We read 42 books about trading so you don't have to
Introducing ChartsTwo, powered by deep learning and Nvidia, of course.
It's the first day of Q2, and after so much upward momentum in Q1, it's really hard to ignore the 2TheMoon references all over social media. Vigorous buying orders have met all attempts by the bears to break major resistance levels. So much so that some would say on this Easter Monday that the bulls have been doing God's work, destroying any generational wealth ill-acquired during the last time the markets were sick in 2022.
At SharpeTwo, we must admit that our data analysis skills have been seriously challenged throughout Q1. After a thorough analysis of our performance, we first wanted to apologize to our readership. We've been fooled by randomness and understood that some changes were needed. What is the point of selling volatility when it is so cheap? Any entrepreneur would tell you—you need to sell products with high margins, and at VIX 13, there is clearly no premium in these options.
However, we wouldn't renege on our principles either. Buying volatility is a tough job only reserved for true masters of the craft. Even after a three-day binge on Ayahuasca, we would never recommend it to retail traders. We knew the solution had to come from elsewhere. Inspired by many successful trading accounts on social media, we went on a three-day silent retreat to find our mojo back. If it worked for them, surely it would also work for us.
And the least we can say is that we used that time to the best of our abilities. During that retreat, we read 42 books about trading, so you don't have to. Some do that in a year, but facing the urgency of the situation, we did it in three days. We refused to sleep, relentlessly seeking the pinnacle of trading success. And we finally got the answer in the last and 42nd book of our reading spree, a testament to the amount of garbage you can find in trading literature. But also proof that the Universe opens the golden path to those who don't give up.
We now recognize that we were completely wrong about the trading game. Looking at straddle prices, spending so much time comparing implied and realized volatility, and using all our resources to recompute the VIX for our different ETFs was utterly useless.
We need to talk to you about our 42nd book, which changed everything and finally got us on the right path. An obscure author wrote it called Eaun Clairsint. You have never heard of it because rumors have it that Jim Simons and Ken Griffin spend at least 3 billion per year to ensure it is not distributed. This makes Eaun a very wealthy man, and he spends most of his days in exotic destinations when he is not on the private islands he bought almost 55 years ago, not too far away from Australia.
This book was so profound that we needed to rebrand the newsletter and align it with our new philosophy. Today, we are proud to say that SharpeTwo has become ChartsTwo. This would not have been possible without our trusted partners and sponsors, Nvidia, who stuck with us even during that tough Q1. Thank you immensely for your support and for making this project a reality.
They provided their latest Blackhawk GPUs, and after a few hours of manual configuration (pro tip: CUDA is not that hard anymore, and ChatGPT is a master at it), we are very proud to present our new deep learning-based model, which tirelessly analyzes thousands of charts per second.
To our knowledge, we are the only operation using AI and deep neural networks at scale to increase the value for our readership. Here is how it works:
We have collected charts and candlestick patterns from 10,888 stocks listed on the US stock market over the past 25 years, including even the delisted ones, to ensure we are free from survivorship bias, especially during rocky markets. For each day on the market, we took a screenshot of the current stock pattern and the performance over the next month. For those interested in statistics, this means 10,888 * 252 * 25 pictures, or more than 68 million! The amount of disk space was gigantic, and so was our cloud bill. Because of this, we are long on Microsoft, hoping to cash out on their dividends to absorb the costs.
Anyway, we then trained a deep neural network on that dataset, so deep that it became silent when we explained the architecture to ChatGPT. After a few inquisitive prompts, we only got this cryptic answer: "Sam wants to talk to you." We were unsure what to make of this, but some of our Reddit friends confirmed it was the answer OpenAI sent when your usage of ChatGPT is so advanced they may be interested in hiring you.
But we are not remotely interested. Instead, we are fully focused on making ChartsTwo a success and bringing some fantastic technical analysis directly produced by AI every day to minimize human bias and reduce errors in interpretation. This is truly revolutionary.
We couldn't wait to share this news with you and couldn't finish this article without introducing the first prediction from our models. Sit down and breathe deeply because you are not ready for the first trade:
Buy equities and short VIX futures.
We’ve warned you, didn’t we? Truly impressive.