1 00:00:00,030 --> 00:00:03,110 This podcast is brought to you by the award-winning prop firm, Fidel cre, 2 00:00:03,110 --> 00:00:04,790 and is for entertainment purposes only. 3 00:00:04,790 --> 00:00:07,350 After years of using five minute charts, 4 00:00:07,420 --> 00:00:11,870 I can see an incredible amount of things going on, on a five minute chart, 5 00:00:11,920 --> 00:00:14,510 on a typical five minute chart, let's say for the Emen, 6 00:00:14,510 --> 00:00:17,590 which is on the popular Stock index future contract, 7 00:00:17,590 --> 00:00:21,870 that American Trade and Session opens six 30 California time, 8 00:00:21,970 --> 00:00:24,630 one o'clock or one 15 California time. 9 00:00:24,680 --> 00:00:28,590 So you've got 81 5 minute bars in the day. In a typical day, 10 00:00:28,900 --> 00:00:30,630 I see on an average day, 11 00:00:30,630 --> 00:00:35,110 I probably see 41 point scallops and 22 point scallops, 12 00:00:35,170 --> 00:00:39,950 and I probably see 60 or 70 setups on a typical 81, 13 00:00:40,320 --> 00:00:44,230 um, bar chart. I don't take all of them. On an average day, I might take 10, 14 00:00:44,230 --> 00:00:48,310 20 or 30 trades, but I see an incredible number of setups. 15 00:00:48,310 --> 00:00:53,190 Now I just sit down and I try to structure as many good trades as I can 16 00:00:53,220 --> 00:00:57,590 a day on my 81 bars and on a good day, you know, I don't lose anything. 17 00:00:57,590 --> 00:01:01,030 You know, I, I might win a hundred percent of, uh, the trades. 18 00:01:01,180 --> 00:01:02,750 I know several traders, 19 00:01:02,990 --> 00:01:07,590 probably many traders who win about 90% of the time as, uh, day traders. 20 00:01:07,650 --> 00:01:10,550 And they win just about every day, if not every day. 21 00:01:10,550 --> 00:01:14,270 I've never had a year in which I've won every day of the year. You know, 22 00:01:14,300 --> 00:01:17,470 I always mess up some way, uh, at some point during the year. Uh, 23 00:01:17,470 --> 00:01:20,510 my goal in life, I don't know if I'll live long enough to achieve that goal, 24 00:01:20,520 --> 00:01:22,590 is to win every day of the. 25 00:01:22,590 --> 00:01:27,270 Year. Episode 217, folks, we got Al Brooks back on the show after six years. 26 00:01:27,400 --> 00:01:31,110 He was episode 40 of my 52 Traders podcast. And what I'm actually doing, 27 00:01:31,110 --> 00:01:34,230 cuz this has been locked away, is I'm re-releasing this right now. 28 00:01:34,230 --> 00:01:37,510 You're gonna hear that interview, please give me a bit of slack. 29 00:01:37,510 --> 00:01:41,110 It was my 40th interview ever, so I'm probably not the best. 30 00:01:41,390 --> 00:01:44,430 Hopefully I've improved over time. But yeah, that's coming up in a second. 31 00:01:44,430 --> 00:01:46,230 And what we've done, and even better, 32 00:01:46,440 --> 00:01:51,190 is we've got Al Brooks back in the house with a price chart in front of him for 33 00:01:51,190 --> 00:01:51,950 about an hour, 34 00:01:51,950 --> 00:01:56,590 and the guy just breaks down everything that is coming up on the channel in a 35 00:01:56,590 --> 00:02:01,350 day. So please make sure you check that out after listening to this archived 36 00:02:01,350 --> 00:02:03,990 interview that's being re-released. All right, 37 00:02:03,990 --> 00:02:07,510 other things going on here at Trading Nu there's a few more options up there in 38 00:02:07,510 --> 00:02:09,670 the robot section of trading nut.com. 39 00:02:10,040 --> 00:02:12,990 So I'm opening up a few more things to you folks out there. 40 00:02:13,000 --> 00:02:15,150 If you do wanna check that out, there's a link under the video. 41 00:02:15,150 --> 00:02:18,910 Or just get a trading nut and find that the Robots link. Click on that. Uh, 42 00:02:18,910 --> 00:02:22,990 there's a couple more new options up there that I know you're gonna love right 43 00:02:22,990 --> 00:02:23,390 now. 44 00:02:23,390 --> 00:02:26,630 Attention to all those folks out there who are on the free version of Trading 45 00:02:26,630 --> 00:02:30,110 View. Now, if you are looking to upgrade or get Trading View Pro, 46 00:02:30,110 --> 00:02:33,070 I've got a solution for you. So my new sponsor, black Bull Markets, 47 00:02:33,430 --> 00:02:34,830 actually have a promotion on at the moment. 48 00:02:35,000 --> 00:02:39,150 There's a link below the video and you can get access to Trading View Pro with 49 00:02:39,150 --> 00:02:40,910 them. So go and check them out there in New Zealand. 50 00:02:40,910 --> 00:02:42,510 Regulated there based here in New Zealand. 51 00:02:42,780 --> 00:02:45,190 Well worth going to check them out anyway, so yeah, 52 00:02:45,190 --> 00:02:49,670 they have got a Trading View Pro offer link under the video here or in the cart 53 00:02:49,670 --> 00:02:53,870 above. The other thing I wanna remind you of is my other sponsor for Del Crest. 54 00:02:53,970 --> 00:02:57,830 Now they're doing a 50 K challenge for anyone that wants to come on the trading 55 00:02:57,830 --> 00:03:02,720 that livestream and trade the challenge and verification phase of the, 56 00:03:02,720 --> 00:03:06,720 uh, the 50 K challenge and try and pass it on my livestream. 57 00:03:06,720 --> 00:03:09,840 So I've got three traders up there already. I'm looking for two more. 58 00:03:09,840 --> 00:03:10,560 If you're interested, 59 00:03:10,560 --> 00:03:13,640 there's a link in the description below the video here as well. 60 00:03:13,640 --> 00:03:15,400 So go and check that out. But first, 61 00:03:15,400 --> 00:03:19,400 let's hear from Fidel Crest now and then get on with the interview. 62 00:03:19,400 --> 00:03:22,800 Fidel Crest is an award-winning pro firm that funds traders with up to 2 million 63 00:03:22,900 --> 00:03:25,600 and offers generous profit splits up to 90%. 64 00:03:25,600 --> 00:03:29,440 So one thing that really sets Fidel Crest apart is their no minimum trading days 65 00:03:29,440 --> 00:03:32,760 requirement on their challenge and verification stages. On top of that, 66 00:03:32,760 --> 00:03:36,160 traders who successfully pass the challenge of verification stages are eligible 67 00:03:36,160 --> 00:03:40,560 to receive a bonus payout of up to 30 K on top of their funded stage profit 68 00:03:40,560 --> 00:03:42,040 split payout on performance. 69 00:03:42,060 --> 00:03:46,760 And be sure to use promo code trading that all One word to get 10% off your next 70 00:03:46,760 --> 00:03:47,200 challenge. 71 00:03:47,200 --> 00:03:50,440 Click the link in the description below or the card above to find out more. 72 00:03:50,440 --> 00:03:54,160 Welcome Al, thanks for joining me here on the 52 Traders Podcast this week. 73 00:03:56,390 --> 00:03:59,880 I appreciate having the opportunity to speak with your group. 74 00:03:59,880 --> 00:04:00,713 Thank you very much. 75 00:04:01,630 --> 00:04:04,280 Okay, Al, so I've mentioned some of your highlights already, 76 00:04:04,280 --> 00:04:06,520 and I know that's only a small part of your story, 77 00:04:06,730 --> 00:04:10,840 so can you tell the listeners a little bit more about you personally and what 78 00:04:10,840 --> 00:04:12,200 first attracted you to trading? 79 00:04:13,350 --> 00:04:13,990 Well, 80 00:04:13,990 --> 00:04:18,720 I grew up poor and my mother wanted to have a doctor in the family, 81 00:04:18,720 --> 00:04:20,400 so she picked me to be the doctor. 82 00:04:21,300 --> 00:04:24,320 And all the time that I was at the University of Chicago, 83 00:04:25,920 --> 00:04:27,600 becoming a doctor, becoming an eye surgeon, 84 00:04:28,230 --> 00:04:32,440 I wondered if I should be downtown at the me or the Board of Trade Trading. 85 00:04:32,900 --> 00:04:36,400 And I just didn't have the courage to make the switch. You know, 86 00:04:36,400 --> 00:04:40,600 I knew staying as a physician was a sure way to make a lot of money, 87 00:04:41,420 --> 00:04:46,160 and I had no idea whether or not I could make money as a trader on the floor 88 00:04:46,250 --> 00:04:51,200 of, um, the futures or options pits. And, um, 89 00:04:51,250 --> 00:04:53,640 so I stuck with, um, 90 00:04:53,640 --> 00:04:56,880 being a surgeon and I worked extremely hard 91 00:04:58,380 --> 00:05:02,890 to save up a lot of money. And in 1989, excuse me, 92 00:05:03,090 --> 00:05:04,410 1988, I had a daughter, 93 00:05:05,070 --> 00:05:08,370 and 15 months later I had identical twin daughters. 94 00:05:08,420 --> 00:05:10,930 So I had three daughters under the age of 15 months, 95 00:05:12,670 --> 00:05:15,130 and I thought, okay, I saved up a lot of money. 96 00:05:15,130 --> 00:05:18,330 I'm gonna stay home and raise the girls. And while doing that, 97 00:05:18,400 --> 00:05:20,730 I will also trade more. 98 00:05:20,800 --> 00:05:23,810 I started trading in 87 the month before the crash. 99 00:05:25,070 --> 00:05:28,770 And back then they did not have eis. They had full size contracts. 100 00:05:29,710 --> 00:05:32,170 And the day of the crash, I had a big surgery schedule, 101 00:05:32,200 --> 00:05:34,490 I had to be in the office, I forgot what time, 102 00:05:34,490 --> 00:05:39,330 eight o'clock or eight 30 or something like that. And on the day of the crash, 103 00:05:39,330 --> 00:05:44,090 I sorted shorted 13 [inaudible] contracts, excuse me, 104 00:05:44,330 --> 00:05:47,410 13 s and p contracts, which today would be, um, 105 00:05:47,410 --> 00:05:52,170 the equivalent of five times that. So we have 65 contracts or something, 106 00:05:53,670 --> 00:05:57,050 and I had to close out before I went to work. You know, the, 107 00:05:57,080 --> 00:05:58,000 the market started going, 108 00:05:58,170 --> 00:06:02,080 it went up actually on the morning of the 1987 crash initially. 109 00:06:02,580 --> 00:06:06,120 And I ended up closing out the position. I think I lost $5,000. 110 00:06:06,700 --> 00:06:10,890 And then as I was driving into work on the radio, 111 00:06:11,840 --> 00:06:14,850 I could hear, uh, the reports that the stock market's going down, 112 00:06:14,850 --> 00:06:19,370 and nobody knows how far down it's going, but it's just going down. And, um, 113 00:06:19,430 --> 00:06:23,490 the drop is far beyond what the computers are able to, uh, follow. 114 00:06:24,630 --> 00:06:29,210 And at the end of the day, had I held onto my 13 s and p contracts, 115 00:06:29,520 --> 00:06:34,370 I would've made $400,000 on the day. Unbelievable . 116 00:06:34,370 --> 00:06:39,250 Yeah, which is crazy. And that day I decided that, 117 00:06:39,250 --> 00:06:43,730 you know, there's pretty good upside to being a full-time trader. And well, 118 00:06:43,730 --> 00:06:47,730 a couple years later, when my girls were born, I decided to go ahead, stay home, 119 00:06:47,730 --> 00:06:51,410 sell my medical practice, stay home, and become a full-time trader, which I did. 120 00:06:52,270 --> 00:06:55,330 And when you start out, everyone who starts out, 121 00:06:55,330 --> 00:06:59,610 unless you're at Goldman Sachs or at some major bank and they put you in some 122 00:06:59,610 --> 00:07:02,690 kind of training program, you have to kind of figure it out yourself. 123 00:07:03,540 --> 00:07:08,040 And back then, in the eighties, the, the internet, well, 124 00:07:08,040 --> 00:07:11,160 there was not much on the internet, but when you subscribe to magazines, 125 00:07:11,740 --> 00:07:16,120 the ads were looked very attractive and appealing. You know, I want to help you, 126 00:07:16,570 --> 00:07:21,360 uh, use my software, take my training course. And, you know, I took courses. I, 127 00:07:21,450 --> 00:07:24,360 um, had tutors. I, um, 128 00:07:25,430 --> 00:07:28,760 bought all kinds of software that was guaranteed to make me rich. 129 00:07:29,380 --> 00:07:32,840 And every, you know, I spent a lot of money on all kinds of help. 130 00:07:33,380 --> 00:07:37,440 And either the people were simply incompetent, 131 00:07:37,440 --> 00:07:42,400 which most of them were, or they were, uh, dishonest. You know, 132 00:07:42,400 --> 00:07:47,120 some, I know at least two or three of the software companies were ultimately, 133 00:07:47,370 --> 00:07:48,880 uh, charged with fraud. 134 00:07:50,290 --> 00:07:54,650 So there was no really good source of information back. I, 135 00:07:54,650 --> 00:07:56,650 I learned in medical school that, you know, 136 00:07:57,110 --> 00:08:00,050 the best way to learn something is to just study it, study it, 137 00:08:00,050 --> 00:08:02,410 and study it from someone who's doing it really well. 138 00:08:03,270 --> 00:08:07,170 And I assumed that all these books, I read everything, all these books, 139 00:08:07,170 --> 00:08:09,770 all these articles, all these websites, you know, 140 00:08:09,770 --> 00:08:11,810 all these people were there to help me. 141 00:08:12,470 --> 00:08:16,450 And I was losing money and I kept losing money and I lost money for about 10 142 00:08:16,450 --> 00:08:20,410 years. So I decided that, you know, 143 00:08:21,010 --> 00:08:22,970 somebody making money doing this because I'm losing it. 144 00:08:23,170 --> 00:08:25,370 Somebody's making my money. So, so there, 145 00:08:25,370 --> 00:08:29,850 there is an ability to make money out there, uh, but I simply did not have it. 146 00:08:29,870 --> 00:08:34,330 And using my doctor's approach to learning was, 147 00:08:34,550 --> 00:08:38,130 was a failure. You know, trying to copy what other people are doing, you know, 148 00:08:38,130 --> 00:08:40,770 reading, studying, uh, it's all garbage. 149 00:08:41,950 --> 00:08:46,130 And ultimately I concluded that these people, some of them are, 150 00:08:46,150 --> 00:08:48,530 are honest but don't know how to do it. 151 00:08:48,880 --> 00:08:52,370 A lot of them are dishonest and they don't care that they don't know how to do 152 00:08:52,370 --> 00:08:54,970 it. So I decided to strip away everything. 153 00:08:55,510 --> 00:08:58,600 Back then there was a big push. I mean, 154 00:08:58,600 --> 00:09:00,560 it was just assumed that if you're going to trade, 155 00:09:00,560 --> 00:09:05,160 you have to use all kinds of indicators, you know, bands and oscillators and, 156 00:09:05,530 --> 00:09:08,960 um, you know, G lines, gang lines are actually popular back then. 157 00:09:08,960 --> 00:09:11,960 Nobody uses them anymore cuz you know, they're, they're fraud. 158 00:09:13,130 --> 00:09:18,120 So I, my computer screens, I had multiple monitors, I had, um, you know, 159 00:09:18,120 --> 00:09:21,760 all kinds of indicators, all of my screens. And, you know, 160 00:09:21,760 --> 00:09:23,640 eventually I started to write my own indicators. 161 00:09:24,060 --> 00:09:29,040 And I started to realize that indicators are just another variation of a 162 00:09:29,040 --> 00:09:32,920 price chart. You know, you, you're, you're waiting different factors, 163 00:09:32,940 --> 00:09:36,960 but anything that you see on an indicator, you can see on a price chart. 164 00:09:37,290 --> 00:09:42,200 So I started to remove all of my indicators and I left myself with simply 165 00:09:42,200 --> 00:09:46,160 a price chart. No, no average, no, no moving averages, no nothing on it. 166 00:09:47,070 --> 00:09:50,720 I've tried every kind of timeframe, you know, tick charts, volume charts, 167 00:09:50,720 --> 00:09:54,840 one minute chart, 60 minute charts, um, all kinds of other kinds, 168 00:09:54,840 --> 00:09:58,200 all kinds of other charts over the years. And I like rhythm, 169 00:09:58,350 --> 00:10:02,720 I like predictable rhythm and time charts give me that. 170 00:10:02,720 --> 00:10:06,240 I know that the chart's gonna, the bar's gonna close in five seconds, 171 00:10:06,250 --> 00:10:08,640 in 10 seconds, and one second. I like that. 172 00:10:08,640 --> 00:10:12,400 Whereas you don't know that with volume charts or tick charts. Also, 173 00:10:12,400 --> 00:10:16,040 the trend lines on time charts are extremely reliable. 174 00:10:16,510 --> 00:10:20,280 A lot of computers use them. I mean, they clearly use them because they're very, 175 00:10:20,280 --> 00:10:21,113 very reliable. 176 00:10:21,290 --> 00:10:26,080 So I settled on using a time chart and I've tried using smaller timeframes, 177 00:10:26,080 --> 00:10:30,360 like one minute charts and two minute charts. I was making two minute mistakes. 178 00:10:30,660 --> 00:10:33,840 And then if you use higher timeframes, you know, 15 minute charts, 179 00:10:33,840 --> 00:10:34,673 60 minute charts, 180 00:10:34,970 --> 00:10:38,520 it doesn't really make sense to sit in front of the computer all day and do 181 00:10:38,520 --> 00:10:40,480 that. I like sitting in front of the computer, 182 00:10:40,510 --> 00:10:42,680 I like watching every tick during the day. 183 00:10:43,060 --> 00:10:46,240 And ultimately I settled on a five minute chart. 184 00:10:46,860 --> 00:10:50,000 And after years of using five minute charts, 185 00:10:51,150 --> 00:10:54,920 I can see an incredible amount of things going on. 186 00:10:54,920 --> 00:10:59,080 On a five minute chart. On a typical five minute chart, let's say for the ein, 187 00:10:59,080 --> 00:11:02,920 which is the popular stock index future contract, 188 00:11:02,920 --> 00:11:07,560 that American Trade and Session opens six 30 California time, 189 00:11:08,300 --> 00:11:13,110 one o'clock or one 15 California time. So you got, um, 190 00:11:13,110 --> 00:11:17,350 81 5 minute bars in the day. And a typical day, 191 00:11:17,350 --> 00:11:19,910 looking at those 81, um, bars, 192 00:11:20,500 --> 00:11:25,190 I see on an average day I probably see 41 point scallops 193 00:11:25,650 --> 00:11:27,710 and 22 point scallops. 194 00:11:28,410 --> 00:11:32,670 And I probably see 60 or 70 setups on a typical 195 00:11:32,670 --> 00:11:36,830 81, um, bar chart. I don't take all of them. 196 00:11:37,070 --> 00:11:39,870 On an average day, I might take 10, 20 or 30 trades, 197 00:11:40,330 --> 00:11:44,910 but I see an incredible number of setups. So on 81 bars, 198 00:11:45,210 --> 00:11:50,110 you know, I see at least one setup on every, um, one or two bars. 199 00:11:50,840 --> 00:11:54,400 So I don't need indicators. And I also don't need a 15 minute chart. 200 00:11:54,400 --> 00:11:57,640 I also don't need a globex chart. I also don't need, um, 201 00:11:57,640 --> 00:12:02,080 charts of anything else because on that one chart I'm seeing 40 or 50 202 00:12:02,430 --> 00:12:06,080 trades a day out of 81 bars. So I don't need anything else. 203 00:12:07,030 --> 00:12:08,850 And that's what I do. I now, 204 00:12:08,850 --> 00:12:13,770 I just sit down and I try to structure as many good trades as I 205 00:12:13,770 --> 00:12:18,070 can a day on my 81 bars and on a good day, 206 00:12:18,520 --> 00:12:20,790 um, you know, I don't lose anything, you know, I, 207 00:12:20,790 --> 00:12:25,390 I might win a hundred percent of, uh, the trades. Um, now I, 208 00:12:25,810 --> 00:12:29,870 I'm, there's, there's an organization called the nfa, natural fu, 209 00:12:30,350 --> 00:12:31,590 national Futures Organization. 210 00:12:32,130 --> 00:12:36,350 And so I have to be careful about what I say I personally do, 211 00:12:36,350 --> 00:12:40,910 cuz I don't want to be audited by the nfa. Al you said x you know, 212 00:12:41,120 --> 00:12:44,670 uh, we wanna look at all your trades for the past two years, you know, 213 00:12:44,670 --> 00:12:46,950 give us records of all your trades. You know, 214 00:12:46,950 --> 00:12:50,790 I'm 64 years old and I don't want to be audited by anybody, 215 00:12:50,790 --> 00:12:54,630 so let me speak in generalities. I know several traders, 216 00:12:54,910 --> 00:12:59,790 probably many traders who win about 90% of the time as, 217 00:12:59,790 --> 00:13:04,670 uh, day traders. And they win, um, just about every day, if not every day. 218 00:13:05,280 --> 00:13:10,110 Um, I don't, I I've never had a year in which I've won every day of the year. 219 00:13:10,290 --> 00:13:14,830 You know, I always mess up some way, uh, at some point during the year. Um, 220 00:13:14,830 --> 00:13:17,950 my goal in life, I don't know if I'll live long enough to achieve that goal, 221 00:13:18,320 --> 00:13:21,270 is to win every day of the year. But, you know, 222 00:13:21,300 --> 00:13:25,630 invariably there's some day which, um, has a couple fake out, moves early, 223 00:13:25,850 --> 00:13:30,670 and I lose. And then, um, the day enters a very quiet training range. 224 00:13:30,720 --> 00:13:34,150 Or I'll have a doctor's appointment and I'll have to run. 225 00:13:34,830 --> 00:13:38,150 Something will happen. So at the end of the day, I've lost money, 226 00:13:38,490 --> 00:13:40,870 but I never lose, um, much money. 227 00:13:41,070 --> 00:13:44,390 Folks, I'm excited to tell you about my new sponsor, black Bull Markets. 228 00:13:44,540 --> 00:13:48,590 They have based here in New Zealand and they're in New Zealand regulated broker 229 00:13:48,890 --> 00:13:51,470 who offers up to 500 to one leverage. 230 00:13:51,690 --> 00:13:56,430 And over 26,000 tradeable instruments you can trade four x shares, 231 00:13:56,430 --> 00:13:58,310 commodities, indices, crypto, 232 00:13:58,490 --> 00:14:02,510 and they're an award-winning brokerage firm here in Asia Pacific with dedicated 233 00:14:02,510 --> 00:14:06,670 24 7 client support and no minimum deposit to trade with black bull markets 234 00:14:06,670 --> 00:14:10,470 today. Click the link in the description below or in the card above. Cool. 235 00:14:10,470 --> 00:14:14,550 Some really, really good story there, Al. Um, have you got more, more to it? 236 00:14:14,550 --> 00:14:17,750 Cuz I'm gonna ask you all some questions that dive a little deeper on some of 237 00:14:17,750 --> 00:14:19,630 those things, um, throughout the show. Okay. 238 00:14:20,450 --> 00:14:21,560 Go ahead. Why don't you ask me? 239 00:14:21,670 --> 00:14:25,600 Okay, so, well, the first one I've got is you mentioned, uh, that glines, uh, 240 00:14:25,610 --> 00:14:28,560 uh, you know, there's a fraud. What, what did you mean by that? 241 00:14:28,560 --> 00:14:29,680 And where does that sort of come from? 242 00:14:29,680 --> 00:14:30,880 Because that's the first time I've heard that. 243 00:14:31,630 --> 00:14:33,040 Okay. I could, you know, 244 00:14:34,190 --> 00:14:37,680 glines are dependent upon your bar compression, 245 00:14:37,680 --> 00:14:42,200 how many bars you have on the chart, and there's so many variables that, um, 246 00:14:43,710 --> 00:14:47,680 I I don't know of anyone who consistently makes money using G lines 247 00:14:48,380 --> 00:14:51,320 and, you know, it's just a, for a form of trend line. There are, 248 00:14:51,320 --> 00:14:53,320 there are other things out there that are pretty fraudulent. 249 00:14:53,390 --> 00:14:57,360 A lot of fiocchi stuff is fraudulent. Uh, just the, the, the basis, 250 00:14:57,740 --> 00:15:00,400 the logic behind Fiac is nonsense. 251 00:15:00,830 --> 00:15:04,920 That there's this magic spiral of numbers that, um, you know, 252 00:15:04,920 --> 00:15:09,320 the entire world operates on, and that's just total nonsense. Um, 253 00:15:09,320 --> 00:15:13,320 I can tell you that a 50% retracement is extremely important. 254 00:15:13,390 --> 00:15:17,480 A 50% extension, a hundred percent extension, those are extremely important. 255 00:15:17,900 --> 00:15:19,920 Coincidentally, the FCI numbers, 256 00:15:20,180 --> 00:15:23,480 but they're not important because the FCI numbers, you know, 257 00:15:23,480 --> 00:15:26,960 I could talk for an hour about the mathematics of why, uh, 258 00:15:26,960 --> 00:15:31,040 a 50% retracement is important or why, um, uh, 259 00:15:31,040 --> 00:15:33,520 two-thirds or 75% retracement is important. 260 00:15:33,650 --> 00:15:38,400 It has nothing to do with vichi, it has all to do with risk and reward, 261 00:15:38,930 --> 00:15:43,740 uh, and probability. So, um, you know, 262 00:15:43,740 --> 00:15:45,500 so there are all things, 263 00:15:45,730 --> 00:15:50,460 a lot of things out there that look like they're the cause of something where, 264 00:15:50,460 --> 00:15:55,010 where in fact they're just correlated. And, um, okay, you know, 265 00:15:55,010 --> 00:15:59,730 fac numbers is, you know, if enough people trade facs, they would be important, 266 00:16:00,070 --> 00:16:00,650 but I, 267 00:16:00,650 --> 00:16:05,090 I really don't think enough people pay attention to 62% and 38%, 268 00:16:05,090 --> 00:16:07,610 and then all the minor ones in between. You know, 269 00:16:07,610 --> 00:16:12,140 most traders are just dealing with 50% or, or approximations. 270 00:16:12,200 --> 00:16:14,060 You know, if you look at an ne in chart, 271 00:16:14,960 --> 00:16:16,980 and let's say an average day has 10 points, 272 00:16:17,310 --> 00:16:21,940 an average day now is more than 10 points, but an average day has 10 points and, 273 00:16:21,940 --> 00:16:23,780 uh, four, four ticks per point. 274 00:16:23,780 --> 00:16:27,100 So an average day has 40 ticks vertically from top to bottom. 275 00:16:28,160 --> 00:16:33,060 And if you look at all the reversals during the day and you include, 276 00:16:33,270 --> 00:16:36,340 uh, higher timeframe charts, and over the past several days, 277 00:16:37,370 --> 00:16:42,080 there are probably 40 FCI levels during, 278 00:16:43,010 --> 00:16:44,880 in the, in the course of a day. 279 00:16:45,210 --> 00:16:48,760 So that means it's just about everything in the day is at a FCI price level. 280 00:16:49,140 --> 00:16:53,760 And FCI traders don't worry about 281 00:16:54,080 --> 00:16:57,680 things being precise. Let's say the market goes, you know, 282 00:16:57,680 --> 00:17:00,760 four ticks beyond a 62% retracement, they'll say, oh, 283 00:17:00,760 --> 00:17:02,920 well it hit a 62% retracement. 284 00:17:03,210 --> 00:17:08,000 So if every FCI line has a band of four ticks above or below it, 285 00:17:08,340 --> 00:17:12,640 you know, you're talking about every price on the chart as being a FCI level. 286 00:17:13,250 --> 00:17:17,920 Um, you know, so to me it's, it's not helpful at all. The same with, 287 00:17:17,990 --> 00:17:22,520 well, you know, I don't know, I I don't wanna talk too much about, 288 00:17:22,650 --> 00:17:27,240 um, all of, um, all of the things out there that are fraudulent, 289 00:17:27,300 --> 00:17:32,160 but, you know, for the most part, Nazis are fraudulent, G is fraudulent. Um, 290 00:17:32,160 --> 00:17:36,400 most oscillators are, are fraudulent and, and useless. 291 00:17:37,290 --> 00:17:41,680 So, you know, to me, I I'm mainly interested in is the market going up? 292 00:17:41,680 --> 00:17:44,760 Is the market going down? How strongly is it going up? 293 00:17:44,760 --> 00:17:46,040 How strongly is it going down? 294 00:17:46,150 --> 00:17:49,560 I look at every bar in the chart and at every instant during the day, 295 00:17:49,740 --> 00:17:53,240 I'm asking myself, are there more buyers? Are there more sellers? 296 00:17:53,310 --> 00:17:57,400 When the bar closes, I ask myself, above the high of this bar, 297 00:17:57,500 --> 00:18:01,360 are there more buyers or are there more sellers at the low of that bar? 298 00:18:01,430 --> 00:18:04,880 What do I think is likely? Are there more buyers or are there more sellers? 299 00:18:05,260 --> 00:18:07,880 And you know, if you think about it, if you, if you, 300 00:18:07,880 --> 00:18:12,120 let's say the market's going sideways and then above the high of the bar, 301 00:18:12,120 --> 00:18:14,680 you know, there are stock entry traders, 302 00:18:14,680 --> 00:18:17,000 there'll be bulls buying one tick above the high of the bar, 303 00:18:17,380 --> 00:18:20,120 and there'll be bears selling one tick below the, below the bar. 304 00:18:21,050 --> 00:18:24,990 The flip side of that is limit order traders taking the other side of the trade. 305 00:18:25,480 --> 00:18:29,430 So let's say we have a bar and we know, and let's say it's a, 306 00:18:29,430 --> 00:18:31,110 looks like a buy signal. You know, 307 00:18:31,110 --> 00:18:33,870 there are bulls buying one tick above the high, high of that bar. 308 00:18:34,020 --> 00:18:35,030 Well guess what? 309 00:18:35,030 --> 00:18:39,150 Half the time I'm selling with a limit order at the high of that bar, 310 00:18:39,150 --> 00:18:42,550 taking the other side of the trade betting that there are more sellers than 311 00:18:42,550 --> 00:18:45,630 buyers above that bar. And the same is true below the bar. 312 00:18:45,910 --> 00:18:48,190 There are always gonna be traders saying, oh, 313 00:18:48,190 --> 00:18:50,550 if it goes one tick below this bar, it's going down. 314 00:18:50,800 --> 00:18:54,670 So there'll always be stop order traders selling one tick below the low of the 315 00:18:54,670 --> 00:18:58,780 current bar. Well, half the time, approximately, 316 00:18:58,780 --> 00:18:59,700 maybe more, 317 00:19:00,160 --> 00:19:04,500 I'm placing a limit order to buy the low of the current bar betting that the 318 00:19:04,500 --> 00:19:06,980 bear breakout will fail. You know, most breakouts fail, 319 00:19:06,980 --> 00:19:10,940 most stop orders in general, um, it's, 320 00:19:10,940 --> 00:19:13,340 it's the way traders should trade. 321 00:19:13,340 --> 00:19:15,700 Most traders starting out should trade with stops. 322 00:19:15,880 --> 00:19:20,620 But most of the bars on the chart, a stop order is a losing strategy, right? 323 00:19:20,620 --> 00:19:25,020 Most of the bars on the chart are a fairly narrow range and buying 324 00:19:25,100 --> 00:19:27,660 above, selling below a losing strategy. 325 00:19:27,680 --> 00:19:32,180 And so for most of the bars on the chart, I am doing the opposite. 326 00:19:32,180 --> 00:19:35,020 I'm looking to sell above bars. I'm looking to buy below bars. 327 00:19:35,550 --> 00:19:39,480 If the market's in a trend, let's another the story, you know, 328 00:19:39,480 --> 00:19:43,000 I am looking for stop entry trades as well as limit order trades. 329 00:19:43,170 --> 00:19:46,200 If the market's in a trading range and it's reversing up from the bottom, 330 00:19:46,390 --> 00:19:50,880 I will take a stop entry trade. But during most of the bars on the chart, 331 00:19:51,490 --> 00:19:51,840 um, 332 00:19:51,840 --> 00:19:56,480 a trader stands to make more money using entering with limit orders and using 333 00:19:56,480 --> 00:20:00,680 wide stops, wide protective stops, and scaling in and trading small. 334 00:20:02,660 --> 00:20:07,010 So, so, um, what you're talking about, I mean, that sounds a little bit like, 335 00:20:07,300 --> 00:20:11,410 um, looking at order flow, but I'm guessing you don't look at order flow, or do. 336 00:20:12,100 --> 00:20:17,080 You I do not. I have, um, a friend who, um, runs one of my websites, 337 00:20:17,080 --> 00:20:20,840 the Brooks Trading course web website, um, who, um, 338 00:20:20,950 --> 00:20:25,520 a year or two ago tried to sell me on depth of market trading and order 339 00:20:25,520 --> 00:20:27,680 flows and all that. And, um, 340 00:20:28,350 --> 00:20:32,920 I told him that I don't need to look at, uh, a depth of market, 341 00:20:33,210 --> 00:20:37,960 uh, or order flows. I can see I, I know where the orders are, you know, uh, 342 00:20:37,960 --> 00:20:40,480 he's telling me about iceberg orders. I don't, 343 00:20:40,480 --> 00:20:42,240 I know where the iceberg berg orders. 344 00:20:42,240 --> 00:20:46,000 Like I look at a chart and I know that at a certain, I know where the support, 345 00:20:46,000 --> 00:20:48,720 I can see all kinds of, of support and resistance during the day. 346 00:20:49,020 --> 00:20:53,240 And I know that there are huge orders at all of those prices. I know I, 347 00:20:53,240 --> 00:20:57,960 I see them. I, I I, I don't need that stuff to I, if you can read a chart, 348 00:20:58,140 --> 00:21:01,560 you know, you know all this stuff, you know, if you can read a chart, 349 00:21:01,620 --> 00:21:05,480 you don't need indicators to tell that the chart's about to reverse or a trend 350 00:21:05,720 --> 00:21:09,800 is about to resume. You can see on the chart, you know, what, 351 00:21:09,800 --> 00:21:14,520 what traders are doing on the e mini, every tick is important. You know, 352 00:21:14,520 --> 00:21:18,360 sometimes I hear somebody say, oh, it's just noise. That's total nonsense. 353 00:21:18,570 --> 00:21:21,760 Anytime I hear a person says, oh, the market, that's just noise. 354 00:21:22,090 --> 00:21:23,240 Anytime I hear that, 355 00:21:23,240 --> 00:21:27,320 I think either the person is ignorant and they just haven't taken the time to 356 00:21:27,320 --> 00:21:31,320 understand what the market is doing, or, um, they simply, they, 357 00:21:32,730 --> 00:21:37,120 they're either lazy or ignorant. Everything matters. The compu, 358 00:21:37,550 --> 00:21:38,920 like the emin right now, 359 00:21:39,520 --> 00:21:43,600 probably 70% or more of the trades are conducted by computers, 360 00:21:43,980 --> 00:21:47,440 and those computers are operating based upon logic, 361 00:21:47,550 --> 00:21:51,000 algorithms and on ideas that have been tested. 362 00:21:51,690 --> 00:21:56,350 And that's not noise. You know, that's, it's all logic. So, you know, 363 00:21:56,350 --> 00:22:00,150 I think it's better to take, um, the other side of that argument and say, there, 364 00:22:00,150 --> 00:22:03,990 there is no such thing as noise. Everything that happens happens for a reason. 365 00:22:04,070 --> 00:22:07,310 These computers are not randomly spitting out trades. 366 00:22:07,510 --> 00:22:10,310 Every one of those trades by every one of those computers, 367 00:22:10,310 --> 00:22:13,790 by every one of those firms is being done for a logical reason. 368 00:22:14,930 --> 00:22:19,920 So nothing, nothing is noise. Everything makes sense. And usually if you're, 369 00:22:19,920 --> 00:22:23,200 if you study charts and you understand what every little bar is doing, 370 00:22:23,200 --> 00:22:25,240 every little tick is doing every, uh, 371 00:22:25,240 --> 00:22:29,160 every little piece of support and resistance is doing, um, you know, 372 00:22:29,160 --> 00:22:33,760 you know where the orders are and it doesn't take long for you to see, you know, 373 00:22:33,760 --> 00:22:38,220 what they're doing. Are the orders by orders? Are they sell orders? Um, 374 00:22:38,950 --> 00:22:40,900 so no, I pay attention to order flow. 375 00:22:41,520 --> 00:22:44,100 And, and so, so do you, um, are you, 376 00:22:44,100 --> 00:22:46,100 would you say you're more of a discretionary trader, 377 00:22:46,100 --> 00:22:50,980 or are you using me mechanical rules to pick your entries in, in exits? 378 00:22:51,520 --> 00:22:56,220 I'm entirely discretionary, you know, but you know, I, I do things. 379 00:22:56,530 --> 00:22:59,420 I have a bunch of, I, I've accumulated, 380 00:22:59,420 --> 00:23:04,220 accumulated a lot of knowledge over the years. Also, back on the nineties, 381 00:23:04,250 --> 00:23:09,180 I spent probably 10,000 hours computer testing just about every 382 00:23:09,380 --> 00:23:14,180 idea I could think of. And I also designed a lot of automated strategies, 383 00:23:14,800 --> 00:23:17,460 and I traded a lot of automated strategies, 384 00:23:18,520 --> 00:23:23,420 and I decided that I'm just too controlling and too obsessive 385 00:23:23,910 --> 00:23:28,700 to be an automated trader because every time I'd see a signal trigger, 386 00:23:28,960 --> 00:23:31,580 I'd look at the chart and say, well, you know, 387 00:23:31,770 --> 00:23:34,380 I understand that I tested it and it looks like it's profitable, 388 00:23:34,640 --> 00:23:38,180 but there are things going on here that, um, 389 00:23:38,180 --> 00:23:40,540 there are variables that are that, that are not, 390 00:23:40,540 --> 00:23:43,700 that I did not consider in my system, and I really should consider them. 391 00:23:43,790 --> 00:23:48,040 So I kept overriding all of my, uh, systems. A lot of what I do, 392 00:23:48,040 --> 00:23:51,000 people can automate. And I know, you know, I've, I've been, 393 00:23:51,390 --> 00:23:54,840 a lot of people have contacted me over the years asking me either to work with 394 00:23:54,840 --> 00:23:58,440 them to help them automate or to tell me that they've automated different ideas 395 00:23:58,440 --> 00:23:59,800 and they're doing really well with them. 396 00:24:01,010 --> 00:24:02,530 We'll have to talk further because I, 397 00:24:02,530 --> 00:24:06,570 I've run a course on teaching people how to automate their trading. So, 398 00:24:06,570 --> 00:24:08,730 uh, we'll have to talk further on that. Um, right, 399 00:24:08,730 --> 00:24:10,850 so let's move on with the show. So for those listening, 400 00:24:10,850 --> 00:24:12,610 for the first time we're about to enter around, 401 00:24:12,610 --> 00:24:13,890 I'd like to call the fundamentals. 402 00:24:14,030 --> 00:24:17,290 And this is where I'll be asking Al to tell us stories that will help you 403 00:24:17,290 --> 00:24:20,810 understand what makes him a successful TraderR. So, uh, 404 00:24:20,810 --> 00:24:22,370 you've already given us some of these insights, 405 00:24:22,370 --> 00:24:25,330 but I'm gonna ask you for a few more. So things like, um, 406 00:24:25,330 --> 00:24:28,370 I suppose you've told us your trading style, um, 407 00:24:28,460 --> 00:24:32,210 if you've got a particular strategy you use, which it sounds like you use many, 408 00:24:32,420 --> 00:24:36,330 um, you've told us your timeframes, winning percentages, uh, instruments, 409 00:24:36,330 --> 00:24:39,490 that's all been said, but what about things like, um, draw downs, 410 00:24:39,490 --> 00:24:43,330 what to what's your typical sort of draw down and maybe your risk to reward 411 00:24:43,330 --> 00:24:44,163 ratio? 412 00:24:44,720 --> 00:24:49,210 Okay, let me on drawdowns. I, I don't get big drawdowns. Um, 413 00:24:49,230 --> 00:24:51,330 you know, so I, you know, in general, 414 00:24:51,660 --> 00:24:55,490 traders who have been doing this a long time, uh, they have many accounts. 415 00:24:55,560 --> 00:24:57,250 They don't trade every account every day. 416 00:24:57,250 --> 00:25:00,730 I have many accounts and I trade many accounts every day for different reasons. 417 00:25:00,730 --> 00:25:03,250 And some of them are linked together. Um, 418 00:25:03,250 --> 00:25:06,530 and there are other accounts I don't trade. And, you know, 419 00:25:06,530 --> 00:25:10,450 in terms of actual dollars, you know, I'm never going to be risking, you know, 420 00:25:10,450 --> 00:25:15,210 more than one or 2% of, um, my trading accounts, uh, on any one trade. 421 00:25:15,900 --> 00:25:19,730 So, and I, you know, sometimes I'll get two, two losers in a row. 422 00:25:19,730 --> 00:25:24,490 Rarely I'll get three losers in a row, but, uh, I'm never gonna be risking, uh, 423 00:25:24,490 --> 00:25:25,323 all that much. 424 00:25:26,870 --> 00:25:30,450 And, uh, and in terms of, um, risk to reward ratio, 425 00:25:30,450 --> 00:25:32,090 I suppose it's quite high then, or. 426 00:25:32,210 --> 00:25:36,290 Lemme just say something about that. I think that's important. And you know, 427 00:25:36,320 --> 00:25:39,210 when I hear traders on television talk about risk reward, 428 00:25:40,000 --> 00:25:43,890 it's really deceptive because there are actually three variables. 429 00:25:43,890 --> 00:25:46,530 Risk and reward implies. There's math. You know, 430 00:25:46,530 --> 00:25:50,210 how many dollars are you risking dollars? That's an amount. How many, how, 431 00:25:50,210 --> 00:25:53,930 how many dollars are you trying to win? That's an amount, that's Matt. But, 432 00:25:54,330 --> 00:25:58,750 you know, risk and reward is meaningless unless you also talk about probability, 433 00:25:59,070 --> 00:26:02,670 right? Every trade, every trade that every trader takes, 434 00:26:02,680 --> 00:26:06,430 they're taking either four risk, reward, or for probability. 435 00:26:06,620 --> 00:26:08,110 Nobody can get both. 436 00:26:08,350 --> 00:26:12,550 Nobody can get a great risk reward trade that has a high probability of success, 437 00:26:12,750 --> 00:26:13,350 right? 438 00:26:13,350 --> 00:26:16,790 There always has to be a reason for the somebody to take the other side of your 439 00:26:16,790 --> 00:26:21,670 trade. So if your trade has a really high risk reward ratio, the other guy, 440 00:26:22,050 --> 00:26:24,950 you have very little chance of winning. You have a very low probability, 441 00:26:25,090 --> 00:26:29,190 the person taking the other side has a high probability of winning. Um, 442 00:26:29,280 --> 00:26:32,950 in general, short of timeframe, traders scalpers, i, 443 00:26:32,950 --> 00:26:35,790 I mostly scalp have a very high winning percentage, 444 00:26:36,610 --> 00:26:40,790 but we end up taking lot of trades that have very bad risk reward. 445 00:26:40,800 --> 00:26:44,280 So in other words, very little reward relative to the, to the risk. 446 00:26:44,460 --> 00:26:48,440 But if you win a high enough percentage, you can offset the bad risk reward. 447 00:26:48,940 --> 00:26:53,470 And traders who are looking for really high risk reward 448 00:26:53,470 --> 00:26:57,070 trades, you know, really great reward, very little risk, you know, 449 00:26:57,070 --> 00:27:00,990 they're gonna lose most of the time, right? So if, if you're risking, 450 00:27:00,990 --> 00:27:03,590 let's say you buy, you buy something, 451 00:27:03,590 --> 00:27:07,710 you buy Apple stock and you're gonna risk one penny, right? 452 00:27:07,900 --> 00:27:12,710 You're not gonna lose very much, right? So your risk reward ratio is fantastic. 453 00:27:12,710 --> 00:27:16,830 You're, you know, you're risking one penny and you're trying to make $10, right? 454 00:27:16,830 --> 00:27:20,390 So a fantastic risk reward, uh, set up on that trade. 455 00:27:20,580 --> 00:27:24,390 What's the probability of success? You know, like, yeah, very low. 456 00:27:24,610 --> 00:27:28,270 One in a million. Yeah, right? On the other hand, 457 00:27:28,430 --> 00:27:33,110 let's say you have a limit order to take profit on, on Apple, and, um, 458 00:27:33,450 --> 00:27:35,510 and you've already made $7 on Apple, 459 00:27:35,810 --> 00:27:38,190 and the market gets really close to your limit order, 460 00:27:38,330 --> 00:27:41,990 and now your stop is maybe a dollar away, and, um, 461 00:27:41,990 --> 00:27:46,870 and Apple is now one penny away from your profit target, 462 00:27:47,100 --> 00:27:50,700 what are you gonna do? Okay, so at that instant, 463 00:27:50,850 --> 00:27:54,980 your reward is one penny, right? There's only one penny left to your reward. 464 00:27:55,560 --> 00:27:59,700 And at that instant, you're still risking $1, you stop as a dollar away. 465 00:28:00,170 --> 00:28:04,340 Okay? So, um, you know, you're risking, you know, at that incident, 466 00:28:04,340 --> 00:28:08,500 you're risking, um, a hundred pennies to make one penny. 467 00:28:08,870 --> 00:28:13,060 So you have a horrible risk reward set up. Are you gonna exit at the market? 468 00:28:14,370 --> 00:28:17,960 No, you're not. You're gonna hold. So at that instant, you know, 469 00:28:17,960 --> 00:28:21,080 you believe your probability of success is really, really high, 470 00:28:21,170 --> 00:28:24,120 because otherwise you're crazy. You know, you can't be, 471 00:28:24,120 --> 00:28:28,850 you cannot be risking a dollar to make one penny unless 472 00:28:28,850 --> 00:28:32,970 you're very, very confident of, uh, making a profit. But the, 473 00:28:32,970 --> 00:28:34,650 the point that I'm making is every trade, 474 00:28:35,410 --> 00:28:39,330 whenever I hear somebody talk about risk reward, I think that they're really, 475 00:28:39,540 --> 00:28:42,410 uh, I don't, I don't, I wanna be polite. 476 00:28:42,760 --> 00:28:46,010 I think they haven't thought enough about, uh, what they're doing. 477 00:28:46,310 --> 00:28:50,610 You have to consider probability. And sometimes you'll hear that, you know, 478 00:28:50,610 --> 00:28:53,730 I've watch options, action, and sometimes they'll talk about risk reward, 479 00:28:54,070 --> 00:28:57,330 and then sometimes someone will actually say, oh, yeah, 480 00:28:57,330 --> 00:28:58,410 but you're probably not gonna win. 481 00:28:58,840 --> 00:29:01,490 What they're saying is they are f probability. 482 00:29:02,160 --> 00:29:04,870 Usually when I hear people talk about risk reward, 483 00:29:05,040 --> 00:29:09,780 they're implying that they're taking the trade because they think there's at 484 00:29:09,780 --> 00:29:12,700 least a 50% chance of winning. They never say that, 485 00:29:12,800 --> 00:29:16,380 but that's what they're implying. So whenever they're saying, oh, this, 486 00:29:16,380 --> 00:29:19,820 this trade is a good risk reward tr set up. Well, I mean that, 487 00:29:19,820 --> 00:29:23,780 just saying that by itself is nonsense. You have to talk about probability. 488 00:29:23,930 --> 00:29:28,420 What they're implying is as a good risk reward set, 489 00:29:28,830 --> 00:29:32,740 uh, ratio, and it has a pretty good chance of success. In other words, 490 00:29:32,740 --> 00:29:36,860 the probability is 50%, you know, sometimes 40%, 50%, 491 00:29:36,860 --> 00:29:41,520 60% on any trade, 90% of all, uh, 492 00:29:41,520 --> 00:29:46,360 bars on the chart, on any chart you, you could buy or sell. 493 00:29:46,580 --> 00:29:51,120 And you have between a 40 and 60% chance of success when 494 00:29:51,140 --> 00:29:55,280 10% of the bars on the chart are in a strong breakout up or down. 495 00:29:55,540 --> 00:29:57,560 And during those times, you know, 496 00:29:57,560 --> 00:30:00,040 the probability is overwhelmingly one direction. 497 00:30:00,040 --> 00:30:02,000 If you're in a very strong bull break out, 498 00:30:02,180 --> 00:30:05,760 and it's very hard to make money selling. But all the other bars in the chart, 499 00:30:05,810 --> 00:30:08,800 if it's a bull channel or a bear channel or a trading range, 500 00:30:09,980 --> 00:30:14,760 you could buy or sell at any given incident and have no worse than a 501 00:30:14,760 --> 00:30:19,240 40% chance of making money and no better than a 60% chance of making money. 502 00:30:19,870 --> 00:30:21,760 Okay. That's nice way to look at it. 503 00:30:22,070 --> 00:30:25,400 Yeah, I mean that's, that's the map. And if you think about it, 504 00:30:25,690 --> 00:30:29,840 if you look at any bar on a five minute chart, you know, let's say an chart, 505 00:30:30,520 --> 00:30:32,040 thousands of contracts are being traded. 506 00:30:32,530 --> 00:30:35,080 So that means there are thousands of contracts being sold, 507 00:30:35,600 --> 00:30:38,000 thousands of contracts being bought. And you know, 508 00:30:38,000 --> 00:30:40,720 it's not like one side is smart and the other side is stupid. 509 00:30:41,070 --> 00:30:45,320 Both sides believe they can make money. And that's what I'm saying, you know, 510 00:30:45,320 --> 00:30:47,160 during 90% of the bars on the chart, 511 00:30:47,260 --> 00:30:52,040 you can make money either buying or selling if you structure the trade 512 00:30:52,040 --> 00:30:52,770 correctly, 513 00:30:52,770 --> 00:30:57,160 if you use wide stops and scale in and use sensible wide stops and scale in. 514 00:30:57,220 --> 00:31:00,040 And that's why there's so much buying between taking, 515 00:31:00,040 --> 00:31:04,160 taking place on every bar and every chart because the computers are doing just 516 00:31:04,160 --> 00:31:07,200 that. They're structuring the trades. Um, well, they, 517 00:31:07,220 --> 00:31:12,080 the computers know they have between a 40 and 60% chance of winning and they 518 00:31:12,080 --> 00:31:15,280 trade small enough so that they can use wide stops and scale in, 519 00:31:15,340 --> 00:31:20,080 and that greatly increases their probability of, um, of being profitable. 520 00:31:20,550 --> 00:31:23,560 It's at the price of risk using wide stops, right? 521 00:31:23,900 --> 00:31:28,680 But if you structure your trades correctly during 90% of the bars on any 522 00:31:28,680 --> 00:31:32,200 chart, you can make money either as a buyer or as a seller. 523 00:31:33,830 --> 00:31:37,480 Okay, cool. Hey, um, just, I'm just gonna stop you for a second. Uh, 524 00:31:37,480 --> 00:31:40,920 there's something going, something sort of your, your microphone. Um, 525 00:31:41,070 --> 00:31:44,640 I wonder if there's a loose connection or something. Uh, 526 00:31:44,640 --> 00:31:48,840 I keep getting like this buzzing and then like a beep and then, um, 527 00:31:49,590 --> 00:31:53,000 just now it's just flipped back to having this background noise. 528 00:31:53,230 --> 00:31:55,680 That's my air conditioner. Let me, lemme flip it off. 529 00:31:56,210 --> 00:31:56,800 Ah, okay. 530 00:31:56,800 --> 00:31:59,240 You're, you're in the middle of winter. I'm in the middle of summer. 531 00:31:59,520 --> 00:32:00,440 . Yeah, I know. 532 00:32:00,440 --> 00:32:01,880 Give a moment, lemme go. Turn it. 533 00:32:01,880 --> 00:32:04,520 Off. You got an air conditioning on? I've got, I've got a heat pump on. 534 00:32:12,500 --> 00:32:15,110 Okay. Just flip the square. It might take a minute. Okay. 535 00:32:15,110 --> 00:32:18,190 To, and there's a, there's a, there's still something, 536 00:32:18,190 --> 00:32:21,710 some sort of background noise cuz it disappeared. It, you started off fine, 537 00:32:21,710 --> 00:32:23,310 then it went for the first bit. 538 00:32:23,310 --> 00:32:26,630 You had this background noise and then all of a sudden it just stopped and then 539 00:32:26,630 --> 00:32:29,350 it's just come back in the last one minute. 540 00:32:29,610 --> 00:32:31,190 The air conditioner just came on a minute. 541 00:32:31,190 --> 00:32:32,150 Ago. Oh, did it. 542 00:32:32,150 --> 00:32:32,510 Before, 543 00:32:32,510 --> 00:32:37,390 before we spoke I turned the air conditioner on to 544 00:32:37,390 --> 00:32:38,150 make the house really, 545 00:32:38,150 --> 00:32:42,280 really cold so that the air conditioner would probably not come on again while, 546 00:32:42,360 --> 00:32:43,880 while I was speaking. Yeah. 547 00:32:44,000 --> 00:32:44,340 . 548 00:32:44,340 --> 00:32:47,400 You know, it's, I don't know, maybe 95 degrees out there. 549 00:32:47,400 --> 00:32:51,720 So the air 95 degrees Fahrenheit, so while the air conditioner came on. 550 00:32:51,720 --> 00:32:52,553 Okay. Well. 551 00:32:52,570 --> 00:32:56,240 It, it should, I, I just flipped the switch and sometimes a minute to turn off, 552 00:32:56,240 --> 00:32:58,200 but that is the background noise that's missing. 553 00:32:58,200 --> 00:33:02,360 Oh, okay. That's alright. Hopefully, um, you don't start sweating too much. 554 00:33:03,080 --> 00:33:06,680 . No . Um, okay, I'll, I'll move on with the next question. 555 00:33:07,970 --> 00:33:10,480 So what does your, uh, typical trading day look like? 556 00:33:12,270 --> 00:33:17,210 Well, I, I get up about five o'clock every morning and, 557 00:33:17,460 --> 00:33:20,850 uh, sometimes I'll lift some weights. I have some weights in my, my office, 558 00:33:20,990 --> 00:33:24,370 you know, for several days a week I lift weights. Um, uh, 559 00:33:24,370 --> 00:33:27,250 and then in between sets of lifting weights, 560 00:33:27,250 --> 00:33:31,290 I'm writing a blog and, um, I, 561 00:33:31,290 --> 00:33:34,850 I write a blog from my websites about what I think the training day will be 562 00:33:34,850 --> 00:33:37,650 like. You know, do, do I think today it'll be a training range date? 563 00:33:37,650 --> 00:33:42,210 Do I think it will go up? Do I think we'll go down? Um, and, uh, 564 00:33:42,350 --> 00:33:45,130 and then I'm looking at charts. So I'm drawing lines, 565 00:33:45,130 --> 00:33:48,450 so I'm always drawing lines on charts. So I'm always looking for measured moves. 566 00:33:48,710 --> 00:33:52,650 I'm looking for trend lines. I'm looking at, um, the five minute moving average, 567 00:33:52,650 --> 00:33:56,010 the 60 minute moving average plotted on five minute chart, 568 00:33:56,390 --> 00:34:00,690 and I'm looking at yesterday's high, other significant prior highs and lows. 569 00:34:01,960 --> 00:34:06,100 And then I'm looking at, you know, yesterday, was it a trend day? 570 00:34:06,100 --> 00:34:09,180 Was it a trading each day? If it was a trend day, was it climactic? 571 00:34:09,310 --> 00:34:11,420 So I'm trying to get a sense of, you know, for example, 572 00:34:11,420 --> 00:34:13,620 if yesterday was a very strong bull trend day, 573 00:34:14,570 --> 00:34:18,700 I know that there's a 50% chance that there'll be followed through buying today 574 00:34:18,700 --> 00:34:21,460 on the open, uh, for the first hour or two. 575 00:34:21,930 --> 00:34:26,180 I also know that there's a 75% chance that the, 576 00:34:26,180 --> 00:34:29,500 today we'll have at least two hours of sideways to down trading, 577 00:34:29,760 --> 00:34:33,820 and it will start by the end of, uh, the first, by the end of the second hour. 578 00:34:34,360 --> 00:34:35,170 And finally, 579 00:34:35,170 --> 00:34:39,860 I know that there's only a 25% chance if yesterday was a very strong 580 00:34:39,860 --> 00:34:40,620 bull trend day, 581 00:34:40,620 --> 00:34:44,700 there's only a 25% chance that today is going to be a very strong bull trend 582 00:34:44,700 --> 00:34:48,900 day. So I'm, I'm looking at yesterday, I'm looking at support and resistance, 583 00:34:48,900 --> 00:34:52,260 and I'm, I'm, uh, making, uh, drawing lines on the chart, 584 00:34:52,260 --> 00:34:56,140 just trying to get a sense of what the market is doing. When I was your age, 585 00:34:56,730 --> 00:35:00,420 a lot of times I would, uh, start trading at five o'clock as soon as I get up. 586 00:35:00,680 --> 00:35:03,700 And sometimes I would, uh, trade into the evening. 587 00:35:04,610 --> 00:35:07,550 And there have been nights when I've traded all night long. Um, 588 00:35:07,550 --> 00:35:11,030 back then I used to trade currencies instead of four x, now I trade four x. 589 00:35:11,730 --> 00:35:15,510 But you know, now that I'm getting to be an old guy and, uh, 590 00:35:15,510 --> 00:35:17,990 I don't need the money, um, I can, um, 591 00:35:18,750 --> 00:35:23,280 I can be more selective and I have a, a more predictable, um, 592 00:35:23,570 --> 00:35:24,403 workday. 593 00:35:25,110 --> 00:35:27,640 Cool. Okay. And so in the beginning, 594 00:35:27,640 --> 00:35:31,040 what do you think differentiated you from the average mum or dad trader out 595 00:35:31,040 --> 00:35:33,960 there? So what traits did you have and what actions did you take? 596 00:35:34,710 --> 00:35:38,240 Well, early on, you know, I applied my, you know, 597 00:35:38,240 --> 00:35:42,840 medical school approach to learning and, you know, I just, you know, 598 00:35:42,840 --> 00:35:45,360 read all that stuff and had all these tutors and went all, 599 00:35:45,360 --> 00:35:48,560 took all these classes and everyone was pushing indicators. 600 00:35:49,220 --> 00:35:54,040 And to me it, it was just hiding the underlying truth and the underlying truth, 601 00:35:54,040 --> 00:35:57,840 this price, and I can see it on a chart. So for years, 602 00:35:57,840 --> 00:36:01,880 I just assumed that I had to have all those indicators. And, you know, 603 00:36:01,880 --> 00:36:03,480 10 years after 10 years of losing, 604 00:36:03,480 --> 00:36:07,240 I got rid of all of them and I just started looking at the bars. And you know, 605 00:36:07,240 --> 00:36:10,920 if you just print out a chart of any market, at the end of the day, 606 00:36:11,070 --> 00:36:14,760 it's crazy to see, oh, it's going up here. If I make, if I bought, 607 00:36:14,910 --> 00:36:16,720 I would make money. Oh look, 608 00:36:16,720 --> 00:36:20,400 it's now going down and it's going down pretty strongly. If I sell here, 609 00:36:20,400 --> 00:36:23,600 I'll make money. I don't need indicators, I don't need a course. 610 00:36:23,600 --> 00:36:27,320 I don't need anybody, you know, a 10 year old kid can see that. 611 00:36:27,890 --> 00:36:31,400 So that became the basis for my trading. You know, 612 00:36:31,400 --> 00:36:35,040 just looking at what the bars are doing and try to get a sense of, you know, 613 00:36:35,040 --> 00:36:38,560 will the market go up? Will it keep going up, will it go down? You know, 614 00:36:38,560 --> 00:36:42,120 will it keep going down? And um, and if it's all sideways, 615 00:36:42,120 --> 00:36:46,160 what's the best way to trade it in general? If it's sideways, 616 00:36:46,160 --> 00:36:50,840 I'm looking to buy below prior lows, buy more lower and get out quickly, 617 00:36:50,920 --> 00:36:52,800 scalp. If it's going sideways, 618 00:36:52,800 --> 00:36:56,960 I look to sell above prior highs and sell more higher 619 00:36:57,540 --> 00:37:01,920 and then, uh, scalp. So buy low, sell high, uh, scale in use, 620 00:37:01,920 --> 00:37:03,240 wide stops and scalp. 621 00:37:04,580 --> 00:37:07,670 Cool. Okay. That's good, good advice out there. Uh, 622 00:37:07,680 --> 00:37:10,670 so if you're a retail trader working a day job, 623 00:37:10,670 --> 00:37:13,830 what steps would you take to start earning an income as a trader? 624 00:37:14,780 --> 00:37:16,470 People ask me that, um, 625 00:37:16,470 --> 00:37:20,790 fairly regularly and everyone's aware that, you know, if your, 626 00:37:22,010 --> 00:37:26,240 uh, work hours totally overlap the trading day, you cannot be a day trader. 627 00:37:26,620 --> 00:37:30,240 But a lot of people, the market opens, especially if you work in the west coast, 628 00:37:30,340 --> 00:37:34,970 the market opens early enough so that you can trade for an hour or two 629 00:37:34,970 --> 00:37:39,590 before, before you have to go to work. And then alternatively, 630 00:37:39,590 --> 00:37:42,910 you could trade, you know, if you have, uh, depending on where you are, 631 00:37:43,130 --> 00:37:47,270 you know, the four x markets are active pretty much most of the time. Uh, 632 00:37:47,270 --> 00:37:50,750 the longest dead zone in the four x market is right after the New York Stock 633 00:37:50,990 --> 00:37:55,350 Exchange closes. And, uh, but then it picks up again, you know, uh, 634 00:37:55,350 --> 00:37:57,190 in the middle of the night, middle of the night, 635 00:37:57,190 --> 00:38:01,790 California time around midnight. So, um, you know, most traders, 636 00:38:01,790 --> 00:38:06,550 most traders can find hours during the day when some market is 637 00:38:06,550 --> 00:38:06,830 open, 638 00:38:06,830 --> 00:38:11,030 open and they can find several hours during the day when some market is open. 639 00:38:12,920 --> 00:38:16,630 So I would just try to find a block of time and start to trade 640 00:38:17,690 --> 00:38:21,760 if most traders when they're starting out don't have a huge account. So, 641 00:38:21,760 --> 00:38:25,520 you know, trading the e mini and trading some of the European markets, 642 00:38:25,550 --> 00:38:30,440 some of the bond markets, they can't do it. But, and also stocks, you know, 643 00:38:30,440 --> 00:38:30,760 a lot of, 644 00:38:30,760 --> 00:38:34,600 there are minimum account sizes in the United States if you're gonna become a 645 00:38:34,600 --> 00:38:36,840 day trader, if you're gonna be placing a lot of trades, 646 00:38:36,840 --> 00:38:40,720 you have to meet certain account minimums. And then the alternative is, uh, 647 00:38:40,720 --> 00:38:43,200 four X markets. And four x markets, 648 00:38:43,230 --> 00:38:48,080 I think are a good starting place for a lot of traders because you can 649 00:38:48,080 --> 00:38:50,600 have a small account and you can trade really, really small. 650 00:38:52,360 --> 00:38:55,890 Yeah, and I think that's a, that's valid point. I mean, I did start off, uh, 651 00:38:55,890 --> 00:38:59,570 with options and quickly moved into Fourex after realizing that, you know, 652 00:38:59,570 --> 00:39:02,930 there was a lot of money, uh, that you had to put at risk, um, 653 00:39:02,930 --> 00:39:05,570 initially just to, you know, take even a few trades. 654 00:39:05,570 --> 00:39:06,890 And as soon as you start losing it, 655 00:39:06,890 --> 00:39:10,610 the emotional thing was quite difficult for someone who's just starting out. 656 00:39:10,610 --> 00:39:13,490 So ended up moving to Fourex where it, you, you can, you know, 657 00:39:13,490 --> 00:39:16,330 essentially practice and until you do, um, 658 00:39:16,800 --> 00:39:20,370 feel more confident and get control of those emotions. So, uh, 659 00:39:20,370 --> 00:39:23,050 can you explain to the listeners your preferred trading strategy? 660 00:39:23,060 --> 00:39:27,130 So the ins and outs of how it works and why you chose this type of strategy over 661 00:39:27,130 --> 00:39:27,963 the others? 662 00:39:28,280 --> 00:39:30,370 Well, I, you know, I, I'm always thinking of, 663 00:39:30,370 --> 00:39:31,810 of the market in terms of the cycle, 664 00:39:32,240 --> 00:39:36,370 that it's either in a trend or in a training range and trend, 665 00:39:36,370 --> 00:39:40,170 it can be a very strong trend of breakout or it could be in a channel. And so, 666 00:39:40,170 --> 00:39:44,010 you know, my favorite strategy is just to see what the market is doing. 667 00:39:44,620 --> 00:39:48,450 Is it in a strong breakout? I love strong breakouts, right? Uh, 668 00:39:48,450 --> 00:39:51,890 it's the highest probability time for trading, but like I said, 669 00:39:51,890 --> 00:39:54,770 high probability means smaller reward and less risk. 670 00:39:54,770 --> 00:39:56,570 By the time you've had a big breakout, 671 00:39:56,570 --> 00:39:59,970 there's probably not much left to the move and you stop as far away. 672 00:40:00,310 --> 00:40:04,630 And then when the market starts to enter a channel, I start to, uh, 673 00:40:04,630 --> 00:40:08,390 do limit order trades, uh, against the channel. Once the channel, uh, 674 00:40:08,390 --> 00:40:10,870 starts to become broad. So, um, you know, 675 00:40:11,130 --> 00:40:15,150 I'm very happy trading in channels as well. And then in a trading range, 676 00:40:15,180 --> 00:40:20,110 like I said, uh, I like trading ranges, you know, buy low, sell high scalp, uh, 677 00:40:20,110 --> 00:40:24,670 I use wider stops I scale in. Um, so for me, it doesn't matter. 678 00:40:24,670 --> 00:40:28,150 There's, the market can do one of three things. It can be in a breakout, 679 00:40:28,530 --> 00:40:32,310 you know, no pullbacks. It can be in a channel, which is a trend with, uh, 680 00:40:32,500 --> 00:40:34,470 a lot of pullbacks, or it can be in a trading range, 681 00:40:34,470 --> 00:40:39,160 which is just the sideways channel. And I don't, I don't have a favorite, 682 00:40:39,580 --> 00:40:43,280 you know, I, I I, I trade all of them and I'm very comfortable with all of them. 683 00:40:43,540 --> 00:40:47,840 The key is recognizing, uh, which one is going on right now. And, 684 00:40:47,840 --> 00:40:52,360 and a lot of times, uh, the market's in a transition, you can't tell. And, um, 685 00:40:52,360 --> 00:40:53,680 anytime I'm confused, 686 00:40:53,950 --> 00:40:56,920 that's my radar telling me the market's in a trading range, 687 00:40:56,920 --> 00:41:00,040 even if it doesn't look like a trading range. If I'm confused, 688 00:41:00,040 --> 00:41:03,520 it's in a trading range, and I'm looking to buy low buy more, lower, 689 00:41:03,700 --> 00:41:05,800 I'm looking to sell high, sell more higher, 690 00:41:05,800 --> 00:41:08,560 and I'm looking to get out with a quick profit. The one thing, 691 00:41:08,560 --> 00:41:09,360 when I'm confused, 692 00:41:09,360 --> 00:41:13,000 the one thing I'm confident of is that the market's not gonna go very far. 693 00:41:13,280 --> 00:41:15,840 Right? And if the market's not gonna go very far, 694 00:41:15,840 --> 00:41:20,000 I'm not gonna be swing trading. I'm, I'm going to be looking for, for scallops. 695 00:41:21,290 --> 00:41:22,500 Cool. And, um, 696 00:41:22,500 --> 00:41:25,500 so if you had to dive a little deeper thinking about a price chart, 697 00:41:26,090 --> 00:41:30,140 what three things would you recommend a novice trader educate themselves on when 698 00:41:30,140 --> 00:41:30,973 reading a chart? 699 00:41:32,400 --> 00:41:36,810 Well, first thing, and first thing I would learn on the market cycle, 700 00:41:36,990 --> 00:41:41,330 you know, learn to be able to distinguish a breakout from a, uh, 701 00:41:41,330 --> 00:41:46,330 channel and from a, uh, trading range. And, um, 702 00:41:46,330 --> 00:41:48,370 I would get some sense of strength. 703 00:41:48,660 --> 00:41:50,970 So a lot of times the market will be in a channel, so, 704 00:41:52,430 --> 00:41:54,850 and then it'll go back up. Let's talk about a bull. 705 00:41:55,060 --> 00:41:57,690 So a lot of times it'll pull back and then it'll start going up again. 706 00:41:57,690 --> 00:42:00,130 It'll pull back and it'll start to go up again. You know, 707 00:42:00,200 --> 00:42:02,650 I would pay attention to, um, 708 00:42:03,870 --> 00:42:07,130 how deep the pullbacks are. Are they only lasting one or two bars, 709 00:42:07,130 --> 00:42:10,770 or are they lasting 10 or 20 bars? In other words, are the, are, 710 00:42:10,780 --> 00:42:14,130 is the market making big swings? If the pullbacks are, 711 00:42:14,560 --> 00:42:17,730 when traders start to see pullbacks, they're always trying to fade. 712 00:42:17,730 --> 00:42:19,370 They're always looking, let's say a bull channel. 713 00:42:19,600 --> 00:42:23,010 Once traders start to see pullbacks, they start imagining tops. 714 00:42:23,780 --> 00:42:27,680 But if the pullbacks are only a bar or two or three, and they're not very deep, 715 00:42:27,820 --> 00:42:31,440 you know, um, if you look at a higher timeframe chart, 15 minute chart, 716 00:42:31,440 --> 00:42:32,273 60 minute chart, 717 00:42:32,710 --> 00:42:37,680 that bull channel on the five minute chart is in fact a very strong breakout 718 00:42:37,680 --> 00:42:42,360 on the 15 minute or 60 minute chart. So if the pullbacks are not deep, 719 00:42:42,360 --> 00:42:44,880 if they're only lasting a bar or two or three, 720 00:42:45,020 --> 00:42:47,240 and they're not falling down many points, 721 00:42:47,890 --> 00:42:51,500 even though you're seeing pullbacks only trade in the direction of the trend, 722 00:42:51,730 --> 00:42:55,700 I think that's a really common cause of losses. 723 00:42:55,700 --> 00:42:57,260 People start seeing pullbacks, 724 00:42:57,470 --> 00:43:02,380 so they start seeing reversals and they start taking opposite. Um, you know, 725 00:43:02,380 --> 00:43:05,780 they start betting on, um, the opposite direction. 726 00:43:06,040 --> 00:43:10,660 One of the natural things that a beginner is always going to focus on is risk, 727 00:43:10,660 --> 00:43:11,320 right? 728 00:43:11,320 --> 00:43:16,300 You work so hard to save some money so that you can start trading and the 729 00:43:16,300 --> 00:43:19,300 money becomes really precious. And when they look at any trade, 730 00:43:19,720 --> 00:43:23,420 all they think about is one variable risk. And I, 731 00:43:23,420 --> 00:43:27,140 I said that there are three variables, you know, risk reward, 732 00:43:27,140 --> 00:43:30,100 you always hear people talk about risk, reward, and then probability. 733 00:43:30,100 --> 00:43:32,340 And I think probability is the most important of the three. 734 00:43:33,410 --> 00:43:37,110 But when a trader starts out, they, uh, all they think about is risk. 735 00:43:37,110 --> 00:43:41,310 I cannot lose this money. You know, it's like death, it's my death, you know, 736 00:43:41,310 --> 00:43:44,590 I'll die as a trader if I blow this account. Uh, you know, 737 00:43:44,590 --> 00:43:46,950 my trading career is over, my dream is dead, 738 00:43:47,650 --> 00:43:50,670 and they focus a lot on risk. And, 739 00:43:50,690 --> 00:43:53,070 and that's a mistake because when you focus on risk, 740 00:43:53,300 --> 00:43:56,910 you're naturally gonna be looking for trays that have the smallest risk, 741 00:43:57,070 --> 00:43:59,630 which usually means that the market's going up, 742 00:43:59,630 --> 00:44:03,510 you're looking to sell because the stop is just above the high of this bar, 743 00:44:03,750 --> 00:44:07,830 right? But you're ignoring probability. And, you know, 744 00:44:07,830 --> 00:44:11,990 anytime you're taking a low risk trade, you're taking a low probability trade. 745 00:44:12,760 --> 00:44:17,190 So I think one of the mistakes traders do is they tend to, um, 746 00:44:17,300 --> 00:44:22,190 look for reversals when the trend is going on, and then another. So, uh, 747 00:44:22,360 --> 00:44:27,190 so in other words, a trend when when it's channeling up, 748 00:44:27,190 --> 00:44:30,870 it's gonna keep going up, 80% of reversals are going to fail, 749 00:44:30,870 --> 00:44:34,040 and you're gonna lose money. So yes, your risk is small, 750 00:44:34,180 --> 00:44:38,980 but if you're losing 80% of the time, you're going to lose money on the other. 751 00:44:39,040 --> 00:44:41,780 Let me just flip it over and go to a trading range. 752 00:44:42,890 --> 00:44:46,500 A trading range is filled with two legged moves, two legs up, two legs down, 753 00:44:46,640 --> 00:44:49,180 and the second leg is usually extremely strong. 754 00:44:49,610 --> 00:44:53,460 People are naturally hopeful. Everyone's hopeful. I mean, 755 00:44:53,460 --> 00:44:57,700 it's a survival skill. And I think it, um, I think it was bred into us, 756 00:44:57,700 --> 00:44:59,340 you know, if, um, you know, 757 00:44:59,340 --> 00:45:02,140 if you're a caveman and you didn't find any food today, 758 00:45:02,140 --> 00:45:05,260 and you just give up hunting, you're gonna die. But if you keep, 759 00:45:05,260 --> 00:45:07,500 if you persistently keep looking for food, 760 00:45:07,500 --> 00:45:11,660 eventually you'll find food and you'll survive. And the, the, the, 761 00:45:11,660 --> 00:45:16,260 the people who are hopeful get selected out and their genes become, um, 762 00:45:16,730 --> 00:45:20,460 a very big part of our, our population, I think people are naturally hopeful. 763 00:45:21,810 --> 00:45:25,510 And because of that, you know, when the markets in a sh trading range, 764 00:45:25,540 --> 00:45:28,990 I think traders always hopeful that, oh, look how fast it's going up. 765 00:45:28,990 --> 00:45:31,830 It's gonna be a breakout and we're soon gonna get a trend. 766 00:45:32,280 --> 00:45:36,590 So they buy a very strong bull bar at the top betting on that. 767 00:45:36,810 --> 00:45:38,950 The trend is going that it's the start of a trend. 768 00:45:39,220 --> 00:45:43,270 They sell a very strong bear bar at the bottom thinking that, wow, 769 00:45:43,270 --> 00:45:46,790 this time for sure we're going to break out and this is gonna be a big trend. 770 00:45:47,330 --> 00:45:51,470 But if you're buying at the top, you're stop as far away, risk is big. 771 00:45:51,760 --> 00:45:54,950 If you're selling at the bottom, you stop as way at the top of the range, 772 00:45:54,950 --> 00:45:59,350 your risk is big and your probability is low, right? 773 00:45:59,350 --> 00:46:04,110 So here you have a trade with big risk and low probability. 774 00:46:04,880 --> 00:46:05,400 Um, 775 00:46:05,400 --> 00:46:09,830 so do I want to sell that strong bear bar at the bottom or buy that strong bbar 776 00:46:09,830 --> 00:46:12,110 at the top? No, I'm doing the opposite. 777 00:46:12,480 --> 00:46:16,230 If I see a trading range and I see a strong bull bar at the top, I'm selling, 778 00:46:16,410 --> 00:46:20,750 you know, if it has a, if it closes on it's high, I'm selling, right? 779 00:46:20,920 --> 00:46:25,510 Because, you know, the guy who's buying has a big risk and low probability. 780 00:46:25,880 --> 00:46:29,350 So if I'm doing the opposite, I have much less risk and a high probability. 781 00:46:30,230 --> 00:46:34,900 So I think that is another problem that traders face. You know, um, I I, 782 00:46:35,130 --> 00:46:40,100 I have what I call the 80% rule on my inertia rule 783 00:46:40,370 --> 00:46:44,420 that 80% of the time the market's gonna continue to do what it's been doing. 784 00:46:44,710 --> 00:46:48,420 If it's trending, 80% of reversal attempts are going to fail. 785 00:46:48,590 --> 00:46:53,020 So you should not be looking for reversals. And if it's in a trading range, 786 00:46:53,990 --> 00:46:56,930 the market has inertia, it's going to continue in the range. 787 00:46:57,000 --> 00:47:00,370 80% of breakout attempts up or down will fail. 788 00:47:00,740 --> 00:47:04,130 So instead of betting that a breakout will finally succeed, 789 00:47:04,260 --> 00:47:05,690 no matter how strong it looks, 790 00:47:05,950 --> 00:47:09,570 you have a better chance of making money if you start looking for trades in the 791 00:47:09,690 --> 00:47:10,523 opposite direction. 792 00:47:11,700 --> 00:47:15,950 Cool. And then just on there, so, um, so you talk about probability a lot, 793 00:47:15,950 --> 00:47:19,270 and to be fair, it's the first time that anyone's actually mentioned, well, 794 00:47:19,470 --> 00:47:22,310 actually maybe it's the second time anyone's mentioned on the show, um, 795 00:47:22,310 --> 00:47:26,870 the significance of probability. And so, so when you were automating your, uh, 796 00:47:26,870 --> 00:47:27,990 strategies back in the day, 797 00:47:28,210 --> 00:47:32,040 was that something you would calculate on a regular basis within each strategy? 798 00:47:32,770 --> 00:47:33,560 Oh, you know, it, 799 00:47:33,560 --> 00:47:37,860 as soon as you do an automated trade and you get a result, 800 00:47:37,860 --> 00:47:42,540 you print out the result, you're gonna see percent win percent loss. So, 801 00:47:42,540 --> 00:47:45,860 you know, you quickly, um, see probability, 802 00:47:45,920 --> 00:47:49,780 but I still think traders don't really pay much attention to it. I think, 803 00:47:50,010 --> 00:47:53,140 I think when you're, when you're doing those, uh, automations, 804 00:47:53,140 --> 00:47:56,500 you tend to focus on risk and reward. You know, how much should I, 805 00:47:56,500 --> 00:47:59,500 how much should I win, how much do I lose? But, um, 806 00:47:59,820 --> 00:48:03,820 every trade has three variables, not two, not risk reward. 807 00:48:03,820 --> 00:48:05,660 It's risk reward and probability. 808 00:48:05,960 --> 00:48:10,540 And I think understanding probability is crucial to being a trader. Like I said, 809 00:48:10,930 --> 00:48:15,800 during 90% of the bars in the chart, you can make money buying or selling, 810 00:48:16,140 --> 00:48:20,760 and the probability of making money, if I buy it any instant, right? 811 00:48:20,830 --> 00:48:24,040 I have and pick, let's say I pick a reward equal to my risk. 812 00:48:24,370 --> 00:48:29,080 So let's say I'm buying Apple and I'm risking $1 to make $1 to make 813 00:48:29,080 --> 00:48:32,480 $1 at any bar on the chart, you know, 814 00:48:32,480 --> 00:48:34,840 for 90% of the bars I have, uh, 815 00:48:34,840 --> 00:48:39,080 between no worse than a 40% chance of making a dollar before losing a dollar, 816 00:48:39,300 --> 00:48:44,040 and no better than a 60% chance of making a dollar before losing a dollar. 817 00:48:45,180 --> 00:48:48,240 And as a trader, you're trying to, uh, 818 00:48:48,400 --> 00:48:52,760 structure a trade to make the probability better or make the reward a little bit 819 00:48:52,760 --> 00:48:56,320 better. And, you know, that's, that's the art of trading. You know, 820 00:48:56,320 --> 00:48:58,320 you're always, you're trying to, 821 00:48:58,320 --> 00:49:02,320 you're trying to work with the three variables to structure a trade that gives 822 00:49:02,320 --> 00:49:04,800 you the best, uh, trader's equation. You know, I, 823 00:49:04,800 --> 00:49:06,760 I talk about the trader's equation all the time, 824 00:49:07,480 --> 00:49:11,660 and it incorporates the three variables, you know, is, um, 825 00:49:12,120 --> 00:49:16,540 you know, is the probability of winning, um, time. Well, I don't, 826 00:49:16,850 --> 00:49:18,340 I don't know, it'd be complicated to say, 827 00:49:18,340 --> 00:49:21,540 but basically you wanna make sure that you know, 828 00:49:21,540 --> 00:49:25,100 your risk and reward and probability makes sense. You know, 829 00:49:25,100 --> 00:49:28,660 your probability of winning times your risk has to be, uh, 830 00:49:28,680 --> 00:49:32,780 significantly greater than your probability of losing times to your, uh, 831 00:49:32,840 --> 00:49:37,500 how much you're risking on the trade. So, okay. If that makes sense. 832 00:49:37,530 --> 00:49:38,020 Yeah. 833 00:49:38,020 --> 00:49:41,060 Cool. Alright, so we're gonna move on and to the next part of the show. 834 00:49:41,060 --> 00:49:43,180 So this is a part I'd like to call the technicals, 835 00:49:43,180 --> 00:49:46,580 and I'm gonna run through 12 quickfire questions to help you, 836 00:49:46,580 --> 00:49:50,380 the listeners out there understand what it takes to become a successful TraderR. 837 00:49:50,590 --> 00:49:52,380 So are you ready, Al? 838 00:49:52,640 --> 00:49:53,473 Yes, I am. 839 00:49:53,810 --> 00:49:57,580 Okay. So how long did it take you to go from trading newbie to consistently 840 00:49:57,580 --> 00:49:58,413 profitable? 841 00:49:58,630 --> 00:49:59,980 It took me 10 years. 842 00:50:00,890 --> 00:50:04,620 What's your mental approach to trading and what special techniques do you use to 843 00:50:04,620 --> 00:50:05,700 keep those emotions in check? 844 00:50:06,410 --> 00:50:09,700 Well, I think to be a successful trader, you know, I, I talk about the, 845 00:50:09,700 --> 00:50:11,460 I don't care position size. 846 00:50:12,130 --> 00:50:17,020 I think the single best thing that a trader can do is get to the point where 847 00:50:17,020 --> 00:50:21,310 they truly don't care and let, so if you're paper trading, you don't care, 848 00:50:21,310 --> 00:50:23,110 but you lie to yourself all the time. 849 00:50:23,110 --> 00:50:26,510 I used to lie to myself all the time and I paper trade, you know, and I'd say, 850 00:50:26,510 --> 00:50:27,080 oh, I, I really, 851 00:50:27,080 --> 00:50:29,960 really wouldn't have taken that trade so I'm gonna cross that one out. Or I, 852 00:50:29,960 --> 00:50:30,480 I should have, 853 00:50:30,480 --> 00:50:33,240 I really would've taken this trade and it shouldn't need to be a good winner. 854 00:50:33,240 --> 00:50:36,760 I put that in. Um, so it's really easy to lie when you're paper trading, 855 00:50:37,910 --> 00:50:40,770 but I think it's better to trade real money, for example, 856 00:50:40,770 --> 00:50:43,210 Forex is a good way to do it because, um, 857 00:50:43,210 --> 00:50:47,090 you cannot lose a lot of money if you trade small, right? Um, 858 00:50:47,220 --> 00:50:52,170 so the best thing to do is get to a position size where you truly do not 859 00:50:52,170 --> 00:50:52,450 care. 860 00:50:52,450 --> 00:50:57,370 Get down to the I do not care size so that you can remain objective and 861 00:50:57,370 --> 00:51:00,970 do everything that you're supposed to do and just practice doing the right 862 00:51:00,970 --> 00:51:05,050 thing. Most traders quickly can figure out what they have to do. I gotta buy, 863 00:51:05,050 --> 00:51:07,610 I gotta sell, I gotta get out, you know, I gotta get in. 864 00:51:08,840 --> 00:51:13,100 And it just takes a lot of time practicing doing what you should be doing 865 00:51:13,760 --> 00:51:14,860 and, you know, 866 00:51:15,450 --> 00:51:19,060 I would do it with real money so that there is a little bit of pain if you lose 867 00:51:19,080 --> 00:51:23,880 and there's a little bit of happiness if you win. So, um, I would, 868 00:51:24,110 --> 00:51:28,760 I would, I would trade the I don't care size, whatever size that is. Um, 869 00:51:28,760 --> 00:51:29,593 I would trade it. 870 00:51:29,780 --> 00:51:32,280 And turning off your, um, turning off your, uh, 871 00:51:32,280 --> 00:51:36,320 trade screen is sometimes helpful and there was some advice that was left by 872 00:51:36,320 --> 00:51:39,720 another, um, interviewee, uh, on the show. 873 00:51:39,730 --> 00:51:42,800 So keeping that away from your view so you can't actually see it. 874 00:51:42,980 --> 00:51:45,840 And so you dunno how much you've got at risk and if you're all you know, 875 00:51:45,840 --> 00:51:49,160 is if you're up or down. Um, I tried that the other day and it seemed to work. 876 00:51:49,780 --> 00:51:53,320 May interrupt for a moment. Another thing I sometimes all traders should do. 877 00:51:53,320 --> 00:51:54,760 A lot of traders exit too early. 878 00:51:55,890 --> 00:51:58,980 I tell 'em if they structure a pretty good trade, and they have it on, 879 00:51:58,980 --> 00:52:02,260 let's say, on the five minute chart. You know, place a bracket, order in there, 880 00:52:02,260 --> 00:52:05,060 place the logical stop place, the logical profit target, 881 00:52:05,060 --> 00:52:07,980 maybe two times greater than the risk, and, uh, 882 00:52:07,980 --> 00:52:12,730 go for a walk and come back in an hour. And, uh, you know, 883 00:52:12,730 --> 00:52:14,210 if he structures your trade correctly, 884 00:52:14,360 --> 00:52:17,370 I think you'll be surprised to find out that over time, you know, 885 00:52:17,370 --> 00:52:20,010 if you do it 10 times, you're gonna, you, you're going to make money. 886 00:52:20,720 --> 00:52:23,870 So that's basically the equivalent thing of your saying what you're saying. 887 00:52:23,870 --> 00:52:25,470 Yeah. You know, don't look at it. 888 00:52:25,820 --> 00:52:27,750 Yeah. Walk away. And, uh, 889 00:52:27,750 --> 00:52:31,230 I had another guy on the show that literally trades in the morning, that's it. 890 00:52:31,450 --> 00:52:34,270 And he walks away. Well, he doesn't, he turns off everything, 891 00:52:34,270 --> 00:52:36,150 doesn't have anything on his phone that he can check. 892 00:52:36,520 --> 00:52:41,070 It literally sort of excludes himself from his computer screen so he doesn't 893 00:52:41,070 --> 00:52:44,830 know until the next day. And so whatever happens, happens. Um, right. 894 00:52:44,830 --> 00:52:46,270 So what's your favorite entry setup? 895 00:52:47,220 --> 00:52:49,070 Well, as I said, you know, I like, 896 00:52:49,500 --> 00:52:52,590 I think of the market in terms of the market cycle, uh, 897 00:52:52,830 --> 00:52:55,750 breakout channels and trading ranges. And I don't, 898 00:52:55,750 --> 00:52:59,470 I don't care which part of the cycle it's in, you know, you know, I, I'm, 899 00:52:59,470 --> 00:53:02,750 I'm happy and I enjoy trading all of them. You know, on a given day, 900 00:53:02,750 --> 00:53:06,110 the breakout may be so exceptional that I'm really excited and happy about it. 901 00:53:06,110 --> 00:53:06,870 Other days, 902 00:53:06,870 --> 00:53:10,910 the trading ranges might be so predictable that I can make it an incredible 903 00:53:10,910 --> 00:53:15,110 amount of money by just buying below prior lows, selling about prior highs. 904 00:53:15,170 --> 00:53:18,350 And then other times the channels are really broad. Uh, 905 00:53:18,350 --> 00:53:19,750 let's say it's a bull channel. 906 00:53:20,140 --> 00:53:23,350 I can sell every new high scale in higher and do really well, 907 00:53:23,480 --> 00:53:27,840 or buy 50% pullbacks of, uh, of the prior leg and do really well. 908 00:53:28,090 --> 00:53:32,350 So for me, I don't have a favorite, you know, I'm just, you know, I just, 909 00:53:32,580 --> 00:53:35,430 I trade whatever's in front of me and I never, um, 910 00:53:35,460 --> 00:53:38,990 I never worry about what is not in front of me, and I'm, 911 00:53:38,990 --> 00:53:41,190 I'm comfortable trading whatever the market is doing. 912 00:53:42,540 --> 00:53:45,750 What strategies do you use to exit of manage active trades? 913 00:53:47,470 --> 00:53:51,200 I usually enter, I usually, um, limit orders. 914 00:53:51,380 --> 00:53:53,720 And based on the trader's equation, 915 00:53:53,830 --> 00:53:57,800 I know what the minimum reward I have to make on a given trade 916 00:53:58,840 --> 00:54:02,870 to take the risk that, that I'm taking, you know, going to a trade, I know what, 917 00:54:02,870 --> 00:54:03,710 what my risk is. 918 00:54:04,010 --> 00:54:07,990 The first thing I think about on any trade is where do I have to put my stop? 919 00:54:08,270 --> 00:54:12,590 Right? And a lot of beginners put stops that are way too close. 920 00:54:12,750 --> 00:54:17,310 Right. And, you know, that's a, that's a, a really costing mistake. 921 00:54:17,410 --> 00:54:18,870 You know, I try to be objective. 922 00:54:18,870 --> 00:54:21,230 I look at the chart and I know where my stop has to be. 923 00:54:21,990 --> 00:54:24,850 And once I know where my stop has to be, that's my initial risk. 924 00:54:25,240 --> 00:54:27,890 I know where my initial profit target has to be, 925 00:54:28,010 --> 00:54:32,090 given that my probability of making money is between 40 and 60%. 926 00:54:32,580 --> 00:54:37,330 In general, I want my reward to be at least two times my, um, 927 00:54:37,330 --> 00:54:40,290 initial risk. Once the trade starts going my way, 928 00:54:40,680 --> 00:54:43,890 I ignore initial risk and I look at my actual risk. 929 00:54:44,070 --> 00:54:47,730 How many ticks did I actually have to risk to, uh, 930 00:54:47,730 --> 00:54:51,170 stay in the trade at this point? And then I try to, uh, 931 00:54:51,170 --> 00:54:55,370 take a reward equal to two times that, uh, actual risk. 932 00:54:55,740 --> 00:54:58,570 If the probability of making profit is really, really high, 933 00:54:58,570 --> 00:55:03,190 if I'm trading during a strong breakout, I'm not gonna get, uh, two times, 934 00:55:03,360 --> 00:55:06,190 uh, a reward equal to two times risk. 935 00:55:06,440 --> 00:55:10,630 Usually if I have a high probability trade, I have to take a lower risk reward, 936 00:55:10,630 --> 00:55:15,110 which means I usually have to exit with, um, a reward equal, 937 00:55:15,110 --> 00:55:18,390 equal to risk instead of two times risk. Remember, 938 00:55:18,640 --> 00:55:22,110 if you're taking a high probability trade, you have to give something up. 939 00:55:22,330 --> 00:55:24,550 And that's something is always risk reward. 940 00:55:24,720 --> 00:55:28,670 So if you have a very high probability trade, you have to, uh, 941 00:55:28,670 --> 00:55:32,710 go for a relatively smaller reward relative to your risk. 942 00:55:33,940 --> 00:55:37,190 Cool. And what's your recommended must-read trading book? 943 00:55:38,320 --> 00:55:42,930 Well, I've written many, I've written many. I've written four books. Uh, 944 00:55:42,930 --> 00:55:47,530 that three volume set that I, uh, wrote several years ago, um, has a, 945 00:55:47,530 --> 00:55:52,250 it's a pretty good summary of how I view the market. And then beyond that, 946 00:55:52,420 --> 00:55:56,610 um, in terms of, um, a fun book, you know, that, um, 947 00:55:56,610 --> 00:56:00,870 that that fictional book about, um, Dan, 948 00:56:00,870 --> 00:56:03,470 what's it called on the Jesse Livermore book? 949 00:56:03,560 --> 00:56:06,070 Ah, yeah. Um, the, ah, 950 00:56:06,680 --> 00:56:09,150 as been mentioned on the show before many times, um, 951 00:56:10,320 --> 00:56:11,750 of a stock market. 952 00:56:11,750 --> 00:56:12,590 Remini remini. 953 00:56:12,590 --> 00:56:13,070 Reminisce. 954 00:56:13,070 --> 00:56:16,390 Yeah. Stock, stock, you know, stock trade or something like that. Yeah. That, 955 00:56:16,390 --> 00:56:20,870 that was a fun book. And then beyond that, you know, every book has something. 956 00:56:21,130 --> 00:56:22,430 And, uh, I, I don't, 957 00:56:22,430 --> 00:56:25,720 I don't think there's anyone book that's so much better than all the others. 958 00:56:26,790 --> 00:56:27,280 Okay. 959 00:56:27,280 --> 00:56:30,920 If there's one thing you would recommend any retail trader to spend the next 960 00:56:30,920 --> 00:56:34,280 month mastering, what would it be? Why and how could they go about mastering it? 961 00:56:35,450 --> 00:56:38,640 Um, I would, uh, first thing I would say is decide, 962 00:56:38,640 --> 00:56:42,070 figuring out where stops have to be. You know, 963 00:56:42,070 --> 00:56:45,830 look at any chart and if I buy here or if I sell right here, 964 00:56:45,950 --> 00:56:50,110 where do I have to put my stop? And once you know where your stop is, 965 00:56:50,110 --> 00:56:52,590 then you know what your position size has to be, 966 00:56:52,590 --> 00:56:55,950 because you never wanna risk more on, 967 00:56:56,280 --> 00:56:58,990 on a trade than you typically are comfortable risking. 968 00:56:59,240 --> 00:57:03,230 So the first thing I would just look at any chart, okay, I'm buying here. Wow, 969 00:57:03,230 --> 00:57:07,470 that stop has to be far away if I buy here. Well, that's, that's, 970 00:57:07,470 --> 00:57:12,350 that's the stop you have to use and you have to trade small enough so that 971 00:57:12,350 --> 00:57:15,790 you're risking no more than you do on any other trade. But that, 972 00:57:15,790 --> 00:57:17,870 that would be the first thing I would do, is, you know, 973 00:57:17,870 --> 00:57:21,830 trying to get some sense of where I have to put my stop, where, 974 00:57:21,830 --> 00:57:23,070 where's the sensible stop. 975 00:57:23,980 --> 00:57:27,270 I really like that. That's a really good bit of advice. Um, 976 00:57:27,270 --> 00:57:31,670 what trading related internet resource, like b bloomberg.com, do you always use. 977 00:57:32,300 --> 00:57:37,070 Zero? Nothing, because, yeah, I, um, in terms of fundamentals, 978 00:57:37,070 --> 00:57:41,350 there was a show on in the United States, um, I forgot what it was called, 979 00:57:41,350 --> 00:57:45,410 money in motion or something a few years ago about, uh, 980 00:57:45,750 --> 00:57:50,690 for trading. And, you know, the guy or the gal would say, 981 00:57:50,690 --> 00:57:55,370 I'm gonna buy the dollar yen, or, um, because, um, 982 00:57:55,510 --> 00:57:56,130 you know, 983 00:57:56,130 --> 00:58:00,410 Japan is doing such and such and the United States is doing such and such and, 984 00:58:00,430 --> 00:58:05,090 and also, or, or it's at a 50% retracement. And I say, wait a minute, 985 00:58:05,390 --> 00:58:08,960 you're not buying because of that stupid thing you just said about fundamentals. 986 00:58:08,960 --> 00:58:11,080 You're buying because it's at a 50% retracement. 987 00:58:12,040 --> 00:58:15,760 Every piece of fundamental information is already baked into price. 988 00:58:16,630 --> 00:58:21,110 Every institution knows the fundamentals far better than I can any, ever know, 989 00:58:21,110 --> 00:58:25,710 any fundamental. So, you know, someone say, I'm gonna sell Brexit because, um, 990 00:58:25,710 --> 00:58:29,190 you know, uh, I'm gonna sell the British Pound because of Brexit, um, 991 00:58:29,190 --> 00:58:33,670 because of Brexit. You know, that's nonsense. I'm not gonna do that. Um, 992 00:58:33,770 --> 00:58:35,870 I'm gonna look to sell pullbacks maybe, 993 00:58:36,850 --> 00:58:40,510 but I'm not simply just gonna sell because of Brexit. Right. 994 00:58:40,940 --> 00:58:43,750 I don't care about fundamentals. I, I don't care at all. 995 00:58:43,840 --> 00:58:45,590 They're totally baked into the market. 996 00:58:45,810 --> 00:58:49,310 All the institutions know them much better than I could ever know them. 997 00:58:49,700 --> 00:58:52,310 I don't care. But the, on the other hand, 998 00:58:52,410 --> 00:58:55,550 the institutions cannot hide their information. 999 00:58:56,700 --> 00:59:00,970 If the institutions as a group think that the market is going down, 1000 00:59:01,680 --> 00:59:04,530 that the market's gonna go down and I'm gonna look to sell. 1001 00:59:05,340 --> 00:59:09,970 If more dollars think that the market's gonna go up, uh, 1002 00:59:09,970 --> 00:59:12,530 the market's gonna go up and I'll see that, and I'm gonna buy. 1003 00:59:12,860 --> 00:59:16,970 So I don't care what the fundamentals are, you know, all the time, you know, 1004 00:59:16,970 --> 00:59:20,050 you'll see stocks with bad earnings reports and they go up, 1005 00:59:20,050 --> 00:59:22,580 or stocks with good earnings reports when they go down, 1006 00:59:22,790 --> 00:59:27,100 or some fundamental thing that looks terrible. Japan's economy might be bad, 1007 00:59:27,100 --> 00:59:31,580 but the end starts going up. So I don't care what the fundamentals are. 1008 00:59:31,960 --> 00:59:34,380 All I, I'm in this to make money, alright, 1009 00:59:34,380 --> 00:59:38,540 I'm in this to make money and you know, I, and you know, I, if the market, 1010 00:59:38,540 --> 00:59:42,220 if if the chart in front of me, if the price is going up, I wanna buy, 1011 00:59:42,430 --> 00:59:45,540 if the chart in front of me is going down, I'm gonna, I'm gonna sell. 1012 00:59:45,770 --> 00:59:47,580 I don't care why I don't, 1013 00:59:47,580 --> 00:59:50,780 I don't care if it's due to some kid in Brazil eating an ice cream cone. 1014 00:59:50,810 --> 00:59:54,500 I don't care. You know, I just care about, you know, can I make money? 1015 00:59:54,680 --> 00:59:58,020 And knowing the fundamentals has nothing to do with me making money. 1016 00:59:58,890 --> 01:00:01,540 What's the biggest mistake most retail traders make? 1017 01:00:02,770 --> 01:00:07,520 I think the biggest one is, uh, focusing on risk. All I think about it is, 1018 01:00:07,520 --> 01:00:10,680 oh, I work so hard to get this money. If I lose this account, 1019 01:00:10,680 --> 01:00:13,120 my wife will kill me, or my husband will kill me. And, uh, 1020 01:00:13,120 --> 01:00:17,440 they'll never be allowed to trade again. And so, uh, they focus on risk. 1021 01:00:17,590 --> 01:00:19,240 I think that's the single biggest mistake. 1022 01:00:19,240 --> 01:00:21,440 They end up using stops that are too tight. 1023 01:00:21,790 --> 01:00:25,240 They end up taking trades that have really low probability. 1024 01:00:26,800 --> 01:00:29,010 What's your preferred broker and trading platform? 1025 01:00:30,210 --> 01:00:34,500 Yeah, I, um, yeah, I can tell you that I use, uh, 1026 01:00:34,500 --> 01:00:38,820 interactive Brokers a lot. I use Trade Station a lot, but I'm really not, uh, 1027 01:00:38,820 --> 01:00:42,940 up to date. Uh, I'm not qualified to, uh, you know, 1028 01:00:42,950 --> 01:00:47,260 ex to say what, what is the best program out there? Um, I think both of them, 1029 01:00:47,500 --> 01:00:51,900 trade Station in in particular has a lot of legacy issues. Uh, 1030 01:00:51,900 --> 01:00:54,540 they have very old software that they keep trying to fix, 1031 01:00:54,840 --> 01:00:58,820 and instead they should just throw out the entire thing and, um, you know, 1032 01:00:58,820 --> 01:01:00,340 rewrite it for Windows 10. 1033 01:01:01,080 --> 01:01:04,460 But I understand the economic reasons why they do not, you know, 1034 01:01:04,460 --> 01:01:06,140 it's good enough, you know, but there are, 1035 01:01:06,140 --> 01:01:09,580 I'm sure there are a lot of others that are, are, that are equally good. 1036 01:01:10,710 --> 01:01:14,210 And if you could leave our listeners with one piece of advice, what would it be? 1037 01:01:15,690 --> 01:01:20,360 Uh, trust yourself. You know, learn to, uh, to ignore everybody, 1038 01:01:20,360 --> 01:01:23,880 all the experts on television and just trust yourself. You know, 1039 01:01:23,880 --> 01:01:25,920 develop the ability, uh, 1040 01:01:25,920 --> 01:01:30,640 to get confident about what you're reading on the chart and also realize that 1041 01:01:30,810 --> 01:01:35,040 no matter how confident you are, 40% of the time, you're gonna be wrong. 1042 01:01:35,610 --> 01:01:39,400 So be always entirely open to the exact opposite of whatever, 1043 01:01:39,720 --> 01:01:41,680 whatever you believe. And do not be surprised when it happens, 1044 01:01:41,690 --> 01:01:44,520 because it's gonna happen at least 40% of the time. 1045 01:01:46,040 --> 01:01:48,490 Okay. We'd like you. So this is the last question. 1046 01:01:48,490 --> 01:01:51,090 We'd like you to give us the bones of a full trading strategy. 1047 01:01:51,090 --> 01:01:54,410 So the entry set up, stop loss, take profit targets, market timeframe. 1048 01:01:54,640 --> 01:01:58,330 Some of our listeners can try it at home. What have you got for us there, Al? 1049 01:01:58,480 --> 01:02:00,730 Okay, I'm gonna give you one, uh, 1050 01:02:00,730 --> 01:02:04,490 which is probably the easiest to visualize as I'm speaking. 1051 01:02:04,940 --> 01:02:06,890 So let's say the Forex market, 1052 01:02:07,470 --> 01:02:09,970 the Euro versus the dollar is totally flat, 1053 01:02:10,510 --> 01:02:13,730 and then it breaks out and rallies, uh, 1054 01:02:13,730 --> 01:02:18,610 a hundred pips over the course of the next 30 minutes, right? What, 1055 01:02:18,610 --> 01:02:20,080 what do I think is gonna follow? 1056 01:02:20,210 --> 01:02:24,280 Do I think it's gonna reverse or do I think it's gonna go up probably at least a 1057 01:02:24,280 --> 01:02:28,880 60% chance that it's gonna go up for a hundred pips at some point later in the 1058 01:02:28,880 --> 01:02:33,160 day? So I'm gonna buy for any reason, I'll buy at the market, right? 1059 01:02:33,160 --> 01:02:35,120 I'll buy below the low of the prior bar. 1060 01:02:35,120 --> 01:02:38,720 I'll buy above the high of the prior bar. I'm gonna buy for some reason, 1061 01:02:39,420 --> 01:02:43,480 but my stop is gonna be a hundred pips away. It's gonna be below the, 1062 01:02:43,480 --> 01:02:44,100 below that bar, 1063 01:02:44,100 --> 01:02:48,160 and I'm only gonna buy that a hundred pip breakout if it's well above the highs 1064 01:02:48,160 --> 01:02:50,120 of, uh, the past day or two or three. 1065 01:02:50,120 --> 01:02:52,440 I wanna make sure that it's truly broken out of everything. 1066 01:02:52,810 --> 01:02:56,800 So we have a hundred pip breakout. I buy, my stop is a hundred pips away, 1067 01:02:58,020 --> 01:03:00,760 and, um, it's a high probability trade. 1068 01:03:01,010 --> 01:03:04,920 So I need to get a reward equal to at least one time my risk. 1069 01:03:05,410 --> 01:03:09,520 So I'm going to initially plan to take profit of a hundred pips. 1070 01:03:09,640 --> 01:03:11,640 Let's say we have a 20 pip pullback, 1071 01:03:11,740 --> 01:03:15,640 and then the market starts to go up strongly again. Well, at that point, 1072 01:03:15,650 --> 01:03:18,280 my actual risk turned out to be only 20 pips. 1073 01:03:19,050 --> 01:03:23,120 So mathematically I could exit with a, uh, 20 pip profit. 1074 01:03:24,190 --> 01:03:26,900 However, because of the size of the breakout, 1075 01:03:27,040 --> 01:03:29,420 I'm pretty confident that I have a, 1076 01:03:29,420 --> 01:03:33,180 a reasonable chance at making a hundred pips mathematically. I can get out, 1077 01:03:33,180 --> 01:03:36,140 I can get out at a hundred pips if my, excuse me, at 20 pips, 1078 01:03:36,140 --> 01:03:40,140 if my actual risk turned out to be only 20 pips. It's a high probability trade. 1079 01:03:40,430 --> 01:03:45,380 So exiting with a reward equal to risk makes sense. But, um, 1080 01:03:45,380 --> 01:03:49,060 I'm gonna get a hundred pips. I'll try to sit patiently and get a hundred pips. 1081 01:03:49,060 --> 01:03:52,780 I'm just say one thing about that. I had a friend years ago, 1082 01:03:52,780 --> 01:03:56,300 I used to trade with him online for several years, maybe 50 years ago. 1083 01:03:56,640 --> 01:04:00,820 And he would take a trade like that and he would place his stock in a hundred 1084 01:04:00,820 --> 01:04:04,260 pips below, he'd place his limit order in a hundred pips above, 1085 01:04:04,640 --> 01:04:08,380 and then he'd go take his mother out to the doctor's office for a couple hours, 1086 01:04:08,380 --> 01:04:11,140 two or three hours, or he'd go out on the lake in, 1087 01:04:11,270 --> 01:04:14,380 in canoe for a couple of hours, and then he'd come back. 1088 01:04:15,320 --> 01:04:18,100 And part of it was he had things to do, 1089 01:04:18,280 --> 01:04:23,060 and part of it was he wanted to make sure that he didn't interfere with what 1090 01:04:23,060 --> 01:04:26,580 he knew was a logical thing to do when he put the train on. 1091 01:04:29,390 --> 01:04:33,200 Cool. And, um, just on that, so, so the, so the 20, 1092 01:04:33,200 --> 01:04:37,760 so say it retrace 20 perps, is that you'd say you'd enter there or even, 1093 01:04:38,420 --> 01:04:41,280 and then you'd, you'd sort of enter at the, at the end of the retracement, 1094 01:04:41,280 --> 01:04:44,680 or you're saying you'd enter at the a hundred pipp mark regardless? 1095 01:04:45,110 --> 01:04:48,560 Well, let's say the market is racing up. Usually I'm buying at the market, 1096 01:04:48,760 --> 01:04:49,380 right? 1097 01:04:49,380 --> 01:04:53,720 But let's say just turn on the screen or having to look at the chart and it's up 1098 01:04:53,720 --> 01:04:55,800 a hundred pips and I decide to buy right there, 1099 01:04:56,020 --> 01:05:00,920 and the instant I buy it starts to sell off and 15, 20, 30 minutes 1100 01:05:00,920 --> 01:05:04,840 later it's down 20 pips, right? Yeah. Um, and I've already bought, 1101 01:05:05,130 --> 01:05:07,480 so right now I have an open loss of 20 pips. 1102 01:05:07,850 --> 01:05:11,770 My stop is still down there at a hundred pips. However, 1103 01:05:12,100 --> 01:05:16,930 if the market starts to go up and it goes above my entry and it goes up 20 pips 1104 01:05:17,000 --> 01:05:20,880 more, right? Mathematically at that moment I can exit. 1105 01:05:21,020 --> 01:05:24,240 And if I take that trade a hundred times and manage it that way, 1106 01:05:24,510 --> 01:05:29,440 I will make money because I have a reward equal to my risk and my 1107 01:05:29,440 --> 01:05:34,440 probability is 60% or higher. Mathematically, that is a sound way to trade. 1108 01:05:35,090 --> 01:05:36,080 So you can, 1109 01:05:36,080 --> 01:05:40,760 you can exit with a reward equal to your risk as long as the probability is 1110 01:05:40,760 --> 01:05:43,800 60% or higher. And if you're buying, uh, 1111 01:05:43,800 --> 01:05:45,720 the market during a very strong breakout, 1112 01:05:45,940 --> 01:05:50,380 the probability is 60% or more that you'll, 1113 01:05:50,470 --> 01:05:54,620 if you go for any risk and, and, uh, any reward, 1114 01:05:54,680 --> 01:05:58,060 and the risk is equal to the, to the, um, 1115 01:05:58,710 --> 01:06:00,940 if the risk and reward are equal, you'll make money. 1116 01:06:01,390 --> 01:06:06,320 So it doesn't matter if you're going for a 10 pip profit u risking 1117 01:06:06,320 --> 01:06:11,080 10 pips, it doesn't matter if you're going for a 50 pip profit risking 50 pips, 1118 01:06:11,260 --> 01:06:15,640 you still have a 60% chance of, um, making, um, 1119 01:06:16,090 --> 01:06:16,910 uh, 1120 01:06:16,910 --> 01:06:21,590 making your profit target before your stop is hit so mathematically, 1121 01:06:21,590 --> 01:06:24,350 if you, if you take, if you manage it that way every time, 1122 01:06:24,440 --> 01:06:28,630 go for a reward equal to your actual risk, uh, it's a profitable strategy. 1123 01:06:29,530 --> 01:06:33,170 Makes perfect sense. Thanks Al. Um, right before we wrap up, 1124 01:06:33,170 --> 01:06:35,370 what's the best way for traders to get hold of you. 1125 01:06:36,450 --> 01:06:41,400 Through one of my websites like brooks trading course.com or 1126 01:06:41,400 --> 01:06:45,880 brooks price action.com? Usually I get so many emails now that, you know, 1127 01:06:45,880 --> 01:06:49,360 I have, uh, people handle most of the, um, 1128 01:06:50,490 --> 01:06:54,860 emails. But you know, if you're, if you're signed up for one or the other site, 1129 01:06:55,120 --> 01:06:56,980 you know, you're able to post questions. 1130 01:06:56,980 --> 01:07:01,420 And I try to answer the questions online because a lot of times people ask a 1131 01:07:01,580 --> 01:07:01,970 question, 1132 01:07:01,970 --> 01:07:05,700 I what was happening with the emails is someone would ask a question two days 1133 01:07:05,700 --> 01:07:05,940 later, 1134 01:07:05,940 --> 01:07:08,660 someone would ask the same question two days later someone would ask the same 1135 01:07:08,900 --> 01:07:10,260 question and you know, 1136 01:07:10,260 --> 01:07:14,300 it made more sense just to have people post the questions on the website and 1137 01:07:14,300 --> 01:07:17,820 then I answer the question on the website so that everyone can see it. 1138 01:07:19,040 --> 01:07:23,090 Cool. Oh, a big thank you to, to al for sharing with us today. 1139 01:07:23,090 --> 01:07:25,450 Everything we've discussed here, along with all the links, 1140 01:07:25,450 --> 01:07:27,330 are gonna be on the show notes to find them. 1141 01:07:27,330 --> 01:07:32,290 Simply search for al in the search box on 52 traders.com. Until next time, 1142 01:07:32,290 --> 01:07:35,490 I wish all my listeners a trading happiness and success, 1143 01:07:35,490 --> 01:07:38,210 tired of missing trades or spending hours at the charts. 1144 01:07:38,770 --> 01:07:41,090 Introducing my Robot Builders Club. With our platform, 1145 01:07:41,090 --> 01:07:44,690 you can build bots in minutes, not weeks, without any coding required. 1146 01:07:44,690 --> 01:07:48,930 Get lifetime access to my video course v i p community and over 40 ready made 1147 01:07:48,930 --> 01:07:51,770 robots works with empty four or empty five. And as a bonus, 1148 01:07:51,770 --> 01:07:55,490 you'll get three months access to my Robot lab where we building test bots on 1149 01:07:55,490 --> 01:07:59,170 live calls every week. Join the hundreds of traders who are trading smarter, 1150 01:07:59,170 --> 01:08:01,610 not harder. Click the link in the description to learn more. 1151 01:08:01,610 --> 01:08:04,490 Get the free training and download a free robot. Alright folks, 1152 01:08:04,490 --> 01:08:08,890 there you have an interview done and dusted from 2016 off all things. 1153 01:08:09,150 --> 01:08:11,050 Now we've got a much more recent, 1154 01:08:11,050 --> 01:08:15,560 like literally two or three weeks ago I recorded a charting session with Al 1155 01:08:15,820 --> 01:08:18,680 and this is gonna blow your mind. Trust me, it is gonna blow your mind. 1156 01:08:18,680 --> 01:08:22,960 It is absolutely awesome. He reads literally every single candle. 1157 01:08:22,960 --> 01:08:25,440 So everything you've heard here in the interview we talk about, 1158 01:08:25,440 --> 01:08:29,440 we break it down and even more, we go onto so, and there's so much more stuff. 1159 01:08:29,530 --> 01:08:31,520 It is well worth going and checking that out. Now, 1160 01:08:31,520 --> 01:08:34,760 there's a link below the video here if you are on the, uh, 1161 01:08:34,760 --> 01:08:37,440 YouTube channel or if you're listening in the podcast, go and check it out. 1162 01:08:37,440 --> 01:08:39,960 Link into the description and that video will be on that page. 1163 01:08:39,960 --> 01:08:43,400 Other things to remind you of are the new things happening in the robot 1164 01:08:43,400 --> 01:08:45,480 section@tradingnet.com. Go and check that out. 1165 01:08:45,560 --> 01:08:49,120 Three new things up there at the moment. I know you're gonna love them. 1166 01:08:49,120 --> 01:08:50,440 I'm not gonna tell you much more about them. 1167 01:08:50,440 --> 01:08:54,200 Just go and check them out after this. And the other two things are, yeah, 1168 01:08:54,200 --> 01:08:57,520 trading View Pro, pro, go and check out Black Bull Markets. 1169 01:08:57,520 --> 01:08:58,680 They have a special offer. 1170 01:08:58,680 --> 01:09:01,720 There's a link under the video to that as well as for Del Crest. 1171 01:09:01,810 --> 01:09:05,480 If you want to take part in that 50 K challenge. If you think you can do it, 1172 01:09:05,480 --> 01:09:08,200 you get a chance to win a thousand bucks. If you pass both stages, 1173 01:09:08,550 --> 01:09:11,640 cost you nothing, uh, you get to come on Trading Nuts, 1174 01:09:11,640 --> 01:09:16,160 livestream channel and do your thing. Show people what you can do. 1175 01:09:16,370 --> 01:09:18,920 So if you're looking to grow a YouTube channel or something like that, 1176 01:09:18,920 --> 01:09:21,040 it could be perfect for you. Alright folks, 1177 01:09:21,040 --> 01:09:25,840 thank you for listening and watching and we'll see you in this our Brooks video, 1178 01:09:25,840 --> 01:09:28,480 which is, I've gotta tell you, it is awesome, awesome, awesome. 1179 01:09:28,480 --> 01:09:31,400 You've gotta go and check it out. So we'll see you there. Otherwise, 1180 01:09:31,400 --> 01:09:33,600 we'll see you in some other video here on Trading Up.