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STEAL This INSANE Trading Strategy from The WORLD'S #1 Trader - J Law — Transcript

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0:00He is a twotime US investing trading
0:03champion in the $1 million live money
0:06division with over $350%
0:09return in 2024 and over 250% return in
0:142025 a back-to-back trading champion.
0:17>> If you are currently just trading a
0:19simple pattern breakout, your overall
0:21win rate could potentially only be
0:23around 20%. Or quite honestly, it could
0:25be even lower than that. My own winning
0:27ratio typically sits right around 40 to
0:3050%. Just drawing out trend lines,
0:32merely looking at moving averages or
0:34even trading basic chart patterns.
0:36Honestly, that is truly not going to cut
0:38it. Because if you trade this setup
0:40every single time that you see it on any
0:42chart, you are basically just trading at
0:45random. It might work or it might not
0:47work. And random trading only leads to
0:49random results. In this special episode,
0:51Jaylaw for the first time in person
0:54breaks down his multi-edge trading
0:57strategy.
0:57>> Major financial institutions know
0:59exactly how they operate. They've run
1:01countless back tests on various
1:03indicators and different technical
1:05analysis methods. In fact, sometimes
1:07they even end up using these exact
1:09[music] same strategies in reverse. That
1:12is the reason why I would never rely on
1:15just a single indicator. I always wait
1:18for multiple different edges to come
1:21together and align perfectly with each
1:24other.
1:24>> He takes us through the exact system
1:26that allowed him to be a two-time US
1:29investing champion.
1:31>> Once you build them in, I truly believe
1:33this is something that AI simply cannot
1:35replace. How can we truly prove that it
1:38is still actually effective? How do we
1:40know that major institutions will not
1:42just turn it against us? That is
1:44precisely the very reason why I [music]
1:46am now going to
1:48>> I know that everyone will be asking like
1:50what is the strategy? What is the
1:51charts? And if I'm not mistaken, today
1:53we're going to go over uh the multi-edge
1:56trading strategy.
1:58>> So where should we begin?
1:59>> First of all, let us go ahead and talk
2:01about my usual strategy for entering a
2:03trade. This strategy is actually very
2:06simple. I do not like to make my own
2:08technical analysis complicated at all
2:10and I just want to trade in the most
2:12simple and direct way possible. Usually
2:14I like to treat this particular area as
2:17a base. Once we get a momentum breakout
2:19occurring, I am going to wait for the
2:21price to pull back down to this breakout
2:23level. This level might be the previous
2:25peak of the wave which was a resistance
2:27level that now flips into a support
2:29level. And when the price returns back
2:31to this area, that is the place where I
2:33will look to make my entry. But I am not
2:35just going to enter into the trade
2:37blindly. Typically certain conditions
2:40must be met. For example, right here at
2:43this particular spot, we also have
2:45support coming from the moving average
2:47at the same time. Maybe it is a 10
2:49period moving average or it could be a
2:5220 period moving average. Either one or
2:54both. But we still have this moving
2:56average support here. And we have this
2:59support level right on the first
3:00pullback after we see a breakout occur.
3:03This is actually one of my absolute
3:05favorite trading setups that I love to
3:07trade. Now, please keep in mind that it
3:09is not always going to look quite this
3:11standard. It can easily present itself
3:13to you in a wide variety of different
3:15ways. For instance, you might see a
3:17really strong and powerful trend, which
3:19is then immediately followed by a quick
3:21pullback. At this specific level, I
3:24might not really find a solid reason to
3:26enter. But when it breaks out once
3:27again, perhaps we will see it around
3:29these areas.
3:32If we apply the exact same logic, first
3:34of all, this specific area right here
3:36represents the previous swing high,
3:38which in and of itself is a key level of
3:40resistance, but once we actually get a
3:42clean breakout above it, it can easily
3:44turn around and begin to act as a
3:46support level. And it does not even
3:48necessarily have to be a moving average.
3:50We might be able to get some waves right
3:52around this area here, and it could end
3:54up forming a new market structure in
3:56this area and a potential trend line or
3:59other similar supports. To put it quite
4:02simply, I am always looking for multiple
4:04reasons to enter into a trade. That is
4:06why I call this the multiple edge
4:08trading strategy or simply the multiple
4:11edge trading system. Now, why is it that
4:13we exactly need to have multiple edges?
4:15I am quite sure that you are all
4:17familiar with standard technical
4:19analysis and you have probably already
4:21studied plenty of these various methods
4:23before. For example, you might have
4:26already learned about various trend
4:28lines or moving averages. These can act
4:30as support or they can help you to
4:32identify key support and resistance
4:34levels. Of course, there are indeed
4:37plenty of other ways to enter into a
4:39trade. For instance, some traders will
4:41choose to rely on Fibonacci
4:43retracements, while other traders prefer
4:45trading classic chart patterns such as
4:48the cup and handle, VCP, or whatever
4:50else you might want to call them.
4:53However, if we choose to rely solely on
4:56a single indicator to guide our trading
4:58entries, the overall failure rate is
5:00going to be quite significantly high.
5:02You have probably heard this statement
5:04before, but even for the very best
5:06traders out there in the market, a good
5:07win rate is often only just around 50%.
5:11A great number of retail traders
5:13mistakenly make the assumption that if
5:15you buy a breakout like a classic cup
5:17and handle chart pattern, your overall
5:20win rate is automatically going to be
5:2250%. But in actual real world trading,
5:25that is simply not going to be the case.
5:27If you are currently just trading a
5:29simple pattern breakout, your overall
5:31win rate could potentially only be
5:33around 20%. Or quite honestly, it could
5:36be even lower than that. So what does
5:38having a 50% win rate actually mean for
5:40you? In reality, even when you are
5:42trading at your absolute best, you will
5:44only average around 50%. However, if you
5:47are simply relying on a single indicator
5:50or trading every single pattern that you
5:52happen to come across, I am absolutely
5:54certain that your win rate is going to
5:56be well below 50%.
5:58That is the reason why I would never
6:02rely on just a single indicator. I
6:05always wait for multiple different edges
6:07to come together and align perfectly
6:10with each other. Now, if we take a very
6:14close look at this exact same price
6:16level and we see that it is lining up
6:18perfectly with moving average support
6:20along with strong horizontal support and
6:22perhaps even some angular support such
6:24as a trend line. Why is it that a
6:26trading setup at this very specific spot
6:28tends to have a significantly higher
6:30overall probability of success? Some
6:33traders trade moving averages, so they
6:35will enter here. Other traders trade
6:38horizontal support getting in at this
6:40level. And some traders trade trend
6:42lines, meaning they might enter right
6:43here. That is the reason why I
6:46personally like to refer to this very
6:48specific spot as a multiple edge trading
6:50area. As you can see, when you have so
6:52many different styles of traders and
6:54investors who are all looking to enter
6:56the market at this exact same price
6:58level, it naturally builds up a massive
7:00zone of support, giving us a highly
7:02reliable, rockolid reason to enter into
7:04the trade. Now, if we take a look at the
7:07overall win rate for this specific
7:09strategy, my own winning ratio typically
7:11sits right around 40 to 50%. I would
7:15also like to point out a very important
7:17concept when it comes to the entire
7:18subject of technical analysis. While we
7:21definitely need to understand all of the
7:23basics, however, relying on basic
7:25technical analysis only is simply not
7:27going to be enough. For example, just
7:29drawing out trend lines, merely looking
7:31at moving averages or even trading basic
7:34chart patterns. Honestly, that is truly
7:36not going to cut it. As you can see,
7:38these technical analysis methods have
7:40been thoroughly studied inside and out
7:42for many decades. Major financial
7:44institutions know exactly how they
7:47operate and they employ entire dedicated
7:49teams of researchers who are constantly
7:51analyzing and applying them in the
7:53markets every single day. They've run
7:55countless back tests on various
7:57indicators and different technical
7:59analysis methods. In fact, sometimes
8:01they even end up using these exact same
8:04strategies in reverse. So if we rely
8:07solely on basic technical analysis, our
8:09success rate is certainly going to be
8:11incredibly low. As a matter of fact,
8:13Stanley Ducken Miller has recently
8:14mentioned that only approximately 20% of
8:17his technical analysis is actually
8:19effective in today's market. Now you
8:22might very well be asking yourself if I
8:24am sharing this strategy openly right
8:26now or if other retail traders are
8:28already using it, how can we truly prove
8:31that it is still actually effective? How
8:33do we know that major institutions will
8:35not just turn it against us? Does simply
8:37having multiple reasons to enter a trade
8:39or finding multiple levels of support
8:42guarantee that it is actually going to
8:44work? But in reality, that is actually
8:46not the case. Now, you might say to
8:48yourself, well, if the multiple edge
8:50trading system is eventually figured out
8:52by these institutions and more and more
8:54people start to use it, will it not
8:56eventually stop working altogether? So,
8:58how do you go about proving that this
9:00exact method will indeed continue to
9:03remain effective in the long run?
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10:56at Apex today. Let's get back to the
10:58episode. Now, simply understanding this
11:01basic concept is not going to be quite
11:03enough on its own. At the end of the
11:05day, these are really just fundamental
11:07technical analysis tools. Sure,
11:09combining them together can definitely
11:11help to boost your overall win rate, but
11:14it is still a very long way from being a
11:16consistently profitable strategy that
11:18you can truly rely on over the long
11:20term. And that is precisely the very
11:24reason why I am now going to integrate
11:26three additional factors into the
11:29multiple edge trading system.
11:33Together, they are designed to help the
11:35multiple edge trading system maintain a
11:38durable edge over the long run. Now, the
11:40very first key to making this strategy
11:42work is that we actually need to add an
11:44extra layer of an edge to it, which is
11:46what we call the cognitive layer. To
11:48start things off, we really need to
11:50fully understand exactly what the true
11:52essence and the underlying logic of
11:54technical analysis are truly all about.
11:57Whenever you are looking at any
11:59particular kind of price movement, if it
12:01is indeed going to develop into a
12:03sustained long-term trend, it absolutely
12:05has to be powered by a very strong
12:08fundamental drive. And in the vast
12:10majority of cases, that underlying
12:12fundamental drive is going to be sparked
12:14by some sort of specific catalyst. This
12:16particular catalyst could potentially be
12:19earnings that are beating the market
12:20expectations or perhaps it could be the
12:23official launch of some brand new
12:25products. It could also be triggered by
12:27the management team suddenly raising
12:29their guidance, thereby bumping up their
12:32future forecast or outlook. Typically,
12:35as soon as these catalysts actually
12:37begin to kick in, you will see an
12:39immediate and incredibly sharp upward
12:41movement on the chart. And whenever that
12:43particular event happens, I personally
12:45always like to refer to this specific
12:47kind of rapid spike as a momentum move.
12:50Now, if you go ahead and open up your
12:52charts, you will easily find plenty of
12:55these multiple edge trading areas. But
12:57the honest truth is, not every single
12:59one of these setups is actually going to
13:01trigger a real momentum move. For
13:04myself, I usually need to see a very
13:07clear momentum move happen first. It is
13:09only then that I will look for a
13:11multiple edge trading area further down
13:14the line in order to get my entry. For
13:16example, let us say that a bottom
13:18suddenly forms right here and we get
13:20this really strong bullish candle which
13:23is maybe surging by 25%.
13:27Right after that has happened, we saw
13:29that it was followed by some incredibly
13:31strong bullish candles driving the
13:33market price straight upward. Now, when
13:35you see a massive runup like this, it
13:38can be extremely difficult to find a
13:40low-risk entry point to get yourself
13:42into the trade. And that is precisely
13:44the reason why I always prefer to wait
13:46for a market pullback. Now, typically
13:49these very strong momentum moves are
13:52going to be accompanied by a massive
13:53amount of trading volume. And if the
13:55subsequent pullback that we see after
13:58that move comes on very low trading
14:00volume, well, that right there is
14:02exactly what is going to give us a brand
14:04new trading edge. As you can see, there
14:07is this massive surge in buying
14:09pressure. But when the price pulls back
14:11again, the selling pressure is
14:12relatively low. I always like to call
14:14this setup a high volume breakout paired
14:17with a low volume pullback. For me, this
14:19very specific combination represents a
14:22major part of my trading edge. Now,
14:25whenever the market price pulls back to
14:27a very obvious area where multiple
14:29support levels align with one another,
14:31it will usually offer you an incredibly
14:34favorable risk-to-reward ratio for
14:36making your market entry. From there,
14:38you can very easily place your stop-loss
14:40order at a very reasonable distance just
14:43below this META level. Let us say
14:45somewhere around 3 to 5%. Sometimes, if
14:48you happen to get lucky, you might even
14:50be able to utilize a tight 2% stop-loss.
14:53Most of the time, once these momentum
14:55moves actually kick in, there is going
14:57to be a continuation trend following
14:59behind them. That trend is not going to
15:01end anytime soon. If your analysis is
15:04completely correct right now, if your
15:06own analysis is indeed correct, you can
15:09certainly expect the very next major
15:11swing move to fully play itself out. And
15:13the subsequent follow-through on that
15:15particular move can be absolutely
15:17massive, both in terms of its overall
15:19price range and how long the trend
15:21itself actually lasts. This is precisely
15:23what makes it an incredibly high
15:25risk-to-reward trading setup. With this
15:28setup, you will be able to utilize a
15:30tight stop loss of around 3% to 5%
15:33aiming to capture a massive move of over
15:3625%. And just like I have mentioned to
15:38you before, my ultimate goal is always
15:40to target those five R trades. Now, when
15:43we look at the long run, I might not
15:45always be able to hit a 5:1
15:48risk-to-reward ratio because my
15:50long-term profit factor usually hovers
15:52right around three. So looking back at
15:54the specific trading plan that we have
15:56just laid out where we have established
15:58a 5% stop-loss level, how exactly should
16:01we go about managing our position
16:03sizing? Let us assume that your account
16:05balance is 100,000 and we are going to
16:07use a 0.35% maximum draw down per trade.
16:10This simply means that if you lose this
16:12trade, you will lose 0.35% of your
16:14entire trading account.
16:17If we assume that your entry price is
16:18100 and you decide to set a 5% stop
16:21loss, that is going to put it at exactly
16:2395, this means that you will need to buy
16:25exactly 70 shares. Now, if this trade
16:27actually hits your stop- loss, you are
16:29going to lose a total of $350. But on
16:31the flip side of things, if you win, and
16:33let us say that you hit a 25% target,
16:35you will walk away with a total profit
16:37of $1,750.
16:40Now, please keep in mind this is just a
16:43rough estimate. In reality, you might
16:44only walk away with a 3R return. Or if
16:47good luck is on your side, this trade
16:49could very easily run all the way up to
16:5110R.
16:52All right. Now, let us proceed directly
16:54to our second factor. This second factor
16:57is completely about having another
16:59layer, which I personally like to refer
17:01to as the intuitive layer. In the
17:03English language, we would typically
17:05refer to this as
17:08So, what exactly does all of this mean?
17:11Well, it is really all about identifying
17:14the hottest themes that are driving the
17:16market right now. We need to understand
17:18exactly where the smart money is
17:20actually flowing, which specific
17:22industries are gaining the most
17:23momentum, and what particular types of
17:25stocks are leading the charge. As a
17:27general rule, whenever a specific market
17:30theme becomes hot, we are very likely to
17:32witness a truly powerful momentum move,
17:34which almost always triggers a massive
17:37sectorwide rally. Right? So if you are
17:40indeed able to do this whenever you see
17:43certain individual stocks suddenly
17:45starting to surge upwards or perhaps
17:47when an entire group of stocks begins
17:49rallying all at the same time and then
17:51you are easily able to very quickly
17:53pinpoint the exact reason behind it.
17:55What is the actual underlying logic that
17:57is driving that upward move? This will
18:00actually increase your chances of
18:02successfully finding the right multiple
18:05edge trading areas.
18:07Now, this particular kind of intuition
18:10might not be obvious at first. You
18:12really have to look closely at a few
18:14specific companies in order to see it.
18:17At the very moment you first see a
18:19market starting to rise, the chances are
18:21that very few people actually know
18:23anything about it yet. That is precisely
18:25the moment when you need to step in
18:27early to uncover the real underlying
18:29reasons driving those specific companies
18:32and use that very same logic to figure
18:34out exactly which other industry sectors
18:37are also going to benefit. Typically
18:39speaking, when one group starts to move,
18:41it naturally drives another group
18:44higher. So whenever this happens, you
18:46will begin to see momentum building
18:48across different groups. By focusing on
18:50these specific areas in order to find
18:52our entry opportunities, we will be able
18:54to significantly increase our overall
18:57win rate. So, why is it that I am so
19:00confident that these two edges will
19:02never change? Let's take a break for a
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19:54back to the episode because absolutely
19:56no matter how well these major financial
19:59institutions understand technical
20:01analysis, it does not change their
20:03underlying reasons for investing in any
20:05given company. At the very end of the
20:07day, their decision to buy is always
20:09going to be driven by solid fundamentals
20:12and whether that particular company or
20:14its industry is truly aligned with the
20:16trends of the future. Now, at this
20:19particular point in time, they are
20:21actually going to use real money in
20:23order to buy up these assets or to
20:25acquire these companies. And that is
20:27something that is absolutely never going
20:29to change. So, that brings us directly
20:31to our third edge, which is what we
20:33refer to as a technical edge.
20:37Right now when we are talking about
20:39having a true technical edge, it is not
20:41simply about knowing the basics of
20:43technical analysis. You really do have
20:46to learn to read between the lines and
20:48understand what is actually happening
20:50behind the charts. You truly need to
20:52grasp the deep core logic and know
20:54exactly why these patterns are actually
20:57working. Now much more often than not
21:00when you are looking at an exceptionally
21:02strong company or a highly dominant
21:04industry their charts will already start
21:06showing you a few things that constantly
21:08remain the same. And the very first
21:10constant that you will see is going to
21:12be its RS or relative strength.
21:17As you can see, when we take a look at
21:19the market and we find that there are
21:21certain individual stocks or specific
21:23sectors that are completely
21:25outperforming the broader market index,
21:27demonstrating an incredible amount of
21:29relative strength, it is a very clear
21:31sign indeed that major institutional
21:34capital is actively prioritizing those
21:36companies. Whenever the broader market
21:39rises, these stocks tend to shoot up
21:41even higher. When the market goes
21:43sideways, they can still manage to grind
21:45their way upward. And when the market
21:47drops, they will only dip slightly, hold
21:50steady, or even keep on climbing. This
21:52is the classic concept known as relative
21:55strength, which was pioneered early on
21:57by William O'Neal and Stan Weinstein.
22:01And the second constant that we can rely
22:03upon is the market structure. In any
22:06uptrend, you will always see the price
22:08making higher highs. This is something
22:10that institutions simply cannot
22:12manipulate. Therefore, I use these three
22:15edges to guide my multiple edge trading
22:17system. Right now, I always try to make
22:20sure to focus on those setups that have
22:22at least one of these three key factors.
22:25But you always have to keep in mind that
22:27these three factors actually influence
22:29each other. They do not just exist in
22:31complete isolation as they often overlap
22:34and are deeply intertwined with one
22:36another.
22:37Therefore, in order to wrap things up
22:40with a quick summary, whenever we are
22:42utilizing this multiple edge trading
22:44system, if we choose to incorporate
22:46these three additional key factors,
22:49first of all, institutions themselves
22:52actually use this exact approach when
22:54they buy stocks. They are putting real
22:56money on the line to invest in companies
22:58with solid growth potential, strong
23:01narratives, and clear catalysts. or they
23:04look for assets that are closely tied to
23:06major future trends since they are
23:08deploying actual capital. This is the
23:10exact methodology they rely on.
23:14Second, by integrating these three key
23:16factors, it makes our multiple edge
23:19trading system incredibly difficult for
23:21other institutions to exploit. Honestly,
23:24these three elements represent the
23:26absolute core, the most fundamental
23:28logic of technical analysis. And once
23:30you build them in, I truly believe this
23:33is something that AI simply cannot
23:35replace because you are no longer just
23:37trading randomly. Taking a trade
23:39whenever you happen to see a chart
23:41pattern or a confluence of edges.
23:43Instead, you have a very clear and solid
23:46reason, an actual driving force that
23:48guides your technical entry. And that,
23:50in my personal opinion, is something
23:52that cannot easily be replaced, not even
23:55by artificial intelligence. I've let
23:57you, you know, cover it all and it's
23:58such in-depth and you can see why it's
24:00obviously named the multiple edge
24:02trading uh system and I love the
24:04three-step process as well. And just a
24:06few questions before we go on to the the
24:08charts. So one being uh in regards to,
24:12you know, because it's the multiple
24:14layers and the multiple edges uh put
24:16together. Is that why the number of
24:18trades you take is actually much lower
24:20than some of the other stock traders
24:22I've spoken to where they're taking
24:23maybe a thousand trades in a in a year.
24:26you're taking as we talked about like
24:27over just over 200 in a year.
24:30>> That is absolutely correct. Yes. Just as
24:33I had explained to you during our
24:35previous interview together, I would
24:37define myself these days as being more
24:39of a medium-term trader. The primary
24:41time frames that I focus on are the
24:44daily and the weekly charts. But even
24:46though I have said that to you, I do
24:48occasionally drop down to the hourly
24:50time frame in order to help guide my
24:52actual market entries. But speaking
24:54personally, I am mainly looking for
24:56sustainable market moves on the daily or
24:59weekly charts. So because of that
25:01reason, my actual trade execution
25:03frequency is much lower. In the end, I
25:05think that every trader has a different
25:07style. If you are actively looking to
25:10achieve your goals through high
25:12turnover, specifically through the use
25:14of short-term trading, then you will
25:16absolutely have to increase your overall
25:19trading frequency. And really, that is
25:21exactly what the concept of turnover
25:24rate is all about. Now, if you are a
25:27short-term trader, you do not really
25:29need to have all of this. You only need
25:31to spot those quick market movements on
25:34the 5-minute or even the 1 minute chart.
25:36But if your lifestyle and schedule do
25:38not allow for that, perhaps you have a
25:40busy full-time job or a family that you
25:43have to take care of, then trying to
25:45execute a thousand trades is simply not
25:47going to be realistic for you. Yeah. And
25:50that is exactly the stage I'm at right
25:53now. That is why I really need to slow
25:55things down so I can build a stronger
25:57edge for myself and make sure my trading
26:00system keeps maintaining a positive
26:02expectancy. And then in terms of uh
26:06stock selection outside of the the theme
26:09and what's happening within the groups
26:11is there particular criteria you need to
26:13see in terms of uh the volume or in
26:16terms of uh the market share uh to be
26:18able to still trade that stock?
26:20>> Yes, that is absolutely true. Just like
26:23I have mentioned to you earlier, first
26:25of all, you really do need to see
26:27genuine trading volume and volume is
26:30something that never lies. But a single
26:31day of volume, well, you see, it can
26:34sometimes be a little bit uncertain and
26:36difficult to read. But if you happen to
26:38have multi-day volume, something like 2
26:41or 3 days of continuous high volume that
26:44just keeps on coming in, these rising
26:47bullish candles are showing us very
26:49clearly that institutions are actively
26:52stepping directly into the market. We
26:54are not simply seeing a few small funds
26:56or minor players dipping their toes in,
26:58but rather we are seeing a massive wave
27:01of continuous, highly sustained buying
27:03pressure. Institutions rarely buy
27:06everything in a single day. If they
27:08truly believe the thesis is solid and
27:10the company is real, they'll just keep
27:12buying, accumulating their position over
27:14and over again. And usually when you
27:18have an exceptionally strong theme or a
27:20highly powerful catalyst that is able to
27:23sustain itself over a much longer period
27:25of time, you will definitely want to
27:27look at the daily volume. But for my own
27:29part, I actually prefer to focus on the
27:32dollar volume rather than simply looking
27:34at just the standard trading volume. We
27:36are typically looking at over $100
27:39million. And quite honestly, even with
27:42small cap or lowerpric stocks, if there
27:44is a really strong catalyst that is
27:46driving them, even if it is just in the
27:48short term, their average daily dollar
27:50volume can very easily shoot up,
27:53sometimes even hitting $500 million in a
27:56single day or potentially even more than
27:58that amount. Once the daily trading
28:00volume successfully crosses the 1
28:02billion mark, you will begin to see a
28:05massive influx of institutional players
28:07and market participants. Having that
28:10kind of established footprint in place
28:12makes everything feel so much more
28:14solid.
28:15>> And then in terms of the multiple edge,
28:18is there a specific number before you
28:20can execute a trade? So we've talked
28:22about the how high volume uh breakout
28:26for example and the low volume pullback.
28:28Uh we have the uh support resistance. Uh
28:31we have uh the EMAs for example or or
28:35the market averages sorry. Um, is there
28:37a specific number of edges before you
28:40can execute a trade?
28:42>> All right, so what I truly do love about
28:45this particular strategy is the way that
28:47it allows everyone to build their very
28:49own multiple edge trading system. Now,
28:52my own personal system might be
28:54completely different from yours, but how
28:56many of these edges do we actually need
28:58to have? And is it absolutely necessary
29:01for us to use moving averages or trend
29:04lines and other things like that? Let's
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31:22Now, let's get back to the episode. Now,
31:25you do not have to use my specific
31:27method. You can very easily choose to
31:29use your own just as long as you have
31:31multiple reasons for your trades. For
31:33example, if you use the MACD indicator
31:36or perhaps the RSI or whatever other
31:39technical analysis tools you have found
31:41to be highly effective in the past, you
31:43can certainly use all of that in order
31:45to build your own multiple edge trading
31:47system. So, where exactly did this whole
31:50idea come from? Let us take Warren
31:52Buffett for example. I truly believe
31:55that he has a multiple edge trading
31:57system just like Peter Lynch. But what
32:00exactly is his competitive edge? It most
32:03likely comes from his own personal set
32:06of metrics. For instance, Peter Lynch
32:08famously used the PEG ratio. Or maybe it
32:10is all about the price to book ratio. He
32:13simply has his own unique set of
32:15filters. Just in the same way as Warren
32:18Buffett, whenever he looks at a
32:19company's financial performance, he
32:21always has his own unique angle. He
32:24might see an economic moat or have other
32:26specific reasons before making a final
32:29decision. Of course, they are very
32:31long-term investors, so their filters
32:33are much stricter and their selection
32:35process is incredibly precise, but the
32:38underlying idea remains exactly the
32:41same. We are simply using different
32:43filters to increase our level of
32:45certainty when we are entering a trade.
32:48Now, the second question is how many
32:50edges do you actually need? Honestly,
32:53there is really no absolute rule here.
32:56The more edges you look for, the lower
32:58your overall trading frequency is going
33:00to be because trying to align edges A,
33:02B, C, D, and E means your setups will be
33:05incredibly rare. On the flip side, if
33:07you require fewer edges, you will find
33:10yourself trading much more often, but of
33:12course, you will lose that extra layer
33:14of protection. Sure, the overall win
33:17rate might be on the lower side, but
33:19that is really not the most critical
33:21factor for us here. When we are trading,
33:23we need to look at the bigger picture
33:25and take a much more holistic approach.
33:28We always have to think in terms of the
33:30whole context. Within that particular
33:32context, a certain edge becomes so much
33:35more important. Let us take a strong
33:37momentum move for example. Even then,
33:40the actual way that it shows up can vary
33:42quite a bit. Whether it is a 25% gain in
33:45a single day or even as much as 60%. If
33:48that is indeed the case, then this edge
33:51is actually already strong enough. And
33:53when your reasons are fully solid,
33:55sometimes simply having two edges is
33:58more than enough to take a trade. Now, I
34:00also want to add another layer of depth
34:02to this cognitive edge, which is the
34:04capacity for contextual thinking.
34:08>> I love that. And then to follow up with
34:10that, would you say that you have to
34:12start within this order in terms of
34:14these three steps? Would you start with
34:16your cognitive edge, move on to your
34:18intuitive, and then to your technical um
34:21versus like starting with a technical
34:23edge and then sort of building the rest
34:25around it?
34:26>> Well, there is not just one single fixed
34:29way of doing this. Just like I have
34:31explained to you earlier, these three
34:33elements do actually influence one
34:36another. In just a moment when we pull
34:38up the charts, I will show you exactly
34:40how you can apply this very flexible way
34:43of thinking. I am not looking at just
34:45one single edge on its own. It is all
34:48about seeing which one plays out first
34:51because we really need to think in the
34:53proper context and put all of these
34:55pieces together. Final question for you,
34:58I promise. Uh we've looked at a long
35:00example here. Is it the same in terms of
35:02the multiple edges uh trading system and
35:04and this same concept when you do take
35:06any short trades as well?
35:08>> Yes, it works in the exact same way.
35:11Honestly, long and short positions are
35:13just mirror images of each other. An
35:16uptrend on the long side always makes
35:18higher highs and a downtrend is just the
35:20exact opposite. More often than not, the
35:24absolute best shorting opportunities
35:26will always come directly from a strong
35:28momentum move. you will get some
35:30incredibly massive news which is
35:32followed by a huge gap down creating a
35:35giant candle that drops the price by
35:3730%. And then if you were to actually
35:40flip the chart upside down, well that is
35:42exactly what a perfect short setup is
35:45going to look like. When you see
35:46something like this, for example, a big
35:50candle down 30%.
35:53Right now, whenever the price pulls
35:55back, this specific level was resistance
35:58and then it became support. But after
36:00the breakout occurs, it flips right back
36:02to resistance with a key moving average
36:05sitting right here. This exact spot
36:07becomes a strong multiple edge trading
36:10area for the short side.
36:12>> I love that.
36:13>> But I do really want to warn you about
36:16this. the specific skills and the
36:18mindset that you will need for the short
36:20side are actually going to be much more
36:23demanding than when you are going long
36:25because when you are shorting everything
36:27is compressed and things move incredibly
36:30fast. So your reaction time has to be
36:32absolutely lightning quick and
36:36at the end of the day any stock can
36:38suddenly gap up 80 or 100% especially
36:42when you're dealing with pharma
36:44companies. So compared to going long,
36:46the risk on the short side is just so
36:49much higher and it really demands a much
36:52more advanced skill set. Perfect. And
36:54then now we're going to go over some
36:55chart examples. So now that we've gone
36:58over the sort of picture perfect and the
37:00details of the trading system. Now we're
37:02going to go through actual chart
37:03examples to showcase what this looks
37:06like in reality, as well as examples of
37:09how to enter and execute around that as
37:11well. But yeah, JLo, you feel free to
37:14take it away.
37:15>> All right. So, what we have right here
37:17in front of us are some realworld
37:19trading examples. Let us begin by taking
37:22a look at this Google chart to see how
37:24we are able to actually apply a multiple
37:27edge trading system. First of all, let
37:30me just clear this off of the screen.
37:32Right now, I am going to turn on this
37:35magnet tool so that I can demonstrate to
37:38you exactly how and why these price
37:41movements play out with such an absolute
37:44and perfect level of precision.
37:47For example, if we connect this swing
37:50high to this other swing high over here,
37:52you will be able to see exactly how the
37:55price reacts to this trend line as a
37:57level of support. Now, you are going to
37:59see this exact kind of setup on a very
38:02large number of different charts. But
38:03the honest truth of the matter is that
38:05not every single setup is actually worth
38:08trading. Now, let me show you exactly
38:12how I applied what we have just
38:13discussed to this specific trade rather
38:16than taking any other setups. Because if
38:18you trade this setup every single time
38:20that you see it on any chart, you are
38:23basically just trading at random. It
38:25might work or it might not work. And
38:27random trading only leads to random
38:29results.
38:31So why is this specific level MEA? Well,
38:35first we had an earnings report here
38:37that caused a gap up. This whole section
38:40is actually a clear momentum move. We
38:43really do need to look at each of these
38:45stocks individually. Sometimes these
38:48momentum moves are not going to be
38:50textbook perfect. Please remember that
38:53this is a mega cap company. It is very
38:55rare indeed to see a single candlestick
38:58give you a 20% jump. That just does not
39:01happen with stocks of this size. If it
39:03really happens like that, it's actually
39:05a very very uh good news. That's why it
39:08will be done. So if we truly want to
39:11look at this from a realistic
39:13perspective, when a massive mega cap
39:15corporation delivers a 14% price move in
39:19just slightly under a single calendar
39:21month, that is something which really
39:23has to be considered as an incredibly
39:25strong and powerful upward rally. If we
39:29can fully understand why the stock has
39:32been lagging behind, it actually makes
39:35these latest earnings results much
39:38easier for us to grasp. If you take a
39:41look at the S&P 500 up here, by the
39:44month of June, it was already back near
39:46its all-time high, but Google was still
39:49struggling during that time, just trying
39:51to find a way to get past its 200day
39:53moving average. It was extremely clear
39:57that the company was lagging behind at
39:59that time. But starting in the month of
40:02July, it really began to pick up that
40:05upward momentum once again. As you can
40:08see, it has been climbing for days. Just
40:10a continuous move upward. 1 2 3 4 5 6 7
40:158 9 10 straight days of solid gains plus
40:19that gap up on earnings. So right here
40:22you can actually see that something
40:24significant has changed and we really
40:26need to understand exactly why this
40:28shift is happening. If you look at the
40:30earlier section there is no RS line
40:33here. But starting from July 10th the RS
40:36line suddenly reappears. So we really
40:38need to figure out exactly why that is.
40:41These days using AI is so convenient.
40:44You can just ask it why Google has been
40:46lagging behind. Why the stock dropped so
40:49much and why it struggled to rally and
40:51the answer is simple. The market is
40:53deeply worried that Google will end up
40:55as a victim of this AI revolution and
40:58might actually turn out to be a loser.
41:00Back in those days, people were
41:02constantly turning to AI and chat GPT to
41:06find their answers. And that really got
41:08the market wondering, do we even need to
41:11use search engines anymore? If the
41:14demand for search engines disappears,
41:17their advertising business, which is
41:19their primary source of revenue, will be
41:22severely impacted. This means their
41:24future earnings are certainly going to
41:27suffer. That is exactly why the stock
41:29has been so weak lately, reflecting
41:32these major concerns.
41:34After these uh performance results were
41:37released, this was the turning point.
41:40Once these earnings results were
41:42released, the market saw that their
41:44advertising business still grew by 10%.
41:47Even with the potential threat of
41:49artificial intelligence, their search
41:51engine ad revenue managed to climb by
41:5410% clearing up all of those previous
41:57concerns. And that is exactly why we saw
42:00this post earnings gap up. We did see a
42:04pullback after that, but the broader
42:06market was also pulling back at the
42:09time. Therefore, even though the stock
42:12gapped up after earnings and then pulled
42:15back a little bit, this pullback is
42:17actually a wonderful buying opportunity.
42:20Now, if we take a look at this drop on
42:22August the 1st and then compare it to
42:24the SNP index on the same day, just like
42:27what we saw with Google earlier,
42:31now this very specific drop actually
42:33occurred back on the 1st of August, at
42:35which point the price of the stock fell
42:37by 1.44%. At that exact same time, the
42:40S&P 500 index was down by 1.64%. So,
42:44with the S&P 500 itself dropping by
42:461.64% 64% for a stock with a beta value
42:49of over one to actually drop less than
42:51the broader market. That really does
42:52show some incredibly solid relative
42:54strength. Secondly, while the broader
42:57market gapped down and broke below the
42:5920 MA on that particular day, Google
43:02actually just pulled back right to its
43:04own 20 MA. It did not break below that
43:07line at all. Instead, managing to hold
43:09itself just slightly above that key
43:11technical level. Right now, when you
43:13take a look at the RS9 rating, it very
43:16clearly demonstrates that this recent
43:19pullback was quite simply due to a much
43:21broader market correction. It was not
43:24caused by any internal issues with the
43:26company itself. It was merely being
43:28dragged down by the overall market and
43:31that is precisely where we can obtain
43:33our fundamental edge. Secondly, the
43:36trend line itself which was a resistance
43:39has reversed to become a support. That's
43:42the second edge. Third, we have the
43:45moving average, which is our third edge.
43:48Fourth, look at the volume leading up to
43:51this, which was steadily rising. Even
43:54after the earnings call, the volume was
43:56still massive, but by August 1st, it had
43:59dropped to a very low level. And that is
44:02our fourth edge. All right. So, that is
44:05the fifth edge of our RS strategy. Now
44:08when we look at this particular
44:10horizontal chart structure, we are able
44:12to see how this price level originally
44:15functioned as a level of resistance. But
44:18once we have obtained a clean breakout
44:20right over here, it has flipped over to
44:23become our new support level.
44:26Okay, let's extend this area out and see
44:29what happens after.
44:38A bit later on at that exact same level
44:42once it had broken through it flipped
44:44back to support thereby giving us an
44:47additional edge. Now that we clearly
44:50understand that this is a META setup we
44:53can go ahead and utilize a stop loss
44:56that makes perfect sense. For example,
44:58we can use this specific bar from July
45:0121st to serve as our primary guide for
45:03exactly when we should exit. We can
45:06place it just a little bit below this
45:08specific area right here. Because if the
45:11price action pulls back down to this
45:13level, it is going to break completely
45:15below the 20 MA, break right through
45:18this support area, and also break below
45:21this key trend line support. If that
45:23indeed happens, our entire setup is no
45:26longer going to be valid. So, this is a
45:29logical spot for a technical stop. If
45:32you give it a bit more room with a wider
45:34stop, then your position size would
45:36probably be a bit smaller. But right
45:39here, it would be a relatively tight
45:41stop. So, your position size can be
45:43larger. If you enter in this area, you
45:45only need about 1.6% as uh your stop.
45:49So, your position size can be bigger.
45:51But if you uh want to slightly increase
45:54your success rate and if you don't mind
45:56you can use a stop of around 2
45:58something% uh as your exit guide that
46:01means your position size would be a bit
46:03smaller.
46:05But even if we are going to look at the
46:06situation in that particular way, if you
46:09are simply looking to target a very
46:11quick and short-term trade and we decide
46:13to use the previous swing high right
46:15here as our profit target, the total
46:17distance to get to that point actually
46:19gives us a really solid return of 9%.
46:24Now, if this particular setup actually
46:26works out for us and the exact direction
46:28that we are anticipating holds true, we
46:31can usually expect to see a breakout
46:33right to this level. Although it might
46:34take a slightly longer time frame to get
46:36there. And if that indeed happens, the
46:38overall profit potential is going to be
46:40much much bigger. But even if we are
46:43only looking back at the previous swing
46:45high as our potential resistance target
46:47level, you are still going to be looking
46:48at a 9.4% rate of return versus a risk
46:51of only 2 something%. Therefore, that
46:54easily gives us a really solid
46:56risk-to-reward ratio of approximately 4
46:58to 5 R. And if you should actually end
47:01up getting lucky in love, the potential
47:04risk-to-reward ratio that you are going
47:06to get further down the line is going to
47:07turn out to be absolutely massive.
47:10Immediately right after that, we saw a
47:12whole wave of other positive news coming
47:14out, including brand new updates on
47:16their own TPU and of course all of the
47:18massive buzz surrounding Gemini itself.
47:21All of these strong developments really
47:22came together at the same time, acting
47:24as a major catalyst that kept on pushing
47:27Google's stock market price higher and
47:29higher. Therefore, you will see that for
47:31a stock price to sustain a long-term
47:33uptrend, it absolutely must possess
47:35extremely solid fundamentals. And
47:38looking closely at fundamentals is not
47:40simply about reading charts or analyzing
47:42financial statements. It is really about
47:44whether that particular company still
47:46possesses genuine growth potential for
47:48the foreseeable future. Now, the key
47:50factors that I have just mentioned such
47:52as these TPUs and Gemini are truly the
47:55core drivers for the company's future
47:57long-term growth. You see, whenever I am
47:59talking about the fundamentals, I am
48:01always looking directly at exactly where
48:03that future growth is going to come
48:04from.
48:06>> For you, would you uh manage your trade
48:08using the moving averages or would you
48:11be using uh the market structure?
48:13>> Personally, I prefer to use a variety of
48:16different methods to guide my exits
48:17rather than just relying solely on a
48:19single approach. This is because we
48:21really need to look closely at the
48:23unique characteristics of each
48:24individual stock for our exit strategy
48:27to make complete sense. Of course, when
48:29you are first starting out as a
48:30beginner, it is best to keep things as
48:32mechanical as possible. So, a lot of
48:34people might talk about using a fixed
48:36takerit method. For example, setting a
48:383R target or a 15% profit target or even
48:42selling into weakness like taking profit
48:44when it breaks below a moving average.
48:46There are just so many different
48:47approaches like that. However, without
48:50having the proper context and truly
48:52understanding each stock's unique
48:54characteristics, you might very well end
48:56up selling a massive winner way too
48:58early. On the other hand, a rally could
49:00turn out to be completely short-lived,
49:02yet you still find yourself holding on
49:04to it for far too long. That is the
49:06reason why you must always tailor your
49:08exit strategy based on the exact type of
49:11stock you are trading. Now, if you are
49:13currently dealing with a stock that is
49:15being driven purely by short-term
49:17momentum and does not actually have a
49:19proven business model to back itself up
49:21just yet, especially when we are looking
49:23at things such as these meme stocks or
49:26companies where the market price is
49:27being pushed up entirely by hype and
49:29storytelling, you will need to have a
49:31fixed exit strategy in place to take
49:33your profit. For example, if the price
49:36drops below the 10 or 20 MA, that is
49:40exactly when you should get out.
49:42However, if we take a closer look at
49:43this company, ultimately it is still a
49:45growth company. Now, when it comes to
49:48the category of growth stocks,
49:50especially those companies with really
49:51solid business fundamentals, you have to
49:54ask yourself this question. What is your
49:56actual level of conviction in this
49:58business? Are you looking for
49:59sustainable long-term growth? Or are you
50:01approaching this as a half trader and
50:03half investor trying to both trade and
50:05invest in it at the same time? Or are
50:08you perhaps simply looking to trade some
50:10short-term momentum here? To be sure,
50:12focusing on short-term momentum
50:14definitely works, but you are
50:16potentially going to miss out entirely
50:18on the much longer term upward runs of
50:21these major growth companies. There
50:22really is no single right answer to this
50:25question. So, in order to keep things
50:27highly practical, I would like to share
50:29a few different exit strategies with
50:30you. Actually, let us go over three very
50:32specific ways to exit. The very first
50:35way that you can exit your position is
50:37to sell your shares into strength. This
50:39simply means that when the price gets
50:41extended, you might want to sell off a
50:43portion of it depending on your
50:44understanding of the company and your
50:46overall level of conviction. If you
50:48happen to have high conviction, you do
50:50not need to sell all that much.
50:52Alternatively, you can use the second
50:54exit strategy, which is simply to sell
50:56into weakness. Now, what you are really
50:59going to want to look at is this. If it
51:01is indeed just a pure momentum stock,
51:03then the 20-day moving average is
51:05certainly going to be a really solid
51:06guide for your exit strategy. But you
51:08really do have to understand this. The
51:10market will often overshoot in this
51:12manner. It is not going to bounce
51:14exactly at the 20 MA line. There are
51:16times when it will overshoot. So you
51:18definitely need to give it a reasonable
51:20buffer, especially if you are indeed
51:22using a sell into weakness exit
51:24strategy.
51:26Now the third method actually comes into
51:28play when you are trading a specific
51:30individual stock. Especially when we are
51:32talking about those very large cap or
51:34meggaap corporations. Since these major
51:36market players already have a highly
51:38proven track record and solid financial
51:40strength, their stock prices tend to
51:42move in a very consistent and long-term
51:44upward trend. If you do not want to miss
51:46out on the entire market move and you
51:48have managed to get yourself in at a
51:50really precise and solid entry point
51:52with your position sizing dialed in
51:54absolutely perfectly, then you can
51:56simply sit back and monitor the price
51:58action, watching very closely to see if
52:00any warning signs start to show
52:02themselves. Under normal circumstances,
52:04a strong price action will tend to just
52:06ride quite smoothly along either the 10
52:09or the 20 MA. It is really only when you
52:11begin to notice some highly unusual
52:13behavior within the market that you
52:14should indeed sit yourself down and
52:16carefully decide exactly how much of
52:18your open position you will need to
52:19sell. Now, as long as the market price
52:22continues to remain riding above both
52:24the 10 and 20 moving averages, you can
52:27simply keep monitoring the chart and
52:29holding on to your open position. Then,
52:31once the price eventually reaches a
52:33certain key level, you will be able to
52:34apply a zerocost strategy in order to
52:37sell off your position. Now the
52:39fundamental idea behind this zerocost
52:41risk reduction strategy is let us assume
52:43that we have just entered the market
52:45right at this very specific price level.
52:49Now you can choose to make your exit at
52:51any given point depending entirely upon
52:54your own personal judgment. Let us say
52:56that you are holding this position right
52:58here and you see that it has gotten
52:59pretty extended already sitting on a 70%
53:02gain. And so then right from that point
53:06um if we were to do some quick
53:09mathematics let us say that you have
53:12made a 70% profit you would only need to
53:16sell 58.8%
53:18of your total position and then the
53:21remaining 41.2%
53:24of your entire original position is
53:27basically going to be at zero cost. To
53:30express this in another way, the actual
53:32profits that you have already taken out
53:34are now completely equal to the total
53:36value of your remaining open position.
53:38Therefore, even if this particular stock
53:40somehow drops all the way down to zero
53:42one day, you will not lose even a single
53:44dollar of your own hard-earned money.
53:46Now, of course, from a practical point
53:48of view, the probability of a
53:49large-scale company completely going
53:51under and hitting zero is still
53:53relatively low. Now, please keep in mind
53:55that this is just an extreme example.
53:58But when you already have an open
53:59trading position and you have managed to
54:01bring it down to a zerocost basis, all
54:03of the psychological pressure of holding
54:05that trade completely disappears. This
54:08naturally gives you a much stronger
54:09holding capacity, allowing you to ride
54:11it out for a relatively long period of
54:13time and successfully survive the normal
54:15cycles of market volatility. Right now,
54:18I do really need to remind all of you
54:20that this particular zerocost selling
54:22strategy is not going to work
54:23successfully for every single stock. It
54:25is definitely not going to be a
54:27one-sizefits-all approach because we
54:30really have to be completely honest with
54:32ourselves. There are definitely some
54:33companies out there that might not even
54:35exist in 10 years time. That is
54:37precisely why you need to have a really
54:40deep understanding and a very strong
54:42conviction about the stocks you hold
54:44knowing that in the long term they will
54:46actually exist. These are indeed the
54:49kinds of companies that will definitely
54:50be around for the very long term holding
54:53a highly vital position with a very real
54:55technological moat. Let us take a look
54:57at some real world examples. For
54:59example, right here is a stock that I
55:01have actually traded myself which is
55:03known as ISRG. Now, if we were to take a
55:06step back and look at a very long-term
55:08time horizon, you can clearly see that
55:10ever since it went public back in the
55:12year 2000 all the way leading right up
55:14to the present day, this particular
55:15stock has consistently remained in a
55:17very strong long-term uptrend. One very
55:20major reason for this is that their Da
55:22Vinci surgical system possesses an
55:24incredibly strong economic moat, which
55:26is truly the only way that they can
55:28sustain that level of performance. If
55:30you are not dealing with this specific
55:32type of company, then you should simply
55:33sell the stock outright. There is really
55:35no need for you to bother with a
55:37zerocost strategy in order to add a
55:40little bit more to this. Companies of
55:42this particular type need to possess a
55:44few key characteristics. First of all,
55:46they should be monopolytype businesses.
55:49They must hold a truly critical level of
55:51importance to the world where the entire
55:53world relies on their specific
55:54technology and we simply cannot function
55:56at all without them. Secondly, it is
55:59essential that it possesses an
56:01incredibly strong technological moat
56:03which makes it extremely difficult for
56:04others to replicate or copy and also
56:07highly resistant to being replaced by
56:09its competitors. That is absolutely the
56:12only way that they are able to command a
56:14premium and successfully build in a very
56:16healthy profit margin which ultimately
56:18keeps the entire business highly
56:19profitable and allows them to sustain
56:21their operations over the very long run.
56:23And thirdly, the industry itself
56:25absolutely needs to be a promising
56:27high-growth sunrise industry and it must
56:30definitely not be a highly mature or
56:32even a declining sunset sector. This is
56:34absolutely crucial for us because we
56:35really need to see a strong and
56:37consistent rate of growth which is the
56:39only possible way that the market will
56:40ever be willing to grant it a sustained
56:42long-term premium. Now if we look at
56:45highly mature companies with a very
56:47small amount of growth such as
56:48McDonald's or Colgate for example, you
56:51will notice that they do not really make
56:53these kinds of moves. Instead, you tend
56:55to find this setup much more often in
56:57tech stocks. And that is exactly the
56:59reason why I prefer searching the tech
57:01sector in order to find these types of
57:03opportunities.
57:05And last but not least, the corporate
57:07management team really needs to have a
57:09very clear vision and the strong drive
57:11to execute it. Things like leadership
57:13integrity, their long-term outlook, and
57:15the overall corporate culture are
57:17absolutely critical to the ultimate
57:19success of a company. If a company's
57:22management lacks integrity, for example,
57:24by getting themselves involved in
57:26fraudulent accounting, then they will
57:28absolutely never be able to become this
57:31kind of company.
57:33>> In terms of the uh the Google example
57:35that we were looking at, is it should we
57:38look at the entry of what that would
57:40look like for that particular example?
57:41Now, another trade that I took was with
57:44Rocket Lab.
57:49So, my entry point was located somewhere
57:52around these zones. To be completely
57:54honest, whether it was on this day or
57:56that day, my memory is a little bit
57:58blurry at this current point in time,
58:00but it was most definitely right around
58:02this particular area. And I am going to
58:05show you exactly why I decided to choose
58:07this spot. Okay. So right over here we
58:11are able to see a clear swing high.
58:13Okay. And then moving on to this section
58:15right over here. It actually managed to
58:18break clean through the previous
58:19resistance level. Now I would like you
58:21to pay close attention to the exact way
58:23it broke out. This move happened right
58:25after the earnings release which sent
58:27the price surging up by 12% before we
58:29eventually saw this minor pullback.
58:32To be completely honest with you, if I
58:34had only been quick enough to catch it,
58:36this exact spot right here would have
58:38been the absolute earliest multiple edge
58:40trading area. But unfortunately, I have
58:42completely missed out on it. Strictly
58:44speaking, this particular area can be
58:46considered a multiple edge trading area.
58:48This is because you have got earnings,
58:50momentum, a gap up, and then a mild
58:52pullback. During that gap up on the move
58:54higher, we can see that the volume was
58:56actually massive. But on the subsequent
58:57pullback, the volume was relatively
58:59light. And right here at this exact
59:01point, we have the 20 MA. So looking at
59:04this specific setup right here, it was
59:06actually a truly great multiple edge
59:08trading area. But unfortunately, I ended
59:11up missing it myself. Okay, so right
59:13after it finally triggered, the move had
59:15some really strong follow-through to it
59:16and it ended up surging by as much as
59:1812% on that day. So it actually hit this
59:22resistance level with a very strong
59:23bullish candle and then it subsequently
59:26continued to follow through by 12%
59:28before following through by another 9%.
59:31Now when we look at this particular area
59:34because the price has shot up in such an
59:36incredibly fast manner, it is actually
59:38going to be quite difficult to find a
59:40low-risk entry point right here. But the
59:42good news for us is you can sometimes
59:44count on the market itself to provide
59:46you with another opportunity. Now once
59:49it pulls back directly right to this
59:51particular area, this specific position
59:53is going to be the exact location where
59:55your META is situated. So this specific
59:58spot right here was actually
1:00:00representing our very first entry point
1:00:03back on August 28th. Okay. But then if
1:00:05we look at what happened right after
1:00:07that, the price actually broke below the
1:00:09low of that particular day. Now you
1:00:11might be wondering, should we have
1:00:12exited our trade on this day? No,
1:00:14because even on this particular day,
1:00:16this level remains a multiple edge
1:00:18trading area. Sometimes the very first
1:00:21MEA setup might not work out and the
1:00:23price could easily drop down to the
1:00:25second layer of multiple edge trading
1:00:27area. That is the reason why we cannot
1:00:29get too stubborn thinking this is our
1:00:31only possible entry point. Sometimes a
1:00:33stock's price could be influenced by the
1:00:34broad market, especially since if you
1:00:36look closely right here, the market
1:00:38actually experienced a pullback back in
1:00:40September. Right here we can see it
1:00:42pulls back along with the market
1:00:44dropping down to the next key level here
1:00:45on MEA. This is the exact swing high
1:00:48from that trading day which has now
1:00:50flipped into a level of support.
1:00:52Therefore, you really do need to keep
1:00:54this in your mind that the financial
1:00:56market is constantly overshooting. That
1:00:58is the reason why we have to think in
1:01:00terms of context. We must completely
1:01:02understand the real reason behind this
1:01:04fake breakdown and see if there is
1:01:06actually some abnormal price action
1:01:08going on right now. Let us take this
1:01:11specific day as an example which was
1:01:13September the 6th. Let us take a look
1:01:15back at what actually happened to the
1:01:17market on that particular day. The
1:01:20market dropped by 1.68%
1:01:22breaking right through the 10, the 20
1:01:24and the 50-day moving averages.
1:01:28But let us look back at the stock we
1:01:30have just mentioned. It has only
1:01:31slightly broken below the 20-day moving
1:01:33average line and it is still holding
1:01:35above the 50-day line. Please keep in
1:01:37mind that the index is already trading
1:01:38below its 10, 20, and 50-day moving
1:01:41averages. And second of all, when the
1:01:44major index dropped by 1.68%,
1:01:47this particular stock, which was a
1:01:49lowpriced, low market capitalization
1:01:51company at that point in time only fell
1:01:53by exactly 4.44%. What is more, the
1:01:56trading volume on that downward move was
1:01:58actually incredibly small. Now if we
1:02:00look at this in a much broader context
1:02:02and really apply some contextual
1:02:04thinking by taking all of these
1:02:05different factors into account actually
1:02:08when we look closely at this particular
1:02:09day you can easily tell that the selling
1:02:12pressure was not strong at all. It was
1:02:14purely driven by the broader market and
1:02:17then it actually continues to drop down
1:02:19just a little bit further. Therefore
1:02:22this setup actually provides you with a
1:02:24much better riskto-reward ratio when
1:02:26compared to that first entry point. This
1:02:28is a far more attractive level. Now, if
1:02:30you did not hold any position in this
1:02:32particular stock at all, would you
1:02:34actually consider buying shares on this
1:02:36specific day? If your personal answer to
1:02:39that question is yes, then why would you
1:02:41choose to stop out right here? Okay, so
1:02:43now as we have just finished discussing,
1:02:45we actually have a few different edges
1:02:47working in our favor here. Let us go
1:02:49ahead and do a very quick recap. First
1:02:51of all, we have a strong momentum move
1:02:53which is marked by a high volume
1:02:54breakout which is then followed by a low
1:02:56volume mild pullback. And that right
1:02:58there is indeed our very first edge. Our
1:03:01second edge is the previous peak which
1:03:03has now successfully flipped into
1:03:05support. As for our third edge, it is
1:03:07how the price is currently reacting to
1:03:09the moving average. Even though we saw a
1:03:12brief overshoot, it only lasted for a
1:03:14single day. So, we do not consider it to
1:03:16be a true breakdown. It is still holding
1:03:18strong right within this moving average
1:03:20support area. And that gives us our
1:03:22third edge. As I have already mentioned
1:03:24in my previous video, whenever we are
1:03:27conducting a market review, the most
1:03:29important thing is not simply looking at
1:03:31the chart itself. Instead, we need to
1:03:33put it into the context of the market at
1:03:35that specific time, seeing exactly what
1:03:37is moving and what is moving together.
1:03:39That is the only way for us to get a
1:03:41much better understanding of what the
1:03:43chart is actually trying to show us. If
1:03:46we go back to that specific period and
1:03:48look at other stocks in the exact same
1:03:50group, let us take a look at LUNR right
1:03:53here as a great example. You will see
1:03:55that back in the month of September, it
1:03:57was already showing some really strong
1:03:58momentum and clear relative strength
1:04:01even when the broader market went
1:04:02through a temporary pullback. This
1:04:04particular stock managed to hold its
1:04:06ground, staying right above these key
1:04:08moving averages right now because the
1:04:10other companies in this exact same
1:04:12industry group are also performing
1:04:14incredibly well right now. It definitely
1:04:16gives us a major extra edge. We are
1:04:18basically riding a really strong group
1:04:20move here.
1:04:22Now, if we go ahead and take a look at
1:04:24the stock AS, we can see that it is the
1:04:27exact same story. back at that
1:04:28particular period of time, this entire
1:04:30space themed sector was performing
1:04:32extremely well and showing a tremendous
1:04:34amount of strength. So, as a perfect
1:04:37example, once you first begin to spot a
1:04:39stock like ESTS and you really begin to
1:04:42study that entire group of companies
1:04:44while keeping an extremely close eye on
1:04:46all the other stocks in that sector,
1:04:48that is precisely the way in which you
1:04:50are going to start noticing a great many
1:04:52other excellent trading opportunities.
1:04:55This is precisely what I mean when I
1:04:57talk about having the ability to connect
1:04:59the dots and extrapolate. Once you begin
1:05:01to see a certain financial asset start
1:05:03to move and you dig deeper to understand
1:05:06exactly why that entire market sector is
1:05:08moving with it, if that underlying
1:05:10fundamental logic really makes sense,
1:05:12then you can very easily follow the
1:05:14trail to uncover other highly profitable
1:05:17trading opportunities.
1:05:19Therefore, simply rely on MEA in order
1:05:22to take a trade here is not going to be
1:05:24quite enough. What we would really like
1:05:26to see instead is the entire group
1:05:28showing some serious strength because
1:05:30when the rest of the sector starts
1:05:31moving upward together in unison, it
1:05:33clearly proves that there is a real
1:05:35underlying fundamental driving force
1:05:37behind this move. Just like I have
1:05:39already mentioned to you earlier, it's
1:05:41not about earnings since they aren't
1:05:43profitable yet. Now if we go with those
1:05:46traditional academic methods of
1:05:48fundamental analysis, they are going to
1:05:50be completely useless here.
1:05:53We need to try and understand what it is
1:05:55that the market is actually looking for.
1:05:57Now during this most recent period
1:05:59because of everything that is happening
1:06:01with SpaceX and specifically because
1:06:03their overall valuation has shot up,
1:06:05people are now really starting to focus
1:06:07on space technology. So the market
1:06:10really views this as a future trend.
1:06:12Honestly, this is all the information
1:06:14you need. Just get confirmation from the
1:06:16chart, which is absolutely crucial. And
1:06:18so that is the reason why I would
1:06:20describe myself as being someone who is
1:06:22about 70% technical. I really do need to
1:06:25see actual momentum on the charts, real
1:06:27relative strength, and a genuinely
1:06:29strong sector before I will even begin
1:06:31to look at the underlying fundamentals.
1:06:34First, I will look at the fundamental
1:06:36side to see whether or not the trade
1:06:38actually makes sense and completely
1:06:39understand the underlying logic behind
1:06:41it. From there, I will use my META entry
1:06:44method to pinpoint an extremely high
1:06:46risk-to-reward entry point.
1:06:49All right, so our next example that we
1:06:51have here is RCL. Now, the exact spot
1:06:54where I actually took this trade was
1:06:56back in the month of February of 2024,
1:06:59entering into this market right around
1:07:01this area. The main reason that I wanted
1:07:03to bring up this particular case is
1:07:05because it clearly shows how we
1:07:06sometimes need to be incredibly flexible
1:07:09when we are applying the MES
1:07:11methodology. Now, if we take a close
1:07:13look at this specific setup as an
1:07:15example, you might begin to notice
1:07:17something that is quite interesting. The
1:07:19RS actually looks to be pretty weak
1:07:21right here and the price itself is
1:07:23trading well below the moving averages.
1:07:25So, why is this still considered a
1:07:27viable spot for us to take an entry?
1:07:30Therefore, I am going to use this very
1:07:32specific example in order to demonstrate
1:07:34to you exactly how we actually need to
1:07:37incorporate these different time frames
1:07:39when we are using MES.
1:07:42Okay. So, first of all, let us take a
1:07:44quick look back at the previous section
1:07:46right here. Now, if we go ahead and take
1:07:49a look at this previous move, it was
1:07:51indeed actually an incredibly strong and
1:07:53highly powerful push. And if we take a
1:07:55look at the overall market context at
1:07:57that specific point in time, it was
1:07:59basically moving in perfect
1:08:00synchronization with the S&P 500 index
1:08:03with both of them climbing up together
1:08:05in order to reach and hit brand new
1:08:07historical highs.
1:08:09Now, if we look closely at this
1:08:11particular move, it was actually driven
1:08:13by some of the key market fundamentals.
1:08:15But this specific case is actually a bit
1:08:18unique because if you take a look at its
1:08:20peers in the very same sector, they were
1:08:22actually looking quite weak indeed. This
1:08:25stock was the one clear exception,
1:08:27completely bucking the overall trend. So
1:08:30the primary reason for this was that we
1:08:32were right in the middle of the
1:08:33post-pandemic period and people were
1:08:35very eager for some revenge travel. On
1:08:38top of that, RCL really stood out
1:08:40because of the exceptional quality of
1:08:41their cruises. Compared to other cruise
1:08:43lines, they possessed some highly unique
1:08:45advantages that made them a huge
1:08:47favorite among their customers. So that
1:08:49was indeed the exact kind of background
1:08:51we were looking at back then. And right
1:08:53after the official earnings report came
1:08:55out, the technical indicators also gave
1:08:57us a clear confirmation, perfectly
1:09:00validating all of the underlying
1:09:01fundamentals. Right now, if we look
1:09:04closely at this previous move, we are
1:09:06easily able to see a multi-day rally.
1:09:08This is a very clear sign of
1:09:10institutional buying with absolutely no
1:09:12selling pressure anywhere in sight. Just
1:09:14take a look at how those green bullish
1:09:16candles completely dominate the red
1:09:18bearish ones.
1:09:20Now when we take a look at a company
1:09:22like this particular one since it is
1:09:24actually a midsized business rather than
1:09:26simply a smallcale operation. So when
1:09:29you take a look at the S SNP500 index
1:09:32going up by 16% while this particular
1:09:35stock managed to surge by 60% over that
1:09:38exact same period of time it really goes
1:09:40to prove that it is generating some
1:09:42serious alpha and showing an incredible
1:09:44amount of strength. In addition to that
1:09:45the RS line clearly shows us that this
1:09:48is a very strong stock indeed. So right
1:09:51after a massive 60% upward rally, it is
1:09:54absolutely normal and healthy for the
1:09:56stock to enter into a sideways
1:09:58consolidation phase. We simply cannot
1:10:00just look at this brief pullback where
1:10:02the price drops down below the moving
1:10:04average and suddenly claim that there is
1:10:06something fundamentally wrong with the
1:10:08underlying company itself. However, if
1:10:11we want to look at this from a much
1:10:13higher time frame perspective, let us go
1:10:15ahead and switch over to the weekly
1:10:17chart.
1:10:19Whenever we take a look at the weekly
1:10:21chart, the price action is actually
1:10:23behaving in a completely normal manner.
1:10:25We have seen four consecutive weeks of
1:10:27steady gains which were followed by just
1:10:29a single week of a minor 1% pullback and
1:10:31then we observed another five straight
1:10:33weeks of strong upward momentum. So
1:10:36looking at this, it is really just a
1:10:38simple pullback right back down to the
1:10:4020 moving average and that gives us our
1:10:42very first edge, the moving average
1:10:44edge. In addition to that, we have the
1:10:46previous swing low here which acted as a
1:10:48level of resistance. But once the price
1:10:50broke through, it flipped over and
1:10:52turned into support. And that right
1:10:53there is what gives us our second edge.
1:10:56Thirdly, the volume during that
1:10:58multi-week rally that we saw earlier is
1:11:00actually much higher than what we are
1:11:02currently seeing over here. Now, if we
1:11:04look closely at this specific week,
1:11:06which is the week of February 12th, we
1:11:08can see that the volume has been
1:11:10steadily declining over time and the
1:11:12price has just pulled back right to the
1:11:14level of the 20 MA on this weekly chart.
1:11:18Now, if we take a look at the weekly
1:11:20chart, this is actually a multiple edge
1:11:22trading area. You might find it rather
1:11:24strange because this week we saw a
1:11:26massive drop on very high volume, but we
1:11:28really need to look at this situation
1:11:30rationally. If you look at it closely,
1:11:32the total decline for the week was only
1:11:34minus0.02%.
1:11:37Therefore, when we see a high volume bar
1:11:39like this particular one, there is
1:11:41absolutely no need for us to worry or
1:11:43overanalyze things. If you take a close
1:11:45look at the following week, we can see
1:11:47that we only saw a minor 5% drop, which
1:11:50is actually a very mild and healthy
1:11:52pullback. Because of that situation, the
1:11:54overall momentum of this entire move is
1:11:56still remaining completely intact.
1:11:58Another crucial point that you must keep
1:12:00in mind is that the high time frame
1:12:02market structure constantly dictates
1:12:04what is happening on the lower time
1:12:06frames. Let us take this area right here
1:12:08as an example. This is the weekly chart,
1:12:10a major high time frame level and it
1:12:13absolutely has the power to drive and
1:12:15shape the structure we see on the daily
1:12:16chart. Now, if you are simply looking at
1:12:19the daily chart, you really will not see
1:12:21anything standing out at this exact
1:12:23price level. There's absolutely nothing
1:12:25obvious to be seen there. So why on
1:12:27earth is the price finding support at
1:12:29this specific point? Well, that is
1:12:30because it is actually being supported
1:12:32by the 20 MA on the higher weekly time
1:12:35frame as well as the key level of
1:12:36support coming from that previous wave
1:12:38top. So there are definitely times when
1:12:41you might not be able to see any obvious
1:12:43support at a specific price level. But
1:12:45once you switch over to a completely
1:12:46different time frame, it will suddenly
1:12:48become incredibly clear to you. you will
1:12:50quickly realize that on a much higher
1:12:52time frame, that exact spot is actually
1:12:54a very solid area of support. So, if
1:12:58you're trading on a lower time frame or
1:13:00if you're a short-term trader, you'll
1:13:01notice the exact same thing. The hourly
1:13:04chart directly impacts the 5-minut
1:13:06chart, which in turn influences the 1
1:13:08minute chart. So, this is an absolutely
1:13:10perfect example that really shows you
1:13:12exactly how the core methods of
1:13:15technical analysis are actually quite
1:13:17similar. A specific price level might be
1:13:20a multiple edge trading area on a
1:13:22certain time frame. Therefore, we must
1:13:25always stay flexible switching between
1:13:27different time frames to suit your
1:13:29trading style. Core technical analysis
1:13:32is the same. A level may be a multi-edge
1:13:34area on a time frame. So, we switch time
1:13:36frames depending on your style. Look at
1:13:38this example. We need to integrate all
1:13:40key factors we discussed and blend them
1:13:42all together. So, let us go back to
1:13:44September of 2025. On September 10th,
1:13:47Oracle officially released its quarterly
1:13:49earnings report, which immediately sent
1:13:51the stock surging by a massive 35%.
1:13:55Now, if we take a look at a large
1:13:57capitalization company, a 35% surge is
1:14:00indeed incredibly rare. There has to be
1:14:03a massive and incredibly important
1:14:05catalyst working behind the scenes to
1:14:07drive such a huge upward movement. Now,
1:14:09all of this actually happened back on
1:14:11September the 10th, but at that specific
1:14:13point in time, I was not actually
1:14:15keeping an eye on this particular stock.
1:14:17I was focusing my own attention on a few
1:14:19other companies instead. And one of
1:14:21those companies just happened to be
1:14:22Nebius.
1:14:26Now, let us go back to how Oracle gapped
1:14:28up by 35% right after their earnings
1:14:31release. There is actually a very
1:14:33important and significant reason behind
1:14:35this move, and that is none other than
1:14:36their massive RPO. They currently have
1:14:38an incredibly large backlog of customer
1:14:41orders. If my memory serves me correctly
1:14:43on this, that RPO has actually reached
1:14:45the level of hundreds of billions of
1:14:47dollars. Now, when you take a close look
1:14:50at an order volume of this incredibly
1:14:52massive scale, it is absolutely and
1:14:54inevitably [clears throat] bound to
1:14:55trigger a major ripple effect, creating
1:14:57a massive chain reaction throughout the
1:14:59entire industry.
1:15:01And as I was keeping an extremely close
1:15:03eye on these AI data center companies, I
1:15:05began to see some incredibly strong
1:15:07confirmation appearing on the charts,
1:15:09which showed me that my initial thesis
1:15:11was indeed absolutely correct.
1:15:13Specifically, I distinctly remember
1:15:15watching CRWV at that particular time.
1:15:18And on that very same day of trading,
1:15:20the stock ended up gapping up by
1:15:21approximately 16%. On top of that, since
1:15:24they are both operating in the data
1:15:26center space, Nebius actually gapped up
1:15:28by a massive 49%. Which was something
1:15:31that was even more impressive. So, back
1:15:33at that time, I decided that I would
1:15:35focus all of my attention and set my
1:15:37targets specifically on Nebus. Just as I
1:15:40have already mentioned to you a moment
1:15:41ago, the recent earnings report from
1:15:43Oracle acted as a truly massive catalyst
1:15:46that boosted the entire sector. This is
1:15:48really all about having that particular
1:15:50kind of intuitive feel for the market.
1:15:52We are not simply looking at a single
1:15:54stock that is jumping by a few percent
1:15:56on a momentum move and then trying to
1:15:58find those specific multiple edge
1:16:00trading areas. There are times when we
1:16:02might start out by looking at one
1:16:04particular company because we spot
1:16:06something that is very interesting which
1:16:08then leads us to keep on digging even
1:16:10deeper until we finally find other
1:16:12stocks that are much more worth trading.
1:16:14Okay, so now let us take a closer look
1:16:16at the way we can actually trade this
1:16:19specific company when we are facing such
1:16:21a massive gap up. What exactly is it
1:16:23that we can do here?
1:16:25Now, if you go ahead and connect this
1:16:28swing high with this other swing high
1:16:30over here, you will actually be able to
1:16:31see that the very first pullback we got
1:16:33after that gap up right around the 86
1:16:36area found some really solid and
1:16:38reliable support right along this trend
1:16:40line. Then if we take a look at
1:16:42September the 12th, we can see that
1:16:44there is another pullback bouncing off
1:16:46of that exact same level with the price
1:16:49bouncing both here and here. You
1:16:52actually would have had a solid 4 days
1:16:54of entry opportunities to get into the
1:16:56market right around this 86 mark. To be
1:17:00completely honest, you do not really
1:17:02need much of an edge here. And the exact
1:17:04reason for that is precisely what I have
1:17:06mentioned to you earlier. That truly
1:17:08massive backlog of hundreds of billions
1:17:10in RPO is already an incredibly powerful
1:17:13driving force all on its own. Plus, when
1:17:15you take a look at this company, as for
1:17:17its other catalysts, I have slightly
1:17:19forgotten what else actually happened on
1:17:21that day. It was not simply Oracle,
1:17:23though. There certainly seemed to be
1:17:25other factors that caused it to gap up
1:17:27by 49%.
1:17:29There is a massive 49% gap up which is
1:17:32accompanied by an unprecedented and
1:17:34incredibly rare surge in the single day
1:17:37buying volume. When we look back, we
1:17:39have basically never seen anything at
1:17:40all like this before. So this sheer
1:17:42momentum entirely by itself already
1:17:45provides us with a highly significant
1:17:46trading edge.
1:17:49Now, whenever you experience a really
1:17:51powerful momentum push, it actually gets
1:17:54quite a bit more difficult to find a
1:17:56clear edge, such as a moving average or
1:17:58other common technical indicators.
1:18:00Instead, the market price might just
1:18:02make a simple pullback to a hidden
1:18:04support level that the vast majority of
1:18:06people completely overlook, but it finds
1:18:08support right there, and then it just
1:18:10continues heading straight back up.
1:18:16Now, if we look closely beyond this
1:18:18immediate area, if we actually zoom in
1:18:20and drop down to a much lower time
1:18:22frame, you are going to clearly see that
1:18:24it gives us a great number of excellent
1:18:26entry points. For example, right at the
1:18:29moment when we experience that first day
1:18:31drop and the market pulled all the way
1:18:32back to this exact spot. This specific
1:18:34level was already serving as a very
1:18:37clear and natural support. Additionally,
1:18:39when we look at the lower time frame, we
1:18:41can see that we have support from the
1:18:43hourly 20 MA. This actually provides us
1:18:45with a great lower time frame trading
1:18:47area with multiple different edges.
1:18:50Therefore, on the lower time frame, we
1:18:52are getting our very first edge with a
1:18:54momentum move, which is defined as a
1:18:56high volume breakout followed by a low
1:18:58volume pullback. we are pulling right
1:19:00back into this 20 moving average
1:19:03aligning directly with the second leg of
1:19:06that previous double bottom pattern. On
1:19:09top of all that, when we look at the
1:19:11higher time frame, we can see a daily
1:19:13trend line here flipping from resistance
1:19:16into support, giving us an excellent
1:19:19additional edge from the higher time
1:19:21frame.
1:19:23Now, if you should decide to enter the
1:19:25market right here, even though it has
1:19:27already gone up by as much as 50%, there
1:19:30is still going to be another 50% move
1:19:32left in the short term, which gives you
1:19:34some really solid potential upside to
1:19:36work with.
1:19:38As you can clearly see, because this
1:19:40company constantly requires a very
1:19:43massive amount of capex, they still have
1:19:46not been able to successfully prove that
1:19:49they possess a truly strong and
1:19:51sustainable source of consistent
1:19:53profitability. Therefore, when it comes
1:19:56to the process of dealing with these
1:19:58particular kinds of companies where we
1:20:00find that the underlying business model
1:20:02is not actually all that solid or
1:20:05robust, you can absolutely leverage
1:20:07trend lines in order to assist you when
1:20:09you are trading them.
1:20:12Basically, resistance is there in order
1:20:14to guide your exit. You might want to
1:20:16connect these couple of key points to
1:20:18map out an area and then you can use
1:20:20those exact price levels to start taking
1:20:22your profit.
1:20:24in terms of uh entry with this one, you
1:20:27know, what would that look like in terms
1:20:28of because you have such a large gap?
1:20:31>> Uh you know, how would you where would
1:20:32you look to place a stop loss on
1:20:34average?
1:20:35>> All right, if you are looking at that
1:20:37particular first day setup or even at
1:20:39these recent entry points that we have
1:20:41just talked about, there are actually
1:20:43two entirely different methods that you
1:20:45can use right here. First of all, the
1:20:48very first method is to make use of a
1:20:50mathematical stop. You could choose to
1:20:52set a 5% stop loss. This is because if
1:20:54we go back and take a look at the hourly
1:20:57chart,
1:20:59whenever you take a look at the hourly
1:21:00chart, you will very often see these
1:21:03massive gap ups. If you have actually
1:21:05managed to get in right around these
1:21:07specific price levels, a 5% room is
1:21:10honestly going to be more than enough to
1:21:12set a stop-loss that makes perfect sense
1:21:14for your trade. If you really want to
1:21:16play it aggressively and scale your way
1:21:18up to a really large position, this is
1:21:21especially true if you are currently
1:21:23trading on a much shorter time frame,
1:21:25you can easily utilize the low point
1:21:27that was formed immediately after this
1:21:29massive gap up. Simply give it a little
1:21:31bit of extra breathing room just below
1:21:33that specific level to set your stop
1:21:35loss, which ultimately comes out to
1:21:37approximately a 2 point something%
1:21:39stop-loss.
1:21:41To be sure, you might very well get
1:21:43stopped out a little bit more easily on
1:21:45this particular trade setup, but the
1:21:47absolutely incredible risk-to-reward
1:21:49ratio completely makes up for that. This
1:21:51is what allows you to trade with a
1:21:53relatively larger position size. And
1:21:55then once the trade moves into profit,
1:21:57you will be able to scale out and reduce
1:21:59some of your position, which lets you
1:22:01comfortably ride out the rest of the
1:22:03entire move.
1:22:05>> Nice. In terms of an entry, would you
1:22:06feel more confident entering, you know,
1:22:08once they've say sort of reclaimed uh
1:22:11the moving averages there? Sort of
1:22:13setting the those the double bottom as a
1:22:16as a significant low.
1:22:18>> You can go ahead and enter the trade
1:22:21right here directly at this exact
1:22:23position. The thing is a moving average
1:22:26should never be treated as a highly
1:22:29precise single line. In reality, you
1:22:32always want to give it a bit of a range,
1:22:34a flexible buffer zone. It actually
1:22:36works on the exact same principle as a
1:22:39standard horizontal support level. Now,
1:22:42we all already know how horizontal
1:22:44support works. It is never going to be
1:22:46just a single sharp line. If we look
1:22:48back at Google, for example, you can see
1:22:50that it actually behaves much more like
1:22:52a range. And we treat moving averages in
1:22:54the exact same way. Take a look at these
1:22:56green lines on my screen. I actually
1:22:58have two of them plotted right here. But
1:22:59why exactly is that? So right here we
1:23:03have this dark green line. The dark
1:23:05green one is actually the 20 EMA and the
1:23:07light green one is the 20 MA.
1:23:11Now right around here it is actually
1:23:13starting to form a trading range which
1:23:15basically provides me with a very clear
1:23:17understanding of whether it is staying
1:23:19within a reasonable boundary. But of
1:23:21course if it indeed ends up breaking
1:23:23deeply below this range then obviously
1:23:25the whole setup is absolutely going to
1:23:28fail. Speaking for myself, I do not look
1:23:30at it in that way. I do not really feel
1:23:32as though the price absolutely has to
1:23:34cross back above the moving average
1:23:35before I can begin to consider that MA
1:23:38to be a truly valid level of support.
1:23:40>> I think we went in in depth and we went
1:23:42over numerous examples really showcasing
1:23:45the layers to your trading and being
1:23:46able to combine them all together to
1:23:49create a a confident trade and and an
1:23:51actual, you know, good quality trade as
1:23:54well. And I thank you for going into
1:23:55such uh detail also. And everyone at
1:23:58home, drop a comment with your biggest
1:23:59takeaway from this episode. I know I
1:24:02didn't do too much today because we were
1:24:04letting a champion and master at work,
1:24:06you know, showing us true trading
1:24:09ability and teaching ability at that
1:24:11because I didn't have to do too much
1:24:12either. But links for JLo are in the
1:24:14description below. So, make sure you
1:24:16check them out. But drop a comment with
1:24:17your biggest takeaway. Any questions you
1:24:18may have, throw it there and we'll check
1:24:20that out. Also, other episodes are on
1:24:22screen right now. Make sure you hit
1:24:23subscribe. Make sure you hit like. And
1:24:25this has been Char Fanatics. Take care.

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