YT YouTube2Text

YouTube2Text → Transcripts → 32,000% in 10 Years - The TQQQ Trading Strategy of a 60 Year Trader | Les Masonson

32,000% in 10 Years - The TQQQ Trading Strategy of a 60 Year Trader | Les Masonson — Transcript

by TraderLion · 12,466 words · 2,065 segments · language en · Watch on YouTube

Open in transcriber Summarize with AI Download SRT/VTT

Full transcript

0:00So, I did an analysis using AI. I said,
0:02"What if T triple Q were available back
0:05in 2000? How would it have done between
0:072000 and 2009?"
0:10And the result was that you would have
0:12lost all your money
0:13>> [music]
0:13>> twice cuz it got destroyed. So, I'll be
0:15using this strategy, and then I've done
0:18some backtesting already, and the T
0:20triple Q went up 32,000% during the
0:23backtest period. I don't care what's
0:25happening in the outside world because
0:28there are a million variables. So,
0:30trading the market, all you need is a
0:31screen with price on it. And they don't
0:34all cross at the same point, but once
0:35you get three or four of them crossing
0:38and you're at the bottom of a three
0:39standard deviation channel, the odds are
0:42that the NQ will reverse its direction.
0:44When they drop low here, like over here,
0:46the this dropped below, and then it
0:48reversed up, reversed up, dropped below
0:50the 200, you get back in. This was a
0:52great buying opportunity. April of 2025,
0:55cutting losses is something that most
0:57people have problems with. They They
0:59don't want to say that I'm I'm wrong or
1:01I made a mistake, but in trading, it's
1:02great to make a mistake. And as long as
1:04you don't repeat it, and as long as your
1:06wins are at least twice your losses as
1:08far as dollar terms, you're doing well.
1:10Number one is get yourself an education,
1:12no matter how you get it. Number two is
1:14decide if you're going to be an investor
1:16or a trader. And then also make sure you
1:19keep your accounts separate and develop
1:22rules and cut your losses. And with
1:24those four things, you'll do very well.
1:29>> Everyone, how's it going? I just wanted
1:31to let you guys know that the D few
1:32Black Friday sale is now live. We're
1:35really excited about this offer, and we
1:37think a ton of traders will take
1:38advantage of it. So, if you've been
1:40waiting to join D few or been wanting to
1:42upgrade from a monthly to an annual
1:44subscription, this is the time to go
1:46ahead and move forward. What's included
1:49is that you can get a full year of D few
1:51for $490 a year and be locked into that
1:54price for as long as you're a member.
1:55[music]
1:56This is important because after this
1:58promotion ends, after this Black Friday,
2:00we will be raising the annual price to
2:02990 a year so that we can continue to
2:05basically invest in [music] new
2:07features, add data packages, and
2:09increase functionality to help traders
2:11improve and operate in the [music]
2:13markets. So, what's included is the Dfyu
2:15dashboard, trading journal and
2:17analytics, Dfyu custom indicators, Dfyu
2:20AI, and everything else we currently
2:22have to offer.
2:24But that's not all. And this is where
2:25the deal really gets good is we're also
2:28offering for that same price two live
2:31trading masterclasses included. The
2:34first will be in November and focused on
2:36growth stock trading setups. [music] So,
2:38trading breakouts, pullbacks, and
2:40gappers, and how to build a full system
2:42and workflow
2:43>> [music]
2:43>> around those setups. The second
2:45masterclass will be in December, and
2:47that'll be focused on the other side of
2:49the equation, basically sell rules.
2:51[music] So, we'll be talking how to sell
2:53into strength, sell into weakness, and
2:55how to manage your best trades
2:56effectively so you can get the most out
2:58of, you know, those outlier trades. Both
3:00of these masterclasses will have three
3:02individual webinars plus an additional
3:04VIP Q&A and resources. Non-members will
3:08be paying $297 individually for both of
3:11them, but [music] again, it's all
3:12included in the Dfyu Black Friday sale.
3:15So, if this sounds interesting to you,
3:17make sure to go ahead and lock in your
3:18Black Friday deal before November
3:20[music] 12th so you can attend both of
3:22these live. The link to join is down
3:24below in the description, and again, the
3:26price of Dfyu after this promotion is
3:29over will rise to 990 a year. So, this
3:31is the time to go ahead and move
3:33forward. [music] If you've been waiting
3:34to join Dfyu or wanting to upgrade, this
3:36is the time to go ahead and lock in
3:38>> [music]
3:38>> a great price. So, with that, let's go
3:41ahead and dive right back into the
3:42podcast.
3:44>> [music]
3:48>> All right, welcome back everybody to the
3:50Traderline podcast powered by Dfyu. As
3:53always, I'm Richard, your host, and
3:54joining us today is Les Masonson, who is
3:57an experienced trader and author with
3:59over 60 years experience in the markets.
4:02and since 1987 he's researched and
4:04developed ETF strategies, and uh focus
4:07of the last 15 years has been the TQQQ
4:10and Nasdaq E-mini futures. Uh today
4:13he'll share with us his findings,
4:15trading process, and lessons from his
4:17decades of market experience. And um
4:20Les, thanks so much for being here.
4:21Great to chat with you again. Uh for
4:23everybody curious, we went extensively
4:25into your background in the previous
4:27interview, and that'll be linked down
4:28below. Uh but it's great to have you
4:29back and to dive deeper into your
4:31process.
4:32>> My pleasure to be back, and we hope to
4:34give your viewers another great
4:36education today.
4:38>> Absolutely, absolutely. And uh there are
4:41so many great questions uh from folks
4:43last time, you know, how to manage risk
4:45when trading TQQQ, uh and we're going to
4:47get into all of that. So, uh first first
4:50and foremost, for those of you uh for
4:52those watching who maybe didn't watch
4:54the previous interview, do you mind
4:55giving a very, you know, quick version
4:57of your background, and maybe start from
5:00when you first started trading
5:01full-time?
5:02>> Okay, well, I first got into the market
5:05in 1957.
5:08Probably no other guests you've had on
5:11uh
5:11can probably say that.
5:13I got a share of Pan Am Airways from my
5:15grandmother,
5:16and that started me on the
5:20the career of basically focusing on the
5:22market. So, I went to the library, did a
5:25lot of research, and then I kept reading
5:28the different books, different
5:29newspapers. And when I decided to go to
5:33college, I I would major in finance and
5:36investments.
5:37And then I did I got a master's.
5:40And the master's, the uh
5:42I had to do a research paper
5:45for uh to get the MBA, and I did it on
5:48relative strength analysis.
5:50And that was probably 2 years after
5:53uh Robert Levy's book came out on
5:54relative strength. So, that worked out
5:56very well. So, I've been involved in the
5:59markets ever since. I
6:01traded uh
6:04the since 1987, I've been trading the
6:06markets the last 15 years focusing on
6:10the T triple Q and then more recently on
6:13Nasdaq futures.
6:15And what's interesting about the
6:16difference between the T triple Q and
6:18the Nasdaq futures is that when you
6:20trade a futures contract
6:23it's based on the on the tax code uh
6:26section 1256 of the tax code meaning
6:29that 60% of your profit is considered
6:32long-term
6:34and 40% is considered short-term
6:37even if you do a 1-minute trade.
6:39>> Interesting.
6:40>> And also what the what's called the wash
6:42sales rule
6:44doesn't apply to futures because it's
6:46not a stock type of vehicle according to
6:49the IRS.
6:51So, in any event, I use technical
6:53analysis. I learned it very early on.
6:55I'm self-learned in that area. I read a
6:57ton of books on the situation. My
7:01personal library is about 550 books
7:04right now.
7:05I've written over 100 book reviews. I
7:08love to read and learn. Every day I
7:10learn something, I spend 2 hours a day
7:13on the
7:14exchange-traded funds because I write a
7:17column for technical analysis magazine
7:20uh on ETFs which I've been doing for 10
7:23years. I also have interviewed 30
7:25traders and technicians and I've also
7:28done 10 software reviews for the
7:31magazine itself.
7:32So, I keep pretty busy
7:34and uh
7:36I use technical analysis. I've developed
7:39a strategy using the basic indicators.
7:43And I hear all the time that people say
7:46or the academics say technical analysis
7:49doesn't work. They did massive studies
7:51on it. None of the uh
7:54the technical indicators work in time.
7:57Well,
7:58if that were the case, you wouldn't have
7:59a lot of people making a lot of money
8:00using technical indicators.
8:03And there's also thousands of certified
8:05market technicians
8:07that have been
8:09gotten their certification over the
8:11years and many of them work in large
8:13institutions across the world. And if
8:15the work that they did was not useful
8:19and it didn't produce results, they
8:21wouldn't have a job. So to say that
8:23technical analysis is a a weak way to
8:27to apply the market, it's a ridiculous
8:29thing.
8:31Also, uh during those years in in the
8:34last 10 or 15 years, I wrote a couple of
8:37books. One is on all about market timing
8:41and that's a subject that
8:44I challenge Wall Street on because 99.9%
8:47of Wall Street keeps saying market
8:49timing doesn't work, it's time in the
8:51market.
8:52Well, the question is, how many of them
8:54have really looked at in detail?
8:57Because if there was no strategy that
8:59beat buy and hold
9:02and technical analysis was not
9:03available, then you buy and hold and buy
9:06an index, buy and hold forever
9:08and
9:09keep getting hit by the bear markets and
9:11lose 20, 30, 40, 50% every 5 to 10
9:14years. But a lot of people can't sit
9:17through that. So it's very important to
9:20use a a trade approach that gets you out
9:23before the bear market begins. And of
9:26course, the best place to have your
9:27money, if you have it, is in a
9:29retirement account.
9:31Especially a Roth because you can build
9:33up a huge amount of wealth in a in a
9:36Roth IRA and then when you start taking
9:38it out, there's no tax consequence.
9:41The only problem if you have a trading
9:44and you use your regular account, every
9:46time you trade, you have capital gains
9:48to pay.
9:50So that's the big downside of trading.
9:52You keep have to paying tax on what you
9:55do, but look, it's probably less tax
9:57than in other countries.
9:59So and again, if you don't want to hold
10:02for 12 months, you have to
10:04you know, have to hold play hold for the
10:05shorter term and the the tax rate is
10:07higher for the short term. So that
10:10there's a tax consequence to everything.
10:13So, that's that's the quick picture. I
10:14enjoy trading. I day trade. I'm out by
10:17the end of the day.
10:19I use uh
10:21I can actually uh
10:22show you if you want to go to uh
10:25>> Sure.
10:25>> some slides, I can share my screen. I
10:28just put up my screen for my uh
10:31trading day and I this is the 1-minute
10:34Nasdaq futures chart.
10:37And I have some basic indicators on the
10:39bottom and they may be hard to read, so
10:41I'll mention what they are.
10:43Uh
10:44you relative strength index is the first
10:46one down at the bottom.
10:49Uh you can see my arrow moving?
10:51>> Yes. Okay.
10:51>> Oh, okay.
10:53And but I changed the uh reading to
10:55seven to make it work faster.
10:57Then I have the uh the MACD.
11:00And I use a faster setting, 6 13 and 5.
11:04And then I use the
11:06commodity channel index.
11:09And up here I have
11:12two Keltner channels.
11:15The two and three standard deviation
11:17Keltner channels and the VWAP
11:20and the 200-day moving average. So,
11:23that's the screen. And what I wait for
11:25is when the the indicators line up
11:30like over here, I wait for it to drop
11:31below the
11:34the three standard deviation band here,
11:36wait for a crossover
11:38of the RSI and MACD and the
11:44the CCI and then take a long or short
11:46position.
11:47You know, I I wait for the crossovers
11:50>> Mhm.
11:50>> depending on the situation. Like right
11:52here is a flat market, so that would be
11:53a a bad situation.
11:56I also
11:58use a 5-minute chart where the
12:03indication of what you should do is much
12:04clearer because you have the crossover
12:07marked here by a vertical line.
12:10And they don't all cross at the same
12:12time, but once you get three or four of
12:14them crossing and you're at the bottom
12:16of a three standard deviation channel,
12:20the odds are that the
12:23the uh
12:25the the then that then that the NQ will
12:28reverse its direction.
12:30>> Mhm.
12:31>> A lot of people use 10 or 15-minute
12:33charts, 30-minute charts. Everyone has
12:35their own time frame.
12:38So, I use this throughout the day. I
12:39look for extreme points. That's what I
12:42go for. When everything's an extreme and
12:45then reverses direction,
12:47then I go for the trade.
12:49And I could have five trades round trips
12:52a day. I could have 10 or I could have
12:54three.
12:55So, I have no
12:57uh requirement. I just watch the screen.
13:00I don't listen to the news. I don't take
13:02anyone's opinion. I don't care what's
13:04happening in the outside world
13:07because there are a million variables.
13:10So, if you're trading the market, all
13:13you need is a screen with price on it.
13:15And some people only use support or
13:17resistance.
13:18Some people only use
13:21you know, bar charts. But, I wanted to
13:22mention, too, these are not standard
13:25candles here. These are called
13:27Heikin-Ashi candles.
13:29h e i k e n {dash} a s h i, which makes
13:34the candle
13:35more wider as far as vertical length so
13:39that you don't see the gaps like do in a
13:40regular candlestick chart. So, that you
13:43can see the trend much easier.
13:45And that's something you may want to
13:46check out on your own chart. Check the
13:49Heikin-Ashi
13:50uh option on your chart. Compare it to
13:53the bar chart and the candlestick and
13:55see which becomes more adaptable and
13:58more reasonable for you.
14:00Also, you know, my indicators are the
14:03ones I use. You can use any ones that
14:05you feel necessary. But, I would never
14:07use one single indicator to make a
14:09decision because that indicator can have
14:13a a degree of fallibility.
14:16So, you want to get the weight of the
14:17evidence approach. And that's what I use
14:19here for the trading.
14:21That's what I've used for 15 years, and
14:23it works very well.
14:25So, as far as risk is concerned,
14:28when I get the sell signal on the chart,
14:31I'll get out. And when I get the buy
14:33signal, I'll go in.
14:35And at the end of the day, I'm flat.
14:38So, that's how that works.
14:40>> Yeah, to dive deeper into risk, um are
14:42you placing an initial stop loss, and
14:44what does the sell signal look like uh
14:46if you had to describe it?
14:47>> A sell signal will look like, you know,
14:49a cross below the RSI,
14:52and a and an MACD crossover, and a cross
14:56below
14:57the two of the three standard deviation
14:59channel up here from a high point.
15:02>> Mhm.
15:03>> And uh I don't use stops because I'm
15:06watching the screen.
15:07If, for example, I wanted to leave my
15:11screen, I would definitely put stops in,
15:14probably below the eight exponential
15:16moving average.
15:18Other people use 10,
15:20but you can use what you want. The key
15:22is to adjust your moving averages to the
15:25security that you're trading,
15:27because they may be different than the
15:29standards. So, instead of a 20 MA, you
15:32may want to use a 21 or 22 or 24. The
15:35same thing if you put a 50 on it and a
15:37100 and 200 simple, you may want to
15:40adjust those based on the security or
15:43ETF that you're trading. So, make it
15:45unique.
15:47>> Yeah.
15:47>> Also, as far as my trading is concerned,
15:50I'm a specialist.
15:52I don't trade anything. I don't look for
15:54anything else,
15:55but the Nasdaq Qs or the when in the in
15:58the past I used the TQQQ. I don't care
16:01about individual securities. I don't
16:03want to get involved in the accounting,
16:05checking earning statements, and all
16:07this other stuff.
16:09But everyone has their own uh
16:11uh area where they want to focus on. So,
16:14my area is only one thing. I can try can
16:18focus on one thing and that's it.
16:21And makes it much much simpler. So, I
16:23don't have to do any pre-market work.
16:25The market opens at 9:30. I'm at my desk
16:28at 9:29.
16:29I don't listen to the news.
16:31I don't care what happened overseas. I
16:33don't care if there's a Fed meeting
16:35today.
16:37But the only thing I would be careful of
16:38is before the announcement, I will take
16:41a position off.
16:43>> Mhm.
16:44>> Cuz I don't know which way it's going to
16:45go.
16:46Or sometimes I may decide to put an
16:48order in
16:50below
16:51the current market price by 20 or 30
16:54points or above the market price or
16:56both.
16:57And then once it jumps, I just sell out
17:00and then get the other one. So, I try to
17:02play both sides of it. You can put two
17:04orders in on both sides of the market
17:07and see which one hits and then close it
17:08and then wait for the other one to hit.
17:10So, on Fed day, you can really have an
17:12interesting day
17:14by making money on both sides.
17:16But that's something you have to be
17:17aware of because the Nasdaq can jump 100
17:20points
17:21at 2:10 p.m. when the announcement comes
17:23out and then reverse 200 points
17:26and then keep doing that for 5 or 10
17:28minutes.
17:29And then when the news conference
17:30happens, that's another time when things
17:33may jump around. So, if you're not very
17:35careful and you want to be conservative,
17:39don't trade during the the Fed
17:41announcement.
17:43And by the way, day trading is not for
17:46most people.
17:48If you're young and you started doing it
17:51and you're doing very well,
17:53there's a reason you're doing very well.
17:55The market has been in a bull market
17:57since 2009.
17:59Except for 2018, we had a blip. 2020, we
18:03had a blip. And 2022, we had a bigger
18:05blip.
18:07So, you haven't experienced the 2000 to
18:102009 period if you're very young.
18:13Or back in '73, '74. I'm probably the
18:16only one here that's experienced that,
18:18the big bear in '73, '74.
18:21So, day trading is very difficult.
18:24It looks simple. Anyone could look at a
18:26chart and say, "Oh, I would have done
18:28this or that." But, in real time,
18:31emotion is involved.
18:33>> Yeah.
18:33>> Your experience is involved.
18:35So, if you want to do day trading,
18:38start with a small amount of money,
18:41trade one vehicle, put technicals on,
18:45and see how you do.
18:47Don't start with 10 20 30 50 100
18:49thousand dollars in day one.
18:52Take a thousand dollars and trade what
18:54you want and see how you do.
18:57And try to have rules. You need rules.
18:59And if you can back test your rules or
19:01your indicators, because AI now allows
19:04you to do a lot of back testing, which
19:05I've done
19:06on these uh these uh indicators. I've
19:10I've been using uh
19:12Gemini
19:13has a new uh
19:15product called Argo, A R G O. That's the
19:17latest one. And Claude.
19:20So, I've been doing back testing on TQQQ
19:22and others, and the results are amazing.
19:26The problem is that
19:27uh Gemini gave me some outstanding
19:29results, and I said to Gemini,
19:32"What is your uh
19:34uh
19:35what do you feel about the confidence
19:37level you have in the results that you
19:39just provided to me?"
19:41And the answer was, "10%
19:43confidence." I said, "Are you out of
19:45your mind? You're giving me all this
19:47stuff. It looks great on the screen. You
19:49have a 10% confidence." And I said, "Why
19:51is that?" And they gave me a whole
19:53litany of reasons.
19:55They made certain assumptions. They did
19:57this. They did that. I said, "Don't you
19:59ever do that again."
20:01And uh I had to have my friend involved
20:04to use his Claude
20:05take the their output take the code that
20:08they produced and ran through it, and um
20:12they I I had to I had to send it back to
20:14Gemini to see what the Gemini said. Then
20:16Gemini said all of Claude's key points
20:19were accurate. They apologized
20:21profusely, and they
20:23they redid this this stuff. So,
20:26you have to use two AIs.
20:28>> Yep.
20:29>> At least
20:29>> each other.
20:30>> To check each other. Also, it's very
20:32important when you're doing any work on
20:34the AI,
20:36you have to feed it the data.
20:39Otherwise, it'll try out and get the
20:41data and you don't know where it's
20:42getting it from. You can ask it, but you
20:44don't know how accurate it is. So, I use
20:47data from stockcharts.com
20:49and the company called Nord Gate has
20:51data.
20:52Uh Yahoo Finance has data, you have to
20:54pay for it.
20:55But, you need data that is adjusted for
20:58dividends and for splits.
21:01If you want to use that or sometimes you
21:03want to use just the price data. Well,
21:05make sure you're just getting that as a
21:07pure data stream.
21:09And uh once you give it all the data,
21:12the AI will not make certain
21:14assumptions.
21:17But, I think anyone nowadays
21:19can use AI to back test any particular
21:23strategy they want
21:24and test it over multiple periods and
21:28use forward testing, back testing.
21:31And uh what the typical result is that
21:34when you do stuff in live real time,
21:36many times it doesn't do the same as it
21:38did in the back test.
21:40Which is pretty sad, but that's the
21:42result of doing a lot of testing.
21:45And there are a lot of uh
21:47ways to learn. You know, you learn by
21:48doing and uh
21:50your prompts have to be very precise.
21:54>> And uh let's When when you're running a
21:57back test for people who just want to
21:59get started doing that, uh any common
22:01mistakes that you see people make or
22:04assumptions that you should watch out
22:06for that might be made that would
22:07completely throw off your results and
22:09and not not be as accurate as as you can
22:11be.
22:12>> Right. If you don't have every single
22:14rule
22:16spelled out,
22:18depending on your on your AI, it will
22:20ask you
22:21specific questions. Like I thought when
22:24I was doing something recently, I gave
22:26it about 10 different rules.
22:28I thought I had it as clear as possible,
22:31but I said to it,
22:33"If you understand all my rules, do the
22:36back test now.
22:38If you do not understand or have
22:40questions, let me know." And it had 10
22:42specific questions on how I want the
22:45data to be done, "What about this? What
22:48about that?" And it was very specific on
22:50the questions, so so it made sure that
22:53it understood exactly what I wanted.
22:57So, it's very important that your rules
22:59make sense. Every buy and sell rule has
23:02to be 100% accurate, otherwise your
23:05results won't be that accurate. Then, of
23:08course, test it on another platform
23:10entirely, another AI. Then the results
23:13should be extremely close. If they're
23:14not,
23:16send the results back and forth to each
23:17other and let them
23:19critique each other.
23:20>> Battle it out. I like it. Yeah.
23:22>> And it's not hard to do. You don't have
23:23to do any math.
23:25And and any any of the AIs will give you
23:27the code. So, if you have the code, like
23:30a Python code, you can put it into any
23:33software that takes Python, and you'll
23:36have it on your screen in the in the
23:38platform you use. It's terrific.
23:40>> Everyone, just want to jump in here real
23:41quick and let you know that this episode
23:43is brought to you by D View, which is
23:44the platform I use every single day to
23:46find new trading ideas, monitor existing
23:48positions, identify new leading themes,
23:51and analyze the markets. You guys
23:53deserve a platform that keeps innovating
23:55and brings you the most up-to-date tools
23:57to trade the market. And at D View,
23:58almost every single week, we're
24:00launching a new feature or system
24:02update. Here's what makes D View
24:03different. The screener comes loaded
24:05with preset screens from actual market
24:07wizards and top traders. So, you're
24:08starting from the setups that the best
24:10in the world actually use. And when
24:12you're flipping through results, you've
24:13got mini charts right there, so you can
24:15visually scan through hundreds of stocks
24:17all at once. That alone saves me so much
24:19time every single week. The charting is
24:21built for how we actually trade.
24:23Multiple time frames, unlimited
24:24indicators included anchor VWAP,
24:26enhanced volume, custom indicators like
24:28R and V, and the built-in RS rating.
24:31You've got custom dashboards to track
24:33the market, themes, and real-time sector
24:35rotation, so you always know where the
24:37money's flowing. Best yet, we just
24:38launched the DEView AI terminal, which
24:40brings all your research into DEView
24:42with easy-to-use preset prompts or your
24:45own custom ones. You can even identify
24:47gap catalysts with just a right click.
24:49The DEView Black Friday sale is live
24:51now, so don't wait. Check out the link
24:53down below in the description to access
24:54our biggest deal of the year.
24:59>> The Excellent. And unless I want to dive
25:01deeper into backtesting, but maybe we
25:03can get back to that. Um I wanted to
25:04focus first on the relative strength
25:07aspect of your process. I know you
25:08prepared uh some great slides on that if
25:11you want to run up to those and kind of
25:13talk through how you look at the
25:14different markets, track performance
25:16over different periods. Uh that would be
25:18excellent.
25:19>> Right. So,
25:20the reason uh I wanted to cover relative
25:23strength is because I learned about it
25:26back in uh probably the 1980s.
25:29And then uh I did my master's thesis on
25:32it as I mentioned before.
25:33I always thought it's interesting to see
25:36who the leaders are,
25:38who the leading stocks or groups are,
25:41because that's where the action is. And
25:42if you look at anything
25:44today, you have many different uh
25:46software products where you can check to
25:48see which are the leading stocks,
25:50sectors, and industries. So, I have what
25:53I have on the screen
25:55is a picture of the Nasdaq 100 stocks.
25:58Again, it's only the top uh
26:0120 or so because it's too long to put on
26:03the screen.
26:04And this is a 1-week time frame.
26:09So, this is as of August the 7th.
26:12The top
26:13uh e- The top stock ticker is T E A M.
26:17That's the name of it on the left there.
26:19It's up 47% in 1 week.
26:23Okay. The
26:24previous week, it was up 36%. Week third
26:28week earlier, it was down 4%.
26:31Or so that's This is a weekly
26:35a table and it goes all the way back. I
26:38didn't have enough room to put it on the
26:39screen. You can go back as far as you
26:41want. As you can see,
26:43the red and green
26:45are all over the map.
26:47Something is red one week, it's down up
26:49the next week. So to look at this on a
26:52weekly basis is a little difficult to
26:54see what the what the strongest are. One
26:56thing I want to point out is I put in
26:59particular I added one line to this
27:01table,
27:02the TQQQ,
27:04because Dr. Eric Wish a few years ago
27:07did a study and he found that the TQQQ
27:11does extremely well in a bull market
27:14and it's very hard to pick individual
27:17stocks beforehand out of the 100 that
27:19you think will be the best. So he
27:21suggested
27:23considering the TQQQ
27:26instead of trying to pick the best stock
27:28and in this case is
27:29in this example, you could see it's
27:31number three out of 100.
27:35So now I want to go down one
27:38slide.
27:39So this slide shows the results after 19
27:42weeks.
27:44And after 19 weeks,
27:47the top performer was the uh
27:49the semiconductors.
27:52200%
27:54return in 19 weeks and the others who
27:58are strong are listed here, Micron
28:02and Intel
28:04and all the others are up here to the
28:06TQQQ
28:08was strong, up 92% but not when you have
28:11these
28:12tremendous uh semiconductor related
28:14stocks which without a blow off
28:17a run, no nothing's going to beat those.
28:19But you can see also measuring over 19
28:22weeks gives you a much smoother picture.
28:25These are all green here, okay? So in
28:27other words, what this what this is
28:29showing you is that these individual
28:31securities or
28:33except for the the uh uh
28:36ETF SOXL
28:39uh they have uh had long-term weekly
28:42trends over 52 week 19 weeks of being
28:45very strong.
28:47So, this is this not something out of
28:48the blue. So, you can see that semis
28:51have been strong for multiple weeks.
28:53And if you go down one even further
28:5652 weeks with the same database Micron
28:59was on top.
29:0252 weeks 638%.
29:06So, you saw in the past two Micron was a
29:08little bit lower because recently it
29:09hasn't been as strong. It gave back some
29:11of its gains. TQQQ
29:15right around here.
29:17So, SOXL was very strong. So, if you
29:20just bought the semiconductor
29:22triple leveraged ETF
29:25you're up 445% without having to guess
29:28which of these other
29:30semiconductors will be strong.
29:33So, you can use this type of analysis
29:36and you can determine the number of
29:38weeks you want to access. You can do it
29:40over say 4 weeks, 8 weeks, 12 weeks, 19
29:43weeks and see what the changes are in
29:46the market because once there's a change
29:49in
29:50in in relative strength, that shows you
29:52where the action is.
29:54And that's a very big
29:56uh
29:57tell as to what's going to be happening.
30:00Like right now
30:02uh I use another piece of software and I
30:05can see that I I put it up the the top
30:07stocks
30:08making new highs are the energy stocks
30:11and petroleum stocks. This is not
30:13something new either. They're the
30:14leading group this year.
30:16>> Yep.
30:16>> So, it's not something that's going to
30:18happen for a week or two and then die
30:19out. So, things once they become strong,
30:22they become strong for a long amount of
30:24time. And that enables you to play in
30:27that area whether it's a futures
30:29contract or an ETF or individual
30:32securities.
30:34I want to switch now to sectors which
30:36I've been focusing on for many years,
30:38too. There are 10 sectors out there.
30:42And if you were able to uh look at a
30:46what's called a uh a calendar chart or a
30:48periodic chart by year, you'll see all
30:51the sectors have different uh
30:54performance every year. Sometimes the
30:55large cap is on top, sometimes the small
30:58cap, sometimes cash.
31:00But it changes every year. So, the key
31:02is to be in the strongest sector. The
31:05problem is if you looked at each year,
31:08the difference between the
31:09top-performing sector and the
31:11bottom-performing sector is 25 to 30
31:14percentage points.
31:16So, the question is how do you get to
31:18those
31:19to the top sectors? Well, you do a
31:21relative strength analysis.
31:24So, here this is the same chart type of
31:26chart I used before. This is a four-week
31:29performance
31:31table.
31:32And energy here, as of August the 7th,
31:35when this was run, was the top
31:37particular ETF that week, and it was for
31:41the last four weeks.
31:43Over the past four weeks, prior to that,
31:45it wasn't that strong, but you could see
31:47what was.
31:48XLF has been strong weeks before that.
31:52Okay?
31:54Real estate had a couple of strong
31:56periods here.
31:58But you go to XLK,
32:01this is the uh tech sector, it didn't do
32:04that well over four weeks ending August
32:06the 7th.
32:08So, you can see the trend here,
32:10and you can also change the particular
32:13time frame.
32:15I I just added TQQ to this and brought
32:18it up to October 16th.
32:20The last uh don't forget the last one
32:22was August.
32:23This is another couple of months later,
32:25and guess what's on top again over the
32:27last four weeks? The XLE is still back
32:30up there. It was still up there there, a
32:33little weaker here.
32:35But now XLP came up, which is the uh
32:39consumer staples and XLY healthcare,
32:42which are the more defensive groups. And
32:45technology, even though it was strong
32:47for multiple weeks here,
32:50it now is was weaker.
32:54So,
32:56this is an an interesting way to play it
32:58as far as looking at the relative
33:01strength over the various time periods.
33:03You can pick any week number you want.
33:06You can say uh we want to focus on four
33:08or eight or 12 or 16 or any number you
33:11want, but you'll see a pattern. And the
33:14pattern would be stronger and stronger
33:16and stronger over time. And that's where
33:18you want to be. You can also see the
33:20change here.
33:21Right over here is a change now. Tech
33:24was good up until 10/9, and then it
33:26started down 10/17, and it was bad. But
33:29we had a couple of bad weeks of tech
33:31until last Friday, and then the last
33:33three two days have been tremendous
33:35again. So, things shift over time.
33:38>> And let's just to jump in with the
33:39question. Um how often do you review a
33:43table like this?
33:44>> Every week. Every Friday.
33:46>> Every Every Friday. And what would catch
33:48your eye that says, "Okay, this area of
33:50the market is strengthening." And like
33:53like you said with tech, you know, we're
33:54seeing we're seeing some pullback. What
33:56would get you focused on an area that
33:58says yeah?
33:58>> another change. In other words, maybe
34:00this now XLE becomes yellow or red next
34:03week.
34:04>> Mhm.
34:04>> But the question is, how far down did it
34:06go? If it didn't drop,
34:08in other words, there's uh say 13 11
34:11sectors. I have a few other things on
34:13this table besides sec like TQQQ is at
34:15the bottom, but
34:17I would say to myself, if if energy is
34:19in the top three
34:21out of the 11 sectors, I'm not going to
34:23touch it. I'm not going to change it
34:25this week.
34:26So, I'd have a cutoff.
34:28Or I'd use an 80 EMA or 10 or 12 or 20
34:32EMA on the actual chart of XLE.
34:35>> Mhm.
34:36>> But I don't want to be around if it's
34:37going south.
34:39>> Yep.
34:39>> I can always come back to it, but in the
34:41meantime, as long as it's you know,
34:43green, yellow
34:45area, I'm I'm good.
34:47Like these like these three now are
34:49getting stronger. You see XLU, XLB, XLY,
34:52they were in the red here. So, they're
34:54getting stronger.
34:56And now your XLK down here is getting
34:58weaker. But it you know, it's come back.
35:00So, that's why you a one week
35:02relative strength chart is useless.
35:05It changes color all the time. You need
35:08at least four weeks which is a month.
35:10It's nice to use eight weeks or 12
35:11weeks, and then you can have two
35:13criteria for selling it. One is a drop
35:15in rank
35:17from one to 11. If it drops below say
35:19three or four, you say you're gone.
35:22Well, you have to give it some slack
35:23because it's not going to do great every
35:25single week.
35:26So, give it some time.
35:28Or it cuts below your
35:31uh moving average.
35:35So, that's how you do that.
35:37>> Is this a strategy that you yourself
35:39employ or just something that you've
35:40kind of uh researched? Uh so, in
35:42addition to your day trading, you do
35:44this as well?
35:44>> this at all personally. I've done
35:46research for years.
35:48I will I am going to be doing
35:50backtesting this on uh
35:53the uh
35:54the AI sites,
35:56and I will come up with a strategy.
35:59Uh but I'm not going to necessarily use
36:01all seven or not all 11 of these
36:03sectors.
36:05Cuz if you're looking at doing the with
36:07the history of uh
36:09sector analysis, maybe only
36:12five or six have really done the the
36:14greatest amount of
36:16uh performance over time, which would be
36:19the consumer uh
36:22the XLY.
36:24>> Yep.
36:24>> The XLE,
36:26the XLC,
36:28and XLK.
36:31And XLI. Say those six have done much
36:34better than the utilities, real estate,
36:36and the others. So, you can just use a
36:38strategy with six of them and not have
36:40all 11 in in in the mix.
36:42But I think it's a relatively easy back
36:45test
36:46and it for someone that just wants to
36:48get involved with sectors and rather
36:50than stocks, it's a nice thing to do.
36:53And you want to be in the that where the
36:54action is, where the strongest sectors
36:56are.
36:57And that's one way to do it.
36:59>> I like how you mentioned you might want
37:01to focus on just those cuz you really
37:02want a sector that can trend, right? You
37:05want that relative strength to persist.
37:07You don't want just rotation that
37:08changes every week. You want something
37:10that can be more of a not not longer
37:13term longer term, but will actually last
37:15multiple weeks.
37:16>> Right. For example,
37:18you know, energy has had a tremendous
37:20year.
37:21>> Yep.
37:21>> It's had its ups and downs, but it's
37:24still on top.
37:25>> Yep.
37:26>> So, that's what's interesting about
37:28that.
37:29Okay, this table is not like the other
37:31one, but this was from chartmill.com.
37:34I have a free subscription because I use
37:36the
37:37I don't have to pay for it as far as
37:39they they give people free free access
37:42to certain parts of their subscription.
37:44This is from chartmill. I just saw this
37:45yesterday. I have so much software that
37:48I use. I I don't go into anything in
37:50in the depth. And that's another thing I
37:52want to mention to people. If you're
37:54using software,
37:56whether it's yours
37:58that you've developed, Richard, or
37:59others that you use, I use multiple
38:01ones.
38:03Most people have not
38:05used all
38:06aspects or learned all the possible
38:10places to go in the software to get
38:12education and tremendous capability.
38:16Like for example, I use stockcharts.com
38:18for probably 20 years, and they keep
38:20upgrading it all the time. And every
38:22time I go there, I get blown away by how
38:24much information's available, how you
38:25can cut the market into many different
38:28sectors, different ways, different
38:30measurement tools.
38:32So, it's it's really a great thing that
38:33we have. You know, back in 1970,
38:36we didn't have this. And I remember
38:38trading in 1987,
38:41as I mentioned, I think previously, had
38:42a satellite dish on my my deck in the my
38:46house to get real time 6-ft satellite
38:49dish.
38:50Ridiculous. Now you can do everything on
38:52your on your phone. So, anyone who is
38:54involved in trading, investing today,
38:57they're very lucky to have the resources
39:00available,
39:02which we did not have back years ago to
39:05analyze the markets, see what
39:08areas they want to focus on, develop
39:10rules,
39:11follow the rules,
39:13and then you'll do very well. You have
39:16to have a methodology
39:18that's that's really
39:21that you've worked with. Uh if you want
39:23to play on Robinhood and the betting
39:25markets and other stuff, that is
39:26gambling.
39:28Uh it's not investing. It's not trading.
39:31So, be very careful what you do there
39:33and then make sure you can afford what
39:34you do because the odds are you'll lose
39:36it all.
39:38Um by the way, some of you are probably
39:39pretty young relative to others, and we
39:44haven't had a serious bear market since
39:462008.
39:48And don't forget in those years, there
39:50were two devastating bear markets from
39:522000 to 2008.
39:55We are going to have one.
39:58When it's coming, we do not know,
40:00but you have to prepare yourself for it,
40:03and just watch your charts. Don't listen
40:06to anyone's opinion,
40:07and you'll see how well you do. You
40:10know,
40:10also on on the the analysis here on the
40:14relative strength, you can see things
40:16turn red. You're not going to see green
40:18numbers here all the time.
40:20But the reason I put this table up is
40:22just to show you that this particular
40:24chart
40:25table, which comes out daily, you can
40:27show you the 1-week, 2-week, 1-month,
40:303-month, 6-month. You get a flavor for
40:32what's going on here, and what's strong.
40:35And energy is Look at this. Look at the
40:36track record of energy.
40:39And information technology was was
40:41strong.
40:42And they could see the weak areas, the
40:44strong areas. You can just watch what's
40:46going on in in
40:48Communication services has had a rough
40:51time here
40:52the the past month.
40:56But this just this table is arrayed on
41:00I I did it on 3 months. That was the
41:02sort that I did. If you can sort this by
41:05the way up or down to high to low
41:08at any time. [clears throat]
41:10So, I just wanted to mention that to
41:12everyone.
41:14>> And what what follow-up question
41:15>> a very interesting area.
41:18You can do it on any particular group of
41:20stocks, group of sectors, ETFs.
41:24Uh for example, you can do an array on
41:27all the country ETFs. There are probably
41:2820 or 30 country ETFs. You can put them
41:31in a table and see what the relative
41:33strength on those. Just check your
41:35software.
41:36They may have a section on sectors.
41:39And uh check it out.
41:41Uh
41:42and you'll find it to be very
41:43interesting.
41:45>> And people can then either trade the
41:46ETFs or they can dive deeper into those
41:49sectors that are performing well to look
41:51for individual stocks if that's more
41:53their style.
41:54>> They can find out what stocks are in
41:55that sector
41:56and array those in order of relative
41:59strength as well or put them on charts,
42:01look at the charts, get rid of 90% of
42:03them,
42:04and you're left with 10 to to play with.
42:07>> Yep.
42:07>> And uh
42:09see what what and do the best you can
42:11with those.
42:13>> Yeah. And last uh one follow-up question
42:14from when you first got started, did you
42:16have to ever draw charts by hand and uh
42:20if so, did that did that kind of teach
42:22you anything about price action that you
42:23think maybe traders nowadays when they
42:25first learn on softwares maybe miss?
42:28>> Well, I I have not done charts by hand.
42:32I know Linda Raschke and others did a
42:35lot of stuff by hand and they felt that
42:38it was very helpful because it the brain
42:41likes to to absorb what you're doing
42:44when you're writing even that as a
42:46handwriting, too. If you're writing
42:48something by hand and taking notes
42:52rather than just typing on a screen, it
42:55tends to remain in the brain for a
42:57longer time frame. So, that's probably
42:59something that is
43:00beneficial. Uh but I did not uh do any
43:04uh charts by hand, although I kept a lot
43:07of my records by hand.
43:09I got a couple of charting services.
43:11There was something called Daily Charts
43:13back then. I subscribed to Investor's
43:15Business Daily when it was 5 days a
43:18week. You may not even know that,
43:19Richard. It was 5 days a week uh back
43:22years ago, not just a Saturday edition.
43:25>> Mhm.
43:26>> I also attended William O'Neil's session
43:28in New York City in 2007
43:31uh with David Ryan. He had an advanced
43:34workshop. So, I was able to meet him at
43:37that point.
43:38Uh but charting is something you should
43:41be very uh careful and learn how to
43:45do charting. Read a number of books.
43:47There are a lot of books on
43:49uh on technical analysis out there.
43:52Pick up a book or two. Go to your local
43:53library. Go to section 332,
43:56which is uh universal in the country.
43:59That's the investing and trading
44:01section.
44:02Uh
44:03the code at the bottom of the of the
44:04book.
44:05And take out a few books and read.
44:08Uh
44:09that will be your best investment, by
44:10the way.
44:11Most people don't read anymore.
44:13>> Yep.
44:14>> I mean, I read even though I have 550
44:17books,
44:18I go to the library all the time and get
44:20new books. I only read non-fiction.
44:24No don't read fiction since high school.
44:27I like to know what's going on. I read
44:28books on psychology, on health,
44:31on well-being, on the markets. I also do
44:34a many book reviews
44:36uh for the books that come out from
44:38Harriman House and Wiley and McGraw
44:40Hill.
44:41I write book reviews on Amazon.
44:44Uh it's interesting that probably only
44:46three out of the
44:47every 10 books I can write a review on
44:51because some of them are so weak that I
44:53tell the publisher I'm going to give it
44:55one star.
44:56So, I suggest you don't want me to put
44:58it on.
44:59So, I don't know how some of the books
45:00get through the publisher because
45:02there's nothing in them.
45:05And then there are books that are so
45:06tremendous that it's amazing.
45:08But the library has a lot of books. You
45:10can go on Amazon and get the trading
45:13books.
45:14Uh Bill William O'Neil has books. You
45:16have one behind you.
45:18A book on trend trading by Michael
45:20Covel.
45:22Yeah. Greg Morris has books on trend
45:24trading.
45:25Uh Ari Kiev, K I E V,
45:28has a book on market psychology. Jack
45:32Schwager has all the
45:34the the market wizard books. And by the
45:37way,
45:38if you look read all the market wizard
45:39books, no two wizards do the same thing.
45:43They either use fundamental or technical
45:46or both or neither.
45:48And they trade all kinds of different
45:49vehicles and they're all successful.
45:52So, don't think you can duplicate what a
45:55wizard has done.
45:56You have to learn what fits your
45:58personality.
46:01Practice, trade it small dollars first,
46:04then go in a little bit heavier, and
46:06don't get uh a feeling of high degree of
46:10confidence because you've done well the
46:11past year or two.
46:1323 and 24 were tremendous years in the
46:16market and 25.
46:19And this year we're lucky. It was the
46:21fourth year of the bull run
46:23that started, you know, really in 2020
46:2620 Well, because the last bull run was
46:29from is 2022, but this is really since
46:312009.
46:33We've had the big run, so
46:35don't be overconfident. Don't think
46:37you're a genius.
46:39If you've done well, excellent, but you
46:41want to keep doing well. So, be very
46:43careful out there
46:45and make sure that you are
46:48uh protecting yourself on on the risk
46:50side cuz risk and reward go hand in
46:53hand.
46:54>> Yep. And we'll we'll drop the the list
46:56of those books uh down below in the
46:58description that you guys can check out.
47:00Unless outside of the market any
47:03books come to mind that you've over the
47:05years you found really helpful and maybe
47:08complement trading but don't necessarily
47:10have to be about trading at all.
47:13>> Um I can't recall the titles. I
47:16I read so many books. Uh
47:19I just don't recall the titles. Uh
47:21>> Yeah, no worries.
47:22>> You know, you read books on psychology.
47:25Uh also, it's good to have to be healthy
47:28and exercise and eat right
47:31because everything affects your your
47:33body.
47:34So, I read books on health, you know,
47:36Mediterranean diet type of thing.
47:38Uh make sure you do aerobics, do
47:41walking,
47:42eat properly, stay away from sugar.
47:45Uh the older you get, the more
47:48problematic it is with the health
47:49issues.
47:51So, also, you want to keep your mind
47:53active. You don't want to get
47:54Alzheimer's.
47:55You know, it's
47:56not a good disease in all respects. So,
48:00if you can ward it off by staying active
48:02mentally as well as physically,
48:05it makes a a big difference.
48:07And if you also if you wake up one day
48:08and you're a trader and you're not
48:10feeling that well, just close your
48:12screen.
48:16>> Yep.
48:17>> Yeah, and you don't have to trade every
48:18day, by the way. If you're a day trader,
48:20you don't have to trade every day.
48:22You can trade when the days you want,
48:24you can trade certain hours
48:26depending on what you you know, if
48:28you're
48:29depending if you're a single or not,
48:30that makes a very big difference how you
48:32handle your time. Time management is
48:34critical.
48:35You know, I have time now that I'm
48:36retired. I can read.
48:39I read The Wall Street Journal, IBD,
48:42MarketWatch,
48:43New York Times, Los Angeles Times,
48:46Washington Post.
48:49I get the Bottom Line Health newsletter.
48:51I read that.
48:52I read I do a lot of reading. I go to
48:54the library. Libraries here are empty.
48:58They just built a new library down here
48:59about 10 miles away in Florida called
49:02Canyon Ranch. I'm going to get to it,
49:04but I don't expect to see anyone in the
49:06library.
49:08Especially the young folks.
49:10They're on the
49:11>> Hey, I I read less. I read less, so
49:13>> you are not You are not the average.
49:17You read because you'll enjoy it and
49:19you'll learn.
49:20>> Yep.
49:21>> A lot of people don't have the time or
49:23interest.
49:24And that's the problem with the young
49:25younger generation now.
49:27They have the electronic devices and
49:29they think they can learn everything
49:30from those devices. Well, you can learn
49:32a lot,
49:34but some of these books you If you don't
49:36get some of these books, you're not
49:37going to get the real education and the
49:40background.
49:42And it's much cheaper to buy $1,000
49:43worth of books than to blow it in the
49:45market on a bad trade.
49:49>> Very true. Very true. Perfect less
49:51Thank thanks for those recommendations.
49:53Let's jump back to the slides here.
49:55Anything else on relative strength that
49:57you wanted to focus on today?
49:59>> I think I covered relative strength
50:01pretty well.
50:02Uh
50:04just want to see if there's anything
50:05else
50:06that I want to bring up.
50:12Covered relative strength. Oh, yeah, I
50:14did I did want to mention
50:16about the T the the leveraged ETFs for a
50:19minute.
50:20>> Mhm.
50:22>> I traded the TQQQs for many years and I
50:25just want to mention that it's very
50:27volatile. I have a chart up here
50:30from let's see 2000 Oh, this is just a
50:34one year. This is the current year
50:36ending in October 16th.
50:38And the TQQQ is in green.
50:42Look at the run from the end of March
50:4430th.
50:46It was minus 30%
50:49to up 65%.
50:51That's 100% increase.
50:54And the red is the the
50:56the QQQ which it's based on.
50:59And the blue is a QLD which is two two
51:02times. So, the TQQ is three
51:06three times the Qs
51:09and the QLD is two times the Qs. But
51:11what we're referring to here is on a
51:13one-day basis only.
51:16So, 3x means if Qs go up 1% today,
51:21the TQQ goes up 3% and the QLD goes up
51:242% today only. They're not talking about
51:28what happens over time.
51:30Over a 2 days, 3 days, a week,
51:33a month, a year.
51:36The worst market
51:38for a leveraged ETF, if you if you hold
51:41them,
51:42the worst market to be in is a flat
51:44market or a down market
51:47because it's decays in price every
51:49single day. You can lose a lot of money
51:51in that respect. If the TQQ went down
51:5510% 3 days in a row,
51:59it needs to get 37%
52:02return to compa- to get back to that
52:05minus 30% because of the compounding in
52:08a negative way.
52:10So, if you want to play the leveraged
52:13ETF market,
52:16uh you can start with QLD which is 2x.
52:19It won't be as volatile.
52:21And in a in a market that's choppy, it
52:25won't lose as much as TQQ.
52:28But I wanted to show you also
52:32a a little longer chart from November of
52:3513 to 2016
52:38to show you the difference in returns.
52:41And they're huge.
52:44I mean, this is Who could handle
52:45something like this? The only one is
52:47probably a trader.
52:50But the other Sorry, the I've got to one
52:52more and then I'll explain what I mean
52:53what I want to mention also.
52:55>> Mhm.
52:55>> This is a 5-year look back.
52:58And you could see
53:00because that included 2022 in there,
53:04which was difficult for the market.
53:07That the the
53:09the QLD and the TQQ pretty much did the
53:11same and the Qs did a you know, worse
53:15because obviously
53:17it's not leveraged, but you can see how
53:19stable the Qs were
53:21where the leveraged ones were all over
53:22the map.
53:24So, when you have a down market like
53:26over here
53:27the TQQQ gets wet really whacked
53:30and it takes a long time for it to get
53:33back to where it was.
53:35And by the way
53:36uh the
53:37the TQQQ came out in February of 2010.
53:43So, it has a run from 2010
53:46to
53:47now it's up about 35,000%.
53:52If you bought it and held it.
53:54The problem is no one's going to buy and
53:56hold this thing
53:57because it has huge drawdowns, 50%, 80%,
54:0170%.
54:04So, I did an analysis using AI. I said,
54:07"What if
54:08TQQQ were available
54:10back in 2000?
54:13How would it have done between 2000 and
54:162009? 9
54:18And the result was that you would have
54:20lost all your money.
54:23Twice.
54:25>> Yep.
54:25>> Cuz it got destroyed.
54:28The Nasdaq, by the way, in 1999
54:31people won't believe the Nasdaq
54:33Composite Index was up 86.2%.
54:38In 1 year.
54:40Average because of all the high-flying
54:42internet stocks.
54:44But then the in the market crash, it
54:46dropped, you know, 80%.
54:49So, the market is very volatile and you
54:53have to be careful that you don't want
54:54to be there. Now
54:55the only time I would recommend anyone
54:58buy and hold this
55:00is if they have a few thousand dollars
55:04and they want to hold it for at at 20
55:05years.
55:07And it has already had a 25% correction
55:10at least.
55:12So, if you want to take a flyer in this
55:14for a long-term or give your grandchild
55:16some money or a child and you could put
55:18a few thousand dollars in, wait for the
55:20TQQQ to drop 25% or more,
55:24put a thousand dollars in
55:26and let it sit for 20 years.
55:30But if you don't, you're going to sell
55:32it out in the intermediate term and you
55:34could you probably lose the thousand.
55:37So, that's an amazing vehicle. Imagine
55:4035,000 in uh
55:4317 years.
55:47And don't forget this if I would have
55:48put up the SOXL here, it would have been
55:51up off the chart somewhere because XL
55:54the triple
55:56uh semis
55:58made Q the trip TQQQ look like a baby.
56:04So, there's a lot of money to be made
56:05here and a lot of money to be lost. And
56:08by the way,
56:09there's an opposite to the TQQQ.
56:12It's called the SQQQ.
56:15The problem is
56:16in a bull market that keeps dropping and
56:18dropping and dropping. So, what the
56:21ProShares had to do was reverse stock
56:24split six times to get it back to a
56:27level. It kept dropping to $2 a share.
56:30So, they kept doing reverse stock splits
56:32like six to one or 10 to one
56:35to get it back where it was.
56:38Also, the TQQQ had six stock splits,
56:41normal stock splits because the price
56:43got too high.
56:45So, that the TQQQ trades
56:48probably around
56:50uh
56:5150 million shares a day.
56:54And it has assets of about 36 53 uh the
56:5934 billion dollars in TQQQ
57:02whereas the Qs themselves have 471
57:06billion dollars
57:08in assets under management. It's the
57:09fifth largest ETF. And by the way, if
57:12you haven't
57:13traded technology stocks, you may want
57:16to start just with the triple Qs.
57:19No leverage.
57:20Try your rules out. See how you do. If
57:23you do well,
57:24uh branch up branch up to the
57:27QLD. And if that does well and you want
57:29to go further and take more risk, you
57:31can go up one level, TQQQ.
57:35Or if you decide the leverage is too
57:37much of a risk for you, just stay away
57:40from it.
57:42Trading is hard enough without going to
57:43leverage.
57:45>> Yep.
57:49Excellent. Did you have one more slide
57:50on the performance? I think you had a
57:52>> see what I had here. Let me go down one.
57:56Yes, there it is. There's the
57:57performance since uh the beginning of
58:01TQQQ.
58:0335,242%.
58:09QLD at almost 11,000 and the the QQQ
58:131,800. So, if you take 35,000 and divide
58:16it by 1,800,
58:18it's a factor of probably like about 16.
58:21So, you got 16 times your money, not
58:24three times. But again, it's over a long
58:27period of time.
58:28>> And the market we've been in a bull
58:30market.
58:32>> Yep.
58:33>> What's going to happen in the next 10
58:34years? We have no idea. And if the
58:37market is flat,
58:39TQQQ is not going to do good for you.
58:42So, be very aware that this is came into
58:46existence at a very opportune time.
58:50After the market crash
58:52that ended on March 2009.
58:56This happened to come out a year later.
58:58Markets were moving how much higher. And
59:00except for 19 for 2022 with the big
59:04drop. And by the way, TQQQ dropped 61%
59:08in 2022.
59:12So, if you could if you're able to play
59:13both sides of it,
59:16you know, SQQQ on the downside,
59:18but it doesn't go down that often. It's
59:21much harder to trade the short side of
59:23this because of the time frame is very
59:26limited. And if you stay too long, you
59:28get whacked and uh you lose all your
59:30money that you put into that trade.
59:35>> It's a roller coaster.
59:36>> Also, I want to mention another thing.
59:39This is what you're doing
59:41when you're trading the the uh triples
59:43of any kind.
59:45And of course, that when a bear market
59:47comes,
59:48it goes down very fast.
59:50So, you need to put your helmet on,
59:53protect your money.
59:55Cash is a good place to be in a bear
59:56market.
59:57Money markets can get you 3.5 to 4% now.
1:00:00SGOV,
1:00:02a bill, BIL,
1:00:05two ETFs or a money market at a
1:00:08a brokerage house.
1:00:10Fidelity has their money markets around
1:00:123.4,
1:00:14as does the other brokerage firms.
1:00:19And lastly,
1:00:22just another slide of a few indicators
1:00:25to use on the TQQQs.
1:00:29I have an RSI here at 7, MACD 6 13 and
1:00:349.
1:00:35I marked off the buys and sells with
1:00:37green or red
1:00:39circles.
1:00:41And then when they have they they line
1:00:43up, you you take the trade or you sell.
1:00:46When they drop low here, like over here,
1:00:48the
1:00:49this dropped below and then it reversed
1:00:51up, reversed up, dropped below the 200,
1:00:54you get back in. This was a great buying
1:00:56opportunity, April of 2025,
1:00:59and also right here.
1:01:01You could see the the lineup.
1:01:05So, look for the big drops, confirm them
1:01:07with your technical indicators, and
1:01:10you'll be in good shape.
1:01:12>> So, this would be an example of a more
1:01:14swing
1:01:15position trade system that you can take
1:01:17advantage of the volatility and
1:01:18hopefully protect yourself in the in the
1:01:20worst pullbacks.
1:01:22>> Yeah, you just follow your indicators,
1:01:23keep your moving averages up on the
1:01:25screen,
1:01:26and decide whether you want to make sure
1:01:29you're out if it's a 10 8 or a 20 EMA,
1:01:32whichever one you feel comfortable with,
1:01:34that you don't want to be there. And if
1:01:36you're trading in every time at the
1:01:37account, it doesn't matter if you sell.
1:01:40No tax consequence. You can get get back
1:01:42in
1:01:43the day later if you think things
1:01:45reverse.
1:01:48>> Excellent. Uh Les, did you want to dive
1:01:50in deeper into your trading style? You
1:01:53went through your charts and how you
1:01:54operate, but was there any other details
1:01:56that you want to mention?
1:01:57>> No, I just want to mention some things
1:01:59at the end when we get to the end
1:02:00regarding, you know, what I have coming
1:02:02up for the
1:02:04the seminar we're doing later on.
1:02:06But uh unless you have other questions
1:02:09prior to that.
1:02:11>> Uh I think I think we've we covered a
1:02:13lot already. Um
1:02:15getting more into the risk side cuz
1:02:17obviously the drawdowns are where the
1:02:19the
1:02:19leverage ETFs kill you. Um any
1:02:22additional thoughts or clarifications
1:02:24for folks who want to get involved, but
1:02:26want to make sure they're managing risk
1:02:28and limiting those drawdowns as much as
1:02:30possible?
1:02:31>> Well, you have to decide uh
1:02:34Well, first of all, you have to decide
1:02:36if you want to trade at all or if you
1:02:38want to invest. So, you have two
1:02:40different time frames. If you're
1:02:43trading,
1:02:44you probably want to use daily charts.
1:02:47If you're day trading, you're going to
1:02:49use charts that are
1:02:51short-term minute charts, 1-minute,
1:02:535-minute, 10, 30, whatever you decide.
1:02:56If you're investing, you can use weekly
1:02:59charts.
1:03:00And then decide on indicators that you
1:03:02want to use
1:03:05to make those decisions.
1:03:07And then decide on the exact sell rules
1:03:09you're going to have.
1:03:11There's no problem if you want to put a
1:03:13trailing stop in,
1:03:15X% below where it currently resides, or
1:03:18below a moving average, or use a moving
1:03:20average as a sell point.
1:03:22But you have to have your sell rules
1:03:25in place after you make the trade.
1:03:28Either a hard sell or a soft sell.
1:03:31But the problem with a soft sell rule is
1:03:33that you may decide to not execute it.
1:03:37You're going to say, "Let me wait a few
1:03:38minutes or a few days." And that's a
1:03:40huge mistake.
1:03:43You want to make everything
1:03:45rule based, no emotion, follow the
1:03:48rules.
1:03:49And of course, if you can test your
1:03:51rules beforehand
1:03:54on different time frames or different
1:03:55securities, make sure the rules are
1:03:58sensible and they give you a winning
1:04:01hand. And also, as far as losing, you
1:04:04want to cut your losses fast.
1:04:07That's what Mark Minervini does.
1:04:09Mark Minervini has his rules.
1:04:12He does never disobeys his rules.
1:04:16And that's why he's a winner. And he won
1:04:18two trading championships. He has two
1:04:22books on trading, one on psychology.
1:04:25And he keeps in his a lot of his
1:04:26disciples are winning the US trading
1:04:29championships based on his uh trading uh
1:04:33style. Because he works with them on
1:04:35showing them what how he works. And he
1:04:38works based on technical indicators and
1:04:41certain patterns.
1:04:43And that's what he does. And he doesn't
1:04:45break his rules.
1:04:47And then very few people can do that.
1:04:50But that's what you have to do if you
1:04:51don't want to lose too much money. So,
1:04:54the risk is all up to you how much you
1:04:56want to take. And then you have to
1:04:58protect yourself so that it's not a
1:05:00problem.
1:05:01Cutting losses is something that most
1:05:03people have problems with. They that
1:05:06they don't want to say that I've I'm
1:05:07wrong or I made a mistake.
1:05:09But in trading, it's great to make a
1:05:11mistake.
1:05:12And as long as you don't repeat it, and
1:05:14as long as your wins are at least twice
1:05:16your losses as far as dollar terms,
1:05:18you're doing well. But a lot of traders
1:05:21try to do three or four times their
1:05:22losses. So, if you're making $100 If
1:05:25you're losing $100
1:05:27on a trade, what they're trying to
1:05:29really do is win three or $400 on a
1:05:31trade.
1:05:33So, you have to have a good risk to
1:05:34reward ratio.
1:05:37Nothing is nothing complicated.
1:05:40>> Yep.
1:05:40>> It's something that you have to decide
1:05:42how you're going to run your It's like a
1:05:43business. You don't want to go into
1:05:45bankruptcy.
1:05:47So, you have to have protection. But,
1:05:48the insurance is your rules to make sure
1:05:52they're executed. And if you have a
1:05:53rule, like a stop loss, put the stop
1:05:56loss in immediately after you make the
1:05:58purchase.
1:05:59So, therefore, you don't have to think
1:06:01about it.
1:06:02You'll be taken out.
1:06:04If it drops.
1:06:06And you can use use a trailing stop if
1:06:08you don't want to have a certain dollar
1:06:09stop.
1:06:13>> Yeah, great. And let's I got one
1:06:15follow-up question on your charts. If
1:06:16you could maybe go to one of those um uh
1:06:19uh slides there uh of your charts.
1:06:21>> You want to go on the uh indicators, you
1:06:23mean?
1:06:24>> Yeah. Yep, exactly.
1:06:25>> is?
1:06:26>> Yeah, exactly. So, um one question for
1:06:28you is
1:06:29for you as a day trader, what made you
1:06:32choose the Nasdaq futures and the TQQ as
1:06:36your vehicle? Is it just that there's
1:06:38good trend throughout the day? There's
1:06:40good opportunity? There's good
1:06:41volatility? What made you settle on
1:06:43these as the ones that you're going to
1:06:44focus on?
1:06:44>> been watching the Nasdaq for years, and
1:06:46that's where all the the top tech
1:06:48companies are.
1:06:50>> Mhm.
1:06:50>> So,
1:06:52All right, that's why I went into the
1:06:53TQQQ initially because I found it to be
1:06:56a leverage vehicle. I like risk.
1:06:59And I found it to be very liquid.
1:07:02>> Mhm.
1:07:03>> Easy to trade.
1:07:04And I enjoyed it very much. And I saw it
1:07:07patterns, too. During the day, sometimes
1:07:09you see um a
1:07:12a low point at 10:30 in the morning.
1:07:14>> Mhm.
1:07:14>> Or at 3:20 it reverses direction. So, I
1:07:18started actually keeping a a
1:07:21a
1:07:22a table of the times of day and when the
1:07:24highs and lows were, but it got to be
1:07:26too much work because you know how many
1:07:28times this thing reverses in a day?
1:07:30>> Yep.
1:07:31>> It'll be 20, 30 times.
1:07:33>> Yep.
1:07:33>> So,
1:07:34uh I liked the the the way it it moved
1:07:37and I was able to use the indicators
1:07:40that gave me a good
1:07:42uh timing mechanism.
1:07:44>> Yep. And one question for you
1:07:46>> is critical. Timing is critical.
1:07:49>> Yes.
1:07:50Excellent. Uh one one question I had for
1:07:53you was obviously your time frame is a
1:07:56day trader. You're focused on intraday
1:07:58action. You're out by the end of the
1:07:59day. Does the daily chart give you any
1:08:03perspective at all on like if the trend
1:08:06on the daily is above a moving average,
1:08:08it's a better better period for trading
1:08:10for you, or is that completely outside
1:08:12your process? You're just focused on the
1:08:14intraday action.
1:08:15>> During the day, I focus on intraday
1:08:17action. However, at night, I look at the
1:08:20daily and the weekly.
1:08:21>> Mhm.
1:08:22>> If the daily is a
1:08:24in a bull and the weekly's in a bull,
1:08:28and then everything's are above the key
1:08:29moving averages,
1:08:31that gives me more confidence.
1:08:34And also, by the way,
1:08:37people shouldn't probably trade
1:08:39if the uh
1:08:41price is below the 200-day moving
1:08:43average
1:08:45on the long side.
1:08:47>> Mhm.
1:08:47>> Of course, there will be rallies
1:08:49coming up, but if you
1:08:52if you don't want if you don't want the
1:08:54risk of trading in a long in a in a
1:08:58place where the market is very weak.
1:09:00And it's very weak below the 200-day
1:09:02moving average.
1:09:04And it can keep going down, down, down
1:09:07like in 2022.
1:09:09You had the uh the price of the TQQQ
1:09:12drop below the
1:09:14the 200-day early on in the year and
1:09:17kept going down.
1:09:19>> Yep.
1:09:19>> Through October. So, wait for a reversal
1:09:24and then the odds will be more in your
1:09:25favor. And of course, use the daily
1:09:27price chart and weekly to help you
1:09:30determine that. You don't have to catch
1:09:31the bottom. You'll never catch the
1:09:33bottom.
1:09:35If you get the the other part of the the
1:09:37run, the other 75% of the run,
1:09:40that's fine, too.
1:09:42No one's perfect in the market.
1:09:44>> Yeah, one of my favorite Livermore
1:09:45quotes is the Or was it Livermore? Or
1:09:48the the first fourth and the last fourth
1:09:50are the most expensive for force in the
1:09:52market. I I think you know what I'm
1:09:54saying. Trying to catch
1:09:55>> that's that's true. You don't need the
1:09:57top and the bottom because you won't be
1:09:59able to do it anyway. Just be satisfied
1:10:01with the middle.
1:10:02>> Yep.
1:10:04Excellent. Uh Les, this has been great.
1:10:06Um
1:10:08we're going to be working together on a
1:10:09workshop with also Dr. Allen Ellman and
1:10:12Dr. Eric Wish coming up early next year.
1:10:14Do you want to discuss a little bit
1:10:15about what you'll be covering and what
1:10:17you hope to pass on to students there?
1:10:20>> Right. Well, in the in the workshop,
1:10:22I'll be focusing on
1:10:25the leveraged ETFs
1:10:27and showing first of all, explaining how
1:10:30they work, what the key risk levels are,
1:10:34what the components are,
1:10:36uh
1:10:37the fact that they lose value during a
1:10:40flat and down markets,
1:10:42and what to be prepared for in in doing
1:10:45that. And of course, risk will be
1:10:48covered in great detail because it's
1:10:50a difficult uh vehicle to trade.
1:10:53But also, I'll be providing uh
1:10:56the attendees with a a trading strategy
1:10:59that I've back tested
1:11:01that combine a number of the indicators
1:11:03that we just saw on my screen. So, I'll
1:11:06be using a specific moving average,
1:11:09and that will be as a line in the sand.
1:11:11If the uh
1:11:13the indicator if the uh say you're doing
1:11:15a TQQQ for this discussion,
1:11:18if the price is below a certain moving
1:11:20average, you don't want to be involved
1:11:21at all.
1:11:23Then I'm going to have a an MACD
1:11:25indicator
1:11:26like we saw before,
1:11:28and I'll use the the
1:11:30histogram line. If you're above it, zero
1:11:33or not.
1:11:35Then I'm going to use the RSI with
1:11:36extreme readings.
1:11:40And the Keltner channels, and then two
1:11:43other things which are really help a
1:11:46lot.
1:11:47The percent of Nasdaq stocks above their
1:11:5050-day moving average.
1:11:53I'm looking for extreme readings as
1:11:55well.
1:11:56On this. In other words, when most of
1:11:58the stocks are below their 50-day moving
1:12:00average, and it reaches an extreme
1:12:02point, that would typically to be
1:12:04watching for a buy signal and vice
1:12:06versa.
1:12:09And the other thing is the bullish
1:12:11percentage. These are stocks that are on
1:12:15buy signals based on point and figure
1:12:18charts, and I'll wait for a percentage
1:12:20to be very low or very high. And these
1:12:22are common indicators that you can find
1:12:24on
1:12:25many different software packages.
1:12:27So, I'll be using this strategy. And
1:12:30then
1:12:31I've done some back testing already.
1:12:34And the TQQQ went up 32,000% during the
1:12:38back test period.
1:12:40The problem is the 81% drawdown.
1:12:44So, one strategy I tested
1:12:46had a
1:12:4845% drawdown with a 29%
1:12:52compounded annual growth rate. So, I'm
1:12:54trying to work on other strategies as
1:12:56well
1:12:57to have a lower drawdown.
1:13:00And get this this number up as well. So,
1:13:02I'll be coming up with a strategy
1:13:04that gives you a very large cumulative
1:13:07return with a much lower drawdown
1:13:11than the particular
1:13:13TQQQ itself. So, this is a trading
1:13:15strategy.
1:13:18And
1:13:19I think that the
1:13:20audience will appreciate that. And also
1:13:23discuss how I do back testing using AI.
1:13:27So, that they
1:13:27>> That's what I was going to ask. It'd be
1:13:28cool to see your process.
1:13:29>> that themselves and use the indicators
1:13:31that they want and also change some of
1:13:33the values and see how things change.
1:13:36But, one thing you don't want to do in a
1:13:37back test is overfit the data.
1:13:40>> Yeah.
1:13:40>> You want to have a smooth curve and
1:13:44put in so many variables that it looks
1:13:46like there's no problem. The more
1:13:48variables you have, the more risk that
1:13:50it will never work in real time.
1:13:53>> I I talked with uh Tom Basso or maybe it
1:13:55was uh his friend Lorenz Benz Dorp about
1:13:58when they develop a strategy, what what
1:14:00tells them that they did something
1:14:02wrong. And they said that it's just a
1:14:03clean line that goes to heaven. Uh
1:14:06basically, you want to see draw downs.
1:14:07That means, you know, it's a it's a
1:14:08normal market cycle and there there's uh
1:14:11there's periods where it doesn't work.
1:14:12There's periods where it does work.
1:14:14>> Yeah, absolutely. Uh things are not a
1:14:16perfect straight line. Well, if you get
1:14:18a decent uh draw down, 10 or 20%,
1:14:22that's that's terrific, actually. If
1:14:24something that
1:14:26uh by itself goes down 80%, you're
1:14:27better off with a you know, with a
1:14:29strategy that cuts the draw down, gives
1:14:32you
1:14:32a fair amount of the
1:14:34compounded annual growth rate.
1:14:37So, that that's a winning combination.
1:14:40>> Yeah, excellent. Well, I'm looking
1:14:41forward to this. Uh the link to join the
1:14:42wait list will be down below. Uh if
1:14:44you're interested, we'll let everybody
1:14:46know on the list first as soon as uh
1:14:48tickets are available. So, uh definitely
1:14:50check that out and uh Les is looking
1:14:52forward to your presentation as well as
1:14:53the presentations from Dr. Wish and uh
1:14:56Alan as well. Uh perfect. Les, this has
1:14:59been um a lot of fun and I think you've
1:15:01covered a lot of great golden nuggets.
1:15:04Um are there any kind of overarching
1:15:06things from your experience uh or what
1:15:08you covered today that you think are the
1:15:10most important takeaways for people
1:15:12watching that you really want people to
1:15:13remember from uh this session?
1:15:16>> Yes, number one is get yourself an
1:15:18education,
1:15:19no matter how you get it.
1:15:21Number two is decide
1:15:24if you're going to be an investor or a
1:15:25trader.
1:15:27And then also make sure you keep your
1:15:31your accounts separate.
1:15:33Keep your trading account separate from
1:15:34your investing account.
1:15:37And develop rules
1:15:39and cut your losses.
1:15:41And with those four things, you'll do
1:15:43very well.
1:15:45>> Excellent. Well, Les, thank you so much
1:15:47for your time. Appreciate it. Uh to
1:15:49everybody watching, I hope you guys
1:15:50enjoyed. Uh leave a like down below if
1:15:51you did. Subscribe if you're new to the
1:15:53channel. And if you have any questions
1:15:55for Les or
1:15:56um topics you'd like him to see him
1:15:58cover in the workshop, let us know down
1:16:00below in the comment section and we'll
1:16:02be uh sure uh to address all of those.
1:16:04But thanks so much for watching and uh
1:16:06we'll see you guys in the next one.
1:16:07Cheers.
1:16:11>> [music]
1:16:17[music]

About this transcript

This page contains the full transcript of 32,000% in 10 Years - The TQQQ Trading Strategy of a 60 Year Trader | Les Masonson by TraderLion, generated from the public captions YouTube serves with the video. The transcript has 12,466 words across 2,065 segments, with the original timestamps preserved so you can click any line to jump to that moment in the embedded player.

What you can do with it

Use the transcript to take notes, quote the speaker, build a study guide, generate a summary with ChatGPT or Claude via the YouTube Summary tool, or export it as a timed subtitle file with YouTube to SRT. You can also re-open it in the transcriber to choose a caption track available on the video.

Free YouTube transcript tool

YouTube2Text is a free YouTube transcript generator — no signup, no daily limit. Paste any YouTube link and get the full transcript instantly, with timestamps, click-to-jump, caption language selection, AI prompts for ChatGPT, Claude, and Gemini, and exports to TXT, SRT, VTT, or Markdown.