One of the most surreal and amazing benefits of running CitriniResearch is that I have gotten to meet an astounding number of investors and traders that I respect (I have a high bar).

Everyone from legendary macro veterans, deca-cycle semis investors, PMs you’d never recognize casually moving billions of dollars a day that have racked up mind blowing total PnL over decades, single manager HF guys who’s AUM is 80% their own money, individual investors with truly silly CAGRs on their PAs et cetera, et cetera.

And, for one reason or another, these people let me have their phone numbers. Today, while staring heatedly at the SK Hynix chart that I sold 200% ago in terms of share price and 5 weeks ago in terms of time elapsed, I had the idea to message a bunch of them with a simple request:

“Let’s try to save some unsuspecting traders. What’s your single best tip for trading/investing through a parabolic move?”

I’m sure some of them would go on the record, but I’m keeping it anonymous - I promise they’re all excellent at what they do. Here were their answers:

“Most of the time in a parabolic blow off top you get a big quick move down, like -20 to -25%, then dip buyers drive it up close to (but not right back) to where it sold off from. This is your best chance to go short / get out near the top.”

“Trailing stops. Keeps you in but you can’t die.”

“Volatility increases near the highs. Just enough to ensure that everyone is positive the huge down day is just another dip to buy. If you’re up on a stock 100% in a month, then down 10% in a day and up 15% from there the next - the top is close.”

“Sell slowly”

“You will sell too early if you’re an investor and something you own goes parabolic. If that happens you’ve got two options: get back in the same week you sell. If you don’t have the balls to do that, go find another play, you’ve tapped this one.”

“I always sell too early, so I’ve learned to leave tail positions on. 10-20%. Reduces the risk you’ll reenter poorly.”

“A parabolic move isn't the time to play hero ball.  Don't sell the first dip. Sell the failure after the first dip.  One form of discipline is to count days from the breakout for a potential top. 34 or 55 are most common.  As parabolic moves tend to retrace to the breakout out. Silver is a good example.

Finally, one has to ask themselves: is it better to stay out and watch everyone else make money, or chase, lose discipline and thereby put in the top.  The pain of losing is far greater than the joy of winning.”

“Fundamentally… Once price disconnects from reality, it often requires a new flow to stop it. That new flow is usually when the price gets so out of wack that it brings in a participant that usually isn’t there. Sometimes that participant is a govt or regulator, sometimes it’s a new investor or supplier”

“I don’t care if you’re Benjamin Graham and Warren Buffet’s love child, in a parabola everyone starts looking at lines on charts so you better find some lines you like.

Zoom out to weekly candles if you use candlestick charts and put a 3 or 4 week exponential moving average on it. If the wick and body of the candle don’t touch that line at all, you’re nearing the point of exhaustion.”

“Trailing stops”

“Accept you’ll eventually get caught dancing when the lights turn on.”

“Parabolas don’t top on bad news. In my experience, they top on no news at all.”

“In a parabolic move, use short dated options even with vol high if vol is realizing.  Don’t look at how far the strike is from the money in % terms.  Imagine it in compounding terms…if we are up 10% a day for 4 days where are we?”

“Use a trailing stop when you’re in a parabolic uptrend, then short the move up after you get stopped out with a stop loss where the first move topped”.

I doubt any of these answers will make parabolic moves easier (either psychologically or technically), but you never know what’ll click at the right time!