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3x Trading WORLD CHAMPION Reveals the “Low-Effort” Strategy That Won the Robbins Cup (Live On Chart) — Transcript

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0:00This is John Luca, one of the youngest
0:02World Cup day trading champions ever. At
0:06just 23 years old, he traded in the most
0:09prestigious trading competition on the
0:12planet up against veterans, full-time
0:14professionals, people who've done
0:16nothing but trade for decades. And he
0:19didn't just beat them, he made 104%
0:23in a single quarter. And in this
0:26episode, he's breaking down his complete
0:28championship winning strategy and risk
0:31model live in person for the first time
0:35ever. And I was always trying to predict
0:38it and I always lost money doing it. So
0:42when once I understand this thing, I
0:45started becoming profitable and once I
0:47understand one more thing, I started to
0:50win the trading championship. I became a
0:52statistical trader. So I start using
0:54math to beat the benchmark and to beat
0:56the championship. So that's what totally
1:00shift my trading. Don't try to
1:02understand a pattern. Try to find
1:04something that you know that works
1:06[music] and not by feeling. John Luca
1:09has built one of the most sophisticated
1:10trading processes I've ever seen. He
1:13uses market regimes to define the
1:14environment, structure and value areas
1:17to frame the setup, then price
1:18efficiency and volume to time the exact
1:21entry.
1:23You see this? So one condition is met.
1:25The break of structure, the break of the
1:27value area happen and we have the volume
1:31low effort big result.
1:35Okay. So we just take the trade here.
1:38>> But what really caught me off guard was
1:41his risk model. I'd never seen anyone
1:44approach risk like this before. So in
1:46this case [music] a win tell you
1:48something about the next trade because
1:50we perfectly know that the market is in
1:52trend and our strategy has a positive
1:56autocorrelation and perform better in a
1:58trending market. Okay, that's so
2:00important to understand because once you
2:02have this you can squeeze your risk to
2:05the maximum level.
2:06>> And that's when I realized John Luca
2:08didn't become a world champion because
2:10he got better at predicting the market.
2:12He became one when he stopped trying to
2:15predict it at all. He spent years
2:18losing, rebuilt the way he thought about
2:20trading from the ground up, and turn
2:22that process into a championship winning
2:25system. Nothing in this video is
2:27financial advice. Everything discussed
2:28is simply the insights of a 23-year-old
2:32world champion. Now, let's see what John
2:34Luca is made of.
2:38[panting]
2:40Gian Luca, you just finished first place
2:43in the quarter 2 2026 Robins World Cup
2:47trading championship with a 104% return.
2:52You also finished first place quarter 4
2:542025 with a 58% return and you're
2:58currently in first place quarter 3 2026
3:02with a 254%
3:04return at just 23 years old. It's
3:07extremely impressive. Now, before you
3:09show me the exact strategy you used to
3:12do all of this, what's the number one
3:15thing that clicked for you that allowed
3:17you to go from a guy just trying to
3:20figure all of this out to trading at an
3:22elite level like that?
3:24>> Okay. So, thank you for the greetings.
3:26And um I started my career as a trader,
3:30as a discretionary trader. I was always
3:33trying to understand why certain move in
3:36the market happened and I was always
3:38trying to predict it and I always lost
3:41money doing it. So when once I
3:45understand this thing I started becoming
3:47profitable and once I understand one
3:49more thing I started to win the trading
3:52championship. The first thing that
3:54switched me that switched my trading was
3:57that you don't need to understand the
4:00market to be a to be a profitable
4:02trader. Most traders spend their time
4:05studying every move of the market trying
4:07to understand why a certain thing
4:10happened. But the reality is the the
4:14movement already happened. You're
4:15already late. and understanding why will
4:19only drain your time and not and it will
4:22not gain your P&L. So what I did instead
4:26was was not trying to understand the
4:29market but finding some properties in
4:32the market test it and exploit it. So I
4:36wasn't searching for a profitable
4:38strategy. I was searching for certain
4:40problem for c for certain properties
4:43that I can use in a strategy and
4:46maximize the return and the first thing
4:50and this all combined made me a made me
4:53a mechanical trader. Later on I will
4:56show you all the strategy in the next
4:58few minutes. I became a statistical
5:00trader. So I start using math to beat
5:03the benchmark and to to beat the
5:06benchmark and to beat the championship.
5:08So that's what totally shift my trading.
5:11Don't try to understand the market. Try
5:13to monetize every time you saw a
5:16pattern. Don't try to understand a
5:18pattern. Try to find something that you
5:21know that works and not by feeling.
5:24Because I want to be honest with you,
5:26the moment you click buy and sell based
5:28on a feeling, you're not a trader. you
5:30are just a gambler with a Trading View
5:32subscription. That's the reality. Most
5:34people don't realize it, but it's the
5:36truth. So, try to find something that
5:39you know that works based on statistical
5:41analysis data and exploit it to the
5:45maximum return possible. That's what I
5:47did.
5:48>> And Gian Luca, just to be clear, Robins
5:50World Cup, most prestigious trading
5:52championship, you've beaten guys that
5:54have been trading for 30, 40 years on
5:56there. And you're saying that once you
5:59let go of the why and stop trying to
6:02understand every piece of the market,
6:04you were actually able to go from
6:06struggling to highly successful.
6:09>> Absolutely. Yes. Because if you start
6:12asking how if you always ask why instead
6:15of how I can monetize it, you're not
6:18making a strategy. You are taking
6:21response of what the market already did.
6:24So you just you need to switch you need
6:28to switch your thought about that and
6:31start thinking about okay I don't care
6:33why the market did this my job is not to
6:36predict the market my job my job is not
6:39to understand the market my job is to be
6:41on the right side of it okay I don't
6:44care why the market did something I
6:46don't know this is not my job I need to
6:50monetize when I can
6:53my setup. That's what you actually need
6:56to know. Okay.
6:58>> And Gian Luca, just to be clear, do you
7:01think if we took almost any struggling
7:04retail trader and taught them your
7:07process and what clicked for you from
7:09start to finish that they could start
7:12trading at a at least successful level?
7:15>> Absolutely. Yes. I taught my approach to
7:18a few friends. They always became
7:20immediately profitable because they
7:22switched the method. They switched all
7:24you think about all they switch all they
7:27think about the market. And when you
7:30know that in certain condition you have
7:34a positive expectancy. Not taking the
7:36trade will leave money on the table.
7:39I'll make easier for you. If I give you
7:41a coin and I'll tell I'll tell you try
7:44to bet on a coin but you know h it's a
7:48cross header or head or tail. Okay. And
7:52you know that will land tail 65% of the
7:57time. Okay. Because that's the edge. If
8:01the coin you you will bet on it first.
8:05>> What do you think? If 65% of the time it
8:08lands tails, assuming a onetoone payoff
8:12structure,
8:13>> of course, I'd go with tails.
8:14>> And you will be scared if it lands ends
8:16five times in a row.
8:17>> Mhm.
8:18>> Of course. No, because you know that you
8:20have an advantage.
8:21>> Mhm.
8:21>> Okay. That's what we need to know. When
8:24you trade with my appro with my
8:26approach, you will know that in certain
8:29condition you have an advantage. That's
8:31it. And it's not based because you think
8:33so. It's made because the data say so.
8:37>> And it's a way easier. It's a total way
8:41easy. It's a total easy way to trade
8:44instead of discretionary instead to
8:46trying to understand anything in the
8:48market. That's what shifted for me and
8:51that's what for me is the holy grain in
8:54trading.
8:55>> And you would attribute this again to
8:57the success you've had at this level.
9:00>> Totally. because I was an unprofitable
9:03trader for more than two year after I
9:06switched my approach and I became and I
9:08became profitable but I knew that I was
9:12just looking for the top of the iceberg.
9:14I knew it can go deeper this kind of
9:17knowledge and later on I studied
9:19statistical analysis and I became a
9:21trading world champion two times
9:23actually maybe hopeful three. Gian Luca,
9:26I want to get out of the abstract here
9:29and get on the whiteboard, see exactly
9:31what you do, and then we'll get to the
9:33chart later. So, when you're ready, I
9:35am.
9:36>> Okay.
9:36>> Okay. Excellent.
9:37>> Jan Luca, walk me through exactly what
9:40you did to come in first place for two
9:43trading championships and how you're
9:45currently in first place.
9:47>> Yes, of course. So because so before I
9:49show you all the framework of the
9:51strategy that I use actually in the
9:54championship, we need to understand some
9:57concept of
9:59validation of your edge and how you can
10:02actually optimize your edge for a for a
10:05championship for a prof because the
10:08reality is most people try only to get a
10:12better strategy. So they add one
10:14concept, they try to fix the weak point,
10:17but the result is always the same. They
10:19overfeit the edge. When they go live,
10:21it's totally different. So we will work
10:24through first how to avoid overfitting
10:28and how to do a proper back test in
10:30order to understand and trust your data.
10:33>> Now, real quick, how important is this
10:35validation step from one to 10?
10:38>> It's 10. It's totally 10 because if you
10:40don't do that the all thing that you
10:43will do later will be only ruled by luck
10:48>> and you can have luck for 50 trades for
10:51100 trades but for 10,000 trades luck
10:53cannot be an answer. Okay. So we will
10:57work through the back test part and the
10:59most powerful part is not trying to add
11:02some concept in the strategy but
11:06choose the best risk model to monetize
11:10to squeeze every return of your
11:12strategy. I have to tell the truth on
11:14you uh about some of my championship
11:17because half of the profit that I made
11:19on the championship was made by the
11:21strategy. The other half was made by the
11:24risk model that I actually use. If I use
11:27instead a fixed risk a fixed risk sizing
11:31model, I will always gain half than what
11:34I did now.
11:35>> Okay,
11:35>> so we will start from the first that is
11:39actually
11:41overfitting.
11:42>> And to be clear, what is overfitting for
11:43anyone who doesn't know?
11:44>> Overfitting is when you made real on the
11:48past that fits so perfect that actually
11:50work on the past. When you strict your
11:54rule, when you add so many rules, so
11:56many filters on your strategy, the
11:58result is
12:02when you add so many rules and you never
12:06optimize. No, when you add so many rule,
12:09you just have a perfect back test.
12:12>> You just have a perfect back test. But a
12:15back test doesn't make money.
12:17>> You know, a strategy in a live account
12:19makes money. So to be clear, it's like
12:21you take a rules, add them to your
12:24strategy until you finally get a good
12:26back test.
12:27>> Yeah.
12:28>> But it won't repeat in the future.
12:30>> No. Because for doing a back for doing
12:34an amazing an amazing back test, you
12:37have to live what the data tells you
12:40that work and eliminate what you love.
12:43Because people are so attached to maybe
12:46a setup, maybe a certain condition, but
12:49you have to be cold about this. You have
12:51to leave only what does the data tell
12:55you that work.
12:56>> That's the first part. And I and the
12:59second part will be the win rate. Okay,
13:04we will tell you what I will tell you
13:07why the W rate alone is basically a
13:10scam. telling that my strategy has an
13:1280% win rate means nothing on if the
13:14strategy is profitable or not. So what
13:17we will use instead I will show you
13:19later and later on we will talk about
13:22the initial risk models that I
13:25anticipate to you
13:26>> is based on calibration and
13:29autocorrelation.
13:32>> It's a big word.
13:33>> I'll ask you about that later.
13:34>> No worries.
13:36But first let's start with the first
13:38one. I know that you're watching this
13:41right now and you have a probably and
13:43you probably have a back test that look
13:45like this.
13:46>> I'm totally sure that one of you that
13:49are watching this right now have a back
13:50test that sound like this. But the
13:53reality is is this back test real or is
13:57it a fantasy? We have to question that.
13:59How we question this. First we should
14:03understand where we do our back test.
14:05Let's assume that we
14:08make the rule and make the strategy on
14:11the 20
14:134
14:15and 2025 market. Okay. What you have to
14:19do? You have to do a test auto sample is
14:23called this is where you build the
14:26strategy.
14:27>> So this is your in sample period.
14:29>> Yeah.
14:30>> Okay. And why is this important? because
14:33because you have to run your strategy in
14:37sample that the market has not seen yet.
14:39>> Okay, this is called in sample test. The
14:42out of sample means that you have to
14:44test the same strategy in the data that
14:48the market has not seen yet. So for
14:50example in 2026 market
14:53>> if the condition stays and what I mean
14:56with the condition I don't mean the way
14:58rate I mean the share ratio the
15:00expectancy all the important metrics
15:02that matters that I will explain you
15:04later if of course they will move okay
15:08because our edge is never stable it
15:11changes but for example if our
15:13expectancy and sharp ratio move around
15:1520% 25% is totally normal okay if moves
15:20for more than 50%.
15:22It's probably that your edge isn't
15:24solid.
15:25>> Okay.
15:25>> And why do you look at the sharp ratio?
15:27>> Because I want to see my return in the
15:31report of the draw down. Okay. This is
15:33so important because two traders can
15:35make the same amount of money but one
15:38maybe two traders can make 50%. Okay.
15:42Same. How do you judge which is the best
15:45one? You judge it by the with the share
15:48ratio because maybe this trader has a
15:51solid process. So it went 10% 5% draw
15:55down etc etc. Maybe these guys went one
15:58day 10% profit one day minus 20 the
16:01other day plus 30. He has not a solid
16:04return.
16:05>> So this
16:08can be luck.
16:09>> This cannot. So share preo responds to
16:13one question. Does is your age solid or
16:17you are just a gambler that had luck
16:19because also the variance and the luck
16:22is really important. The more sample you
16:26have on your strategy, the more variance
16:29you will have. Okay. And variance what
16:32does it mean? That the edge will show
16:34itself over the variance in the for
16:37example if we are a scalper. Okay. We
16:40take for example 10,000 trades in a
16:42year. Okay. Our viance can be also 100
16:45trade. What does it mean? That our edge
16:48isn't solid in the first 10,000 trade.
16:50In the first 100 trades, sorry, but it
16:53will prove itself after.
16:55>> Mhm.
16:55>> Of course, it's not totally always like
16:58this, but you can have luck in the first
17:00100 trades.
17:01>> So, just to be clear, when you have low
17:02sample size, variance and other factors
17:05can affect the performance that you see
17:07in your back test or even live trading,
17:10right? It's you can't tell it do I
17:12really have an edge or is it just
17:15>> chance variance etc. Right now what what
17:18specifically then is a good sharp ratio
17:22>> above 1.5 is still good.
17:24>> Mhm.
17:24>> Okay.
17:25>> I would say also 1.4 is still good but
17:28below one is not very good.
17:30>> Okay.
17:30>> Okay. So we will say just this
17:33>> please continue. Yeah. One of another
17:35thing that is so important for the PBO
17:38that is the probability back test
17:39overfitting is how many variants of the
17:42strategy do you actually test because if
17:45we have a strategy and for example we
17:47have a trigger okay we can take an
17:50operation here
17:53and we test so many variants of this.
17:56Maybe we test 10 different model of
17:59trigger, 10 different model of market
18:02structure. For sure we will find
18:05something that will have a share ratio
18:07above this.
18:08>> But this does not mean that this is
18:11real. Okay? Because if you test lots of
18:13variants of that sample of that strategy
18:17can be overfitting itself. Okay? So it's
18:20so important to see if your data are
18:23stable. So for example expectancy
18:27and share ratio are solid in the auto
18:31sample test. Okay. Because these are
18:33just an
18:35strategy can be overfitting. This is the
18:38response.
18:39>> Okay.
18:40>> Okay. We have also other model like
18:43chunk optimization. So you can divide
18:46your back test in 10 different row for
18:49example and see if the model are stable.
18:52if the if the metrics are stable. But
18:55this is actually my favorite one.
18:58>> Okay. And you're just saying what to do
18:59is you build your strategy on a specific
19:03data set.
19:04>> Yeah.
19:04>> Right. And you're going to add rules or
19:07do whatever and you'll get a good back
19:09test.
19:09>> Yeah.
19:09>> Because you would never move forward
19:11without a good back test.
19:12>> Then you test what you did here out of
19:16sample completely new data.
19:18>> Yeah.
19:18>> To see if the strategy is overfit.
19:21>> Yeah. And obviously if it's overfit then
19:23>> then we have to see what is the problem
19:26itself because if it's overfitit and our
19:29data are totally different from the back
19:32test we don't we didn't have a strategy
19:34we just have a dream okay that's the
19:37reality of that. So we need to change
19:39everything about that.
19:40>> But if you actually can get the same
19:43result or similar result in the out of
19:45sample test
19:47we can have a solid edge. It's so
19:49important to not to change the rule
19:51here. This is the validation period.
19:54This is the testing period. Most people
19:56say okay but in 2026 we can have
19:58different conditions so I will make new
20:00rule. No that's the out of sample test.
20:03You cannot okay once you have data you
20:06should understand what is really
20:09important to check and what is not.
20:12>> Okay. I will tell you for the second
20:15step about the win rate. So before we
20:18move on to win rate though you had
20:21mentioned expectancy and sharp ratio.
20:23Yeah.
20:23>> Now as we all know there will always be
20:26performance degradation going from the
20:29in sample to the out of sample right. So
20:31you might get a 1.8 sharp ratio which is
20:34phenomenal in the in sample
20:36>> that is almost guaranteed going to drop
20:38out of sample.
20:39>> It's not guaranteed but it it will
20:41probably so
20:42>> in in practice it very much likely will.
20:45So, how does somebody know then if they
20:47go from what is too bad if it degraded
20:52too much out of sample and what isn't
20:54too bad? What is still workable?
20:56>> Too bad is if the matrix that we have
21:00here drop below 50%.
21:02>> Okay.
21:03>> Okay. This is a rule because our trading
21:05is based on rule. We don't guess
21:07anything. I won't tell you I think this
21:10so you should try to think like me. No,
21:12it's not like this. It's real. So for
21:14example if I have an expectancy of 0.2
21:19and this
21:21are made in the in sample test and in
21:24the out of sample it drops of 50%
21:29and we will have a degradation of this
21:33>> like or a degradation of 50% the
21:36strategy is not solid enough. That's the
21:39reality. We will also have a failure
21:42test because this is the back test. But
21:45a back test isn't forever. You need to
21:48optimize your strategy and you have to
21:50look at the deg of the you have to look
21:52at the degradation of each metrics.
21:55Okay, we have a warning. For example, if
21:57the if this drop by 30% is a warning
22:01that maybe something is changing, so we
22:03should lower the risk or maybe this the
22:07matrix is going up. We don't know. We
22:10have to check with a failure test that
22:11is the end of the protocol.
22:13>> One more thing, Jay, why specifically is
22:1650% the cut off?
22:17>> Because I tested.
22:18>> Okay,
22:18>> it's it's always like this the response.
22:20It's not a rule, a a defined rule. Okay,
22:24I tested with that when the matrix drop
22:28below 50% the strategy is not the same
22:32as the same uh is not the same it
22:34changed. So we should understand how to
22:39optimize it. So what we can change or
22:42changing the model for example.
22:44>> Okay, understood. And last thing for
22:46expectancy point two for anyone who
22:48doesn't know exactly what this number
22:50correlates to. I will explain in the
22:52wheel rate. So no worries about that.
22:54Okay.
22:55>> Mhm.
22:55>> So let's talk now about wheel rate.
22:59>> So let's move on. Do you have any
23:01question? Any more question about that?
23:02>> Nope.
23:03>> Let's move on about the wheel rate.
23:05Okay. I know that you that you are
23:08watching this see some videos of guys
23:11telling my strategy is amazing because
23:13has an 80% win rate. But what does it
23:16mean we rate itself? As I told you
23:18before anything the rate is basically as
23:20count because the important thing is if
23:24my strategy produce money in a large
23:27enough sample and it's not based on rate
23:29it's based on expectancy.
23:37So we will cancel this. We will never
23:39analyze our data with this. We will
23:41analyze with this. How does expectancy
23:44works? It means the returns of money per
23:47dollar risked. So for example, if I have
23:50an expectancy of 0.2, okay, what does it
23:54mean? That per dollar that I put in the
23:57market on average, if I look at the
24:00target and the stop, I will get $120.
24:05Uh,
24:07okay. So what does it mean? If I risk
24:09for example $1,000 per trade, my average
24:12return will be $1,200.
24:18>> So we should we have to start to analyze
24:21this instead of the ree because this
24:23tells you if the strategy makes money
24:26>> this not. Okay.
24:29Once we are going now that we are going
24:32for the actual data of the strategy we
24:36have to look of the we have to check the
24:39risk model. Okay most people say that
24:42this strategy has a 0.2 expectancy
24:45that's it. It's not totally true because
24:48it depend in which state of the
24:50marketing the of the market the strategy
24:53produce this result. Okay.
24:55>> Okay. And we have to introduce the
24:57concept of regimes that is so important
25:00and it's one of the base model of my
25:03strategies that I use in world
25:04championship. So before this we will use
25:08a 2.5
25:10and we will talk about regimes.
25:16So
25:19our strategy can have a different
25:22performance in every regime of the
25:23market. Personally I codified four and
25:27is the low, medium, high and extreme. So
25:31our result should be filtered in each
25:34regime
25:35>> because maybe our expectancy can be
25:38negative
25:40here, positive here,
25:44extremely positive here
25:47and extremely negative here.
25:51in in Gianluca
25:53when you say regimes I've never seen
25:55regimes classified by low, medium, high,
25:58extreme.
25:58>> Yeah, I did it because I needed to
26:01objectify the regime. So this is my
26:04personal calibration. We we can say like
26:08this and this is what I actually do when
26:11I have to look at the market. I say okay
26:13in which regimes we are and the only
26:17things that matters is of course knowing
26:20that this is negative is important but
26:23how many sample do we have we will talk
26:26later about the sample size because it's
26:27it's an important really an important
26:30part and in this case we know that in
26:33with the with a high regime so when
26:36there is high volatility
26:37>> we have this and this is the best
26:40performers
26:41Or we can actually objectify regimes.
26:44Yes.
26:45>> Okay. Because
26:47knowing this for for sure we cannot just
26:50use the ATRA because the 8year means the
26:54volatility per session.
26:56>> Okay. And maybe it's a 30. But what does
26:5930 means? We need to know the 8year
27:02percentile.
27:03>> ATR percentile percentile. Sorry. Okay.
27:06Okay.
27:06>> Okay.
27:13And let when I work through this you
27:17will understand how objective these are.
27:20Okay.
27:22>> Yeah. Okay.
27:22>> That and then put a
27:25>> Yeah.
27:25>> Yeah. Okay. Great.
27:27>> Okay.
27:27>> Looks amazing.
27:28>> Yeah. [laughter]
27:29>> So when I walk through this you will
27:31understand all these how objective this
27:34thing are. You cannot have doubt.
27:36>> Okay.
27:37>> Okay. That's so important. So we have
27:39range. For example, if the ATR
27:41percentiles plot from zero
27:50to 25,
27:52this is classified as low.
27:57>> Okay. And yeah, please continue.
27:59>> Yeah. When it's from 26 to 50, it's
28:03classified by medium. When is from 51
28:07>> 75?
28:08>> Yeah. Yeah. [snorts] I always forgot
28:10this.
28:10>> That's right.
28:11>> Is classified Ike.
28:15When is from 76
28:18to 100? It's classified extreme. Okay.
28:24This is how easy we can objectify the
28:27regs.
28:29>> And Gian Gian look at how does someone
28:31get access to this?
28:33>> It's basically a free indicator. Okay.
28:35You can also search with the ATR
28:37percentile. The settings are
28:41ATR length 14.
28:43>> Mhm.
28:45>> And the and the
28:49and the percent percentile length 200.
28:52It's easy really. You can classify the
28:55regime like this. There are also the
28:57model, but this is the easiest one.
28:59>> This is free on Trading View.
29:00>> Yeah, totally free. You can just search
29:02on it. I will write for you the
29:03calibration. So
29:06length 14 and 200. This is the
29:08calibration that I actually use.
29:10>> Why do you use that those numbers
29:11specifically?
29:12>> Because I tested it and [laughter] I saw
29:14that this gives me the best result ever.
29:16>> Okay.
29:16>> Okay. And it's not because I think so.
29:19Okay. It's always because I tested it.
29:21It will be always the same response.
29:23>> Oh yeah. I've interviewed a lot of guys
29:24that just say I think so. Go ahead.
29:27>> So h the regimes actually tell you the
29:30volatility. Your strategy and your data
29:32should be filtered by volatility. And
29:35for the next model that I will explain
29:37to you that is the meta label, we need
29:39to know which is the best regime of our
29:41strategy. In this case, we will have
29:44high for example. Okay, we have to keep
29:46in mind the high regimes. Okay,
29:50now we can talk about the risk model
29:52because this is the most important part
29:55of the strategy and it's it gets it gets
29:59really interesting here
30:01>> so I can consider
30:02>> so you're ready to move to number three
30:04just to be clear then this these are
30:06volatility regimes
30:07>> volatility regime
30:08>> and when we see expectancy we're
30:10measuring expectancy for a strategy by
30:14each regime so it could do bad and low
30:17volatility but great and High
30:18volatility.
30:19>> Totally sure.
30:19>> You're saying it's important to make
30:21this distinction, right?
30:22>> Yeah. Because every day when you open
30:24your chart, you should know in which
30:26regions you are. Okay.
30:28>> It's mandatory.
30:29>> Mandatory. Okay.
30:30>> Mand mandatory. Okay. Now, let's talk
30:33about the risk model. Okay.
30:36As I told you before, you don't need to
30:38search for a profitable strategy. You
30:42need to search for
30:45properties of the market that you can
30:47exploit.
30:48>> My strategy run a high positive
30:51autocorrelation. What does
30:53autocorrelation means?
30:54>> Mhm.
30:55>> If we we flip a coin, we have a 50%
30:58chance that it will land head or tail.
31:02>> That's easy. So when you when you throw
31:05a coin, for example, there will be 50%
31:08chance that it will land head or tail.
31:10And there are they have no influence on
31:14the next row itself. It before it lands
31:17tail does not mean that ads that ads is
31:21more probably.
31:22>> This is the point. But we are not we are
31:24trading in the market and in the market
31:26is totally different. We can have three
31:29types of autocorrelation.
31:32Zero autocorrelation
31:34positive and negative. So zero
31:37autocorrelation is really helpful to
31:40know because means that your win and
31:44your loss are basically random. This
31:47does not mean that your strategy is
31:49unprofitable but you don't have a memory
31:53on your strategy. Okay? So you win and
31:56the same chance. So when you win there
31:59are no advantage on the next trades.
32:02>> When you have a positive autocorrelation
32:04of course I mean I strongly positive.
32:07>> What is strongly positive?
32:08>> Strongly it's a range. Okay. Because
32:10usually from zero to two is zero
32:13autocorrelation.
32:14>> From three to five is basic
32:18autocorrelation. for six to eight is
32:23strongly
32:25strong autocorrelation
32:27>> from 9 to 10, it's probably overfit.
32:32It's really rare to find a strategy that
32:35have a positive autocorrelation of 10.
32:37And if you have it, you probably found
32:40the holy grail.
32:42>> And so, of course, this is a formula.
32:45>> It's a little bit complicated. I won't
32:47go deeper now but you can just put all
32:51the your data and the autocorrelation
32:53you can also search for a online
32:55calculator. Okay. So
32:56>> so you'll show us how to do this later
32:58on.
32:58>> Yeah. Yeah. I will show you how to do on
33:00the platform and what and this range of
33:03course is the same for the negative.
33:05This is basic negative strong negative
33:08extreme.
33:09>> Okay.
33:10>> What does it mean that when I have a
33:12positive autocorrelation my wins and
33:14loss cluster. Mhm.
33:16>> So for example, when I win a trade, the
33:19next one will tend to win.
33:22>> Mhm.
33:23>> Okay. The next one the same.
33:27If the next one is a loss and I have a
33:31strong positive autocorrelation, what I
33:33can expect from the next trade that the
33:36next trade will be a loss too,
33:38>> etc. and etc. So I need to understand in
33:43which trade I have the best edge and the
33:46best expectancy. I will show you also
33:48later on on the chart where we will draw
33:50a chart why this happens.
33:52>> And we need to understand for the meta
33:55label that I will show you later which
33:58are the trade with the higher expectancy
34:00on the strategy. And in this case
34:04when we have a loss we have a loss we
34:06have a loss. When we have a win, the
34:10next trade is the highest expectancy
34:12trades of the strategy because the out
34:15the
34:17loss the cluster of loss just flipped
34:20and we got a win. So we know that in the
34:23next trade we have an higher advantage
34:26than for example this.
34:29>> Mhm. Okay. This is so important to
34:31understand and I know that this is my
34:35best setup based on autocorrelation.
34:38We will also rate every setup from one
34:42to 10 and we will and we will understand
34:47how much should we risk in each trade
34:50based on the rating.
34:52>> So
34:54sorry. [laughter]
34:56So you know just to be clear what I
34:59think you just said autocorrelation this
35:01is clear right let's say this is 67 down
35:04here
35:04>> in our return structure for the system
35:07>> you're saying once autocorrel once the
35:10loss cluster exhausts and flips to a win
35:15this second this second trade that comes
35:18after the first win when autocorrelation
35:21is strongly positive this is your big
35:24trade.
35:25>> Yeah. Okay,
35:26>> that's that's my big trade. Also, if the
35:28autocorrelation is the range, I can
35:30still take this as a big trade, but I
35:32have to risk a little bit less.
35:34>> Okay.
35:34>> Okay. And in the negative
35:36autocorrelation, that is not the case of
35:38my strategy, the situation is opposite
35:41is opposite.
35:42>> Mhm.
35:44>> So the strategy mirror revert. So
35:47usually when I take a win, the next
35:49trade will be a loser. It's not totally
35:52like this, but it will be probably We
35:55are talking about probabilities.
35:57>> The next trade will probably be a
35:59winner. So our loss and win does not
36:01cluster but invert.
36:03>> Okay, this is this is not really common.
36:06Is common maybe in the mean reversion
36:08strategies not in the trending strategy.
36:10I in my career I only had one strategy
36:13that was at four of negative
36:15autocorrelation but most of my strategy
36:17have a positive autocorrelation
36:19>> and autocorrelation it is what I search
36:23when I actually need to bet a strategy
36:26but why this happen because we need to
36:28understand everything okay so maybe we
36:31can assume that we have a strategy that
36:34works in the trending market okay and we
36:37are actually in a trending market right
36:39now Okay, maybe we take a trade here and
36:44we take a win. We close here.
36:47>> Mhm.
36:48>> We take another trade here, we take a
36:50win.
36:53What does it mean that our strategy
36:55likes the condition of the market itself
36:59in this exact moment? So in this case I
37:02will win tell you something about the
37:04next trade because we perfectly know
37:06that the market is in trend and our
37:09strategy as a as a positive
37:11autocorrelation and perform better in a
37:14trending market. Okay, that's so
37:16important to understand because once you
37:18have this you can squeeze your risk to
37:20the maximum level. Okay. So for example
37:23in the next trade we take a win
37:26another win
37:29maybe the price revers okay and it start
37:32to doing this okay here even if we have
37:36a positive autocorrelation what does it
37:39mean that the market is in a range and
37:40we are trading a tra a trending strategy
37:43here we will probably have loss loss
37:46>> loss because the market does not like
37:49the condition of the market in that
37:50exact moment
37:52>> once Once we understand, once we
37:54understand risk, we understand what
37:57every
37:58win and loss mean on our strategy
38:01>> and how much we can squeeze on it.
38:03Because I told you that this is actually
38:06my best trade, the win after the
38:08reversion. But I also need to tell you
38:10that when I have this kind of condition
38:12and I switch to a loss, I won't take
38:15this trade.
38:16>> And you won't take this one either.
38:18>> This one, yes, I take. But this is the
38:21worst setup of my strategy because the
38:24autocorrelation just shift. Okay. So
38:27when I need to take when I have a loss,
38:29I knew that the probability of the next
38:32trade that being a loss is really high.
38:35>> Okay.
38:36>> Basically you take a loss and that has
38:38predictive utility
38:40on what the outcome of the next trade
38:42will be
38:42>> 100%. So I don't take this trade never.
38:45Of course, this I take and because I
38:47need to wait for the reversion for the
38:50actual reversion of the streak. But as I
38:54told you before, this was the other was
38:57the best setup. This is the worst setup.
38:58>> I'm personally curious. Why don't you
39:00take this one? Why don't you just wait
39:01for it to come back to a win?
39:02>> Because this has the as the worst data
39:06on my strategy. This is still
39:07profitable. Okay. It's the probability
39:10of this being a loser is still lower
39:13than the expectance itself.
39:15>> Okay.
39:15>> Okay. So, I still have some kind of
39:18advantage here. Here, I don't have any
39:20advantage at all.
39:21>> Mhm.
39:22>> Okay.
39:22>> Got it.
39:23>> So, that's what I trade. But if I want
39:26to be sure to take all the best setup, I
39:30need to I don't need to take this
39:32because of course the advantage that I
39:33have here is not the one that I have
39:36here. Okay? because this comes after a
39:39win. This comes after a loser. Okay. So
39:42if I want to take reduce my sample size
39:45and take all the best trade, I should
39:48not take I shouldn't take for example
39:50this trade.
39:51>> Got it.
39:51>> Okay.
39:53>> There's there's a couple nice things
39:55that we could unpack here. So
39:57>> Okay. Yeah. Yeah. So trending market
39:59trend following strategy
40:01>> positive autocorrelation in the returns
40:04of that strategy
40:06>> while you're in a trending market with a
40:08trend following strategy. Are you using
40:10this though specifically in the returns
40:13to basically help you figure out
40:17with your trend following strategy are
40:20we in a trending market or not?
40:21>> Yeah. Sure. because it's [snorts]
40:25totally common that when I tend to win,
40:28we are in a trending market.
40:30>> Okay.
40:30>> When I tend to lose, the price start to
40:32range. Okay. So, it's totally true what
40:35what you said before and it's also
40:37easier to understand in which in which
40:40not regimes but in which trends we are.
40:43>> Okay. And knowing this can actually get
40:46a better risk model. Okay. So that's is
40:50the autocorrelation and that's one part
40:52of my risk model. Okay? Because we need
40:56to know and I will see this I will write
41:00this if we have a loss a loss if you
41:03have a loss then we have to win. This is
41:06my trade. Okay this is important for the
41:09meta label in the in the other part.
41:14So now let's move on with four six with
41:17four five six. You have some other
41:20question.
41:21>> I got one more.
41:22>> Sorry guys, don't kill me in the
41:23comments. All right.
41:24>> Okay.
41:25>> Look, how frequent or common is it that
41:29you actually have a strong positive
41:31autocorrelation in the returns of a
41:33system.
41:34>> It depends if you know what you are
41:36searching for in your back test. when I
41:38do back test and when I test a strategy
41:40I as I said you before I search this
41:44okay I also I can also I I can also
41:48sacrifice some of my setup some of my
41:51entry model but I need to search
41:53properties I need to search property of
41:56the strategy not the profitability
41:59itself because the profitability is
42:01stable this you can exploit it
42:03>> okay and one more thing yeah will you
42:05show me later because what's going to
42:06happen generally with auto correlation,
42:08right? It's going to go, oh, it's going
42:09to be all over the place here, here,
42:11here, all over, you know, over time. Do
42:14you have a method that you can show
42:15later to know that even while
42:18autocorrelation is fluctuating, you're
42:20you should stay locked in with the
42:22strategy?
42:22>> Yeah. You mean know how to calculate it?
42:24>> Well, yeah, because autocorrelation is
42:26always changing, right, based on So, how
42:29do you know,
42:30>> let's say you're in a seven and later on
42:33you're in a one. Yeah.
42:34>> Right. How do you know? Okay, stick with
42:37this.
42:38>> Okay,
42:38>> you know what I mean?
42:39>> Yeah. So the calculation I can explain
42:42also to you. It it's basically a compare
42:46of two model conditional and
42:49unconditional rate.
42:50>> Okay. So your question is all to
42:53actually know this number.
42:55>> Uh yeah. Yeah. The question is you know
42:58autocorrelation depending on how far
43:00you're looking back or again where you
43:02are um in the
43:07price moves itself you autocorrelation
43:10will be fluctuating up and down right so
43:12how do you how do you know that
43:14>> let's say autocorrelation was a six
43:16seven or eight and then it moves down
43:18near zero how do you know okay this will
43:21come back I should stick with this
43:23strategy
43:24>> you know what I mean
43:25>> yeah yeah totally Understand? So we
43:27basically use the same concept of of the
43:30degradation of itself.
43:31>> Okay.
43:32>> So if we have for example a
43:34autocorrelation of eight okay basically
43:37I didn't told you but the the
43:39autocorrelation is the compare of the
43:41unconditional rate unconditional win
43:44rate that is basically your normal win
43:46rate and the conditional win rate. The
43:49conditional win rate is actually if we
43:52have a sequence of win and loss, we
43:54don't need riskreward. Let's assume that
43:57we have a 40% win rate, normal win rate.
44:00>> The CO rate
44:03will take in the calculation all the
44:08trades that came after a loss. So we
44:12will see this one.
44:18We will say this because it came after a
44:20loss. As you can see here, we have a
44:22loss.
44:24The next trade came before came after a
44:26loss. So it it should be taken on our
44:29data. This win came after a loss. It
44:32should be taken on our data. So in this
44:34case we have one two three four five six
44:37two out of six. Okay. We just compare
44:41the percentage of this and the
44:42percentage of this and we will land in
44:44one number.
44:45>> Okay.
44:45>> Okay. This is how we basically calculate
44:47this.
44:47>> Okay.
44:48>> And uh what we have to understand is the
44:51autocorrelation is a little bit
44:53different. We don't we use the same
44:55concept of degradation. So if our
44:58autocorrelation go from eight and it
45:01degradates itself from 50%
45:05it should come to eight to four.
45:07>> Mhm.
45:08>> It's still auto correlation. Okay.
45:11>> But is a less stronger one. So we know
45:14how much we should risk. We need to
45:16understand that
45:17>> oh this ties into how much you should
45:18risk.
45:18>> Yeah, got it.
45:19>> We need to understand that
45:20autocorrelation itself it's not the
45:22advantage of the strategy. It's a
45:24properties of the strategy. So even if
45:26this comes back to zero does does not
45:29mean that we don't have an edge. Does
45:32this mean that we cannot exploit this
45:34property anymore till we have enough
45:37sample to validate again? Because maybe
45:40in the other 100 traits
45:42it goes back to five. Okay, we basically
45:46needs 100 trades for validate
45:47autoorrelation h for revalidate
45:50autocorrelation and if it comes back to
45:53five we know that we have auto
45:55correlation again.
45:56>> Got it. Okay.
45:57>> Okay.
45:57>> Yeah. Okay. That's it. That's all I got.
46:00We need to understand two more things be
46:03before we move on with the strategy and
46:06one is actually
46:09correlated to the regimes and the other
46:11one is correlated to our trigger.
46:13>> Okay.
46:14>> So the first so in this case is the four
46:17is the regime freshness. The last is the
46:22price.
46:23>> Okay. So let's start with the regime
46:26freshness. Okay. We already understood
46:29regimes what they are what we are how we
46:32use them. But we need to ask one more
46:35question. Does this regime is this
46:38regime actually changed? Is it old? Is
46:42it mature? Is it new? Is it what? Okay.
46:47So we can actually get this data. Okay.
46:50And why we need this data? because our
46:54edge perform better when the edges when
46:56the regime is fresh.
46:58>> Okay.
46:58>> Okay.
46:59>> So, it's another condition that we need
47:01to understand for the rating of our
47:05setup.
47:05>> Okay. And lastly, the price efficiency
47:08that is related to the trigger. But
47:10let's understand how we can actually
47:12doing this. we need to use a concept
47:14that I don't know is if is well known in
47:18the trading space but is that the basian
47:22online change detection will just
47:24measure the freshness of our regimes
47:28okay and we need to understand which
47:31which are the best performance of our
47:33strategy in each range okay it's
47:36basically an indicator you can always
47:38find this on um on the trading view
47:42>> okay
47:42>> or you can also do the calculation alone
47:44because our strategy is not based on
47:47indicator. You can calculate the 8year
47:49percentile by yourself. You cannot
47:51calculate this by yourself. It's
47:53difficult. It's difficult but you can.
47:55Okay. So this will is will get our life
47:58easier and will tell us with a level the
48:03freshness of it regimes.
48:04>> Okay. So this is free on trading view.
48:07>> Of course it's all free.
48:09>> Okay. So this will plot on our chart
48:12some values. Okay. And it's called
48:15length. We will plot it will plot on our
48:19chart a value that is called regime age.
48:22This value can go up from zero to 100.
48:25>> Okay.
48:26>> I classify this into some range and is
48:30fresh. Okay. This I did it by myself. So
48:33it's not like this always. But for my
48:35calibration I need to objectify and give
48:38of on this number some kind of range.
48:40Okay.
48:41>> Mhm.
48:41>> So from zero to 30 it will be fresh reg
48:46from 31 to 60 it will be measure. For 61
48:52till 100 it will be old.
48:55>> And this is going off ATR percentile. It
48:58will measure the regime based on ATR
49:00percentile. The indicator can do that.
49:02>> Yeah. Yeah. The indicator can do that.
49:03It's totally easier. You will find this
49:06on trading view. You can just search for
49:08this. And uh you have to check for this.
49:12>> Okay. Once we have this, we need to
49:15respond to the question in which range
49:19our strategy perform better.
49:22>> Mhm.
49:22>> This is the range. Okay. We need to know
49:25this also for the actual uh rating.
49:28Okay. Once we know this, we can go with
49:31the last part and then we can go with
49:32the model. Okay.
49:35>> And is there a possibility that the
49:36strategy could perform better in an old
49:38regime or mature?
49:39>> Yeah, of course it changes.
49:41>> Okay.
49:41>> Every time you go up 100 trades, you
49:44should recheck this.
49:45>> Okay.
49:46>> Okay.
49:47>> For your strategy personally, it works
49:49best in the fresh
49:50>> for my strategy. I the strategy that I
49:52will tell you later is the strategy that
49:54I use in the championship. And all of
49:56this will higher or lower my risk. For
49:59example, if the setup is unmature, it
50:02will not get the point of this.
50:05>> Okay. So, the setup will be with a with
50:08a lower hel for example.
50:10>> This is for your one to 10 rating.
50:12>> Yeah.
50:13>> This adds a point if it's true.
50:15>> Yeah. If points also the regimes add
50:17points also uh the the autocorrelation
50:21adds a point. We will see later.
50:23>> Excellent. Excellent. for the price
50:26efficiency. What I usually search for is
50:28this. Let's assume I'm actually seeing
50:32my trigger right now. So, I have
50:37a red candle here,
50:40another red candle here,
50:43and
50:51a buying candle here. All the previous
50:55condition are codified and it's all
50:58good. Okay. Uh this is only the trigger.
51:02We need to understand a concept that is
51:04called price efficiency that compare
51:07price and volume. Okay. Let's assume
51:11that we have this kind of engulfing. I
51:14don't care about the engulfing itself. I
51:16care about how much effort it needs to
51:21produce this kind of result. For
51:23example, here we will have the volume
51:25like this
51:29strong cell volume.
51:33Okay, we will have a average. So a
51:36simply MA you can put the MA in 20. And
51:41what we see that with less effort, okay,
51:47for this volume, we got a higher result.
51:51Mhm.
51:52>> That's my actual condition of entry.
51:55Okay. And this is the concept of price
51:57efficiency. So when I search a trigger,
51:59I search for this. I have also under
52:02condition because maybe this is not
52:04actually always like this. Maybe in this
52:07case
52:08I have the volume that are still high.
52:11So over the AMA and what I use is
52:15looking at this. Maybe we have another
52:17candle here
52:20that is going up. He did the engulfing
52:22of the previous candle and the volume
52:25are going lower.
52:27What does it mean that with less volume
52:30we are obtaining lots of result?
52:32>> Yep.
52:33>> Okay, that's where I enter the candle
52:37with stop loss here.
52:38>> This is part of your this is your actual
52:39>> this is my actual strategy.
52:41>> Okay, so
52:42everybody calm down. So, so um so you're
52:47actually looking for there to be a
52:50disproport basically it's
52:52disproportional the result you're
52:54getting compared to the effort. You want
52:56low effort big result.
52:58>> Yeah. I want to have a low effort big
53:02result.
53:02>> Why?
53:03>> Because that's the condition I tested.
53:05>> Okay. Okay.
53:06>> I know. But when I have this kind of
53:08condition my expectancy raise.
53:11>> Okay.
53:11>> Okay. This is actually the best setup.
53:14Okay. And we will call it reducing
53:19volume versus low effort. We need to
53:23name this because one other point of the
53:26meta label is is this my best setup
53:29based of volume. If is in this case we
53:33add a point.
53:34>> Got it. Okay. So we will see all the
53:37behind part of this. So when we actually
53:40have to search for this but we we have
53:43to understand this kind of concept it's
53:46really easy this as I told you before
53:48the advantage is not always the strategy
53:51okay it's what we use and what we model
53:55and how much should we risk in each
53:57setup
53:58>> Ga just to be clear is this
54:01>> the effort and result is this
54:04objectified
54:05>> yeah this is totally objectified because
54:07if we have an engulfing we need to
54:10search for this engulfing okay and we
54:13need to have it's not important if we
54:16are over the EMA but we need to have
54:20higher price lower volume
54:22>> okay
54:22>> it's totally objectify also the low
54:24effort we need to have a candle that is
54:28actually
54:30that actually made an engulfing of the
54:33other one okay and it has to be with a
54:37low volume okay so lower than the EMA.
54:41>> Mhm.
54:41>> Okay, that's what we actually use.
54:45As you can see, there are no I think so
54:47there are no maybe is this and that's
54:51it.
54:52>> Okay, got it. So, you can even take the
54:54engulfing long.
54:56>> Yeah.
54:56>> As long as it
54:58>> engulfs the previous red
55:00>> and volume went lower.
55:01>> Yeah. And the entry will be on the
55:03closure of the candle with stop below
55:05that candle.
55:06>> Stop goes at the low of that engulfment.
55:08All of that engulfing not of this, of
55:10this.
55:10>> Right on it. Right on that low. And
55:12where's the target?
55:13>> One to two.
55:14>> Oh, you have an RR rewarder. So, so it's
55:17always one to two.
55:18>> Is the optimal target. I tried one to
55:20one. The expectation was a certain
55:22level. I tried one to two was a certain
55:24level and I tried 1 to three, one to
55:26four, one to five and the best result
55:29was 1 to2.
55:30>> You tested it. That's why I already
55:32that's that's the reason why. Okay. I
55:34was just making sure. I didn't know if
55:35there was some hidden agenda. But but
55:37the question I will show you when I go
55:40on the actual when I draw the chart that
55:42we have some re-entry model it's not
55:45finished. Okay. We can continue. This
55:47strategy is based on momentum trading.
55:48>> Okay.
55:49>> Okay. So we will continue the setup.
55:52>> It's not it's not ended. Okay.
55:54>> Okay.
55:55>> So once we understand this we should
55:58understand how we can rate a setup.
56:02Okay. And the process itself it's called
56:06it's okay with this you have so many
56:07questions.
56:07>> No no no no no it's yeah I've asked
56:09enough [laughter]
56:11>> and it's called meta label. This will
56:16take five question and we have to point
56:20a yes or a no. Okay. So the first
56:23question is is this setup in my best
56:29regime?
56:31So as I told you before the best regime
56:33was I volatility.
56:35>> Maybe the setup is in I volatility.
56:38>> So one point.
56:39>> Excellent.
56:40>> Okay. The other question is is this the
56:44best trade based on autocorrelation? As
56:48I told you before the best trade was
56:50this loss loss win.
56:55>> Got it.
56:57>> This is this trade. Yes or no? Maybe
57:00it's yes.
57:02>> Okay.
57:03>> The other is the freshness. So is the
57:07best freshness of the regimes. So it's
57:10in a major regimes, old regimes or I in
57:14fresh regimes.
57:15>> Mhm.
57:16>> Maybe it's in the fresh one that is the
57:18best condition. Okay. So we'll add a
57:20point
57:22which price efficiency is in a reducing
57:25volume or in a low effort. Is in a
57:28reducing volume. Yes, we had a point.
57:30>> This is specifically for your strategy
57:32though.
57:32>> Yeah, but you can also use for your for
57:34your strategy itself. Yes, that is
57:36basically for my strategy. But I will
57:38show you how the strategy works. And the
57:40last the last one is in which session we
57:44took it. I didn't mention this because
57:45it's really easy in a new year session.
57:48I higher advantage than London session.
57:50>> Okay.
57:51>> So if the session is the New York, we
57:53will add a point
57:54>> based on testing, right? Yeah. Should
57:56everyone with any strategy ever be cons
57:59try try to distinguish where
58:01>> yeah the session is really important
58:03because also if we as I told you before
58:06we check of the expectancy in each
58:08regimes we should check in the
58:09expectancy in each session.
58:12>> So in this case we will have a five to
58:14five. So this is my best setup that I
58:18can actually trade on my strategy. So I
58:21will allocate more risk.
58:23>> Got it? And my risk depends on the Kelly
58:25number. And the Kelly number is
58:27basically the mathematical perfect risk
58:28that you can apply on your strategy. But
58:30the full Kelly is always too much
58:32>> for Kelly is absurd.
58:33>> Yeah.
58:34>> Yeah.
58:34>> Because it it it assume that the
58:37strategy never changes.
58:39>> So with this condition I won't suggest
58:42you a risk because it depends if you're
58:44trading prof if you're trading uh some
58:47kind of championship, if you're trading
58:49personal account. But what I you what
58:51what I use in the championship is that
58:53when I have five to five I use
58:57half Kelly
58:58>> half kell.
58:58>> Yeah.
58:59>> Really?
58:59>> Yeah.
59:00>> That can still be quite high.
59:01>> It can be. I mean
59:02>> Yeah, it can be. Yeah, but it's not
59:04totally it's not always like this.
59:05>> Okay.
59:06>> When I have four, I use one a quarter.
59:11When I have three, I use N and two.
59:14>> This is a fifth.
59:15>> Yeah.
59:16>> Okay.
59:17I use a one six cali.
59:21>> Okay.
59:21>> Okay.
59:23This is how we optimize your risk.
59:25>> Okay. I'm curious though because you
59:27said 55 4 5 3 525. Even if you have two
59:30out of five true, you'll still take the
59:32trade.
59:33>> Absolutely. No. I have the advantage. So
59:35why not?
59:35>> Okay. Got it.
59:36>> Why you shouldn't take the trade if you
59:38have the advantage? Y. Okay. Also, if I
59:41have one to five, I will take the trade,
59:44but I will risk so less on that specific
59:46trades.
59:48>> Okay.
59:48>> Okay.
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59:50trading? Perfect timing. Right now, we
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1:00:01description below. Now, [music] back to
1:00:03the video.
1:00:04>> So, now we can go deep on the strategy.
1:00:07We talk about everything that we need to
1:00:09know. So I can explain in a very good
1:00:13way everything and you can understand
1:00:15it.
1:00:16>> Okay.
1:00:16>> Okay. Do you have any more question or I
1:00:18can cancel?
1:00:19>> Cancel.
1:00:20>> Okay. So for the strategy you will be
1:00:22very surprised and how easy is this.
1:00:25Okay. So first we have to recognize a
1:00:29trending pattern a trending situation.
1:00:31Okay. How we objectify it through volume
1:00:35profile. Okay. Okay.
1:00:37>> So, for example, we have this session
1:00:39and we have a volume profile that is
1:00:41like this. It's not like it.
1:00:49Okay. This is the value area. Yep. Okay.
1:00:55And in this developing volume profile,
1:00:58the value area is higher. So, for
1:01:00example, is
1:01:03this the value area is this. I know it's
1:01:06not the best volume profile that you
1:01:07ever seen, but it's okay.
1:01:08>> Are these session based or
1:01:10>> Yeah, it's session based is the volume
1:01:11profile. Session based HD in trading
1:01:14view.
1:01:14>> Okay.
1:01:14>> You can use in trading view, you can use
1:01:16in order for platform. It doesn't matter
1:01:18with this with the poke with I of Poke.
1:01:21We recognize the structure. You can
1:01:25objectify in a 100% way with this.
1:01:28>> Okay.
1:01:28>> Okay. We need to wait once the price
1:01:33reach the value area of the previous
1:01:36session. So when the price actually came
1:01:39here.
1:01:40>> Got it?
1:01:40>> Okay. This is where we look and we say
1:01:44okay maybe we can have a trade. Of
1:01:46course the price must be still long. So
1:01:49if this is our level that take the long
1:01:52this should not be broken. It must be
1:01:56valid.
1:01:56>> The lower value.
1:01:58>> The lower value. Yeah. the the lower
1:02:00point of the of the
1:02:03>> market structure
1:02:04>> market structure. Got it.
1:02:05>> Okay. So, we just need to understand the
1:02:07lowest and the highest point and we need
1:02:09to see when the price comes here. Okay.
1:02:14Let's zoom in. Let's zoom this part.
1:02:17When we have this, what we are searching
1:02:19is basically this.
1:02:24So, this is the range of the value area.
1:02:29The price comes here
1:02:35back into the value area
1:02:36>> value area of the previous session.
1:02:38>> Got it.
1:02:39>> So this and after
1:02:46break the level.
1:02:49Okay. when we have the break of the
1:02:53level. Okay, we will just see for the
1:02:56price efficiency. Okay. Okay. So in this
1:02:59case, what are the volume telling us?
1:03:01The volume maybe are like this.
1:03:09So we have a confirmation by volume.
1:03:12>> Okay. And it's basically so simple
1:03:15because every time that we have a
1:03:17trending market, we have to wait till
1:03:20the strategy till the h the market comes
1:03:23in the value area of the previous
1:03:25session and it's break it.
1:03:28>> Okay.
1:03:29>> Okay. When it breaks it, we just need to
1:03:31see if this is actually our trigger by
1:03:35based by volume.
1:03:36>> Okay.
1:03:37>> Let's assume that this is our trigger.
1:03:40what we have to do first we should know
1:03:44how much we can go okay how farther the
1:03:48price can go. So for example if the
1:03:52this is the high okay and we are
1:03:55analyzing this situation okay and the we
1:04:00are tra we are taking a trade here we
1:04:04know that we can take each trade till
1:04:07this level
1:04:09>> the maximum of this level
1:04:10>> the market structure high
1:04:11>> yeah the market structure high
1:04:13>> I I do have a couple questions
1:04:15>> yeah don't worry about that
1:04:17>> so as long as the value area low of the
1:04:20previous session is not violated. Yeah,
1:04:22>> this is active.
1:04:23>> This is active
1:04:24>> an active setup that can be taken. If
1:04:26this is broken,
1:04:27>> yeah,
1:04:27>> the whole thing is done.
1:04:29>> Absolutely not.
1:04:30>> We need to understand which is the level
1:04:33of the market structure that takes
1:04:35actually the long.
1:04:35>> Oh yes yes yes.
1:04:36>> So as I told you before this is the
1:04:38value IO. Okay. This is the level that
1:04:42actually
1:04:44takes the long we can say from the
1:04:46market structure. Mhm.
1:04:48>> Yeah.
1:04:48>> So
1:04:50I will draw it better.
1:04:52>> No problem.
1:04:56>> So if this is the value area, we just
1:04:59need this. We don't need the poke. And
1:05:01maybe we can assume that the the low the
1:05:05low level lowest level is this.
1:05:07>> When the price comes here gives a
1:05:10specific pattern. Okay. Even if it
1:05:14breaks this level, it does not matter.
1:05:17>> Okay? Because we have still this level
1:05:20>> low.
1:05:21>> But we cannot see every engulfing here.
1:05:24We need to wait for the engulfing that
1:05:28breaks this level
1:05:30>> above the high above the value area
1:05:31high. So this is always taken at a break
1:05:34above the value area high.
1:05:36>> Absolutely. Yes. Okay.
1:05:37>> Okay. In this kind of situation, we have
1:05:39to look of the in the volume. Okay. We
1:05:42can see that maybe the situation is this
1:05:44from for these three candle we have the
1:05:47AMA of the volume here we have volume
1:05:51here
1:05:52volume up for from this candle and
1:05:56volume like this from this candle
1:05:59>> this yeah this isn't your falling volume
1:06:02though right
1:06:03>> so so what we have to do we have a
1:06:05double condition because the volume are
1:06:07falling
1:06:08>> okay
1:06:08>> and the price is going up and the volume
1:06:11itself it's lower than the EMA. So does
1:06:15it what does it mean that with low
1:06:16effort we are taking I result.
1:06:21>> Mhm.
1:06:21>> So this is the combination based based.
1:06:24Okay.
1:06:24>> Okay. So this can be a trigger but we
1:06:26need to understand how we can place the
1:06:29stop how we can place the trade and as I
1:06:31told you before it's basically the same.
1:06:35So
1:06:36we take the trade here with stop loss
1:06:39here and target one to two
1:06:42>> there's how do you define effort though
1:06:44are you doing open to close are you
1:06:46doing low to high
1:06:47>> the effort just the
1:06:49>> the result I apologize the result
1:06:51>> the result it needs to do the engulfing
1:06:53of this
1:06:54>> okay it okay
1:06:56>> so it's totally objective because if you
1:07:00have this kind of volume you have an
1:07:02engulfing of this candle this is the
1:07:04condition of the low effort high result.
1:07:08>> Okay,
1:07:09>> if this candle does not have the
1:07:11engulfing of this candle. Okay, let's
1:07:14assume that this candle is lower than
1:07:16the previous one. This will not be the
1:07:19setup. We have to wait one more candle.
1:07:21>> But when you say engulfing, you just
1:07:23mean it opens and takes out the high of
1:07:25the previous
1:07:26>> the highest week in this case.
1:07:29>> Not not like a bullish engulfing.
1:07:30>> No, no, no. We need to take the highest
1:07:33of week.
1:07:34>> Yeah.
1:07:35>> Okay. I can for example this maybe the
1:07:38longest week is here.
1:07:39>> Got it.
1:07:39>> Mhm.
1:07:40>> We have an engulfing because the body
1:07:42>> close
1:07:44above that.
1:07:45>> Okay.
1:07:46>> Okay.
1:07:46>> I understand. I just want to make clear
1:07:48one more time then the result the candle
1:07:51size does not matter. It's about taking
1:07:53out the previous high.
1:07:55>> Yeah.
1:07:55>> That isn't the result that we're looking
1:07:57for. That's totally right.
1:07:59>> And then effort is just falling volume
1:08:01that matters. The size of the volume
1:08:03matters, not the size of the candle.
1:08:04>> No, the size of the volume. Got it.
1:08:06That's right.
1:08:06>> Yep.
1:08:07>> So we need we know that in this
1:08:10condition we have an expected movement
1:08:14through this level.
1:08:16>> So we are targeting this level. Let's
1:08:18assume that with this operation we take
1:08:20target. Okay. Our price get in and it's
1:08:23match the target. We got to but it's not
1:08:27finished yet because we still have space
1:08:30work
1:08:31>> and maybe we can see that I will do it
1:08:34bigger. So we took the trade here with
1:08:38this stop loss and we took target. Okay.
1:08:42Okay. Maybe in one candle or two. Okay.
1:08:46What we can see that the we have still
1:08:50space and we will see for the sec exact
1:08:54same condition of this. So these two
1:08:58candles
1:09:01we have some kind of volume
1:09:04inefficiency.
1:09:06Maybe the volume of this the EMA is this
1:09:10but the volume are still decreasing.
1:09:13>> Mhm. Above the EMA.
1:09:14>> Yeah. Not not above the EMA because yeah
1:09:17it's still above the EMA but they are
1:09:19decreasing and the price is going up. As
1:09:21you can see we actually made an
1:09:23engulfing again.
1:09:24>> Yeah.
1:09:24>> So we can take another trade.
1:09:26>> Really? You scale you you Okay. Okay.
1:09:28>> Here target one to two. Same trade but
1:09:32it needs to start with the first trade.
1:09:35If we don't have the first trade that is
1:09:37with the break of the value area high of
1:09:40the previous one, we won't take
1:09:42continuation trade.
1:09:43>> Got it. So if you don't take this trade
1:09:45at the value area high, this whole
1:09:46thing, no matter how much it chains, it
1:09:48is done.
1:09:49>> Yeah, totally.
1:09:50>> This could be massive profits if the
1:09:52whole thing works. [laughter]
1:09:53>> Yeah.
1:09:53>> And it works out like like that.
1:09:56>> Trade, we should do the meta level
1:09:58check. Is this the best condition of um
1:10:02my volume? Is this the regime freshness?
1:10:04Because when you take continuation, the
1:10:06regime is mostly the same. The freshness
1:10:08is mostly the same. So you usually take
1:10:10advantage of this. Okay.
1:10:12>> Okay. It's a momentum strategy. So, we
1:10:14have a low stop loss, low low target.
1:10:17And you all do this into the 50inut time
1:10:21frame.
1:10:21>> Got it.
1:10:22>> You don't switch time frame. That's so
1:10:24important.
1:10:24>> You figured this out from testing.
1:10:26>> Yeah. Okay.
1:10:27>> You analyze and you entry in the same
1:10:29time frame. That's so important because
1:10:32if you change time frame, this will be
1:10:34different.
1:10:34>> Okay. This will be different.
1:10:36>> Absolutely. Yeah. So, so this then
1:10:39you're going to take this all the way up
1:10:41until this market structure high and
1:10:43then it's done.
1:10:44>> Yeah, we need to wait for another
1:10:46session that will return in this kind of
1:10:49value because if the price from here it
1:10:51goes up
1:10:53>> the previous previous value area will be
1:10:56this.
1:10:57>> Okay. And we need to wait that the price
1:10:59will return here.
1:11:00>> Just to be clear though, you might still
1:11:02have a position open while this market
1:11:05structure high gets reclaimed. No, we
1:11:07usually take the last target here.
1:11:09>> If you do have a position open, it's all
1:11:11closed right here.
1:11:12>> Even if the target here
1:11:15>> is not one to two, we take less.
1:11:17>> Got it.
1:11:18>> Okay. So, we can open a trade also with
1:11:20a less riskreward, but we cannot go
1:11:23above this eye.
1:11:24>> Okay.
1:11:24>> Okay.
1:11:25>> Got it. And and then what if on this way
1:11:29down earlier in the move, you took out
1:11:31this market structure low?
1:11:32>> It's totally invalidated.
1:11:34>> Just forget the whole thing. Don't even
1:11:36you can choose another asset.
1:11:39>> Why specifically though? Why if it takes
1:11:41out this low?
1:11:43>> Because if it takes out this low, it
1:11:45returns and it gives you the trigger.
1:11:47That trigger has a negative expectancy.
1:11:49>> You tested it.
1:11:50>> Yeah.
1:11:50>> Okay.
1:11:51>> Okay.
1:11:52>> I got to ask. So final question though
1:11:55is a lot of people define market
1:11:58structure highs and lows very
1:11:59differently though.
1:12:00>> Yeah.
1:12:01>> Now is this part objectified? Because
1:12:04this is one of the hardest things to
1:12:05objectify.
1:12:06>> Totally sure
1:12:06>> it is objectified.
1:12:07>> It is objectified.
1:12:09>> So how do you do that?
1:12:10>> So I we we have to study a concept valid
1:12:16against not valid candle. We will search
1:12:20for a valid candle. Okay.
1:12:27Okay. We will have this kind of candle.
1:12:30Okay. Because your question is so smart
1:12:32because you actually intend to objectify
1:12:35anything and we objectify this but we
1:12:38didn't objectify this.
1:12:40>> So we will call a valid candle a candle
1:12:44that has an higher body sides of the
1:12:48highest of the longest week. Okay. So
1:12:52for example the size of this you can
1:12:54measure on trading view. Okay with a
1:12:56rule and with a magnet. The size of this
1:12:59is four. The size of this is three.
1:13:01Okay. So four is above three. So this is
1:13:04a valid candle. This maybe we have three
1:13:07here and six here
1:13:09>> based on ATR or
1:13:11>> no based on just the measurement with
1:13:14the magnet.
1:13:15>> Ah okay.
1:13:16>> Okay. With the numbers of tick they
1:13:17moved
1:13:18>> the number of ticks.
1:13:19>> Yeah. Okay. Okay. With trading views.
1:13:21Okay.
1:13:22>> Yeah that's easy really. When you have
1:13:24this let's analyze a trend. Okay. you
1:13:28will know that everything is always like
1:13:31this. Okay?
1:13:33>> Etc., etc. We need to take
1:13:39in this case the
1:13:42valid short candle before the breakout.
1:13:46So for example, here we have in the I
1:13:49will make it bigger because it will be
1:13:51cleaner.
1:13:53Okay. So we will search for this
1:13:56breakout structure. Okay, we need to
1:13:59search in the 15inut time frame each
1:14:03short candle before the movement. Okay,
1:14:08so in this case we have a little
1:14:09retracement here.
1:14:10>> We will search for one single valid
1:14:13candle short. Okay,
1:14:15>> the closest to the breakoff structure.
1:14:19So in this case maybe we have this
1:14:21candle that is I will transfer this that
1:14:25is this
1:14:28as you can see the longest week is
1:14:30higher than the body so it's not valid
1:14:33here instead we have a valid candle so
1:14:38if we zoom in
1:14:42we will have a candle like this
1:14:46okay the body is higher
1:14:49than the longest week. So this will be
1:14:52my level.
1:14:53>> That's your market structure low.
1:14:54>> Yeah.
1:14:55>> I've never seen anyone do it like this.
1:14:56>> You you never seen
1:14:57>> No. No. I mean,
1:14:58>> but you need to objectify the concept.
1:15:00>> Yeah.
1:15:00>> But the question is if here we don't
1:15:03have a candle valid and here we don't
1:15:06have a candle valid. What we should do?
1:15:08>> Yeah.
1:15:08>> We go here.
1:15:10>> Okay.
1:15:10>> Okay. So we search here. For example, we
1:15:13have this kind of
1:15:15the closest can be this and this will be
1:15:19the the break of structure low. So the
1:15:22break of this means nothing.
1:15:25>> Got it?
1:15:26>> Because we don't have a valid candle
1:15:27here.
1:15:27>> If this one is valid, assuming that one
1:15:29is valid.
1:15:30>> If this one is not valid, we go lower.
1:15:32>> There's no exceptions where this doesn't
1:15:34happen. This has to happen, then it's
1:15:36valid.
1:15:37>> Because you need to objectify the range.
1:15:39This is my lowest. This is my highest.
1:15:42Maybe we have the breakout structure and
1:15:46here we have the candle valid. Maybe
1:15:49also this candle is valid. Also this
1:15:51candle is valid. But we have to take the
1:15:53closest one to the breakout.
1:15:54>> Got it.
1:15:55>> So maybe the level can be this and once
1:15:57broken the price goes short and the and
1:15:59our validation is still not valid.
1:16:01>> You do the same thing for highs.
1:16:03>> Yeah,
1:16:04>> very short. I'll have to code this as an
1:16:07indicator. You
1:16:07>> I already did it. [laughter]
1:16:10So,
1:16:11>> so, so then, okay, last thing,
1:16:14everything is objectified here.
1:16:16>> Um, volume profile, this is
1:16:18sessionbased. Last thing I want to ask,
1:16:20I know right here, this is a really
1:16:23clean example, but I know this can get
1:16:25really messy, right? I mean, you could
1:16:27stay right under the valley area high
1:16:29and, you know, little tiny candle comes
1:16:32above it, falling volume. There's got to
1:16:35be a something that invalidates the
1:16:37trade here, is there?
1:16:39So basically
1:16:42when the price comes down
1:16:45don't break the lowest and go up the
1:16:49trade is always valid. It's it it has a
1:16:52positive expectancy over the last three
1:16:56years of data. The only thing where I
1:16:58don't trade the trade is when there are
1:17:02some some some kind of news
1:17:04>> NFP, CPI, some kind of news during the
1:17:07trigger. In this case, I prefer not to
1:17:10trade because also one filter that I
1:17:12made is does my strategy perform goods
1:17:15perform good in a day with lots of news.
1:17:20>> The result is no.
1:17:21>> Got it?
1:17:21>> So, I usually don't trade. But when you
1:17:23have this you can objectify to the
1:17:2615-inut time frame
1:17:28you it will be always
1:17:33always uh
1:17:36always tradable. One last thing that I
1:17:38have to tell you before is as I told you
1:17:42we have measurement. Okay.
1:17:44>> This is not never 63 is 0.6 0.3 0.3 0.4
1:17:50usually. Okay. Yeah,
1:17:52>> when we have to break this level, okay,
1:17:55the price here and here, this distance
1:18:00should be 0.6.
1:18:03Okay, so the movement of ticks from the
1:18:09value area to the closest of the candle
1:18:13for B valid should be 0.6. If it's 0.4,
1:18:17it's not broken anymore. Okay.
1:18:20>> Okay. Interesting. So, how much it
1:18:23closes over the value area high
1:18:25>> 0.6.
1:18:27>> Yeah.
1:18:27>> Um in uh sorry,
1:18:30>> trading views measuring tool. You'll
1:18:32have an example of this.
1:18:33>> Yeah, for sure.
1:18:33>> Okay. Just Yeah. Yeah. No worries.
1:18:35>> Okay. Awesome. So, if it gets small
1:18:39little, you know, crappy candle, this is
1:18:42done.
1:18:42>> Yeah. Because maybe it's 0.4. So, we
1:18:44need to wait the other candle.
1:18:46>> So, if it comes back down and then 0.6
1:18:49is up,
1:18:49>> it's okay. then you'll take it.
1:18:50>> It's okay.
1:18:51>> And but if it's 0.4 is just up up up up,
1:18:54you don't take it. No.
1:18:55>> Even if you miss out on everything.
1:18:57>> So that's the only invalidation criteria
1:19:00that
1:19:00>> Yeah, that's the only validation
1:19:01criteria.
1:19:02>> As long as you simultaneously take out
1:19:05the high of the previous candle,
1:19:08>> close above the value area high on a
1:19:100.6.
1:19:11>> Yeah.
1:19:12>> And have falling volume from the current
1:19:15candle to the previous.
1:19:16>> Yeah.
1:19:17>> That's the entry.
1:19:18>> That's the entry. I will show one setup
1:19:20now.
1:19:20>> Okay.
1:19:21>> And I will show you the data behind
1:19:23this.
1:19:23>> Excellent. Please. Yes.
1:19:24>> Okay.
1:19:25>> That'll clear up a lot.
1:19:26>> I'm just kidding. [laughter]
1:19:28>> Okay. Let's go to the chart.
1:19:30>> Yeah. Okay. So, let's analyze some
1:19:33setups of this in the practical part.
1:19:36Okay. Let's analyze this setup of NQ.
1:19:39And in this case in this session what we
1:19:42can see that the previous session and
1:19:43the this actual session we have a shift
1:19:47of the value area. So we classify this
1:19:50as a as a trending long market. Okay. So
1:19:56what we have to do is wait.
1:20:02Okay. As you can see in the developing,
1:20:05okay, as you can see in the developing
1:20:06of this session, they are all above.
1:20:09Okay, we should to understand our point
1:20:12of control. And in this case, as I told
1:20:14you before, we need to check the closest
1:20:18sell candle valid. How we do this? We
1:20:23have all green candle here. Green,
1:20:25green, green. This is the first candle,
1:20:27red. Okay.
1:20:29But as you can see the body is lower
1:20:33than the longest week.
1:20:35>> Okay,
1:20:35>> you can see it. Yeah, right.
1:20:37>> Okay, so it's not valid. You we can also
1:20:41measure this. We can take this and this.
1:20:43And as you can see the distance between
1:20:46the body is 16. The distance of the week
1:20:49is 56. So 56 is higher than 16. So it's
1:20:53not valid.
1:20:56After this we search for the other
1:20:59candle. This candle is not valid too. We
1:21:01can see by I. This candle is not valid
1:21:05too. We can see by I. This candle not by
1:21:08not valid too. This is the first candle
1:21:12>> that is valid because the body is
1:21:1754 and the longest week is this. Then
1:21:21this and this probably 30. No, 24.
1:21:26We have a candle. So, we don't need to
1:21:29go behind this level. Okay. And in this
1:21:33case, we will take the lowest point of
1:21:38this point in general. And in this case
1:21:41is this.
1:21:43We don't need to check if this candle is
1:21:45valid. We need to take this candle and
1:21:47take the lowest level. So, we don't do
1:21:50this.
1:21:52>> Okay? But we do this.
1:21:54>> Okay. So the lowest level.
1:21:56>> Yeah.
1:21:57>> Okay.
1:21:57>> Lowest level that we can actually have.
1:22:00But if you see this is the first candle.
1:22:04We don't need to look at other candles.
1:22:07>> Okay.
1:22:07>> Okay. Because we just need one.
1:22:09>> Okay.
1:22:10>> But in this retracement, of course, we
1:22:12will have one. It's probably like this.
1:22:15It's really uncommon that we'll go down
1:22:18to search for another candle. So,
1:22:20>> so then if if it was here and sorry,
1:22:23this is hard to see. If it was here
1:22:24though,
1:22:25>> yeah, the
1:22:26>> would this be ineligible because it's
1:22:27just already been traded through?
1:22:29>> No, this will be eligible because it's
1:22:32this retracement. This is other
1:22:35retracement. I have to search for a
1:22:36valid candle here.
1:22:38>> Okay.
1:22:39>> Okay. So once we have our point of
1:22:41control, we can simply
1:22:45wait for the market to to to come in the
1:22:50previous value area. Okay. So in this
1:22:53case the previous value area is this.
1:23:00We will just take this zone and we will
1:23:02take out this. We don't need it.
1:23:06Now we need to wait for the price to
1:23:09come this to come here. Of course we
1:23:12will do our check for the regimes. As
1:23:14you can see we can see the regime age in
1:23:16this case here is 60 bar. So it should
1:23:20be mature or old. Okay. And let's
1:23:23search. Let's wait for the market to
1:23:26come here.
1:23:28Not yet. Okay. This is the first.
1:23:34As you can see the price entered here
1:23:38also with a week is okay and get a
1:23:41reaction
1:23:43now we because it broke also the level
1:23:46it touched and broke this close above
1:23:48the eye we can see the volume is not
1:23:53confirmed by volume this because the
1:23:56volume are going up the volume are not
1:24:00lower than the EMA so we don't have the
1:24:03confirmation that we need to enter.
1:24:05>> Okay.
1:24:05>> Okay. So, we just wait. We wait.
1:24:09>> And that means it's okay for price to
1:24:11not have closed in the value area.
1:24:13>> We can just touch it and if it engulfves
1:24:16and you get the lower volume.
1:24:17>> Yeah. If we took this trade, it it will
1:24:19be a stop loss,
1:24:21>> but our condition was not met. Okay. So,
1:24:25we totally understand that this wasn't a
1:24:27trade of the strategy. What we can see
1:24:29here that the we don't we don't have any
1:24:33engulfing yet.
1:24:35We have the first engulfing. We have to
1:24:37search if this engulfing is valid or not
1:24:40because it's not like this look like an
1:24:43engulfing. Is this is an engulfing yes
1:24:45or no. So we measure this as you can see
1:24:49is 24. I told you 0.6 is for forex. Six
1:24:53is for in this case NASDAQ and 24 of
1:24:57course is above six. So we will take
1:25:00this trade
1:25:01>> and volume falling.
1:25:03>> Why? Because if we see the last two
1:25:07candle
1:25:08they're going up the last two green
1:25:10candle. Okay we have a closure above
1:25:15also this we can measure but if this is
1:25:1724 this will be higher. So it's for sure
1:25:20above six. And what are the volume
1:25:22telling us? That they're going lower.
1:25:25But we still don't have the break of the
1:25:28level. So it's premature. Okay, it's an
1:25:32int. But we need to break this level. So
1:25:34we have to wait again.
1:25:37Not yet.
1:25:39Not yet.
1:25:41Not yet. Not yet. We just wait. And as
1:25:46you can see, if we took this trade, it
1:25:48would be a stop loss again. but was not
1:25:50met the condition.
1:25:52So, we just wait.
1:25:56And now maybe we can have this trade. As
1:25:59you can see, this is not a really
1:26:02beautiful candle.
1:26:03>> This is a great example. Yeah.
1:26:04>> Yeah.
1:26:05>> Okay.
1:26:05>> But we don't care how beautiful it is.
1:26:08We care it's reached the value. We can
1:26:10just see first we can just zoom in and
1:26:14we can see if the engulfing is six is
1:26:17three. three is not six. So, we can't
1:26:20take the trade yet. We need to wait.
1:26:24But we have the break of the level.
1:26:27We can just measure.
1:26:32It's five. So, not yet.
1:26:35>> Okay.
1:26:40Not yet.
1:26:42Now, we have the break of the level. We
1:26:46have the engulfing for sure. Of course
1:26:48it's more than six and we have one
1:26:50condition. The volume are going up but
1:26:52they are below the EMA.
1:26:55>> You see this? So one condition is met.
1:26:58The break of structure the break of the
1:26:59value area happen
1:27:02and we have the volume low effort big
1:27:06result.
1:27:08>> Okay. So we just take the trade here.
1:27:14One thing I want you to clear then
1:27:16obviously is
1:27:17>> we wanted volume falling but if it's not
1:27:20falling if it's below the EMA
1:27:22>> is is the other price efficiency.
1:27:24>> Okay.
1:27:25>> Okay. What is our target? We are aiming
1:27:28for this. Okay. That's obvious. So we
1:27:32will keep taking trades till this level
1:27:36if we can. So we have an market entry.
1:27:39So we are already in this trade. The
1:27:41risk reward is one to two.
1:27:45Okay, it's one one to one to two. Let's
1:27:48see what happens
1:27:51here. We just have to wait. What we saw,
1:27:54we took target, we gain true error, but
1:27:57there are no condition of entry because
1:27:59the volume are going up.
1:28:01>> Yeah,
1:28:02>> the candle are going up and the volume
1:28:04are going up. This candle that did
1:28:06engulfing is not below the EMA. So we
1:28:10need to wait. Got it?
1:28:13No engulfing. So even if we have some
1:28:15condition, we don't have the engulfing.
1:28:18So we need to wait.
1:28:21Engulfing first. Engulfing is this.
1:28:24Okay. You see the engulfing of the
1:28:25previous candle. We can check but is for
1:28:28sure above is 25. It's okay. So we can
1:28:32simply take another trade stop loss here
1:28:36because the volume are below the EMA one
1:28:40condition is met. So we aim for another
1:28:43one to two
1:28:50and we take target with one candle but
1:28:52we cannot take another trade because
1:28:55volume are going up. This level is about
1:28:58to be reached and of course this is high
1:29:03result high effort.
1:29:04>> So we just need to wait one more candle
1:29:07and in this case we cannot take trade
1:29:09anymore because even if our condition is
1:29:11met
1:29:12>> it already reached the eye.
1:29:13>> Got it? So as you can see the strategy
1:29:17is totally objective and what I'm about
1:29:19to tell you now is how we can measure
1:29:22the data the data in this platform and
1:29:24will probably leave you speechless
1:29:27because it's for me it's amazing. As you
1:29:30can see here, we have the strategy. We
1:29:32gain 147R in two years and we can see
1:29:37all the metrics below. Okay, for
1:29:39example, the expectancy, the sharp
1:29:40ratio, the payoff, the sortino,
1:29:43everything. As as you can see, this is
1:29:46the risk that we used and this is the
1:29:48cost that we actually use. This is an
1:29:51appro appro approximation.
1:29:55This is an approximation of slipage,
1:29:58cost, swap and etc and etc. And as you
1:30:02can see we have the rolling expectancy.
1:30:04What does it tell to us that the old
1:30:06track record has a rolling sharp rolling
1:30:10sharp ratio sorry not expectancy that
1:30:13the whole track record is 2.2 on the
1:30:17rolling 60 trades is 2.05.
1:30:20So we have a decreasing of 7%. Mhm.
1:30:23>> Okay. We can see the same thing of the
1:30:27in this case expectancy we have a 0.2
1:30:29and the average of the 60 trade is 0.17.
1:30:34And the cool part is we never talk about
1:30:38prof. Okay. But is this profable in is
1:30:43this strategy applyable in prof? This is
1:30:45the question. Okay. So what we will do
1:30:49is just take the profform section.
1:30:53And uh we will try it on your prof.
1:30:57>> Hold on everybody. [laughter] Okay.
1:30:59>> Yeah, I know. It's it's amazing. We will
1:31:02see because we didn't talk about that,
1:31:05but profing
1:31:07and trading are two different complete
1:31:09games,
1:31:09>> right?
1:31:10>> And uh for example, here we have a list
1:31:13of future prof. Tell me which one do you
1:31:16prefer, core or rapid? You just do core.
1:31:20Okay. Let's run a simulation of 200
1:31:24challenges on your prof to see how many
1:31:28we can pass and how many we can bust
1:31:31based on this data.
1:31:32>> Who the heck put this in here?
1:31:33>> What?
1:31:34>> Who put this in here?
1:31:35>> Me. [laughter]
1:31:36>> Come on. You're killing me.
1:31:38>> Let's see it. Okay.
1:31:53Oh, looks very You ever seen an uh EDM
1:31:56festival?
1:31:57>> Yeah, that's so cool.
1:32:01So, in this case, we will pass 40% of
1:32:04the EV of the E of the evaluation. And
1:32:07what does it mean that in our best
1:32:10scenario, we pass 92 evaluation out of
1:32:15200 and we lost 108. So, we spend almost
1:32:20$10,000 to gain $184,000
1:32:23of drill down acquired.
1:32:25>> Nice. Yeah.
1:32:26>> And in the average scenario, we just um
1:32:30spend the same, but we gain $162,000
1:32:34of draw down acquired in profer
1:32:36challenges in funded, of course. And in
1:32:38the worst scenario, we pass 71 out of 20
1:32:41out of 200 and we gain 142,000.
1:32:47And the interesting part is that this
1:32:51trading strategy is built for
1:32:53championship not for prof.
1:32:56Because in profform is so important
1:32:59the frequency of execution.
1:33:02>> The frequency of execution are more
1:33:05important than the expectance itself
1:33:07>> because the higher execution you have
1:33:09even with a lower expectancy the more
1:33:13money you can get on challenges and
1:33:15funded accounts. We're gonna have to cut
1:33:17this part out. [laughter]
1:33:19>> Listen. Yeah. Listen.
1:33:21>> Do you have a simulation for when
1:33:23they're actually funded?
1:33:24>> Yeah.
1:33:24>> You want to see it?
1:33:25>> Yeah, please. Absolutely.
1:33:39>> Okay.
1:33:41So, this is just to get one payout.
1:33:43>> Yeah.
1:33:44>> Okay.
1:33:58So as you can see in the worst scenario
1:34:03we spend 36 $35,000
1:34:07and we gain if all the payouts were of
1:34:11course good like we expected all the
1:34:13rule we can get 600k Okay.
1:34:15>> Okay.
1:34:16>> Okay.
1:34:16>> In the worst scenario considering if you
1:34:18buy if you get funded 200 times.
1:34:21>> Yeah. You this is based on 200 times.
1:34:23Most people use proform like okay I'll
1:34:27buy one. Let's see what I got. But in
1:34:30promir you have to use a model. If you
1:34:32use the same strategy that you use in
1:34:34championship in the promir you are
1:34:36leaving money on the table. That's 100%
1:34:38accurate.
1:34:39>> Just to be clear G Luca this is 200
1:34:41times getting funded. Right.
1:34:43>> So this ignores the challenge
1:34:46>> of course because if you see we spend
1:34:47more.
1:34:48>> Yeah. Yeah.
1:34:48>> So this is in 200 funded accounts.
1:34:51>> Okay.
1:34:51>> Okay. But of course this does not count
1:34:54if for example we break some rule and we
1:34:57don't get paid. Yeah.
1:34:58>> We this assume that we are doing
1:35:00everything perfect that we always know
1:35:02that you have to trade manual so you
1:35:04will make some error. But this is what
1:35:07you've get you've got with the strategy
1:35:08that I actually told you in this
1:35:10episode. That's amazing.
1:35:13>> Yeah.
1:35:13>> And and and this is the strategy that
1:35:16you use to win all the world
1:35:17championships, beat all the veterans,
1:35:20everything.
1:35:20>> Yeah, it's so easy to understand. But
1:35:23the model itself also we can see as I
1:35:26told you before we can go into the
1:35:28autocorrelation session and we can see
1:35:31that our result are using cluster wins
1:35:34follow win losses follow losses. The
1:35:37memory strength is 7.9 and is 100% sure.
1:35:41So, as I told you before, after a win,
1:35:44we have a 52.5%
1:35:47that next trade is a win.
1:35:49>> This is beautiful, but I have a couple
1:35:51questions.
1:35:52>> Yeah, no worries.
1:35:52>> Someone who is new.
1:35:54>> Yeah, just forget that. They can't do
1:35:56this if they're brand new. So, Oh, yes,
1:35:58you can. But um for someone who's never
1:36:02looked at this stuff before, Yeah.
1:36:04>> take everything you you talked about on
1:36:06the whiteboard and look for that
1:36:09>> inside of this kind of software. Yeah.
1:36:11>> Right. All of that is inside of this
1:36:14kind of software.
1:36:15>> But did you upload
1:36:18your back test data to this manually?
1:36:20Yeah, you have to upload this manually
1:36:22or you can just simply uh take your
1:36:25Metatrader account, download all and put
1:36:28it here or uh take one broker statement,
1:36:32put it here and it will analyze it.
1:36:33>> It'll do it all.
1:36:34>> Yeah,
1:36:35>> completely free.
1:36:36>> Uh no.
1:36:37>> Oh, come on. We love free stuff around
1:36:39here.
1:36:40>> How do we do the free one?
1:36:42>> Okay. Um Okay. So, just Yeah. I just
1:36:45wanted to make sure it was clear for
1:36:46anyone who was potentially interested in
1:36:48this how they could actually do it, you
1:36:50know.
1:36:50>> Yeah, this is just the calculator. You
1:36:54can also build your own journal. We can
1:36:58call journal, but I prefer terminal
1:36:59because it's a lot of more complicated
1:37:01than a journal. You can build your own
1:37:03terminal. You can calculate your own
1:37:06data, your old metrics with your own
1:37:08data. And you can actually have
1:37:11something like this. At least you need
1:37:13the memories. You need to calculate the
1:37:15autocorrelation. The regime is not too
1:37:17complicated. This is just reorganized.
1:37:20>> That's the the accurate part.
1:37:22>> Does it actually require this deep of a
1:37:25look to be successful?
1:37:27>> No.
1:37:28>> Really?
1:37:28>> No. No. No. No.
1:37:31>> You can be profitable with less than
1:37:33that. But if you want to gain percentage
1:37:37in every high percentage in every
1:37:39quarter, you have to know how much you
1:37:42can squeeze it.
1:37:43>> Okay? You have to know for example the
1:37:46Monte Carlo analysis. We didn't talk
1:37:48here but it's amazing how we can
1:37:51actually see in 10,000 shuffle in how
1:37:53many of them we lose money. We lose
1:37:56money. What is the average scenario?
1:37:58What is the best scenario worst
1:38:00scenario? Okay, we need to understand
1:38:02that because even in that we have 41 on
1:38:0510,000 shuffle order that lose money.
1:38:08Okay, so in the worst case here we can
1:38:12make 15 are in negative but it's 41 out
1:38:17of 10 10,000.
1:38:18>> Yeah, it's very yeah
1:38:20>> but you have to know that we didn't talk
1:38:22about that but it's fundamental.
1:38:24>> So the minimum reproducible version for
1:38:27someone who watches this and goes I this
1:38:29is what I need to do. Yeah,
1:38:30>> everything you talked about on the
1:38:31whiteboard you would say.
1:38:32>> Yeah, I agree.
1:38:33>> It's the minimum repetition
1:38:34>> is the minimum. But you can that you
1:38:37that you are watching this right now,
1:38:38you can copy this and you can apply it
1:38:41tomorrow. You just need to do the back
1:38:43test. You just need to analyze it, see
1:38:45the result and then you can trade.
1:38:47>> Okay. And what if I took your strategy
1:38:49and started trading in the world
1:38:51championship with it?
1:38:53>> Let me know. [laughter]
1:38:55>> Let me know. I hope that you don't do
1:38:56it.
1:38:57>> Ah, nobody else do it either. I don't
1:39:00think so.
1:39:00>> But um yeah, you basically can.
1:39:03>> Okay. Excellent.
1:39:04>> You basically can.
1:39:05>> Awesome. Is there anything else?
1:39:08>> No, that's all. I think that we did lots
1:39:11of things and in this episode and um
1:39:15>> one more question. Yeah.
1:39:16>> For someone who wanted to get more
1:39:17oriented with what all of this even
1:39:19means. I don't know if the software
1:39:21actually describes what is actually
1:39:24going on with all of this and how to
1:39:26interpret it. But where can someone
1:39:29start to get and with no programming, no
1:39:32tech experience, where can they start to
1:39:34even begin understanding what this kind
1:39:37of information is telling them?
1:39:39>> You have two way. First, I do free
1:39:41education on YouTube explaining all of
1:39:43this. Okay?
1:39:44>> So, you can search my channel. I
1:39:46>> This is my model. I need to explain why
1:39:49does it work and do I education. Either
1:39:52way you can read books of statistical
1:39:54analysis. There are few there are really
1:39:56a lot.
1:39:57>> Mhm.
1:39:57>> Okay.
1:39:57>> Any recommended books?
1:39:59>> I forgot the name. Wait.
1:40:00>> Is it in Italian or is it in English?
1:40:02>> No. Is it in English?
1:40:03>> Okay. Great.
1:40:03>> H I think that is called the Eden Mark
1:40:06of model.
1:40:07>> Ah okay.
1:40:08>> You you know it this is I I don't
1:40:11remember the exact name but it talk
1:40:12about that.
1:40:13>> Okay.
1:40:13>> This is really important.
1:40:14>> Mhm. So you can either search for books
1:40:17of statistical analysis. You can either
1:40:19watch some of my videos. It's up to you.
1:40:22>> Okay. Well, Gian Luca, I mean, we went
1:40:25through the validation process, how to
1:40:28squeeze as much as possible with a risk
1:40:30model, the exact strategy you use in the
1:40:34championship, and then backed it up with
1:40:36real chart examples and software that
1:40:39can actually help someone know whether
1:40:42they potentially have an edge in the
1:40:44first place, right? And know
1:40:47>> if what variance will look like and what
1:40:50things of this nature, right? Okay.
1:40:54Nothing else.
1:40:55>> I won't say nothing else. I won't I
1:40:57won't say Yeah, I say nothing else. It's
1:41:00the complete framework that I use in the
1:41:02championship is the complete framework
1:41:04that not made me profitable but made me
1:41:06a champion. Okay.
1:41:08>> Okay. So, as you can see the strategy
1:41:10was mechanical. The statistical analysis
1:41:13behind it made me champion. Okay. So, I
1:41:16would say that mechanical trading made
1:41:18me profitable. But the statistical
1:41:20analysis gave me the shift that exploit
1:41:23my result.
1:41:24>> Got it. For struggling traders out
1:41:27there,
1:41:28what's the final piece of advice that
1:41:30you would leave them with?
1:41:33Wait.
1:41:39Okay.
1:41:41Don't trust anyone.
1:41:43>> Okay. It's really
1:41:46important that you never trust someone
1:41:48else word. If I'm telling you that this
1:41:51is the strategy that made me profitable
1:41:54and I'm telling you this is the data,
1:41:56you shouldn't trust me. You should test,
1:41:58you should exploit and see if this
1:42:02actual make a result.
1:42:04>> Okay? So it's really important that you
1:42:08don't put money at risk based on
1:42:13confidence, confidence and the trust. So
1:42:17you that you are watching right now
1:42:19probably you lost money before maybe you
1:42:22are not profitable yet. You just need to
1:42:24find one objective way to make money in
1:42:27trading and repeat it constantly. You
1:42:30don't need to study thousand of concept,
1:42:33thousand of way to analyze the market.
1:42:35You just need one model that is
1:42:37repeatable and you need to know how to
1:42:39optimize it over time. That's all. The
1:42:44more you add, the less results you have.
1:42:49>> Gian Luca, thank you so much. I really
1:42:51appreciate it.
1:42:51>> It was really a pleasure for me to be
1:42:53here.
1:42:53>> Absolutely. We will do something again.
1:42:56Most certainly.
1:42:57>> Okay. IQ Capital. You can start your
1:42:59first challenge for as little as $9.
1:43:02Terms and conditions apply. Check the
1:43:04link in the description below for more
1:43:06detail. Built by traders for traders.

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