TraderLion Conference 2026 Day 2: Learn From Market Wizards and Champion Traders

All right, welcome everybody to day two of the 2026 Trader Line Conference. Super excited to once again have a fantastic lineup of presenters. Day one was excellent with Jim Roel, Peter Brandt, and Praep Bond sharing a ton of knowledge and experience with us. And day two should be no different. To kick things off, um, just a few reminders again, we keep this 100% free. And one ask that we do have in return is if you do find the presentations valuable to help us share this resource with, uh, your friends, other traders you know. And a great way to do that is by scanning this QR code, sharing it on Twitter, and you can also click the link that should be popping up in the chat, uh, or is in the description. So again, uh, if you're able to, please go ahead and share this with folks who might be interested and find it valuable as well. Here's basically the schedule for day two. Kicking things off, we've got Ariel Hernandez discussing the puzzle pieces of profitability and performance, really getting tactical, going through a ton of examples, not just showing you the concepts, but showing how to apply them as well. Uh, that will be excellent. Uh, then at 12:20, we'll have Brian Shannon, one of my absolute favorite people to talk trading with, an excellent educator and trader discussing Incer VWAP and the golden rules of trading. And then at 1:25, and this is going to be really special, we've got more of a, uh, you know, laid-back panel with Matt Caruso and Jason Shapiro. Uh, Matt is obviously a fantastic CAN SLIM, uh, trader, top performer in the USIC. Jason Shapiro is a market wizard with over 30 years, uh, uh, basically of experience in the markets. And they're basically going to discuss the, uh, you know, they're going to compare and contrast their different styles, discuss what holds true overall, what are the principles of trading and what really matters to achieve success. So another fantastic lineup. Uh, let me know in the chat right now who you're most looking forward to, uh, learning from on day two. And again, Ariel at 10, Brian Shannon at 12:20, and Matt Caruso and Jason Shapiro at 1:25. Uh, huge thank you to our sponsors, Deep View, Trader Line University, and the Trade Lab. A little bit about each. Uh, we're currently running the Deep View sale. Uh, this is my go-to platform for screening, charting, uh, idea management, and we're going to be adding a ton of additional features this year, including a journal, uh, trade analytics, and getting into agents, and a lot of fun stuff that helps us become more efficient in our routines. Uh, so with the summer sale, we're currently offering a special deal on your first year of DFW. You can check out the link down below in the description for the details or visit dfw.com for the annual deal. Uh, moving on, we've got the Trader Line University summer sale. 25% off any master class of your choice. Uh, let me know in the chat right now if you've taken a Trader Line master class. What did you think about it? Would you recommend it to others? Uh, again, we have fantastic resources across the board from swing trading to position trading to the psychology aspect. There's a great class that can help you expand your knowledge. Um, so I'd highly recommend checking out these, uh, options over at traderline.com/university and use code SUMMER for that 25% off. Uh, moving on, I also want to mention my educational service, which is the Trade Lab. Uh, this is a daily report, but it's also much more than that. Uh, with it comes a lot of built-in resources that basically help you, uh, teach yourself how to build your system and, you know, refine your strategy. We've got the Building a System course, which comes included, helps you walk through writing your trading rules. We've got the Trade Lab Boot Camp, which I know many of you guys have taken, which walks step by step with a dedicated webinar on one aspect of trading. So whether it's sell rules, whether it's position management, uh, whether it's journaling, there's a webinar dedicated to that subject that can help you basically dive deep into your process. And each month I also do a case study on one market leader from the past and distill those characteristics and how we can apply that going into the future to basically find the next batch of market leaders. So again, highly recommend checking out the Trade Lab. And if you're interested and want to learn more, uh, basically just email me at, uh, [email protected] and mention Trade Lab conference deal and I'll go ahead and send you some additional information. All right, so I know I get this question today, so I figured I'd just mention it right off the bat. Uh, will this be recorded? Yes. Uh, you can already actually scroll back on the same URL and rewatch. So it will be, uh, present on this URL even after today ends. And you can already rewatch day one as well if you missed it or want to revisit, uh, Jim, Peters, or Praep's presentation. So yes, this is recorded and if anybody asks in the chat, please just kindly say, uh, yes, it is being recorded. Um, how to get the most out of the conference experience. You know, there's a little, there's a lot going on here. So, the best way to do it is in pieces. So, we'd highly recommend subscribing to the Trader Line channel so you always know where to find this resource. Join the VIP pass with a QR code, which will include the slides. We're setting up the resource right now. We'll be, uh, basically letting you guys, uh, in and getting access set up early next week. And basically, you'll have access to all the presentations, all the recordings once they're available, all the slides, everything organized in one place for you. I'd also recommend engaging in the chat with others and with the speakers. Share notes and key takeaways on X. I saw a great, uh, you know, great bunch of notes yesterday on X. So, great job on that. Um, you know, I think taking notes is the best way to learn. And I really recommend writing things down instead of typing them, sorry, typing them up on a computer. Um, for me personally, just helps me internalize the concepts that much more. Uh, typing is kind of one step removed somehow. Uh, so I highly recommend taking, you know, notes and then maybe transcribing them over to a Google Doc or wherever you want to store it, uh, in the digital world. But definitely recommend taking notes and sharing them on Twitter if you can. Uh, then again, this is all recorded so you can rewatch your favorite presentations and hopefully you get even more golden nuggets the second time around and even more the third time around as well. So again, just a reminder to unlock the VIP pass, it's 100% free. Click the link down below in the description. It's also pinned in the chat or you can basically scan this QR code right here. I also mention if you're looking for more additional free resources, we have plenty over at Trader Line University. We've got model books, we've got, uh, historical studies, we've got the ultimate screening guide, the beginner's guide to stage analysis. So much packed into one place. Again, 100% free. Just go ahead and scan the QR code and go ahead and create accounts and it'll be all right there available to you. Um, you know, each year, um, we partner with a charity. So, not only are we putting on this conference, but we also are trying to pay it forward. And this year, it's a little bit personal, more personal for me, uh, the cause that we chose. Um, earlier this year, my grandmother, grandmother, uh, Grandma Jackie passed away from, uh, complications with Parkinson's. And, um, basically this year I want to pick a cause that would help do research to help others who are impacted by this disease. Whether you're, uh, the person who actually has it or it's a family member, a dear friend, um, whatever the, the situation is, um, paying it forward with a donation can help, uh, treatment, uh, help us, you know, deal with this devastating disease that impacts over 100, sorry, not 100, 1 million Americans, um, and really

knowledge and experience with us. And day two should be no different. To kick things off, um just a few reminders again, we keep this 100% free. And one ask that we do have in return is if you do find the presentations valuable to

help us share this resource with uh your friends, other traders you know. And a great way to do that is by scanning this QR code, sharing it on Twitter, and you can also click the link that should be

popping up in the chat uh or is in the description. So again, uh if you're able to, please go ahead and share this with folks who might be interested and find it valuable as well. Here's the basically the schedule for day two.

Kicking things off, we've got Ariel Hernandez discussing the puzzle pieces of profitability and performance. really getting tactical, going through a ton of examples, not just showing you the concepts, but showing how to apply them as well. Uh, that will be excellent. Uh,

then at 1220, we'll have Brian Shannon, one of my absolute favorite people to talk trading with, an excellent educator and trader discussing Incer VWAP and the golden rules of trading. And then at 125, and this is going to be really

special, we've got more of a uh, you know, laid-back panel with Matt Caruso and Jason Shapiro. Uh Matt is obviously a fantastic Cans slim uh trader, top performer in the USIC. Jason Shapiro is a market wizard with over 30 years uh uh

basically of experience in the markets. And they're basically going to discuss the uh you know they're going to compare and contrast their different styles, discuss what holds true overall, what are the principles of trading and what really matters to achieve success. So

another fantastic lineup. Uh let me know in the chat right now who you're most looking forward to uh learning from on day two. And again, Ariel at 10, Brian Shannon at 12:20, and Matt Cruso and Jason Shapiro at 125. Uh huge thank you

to our sponsors, Deep View, Trader Line University, and the Trade Lab. A little bit about each. Uh we're currently running the Deep View sale. Uh, this is my go-to platform for screening, charting, uh, idea management, and we're going to be adding a ton of additional

features this year, including a journal, uh, trade analytics, and getting into agents, and a lot of fun stuff that helps us become more efficient in our routines. Uh, so with the summer sale, we're currently offering a special deal

on your first year of DFW. You can check out the link down below in the description for the details or visit dfw.com for the annual deal. Uh, moving on, we've got the Trailerine University summer sale. 25% off any master class of

your choice. Uh, let me know in the chat right now if you've taken a Trader Line master class. What did you think about it? Would you recommend it to others?

Uh, again, we have fantastic resources across the board from swing trading to position trading to the psychology aspect. There's a great class that can help you expand your knowledge. Um, so I'd highly recommend checking out these uh options over at

traderline.com/university and use code summer for that 25% off. Uh, moving on, I also want to mention my educational service which is the trade lab. Uh, this is a daily report, but it's also much more than that. Uh, with

it comes a lot of built-in resources that basically help you uh, teach yourself how to build your system and, you know, refine your strategy. We've got the building a system course which comes included helps you walk through writing your trading rules. We've got

the trade lab boot camp which I know many of you guys have taken which walks step by step with a dedicated webinar on one aspect of trading. So whether it's cell rules, whether it's position management, uh whether it's journaling,

there's a webinar dedicated to that subject that can help you basically dive deep into your process. And each month I also do a case study on one market leader from the past and distill those characteristics and how we can apply

that going into the future to basically find the next batch of market leaders. So again, highly recommend checking out the trade lab. And if you're interested and want to learn more, uh basically just email me at uh [email protected] and mention trade

lab conference deal and I'll go ahead and send you some additional information. All right, so I know I get this question today, so I figured I'd just mention it right off the bat. Uh will this be recorded? Yes. Uh you can already

actually scroll back on the same URL and rewatch. So it will be uh present on this URL even after today ends. And you can already rewatch day one as well if you missed it or want to revisit uh Jim

Peters or Praep's presentation. So yes, this is recorded and if anybody asks in the chat, please just kindly say uh yes, it is being recorded. Um how to get the most out of the conference experience.

You know, there's a little there's a lot going on here. So, the best way to do it is in pieces. So, we'd highly recommend subscribing to the Trailine channel so you always know where to find this resource. Join the VIP pass with a cure

code which will include the slides. We're setting up the resource right now. We'll be uh basically letting you guys uh in and getting access set up early next week. And basically, you'll have access to all the presentations, all the

recording recordings once they're available, all the slides, everything organized in one place for you. I'd also recommend engaging in the chat with others and with the speakers. Share notes and key takeaways on X. I saw a great uh, you know, great bunch of notes

yesterday on X. So, great job on that. Um, you know, I think taking notes is the best way to learn. And I really recommend writing things down instead of typing them, sorry, typing them up on a computer. Um, for me personally, just

helps me internalize the concepts that much more. Uh, typing is kind of one step removed somehow. Uh, so I highly recommend taking, you know, notes and then maybe transcribing them over to a Google doc or wherever you want to store

it, uh, in the digital world. But definitely recommend taking notes and sharing them on Twitter if you can. Uh, then again, this is all recorded so you can rewatch your favorite presentations and hopefully you get even more golden

nuggets the second time around and even more the third time around as well. So again, just a reminder to unlock the VIP pass, it's 100% free. Click the link down below in description. It's also pinned in the chat or you can basically

scan this QR code right here. I also mention if you're looking for more additional free resources, we have plenty over at Trailine University.

We've got model books, we've got uh historical studies, we've got the ultimate screening guide, the beginner's guide to stage analysis. So much packed into one place. Again, 100% free. just go ahead and scan the QR code and go

ahead and create accounts and it'll be all right there available to you. Um, you know, each year, um, we partner with a charity. So, not only are we putting on this conference, but we also are trying to pay it forward. And this year,

it's a little bit personal, more personal for me, uh, the cause that we chose. Um, earlier this year, my grandmother grandmother uh, Grandma Jackie passed away from uh, complications with Parkinson's. And um basically this year I want to pick a

cause that would help do research to help others who are impacted by this disease. Whether you're uh the person who actually has it or it's a family member, a dear friend, um whatever the the situation is, um paying it forward

with a donation can help uh treatment uh help us, you know, deal with this devastating disease that impacts over 100, sorry, not 100, 1 million Americans um and really can negatively impact their quality of life. So, I recommend

um you know, researching this cause and donating if you're able. Even $10 is great. And uh here's a photo of my grandmother uh my mother and my aunt right here. Uh we raised an enormous amount, you know, yesterday, let's keep

that up. So if you're finding value in the conference, again, help pay it forward with a donation towards Parkinson Research. Uh the way to do it is over on the right hand side, I think below the chat. Uh but also feel free to

ask in the chat. Uh if you can't quite find exactly where to donate, but I highly encourage you to do so if you're able.

Um, one other thing to mention is not only do we put on this conference each year, but we also have uh plenty more to offer on the channel. Uh, the Trailine podcast, inerson interviews, I'll be doing additional ones later this year.

You guys seem to dig that. Uh, tutorials, free webinars, key clips. It's all located right here. Our goal is to make this the f, you know, the best possible resource for uh, serious traders to learn and expand their

knowledge. That's our goal. Uh, and our long-term goal is a million subscribers to help a million traders. Uh, but in the short term, help us reach 200K. Uh, go ahead and look down below and if you are subscribed, awesome. Thank you so

much. But if you're not, go ahead and click that button. 100% free and you'll have access to all those resources that we're building for you. All right, and with that said, thanks so much for attending once again day two of the

Trailerine Conference. Super excited for our lineup and we'll be right back. Uh but with that said, sit back, relax, get your notebooks ready, and enjoy.

All right, welcome back everybody. It's my pleasure to introduce the next speaker, Ariel Hernandez. Uh he's going to be discussing the puzzle pieces to profitability, discussing how to build your trading system from the ground up the right way. Uh Ariel is a full-time

trader. He's the founder of Market Pulse and uh it's a pleasure to have him. So Ariel, thank you so much for being here and uh appreciate you taking the time.

Thanks, Richard. Thanks for having me. Yeah, this should be tons of fun and and hopefully uh talking to some newer traders, aspiring traders, and kind of setting them um on the right path.

Let's do it. Let's dive in. All right. So, I did go ahead and I I've been asked a gazillion times and you and I have spoken privately. Um, when you're talking to a brand new trader, it can feel pretty overwhelming because

how do I how do we say this? There's so many things you need to know, right? And I kind of call them non-negotiables. But if you start at if you try to learn everything all at once, it can feel very

overwhelming. And the way I kind of like to view things, and I view the stock market this way, too, it is just a big puzzle. Um, and the more you know, uh, the the more the broader picture, the

whole puzzle makes sense. But you can't start by learning everything or effectively you'll learn nothing at all.

You have to start by digesting and ingesting little bits at a time, effectively small puzzle pieces. And like a puzzle, when you put it together in your mind or on a table, you pick up a piece, you see where it fits, you see

how things click together, and you can't complete the entire puzzle in your head without knowing these individual pieces, or as you and I both know them, non-negotiables, right? things such as how we might scan the market, how we

view relative strength, what sort of technical setups you use to get yourself involved with a stock. You know, what um what proper position sizing sizing looks like, what progressive exposure looks like, how you might trim into strength, if you trim into strength, how do you

trail your remainder of your uh stocks? And so, a lot of these things, if you try to learn it all at once, it feels very overwhelming. And every single year that you do trade, you know, you always have that light bulb moment, that aha

moment that um I didn't know that. I can't believe I trusted myself to trade without knowing that what thing, whatever that thing might be. And so I kind of wrote this um ebook and turned it into a little bit of a presentation

for us today. And hopefully we'll go through some of this and this will help some people make some sense of the market.

Perfect. Yep. And uh for anybody who doesn't know, I am Ariel Hernandez. I've been swing trading now for just over uh full-time trading for just over six years. Swing trading since the start of 2022, about the worst time that anybody

can become a full-time swing trader. Um markets were obviously super um incredible in 2020. Everybody knows that we were um you know driven by monetary policy just money being created and printed and flooded into the markets. Um everybody kind of had to sit at home. A

lot of people became traders. Not everybody stayed as traders. Um and that is the unwillingness to from some people to kind of sit back and learn um when markets environment change how to keep the money you've made um and then you

know sidestep a bad market and and it's not like I sidestepped a terrible market. I decided to become a swing trader in 2022. So I effectively stepped right into a bad market. But fortunately, and you've talked with some

of these people before, um, some people that I absolutely admire from a Stan Weinstein to learning Bill O'Neal and some of his tactics through some of the people who have learned from him like a Pat Walker momentum from a Dan Zanger or

a Mark Minervini. Taking concepts from all of them, applying it to my own trading is is uh what got me through.

And then the market has been pretty incredible uh you know late 22 and and obviously into today uh recording June 17th and and you know we are basically in the best market that anybody has ever seen since 1999. So it's it's a blessing

but at least since 2020 at least since 2020 you know it was a little bit different in that environment. Um the difference was what was going higher were NFTTS and what's going higher now is on the back of billions hundreds of billions of

dollars being spent. In fact, you know, Google raising an extra $80 billion um just so that they can fund their growth in the AI space even more. Um I remember in 2020 you you had meme stocks, right?

You had COVID stocks, unprofitable biotechs flying. Um, you had your TCAT and your DLPN, unprofitable, you know, people paying millions and millions of dollars for photos of a JPEG rock um, or a monkey where this is much different.

It feels in some points a little bit overdone, but what it really is is fueled by hundreds of billions of dollars of real money being spent by the biggest companies in the world. So, a little different. And obviously before

we started recording, you and I were talking about how today felt a little odd with, you know, uh, rates unchanged, markets getting hit, in particular, the mega caps. A lot of them living underneath their 50-day and their 200

day, and, you know, you they're they're innocent until proven guilty, but today definitely wasn't a pretty look. Um, but we try to not, you know, think about that too much until comes into play.

And I'm sure one of the puzzle pieces is the market analysis, situational awareness. It all plays into exactly what we covered today.

Yes. Yes. And and one of the things that we don't want to do um is operate, and we'll get to it. Um, we don't want to operate, and some people have kind of seen me tweet this recently, it's not what you

buy or even sometimes where you buy it. Those can be very important, but it's the when you buy and understanding that your environment ultimately trumps everything you're doing in the market.

If the market is no good, and that's not to say that individual stocks can't perform well in a in a crummy market, but if the environment is no good, the market will let you know. And it'll let you know through the feedback that

you're getting on your individual positions. So, we'll kind of uh move on here um into this next slide, and it's how the pieces fit together. I'm sure I could have um you know, come up with more than 21 pieces. I'm sure that if we

talked about it a little bit longer, we could probably find seven or 10 more pieces um to talk about, but it's effectively your foundation, your selection, your execution, your management, and your survival. So, you have to it's it's hard to

it's hard to find the winning stocks that could be winning stocks if you don't know how to scan the markets. So, and then it's it's hard to get yourself to hold a position if you oversize. But again, as a brand new trader, these are

all things that we kind of have to learn. And instead of being overwhelmed with all of the things that you have to learn, we're going to try our best to break it down into individual pieces so that it doesn't feel too overwhelming.

So with that, let's talk about the foundation, which of course, Richard, as you mentioned it, read the market before you read the chart. It is incredibly important. And the first foundation or foundational piece um would be risk on

versus risk off reading the market environment. And then I I put here 75% of stocks. And that's typically and I say that because it's it's majority of the stocks that we're going to be trading growth names. A lot of people

aren't necessarily and I and I guess to this before I continue. If you're trading a gold stock, I don't care that the S&P 500 is coming down.

I'm focused on GLD or gold futures. If I'm trading cryptocurrencies, I don't care that the NASDAQ is going down. I'm focused on maybe Bitcoin or Ethereum or any other one of the cryptos that might be moving. And so when I say

if you're focused on and if you're buying an energy stock, oil and gas, what crude oil is doing is important and maybe has zero to do with the NASDAQ.

So, and I would say half of your stock's price appreciation is directly correlated to the group that it's in, but even more so, it is correlated to the underlying market as well. Um, so majority of your stocks move with the

market, the biggest lever to your own P&L is reading the market regime than it is picking the stocks. And it goes back to what I mentioned earlier. It's not the what you buy and and where you buy it. It's when you buy it. If you had

been going through the correction and the choppy phase which was, you know, middle of October, November, December, January, February into March, and then all of a sudden, ends of March, you start to get Marll, you know, acting better, ARM acting better, Dell gapping

up on earnings, hanging in there. Well, and we could even look at some of these charts quickly. You know when you go back to this period here let me know if you can see this well Richard. Okay so

this is ends of February. So the market is still acting poorly yet Dell is gapping up above all key moving averages. It's giving you a big pickup in volume. That's certainly not my ant Suzie. And then it's beginning to

digest while the market continues to be choppy. You could see this even when you go back to the correction in 2023, which is one of my favorite corrections. It was just the simple um three waves down in the summer. I won't forget it. It was

this would have been right here. So, it would have been this simple three waves down correction. And then right when you got this market follow-through day going on November 1st and then you look at a name like Netflix, you look at AET, you

look at DEAC, you look at AMD, you look at Uber, right around that time, five industry groups, I won't forget it, right at that time at DECK was gapping out and this would have been right in here effectively into a new

all-time high when the market was still going through a correction and then Netflix I won't forget this one this one proceeded to double right from there and this would have been in let's go back to 20 here it is so this thing gaps back up

above the 200 day and while the market continues lower this thing is just going sideways and that is one of the most important things when you're trying to find the stocks that are showing relative strength and we'll circle back uh to this topic again

here momentarily. You want to be understanding of what the market is doing and how stocks typically act in that environment because stocks have a hard time going up when the market's going down. But the stocks that are holding up best when the market had been

going down are the names you really want to just, you know, focus in on uh when the market environment starts to shift and you get what is known as that classic Bill O'Neal follow-through day.

So simple, very simple exercise, risk on your indexes above your 50-day, your 50-day is above your 200 day. Typically, breath is expanding. We saw that big time in April. Um, names that are offense semis software growth, right? Anything techreated tends

to be when tech is leading. When the QQQs are leading the move up, that for me is risk on, risk off. Indexes are below the 50-day breath is contracting.

Usually you'll see distribution days. So bigger volume on the down days, you know, on the up days it seems like the volume just kind of dissipates. Although let's not mistake um low volume rallies for rallies that cannot be durable

because again we saw that from April 8th of this year on you could absolutely have a rally on low volume um and then everybody is doesn't believe that the rally is real. What's most important is you have group and stock

participation and once you have that in particular some of your XLK which is let's say 30% of your S&P 500 acting well you almost can't be negative in that scenario when you've got growth name after growth name after growth name

trending higher. So that's super important. Yeah, just to just to add here um completely agree with this and I actually wrote an article um kind of looking at the case study of uh the last April um 2025 correction where obviously

we had the big sell-off due to the tariffs and basically um I think my opening point was what was the greatest opportunity coming out of that correction and the the main point was that it wasn't picking one stock that

doubled and tripled from there. It was getting aggressive when we reclaimed the 21 EMA, the 50 SMA. Like you said before, it was about when you kind of got aggressive, not necessarily the the single instrument or group of stocks

that you were focused on. You know, if you got aggressive at the right time, it almost didn't matter where what you bought, what what you bought, that natural breath expansion at the at the start of of a new market cycle, it's going to

lift all boats. So, it's it's more about being open-minded to a rally working. Um, getting on exposure while managing risk because that's obviously a huge, you know, part. You want to protect yourself if a rally fails. Uh, but not,

you know, you got to risk stuff to actually participate in an uptrend. And we saw that last year in 2020 25 and then this year in 2026, like you said, low valu rally. Nobody believes it's going to work. Uh, but the stocks were

telling you, the setups were telling you, and that's why we have to have a market cycle system, which I guess is your point here. You got to know when it's risk on versus risk off. And that I think is what I'm glad you led with the

slide because I think it's it's the most important component uh of trading. And it might take a year or two, multiple cycles to really internalize that when to get aggressive and when not. And and you know, you learn something new every

cycle, too. The little tells, deck gapping up. Um, and you learn more over time.

It wasn't just deck, Richard. It was and you go back to 2025, you go back and look at the when stocks went and made a new low in March and stocks really washed out through those March lows except a few. Your Crowd

Strike, your CLS, your Robin Hood, your Palunteer. I remember I bought Palunteer at 100. It doubled. I bought CLS at 100.

It's it more than tripled. Um I bought Robin Hood in the 50s. It it went up almost 200%. Now I for other reasons got shaken out of uh Robin Hood and then didn't buy it back, you know, due to

earnings, but it almost didn't matter what you bought. It's more about recognizing the shift in the environment. And you know, most follow-rough days tend to fail. Um, but that's also why you have to have and you have to know what progressive exposure

looks like, what proper position sizing looks like, so that even if you are caught on the wrong side of a follow-through day, it doesn't really do a lot of damage to you. But if you get caught on the right side of a

follow-through day, that's the market saying, "Hey, this is working. Go find something else. This is working. Go find something else." And all boats are being lifted. Everybody feels like a genius in a really good environment. And that's exactly what the market tells you

immediately after a valid follow-through day. You get stock after stock after stock after stock really going to work.

Um, and that I think is super important to be paying attention to. And all of it really ends up stemming from the feedback in our own portfolio really irrelevant of what you buy. So long as you know how to find the quote

unquote needles in the haystack and you are paying attention to names that are showing relative strength. How do you do that? Well, you do that through scanning. But the easiest way of doing it is what stocks are hitting what

stocks are less than 20% or 15% or 10% from an all-time high while the market is going down. That's a pretty big tell.

If a stock is going up over the course of 30 days when the market's effectively going sideways or down, that's relative strength. If a stock is sideways when the market's down, that's relative strength. If a stock is up when the

market's if a stock is more up than the market when the market's up, that's relative strength. And then when the market's getting absolutely hammered, but your stock is down a percent or two, again, that's relative strength. You do

that over the course of 30 days or 40 days or 90 days, what you have there is likely a chart that's gone up and then is just consolidating.

And the more the market gets beaten up, and that's why like as a swing trader, I welcome corrections. In fact, give me the worst possible correction ever because we know that from those ugly corrections come periods of awesome low

volatility swing trading and it and then they all stem from a market follow-through day. So, yeah, understanding risk on, risk off, what that follow-through day might look like, and then what stocks you're looking at after, during, and just um before you

get that valid follow-through day is important. But I think finding relative strength is not nearly as hard as I think some people make it seem. um or you and I both, you know, having studied a Mark or Bill O'Neal or Stan Weinstein,

those are the stocks that, you know, they just stand out all the time, right?

If and and I say this as well, if even if you missed SanDisk from 40 to 200, as as soon as it goes sideways, 7 weeks, party's back on, right? It's like the momentum on these things are up. they

stop and they take a breather and then they continue higher. Um and you welcome a deep market correction because that just makes the leaders that much more explosive when you finally come out of that corrective period. So um with that

that kind of leads us into industry and subindustry groups and this will be your foundational piece number two hot and then what I want people to do is to think in themes not in tickers right because if you sit there and you find a

chart and the chart looks great but it's in a weak group I would ra I would tell you this I would rather own the worst fundamental company in semiconductor space April 8th then I would have owning the strongest food

stock right or home builder right like if you own Toll Brothers great they're the best acting home builder but if you owned the cruddiest semiconductor on April 8th you did much better than the guy who bought Toll Brothers

And it's simple. It's you have to think in themes. Again, half of your half of any stocks move is explained by its sector. And then um if you're not focused on stocks within the top 40 groups, which is almost like a universal

thing for anybody who's a cancelling trader, you want to be focused on stocks within the top 40 groups. So without it, it you're just like um not bound to fail, but you're bound to find less stocks that make big moves,

which is you're swimming against the current a little bit. Exactly. And like I said, I'd rather own the worst semiconductor in the strongest I'd rather own the worst stock in the strongest group than the best stock in the weakest group. You know, stocks, you

know, they don't move alone. They all moved together and they tend to move. Just think back to last year. It wasn't just Oakllo. It was Oaklo. It was SMR.

It was NE. It wasn't just Regetti. It for the Quantums. It was Regetti and NQ and QBT QBTS and QBT. They might be the, you know, they might be like these unprofitable, unproven businesses except they all broke out of big bases and made

D and they all doubled. And it's the same thing what you've seen it with the Neoclouds. Has it just been Hut moving? No, it's been Hut with Wolf and Aldn NBIS and Cipher. Uh, and they're just all moving together. Was it

just um AMD? No. Z AMD, ARM, Marll, Intel, you know, for the semiconductors, equipment and materials. Is it just ASML? No, it's AAT. It's KAC. It's LRCX.

Was it just SanDisk? Nope. It was MU and STX and WDC. These things move in groups. And so identifying themes and groups is much more important than identifying a nice chart setup. A lot of times someone will ask me, "Hey,

what do you think of XYZ chart?" And the first thing I do if I don't know the company right off the top of my head, I go and look at what group they're in. If they're group number 97,

I don't care, right? Like it's a decent chart. You can draw a pen in, but congratulations, it's group number 97.

The odds that this becomes a failed breakout go way up just because it's group number 97. If it's group number three, now we're talking. Right now we're talking.

And so that's that's really important. Think in themes, not in tickers. Money rotates in groups. Semis run together.

Home builders will run together. Uranium names will run together. It's it's happened since the dawn of time. It'll always happen like that. You know institutions um they they put money to work in baskets. And I I always think back to

not that I didn't already know this, but when Stan Dunkin Miller was doing an interview one time, he said um he tells the guys at his trading uh you know, who like will buy stocks for him. He'll just

tell them to go buy it. and and he said something. Malay got elected as president and he was like, "Oh, this is going to be super bullish Argentina." He told the guys on his desk, "Go buy me the five most liquid Argentinian

stocks." He didn't say which five. He didn't sort them by um fundamentals. He just said, "Buy me the five most liquid." Well, he's not the only, you know, family fund with a few billion dollars to run. And so when Argentina

becomes a theme, they allocate to just the whole theme, right? Melly and YPF and GGAL. Like why does a bank and an oil stock move together? Well, they're moving together because it's Argentina.

It's the theme. Um, and it's it's the same thing, but now just think about that same concept, but with more broad implications. It's the fourth industrial revolution. It's AI. It's everything that goes into it. So, it's the AI data

center buildout, the powering it, the the actual infrastructure and construction of it. And so, there is just money flying to every which theme that AI even touches. So, very very good to think about and it's the reason why,

you know, there are continue to be some groups which just are not nearly as loved. Um and so every um a simple way of scanning. So every watch list, you know, I kind of tag it with its subindustry group. Um and then track

names that are leading for one week, one month, three month. You could even go out as far as 6 months. I think it I find a little less relevance there.

Although it can continue to be relevant. And I've even done a video on this where how to scan for relative strength.

And if you looked at and I did it exactly a year ago and exactly one year ago the stocks and the group that kept hitting my scans and hitting my scans and hitting my scans, gold and silver.

Well, does anybody remember what gold and silver ended up doing from the middle of last year until the beginning of this year? They had already been in established uptrends, but then they finally went parabolic um into that move. And I know you and I

were actually in New York together um during that move. So, but you you didn't miss the parabolic move if you had just tracked the relative strength over right who's the best groups over the last 3 months, gold and silver. Let's pay

attention to those. And then you did not miss the parabolic move. If you even tracked those and found those names in in June or July and you go up and then you go sideways and I always like to

reference this gold chart because it is picture perfect and depicts exactly that. You have a massive uh 10-year long cup and handle and gold finally emerges from that in February going into March of 2024 and you make a move up and then

you consolidate. You make a move up and then you consolidate and then up and consolidation and up and a longer consolidation. And I mean some of this up the right hand side. This is just as absolutely picture perfect as any

consolidation as you'll ever find in any book anywhere where you go up and then all of a sudden you go sideways from April until August. I mean you just don't find anything prettier up the right hand side. You want to talk about

volatility contraction. You want to talk about all key moving averages above all key moving averages getting really tight on the right hand side. A nice clean horizontal pivot which for me are always the most reliable and then just another

breakout and then finally you know you finish that off with just a very nice parabolic move. Um and then you know something that's either going to roll over or uh you know will continue to build out its long base because it's

what it needs before it can ever continue to go higher. But thinking in themes not in tickers relative strength and relative weakness.

So again reading the market scoreboard relative strength is how a stock performs versus the S&P 500 and then its sector. So, for me, I always have the S&P 500 as my baseline, and I like to think about how my individual stocks act

or how my group is acting versus the S&P 500. That gives me the strongest groups to the forefront. And then you can do that um one step further. How is your stock acting versus the group? And then that's how you end up in let's call it

AMD versus Nvidia recently. Um so again how a stock performs versus the S&P 500 or its sector. Again I wrote here the math is trivial but the implication is enormous. Right? So if you're focused on the names with the strongest relative

strength you end up in the best names in the market. Um again institutions only they they move stocks from 20 to 200. They don't chase weak charts. They accumulate strength. And that's exactly why charts look strong is because institutions are

accumulating. And the best time to find those names are when the market's going down, they effectively stick out like sore thumbs. Markets going up, these names go up more. Market's going down.

Even on a day like today, or go back a few days ago, and what was it, Richard?

It was last what what were the two big recent down days we just had? It was last Thursday and Friday. Is that correct?

Uh or maybe the two days before that. Let's see. Yeah, two days before that. So, Friday and Tuesday, excuse me. And what stock was acting really, really well? CRDO.

And I remember we had that nasty down uh Tuesday and this is on Tuesday. This stock closes green, right? Like if that's not a you know a stock going up 5% on the day when your markets are closing down it's like uh

you better be paying attention to this stock because it's trying to tell you that it is trying to go higher. So making sure that you are recognizing that in real time. Obviously it's pretty difficult if you're a brand new trader.

You know sometimes you think it's extended, maybe the market's not so good, etc. But those are the sort of names um you want to be paying attention to. And then obviously um if you if you are a fan of IBD um you do want an RS

rating of 70 plus. That's kind of even on the low end in my opinion. I I prefer 80 90, right? 90 is like even better. Um and that that's typically ideal. And then yes, up 5% while the index is up 8%

is relative weakness. That is not relative strength. And then just think about that when the Q's are down big and CRDO's up 5%. That is huge relative strength. So making sure that you're paying attention to that. Super super

important. Before you go to the next one, just can you go back to the CRDO uh chart for just a sec? Yeah, second.

Because um on June 5th and CRDO had a big wick on that day. Um, yeah. Uh, two more to the right.

Yeah, right here. Yeah. So, this looks weak, right? But the index was down 5% this day and this held above the prior days low. So, there's um it the fact that it didn't break the prior day's low when the index

is below the 21 EMA breaking down 5% that's RS. And there's there's RS on a one-day basis, but then you want to kind of collect evidence of RS over a period, right? You don't want a stock that's just strong for one day. That can be an

outlier, but especially during the later stage of a correction. If you kind of keep a list each day of stocks showing RS, subtle signs, you know, gapping up when the market's pulling back, holding above its moving average when the

market's below. If you do that for like five days and a, you know, five stocks show up every single day, those are the ones you want to kind of keep an eye on closely and look for that next setup.

And Richard, what will you notice too? Like with the CRDO, was it the only semiconductor acting well? No, ARM Marll, AMD, like these AAT, KAC, ASabel, LRCX, these things are just not going away. Um and and the market gives

like a little reprieve for a day and AAT is often flying. Um I I had by the way sidebar I had AAT really well. I mean today again not the prettiest chart but I remember I was looking in here up this

right hand side and I was like boy this looks like a really nice cup and handle.

Um, and sure enough, you know, it ended up playing out pretty well, but of course, not until I got shaken out, which was in here. Uh, which but if you're if you're saying to yourself, you know, it might have broken down some,

what was the market, what were the names in the group doing at that time? And did it really do anything wrong? Yes, it it failed to break out in that moment, but it it wasn't long before it was back

above all key moving averages and going and printing a new all-time closing high. So, something to pay attention to.

Obviously, stocks don't make it easy to get involved. They tend to shake out all the time, which is I know why some people love to buy the shakeout instead.

But is if that's something that you study and and you know I I talk to Nick every single day for instance and he loves buying um support gaps the the drenle gaps which I know you guys now have on Deep View.

Those are perfect. Those can literally be perfect. And and speaking of those support gaps, when the market shakes, I remember I bought Dell on the shake into a support gap, which is basically going back to this day's close. And then as

soon as you go back and retest that level, you hold a support gap, you hold the 20 simple moving average, you're buying that as it's responding to that level. your stop is minuscule like a dollar and change for something that I

buy at 156 and just a few months later is at 400 plus right so it's like those are some in some cases can be the best riskreward sort of spots so even on something like CRDO you'll you'll hold the 20 and by the way

that stock moves 10% per day so to close down only 5% it didn't even closed down its full average daily range. That's something else that people can look at and say, "Wow, okay, the market might have been down however much percent this

day, but it only closed down 5%." And it actually moves 10% per day. So, definitely something to um to keep in mind and and exactly what you said, Richard.

Paying attention. One more thing. No, go ahead. Yeah, sorry. Sorry to keep in No, dude. You interrupt all you want, brother.

Yeah. R RS is just so important and and one other tactic that I want to mention today is like a and this is like full correction. We're in a full correction.

We're start we've got a key low in and we're counting the days until a follow-through day. It I what I like to do is I'll look at how many days we are since that key low. So let's say we make

the the key low four days ago. Um I'll go ahead in in DFW and run like a general screen that has general criteria, right? liquidity, stuff like that. And I'll sort it by price percent change over five days because we're like

five days from that key low. So, what you're seeing is which stocks have bounced the strongest since that day.

Um, and I'll also kind of look at a a one month view. So, if it's been 5 days, I'll look at a one-mon view because then you'll see which stocks are holding up the best in that last leg down before

that key low. Um, and I I picked this up from from Eve Boach. Shout out to her.

So, um, that's just a key, that's a way that you can see what's holding up the best and what's bouncing the strongest.

And you can even do this, you know, if say we're 3 days after the follow-through day, you could do a price percent change 3 days or price percent change again for that key low and have a little bit more of a bigger window. But

you're trying to see which stocks are bouncing the strongest and are in proper setups holding up the best big picture.

So, sorry to jump in again, but I think it's a good Please, please keep going. I love it. I honestly think that's a perfect compliment because one of the things too that I think people there might be some

misconception around is just because you didn't buy something on the follow-through day does not mean if it's a valid follow-through day and it's going to be a leader, it'll have hit new 52- week highs first. It might feel

stretched, but that does not mean if if you like buying pullbacks or support gaps or um there might be a hightype pennant or I know high-type flags can be a little bit more rare, but that does not mean that you're not going to get a

follow through or another continuation setup down the road. So, so many stocks and that this goes for even SanDisk. Again, I know this is kind of an anomaly with with how strong this one has been, but it gave you a

setup in the 40s. It gave you a setup in the 200s. It gave you a setup on the 50-day reclaim. It gave you a setup at 900 with a high tide pennant. It gave you a pullback by going back to May

19th. It's just giving so many opportunities to get long a leader that I I I even bought this. I missed the 247 breakout because I bought ALAB in January. Big mistake. Although looking at it now uh that I don't own it, it's

it's it's a heck of a lot higher. And and I bought a Reddit which again did not work. And I and I passed on SanDisk, you know, just bad bad um to not buy something like that. But that's not to

say that it didn't work buying it at 9. I didn't buy Micron at 150, right? But I bought it at 406 and it worked great. So just because a leader might feel extended, that's exactly what leaders do, but they almost always seem to give

you a secondary and another follow-through, especially if that follow-through day is valid. And to what you said, Richard, is there some when you're doing that scan for stocks up the most pre uh percent change from the lows or from that date, are you also

recognizing that there's particular themes exactly that are holding up? I have I have a column in DW right next to that price percent change that will be what gicks industry it'll be in. So you'll see exactly like you'll see the

top five are semis. you'll see the top five or software. Um, also like just in general like deep view if it's the most common industry group, Deep View will cover color it in blue just kind of highlighting again the strength in that

group. So yeah, 100% that that's so key because it'll point you towards the group and then you can investigate, be a detective, find the the the instruments you want to play, whether that's looking at liquidity, looking at the quality of

the setup. But yeah, 100%. I'm I'm really focused on what theme is showing up, not just like which individual stocks are holding up the best.

Yeah. And for anybody um I know in the other slide too, I had um was it one other slide up? Yeah. Um trading tickers without gicks context is flying blind.

For anybody who doesn't know what that means, that is the if I'm not mistaken, global industry classification standard.

So it's just basically stocks being grouped into groups. So um sectors. Exactly. Groups. Subindustries.

Yep. Industries. Yep. Just for anybody because you said Gixon. I I I knew but somebody might be listening to this guy. I have no idea what he just said. Um okay. So moving on. The fourth puzzle piece is leaders

versus lagards. Leaders, they tend to build higher lows. They have shallow shallower pullbacks. um they've got, you know, usually decreasing volume even on those pullbacks. We're not really too worried about the indices here at this point. Usually leaders tend to show up

before the market even gives you that follow-through day and then their rallies tend to be on a pickup in volume and then when they do base, they give you tighter bases. Obviously, we just looked at that gold as an example. We

could even and a great another great example of this would be um Nvidia when it went on its own fivemonth base. This is exactly what leaders do. They make a gigantic move up off the lows effectively 200 and some odd percent and

then proceed to go sideways for months on end at the top of the range. That is exactly what leaders go on to do and it seems to happen over and over and over.

The longer the base, typically the longer and prolonged the breakout can be, the shorter the base, you can still have some very explosive moves. Um, we've we've seen it even out of a name like SanDisk, which again, hate to keep

bringing this one up, but it is just such an absolute textbook beauty. You make this big move off these lows, you know, 500% and then you build a 7-week sideways base and then you proceed to build a 9-week sideways base. And at

each of these times, the market is going through a little bit of turmoil, which is completely healthy and normal. And then even this one before the market broke out in January well before the market. And then again as the market was

going through its own uh period of consolidation so was SanDisk before proceeding to its next leg higher. So leaders tend to do that shallower pullbacks sharper rallies. Um and then rank a group uh a distance from its 52-

week high and then look at its relative strength rank. And something that you know we continue even Richard and I talk about all the time. It's the easiest way to put yourself on the side of a big winning trade. paying attention to

relative strength. Um, and then watch the lagard and and I don't actually know that this is the best way to do it, but there has been some um, you know, kind of looking at this when the lagards start to break

down that can start to affect some of your leadership. Not necessarily, but I I can give a pretty good example um with the optics names recently and it's hard to call CIN a lagard, but you break down on

earnings, you start to roll over below the 50 and this entire time when CIN breaks below the 50 um after this thing had been in a really nice prolonged uptrend, the other optic stocks, whether you're looking at light um has done

absolutely nothing. whether you're looking at AOI has done absolutely nothing. So hard to call a name like CIN a lagard but it has become one especially within its own group and you have to start to view that um under a

lens where you say hey if these lagards CI start to break down and break down on earnings you got to be careful with these other quote unquote leaders because just when you think that they are leaders they they start to follow suit um with

the others right with CIA N and and if you look throughout all the optics, GLW, VIAV, they have all turned into a headache.

Um, if you're trying to buy a pullback, buy a reclaim of a key moving average, they've all become a real big pain. And so, paying attention to the quote unquote lagard. When it breaks structure first, the leader is usually one to

three weeks away from doing the same. And that's just kind of from my own observation. CIE just broke down 10 days ago. Call it two weeks. If I'm looking at AOI, you certainly look and and LIT, you look like you are right there from

also breaking below their 50 and and you start to break below the 50 and it can get all sorts of ugly quickly. So something to pay attention to. Finding the needle in the hay stack puzzle piece number five. How and why we scanned the

market. Right. So you've got over 7,000 listed stocks, right? I would say much fewer than 50 of them are ever worthy of your attention on any given day. I personally like to shrink my list down even further. 8 to 10 to 12 stocks that

I even have an alert on. I would say 100 150 names um in my universe list at like any one time. I was talking to a student today and he said he had 300 names on his universe list and he's done a really

good job of holding some big winners Marll and Dell and he still has them.

But the one of the things that I said I said 300 names is maybe too much and because you like holding names for a longer period of time the way you can kind of um shrink your universe list is

have some accelerating earnings in sales. if they don't have accelerating earnings in sales, maybe they could be kind of that um um I don't know, I don't want to call it like a wallet pattern, but just know that it's going to be like you're you're

just trading this for a few day momentum burst for your equity curve and then that's it, right? But if you want to sit in something for weeks and potentially months, usually having accelerating earnings and sales is the thing that

stops that stock from roundtpping all of its gains. Right? So Oplo was fun last year, but it more than roundtrip the entire thing. Why? They make zero dollars. So, they're they're fun and they work when the theme is working. But

if you really want to sit in names, and you want to be more of a position trader multimonth even a full year, accelerating earnings and sales, uh, 25% quarter over quarter or trailing 12 months, near their 20-day highs. I personally like stocks with

over a billion dollar market cap. And people are like, "Well, Ariel, at a billion dollars in market cap, are you are do you feel like you're missing names?" The reality is no, right? A billion dollars nowadays for a company

is is actually kind of small. I mean, as crazy as that might sound, right? You could still have 2500 stocks to pay attention to north of a billion dollars.

And to this, I'll say if you are into trading momentum, Regetti had a billion dollar market cap at like $2. Did you miss anything? If you didn't buy it at a$150, but you bought it at two, right? It still went

to 50s. So, you didn't miss anything. A billion dollars for me is perfect. Um, and that's a really good scan to run.

Another one is your highest momentum. So, 70% above 52- week lows. That's already charts that are going up. Um, greater than $10, uh, trades more than 2 million shares a day. And then price above the 50 simple moving average. You

can adjust that to prices above or below the 50 simple moving average or even below up to 5%. Um, and that will give you a couple stocks that might just be consolidating just underneath before you get that old Oliver Kell wedge pop. Uh,

potentially right back through the 50, which is a setup that I do not mind trading at all. And then episodic pivots or earnings gap ups, power earnings gaps, and then you could take that as a you gap up on news. um you trade big-

time elevated volume. Um could be on news or earnings or after the stock's been neglected. And then again, shout out to a meat. Um trading a high volume close setup right behind uh those as well if if they

meet the criteria. So finding the needles in the haystack is a nonnegotiable. Any questions there, brother?

No. Uh do you have a preferred market cap range? Like I like the like 5 to 20 billion range in general and trading those for so they can double and triple and quadruple. Um not you know I don't want to neglect

because I didn't mind the move that AMD made right and AMD is was a half a trillion or or le just a little less. So I don't want to neglect because you can just be over a billion. Of course there

is that like sweet spot where you know you're you're a call it a you know10 billion dollar business and you can go to 50 or 100 or what have you. Um, like if I had to have a preference, I I

happen to like Rocket Lab, even though maybe right now it's not acting the best, but you know that 60 billion with with SpaceX at 2 and a half trillion. So it's like you got this $60 billion business with maybe some wiggle room up

to a hundred plus in the future, right? Like that to me feels feels fairly comfortable. Um, yes. Like once you get to Sorry, Richard. Once you get to like these two and $3 trillion market cap, I I ask

myself like yes, they can go up, but how much meat is on the bone? Like we all want to catch a 100% move. Is Nvidia going to be the stock that gives us a 100% move here and then what becomes an

eight or a 10 trillion company? Not saying that it well not saying that it can't versus you catching you know NBIS air air ARM or even Dell right and it's got that opportunity to you know double triple quadruple versus something like

Nvidia where you just look at it and you're like if this thing quadruples it's like it's like 20 trillion right like the odds of that become significantly less as you get too big too big for your own good. Yeah. And I

was just going to add um would you mind defining dollar volume and talking a little bit about that aspect and and why you look for uh pretty liquid in the can slim and and reasonably liquid in the scale number two as well.

Yeah. Well, so institutions have to trade liquid names otherwise they're building positions for a really long time in illlquid stocks. But what can happen is if you're trading an e-liquid name, you know, something that's only trading 20 million bucks a day, it only takes one

player to exit their position to absolutely destroy a stock, right? But if somebody wants to exit a billion dollars of Nvidia, they could do so fairly easily in two days, right?

Without, you know, crushing the price of Nvidia. And you know, as a as a retail trader, I I would always just say if you're sticking to more liquid stocks, you'll never you'll deal with less slippage.

And that's really important. One of the costs of doing business, especially as your own portfolio begins to scale, is not moving the stocks that you're trading. There are instances where I'm buying a name like Dawan and I'm like if

I buy the actual if I buy a 10% portfolio size I I don't want to move a stock even 50 cents, right? And there are instances where there are names that I might be trading that are trading 80

million or hundred million dollars in daily dollar volume where you move them a little bit and I don't want that at all because you move them on the way in you move them on the way out and as

you're buying others might be doing the same thing. So you're dealing with slippage, the cost of doing business on both sides versus if I buy Intel, let's say, you could put a myself or any institution could buy $5 million worth

of Intel with a single click of a button and it might move 8 cents, right? So or 10 cents or 15, like much less. And so your slipage is a whole lot less. And if you're focused on very highly liquid

names, just even just north of a hundred million dollars a day, you're not missing out on any of the best stocks in the market. Zero. No, you're not missing Micron. You're not missing SanDisk.

You're not missing Nvidia. You're not missing ARM, Marvel. They're all trading billions of dollars a day. I know that stocks that are trading 20 million bucks a day, they can they can certainly make big moves, but and maybe most people with smaller

accounts like they might be trading with a 30,000 20,000 that this isn't something that they have to think about because they might only be buying 20 shares, 10 shares, 15 shares, 50 shares.

But as most traders, and everybody wants to scale, you have to be trading names that are liquid. Otherwise, it just becomes far too difficult. Um, you you move a stock when you get in, you move a stock when you get out. That cost of

doing business adds up at the end of every single trading year in a way that you don't even really want to do that math. So, um, again, you're not missing any of the best stocks in the stock market over the last 12 months if you

just set a filter at 60 million. Um, and then almost everybody can find, you know, great stocks to trade, good earnings and sales, over a billion dollar market cap, over 60 million daily dollar volume. And and what it'll do is

it'll actually it'll narrow your focus on to the best of the best. I would even take it another step further. Don't trade stocks that trade less than 3% average daily range per day. You want to make money this decade. Avoid the

turtles, right? General Electric is fine. It's going up. But do you want to own General Electric for a 30% move in a year or do you want to catch AOI from 40 to 200, right? So, and even AOI at 40 bucks was

trading $100 million a day and it had a, you know, 8% average daily range and a market cap north of 1 billion and it, you know, has good accelerating earnings in sales. And it's the same thing with um a name like Alab for instance. Like

they've all got it, but what you're doing is you're just eliminating the General Electrics or the Boeings of the world. Slow. They maybe have some good growth, but then they're just too slow.

And you got to do something to quote unquote find the needles in the hay stack.

Yep. Great. Yeah. I think the combo of liquidity plus higher ADR that there's a sweet spot there. And I I don't like the super high ADRs because like those can be there. Um but you know I think like

five to eight% is kind of a sweet spot. Sweet spot. CRDO. Yeah, it's a sweet it's a sweet spot. And you know those and ALAB a big opportunity for those names to double Marll like 6%.

Even AMD recently th they move beautifully. But then even sometimes when they become too big like Nvidia or Apple all of a sudden its average daily range shrinks all the way to two and three and and hence the reason why you

get these double and these triple leveraged ETFs which you know they're their own monsters but they can actually be very beneficial if used properly as well. not something that I tend to trade, but during a period of a momentum

burst, they're some of the best instruments. And at first, I was like, you know, the market doesn't really need a a 3x leveraged whatever it might be.

But there are instances when it's actually not that bad. I think we need a 10x SpaceX. Is that is that man, that's I think we've already got 2x um and probably 3x if I'm not mistaken.

One more thing about like the universe. Uh that I think might be good to mention.

Like this is something that you learn over time, but learning the character of the stock you're trading, you know, is it a is it a stock that when in trends trades cleanly? And this goes to liquidity a little bit too. Does it

respect the moving averages? That's the ones I like to focus on. It I call them choppy traders if they're kind of the opposite. There's like no respect for moving averages. There's little follow through on breakouts. Um IOC, you mean?

Yeah. Yeah. Yeah. Exactly. Exactly. And all like the commodity ones. That's what like another reason why I I dislike them. Um but also just like when I'm when I'm screening and I find a good setup, it's in a good theme. I'll look

at like the last trend like from a base and like first of all, I'll do like a measuring tool in DView and like measure from the breakout to where it kind of topped or rolled over and like was that

a meaningful move? Was that a 40 50% move that I would be interested in? um and and linear and linear linear linear and respecting the moving averages. So that those little things looking to the left, what has the stock

done before? Has it shown it's capable of making a market leader move? You know, does it is it a serial gapper?

Like does it like to gap up on on earnings and positive news? Those are little nuances that you'll pick up and have a running list of that can help you, you know, focus on the right names.

Yeah, I agree with that completely. I know. Um it's tough when you look at an IoT or a TEM and you're like, well, the theme is good. Does it but it just it itself is such a choppy, inconsistent,

but it goes back to learning your stock's personality. If you've watched your stock long enough and you say, "Hey, this thing loves to shake out the 20-day." So then just waiting for it to shake out the 20-day and then be a buyer

there and knowing, hey, this this is what this thing likes to do. This is how I will would buy this name anyway. It's tough when you're um if if you're not super adaptable to different entry tactics, if you're just

like, "No, I'm a traditional breakout buyer and I only like to buy earnings gap ups or I only like to buy." There are charts that like to gap up on earnings but then do nothing for a few days. That can be very very annoying.

There have been charts that like to gap up on earnings and then immediately follow through. Um so that might work for you but then the others might not.

So definitely learning your stock's personality. I like what you said there about um learning looking left and seeing if it's got linear price history.

If it doesn't, and it never has, I'd rather it prove to me that this is like a new regime, new market participants in this thing, new institutions that are like desperately trying to own it.

They'll drive it up. It'll become linear. It'll have like that Dave Ryan ants, right? Where it's just being accumulated day after day after day for a couple of weeks and then it'll flag.

It'll pull back. It's up four, five, six weeks in a row. Now you're like, I man, I got to own this thing at some point.

Uh, and then you're just waiting for that new consolidation, whether it be a consolidation like SanDisk or something a little sloppier like VRT. Um, I remember VRT at like 17 bucks and then it just like ran away. And it never made

me comfortable to buy it, but that was a big lesson. Those are the ones that institutions that they're dying to own this thing. They don't care what it looks like, what the price is. There's no weak hands and they are accumulating

the hell out of it. So that those those are how that how how it goes sometimes. Anyway, yeah, I bought, by the way, uh I bought VRT like from that gap down at like 178, sold it on one bad day and just never

bought it back, dude. It's just it happens. Uh oh, no, not ever, but like not not during that initial move.

I was about to say anytime I've tried to own VRT recently, um it's it's not been pretty.

Yep. So speaking, I think it got back above the 50-day today. Yeah, I think so.

And and so did CEG just when you think they were close below it faded a little bit into the the close. Yeah, I mean market market was a was kind of tough. Okay, so moving on. Puzzle piece number six. Fundamentals and themes

drive price the fuel beneath the chart. The biggest winners always pair powerful fundamentals with a chart confirming institutional accumulation. Something that we just talked about. Look for tripledigit EPS growth. Does not always have to be like that, but if you have

it, um, obviously better revenue, uh, confirms kind of that EPS story. Um, and then great fundamentals plus a hot theme gives you that much more potential.

Going back to what I mentioned earlier, I would rather own the crummiest stock, right? In the strongest group, in a hot theme, that increases your potential.

you now give me a hot theme with great earnings and sales, then you look like ALAB where you look ugly at first, then the theme gets hot, now it's like, oh man, but they do have awesome earnings and sales. In fact, they've got

tripledigit EPS uh growth. I'm not sure if it's still that, but I'm pretty sure it was for a while. Um, and then all of a sudden, huge move. Um, and then again, same fundamentals, but in a dead theme,

you're going to get 20 30%. Amazing fundamentals. In a great theme, you get 100 200% moves. And that is very important to remember. You can go and catch awesome move, but if it's a crummy theme and it's like

moving in a vacuum, you're swimming upstream. doesn't make for nearly as awesome of a trade as it does when it's got awesome fundamentals in a great theme. So, and then obviously a chart, the technicals itself triggers the entry

and triggers the trade. Fundamentals and themes decide how big to go and how long to hold. Semiconductors right now, that has been kind of the the theme. um anything AI related has been the theme.

Although maybe a theme that's getting narrower and narrower um in as the as the length of this trend goes. I don't know if that's entirely true or not, but if they've got good fundamentals and a hot theme, that obviously should be the

determining factor of your patience and your position sizing. Um okay. Um, puzzle piece number seven before we wrap up the foundation, improving your situational awareness.

Read the whole board, not just your ticker. So, hold the full picture in your head, the your index, your breath, your leaders, your laggers, your themes.

I don't really focus too much on bonds. I have been focusing a little bit about the dollar. We talked about this a bit before we started um recording. You'll notice today the dollar was super strong. the market was getting beaten

up. You almost saw those things moving tick for tick. Um and and obviously that is kind of holding the whole picture in your head. The last time we saw the dollar rallying in a big way was 2022.

We obviously know what the market was doing at that time. So I at least want to be conscious of it and that's just part of holding the whole picture in my head. On the flip side of that, I can't

lose sight of the fact that WDC, NBIS, ARM, and even Micron all tapped a new all-time closing high today at some point. So, you know, balancing those things is is is kind of important for me. What leaders are doing is very

important. That's the most important thing to me. But also and equally as important is what setups do I have that are buyable tomorrow?

If I've got very few stocks that are actionable and then that they're triggering for on a technical level, then I just do nothing. Um, and I let names work if I have them. Um, and then maybe if the market you show some

distribution, do I have a name or two that I could potentially short on the other side of the market to play some potential unwind in the market? Um, setups repeat. Um, context never does.

The same chart is a buy in one tape and is a trap in another. Right? That's why that when is very, very important. And then your morning checklist, right? What does your index look like? How's your breath? What's your leadership looking

like? And then, you know, what is there is there any news for the market? Today was FOMC. Knowing that, and then your own book, right? What positions do you have open? What's working? What's not?

Um, and then taking it from there. And then um awareness catches it early. distribution, distribution days, failed breakouts, defensive stocks leading, and then maybe even the dollar, not so much bonds rallying, um, is something that would kind of raise the antennas. If we start

to see failed breakouts, if I start to see toilet paper, I always joke the XLP consumer staples leading, you know, that makes me a little bit more defensive um, than if semiconductors and the SMH acts great. If the SMH turns into a failed

breakout and the dollar start to rally and my own stocks start to stop me out, those are red flags. Those all go into kind of improving your own situ situational awareness. But ultimately, that can all be boiled down to your own

portfolio. How are your names acting? How is your universal list acting? They were showing relative strength before you bought them. They were they were going up when you were in them. You eventually get stopped out. Something looks like a clean setup. You go to buy

it, it fails. Those are all things that you can kind of say, "Hey, let's pump the brakes a little bit." But as long as leaders continue to lead, you kind of got to, you know, keep some of the

negativity out of your head. All right, moving on. Um this second part is on selection. So a small menu of setups traded with conviction. So the setups I trade um again a big move up type base. We talked about it in gold.

We talked about it with Nvidia. So you'll get even SanDisk. You get that 30 to 100% move in some cases even more.

Then two to eight weeks of contraction. You saw it again with SanDisk. Seven weeks of sideways, nine weeks of sideways. Then range expansion. Again, you saw it with gold. Um, and in some cases, you can get five months of

contraction. The bigger the contraction, the better, especially if it's coming off of a really big move. Episodic pivots or power earnings gaps are the other setups that I love to trade. Um, usually I don't buy them on day one

anymore. I kind of will wait for even the Scotland fish hook. Um, I know you you've obviously chatted with him before. um or the high volume close setup which AMI talks about so often and uh just sometimes a simple if you're

going to buy them on the earnings gap up day something as simple as a fivem minute opening range break um could be good enough I love volatility contraction patterns that is the exact chart that we spoke about in gold just

picture perfect you get a very big move up and then all of a sudden and these pullbacks are very shallow but effectively they get shallower and shallower as you move the right hand side of the chart. That is your classic

very classic U mark mini VCP and then obviously a simple bull flag. So a move up and they could they could be very very short bull flags or they're almost the traditional cup and handles. Um think about something like Morgan

Stanley. Um, as of late, this is just a textbook cup. And then you have your handle here on the right hand side. And would you be too surprised if I can find you another banking stock which looked identical at the exact same moment?

Well, don't be too surprised because stocks move together. Goldman Sachs, your cup and your handle, no surprise.

No surprise. Charts move together. That's probably the thing that I would reiterate more than anything.

setups are fine in a vacuum, but they're better when they're together. Morgan Stanley, Goldman Sachs, I mean, you know, two synonymous names in the banking industry. Both with cup and handles, both with breakouts. Surprise, surprise. And it wasn't the only cup and

handle um that I was looking at. Guess what you had here? And this is a semiconductor. A cup with a handle, right? And we were looking at a Matt earlier, Richard. a cup with a handle. And yes, some of them can

be a little bit volatile on the right hand side of the chart, but would you be too surprised that semiconductors were giving you cup and handle setups and then they're breaking out together?

So, very important. Again, those are the setups that I like to trade and that's how we kind of view it as selection. And again, pick two or three setups, learn them cold, know them like the back of your hand, um, and let the rest of the

market exist without you. That's like a good way to, you know, kind of view it as you become a little bit more seasoned. Um, I used to trade the earnings gap up, but then I learned from a meet and I learned from Scotland the

Fish Hook setup, the HBC, and then you add those to your playbook. If you happen to miss an earnings gap up on day one for whatever reason or because you didn't want to buy it or maybe you've noticed that they've been pretty

volatile on day one, that doesn't mean that you have completely missed the setup. In fact, you can buy a day later, two days later, 5 days later, and maybe it still meets the criteria for a setup that you understand.

Yeah. One more example, and this is VCPs. Can you bring up MU? um way down in the base.

Yeah, at least this is kind of my perspective. Um Oh, no. Uh the most recent base actually is what I'm looking at.

Um this is this is my interpretation of ECP's. Uh Ariel, you might be a little bit different, but it doesn't always have to be higher lows. We we just need some tightening on the right side. And like there there was a shake out here.

Yeah. And that's like a perfect high handle, whatever you want to call it. It's not so much about memorizing patterns. is about like understanding what does constructive price and volume action look like and it can express itself in multiple ways but we're

looking for a mature base and then a burst up the right side and then tightness and like you don't need to memorize exactly what a cup and handle looks like although it's like the simplest but that's what I look for is

just like tightness up the right side at when a stock is in a mature base and yeah we've got a we've got like this could be there's an undercut and rally setup here and this is a beautiful this is A

absolutely beautiful shakeout here, too. So, this is um I I don't mind when price does this at all.

Oops. This does not bother me in the slightest bit when when price gives a healthy shake out underneath the base.

And I remember the market gave a follow-through day on the ETH, hence the gap up. Surprised that a stock would gap up with the market because that's exactly what stocks do. They tend to move in lock step with the market, but

some better than others. Micron being a leader, I ended up buying this on the 9th on effectively the little undercut and the reclaim of the 50 simple moving average. Um, you know, we could take it down to a smaller time frame and look at

the actual setup itself, but a pretty straightforward setup nonetheless. Um, when you look at just what a 620 setup looks like and it boils it down to a fiveminute chart, you know what the market's doing, you know what group it's

in, you know that these things are super strong. it reclaims a key level. The market just gave you a follow-through day, the prior day technically, and now you've got a smaller time frame to get in and then to manage risk on a smaller

time frame with the bigger picture context in mind. And also with the market environment, having change regimes into a potential, we just got the follow-through day. Now, it's time to start getting aggress not aggressively long, but it's time to

start getting some money to work in the market. um and doing so quickly, especially if this is going to be a valid follow-through day. You know, getting positioned anywhere from the 8th all the way up until, you know, middle

of April, from the 8th to the 16th or 18th or 20th makes total sense to me. Um and then obviously, you know, we all know what the market does from there.

So, yeah. And one more thing, um that was a little bit of a tell for SNDK is MU, the base before this, if you could go back to this. Uh no, stay on MU for just a sec. Sorry. um the base before this. So

back in um here December time frame, this y gapped and broke out and was trending before SNDK even started moving at the right side of its base. So seeing the strength here tells you to investigate the theme a

little bit more. And then SNDK uh so this this broke out of the base that uh on December 19th SNDK that same time frame if you could bring up that chart um was just moving off the lows and

didn't break out until Jan 2 uh Jan 6 time frame. So that's that's a little bit about how again narrowing your focus a little bit and spotting those early entries when sister stocks are are developing and setting up. So just want

to point out that and and look at how absolutely tight these days are. Yep. like the range goes from you know a big wide range on the way up obviously pretty nasty wide range on the way down but then you do develop those higher

lows you are above all key moving averages and just before you have range expansion I mean you couldn't really trade any tighter over the course of three days for a stock that moves 7% per day effectively you know you're trading

you're trading these days with uh you know half of its typical range y which One one one thing about that bad bar and just like really bad bars in general at the beginning of the base.

Draw a line from that close. When when a stock has a really bad bar, this is just an observation I've made.

Does it follow through below that close or does it not want to close below that bar? This whole base was based on that on December 3rd, which is um a little bit I don't think it closed below that. But it did close here. 195.96

19438 dude you're talking less than a buck right 40 cents 40 I mean a little bit more yeah so just like HVC's can be helpful on really good days as earnings as pivots you know a really bad bar if

there's no progress down yes the stock might need some time this based out for a bunch more weeks but you know pay attention to whether we get followthrough below it because that can be a tell to keep an eye on a stock this

is a stock that went from um in the prior move 52 to 300 basically. Then it had that bad bar, built a base, but you should still have this on your radar disregarding that one bar because it doesn't want to close below that close.

So just something to keep an eye on and and how important still that 50-day is. This entire time this thing was so strong it remained 10 times its average true range above the 50 effectively the entire way up. And all this bar did was

allow that compression to take place even a little bit faster. Let the moving averages. We're not You can consolidate through time or you can consolidate through price. This one did a little bit of both with that November 20th bar. And

in reality, nothing super harmful where you would look at this and go, man, that that defeated this, you know, absolutely beautiful name. Um and and just one to study study a ton of because obviously we might never see a move like this but

it's how big moves develop. You make a big move up and you consolidate sometimes for seven weeks, sometimes for nine, sometimes for four months. Gold was another beautiful base, Nvidia was another beautiful base that SMCI was a beautiful base. It's about understanding

what those bases look like, how they can develop, how big of a move it up it was before that consolidation needed to take place. And I don't mind this bar at all, Richard. I mean, I remember clear as day

having that 247 alert, but my problem that day was buying ALAB and Reddit, both of which were working for a day.

So, I was like, well, all right, I missed one, you know, and I'm like, okay, I missed it. No big deal. But then obviously this is the one that really ended up working and the other two well we know how those are looking although

ALAB is a heck of a lot higher um now than than when I bought it but anyway um okay so next is entry tactics getting in and this is another puzzle piece again it's good to know your setups know your

entry tactics um entry tactics getting in with structure and not hope and entry is not price it's a moment when buyers prove control. So, it's a pivot.

Sometimes it's for me typically I love to buy a break over a prior day high.

How can you go higher if you haven't broken a prior day high? The other way that I do like to buy is pullbacks into key moving averages. Oftent times you are still within a prior day range or you have broken the prior day range

holding a key moving average and start to turn back up. But something very very simple for a brand new trader to do like a SanDisk, is it even really breaking out if it's not breaking above a prior day high or breaking out of the range?

The answer is no. And so you're buying something within a range. I've always kind of had this belief. If you're going to buy in a range, buy the weakness in a range, not the strength. Because if you buy within a range and you buy the

strength, you're very likely to get chopped up. When you start to buy strength, you want to buy those new highs. And again, shout out to Dr. Wish and the green line breakout. When you're buying a all-time high, there are no

more sellers apparently. Well, that that doesn't necessarily have to be true, but there it's you're in price discovery mode. And who wants to sell their stock when everybody every historical buyer is green? So, that is a kind of that

psychological side of it and that's your that's your pivot, right? It's that new all-time high or the break of the range or at the very least a break of a prior day high. You could play a opening range

break 1 5 minute, 60 minute, 30 minute, 15 minute. I've seen people do it all multitude of ways. Again, it boils down, in my opinion, not so much to the time frame that you're using to get yourself positioned, but more so the when you're

doing it. If you're buying a breakout in a healthy environment after a market correction, your likelihood of success goes way up. Um, if you're buying a stock with in a top 40 group, your success your likelihood of success goes

way up. And if you're buying a stock in a good group with good earnings and sales in a good market after a market correction and when you've now gotten the follow-through day, you're now your success, your likelihood of success goes

way up. So, you're just kind of stacking the deck in your favor. And um I don't remember exactly who was that said this.

I think it may have been Mark and he said something like um gambling um and trading stocks can be very similar. The difference is I get to see my cards first before I put money on the table. And that's exactly what, you

know, taking your entry might look like. If I just had to blindly say, oh, FCX is going to break out tomorrow, maybe.

But if I got to saying, well, copper's ripping, industrials are doing well, metals and mining are doing well, FCX has got a clean pivot, and then and then you layer, you know, those things in your favor. Now, all of a sudden, your

likelihood of success does go up, but you have to kind of layer those other pieces. And and that is where you know having that situational awareness is something that everybody will get better at. But having that understanding um as

one of your puzzle pieces is so important. And then obviously the reclaim entry where it could be the reclaim of a key moving average, the reclaim of a support gap. So a stock might fade at the open. There are times

where that's the same case. The market might gap up. You don't want to chase a gap up, but you do wait for the profit takers to come in. you get a little bit of a fade at the open and then you buy

the reclaim of VWAP. Um, and that's just volume weighted average price and then your stop will you'll already have a low in place. And so your entry is your reclaim of VWAP. Your stop is low of day. That allows you to understand what

you're even risking before you ever get in. And that is something that all of us should know before we ever get into anything is where you're leaving in case you're wrong.

And that is entry tactics. When to avoid buying, the art of saying no. So if you have a market filter, the market is below the 50-day, the 10day is below the 20, both are sloping down. That's your market filter very easily with key

moving averages. Not buying a growth stock when that's the case, especially if it's not a follow-through day. If you've had a low and then you're going to float higher for two, three sessions and then get a follow-through day and then you buy it

even though you're still below the 50. Okay, fine. A follow-through day is its own separate guideline for getting you engaged in the market. But in most instances, when you're below the 50, you're below the declining 10 and the

20. That should be a very simple market filter for a new trader. Just don't be a buyer of stocks. Don't buy stocks that are extended. So either above their flat pivot for me. I also would say don't buy

stocks that are more than four times their average true range from the 50. A very simple example is if a stock moves 4% per day, don't buy greater than 16% above the 50 simple moving average, you're already starting to get into once

you're at six times, seven times and people are like, "Wow, this looks so amazing." You're buying extended. Only nuance there is if it's an earnings gap up, that becomes the only reason that you can buy anything that's extended

because it's on a news catalyst. Extension from the 50 is actually what you want to see. So, a little counterintuitive, but again, something that I think um you know, traders definitely pick up on and they have to learn. Also, be a little bit more

careful with late stage bases. names that are a little loose around pivots, names that look like they built a clean pivot but then fail once, fail twice, fail three time, you got to be a little bit more careful. Um, look at where the

stock has come from. That's not to say that names can't go higher, but when you do get to late stage bases, they tend to be a little bit choppier. Um, they they tend to need at least a correction

before they can come back to life. Uh, wided loose base, something of which you're seeing in the optics. again, do I know that they're going to break down?

No. But think about where a name like LIT has come from. And then say to yourself, does this base up here feel like a clean base? Maybe, but just not yet. And it's not that I don't think it's great, but it's you have to take

into context of where this thing has come from and in the time frame it has done it. It, you know, just last April, so 16 months ago or or 14 months ago, you know, the stock was $45 and it

effectively got to a,000 plus. Is this enough consolidation here for you? Is this clean enough where you say to yourself, you know, this this looks a little bit more like this type consolidation? Not quite. What you're seeing it during this consolidation of

October of last year was a lot cleaner and considering that this thing was breaking out with the market was chopping and and in fact chopping and then almost going lower.

So, incredible resilience from this name. But now that you've made this gigantic move up, you've got CIE a leader in its group breaking down. I would just say it's not that it can't work. It's just that maybe the group's

not getting as much love as we thought. And maybe this consolidation, considering the recent move up over the last year, isn't a long enough consolidation after a,000% plus move. Um, so be a little bit mindful of late stage bases. Um, and

then again, you're already at your max heat. So maybe you're already at max heat. Um, meaning if you've got too much brand new exposure on and you know that if you're going to go get stopped out of all those brand new positions without

seeing too much traction, um, your your your chance for a four 4%, 5%, 6%, 7% portfolio draw down from your realized gains might be a little bit too much.

And that's also um you know kind of dovetailing into what progressive exposure can can really be. So moving on here we've got execution risk first shares second stops without negotiation that's an absolute must. So proper position sizing the math under every

winning trade. Position sizing isn't just how many shares. The question is how much will I lose if I'm wrong as a swing trader. You have to know you're wrong 35 or or sorry, 60 65% of the time. I my stats say I'm right 35 to 37%

of the time. But when you have a winner, right, letting that thing work, letting it make up for a bunch of your little losses. That is the idea. Um, and then obviously your shares is your account risk uh multiplied by the risk of or

your account size multiplied by your risk percentage and then divided by your entry minus your stop. An easy way of saying um if you're buying at a 100 bucks and your stop is 99, right? If you're buying a 10% position and you're

risking only 1%, how much can you actually buy to keep your loss at.3%. So, how many shares can you buy? So, um risk per trade 0.5%. I actually don't even go that high. I know some people uh like to do that. I think 75% can be a

little um high too. And that a little high as well. When you're for me, even without a losing streak, I like to keep my losses right around a quarter of 1%, maybe even three of 1%. That makes me

feel most comfortable. If you're risking more than 1% on a single trade, you are definitely gambling. You're oversizing.

There's really no reason for that. Almost all swing traders will go through 8, 10, 12 losses in a row. The last thing you really want to do is give back, you know, 10, 12, 15% of your portfolio during a single bad losing

streak. I want to say it was October of last year. Um, just after we had that, you know, kind of nasty, um, down day October 10th, I had like a 11 trade losing streak, I ended up losing 1 and a.5% of my

portfolio. So, by the time I get to my third and my fourth and my fifth loss, I'm taking 3% position sizes, not because I don't trust the setups that I'm trading or I don't trust myself or I don't trust the

mark. I'm either not seeing things well, the market isn't friendly, or my entry tactics are horrible for for the market that we're in. I should be buying pullbacks, but I'm buying breakouts.

And you notice that by the time you get to your fourth and your fifth losing trade in a row, and if any one of those three things are true, my entry tactics stink, the market's a little bit choppy,

or I'm not seeing things, well, all of those scenarios, I want to be trading smaller and smaller size. So, if I have to take a 3% position size, but then my stop is 2% to low of day and I'm risking

effectively nothing, good. Good. Let the market get me into a winner and then I'm going to say, "Oh, that's an aerospace and defense dot. Let me go buy another." Oh, I've got another winner in an aerospace and defense. Let me go buy

another. And so operating behind traction versus getting more aggressive to make back losers. It was very easy to make up my one and a half% portfolio draw down once I got myself into a few positions. Those happen to be shorts.

Um I I shorted Regetti. I shorted um UAMY um and so and I even I think I shorted um Nugget because gold had you know a pretty nasty pullback got a little extended there and so but I I was seeing

things well on the short side of the market and all it really took was three 5% positions on the short side to more than make up for my losses that I had on the long side. Um so proper position

sizing is truly truly the best way that any trader can really uh control their risk. The shares that you buy is like the single most important thing that helps control your draw down. When you're in an up market,

you're a genius. Everything is working. Trading is simple. You look in the mirror, you know, your chest is a little bit bigger. You're just a genius, right?

your head weighs a million pounds because you can't do anything wrong, right? In a bad market, you should notice by trade number four that either you're not seeing things well, the market's not friendly, or your entry tactics are terrible for the environment

that you're in. So hopefully that makes sense. Um, using average true range for position sizing. So stocks sizing for stocks actual personality. And this goes back to what you said earlier, Richard.

If I'm buying CRDO or let's say AOI that moves 13% per day, I don't need more than a 5% position. I personally don't know how people put 20% of their account into a name like that. I think that that

volatility is insane. It it feels fun when you catch it and it makes a huge move, but volatility cuts both ways and you know, just being wrong and being wrong and being wrong could lead to massive paper cuts. So ATR is a stock's

average true daily range or an average daily range. So um a $5 ATR stock moves five times as much as a $1 ATR stock.

And that is as effectively um just looking at a stock's average daily range with its current price, you can figure out roughly how many bucks per day it moves up or down. Um so knowing that uh a stock's personality in terms

of its average true range very important stop distance should never exceed more than one to one and a half times its average true range. And I even think that that's a lot. So if a stock moves 5% per day and I go to buy a breakout

over prior day high, right? Having a stop that's 7 and a half% away that seems a little bit steep. Um, normally low of day is my stop. And if a stock moves 5% per day, I almost, actually, I'll even say this, I never buy a stock

when it has moved its full average daily range already. You're effectively asking the market for favors at that point. I don't like to ask the market for any favors. Um, yes, on a breakout day you you can get an outsized move, but if

you're buying a break over prior day high and you got like, let's say the oops reversal setup, which I know you're familiar with, Richard, you the oops reversal is meant to be played after the wash out and then a

reclaim of a prior day low and and you might be buying it as it's going back through the prior day low or bouncing off a key moving average or reclaiming an intraday VWAP. But if you wait until it has to take out a prior day high from

an oops reversal, now all of a sudden the stock had to move more. Now it's a it's bullish that it did that. But all of a sudden, if you're then stop the low of the day and you're buying it over a

prior day high and an oops reversal, your stop is like twice as big as it should ever be. Um, so that becomes very uncomfortable.

Um and then no ads once price is three times its ATR above your initial entry without a fresh base and then again trim into strength. Um never chase price and for me more than four times its ATR above the 50 simple moving average is a

nogo for buying a brand new position in this environment recently. I've been I I have been bending that rule a little bit. I haven't been breaking it five times its ATR from the 50 because things are just so damn strong. That's okay.

Um, but 7 8 9 10. I was tweeting about this a few weeks ago when semiconductors were flying 20 I had 42 stocks on in my universe list that were more than 10 times their average true range above

their 50 simple moving average. 27 of them were semiconductors. eight, nine, 10 days ago, zero were semiconductors. In other words, the market worked out all of that froth. So, if you showed up to buy something at 8, 9, 10, 12, 15 times its ATR above the

50, the market rinsed all of that froth out. 27 out of 42 stocks were semiconductors extended from the 50.

less than two weeks ago, zero were semiconductors extended from the 50. So that's a huge you just have to kind of know that. And for me, again, more than four times, there's just not a lot of meat on the bone at seven times, I like

to trim. And then every ATR above that, I like to trim some more. Going moving on with execution, cutting losers quickly, the single most important skill. Um, you can have mediocre everything else and still make money if you cut losers fast and let

your winners run. Um, I think it was Pat Walker who said this, you're supposed to um cap your losers, not cap your winners. Um, so so if you have a loss, you take it quickly, but when you have a

win, let that sucker work. If it's above the 10, above the 20, let it work. Once it starts to get extended, you know, ATR, consider yourself very lucky if it gets to 10 and 12 and 15 times its ATR

from the 50. I consider myself super blessed when Dell got to 20 times its ATR from the 50 that at that point, you know, you kind of got to have it in you to just know to step aside. Um, the

stops lives where your thesis is wrong. For me, that's typically low of day or a prior low of day. Um, not where you're uncomfortable. Stops are structural, not dollar-based. At least that's always for me. I always know the dollar amount that

I'm going to lose before I enter based on structure. Where am I buying? Where's my stop? How much am I losing in case I'm wrong based on how many shares I can take. Um, and then that helps me adjust

my position sizing to only take a.3% loss if I'm going to have it. Um, no trade ever loses more than 7 to 8% from entry. Otherwise, the charts just not that tight. Um, most of the time for me, 3 to 5% seems to be about

right based on the stocks that I'm trading and their average daily range. And then, uh, math is asymmetric. A 10% loss needs 11% to recover. A 25% loss needs 33%. And if you lose 50% of your portfolio, you need a 100% gain to get

it back. So, keep losses small. very very important. And then moving averages as a trailing tool, the 1020 and the 50, nothing else. I I do use the 200. I think that is the ultimate line in the sand. Above the 200, very important.

Below the 200, we know what the heck is going on. Um moving averages are not magic lines. Again, they're just general areas where buyers and sellers can potentially be interested in it. A lot of traders do use them. That's why

they're they are as valid as they are, but they are definitely not the holy grail. I know some people who use the 9 EMA or the 10 SMA or the the 21 EMA. I use the 20 SMA.

The 9.5 uh whole moving average, Ashley. That's that's that's the holy grail for me Ashley.

It doesn't matter. It's all going to be it's all about the areas that that these are part of.

Exactly. Right. I I put much more emphasis on price structure. So, if you're building technical higher lows, I find that to be way more important than where's the 20-day. If you undercut the 20-day, but you built a structural

higher low, I'm still hanging out in that trade. And a really good example of this for me was last year on this ARC trade, and I was using the at this point. So, I had bought this breakout and you started to have these pullbacks

and I started to kind of view these as like some even where you broke down but you're still above the 50 at this point mentally I was like I'm going to use the 50. So, this because I had already

trimmed my position. This pullback didn't necessarily bother me and then I knew when you had made this move sharp move right back up to highs I knew that I would then be using August 1 low structurally as my higher low. Well, when you pulled

back again, breaking the 50-day on this day didn't bother me because you were still above that August 1 low. And then this next pullback did not bother me because you are now above August 20th low. So structural structural

um just just price structure is much more important than a lagging moving average. I can then sit through these higher lows and it not bother me in any way, shape or form. And eventually I was stopped out on

um November 6th because you had broken what I thought to be was um another fairly important little base which it had built. So once you kind of got to this close for me that was that was it.

And you know for now that has kind of turned out to be the right idea because I don't know that I would have been comfortable watching this thing go you know basically back to where I bought it. So, um, yes, Ashley, sorry, with

with this chart. Uh, we had, we talked about those bad bars, uh, earlier, and this is a good example of bad bar off the top, and that gap down here.

Yeah. Yeah. So, that gap down finally loses that close really, which is interesting. Oh, switch sides. Sorry.

No, you're good. You're good. Um, yeah, that that bad gap down there that to the 50-day, you finally kind of really lose that close from that day and those those bad bars off the top like that when a name's been trending and

then just completely out of character bad bar. I call those like base starter bars a little bit like the stock's going to need a little bit of time or a lot of time. I think TTD um this is just an

example that comes to mind. Can you bring up TTD back in like 20 2021? Um yeah, this this stock has gotten destroyed, but um here.

Yeah. No, I think um Oh, 2021. Yeah, 2021. Um yeah. Yeah, off the top there. So, it made a new high and um it's actually to the left. But that that's another one. But all the way to the left there's this big bar. Yep.

That's what I'm thinking of. Look at that negative bar. This was a leader up until that point. And then it it needed like two years of consolidation uh to to work that out and then it had another off off the top there. So those big out

of character bars for me something to keep an eye on as well with what I'm holding holding.

This thing has just been a this thing has just been rough all together. Yeah.

It was it was a great name during 2020, man. Like this this was great.

Yes, it was. Two weeks tight like at the cup spot. So nice right here, too.

Yep. That's that's a classic cup and handle with a shakeout and everything. Great suck to study. I mean, look at that shake out with this shake out.

Yeah. And and you talk about like compression up the right hand side. Look at how narrow of a bar this is on June 20th or June 1st. Like this is the kind of candlestick when I'm looking at the

right hand side, I am going, man, that looks amazing. Because if I buy it over a prior day high, I could set my stop to this day's low. Yep.

And be no risk at all. And and obviously that ends up working out, you know, great. That ends up working out really really well where you just get, you know, even a couple of uh weeks of momentum. I mean, 40% not bad. Yep. Not

not bad at all. Um, okay. So, moving averages is a trailing tool. You know, again, the 10, 20, the 50, the 100, and the 150, they're noise. I have them on my charts for visuals. I don't trade off

of them or around them, but there is a big space between the 50 and the 200.

Um, so I I have them there visually. The 200 is a market health filter or a market stop filter. Like if you're above the 200, technical chart patterns that are bullish chart patterns that take a place above the 200 for me are bullish.

Technical chart patterns that take place below the 200 should be viewed under a bearish lens. Of course, you do have reversal patterns, right? You've you've I mean, I'm sure you saw this tan. Um and again the market gives you them

every now and again. Um where you get this uh you get these I don't even know what you call this thing. What do they call this one?

Richard shooting star island gap. Yeah. Uh and you saw it you saw it with Microsoft as well where you got over the 200 island gap and then it just gets all bad from there. Um, so yes, the the

market does give you them, but again, for the most part, below the 200, no good. Above the 200, okay, fine. We're cooking. And technical, clean, bullish technical setups should be viewed under a bullish lens. Above the 200, below the

200 with a bearish lens. Keep it simple. Um and and if you've got yourself a good trend, you'll notice that it the typical news for something above the 200 tends to be bullish. And then when you're below the 200, any kind of any kind of

bad news, you know, tends to get hammered below the 200. Okay, moving on. Management and we are down to our last couple pieces. Trim, add, scale, rotate, turn winners into outsized winners. So, momentum burst, trimming into strength.

Um and then harvest before the mean reverts. So a momentum burst is an 8 to 20% expansion and that is all obviously depending on a stock's average daily range over 3 to 8 days. I typically look 3 to five but you know you can go eight

sometimes um stocks coming out of a correction even better right to be patient for the 7 8 9 10 days um that a stock will shoot up for before you get a pullback. I like to finance my trade

into that. So derrisk some of it and then that allows me to comfortably sit through pullbacks. So 3 to 5 days especially now I say 3 to five because stocks move so much faster um than like at any other time. So you get like this

3 to 5 day momentum burst trim into that. I personally like to trim anywhere from a third to a half of my position.

If I get a 20 30% move in three sessions to five sessions, I I like to just just take off half, right? If it goes higher, you still have half. If it comes back lower, you'll be grateful that you sold

half. Uh you can go to sleep at night, you know, knowing that that you you captured a 20% move. Um after that burst, the odds of a multi-day pullback are sideways. They do rise sharply.

stocks tend to revert to the mean once they get extended from their key moving averages and then again layer trims as well as trims um into extensions. So sell a third to a half after that strong 3 to 5 day push and then uh trail or

that 15 to 20% move. Um and then sell into other pieces. And it doesn't necessarily have to be quote unquote parabolic. Um but into 7 8 9 10 11 12.

Every ATR above the 50 simple moving average I like to trim some more and trim some more. And I I personally just do 10% of what I have left. So my my trims actually get smaller and smaller and smaller and smaller until I think

you've gone ballistic like Dell. And then you know, thank you very much. I'll just go ahead and um take my exit here.

Um an extension is what is up a lot vertical closing on highs with accelerating volume. That's when you sell. Again, Dell uh reminded me a little bit of Oracle, but Oracle just so happened to peak when the market was

then going to go through some volatility. Dell just so happened to gap up when the market, you know, was was going to do a little bit of pulling back, but potentially, you know, go on a continued run from here.

Um adding to your winning position. So, you add to your winners, you never add to your losers. If you're adding to losers, you're already fighting with what the market's telling you. And the market, if it's telling you that you're

wrong, and you're adding more again, just fighting what the market's telling you. You need to know where you're wrong so that if you get there, you're not buying more, you're just getting out.

Um, and then each ad must be triggered by the stock proving itself further. What I mean by that is it's giving you another clean technical setup. So, if you're buying an undercut and reclaim or the oops reversal or a reclaim of the

50-day, you might get that oops reversal and then you get like, you know, three, four, five days up in a row and then you trim off a tiny little piece, but then the stock builds higher lows against the

rising 20 and that second higher low gives you a very, very tight day so that you can add more above the prior day high and that is completely fine. But that is the stock proving itself to you after you've bought it well, got

rewarded, paid yourself, structurally it did nothing wrong, and then it gave you a follow-up setup. You might own it for another 3 weeks. You're up 30, 40% on it. Then it gaps up on earnings.

Now all of a sudden, you might have a HVC to work with. Now all of a sudden you might have a fish hook setup to work with or a highte flag or a highteight pennant or another technical setup for

you to be able to add more shares. Um so again a couple of clean ads if you get your first bull flag and then the next range expansion you can go ahead and add to your position. So pyramiding. So

initial you have your first full percent uh your first amount, let's call it a,000 shares and then your next ad. I never double um my my um position size.

So I always take a little bit less than what I already own as to not screw up my cost basis too much. I think that's more of a mental thing. But there are times when you can own a stop for several

months. It gives you a really nice consolidation and then I just treat this next buy as a brand new position as if I didn't own it from lower um and then move the stop um on the on that position

every time you go to add. So, if I buy it as a brand new position, my stop on that brand new position might still be low of day, but structurally, if I own some from a few months ago, I might

already be trailing the 50-day with those shares. Compartmentalize that where if you're adding more, treat it like a brand new position. And that is really the only way I do like to pyramid into my stock is if I'm buying it and

adding to it as if it were a brand new um position. And then progressive exposure. I find this part to be incredibly important. So, you're earning the right to size up. Um, exposure expands and contracts with the market

environment and your recent performance. You earn and the market earns your investment. So, you get a follow-through day. It's a valid one. You buy something, it works, you buy more. That works, you buy more. That works, you buy

more. That works, you buy more. you're getting aggressive behind things that are working. But if you get a quote unquote follow-through day and you buy something and then the market goes and takes out those lows, you've only put on

a position or two and the market didn't prove those to be winning positions. You got knocked out. Now you're back in cash and you haven't put yourself in more harm's way as the market then maybe wants to turn back down. So the market

has to earn your investment. Progressive exposure again along with proper position sizing to me is one of the most important ways to keep yourself out of harm's way and to minimize your draw downs. A catastrophic blowups happen when traders size up right before

conditions deteriorate. That makes it that this makes um that blow up impossible. Um you could still slowly paper cut yourself to death.

Absolutely. But if you adhere to progressive exposure, it really um limits the possibility for you to just quickly blow up your portfolio. Pilot positions first. Um again, I don't even know that I would um get myself to 25% invested or invest 25%

of my portfolio in a single day. I know with Bill O'Neal and I've even listened to Mike Webster on this getting 30% of your portfolio on or just after the first couple of follow-through days and Richard maybe you could speak on this

because I know you've spoken with Mike quite a bit. Um getting to about 30% invested within the on the follow-through day and just after seems to be about the sweet spot, but they go after a couple of stocks. They don't

just go after, you know, 30% or 25% in a single name. Again, I won't speak to Mike's personal uh portfolio, but I if you're managing, you know, um, Bill's portfolio, it would be, let's say, 30% over the course of two days and then

build on from there as more set more setups kind of, uh, materialize. Um, okay. And then constructing an open portfolio.

um from single trades to a coherent book. So in a strong market, four to eight core positions. I could tap I could typically go a little bit more than that, right? Especially in this most recent environment, you probably

got up uh north of uh 12 positions. Again, you you'll hear even from some of the most popular cancelling traders is being a little bit more concentrated in four to eight names is a little bit better than having super small position

size in 20 stocks. Um, your top two to three to four leaders um should probably be your biggest positions in a weaker tape. Two to four names. I also personally do not mind um playing the other side of the market if the market

starts to see some distribution. So I will always almost always have at minimum four to six positions open um sometimes even on both sides of the market. Um so um yeah so again your your open heat is your total loss across every position.

If you were stopped out today, um you want to kind of cap that at about 2%.

And even that to me is just a touch high, but that would be about it. Not going to get more exposure. Um if you're at 2% equity, um and then again, if you put on three semiconductors, treat that as one

position, right? The last thing you really want to do is get deepse for anybody who knows what I'm talking about. if you have too much um exposure in just one sector um correlated names treat that as the exact same bucket. So

if if you're taking if you bought AMD, Marll, ARM, SanDisk, Micron, you know, you got to start to kind of treat these things as the same exact basket. They tend to go up together. They tend to pull back together. So something to keep

in mind. And one question, sorry, jump in. uh that open heat 2% is that kind of looking at newer trades because what if you have a trade that correct is just trending it's above the 21 EMA you know

like it could easily have you know five I don't even think about those Richard if you because in under most circumstances those have already been trimmed and even if you get stopped out and I I kind of made a tweet about this and it

really like helped me with my mentality I never look at my unrealized gains as my money if if you started with $100 $100,000 account in April and then all of a sudden you got to $160,000 by June, but then and you're in a bunch

of positions and maybe they're trimmed and then all of a sudden, you know, the market gets crushed. You eventually get stopped out of all your names and you end up with 148,000.

Did you lose $12,000 because your unrealized equity peak was 160 or did you make $48,000 because you started at a hundred? So, I only like to if if I'm going to give back some unrealized gains on a brand new position or on a on a

position that I've had open, not a problem. But it that's not the same as taking red on a brand new position today.

Agreed. So, so if I have $20,000 in open profits and I close it for 15K, I made 15K. I gave back, you know, a quarter of the open gains, but you still made $15,000. I I I But it's way different

than opening up a position and then just losing five grand. Yep. So, um, kind of thinking about it like that.

Yeah, makes sense. Uh, flipping from long to short, trading the other side of the tape. Shorting isn't the opp So shorting isn't the opposite of going long, although some people do. Um, and you can flip the chart upside down. Um, as silly as that

might sound, it's his own dip. Uh, discipline obviously if you're trading stocks that are hard to borrow, borrow fees. Um, and then of course there's unlimited upside risk. Um, I do like shorting into declining moving averages.

And then you couple that with a 5 minute 620 setup back to the downside. Um, and then again, you get much more traction on the short side of the market when the index loses the 50, when the 10 is below

the 20. Um, or of course, you're focused on stocks that are already below their key moving averages, for instance, like um any of the bags, right? you look at Meta or you look at Microsoft or you look at Palunteer or

you look at I it if if you're actually shorting that side of the market traction has been much easier to come by if you're shorting stocks that are already below their 200 day. Um and then same thing you're going to cap your

individual short risk at a quarter to a half percent per trade. I personally like a quarter. Um and and and for me similarly, Richard, when I'm looking to get myself involved on the short side, there's only two types of shorts I

really like to trade, and that's extended parabolics or just the opposite of what we look for when we're looking for that follow-through day and names that have been showing the best relative strength.

I like to say to myself, what names have been super weak? And then when the market starts to show you some periods of distribution all of a sudden, you know, you're shorting and it could be, you know, MSTR if you want to short

MSTR. Um, you know, a pretty good example as of late could be a name like Carvana, right? Maybe a late stage base and you've got this latest stage base.

you're back below the 200 and you're shorting these pushes into flattening or declining moving averages back um in in March and February, you were seeing lots of that. You could look at a name like Uber and effectively every single visit

of the 50 simple moving average was a short opportunity. But you but that's something that you're prepared for knowing that hey if the market's going to undergo some distribution what's already showing some relative weakness how can I get myself involved in that

side of the market if that's something you choose to do. If that works it's not because you're a genius it's because you're seeing things well the market is rewarding that side um and your entry tactics are on point. Right? Normally

those three things come together. And it's the same thing to the long side. You're on to the right groups. You're seeing things well. Your entry tactics are on point and the market's helping lift the group that you're in. It's the

same thing to the short side. If the market rewards you on the short side and you go and take another and it works and another and it works and another and it works, you're using progressive exposure on the short side. as it's working.

You're not arguing with the market like it should go down. It's a everything's a Ponzi right now. Yeah. You know, the government can't keep pumping the markets and you're just stubbornly shorting names at 52- week highs is not

the way. Um, if you want to short a parabolic, fine. That has its own criteria as a setup and that's not something that, you know, we should be talking to with newer newer traders. Um, are you quicker to derisk or take a

partial on your shorts versus your longs? How's the position management a little bit different with these?

Yeah, if if you're shorting a parabolic, then for me it's um, you know, I'm looking for like two day two, right? So, you'll get like normally day one it's usually a big unwind and then day two you'll get like a maybe a small gap down

and a wash out. I'm taking some off because I know things can only go down so much. If you get 30% move down from your entry, you've you've nailed it, right? That that on the short side, 30 40 I mean that that's a big move like

50% move down on a short side is huge. So yes, a whole lot quicker if you're shorting a parabolic. I'm looking to cover into the ascending moving averages effectively, which is also why bounces from ascending moving averages can work

so well. um because you've got short sellers looking to cover in some of those spots. But if you're shorting something below the 200 simple moving average, 3 to 5 day wash out, cover it and then just trail with a declining

20-day for instance. Okay. Um and then just play it play it just like that, just like you would a long and try to be patient. We don't know how long something can fade for. Um, but again, it just becomes really tough

because there's only so much things tend to go down unless your name is the trade desk and Dualingo.

Those are about the only two. Um but yeah, 30% parabolics or um if you're playing a stage into a stage four breakdown, then then treat it almost as you would along 3 to 5 days on the momentum wash out and then just trail it

on the declining 20 or the declining 50. And then finally for the last little section, this is fairly quick survival.

Staying in the game long enough to compound, handling a losing streak, surviving the storm so you can compound after. So a 30 to 35 to 45% win rate. I tend to kind of fall in like that 37 to

40 is totally normal. Streaks of four, six or even 10 losses happen. That happened to me in October and it was still a profitable month. Um what matters is how you aggressively shrink.

In other words, how do you shrink your position sizing so that you go from I'm taking 10% position sizes to seven to five to three. Um and then again mechanical degrossing.

So going from let's say 70 it's like going from I'm taking um you know 100% size which could be 10% of your portfolio to then seven to then five to then three all should be based on your own prior traction. Um and then

as you're getting stopped out of your positions um I I don't really use staggered stops too much but that is something that I've been kind of trying to learn and incorporate. Uh, shout out Jeff Sun for putting that on my radar.

And that is one of those things where if you buy a breakout, but then it just doesn't quite break out, take off a third, take off a third, take off a third, stop low of day, um, or stop at

the low of the pivot, but without having your full size at the low of day pivot, right? Usually when you buy a breakout, the best trades go and they don't turn back around. So that's what you want your stocks to act like, too. Um, so

draw downs are signals, right? Either the market changed, your setup stopped working, or your execution is off. The answer is always to trade smaller.

Either you're not seeing things well, the market is not being friendly, or your entry tactics are terrible for the environment that you're in, or you're just flat out playing the wrong side of the market. All of those scenarios, you

want to be trading smaller. losing streaks make you want to do more, which is counterintuitive. You want to make that money back, right? But again, the right answer is always to do less. Um, go for a walk, go lift some weights, go

to sleep, pick up golf, do some fishing, do some iking, play with your dogs, do anything but trade more. Um, again, if you like shorting the market and and this conversation um is hopefully based more towards newer traders, shorting the market is probably

not the first thing that you should get yourself into. Then maybe there is something for you to do in a crummy environment. But if you're on a losing streak, it's most likely because you're not a genius for the for what

you're doing for the environment that you're in. If you change what you're doing for your environment, then you might feel like a genius, right? In in March and February, shorting against the declining 50 and I could find 50

examples of that chart like Uber was the thing that's working. It if you started to buy stocks from April until end of April, you're a genius because you're going long. So, um yeah, hopefully that makes sense. So, doing less when you're

having a losing streak. Don't let perfect get in the way of progress. Uh, the trap of paralysis and overoptimization.

Again, focus on what you know. Um, perfectionism is is a stall tactic. Um, when you're afraid to be wrong, you don't need to get everything perfect.

Again, as a swing trader, I'm right 35 maybe 40% of the time, even in a good environment, even during April and May.

Um uh market pays for compounding not for being right. Uh a a B+ trade taken beats an A+ uh trade watched. So again the when is very important. You don't you could have a B+ entry but if you

understand that the environment is there and you take that entry is much better than if you're just waiting for something picture perfect. I I know Richard um when we do these model books and I've made a model book myself. I am

putting SanDisk on there. I am putting Nvidia on there and gold on there. But if you're waiting for that, you're going to be waiting for a really long time.

And so if you're waiting for this quote unquote A+ to come around, this perfect chart in a perfect group with accelerating or if you need everything to be perfect, oftent times the best charts, the best entries, the best

setups get away from you while you're waiting for perfect um exact. And then common traps, waiting for the exact pivot to hit. Um you know, doing a gazillion back tests, right? Sometimes, you know, getting in there um in real

time is the best way to learn. And then, you know, when you miss an entry, you know, you size it up 3x the size because you're like, "Oh my god, now I gotta get the chart." Um, you know, that that will

absolutely kill you. And then a predefined trigger. So, the night before I I you know, I do a nightly watch list every single day before the next day. I don't ever go a without putting together a watch list. That is predefining the

stocks you want to watch for the next day. predefining your entry tactic, knowing the if this then that scenario for both the long and the potential short side the night before with alert set so that when your alert hits and

you're like it's hitting to the upside, you know exactly what to do. My brain then goes, how are the other stocks in the group acting? How is the market acting? It's time to, you know, execute.

And then um and then that's it. Now you have all the pieces. Hopefully that was um pretty good. Uh read the regime, find the leaders, wait for your setup. Part number two is risk first stops without negotiation. Trim some into strength and

then shrink your size during draw downs. You can still take that B+ trade. You don't have to wait for perfect. Perfect is very rare. Um and then, you know, let your money compound through doing the right thing day after day after day

after day. And don't forget to do your nightly homework so that you can be prepared for the next day.

Awesome. Well, you covered a ton uh today. So, thank you so much for for the depth here. Uh there's a lot of nuances that you shared. So, um a lot of folks I think will have to watch this multiple

times. Uh but this is fantastic. And if you had to say, you know, one overarching message that you want everybody to walk away with having watched this, what would you tell them to focus on or or you know, the biggest

uh piece of advice that you want to share? Yeah, I think if you're a brand new trader, obviously if you're a seasoned veteran, um you obviously don't stop learning, but if you're a brand new trader, don't be overwhelmed by what you still don't know

to take things and as the you know name of this uh slide is of these slides. Um it's it's puzzle pieces to profitability. You have to remember take things a small little thing at a time.

How do I find the stocks to trade? What is progressive exposure? What is um position sizing? What are my entry tactics? What is a clean technical setup? How do I view groups? What is the market overview? But take time to learn

each of those puzzle pieces. And once you learn all of those puzzle pieces, that allows you to put the whole picture together. Don't get overwhelmed because this is a at moments, Richard, you know this, it can be an overwhelming career.

But if you take the time to learn all of the individual pieces, you can then make sense of the whole um without feeling overwhelmed like I just don't know that.

I just don't know that. And then get overly frustrated at at something that is truly difficult. So focus on one little thing at a time. Treat this as a long lasting career, not as a hobby. And um yeah, I mean amazing things can

happen Rich. Yeah. And you might have to relearn the pieces a few times over many market cycles. I know I have had to relearn stuff.

I have too. You know, again, it's I'm not perfect. Like if I were perfect, I I' I'd have bought SanDisk on January 1st. Instead, I'm buying it 250% higher.

And then even that, I didn't hold perfectly. So, there are always things that I can look back at and just say, I didn't do that well. I didn't do that well. But as the the next market cycle comes, I'm I'm improved for the for the

ne for the next bare cycle, for the next bull cycle. And then you get that follow-through day. The important part is is that we catch a meat s some of the move, a meat of the move, however long

that move might be. And then you can reflect back when it's all said and done and say, "What did I do wrong? What could I have done better? And what did I learn from this experience?" And everybody has to do that. Even watching

this and and reading through these slides and and going through it yourself. You're never going to be perfect. Let's forget about that, right?

Nobody is perfect. I know the best traders in the world who who make mistakes all the time. That's not the game here. The game is to make money.

It's not to be right. Right. People want to be right, which is actually why they have such a hard time selling their losers because they refuse to be wrong.

But but if you accept that you're going to be wrong a lot, that actually helps you make more money down the road. So again, don't be overwhelmed. That would be my kind of um my my lasting message with people. And take every little piece

and and there's probably a lot of other little pieces, Rich, that we could talk about, but take every little piece and study it, break it down, and then realize how everything kind of layers on top of each other. even though they're

all separate nuances that help you become more profitable. So hopefully that helps, man. Yeah, this was fantastic and and thanks again for putting this together. And each of these pieces, it actually uh and not not not to do like a selfish plug,

but like the book that we wrote, the trader handbook, it fits really well with that because each chapter of that is kind of one piece that you laid out, you know, routines, entry tactics, screening. So, uh for people looking for

more guidance, you know, that's that's an option for you. um the playbook. Um but yeah, this was fantastic and again, I think people are going to have to watch this multiple times uh to really uh get get everything you share today.

But uh appreciate it immensely. You know, thank you so much. Uh to everybody watching, I hope you guys enjoyed. Uh let us know your, you know, biggest takeaway or nugget uh in the chat right now or down below in the comments. Um

and with that, you know, uh we'll be right back. Thanks everybody. Okay, welcome back everybody. It's my pleasure to introduce the next speaker of the Trailing Conference. We have Brian Shannon. He's an experienced swing trader and educator. He's the founder of

alphrendds.net and the author of multiple excellent books uh like this one here. Uh we'll be touching on some VWAP uh strategies later on in this conversation. Uh but we're going to cover quite a few topics and to start

with uh Brian first and foremost thanks so much for being here and and and for your time. Um I'd love to go through uh this graphic here which I know you've kind of prepared on your side to kind of

talk through the golden rules of engagement and some highlevel principles that have helped you as a trader and help you teach a lot of newer traders as well.

Yeah, always a pleasure to be here Richard. thanks for including me again this year and uh great great event that you guys always host. So this is as you said something I share with actually with Alpha Trend subscribers. There's

just kind of some you know I here I have them as golden rules of engagement. Um you you know one of the strategies that I created it must have been 15 16 years ago now is don't chase the gap wait for

VWAP. And I've written about that in the anchored VWAP book as well. But you know, a lot of times what you'll see is a stock gaps up because of some news or whatever. And and we all know the

situation and you amateurs will get excited and say, "Wow, look at the great news." They'll chase it. It runs, you know, let's say it's a $50 stock. It runs 50 cents after they buy it. They feel like, "Wow, I'm the hero. This is

great." But then it starts to fade. It breaks the volume weighted average price. And maybe it never recovers.

maybe it drops, you know, closes the entire gap, let's say, to $48 per share.

Now they're down a buck 50 and they're thinking, well, look how good the news was. Um, so those initial buyers, you know, sometimes those trades do follow through. Um but majority of the time they're going to at least undergo a

little bit of profit taking or some people are going to try to fade that move, add some short to it and try to either make a scalp or see if that uh you know gap will close. So what I

observed was let it settle down a little bit let it regain you know let it undergo bring in the short sellers a little bit of profit taking from people who are saying hey don't look a gift horse in the mouth and then is it

instead starts to stabilize and recover back above that volume weighted average price it says that initial imbalance has been wrestled through and the buyers are back in control once it's above that daily volume weighted average price so that's the point where I say okay now We

know the buyers are have have control. It's their game to lose. So I will often enter in that you know as it crosses above that VWAP with a stop below the low of the day maybe even that tight or

you know somewhere closing the gap. So that's number one and it it actually stems from just what's underneath that before you you enter ask where has it come from and where does it have the potential to go. So let's say this stock

ran from 40 to 48 in the prior week and then it gaps up. I mean we could we could talk about Micron, right? That Micron was in this huge uptrend. It comes out with the best numbers like any

company has ever done maybe, right? It just just unbelievable numbers. And what happened? Well, it initially rallied and then it started to fade and now we're well below that initial high. And what we have to say is was there a lot of

energy expended getting to that point. So back to my example, let's say for it went from 40 to 48, then the news comes out, it gaps up to 50. Well, you got to think, well, this stock is up 25% in the

last week. Is the smart money, the educated money, buyers up here or sellers? So, what's most likely? Is it likely that it's going to go from 48 to, you know, 55 by the end of the day?

doesn't mean it's not possible, but we're interested in what's most most likely, what's what's probable, not what's possible, and putting the odds in our favor. So, it it just says, you know, be careful. It it's expended a lot

of energy. The upside might not be there as much, but then you look at it and say, where does it have the potential to go and where is it likely to encounter a source of supply that might be strong

enough to offer resistance? It might be a prior support level. Support broken tends to act as resistance. So if it runs into this level where at $50 it was a year ago and traded sideways for 6 months there, well that you know there's

going to be price memory there and most likely some supply. So it lessens the likelihood of it following through to the upside. Um so again and then you know the final thing is is the perceived risk worth the potential reward and

where do you manage risk from there? So you have to have the next one to the right is a stop-loss strategy. So you have your initial protective stop which of course just pro protects yourself from your uh pro protects your capital

from from losses or outrageous losses you know from keeping them reasonable and having that strategy say okay if the market disagree was with me I know where to move aside. So the only times that let's say I enter a trade that day, the

only time I'm going to adjust that stop is after it's traded for a couple hours. So let's say the stock runs very, you know, it doesn't gap from 48 to 50, but I I buy it on a break past some supply at

$4810 and you know, two hours into the day is at $50. Well, at that po that point I'm not going to keep my stop at let's say 46 where it initially was. Now I'm risking $4, you know, $2 of profit and

$2 of my initial capital. Ideally, I can make it so that I put it at, you know, at break even. So that not going to let my uh winner turn into a loser. So, and the other thing is that for open

positions, this is what gets a lot of people is especially in an uptrend when we have the market trending higher and the market gaps down for whatever, maybe no reason, maybe because something happened uh in in the Korean market uh

or because of a jobs report or something like that, we get that knee-jerk move lower, but we're, you know, we're down to an important level. let's say the 20-day moving average in the market and it'll turn sideways for a few minutes,

then the buyers come rushing in and it it goes and closes positive on the day.

Well, anyone who had their stop set prior to that open, they're going to they're going to have the stock stolen from them. So, again, let's say I own the stock at 4810. My stop is at 46. It opens at $45.90.

It ticks lower for about three four minutes, hits a low of uh uh uh 4685.

Did I say 40? Uh 4585. Uh and then it starts to recover. So I look at it and say let's give it at least 5 minutes. If if the stop was at 46 and now here it is 4585 was the low

of the first five minutes. I can't tell you how many times that has kept me in a stock that does go back and turn red to green. And what I'll often do, not often, but sometimes do is say there's

nothing wrong here. In fact, if I was to throw this away, it would be a stupid thing. So now, if I can buy the stock at 4605, add to my position, average down is a a rare time when I'll average down.

But my stop is if I'm buying at 4610, my stop on the entire thing is at 45.83, two pennies below that 5minute low. Now I've lowered my cost basis to $475 per share. And as it runs up to that

4705, I might sell the the initial position that I sold that I purch I'm.

I'm sorry, the secondary piece, the 4610. So now I've got my full-size position and I've lowered my cost basis and I'm break even on that and I'll keep my stop below the low of the day. And and it's just again a riskmanagement

technique. So now I've got this stock at uh a better cost basis and I always hold on to like I I'll look at it as just a psychology trick is that for me at least is that I will sell my lowest cost basis

first um because that I'm sorry my highest cost basis right sorry for that um first and I will look at it and say now here's my position and go from there. Um, so again, if it gaps down in

the first five minute, so the bottom line is, you know, just don't set your stop in the first five minutes today, don't panic and throw your stock away.

That's that's what I'm looking for. If I look at a stock and I, you know, tell subscribers or it's my plan to say I'm going to buy above $4810 with a stop of 40. I would, actually, I don't know why I'm saying 46. My stop

would likely be $47.38. you know, two pennies below a low from yesterday morning at 47.40. So, if the stock gaps down to $47.35 below what was to be my stop, to me, that says the trade's invalidated. The original structure that we were looking

for is no longer valid. The the higher low that that I was going to protect myself against has now turned into a lower low. So the the the trade is off the table in terms of how it was set up

last night. Doesn't mean I might not reconsider it, but most of the times if they break that stop level, it's going to continue lower. So I'm really just not interested in in take uh you know taking the trade because it will have to

to get back to their original price. It's going to have to expend too much uh energy to get there. Um, so and this the yellow box there that's more for subscribers just saying you know all the ideas and and and actually but I think

it's a universal rule that if I mention something on Twitter um you know I'm not going to tell you buy here sell there.

I'm going to say put this one on your radar worst case stop would be here make the trade your own. I'm not going to I I don't know the financial condition the risk tolerance of the experience level of anyone on Twitter. So, I'm not going

to give advice to people. I'm going to say, "Here's the setup. Does it make sense? Make make the idea your own." And then when it comes to initial profit taking, what I like to do is it's and I've explained this to you before. When

I have an A-list idea, I'm going to go, you know, if my maximum risk size is, you know, let's just say, uh, you know, $100,000 in a position, I might go $150,000 on the stock. And if I buy

$150,000 worth of that stock as it runs up to daily R2, daily R2 is the uh pivot analysis. I've got a little table I can share in a moment that that was actually made for Forex, but the Forex one, it's,

you know, somebody did a study and 83% of the time, I think it was, we'll we'll check my memory when we look at it. Um, a stock trades between R2 and S2 every day. So the odds are it's not likely to

go much further. And I look at that and say on day one that will be often let's say again it's $4810 that I purchased the stock at daily R2 might be at $49.85.

So as it gets there, what I like to do is look to take a quarter of my position off. So because I I went in extra heavy on it because it's an A-list idea. I want to be able to sleep well and not

worry about it. I want to reduce my risk and and take take some profit and essentially reduce my my overall cost basis on. So what I do when it gets there is I will look I do what I call my

twominut rule. So I don't want to exit right at daily R2 if it's 40 what uh $47.85.

Instead I'll look at a twominut um chart and I'll say the you know 47.85 85 is daily R2. As it hits that, I'll look at the prior twominut bar and say, what was the low of that? The low of that might

have been 4760. And then as this 2-minute bar when it hits R2 completes, if the low of that was 4770, my new stop is 4768.

And keep trailing it up under those twominute lows. And sometimes it'll keep you in for dollars. I mean, it's just crazy how much you juice you can get off of that two-minute exit. So, that's for taking that initial quarter risk off.

And then I'll go back and, you know, look at where my initial um stop is and hopefully be able to bring that the stop on the balance up to a much more reasonable level so that I'm no longer

risking. But if I I it still has to be based on structure. So, it might not be that original stop is 46.85. 85. Uh it might be uh now at this point or uh $47.90.

And even if I get hit at 47.95, I've already taken that quarter off. So if I, you know, lose a dime on the three quarters and I gained a $1.50 on that first quarter, I'm not losing money. And

and that to me is just an a hugely important riskmanagement technique. It helped me in uh what was the stock just uh oh SoFi today uh yesterday. Um anyway, so let me let me stop there and and this is supposed to be an interview,

not a lecture. Yeah, I' I've got some questions. Uh first, uh I love the the first section that you went over. Before you enter, ask where does it come from? Where's that have the potential to go? Because stocks kind of expend energy, if you

will, as they make a move. It doesn't mean that it's not a stock worth watching, but you want to let it settle, kind of reset that. And a question I had for you, uh, Brian, is what's kind of

the difference between just a higher low, because as it as it pushes up, it might make a higher low versus a lowrisk higher low that you'd actually want to trade. I I think that distinction would be is important to kind of share with

everybody. Yeah. So when I go first just to set my initial protective stop, I want to do it based on market structure. And I'll typically look at maybe a 10-minut, 15 minute, 30 minute time frame and look for the obvious higher low on on one of

those time frames versus if I'm taking a profit on a two-minut chart, you know, I'm looking at the higher low on those two-minute bars only. There's no real structure to that. That's just pure momentum. So, we're talking about market

structure versus momentum. And looking at it, that's kind of the trick is to say what is the most recent relevant high or low for that. It kind of leads into the 5day moving average. And I can we you know, we can look at some charts

on this as well. Yeah. Okay. So, here's an example of a stock and and it's a winner. So, I'll show some losers, too. Don't worry for the people wondering about that. But I'm in OKTA right now. And I got involved in

OKTA. There was one that I was watching cuz this was a nice orderly pullback in here and we had earnings. So this was the earnings report right here and the stock gapped up on earnings. It had this huge run and if we put an anchor on

those earnings on the 30 minute time frame on the right you can see right and right here you can see that it initially was starting to turn sideways in here and then it had that shakeout. I love to

see that shakeout and and that's something I look for a lot. And then it ran up here and made this higher high.

So again, the question is, so I did not buy on that day because it just ran from 107 to 121. It ran 14 points. I was thinking, well, I'm not going to buy the higher high above the 5-day moving

average. It's not just the higher high above the 5-day moving average. But is there structure here? If I'm looking at a a higher low, one, I don't have a higher low. I have a lower low. So I don't want to chase that. So instead, I

want to see the stock pull back. And then I believe I bought it over here. Um my price of purchase was $11,950.

So right over in here is where I purchased it. And the initial protective stop was right under here. That was my initial protective stop for the purchase of right here. Uh 119. Yeah, right in that that general zone. The next day it

gapped up. It ran into the anchor from the earnings and that was also daily R2.

So I took my first quarter point uh piece off with a gain of $3 per share and then it came down and all the way back to to my purchase price. And I was thinking well glad I did that because

who knows if this is going to work. And then the next day it gapped up. So I said okay stop goes under here. So I raised my stop up under there. Now as it went here my stop I didn't want to put

it here. I I said if it goes back below that level, that's now the anchor from the earnings report. So, my stop goes under there. And yesterday, I took a quarter point uh quarter piece off because it broke out. Uh it it actually

broke out the day prior. Uh it it broke out yesterday and it was running into strength. So, it it was really strong.

So, I I let's look at the two-minut time frame. So, what I did here was I actually didn't use the two-minute exit.

I said that uh I used the the low of the day actually. Where'd that pope? I thought I knocked over my glass of water. I didn't. Um so I used uh an exit right here and got stopped out at this

point for a quarter piece uh for a gain of $20.60 per share. Now my stop on the balance is 12974, which is the higher low below the rising 5day moving average. That's pretty far away, but it it allows me to say, "Okay,

when is the next time that I adjust this?" Let's say on Monday, we see something like this. It comes down to and even through the 5day moving average, but then recovers and rallies back up. Well, then at that point, I

will set my stop under here because the five-day moving average will look like this.

And that will be the higher low with the rise in fiveday moving average. And I might I don't I I might even add one of those quarter pieces back right here with my entire stop under this level. So

that that's an example of one obviously that worked and and if there's you know people saying oh you know now show us a loser the the losers are boring because they're so you know always so small.

Yeah. Can I jump in for with the question? Yeah. Yeah 100%. Yes. The the fiveday moving average you know a lot of people had questions about that actually. Could you kind of break it down how you use it? Because you're

not looking at it on a daily time frame. It's using that to help analyze kind of structure on the short-term time frames.

Like here we're on the 15minute and we're kind of building that stage one along the 5day moving average and then you're trading from that compression. So yeah, could you break down kind of how you use that fiveday?

Yeah, exactly. And and that's that's the key, Richard, is I use it, you know, for trend alignments. When we have a stock in a primary uptrend, let's go back to the two time frames. It's clearly in a primary uptrend. But over here on the

30-inut time frame, we have a stage two uptrend. We have some distribution. We have decline. We have accumulation. And then we have a new stage two markup.

That's what my first book was all about is trend alignment. The trends are aligned in this zone because now we have an uptrend on this time frame that's in alignment with the uptrend on the longer term time frame. Um, so the 5-day moving

average, as you pointed out, let's just go back to this screen again. So this is a 15minute time frame and the only time that you would if you were to look at a daily chart, the only time you would

actually see a 5-day moving average is at the close. If you're looking at the 5-day moving average on a daily chart first thing in the morning, you're looking at the last four days plus 15 minutes. So that's not a true 5-day

rolling moving average. So, in order to compensate for that, I only use it, as you pointed out, on intraday time frames. So, here on a let's let's go to a 10-minute time frame because the math's a little bit easier. But you'll

see here's where that 5day moving average is. And the price right here is 13435.

And what we're looking at here is I've done this math a million times, but there you know over the course of the day 6:30 uh I'm sorry 6:30 local time uh 7:30 actually uh 9:30 to 4 is 6 and 1/2

hours of day uh of of the day to trade in the regular trading hours. So that is 390 minutes per day. There are in 5 days there are 1,950 minutes. So, the average of the last 5 days is 1,950 minutes. So, when I look

at this 5-day moving average I have labeled here, you can see the period is 195 because 195* 10 is 1,950, the number of minutes in 5 days. This orange line right here is something that I created. And what it does is it just

allows me to anticipate the direction of the 5-day moving average. So first thing Monday morning when we get a new first bar, the very first trade, this orange line moves forward to this bar. In other words, what it does is allows me to say

at what pace when will the direction of the 5-day moving average change? Well, this 5-day moving average is going to be difficult to turn lower because we've got, you know, unless it's back below this level right here on Monday. So, it'

have to go back there. And then the 5day moving average would look like this.

That's unusual to happen, but it can happen. Um, so it allows me to, like I said, anticipate. So, 1,950 minutes on a 10-minute, that's 195. Divide 1,950 by 15 and you get 130. So, that's why it's in the same exact spot. If we look

at the 30 minute time frame, 1,950. Well, it's it's right there. Uh 65 time 30 is 1,950.

So that moving average is going to be in the same spot on all time frames.

Yep. Sure. Um this this is one I was stopped out of yesterday. SoFi. This isn't my normal type of trade actually because uh and I I probably even shouldn't even show this because of it because it has a

declining 200 day moving average. However, the 200 day moving average is so far away and even the anchor from the um from the tariff loans. I was thinking, well, Robin Hood is getting some action. I should have just gone

with Robin Hood. And this stock is bumping up against the year-to- date anchor with more frequency. And we're seeing higher lows. So, what I was looking at in this setup was these higher lows indicate the buyers are getting more aggressive. They're not

waiting for a pullback to 15. They took control at 16. Then they took control at 17. And while that happened, we had the 20-day moving average rising up through the 50-day moving average. And looking at that 20-day moving average, it's

going to continue to rise. Now, the 50 is still declining. That's what this line is here because we're averaging this data out. So, it just started to decline again. So, in this case, I had purchased uh SoFi at 16 1825.

I think it must have been this day uh just two days ago on the 1st. And that very first day, it wasn't much, but the two-minute exit, we can look at it here.

Um when it hit Oh, we won't see a daily. That's what just one day's pivot, but okay, I had it circled. This was daily R2. Daily R2 on that day was actually right here. And it came and made that

lower low on the two-minute time frame. So, I sold my first quarter position. And it actually was only 14 cents per share. But still, it's that's how I do it. So, I wasn't looking at the number of uh you know, how how many cents or

whatever. Uh my initial protective stop was at $17.82. That wasn't actually my initial. My initial protective stop was 1770.

So I raised my stop yesterday uh two days ago to um 1782. So I took a quarter position with a 14 cent gain. Lost 43 cents on three quarters of uh position. And that means on average I lost 29 cents. The original

stop was 77 cents away. So, it ended up being a a 0.37R uh instead of a full R by taking that first quarter off and raising the stop up.

Yeah. Perfect. And I I think people might be wondering, you know, what's kind of your process for finding this these trade ideas? Do you have screens you use? Is it more of a universe method where you've got a universe of stocks

that you'll review each day, uh each week? What's kind of your process for finding uh different trade opportunities?

Yeah. Um, so I it it's more of a universe as you mentioned and and I enjoy that. I I screeners are great.

They're they're really awesome for, you know, cutting the workload. Um, for for the number of years I've been doing this, I can get through a large list of stocks really quickly. So I go through a master list of stocks. It's about 800. I

I just did it yesterday. Um, and I whittle it down to this list here. Uh I don't know if that can we can kind of see it barely. So you write down kind of interesting names basically.

Yeah. And and these are the ones you know and there's maybe 12 for per there's maybe like 70 stocks there. I I don't plan on trading all 70 of these stocks. But what I notice is things like this when I look at it and you know a

lot of people get hung up on prior themes. They get hung up on the themes of you know quantum names. Um, so I'll have like here are a 15-minute time frame of quantum names or the space stocks or which are, you know, the drone

stocks which are, you know, declining and not working well. So, what a couple weeks ago I noticed ILMN and I put this on uh on on X right over in here saying, look, you know, I like the way it's

consolidating along this 20-day moving average. If you look at the weekly chart right here, it's got room to run up into this prior band of resistance. This looks like an inverted head and shoulders pattern. If the head and

shoulders pattern hits, you know, this is our first level of interest. So, that's to justify taking a trade there to say, okay, that's not a price target, but that's a level of interest where it might have the potential to go. If for

an investor, they're looking at it, it has the objective maybe of 225ish. So I look at ILMN and I say, "Wow, you know, that's that's the largest gene uh DNA sequencer in the world." So I look at it

and say, "Well, what other you know, genomic names are popping up?" And I noticed um what what uh mRNA MNA Mona was in a similar situation. And then now I've got Bean, which is another one. And Beam has yet to go. But if I So

here you can see I've been doing some drawing in this chart. There's a good station analysis example here. Look at that. Perfect.

There's a great stage example and anchored VWAP. So there's the anchor from the IPO and here's the anchor from the all-time high and from this peak. So you can see that these VWAPs are coming together to say this is an important

level above this level. Basically the biggest losers in the stock on you know the from the the from the average price everyone's making money. So this is, as you said, stage one accumulation, stage two uptrend, stage three distribution,

stage four decline. If they don't scare you out, they wear you out. Now we've got this nice long-term base where we keep hammering away. And same thing, we keep seeing us hammering away at this level. The frequency is more often, the

higher lows are coming in. All these moving averages are stacked perfectly, one above each other, and they're all rising. So then I look at it on the daily chart. That's beautiful. It's holding this prior band of resistance.

Here's what I This stock though, look, look at this thing. It's a little whippy. It's all the character. Yeah.

Right. And and the funny thing is the ATR is only 7 and a half%. So it's not just that, you know, and that's pretty high. That's, you know, but it's it's what it does. This is clearly not a

stock to buy on strength. If you buy on strength, you're going to have these things happen to you over and over and over again. So instead, you look at it and say, okay, now on this shorter term time frame, we just the 30-inut time

frame, we just saw this shakeout on uh what what day was that? This is uh so that was Wednesday. It recovered yesterday and now I'm I I bought a little bit of it. My worst case stop is under here. What I really want to do is

raise my stop under here. And I probably will add to it because I don't have that larger size position. If it pulls back, I think what I'm likely to do is actually add call options because I don't like the personality of

this stock. I actually had been tra I have been trading it a little bit and selling into this strength, but I I just I want to be in for the move. I don't want to be in for these little stupid

spikes that fail. Um, and I think that holding options is probably a better scenario for me. So anyway, so the the to answer the question is I I will then start to say, well, what else is on my

list of genomic stocks? And DNA DNA just ran from 7 to 11. So you know where where has it come from? From 7 and 12 to 11. And where's it potential to go before it's likely to encounter supply?

It's right there. So, is buying here a good low-risk idea? No. That that's just chasing. That's that's dumb. That people who buy this breakout are likely going to end up spitting it out in a few days because what's most likely with this

stock and the 30-inut time frame is that we're going to see something like this.

And then if it comes down and in the next few days, we get the 5day moving average to do this, then I will be interested in buying it here. and maybe it pulls back to let's say that you know

that anchor and that's the daily time frame but this is what it would look like on the intraday. Um you know I noticed just uh going in through charts yesterday I was looking at um first I think it was CCJ that popped up and I

was thinking wow C CJ looks like a short here and this thing looks awful. Um you look at the weekly time frame it it looks terrible. So I looked at, you know, UEC and and everyone's still a lot

of people are still hung up on, you know, energy for the AI power, but you know what? That's yesterday's news. This is a big head and shoulders pattern.

Doesn't mean it's going to go do what the what it indicates. People are still hung up on this stock and which is a kind of a cult drone stock, but you know, stage analysis 101 uptrend sideways. It just broke some major

support here. And the funny the the interesting thing here is you look at the anchor off of the IPO and look at how that had been support.

Yep. Now it's become resistance. So you break that down to a daily time frame and there's the anchor off the um uh the market uh market low and here support broken acts as resistance. It's doing exactly what it's supposed to do. And I

still see people on Twitter saying, "What's wrong with ONDS? I'm buying more to the moon. It's going and you know that that's not the way money flows work. Anyways, I I went on a little bit on your answer, but but it's a manual

process. I I notice themes and when I find, you know, three um drone stocks that look weak, it tells me, okay, if we get a pop because of some headline, it's most likely going to be sold into. Don't

get excited about it. It's probably not worth looking at. Same with uranium plays, all the, you know, even in the SMRs, OKLO. Um, they they just look awful uh on pretty much all time frames.

NES SMR, they'll probably go up on uh you know, next week and people that there's the new one, but you know, structurally they're broken. They're going to need time to to heal. If they don't scare you out, they'll wear you

out. Focus on where the strength is, all that good stuff. Perfect. So, just to double click on what you said there, you've got a universe of stocks that you go through on a day-to-day basis. Each of those kind of has a theme that you're aware

of. And when you start to notice one chart setting up, you try to investigate and see, okay, are there any sister stocks also acting well? You know, LLY as well as another, you know, biofarma name that that's been shaping up that

theme. You start to see, you know, similar charts setting up together, uh, moving out of bigger patterns. That's what gets you interested in a theme. And then similarly, you know, all themes have their time when they end. And we

had a great space, you know, drone theme, um, you know, earlier. Uh, but now that theme has kind of exhausted itself a little bit. Um, so is am I accurate in kind of what I just described? That's kind of how you

typically. So, so I'll go into my, you know, lists here. I've got oil, oil service, photonics, um, power generation, power grids, psychedelics, quantum computing, rare earth, robo taxis, robotics, rockets. So in here, you know, if the group starts behaving well, I'll just

look at this group and say, okay, let's sort them by average, you know, by by volume. Of course, SpaceX is number one.

And I'll go through them and say, well, you know, Rocket Lab, maybe it's going to try to stabilize and rebuild RDW, it's broken. It's just, you know, left for dead. AS, you know, they're just choppy messes.

There's just a choppy choppy mess. learner's down to the 200 day moving average. Who cares? Um, you know, we've still got a declining 20 and 50. Same with Fly and Aridium is bucking the trend. BKSY. So, they're all, you know,

SPIR probably looks the best. But I look at that and say, okay, what if I like SP based on its own merits? I look at the space, you know, the money flowing out of space. I would look at this one, I

say, this isn't an A-list idea that I'm going to do exercise. This might be, you know, again, if my size unit was h 100red,000, I might only do 75 or, you know, $60,000 worth as a stock because I

don't feel that there's, you know, that I have confidence from the market and the sector.

Right. Perfect. And I actually wanted to touch on SpaceX a little bit more like around its IPO because I know, you know, in in your book, you kind of talk about how to anchor things uh you know, that

first day. um could you kind of walk us through this this this recent IPO and and how you've been analyzing it uh using the anchor VWAP and and also you know just looking at multiple time frames I think that would be great.

Sure. Let me see if I can go back to the start. I can't on a two-minute time frame. Let's do it on a five. So you know as we just saw withd anchor from the IPO. Um here's a great

example. I I've just got to go back on this for a moment. Intel. If you look at Intel and go to Oh, this is daily. How to switch to daily is supposed to be my monthly chart. If you look at Intel and

anchor to the IPO, look where this move just occurred from. I mean, it it's pretty insane how well it works for holds value and and for how long. So going back to SpaceX, you know what I always do is the very first moment it

starts trading, I put an anchor on that first minute of trading and then I'll put an anchor on the second minute of trading after about 10 minutes. And and the reason for that is that first print is a negotiated print. It's all the

people who are, you know, matched up that where where opened at 135. It opens on its largest volume. you you won't see a higher volume bar most likely. Well, maybe when they add it to the NASDAQ, you won't see a higher volume bar than

that. So, that's a negotiated transaction at 135. It matches up buy on the open versus sell on the open. So, that is not free market trading the way I see it. And oftentimes that in and just for the first day it'll be

important to to anchor from that second minute. As we start to, you know, see a day and a half, two days worth of data, you can just, you know, default it to the anchor from the IPO. So when we see

that, that's what we want to do is anchor to the IPO and while we're above it. So we had initial volatility. It's very similar to an earnings report.

anchor to the open of the earnings and for a day or two it might chop around there but then the buyers take control.

What we want to see is do the buyers maintain control a healthy IPO. If this was a healthier uh after act hour after after market action it would have done something like this right instead we ramped it up gapped it down we came on

uh Tuesday morning pre-market it actually touched this anchor so it doesn't count I guess but it was there and it was actually trading there and I was saying listen be careful it's it's just run from 150 to 172 it's just run

you know 10 plus percent. Where does it where has it come from? Where does it have the potential to go? Is that anchor as well as the anchor off of the high?

So, the high actually occurred here, but I want to put my anchor at the beginning of that day because I want the psychology and the average price of everyone from that day. So, I was looking and I'm still looking at this as

here's a potential supply zone. If we see future rallies, let's say Monday it starts doing this. If it rallies up into this zone, I look at that as a level of interest to say, okay, let's say I bought it here and I'm looking at this

now. I'm gonna it comes into this zone. I'm going to treat that as now I'm going to use my two-minute exit. If if it, you know, undercuts the two-minute bar low, I'm going to sell some and I'm going to

get aggressive. I'm not going to keep a stop way down here or even here. Maybe I'm going to look at and say you'll sell half of the position and then if it builds a higher low then I'll raise my

stop up under here. So that's the way I want to look at the blue one by the way is the month to date which I always leave on there and that was just Friday's action. This was the week to

date from last week. So what I also have um here to look at is the anchor off of the low. So from the lowest it's traded post that first 10-minute bar that the anchor is right in here. So it's telling

me that, you know, the the sellers are pretty much in control from the IPO and from the highest point. Now we're trying to find buyers in this zone where it kind of opened breaking below here. You know, if it did something like this,

they add it to the NASDAQ and it does this, then you're probably going to see it quickly drop to 135 or whatever. But, you know, that that's just the way I'm looking at the probabilities of it. Uh, I'll let market action dictate. So, uh,

anyways, it made its higher high above the flat to rising 5day moving average right here and rallied right to where it was supposed to, meaning the anchor from the IPO in the pre-market.

Perfect. And do you handle IPOs any differently than a more mature company or is it it's it's all based, you know, it's it's all the kind of same thing for you?

I pretty much the same. Um, the you know, I'll look at them when I look at IPOs. We we had a couple this week. Lime was one of them. This one actually is a little bit under what my typical uh it's

just, you know, it's the scooters. Everybody knows who it is. So, I decided to watch this one. But there were two others. I I generally look at it and say, who's the investment bank? Um, and is the uh market cap at least two, not

the market cap, but the valuation of the company at least $200 million. If it's less than $200 million, I'm just not interested in in the name. So that's kind of my cut off point. And there were two of the BSD I think was one of them

or something like that this week. Um no BG. Yeah, I don't know. Yeah, it doesn't matter.

Yeah, cool. And is is there like a liquidity and I know you've kind of answered this in the past, but an average volume that you need to kind of get involved or or to be more interested in in a name? Well, for for my general

trade, not, you know, IPO is not included because um they they don't they can't qualify yet. But my my rule is at least half a million shares over the last 20 days. A lot of places use 50-day moving average, but a lot a lot of times

what I've noticed with that is a stock will break out uh you know it might trade 400,000 shares a day and it tra breaks out on 10 million shares and then it does 8 million shares and 6 million 5

million and and now the 20-day moving average of volume is going to be 1.2 million whereas the 50-day moving average might only be 480,000 shares because it's still got that longer tail of data to whip. you know, we've still

got an extra 30 days of lower volume. So, to me, the 20-day is is what I'm looking for. It keeps you in some of the uh more active um you know, powerful fresh breakouts.

Mhm. Perfect. And I think you you wanted to touch on um a little bit about the personality character of stocks too and how you look at that. Um, I think uh, ADR or HR is one way that you look at

that. But I think there's a really important concept because it's something it's it's a nuance of technical analysis like we talked about with beam. You know, it's got its character. You kind of have to learn that and and know how

to deal with the names you're trading. Sure. And the easiest way to look at that is is the, you know, the ADR is the average daily range and that's measured based on points. The ATR is uh I'm sorry, the average daily range

is high to low. The average true range isaps from the prior days close. So it includes the gaps like you you just uh said.

So if a $200 stock has an ATR of five versus a $25 stock having an ATR of two, how do you normalize those? So the percent is how you normalize those. So, a stock like um well, some boring

industrial stock. I just had one on my list. Um uh what was it? Oh, like UPS. I I don't know what the uh but I was just looking at UPS because that has a decent chart, but it's ATR is two it's two and a

half%. So, it's a slow, boring stock. It tells you, listen, don't expect to have a move like you're going to see in Micron. Okay. So this is where beginner traders should start with these types of stocks or you can also use it as

position sizing. So there you there's different ways of saying it is you know I don't want my portfolio to and this goes too much into too too much theory of what your ATR for your per portfolio is and how it'll adjust that but just

based on individual stock you know I I look at the ski um ratings and you know trail ratings and you know if you've got a friend you want to introduce to skiing you're not going to go take them on the expert run they have

these for a reason that person's going to go get injured over there, they're going to hate the sport. They're going to think you're an for bringing them there and, you know, swearing the whole way down. So, you bring them over

the bunny slope and say, "Practice here. Get your skill set." As you become more comfortable there, you either raise your share size at that point uh and stick to those stocks because that's your personality. It meet matches well with

that. Or you move up to the intermediate. Now, you start looking at more difficult. You start throwing some moguls in there and doing some things like that. Now you're you're you're you know hucking down cliffs and in steep

gullies in the 10% ATRs. And I see newer traders attracted to these names. And it's very similar to the analogy of you know a baby has to you know crawl that's 2% ATR. They walk 4% they jog. They they

run and then they're sprinting in 10% ATR. So that that's just a you know a a general snapshot of anything more than 10% ATR. The the way I say it to Alpha Trend subscribers is if you have to ask

my opinion about a stock that's trading more than 10% ATR, you're not qualified to trade it. If you can't know what to do in that stock yourself, then you you shouldn't be trading because things move so quickly. And with a 10% ATR, I'm not

going to swing trade that the same. I'm going to be much more aggressive about taking like like in beam. I'm going to, you know, take some of those profits on those rallies because I know that they're going to fail until they don't.

Which is why I want to have options to say, okay, I'm going to hold that piece.

I'm going to trade this stock like an idiot because it's an idiotic stock and it's what that's the personality. That's how I have to match myself to the personality of the stock if I want to trade this stock. or I have to just look

at it and say, "Okay, this is a volatile stock. Uh, instead of putting, you know, $100,000 in this stock, I'm going to put $20,000 into it and just leave it alone." But that's that doesn't suit my personality. I I you know, so um you

know, matching your personality with the personality of the stock and the difficulty level and the liquidity, these are the some some of the things that people often overlook. Do you also look at ATR as like uh an indicator at

all to help you find like where the tighter entries would be? So like a moving average of ATR trading it when it gets you know tight compressed uh and then you know throughout a range things will get wider or looser towards the end

of a trend. Uh just just want to hear your thoughts on that if you look at that at all. Yeah, I you let me go back and share the screen. Um because I I do I don't talk about this much because I I

haven't really formulated what I what the what the value is yet. But if you take a look at a stock like Micron and you can see here I've got the average true range points. So and then the uh 14 day percent. So let's just

compress the volume. And so here we can see you know very clearly the points is rapidly rising but that's cuz the price of the stock is rising.

So that's not as valuable as the percent ATR. I I said this the other day and people said how can you quote that horrible man? George Soros says you know volatility peaks at turning points and diminishes with the trend. Now, it

doesn't mean that this is a peak, but this is the highest volatility we've seen in this stock pretty much you go back ever. So, I have to look at that and say, you know, is this a a turning point or

is this maybe just we're due maybe not for a deeper price correction, although I'd love to see it pull back down to the anchor from uh the year-to- date low uh down near 800. It wouldn't go there quickly. it would, you know, because of

the high volatility, it probably do something like this. Um, but I look at that and say, okay, this volatility likely needs to cool off a little bit before it sets up in a lower lower risk way. So, I'll look at these and say, is

it coming out of a a lighter lower volatility even though it was in an uptrend? So I want to match that ideally with some pullback or some contraction in range not just uh you know absolutes.

Cool. And could you bring up beam actually again and go back to a weekly?

I actually had a question. I forgot about this. Uh beam beam. Yeah. So um one question a lot of people might have looking at this chart um is it's very far off alltime highs. They're they view a lot of supply. Uh but that's

kind of what you're using the anchor view app from the highs to to judge, right? So yeah, kind of talk me through how you interpret that whether there's supply that you know could impede a trend or or something like that. Um and

how you use that anchor view app to kind of um diagnose that. Sure. You could look at it again with these anchors. We'll just put those in there and say, well, that's the average price that it's traded at adjusted for

volume since it came public. So that's where the greatest price memory is. And then I'll just look at basic horizontal support and resistance, right? And you look at it from that standpoint. And then I might look at it and say, okay,

where's the next level of interest? A place that has been, you know, prior, you know, we saw resistance over here become support, support, and then resistance. So that's a natural level that you know we saw in here there was 6

months worth worth of trading that by now I would hope that most of those people are out that they've done something else but it's not necessarily that there's people at 40 uh3 42 43 looking to break even but everyone sees

the same thing on the chart and they say you know and the phrase is support broken tends to act as resistance. So, everyone looks at and says, "Well, it looks like it's got a clear shot, maybe up towards that 42 level." And I'll look

at that and say, "That's just the basis of my riskreward to say if it can push it through here, I want to hold up into at least this zone hopefully. Not not a price target, but that's a level of

interest where it seems likely some supply would be released either because these people are looking to break even or because everyone's looking at the chart saying, "Oh, it's coming into resistance." We only know it's resistance if it does this. Of course,

um it might continue to move right up through it. And that would be great.

That that's why our job is to manage risk and say as long as it makes these higher lows, I'm going to set my stop under these higher lows and then get stopped out over here. So, to me, it's

just you you could use um the tool's not as good on here, but um you could use volume by price. Um Trading View's got a great way of doing that. I think your software does as well. Um, so that

that's th those are some of the things that you can look at and say where's the you the most um prior trading and and therefore price memory.

Perfect. And obviously you've you've mentored and and educated many many traders um over the years on technical analysis. Um, what are some uh I I don't want to say chart crimes or or but like you know technical technical analysis

mistakes that you see kind of maybe newer traders make that are worth pointing out to be aware of and and how people can prevent doing those.

Well, it's you know I pointed this out to subscribers this week. We we were involved in Cognex CGNX and this is another uh one that I could have pointed to as a loser. Um but Cognex, you know, it it's it's created this little head

and shoulders up here. supposed to be a reversal pattern but can sometimes be a uh continuation but it was breaking so we got involved right in here sold a quarter up at this point and then I I saw someone mention hey Cognex is

breaking out and they were all excited and buying the stock right up here we owned it at and it's not necessarily that you know it's it we did it better but it's it's just more about again where has it come from so we owned it at

6950 um 69.50 on this day and sold a quarter point as it broke out. We used the 2-minute exit because it had just run actually from 63 to 73. So it just ran 13% in the matter of a week. So I said,

you know, it's prudent to sell some to the breakout chasers. So people who chase breakouts without asking how did it get here? So in just you know 6 7 days it ran from 63 to 73. Buying that breakout doesn't make sense. People

always complain well breakouts don't work. Well not if you're buying at the breakout up here. What we're buying is the higher high above the flat to rising 5day moving average with a stop underneath the most recent relevant higher low here. So our initial risk was

this much. We sold a quarter off up there and then the balance I think we sold still at a profit. um somewhere in here maybe we had raised the stop um but it and it was a small profit overall but

it's better than still holding it and being down a$130 like perfect so so the so yeah I'm sorry so the so again where has it come from where does it have the potential to go that's one of the biggest chart crimes I see is

people just chasing momentum without saying and you can buy momentum you can buy the fifth day the stock is up in a row but you better be doing it on a one minute time frame and managing your stop

off that chase the gap VWAP morning low because if it pulls back a stock that's up 15% in 5 days, it's totally normal for it to pull back four 5% and you're the guy who's going to feel not your

profits deteriorating, but you're feeling actual losses from that chase. Perfect. And actually, do you have an example of the chase the gap by the BWAP that comes to mind that's recently happened? Okay, so going back to OKTA again, this was a stock I was already

involved in. But on this day, you can see it gapped up. This was the opening bar on uh July 1st and it gapped up. It gapped up and then it pulled back initial profit taking. And as a long

holder, I was thinking, okay, no problem. My stop's under here. It's got some room. I, you know, this is fine.

So the people who chase that gap, it doesn't look like much, right? Oh, what's the big deal? if I bought at 138.20. Well, within 10 minutes you're down $2 per share.

Within five minutes, you lose $2 per share. You You're not thinking you're the smartest participant in the market.

I hope. Uh and maybe you're thinking, well, that's part of the process. My stop is down here. I don't care. I want to be precise from the, you know, I would rather not buy the pullback and think, okay, maybe I'm going to get

lucky here. I want to buy that strength right here. And then for an additional uh you know for an add-on or new position your stop can go right there that close and then as it runs up that day this might have been daily R2 let's

say take a quarter of it off raise your stop up to under here. Now you have a riskless transaction overnight theoretically unless it gaps below that low. But but you know the markets do it on a consistent basis. Um, chase the gap

too. Yeah. What? And gaps down too. Um, cha chase the gap or wait for VWAP right here. Gaps down, hits the prior days VWAP or the week to date VWAP and then buy right there with a stop under here.

It is to me the best entry technique there is. Some people might say wait for the opening range. And I would say opening r or red to green. So red to green has you buy up here. Opening range

has you buy up here. chase, you know, buy above VWAP has you buy right here.

Would you rather own at 730 4370 or 70 4520 a dollar and a half higher or even up to the red to green here, you know, $3 higher. So to me, that's the best entry technique on shorter term

time frames. and looking at that gap down that spot where it reclaims a view up. It's basically like the sentiment shift of the day because anybody who's bought that day at that point they're starting to get green. So there's like

that's that's where kind of the momentum really starts getting going uh to the upside is as we reclaim that VWAP after the gap down. Yeah. And and it works great in an uptrend. So the and the bottom line was we're above a we we were

above a rising 5day moving average and we came down right to the week to date anchored volume weighted average price as well. So that told us hey we're in an uptrend. We're down to the week to date anchor. Let's take a look at this on the

shorter term time frame. I want to be long the spy either for a day trade or maybe you want to buy it for a longer term position and maybe you got stopped out under here. But for me it would have

been a a day trade. I didn't day trade it that day. I was involved in other stuff. But, you know, that that's an example there.

Perfect. Well, Brian, this has been great. I think we've actually covered a ton of different useful concepts. So, hopefully everybody watching has at least one great takeaway. Um, any kind of last message or overarching, you know, uh, you know, thing that you want,

you know, if somebody somebody watching this has one thing that they take away today, what do you think the most important message you can share is?

Uh, understand the trend and trade with it. Don't get, you know, hung up on stories. Um, the stories of the day, you know, like I like we spoke about the uranium stocks. Yes, these en these these data centers are going to require

a ton of energy, but that doesn't mean you can just buy nuclear stocks in a downtrend and make money. If you are going to buy them, you're going to likely experience a lot of unnecessary pain waiting for the buyers to regain

control, which might be in six months. And you might even pay a higher price, but you're going to have the wind at your back. And you don't have to, you know, look at your stock for 6 months thinking, why am I holding this loser?

It's down 10%, 15%, 20%. Oh I was wrong. Sell it at the exact worst time when some bad news comes out. And that ends up being the bottom.

Perfect. Well, Brian, thanks again as always. Always always enjoy talking with you and always learn something new. So, thank you so much uh to everybody watching. I hope you guys enjoyed. Leave a like down below if you did. Subscribe

if you're new to the channel and we'll be right back. Take care. Thanks, everybody.

All right, welcome back everybody. It's my pleasure to introduce the next panel of the Trader Line Conference. We have Matt Caruso and Jason Shapiro. Um, we have both fantastic traders with very different styles. And today we're going to be comparing and contrasting and

distilling the common principles between them. uh to introduce them a little bit. Matt Caruso is a top performer in the US investing championship where he returned over 300% in one year using a growth swing/position trading approach. And in

the other corner, we've got Jason Shapiro, hedge fund manager, market wizard with over three decades of experience in the markets. And Jason is a contrarian who uses coot data to trade positioning of the crowds. Uh Jason, uh Matt, first and foremost, thanks so much

for being here. This this will be a lot of fun, I think. Uh so welcome. Thanks for your time. Yeah, thanks so much, Richard. Good to be here, Rich.

Awesome. So, to start with, I'd love for you guys to from maybe a high level perspective, share your overall approach and goals in the market because both of you have, like I said, very different styles, but uh yeah, let's start with

that to add a little bit of context. So, Matt, maybe we'll start with you. Could you share kind of your general approach and what your objectives are in the market?

Sure. So, uh I kind of really fall in the shoes, I guess, of you know, William O'Neal and Can Slim type of investing, but my background is just a little bit different. I was a market maker. So I

kind of took what you know, Willie O'Neal did as as the basis of things and I've kind of adjusted over the years and way suits me with different types of entries I use as a market maker and uh

different kind of ways to kind of figure out market direction. So nowadays I I pretty much just trade long only equity and uh my aim is to really kind of avoid the big drops and then participate in the best leaders for the uptrends and uh

just do that with as much focus as possible. Perfect. And uh Jason over to you.

Yeah, I'm a futures trader. Um, I manage a CTA um for, you know, I have some institutional clients who who allocate money to me mostly because I think my return streams um end up being very non-correlated to uh just about everything else that they

run it against. Um, which obviously adds value. you know, if I can be zero correlation with positive returns, then I'm I'm going to increase their riskadjusted returns. Um, the way I approach it, um, is I take a very sort of I guess

they call it contrarian point of view, but it's more contrarian of positioning. So, I'm looking at where people are massively long or where people are massively short and then I'm looking to go the other way, which is why I end up

with zero to negative correlation to everybody because I'm essentially doing the opposite of what everybody's doing when they are all doing it or when I can measure that they are all doing it. And then I wait, you know, once I that my

measurements tell me that, I don't just get in um because I don't want to get run over. Um I wait until the market confirms what I'm saying. So, I I always like to say I have three pillars of what

I do. Positioning needs to be one-sided. Sentiment needs to be one-sided. And then market action needs to confirm what I'm saying. So, okay, it's going down.

Everyone's getting short. Everyone's getting bearish. I'm not just going to buy, you know, the falling knife. I'm going to buy it when the market then gives me confirmation that, hey, now it's not going down anymore.

Yeah. I think from our previous talks, you know, people know you for the news failure concept, which I think I I definitely want to touch on. Uh but perfect. That's a good kind of starting point so people can hear both sides. Um

let's dive a little bit deeper. Um obviously, by the way, you guys do a fantastic podcast, The Markets Unscripted, where you guys both give your perspective each uh you know, each week about what's going on, which is awesome. Uh we we'll link that in the

chat. But um Matt, maybe starting with you again. Um obviously you guys have different edges. Um what would you say are your biggest edges as a trader and how do you apply those in in your process? Yeah. So, it's funny like like

the well, first of all, when we're doing the podcast, we just thought it would be just, you know, we were just kind of talking at at an event last year and we're just saying, you know, the perfect trader would be basically being able to

to play that uptrend to the the maximum capacity and be really focused on the key leaders, but then at the extremes, because, you know, the trend followers are always going to be late, then at the extremes be able to fade that. I'm like,

you know, Jason and I together be like a superstar team. And we thought that would be like a great basis of uh you know the podcast and uh what's been what kind of some elements that I thought were great you know I always figured you

know in the directional trend like that that's more like that would be more my wheelhouse but what I found was amazing is that you know just when both of us are in sync at the same time that that

really kind of actually point to the strongest part of the rally which we had the past couple of months because we are both seeing similar types of things. So uh but my I think you know kind of what

makes my side stand out a little bit more is you know as being more equity focused and really like zeroed in on my true mission is to find the absolute like equity leaders of the rally and I think that is that is one of the keys

because you know a lot of people can play the long side of the market and it doesn't take wizardry to kind of figure out if we're going to start going in an uptrend or not but tying that in with

really find a leadership of the market like to me a leader a leading stock is one that does two things it goes up more than the market on upswings and it'll decline less than the market on down swings on a relative basis and so and

that you know reality that's alpha that that's what everyone is seeking or else you can just buy a lever QQQ ETF. So really one being able to bring the universe of thousands of stocks down to a few is like a critical component

because you're going to be wrong anyways but when you're right you really want to be right and uh then after then after is what most people won't talk about but getting that right with the right positioning is the next key because

anyone can point to I got these five great stocks but if it's a 1% of the portfolio and doesn't really do anything either. So, I think that's kind of really that zeroing in within stocks, even when we chat on the podcast. That's

something I always like to kind of bring up and and share as a as a standout feature, I guess.

Yeah. Perfect. Yeah. Anybody can identify the leaders, but actually getting meaningful size, that's that's the whole name of the game.

And also identifying them before they become crowded like Jason was talking about. It's not, you know, after the fact doesn't do it doesn't do you as much good as got to be when things are kind of uh not feeling so comfortable

when you're buying them initially. Yeah. It just wins you Twitter points, which don't count for anything. So, there you go. Uh so Jason, perfect.

Let's dive a little bit deeper into your method. How would you describe your edge? I know we've talked about this a little bit before and uh but yeah, uh to to explain it again, how would you define your edge in the markets?

So it's funny. Um I think that's kind of that answer's changed over the years.

You know, I used to when I used to go out and try to raise money, you know, the people would ask me, "What's your edge?" And I would usually say something like, well, the data that I use is not

data that a lot of people use that I'm taking this contrarian approach means. And while I believe that maybe gives me some edge, as I've started, you know, I started this crowded market report a few years ago and I I've had so many people

join and I've been able to watch other people going through and I have I talk to them and I try to it's really sort of changed my view on this whole thing. I think it's actually a lot simpler. I

think that what my edge is. I am very disciplined and I'm very patient. Right?

And really what that means is I have a lot of experience. That's all it is. Right? I I've come to the conclusion that do I believe that what I do over time works?

Yes. I better believe that. Otherwise, what am I doing to the numbers have proven that? But I I've come to the conclusion like I always say now I don't care what makes you want to buy or sell something. I really don't, you know. Um

but you have to be disciplined about it. You have to be patient about it, right?

You're not going to buy something here. My macro view is this. So I'm going to buy this. Well, that might be your macro view, but don't buy that thing until the market is agreeing with you. Like don't fight the tape, right? It's the same

thing that I do. Okay, I'm going to buy this thing because I think everybody is short. Okay, but I'm not going to do it until the market agrees with me. So, I think it's those things that give me

edge. My ability to do that and and like Matt was saying, it's one thing to have a plan. We all know ride winners, cut lose, you know, we all know this crap, risk management, you know, but do you actually have the patience to

do that? Do you actually have the discipline to do that? And I think as I go through it and like I say when I compare myself to the people that a lot of the people that are I'm like dang and

the way they do all their different things. Um I think that's that's really where where my edge is. People say to me all the time like hey man you just went seven weeks without making a single trade. How do you possibly do that? I'm

like well because I'm not here to make trades. Hey, I'm here to make money, you know, and if that's what I have to do, then that's what I have to do. And that's what process is so good. And

again, everyone knows, oh, you have to develop a process and it has to have an okay, but if you're not going to follow it, then what's the point, right? So again, how am I able to do that? Well,

because I developed the process because without a process, I went through a long time where I did what everybody does, make a bunch of money, lose a bunch of money, and get nowhere. So I developed the process and then once I had a

process and it was working I still screw it up by breaking the process you know doing all these non-discipline things and then I learned that that doesn't help me that only hurts me over time right so I got rid of that you know so I

think that's what the edge is at this point I would just follow up on that though because same with me with crucial insights when I started that you know was we started off but like just learning to deal with people every day

and I think you know I think Jason would say something similar, you know, whereas when you trade for a living, like I've done, you know, for many years now, Jason, you know, you start to kind of get insulated with other people who have

like similar levels of experience. Not that everyone does things right, but, you know, you almost start to forget, you know, some of the strengths like Jason says, you know, I thought my edge was something else, but it changed over

time. You start to you start to kind of like overlook the strengths that you built up over time. And I, you know, we could see it like in in March, it's like it's panic, right? Then after everyone, I'm in full cash. Cash is a position.

And sometimes that's the place to be. But if if then after you just wait until it's comfortable if to kind of buy stocks well then you're late. And so like if the market just will almost naturally train you to do the wrong

thing. You know during an uptrend when you're scared to buy all the dips work but the first ones feel scary. Then at the end you say like w this discipline has been hurting me like why you stops and that's when the trend ends and then

you kind of give everything back and more. So just that that discipline is is just so incredible. And I think Jason's right, you know, time in the seat is something that you can't kind of just learn in a book. But sticking to one

process is key. I also jump so many systems over time when I start off. And it's like every system has its nuances, you know, like like Jason does, you know, looks at uh news failure. Well, there there's a nuance to that. Like I

mean, I try like I try and learn from Jason every week when we chat, but like you know, I I'm trying to get my eyes to be trained that way. And same with like, you know, holding positions. When are

you stepping on the accelerator? When are you taking your foot off? like what what are the key levels? When is it now time to just scale out completely? Like those on paper it seems simple, but everyone analyzes a chart typically one

at a time and then working it all together as a system is like then suddenly you're in real time you're hit with this whole other barrage of problems you're totally unprepared for.

So I think focusing finding what works with you psychologically and and with your personality and then like you know sorry to say but give it a few years like and then after see how you do over time.

Yep. And I was going to add uh to what Jason said about patience. I think that fully applies to our our style more met too because there's there's those two to three times a year where we want to be

active right after a correction after kind of a reset. And like you said, those are when the breakouts work. Those are when the gap ups work and follow through. Nobody trusts it. Everybody, you know, is uh you know, in this recent

year, everybody was chopped to shreds for the last four months and then that's when it works. So that patience element is applies to both styles, I think, really well. And I think that's a key pillar. Um, anything to add on on how

you incorporate patience into your process or stay in tune with when to be aggressive and when to be patient.

Yeah, you know, like I early on I tried to always kind of like systemize things the best I could, but some but the problem with that is the market always does shift a bit, but I just I've really

gotten to the point where if if we're at the start of a new trend, like you know, near fall through day or what, whatever tool you want to use, breakouts will work. Then after a month or two, again,

you know, what's the exact definition? Like again, every cycle is different, but after a month or two, breakouts again, then they look good, they all fail, and then then pullbacks are where you want to like kind of shift. So, you

just you want to have different tools. Even if you're a trend follower, you want different tools to time things. The trend's great, but you know, like like Jason always says that these stocks move 30% in a week, you better have like some

kind of you better understand the game you're playing with. So, you know, timing is really critical when those are the kind of swings. So you you have abs and you'll still get it wrong, but at least keep working towards kind of

optimizing the best you can. So just like understand where you are in the cycle of things is just so critical.

Yeah. Perfect. And I just want to say to what you guys were just saying, right? When I talk about positioning, you're talking about like, okay, so it's a bull market and it dips and then it goes back up and you should have bought

it, but you didn't because you were scared and you should have because then it goes back up and then it dips and you should have bought it and you didn't because you were scared and then the market rips

back up and it dips and you should have bought it but you didn't because you were scared and it rips back up then it dips and you say, "This time I'm going to buy." And that's the time it doesn't

work. Well, that's positioning in real time. That's positioning. And it's and the point is it's not just you. Okay, this is one thing I think people have to get over. I know you love yourself and I know that and you should. Okay, but we

are people and we all are human beings and we all suffer from the same exact issues. Okay, we all fit under that normal distribution curve. So we all make those same mistakes and we all do them at the same time. And so you know

where that shows up is positioning. Okay? Because on that first dip that you should have bought, the positioning will show that nobody's long because you didn't get long that dip. I didn't get long. We didn't do it. So, the market

rips. Second dip, it'll show people are probably selling the dip again, right? It rips. And then that one dip that they did buy, the positioning will show. Oh, everybody bought this dip. Okay. Well, then this is the one I'm not going to

buy, right? Um, and this has actually been, as Matt knows, my my thesis for to answer what everybody wants to answer right now. When is this bubble going to end? And my thesis, which to this point has not been proven either right or

wrong. Um, so I don't know what it's going to be, but my thesis has been I don't think that we're going to see massive longs on a rip higher because people have been calling it a bubble every time. So, they're not going to chase it.

I think if we're going to see position and show people get super long, it's going to have to be on a dip just like we just said. That will be they haven't bought any of these dips. It's never

showed up on then all of a sudden somewhere in here I think there will be a dip that they all buy and then that will be the one that they shouldn't have bought. Is it this one? Is it I I don't

know. Does it end up being that way? I don't know. It would be much easier, trust me, for me if they ended up chasing, you know, at the top because then I could get great sell signals all the way up there. That would be great.

And I hope that's what happens. It just kind of feels to me like it's not going to happen because, you know, there's one I don't want chase this thing. If they haven't chased it by now, in other words, like what's going

to make you chase it now? You know, like if you've missed, what are you going to do? You're going to come in and say, "Oh, this AI thing actually is real." I mean, if you haven't come to that

conclusion yet, then I don't know when you're coming to that conclusion, right? I've been saying like with the show on I think that this last move up from early April, late March, early April was that was the people who were doubting AI

actually coming in and saying, you know, something this thing is real. And that's why you start hearing, oh, we're in the second or third inning. You know, now all of a sudden they're justifying the fact that they missed this entire 700%

run on these stocks that we're only in the second and third inning. So, we can get it that. So, is this going to be the dip they buy? Again, I don't know. I'm not here to forecast what's going to

happen. That's why I have data. But my point being that positioning data helps to determine exactly the things you're saying, right? Um, and and and the second thing I would say is with all that and then I just came to my mind

here as you guys were talking about this this whole idea of when to add, when to reduce, when to do this, when to do that. The the the problem with that a lot of times is you added this time it worked. Does that

mean it was the right thing to do? You know what I mean? And by the right thing to do I mean over time you know what was the the thought process that made you do that because what happens then you do

the same thing next time for the same reason it doesn't work right. How do you determine what is the right decision-making process? And I don't know the answer, but I I think that it's an important question, right?

Um I think that it traps us a lot of times into believing that we are doing the right thing when maybe it was just luck. I always go back to the coin flip thing. You know, if I say it's coming out heads and it comes

out heads, does that mean that I got it right? or does it just mean it was a 50-50 bet to begin with? You know, and I would of course argue that it's a 50-50 bet to begin with. You also, the other coin

flip thing I like is if you get, you know, a thousand people to flip a coin, you're going to have 500 to flip heads.

They flip again. Now you got 250 that did it twice, 125, three times, and so on down the line, and eventually you're going to have one guy that flipped heads 10 times in a row. Does that make him

the greatest heads flipper that ever lived? And he can go write a book about how to flip heads every time. And he can start a Twitter feed about, you know, follow me and I can teach you how to

flip heads all the time, you know, and he can be in coin flip market wizards because he flipped 10 heads in a row, which is theoretically impos. No, it means somebody was going to do that and he happened to be the lucky person to do

that, right? So if you think about it in terms like that, I think the only answer is less is more. You know, the less moving parts you have and the less stuff to fool your mind into thinking that

what you are doing is the great thing, the better off you are is my view on that.

You know, there's two things I want to touch on there, Jason. There's one there's one of your quotes we we had on the podcast a couple of months ago. I wrote it down. I don't want to throw too

many accolades your way. I'm joking. But one one of my one of my favorite lines that Jason said that really kind of put it in my mind. Everyone's everyone says, you know, price tops when fundamentals are fully discounted in price. And Jason

says, "No, it's when it's fully discounted in positioning." And I thought like, "Wow, that was such a banger. That is so accurate. It's not like because you know when is when when is it that fundamentals are fully valued?" Like, you know, I'd argue a lot

of people understand the EI trade. It's when the bulk is too crowded and it's represented in position positioning that the problem shows up. So, I thought that was really cool. And also to touch on like the other thing you're talking

about, you know, saying that you don't have the answers. I I find trading is a really interesting business because I find the the more I go on and the more I trade even if I'm doing well the harder

I realize the business is you know when you're starting out it's like like you know Jason oh yeah cut your losers ride your winners simple then after you okay well how long do I ride my winners and what how many losses in a row is now a

problem and then you know is did the first time well did I do it because I was right and so even simple things over time you realize wow that that super simple thing I thought was just like an

easy part of the process you're going to hit an environment where it's totally going to work against you. So, and I think this is why most successful investors over time their systems actually get simpler and simpler versus more and more complex because you want

less variables to be playing with every time you have to make a decision. If you have a, you know, like when you people start off, they'll go to a chat GPT or whatever systems test and have like 40

entry rules and like how much of that is curve fit? How much of is is that rule in real time going to change? Did it break? And it's way too much. like you want to keep this as simple so you

understand your tools and you understand when not to use your tool and that only comes from having like a simpler strategy but again it's it's like Einstein says you know you want everything to be as simple as possible

and no simpler and that takes some time to do but I think that's the goal everyone usually ends up working towards yeah so they they're people early on they're trying to optimize they're trying to find this secret sauce when in

reality it's keeping it uh as robust the the most robust system has the the least you know dials to turn and and all that.

Is that where you're talking about B? Absolutely. And also you have to dial the if you are going to optimize I would say instead of optimizing the system optimize like in terms of signals optimize it for you. So many people try

and learn a system and it's it's too risk uh it's too it's too risky. It's too volatile. They they can't handle it and so they're going to fail because they can't handle other people it doesn't give them the type of returns.

They get fed up. They'll go somewhere else. So you got to the parts you should be dialing in once the system is robust and you feel somewhat you know happy with it instead of always trying to get like the perfect moving average or the

perfect entry technique or what make it the right size for you. So you know if you go through a really bad period you see like wow that was way more than I could handle that then you say oh I

should dial back my risk or if there's an uptrend say like a I made way less than I should have because I was scared to buy okay next time force yourself to dial up your risk. That's I feel that

you get more value dialing in your own personality versus always kind of tinkering more and more with more indicators and more tools.

Yeah, I was some guy on Twitter the the other day. Um I um as I'm sure you guys know, I sometimes will will put things on Twitter and this is something that we talk about a lot on my Discord as well,

but there's a certain person who's a CNBC personality who I think is one of the if not the greatest fate there is.

Right. Um, and so I will comment on when he's making different moves and it's not a personal thing, right? I just think he exhibits the personality traits of somebody who is doing it wrong and a and b it is proven. We have kept records of

the traits that he makes for years and he has been very very bad. Um, so I put something on Twitter the other day saying, "Oh, this guy did this, so you know, everybody should watch out for that." And some guy came back at me

pretty hard saying, you know, this is stupid. Like, I don't know why you put this on here. Like, I'm a hedge fund manager and it's not as simple as just going opposite people. You know, the market is a lot more complicated than

that. And I was like, "Yeah, making the easy money sucks. You know, let's make it complicated and make the hard money." Like, you know what I mean? Keep it simple. If I knew a guy that absolutely lost 100% of his trades, why would I

need anything else ever? You know what I mean? To stroke my ego. Oh. to to to to justify the fact that I spent, you know, how much money going to an Ivy League college and an Ivy League MBA program

and all that knowledge and money was spent so that I could get this incredible knowledge of the difficulty of of all that stuff. I guess if that's what you want to do. But do you want to make money or do you want to prove

you're smart? You know, I if you know, if there was something that told me, like I said, if there was one person who I knew 100% of the time, got things wrong, you know, and I could just take

the opposite of that all day every day and make money all day every day, why would I care about anything else?

So, like we say, it's like they say, the market the market will always give you what you want to get out of it. If you want to gamble, it'll be a casino. If you want to build a business, it could be a

business. If you want excitement, it'll make it exciting, you know? you get out of it really what you want.

So yeah, that's right. And if you I say that all the time too. I if what you want to get out of it is is actually making money and you everybody say, "Well, what do I want to get? I want to make money." Yes, that's

what you say. I get it. But you really have to, you know, you really have to dig deep and be honest with yourself.

What is it that you're doing? Right? Because when we go to the casino, I think almost all of us know that we're walking away with less money than we walked in with.

There's a chance that we don't obviously otherwise we would never go. But we know that mathematically we lose money in the casino. The casino makes money. That's why they have big beautiful hotels and all this stuff, right? Right? And they can give away

food and drinks and all that because because they make a ton of money because the odds are in their favor. It's pretty simple, right? We're flipping a coin in there. They're getting paid 52. We're getting paid 48. Over time, we're going

to lose. Yet, we still go. Why? Because there's some excitement to it. There's some entertainment to it, you know. Um, and there's hope.

Huh. Yeah. You know, it's exciting. You know what I mean? you're waiting for that card to flip and you're waiting for those dice to roll and you're with the people and you're getting free drinks and you're having fun and it's fun

entertainment. It can be fun. Um, so it's the same thing in the market. Is that what you're in the markets for? The markets are very exciting. They're open every day. They're up, they're down, they're bullish, they're bearish, the

news, the tweets, the this, the that. It's very excit can be very exciting. And if that's what you're in it for, then just know that and that's fine. I'm not judging, you know, as a this is my business, you know, um I can't be in

this for the excitement because it's not exciting for me to be broke, right? I've been there. There's nothing exciting about it, okay? There's nothing exciting about me losing money for clients, all right? And them calling me up telling me

I trusted you and you suck and you know all that. And there's nothing exciting about that, right? So, these are the things that end up helping you develop the discipline. You really have to focus on what is it I'm trying to get here? Is

it for fun to break up my boring life? Okay, fine. I do things. Look, you see my guitar is hanging back there. I always say I I play guitar to break up my boring life, to have a hobby, to do

something that I think is fun and exciting. It costs me money. I have to pay for that guitar. I got to pay for my guitar teachers. You know what I mean?

like I ain't getting paid to do that. My hobbies cost me money. If it's a hobby, just realize that it's a hobby and that's fine. And then set your expectations as such. If you are intent on actually having this something that

is going to make you money, then you've really got to develop the these disciplines that that that we're talking about. Otherwise, it just ain't going to happen. The number of people that are successful doing this is in the low single digits.

Get it. Believe it. Live that. understand that because that's a fact. The low single digits is how many percentage of people are going to be successful doing this, right?

And I and I'd say guys who are successful, think about what that takes. Yeah.

And I'd say guys who are successful like like you and I like you know, we've shared battle stories, you know, it's like we've shaped our life around it. It wasn't a hobby and and even then it's a very hard journey. It's not easy like

like beating the market is not an easy thing. So you better approach it with I think the respect it deserves.

No. And and that's fine. You know what I mean? It can still be fun. It can still be exciting. It can still be a form of entertainment. It can still just like going to the casino. Hey, every once in

a while, you know, hit that number and get that pay and, you know, go out that night and party and all that. It can still be all that if that's what you want it to be, but just realize that

that's what it is for you, you know. Um and and and therefore, like I say, your expectations are set. But just understand what what I think it means that two to 3% of people do this. you know, put most of your

money into index funds at that point and and take the 5% and have fun with it if that's what you want to do, right? Um, that's great, but otherwise, you know, you got to know how how difficult over time it is. And yes,

people are making money. Look, from April, early April until, you know, recently in this market, man, these things took off, right? You're a genius. You know, it's that saying, everyone's a genius in a bull market.

Just realize that this is an overtime thing. And just because I hit the blackjack table today and I w I've walked out of the casino before with money from the blackjack table. I've walked out of the casino before with

money from the craps table. We went on a heater and all that stuff, right? But do I think that over time I'm going to go to the casino every day and I'm going to walk out with more money than I walked

in with? is I know for a fact there's zero chance despite the fact there are times that I do. So you got to remember that you got you're not a hero. Okay?

You you have to stay humble more than anything else. Okay? And you're not going to make this is another subject, but you are not going to make money in this game. I promise you. And you're not going to listen. I know no one's going

to listen to me and that's fine. I'm going to say it anyway. You are not going to make money in this game by being a better predictor of the future than everybody else. You're never going to do it. Okay? You're going to do it

through these other things, right? Like that people talk about what we're talking about patience, right? You can be better than everybody else at being patient. You can be better than everybody else at being disciplined.

Okay? Those are the things that are going to put you in that 2, three% of the winners. Not I predict the future better than everybody else. It's not going to happen, man. Nobody does it.

Okay? We all, like I said, we all predict the future once in a while and get it right. But did we get it right or did we just make a guess that just actually happened to happen? You know,

that's why I go back to that flipping the coin thing, right? Don't kid yourself because that's what your mind will do. You will remember the times you got things right. You will forget the times that you got things wrong. And

over time, the sin of it all is you will lose money and that sucks. Okay. So, I think those are the important things to think about. And speaking of prediction, Matt, I think you wanted to talk a little bit about looking at a chart

versus actually trading. Is that kind of what you were getting at about it's not really predicting, it's about, you know, you got to trade what you're given with.

That's just a way to get an idea and then it's about managing the idea properly.

Yeah. you know, I I even though like like I have my CMT and I'll talk technical analysis people and stuff, you know, but like I I've seen I see a lot of analysts from all disciplines, fundamentals or whatever it is and and

like oh this is this is what I think is going on like trading through something and and you need those skills like you need to know like you know I know what coot data is I need to know what volume

is how that works patterns you know a lot of that you know really most of everything you're doing is to figure out of the thousands of stocks that you have how do I bring it down to like 15 or 20

that I actually want to trade. And then if I buy this asset or this stock, where do I know I'm wrong? You know, so part part of it you can do with charts, you can do it with fundamentals. But the

problem is, you know, um most people really like uh a confident answer, you know, uh I was on Fox Business yesterday with, you know, and my views, but you know, like most people want to see like, you know, oh man, you were wrong. Maybe

I was wrong, maybe I was right, but if I'm wrong, I'm going to be selling early. But see like the way most people when they come to the market is like they have a view and then after they

they wait for the market just to prove that they're right. So like the like everything you're going to use a chart whatever data you're going to use. It's great, but the process of trading with that information is vastly different if

you want to do it successfully because you have to you it's it's that old saying, you know, you have to have very strong opinions, weekly held, you know, it it always comes down to that, you know. So, you know, so looking at the

chart um is just part of it and and understanding what that is like to live with and to trade through is then a whole other feature with which again takes experience. But knowing going into it that the chart has limited I see even

if you call it zero predicted value doesn't mean it has no value because if you can figure out quickly where you're wrong that's great if I know if I'm buying above this this price point I have either a chance of a 20% rally or a

5% loss at 50/50 if that that's still zero predictive value but I'll make money over time. So, but just knowing what your process is and where you're wrong, I think is crit and that's the difference between being like an analyst

and being a trader. And if people trying to make money, you need to be like a trader, you know. And I think there's a very important point there as well to people that are listening here.

A very difficult point as human beings for us to get to, but one that I have noticed.

People want to hear people come on TV, on Twitter, wherever it is, on YouTube, and tell them what's going to happen.

That's who they listen to, right? And that's exactly the wrong thing to do. Yeah.

The people to listen to are the ones who say, "I have no idea what's going to happen." Because that's the only truth.

Okay. The rest is all salesmanship, right? It doesn't mean you don't know what you're doing, but the truth is you don't know exactly what's going to happen. Is being able to react to those things.

It actually does mean you know what you're doing. I think if you could admit that those are the honest people, you know, we're all trying to figure out who's honest, who's a scammer. Okay, my first thing is people who come on there

with these strong opinions. This is what's going to happen. Automatically, they're gone in my view, you know, um it's about risk, reward, and odds. It's not about me or or anybody knowing what's going to happen. And people that

are and again, I can get on there and make a YouTube video. I'm going to flip heads. And I flip heads. See, I told you I was going to flip heads. Did I Did I do anything? You know what I mean? And it's the same

thing. Look at it as the same thing. The market is going to go up this week and then the market goes up this week. Oh, this guy's a guru. I'm going to listen to him all the time. Wrong. You know,

wrong. Well, you know, but like I would argue that a lot of people come to the market and we're all trained in school growing up, right? And you know, you're rewarded in school to be right. That's the only

thing the test if you got the answers right that's all that matters. Doesn't mean it doesn't matter if you had a fallback plan or anything else that you get the answer right. So I I think it's just I've been doing this for so long

like since I was a teenager so it's I've reprogrammed my brain but most people come to the market one they hate being wrong and they actually just think that their job is to be right all the time.

And I don't blame them. That's it's the natural human way and it's how we're we're all trained for for many years.

You go your 15 years you go to school and whatever 15 20 years every year is the same thing every class. Do you have the right answer? And the market that doesn't matter. You could be wrong. You could be wrong nine times in a row. Be

right once but catch a sand disk at 40 and take it to 200 and you made a boatload of money. You know what I mean?

But if I told you, you know, Rich, I have the best system ever, but you can be wrong 90% of the time. You say, "What? It's a horrible system. Not for the guy who bought sand and it went up,

you know, 33,000%." So, it's just it's there's all these these sound like small things or they may even sound obvious when people hear them, but you'd be amazed at how many of these like subconscious issues you have or I don't

call it an issue that you have, but these biases and and that totally will undermine everything else you're trying to do and ruin your process without you even realizing that you're doing it. And I think that gets right back into why

such a small percentage of people are successful doing this because like Matt says, the things that we have been taught in life are the things that we're going to do and those are the things that that don't aren't going to work in the market. So

therefore, it's only like the small percentage of people that can see that I have to do things differently in this game in order to be successful. not the things that got me A's in school are not the things that got me successful in

other ways, right? Those are the things we've been taught to do and taught to measure. With this, you're you're you're playing an unknown future. Okay? So, the thinking has to be different. It's about odds, not about facts. If I sit here and

study my math and study it and study it and study it and and get the math right, well, then when I go to the test, I will get an A on the test. That's not how this works because math is known. All

right. The the future is unknown. So I would also say about it differently to be successful.

A small percentage of the people are willing to accept that you have to think about it differently and are willing to take the ta the the the task how to think about it differently and that's why only a small percentage of the

people succeed in this quite frankly. Sorry. Go ahead Matt. No and I'd say like you know think about like the process you have to go through to be successful is like one you have to learn a system. You probably have to

read about many systems to find that one the one that works for you. You have to work through it. You have to risk your money to see if you're wrong. And then you're absolutely going to have to learn

all of your personal failures only through failing in the market and then still have the perseverance to want to go back and fix yourself. And you have to do all of this while you're living your life. You know, like I always say,

if people want to trade for a living, there's only there's only two ways you can do it. One, you be very young and ideally get someone to back you or be retired and you're financially independent. If you're going to like

quit your job at 40 while you have a wife and three kids and you're going to start this, I I'd say almost zero zero% chance of succeeding because the path is just way too difficult because you have to do all those you have to do all of

these things to get it right and succeed over time. So if you're younger, you have the pathway and some backing and some hopefully some toutelage. If you're older, the money pressure at least is gone. So so the life pressures are less.

But that's why only because apply that to any other uh first of all even if you look at entrepreneurship what is it 90 plus percent of businesses fail and that's just general businesses. I'd argue the market's harder. The upside's

bigger but the market's harder. So uh that's why I take people say how long is it going to take? Well, how long is it going to take you to to go to fail?

Figure out what you did wrong and fix yourself so you don't do it again.

That's that's your answer. For some people they're stubborn. Some people they're malleable and and some are more dedicated than others. But that's why most people will join at the end of a bull market, leave in the middle of a

bare market, then miss the start of the new bull market and then and the market just has you all training. It's all part of psychology. These are all the and this is why it's not because in the end

it's some kind of black art and news failure is a concept that no one ever has spoken about before in history but it's incorporating into a system that you understand that's simple and that that works with your psychology and

you've trained yourself to kind of work with and and that's and that to me is what really separates someone who's successful and the many who try and then don't.

It's a great line. The upside is bigger but the business is harder. Mhm. I don't think that the word but should be in there.

The upside is bigger because the business is harder. Like this is what this is what life is. We know that, right? Who makes a why do hedge fund managers make billions of dollars, right? Because one out of a very very

large number makes that money and those are the ones we hear about. We don't hear about the other million who have failed, right? It's incredibly difficult to do it, right?

Why do why does an NBA player make so much money? Because there's only a small amount of people that can be NBA players, right? Why does somebody who works, you know, parking cars for a living does not make that much money?

Well, because it doesn't take very much to become a car parker. All you need to do is get a driver's license, right?

That's pretty obvious, simple economics, right? So, think about that. The fact that these hedge fund managers make so much money proves what Matt is saying.

It's because it's so difficult to do, right? Another more proof that how difficult it is to do this, you know. Um again, something something to think about. The whole thing about the doing it for a living thing um is also I

think totally spot on. This is why Jason and I even though we have very different approaches we just started chatting there's like a a common understanding of the journey and the path that will it doesn't matter the system you know I

just happen to like what I do and he likes to have but the common underpinnings and if you if you know you're around enough professional traders who are successful you I I' don't know if I can point to a

successful trader who's incredibly arrogant I'm sure there's some walking around but most really get humbled over time and anyways that's just the way the path yeah and I do want to get to how you guys differ in just a second, but to

because I think that's that's valuable too in and of itself. Um, but first to get a little bit more tactical and this is right along the lines of what you guys were saying about this is a a game

a discipline where we're we're trading an unknown future. Um, how do you guys address that? Um, with regards to position sizing and risk management and maybe just talk in guidelines because obviously there's there's traders watching this of different styles, but

uh Jason to maybe start with you. How do you guys how do you deal with that unknown future through proper position sizing and risk management?

It's all a function of my process and my system. It all works together. Why am I getting in tells me why am I getting stopped, right? Or why am I taking profit? They all answer the same question. And within that is so

therefore how am I sizing the position? Right? So I'm getting in. Why? Because the mark everybody's super short and the market is no longer going down on bad news. Okay? Because here's my news failure day. That's why I'm getting in.

Okay. Well, then where am I getting out? Well, if it takes out the low of that news failure day, then my news failure day did not work. Just like if I'm trading a head and shoulders and it doesn't goes back through, then the head

and shoulders didn't work, right? Um or if I'm trading a breakout of a moving average, if it goes back down below the moving average, then the moving average didn't work. Okay? So, I know why I'm getting in and therefore I know where

I'm wrong based on how and therefore that's how I size. I know how much I want to risk per trade.

I know where I'm getting in. I know where I'm getting stopped. So, I know how to size. That's it. I don't add, I don't reduce. I just put on my size and then the trade either works, I get to my

exit, I get out, or I get stopped, I get stopped. That's it. Less dials you have to push once you're in the trade.

Less I don't want to get into it. And people say it to me all the time. Why don't you add when it starts working?

Why don't you less dials, man? You know what I mean? And you know my my real answer for all these questions that people ask is because what I have done has worked for me for 25 years. So why am I going to

change it? I mean you know that's the real answer. Could it be better? Could I go and back test and I have done that and we have tested all these things and they have shown that they don't help. So

that's the second part of the answer of why I don't do that. But the real part of the answer is exactly what you said.

Less dials, keep it simple. You know that's going to do nothing but mess with my head. So now I'm adding the risk. So now it goes a little bit against me and I get out and then it goes back up and I

get back in and chase it and there, you know what I mean? Suddenly a winning trade becomes a losing trade, right?

It's hard enough as it is just to get a winning trade. I don't want to mess it up by doing that. It's all about this is why I got in. I'm putting the trade on.

I'm putting it on. I'm sizing it so that I know what my loss is if I get it wrong and I'm out.

That's that's how I do it. Yep. Matt, Rich, can you just remind me the question again?

Yeah. So, um how you think about sizing and risk management? Um and obviously you guys have different styles. Um yeah.

So, kind of how you think about you've got a great setup. How do you think about how much you're going to allocate to that initial setup and also how you manage your risk if it if it turns against you? So similar to Jason like

you know I have just a different a process where my process is one I I want to follow the leader find the leader of that cycle unlike Jason I do like to build into it because at the start of a

new cycle a lot of stocks will show relative strength some will be the key leaders some maybe it's a little bit of like a you know a leftover of a stock that was just getting some you know safety buying or whatnot. So, I will,

but you know, so everything I do though is trying to kind of how do I filter down to that process? And I I'll add in the strength, but I want to make sure that if I'm starting early or if I'm in

a very choppy period, I don't get cut to shreds. So, my sizing is actually always consistent. I always have a similar size of my portfolio that I'll put in the stock. And um, you know, the real key of

what I do is is there's two things you want to do. You want to figure out when you're in an uptrend and you want to be in the leader, you know, but you know, stock markets up trend maybe a third of the time. So,

two-thirds of the time is not a very good time to be probably running the system. So, knowing when is a big part of that. And so, you know, the the position sizing is important, but I have so many other things that I have to kind

of dial in to figure out. Getting position sizing wrong is what will blow you out, you know? So, if you're just too heavy and it goes so like that is something I I like I want to defer away

like a worst case scenario to something else. If the stock is working, I can add to it, I can build into it. But if I'm wrong and it's a really bad time, either I'm getting chopped up or the market

just falls out from beneath me, I don't want to have excessive size. So I people always ask me too, why don't you size it to the, you know, to to how big the risk is to the low of the bar. And the reason

for that is, you know, I was a market maker and I was trading all these gold stocks for years and a lot of the stuff you use, you know, this is again where you want to know your strategy because a

lot of these stocks, they'll have a very like a powerful day. And I remember early on be like, "Oh wow, the stock's breaking out." out. So, I'd buy a whole bunch more than usual and guess what?

Financing after the close. Clearly, the book the book runners like raised it up so they can offer it at the same price it was yesterday, but make it seem like a discount. But on that gap down, because you went really big, well, this

10% drop is like, oh, I just like I had 40% of my account all at once and I'm down 10% on 40%. It's a big drag. So, like that's happened enough times that like, you know, there's also subtleties

beneath the surface where the risk is fine. If I'm right that it's the leader, if I'm right, it's the trend. the the trends usually last three to five months. I'll get more than this this one entry. And so I I try and keep my sizing

simple and just try and answer those other questions first. And sizing affects your head, too. I was talking with Jim Roel about this, like to to truly handle it with his rules. He can't be too too oversized in it. He has

to he has to size at at a level where it makes a difference if it works and moves the needle, but not too much that it can dramatically hurt him if it if it goes against him. And the way I think about it, like I always

tell people, you want to be on the knife's edge where if if you have any more, you can't sleep at night. That's too much after. And if you have any less, you're probably not going to be focused or you won't care as much. Like

like and and that that dial is different for everybody. What it is for me is different for somebody else. And also like you know you have to realize some people it's more hurtful to take a loss.

For some people it's more hurtful to have I had this great idea that turn into a big winner and and I was undersized. So like you know you always like for me I've always been someone where like you know I always try and

catch that leader with the right if I'm if I have like a small position it takes off it's I'm kicking myself more than if I just take a have a bad opening one session. You know I'm okay. I'm a little

numb to that. But uh again but yeah getting the size right will totally affect your psychology. Goes back to what we said before. you you'll do more good for yourself by getting the dials of you than trying to say, "Oh, should I

use the nine EMA or is it the 10 or should I wait for a 14 RSI versus a nine?" Like, that's not going to make you successful over time in my opinion.

Yeah. There there is no, we were talking about this, I think the other day, there is no answer.

There is no perfect system. There is no solving the market. Okay? It's the you have to solve yourself, right?

That that's really the game. And this whole sizing discussion points to that, right? You can get the market right, but the sizing wrong and that screws you up. That's you, right? This whole thing of you have to have enough

on but not too much on. That's you. This whole greed thing, right? The reason you have too much on is because you're getting greedy on this trade. One trade should not make a difference. I know you want it to, but it shouldn't. This is an

overtime thing and the only way you're going to get to overtime is by not overleveraging. I am guilty of underleveraging personally. Um I I will admit it. My my clients tell me all the time. I'm too small. Well, I'm sorry.

That's how I am. It's fortunate for them that I'm a futures trader. They only have to put up margins. So, if they want to lever me up, they can lever me up.

Okay? But this is how I do it just because that's how I am. I'm a I'm a futures trader that is riskaverse. Okay?

Um, other people like Matt was saying, you have to dial that based on where you are, where your mind is, where you are in life, where you are financially, where what your goal is with all this, you know, is it for fun, is it for this,

is it for is it your lottery ticket, you know, um, all that. But that's all these things that that that are in your head.

This has nothing to do with is it telling me that the mark is something telling me that the market's either going to go up or down? um this is all the stuff that's in your head like and you know and I would say what you

know another reason why it's so few people succeed is because no one wants to hear this I'll bet you this is not going to be the blockbuster clip of your your conference someone who says I have the new system for trading the QQQ

that's like super effective and avoids the draw downs but I get five times the upside that'll be the most success successful clip look at books every book is how to buy stocks like what books do you know that discuss this because

number one there's no perfect answer for everyone so difficult. So, everyone just learns like how do I buy? How do I buy?

Then when that doesn't work, okay, they try and figure out some books on when to sell. There's even fewer of those. And and if you just go to portfolio management books, it's like boring, dry stuff that's more for institutional

investors. That's like a, you know, PM, not really for what we do. So, you could see it in the book market like they the skills that people need aren't there, but they're not there not because they don't want to teach people, but because

the the book sellers know that that book won't sell because no one wants to learn that in the first place. It's not fun.

So, that's just the answer's right there. And that's true about not just trading and trading books. It's true with everything. No, nobody wants to hear the real answers. Everybody wants to hear the simple answers. You know, like you go through anything, exercise,

right? Everybody wants I want to lose weight. Well, I I just, you know, everybody wants to just put a shot in like now, right? They don't want to hear, well, change the way you eat, change the way you exercise. That's

boring. You know what I mean? I don't want to deal with that. I just want to get skinny. Okay, give me a shot for crying out loud. I'm telling you right now, I ain't no doctor. All right, I'm

no chemist. I'm telling you right now, in 20 years, these GLP shots, there's going to be side effects that nobody thought of. All right? That nobody came out with. I'm telling you right now, the shortcuts always have side effects. All

right? And in our business, the side effects are losing money. All right? Do things the right way, man. This is a life thing. And Jason, what's that quote you told me?

You get rich by selling things people want that don't need. Somebody gave me that on one of the interviews I did. It was like, you get rich by telling lies to people who want to be lied to.

That's it, right? Yeah. It's much easier to sell a book, how I made a million dollars, than it is on how to be disciplined so that over time you can make like I'm already falling asleep here.

How to lose small on right small. Eli Liy is doing pretty well with their trillion dollar valuation selling their injections, right? I mean, because it's I'm I'm a 24 year old kid. The last thing I want to hear is this gray

bearded dude telling me that, you know, to to build wealth slowly, you know, I mean, who who wants to hear that? But by the time you get to be a gray bearded dude, you look back and you say, "Damn,

I should have listened to that guy." Right? I know I I I do that. You know, when I was 24 years old, I was swinging it around driving my Porsche. Then six months later, I had the sale. You know,

I went through it. I know it. I'm like I say, we all went through it.

No different than anybody else. You know, we're all the same. So, I get it.

But I can only say what I've learned and you could people can either take it or or leave it, you know.

All right. We've we've agreed too much. I think we got to disagree now. So, um, what what do what's, uh, what's a topic or a concept that you guys have found in your podcast that you you do have

different views about and maybe just different approaches about how you address it, but uh, does something come to mind and maybe Jason will start with you. Is there something you kind of uh, disagree uh, with on Matt uh, with Matt

on that comes to mind? He's trying to break us up, Jason. I don't know. I find a lot of disagreements from the big picture point of view. Right. Right. We disagree because we trade differently, right?

Right. So, like we just talked about his sizing. The way he sizes is different than the way I size. But that's because the way I size is a function a of me and b my process or I would say a my process

which is then a function of me. Whereas the way he sizes is a function of his process. Right? Like I was saying, one is the other. How I get out is based on what my process is on how I get in. How

I size is based on that. And it's the same thing with he. I agree in principle with the how he's coming to that conclusion, but his conclusion is different than the conclusion I come to.

Fair enough. You know, I I think this uptrend is perfect as an example where we I don't want to say necessarily just disagree, but where we're at odds in a certain cases, you know, about a month was three four weeks ago, you know,

after we were talking all this AI stuff. I just like, oh man, I'm way underexposed and like these things by I should have had more. And then like just a a couple days ago, I was talking to Jason. I was like, "Man, Jason, when you

had that MU news failure you spoke about like peak day, I should have cut back like a lot more. I had too much." And and it's just again, it just goes back to the system, right? We were saying

that's when we first started talking like a combination of these two ideas would be like an optimal way to trade everything. But again, it's we have our own process. It's hard. So, it's not so much like I think any two traders will

agree. If you if you read the market wizard series, all the traders have the same core principles, all vastly different strategy. No one is saying like keep averaging down until you finally get to the low. Like no one no

one's taking that angle, right? Everyone is a risk management, you know, cut your losses. Like that that's the consistent type of stuff. Some will do it differently, but I think that's like a good example of how in real time, you

know, we could both make money over a couple of months, but like oh man, like you know, Jason, like he said, I should have had more and because I'm a little more aggressive and then after on this past week, I'm saying oh why the like I

I backed off. Why didn't I back off like way more than I did when I saw like even subtle signs? I should have I should have been more at it. And I think that's like a perfect example, you know.

Yeah. Perfect. Yeah. So, I don't think it's more about it's not so much disagreement, it's just different methods, but that that's what I kind of truthfully. This has all been new to me, okay, since I became this like public figure on YouTube and all

this stuff. I never really spoke with people about this stuff. I did my thing and I I lived my life. So, it's all been very new and very interesting to me. And that's kind of why I liked getting

together with Matt because it's very interesting to me this whole thing of hey totally different ideas totally different processes but at the core of it it's the same and that's why I was saying before it's not just trading it's everything

there's no difference to success in trading and success in life I I was speaking to this doctor yesterday who was asking me about, you know, what I'm doing about my health and I I I went into this whole

thing because just recently I changed the way I do everything and I changed the way that I'm eating and I've had to become ridiculous about it, right? In order to do it. And she's like, you know, it's a little over the top. I was

like, okay, but this is what I've learned. You know, for me to be successful in something, I have to be extremely disciplined.

Yeah. To get there. All right. as a trader. That's what finally got me to a place where I was successful as a trader was I had to become extremely disciplined to what I'm doing. So now I'm going from

being a sugar addict, okay, a very unhealthy person and I'm trying to become a healthy person. So therefore, I'm becoming extremely disciplined about doing that because that's the only way I know how to do it. All right, that's

what's worked. So like I say, it's the same thing for everything in life. How you how are you going to succeed in trading? How do you succeed in anything else? Find something that you have succeeded in in life and see why that

is. How you have you succeeded in your marriage? Great. How? Wasn't because you were lucky. It was because you worked at it, man. You know what I mean? I've been married on the bad side and now on the

good side. And yes, there has to be some compatibility there, just like you have to be compatible with your trading system. But within that, there's still going to be some volatility and there's still going to be some bumps in the

roads and you're going to have to get through those. Okay. And that that's Jason at at marriage counseling. You know, there's been some volatility in our marriage.

Yeah. Well, I'm just saying like you have to get through that and and you have to have a process for getting through that and you have to be open and you have to be honest. It's the same thing with trading. What else have you

been successful in? I was successful as a baseball player. Okay. How, you know, think about that. Those are the things that didn't get. You weren't born a great baseball player. You might have been born a a good athlete, but you

still had to work on your baseball. It's the same exact thing. There's no difference. Buying something that you've been successful in or that somebody else has been successful in and apply those same principles to approaching trading.

You're not just going to walk into this and start swinging the bat and start hitting home runs. Okay? I promise you.

Well, you know, that's a perfect Pete Rose is one of the alltime I think he's the all-time hit leader for the MLB. And he he popularized the the concept of going to look at the tapes and figure out exactly where the more the most

likely place that the ball would come down, you know, for the different batter, different pitchers. And that's how I mean, he had to be obsessive about it. I was actually talking to my brother-in-law recently about, you know, A-Rod with the Yankees about how he was

so obsessive. It's like after every game, he'd go home and he'd rewatch the game two times. Like that's not a normal thing to do. But then I can't hit homers like A-Rod. At least I don't think I can. But uh it's just this it carries

over through everything. I agree, Jason. Yeah, it's all it's it's all just because people get this thing like it's so accessible for you.

It's so easy to open an account. You can't just walk into a major league ballpark and see if you're going to be a home run hitter, right?

But you can open up an account in five minutes. And I am a professional trader.

you can do exactly what I'm doing within five minutes. Okay? So, just because it's so easily accessible does not mean that it's easily mastered, right? And I think people confuse those two things because it's so easy to get into the

game that it can be easy to do. Well, no. Excellent. And um just because I can see people uh asking this question in their heads already and just to clarify um we've mentioned news failures a few times uh so far um Jason would you mind

uh just giving a general definition of that maybe some recent examples like we talked about the MU earnings um and then Matt I'd love to hear kind of how you've taken that concept a little bit because it's not it's not classic can slim right

but it's part of learning different styles and I know throughout your career you know you've learned how market market makers um act you and that translates to how you approach um a stock going into a pivot you might you

know you're you're recognizant you're you're observant of that um so yeah Jason would you mind kind of explaining that concept for everybody so let's start with this Matt said earlier you want to figure out when you're in an

uptrend or a downtrend right I like to look at it as are you in a bull market or a bare market and clearly you want to be long bull markets and short bare markets okay obvious way that I see

What is a bull market? And it's not the way I see it. This was stated by people in the market wizards books. You hear it all the time. But what is a bull market?

A bull market is one that goes up a lot on good news and does not go down very much on bad news, fights off bad news.

That's a bull market. Okay. So I am trying to catch market turns. So it's going from a bare market to a bull market. So what am I looking for?

I'm looking for a market that no longer goes down on bad news. If a bare market is going to go down a lot on bad news, all right. Well, now bad news comes out.

And not only doesn't it go down a lot, it goes up. Why does it go up? Didn't everybody see the news? Of course they saw the news.

We got the whole world watching all these news things every day, right? Um it's because in my view, everybody's already short. is combination of those two things, right?

Um, so we're now switching from bare phase to bullphase, not definitely, but we're getting a sign that the odds could be that we are now switching. Therefore, the riskreward of the trade changes, right? So, what's an example? I think the best

example that I can remember recently was the low of the 2022 bare market. You have to pay attention to what was the narrative. What was the narrative that was driving what the market was doing? 2022, the market started going

down because the Fed was raising rates. The Fed was raising rates because inflation was going higher. That was the story. Every time an inflation number came out, the market would go down.

Every time the Fed would raise rates again, the market would go down. That was what was going on. You have to be able to figure that out, which is not very hard to figure out. If I could do

it, you could do it. Okay. Um, but that's what was going on. So, what happened in October of 2022, we had a CPI number come out that was not only higher than what was expected, it was also the highest CPI number all

the way up until that point. So if the narrative was higher inflation leading to higher rates leading to lower stock market then clearly a higher thanex expected number should have been very bearish for the stock market and it was.

The market opened down it went down a lot. By the close of that day the market closed up.

This was the driving narrative of why the market was going down. It could no longer make the market go down anymore.

That was the exact bottom day of the stock market. Okay, that is news failure. And people come to me all the time. Is this news failure? Because this is a danger. Again, getting back to the psychology and the discipline. Now all

of a sudden you're trying to force news failure. Is this news failure? Well, you can say this uh you know this ISM number was kind of bullish and the market went down. Is that news failure? I always say

if you have to ask then it's not. It should be obvious. We're talking about major, at least in my position, major market turns. They only happen once in a while. Okay? A major market turn doesn't happen every day. All right? Lucky if it

happens every six months to a year, right? So, if you have to ask, then it probably isn't. It should be obvious.

What was the driving narrative? Okay? And was that just confirmed by the news? And therefore, how did the market react to it? Right? Why was oil going up?

Because of the war with Iran. Obvious. All right. If the war with Iran news gets worse and oil can no longer go up, there's your news failure. There was one on April 2nd with the stock market. Why was the stock market going down in

March? Because the war with Iran was causing this oil issue. The oil issue was causing the potential for an inflation issue. The inflation issue was causing a potential for an interest rate issue, which then caused a potential for a stock market

issue. Okay, there it is. Pretty simple. Well, on April 2nd, oil was up over 10%.

The stock market closed up that day. That was the bottom of that market. Now, does that mean that I knew that the market was going to go from April 2nd and do what it did over the course of

April, May? No. Of course, I had no idea. If I did know that, then hey, we wouldn't even gonna be sitting here because I'd be on my boat right now. You know what I mean? Um sitting in Monaco

or going to the casinos blowing a whole bunch of money, right? Um but my point being, it gave you the sign that was the news failure, right? Um the market is no longer reacting to this horrible news in

a bad way. So therefore, the odds have changed. Did it mean that that had to be the bottom? No, it didn't. But it means again it's a good riskreward bet that it that it was excellent. And uh Matt like uh what are

your observations about the news failure? Is it something you're incorporating a little bit more? How do you think about it?

Yeah. So I've been thinking about this a lot actually just this past week where because you know we talk a lot about relative strength which again I get the the question relative strength is not the RSI indicator. Relative strength is

comparative. So the stock is strong vers stronger than the index. It's not the momentum oscillator. That's always a common misconception, but I was just thinking, you know, applied correctly, relative strength off of the bottom, which we know everyone's looking for

these leaders, is the concept of news failure, but it's applied to price. So the, you know, basically you're looking for an index that is weak. For example, this past week, all the AI stocks got now, what day today here or July, I know

this be after July 8th. So the past week has been a massive selloff here in all these these AI names. And every day the markets opened up, they were already to the downside. Today was the first day where there's oil in news. The S&P is

underperforming the triple Q's. The triple Q's are doing a bit better and almost all of my A stocks, AI stocks are already positive. That was the same stuff we saw back in March. So, it's not news failure, but it's um I guess it's

it's I guess price failure sounds wrong, but it's index failure. So, the indexes are weaker and these stocks are stronger. They're already positive.

Usually, that points to accumulation. It's not a buy by itself. It's something that I I watch super close. But, you know, you mentioned before, you know, how does as a market maker influence your breakouts or when when you do what?

Well, that's why at the beginning of a trend breakouts work because you have this coiling spring, right? The market's been weak. It's been weak. The stocks don't go down. They're not going down simply because someone's accumulating them because they're all tied with this

passive index investing. They've always been, but now even more so. So, if they don't fall, it's because someone's purposely going in to buy when the market is weak. Who would do that unless they had a really strong view of this

stock and they're not going to be selling it in two days. if if that is the case. And so then after when the when the the market improves and everyone's worried, well, of course the breakouts work because everyone who

wanted to sell is already sold and the guy who bought it all is not looking to go and sell it now because he had to buy it in the midst of all this uncertainty.

So that's why the breakouts work early on. And relative strength is basically another form of news failure, which again doesn't guarantee, but you stack the odds. Like if there's positive relative strength over one week, two weeks, and then the financial crisis

hits, well, the stocks are going to break down anyways because that buyer will be overwhelmed and the future turned out differently. But you're stacking the deck. If the market does, you know, hold itself in and find whatever reason to rally, well, if the

stock didn't fall when the market fell 3%, if the market goes up two or 3%, I bet you it goes up a lot more than the market because it's already it's already been under accumulation. And everyone else is noticing that, too. So

everyone's kind of charging to the same names, the smarter investors and those who are are apparent. So again really similar like applied differently but like underlying mechanism is is there's a lot of similarities and overlap.

Perfect. And and oh by the way and again I don't conclude anything until the market closes, right? Intraday moves can fool us a lot about what what we're saying.

But to Matt's point of the NASDAQ's leading today, right? Well, we've been going through this big rotation where people are getting out theoretically of these stocks and getting into more Dow Russell type of stuff. We have seen that, right?

Guess what? The Dow is now the most crowded thing on Coot there is. Okay.

But we are now seeing today the NASDAQ starter before him. Oh, by the way, on a day when the Cosby was down over 5%. It costs me being as I've been saying calling it the the mothership of this AI trade the thing to

watch to to give you a clue as to what's going on right so that in a way is if we in fact close like this today in a way news failure the Cosby Py was down again the market is weak the NASDAQ is the

more volatile thing it's what the narrative has been doing right that this whole switching out of those Why isn't the Nazic the weakest thing today? Can you explain to me why? Is there some other reason? I don't think that there

is. You know, this may be, and again, there's never a guarantee. I'll say it every time, but this may be the sign that this rotation is now done and going back. The positioning is showing that's what it should be, right? The the the