$ETSY ( ▲ 6.18% ) has been a great trading sardine the last few months and yesterday we broke out with news, sure, it faded today, but we got the move and likely more down the road.

I am going to quickly go over the idea generation process we use in the report to track potential ideas - at a high level.

This is what it looks like in basic form. You do the work ahead of idea, you dive into it, you set up the targets and then you wait for the entry.

That might be next week or in five months, the point is work is done ahead of time.

This is the process we run in The LongVol Report. We take a thought of an idea then start to dive into the sector or names that catch our attention.

They can be a multitude of things:

I need idea flow - that’s what matters to me personally because without it then I am aimlessly wandering around looking for random ideas to get into and that is not a recipe for idea generation, nor is it repeatable.

For me I think this is a simple idea: more idea flow = more potential trades = more alpha.

I always make the joke that I do “all my own stunts” but that’s the truth, I really could care less what other fund managers are doing, what someone else has to say or what is written in an article. I see it all the time and saw it today on X (no less) of someone talking about Michael Burry’s returns - my view: why do I care? What does Michael Burry have to do with me generating returns?

The answer is nothing. Waste of time.

What I have taken away from other fund mangers over two decades are how they view certain things which I incorporate or skip…

One of those was from Steven Cohen on how ideas are presented.

Step one:

What are the details? Why do we care? What are the headwinds/tailwinds?

We began tracking this last December. It was added into the report in January.

Step two:

What are the price targets? We call them ‘soft-targets’ - without these you’re every other would be investor pretending to be Warren Buffet.

For those of you in real estate. Do you go into a deal and think, “I am not sure where I am going to sell this but let’s take a punt at it and see” - of course not.

But when we get to equity investing this seems to skip the minds of investors.

Some of you read this and only read the price action then miss the catalyst driving it - the why matters more than the price but the technicians don’t care about that hence why they tend to panic out when something moves against them -5%.

Know what you own and why you own it.

Step three:

Management of the position. Management of a position varies person-to-person, I am still long this name and sold some of it into that move yesterday but I own the equity and calls on it still because of my longer-term views.

Many of you cashed in and that’s great too!

Conclusion

This has worked for me for a long time so when you see me make fun of call flows, dark pools, news and other stuff it’s not because I am saying it doesn’t work and that I don’t care, which I don’t - it’s me saying I have a process.

The process is repeatable and once you can do that then you have idea flow and the more idea flow you generally have the better chance of you building out a portfolio of ideas to monetize.

If I go back to my futures trading days (and those of you that trade futures can attest) our version of idea flow was not as complex because we were just trading levels and order-flow on ES, NQ, CL, DAX Futures - but even with that, you had to look and see what the play was, ahead of time, just like we do in TLV Report.

Congrats on $ETSY to those that covered the long and congrats on $CELH was nice so far this week.

Dan