trading conditions. He realized that hedge fund dominance was increasing, liquidity was rising, and this made it difficult for him to get out of positions on a pullback when he entered trades early. This was a trading signal that his stock trading strategy needed some tweaking. His solution was to place smaller positions first until he became more confident with scaling. Since human nature strives for consistency, most traders are not comfortable changing some aspects of their trading strategies to accommodate the changing market environment.
Jimmy has learned to avoid the euphoria of the market, and this works wonders for him. Personally, I would never advise anyone to counter a market trend because of hints that the stock market is in a panic and will reverse. This requires timing and emotional control, which can only be achieved with experience. The trader is advised to take some of the profits or liquidate their position entirely rather than looking for a reversal in a strong rally.