Stuff I wish I knew before investing

William Law
5 min readMay 10, 2021

*Disclaimer: never financial advice, this is just a reflection of all the things that I’ve learnt from trading and investing.

Originally posted on March 14, 2021, on my blog.

The past three months of actively day and swing trading have taught me a lot about understanding markets. I never understood how others would come to conclusions about the market sentiment and how a stock would move. I wanted to write this to summarize the important things that I learned and want to remember — like a note to look back.

Market indicators

At the time of writing this (Feb. 28, 2021), these are the levels that I generally watch.

I found that market indicators gave a sense of direction, if not a sentiment of the market behavior at the time of taking on positions. This has given me some clarity for opening long positions and can be good for swing trading.

Futures

  • US30 - Dow Jones futures
  • US500 - S&P500 futures
  • USTECH100 - Nasdaq futures
  • US2000 - Small cap futures

$VIX - volatility indicator

  • The levels that I look at:
  • Above 20 → warning
  • 22.5 → caution
  • 25 → not good

$VXX - fear/uncertainty indicator

  • The levels that I look at:
  • Below 16 → good for bulls
  • Above 17 → not good
  • Note: this is an inverse relationship with SPY.

US 10 year treasury bond ($US10YR)

  • The levels that I look at:
  • Under 1.4% → good for equities
  • 1.6% → as support
  • 1.9% → not good

Crypto

  • $ETH → performance of not only ETH but also altcoins
  • $BTC → generally indicates market sentiment/movement
  • $DXY: The levels that I look at: 88.5 - 90.8 to be safe for crypto
  • $BTC.D: For altcoins, broadly speaking, you want the BTC dominance to fall
  • For BTC → you want BTC dominance to pick up for BTC to ramp

--

--

William Law

swe // trading — prev: @MLHacks, eng @ early-stage startups | Twitter @wlaw_