I Asked 6 Pro Traders To Share Their Best Day Trading Strategies (1-Hour Masterclass) — Transcript

Full transcript

1. 0:00ng I learned over the last few years of trading is that
2. 0:02traders have different styles. No one does things the exact same way.
3. 0:06So I decided to go and ask traders that I
4. 0:07interview about their day trading strategies
5. 0:09and share them all with you today. I asked six traders what their best strategy is and
6. 0:13how they do things in the market. You'll get to hear this fully in this masterclass.
7. 0:16With these one hour masterclasses, we combine
8. 0:18the best advice of traders we've interviewed
9. 0:20into a one hour video you can watch or sit down to trade and listen at the same time.
10. 0:24And this one features some good legends of trading.
11. 0:25I guarantee there's something you'll
12. 0:27find useful in this video. So watch it till the end. And we'll dive right into it.
13. 0:30I believe that everybody who tells me you have to have positive risk reward has,
14. 0:37let me first make the unkind comment.
15. 0:39Everybody who tells everybody who tells me to trade with
16. 0:42a two to one or three to one risk reward ratio
17. 0:44is really not trading. Those are not traders.
18. 0:46Those are those are YouTube gurus because in reality, nobody gives you $2 bills for
19. 0:52for 50 cent bets. OK, I mean, they do. But that happens one out of 100 times.
20. 0:58It's not about risk reward ratio. It's about your win bet ratio. In a real market,
21. 1:04with incredibly efficient prices, incredibly
22. 1:06efficient flows, it's extraordinarily difficult
23. 1:09to achieve anything that is two to one risk reward more than 25 percent of the time.
24. 1:15Right. Run those numbers. Those are not positive numbers. And, you know,
25. 1:22most of the professional traders that I talk to, their extreme
26. 1:26type take profit is one and a half. In other words, they're comfortable,
27. 1:31you know, maybe being 35, 40 percent at one and a half.
28. 1:35You have to ask yourself the reason.
29. 1:37The reason why I think, you know, all of those,
30. 1:41the most fake advice you get on the Internet
31. 1:45is these risk reward ratios and the win ratios.
32. 1:47I have a two to one risk reward ratio and I went
33. 1:5070 percent of my trades. Just think for a second what the liar is saying to you.
34. 1:56They're basically saying to you that within a
35. 1:58couple of months they can take a ten thousand
36. 2:01dollar account and run it to about a million.
37. 2:03And then within a couple of months of that,
38. 2:05they can run it to a hundred million. Within a couple of months of that,
39. 2:07they can run it to a billion. Nobody in the history of trading has ever, ever achieved
40. 2:1570 percent win rate on a two to one risk reward ratio in any kind of high frequency.
41. 2:19Maybe if you did two trades a year. Yeah. OK, that's great.
42. 2:22That's not the same. If you did more than 100
43. 2:24trades a year, I guarantee you've never done that
44. 2:26because the math of that is simply impossible.
45. 2:28In any normal corporation, your profit after, you know, you sell toothpaste,
46. 2:34your procter and gable's profit is, you know, five cents.
47. 2:38Right. So a five percent edge where let's say, you know, you have a 50/50 bet and
48. 2:42you're winning at 55 percent is extraordinarily
49. 2:45lucrative and extraordinarily attractive and far,
50. 2:48you know, pretty much at the edge of reality of
51. 2:51what you can achieve. I mean, high frequency
52. 2:55trading firms have like a 51, 51.2, 51.3 edge.
53. 2:59Right. And those guys are far smarter and better
54. 3:02and have more and more statistics than you.
55. 3:04So, you know, I always take issue with everybody,
56. 3:07anybody who tells me that because that's a lie.
57. 3:10You know, I show my accounts to all of my traders
58. 3:14every single day. It's public. It's, you know,
59. 3:17it's on my effects. So my effects. Sorry.
60. 3:20And, you know, you can see every single trade.
61. 3:22As a matter of fact, I open up my MT5 publicly so you
62. 3:25can see every single trade I'm taking.
63. 3:28And it's not pretty. It's just that, you know, you don't
64. 3:31get those kind of risk reward ratios.
65. 3:33So that's to me always the key differentiator between I
66. 3:36know somebody who trades for a living or somebody
67. 3:38who is just, you know, sells trading courses for a living.
68. 3:41Those are two different things.
69. 3:42And, you know, ask themselves, are you better than Exxon?
70. 3:45Are you better than, are you even better than Microsoft or Google? I mean, Google,
71. 3:51Microsoft, the fattest, highest, most lucrative.
72. 3:55Amazon has like a 5% edge on all of the packages
73. 3:59they sell to you. It's just not reality.
74. 4:03And you're talking about markets much tougher than all those guys.
75. 4:06All those guys dominate their markets.
76. 4:08They, you know, they're the axe, as we used to say in the old days of those markets.
77. 4:13You're just, you know, you're competing in the
78. 4:15single most competitive market in the world.
79. 4:17So you should be grateful for a 5% edge.
80. 4:20And you're right. I think that's another thing that's
81. 4:23terrible because people have these horrible
82. 4:25expectations of like, hey, you know, if I just
83. 4:28do this with, you know, what people tell me to
84. 4:30do and I should be earning, you know, I should
85. 4:33take $10,000 into $100,000 in two months. Yeah.
86. 4:36I mean, anybody who does that is just basically
87. 4:40gambling with a 10,000 to the trading.
88. 4:43And that's why it's a non-replicable. How many guys
89. 4:47who you've seen win trading contests, then go on to trade for the rest of their life?
90. 4:55The answer to that is almost always zero because they die.
91. 4:59They all die in the battlefield.
92. 5:02And, you know, what I try and do is survive for a lifetime.
93. 5:07And that's where those numbers,
94. 5:09that's where those skills, those expectations really come in.
95. 5:11If you want to survive for a lifetime, you have to have a much more realistic
96. 5:15idea of how trading actually is really done.
97. 5:18Nothing really complicated. There's only two
98. 5:21price actions that happen. And you need to just
99. 5:25be, you need to have setups that can accurately
100. 5:28filter for when those things have a higher
101. 5:30probability of happening. The two price actions
102. 5:33is continuity and reversal. As a matter of fact,
103. 5:36there is literally no other strategy in trading
104. 5:39and everything from the most complicated Elliot
105. 5:43wave structures to the most algorithmically
106. 5:46driven high frequency trades to your basic macro,
107. 5:50"Hey, let me look at the world" ideas are all a
108. 5:53function that can be reduced to just two types of trades.
109. 5:57It's either a reversal trade or a continuation trade. Right now, what we do and
110. 6:03where my setup has been very helpful and I have
111. 6:06to really thank Linda Rashke, the market wizard
112. 6:08for this because I've had her on my trading fest several times.
113. 6:12And like the last time we had her on trading fest, she sort of, you know, I just
114. 6:15let her talk for like two hours and she basically
115. 6:17just gave like a PhD level seminar in intraday trading.
116. 6:21She's been an intraday trader for like, you know, 40, 50 years. And like the most
117. 6:27interesting thing she sort of pointed out to me
118. 6:30was the fact that intraday trading is basically auction theory.
119. 6:34It's just like going to Christie's or Sotheby's, you know, in terms of, you know,
120. 6:38betting for art, it's always auction theory.
121. 6:40And always the highs and the lows of the day
122. 6:44are the most important levels to watch. Right?
123. 6:48And that's, you know, we developed basically our
124. 6:51reversal and continuation strategies relative to
125. 6:54the highs and lows of the day, you know?
126. 6:56And, you know, I was just thinking about this,
127. 6:58not to wax philosophical here, but I thought it
128. 7:01was interesting. Like I was like, why do highs
129. 7:03and lows of any instrument, any instrument, but
130. 7:05of course, stock index futures, which is what I
131. 7:08specialize in, matter so much. And that's because
132. 7:12as human beings, we're always a relative bet species.
133. 7:17Like we're always, always comparing relative to whatever is the current standard,
134. 7:23not the absolute standard. Right?
135. 7:25I mean, I just think you're like, what's the definition of happiness?
136. 7:28It's an absolute standard.
137. 7:30Like, you know, if you're healthy, you have enough food,
138. 7:33you have shelter over your head. That's absolute
139. 7:36standard of happiness. But nobody's happy with that.
140. 7:39Nobody's happy with that. Because what you
141. 7:41want to be is you want to be running a marathon,
142. 7:44you know, you want to have the biggest house in the world.
143. 7:48And, you know, I don't know what the
144. 7:50third value, you want to have more, you know, more toys.
145. 7:53None of those things are necessary for an absolute standard of happiness.
146. 7:56But we all want a relative standard of happiness.
147. 7:58And I think as a human species, because we're always measuring
148. 8:02ourselves against some moving target, that
149. 8:05behavior completely translates itself into the
150. 8:08marketplace, where the highs and the lows become
151. 8:11the relative barriers against which the price
152. 8:14constantly battles all day long. And that's where
153. 8:16we spot our opportunities and try to trade those trades.
154. 8:20You know, that's basically it.
155. 8:22We have a special indicator that I have made for me that we use on TradingView,
156. 8:26that constantly shows us the fresh highs or
157. 8:29the fresh lows made for that day. So, you know,
158. 8:33that Mark is sort of relative. It's always dynamic, it's moving. And when we get close
159. 8:39to those levels, you know, we have a series of
160. 8:42reversal setups and a series of continuation setups that we apply algorithmically.
161. 8:47So, in other words, you know, the line of price is near the low
162. 8:50of the day, what are we going to do?
163. 8:51Well, we're going to have a reversal setup that's going to
164. 8:53follow the following particular rules.
165. 8:56We arm our algorithm once it gets into that area, and it'll
166. 9:00let the algo execute once all the rules are met.
167. 9:03And that's, you know, it's as simple as that.
168. 9:05And do that over and over and over again.
169. 9:09Anything I say is only applicable to me and people who have
170. 9:13a personality similar to me, right?
171. 9:16So, under no circumstances do I think that what I do,
172. 9:21you should do if you don't feel comfortable with
173. 9:23it. Because there's 100 different ways to trade in the markets.
174. 9:26And there are people who trade very differently than I do and very well.
175. 9:29And you need to just the single most, we've talked
176. 9:32about this all time that the single most important
177. 9:34thing is that you need to align your strategy
178. 9:37with your personality. Now, you know, in my group,
179. 9:40we actually created a banner and a logo, we call
180. 9:43ourselves degenerate traders. And it's kind of a,
181. 9:45you know, tongue in cheek comment about what we
182. 9:48do, meaning, you know, the logo is degenerate
183. 9:50traders, any market anytime because we like price
184. 9:53action, I'm a person who doesn't have a lot of
185. 9:56Patience, and likes quick in and out, stimulation,
186. 10:00and, you know, ample. So the other positive side
187. 10:04of that, of course, is I have lots and lots
188. 10:06and lots of sample size, I can within a week,
189. 10:08do 100 trades, and have a good idea of where
190. 10:11things are working, things are not working and
191. 10:13how to tweak them, you know, so I get a tremendous
192. 10:16amount of fast feedback. I'm a person that likes fast feedback.
193. 10:19There are people who despise the way I trade, and like to just simply trade, you
194. 10:25know, once a week or once a month. The good thing
195. 10:28is my strategies is very scalable. It is fractal
196. 10:31in a sense that the same reversal continuation
197. 10:35ideas repeat themselves on much larger timescales.
198. 10:39It's just that, you know, I would die of boredom
199. 10:42watching the four hour chart. And I mean, I went
200. 10:45back to FX for a little bit. Kathy always, you
201. 10:47know, always drives me back to FX occasionally.
202. 10:49And even like on a one minute chart, I laid down
203. 10:51a trade on euro, you know, like, just to give you
204. 10:53an idea, within stock index features, our average
205. 10:55duration of the trade is around 10 minutes, right?
206. 10:58I'm in and 10 minutes is like a long time.
207. 11:00I mean, usually, sometimes it results in two or three minutes.
208. 11:02And I'm trying to do this, you know, 510
209. 11:05times a day, find optimal points during the day,
210. 11:07and I'm just in and out 510 minutes.
211. 11:09So then, you know, I started, we started applying this to
212. 11:12currencies, which actually works. But like on euro,
213. 11:15the same, the same duration is like two hours.
214. 11:18And I'm like, oh, you know, I'm dying of boredom
215. 11:21just watching this thing, because it's like,
216. 11:23it's like a slow motion car wreck in effect.
217. 11:26So you have to know what you like, what kind of
218. 11:28velocity you're happy with. And by no means, you
219. 11:33know, what I do is should you do if that's not
220. 11:36the kind of, you know, if you like to go fly
221. 11:39fishing, then my strategy is not for you.
222. 11:42You know, if you like to go fast on a motorcycle, then it probably is.
223. 11:46That's kind of how I subdivide all of my traders.
224. 11:48Feedback is a wonderful thing, right?
225. 11:50I did a trader fest a little while back
226. 11:52a couple of weeks ago. And I had some literally,
227. 11:54I had, you know, Denise Schill, who is probably
228. 11:57the single greatest trader, trainer of traders in the world.
229. 12:00I mean, she, you know, she teaches all the hedge fund managers, if you've ever
230. 12:06seen the show billions, the character of Wendy,
231. 12:09who is like the main character in that show, you
232. 12:12know, the hedge fund psychiatrist, that's her, that was based on her character.
233. 12:16So it was extraordinarily valuable to her.
234. 12:19And she used to be a former trader herself. So it's not, this
235. 12:21isn't, she isn't just a psychiatrist who teaches
236. 12:23you how to trade, she's a trader who went back to
237. 12:27her original, you know, training. And so she had
238. 12:30a tremendous amount of impact on me.
239. 12:32And one of the things that she said to me is that this is,
240. 12:34I think this is great advice for anybody.
241. 12:36There are two things you need to do to make your trading
242. 12:38strategy successful. You need to test, you need
243. 12:41to trade your strategy. And you need to trade yourself.
244. 12:45Meaning you need to, when you're taking
245. 12:48a journal of how your strategy is doing, you also
246. 12:51need to take a journal of how you are doing with that strategy.
247. 12:55Because that's the thing that
248. 12:56people always forget. It's there are two variables in the game.
249. 13:01There is, you know, your analysis of
250. 13:03the market, and then your execution of your analysis.
251. 13:05And your execution of your analysis
252. 13:07is always 100% going to be emotionally based. 100%.
253. 13:11I mean, the one of the things is that emotion is
254. 13:14a feature, not a bug of human condition, which is very true.
255. 13:18And once you embrace that, once you
256. 13:19understand that there's no such thing as discipline,
257. 13:22or controlling your emotion, or any of those
258. 13:24nonsense terms that anybody tells you, because
259. 13:27that's literally physically and psychologically
260. 13:29not possible in human beings. What is possible
261. 13:33is to study yourself sort of on a kind of outside
262. 13:36basis and understand, well, you know, I've seen
263. 13:39this, you know, every day, this happens, and I do
264. 13:42this, you know, every day, this particular setup
265. 13:45happens, and I get suckered into taking it,
266. 13:47because I think that that's the right setup, but it's really not part of my stuff.
267. 13:51So once you actually start to note, take, and classify your
268. 13:56own behavior, your own patterns, the patterns of
269. 14:01your personality, in many ways, I actually think
270. 14:03are more powerful than the patterns in the markets.
271. 14:07The patterns in the markets are actually, you
272. 14:09know, relatively easy to interpret, but to
273. 14:11understand your own patterns, and then modify them,
274. 14:14you know, because you trade yourself the way you
275. 14:17would trade a chart and say, oh, you know, well,
276. 14:19that's a dumb setup, because of course, it's not going to work.
277. 14:21But this setup, if you do it, that's going to work. Speaking about, you know,
278. 14:26FOMO, for example, FOMO has been a huge,
279. 14:29huge failure of mine. And that in many ways,
280. 14:33what that entailed is that I would, my algo
281. 14:35has all sorts of like drop down menus for each
282. 14:38particular strategy, but also the drop down menu
283. 14:41for market, right? And anytime I use market,
284. 14:44as an entry strategy into the marketplace, that
285. 14:48was generally a sign of my poor behavior pattern,
286. 14:51because I was chasing something, I was not letting
287. 14:54the algo take the trade. So that's what helped.
288. 14:57I mean, I forgot, I already forgot, I started
289. 14:59ranting over my question was, but I think the
290. 15:01most important thing is, is I learned how to trade
291. 15:03myself, in conjunction with trading my own strategy,
292. 15:06that's really improved, improved my overall
293. 15:09performance, it went from me making, you know,
294. 15:1130 unnecessary trades a day to making just seven to 10 qualified ones.
295. 15:17Well, what makes us so good is really, you know,
296. 15:20number one, understanding the dynamics of the
297. 15:23market, you know, it's a really good question.
298. 15:24It's very tempting, especially with new traders
299. 15:26that come in to, to automatically look for the
300. 15:29tops and bottoms, you know, many new traders are,
301. 15:32you know, we're humans, right? So always want
302. 15:35to go against the trend. And we also want to go
303. 15:37against the, that what's popular and say it cannot
304. 15:40possibly keep on rising, it cannot possibly keep on falling.
305. 15:44And what makes my trading strategy so great is something very simple, which is
306. 15:49recognizing that the very simple line that the
307. 15:53trend is your friend, on both a long term basis,
308. 15:57as well as a short term basis. And what makes my
309. 16:00trading strategy so effective is that it is that
310. 16:03I only trade in the direction of the trend when
311. 16:08market sentiment is on my side. So if you drew
312. 16:12that down a little further, what does that really mean?
313. 16:14What does market sentiment really mean?
314. 16:16Market sentiment means the how investors and traders feel.
315. 16:21So what I'm looking for is I'm looking for the long term trends, for example,
316. 16:27to be bullish dollar yen. But I also want market
317. 16:30sentiment, I also want investors on a short term
318. 16:34basis to be bullish dollar yen as well.
319. 16:37So I'm looking for, at the end of the day, the long term
320. 16:41and the short term trends to be on my side.
321. 16:44And I'm looking for the fundamentals also to be on my side.
322. 16:48So what makes my trading strategy so great,
323. 16:50and what makes a trading strategy so great is that
324. 16:53number one, I'm trading with the trend.
325. 16:56It's not that hard. You know, yes, you can make money
326. 17:00picking tops and bottoms and fading some resistance
327. 17:03levels and swing highs and swing lows, but you're
328. 17:06going to make a lot more money with less stress
329. 17:09on a more consistent basis by going with the trend.
330. 17:13And I assure you that I've done this for two decades.
331. 17:16It really works. It's much easier to trade with the trend than against it.
332. 17:21And then what works is that you want the rest of the market
333. 17:26to be in your direction as well. And that is where
334. 17:30we want to look at fundamentals. We want to look
335. 17:32at how stocks are doing, want to look at how bonds
336. 17:35are doing, want to look at how gold is doing.
337. 17:38So having all of this in sync with your trade
338. 17:41and making sure that you look for those things and
339. 17:43only trade when those things are in line with the
340. 17:46trade is what makes a trading strategy so great.
341. 17:50But it's not just that, Etienne. You know, a lot
342. 17:53of it is the entry. A lot of it is the exit
343. 17:58strategy as well. I am aware that on a day-to-day
344. 18:04basis, if I'm trading, usually my positions that
345. 18:08I hold last no more. I have day trades and my swing trades.
346. 18:12I'm much more active in my day trades.
347. 18:14My day trades usually last anywhere from
348. 18:1820 minutes to 15 hours. And what's really important
349. 18:25about that is that I recognize with those trades
350. 18:31that usually the sweet spot for these day trades is anywhere between 20 to 60 pips.
351. 18:41And when it gets to 20 pips in my profit, I
352. 18:45start to try to take some money off the table,
353. 18:49move my stops up for my day trade, especially
354. 18:51when I'm trading right at the New York Open.
355. 18:53For my Asia trades, I usually will be a little
356. 18:56bit more fluid and allow them to carry overnight
357. 19:00and maybe go for 60 pips. But if you think about it, unless it's a really, really big
358. 19:06overnight story or overnight movement, a 60 pip
359. 19:09movement overnight is probably the Max that you would expect.
360. 19:13So I've also been much more refined in my exit and most importantly, when a trade is
361. 19:20not moving my way, I'll get out. And I am ruthless
362. 19:25when it comes to getting out of trades that are
363. 19:30just simply not moving my way. Because based upon
364. 19:33my technique, the trade should be moving in my
365. 19:36direction quickly. It may not get full profit
366. 19:39quickly, but it should not be moving in the
367. 19:42opposite direction quickly. And so if it is,
368. 19:45I will cut the trade. So being able to have a
369. 19:49selectivity in your entry and then also being
370. 19:53ruthless in your exits, I think is -- and focusing
371. 19:58just as much on both, because you can't make
372. 20:01money if you're not taking profits -- is really
373. 20:04what makes the trading strategy great.
374. 20:07Where I'm not just focusing on the entry, I'm also making
375. 20:10sure I bank my pips and I bank my pips consistently.
376. 20:14So the only thing I've added is gold.
377. 20:17I've become more aggressive in trading euro crosses, as we just talked about.
378. 20:26When I see a setup in euro-Aussie, euro-Kiwi, euro-CAD,
379. 20:30Kiwi-Swiss, Aussie-Swiss, any commodity pair-based
380. 20:34currency, I will usually lean more into them.
381. 20:38I will be much more apt to take those trades
382. 20:42because they work the best for my trading strategy.
383. 20:47I will avoid trading, for example, sterling, because sterling I've learned is just
384. 20:53too volatile for my strategy. And that includes
385. 20:57all of the sterling crosses. But I've also gotten
386. 21:01to trading gold, and gold works very well with my
387. 21:06Zip trading strategy. Zip also works really well
388. 21:10in the indices as well as Bitcoin, but I think for
389. 21:14me it's just a matter of focus. It's very hard
390. 21:19for me to focus on all of the Forex instruments as
391. 21:23well as gold, as well as Bitcoin, as well as the indices.
392. 21:27But my trading partner Boris, through the years has changed a lot and he actually
393. 21:33doesn't trade Forex anymore. And he specializes in
394. 21:36trading Bitcoin, the NASDAQ, the ES, Dax, as well as gold.
395. 21:43So our strategies have become much more refined in those instruments as well.
396. 21:50But I think he finds and I find that it's very difficult to
397. 21:53split your focus. And Forex has long been lucrative
398. 21:58for me and long been the market of my choice and
399. 22:03what's generated the most pips for me.
400. 22:06And so why change what's not broken, right? And that's why I
401. 22:11focus exclusively on Forex, but I do trade gold as well.
402. 22:16It's always a good idea to try demo first,
403. 22:19but there's nothing like real trading because
404. 22:22when you're demo trading, it's very different
405. 22:24from the psychological aspect of real money.
406. 22:28Even if it's a small amount of money that you put in
407. 22:33like a prop account, adding the psychological
408. 22:37element makes a huge difference in your behavior in trading.
409. 22:42So I think that there is no replacement
410. 22:46for real trading and that demo trading is a good
411. 22:50start, but it is only going to get you so far because it's not real money.
412. 22:54I think that technicals will always and chart reading will
413. 22:59always be the way most traders start because
414. 23:02it's the simplest, right? I mean, you learn a
415. 23:06strategy, you learn a pattern, and you look at
416. 23:09it in the charts and you hopefully learn how to
417. 23:12make money from there and just repeat it over and over again.
418. 23:16But I think that what people will discover is that while the technicals are
419. 23:23interesting, that a lot of times, technicals are
420. 23:28basically trading the past, right? And fundamentals
421. 23:34are about trading what could happen in the
422. 23:36future and what's understanding the big story
423. 23:39and understanding the general direction of where
424. 23:42these instruments are headed in the short and in the long term.
425. 23:47So I think people are starting to realize that it is very, very important.
426. 23:51I have a YouTube channel that focuses a lot on fundamentals
427. 23:55and I'm seeing so much interest in it because we
428. 23:58have so many big stories. And when people start
429. 24:01to learn the importance of market correlations,
430. 24:04how you can use bonds to trade Forex, how you
431. 24:07can use stocks to trade Forex, how you can use
432. 24:10EUR/USD to trade gold, they start to see the market
433. 24:14in a different way. And at the very beginning of
434. 24:17this conversation, Etienne, I talked about how
435. 24:20what makes my strategy so successful is that I'm
436. 24:23a trend trader and the trend is determined by fundamentals.
437. 24:28And I have a certain fundamental view that is determined by what's going on in the
438. 24:34markets that will oftentimes not change.
439. 24:36I mean, fundamentals do not change day to day. Fundamentals,
440. 24:39either the economy is doing well or it's doing poorly, or war does not end in a day.
441. 24:44So these are stories and things that you learn about and
442. 24:47you understand that will impact the markets for
443. 24:50days, weeks, months at a time. And when you have
444. 24:54that in the back of your minds, then you kind
445. 24:57of lean into it, meaning that I will only take
446. 25:00the trades in the direction of fundamentals.
447. 25:04And that's why we hit, I think, 9 out of 12 winning months.
448. 25:10And my accuracy with my trading is so
449. 25:13high because I focus only on trading the setups where fundamentals are on my side.
450. 25:20So I think people are waking up to that. They want to learn more.
451. 25:24They want to be able to understand the big stories.
452. 25:26And that's what really makes trading
453. 25:28interesting too, which is that you're seeing these
454. 25:31stories in the news and you want to learn how,
455. 25:35you know that affects your trades. You know that
456. 25:37affects the stock market. You know that affects dollar.
457. 25:40You know that affects oil. You know that affects gold.
458. 25:43But how do you turn that into a trading opportunity? I talk to a lot of technical
459. 25:48traders and they'll even say to me, they'll even
460. 25:51say off the cuff, "Yes, my trade was affected by
461. 25:54the US CPI report or the non-farm payrolls report.
462. 25:57" All of that is fundamentals. They may not be
463. 26:00acknowledging it right off the bat, but you know,
464. 26:03they are looking at minimally the calendar and incorporating that into their trade.
465. 26:12And even when these technicians don't acknowledge it,
466. 26:15fundamentals is always a part of your trading
467. 26:17and you will only become a better trader when you
468. 26:21understand even the simplest aspects of fundamentals.
469. 26:25I mean, in many ways, you know, if you put too many indicators in your charts, you can
470. 26:29convince yourself of anything. I think technicals are oftentimes subjective as well.
471. 26:35Yes, I mean, of course fundamentals are subjective because
472. 26:38they are, you know, when you read about something,
473. 26:40it's about the person's opinion. But if you have
474. 26:44the right people, the smart people to follow on
475. 26:48social media who know how to interpret fundamentals
476. 26:51correctly, it becomes less subjective because,
477. 26:55you know, most of the people listening to this
478. 26:58podcast won't be able to understand the right
479. 27:01takeaways and fully analyze the fundamentals in
480. 27:06the way that it should be. But it's not hard to
481. 27:10do so if you read Bloomberg.com or if you look at Reuters.
482. 27:15com or Wall Street Journal, you know, they will explain the main takeaway to you for
483. 27:21today's non-farm payrolls report, for example.
484. 27:24So, you know, go to the experts, go to the
485. 27:28media, you know, you can follow me on Twitter,
486. 27:32@KathieLeanFX, but I'll be honest, I do not do
487. 27:36data instant insights as regularly as some other
488. 27:40people because, you know, it's not my job.
489. 27:43I'm trading oftentimes. So, 4X Live is really good.
490. 27:46Also, V Patel FX, I like a lot. He does really good analysis.
491. 27:51ING Economics does a really good job.
492. 27:55And of course, you know, Bloomberg and Reuters,
493. 27:57they do some instant insights. So, there are ones
494. 28:00who more religiously report on data and give you
495. 28:05instant reactions that you can follow.
496. 28:08You can also just look at who I follow on Twitter and kind
497. 28:11of curate, you know, that because that will allow
498. 28:14you to see, you know, who I like instant analysis from.
499. 28:17Also, New Squawk is really good.
500. 28:19Financial Juice, you know, the people whose job is to analyze data.
501. 28:22I'm not going to change what I do.
502. 28:24I don't think that on a year-to-year basis the
503. 28:27themes really affect my trading strategy.
504. 28:30It should not, right? I think my strategy is still
505. 28:33going to be focused on the trends on a swing and
506. 28:36day trading basis. And the trends and the stories
507. 28:40will determine the trends. The story of whether
508. 28:44the BOJ truly comes out of ZURP, of who is the
509. 28:47first center bank to lower interest rates, those things will determine what I trade.
510. 28:53Because I always say fundamentals determine what you trade
511. 28:58and technicals determine when you trade.
512. 29:00So, you know, I'm going to be watching the themes and I'm
513. 29:04going to use my technicals to tie my entries.
514. 29:06Really the basic principles are there.
515. 29:09And one of the best things I found early on in my career
516. 29:12was Stan Weinstein's book, "Secret for Profiting
517. 29:15Bull and Bear Markets." Basically, it drove into
518. 29:18my mind that, you know, you don't buy stocks in downtrends.
519. 29:21That has saved me for, you know, kept
520. 29:23me in the business. I've seen so many people get
521. 29:26blown out or, you know, go have to rebuild and
522. 29:29come back buying stocks in downtrends.
523. 29:32So that was really the first and foremost thing is I only
524. 29:35buy stocks that are in a primary uptrend.
525. 29:38I wait for a pullback. And then, you know, I've refined
526. 29:41it in terms of the timeframes I look at, the time
527. 29:44I'm willing to hold a stock, and then tools like
528. 29:48the Anchored VWAP, which has really become much
529. 29:51more critical to me since about 2015, when I
530. 29:55convinced TC2000 to add that to their trading platform, to their charting, that is.
531. 30:00So I'm going to stop selling, and the buyers get a little bit
532. 30:04more aggressive and start buying the offers, and then momentum begins from there.
533. 30:08So it's, you know, it's just a fascinating tool to really look at.
534. 30:12And first, you have to understand that
535. 30:14market structure and how money flows in a cyclical
536. 30:17way, you know, through the market on all timeframes.
537. 30:21You know, there's, there's, there's all kinds of traders at SMB.
538. 30:25SMB has guys that have been there,
539. 30:27you know, 10, 15, 20 years, who are extremely successful.
540. 30:30But they're always bringing in new
541. 30:32guys who are, you know, trying to learn right from the start.
542. 30:37And the great news for them is they're learning from a structured environment.
543. 30:41So you know, someone at home might just say,
544. 30:44Hey, I'm gonna start trading and read a couple books, watch a few videos,
545. 30:47and just kind of do what I want to do.
546. 30:50Instead, they've got, you know, teamwork, and they work on
547. 30:53those together, they break into little pods,
548. 30:55they, you know, they say, here's your group,
549. 30:57let's work together, let's analyze these stocks.
550. 31:00So it's more that you've got, you know, extra sets of eyes.
551. 31:04They struggle with the same things, though, buying when the stocks up too much,
552. 31:07thinking the stock is down too much, trying to
553. 31:09catch a bounce, and that sort of thing.
554. 31:11It's, it's all all the same things for everyone.
555. 31:14I mean, you go look at the biggest hedge funds on
556. 31:17the planet, they're not immune to the same mistakes you and I make each person.
557. 31:21I mean, some of them are super, you know, into their, you
558. 31:24know, their playbook is Bella's book, you know,
559. 31:27you make your play your one good trade, make
560. 31:29your playbook and know what your plays are.
561. 31:32But I think that, you know, similar to mine, I consider myself a discretionary tool,
562. 31:38but I have a lot of guidelines, I don't
563. 31:40necessarily have rules that I have to do this every single time something does that.
564. 31:44But it's more, okay, now we're in this area. Now I'm going
565. 31:48to use my mind to think about what's the overall
566. 31:51picture in the market? Does that support this?
567. 31:54No, how's this sector acting just a little nuances
568. 31:57that you get from, you know, having a lot of
569. 32:00experience in the market. So there's, you know,
570. 32:04rules based, but not always 100% adhere to more
571. 32:08guidelines is what I like to call and I kind of
572. 32:11knew that I was a trend trader, you know, part of
573. 32:13when I was working at Lehman Brothers as a
574. 32:16broker, I was working for a senior broker there,
575. 32:18and he would buy stocks of companies that reported
576. 32:21better than expected earnings and had a good chart
577. 32:24pattern to go along with them. And I remembered
578. 32:26him just doing really well with that for his
579. 32:28clients much better than you know, the other
580. 32:30brokers in the office. So that kind of set some
581. 32:32of these principles in place that I found Weinstein's book. But you know, I've tried
582. 32:38mean reversion trades, and I've learned the hard
583. 32:42way that I lose money on those net on balance,
584. 32:46I tend to get too emotional, I think, well,
585. 32:48it's going to hold this 20 day moving average,
586. 32:51I'll buy some hope it didn't hold that it's at the 38.
587. 32:542% retracement, I'll add a little, it's got a hold there, then it goes down to the
588. 32:5850 day moving average, this is clearly the bottom,
589. 33:00I'm going all in and then, you know, keeps going
590. 33:03lower and puking it out and taking a huge loss.
591. 33:06So that clearly does not suit my personality.
592. 33:09I don't think it suits most people's personality.
593. 33:12It's, it's a way of looking at, hey, maybe I
594. 33:15can catch a quick move, if I get that reversal, right.
595. 33:19But you know, seven out of times, seven
596. 33:21out of 10 times, I wasn't getting them right.
597. 33:25And, you know, experiencing losses. So that's how
598. 33:28you learn your styles through trial and error.
599. 33:31The key is, you know, to do it with smaller share size until you get to the point where
600. 33:37you recognize who you are in the market.
601. 33:39One of my favorite phrases is if you don't know who you
602. 33:42are in the market, or I'm sorry, if you don't know
603. 33:45who you are, markets an expensive place to learn.
604. 33:48So you know, keep it small, keep it light,
605. 33:51figure that stuff out, the market will be here, there's no hurry to get involved.
606. 33:56So just keep it sane in, you know, learn and practice on small sizes to start.
607. 34:02You know, when people look at my charts, they say, Well, what do you look at?
608. 34:05And I said, price, volume, and time. Those are the
609. 34:08three most important only price pays volume tells
610. 34:10us the emotional intensity, commitment, time
611. 34:13is subjective, but it comes down to those three things.
612. 34:17So I, you know, the only thing on my
613. 34:19charts is those plus some simple moving averages
614. 34:22and anchored VWAPs. I've looked at all the other
615. 34:26pieces, you know, the stochastics, RSI, Adams
616. 34:29pitchfork, you know, sunspots, you name it.
617. 34:31And I, you know, always be curious and willing to learn,
618. 34:35but keep it simple. There's a phrase, I forgot
619. 34:38who said it, but, you know, simplicity is the
620. 34:40market's greatest disguise. That, you know, it's
621. 34:43just like losing weight. How do you do it?
622. 34:46Well, you're more active and eat less. But you know,
623. 34:49people can still, you know, sell billions of
624. 34:51dollars worth of this new program to help you with it.
625. 34:55Each year, there's a new fad diet that
626. 34:57is willing to be sold because people want shortcuts.
627. 35:00And the shortcuts aren't, you know,
628. 35:02how you do it, do it by keeping things simple and
629. 35:05focusing on what matters. The thing that matters most is price.
630. 35:09That's why I always say only price pays.
631. 35:10Because at the end of the day, you can come
632. 35:12up with 100 reasons why you thought the stock was a good buy.
633. 35:16If the market doesn't agree, then your opinion just does not matter.
634. 35:19You know, it's it's difficult because there's so
635. 35:22much information available. And there's so many
636. 35:25people passing themselves off as experts. And
637. 35:28there's, you know, there's some great young people out there who've done a lot of good
638. 35:32learning about the market, and they have two to
639. 35:35three years of experience. And I see them getting,
640. 35:37you know, you know, hundreds of 1000s of people
641. 35:40following them on Twitter. And I look at and say,
642. 35:42these people are book smart about this.
643. 35:44And that's, that's a great start. But you need some
644. 35:47training experience. And to really get in there
645. 35:50and understand the nuances of what's going on the market.
646. 35:53So to me, it's, you know, it takes time, it's about finding your personality,
647. 35:59again, in the market, your timeframe, what you
648. 36:01know, I'm most comfortable with the shorter term
649. 36:04timeframe, I call my shorter term timeframe, you
650. 36:06know, anywhere from a couple days to a couple
651. 36:09weeks, ideally, that's where I am at my stage
652. 36:12in life, my active, real active day trading days
653. 36:15behind me doesn't mean I don't do some once in
654. 36:17a while, because I still have that skill set.
655. 36:20But it's just not in my personality anymore to
656. 36:23really be interested in sitting down and battling
657. 36:25it out every day for 20 cents here 30 cents there,
658. 36:29you know, you don't have someone there pushing.
659. 36:33So you sounds like you speak highly of SMB, and I think very highly of them as well.
660. 36:38They, you know, help recognize the talent,
661. 36:41and they'll push you buy more, get involved,
662. 36:44go heavier, you're there, have confidence in your trade. And that's the thing,
663. 36:48it's easy to become complacent in where you
664. 36:51are, you know, just doing it by yourself.
665. 36:54So I think everyone should, you know, could benefit
666. 36:57from a performance coach or someone outside of
667. 37:01yourself, to say, you know, to look objectively,
668. 37:05at some of the blind spots that you might see to
669. 37:09yourself and say, Hey, well, why, you know, why
670. 37:11did you get involved in that trade? And it doesn't
671. 37:13even have to be a, you know, someone who has
672. 37:16a lot of trading experience, just a, you know,
673. 37:18someone who's a good performance coach could be,
674. 37:20you know, someone who's, you know, been trading
675. 37:22athletes, that sort of thing, but has a good mind
676. 37:25for performance, and breaking through the new levels.
677. 37:28That's, you know, outside resources are
678. 37:31the best way to do that, you know, find a strategy
679. 37:34that makes sense to them. And if it helps them
680. 37:37make money, refine it to their personality and
681. 37:39their timeframe, and have one or two bread and
682. 37:43butter type of, you know, strategies that you know,
683. 37:46you perform well at, and can kind of consistently
684. 37:50go back to but always be trying to, you know, try new things.
685. 37:55But when you try new things, look at them with, you know, much smaller share size,
686. 37:59and recognize you're outside of your normal,
687. 38:02you know, outside your wheelhouse, as they say,
688. 38:05and that, you know, it's time to go slower
689. 38:08here and recognize there's greater risk because
690. 38:11you're in uncharted territory. This is new to you.
691. 38:15So go slow. Don't, you know, don't be in a hurry.
692. 38:18You know, getting the education that makes sense.
693. 38:21Consider the source of where you're getting your
694. 38:24information from. Is it somebody who's just read
695. 38:26a lot of books and is basically writing a book report?
696. 38:29Or are they people who've, you know,
697. 38:31been involved in the market and right, you know,
698. 38:34coming up with new things and learning with their own money?
699. 38:38That to me is what separates, you know,
700. 38:41what the good advice is and what the bad advice would be.
701. 38:44You know, I get asked by a trader,
702. 38:46I've been dealing with retail traders for many years.
703. 38:50Before I even started Forex Analytics,
704. 38:53I had a community at MB Trading and at the Wise
705. 38:56Trade Group of, you know, traders that I've been,
706. 39:00they've been in my chat rooms for literally 20 years. And I've seen people come and go.
707. 39:04And I'd like to believe that I can teach
708. 39:07everybody how to trade, but in all actuality,
709. 39:11I think there's some people that are just
710. 39:14incapable of doing certain things or, you know,
711. 39:17buckle under pressure. There are certain things that I believe that take experience,
712. 39:22but what I've always focused on is that you have
713. 39:25to be disciplined, you have to have great risk
714. 39:28management, you have to be able to shift gears
715. 39:32when market sentiment shifts. And a lot of that
716. 39:36is from experience. What we always choose to, or
717. 39:40what we try to do as a group is we try to reshape the bell curve.
718. 39:45You know, if you have a bell curve, it's like, okay, you spend 10,000 hours
719. 39:49in front of your computer trading, you're a professional.
720. 39:53Great. Okay, fine. If we can make it that you spend, you know, 3,000 or 5,000 hours
721. 39:59in front of a computer, but you really get the
722. 40:02gist of it, and you can kind of cut some corners
723. 40:06because you learn from senior traders that have
724. 40:11been doing this for so long, guys that have traded
725. 40:14on banks, bank desks, or guys that, guys or gals,
726. 40:17you know, that have been in the business, they've
727. 40:21had ups and downs, they understand the struggles,
728. 40:24and they can, you know, teach in a proper manner.
729. 40:27I think you can cut some corners there, but
730. 40:31there's a lot to be said for experience in the markets.
731. 40:34First of all, whenever you're adding
732. 40:36to a position, it should be, unless it's pre-planned.
733. 40:41So this is, there's a, I've seen so
734. 40:44many traders lose so much money because, you know,
735. 40:48some, like an asset they're trading is going down,
736. 40:52and they're like, you know, and they're long, so
737. 40:54they think it's going up, but it keeps going down,
738. 40:57so they just keep adding. It's what some people like to call Martingale strategy.
739. 41:01Eventually, you average in so, you know, so much by the time
740. 41:06it turns, you eventually make money, right?
741. 41:09That's a, that's a very, very, very flawed system to trade.
742. 41:13Anybody that's ever tried to do that, I've just watched blow up time and time again.
743. 41:19However, if you pre-plan your entry, like I'm
744. 41:22buying here, I'm, I think an asset's going
745. 41:25higher, but I'm going to buy here, here, here,
746. 41:28based on Fibonacci's or support levels, you think
747. 41:32this is a really critical level that you want to
748. 41:36buy something, but you're not really too sure
749. 41:38if it's going to make it all the way down there,
750. 41:40so you want to buy it a couple of different levels. As long as you're adding while you,
751. 41:44while it's pre-planned, that's fine because
752. 41:47you know what your exit strategy is, you know,
753. 41:50and that's, that's key, right? Knowing, okay, if it reaches this level or below,
754. 41:56I have to exit everything that I bought. Well, you already know in your head
755. 42:02that that is the case and you should already have a good understanding what,
756. 42:08from a risk management point of view, what your
757. 42:11loss is going to be. So, that type of adding is okay.
758. 42:14I try not to add to losses unless it's been pre-planned.
759. 42:18What I like to do is I like to add in momentum when something's working for me, but
760. 42:24to answer your question, how I do that is really simple.
761. 42:29I ask myself, would I get into the position
762. 42:33now if I didn't own it? So, let's say I'm buying
763. 42:37the euro and it breaks out above, you know, let's,
764. 42:41let's talk realistic, realistic scenario.
765. 42:45Let's say the euro finally cracks 120 sometime later
766. 42:50this year and I own it at 117, where we're at right now.
767. 42:55When it's at 120, if I, if I can sit back and
768. 42:58say, you know what, if I didn't own the euro right
769. 43:02now, would I buy it? And the answer is yes.
770. 43:05And then, you know, how would I manage that trade?
771. 43:09I'm going to trade it, that independent trade,
772. 43:12just like I would trade anything else.
773. 43:14Make sure I got good risk management. Okay. Where's, where's
774. 43:17my, where's my, what's my exit strategy?
775. 43:19And as long as I can do that, then I'll, I'll, I'll add to a position.
776. 43:24So, you know, as far as, as far as risk management goes, when you're adding on
777. 43:29positions, I think it's, that's a, that's a very, that's a very personal question.
778. 43:33I think you, you and I, or anybody else listening in and I,
779. 43:39we all have different views on risk.
780. 43:42I think a lot of it is really deep rooted.
781. 43:45It's, it's, it's how you grew up, how you view money as a whole.
782. 43:51You know, I, I come from a very modest background.
783. 43:55I grew up, you know, I would say lower
784. 43:58middle class America, and that's how I grew up.
785. 44:02I didn't grow up really wealthy. Although I've
786. 44:05traded with a lot of traders that grew up in,
787. 44:08you know, in, right outside the city and they
788. 44:12grew up, you know, on yachts. So the way they
789. 44:15approach risk management is going to be different
790. 44:18than the way that I look at things.
791. 44:20So, like I said, I think it's a very deep issue.
792. 44:24But I, I always ask myself from a very simplistic point
793. 44:30of view, you know, am I okay with that loss?
794. 44:33Like whatever I'm risking, you know, whatever position
795. 44:37I'm in, I always think about what the worst case
796. 44:40scenario is because the worst case scenario will happen.
797. 44:44I'm not saying it's going to happen in that trade, but it will happen. I take losses
798. 44:50just like everybody else. So what is my worst case scenario?
799. 44:53What's my exit strategy?
800. 44:55If I get stopped out of everything that I just bought,
801. 44:59cause I'm adding, am I okay with that loss?
802. 45:01And I'll know really quick because if I, if
803. 45:05I can't sleep, if my mind is just constantly
804. 45:09thinking about my positions and what I'm doing,
805. 45:12that means my position size is way too big.
806. 45:15And I do get in those situations at the end.
807. 45:18It's not, it's not uncommon for traders to get
808. 45:21in uncomfortable positions, but if you ever feel
809. 45:24uncomfortable, then you need to bring down your
810. 45:28size, not add to your size, right? For any trader
811. 45:30that's listening to your podcast, I'd like to say it's not easy.
812. 45:34I, I trading is trading is not easy.
813. 45:38You can simplify things and make it easy
814. 45:41to a point where you have a simple system, whatever works for you.
815. 45:45And I always try to tell people that what I do and how I trade doesn't necessarily
816. 45:51mean you should trade that way. It's, it's what works for me.
817. 45:56Everybody, there are a thousand ways
818. 45:58as the saying goes, there's a thousand ways to skin a cat.
819. 46:02There are a thousand ways to trade the market.
820. 46:04You have to find what works for you and what you're most comfortable with.
821. 46:10But I will tell you that if you take big losses, you will
822. 46:15never succeed in the markets because you can't
823. 46:19trade if you don't have capital. That's a fact.
824. 46:23You can be an observer. You can sit back and go,
825. 46:26wow, I wish I would have bought the Euro there.
826. 46:30I would have wish I would have sold the S and P there.
827. 46:33But unless you have capital to trade, then you are, you don't have anything.
828. 46:38So that goes back to what I was saying earlier.
829. 46:42One of my biggest, and I have to try to reinforce this
830. 46:46with everybody I talk to you. One of my biggest
831. 46:49lessons I ever learned was just 10 years ago
832. 46:54was keep my losses small. Don't let them be big
833. 46:59because trying to make back money you lost is lost time.
834. 47:03Not only is it lost money, but it's lost time.
835. 47:07So keep your losses manageable.
836. 47:10That means if you're wrong, get out. If your idea is wrong
837. 47:16at the moment, get out. It doesn't mean it's a bad idea. It just is the wrong time.
838. 47:21Yeah. So I actually worked on an equity derivatives desk in London.
839. 47:25So there's a lot more futures and options based.
840. 47:30Whereas now I'm sort of trading, indices, FX, that sort of thing.
841. 47:36So I have developed my own strategies
842. 47:38and I would actually even say, I've been trading
843. 47:42independently 10 years now. The strategies that
844. 47:45I used when I first started to the strategies I
845. 47:48use now are different as well. So like my trading's
846. 47:52evolved and that, but yeah. So the mindset and
847. 47:55everything like that was a thing. But I think as
848. 47:58time progresses, I've evolved as a trader as well.
849. 48:00I think people seem to think just turn profitable
850. 48:05and that's all the answers. And I think one of
851. 48:08the other biggest issues that a lot of retail
852. 48:10traders have is you're undercapitalized.
853. 48:11And I think I didn't realize this when I very first
854. 48:14started trading either. I felt like I had a
855. 48:16really relatively decent paid job in London.
856. 48:19And so I had a bit of money behind me, but actually
857. 48:23when you actually get into it and you actually
858. 48:26crack the math on what you need to be able to
859. 48:30return a decent income, the realities are very different.
860. 48:33So I think a lot of people are undercapitalized. So it's not just turning profitable.
861. 48:37You then need to get the capital behind you to be able to do it. So I was fortunate
862. 48:42that I get funded to trade to get the income that I need.
863. 48:46But it's something that it's not just turning profitable and that's it.
864. 48:54And equally, like I said, it's one of the biggest things is
865. 48:58one month you might have a bit of a drawdown period.
866. 49:01So you lose a bit of money, but you still
867. 49:03got to pay your bills. Then the next month you
868. 49:05make that money back, but over a two month period,
869. 49:08you're still actually pretty flat. So you're just
870. 49:10making up your losses. So you need to structure
871. 49:12yourself and your trading and you need to treat
872. 49:14it like a business. You need to structure it so
873. 49:17that you can pay yourself and you can do that
874. 49:20without it affecting your ability to trade as well.
875. 49:23So I think that's one of the biggest issues.
876. 49:26Other than that, I think one of the major issues
877. 49:31that I've come across through my coaching traders
878. 49:36is this inability to accept losses and stuff as well.
879. 49:41So I think it's really important, or even like not just accept losses, but if your
880. 49:48strategy is not setting up to be able to sit there
881. 49:51on the sidelines and wait for that right moment to get back in.
882. 49:56So generally speaking, like I said, I'm a day trader. I generally don't like to
883. 50:01hold positions overnight. I found again, it was
884. 50:03one of the things very early in my career that it
885. 50:06would be the first thing that I checked when I woke
886. 50:09up in the morning or something like that if I had
887. 50:12a position on and it didn't make me feel, it wasn't good for me.
888. 50:16It didn't make me feel comfortable.
889. 50:19So I really like a day trading style where I wake
890. 50:23up in the morning, have no bias in the market.
891. 50:26I literally, I can follow my routine, like get
892. 50:30showered, get dressed, do my mindfulness and
893. 50:32meditation and stuff like that. Really go and
894. 50:34sit down at the markets with a clear mind and then
895. 50:36analyze it with a fresh mind rather than having a bias.
896. 50:39I think that that sort of like suits me
897. 50:42and it's not for everyone. Some people will need
898. 50:45longer term strategies like as in traders, but
899. 50:47that was what really suited me and resonated with
900. 50:49me. And from there, so that's sort of like what
901. 50:53I would classify myself as, as a day trader.
902. 50:56Other than that, my style is really, as I said
903. 50:59before, identifying the really key areas of
904. 51:02support and resistance and then attacking those
905. 51:06because by identifying the really key areas of
906. 51:10support and resistance, I have a real structure
907. 51:11and a framework to be able to attack the markets
908. 51:13because I know exactly where I'm going to be
909. 51:16entering my trades because I'm not entering
910. 51:19anywhere unless it's in one of my support or
911. 51:22resistance zones. I know where my stop is because
912. 51:24if that zone breaks, then that zone of support and resistance is no longer valid.
913. 51:28Therefore, I want to be out of the trade. And then your
914. 51:31target is a little bit more subjective, but I have other ways of identifying that.
915. 51:36So once you build up the skills of identifying the support
916. 51:39and resistance, everything else becomes quite
917. 51:42natural, quite easy to follow sort of thing.
918. 51:44Yeah, I guess that's sort of like in a nutshell
919. 51:48would be my style is like a day trader, price action, support and resistance.
920. 51:55And I would say I'm very risk focused as well.
921. 51:58I'm very, very focused on the risk of each trade, very
922. 52:03focused on the overall risk to my portfolio
923. 52:07or capital as you like, depending on which way
924. 52:11you want to look at it. And making sure that
925. 52:14emotionally any drawdown that I go through, I'm
926. 52:17able to just carry on going and carry on going
927. 52:20and making the same decisions and stuff like that.
928. 52:23So really protecting the capital and letting the
929. 52:25system play itself out, I guess. So it does take
930. 52:28a little while to build up. I mean, what I always,
931. 52:32the way that I teach, I guess, is you've got to
932. 52:36look for, I mean, again, understanding the markets
933. 52:40would be the institutions and the institutional
934. 52:43order flow is what moves the markets, right?
935. 52:45That is where the big moves come in from that.
936. 52:48So what I try and do anyway, to look for those support and
937. 52:51resistance is look for the repetitive behaviors,
938. 52:53look for the repetitive areas in the market
939. 52:55where at similar areas, the market moves strongly
940. 52:59in one direction, either as support and resistance,
941. 53:03you know, support can become resistance, resistance
942. 53:05can become support, or you have like multiple touches.
943. 53:07Once you can see that this is not just
944. 53:09any reaction, you've got to look for those strong reactions.
945. 53:12So you've got those clear swing points,
946. 53:15all in like repetitively, then you can see that
947. 53:18there's been order flow from the institutions in
948. 53:21the market there before. And therefore, there is
949. 53:24a higher probability. And I'm not going to say
950. 53:26there is because, you know, as a trader, we're
951. 53:28looking at statistics, there's a high probability
952. 53:30that there's still going to be order flow there.
953. 53:32And they're going to defend that area. And you know what, if you get the breakout,
954. 53:35then that area can become support, it doesn't,
955. 53:38and there can be order flow from the other side sort of thing.
956. 53:42So it's really that's probably how I teach it.
957. 53:44I mean, obviously, I do, it's probably
958. 53:46a little bit more in depth than that through my
959. 53:48courses and things, but I would probably be it
960. 53:50in a nutshell is looking for those repetitive
961. 53:52areas in the market where there's been strong
962. 53:55reactions from because that would indicate that the institutional order flow is there,
963. 54:03because that is what actually moves the markets.
964. 54:05Are you looking at fundamentals to back it up,
965. 54:08or only technicals? No, so I'm a believer that
966. 54:11the fundamentals will show itself within the technicals.
967. 54:15So I'm aware of fundamentals in terms of news releases and things like that.
968. 54:20And obviously, I have a bit of a bias, but ultimately,
969. 54:24because I'm a day trader, the overall fundamentals
970. 54:27may not actually really impact me on an intraday basis.
971. 54:31Because, you know, even though you may look
972. 54:35at the equity markets and go, you know what, the
973. 54:37markets are obviously bullish at the moment.
974. 54:39So therefore, we want to have a bullish bias.
975. 54:41100%, you want to look for the bullish bias, you want
976. 54:44to really aim for the areas of support, the
977. 54:47strongest areas of support to buy on pullbacks.
978. 54:50But at some point, there will be a correction
979. 54:53that doesn't change the overall fundamental
980. 54:56idea of the market. But you know, there will
981. 54:59be a period where the market retraces and on an
982. 55:03intraday basis, I can actually have a bearish
983. 55:06bias, even though the fundamentals say over time,
984. 55:09the markets are going to go up, you know.
985. 55:12So I'm aware of fundamentals. But I try not to let them
986. 55:17impact my decision making because I say, from
987. 55:20an intraday basis, if I let that bias affect my
988. 55:24decision making, I can go through, it can be
989. 55:27detrimental to it. Whereas if I go in with a
990. 55:29sort of a bit of a fresher, clean mind, I can take
991. 55:32advantage of all moves in the market sort of thing.
992. 55:35I did used to look at sort of one minute
993. 55:37charts, but I just found again for myself and
994. 55:40some people like it, like the quick reactions and stuff.
995. 55:43But I found that I like a little bit more time to make
996. 55:47sure I'm analysing the markets. And obviously,
997. 55:50the smaller timeframes that you go down, spread
998. 55:53can play a part in terms of your risk to reward
999. 55:55and how that can impact your overall performance.
1000. 55:59So I do look at a five minute, I do a lot of my
1001. 56:02analysis, I would say the main chart I do my
1002. 56:05analysis on is the one hour. So yeah, the five,
1003. 56:09the 15 and the one hour, the timeframes I generally
1004. 56:12look at for my day trading, and I would say a
1005. 56:15majority of my levels are decided from the one hour chart.
1006. 56:20I still believe that experience and discretion plays a huge part. But before you
1007. 56:26can become discretionary, you kind of have to earn
1008. 56:29it. You've got to show that you can make money as a trader.
1009. 56:33Even if it's not pretty, even if you're
1010. 56:35making just a few bucks, if you're demonstrating
1011. 56:38some consistency, and your underlying trade
1012. 56:41metrics are improving by just using some very
1013. 56:45blunt entry levels using these price levels,
1014. 56:50then you can start to factor in discretion over time. There's a great quote out there,
1015. 56:54I don't know who it's attributed to, but you
1016. 56:56have to earn your right to be discretionary.
1017. 56:59I think to be discretionary with limited experience, that's a no go.
1018. 57:05Because it's like kind of me, it's kind of like me showing up
1019. 57:08in an operating room going, I'm going to use a
1020. 57:11little bit of discretion here on this open heart surgery.
1021. 57:14I may have read the manuals, may understand it intuitively, but for me to go in and
1022. 57:19use discretion without having done any operations
1023. 57:22before, probably not going to work out so well.
1024. 57:25And I would use that same exact logic in the market.
1025. 57:29Until you really understand the nuances of
1026. 57:31how the markets work on a day to day basis in the
1027. 57:34securities you're trading, I don't think your
1028. 57:37discretion is worth anything. In fact, I think
1029. 57:39it will actually do more harm. So I think you have
1030. 57:42to-- so for me, I got many, many years under my belt.
1031. 57:46Yes, I want to start with an objective piece
1032. 57:50of data to alert me to where a trade setup is,
1033. 57:53but then I want to rely on my discretion and
1034. 57:56my intuition and my experience to maybe help me
1035. 57:58fine tune whether or not I'm even going to use that price level on this instance.
1036. 58:02There'll be days where prices will come up to these levels,
1037. 58:06and I'll do nothing. Because the market's not
1038. 58:08trading in a way that's conducive to that.
1039. 58:10And as a newer trader, you don't have that insight at
1040. 58:14that point in time in your career to really make that call.
1041. 58:17So you have to kind of start off using it very blunt.
1042. 58:20OK, we're hitting a resistance level.
1043. 58:23Market's a little overbought.
1044. 58:25Some of these other markets are rolling over.
1045. 58:28I'll get short. That's perfectly fine. That's how you kind
1046. 58:31of earn your stripes. You earn that experience.
1047. 58:35You have to be blunt initially. I mean, old habits die hard.
1048. 58:39And as someone who's been at this a long
1049. 58:42time, I definitely still have some bad habits.
1050. 58:45And you try to unlearn those habits as you learn new things, but it's very hard.
1051. 58:49But in terms of the discretion and the experience,
1052. 58:52I think once you get that under your belt,
1053. 58:55I think that's not something that you unlearn necessarily, because I think
1054. 59:00that's a level of experience that you've filtered over the years.
1055. 59:04I think the bad habits come from
1056. 59:07doing things because you didn't know any better.
1057. 59:09Then once you learn that there's a better way,
1058. 59:12that's an easy habit to break. But I don't think
1059. 59:15that level of discretion, unless you're not paying
1060. 59:19attention or you're diluting yourself, I don't
1061. 59:21think that level of discretion needs to be
1062. 59:24unlearned, because that's just like millions of
1063. 59:28data points in your head that I think if you've
1064. 59:32approached the market in the right way over the
1065. 59:34years, that will prove to be quite useful for you.
1066. 59:37So I don't think that in and of itself is a bad habit.
1067. 59:39I think it's the bad habits you did because
1068. 59:41you didn't know any better. Those need to be unlearned, and we all have them.
1069. 59:46That's why you'll never arrive as a trader in terms of
1070. 59:50figuring it out or have it figured out.
1071. 59:53Anytime I hear somebody say, "I got it figured out," I'm
1072. 59:56like, "Oh boy, you're about to be in for a rough
1073. 59:59ride," because the market's always evolved slightly. And we're always on that ongoing
1074. 1:00:06journey as a trader. That's just the nature of
1075. 1:00:09it. I am a diligent journaler. I'm also a diligent
1076. 1:00:13uploader of my trades into TraderSync software.
1077. 1:00:17I know every trade that I have. I've got everything
1078. 1:00:20very clearly defined in terms of what type of a setup it was.
1079. 1:00:25So I learn very quickly over time what's working, what's not working.
1080. 1:00:30And that may not be, let's say, a bad habit to unlearn.
1081. 1:00:32That may just be like, "That setup doesn't work anymore.
1082. 1:00:36Quit trying to make it work." So you have to journal.
1083. 1:00:40There's something about writing it down
1084. 1:00:44on a piece of paper each day that creates something
1085. 1:00:48very connecting for me, and I've heard it from
1086. 1:00:50many other traders. I journal every trade that I
1087. 1:00:53do. I don't do a lot of trades during the day.
1088. 1:00:55I might do four, five, or six. Sometimes, like today, I did two.
1089. 1:00:59If you can't journal those trades in kind of semi-real time, you really should,
1090. 1:01:04because you'll get a lot of insights from that.
1091. 1:01:07But the key stuff really comes from having those
1092. 1:01:10trades uploaded and then being able to look at
1093. 1:01:13your trading history based on time during the day.
1094. 1:01:16You may be from 7 to 8 AM. I'm here on the West
1095. 1:01:19Coast of the US. How do I trade during 7 to 8?
1096. 1:01:22What symbols do I trade well? What type of setups
1097. 1:01:24are working for me? It's like any other business.
1098. 1:01:27You have to go back, and you have to see what's
1099. 1:01:30working, what's not working. How do I make adjustments?
1100. 1:01:34So yeah, unless you have that data, and if you're not keeping track of that data,
1101. 1:01:39you're missing out on something that's going to
1102. 1:01:42really keep you continuously keeping your edge.
1103. 1:01:46I'm one of the people that has been doing it
1104. 1:01:48for a number of years. It requires a tremendous amount of work.
1105. 1:01:51Again, I'm stating the obvious, but I will get into some of the real, what I
1106. 1:01:54would consider good insights from somebody who's
1107. 1:01:57done it for a while. I've had my share of ups.
1108. 1:01:59I've had my share of downs. It's not an easy business.
1109. 1:02:04The key thing, in my opinion-- and I think most
1110. 1:02:08professional traders would hear me out here or
1111. 1:02:12see it this way-- less is more. If you're going to
1112. 1:02:17try to trade every instrument that happens to
1113. 1:02:19come across your screen or that you see on social
1114. 1:02:22media, it's going to make it really hard.
1115. 1:02:25You have to specialize. If you go to most hedge funds or
1116. 1:02:30any of the prop trading desks that are out there
1117. 1:02:32at the banks or any of the prop desks at the hedge
1118. 1:02:35funds, because they all have little pods of traders
1119. 1:02:38within the hedge funds trying to generate returns,
1120. 1:02:40everybody's got a specialty. One person may
1121. 1:02:43trade British Pound. One person may trade NVIDIA.
1122. 1:02:47They're very specialized. And if you're going
1123. 1:02:50to trade in any instrument, know that you're
1124. 1:02:53competing against somebody who's specialized
1125. 1:02:55in that instrument. They're going to have
1126. 1:02:57more insights than you, because they're doing
1127. 1:03:01it five days a week, six to seven hours a day.
1128. 1:03:05So for you to show up and go, I'm going to
1129. 1:03:08trade NVIDIA today, OK, maybe you'll do fine.
1130. 1:03:12But that nuance of not being in sync with how
1131. 1:03:16an instrument trades, I think, can be really a major blow.
1132. 1:03:20So it really requires you to have your blinders on. It doesn't matter what NVIDIA
1133. 1:03:25did today or Bitcoin or whatever.
1134. 1:03:27If you don't trade it, it's just noise. And you should discount
1135. 1:03:31the fact that you could have gone over there and
1136. 1:03:33traded it and traded it well. Maybe you could have.
1137. 1:03:36But just do yourself a favor. Stick to what you trade.
1138. 1:03:39Pick a handful of instruments to trade and trade them.
1139. 1:03:43The other thing you have to get really clear on is you've got to trade on a
1140. 1:03:48time frame that's consistent with what your
1141. 1:03:51demeanor is, your risk tolerance, your demeanor.
1142. 1:03:54I know for me personally, I knew this a long time ago.
1143. 1:03:58There was no ambiguity about this.
1144. 1:04:00I didn't want to be someone who held positions for weeks and months.
1145. 1:04:04Doesn't suit my personality.
1146. 1:04:05I knew I wanted that instant gratification, short-term bursts.
1147. 1:04:10I wanted to capture that stuff.
1148. 1:04:12So unless you're trading in a style that is consistent with
1149. 1:04:16who you are from a personality and risk tolerance
1150. 1:04:19standpoint, it'll never work. The two have to be
1151. 1:04:23in concert with one another. So I know for me,
1152. 1:04:26anything I try to push past a few days or a week or two in terms of FX or, let's say,
1153. 1:04:3310-year notes, I know that I'm out of my element.
1154. 1:04:36That's not where I want to trade. That's too long
1155. 1:04:39for me to wait to know if I've been right or not.
1156. 1:04:43So that's really important. If you can find
1157. 1:04:47someone who's been successful to kind of take you
1158. 1:04:49under their wing-- and I know that's kind of hard.
1159. 1:04:52Nobody that's really successful is going to want to take you under their wing, per se.
1160. 1:04:55But if you can get a few minutes of their advice and get some insights from them,
1161. 1:05:02that can go a long way. There's so much free
1162. 1:05:05information out there now on social media.
1163. 1:05:09It's a blessing and a curse. And I would probably say it's more of a curse,
1164. 1:05:12because you don't know what's really good.
1165. 1:05:15You don't know what that person is doing or what
1166. 1:05:18they're saying is relevant. But again, it goes
1167. 1:05:21back to maybe point number one. Only focus on
1168. 1:05:24a few instruments. Then maybe find a few people
1169. 1:05:26who trade those instruments and appear to trade them well.
1170. 1:05:29Their commentary makes sense.
1171. 1:05:31Maybe pay attention to that. But I think at the end
1172. 1:05:34of the day, you've got to find your own way.
1173. 1:05:36You've got to find a trading methodology that works for you.
1174. 1:05:39And then you've just got to grind it out until you get it figured out.
1175. 1:05:42The problem a lot of people have is when they have
1176. 1:05:45a few bad days in a row, they get discouraged.
1177. 1:05:47They're like, well, maybe I'll go try to trade this way.
1178. 1:05:51Big mistake. Being wrong is part of it.
1179. 1:05:53Being wrong is part of being in this business. And if you can't handle that,
1180. 1:05:57think about that for a while. Because by jumping
1181. 1:06:00to another style or another set of instruments to
1182. 1:06:03trade, you're only going to find that that might
1183. 1:06:05work for a few days. And you're going to hit a
1184. 1:06:06little bit of a lull again. And you're back to square one.
1185. 1:06:10Specialize. For me personally, I like trading the big markets, because the
1186. 1:06:15liquidity is there. And the action is there.
1187. 1:06:18You're going to get plenty of give and take
1188. 1:06:21during the day to allow you to capture a range.
1189. 1:06:24I think when you start to get into lesser known
1190. 1:06:26stocks, if you're intraday trading, that is, you're not going to get those moves.
1191. 1:06:30You're going to have to be in your trades longer.
1192. 1:06:32And again, maybe that's better suited to you.
1193. 1:06:34And that's fine. But I'm talking more from an intraday perspective.
1194. 1:06:37The bigger the market, the more
1195. 1:06:38liquid and the more range it is, that's where I want to be.
1196. 1:06:41I also know it's going to be super competitive.
1197. 1:06:44You're going against thousands of traders, algorithmic traders, big hedge fund
1198. 1:06:49traders, big bank traders. But you know what?
1199. 1:06:51If you sit there long enough, you'll figure it out.
1200. 1:06:55And if you use objective analysis to alert
1201. 1:06:57you to where the trades are, eventually you'll come around and you'll figure it out.
1202. 1:07:00But it takes a long time. There's no shortcut by any stretch.
1203. 1:07:04That's a very cliche way to end my answer,
1204. 1:07:07but it's absolutely true. All right, so I hope
1205. 1:07:09you got some value out of this. Let me know in
1206. 1:07:11the comment section below what your favorite
1207. 1:07:12advice was from this masterclass, what you
1208. 1:07:14will take away and apply to your own trading after.
1209. 1:07:15If there's any topic you want me to cover
1210. 1:07:17in future videos, make sure you comment below those.
1211. 1:07:19I'll make sure to get some videos around those topics.
1212. 1:07:21Now watch this video next, I think you'll like it.
1213. 1:07:23And I'll catch you back there in the video.
1214. 1:07:25Ciao.