Ataraxia Launch: Chaos Theory

My idea of launching this platform/community "Ataraxia" is to share my market beating philosophy and lead others who want to trade/invest independent of wealth managers and funds that simply invest in dink and dunk 7% annual return ETFs and then take management fees on top of that.

To start this new philosophy off, I thought I would try to put into words what exactly this weird thing I call "Chaos Theory" is in investing and trading. Basically, looking back at my 10ish years of active management and nearly 20 years of passive investing, I have noticed that I have beaten out market returns consistently, and almost always because of my erratic trading style.

Let's get one thing clear. No one can time the market.

No matter how good you think you are at analysis or technical charting, etc... it is simply not possible to bottom tick every investment. Most of the times, if not always you will be early to a bottom when trying to value invest. You look for things that are cheap and beaten down, but they always get cheaper.

The issue arises when you simply watch the boat sink, and do nothing.

I see this in almost 90% of active managers. They buy a stock they like, and that might actually have strong fundamental value, but it continues to sink, and they just sit back and watch. Then, once it stabilizes, you are down 20-30%+ and can't mentally get yourself to sell.

But you have to. At least in my way of thinking.

At the end of the day, your goal is to get the total number of dollars in your account up. It doesn't have to be pretty.

It comes down to a core concept I like to call "Share Multiplication". Simply put, if you really like a stock, you should be doing everything you can to acquire more and more shares every single day. (My whole thing is conviction > everything and diversification is the enemy of gains)

That doesn't mean putting in more and more capital and buying more shares, you don't even have to DCA. You simply have to make your money work. Let's take a few different examples.

The easiest way to accomplish this is scalping. If you have 100k shares of $ABC at a $2.50 average and it drops to $2.35, don't be afraid to sell. Once it drops even a couple cents, lets say to $2.30, you buy back in. If you sold all 100k at 2.35, you would have had $235,000 of proceeds, which you then reinvest at $2.30 and viola, you have 102,173 shares now. 2,173 more shares off the same capital for the ride up.

But you're probably wondering... what if it goes up after I sell?

And yes, that's a clear possibility. In an ideal world every time you went to scalp it drops after your sale and bounces back up after you re-enter... but this is not an ideal world.

That's why you have a toolkit.

A toolkit is your arsenal of tradeable vehicles that can be used to generate cash in your account.

Let's say $ABC bounced to $2.45 after my $2.35 sale, now buying back would lose me nearly 5,000 shares, so what do I do?

Forget about it for now. Go into your toolkit. You should have another, nearly identical stock that serves as your 1B for returns. In this case, $XYZ. You use your $235,000 to buy $XYZ instead now, and being that it is another nearly identical stock that fits your research criteria, you would be comfortable holding it, even if it loses in the short term.

As time passes, both stocks will move independently, and there is almost 100% certainty you will win.

If they both go up, well, you are making a positive return on your capital.

If $XYZ goes up and $ABC goes sideways or down, there you go, ideal scenario, you can sell off $XYZ for profit and buy more than your initial 100k shares in $ABC, all with the same exact capital.

Now if $XYZ goes down while $ABC goes up, you could be getting into a mess, and this has happened to me numerous times across my career as well. The key here is to not get emotional and chase $ABC, but to now shift your focus onto "working" $XYZ into your favor and starting the share multiplication process all over.

Alternatively, you can also do safer capital growing trades while waiting for the $ABC scalp to work, like writing options on a large/mega cap you like and are ok with potentially getting assigned. At the end of the day, keep that number on your account growing.

This probably sounds like a lot. And most of it probably doesn't click right away.

But it is far easier in practice, and that is why I launched Ataraxia, to lead others who are passionate and active in their investing and trading, to enhance their returns and ultimately, throw everything out the window, and keep that number growing.

Visit, fill out our onboarding survey, and join for free: https://ataraxiatrading.com/