Appendix A Ten Things To Make The First Day Successful: Fill & Download for Free

My original plan was to go with a fairly simple rant: yes, Nintendo’s stock is almost certainly overvalued — likely wildly so. But then I realized there might be a more useful approach to consider.As such, what follows is really more of a public education piece, meant to help laypeople understand how stock prices can reach irrational heights, and why this phenomenon matters more than you might think.To make this as interesting and painless as possible, I’ve created a separate appendix to get into the really technical details — for those who may wish to either learn more or challenge any of my assumptions. See footnote markers where applicable.Let’s begin with the conclusion.Over the six months prior to the launch of Pokemon Go, Nintendo’s total value as a company was never priced higher than $22.3bn (all figures in US dollars).As of Friday’s market close, that number had increased to $37.2bn — which is to say that the game’s release has added some $15bn to the company’s perceived value. [1]Is that a fair increase? No. In the ballpark? Not even if you’re Babe Ruth on steroids.What would be a reasonable lift? My analysis suggests somewhere around $5bn — which implies that we have no less than $10bn in missing value to account for.Addressing the real pocket monsters.Now, you might be thinking “sure, that’s interesting and all, but it has nothing to do with me”. You didn’t go out and buy Nintendo stock. This is clearly someone else’s problem.Except it isn’t. Because, unbeknownst to you, it’s very possible that you do indirectly own some of those shares — and the eventual correction is almost certainly going to impact your personal pocket book in some amount.While only 55% of Americans personally invest in the stock market, it’s more or less impossible for your financial future to not be tied up to its fate. Huge chunks of the market are owned by 401ks and other pension, insurance, and social security funds, several of which you probably contribute to and one day hope to draw from.For bonus points, guess which types of investors are usually the surest to get out first when a correction begins? Guess who usually eats the eventual losses?The anatomy of a $10bn mistake.It’s tempting to read all the articles gushing about the unprecedented success of Pokemon Go and to think “gee, this really seems like a sure thing”. But, as always, the devil is in the details.The first misconception is that Nintendo somehow makes the lion’s share of profits from all those in-app purchases. So, when you hear estimates that suggest Go’s revenues might reach the billions, it seems obvious that Nintendo is about to get paid.But here’s the thing: Nintendo didn’t make this particular game, nor does it own even a majority stake in the Pokemon franchise as a whole.The corporate structures get complicated, so I’ll save the boring stuff for the appendix [2], but as a quick summary:Nintendo owns a little over a third of The Pokemon Company (TPC).Both Nintendo and TPC own a small chunk of Niantic, the developer of Pokemon Go.Both Nintendo and TPC also have assumed royalty deals with Niantic (i.e., they make a certain % of Go’s revenues on top of a share of Niantic’s profits).What does this all mean?To the best I can calculate it, for every dollar that Go brings in, a max of 23 cents makes its way back to Nintendo. [3]But that’s still billions, right?The Last Next Big ThingLet’s say that Go does continue to re-write the record books, and in magnificent fashion. What kind of ceiling might it have?For comparison, let’s look to Supercell, the Finnish studio that brought us Clash of Clans, Clash Royale, Hay Day, and Boom Beach. The first two are mainstays among the top 5 grossing apps on both Android and iOS, and the other two fluctuate in the 10-25 range. There is no other competitor with even close to those kinds of results.Combined, Supercell brought in around $2.4bn in revenue over the last year.So, let’s get super aggressive here and suggest that Go can bring that much on its own, which would be $6.5m a day (or about 5x what it’s doing right now).Using our 23 cents-on-the-dollar formula, that would mean $528m in revenues for Nintendo.Bottom Line ValuationsEven that number still sounds like a lot. And it is, in a way. But we need to be more than impressed by it. We need to understand what it should fairly translate to in terms of a bump to Nintendo’s stock price.There are many valuation formulas out there, each of which has contextual applicability to different business types. For simplicity’s sake, we’re going to use a watered-down version of one of the most common benchmarks: price/earnings.P/E just needs two data points: how much your company’s stock is worth and how much profit you expect to make. You divide one by the other, and you get a number that essentially tells you how expensive that stock is in relative terms.For comparison, most big companies have a P/E in the 18 range. Apple’s is currently around 12 (quite cheap) and Facebook’s is around 72 (quite expensive, as analysts expect they have lots of monetary growth still ahead).What that formula gives us is a rough framework for estimating the connection between earnings and stock value in the context of the time it takes to “repay” investors for their original stock purchases. If the P/E is too high, it’s likely a bad deal. If it’s quite low, we have a buying opportunity.So, let’s work backward from that $15bn lift in Nintendo’s valuation. Using an average P/E like 18, that would imply an increase in annual profits of around $835m.Remembering that our absolute top estimate for new revenues from Go was $528m, there’ still a pretty big gap.But it gets much, much worse.The Bottom Line is the Only LineThere are two problems in play:Revenues are not profits. At best, that extra $528m that Go brings in is going to get cut in half by in expenses and taxes, leaving only $264m.A P/E of 18 is way too high for mobile games. That formula was designed for companies that see relatively consistent revenues and margins year over year, like TV networks and deodorant companies. Games, meanwhile, have a defined shelf-life. And the success of one has little bearing on the success of the next.Even if Go proves to be the best and stickiest mobile game ever made, for how many years can it bring in $500m or more? The Pokemon franchise has done extremely well over time, but gravity has a better track record. New installments will need to be developed, most of which will only be as successful as the historical average.But let’s be (excessively) charitable and say Go manages to reach and maintain its highest potential for five years without dipping at all financially.$264m x 5 years = $1.32bn.So, how do we get from there to $15bn?The Bigger, Rosier PictureI’ve read a lot of breathless reports on Nintendo and Go, and all of them can be boiled down to some combination of five points:Pokemon Go will make a lot of money.Nintendo will sell a lot of Go Plus wearable gizmos.The success of Go will lead to increased merchandise sales.Nintendo has more mobile games in the works.This is going to lead to a global expansion for both Nintendo and Pokemon.We’ll address each of those points in order. But first, let’s paint a quick picture of Nintendo’s finances as they stand today (just to help us understand how realistic these growth assumptions may be).2015 Benchmark ResultsAll details pulled from Nintendo’s most recent annual report (April, 2016):They brought in about $4.6bn in gross revenues over the last year.They made a 3.3% profit off that, or $150m in net income.Just 3.1% of their revenues came from outside Japan/Americas/Europe.They sold 6.8m 3DS units (with 48.5m games).They also sold 3.3m Wii U consoles (with 27.4m games).You’ll notice something particularly glaring about those numbers: the great Nintendo empire — despite all its games, devices, franchises, and merchandise streams — only made $150m in profit last year.And we’re suggesting that Go alone could bring in $264m? You see why I’m skeptical.(Oh, and one more fun fact from that report: Pokemon Go wasn’t even included in their 2016 revenue forecast. Which makes me deeply question how much of a royalty stake they really have in it.)OK, now time to address those other growth myths.Like a Pokemon Watch, But Less UsefulSurely you’ve seen the ad for a Go Plus band by now — a cheap piece of plastic on a cheaper plastic band, with one button, no screen, and a $34.99 price tag.Had said wonder come out at the same time the app was released, I could see an argument for strong sales. Given that the game itself was free, I have no doubt that at least some people would have bought one.That said:This is typically the sort of retail good that parents buy for their kids. But, by and large, those playing Go aren’t kids (who either don’t have data plans or aren’t given free range to wander around the neighborhood alone).The largest demographic of active players is millennials — a generation notorious for being broke and being allergic to paying for things.The unit itself has a very poor value-case. All it does is vibrate, and it reportedly only lets you catch pokemon you’ve already captured before.It isn’t likely to sell well in emerging markets given the relatively high price-point.It still won’t be available in significant quantities for weeks, if not months. That gives players plenty of time to get used to life without it, to get bored of the game entirely, and/or to read early reviews of the “lucky” players who managed to snag one, many of whom might report it as not worth the money.Given the massive quantities that stores are now ordering, I’m actually half-convinced that Nintendo might risk facing an inventory return issue.Even if they do manage to sell out in record quantities, we’re still only adding tens of millions in profit once you factor in manufacturing and logistics and taxes.Hyper-optimistic projection: 10m sold at $5 net profit each for 5 years, or $250m in net value to the company’s stock-price (we’ll add all these numbers up at the end).But T-Shirts Though?Merchandise is never quite as valuable as we think it is. Sure, we see all the Star Wars blankets and pajamas and novelty mugs out there. But we often forget that licensing companies only make a fraction of every dollar we lustily fork over.In sum total, between clothing and game licenses and movie re-runs and trading card sales, The Pokemon Company brought in $2.1bn in 2015.That’s good enough to make it the 29th most valuable franchise worldwide. By comparison, Disney brings in about $4bn a year from physical merchandise (though they also have other much larger revenue streams from theme parks and TV networks).Could Go’s success lead to an explosion of adult onesie sales? Probably. But it’s not like Pokemon ever ceased to be popular, nor are most Go players new fans. While merchandising will see a lift, it’ll be fairly modest on the whole.(An important factor here is the lead-time involved in new merchandise. It can take up to a year to sort out partnership agreements, get goods manufactured and shipped, have new shows filmed, etc. Overall, it’s more likely that people will buy a t-shirt from someone who can sell it today, who may not even be a licensed vendor.)Hyper-optimistic projection: total brand revenues go up by 50%, equaling an additional $1bn for each of the next five years (at a 30% margin), which implies $1.5bn in increased share value … to TPC, not Nintendo. Dividing that number by 40% (Nintendo’s rough share of TPC), we’re left with just $600m.First App of ManyThis is the most common argument I’ve read. But I’m not sure it’s a good one.True: Go is just one release from a slate of no less than five. Nintendo is committing to mobile as part of their next-gen strategy. More titles are already in development.Also true: the first app of that cycle was not actually Go, but rather Miitomo. Never heard of it? Join the majority of westerners. It was a would-be social network that flopped. It was niche, fadish, and strange.It peaked at 10m downloads, but more recent surveys suggest only 25% of those users still open the app — a number almost certain to drop even further.The scariest part? Miitomo was developed, not by Niantic, but by DeNA — who just happens to be the partner in charge of the rest of Nintendo’s forthcoming titles.(Unhelpfully, the next two games up, Fire Emblem and Animal Crossing, are non-premier brands. At best, they’ll enter a crowded market with a mid-sized core audience waiting for them. At worst, they’ll be less compelling versions of games that existing fans can play without in-app purchases on the devices they already own.)The mobile game market is big and growing, but crowded and finite. People only have so many hours in a day, and console gaming and TV aren’t going to give much more ground. Competition is intense. A good title alone isn’t enough anymore.For the moment, Supercell is king of the ring. Before them, it was Rovio and OMGPop and King Digital. If we can learn anything from history, it’s that staying at the top takes more than the right brand. Games have to simply be better, which requires prescient understanding of the market. I’m not sure DeNA’s Nintendo titles will deliver that.Also, Speaking of DevicesI’ve heard much talk about Nintendo becoming a mobile-first licensing company.That seems to be an over-statement. I see mobile as an experiment. It may turn out to be a very profitable one, but there’s a reason that Go wasn’t mentioned in Nintendo’s 2016 forecasts. It was always just another stream, peripheral to their real aim.Where Nintendo does expect to see a lot of money come in is from their Spring 2017 release of the Nintendo NX, a platform strongly rumored to combine the 3Ds and Wii into one unified gaming system.This makes a lot of sense. Remember how Nintendo has made their money for the past 30 years: selling consoles as a means of selling exclusive games. It’s worked well. They’re on the end-cycles of both the 3DS and the Wii U and they still managed to sell 10m combined units last year along with some 75m games.Why would they cannibalize that? Sure, mobile might end up becoming an increasing part of their future. But do you believe they’re willing to jeopardize the success of the NX along the way?Against the Darkness, an UpsideTheir mobile strategy does make sense in one specific context: growing a new audience overseas.As mentioned above, only 3.1% of Nintendo’s 2015 revenues came from Asia and Africa combined (Japan excepted). And there are plenty of fresh players to capture in Europe and South America, as penetration there has been limited and recent.Overall, there is no doubt that Go will help open up those markets, especially in terms of countries on the development bubble (where a $279 NX might be out of reach but a freemium app wouldn’t be).That said, my optimism has limits. While the potential is certainly there, I see no compelling reason why Nintendo and DeNA will be more successful in this arena than any other developer has been. Historical results mean little, and most of the franchise titles Nintendo leans on in North America have no resonance overseas.(Also, surprising as it might be, Nintendo only has two true blockbuster properties. Mario has sold over 500m games. Pokemon is now past the 300m mark, with help from the freemium Go app. But how many more of their titles have crossed the 100m barrier? Zero. Not Zelda. Not Donkey Kong. Not Smash Bros.)All this in mind, I think it would be generous to assign them Supercell numbers here again, allowing that their other global mobile revenues, at best, will be similar to the top end for Go itself. Though, because they won’t have to revenue-share as deeply as they do with partially-owned Pokemon, they’ll at least keep a higher margin.Hyper-optimistic projection: 50% of $2.4bn in annual revenue over five years at a 35% margin = $2.1bn in added value.Adding It All UpSo, using projections that are optimistic to the point of stretching all historical norms and my personal sense of propriety, the max value we can assign to the launch of Pokemon Go and what it hints at as far as the “new Nintendo” is:$1.32bn (Go)$250m (Go Plus)$600m (Pokemon merchandise)$2.1bn (other mobile revenues)= $4.27bnSo, even rounding up to $5bn to account for inflation and other minor innovations, we’re still $10bn short.And, sadly, someone has to pay for that.PS - To respond to the idea that the stock-lift is just a sign of regained confidence that had previously been lost with the disappointing sales of the Wii U, I’d note that Nintendo shares haven’t been above $30 since May of 2011, about 18 months before the U was released.PPS - The market is continuing to go up. Between when I first began drafting this (Sunday night) and this note (late Monday morning on the Pacific coast), the stock jumped another 13%. Shares are now trading at $37.72, or a market cap of $42bn (which increases the jump from $15bn to a now total of $20bn).

Q. Do you have any links that teach the basics of day trading?[ TL:DR — See the Appendices near the end of this answer. ]“Learning” or “knowing” the basics is one thing — mastering the basics well enough to be significantly profitable over years, or decades is something else. . Also, the breadth and depth of what I consider to be “the basics” might be greater than what you were expecting, and the time necessary to master those basics might be longer than you were expecting.I recommend that you:Think first of learning and mastering the basics of trading as a broader subject, andThen later take a look at intraday trading as a special case.Many who are attracted to intraday trading may be better served by trading in timeframes of overnight, a few days, a few weeks, or a few months.I further recommend that you begin by reading this closely-related Quora Q & A:My son just graduated from college with a degree in business. He started day trading and wants to do it full time. What advice do you have for him?Next I recommend that you read the following two links — the first is a discussion of two well-known book authors and teachers of trading financial assets:Mark Douglas vs Van TharpHere's Why These Are My Top 5 Trading Books Ever -The following outline is framed in the context of trading stocks, but much of it can be applied to trading other assets such as options or futures.I recommend that you proceed slowly and methodically, and first read a few of the classic trading books by Mark Douglas, Van K. Tharp, William J. O’Neil, Richard D. Wyckoff, and others. . To expand your resources, I recommend doing a google search on “best stock trading books” and reading the reviews on Amazon. . See also Appendix A-4 near the end of this answer.———————————————If you want to be successful over many years, and remain successful over many decades, it is a deeper subject that it first appears. . The purpose of this outline is of the outline and introductory presentation below is not to prepare you to begin trading tomorrow or next week, but to:offer a roadmap and an overall framework for learning the subjectto present much or most of the vocabulary of technical trading in a logical, organized, and flowing manner.The numerous trading books, and other resources (including online educational resources) can fill in the details. . How long will it take you to begin trading successfully?How long would it take a gifted individual to learn how to trade stock efficiently?Following the Table of Contents are the text contents of each section.______________________________________________________________________________ Introduction to Technical Trading _____________Great passion leads to great investment of time and great perseverance.Great investment of time leads and great perseverance leads to great familiarity.Great familiarity — plus great discipline — lead to success.But the essence of your success is that you are consciously, passionately, enthusiastically engaged in the quest for ever-greater understanding your freely-chosen endeavor, “being in the flow”, and devoted to mastery of your chosen path.There is no perfectly reliable trading system, and there are few relatively reliable systems that do not frequently need refinement, or major modification, or possibly even periodic replacement.It is likely that a passion-driven, deep-studying, persevering trader can make considerably more than he loses — but it is only likely — there is no guarantee. . How do you feel about that?One definition of passion as it applies to trading is this:You want to do this so badly that you are willing to endure some losses [in a controlled, acceptable way] in order to learn what is needed to succeed.- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -_____________________ Table of Contents ______________________1 — Psychology and discipline are paramount. . . 1.1 — Four reasons to go slow with — or skip — trading. . . 1.2 — Top Ten+ rules to consider2 — Chart Basics: . Price, volume, timeframes ——————————. . . 2.1 — Chart timeframes: . Short-period vs long-period. . . 2.2 — Multiple timeframes (e.g., side-by-side). . . 2.3 — Contrasting price behavior in different timeframes. . . 2.4 — Comparing two timeframes: . The timeframe multiple3 — Chart Enhancements [C/E]: . Geometric, calculated, interpretative. . . 3.1 — C/E: . Geometric constructions. . . 3.2 — C/E: . Extensive complex calculations; . Indicators. . . 3.3 — C/E: . Interpretative. . . 3.4 — Chart Enhancements: . Which ones to use (if any)?4 — Choosing stocks to trade ———————————————. . . 4.1 — Pick better-than-average volatility. . . 4.2 — Pick b-t-a volume and liquidity. . . . . . 4.2.1 — Bid Price versus Ask Price. . . . . . 4.2.2 — Liquidity. . . . . . 4.2.3 — Volume: . Intraday Trading versus Swing Trading. . . 4.3 — Pick b-t-a average sector/industry strength. . . 4.4 — Consider picking some “Story Stocks”. . . . . . 4.4.1 — “Arch Rivals”. . . 4.5 — Consider picking CER-TOY-LAL stocks. . . 4.6 — Stocks versus ETF’s5 — Choosing timeframes to trade ———————————————. . . 5.1 — Lower versus higher timeframes. . . 5.2 — A gradual approach toward intraday trading6 — Scenarios, strategies, and setups ——————————-. . . 6.1 — Scenarios: . Eleven general cases. . . 6.2 — Move from a scenario, to a strategy, to setups. . . 6.3 — Be creative, industrious, and persistent7 — Test Areas — Fertile ground for strategies and setups8 — Test Area Setups and their classification. . . 8.1 — Test Area Setups — Three key criteria. . . 8.2 — Test Area Setups — Eight different types. . . 8.3 — A Test Area Setup can await a breakout. . . . . . 8.3.1 — Intraday Opening Range Breakout. . . 8.4 — Test Area Setup: . An excellent example9 — Tharp’s List of Setups. . . 9.1 — Example #1 (Tharp): . Failed Test Setups. . . 9.2 — Example #2 (Tharp): . Climax Reversal Setups. . . 9.3 — Example #3 (Tharp): . Retracement Setups [R/S]. . . . . . 9.3.1 — R/S: . Bullish or Bearish. . . . . . 9.3.2 — R/S: . 50% retracement setups. . . . . . 9.3.3 — A setup similar to a retracement setup. . . 9.4 — Tharp: . Seven additional types of setups10 — Trending versus Mean Reversion [ Tr vs MR ] ——————————. . . 10.1 — Tr vs MR: . Visible in every channel pattern. . . 10.2 — Tr vs MR: . Be on “constant lookout” for channels11 — Buy strength? . . . Or buy weakness?12 — * * * Learn and understand FIRST * * * Strategize SECOND * * *. . . 12.1 — A General View of Strategies and Setups. . . 12.2 — Don’t overlook Volume patterns13 — RRM = Risk and Reward Management ———————————. . . 13.1 — RRM: . Alternative ways to be profitable over time. . . . . . 13.1.1 — Examples of WMO versus WLM. . . 13.2 — RRM: . When to close a losing position?. . . . . . 13.2.1 — Cutting your losses: . A horse-riding metaphor. . . 13.3 — RRM: . When to close a winning position?. . . 13.4 — RRM: . Choices for beginning or novice traders14 — Position sizing and scaling. . . 14.1 — Limit position size. . . 14.2 — Scaling into (or out of) a full position —————————15 — System trading versus discretionary trading —————————. . . 15.1 — System Trading: . List of specific steps. . . 15.2 — Two different approaches to stock selection16 — Beginners: . Trade *with* the broader market. . . 16.1 — Trade *with* the associated sector . . . & assoc. industry17 — Statistics, updrafts, and drawdowns ——————————————18 — “Herd logic” versus “Contrarian logic”19 — Intraday trading as a competitive, zero-sum game20 — How will you think about “the market”?21 — “Just watch charts”, and ideas will come to youAppendix A-1. . Eight Types of Test Area SetupsAppendix A-2. . List of stock-trading related web linksAppendix A-3. . List of some informative Quora Q&A’sAppendix A-4. . Links That Discuss Strategies and SetupsAppendix A-5. . Checklist for engaging in intraday tradingAppendix A-5. . List of important topics for further studyAppendix A-7. . Buy-and-hold Investing — Fundamental Analysis———————————————-1 — Psychology and discipline are paramount“Bulls can make money — Bears can make money — Pigs may get slaughtered.”“The biggest edge an individual can have in any form of trading is risk management and emotional management.”“Being a successful trader is not about winning big, it’s about losing small.”“The whole secret to winning in the stock market is to lose the least amount possible when you’re not right.” — William J. O’Neil“The second secret to winning in the stock market is to not leave far too much money on the table when you are right.” — William J. O’Neil did not say exactly these words, but has almost certainly said something very similar.“Eighty percent of success in any endeavor is showing up, practicing earnestly and intelligently, and persevering.”IMHO, profitable trading is:40% cutting losses — strictly, unfailingly, efficiently, automatically, mechanically, without hesitation, calmly, unemotionally — in accordance with a detailed, sound, written trading plan30% being patient with winners — in accordance with a detailed, sound, written trading plan. . The most successful traders are generally those who are willing to:. . . “ride some disconcerting waves” or “ride the skittish horse”. . . witness, suffer through, tolerate and endure a few ups & downs, pullbacks (when long) or unfavorable-upmoves (when short), stagnations, and/or plateaus, during the course of many of most of their profitable trades.20% developing AND maintaining effective trading setups that are spelled out within a sound, written trading plan10% everything elseIn this outline, the most important distinction to be made, is the distinction between:the psychology, mental discipline, emotional stability, and ability to stick to a plan that is conducive to long-term successful trading, andthe technical analysis [TA], the specific trading strategies, the logistics, and the mechanics of trading.For lasting success, many traders say the former is at least as important as the latter, if not more important. . Psychology is a key factor in the remainder of Section 1, Sections 13–14, and in Sections 18–20 below.1.1 — Four reasons to go slow with — or skip — tradingIf any of the following applies closely to you, trading may not be the best idea for you:You can’t wait to start trading, winning, and making money. . You want to trade very soon, and you are easily frustrated at the work and delay of thorough, detailed, complete preparation.You cannot deal with small losses in a logical, calm, matter of fact way, even if they are more than offset by larger wins over time.You are uncomfortable with lots of ups and downs, and a continuous atmosphere of uncertainty and unpredictability.You have difficulty learning constructive lessons from mistakes and losses, even small ones, because they are so painful and/or stressful.1.2 — Top Ten+ rules to considerRule #1: . Manage your trading as a business, not as a hobby. . If you are unfamiliar with business management, learn those skills before learning to trade.Keep careful, thorough recordsKeep a detailed trading log and journal (describing the trades, the rationale, the results, mistakes made, lessons learned, and corrective actions), andSet aside a portion of your profits to cover income taxes.Rule #2: . Choose a brokerage, a trading platform, charting software, and other supporting software, that work well for you. . If you are a technical-minded person, I recommend that you try out the Thinkorswim platform at TDAmeritrade. . [Google “stock trading platform reviews 2020”.]Rule #3: . Start with a conservative approach. . I recommend that you begin by learning the basics of Fundamental Investing, and put most of your funds in medium to long-term investments in quality-name stocks, ETF’s, CEF’s, mutual funds, mlp’s [ideally, when they go on sale in a correction or pullback].In the beginning, trade only a small fraction of your overall stock market assets. . If you prove and establish yourself to be an excellent, disciplined, successful, profitable trader, you can always adjust the allocations over time.Rule #4: . Don’t use your living-expense income, your rainy-day fund, or your quality-of-life assets [home, college funds,retirement funds], to fund a trading account. . Don’t use rent money, bill-pay money, education-funding money, etc to fund a trading account. . If this is difficult for you, then you are in the wrong arena.Rule #5: . Don’t begin trading until ALL of the trading terms and terminology, vocabulary, principles, concepts, and mechanics involved are utterly familiar and crystal clear to you. . If there is something you are unclear or hazy about, you are not ready even to paper trade, let alone actually trade.Rule #6: . Practice paper trading before you engage in live, dollar-funded trading.Rule #7: . Start your trading activity with simplicity in mind. . Choose one relatively simple trading strategy, track a handful of stocks (maybe 3 to 6 to start with), and apply the strategy mechanically, consistently, diligently.Rule #8: . Set a limit on the dollar value of the position size (as a percentage of the dollar value of your trading account) of any single trade. . And adhere to it. . A 1% limit is a good starting point. . See Section 14.1Rule #9: . Set a limit on the most you will allow your account to lose in any one day, week, and month — and after that limit is reached stop trading for that day, week, or month. . And adhere to it. . If this is difficult for you, then you are in the wrong arena.Rule #10: . For the first 6 months to one year of your trading experience, do not trade with margin.Rule #11: Set aside trading on days (or during weeks or months) when your trading aptitude or skills seem weak, diminished, or impaired, or when it feels as though losses will ruin your day (or for longer).Rule #12: . Set your focus on being a skillful, accomplished, knowledgeable investor and trader, dedicated to developing the best practices and best trade execution, rather than upon achieving a certain numerical percentage of daily, weekly, monthly, or annual gains, or upon achieving a specified level of income.Trade “with the trade winds” — Income from trading, is like distance covered when sailing in a sail boat. . Or the income that a saleman earns from commissions. . Some days there is a strong wind, and your boat is carried many miles. . Some days there is no wind. . It is a great art to be patient when no good trading opportunities appear.The following rule may be the most important rule of all. . Once you have implemented Rules 1 through 11, it should not be difficult.Rule #13. . Trade with equanimity, and without fear, grief, or sadness. . Practice calmly accepting the market’s verdict in response to your trade — whether it goes in your favor, or in the opposite direction. . . . . . . Can you still be happy about life in general — or at least calm and able to easily focus on other tasks — in the afternoon, if you lose money in the morning? . . . . . . Can you still be happy — or at least calm and able to easily focus on other tasks — in the evening, if you lose money in the afternoon? . If the answer is no, then seriously ask yourself whether you are in the right arena.__________________________________________________________________________2 — Chart basics: . Price, volume, timeframesThe purpose of stock price and volume echarts is to help traders and investors buy low, and sell high.Successful trading requires developing your pattern recognition skills, and being able to read charts, chart patterns, and chart enhancements as easily, quickly, and fluently as you are able to read this sentence.Here are the building blocks of charts and chart patterns. . There are six primary elements of charts, and tons of optional enhancements:1. The ticker code-letters, or ticker symbol — such as AAPL for Apple Computer, or SPX for the S&P-500 stock index, etc. . A seasoned trader probably knows several hundred of these symbols by heart. . Do not underestimate the importance of just learning — diligently and fluently — fifty or a hundred tickers as a start, and eventually several hundred or more.2. Price candlesticks — A single candlestick shows the opening price, the low price, the high price, and the closing price for a designated period of time. . The geometry of individual candlesticks, and the sequencing of various types of candlestick forms [into candlestick patterns] is of great significance to traders.3. Gaps — Vertical gaps in pricing may occur between successive candlesticks, when prices are changing very rapidly, or when prices change a lot in premarket or afterhours. . Gaps figure prominently in many trading strategies.4. Volume bars — Volume levels, and patterns of rising or falling volume is of great significance to traders. . . . . Get into the habit — from the very beginning of your trading career (or avocation) — of ALWAYS comparing the volume action to the price action.5. The Specified Timeframe — The timeframe is the length of time used to construct a single candlestick on the chart. . The timeframe is the duration of one candlestick. . The timeframe is sometimes referred to as the aggregation period.Understanding timeframes deeply and thoroughly, and using multiple timeframes, and is especially important to successful trading. . More on timeframes in Section 2.1 below.6. The Specified Time Interval — the time span, or time window, covered by ALL of the candle sticks of the entire chartOptional “chart enhancements” — Most traders will add additional “enhancements” known as technical indications or technical indicators to their charts, but some very accomplished traders do not — they simply trade from the raw price and volume data, and years of experience. . See Section 3 (including Sections 3.1-3.4).2.1 — Chart timeframes: . Short-period vs long-periodWhen constructing a price chart, each price-candlestick represents a “standardized segment of time”, and the duration of that time segment must be chosen, before the chart can be constructed and displayed.For example, each candlestick can represent 10 minutes of price variation, or 1 hour of price variation, or 1 day of price variation, or 1 year of price variation, etc.Timeframes can range from minutes, to hours, to days, to months, to years, to decades, or even longer. . Some of the most commonly-used time frames are:For high-frequency trading [HFT]: . down to millionths of a secondFor intraday trading: . 1 minute, 5 minute, 10 minute, 15 minute, 30 minute, 1 hourFor “relatively fast” swing trading: . 1 hour, 2 hour, 4 hour, 1 day, 2 day, 3 dayFor “medium” swing trading: . 1 day, 2 day, 3 day, 1 weekFor “relatively slow” swing trading, or position trading: . 1 week, 1 month, 1 Quarter [3 months]For “buy and hold” investing: . 1 Quarter, 1 year, 2 years[ The assignment of timeframes into the above “trader categories” is somewhat arbitrary and approximate, not fixed or absolutely defined. . Notice the timeframe “overlap” between some of the categories. ]2.2 — Using multiple timeframes (e.g., side-by-side)Use of multiple timeframes — for example, in a side-by-side presentation — gives a trader greater perspective, insight and understanding, and is key to certain trading strategies.As both a learning technique and a practical part of an ongoing trading routine, consider a screen format similar to the following:Suppose that you are planning on trading mainly from a 10-minute chart of say, the 100 most recent 10min-candles. . For an ongoing awareness of the bigger picture -- consider displaying a smaller hourly chart of say, the past 100 hours, off to one side, or off in one corner of your screen.Or, suppose that you are planning on trading mainly from a daily chart of say, the 100 most recent 1-day candles. . For an ongoing awareness of the bigger picture -- consider displaying a smaller weekly chart of say, the past 100 weeks, off to one side, or off in one corner of your screen.2.3 — Contrasting price behavior across different timeframesThe beginning trader needs to become thoroughly familiar with, and accomodated to, the following phenomenon:The price can be rising within a shorter-period timeframe, while nevertheless falling over a longer-period time frame, and vice versa.This apparent contradiction is made possible by the fact that a longer-duration candlestick of a longer-period timeframe can and often does ”average out” or “smooth out” a short-duration “micro uptrend” (or wave pattern) that may be happening within the time duration of any single candlestick — while the overall pattern observed within the longer-period timeframe is a downtrend.. . Thus a day-trader might make a profit by going long on a single day, while the weekly chart shows the price dropping from one week to the next.This “trend divergence across timeframes” is can be particularly evident when the longer period timeframe is a large multiple of the shorter period time frame: . For example, if the longer period time frame is 1 week, and the shorter-period time frame is 1 hour.2.4 — Comparing two timeframes: . The timeframe multipleWhen comparing the price behavior between any two timeframes, it is helpful to be aware of the timeframe multiple,Here are some examples that illustrate the meaning of timeframe multiple:1 week [usually 5 trading days] timeframe, compared to a 1 day timeframe: . 5-to-1 timeframe multiple1 day [the 6.5 hour regular session] timeframe, compared to a 10 minute timeframe: . 39-to-1 timeframe multiple1 month [approximately 20 trading days] timeframe, compared to a 1 day timeframe: . 20-to-1 timeframe multipleThe higher the timeframe multiple, the more that countertrends and ups-and-downs seen on the shorter timeframe chart, are easily smoothed out / averaged out / cancelled out — and become either less apparent or invisible — on the longer timeframe chart.To conclude this discussion of timeframes, keep in mind the following:Whenever anyone asks the question “Which way is the price headed?”, the relevant context must be: . “In which timeframe?”Consistently reviewing a stock’s price behavior across multiple timeframes will greatly enhance your trading comfort level, “trading intuition”, trading edge, ability to conceive / develop / implement strategies, and trading success._________________________________________________________________________3 — Chart Enhancements [C/E]: . Geometric, calculated, interpretativeTraders look for patterns, as a basis for understanding the price movements of the past, and possible price movements of the future. . The search for patterns leads to three broad classes or categories of chart enhancements.Thus, Section 3 continues in three parts, as follows.3.1 — Chart Enhancements: . Geometric constructionsProbably the most common [essentially ubiquitous] of the chart enhancements are geometric. . These include:Support lines / resistance lines — horizontal price levels at which uptrends or downtrends have paused, or have been agitated, delayed, interrupted, disturbed, or — most consequentially — reversed. . Some other key, and very closely-related terms are: . consolidation, consolidation zone, floor, ceilingSupport and Resistance are the foundation of technical trading. . Every time you look at a chart, there are three things you should grasp immediately:Where is the nearest clear support in this timeframe? . [this may present a challenge for a stock setting a new low]Where is the nearest clear resistance in this timeframe? . [this may present a challenge for a stock setting a new high]Where is the current price in relation to these levels?Trendlines — up-sloping or down-sloping lines which indicate the average linear rate at which prices have been rising or falling. . A strong departure from, or a violation of, a trend line is often taken as a technical signal that an existing trend may be ending, or reversing.Channel_pattern lines: . . Upper boundary line + Lower boundary line + Central axial line — One of the single most helpful “technical indications” that can be used on a chart (in just about any and every timeframe) are channel_pattern lines.A channel pattern, or channel for short, consists of two parallel (horizontal or sloping) lines, between which 50 to 100% of the candles are distributed, plus a third parallel line that defines the central axis of the channel.The upper boundary line defines a resistance line, while the lower boundary line represents a support line.Channels can be horizontal, ascending, or descending.When the share price of a stock is outlining a horizontal channel, the share price is said to be range-bound.Examples of a horizontal channel: . Weekly chart of TSM from Sept-2017 to Sept-2019; . daily chart of HPE from April—August 2020.[ NOTE: . To view the examples of TSM and HPE cited above, and all such examples throughout this outline, use the free online stock charting apps such as tradingview.com, stockcharts.com, freestockcharts.com, etc. ]Fibonacci retracement levels — Lines which are drawn and used to indicate [or predict, or project] the progress and degree of a retracement. . A retracement is the reversing leg on a chart following a notable high [or low] — in a retracement, the price backtracks to earlier levels seen before the high [or low]. . . . . . . . . .. . . . . . . . . Fib enthusiasts suggest that a very important point of support or resistance occurs when the retracement leg extends 50% of the way to the previous low [or high], but not only there: . The other important points are when retracement leg reaches 23.6%, 38.2%, 61.6%, or 78.6% [based on Fibonacci ratios].3.2 — Chart Enhancements: . Extensive/complex calculations; . IndicatorsThere is a very large number of technical indicators that require extensive calculations. . Almost all modern traders rely on computers to perform these calculations, and then to display the results on the chart.The design, application, and interpretation of these types of technical indicators is an extensive — and potentially distracting — subject. . Traders have many diverse perspectives and opinions about when to use them, which ones are most “accurate” or “predictive”, and under what conditions, and even about whether to use them at all.The following technical indicators are derived from price, volume, and transaction data. . A few of the most popular examples are:Moving averages — Simple [SMA] and Exponential [EMA]. . In the terminology of mechanical and electrical engineering, moving averages are low-pass filters which can be viewed “reducing short-period noise” and enhancing the desired “signal”.I specifically recommend that a beginning or novice trader focus upon, understand, and become thoroughly familiar with the 20-period SMA [Simple Moving Average], and notice how the 20 SMA responds to changes in the stock price. . . . . . And conversely — notice how the stock price behaves as it approaches, upcrosses, downcrosses, and/or rises beyond the 20 SMA.Then gradually begin to incorporate the other “standard” moving averages commonly used by many/most traders: . the 5, 10, 50, 100, and 200 SMA and/or EMA.Moving average crossovers — based on a moving average pair. . A shorter-period moving average [the “signal” line] crosses back and forth across a longer-period moving average [the “reference” line] . For example: . An 8-day moving average line, crossing back and forth against a 20-day moving average line.MACD_(N,N,N) — Moving Average Convergence or Divergence — a way of comparing two moving averages by subtracting one from the otherPPO_(N,N,N) — Price Percentage Oscillator — similar to the MACD, but expressed as a percentage instead of in price unitsRSI_(N) — Relative Strength Index — a dimensionless number between 0 and 100, calculated from the last N periods.RSI = 0 indicates maximal negative price momentum (price is collapsing) . . . . . 50 = neutral (price is flat) . . . . . . 100 = maximal positive price momentum (price is skyrocketing)Bands and Channels —Bollinger Bands — an indicator based on combining the 20-period moving average with the Standard Deviation of the price over the past 20 periodsDonchian Channels, Keltner Channels, STARK ChannelsrVol (N), or Relative Volume (N) — an indicator that shows the ratio of the current volume to the average volume (over the last N periods) for the same time periodVWAP — Volume-Weighted Average Price — an indicator that combines volume and priceHere are many more examples of some of the more popular indicators: . . . ADX_(Average_Directional_Movement_Index) . . . . . . . . . . ATR_(Average_True_Range) . . . . . . . . . . . . . . . . . . . . . . . . . . CCI_(Commodity_Channel_Index) . . . . . . . . . . . . . . . . . . . . Heiken_Ashi_(modified candlesticks) . . . . . . . . . . . . . . . . . Historical_Volatility(N) . . . . . . . . . . . . . . . . .Ichimoku_Cloud . . . . . . . . . . . . . Momentum(N) . . . . . . . . . . . . . . . . . . . . . . . . MFI_(Money_Flow_Index) . . . . .OBV_(On_Balance_Volume) . . . . . . . . . . . . Pivot_points . . . . . . . . . . . . . . Put_Call_Ratio . . . . . . . . . . . . . . . . . . . . . . . . Short_Interest . . . . . . . . . . . . . Stochastics . . . . . . . . . . . . . . . . . . . . . . . . . . . Vortex . . . . . . . . . . . . . . . . . . . . Williams_Percent_R. . . the list can be far longer — there are hundreds, even thousands of technical indicators.Many popular technical indicators fall into one of two popular groups: . the trend indicators, and the momentum indicators.Are MACD and RSI trend or momentum indicators?The general thinking among technical analysts is that a single technical indicator should not be used as a complete rationale to open a position, but if a sufficient number of technical indicators all suggest higher (or lower) prices in the future, then the odds may have shifted in favor of a profitable trade.Here is some food for thought:“I've written many time in the past that the ideal setup for indicators is 3. . Each using a different type of reading on price and volume. . Any more than that your just looking at the same data through a different colored lens.An example would be Volume Wave, Trend Pivots and RSI Laguerre. . Each of those looks at data in completely different ways. . When they all agree you're guaranteed at least a short term indication of price direction.Those same three at higher aggregation, agreeing soon after the first set, will boost your trend signal, and again those three at another higher aggregation kicking in, will keep that trend established.3 Indicators at 3 different aggregations. . Not on the same chart but 3 different aggregate [different timeframe] charts." — staffperson at TD AmeritradeSome/many very successful traders work only from raw price and volume data.3.3 — Chart Enhancements: . InterpretativeThe following chart enhancements are somewhat qualitative and interpretative in nature, (at least compared to those in Section 3.1 and 3.2 above).Chart patterns — Bear_Flag / Bull_Flag . . . . . . . . . Bullish_Pennant / Bearish_Pennant . . . . . . . . . Rising_Wedge / Falling_Wedge . . . . . . . . . “V”_Bottom_(Pivot_Bottom) . . . . . . . . . Double-/Triple-/Quad-Top . . . . . . . . . Head_and_Shoulders_upright/inverted . . . . . . . . . Ascending_Triangle / Descending_Triangle . . . . . . . . . etc.Single-candlestick forms — Topping Tails / Bottoming Tails . . . . . . . . . Body-only_Candlesticks . . . . . . . . . Doji . . . . . . . . . Hammer / Inverted_Hammer . . . . . . . . . Shooting_Star . . . . . . . . . to name a few of the most usefulMulti-candlestick patterns — Bullish Engulfing / Bearish Engulfing . . . . . . . . . Inside Bar . . . . . . . . . Evening Star / Morning_Star . . . . . . . . . to name a few of the most usefulElliot Wave [EW] Analysis — Experienced traders are very much aware that most trends of buying (or selling) does not generally occur in long smooth ramps, but rather in “bumps”, or “jumps”. or “waves”, or “episodes”, or “spurts”. or “legs”, often forming “steps”, or “terraces”, or “flags” or “fins”, or “sawteeth” in the price chart.EW theorists suggest that these waves are driven by sentiment and crowd behavior patterns. . Elliot Wave analysts take this one step further and attempt to predict the direction of the next leg, based on chart analysis. .At the simplest level, EW theory suggests that a major, recurring pattern is 5-phases upward, followed by 3-phases downward [in a bull market] or 5 phases downward, following by 3 phases upward [in a bear market], but there are many levels, subdivisions, nuances, and complexities in actual application.It is challenging to apply objectively, as identifying the idealized EW wave patterns on real-life charts can be problematic. . But it has many devoted adherents who state that a deep understanding of the basic principles does increase their profitability.Chart notations — Many types of information can be added to charts to help the trader understand where the price may be headed. . These include earnings release data, dividend declarations and announcements, splits, company announcements, etc.3.4 — Chart Enhancements: . Which ones to use (if any)?A major challenge for traders is to “see past”, “see through”, or “see beyond” the noise at the scale of the chosen timeframe. . Therefore, for starters, I recommend that you start with support lines (floors), resistance lines (ceilings), trendlines, moving averages, and single-candlestick forms.Not always, but frequently you may find the following to be true:When the price crosses downwards through an important support level, or floor, or basal-trendline (or upwards through a resistance level, or ceiling, or upper-trendline) by a clear / sufficient / decisive margin, look for the trading action to accelerate — meaning, look for the volume and the rate-of-change of the price to increase.Similarly, when the price crosses one of the widely-used moving average lines (such as the 20-period MA or 50-period MA) by a clear / sufficient / decisive margin, the trading action may accelerate — meaning, the volume and the rate-of-change of the price may increase.Once you have mastered trendlines and moving averages, then think about expanding your “enhancement set”. . Learn to recognize Horizontal Support and Resistance Lines, Bull and Bear Flags, Bull and Bear Pennants, Rising and Falling Wedges.I recommend that you next experiment with Fibonacci Retracement Levels.After that you may wish to try out MA crossovers, RSI, or MACD (or whatever you are drawn to) for several weeks. . Keep the ones that, based on your own observations, have the clearest relationship to significant uptrends, downtrends, and reversals. . Over time, try swapping out different technical indicators, and do this for an extended period of time until you have a regular “toolkit” that makes sense to you, and that you can use skillfully and proficiently.But don’t get too wrapped up or overloaded with chart enhancements — only use what you find easy-to-use and productive.__________________________________________________________________________4 — Picking stocks : . Volatility, liquidity, sector/industry, “story stocks”, . . .4.1 — Pick better-than-average volatilityA trader should have a rock solid understanding of volatility, because volatility is what makes profitable trading possible, especially over short timeframes.Before trading, I recommend that you learn some basic concepts of statistics — including variance, standard deviation, and normal distribution. . These are not rocket science, you can learn them in 30 minutes or less:Traders and investors often want a well-defined, quantitative way to measure the degree of variation in prices among a set of asset prices representing a given time window.That is exactly what historical volatility is:historical volatility: . the standard deviation of a set of asset prices (such as stock prices) representing a specified time interval . ( There are some other types of volatility but this is the one to start with. ]Volatility increases when a stock:spikes upwards, or downwardsbegins to trend upwards (or downwards) more strongly than beforereverses direction sharplybegins to bounce up and down severely within the specified time intervalThe higher the volatility, generally speaking, the greater the potential profit that can be made by traders who are skillfully using a productive strategy. . It is very difficult to be highly profitable, when trading an extremely low volatility stock. . Hence traders regard volatility, overall, as a friend, or even as the lifeblood of their trading success, and therefore generally pick higher volatility stocks to trade.At the time of this writing [mid-2020] some examples of high volatility stocks [on the daily chart, using a 20-day volatility time window] are NKLA, AAL, and INO. . Some examples of very low volatility stocks are VZ, PG, and WMT.The volume and volatility during the regular trading session for NYSE and Nasdaq stocks [930am to 400pm ET] is generally much greater between 930am and about noon, than between about noon and 400pm.For this reason, many experienced day traders prefer to trade from about 930am to 1130am, and devote the rest of their day to other activities.Beginners and novices may wish to first begin trading in the less volatile afternoon time period, and gradually move into trading earlier in the day.The period from 930am to 1000am is the most volatile, and even experienced traders should know exactly what they are doing if they trade in this interval.When a stock nears / hits a new high, volatility tends to increase. . Or when a stock has an especially favorable or unfavorable Earnings Release.Volatility itself can be traded: . Check out the ticker symbols VIX and VXX.4.2 — Pick better-than-average volume and liquidityBefore discussing liquidity, it is necessary to discuss the bid-ask spread.4.2.1 — Bid Price versus Ask PriceAt any given time during a trading session, there are two types of prices at work in the market.When a trader buys some shares using a market order, he/she agrees to pay the ask price that a seller or market maker is asking.DO NOTE, HOWEVER, THAT: . With a limit buy order (instead of a market order), the buyer can instruct the brokerage to wait for the ask price to settle down to the target price specified by the trader’s limit order — but with the limit order, a purchase may or may not occur.When a trader sells some shares using a market order, he/she agrees to receive payment at the bid price that a buyer or market maker is offering.DO NOTE, HOWEVER, THAT: . With a limit sell order (instead of a market order), the buyer can instruct the brokerage to wait for the bid price to drift upwards to the target price specified by the trader’s limit order — but with the limit order, a sale may or may not occur. ]At any given time, the ask price is likely to be higher than the bid price, by a percentage that can vary between as little as +0.01% [and occasionally even 0.00%], to as much as +5%-or-more.Two examples serve to illustrate the general relationship between volume and bid-ask spread:Near the end of the regular session on Jul-2–2020, the volume for BAC stock was 77M shares for the day, the bid was $23.30, the ask was $23.31, the spead was $0.01, or 0.004%. . A bid-ask spread in the range of 0.01% to 0.1% offers a relatively low “drag factor” or “slippage factor” for traders.However, for PRK stock, the volume was 48K shares for the day, the bid was $67.99, the ask was $71.49, the spread was $3.50, or 5.1%. . Bid-ask spreads over 0.5% or so [depending on the current level of volatility and the potential profits involved] begin to represent a significant “drag factor” or “slippage factor”, and begin to make the stock less attractive as a trading vehicle.A stock that has just recently started trading on an exchange [i.e., with a recent IPO date (Initial Purchase Offer)] may trade at a higher-than-average bid-ask spread.4.2.2 — LiquidityA highly liquid stock is one that can be sold — that is, converted to cash — relatively quickly, easily, and at minimal bid-ask spread, because there is a large number of potential buyers keeping the bid price near the ask price. . The more potential buyers there are, and the easier, faster, and cheaper the logistics of selling, the greater the liquidity.Some examples of highly liquid stocks in recent years are the common stock shares of GE, F, and BAC. . Common shares are generally far more liquid (and more volatile) than preferred shares. . Some examples of relatively illiquid stocks are: . very low volume stocks, many penny stocks, micro-cap stocks, and nano-cap stocks.4.2.3 — Volume: . Intraday Trading versus Swing TradingIntraday trading volume and volatility often reaches a maximum in the first 10 to 30 minutes of the regular 930–400p trading session. . Then it gradually tapers off in the later morning, and toward early afternoon, and there is often and end of day surge in the last 30 minutes or so.Volatility tends to be correspondingly greater in the morning, and for this reason, most serious intraday traders focus on early morning preparation that involves studying the premarket and getting ready for the 930am opening bell. . Beginning and novice day traders may want to focus on the calmer afternoon until they feel ready to tackle the latter half of the morning, and eventually the opening hour.There is no comparable phenomenon on higher timeframes, i.e., there is no consistent surge in volume and volatility on the first day of the week, or on the first week of the month, or on the first month of the quarter, or on the first quarter of the year. . In this regard, intraday trading is unique.4.3 — Pick better-than-average sector/industry strengthStocks can be classsified by sector, industry group, and industry. . When trading stocks, it is very important to be aware of:which sectors have been performing well in the past week, month, quarter, and/or year (depending on your trading timeframe), and which have been performing poorly. . There are 11 commonly recognized sectors.which industry groups have been performing well in the past week, month, quarter, and/or year (depending on your trading timeframe), and which have been performing poorly. . There are 24 industry groups (per GICS, the Global Industry Classification Standard).which specific industries have been performing well in the past week, month, quarter, and/or year (depending on your trading timeframe), and which have been performing poorly. . There are up to 200 or more industries, depending on the industry breakdown or classification system being used.A study by Ben E. King suggests that when a stock price moves:50% of the move of a stock is due to the move of the sector30% of the move is due to the move of the overall market20% of the move is due to specifics relating to the company (an exception would be an Earnings Release)As you can see, there is something to be said for trading the active sectors.4.4 — Consider picking some “Story Stocks”Another name for “Story Stock” might be “High Profile Stock”. . The following elements serve to help elevate a stock from being just an “ordinary stock” to a “story stock”:The company has a very well-known brand and clear mission to the average person (not just investors). . To the extent that the company is succeeding in achieving that mission, the world can be expected to look and feel very different to millions of “average people”.The company has a dynamic, charismatic, well-known, and maybe even controversial CEO, who is frequently in the news, and who is frequently emphasizing how the products/services are advancing the mission.Investors and shareholders tend to buy and hold the stock through ups and downs out of a belief in the mission of the company, and/or it’s CEO, more than out of rationally and methodically studying and analyzing the financial data of the company, or technically analyzing the price chart. . [This phenomenon might be comparable to “brand loyalty” at the retail consumer level.]Investors and shareholders love to talk about the product or service. . Social media, internet forums, and comment threads are buzzing with commentary and tweets about the company and its latest news. . Business journalists write and publish stories about the stock more frequently than the average stock.The stock may develop a higher than average volatility for it’s sector and/or industry.Suggested examples of Story Stocks: . AMD, AMZN, BYND, DKNG, GBTC, KO, NFLX, NKE, NVDA, PINS, PTON, TSLA, TWTR, SBUX, SFIX, SPCE, UBER, ZM4.4.1 — “Arch Rivals” can parallel “Story Stocks”Somewhat related to the Story-Stock concept is the “Arch Rivals” concept, which can become a fertile ground for traders and trading ideas:KO vs PEP . . . . . . . . SBUX vs DNKN . . . . . . . . MSFT vs APPL . . . . . . . . AMD_vs_INTC . . . . . . . . NKE vs UA . . . . . . . . WDC vs STX . . . . . . . . GM vs F . . . . . . . . AMZN vs WMT . . . . . . . . FDX vs UPS . . . . . . . . WBA vs CVS . . . . . . . . EBAY vs ETSY . . . . . . . . UBER vs LYFT . . . . . . . . etc.4.5 — Consider picking CER-TOY-LAL stocksCER-TOY-LAL is pronounced <sir toy’ lul> .CER-TOY-LAL stands for: . “Companies Especially Relevant To Your Life And Lifestyle” . [and can include the lifestyles of your family, friends, colleagues, associates, co-workers, acquaintances]Look around at yourself and others in your life, and ask yourself:What products or services (provided by publically-owned companies) might you have a greater understanding or appreciation of than the average person?Your personal knowledge or personal appreciation may be valuable clues to companies whose stock you may want to consider holding or tradingCoffee lover? — SBUX . . . . Kids (or you) love certain toys? — HAS, MAT . . . . Into your smartphone? — AAPL . . . . Frequent garage-sale shopper? — EBAY . . . . Into sports betting, the Vegas thing? — DKNG, PENN, CZR . . . . Exercise Enthusiast? — PTON, NKE, UA, LULU . . . . Warren Buffet fan? — BRK . . . . . Like RV’s? — WGO, THO . . . . Renewable energy proponent? — NEE, ENPH, FSLR . . . . Organic shopper? — FSM, NGVC, KRThis approach makes investing and/or trading more interesting, even more fun.. . . 4.6 — Stocks versus ETF’sSuppose that you would like to buy a lot of different semiconductor stocks, but you are discouraged by the thought of managing a lot of individual stocks. . You can buy an Exchange Traded Fund, or ETF, that specialized in semiconductor stocks.[ the finished version of Section 4.6 is not yet available; coming eventually ]5 — Choosing timeframes to trade ———————————————5.1 — Lower vs Higher TimeframesMany beginners want to go straight into day trading in the 10-minute, or 5-minute, or 1-minute timeframe — with visions of “fast money” and “getting rich quick”.But day trading at 10-minutes is far more challenging and far more risky than swing trading in a daily (or higher) timeframe.Lower [shorter-period] timeframes become noisier, more random, and less systematicHigher [longer-period] timeframes become smoother, less random and more systematic5.2 — A gradual approach toward intraday tradingI recommend that a beginner think long-term, and think in terms of progressive development…a — First become a successful, confident investor using a combination of fundamental and technical analysis — over a period of at least 2 years (if highly talented), but preferably 3 to 5 years (if moderately talented)b — Then become a successful, confident, longer-term swing trader — over a period of at least 12 months (if highly talented), but preferably 18 to 24 months (if moderately talented)c — Then become a successful, confident, shorter-term swing trader — over a period of at least 6 months (if highly talented), but preferably 12 to 18 months (if moderately talented)d — Then become a successful, confident, overnite trader — over a period of at least 3 months (if highly talented), but preferably 6 to 12 months (if moderately talented)e — Then finally enter the realm of day trading, maybe starting out one day a week, while maintaining a solid focus on the aforementioned swing-trading and investing.At each step of the way, with shorter and shorter timeframes . . .You can shift from relying on a combination of fundamental and technical analysis, to relying more and more heavily on technical analysis — and you must understand technical analysis extremely well.You can expect to depend more upon complex and sophisticated trading platforms and trading-oriented software.Your continued success begins to rely more and more on psychological and self-disciplinary factors, as outlined in Section 1 above.At a certain point, you may wish to seek out excellent, live-in-person mentor or coach — experienced in the shorter timeframes (be very wary and cautious about an online mentor or coach)If you do not have the temperment, or the patience, to start with Step a in the sequence above, perhaps you can at least begin at Step b, or Step c.If you are bound and determined to begin your trading project in the intraday timeframes, I would strongly encourage you to — in the beginning — learn to trade in the 1-hour or 30-minute timeframes, rather than the noisier and more chaotic 10-minute or 5-minute timeframe. ]6 — Scenarios, strategies, and setupsA trading scenario is a very general description of how the stock price is behaving as the trader considers opening a position — see Section 6.1 below.A trading strategy is a methodology, or set of instructions, that guides the search for setups. . In any given hour or day or week, there is no guarantee that a strategy will lead the trader to specific setups. . But the strategy does gives the trader clear direction in where to start, what to do next, and how to tell if a specific chart (or set of charts) is manifesting a set-up — see Sections 6.2 and 6.3 below.A trading setup is a fully-defined configuration within a specific chart [or within a specific set of closely associated charts] that meets all of the trader’s strategy and screening criteria. — see Sections 6.2 and 6.3 below.A trading system includes all of the above, plus the larger framework described in other sections of this outline.6.1 — Scenarios: . Eleven general cases — or states, settings, situations, conditions, or developments . . . from which to begin thinking about creating strategiesIn my terminology, I refer to the following eleven general cases as scenarios. . The following list is not intended to be a detailed and complete list, only a starting point and a foundation for understanding what traders do.Any of the following general scenarios can be a starting point, or foundation, for developing a strategy…1 — A strong, well-established trend [up-trend or down-trend]2 — A significant up-gap [or down-gap] . . .An up-gap can lead into an up-trend, but an up-gap will sometimes collapse into a downtrend, or level-off quickly into consolidationA down-gap can lead into an down-trend, but a down-gap will sometimes bounce into an up-trend, or level-off quickly into consolidation3 — A strong reversal of a trend [up or down]A reversal can be sharp like a hairpin turn, i.e. happening in one or two candlesticks [sometimes called a pivot, as in a pivot low or pivot high]A reversal can gradual, happening over a relatively large number of candlesticks4 — An extended, gradual, arc-like emergence [up or down] from a consolidation zone or from a support/resistance level.5 — A breakout [up or down] from a consolidation zone or a support/resistance level.If you become interested in trading breakouts, be aware that there is a concentration of breakouts at 9:30am ET Mon-Fri at the beginning of every regular trading session.6 — An uneventful consolidation zone . A trader may open a position within a consolidation zone, if he/she is anticipating a breakout [up or down], or a gradual emergence [up or down]7 — A new all time high (ATH), or new all time low (ATL). . The share price has just exceeded any and all previous prices, or has just fell below any and all previous prices.Traders also pay a lot of attention to new 52-week highs, or new 52-week lows, where the share price exceeds the highest price in the past 52-weeks. . Also, new 26-week highs, or new 26-week lows.But, any defined period of time can be used to identify new highs and new lows, [200 days, 100 hours, or 90-minutes, etc.]8 — A scheduled earnings release (ER) or earnings report . A trader may open a position shortly before or shortly after an ER, especially if he/she has good reason to expect that the release will be especially favorable or unfavorable. . [Since ER’s occur before or after the regular trading session, the trader needs to be familiar with extended hours trading (aka premarket and afterhours trading).]9 — Breaking news. . Examples include: . earnings report, new investor guidance, merger or aquisition news, stock buyback news, stock/bond offering, product announcement, product recall, research initiative, company expansion / downsizing / restructuring / layoffs, new CEO / personnel changes, federal approval for a project or product, lawsuit news, upgrades/downgrades, etc.10 — Ending/Beginning Assessments.End-of-Premarket / Beginning-of-Regular-Session Assessment — Here the trader reviews the action of the Premarket Session (in the last 15 or 30 minutes), and deploys a strategy based on an overall review of what happened during the Premarket, and will be opening positions at or near the end of the Premarket session.End of Regular Session / Beginning of Afterhours Assessment — Here the trader reviews the action of the day, and will be creating a strategy based on an overall review of what happened during the day (in the last 15 or 30 minutes), , and will be opening positions at or near the end of the regular trading session.End-of-Afterhours Assessment — Here the trader reviews the action of the Afterhours Session (in the last 15 or 30 minutes), and deploys a strategy based on an overall review of what happened during the Afterhours, and will be opening positions at or near the end of the Afterhours session.11 — A noteworthy or unusual “spread” between two comparable stocks or assets. . In a pair trade, the trader “trades the spread” (where the spread is the difference in price between two assets).If the trader expects that the spread will increase, the pair trader buys the higher-priced one, and shorts the lower priced one. . Conversely, if the pair trader expects that the spread will decrease, he/she shorts the higher-priced one, and buys the lower-priced one.Any of the above is only a starting point, or foundation, or frame-of-reference, for conceiving, investigating, researching, and developing a multi-criteria, multi-faceted strategy, which can then be used to search for and identify very specific setups.I recommend that an aspiring trader spend a lot of time just looking at a lot of charts and:Learning to quickly recognize Scenarios #1 - 7, andObserving how they interconnect and inter-relate on a stock chart, andUnderstanding how Scenarios #1 - 8 represent the “primary phases” or “core elements” of stock charts.With growing familiarity and experience, he/she will learn to quickly and instinctively recognize each scenario, and also begin to develop a sense of the relative strength of each example encountered, and it’s potential value as a trading opportunity.With growing familiarity and experience, the novice trader can begin to decide if he/she wants to specialize in one or two of these scenarios, or develop trading skill in all of them.6.2 — Moving from a scenario . . . to a strategy . . . to a setupThe logistical challenge of trading is that the shorter the timeframe, and in the absence of dramatic news, the more likely that price movements are random.The short-term trader is looking for opportunities to trade that tilt the odds in his/her favor. . Exactly HOW and WHEN a trader should a trader open a position to improve their odds to better than random chance?A common approach among traders is to define, as precisely as possible, the price pattern(s), technical indicator pattern(s), and/or volume pattern(s) that one expects in order to improve the odds, and then either:1) . . . wait for that “setup” to appear, in one or more of the stocks that one is tracking, or2) . . . find a suitable setup quickly by scanning hundreds or thousands of stocks using scanning softwareWhat is the difference between a strategy and a setup?A strategy is the framework, or set of conditions, or set of criteria, that informs and guides the search for setups.A hypothetical, idealized, or “perfect” setup meets or satisfies a complete set of conditions and circumstances the trader is looking for, and expects to occur over the course of time . . The setup description constitutes a complete set of conditions that must be satisfied before opening a position or entering a trade.An actual setup meets most or all of these conditions to a degree that the trader requires, in order to open a position. .The goal is to find setups in which subsequent price movement is likely to behave in a systematic way rather than randomly.————————————As an analogy, consider a Human Resources Director looking through a stack of resumes, and conducting interviews for a new position in the company . After developing a list of criteria and screening the applicants, a candidate meeting all the criteria and judged to be an excellent candidate is hired.For a trader, finding a good setup and opening a position based on that setup, is analogous to the H/R director finding and hiring the best candidate for the job.For a trader, developing an effective strategy is somewhat analogous to the H/R director assembling a list of the skills, qualifications, attributes, etc. that the candidate should have.6.3 — Important points for strategies and setupsWhen traders employ a strategy that leads them to setups, for which the track record of success is consistently significantly greater than 50% [random], they generally do not publicize the strategy or the setups — it is generally up to a trader to come with their own viable strategies and setups.Effective strategies often incorporate the use of multiple timeframesA potentially profitable strategy should be back-tested, to demonstrate that, at least in the past, it finds setups with a greater-than-even-chance of being profitable.An alternative, or a supplement, to back-testing, is paper-trading.Paper-trading allows you to test a strategy without using real money. . Some brokerages allow the trader to switch back and forth from paper-trading to live trading.Successful strategies often do not remain successful, or vary in their degree of success over time. . They may work for awhile and then stop working, and they may start working again at a later date. . So trading is always a work in progress, so traders are continuously tweaking or revamping old strategies, or developing entirely new ones.Are you a detail-oriented and analytical person who can: . a) work diligently on maintaining effective strategies and b) patiently wait for your setups to happen — or do you impatiently insist on trading impulsively in less favorable (or unfavorable) situations?__________________________________________________________________________7 — Test Areas: . Fertile ground for strategies and setupsAny line of resistance in the chart, any line of support, any trendline, or any of the major moving average lines (5,10,20,50,100.200) in the chart can be viewed a Test Area, when the price approaches that line or that price level. . The trader will then be wondering:How will the price — and price trend over the next several periods — likely change upon entering the Test Area?A Test Area is an especially significant price level or relatively narrow price range at which:the upward momentum of a current uptrend may be diminished, halted or reversed — or —the downward momentum of a current downtrend may be diminished, halted or reversedAs a price trend approaches an important Test Area, traders naturally ask themselves (and maybe other traders as well) the following question :Do market conditions and sentiment favor the continuation of the initial trend through and beyond the test area, or the reversal of the initial trend?8 — Test Area Setups: . ClassificationIf the trader determines [either from Fundamental Analysis, or from Technical Analysis, or from back-testing, or from any other perspective] that the probability of a continuation is significantly greater than the probability of a reversal — or vice versa — then the Test Area can potentially be used as the basis for creating a Test Area Setup.8.1 — Test Area Setups: . Three key criteriaTest Area Setups can be logically classified by three criteria:1 — Initial Trend Direction: . Uptrend vs DowntrendIs the share price in an uptrend, as it approaches a Test Area of Potential Overhead Resistance from below?Or, is the share price in a downtrend, as it approaches a Test Area of Potential Underlying Support from above?2 — Expectation (of outcome): . Continuation vs ReversalIs the trader expecting a continuation of the primary trend through the Test Area?Or, is the trader expecting a reversal of the trend?3 — Timing (of entry): . Anticipated Entry (or Early Entry) versus Confirmed Entry (or Later Entry, or Signaled Entry)Suppose the trader has a clear expectation for the outcome, and wants to trade the price action in this Test Area.Is the trader going to anticipate the reversal, and trade the Test Area relatively early?Or is the trader going to wait for some confirmation, signal, or indication of the directional outcome, and thus trade the Test Area somewhat later?If the trader is awaiting some signal of the directional outcome, it is highly advantageous to be using a trading platform that allows the trader to preset and receive an alert.8.2 — Test Area Setups: . Eight different typesApplication of the three criteria above leads to eight different combinations — and thus eight different cases, or types — as follows:8.2.1 — ACTOR Setup: . Uptrending / Continuation / Anticipated EntryThe share price is trending upwards into a test area of past overhead resistance. . A test of that overhead resistance is about to commence.The trader expects, anticipates that the price will soon successfully breach the resistance and the uptrend will continue — either gradually, or as an upside breakout.ACTOR Setup = Anticipated_Continuation_Through_Overhead_Resistance SetupThe trader who is using this setup would be opening (or adding to) a long position.With similar “combination logic”, there are seven more types , as follows (see also Appendix A-1):8.2.2 — CCTOR Setup — Confirmed_Continuation_Through_Overhead_Resistance8.2.3 — ARAOR Setup — Anticipated_Reversal_Against_Overhead_Resistance8.2.4 — CRAOR Setup — Confirmed_Reversal_Against_Overhead_Resistance8.2.5 — ACTUS Setup — Anticipated_Continuation_Through_Underlying_Support8.2.6 — CCTUS Setup — Signaling_Continuation_Through_Underlying_Support8.2.7 — ARFUS Setup — Anticipated_Reversal_From_Underlying_Support8.2.8 — CRFUS Setup — Confirmed_Reversal_From_Underlying_SupportRefer to Appendix A-1 for a closer look at these eight different types of Test Area Setups.8.3 — Breakouts from test areasWhen the share price approaches and enters a Test Area, the share price can change in a gradual manner, or it can surge or spike in the form of an upside or downside breakout.Get into the habit — from the very beginning of your trading career — of ALWAYS comparing the volume action to the price action [can’t stress this enough!], and of viewing price/volume action on multiple timeframes.A pattern of strongly increasing volume in the periods leading up to a potential breakout, or a spike in volume right at the period of the breakout, strongly increases the chances that a strong and tradeable breakout is happening [as opposed to a “false breakout”], and that it will be a profitable entry point for a trade.EXAMPLES of breakouts: . The upside breakout in Sept-2017 by TSM through the ceiling of it’s 2-year horizontal channel on the 2017 to 2020 weekly chart, and a second upside breakout in early July of 2020. . The upside breakout of GNMK on heavy volume on the daily chart on Jun-15–2020. .8.3.1 — Intraday Opening Range BreakoutOne well-known strategy in intraday trading is the opening range breakout (ORB) strategy.The “range” in the phrase “opening range” is established by a ceiling and floor that may develop over the first few periods following the 930am opening of the regular trading session.Examples of Opening Range Breakout: . ADS, AMD, XRX at ~11 am ET on their 10-minute charts of 07/24/2020.8.4 — Test Area Setup: . A fine, polished exampleThe following link . . .What % of swing traders can: (a) View 20 to 50 stock charts . . . ?. . . is to a Question and Answer published on Quora in 2019.The Answer that was posted by “Benjamin Carson, lives in Kansas / Answered June 26, 2019”, describes very well a specific example of a setup that looks for breakouts in bullish stocks with very specific criteria.With regard to the 8-fold classification described in Section 8.2 above, his setup corresponds to:Case 2 — CCTOR Setup = Confirmed_Continuation_Through_Overhead_Resistance SetupHis setup also resembles the STAR setup described in Section 9.3.3 below9 — Tharp’s List of SetupsVan K. Tharp — one of the leading, internationally-recognized traders and authors of books about stock trading — wrote a book entitled Super Trader, published by McGraw-Hill in 2009. . I recommend that you read the entire book.pages 146–147 of the book is a list of 10 general types of setups. . I do not claim this list is complete, but it is a pretty good place to start.[ Tharp calls them setups, but none of them are complete, specific, and “fully ready to trade” — all are lacking important specifics. . I would call them “general entry/exit strategies”. ]A serious student of trading should become familiar with this list, then choose one, and then do the nuts and bolts work of “building it out” into a complete, specific, turn-key strategy suitable for you and your personal aptitudes and preferences. . [ Once that first one is working to your satisfaction, consider choosing another, and expanding your “toolbox”. ]- - - - - - - - - - - - - - - - -Sections 9.1, 9.2, and 9.3 below present the first three of Tharp’s 10 general types of setups; . each section begins with a direct quote from Super Trader.- - - - - - - - - - - - - - - - -9.1 — Example #1 (Tharp): . Failed Test Setups“1. Failed Test Setups [Failed Test Area Setups]. These setups occur when the market wants to test some area [test some price level]. . For example, the Turtles used to trade 20-day breakouts, and so a 20-day high is considered a test area, and its failure to continue [i.e., the price might temporarily exceed the high but soon reverses] is what might be called a failed test setup.”————————————-Background info: . Many trading strategies involve defining and monitoring a trailing window that includes the most recent 20 days, and creeps forward with each passing day. . (The Turtles’ window-length is 20 days, but the window length can be 10, 30, 50, etc.)20-day high (or 20-day low) means: . the highest price (or lowest price) of the 20-day window.20-day upside breakout means: . On the day of a 20-day upside breakout, the price exceeds the 20-day high.20-day downside breakout means: . On the day of a 20-day downside breakout, the price falls below the 20-day low.The Turtle Traders were comparing the current price to the high and low price within that trailing 20-day-window, and making that comparison the key element of their setup. . For the entire fascinating and remarkable story, do a Google search using “Turtle Traders, Richard Dennis”.————————————-By no means do all Test Setups fail. . Tharp is, however, suggesting that a lot of them do fail, and as soon as a trader recognizes a Failed Test Setup, there is a good chance that the trader may be able to profit from it.Tharp’s Failed Test Setups correspond to the following two of the eight cases [listed in Section 8.2 above and described more fully in Appendix A-1]:Case 3 = ARAOR = Anticipated Reversal Against Overhead_Resistance SetupCase 4 = CRAOR = Confirmed Reversal Against Overhead_Resistance Setup. . . because the word “Failed” in “Failed Test Setup” is referring to the failure of the asset price to continue trending upward through overhead resistance. . In Tharp’s “Turtle example”, it is the failure of the price to continue trending upward beyond the 20-day high.[ If Tharp’s failed test setups category is interpreted to also include “failure of a downtrending price to continue beneath and beyond a 20-day low”, then one could also state that those additional failed test setups would correspond to the following two additional cases of the eight cases [listed in Section 8.2 above and described more fully in Appendix A-1:7 — ARFUS Setup = Anticipated_Reversal_From_Underlying_Support Setup8 — CRFUS Setup = Confirmed_Reversal_From_Underlying_Support Setup ]—————————————-Section 9.2 beginning immediately below presents the second of Tharp’s 10 general types; it begins with a direct quote from Super Trader:9.2 — Example #1 (Tharp): . Climax Reversal Setups“2. Climax Reversal Setups. Here the price goes parabolic to a new high and then falls. These setups are often the start of big moves in the opposite direction.”Examples: . Stock ticker CSCO in 1998–2001; . ACB from June 2017 into August 2018; . NAT for April-May 2020; . HTZ from June 3–16, 2020; . SRNE from May 14 to June 4, 2020; CIG/C for June 22, 2020; . NBR in May-June 2020; . NIO from Jan-Apr 2019; . FSLY from July 28-Aug 11, 2020; . KODK from July 28–Aug 14, 2020MACD and RSI are useful indicators for detecting and catching the early emergence of a parabolic rise. . Knowing and using candlestick forms, candlestick patterns, gaps, and moving average crossovers are very important in judging when a “post-peak” collapse is beginning.* * * * * * * * * * * * * * * * *“Section 9.3 — Retracement Setups”, beginning immediately below, is IMHO one of the MOST IMPORTANT logistical sections of this outline. . It presents the third of Tharp’s 10 general types; it begins with a direct quote from Super Trader:9.3 — Example #3 (Tharp): . Retracement Setups . * * * * * * * * * * * * * * * * *“3. Retracement Setups (often used by trend followers). . Here the market is identified as being in a clear trend (the first part of the setup), then it reverses [and retraces a minor portion of the primary trend for a limited time], and then [it reverses again and] the [primary] trend continues.”One of the most common, and most significant patterns in every timeframe; . an excellent category for the beginning trader to start from and build upon.Repetition of this “trend-reverse-trend” pattern (or “zig-zag-zig” pattern) for two or three cycles can create an ascending or descending channel (See Section 3.1 above, and Section 10.2 below)Consider the following “modes of progress / regress”:Mode A — Even in overall favorable circumstances, progress or overall forward motion in any “walk of life” or project is not generally continuous. . Rather, it is often two or three steps forward and one step backwards, followed by another two or three steps forward, and one step backwards, followed by… etc.Mode B — Likewise, even in overall unfavorable circumstances, regress or overall backward motion in any “walk of life” or project is not generally continuous. . Rather, it may be two or three steps backward and one step forward, followed by another two or three steps backward, and one step forward, followed by… etc.In both Mode A and Mode B above, there are continuing steps in the overall direction of motion, but every so often they are interrupted by a step in opposite direction from the overall direction of motion.An analogy can be made between “everyday life” as in Mode A and Mode B above, and the behavior of stock prices on stock charts.In technical analysis terms, those less-dominant back-trends, that occur in the opposite direction to the overall trend, are termed retracements.Examples: . An especially significant bullish example is the daily chart of SPY rallying from the pandemic V-bottom from March 23 to April 9.For more bullish examples, see the daily charts of JD, TEL, and TWTR from late March-June of 2020; . also AYX and HOG from April-July 2020 [examples of ascending channels]; . also PKI from May-July 2020 .For bearish examples, see CVS, GLW and HLF and their daily charts from Jan through March of 2020.One of the most repeated aphorisms on Wall Street is:“The trend is your friend.”While it may not always be true, it can be hazardous to your account balance to trade against the trend.9.3.1 — Retracement setups: . Bullish or BearishRetracement setups are associated with trends in highs and lows.a) . In a Bullish Retracement Setup, an uptrend leads to a local high, followed by a local low, followed by a continuing uptrend — that continues upward beyond the preceding high.If bullish market conditions continue, the chart may very well develop a “second up-cycle”, in which the chart generates a second high that is higher than the first high, and a second low, that is higher than the first low.Drawing an upper trendline through the two highs, and a lower trendline through the two lows, produces what could become an ongoing ascending channel, if the two trendlines are more-or-less parallel.b) . Conversely, in a Bearish Retracement Setup, a downtrend leads to a local low, followed by a local high, followed by a continuing downtrend — that continues downward beneath the preceding low.If bearish market conditions continue, there is likely to be a “second down-cycle”, in which the chart generates a second low that is lower than the first low, and a second high, that is lower than the first high.Drawing a lower trendline through the two lows, and an upper trendline through the two highs, produces what could be an ongoing descending channel, if the two trendlines are more-or-less parallel.9.3.2 — Retracement Setups: . 50% Retracement SetupsSuppose a stock is in a primary bullish trend, and produces a higher low, and then rallies to a higher high, and then reverses into a retracement pattern.When the price has retraced 50% of the range from the previous low to the last high, the price may find support at that 50% level, and then rally to follow the primary bullish trend.Here is a detailed presentation of what may be called a “50% Retracement Setup”:50% Retracement Swing Trading Strategy - Trading Setups Review9.3.3 — A setup similar to a retracement setupImmediately below is modification of the Tharp quote of Section 9.3 above — note carefully the changes:“Here the market is identified as being in a clear trend (the first part of the setup).Then the slope of the trend decreases strongly and/or flattens for several periods — but with no well-defined reversal, and no significant degree of actual retracement.Then there is either a re-emergence of the uptrend, or an upside breakout, and the [primary] trend continues.”The above setup could be given the name “Similar To A Retracement” setup, or STAR setup. . [ Another setup used by trend followers. ]Study the closely-related patterns known as bull flags and bear flags — these flags echo what I have just described here in Section 9.3.39.4 — Tharp: . Seven additional types of setupsI encourage you to read Super Trader for Tharp’s remaining seven types of setups, and for all the other valuable information in the book. Note carefully that Tharp’s title heading for page 146 is “Setups are not as important as you think” — and recall my one-sentence summary of successful trading:“Profitable trading is 40% cutting losses efficiently, 30% being patient with winners, 20% developing AND maintaining effective trading setups, and 10% everything else — all in accordance with a detailed, sound, written trading plan.”—————————————————————————————10 — Trending versus Mean reversionYou can choose between:Adapting and/or configuring widely-known strategies and setups to your own style of trading, orCreating your own strategies and setupsIn either case, there are some key, over-arching concepts that will help you integrate everything that you are learning, and help lead you toward effective strategies and setups.A prime example would be the complementary concepts of “trending” and “mean reversion”.An idealized way of describing the ups and downs of changing prices is:. . . first prices respond to significant news — or simply to one or more waves of buyer optimism or pessimism — by moving rapidly and/or steadily away from their recent “mean level” — either bullishly (upwards) as buyer demand overwhelms supply, or bearishly (downwards) as supply exceeds falling demand].. . . but after a sufficient amount of time, and/or the arrival of contrasting news, market participants increasingly “change their mind” and the price reverses and moves in the opposite direction, back toward the “mean level”In a bullish-to-bearish shift, those who were buyers now sell to capture profits from long positions, or open short positions.In a bearish-to-bullish reversal, those who were sellers now buy to capture profits from short positions, or open long positons.Thus, most trading strategies and setups are, in essence, expecting or predicting the price to either . . .. . . continue moving in the same direction — and these strategies (or setups) are referred to as trend-following strategies (or setups), or. . . reverse and move in the opposite direction — and these strategies (or setups) are referred to as mean reversion strategies (or setups)10.1 — Tr vs MR: . Visible in every channel patternAn ideal channel pattern consists of all the following, happening in sequence.An up-trend. . The uptrend begins near the bottom of the channel, and heads upwards. . The up-trend is followed by . . .A reversal (from up to down). . The reversal happens when the uptrend meets overhead resistance at the ceiling, or top of the channel. . The reversal causes the price to start heading back down toward the middle of the channel, or mean. . The reversal initiates the process of mean reversion. . The reversal is followed by . . .A down-trend. . The first half of the down-trend is mean reverting, meaning the price is approaching the middle of the channel, or mean. But the second half of the down-trend carries the price below and away from the mean. . The down-trend is followed by . . .Another reversal (from down to up). . This reversal happens when the down-trend meets underlying support at the floor, or bottom of the channel. . The reversal is followed by . . .A new up-trend. . And now you can see how a channel can be formed by a continuing combination of trending (up & down & up & down & etc) and mean reversion (reversal + reversal + reversal + etc).The centerline, or axis, of the channel then represents the mean. . [ Recall and review the example of the 2017–2019 TSM weekly chart, as previously mentioned in Section 3.1 and Section 8.3]10.2 — Tr vs MR: . Learn to see channelsWhether or not the chart you are viewing is currently displaying an obvious, clear, well-defined channel pattern, I recommend that you “squint” and "stretch" your imagination just a bit, to see one there, if at all possible, even a weak / slender / poorly-developed / distorted one, and even if it is a stretch to believe that one is there.Remember that channels can be ascending, or descending — gently sloping or steeply sloping — as well as horizontal, and that this greatly extends the use of channels as a basis for strategies and setups. . Even if the upper boundary is irregular or vaguely defined, if there is a clear lower boundary or basal trendline — there is a fair to good chance that it can be traded through the lens of “channel pattern”.Examples of an ascending channel: . the daily chart of ETSY from June-August 2020; the daily chart of WDC from early 2019 to March 9 2020.When you looking a channel pattern: . Always be aware if the price is currently . . .falling through the bottom of the channel, ornear the bottom of the channel . . . ornear the middle of the channel . . . ornear the top of the channel . . . orbreaking above the top of the channelBecause, to the extent that channel dynamic is still in effect, the direction the price is headed may be statistically related to it’s level in the context of the channel, and whether or not trending or mean reversion lies just ahead.A strategy could be developed around any of the following “channel expectations”:going long when the SP (share price) begins showing signs of gaining strength or gaining momentum as it lifts off the bottom of a channel (or forms an upside-breakout off the bottom), orgoing long when the SP is clearly gaining momentum and up-trending toward the center of a channel, orgoing short when the SP is showing signs of weakness or losing momentum as it approaches the top of a channel (or forms a downside-breakout away from the top of the channel)going short when the SP is clearly losing momentum and down-trending toward the center of its channel11 — Buy strength? . . . Or buy weakness?Q. Should a trader or investor “buy strength and sell weakness" or "buy weakness and sell strength"?A one-size-fits-all generalization such as "buy strength and sell weakness" or "buy weakness and sell strength", by itself, is simply too short and too incomplete to be meaningful or useful.a — First, you must choose a timeframe — because the answer to your question can be different for different timeframes.As an example, let’s choose the daily timeframe (as opposed to say, the 10-minute timeframe, or the monthly timeframe).b — Second, you must understand that, once you have chosen a timeframe, the share price dynamic in that timeframe is, broadly speaking, either relatively trending, relatively range-bound (or in a channel), or “in between”. . I recommend that you next read the following link:How do you determine trends in a stock?A very simple way to gauge whether or not a stock is trending or range-bound is to subtract a shorter-period moving average from a longer period moving average. . [ See the link immediately above for more on trend analysis. ]For example, subtract the 100-day moving average from the 20-day moving average:Diff_% = ( Price_20ma - Price_100ma ) / Price_100maCalculate the value of Diff for about 10 or 20 different stocks, compare the values, compare the appearance of the charts, and you will see a pattern.The stocks that have been steadily rising, or up-trending, over the past 100 days will have a relatively large positive value of Diff.The stocks that have been steadily rising, or down-trending, over the past 100 days will have a relatively large negative value of Diff.The stocks that have been going sideways (either straight sideways, or with some large up and down swings), or which are range-bound, will have relatively small values of Diff.[ To get a broader, more complete picture, use the same approach with several different pairs of moving averages, such as 10 / 50, or 10 / 100, or 20 / 50, or 20 / 200, or 50 / 200. . Then look at the geometry of all the moving average lines running across the chart:The more that several widely-different moving averages spread out from one another on the chart — in a smooth and consistent fan, and/or as many sub-parallel to parallel bands over time, the more trending the share price pattern is.The more that several widely-different moving averages are remaining close to one another and braiding back and forth through each other over time, the more range-bound and/or sideways the share price pattern is. ]Now, past performance is no guarantee of future performance — breaking news can change the trajectory of the share price at any point in time — but past performance should certainly be included in your decision making process.c — If the stock has been trading in a range-or-channel, and it’s near the top of it’s range-or-channel, and you expect the stock to continue being range-bound or channel-bound . . .Then if you own it, it is time to consider selling it. . If you don’t own it, it’s time to consider shorting it [just make sure there’s no good news coming in].d — If the stock has been trading in a range-or-channel, and it’s near the bottom of it’s range or channel, and you expect the stock to continue being range-bound or channel-bound . . .Then if you own it, consider holding it. . If you don’t own it, consider buying it.e — If the stock is just now breaking out of it’s range-or-channel to the upside, and/or trending upwards after a recent breakout . . .Then if you own it, consider holding it. . If you don’t own it, consider buying it.f — If the stock is just now breaking out of it’s range-or-channel to the downside, and/or trending downwards after a recent breakout . . .Then if you own it, consider selling it. . If you don’t own it, consider shorting it.g — If the stock is up-trending and/or setting new highs, try to determine whether it has lots of strength left in it, or if it’s close to exhaustion. . News, media coverage, and sentiment are important factors.h — If the stock is down-trending and/or setting new lows, try to determine whether it’s close to bottoming out, or has a lot further to fall. . News, media coverage, and sentiment are important factors.————————————————-All of the above is within the domain of technical analysis, and important to a technical trader.A traditional buy and hold investor does fundamental analysis to determine a fair value for the stock, compare that fair value to the current share price, and then on that basis, decide whether to buy, hold, or sell.A hybrid buy and hold investor does both fundamental and technical analysis, and combines the two, to determine whether to buy, hold, or sell.__________________________________________________________________________12 * * * Learn and understand FIRST * * * Strategize SECOND * * *Where do specific strategies come from?You can, of course, do a google search, and get lots of search results, and start combing through what you find. . You are likely to encounter much advertising for paid trading courses, advisory services, alert services, subscriptions, newsletters, etc.Before spending a lot of time “shopping, digging, or toiling for a strategy”, I strongly recommend that you FIRST just work on thoroughly understanding what stocks are and what fundamental and technical factors influence stocks, stock prices, and the stock market overall.As you begin to understand the subject, strategies will begin to occur to you spontaneously, naturally, and automatically. . For resources related to trading strategies, see also Appendix A-2 near the end of this answer.12.1 — A General View of Strategies and SetupsMost strategies and setups aim to do one of the following:Enter a trade “before the action”, anticipating and expecting a significant move to occur soon, and hope to capture all of the moveCatch a move just as it is beginning and emerging, and hope to capture most of the move. . Certain price and/or volume changes may be regarded as confirming (as in confirmation) that the share price will continue to move in the expected direction.Ride an obvious, well-established trend, and hope it will continue even further, and for as long as possible.12.2 — A Note About VolumeWhen conceiving, shaping, or modifying a strategy, you may want to keep in mind the following notes about volume in relation to price:“Price changes accompanied by higher volume indicate strong action by institutions and that tends to have sustained and enduring power in the the direction of the move. There are two main ways I watch volume.“If the day was up and the volume was higher than the session prior then that is accumulation. And was the volume heavier than the 50dma of volume? That also indicates a strong move that is likely to be sustained.“I also look at the weekly volume the same way? Was it higher than the prior week and was it higher than its 10wma line?“Moves on lighter volume don’t really tell us much. Those light volume days are easily overcome so they don’t have any great trend value.” — Mike Scott, Quora__________________________________________________________________________13 — RRM = Risk and Reward Management"We can't direct the wind, but we can adjust the sails" -- Thomas S. MonsonRisk magnitude = the dollar amount of your loss if the trade goes against you, and continues to go against you, all the way to your pre-determined limit of tolerance, at which point you mechanically close your position to prevent any further loss.Reward magnitude = the dollar amount of your profit if the trade goes in your favor, and continues to go in your favor, all the way to your pre-determined target, at which point you mechanically close your position to lock in your profit.The introduction of the following simple definitions leads to an important formula — the key formula is shown further below in bold font just below all of the following definitions.NT = total number of trades—————————————NG = number of winning (or gaining, or profitable) tradesPG = percentage of winning trades = NG / NT * 100SG = Sum of gains from NG winning trades = NG * AGAG = average gain per trade, for winning trades = SG / NG—————————————-NL = number of losing (or unprofitable) tradesPL = percentage of losing trades = NL / NT * 100SL = Sum of losses from NL losing trades = NL * ALAL = average loss per trade, for losing trades = SL / NL—————————————-V = Net (gain or loss), from all trades = SG - ALVA = average net per trade, from all trades = V / NT—————————————-NT * VA = SG - ALNT * VA = NG * AG - NL * AL* * * * * * which brings us to the formula of interest * * * * * *VA = ( NG / NT ) * AG - ( NL / NT ) * AL* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *Stated in words, this formula means…The average net per trade (over all trades) is equal to:The percentage of winning trades times the average gain per winning trade— minus —The percentage of losing trades times the average loss per losing tradeIf you have executed 10 trades using exactly the same trading system, and the VA value is significantly positive, it may or may not be positive over the next 10 trades.However, if you have executed 100 trades using exactly the same trading system, and the VA value is significantly positive, the odds that it will be positive in the next 10 trades are better.And, if you have executed 1000 trades using exactly the same trading system, and have a VA value that is significantly positive, the odds that it will be positive in the next 10 trades are better still.Having a positive value of VA, derived from a long trading history, is referred to as having a positive expectancy.13.1 — RRM: . Alternative ways to be profitable over timeYou cannot control whether the stocks you trade go up or down. . But once a trade turns into either a winning position, or a losing position — and that is only a matter of time — you can control, when you close that position.You may find that how you close your positions, and your overall level of profitability after many trades, are linked to the following trade-off arrangement:“Win More Often” (WMO) — Limit your loss on losing trades to 5%, and also take profits on winning trades at 5% [ or 10% in both cases, or 20% in both cases ] — and then hope or expect to win more than 50% of your trades.With the WMO approach, the emphasis is on your percentage of winning trades exceeding your percentage of losing trades.“Win by a Larger Margin” (WLM) — Limit your loss on losing trades to 5%, but take profits on winning trades at 10% [ or 10% and 20% respectively, or 15% and 30% respectively ] — and you do not necessarily need to win more than 50% of your trades.With the WLM approach, the emphasis is on finding — and patiently riding out — trades with significant “reach”, or “ability to trend through a relatively large price range”, and thereby achieve relatively large percentage gains (compared to your percentage losses).You can experiment, of course, and you can backtest. . Backtesting can be quite valuable in helping you decide how to manage your closures.13.1.1 — RRM: . Examples of WMO versus WLMSuppose you have closed 120 trades, and each trade invested $1,000 of capitalIf you won 80, and lost 40, and your average gain per trade is 10%, and your average loss per trade is 10% — you have a net profit of 40 X $100 = $4,000, and your trading results are resembling the WMO (Win_More_Often) pattern described in Section 13.1 above.OTOH, if you won 40, and lost 80, but your average gain per trade is 30%, and your average loss per trade is 10% — you have a net profit of $4,000, and your trading results are resembling the WLM (Win_by_a_Larger_Margin) pattern described in Section 13.1 above.13.2 — RRM: . When to close a losing position?Small profits — ok, i’ll get better at this over timeSmall loss — ok, i’ll get better at this over timeBig profits — ok, actually much better than just “ok”Big loss — Not ok, it will take too long to catch upThe only sure way of avoiding a big loss is to accept the gift of a small loss while it is available.Consider closing a losing position the moment your losses exceed a preset small percentage, for example 5% …this is adjustable, and might be as little as 1% or as large as 25%.Some traders use actual stops, and some use mental stops.Are you the type of person who can easily and promptly let go of a losing position — or do you have an uncontrollable “urge to be right” in which you get stuck [or “married”] to a security, hoping desperately for a turnaround while the losses diminish or destroy your success as a trader?* * * * * * * * * * * * * * * * *13.2.1 — Cutting your losses: . A horse-riding metaphorCutting your losses at a predetermined level is one of the most important, if not the most important principle of profitable trading.Failure to cut small losses before they become large losses is a far, far worse problem than having a strategy which is no better than a coin flip.Most beginners worry if their strategy is good enough, when their emotional courage to accept and take every small loss lies at the very heart of becoming a successful trader.* * * * * * * * * * * * * * * * *So with the above in mind I offer the following “horse-riding metaphor”, which concludes with two key questions that every trader will face more or less continuously through their career.a — Imagine that you are out on the plains where wild horses are moving about in large herds.b — Each horse is moving either east or west.c — Some are walking slowly, some are walking briskly, some are trotting slowly, some are trotting quickly, some are galloping, and some are racing at top speed.d — A few of the horses maintain the same speed and direction for long periods, but most are changing speed and changing direction in a highly unpredictable fashion.e — Now imagine that you are a horse rider and traveler who is capable of riding any of these wild horses, for as long as you choose, and also that you are capable of changing horses anytime you want.f — Imagine that your objective is to travel due west as quickly as possible.g — You cannot control the speed or direction of any horses, but you are free to look around you, and observe what all the other horses are doing, and you are free to change horses anytime you want.Now ask yourself these two very important questions:1 — If you find yourself on a horse that suddenly decides to turn around and travel east instead of west, how long are you going to remain on that horse, just hoping that it will turn around and travel west again? . When there are several horses all around you that are traveling in the westward direction that you want to go?2 — If you find yourself on a horse that, either gradually or suddenly, starts to move a lot more slowly, how long are you going to remain on that horse, just hoping that it will pick up speed? . When there are several horses around you that are going faster than you?* * * * * * * * * * * * * * * * *13.3 — RRM: . When to close a winning position?Consider closing a winning position sometime after your gains exceed a present larger percentage [relative to the loss-limit percentage of Section 13.2 above], for example 10%. . Perhaps 1.5 to 3 times larger — you can experiment as you attempt to improve your track record.Exactly when to close a winning position is an artform, but many successful traders recommend that you do this mechanically, according to mechanical rules that are strictly adhered to.For trading to be worth your time, you must track your total profits and total losses, and of course, your total gains must exceed your total lossesYou will have to experiment to see if this is possible, and the extent to which it is possible. . Some recommend a long period of paper trading [without real money], but others recommend starting with small but real money, because “skin in the game” will accelerate your progress.Many successful traders have a lot of small losses that are more than covered by a lesser number of large gains.———————————“Nature abhors a straight line — and a profitable position usually goes through multiple ‘waves’ on the chart, rather than a simple straight line.”Beginners may be prone to fall into the two-jawed trap of…“I’d better lock in this small profit before it disappears” and“I don’t want to sell this stop-triggering loss yet because I just know it will turn around and break even”These two inclinations can quickly lead to net lossesIf you have found an excellent to superior strategy, and your setups have an exceptionally high average_win_rate (say 60%), then perhaps you can be profitable with a close-out percentage for winners that is comparable to your close-out percentage for losers. . But the key word here may be “exceptionally”.13.4 — RRM: . Choices for beginning or novice traders[ the finished version of Section 13.4 is not yet available; coming eventually ]1% & 1,2,3% — versus — 10% & 10,20,30 % ]14 — Position management: . Position sizing and scaling14.1 — RRM: . Maximum position sizeMore important than all of the above is NEVER going “all in” — never risking more than about 1% [this is adjustable depending on your experience, talents, success] of the funds in your trading account on any single trade.Limiting your position size to 1% (or less) is especially important for beginning and novice traders.Can you resist the temptation to attempt to “get rich quick” by piling all your chips on one color?If this is a problem for you, or even a potential problem, I recommend that you seek counseling or therapy to explore why you may have a self-destructive urge, and how you can let go of that urge.14.2 — Scaling into (or out of) a full positionYou can “buy all at once”, or you can buy “a chunk at a time”. . Also known as: . building, layering, stepping, or progressive establishment of a full position.Consider scaling into, or scaling out of, any position. . Meaning, you can start with a 1/3 size or 1/2 size position and build it into a full position. . Once a full position has reached your profit target, you can close out 1/3 of it, or 1/2 of it, and leave the rest if you think the trade will continue further in your favor.. . You can experiment to see if this helps to increase your profitability.15 — System Trading versus Discretionary TradingSections 4–14 above outline a systematic approach to trading, where the stock selection, strategy, and setups are well-defined, rule-based structures. . System Trading means every decision to open or close a position has been guided by a rule, and the rules are strictly adhered to.Some traders choose not to be bound by a strict set of rules, but would rather look at all available information, and mentally integrate or synthesize that information in a qualitative way, and then choose to either open a position or not, “at their discretion” or according to their instinct, intuition, or past experience. . Discretionary Trading may require more talent, skill, experience, and other capacities to be profitable over the long term.I recommend that novices start out with System Trading, and then very gradually, if at all, move toward experimenting with Discretionary Trading.15.1 — System Trading: . Eight steps leading up to a trade1. Screening, or Stock Selection — Screening is the process of using a stock screener or scanner to find stocks whose attributes match those specified by your strategy and set-up criteria. . Once you have a well-formulated strategy, you will be able to use search criteria to find stocks most closely aligned to your strategy.2. Backtesting — With backtesting, you observe how your strategy would have performed had you been using it over a past interval of time. . Stocks that pass your screening process or selection process can be backtested using your strategy and set-up criteria.3. Ranking — If you are working with more than one stock, all stocks that pass your backtesting process can be quantitatively ranked from “most likely to rise (or fall) in price” to “less likely to rise (or fall) in price”.4. Weighting — Suppose that you have selected the top 5 stocks of your screening and backtesting results to trade. . You can weight them all equally, or weight your higher-ranked stocks more that your lower ranked stocks.5. Position sizing — including how you will scale, if scaling [See Section 14 above]6. Establishing the Stop Loss — Not all traders use stop losses, but it if you are a novice trader, think about this very carefully7. Establishing the Entry Point8. Establishing the Exit Point — [Initial Estimate] — If important news is reported after your entry, you may wish to adjust your initial estimate higher or lower15.2 — Two different approaches to stock selectionWhen deciding what stocks you may wish to trade, I suggest that you compare the advantages and disadvantages of the following two very different approaches:The first approach is to create a watchlist of perhaps 20 to 50 stocks [adjustable to your personal preference], and apply technical analysis to each, updating your analysis on a daily, weekly, monthly, etc basisThe advantage of this approach is that you get to know the stocks on your watchlist very well over time.The second approach is to obtain or create a stock scanning application [such as Finviz, Trade Ideas, or ThinkorSwim], and regularly scan 500 to 1000 stocks [adjustable to your personal preference]. . Once you have chosen a strategy, each scan can be designed to find a specific setup.The advantage of this approach is that you will find more setups that if you just look at the stocks on your watchlist.16 — Beginners: . Trade *with* the broader marketIf you are just starting to trade stocks, only go long specific stocks when the overall market is rising; only go short specific stocks when the overall market is falling.As a beginner, or novice, or even an intermediate-level trader, open long positions when the market as a whole is bullish, and avoid taking long positions when the overall market is bearish or flat.Conversely, as a beginner, open short positions when the market as a whole is bearish, and avoid entering short trades when the overall market is bullish or flat.“A rising tide lifts all boats. . A falling tide does the opposite.”“Knowing when to be patient and stand aside is a mark of a profitable trader.”“On a day when the overall market is up 3%, anyone with a long idea can be a trading genius.”16.1 — Trade *with* the associated sector . . . & w/ assoc. industryIdeally, a beginner should be trading with not only the broader market, but with the associated sector and with the associated industy as well. . Always be aware of how the associated sector and industry are performing as you consider opening a trade with a specifc stock.17 — Statistics, updrafts, and drawdownsYou need to get comfortable with a large component of randomness in price dynamics and trading outcomes.Even if you are profitable on average over months or years, you will likely experience considerable drawdowns in between updrafts — periods during which losses exceed profits. . How comfortable are you with that?Assuming that you are capable of executing the logistics and mechanics well — are you the type of person who can easily [or sufficiently] adjust to the annoyance or pain of many losses, with the patience to wait for the larger gains?18 — “Herd logic” versus “Contrarian logic” in tradingTo a considerable extent, the more traders and algo’s use and apply very similar forms of technical analysis to help make trading decisions, the more the price/volume charts will display characteristics reflecting those principles and methods of technical analysis.In the sciences, this phenomenon is known as positive feedback. . In everyday language, some call this phenomenon self-fulfilling prophecy.But positive feedback and self-fulfilling prophecy also have limits, and there will be times when traders [including traders/investors acting on fundamental data and/or technical data, and/or “gut instinct”] and algo’s make trading decisions that may be inconsistent with conventional, traditional, “at face value” technical analysis.Over certain time intervals it can be advantageous for an individual trader [and/or his(her) algo] to “follow the herd”.Over other time intervals it can be advantageous for an individual trader [and/or his(her) algo] to “be contrarian”.The better a trader understands the strategy and setup-design of the majority of other traders and their algo’s, the better equipped the trader is to be profitable. . [ Think of those old “road runner” cartoons. ]Good luck navigating this challenging landscape! . If it were clear, easy, straightforward, and non-competitive, every trade would be always be profitable — which leads into Section 19 below.19 — Intraday trading as a competitive, zero-sum gameDay trading (as opposed to Buy-and-Hold) is similar to professional sports: . It is a zero-sum game: . For every dollar that someone wins, someone else has lost at least a dollar (or a minus-sum game, counting other expenses).Think of it this way: . Suppose every aspiring day trader had to first complete a rigorous, 1-year trading course taught by the world’s greatest day trader. . The teacher should honestly stand before his class and say:“A - The annual financial outcomes for all the day traders in the world are as follows: . some will break even — some will lose money — and some will make money. . How great will the disparity be, between those who make money, those who break even, and those who lose money?”“B - The more evenly matched all day traders are in training, skill, capabilities, resources, and opportunities, the more likely everybody will just about break even.”“C - On the other hand, the more unevenly matched all day traders are in training, skill, capabilities, resources, and opportunities, the greater the disparity will be in profits and losses. . It is now much more likely that a small number will make big money, a small number will lose big money, and the rest will be spread out in between.”So, if you begin day trading, just remember that you will be competing against truly talented, skilled, experienced veterans who have been doing it for years, some using computers analyzing millions of past configurations and future possibilities every second. . You had better be very well-prepared — mentally, psychologically, logistically — before venturing into this arena.What are your chances of a hit, facing Nolan Ryan in his prime?What are your chances of striking out Ted Williams?What are your chances of a single, if you hit a slow grounder to Ozzie Smith?20 — How will you think about “the market”?Even though day traders are competing for each others’ dollars, I think you will find it helpful to see “the market” — which is merely an average of all of the actions of all the other participants in the game — as an impersonal entity that you wish to align yourself with, not as an entity that is out to “beat you” or “defeat you”. . Think of “the market” as your source of volatility, the whole reason you are in the trading game to begin with.If you are are trend trader, who looks for the long steady rides], think of the game as finding and maintaining alignment with the market’s tendency to trend.If you are are a momentum trader, who tries to capture the breakouts and explosive moves, think of the game as finding and maintaining alignment with the market’s tendency to jump.If you are a contrarian trader, think of it as being attuned to the market’s tendency to correct excesses.One of the most unproductive attitudes is to “revenge trade” after being overly pyschologically invested in a losing trade.One way to think about the market is like a sailor on a sailing ship on the ocean, reading the winds, the currents, and the stars to reach your destination — slipping off course occasionally but overall making progress to your intended destination.21 — “Just watch charts” — and ideas will come to you* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *There is no substitute for spending a lot time watching charts “build out” on multiple timeframes, one candle, or a few candles at a time — while you notice how your chosen technical indications and technical indicators are responding.* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *As you watch charts and become thoroughly familiar with “the building blocks” outlined above, if you are passionate about trading, you cannot help but begin to recognize key patterns.Consider trading quarterly charts for a few years . . .. . . then trading monthly charts for several months. . . then weekly charts for several months. . . then daily charts for several months. . . finally working your way down to hourly charts and 10-minute charts.Or vice versa. . Or all in parallel, but only IF you have the time and the versatile, adaptable, agile mental capacity for doing many charts in parallel — that may pose a formidable and daunting mental challenge.What you learn from following and watching charts as they form, cannot readily be duplicated by simply studying past charts. . Studying “static” charts from the past, is just not the same as watching charts in real time. . I get so many ideas just from looking at fresh charts, and I think that you will too.22 — In ConclusionYou do need a working strategy — but there are lots of strategies available that are good enough to get started with.What should be of greater emphasis is your risk management and position sizing."The beginning is the most important part of the work." — PlatoIn the general scheme of things, risk management and position sizing is far more important — especially in the beginning when you are forming habits that will become the backbone of your trading program — than strategies and setups.—————————————————————————————-Appendix A-1. . Eight Types of Test Area Setups1 — ACTOR Setup: . Uptrending / Continuation / Anticipated EntryThe share price is trending upwards into a test area of past overhead resistance. . A test of that overhead resistance is about to commence.The trader expects, anticipates that the price will soon successfully breach the resistance and the uptrend will continue — either gradually, or as an upside breakout.ACTOR Setup = Anticipated_Continuation_Through_Overhead_Resistance SetupThe trader who is using this setup would be opening (or adding to) a long position.2 — CCTOR Setup: . Uptrending / Continuation / Confirmed EntrySimilar to Case 1a above, but with a later entry associated with the trader waiting for the price to “confirm the outcome”Say the share price has just exceeded a critical threshold identified by the trader, that defines the ceiling, i.e., it has (by this measure) “passed the test” posed by the “test area”, i.e., it has successfully breached the resistance.The trader expects that the uptrend will continue — either gradually, or with an upside breakout.CCTOR Setup = Confirmed_Continuation_Through_Overhead_Resistance SetupThe trader who is using this setup would be opening (or adding to) a long position.3 — ARAOR Setup: . Uptrending / Reversal / Anticipated EntryThe share price is trending upwards into a test area of past overhead resistance. . A test of that overhead resistance is about to commence.The trader expects, anticipates that the price will fail to breach the resistance, and the recent uptrend will be reversed — either gradually, or as an downside breakout.ARAOR Setup = Anticipated_Reversal_Against_Overhead_Resistance SetupThe trader who is using this setup would be opening (or adding to) a short position.4 — CRAOR Setup: . Uptrending / Reversal / Confirmed EntrySimilar to Case 2a above, but with a later entry associated with the trader waiting for the price to “signal the outcome”Say the share price has just dropped substantially, and/or dropped below a critical threshold identified by the trader, that defines the ceiling, i.e., it has (by this measure) “failed to breach the overhead resistance” posed by the “test area”.CRAOR Setup = Confirmed_Reversal_Against_Overhead_Resistance SetupThe trader who is using this setup would be opening (or adding to) a short position.5 — ACTUS Setup: . Downtrending / Continuation / Anticipated EntryThe share price is trending downwards into a test area of past underlying support. . A test of that underlying support is about to commence.The trader expects that the support will fail, and the downtrend will continue — either gradually, or as a downside breakout.ACTUS Setup = Anticipated_Continuation_Through_Underlying_Support SetupThe trader who is using this setup would be opening (or adding to) a short position.6 — CCTUS Setup: . Downtrending / Continuation / Confirmed EntrySimilar to Case 3a above, but with a later entry associated with the trader waiting for the price to “signal the outcome”Say the share price has just dropped substantially, and/or dropped below a critical threshold identified by the trader, that defines the ceiling, i.e., it has (by this measure) “failed to find the underlying support” in the “test area”.CCTUS Setup = Confirmed_Continuation_Through_Underlying_Support SetupThe trader who is using this setup would be opening (or adding to) a short position.7 — ARFUS Setup: . Downtrending / Reversal / Anticipated Entryhe share price is trending downwards into a test area of past underlying support. . A test of that underlying support is about to commence.The trader expects that the support will hold, and the downtrend will be reversed — either gradually, or as an upside breakout.ARFUS Setup = Anticipated_Reversal_From_Underlying_Support SetupThe trader who is using this setup would be opening (or adding to) a long position.8 — CRFUS Setup: . Downtrending / Reversal / Confirmed EntrySimilar to Case 4a above, but with a later entry associated with the trader waiting for the price to “signal the outcome”Say the share price has just acquired critical upward momentum, in a way that suggests that the underlying support is going to be sustained.CRFUS Setup = Confirmed_Reversal_From_Underlying_Support SetupThe trader who is using this setup would be opening (or adding to) a long position.Appendix A-2. . List of stock-trading related web linksWilliam J. O’Neil’s 10 Trading Principles:Free Stock Charts, Stock Quotes and Trade IdeasAbout Van Tharp - Van Tharp InstituteThe Wyckoff Method: A TutorialFoundational-Swing-Trading-ConceptsSwing-Setups-and-Entry-TechniquesTrading Setups Review - Trading Strategies, Guides, and Articles for Active Technical TradersTrade-and-Risk-ManagementHOME - In The Money StocksTechnical analysis of stocks with candlesticksStock Market Insights | Seeking Alphahttps://marketchameleon.com/Stock Market MapFINVIZ.com - Stock ScreenerTrade Ideas: Artificial Intelligence | Automatic Execution | Backtesting | Trader EducationMarketInOut.com - Technical Stock ScreenerPublic ChartListsInvestor's Business Daily | Stock News & Stock Market Analysis - IBDShort Interest Stock Short Selling Data, Shorts, Stocks: Short SqueezeWhat are the best books about stock trading?Top 5 Books for a Budding Professional Trader4 Favorite Day Trading Setups: Examples and How to Use Them - StocksToTrade.comWorking patterns for day trading on the US stock marketIntraday trading |How to filter stocks for day trading - Stockstellar50% Retracement Swing Trading Strategy - Trading Setups ReviewThe 7 deadly sins of TradingGianni Di Poce On Chart Patterns You Should KnowAppendix A-3. . List of some informative Quora Q&A’s. . IMHO, there is at least one very good answer to each of the following questions.What are the most important concepts that transformed your trading after you understood them?I am currently trying to understand the concept of the stock market. Where do I begin?How can I learn in detail about the different sectors of the stock market?How long would it take a gifted individual to learn how to trade stock efficiently?Why is it unrealistic to make 1% a day in the stock market?Dan Underhill's answer to How much of your 25,000 dollar portfolio would a day trader leverage? . . . [ good answer by Dan Underhill, and I recommend reading any and all answers by DH ]What are some ideas for good stock trading? I have been doing stocks on fidelity for about 3 months and have only managed about 30$ Profit in total after putting 700$ in. Should I focus on penny stocks, mid stocks, expensive stocks, or combination?Is the stock market trading more about a technical/analytical game or more a kind of a psychological game? Why?How do you determine trends in a stock?What is the RSI tool / RSI indicator?Are MACD and RSI trend or momentum indicators?Mike Scott's answer to: . How do you interpret the volume of a stock at a given time with respect to the average volume of the same stock? How is it related with the stock price trend?How do you make informed decisions when day trading?Amit Goswami's answer to How do you read candlesticks in trading?What can I do to help improve my live trading execution? I always seem to screw up my own trading progress. . . . [ good answer by Jay Fairchild, and I recommend reading any and all answers by JF ]What is the basic point to trade by support and resistance?How do I start with stock trading?Can I become a full-time trader with $50000?Is it possible to have a 90% win rate trading the stock market like some people claim?How do I differentiate between a fake breakout and a real breakout in a 5-minute time frame for intraday trading?How can I learn in detail about the different sectors of the stock market?Imtiaz Mohammad's answer to As an experienced trader, what is the best stock market advice you can offer for beginners? . . . [ general answer, that also includes a specific strategy / setup ]Appendix A-4. . Links That Discuss Strategies and SetupsPratik Jain's answer to How many types of trading strategies in the stock market are used daily by traders around the world? Which ones?Be VERY wary of spending hundreds or thousands on high-priced trainings or trading courses. . That said, the following links from Warrior Trading are useful and easy-to-read, easy-to-grasp presentations of day trading strategies:Momentum: Day Trading Strategies for BeginnersGap and Go: Day Trading Strategy For BeginnersReversal: Day Trading Strategies for BeginnersBull Flag Chart Pattern & Trading StrategiesMean Reversion TradingWhat does "buy strength and sell weakness" mean in intraday trading? . Shouldn’t it be "buy weakness and sell strength"? . . . [one of the most important links of all here]What are the top / best technical indicators for stock trading? . . . [includes strategies using moving average crossovers (2 EMA’s or 3 EMA’s), plus MACD, Bollinger Bands, Heikin Ashi, and Vortex]Russell D. Daily's answer to What are some of the most successful day trading strategies?ISurya Kamal's answer to What are the best stock daily trading strategies? . . . [ how to use three moving averages together — could be modified to four or more? ]https://www.insidershort.acom/post/intraday-trading-strategy-vwap-and-emaThe Perfect Moving Averages for Day TradingWhat % of swing traders can: (a) View 20 to 50 stock charts [weekly charts], (b) Pick out one chart and predict the price direction [up or down] for the following week, and (c) Average 3 out of 5 hits (or better) over many years?Can the integrated use of support, resistance, trendlines, moving averages, candlesticks, multi-timeframes, breakouts, & chart patterns give the trader a "trading edge" as much as 60/40 versus the random 50/50?Ragnar Lodbrok's answer to What are the day-trading strategies/patterns with a high win probability? . . . [ good answer by Ragnar Lodbrok, and I recommend reading any and all answers by RL ]What's the best stock swing trading strategy?How do I shortlist stocks for positional trading (swing trading)?Swing Trading Strategies overview (SwingTradeSystems.com)What are the best stock daily trading strategies?What are some of the most successful day trading strategies?What are some good intraday trading strategies?What is the idea behind buying a stock that breaks above the 52-week high? Is it still a valid trading strategy?What are some strategies based on EOD (end-of-day) trading?How do I differentiate between a fake breakout and a real breakout in a 5-minute time frame for intraday tradingImtiaz Mohammad's answer to How do I recover all the money lost in stock market? Lost my entire savings of 30 lacs trading bank nifty options. Can someone please help? . . . [about trading options]23 Trading Quotes That Made Me A Better TraderAppendix A-5. . Checklist for engaging in intraday or swing tradingAn intraday trader should be continuously aware of, monitoring, and weighing all of the following:what is the most important general news relevant to trading todaywhat is the most important specific news relevant to this stockhow are the overall market, the sector, and the industry doing at this hourwhat is the “core or primary timeframe” for the trade that I am currently considering or monitoringwhat are the supplementary timeframes for the trade that I am currently considering or monitoringwhere the key support levels arewhere the key resistance levels arewhat is the strength and direction of the current trendwhat indicators am I using, and what are they telling mewhere is my desired entry point, or actual entry pointwhat is my maximum and/or actual bid / ask spread (%) for entrywhere is my initial target, where are any additional targetswhat is my risk : reward ratiowhere is my stopwhat percent of my trading funds are being usedAnd be frequently comparing them to his/her written trading plan for the day.Appendix A-6. . List of important topics for further studyImportant topics that are either not covered — or not sufficiently covered and deserving of much deeper coverage — in this broad outline of technical trading:Trading from alerts — alerts can be generated by many/most trading platforms and some specialized softwareBacktesting your strategy and setups, including risk and reward parametersYour trading journal: . an essential learning, improving, and reference toolShort selling, short interest, short squeezeTechnical indicators: . when and how to use themVolatility, types of volatility, VIX / VXX / volatility indices, trading volatility assetsSector / Industry / Sub-industry breakdownsAlgo’s and algorithmic tradingCorrelation: . Correlated versus non-correlated assets; correlation of an asset to an indexMarket structure and operation: . Bid/Ask Spread, Halts in trading, How to use Level 2 trade data, etc.Order types, including Market Order, Limit Order, etc., their pro’s and con’s, and how and when to useStops, using (or not using) stops, determining stopsExtended Hours Sessions — Pre-market Session, vs Regular Session, vs Afterhours SessionMargin, margin accounts, margin callsStock optionsTrading platforms, pros and cons of various choicesTrading software, stock screeners, stock scannersBrokerage companies, accounts, feesStock trading services, newsletters, websites [free and/or paid subscriptions]Appendix A-7. . Buy-and-hold Investing — Fundamental AnalysisFor those more interested in buy-and-hold investing, and Fundamental Analysis, I recommend the following link:Healthy Wealthy & Wise — Long Term Investing in Best of Breed Stocks — https://www.quora.com/profile/Jim-Beekhuizen/posts—————————————“Profitable trading is 40% cutting losses efficiently, 30% being patient with winners, 20% developing AND maintaining effective trading setups, and 10% everything else — all in accordance with a detailed, sound, written trading plan.”“Give me six hours to chop down a tree and I will spend the first four sharpening the ax.” — Abraham Lincoln“Practice, practice, practice, ’til it all seems sooooooooo familiar and natural, and then you’ll know you are getting somewhere.” — WLHappy Learning! . Happy Investing! . Happy Trading! . Good Luck! . 🍀

The short of this piece (which will get into far more comprehensive detail) is that people should know that the following things are all true:Vern Unsworth, who happily contributed valuable resources to help the boys trapped in the Thai cave, then gave an interview after the rescue in which he rhetorically suckerpunched Musk, throwing shade at Musk’s efforts and motives, despite an admitted near-total ignorance concerning both those things.Musk, who had also happily contributed valuable resources to helping the boys, threw a wild haymaker in return, then trusted a private investigator he shouldn’t have, with this latter mistake being amplified by a journalist who published two emails from Musk about his interpretation of the investigator’s findings despite Musk being clear that he intended for his concerns to remain private, with his interest in sharing them being to provoke the journalist to investigate for himself. [EDIT: This gets worse / more complicated. We’ll get into it.]This whole thing started because CNN had Unsworth repeat something controversial on camera that had negative news value. To my knowledge, no media outlet since has made a serious effort at revisiting that, or at examining or explaining how the above things can all be true, choosing instead to focus solely on Musk’s wrongs (real and weighty as they are), which has only exacerbated the problem.This is an ugly story. No one comes out well. But it’s an important look at biases and incentives and effort, and how these factors often reshape reality into narratives that lead to ends incompatible with anything we ought to call justice.(For those wondering what’s new here vs. my past coverage, a new round of trial documents were released yesterday. What follows weaves the big takeaways into a timelined recap of what we know thus far.)My Relationship to This Story(I debated even including this section, as I don’t think I’m a very important focal point. But I ultimately judged it necessary for explaining why I’m so confident in my arguments, and to illustrate how uninterested the media at large has been in considering their own complicity here.)I published a rundown of Musk’s involvement with the Thai cave rescue on July 16th of last year. My goal was to examine a collection of popular takes on the story, “using context to determine how fair or unfair each claim might be”. This was something I did (and do) regularly as a spare-time project, which runs in parallel to my professional writing (which is mostly corporate).That piece spilled onto Twitter, eventually catching Musk’s attention. On July 17th he opted to retweet a link to it, accompanied by an apology to Unsworth:Nonetheless, his actions against me do not justify my actions against him, and for that I apologize to Mr. Unsworth and to the companies I represent as leader. The fault is mine and mine alone.— Elon Musk (@elonmusk) July 18, 2018His gesture was poorly received, as was my post.Quoting The Verge:On Tuesday, Musk retweeted a fan [not me] who declared that “journalism is dead” and linked to a Quora post [mine] that defended Musk at length, both for his involvement in the rescue mission and his now-infamous “pedo” tweet.Not all the takes were that directly libellous (I did the opposite of defending said tweet), but most shared the same flavor. Mashable said my piece was “quite soft on Musk” and “critical of Unsworth”, which they imagined gave Musk an easy out to offer a half-hearted apology.While I have no personal insight into the sincerity of the apology itself (few do), I took great offense at the general laziness of these takes, leading me to spend a month or so of evenings collecting the available commentary on the case into an exhaustive analysis. But by the time I was done with it, the crowds had moved on, and no outlets I contacted were willing to publish it (in whole or in part).To the best of my knowledge, no outlet has yet revisited their coverage of the story, whether as it concerns me (not very important) or the dynamic between Musk and Unsworth (now the subject of two lawsuits and hundreds of articles).At the heart of it, my interest isn’t really in either of those two men, nor myself. My interest is in pushing for a better standard for journalism, where this story just happens to illustrate the current depth of that need.A Bet Is a Tax on BullshitBefore we head on down the rabbithole, a few points of preface:It’s trivial for two writers to claim the other is wrong. This is why I have a cash-for-corrections policy. Catch a mistake? I’ll send you my thanks along with some spending money. (This applies to journalists too. If someone finds that I’ve misrepresented them regarding something they’ve published, I’ll double the normal reward — happily.)I have no obvious way of knowing if good reporting exists on this story. While all but two of the 100+ articles I’ve read thus far have shared the same basic flaw (i.e., more or less exclusionary focus on Musk), it’s possible I’ve simply not come across the exceptions. I’m happy to offer $50 to anyone who can link me quality examples, which I’ll also share here as an edit. (Will pay the first reader to provide each link. As a reference point, this piece from Vox seems a minimum bar to me. Flawed, but with bright spots. Anything better wins.)The new court docs are all from Musk’s lawyers. We haven’t yet seen responses from Unsworth’s counsel, and won’t for another three weeks or so. Being mindful that this is a significant inequality, I commit to returning to add edits where any new information contradicts or colors anything written here, hopefully within a day or so of new docs being released. (That said, I encourage readers to be mindful that any information new to me would in most case also be new to the reporters whose work I’m deconstructing.)[EDIT: Those new docs were posted last night, Oct 7th. Some edits follows, each clearly marked.]Now, sure, there are obvious adjudication concerns on 1 and 2. While I think I’m a pretty reasonable guy, that’s, ahem, wildly subjective. That in mind, I’m very open to outside commentary here on how to resolve any differences in judgment. I’d be happy to post escrow with some neutral panel, etc.Ok, on to the feature presentation.Timeline RecapIt’s hard to understand this story without factoring the order in which things happened, in that many of these events had domino effects.(Note that some of these dates are +/- one day, as it wasn’t always obvious which timezone an email or article was sent/published in, and I only put effort into checking where I thought it really mattered.)June 23rd, 2018 - Twelve boys and their assistant soccer coach enter the Tham Luang Nang Non cave system.June 24th, 2018 - Vern Unsworth, a local British expat with deep experience exploring said cave system, is informed that the boys haven’t come out. He correctly recognizes that the water has likely risen early, and advises the government to urgently reach out to the British Cave Rescue Council (BCRC).June 25th, 2018 - Thai Navy SEALs arrive. They have no experience with cave diving (very different from open-water diving). The water is murky and rising, and they make little progress.June 27th, 2018 - Three members of the BCRC join the Thais.June 28th, 2018 - US military troops arrive, under a joint command of the USAF. They’re to run point on the operation, with the BCRC’s Richard Stanton acting as lead expert, and Narongsak Osatanakorn (the outgoing provincial governor) serving as political head.June 28th - July 1st, 2018 - Other international divers arrive to support the BCRC, but any rescue attempt is initially judged as too risky. Rain is falling hard, the water is rising, visibility is non-existent, and no one knows if the boys are still alive. But the Thai Navy says no. If they must, they’ll do it alone. The other divers decide they’d rather be the ones taking the risk. They at least have a chance.July 2nd, 2018 - The weather cooperates, and two BCRC divers manage to find the boys — alive! The problem is now how to get them out. The passage is long and twisty, the water is cold and rapid, and none of the boys know how to swim.July 4th, 2018 - This is a global story by now, and many have taken to wondering what they can do to help. Someone on Twitter thinks to ask Musk (who was helpful with Puerto Rico in 2017, and generally likes to contribute resources where he can).I suspect that the Thai govt has this under control, but I’m happy to help if there is a way to do so— Elon Musk (@elonmusk) July 4, 2018July 5th, 2018 - Tragedy. Saman Kunan, one of the Thai SEALs, perishes while delivering oxygen tanks, in part because of the temperature of the water.July 5th, 2018 - On the other side of the world, Musk, perhaps inspired by the Lengede Miracle, begins brainstorming on Twitter, while also reaching out to Thai fixers and other official intermediaries to see what he can offer. In parallel, he sends a team to Thailand, opens his wallet to other contractors (Singaporean surveyors mainly), and begins taking requests for any equipment that might be helpful (he ends up sending 10 Powerwalls, a set of underwater tools for widening the passage, and some high-grade surveying equipment to help those searching for a way to drill to the boys’ location).July 5th - July 9th, 2018 - As an outcome of his discussions with on-the-ground experts, Musk is convinced that a mini sub is his best Plan B offering. This is affirmed by BCRC head Richard Stanton, who provides Musk a list of specification requests and asks him to continue development, as he has doubts about Plan A working for the smallest boy (oxygen mask fit was a major concern). Musk is due in China in a few days, and has his engineers build the best thing they can for him to take with him (much faster than commercial shipping). Time is tight, but they come up with something plausible. It isn’t quite there on all Stanton’s specs, but no concern is raised about fit, and the safety concerns are balanced by the fact it’s a Plan B solution anyhow. Musk also brings an inflatable version shaped to the same dimensions to make doubly sure fit won’t be an issue. Lastly, he leaves orders for his team to prepare to send a smaller 48″ version if need be. [EDIT: Per the October court docs, the fit-check wasn’t inflatable. It was collapsible. There were, however, seven inflatable pods also sent.]July 8th, 2018 - The rescue team begins the mission that the USAF sold to the Thais on a prognosis of an “optimistic” 60-70% chance of success (with ~5 expected deaths). They have a tiny window of opportunity before monsoon season, and this is judged their best shot. Amazingly, four of the boys are out safely that night.July 9th, 2018 - Musk drops off the subs and tours the cave. He leaves acknowledging that the current efforts (which he’s been publicly applauding with enthusiasm) are working, and that the main sub probably won’t be used, but is at least there in case Plan A turns awry. Thankfully, Plan A continues to work, and four more boys come out.Just returned from Cave 3. Mini-sub is ready if needed. It is made of rocket parts & named Wild Boar after kids’ soccer team. Leaving here in case it may be useful in the future. Thailand is so beautiful. pic.twitter.com/EHNh8ydaTT— Elon Musk (@elonmusk) July 9, 2018July, 2018 - From the onset of his involvement, Musk is ripped on Twitter by various media figures, for a weird range of reasons. Some specifically criticize the sub, despite said critics having no personal knowledge of the cave, no experience cave-diving, limited awareness of his conversations with Stanton and others, and little sense of the other things Musk and his team were contributing. (I get into this in far more detail in the two pieces linked at the beginning. The important thing to grasp here is that this criticism is now beginning to get to Musk on an emotional level, as he and team are putting a lot into this. This compounds with his general feeling that many in the press are habitually unfair to him, which has taken a growing toll.This reaction has shaken my opinion of many people. We were asked to create a backup option & worked hard to do so. Checked with dive team many times to confirm it was worthwhile. Now it’s there for anyone who needs it in future. Something’s messed up if this is not a good thing.— Elon Musk (@elonmusk) July 11, 2018July 10th, 2018 - Everyone in the cave is out, rescuers included. And not a moment too soon. As the last group is exiting, a major pump fails. One of many close calls. The closest comes with that smallest boy Stanton was concerned about. But diver Jason Mallison shepherds him out safely, closing out something that deserves the name of miracle.July 13th, 2018 - As the rescue camp thins out, CNN interviews Vern Unsworth. He’s asked to repeat something he said prior, this time on camera. (The following clip is from a Norwegian newspaper’s YouTube account. It’s hard to find the original elsewhere. The most viewed version crops out the part where the reporter clarifies that she’s asking Unsworth to repeat himself, which is important.)July 14th, 2018 - Zeynep Tufekci publishes an op-ed in the New York Times that’s highly critical of Musk. (I reviewed her arguments here. That rundown, together with this, cover a lot of the other criticisms laid against him too, including the furor resulting from the BBC’s framing of Osatanakorn’s “not practical for this mission” comments. There’s a very important bit of context there that most have overlooked.)July 15th, 2018 - A Twitter thread about Tufekci’s op-ed pulls in Musk, who leaves three responses. In one of them he refers to Unsworth as “pedo guy”. When challenged on that claim later that night, Musk responds with “[b]et ya a signed dollar it’s true”. He then deletes all four tweets some hours later.July 16th, 2018 - I publish my original piece.July 17th, 2018 - Musk retweets said piece with his apology. While this calls forth another wave of responses, the story mostly falls off the headlines within a few days thereafter.July 17th, 2018 - James Howard, a self-styled private investigator, sends two unsolicited emails to Musk’s staff, offering to check into Unsworth’s background, hinting at skeletons in the closet. Disclosed emails show that some of the staffers asked each other if anyone knew anything about him, but it seems no response was given at the time.August 6th, 2018 - By now Unsworth had received multiple offers for free legal counsel (something I argued in favor of in my original piece). On the 6th, Lin Wood (Unsworth’s new US lawyer) sends a letter to Musk’s residence, encouraging his counsel to reach out about a settlement. It’s unclear who receives it, how or whether Musk was ever personally made aware of it, or whether it was interpreted as a notice of intent or a shakedown letter. [EDIT: It’s clear from Musk’s deposition with Wood that he did interpret it as a shakedown letter.]August 15th, 2018 - Rumblings of a coming lawsuit grow. Jared Birchall, president of Musk’s home office, decides to contact that investigator. His CV looks good, and he has some references (which are never contacted). Birchall contracts him to research a specific set of questions.August 17th - August 27th, 2018 - Preliminary reports from Howard drip in, all of them quite damning towards Unsworth. Birchall communicates the gist of these to Musk.August 28th, 2018 - The below Twitter thread happens (which began with Musk arguing for an unrelated story correction). This is the first time since his apology that Musk says or insinuates anything publicly about Unsworth. Driven by his understanding of Howard’s reports, Musk challenges Olanoff to look into it more himself (this happens in a subsequent tweet, not the below one).You don’t think it’s strange he hasn’t sued me? He was offered free legal services. And you call yourself @yoda …— Elon Musk (@elonmusk) August 28, 2018August 28th, 2018 - Lin Wood responds to the above tweet.@elonmusk should check his mail before tweeting. pic.twitter.com/3c9QWtdp25— Lin Wood (@LLinWood) August 29, 2018(As an aside, Wood is a bit loose with facts here, which we’ll see more of later. The rescue was long over by the time of Musk’s tweet. Also, tweets don’t go to all your followers. A tiny fraction of those 22 million people would have seen any of those tweets on their feeds. While these discrepancies aren’t that consequential in themselves, I feel this kind of “convenient misstatement” is a systemic problem of which nearly all the parties in our story are guilty.)August 29th, 2018 - BuzzFeed News’ Ryan Mac sends an email to Musk looking for comment on Wood’s tweet. Musk gives an abrupt reply, over-harshly rebuking Mac for shoddy research, pointing to Mac mislabeling Unsworth as a diver (he’s a caver/spelunker who didn’t do any diving in the rescue). This led Mac to, uh, defend himself on that charge, which likely just increased the friction between them. (You can find the full exchange here, under Doc 60, Ex L.)August 30th, 2018 - Musk’s team receives a more in-depth report from Howard. He says there are still things to clarify, but he lists many claims as solid. As it happens, almost all the claims therein will turn out to be wrong, as was true of his prior reports. Howard took them for a ride. When Musk and company learned this is an open question, but the strong presumption (based on their testimony and what fits the evidence) is that it was some time later. [EDIT: From the latest docs, it looks like it took until about mid-September. While there were was at least one major early discrepancy that triggered some questions, the tone of the messages between Birchall and the investigator gradually increase in skepticism over the course of weeks.]August 30th, 2018 - Mac follows up again. Musk responds twice, marking the first email as Off The Record and the second as On Background. Between both, he makes an aggressive series of declarations about what kind of person he believes Unsworth is (based on what he understood from Howard’s reporting, which he’d read or was briefed on earlier that day). The thrust of the emails was “this is how awful this guy is, and you’re defending him when you should really be investigating him yourself, which makes you a bad guy”. [EDIT: One open question is how Musk came to the “child rapist” claim specifically. It seems like he understood from the earliest reports that Unsworth’s girlfriend was actually his wife, and that she’d been 18/19 when they got married, having met some 7 years prior. None of that is true, and “met” doesn’t necessarily imply any sexual relationship prior to the marriage. My read here is that Musk, still seeing red, took the most uncharitable interpretation — which is obviously inexcusable.]September 4th, 2018 - Mac replies to inform Musk that his request to keep his emails off the record was invalid, as Mac hadn’t given prior consent. Later that day he drops this article: In A New Email, Elon Musk Accused A Cave Rescuer Of Being A “Child Rapist” And Said He “Hopes” There's A Lawsuit. It seems clear from timing that Mac and team had spent the intervening days (which included a long weekend) writing this and checking with their own legal counsel, and that they opted against following up with Musk to ask clarifying questions or probe into his views until they were ready to inform him of their decision vis-à-vis his OTR request. Musk, as expected, takes none of this well.September 17th, 2018 - Lin files suit against Musk in California. (A separate suit was also filed in the UK for arbitrage purposes, but I’ve had a harder time finding quality information about it. If/as I’m able to learn more, I’ll add marked edits accordingly.)September, 2018 to September, 2019 - We’ve otherwise heard little about this case in the year or so since. While various court docs have trended briefly on Twitter, Monday’s disclosures were meatier and more sensational, which has naturally resulted in renewed interest.That timeline set, we’ll now zoom in on the most important particulars.The InstigatorsLet’s recall the opening words from CNN’s interview with Unsworth:“And tell me, we just talked about this before, what your thoughts on Elon Musk’s idea was.”Consider this request. Unsworth had said something earlier, presumably off camera, and the reporter wanted him to go back to it now that the cameras were rolling. Why?As you ponder that, note Unsworth’s own deposition testimony:Q. […] how much time by the way did you spend with the SpaceX engineer whose name you don’t remember?A. Very little.Q. A minute?A. Less than five minutes.Q. Did you have any discussion with him about what was going on inside the cave?A. No.Q. Did you have any discussion with him about the rescue sub?A. No.Q. What did you talk to him about?A. I can’t recall what about.Q. Okay. Other than [that…], did you have any other interactions with anyone else working with Mr. Musk at the rescue site or during the rescue operation?A. No.Q. And am I correct that you weren’t in any of the meetings with Mr. Musk or those working with him in which they discussed the cave’s conditions or the rescue?A. No. [I assume the answer was intended to be yes, and that the wording confused him. Otherwise a one-word answer would be odd here.]Q. And you were not in any meetings with Mr. Musk or those working with him when they were working on the rescue sub, were you?A. No.Q. Okay. The next thing you said to the CNN reporter was “it just had absolutely no chance of working,” and the “it” in that sentence is the rescue submarine, correct?A. Yes.Q. And before you sat down for the July 13th CNN interview, you had investigated whether the rescue sub would work, had you not?A. Could you rephrase — repeat the question, please?Q. Sure. Before you sat down for the CNN interview on July 13th, you had investigated whether Mr. Musk’s sub would work?A. What do you mean by “investigated”?Q. In my question I meant you gathered information to enable you to reach a conclusion as to whether it would work. Had you done that?A. Yes.Q. And you talked with people before you met with CNN to get their views as to whether Mr. Musk’s rescue sub would work, correct?A. No.Q. Did you talk with anybody?A. No.Q. Did you look at videos of the rescue sub before you met with CNN on July 13th?A. Yes.Q. In terms of gathering information sufficient to enable you to make a decision as to whether the rescue sub would have worked, what besides viewing a video did you do?A. I just based my opinion on what I saw in the video compared to the conditions that were occurring in the cave system.Q. And approximately how much time did you spend gathering information about the rescue sub and whether it would work or anything about it before you met with CNN?A. Not a great deal.Q. How much?A. Just the video.(These deposition extracts are available here under Doc 62, Ex 1.)So, Unsworth knew nothing about:Musk’s involvementMusk’s team’s involvement (beyond a short conversation he can’t remember with an engineer whose name he forgets that apparently wasn’t about anything relevant)Musk’s conversations with Stanton and others (who were the real subject-matter experts here)The sub itself (beyond whatever it was he observed in watching a short video)The planning that went into the sub’s designThis in mind, why did CNN judge him a fit person to answer questions about the sub or Musk? Remember, this wasn’t impromptu! CNN asked Unsworth to repeat himself for the camera, meaning there was intervening time they could have used to ask questions to establish his credentials here (or lack thereof).From my vantage point, it’s hard to see this decision as anything other than “controversy is good for ratings”. It didn’t inform. Nothing that Unsworth could have said about Musk would have informed. All it could do is incite.(If anyone can find footage of the full interview, I’d love to see it. I’ve looked and couldn’t find anything on YouTube or CNN’s web archive. Just the two versions of that one clip.)Anyway, if CNN was instigator number one, we then have Unsworth’s own eagerness to cast stones.Let’s take his interview comments line by line:He can stick his submarine where it hurts.The best-case interpretation here is that this was a callback to Unsworth’s prior conversation with the reporter. But why say it again on camera as your opening?! So weirdly and needlessly aggressive.It has absolutely no chance of working.Says the YouTube detective.He had no conception of what the cave passage was like.This would be impressive considering that Musk had people at the cave feeding him info. And Unsworth knew this! He talked to one of them! (Musk would have had obvious reasons to confirm this through other intermediaries anyway, but part of his rationale in sending his own engineers was to help answer questions like this.)The submarine, I believe, was about 5 foot 6 long, rigid.Off by half a foot. And there was a 48″ one also being fabricated.So it wouldn’t have gone around corners, around any obstacles.We have no reason to believe this. I get into this whole fit concern more here and here. I can’t say for certain that fit couldn’t have been an issue. But I can say that, so far as I can tell, no one who publicly raised concerns here ever presented any meaningful evidence. There was a single turn that did seem awfully tight, but Musk had sent appropriate tools for that very reason.It wouldn’t have made it the first fifty meters into the cave from the dive start point.I’ve so far found no evidence that would back up this statement. The most concerning turn was much farther into the cave. (That said, it seems Unsworth may have made more comments about this that aren’t in the trial docs published so far, so I guess we’ll see. But the contents of Stanton’s emails on the subject never raise this concern, and I’ve found no incidents of anyone else from the rescue/dive team suggesting anything similar.)Just a PR stunt.About that — let’s go back to his deposition:Q. […] Was there ever a point in time where you have felt that Mr. Musk was trying to claim credit where credit was not due in relation to the cave rescue?A. No.Q. Was there ever a point in time where in your mind you thought Mr. Musk’s motives for involving himself in the cave rescue had nothing to do with trying to rescue the kids, but were instead for some other purpose?A. No.Right.So, in sum, we have a guy who did some genuinely heroic things — who then decided to unload on someone he’d never met and knew little about, for reasons that (so far as we know) are obscure to all but the man himself.It’s hard to see why this shouldn’t merit a measure of condemnation. While we ought to be empathetic to the fact that Unsworth was exhausted and likely misinformed, those are mitigating factors, not exculpatory. It may make what he did less bad, but it doesn’t make it anything other than bad.Most of all though, I wonder why we wouldn’t apply some discounted form of this same empathy and mitigation to Musk himself?Musk was similarly exhausted.Neither were aware of the other’s role, and neither did much to learn what they didn’t know.Both made wildly negative judgments about each other on no meaningful evidence.Both had mitigating-but-not-exculpatory circumstances.Both have made unserious arguments to downplay what they did.This doesn’t make the cases equal. But it does make them comparable. Musk is guilty, sure. I’ve always felt and argued so. Pretty much everyone has. He’s had his trial by public opinion already, and it was a landslide. But judging one person of many in a brawl isn’t how you accomplish justice, nor is it how you decrease the odds of recurrence.As such, we’re going to leave the Musk/Unsworth thread for a bit, and pivot to the majority posture of the journalists involved. Boiling it down, we get something like “we bear no guilt here; Musk’s meltdown was a result of his character and choices, and wasn’t at all influenced by an environment we helped create”.Modern JournalismCompare these two excerpts (emphases my own):Elon Musk paid a private investigator more than $50,000 to search for compromising information on a British cave explorer that he called “a pedo guy” on Twitter last year […] the billionaire hoped to obtain compromising information that suggested Unsworth was a pedophile.and“There is some urgency to the situation,” Birchall wrote in an email on Aug. 27, 2018, to Howard, who claimed to have worked with MI5 and for billionaires including George Soros. “We believe there are planned attacks in the media and/or a lawsuit that are imminent. With that said, we aren’t looking to frame anyone.” In the email, Birchall, also included a list of questions he and Musk wanted answered.Now let’s complete the bolded quote:With that said, we aren’t looking to frame anyone. If there is definitely no smoking gun, then let’s get the information necessary to make that determination and it is what it is.”I’ll let you guess who wrote those excerpts, and why they were framed as they were (where the article opens with the negative, and the balancing quote is scalpelled and placed in paragraph six).Anyway, consider the difference between these two statements:The point of my investment is to prove someone guilty.The point of my investment is to find the truth.The difference is subtle, but not trivial. Framing shapes how readers interpret things. Any editor who cared about neutrality or accuracy would emphatically rule out any lede or headline close to #1. But that isn’t what most still-employed editors are focused on today. They’re largely paid to generate, promote, measure, and manage. The issue I’m describing is considered quaint by most. Who even has the time it takes to sit with these questions for every piece?[EDIT: The latest court docs confirm that Birchall offered a $10k bonus if the investigator found something damning. If this had been public knowledge at the time, I can see the argument for it justifying BuzzFeed’s framing. But it wasn’t.]Yes, Musk spent tens of thousands to find the truth. This isn’t an objectively unreasonable action, and that it ended disastrously is neither here nor there to the decision itself. Someone says “the guy threatening to sue you might be hiding something, and I can find out for sure”, and you say “huh, well go ahead and check, as we’d like to know either way”. I can also see the case for not doing this, but that has nothing to do with how I’d write about it. (I also just wouldn’t write about it. There’s no story here. Pre-trial opposition research in cases like this is so commonplace that it’s not worth even a blurb. Framing standard practices like they’re bombshells is just cheap sensationalism.)This is just one example. For the sake of length, I’m putting a bunch more into an appendix, which will also take a closer look at Mac’s decision to reject Musks’ off-the-record request, and how both Mac and Musk could have accomplished nobler ends in a less destructive way.For our purposes here, I’ll suggest the following:Journalism is increasingly a clickshare business. Editor-to-writer ratios, average time to publish, and budget per article are all plummeting. (The NYT is the cash king, and just look at what’s happened to editors there.)More specifically, there are also very few public editors left in journalism (whose job it is to police and investigate their outlet’s own coverage). The NYT let their last one go in 2017. It’s now difficult to impossible to get anyone there to listen to correction concerns. (For an immediate example, see my letter here, which drew no response.)There’s good business in antagonizing Musk. You’re guaranteed lots of clicks and tribal support. And most don’t even have to do much/any research! Just find the going headline, re-write a few paragraphs, then let news syndication services do the rest. Sure, you might be wrong, and the framing might be bad, and you might be reinforcing a flawed and misleading narrative — but when’s the last time anyone was actually punished for that? More media folks today get fired for old tweets than they do for current coverage.Musk has no obvious tools in terms of correcting faulty coverage. If he tweets about it, his critics say he’s whining. If he accepts it, that comes with collateral damage to his companies and employees and his own mental health.When you combine those dynamics, it’s not surprising that fair/neutral/detailed coverage on Musk or any of his companies is pretty tough to find.You may think I’m hyperbolic here. If so, I really do encourage you to check out the links in the appendix. This story is just one of many.Now, none of this exonerates Musk here. He’s certainly done things that deserve considerable critical coverage. But the idea that him being rich and influential should disqualify him from a weighted sentence is the kind of thinking we were supposed to throw in the dustbin 200 years ago. That he should be held to a significantly higher level of accountability than a guy off the street is inarguable. But that we should desire blood for his sins without considering the culpability of anyone else involved is genuinely dangerous.Without this shoddy journalism, Unsworth’s clip never gets aired, thus never drawing a response from Musk.Without this shoddy journalism, people understand Musk’s contributions in context, leaving him with nothing legitimate to complain about.Without this shoddy journalism, Musk is less on edge in general.Without our clicks, this shoddy journalism isn’t profitable, and therefore doesn’t exist.We’ve been ready (as we should be) to discuss what Musk has done wrong. Are we ready to talk about what we’ve done wrong?The Lawsuit ItselfI’m not a lawyer, and I don’t have a deep understanding of Californian juries, nor the nuances of the legal standards most likely to be included in their instructions. I’m not sure many outside of local experts do.That said, I can offer a few general comments here:One important question is whether or not Musk had a continuous belief in Unsworth’s proclivities. The jury will have to decide on Musk’s likely mindset in the gap between (paraphrasing) “shut up you big pedo” and “wait, this guy is actually a pedo!”.Musk’s argument is that his original comment was a mix of “I don’t like his look” (super subjective) to “old white male pensioner living in Thailand” (gross application of low % stereotype) to “Google says the province he lives in is a hotbed for child trafficking” (true), and that he decided to let his temper take him the rest of the way. While this was a very dumb and reckless and cruel thing to do, the question is whether he was honest in his apology as to this being more runaway anger than serious accusation.Getting even more granular, there were three distinct potentially-libelous moments.The original set of four tweets (mainly “pedo guy” + “bet ya a signed dollar”).The “strange that he hasn’t sued” tweet.The two emails to BuzzFeed.Taking those in reverse order:Libel isn’t the same slander. Libel requires publication of some form. I don’t know how you charge someone with libel when they went to lengths to say “I don’t want you to publish this”. [EDIT: See note at end. It seems like Musk’s team did try to leak these claims elsewhere.]In the case of 2, it will be on Wood to prove that this was a direct public callback to “pedo” and not a general “this guy is hiding something” implication. It will also hinge on whether Musk had reasonable cause to believe his investigator’s reports. (Though those two things are in tension.)1 comes down to how you parse the “bet ya a signed dollar” tweet, as it grounds the meaning of “pedo” to the most likely interpretation by the guy Musk was responding to (not what it may have meant to someone else in some other place at some other time).My handicaps here in mind, it seems likely to me that this last question is his real vulnerability.That said, one counter-argument would be that the first set of tweets was Twitter puffery, where a reasonable person would assume that Musk was just blowing hot air. Subjectively, this kinda fits with the responses I saw. I don’t know anyone who walked away wondering if Unsworth really was a pedophile. They just chalked it up to Musk’s temper. (Of course, I could be blinded by my social context. Perhaps those in other circles had a different take? I’m sure Unsworth’s team will try to find and number said people.)Ultimately, it’s a tough case. I could see it going either way based on whichever lawyer is more persuasive. But, personally, I’m much less interested in the binary outcome than I am the underlying questions of justice — which trial mechanisms aren’t well-designed to answer.Rival Conceptions of JusticeQuoting from another trial doc (Doc 62, Ex 12), here’s a comment from an email that Unsworth sent to an ABC News reporter:Better get his BIG cheque book out.Now, there’s nothing nefarious in looking forward to getting paid. People who file libel suits reasonably expect to see something for their pain, which one imagines is amplified when the defendant is a billionaire. But this is a data point, and it’s hard to argue that Unsworth’s real interest now is Musk clearing the record (seeing as the latter’s deposition has already effectively done that). This is mostly about money at this stage, and about Unsworth’s conception of justice.By what we can understand of Unsworth’s logic from his interviews and legal filings, he’s the good guy and Musk is the bad guy, so BIG money should transfer accordingly. And Wood is happy to sell this image.Example (from Doc 63, Exh. 9)Prior to the cave rescue, [Unsworth] had no previous experience with the media. When interviewed by CNN, he was expecting to be asked about the rescue and was not at all expecting to be asked questions about [Musk] or his tube. [Unsworth’s] response was spontaneous, but well-justified. He honestly spoke his mind and he had no intention of denigrating [Musk], simply a desire to give a frank answer to the question period.So, about this:LMAOI’ll grant that media was new to him, but he’d already done a number of interviews by this point. After your first few you get the idea.He wasn’t expecting to be asked a question THAT HE’D ALREADY GIVEN AN ANSWER TO EARLIER TO THE SAME REPORTER?!Spontaneous second takes. Got it.Well-justified???“I didn’t meant to denigrate you when I questioned your competency and said you’d pulled a PR stunt” must be the new “no offense, but”.It’s exceedingly difficult to take this seriously. Yes, Unsworth is the net victim here. But he did throw the first punch — an ugly and undeserved one — and nothing we can say about either him or Musk in terms of comparative judgment is meaningful if we leave that out. You can be a victim without being an innocent victim. Unsworth is one, not the other.But does his own level of guilt mean he shouldn’t get anything, or that Musk should get off free?My suggestion in the original writeup (emphasis new):Working under the assumption that Unsworth is innocent of the charge, he should sue for libel. If he can’t afford to, he should be helped. Or Musk should reach out proactively to donate to a charity of Unsworth’s choice to begin his amends.Of course, that’s behind us now. Either Musk will be found innocent and Unsworth will get nothing, or Musk will be found guilty, which will leave the jury with hard questions concerning compensatory (restoring Unsworth) and punitive (punishing Musk) awards.In the first case, the deposition extracts suggested that Unsworth has experienced little-to-no financial or social damages. He couldn’t point to any examples of closed doors or changed perceptions. He’s still widely viewed as a hero. He even got a well-deserved MBE (prestigious British honor) for his contributions.That said, general (psychological) damages are thornier. There’s a certain anxiety that comes with not knowing how libelous (or libelous-ish) claims will be received, which can be non-trivial in terms of net effect on mental health. I know I was concerned for a few days when I was getting dragged for what I wrote on this subject. I make my living as a writer. If any of my clients were to take those criticisms seriously, I’d be looking for a new line of work. Now, obviously the perception of a being a possible pedophile is far, far more stigmatic. But it isn’t obvious that anyone of consequence believed Musk’s claims, just as none of my clients were overly concerned by the unmoored ravings of Angry Twitter. Even so, I can see a strong case for reasonable compensation here for Unsworth. Enough to cover a few very nice vacations with his wife, and maybe some counselling to deal with any residual damage.As for punitive damages, it’s hard to see the case for any — not because Musk should get off free, but because in California all punitive damages are awarded to the plaintiff (less legal fees). Why should Unsworth or Wood get rich off this? You suckerpunch a guy (however hard) in a sensitive spot, and he hits back with reckless force. It’s one thing to ask for him to cover your medical bills, and to demand anger management classes or whatever. But to be a substantial beneficiary because the dude you punched was rich and hot-tempered? That’s a horrible sort of precedent.If Unsworth loses, I would challenge Elon to make a significant donation to a Thai charity fighting child trafficking. A non-trivial fine (voluntary or not) for his behavior feels both appropriate and necessary. But if Unsworth wins, I can only hope that the jury will be mindful of what they’re rewarding and why (or that Unsworth will own his part and donate most of the money, which I suppose would be equally good depending on the level of damages).What Have We Learned, Charlie Brown?Some obvious morals here:Never entertain or broadcast uncharitable views of anyone without hard evidence (which you should always share for validation).Always get (and verify) the receipts before forming judgment. This is especially true when the findings are awfully convenient and/or fit with pre-existing narratives/suspicions.If you violate the above rules, you probably shouldn’t be shocked when your target gets very angry with you, and if consequences follow.If you’re rich, you should do yoga and attending regular counselling. You can afford it, and you can’t as easily afford not to do it.Always do above-and-beyond diligence when vetting a PI. If you don’t, any liability is on you.Always make sure that journalists consent to OTR before you start talking.Never blindly trust that reporters want the same things as you, or that their specific constraints are amenable with researching and communicating complex truths. Always make sure.Now, if that last one feels like a cheap shot, let me pose a question:If someone were to read 10 articles (from big-brand publishers) on this story, how would they rate the journalists who wrote them in terms of giving a full and measured and contextual account?To reiterate, I’m happy to put put money to mouth and pay $50 for any example that meets those criteria. I’ve read a lot on this topic, and I think I’ve found exactly one to praise (this one from Daniel Cooper, which though I’d quibble with it in places, did nicely showcase those three qualities).I tend to think that modern journalism models are largely at fault here. That I write these things in my free time is both disadvantage and advantage. While it’s always better to be paid, once you get paid you subject yourself to a model, most of which are bad. Few that are being paid for four hours to get a story done will spend eight, and some stories take a multiple of that. I’m hundreds of hours into this one, and I’m skeptical that anyone could do justice here in less than a full week or two. There’s just too much information to consume before you can have any weighty conclusions.UPDATES/EDITS:Returned here the morning of October 8th to leave some edits based on the latest round of court docs (this time from Unsworth’s side). The big reveals:Birchall had offered a bounty for incriminating info. (Nothing really notable about opposition research in itself. But admittedly a pretty bad look to offer more for negative results.)Birchall had tried to work with the investigator to leak a set of negative claims to UK tabloids. (The idea was ostensibly to get them to investigate and replicate their findings — but still an ugly tactic that isn’t going to sit well with a potential jury. And in the event that they expected that any of the outlets would print the claims on background alone, that hints at an even darker problem.)Musk’s team had begun pushback on Osotanakorn’s statements before the rescue had finished. (This feels benign to me. The negative press was immediate, and I can see why PR folks would want to jump on it through private channels. While the timing seems bad optically, it’s not like this happening in parallel was distracting from the rescue.)Musk seems to have gone beyond his investigator’s findings in his “summary” to BuzzFeed. This is harder to adjudicate, and I’d prefer to review the transcripts more thoroughly this weekend before trying to have a firm opinion here. Will circle back. But even the best reading here isn’t good.There were other minor details that came out in the deposition extracts that will require update/corrections/clarifications across previous pieces, which I hope to get to this weekend:The fit-check sub was collapsible, not inflatable. There was a separate set of inflatable subs (purpose unclear).Not clear anymore if there was a difference between the “pressure pod” and the mini-sub. (Lots to parse in the Doc 81, Ex 57 group chat. A bunch of options were discussed, and it’s not always clear which is which. Will need more time to review and sort out. On the whole though, the chat shows a lot of bright people working hard and fast on generating feasible/high-impact solutions.)More detail about the interactions between Musk and the various divers (seems his main contact was Ben Reymenants, one of the Belgian support divers). Plus more from the unredacted string with Stanton.