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This Simple Strategy Made Me My First $100k — Transcript

by The Rumers · 3,796 words · 513 segments · language en · Watch on YouTube

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0:01Today I want to show you a trading
0:02strategy that helped me make my very
0:04first $100,000 as a trader. Long before
0:07I ever got to that $100,000 in trading
0:09profits, this strategy would give me
0:11something that would be much bigger than
0:13that because this was the first trading
0:15strategy that I ever tried that gave me
0:17three consecutive winning days in a row
0:20of $1,000 each day or more in profits.
0:23Now, I know that does not sound like
0:25it's bigger than $100,000, but let me
0:27tell you what, it certainly was for me
0:30because where I was at mentally and
0:32emotionally with trading at that point,
0:34I had never had three straight winning
0:36days of any amount whatsoever for over
0:40five years. And that is not a joke. In
0:42fact, throughout that 5-year period of
0:44time, there were several months I didn't
0:46even have three winning days for the
0:48whole month. So to have three straight
0:51winning days of $1,000 or more each day
0:53back to back to back was like the most
0:56emotionally gratifying, rewarding, and
0:59confidencebuilding moment I've ever
1:00experienced in trading. Still to this
1:02day, 26 years later. And the reason for
1:05that is because up to that moment in
1:07time, I didn't believe I belonged in the
1:09trading business. I had nothing to show
1:11that I earned a spot where I am at. And
1:14this was the first strategy that
1:16absolutely helped me break through those
1:18barriers. So, what I want to do in
1:19today's video is share with you this
1:21trading strategy and the attempts that
1:23wherever you find yourself in your
1:24trading journey right now. And whatever
1:26that barrier that you may have in front
1:28of you that you keep smacking up against
1:30over and over again that's holding you
1:32back, maybe the strategy can give you
1:34the confidence you need to take that
1:36next step and just get over that barrier
1:38and just move on. So, let's go ahead and
1:40get started with today's video. Now, the
1:42reason this strategy worked out so well
1:43for me and why I hope it works out well
1:45for you, too, is because to its core,
1:48it's just too simplistic for anyone to
1:51mess up, even the rookie trader. And I'm
1:53not kidding when I say that. Because all
1:55we're really going to be doing here is
1:57we're just looking to buy into weakness
1:59on strong assets and sell into strength
2:02on weak assets. That's all there is to
2:04it. And even if you don't understand
2:06what I just said, I promise we're going
2:08to start real slow. We're going to keep
2:09this thing simple, stupid, and go one
2:11step at a time. And by the time this
2:12video is over, you should have a pretty
2:14good understanding of what I'm talking
2:15about here. So, the first thing we need
2:17to do is understand what do I mean when
2:19I say a strong asset and what do I mean
2:22when I say a weak asset. So, let's go
2:23ahead and pull up the charts we're
2:25using. And the first place that we need
2:27to start is with a daily chart. So,
2:29you'll see for today I have the daily
2:31time frame selected. And for now, I'm
2:33using the stock Apple. It doesn't matter
2:36what asset we're trading, whether it's
2:38foreign currency, cryptocurrencies, oil,
2:40gold, futures stocks, doesn't matter.
2:43But we do need to begin with the daily
2:44chart because most of this strategy
2:46revolves around the signals we get from
2:48the daily. And the first thing that we
2:50want to do here is we want to find our
2:52indicator menu and we want to select the
2:56moving average symbol. And once you
2:59select that, it's going to put a line
3:00that overlays on top of that daily
3:02chart. The next thing you want to do is
3:04make sure that this line is set up
3:06properly. You're going to go over into
3:08wherever the menu is and click on the
3:10settings. Some brokers will already have
3:12it set at certain levels. This trading
3:14view has it set at 9, but we want to
3:16make sure this length is set to 50. So,
3:19we're going to begin by using the 50-day
3:21moving average. Just click on that, hit
3:24okay, and it's going to give you a new
3:26line there on the chart. Now, once we
3:29have that line set up on our charts, we
3:30can move to the next step, which is
3:32understanding what does that 50-day
3:33moving average mean on our daily charts
3:35and how are we going to use it when it
3:37comes to this strategy. And we're going
3:39to keep this simple as well. And it goes
3:40just like this. If the asset you're
3:42trading is above that 50-day moving
3:46average, most likely that asset is under
3:49accumulation by funds and institutions.
3:53And what that means to you is bulls are
3:56in control of that chart. and should be
3:58given the benefit of the doubt. And what
4:01we should be thinking here for all of us
4:03when it comes to this strategy is 80% of
4:06every idea that comes out of your mind
4:10should be a buyside or long trade. So,
4:14we want to buy assets and continue to
4:16buy assets that are trading above the
4:1850-day moving average. If the asset
4:21you're trading happens to be below that
4:2350-day moving average, we're going to
4:25inverse that relationship. That would
4:28normally mean that institutions are
4:30actually distributing and selling this
4:32asset. And you would like to sell this
4:35as many times as possible, especially
4:38into strength. So, if you see an asset
4:40that's underneath a 50-day moving
4:42average, you should be thinking 80% of
4:44the time, every strategy that comes out
4:46of my head should be to the sell side.
4:49Above the 50-day moving average, we want
4:51to look to buy. Below the 50-day moving
4:53average, we want to look to sell. Now
4:55that we've determined if the asset we
4:56are trading is above the 50-day moving
4:58average, we should be buying it. And if
5:00it's below the 50-day moving average, we
5:02should be selling it. We now can move on
5:04to the statement that I made at the very
5:06beginning of the video, which is the
5:07core of this strategy. And that is we
5:09are looking to buy weakness on those
5:12assets that are trading above that
5:1450-day moving average. And we're looking
5:16to sell strength that is on those assets
5:19trading below the 50-day moving average.
5:21Pretty simple stuff. Now, the question
5:23here is pretty obvious. What do you
5:25consider weakness on those assets? And
5:28what do you consider strength? So, let's
5:29move back to our charts and I'll show
5:31you. We're going to go back to that
5:33daily chart. We're going to go back into
5:35our indicator menu and we're going to
5:36look for and select the average true
5:39range. Don't do anything to this
5:41indicator. Just click it and go with the
5:43default settings. And you'll see it will
5:45put a line at the bottom of your chart.
5:47Now, I've done a ton of videos already
5:49on this channel about the average true
5:51range. Those who watch it know how much
5:53I use it. So, I'm going to post a couple
5:54of other videos. If you want to take a
5:56deep dive on this subject, feel free to
5:58watch those when this video is done. But
6:00just in case you don't know what this
6:01number means, if you look over to the
6:02right, you're going to see it's just
6:04about five 481. Let's just say five to
6:07make math easier. That means if you are
6:10trading Apple on a day-to-day basis, you
6:12could expect either a $5 move up or a $
6:15five move down any given day. Now, this
6:18is a valuable tool for us traders
6:20because it sets expected value and is
6:22very good for exits and stuff like that
6:24and targets because it lets us know if
6:26the trade we're going to make is worth
6:27it in the first place. But to stay on
6:29point, here's what we're actually
6:31looking for. Once we've determined,
6:32let's just keep five in the top of your
6:34head. Let's go to another chart and I'm
6:37going to move down to a smaller five
6:39minute time frame. Again, I mentioned
6:41earlier that as long as it's 1 hour or
6:43less, this is where we're going to dial
6:44in our entries and exits. What I am
6:47looking for is any continual pullback or
6:51selloff. Continual meaning directional
6:54that is at least 20% of that daily
6:58range. So to make that simple, you take
7:00the $5 daily range, multiply it by 020,
7:03it's going to give you $1. We just need
7:05a $1 continual pullback somewhere
7:10throughout the day to reverse and stay
7:12with the trend. So, let me show you
7:14exactly how that works. Notice here on
7:17this five-minute chart, Apple opens up
7:20and it gets pretty strong. Now, we're
7:22going to move a couple of bars forward
7:23and just stop. Notice that we have this
7:26continual pull from the open print down
7:29towards this base. If I grab any
7:31measuring tool and I grab the very top
7:34of that wick down to the bottom price
7:37point, you'll see it says $229,
7:41which is well in excess of that 20% $1
7:45barrier we were looking for. Correct? So
7:48that's far enough and deep enough to be
7:50considered a valuable pullback for this
7:53strategy. So this would be something
7:56that we're looking to buy into. Now,
7:59from there, all we really need to do at
8:01this point is pick the perfect entry.
8:04So, now that we've seen it move back,
8:06it's above the 50-day moving average.
8:07We're looking to buy it. We have in
8:09excess of a 20% pullback in a continual
8:11direction. Now, it's just a matter of
8:14time for looking for the right
8:15candlesticks and the right setup to
8:18trade this and make the entry. Now, this
8:19is a very important part. Now, don't
8:22skip over it definitely because it's not
8:25uncommon that these things can go a
8:26little bit lower. All we really need to
8:29see to keep it simple, I know I talk a
8:31lot about John Wick candles and power
8:33towers, but all we really need to do to
8:35keep it simple is we just need one of
8:37these fiveminute candles right here,
8:39just one to close above the other. If
8:43you're looking for the easiest, the most
8:45safest entry, wait for the candle
8:47closure. Now, there's definitely other
8:49styles of strategies there, but for this
8:51video, let's just go with candle
8:53closures. Okay, so all we need is one of
8:55those fiveminute bars to close. So, I'm
8:57just going to move it a couple of
8:58candles forward and let's stop at about
9:01right there. Okay. So, if you kind of
9:05look, here's why it's important for the
9:06newer trader to look at candle closures.
9:08Notice that when we pulled back here on
9:11Apple, we did get into support. Now,
9:14this is not a support resistance video,
9:15but that certainly helps the accuracy of
9:18this. Now, I want you to look here, and
9:20I'm going to open up this chart because
9:21I think this is a very important part.
9:23Notice that every time you got down into
9:26this 2450,
9:29you found a buyer, you found a buyer,
9:32you found another buyer. But here's why
9:34we really need these candle closures,
9:36especially for the new trader, is
9:38because notice that this candle right
9:41here just punched through real quick,
9:43but didn't close. It pulled back,
9:45leading to the next candle being red.
9:48Right? This candle didn't quite get
9:51above that. almost but didn't quite and
9:54the following was red. It wasn't until
9:56you got to this very candle did you get
9:59a clear and definitive candle break. Now
10:03ultimately in a chart like this it
10:04didn't make any difference whatsoever
10:06cuz your stop would have been under the
10:08low of day which we'll talk about in a
10:09second. But for the newer trader that
10:11kept you out of the trade for about 30
10:13minutes and maybe that would have caused
10:14you some sort of mental damage up there.
10:16Right? So this is where the entry would
10:19be. Let's just grab this long position
10:21tool. The entry would be right there.
10:24Stop loss would go underneath the low
10:27and we would be looking for a full
10:29retracement or 2:1. I'm going to move
10:31this over so you can see exactly what we
10:34are looking for. But just for this
10:35example, we'll go 2:1 moving back
10:37through the high of the day. So, if I
10:39just kind of play the tape forward,
10:40you'll see that this eventually works
10:43its way all the way back up and well
10:46over that high. But the only reason, of
10:49course, you guys ever remember the check
10:50mark strategy, right? This is what the
10:51check mark strategy was based on, too.
10:53But the only reason that that was a high
10:56probability trade is because it was
11:00above the 50-day moving average. Now,
11:02one thing before that, I just want to go
11:03back and show you something I think is
11:05going to help a lot of you new traders,
11:07and it's this. These moves that you see
11:09down towards the bottom, this is a very
11:12important candle right here. Maybe just
11:14screenshot this. This is why the
11:17strategy works so well is because
11:20actually what this is is a trap. It's
11:23making everyone feel like this is going
11:25to break down and go lower. This is why
11:28we always say never short at the low of
11:29the day and never buy at the high of the
11:31day because if you bought at the high of
11:32the day, the thing sold off, right? And
11:35then if you shorted at the low of the
11:37day, it rallied. That's the points.
11:40Markets are set up to perform that way.
11:42And that's why we need to use this
11:43strategy. Hopefully that made some
11:45sense, but that's the reason why Apple
11:47had gone higher. Now, all we got to do
11:49to go to the sell side is just flip that
11:51thinking. Let's take a quick look here
11:53at a chart. I've got AMD selected, my
11:55intraday 5minute chart, and you'll see
11:57below is the daily chart. So, first we
12:00take a look. Is it below the 50-day
12:02moving average, this blue line? The
12:04answer is yes, which means AMD most
12:06likely will not hold its rallies because
12:09it's being distributed currently by
12:11funds. The next step is to take a look
12:13at the ATR and you'll see it gives us a
12:16number of six. So, real quickly, let's
12:18do our basic math. What is 20% of six?
12:22It's a $120. So, if there's any
12:24continual move up of $120 or more,
12:29that's the trade we're looking for. So,
12:31if I grab a measuring tool and I take a
12:33look at this move we currently have on
12:34it, and I measure it down to its origin,
12:37which is right here, you'll see it is
12:39$2.71,
12:40which is far in excess of the$120, which
12:43means it qualifies for a potential
12:45reversal sellside candidate. All we need
12:48from this point is what? Pretty simple.
12:51Just one red candle that takes out a
12:54previous green candle. So, I'm just
12:56going to fast forward this here. And
12:58right there you'll see is your very
13:00first break of the candle. So in this
13:03case, what I would do is the exact
13:05opposite of Apple. We'll grab our short
13:07position tool. The entry would be right
13:09there at the base of that candle. The
13:11stop loss would be above the high of the
13:13day. And then we would look to retrace
13:16either 2:1 or 50% of that range
13:19somewhere along that line. And that's
13:22the trade that you would have with AMD.
13:24And if I play this forward, what are you
13:26going to see? AMD finds its way all the
13:29way back down to the very base of the
13:31range. But the inverse relationship
13:33there to Apple, the only reason that
13:35trade became a high probability trade is
13:38because AMD was trading under the 50-day
13:40moving average in the first place. So,
13:41if you just use that 50-day moving
13:43average as a guide, you're going to get
13:45a long way in your trading career. Now,
13:47I know you guys understand this whole
13:49entire trading process because it's
13:50pretty simple, right? Step number one is
13:53if it's above the 50-day moving average,
13:54we want to buy it. If it's below the
13:5650-day moving average, we want to sell
13:58it. Then we want to use some sort of
13:59measuring tool via the ATR to make sure
14:01that there's a continual move of at
14:03least 20% of whatever the daily ATR is.
14:06Right? No problems there either. And
14:08then the last step, of course, is a
14:10candle that gives us that entry signal.
14:12So, I know you've already got that. I
14:14know you're on top of this and I know
14:15you're excited. And all you really need
14:18to see now is some live trades, right?
14:21So, we have ourselves a candidate that
14:23fits the strategy, which is the NQ
14:26futures. And all I want you to do right
14:27now is just take a look at the chart.
14:29Even if you have to stop and pause here
14:31and tell me what it is that you see. It
14:34should be pretty obvious. Now, I'm also
14:36kind of rushing fast here because I'm
14:37trading in a live community right now,
14:39but I just kind of want you to look at
14:41this chart. So, let's go from top to
14:43bottom and walk through it real quick.
14:45If we first start out with the daily
14:47chart, you are going to see that the
14:49NASDAQ futures are trading above the
14:5050-day moving average. And what did we
14:52say about the 50-day moving average? We
14:53want to look to buy in situations like
14:55that on dips. Now, what we have to
14:58determine here is the quality of that
15:00dip. So, if we take a quick look here at
15:02the ATR, it's telling us that the NASDAQ
15:04currently has a 321
15:08point move up or down each day, or
15:10that's what its ATR is. So again, if we
15:13come back here and we measure the very
15:15top of this move to the bottom of this
15:17move, that's in excess of the 20% of
15:20that 321. I think you can figure that
15:22out. So all we need to do here is make
15:24sure we have a candle closure. All
15:26right, so I jumped forward here a little
15:27bit. We do have our candle closure.
15:30You'll see right there above the break
15:31of that candle. That is the entry below
15:35the low of the day, below of that double
15:37bottom support. That is going to be our
15:39stop. Now, our target is going to try to
15:42get about half of the range from the
15:44very top part of that chart down to the
15:48bottom of that chart. Let's just let the
15:50trade play out. Come back and visit it.
15:52So, for the sake of time, I jumped
15:53ahead. Also, I got really busy there
15:55with the live community and I apologize
15:56for not getting more of this on film,
15:59but I think the point is proven. You
16:00see, it has moved itself up. It's over
16:03that 50% threshold. This trade is
16:06looking good at this point. just as far
16:08as management probably going to take a
16:10percentage of this profit, but I just
16:12want you to take a quick look at that
16:13chart. It should be pretty obvious at
16:16this point what that chart did. Okay, so
16:20I apologize for this one. I'm a little
16:22bit late, but I'm already short here.
16:25Visit AMD. Again, take a look at the
16:27chart real quick and I think you can
16:30understand that I'm also trading in a
16:31live community, so I apologize. So,
16:33let's go through this real quick. up on
16:35the screen, you're going to see the
16:36daily chart there on AMD. It's
16:39underneath of the 50-day moving average,
16:41and we've already established if things
16:43are below the 50-day moving average, we
16:45want to look to sell them. Now, if we
16:47take a quick glance at the average true
16:49range, we see that that's about $6. Now,
16:52if I measure this move from where it
16:55started to where it is now, it's clear
16:58this is in excess of that 20% threshold.
17:01And all we're looking to do is take a
17:03stop loss above the high of the day and
17:06try to get a retracement of that range.
17:08It's that simple. Okay, so I wanted to
17:10jump back here real quick on AMD. Truth
17:12be told, I almost forgot about this
17:14thing. It's taken such a long time, but
17:16I think the point is proven. The reason
17:18that AMD faded and was unable to build
17:21on that second parabolic, it's because
17:23of that 50-day moving average. I mean,
17:25it really isn't that complicated. So,
17:28when we look back at these charts, just
17:30remember that simple three-step process.
17:34If the asset you're trading is above the
17:3650-day moving average, in most cases,
17:39it's going to be bought. Rallies will
17:41sustain themselves. If it's under the 50
17:43moving average, like AMD, chances are
17:46rallies will fizzle. Those rallies will
17:48be used to sell positions. And all you
17:52really need to do is use the ATR to
17:54measure that move and then use the
17:56candlestick for the entry. It really is
17:59that simple. And you can see with just
18:00two trades how effective the strategy
18:02can be when done correctly. So my
18:04friends, that's going to conclude
18:05today's video. And I hope you found some
18:07education, some enlightenment, and
18:09definitely a tiny bit of entertainment
18:10in this whole thing. And you can see the
18:12value of how this strategy can maybe
18:13help you get to the next level. As
18:15always, I want to remind everybody that
18:18every week my wife and I put together a
18:20free watch list market report. It's
18:23called the gains guide. We send it to
18:25your email inbox every weekend so you
18:27are prepared to trade each week. So, if
18:30you're looking for quality trade ideas,
18:31you're looking for quality levels,
18:33you're looking for assets that are
18:34trading consistently above the 50 and
18:36below the 50-day moving average, make
18:39sure you fill that out. The link is down
18:40there in the description box. It's
18:42totally free. It's just a way that we
18:44pay back the community. Again, I thank
18:46you very much for your support for
18:47watching this video. Take care. Trade
18:49well. Until the next video, guys.
18:52Cheers.

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