PRO Trader Reveals Super Simple Trading Strategy (How The Markets Really Move)

Welcome everyone back to Chart Fanatics, the Go to channel for all of your best strategy and concept breakdowns with the very best traders in the world. Talking of which, today we have the honor of welcoming back. We've done a podcast episode and everyone was requesting the strategy. The strategy that is so easy that a child could use it. Well, today you get to see that strategy firsthand with the man himself. The founder of DND Capital, a traditional prop firm here in the UK is the one and only Rajan Da.

Thanks for having me. I had to come back, Riz, after all of those questions I was getting bombarded.

I can imagine, I can imagine it wasn't my fault. I honestly thought that we to fair we went into it but obviously there's no charts.

Yeah.

So it's hard to visualize. I think people wanted the charts. So here we are.

I fully blame you for that. It was all about the title but now it's all good. I'm happy to come and explain.

Well, people really enjoyed that episode. We got to talk about your journey and the common practices of a professional trader and someone who's again leads, leading the way in terms of UK prop trading as well. But today we're going to go into that strategy. So where's the best place to begin?

I think if I just explain the ethos and how it all began. So obviously you guys know that I've done the STA stuff, we've had Axel on and all that. So I was teaching at the London School of Economics for the sta, so I was kind of like the teaching assistant. I covered some subjects like GAN theory and stuff. But what was really good about it was I got to watch all of the lectures over and over and over again. Probably like eight or nine cycles of this at lse. So I got to know all of the lecturers like you know, Clive Lambert, Jeremy Duplessis, you know, all of all of these guys who are top in the, in their field. And obviously that helped me quite a lot as I was going through it. But one subject that really picked me up was the market profile subject. Now I did explain that like I am a statistical analyst but I use technical analysis. But the fact that it went through market auctions was, was a key thing for me. So if we can break this down to a simplest form, which is what I like to do all of the time, imagine we're going to a car auction or an auction for a house. Essentially somebody froze in a price, right? And then they bid it up, bid it down, you know, then Go through it. That's exactly the way that I see the markets every single day. And going back to, you know, the rice traders in Japan and you know, how Steve Neeson's book candlestick patterns came about and all of this kind of stuff, it was literally that, like the market traders used to go there and you know, even today there's a price discovery. That price discovery mechanism is, is how genuinely I trade every single day. So that was kind of really what I wanted to explain.

Love that. I love that. I'm excited and I know everyone at home is as well. And how visual are we going to get today?

Yeah, no, to be honest, I want to explain what, what it looks like on a, on a, on the whiteboard and then bring it up to the charts a little bit later because I think that the, visually it makes the most sense, like to, to kind draw it out and, and kind of see how we go. So let's, let's get going with that. All right, so what I'll do is I'll start with just obviously, you know, if we look at a daily candlestick, first of all. Okay. And I'm not gonna, gonna make this super basic for, for everyone because I know everybody's going to be able to find out what candlestick is. But obviously you've got, you've got the low of the day. Yeah. You've got the high of the day. And then this here is the main body where you've got the opening and closing prices. So say this is an up candle and, and it's up for the day. You've got the open here and then you've got the close here. Yeah. So literally, I look at a daily candle as being my most important information. The data in the daily candle is what I really need to know. Now if the open here and the closes here, and let's say we're drawing a line graph, it's going to do something like this all day to get to that point. That's what that line graph is going to do to give us this information for the candlestick. But it's. This information in here is where my trades are going to be placed. But I use the information of yesterday's auction and the current price action to make those decisions. So as, as I get this information every day, if something rejects a high or rejects a low, that's going to be really, really important for me. So if, again, if we look at this, I really look at this really simply, like milk, handbags, shoes, sugar, whatever you're going in the shops in the way inflation is now, let's say like in America they're having the issues with eggs or whatever. If obviously we're having issues with supply, we're going to get. Auction is going to get higher throughout the day. You know, orange juice at the moment, what was going on, it sold off very heavily. We were really, really high at the point where the prices are too high, people are going to start to produce too much more and then supply is going to kick into the market and then it's going to sell off. Right. Essentially every single day. This is on my mind. And that's the, that's the bare bones in the start of the strategy. The actual strategy is even simpler than that. So I just wanted to explain.

This is on the daily candle, right?

This would be a daily candle and this, this gives me my ideas for the following day. So like nine times out of 10 and I'll probably say, yeah, say let's maybe put this down to 80% of the time. If the previous day is long. I'm actually looking for longs the day after. I'm not really. I'm always going with the flow of what the auction is telling me. I'm very rarely looking for mean reversion strategies or something like that unless it's a mean reversion strategy in a larger underlying trend. So I'm always looking at this sentiment. Where is this auction going from the day, the week and the month? I'm always thinking about for my next day trade.

So you'll be looking at the bigger picture.

Yeah, I do look at the bigger picture, but most, most of the time I'll draw down into yesterday's price action. Yeah. So now we've got this out the way in regards to what the daily sentiment means and what the actual candle means. We then look at, let's say today, for example, after yesterday sentiment was really poor in the S&P 500. Yesterday we had a huge sell off, isn't it by the end of the day? So I'm then going to look at what Europe is telling me, what's going on with the data. You know, we've got inflation data tomorrow and stuff like that. Well, with that, all that new information that I've got coming into the session after a big sell off day yesterday, are we gapping down today? Is the auction starting lower? You see what I mean? So then there's always. This is the first clue. The first clue for me is like yesterday, okay, we had a bearish auction today our sentiment is already starting really poor. Where Are all of the big stocks opening up for the session? Where are the first trades? And that's a huge advantage of having the pre market data that we get. We get pre and post market data so we can watch the ticket, snicker tape and the flow of all of this before the market opens to get ready for the market open to see what the feel is. So yesterday I was trading Google, I had a Google short I believe and I won the trade. But as I was leading into the session I could see every time I was getting bid up there was a huge seller in there and it was coming down. And then like basically even prior to the open because I watch it like very, very carefully, I was seeing gaps down, gaps down into, into the. And you know I was sitting there thinking that sometimes this is like, this is where the gremlins, the trading gremlins get your thing if I enter that pre market or you won it by the time the market opened. You know I could have done that but I obviously waited and it worked out fine for me yesterday. But that all came from the auction.

When you say the auction, is that at the market open or is that just throughout as well?

Yeah, so the, I will look at it in most trends. So like the, let's say for example we're heading into Europe US Open. I'll look at the European one first and see how it goes. And because we've got the futures markets as well, we can look at 24 hour charts and stuff leading into it. So, so I will take that into account as I'm heading into the to US Open. But I do only really trade for the first hour of the day.

Incredible.

Yeah.

So is that part of the strategy as well?

Yeah, so, so let's, let's then simplify it again because obviously that's, that's what I said. A five year old could do it. Right. So I'm going to use all the colors. So, so essentially because we're going down at the moment, I'm going to do it in a downtrend. Right?

Yeah.

So if we've got like this nice wave pattern down and then all of a sudden you know we got, we got this into heavy of course in the past I'm going to take, I'm going to take a look at the massive support and resistance levels and round numbers. I will, I will take that into account. But we often see them break more often than not. So like Tesla have had a massive level recently on the longer term charts, the weekly charts and stuff but it crashed through Yesterday, you know, we were down 11%. So then we've got this. So let's just say that this is the price. Okay. Then what I've got running for it are like moving averages, but mainly because I don't really use them for, for indicators, I just use them to smooth out the trend. So if something on my two time frames, which are my daily and five minute, if something's moving below the moving averages, I'm only shorting. Yeah.

So you're looking at daily and five.

Yeah.

So daily is your sort of bigger.

That's my anchor chart. Yeah, the bigger picture chart. Yeah. 100 and then. And the five bit is where I trade.

Five minutes. Where you trade?

Yeah.

Anything in between that you look out just, it's just from daily down to five.

I tell you why, why I do that because obviously I use the gaps. So if, if the stock market closes at a significant low or something like that, I don't want all that muddled up data that comes in, everything in between. I want to know where the market took it at the close and where the market's going to bring it at the open. So that stuff in between I actually don't even want to really know about. Yeah, because, because that sentiment, that adds to the sentiment for me. So, so I think it's beneficial because.

Do you feel like a lot of people, they hear top down analysis and they believe that they have to go through each time frame a lot of the time creating conflicting sort of ideas and.

Exactly that. I think that if I was trading a five minute chart and I was looking at monthly and weekly levels, I could easily win a trade within that parameter. So I, even even though the monthly level is there or the weekly levels there, the trade that I'm looking for is generally about like 1 or $2 difference in the price most of the time. If it's Tesla and Meta, they're high beta, so they'll be more than that, they'll be five or six dollars. But that's not going to make a lot of difference to that monthly level. Most of the time when you're testing a monthly level or a week level or trade for it anyway to come back and close above and I'll be winning the trade in that portion. So that's why it doesn't make a difference to me.

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So going back to this, right, so we've got the moving average which is in the purple. We've got the price data that would.

Be the red moving average wise.

So normally like depending on the time frame it will be between a 50 and a 21. So it's quite short. It's a short moving average because I'm a day trader so I trade in and out quite quickly. So now we've got this auction. So this auction, right. It looks, it looks really simple when it's laid out like that. But you know, throwing in what I think about that level there is really interesting when you get this because obviously you've come in, the prices stopped there, you've got an area of congestion here and it's come back to test it before we go down. Yeah, that's the auction area in theory.

Okay.

Okay. So we're flowing down, we've got the auction area now. Anything that kind of comes into there and then we get a bearish candle pattern down. I mean when I said it's that simple, it really is. So this, this there, the chart on the daily often mimics the five minute chart. For me to take a trade they normally have to look quite similar. If, if the, the daily chart is looking like this, but the 5 minute chart is looking like this. I'm not sure, I'm actually not trading that.

Okay.

I'm only trading it if it's got the same kind of, you know, 45 degree angles on the way down. I'm trying to match them as much as possible because when we say like swim with the tide. Yeah, that's what I mean.

I'm only ever saved the price dailies like this. Five minute is like this.

Yeah.

And then within your time window it starts to then do the 45 degree. Is that when it's then in place?

Correct? Yeah, because then the thing is is that as well, if I change the colors on this, I'm going to reverse them is going to happen with that moving average. Right. And then it will start going like that. So then when this price starts to catch up and get underneath the moving average, that's when I'm looking at that trade. Okay. So so the, the indicator isn't an indicator for me to take a trade, it's just an indicator for me to make sure look I'm on the right side of the tide, both directions on the daily and the five minute.

Yeah. So you want that correlation between the two correct.

And then like bringing this all back to how it comes around with the auction is because we get data throughout the day, we get price earnings data, there may be some news, you know, things like this. Like Cisco Systems had had data last night post market. This is a picture that's evolving. So this week obviously we've got the CPI coming up on Wednesday and then on Friday we've got Michigan inflation expectations. Now Michigan inflation expectations on every calendar is normally quite low on the, on the significance. But last time it came out, we saw one hell of a drop because it came in really high. So as this information kicks, that's what that auction is going to do for us. If we see all of a sudden all of the MAG7 dip below all of the moving averages when the underlying trends are going down anyway, we're looking to catch those bearish candle patterns that look a little bit like that in and across. Right. So it is really simple. And when I mean bearish candle patterns, we could be looking at shooting star formations, bearish engulfing candles, anything that can take the price into an underlying trend.

What you say is less so about the pattern itself in terms of the terminology used or how it's presented. It's the. So I think that's where a lot of people get caught up. They focus on that.

Yeah.

When in reality it's just what that represents.

Yeah. So we call it the candle matrix. So like, like I said to you in the last podcast, when you do this so often you're like looking at a 1 minute chart or a 5 minute chart and you can add that puzzle together to make up what a 10 minute chart is doing or what an hourly chart is doing. You don't, after a while you don't, you don't need that stuff. So essentially if we're looking at the, the candlestick pattern itself. So let's say that there is the up candle that's coming across and let's use this one for the down candle. We've then got this and a small rejection to the upside. Yeah. Literally. Right. If this down candle breaks the low of the other one, you know, that's enough for me. Something, something as simple as what time.

Frame would that be?

That would be on my trading time frame, like the five okay.

From that, you know, with your experience on the one minute, that's a breaker structure.

Exactly right.

Without having to go there and get involved in all those emotions and then sort of messes.

Yeah. And then you know, even, even breaking it down so everybody understands it a bit more because it's such a fluid kind of trading exercise. Like, you know, my stops, you know, are basically in. Around the candle structure high.

Yes.

So then I'm, you know, I always go for positive expectancy. So I always go for two to one on every single trade that I'm in. So this is the first part. The whole the who part of that is that let's see how we can boost our odds in our favor. So if we're looking at a market like Tesla that's just taking a huge dive at the moment, it's not going to happen forever. But if it's taking a huge dive at the moment, on the daily charts. Right, on the five minute charts, it's still trending down in that. We then come back in to test what we call the value area or the area of congestion that we're coming in. What's the auction area? If as long as we're under there and we're getting some bearish candle patterns, I'm good.

So just to be clear, in terms of the auction, is the auction everywhere really? In terms of every candle. But the auction area is where it's as you say, most congested, meaning the area that seems to be the mean, the average of where price action is interacted for that day or whatever time frame you're on.

Yeah, correct. So if we rub this out for a second, for those of the people in the world that may not have seen another chart type because everybody focuses on candlestick patterns. Right? Yeah. So with market profile. Right. So like what, what we do with market profile, it goes A, A, A, A, A, A, A, whatever. Like that, Right. For the first, for the first half and like for the first set of trades. Right. Then what will happen is on, depending on your designated time frame, would normally do this for half an hour. Okay. If the price goes up from where A finishes. So let's say the last, let's say for this period for five minutes. Yeah, that's where it ends. B will be here. B, B, B. And if it breaks out, B will be up there. Okay.

Okay.

Then let's say B finishes here and it stops at this. It will be then C, C, C, C, C, like that. And then it will carry on. D, D, D, D like that. So let's say this happens. Yeah. And then let's kick in E, E, E, like that. And let's say the price finishes there for that. This area here is the time where price spent the most amount of time. Yes, yes. So that price there is where the price will spend the most amount of time. That's effectively the value area. If we were looking at this in chart form, it then does something like this. It goes all the way up there, then it settles down there. And that's what the chart would look like with this particular price action. That's an auction. We started the day lows. Market went up, up, up. It found a high. It settled in around the middle.

Yeah.

So the auction area is this. This is the congestion area. Is this. So that's.

Would these be like. Would you be seeing orders here? Like numbers and all correct?

Because like with a footprint chant, they actually write the orders in the numbers in here. How many. How many longs and how many shorts are here? Now, as an equities trader, it's a big skill, but you can obviously watch the tape and you can watch the order book and you could see, let's say, for example, this is like 500 or something like that. In spy, you could see like a lot of people coming in at 500 or whatever. There's a lot of orders there automatically. This will be the volume profile area and it will be the area in which the participants in the market. Market will place the most amount of trades. Yeah. And it will become a magnet. That's why support and resistance levels exist. That's the whole point of them, you know, is it gets there. There's going to be a reaction there because there's the most amount of orders there. So in my mind, then, if we're long on spy, if we're using this as an example for spy, and we're talking about the level of 600 at the moment, if we're long and we're trading above 600, this has happened at 600. Right. As long as we're above 600 and the trend's long on both time frames, I'm going in that long direction because all I've done is just stack those odds, get that positive expectancy, that edge is slightly in my favor. That's all I'm trying to do. Tip that. Even if it's 5%, 1%, 2%, that's all I'm trying to do.

And really what you're doing as well based on this is your. Are you scalping? Would you say day trade?

Do you know What? It's actually not, not as much of a scalpers as some of the other guys like Lance, etc, all of those guys. I take one trade a day. So normally if, if my stop on something like Google or whatever it is is like 60 cents, I'm normally aiming for $1 20. So that could probably take about, on average my trades last about four to like eight or nine minutes. So they're not very long.

I'd say scalp.

Yeah, yeah. If that's a scalp, that's a scalp. But I've got another trader like in our trading room, like you know, who trades like literally like 10 cent stops to 40 cent targets like a lot all day. Exactly. So as a scalper, I know it's.

So interesting and I think it's a really great point actually. It's like perspective.

Yeah.

Right. You know, someone might sit there and say scalping doesn't work. I had that recently, to be fair, I guess. And a lot of people get annoyed when in reality, what I've noticed, and you really see this when you go into the more professional picture is that people do have very strong opinions.

Yeah.

More so because of what's worked for them.

Yeah.

And it's not that they, sometimes they do say like it can't work. They'll say, let's say like scalping can't work. But they might be referring to scalping like that, like seconds while, you know, they, they understand that's you know, minutes or what they were may class as a day trade. And that's where I guess it's not a problem. But it's something to definitely be aware of as a general audience, especially coming into trading, if you're in that sort of beginner intermediate.

I'll bring up something in there because shout out to Lance on your podcast because what he was saying about the technology that you have. Yeah. Also you know that, that practicing your game like when you were speeding up and slowing down the charts and all that. Brilliant. Like we do that. So like he's giving out all our secrets, man. But yeah, we genuinely do that. So what happens is, is that without, with the technology that we have, we trade direct to market. So everything we trade is on an exchange. If we're trading the dax, we're trading on urx. If we're trading copper, we're trading on cme. If we're trading stocks, we're trading on nyse. Right. So we don't have a spread on anything that we trade. A retail trader can't do that, can't scalp. There's no point. There's no trying to enter that game. If you were playing against somebody like me who's got all this technology and there's market access at home. I'm gonna.

When you say scalper, you're talking the second side.

The second, yeah. Because we get in with like 4 or 500 contracts with like Tesla, Google, Apple and all this kind of stuff. A scalper of ours has no spread. The commission's tiny in comparison to a spread. And a commission or broker will charge you. They're getting out 20 ticks later, they, you know, they've made seven, $800 on that. When you're overcoming your spread on that seven, $800 that we've just made, it's pointless. So. So that's why I would probably say maybe there's that misconception saying our scalpers don't work. They work if you've got the right market. Market access.

Yeah, yeah. Like the technology will matter and you know, the infrastructure, you know, maybe even who you're trading with and what. Because as you say, the average retail trader 9 times or 99 times out 100, for example, won't have access to that sort of stuff. Yeah, I love it. But the auction, this is very fascinating. So, yeah, you're looking at that average. You're looking at. So that auction is everywhere.

Yeah.

But the, the main focus of that auction, or say, let's actually break it down, actually that's what came to mind earlier in terms of what's. Why is that area of interest? It's because that is where almost the bidding war is taking place. That is where the, you're going to see between the buyers and sellers, who's in control.

Yeah. So let's look at fair value. So if we're talking about like, you know, Canada Goose jackets or something like that. Right. So, you know, the price of those went up to like a grand or 800 quid or whatever at some point. And then what we then see is like an increased supply. So if, for example, something gets too popular or there's a lot. So with the easiest example of this is gold. Right. So if we're trading with gold and gold is auctioning higher like it is at the moment, as soon as we get close to 3,000 doll, right. The average cost of production is like 920 to $970 an ounce. So they're selling it at 3,000. If they get to 3,000, Newmont, Barrick, all of these Yamana gold, all of these gold companies are going to Produce more because they're making more money at that stage. Right. That's what's going to drive the price down. So that's what we mean by this auction is that if we've got a fair value area where the market thinks it's fair, but also the producers think it's fair and they can make enough sales, that's that fair value area, that auction area for us. That's what we think it is.

I love that. And you know, another prime example. I just used the word, actually.

Yeah.

But prime a few years ago.

Yes.

You know, this supply was so small.

Yeah.

You couldn't get it. So then the prices were so high.

Genius.

So they created obviously huge amount of supply.

Yeah.

Which then the interesting thing is people don't realize it's not the, say, the shops who are buying it, the suppliers who are then ordering it directly. So they're creating this huge order. But then now the supply, the demand is dropped.

Yeah. Because.

But then the supply is so high, so the prices drop with that.

Yeah. And, you know, we, we also, when we got all those questions and stuff that we were getting on YouTube and on our inboxes and all of that, it was really interesting to see that the focus on the psychology versus the focus on the strategy and how that was all working together. This wouldn't work if you didn't have composure and if you didn't let it play out. So in the day, you know, limiting the amount of trades that you've got, making sure you're using the correct money management, this is all part and parcel to it. I still just genuinely feel that. 33. 33, 33. This is potentially the smallest part of what makes this even possible. When I'm sitting there and I'm watching the auction and I'm watching this happen, if it's a day where it doesn't feel like price discovery is going to be made and the auction isn't feeling right, there's no problem. We're not trading for that day. You know, I do try and take what, at least one trade a day because I'm trading around the open. It happens so fast so that the volatility enables me to make my money. Because it's moving so quickly. I need the volatility for this to work for me.

Of course. What would be an instance? What would it look like in terms of. If it's not looking right to you, you know, getting that feeling from the auction?

Well, we've had this recently. So normally when information is coming out. So Trump is a Absolute nightmare for me. And I like the fact that he's inspiring volatility. So don't get me wrong, it gives us more opportunities in the market. But what's happening is he seems to wait for the market open to send out all this stuff. So we've got all of this going on, we've done all our analysis, we've set up the room, all of the traders know sentiment and what everything's going on. And then 10 minutes into the session you get these headlines from Hassit, you get these headlines from the economic advisors, you get these headlines for a defense secretary and all this kind of stuff. And it's either a trade war headline, a Zelensky headline or something like that, or a Russia headline that then flips the auction on its head.

That's where we're going to have problems.

Because you prefer to have a planned trade versus then having to react in the very moment.

Yeah, but think about it. So what I said at the beginning was from the daily charts, the bigger picture, if we're for example, long and we're gapping up and everything's looking all fine and everything's good, my lower term time frame chart, my 5 minute chart is going to start lining up with that and then all of a sudden those headlines come out and it shifts. So then I've not got that syner between the two and that's when I'll step aside, when I don't have, when I'm not going with the tide. I just think there's no point wasting my money.

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If we go back to the. The statement. Yeah, right. That got everyone interested and probably why a lot of people tuned in right now. The strategy that is so easy a child could do it.

Yeah.

Is this why? Because it's essentially rather than looking at all these different confluences and different patterns and different strategies and so on and really in depth layers to it too.

Yeah.

It's just an auction like focus down to the auction.

Yeah. Because people, people then just with all the indicators and the support and resistance levels and the chart patterns, triangles, pennants and then RSI stochastics and all of this stuff, you get lost in what the chart is actually trying to tell you. It's trying to tell you that it's about price. You're forgetting that it's about price and you're more thinking it's about indicators or about chart patterns and all of this kind of stuff. At the end of the day, that's where the simplistic nature of this comes in. So just grab the. Yeah. Thank you. So if you. Why I say it's so simple and why. You know why I believe it is so simple is because if this is the daily chart. Yeah. So if this is the daily chart going up like this, like the weekly or monthly chart on the S P500, literally on the lower term time frame. If we use this color as a lower term time frame, we're getting this every day. Right. That's what's happening in there every single day. So I'll just finish drawing in that. So they're the intraday waves. The big purple one is the daily waves or the higher time frame waves. All I'm saying and all I'm suggesting for people to do is only trade this side of that curve. Right. I think Lance was talking about when he was trying to keep going long against a short market. Right. And he was saying, was he calling it the right side of the V?

Right. The right side of the V. Yes.

Yeah. This is what I'm saying. So the right side of the voice is always going to be that side of the V, that side of the V, that side of the V. That's when the odds are stacked with you. So that's why I'm saying it's as simple as, you know, so simple. A five year old can do it because if the daily time frame is doing this with all the moving averages and that's how it looks, and if we draw the moving average, it's going to be something like this. Right. Going through it. What I'm trying to say to you is when the five minute is on the right side of the V, you know, know. Happy days. You're with the bias and that's why it is that simple. So trade with your daily on the right side of the visa. You're not trying to catch a, you know, buying, buying the low. Because you're never going to get that right. You know, or you are sometimes, but it's a very low percentage. And I do understand when you get that trade. Right. You've got a bigger risk to reward. Yeah. But it's not worth it because I think psychologically people can't handle only winning 30% of the time but having like 9, 10 to 1.

Yeah.

Like, because then they have to be such a good loser. They're going to be. They'll be losing 70% of the time. They have to be one of the best losers possible. And I think that's quite tough for the human psyche. I think when you get better with your trading, you can do it on the other side of the scale. If you're winning 50% of your trades on this side, I think, you know, at 2 to 1, I think that's where we want to be.

What is your mindset when it comes to risk with this? Because you put, you're already through this process, putting yourself in a much higher probable scenario.

Correct.

So essentially an A plus set up an environment. Yeah. What is your stance when it comes to risk then? Are you using static or are you trying to be more dynamic in these scenarios?

This is probably me being completely open and honest, even with some of my traders that I have at dnd, they're probably better at than I am. I'm not. I'm not as good as Lance was saying and a few others that when you really know something is in your favor, you're doubling up, tripling up, you know, compounding and stuff on it. I'm not good at that. I want an easy life.

Yeah.

So honestly. So I rock up every day with the same risk every single day. And I compound on my risk in the sense that, let's say, for example, I'm in casino money and I've got 20 trades worth of casino money. If that 20 trades of casino money turns up to 40 trades worth of casino money, I'll up the risk. So it's back to 20, but I've trading a higher sum. Okay. So that's the way I manage my risk or very on a quant basis. So I do it with maths rather than on my field, thinking that this, today's the big one, I'm going to go in a bit heavier. The reason why is because like Axel said, I write down every trade that I take and I put a percentage score on my confidence level. And Honestly, I'd say 75% of the time the ones I'm least confident about win. So I'm not trusting that intuition of going bigger when I think it's right. Yeah, I'm not trusting it. I just go with what my statistics are telling me rather than my intuition. That's why I really, really do respect some of the other traders that go big when they feel like they're really right. Because I'm not that guy.

I love that. How important is that though, in terms of knowing yourself, knowing your habits and your traits?

It's good. And you know, when we talk about pros and cons of strategies, I would probably say that's maybe a con of the way I trade because I'm never going to be that guy that has that, you know, 50, 60, 70 grand day. I'm at peace with that now because I've tried to do it and I've lost the money.

But do you have. So in terms of strategy though, do you have people using the exact same strategy who are able to sort of identify that?

Yeah. So I'm going to name drop. So one of my traders is called marta. We actually call it the MARTA method in our trading community. We call it the MARTA Method. So what she does is she trades the same way as me and then she'll drop down to a one minute chart and she'll run her trades as much as possible until the one minute turns. So she can. On the same trade as me where I'll take 2 to 1, she'll sometimes get 5 or 6 to 1 because she'll, she'll like microscopically drop down to a lower time frame and wait until she waits for the reversal candlestick pattern on that time frame to get out. Which means that if we do have great momentum, I'm lying there with my pending orders of my stop loss and my target and I'm just. Then I'm just chilling out. Right. Genuinely, I'm so relaxed when I trade. But. Whereas what she'll do is she'll zone in on this chart and she'll try and push it and push it and push it and be aggressive with it. Yeah. And she's a really good trader. So it suits her. And her composure makes her handle that I don't have that same composure.

How important do you think that is though? To really. Because let's say if she carbon copies you, do you think she would still perform well or do you think it would go against, you know, her sort of personality and therefore could end up not getting positive results because it's not really suited to her. Does that make sense? Because it's the same strategy.

Yeah.

Just managed in a way that suits her.

Correct.

Versus you manage the way that suits you.

Yeah. That's why we always have. Why I can't teach everybody the same way and why they can't teach me the same way because we adapt it to our own characters. Like, you know, I'm very much of a Buddhist mentality of a Buddhist Zen kind of guy. So like I'll meditate every day, I'll chill out every day and you know, so I, you know, I'm not that guy that wants to be staring at a chart for eight, nine hours. And that sounds strange because I love it when somebody's so passionate that they're going to stare at a chart and do all of their learning. I think maybe I've been through that phase. Yeah, of course. And I don't need it in my life. So I like. Because the stress levels and whatever you're going to do is going to be much higher. So I'd rather look trade for the first hour and I'll monitor the market and I'll talk to the guys. But when I'm trading the cortisol levels and the stress levels are high. And then as soon as I finish trading and I'm talking to everybody about their trades in the chat room, I'm just, I'm down on just like, oh look, you know, my level headedness or advice then becomes less, less biased on what's going on in the markets. You know, I can, I'm done now. So like my, you know, what I can say to them has no connotation of what's actually going on. It's 100% objective that.

And should we go through in terms of like trade management, how we're looking using these methods?

Yeah, great. That's a, that's, that's a good point because I think that's, that's actually a big part of being, being a profitable trader actually. The trade management.

Yeah.

So, so let's say for example and I'm just going to draw the candle of what would have happened yesterday. So let's say for example we've got this big bearish candle and we're like kind of closing near the low. So a little bit of a marabozu close right now. This next part I'm just going to draw with a line graph. So let's example. This is yesterday, so let's just write it. So that's yesterday. Yep. And then today we're coming in and we're gapping down here. So this is, this is before we start, we know that the market is gapping from there to there. And let's just call that, let's write dollars and let's say it's 1.2 dollars down. Okay. So 1.2 dollars down. Now from this point I'm then thinking on a really good day and this probably, I would say happens maybe 50% of the time. Our research shows that it's about 64, but it's not at the moment it doesn't work that way. I'm straight away, let's change the color for today's price action. I'm then thinking that look, I'm hoping that we've got a smooth day going down. First of all, right. The first resistance lines that are going to be in my chart are going to be this one. And then I'm also going to have the gap level in there as well. So I've got two levels. That one if we gap fill and we get to there, there that's an auction area because we want to see what happens at yesterday's low. And then if we break through there, we've then got that level there that we can potentially look at this. So this whole area has a chance to either be rejected because the market, you know, hopefully hypothetically at the first trade could start doing this, come back and test there and then go that way. And this would then be my ideal scenario. But then sometimes, obviously this can happen or this can happen. So I'm sure short already in my mind because the daily chart's telling me that I'm sure.

Yes.

And then I've got three or four different scenarios in which an A plus short setup is going to come in for me. So if this doesn't happen, I'm just not bothered with it.

Yeah. So prices continue to sell off without any sort of retest of any of the zones.

Yeah, correct.

You know, stepping away if let's say price just comes in and just stays in that zone. Yeah, you're stepping away.

Now the issue is, is that at this part here, right at the open, it can happen really quick. Quickly, yes, it can happen really, really fast. And that's normally what I'm in. So as soon as we're in 10, 15 seconds into the open, you know, really you're going to see a lot of orders coming like that. And if it gets below here, normally you get like quite a big tank. And so that's why like my stop losses are generally 60, $0.70. Aiming for 1.5 target most of the time, something like that, it happens super fast and it that in context of the range of the day. When I show the charts a little bit later, I'll show you range of the day in stocks. You know, if we're looking at the big ones, Nvidia, Apple, Google, we're talking maybe about $3 ranges, something like that on an average day. So I'm trying to capture like $1 of it, 1.2 dollars of it. So not a lot of that big.

Range would you say because of the speed. Do you at all micromanage or manage your trade once you're in it in terms of break even or anything like that or, or because of the speed? It's not really something that needs to be focused on.

We have a massive debate about this. And this is the good thing about being in a prop trading community because we do studies so there's a couple of traders, so I describe myself as a gap trader. Other ones, we call them candle breakers because they look for the specific candle patterns when they're at 1.75 to 1 most of the time they'll move to their stop to break even. I'm wondering is that emotionally or is it statistically? And then Felicia, who trades with us, she goes through all of her stats meticulously. So does Rob. They've told me categorically from going to 1.75 to 1 if they move their stop to break even, that's statistically viable for me because I'm so close to the open and I'm trading around the gaps. It's not because the whipsaws are so high. I've got a trader called Anton who's doing this at the moment. And while volatility has been so crazy with all these Trump headlines, he's hit break even, I would say over the last seven days, maybe about four times times because it's come down so far. He's got to 1.75 to 1. He's moved his stop to break even. It stopped him out. Some of them go on to win. So statistically, I would only take the data from this moving stop to break evens over 100 or so trades.

Yeah.

I think if we're in a really, I'll call it a dark time like we are now, honestly, man, it's tough. If we're in this time, I would say moving stops to break even isn't a good idea at this present moment in time because of the volatility of the candles. The individual candles are so volatile. It'll stop you out before it goes in your direction.

Yeah.

And that's where we were talking about pros and cons. That's where I see a big con of what I do. We're set up traders, we're systematic traders. We can't all of a sudden think like, you know, today's a really, really good short day and this headlines come out and I'm going to run with it and make a shitload of money. We don't think like that. We trade specific setups every day because we keep a track of the statistics. And I think if you're a new trader or a beginner trader, that's the better place to. To be.

Yeah.

I have one trader called Darren who I just leave him his risk and he decides what he does with his risks every day. He does my head in and he knows that in the chat room, honestly, I'll say to him, are you going rogue again today? And we've got a wall of shame as well. Yeah. If anybody makes mistakes, they go up on the wall of shame. So he's normally on the wall of shame, but literally he doesn't over risk every day. So he does whatever he wants, but he Has a. He has a set risk and he has a set target for the day. If he hits his risk, he walks off. He hits his target, he walks off. Everything in the middle is a chaos. But he's a very, very good trader. He's a profitable trader as well. That's what we were saying about each to their own.

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Now let's get back to the episode. Yeah, definitely. And is there anything more that we need to expand on in terms of strategies, but we'll move on to pros and cons.

I will go to the, to the chart to show you this in a live scenario, of course, a little bit later on. But, but really the only thing that everybody needs to think about is depending on your time frame, the moving average is important. So if we're looking at big macro trades like monthly weeklies, I'm obviously using a lower moving average because I'm day trading, right? So if, for example, I'll draw It so they're both alike and we're still in uptrends for a lot of things. So if we look at a UK stock like Rolls Royce or something, right. So Rolls Royce has gone like really, really smooth like that, that. Right now the moving average that I would want to use might not be the 21 for something like this. It may be the 50 or something like that or something that's a little bit slower because. Because as long as we're trading above that. So let's get this in. So like basically as long as we're trading above that and the moving average is doing this, it's these areas on the weekly or potentially the daily are the ones that I'm looking at the retest areas of the moving average. Because then if this is the monthly, let's say this time frame and I'm going down to the daily, so let's say let's completely change the colors and use the daily in red. So. And I've got that similar type of pattern and like it does something like that. That's the area. Right. That I'm interested in for the long on that lower time frame. Because that's the auction retest before we get the breakout.

Yeah.

So that's why the moving averages have to match the time frames quite nicely. Because, you know, I want the break, the moving average and the breakout. Because the moving average isn't what I'm using to trade. It's making sure that the edge is in my favor on both time frames.

So so literally using for that alignment.

That's it. So, so I'll write down the time frame so this is clear. Right. So this is the month and then this one is the day. So that's what, that's what I would want to see between them. I want to see the month looking really smooth, nice flow, looking like a river swimming in that tide, that direction. Auction, this one is going to be the more volatile one. So when we get that auction area test and that breakout of the auction area test, it's so simple because this here gives our natural stop. Yeah. And then we're looking for that 2 to 1 target to the upside. It's giving you it. The market's giving you where the significant low point is if it rejects that auction.

Would you say this is primarily a strategy for stocks or can it be used elsewhere?

I'll explain why. So again, I agree with some of the other guests that you've had on about the marketplace for FX trading and for the indices. Now they're very efficient Markets. So the FX market and this. Let's go back to the summer before COVID we used to when I was growing up in the FX markets because I used to work as an FX broker selling forwards and options in that we used to see swings in euro dollar and cable of like 120, 150 pips a day. The summer before COVID it dropped down to 30 pips a day. I don't know if anybody remembers that summer of 2019. All of the FX traders, options traders and stuff were leaving the market. I had mates at JP Morgan and stuff going to work for sports betting companies like genuinely like quants going into different, different sectors and stuff because FX was dead. They were, they were just like well what's the point of trading this? And that was that thing about algorithms coming into markets, high frequency trading, coming to market, smoothing out the price data. It's good if you're a trend for follower. So there that volatility traders need it. So if a market starts to smooth out like that, very hard to do something like this. So if you're trading the, the S P500E Minis, right the daily ranges on the E Minis is, is a lot smaller than it is on stocks. So if you're trading the mid to large cap stocks like Tesla will move $10 a day. Yeah, you know that's a lot of alpha to be captured within that $10. Yeah, the DAX I qu.

It'S got enough range in the, in the morning and stuff to, to go through. So on the DAX we're working at like 50 cents of a stop loss on average in terms of the volatility rating with a 1€1 target and it meets that every single day. So that's all right. So fx there's the other thing about, is two way flow, right. So you can buy euro, sell euros, you can buy pound and sell pound every day and then you've got two opposing fight.

Yeah.

With gold you're either buying gold, you're selling gold. That's two variables. With stocks you're either buying apple, selling apples. Two variables. So there's four variables in FX markets. There's two variables in most other markets so I find that hard as well. Lastly, I'm just going to throw this in there. If a currency gets too strong it affects somebody negatively. If a commodity gets too strong, it affects somebody negatively. That doesn't happen with a stock. Yeah, a stock. Everybody's happy if they go up to the moon, right. Everybody's making money. Right. But if the pound goes up too much, then nobody's going to be able to buy our exports. If oil goes up too much, we can't afford to put petrol in our cars. So there's an economic impact to this for currencies and commodities that there isn't in stock.

I love that. So it's really understanding volatility is a huge part of it in terms of, you know, where you can get edge because you're not trying to. I think a lot of people look at say for example, the average pip move on Euro. Let's say if it's 70, 80 pips.

Right.

A lot of people are like, I need to get that 70, 80 pips versus as you mentioned earlier, let's say with stocks, if a stock moves on average $3 in a day for you, you're just trying to see if you can capture a dollar of that, $20 of that, maybe. So by knowing that you have larger ranges on certain assets, it allows you then to have a lot more comfortability of what you're trying to capture. How large is the slice you're trying to capture?

Yeah, correct. And you know, we, we measure this all of the time. I say to a lot of my traders, for the average range of a candle, of a daily candle, don't trade in the top 25% or the bottom 25. You want to be trading in the middle portion of that candle. Because if we do get to extremes.

And that's that option area, you're going.

To make a lot of money.

Yeah.

So that's, that's the point. Know where your trade is, work out what you're looking for from it. Something like this, you know, you've got two moving averages. One on a high time frame, one on a low time frame. If you're trading above them on both, you're going to win. If you're, you know, if you're going long, if you're short, you're trading below them, you only need to win 50% of the time. That's what I say. Like a five year old could do it. Especially if you color them the way I color them. So I color them yellow for down and blue we're up. So if we're under all the yellows we're shorting. If we're above all the blues, we're going long and we're in 50 of the time. And we've proved that, you know, so it really is that simple.

Yeah.

The rest is in the mind. Right?

I love that. I love that. Cool.

Let's go over the pros.

And cons quickly and then pull out the charts for the people. You already mentioned. Some of the cons.

Yeah.

If you want to do the con side, I'll do the pro side.

Okay, cool.

So if we start on the pros, I would say it's the simplicity of that. Right. Is, is a huge pro. It's, it's not something that's difficult. You know, trading above both moving averages.

Yeah.

Trading below both moving averages if you're short. So that's, that's fine. A con for, for me is what I was talking about in terms of the restrictive nature of the risk to reward. Right. So I don't know how, how would we describe that? It's systematic.

So, so you could say limited in its.

In its risk reward. But equally you've also highlighted how depending on the trader.

Yeah.

You could increase it. So like I can't remember the name.

You said Marta.

Marta. That's the Marta method, right?

Yeah.

So they've found a way. But obviously if we're taking exactly how you do it, then yeah. But also on the other side is mechanical rule based. Yeah, I would say.

Yeah, it is, it is very rule based. So this is, this is the thing. So I deal with, with at D&D, we mainly want intermediate traders that have been trading, let's say for two, three years, but haven't managed to turn the corner into going profitable. Because we don't, we do teach beginners. We do have a beginners course and everything. So we teach people who are brand new, but really the ones that have floated around to different funded accountant firms have tried trading with brokers and they're not sure like why they can't turn that corner. We turn that corner for them. We really have help them in terms of the beginners, like we know the trader, like Judd, for example, we want to get them fresh so they learn the good habits as they grow up rather than coming with bad habits, having to turn them if they're new. Like for example, I don't know what it is in people's heads that always want to trade mean reversion against the. They always say, oh, the stock markets are all time highs. I'm going to short it like every single day. People that do that just, I don't understand it. Right. So that, that's, you know, the rule based thing is 100% imperative for a beginner. I would say that. So that's good. In addition, on the con side for this strategy, I would probably say for that reason, it probably does take a bit of courage And a bit of bravery. Right. I'd definitely say that. So.

I'd say, because even the cons, just to bear in mind, for the audience as well, the cons aren't saying these are bad, bad things. These are more so things that you have to be aware of. Things that could be a hurdle when trying to learn or try and actually apply this.

Yeah.

So it's not necessarily saying it's bad, it's just more so something to be aware of or in comparison to another strategy could be the bad side, if you will, in comparison to the good. Because I believe every strategy has its own pros and cons and it's actually being aware of them that helps you to understand what you're doing.

Yeah. So the reason why I said actually courage is because something could be going down like Tesla for so long, long. And you know, I have traders in my room have said, how far can that keep going? The thing is, is that, you know, over the last seven or eight days, I've shorted four times and I don't know where it's going to stop. I'm the first person to turn around and say, I don't know where the bloody markets are going to go. I'm just following those rules and keep on trying to go short. And I've won three out of those trades. So, yeah, I've lost one. Absolutely fine. But. But this is it. Like, that's one of the.

Would you say patience is another one? In terms of. In terms of. As you said earlier, there may be times where you have to sit on your hands, especially as we talked about, if the alignment isn't there. Again, you have to sit on your hands. And I know a lot of people would probably. That is a hurdle that some people would struggle with because they're so used to just being active.

Yeah, they're definitely. And then that's why I think that one trade a day or two trades a day is Right. So across our data bank from our traders at D and D. So I go over the reports of every trader every Friday, Friday, and I don't know why. And this is just how it happens. The traders that take three or more trades a day are currently less successful than the ones that take under three trades a day. And I don't know why, I have no clue. Because our strategies are 50. 50. Right. So, you know, we're 50% win rate most of the time. But it just works out that way. The people that over trade, I think it's because the emotion or the fatigue of getting to that point, you know, is, is what makes them lose trades at that point. But on average, our traders who trade under three trades a day are more successful for some reason.

There's an interesting saying that people say is that you can only make, you know, I think it's like two really important high quality decisions a day.

Yeah.

And you know the fact of, because at the end of the day you're trading, you're making, you're trying to make a very strong, informed, high quality decision when you're placing that by yourself.

Yeah.

And therefore, you know, trying to say that you're going to get five high quality decisions.

Yeah.

You know, one, making sure they're high quality when in reality that's very hard to do. Yeah. And then secondly, them being right as well on top of that.

Yeah.

I think that's where it comes from. And I think as you say, like the more trades you take, whether positive, even if, let's say you've taken five and they're all positive so far, the euphoria, the emotion of the positive side is still just as strong and just as dangerous as the negative side.

Right.

And the reality of people being able to, to silence that and be very neutral, no matter how good you are, how experienced you are, you're going to feel great.

Right.

You're going to feel great, especially in the marketplace like this. So I think it's, I think that's where it comes down to is that the level of quality decisions that one can make. I think you, you know, if you meditate, if you look after yourself, maybe you have a chance of increasing that from two, maybe to three. But I don't think there's a, necessarily a way that people can take that to five or six.

Yeah. Because James, who trades in the morning, my business partner, he, he always says to me, like, you know why, you know, you, you need to start up with your trades, you're a good trader, you're making money, just, just trade a little bit more. And one is probably, maybe a lifestyle factor, but like I always say, look, if it's not broke, I'm not changing, I'm making money. So why do, why do I need to do this? I'd rather leverage more money on that one trade a day.

Yeah.

Than take another trade a day and add another bit of risk unit to it. So, yeah, specific times. So this, this great thing about the time window. So in our chat room we do the same 7am session, which is all the people that, like Dax Gold, Copper, like all of those guys, they do the 7am session. Then there's like the low period and stuff, which they do look at the markets, but the chat room obviously goes a little bit more quiet, 11 o' clock and stuff. Then when we get to 2pm, it gets busy again. And then we have swing traders as well.

Yeah.

So Mayan is the one that looks after our swing traders and she trades very similar strategies. They're really, really similar. But I would think this pro on specific time windows is choose the time frame for you where your brain works the best.

Yeah.

So again, it goes back to knowing yourself.

That's true.

I am rubbish in the morning. I don't know. Like you got me here early today. Right.

All of my, the people that I work with, I get going at 10am So I don't book any mentoring coaching sessions until after 10am because it's not.

That's why. Half an hour in. Yeah, exactly.

It's not, it's not. I haven't had a coffee, I haven't had my breakfast. You know, I mean, like I've got. I, I know that I'm not good in the morning.

Yeah.

So this comes actually back to my sports background. When I used to go to the gym, when I was playing sports, I. I was strongest in the afternoon.

Yeah.

If they made us do workouts in the morning, lifting weights or doing sprinting and stuff in the morning, my numbers were down. My. My body clock was really strong at 2, 3 o' clock in the afternoon. Afternoon.

So I think one to add, I just thought of it is you're trading in line.

Yeah.

With the. Well, trading with trend number one.

Yeah.

But also.

As a side note, I won't write it down, but as a side note, you're trading alongside who's in control.

Yeah.

You know, the buyers or sellers. Which is with the trend, essentially.

Yeah, it is, yeah. I only, only ever trade with the trend. I would definitely say that I put down good loser. Right. Because it's hard for humans. You know, they don't, they don't like to.

I'd say the speed as well.

Yeah.

Because that is something that. Yeah, that is something that is a hurdle for a lot of people, I think in terms of being. Especially the level of speed we're talking here.

Yeah. It can be trained. It can definitely be trained.

So would you say this strategy is possible if you don't have that direct market access, your version in terms of the minutes?

I don't think so. About. Yeah, no, because. So in, in a previous life I used to swing trade, so I only Used to swing trade, I used to put it like, like this. So if, if you're trading with a normal traditional broker that's in the UK, like if you've got a 2 to 5 pip spread and you're aiming for 200 points, that's 1%. But if you've got a 2 pip spread and you aim for 20 points at 10%, so that's the way I used to put that. So when I was trading with a traditional broker, I would only swing trade because I was giving up a certain amount of my profits to the spread. It was only 1%. If I used to swing trade, if I was day trading, it would be 10% of the spread of me, me overcoming something. And that was odds. That's the, that's the positive expectancy odds. People don't think about it like that. So we had this quick chat about ftmo, didn't we? Like the fact that, you know, they, they charge you for the challenge, they give you an MT4, MT5, they charge the commissions and the spreads and then they have all the market data. Like for me that's, that's them owning that game. Right. So I wouldn't ever do that because that's a lot to overcome. The odds are not stacked in your favor there. Whereas if you're going direct to market for DAX or on URX or stocks on nys, there's nobody else playing that game against you apart from all the other participants. So I liken this to blackjack. In blackjack, all of the participants play first and then the dealer goes last. Right. That's the way I see ftmo. Poker is a bit like the stock market. You know, everybody's on a bit of a level playing field. Yes, you get charged fees and commissions, but that's, that's neither. Whether you win or lose, it's not.

On top, they just take their fee.

At the very beginning so that those two games, that's the way I see it, poker's a lot fairer than blackjack. There's a small edge to the casino with blackjack, 51%.

So maybe that would be one of the cons in terms of the need for certain technology and access.

Yeah, definitely.

So we.

So would you say that a lot of strategies can be fractal?

Yeah.

So could you take this same concept and do it on a higher time frame?

Yeah, we do.

Then that's the pro side in terms of the fractal nature. So even though they may not be able to scalp as a retail audience, if they don't have that direct access. They could take the same principles and apply it to a higher time frame.

Yeah. So part of making D and D capital and D and D trading school is that like a lot of people, you know, on some of the comments and stuff was like, oh, like, you know, you have to pay to join this place. Right. That's the problem is the infrastructure. So it's costly when it's like a desk fee. So all good, good prop firms, proper prop firms, traditional ones, charger desk.

They do, yeah.

And it's because, you know, getting each trader the market data, getting each trader the platform, getting each trader the new systems, the chat room, the admin, you know, this just is a cost of doing business for us. So like one day, if we get as big as, you know, those guys, Trillium and SB Capital or something like that, we'll probably cut it, to be honest, if we get that big. But the fact is, is that a trader has to come in. And the other thing is, is that it's kind of like putting their balls on the line as well as us.

Yeah.

So we're both in.

You want someone to have some level of risk and then commitment.

Yeah. It's kind of money where your mouth is. But even on top of that is like, I have mentored some traders for free in the past and when they don't come in the same commitment as you, the. The balance isn't in alignment. Because like if, if we think about it this way, if a trader came to me, me and to learn and trade with me. Yeah. And then I trained them for six months and then they pissed off and I never made any money out of them. That's pretty tough, you know.

Yeah, exactly.

So there has to be the same charity. Yeah.

But the thing is though, it's like commitment. I don't care what people say.

Yeah.

Because end of the day, a lot of the time they're saying that 90 of the time because they don't have money. Right. Which is no problem.

Yeah.

At all. But the problem with that is that why are you trying to trade if you don't have money? It's not going to work.

Yeah. Right.

And any business. So, for example, you know, you take any of these richest people in the world, guarantee you they've paid someone for some level of knowledge access, mentorship, guidance, you know, specifically, let's take someone like Elon Musk, for example. Right. We just go to Tesla. I guarantee you he would have paid someone for information around the design of his cars, let's say.

Right. But I did, I went to the sta. You know, I did, I did all of this stuff. So like, it's kind of like paying your dues as well.

I do get it though. I think it really, the mindset stems from the bad actors. So they look at everyone who charges as a bad actor. When in reality, if you have the results, you have the track record, you deserve to be able to charge because you've actually done it. And I think it's fair to say those people who haven't proven themselves, they shouldn't charge because they haven't proven themselves. But the people who have is fair game.

I say, yeah, it's an interesting concept and honestly I would love to, to, to you know, do that like and have a charitable way of doing and that, you know, honestly, they're even in the chat.

That's what this is.

Yeah, you know what, good point. Yeah, fair enough.

That's all the podcast. And this is because that is the, you know, the closest level and the highest level of free education I would say that's pretty much available. And we're getting some of the traders like yourself as well. But it's time for the charts.

Oh yes.

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Now let's get back to the episode. Yeah, so we have the chart and what we're starting with first. We've got Spy.

Yeah, we'll have a go at Spy first because I just think it has been an interesting couple of days. So, so this is essentially what I was talking about just a little bit earlier on on the whiteboard. So my daily chart is obviously showing an extreme downtrend. Like you can, you can see it's pretty solid. On the downside under the moving average looking short and everything. And you, you can see exactly what I mean here. So if I go and pick up a drawing tool. So let's go for a rectangle, this area here. So this is where I, where we were talking about of where it starts. Started and what it actually did at the first part of the auction. So nice. It's brilliant. Right? And then as we got into that motion, if I take an arrow, you can see that right there.

Yeah.

It like this is so clear to see for anyone.

Is this what you're talking about when it comes to speed?

Yeah. So the market auctioned it, sold off, it even tested it again there. So let's just, just if you are really, really fast and I think a few people probably would be, you could catch the test into the low of that auction period. Here comes down that gap.

Is that the gap for the open?

This here? Yeah.

So as we talked about earlier, gap in the open, you then have two levels, correct, one being the gap and then one being the opening level.

Correct. So as soon as we gapped, we went down, found out where the price auction was. It traded within there, came, tested, it shorted. Right. So it was a really, really nice move and this was the better one for me because it came up to test that level again where it was slightly. So we had 1, 2, 3, 4, 5, 6 touches of that level broke down and then it was shorts all the way for the rest of the day. So it goes off the back of this. Obviously, you know, we're sure, we know we're gapping down. Today is going to be an interesting one. You can see my pre market data. We're gapping up. So this is where we have to wait a little while for today's trading because if the auction is going to change to the upside, we would need a whole candle encapsulation on the daily for it to, for it to go long for that candle pattern that I was talking about. So I wouldn't really be taking longs today. I need to find something else like that. So I've got a little watch list which I call like Raj's trading watch list. This one. So it's the Mag 7, right?

Yeah.

So if I'm looking at today, you can see like most of the big firms are all gapping up apart from Apple, right?

Yeah.

So if I was to short and sentiment was going to be short, short. Apple had a really strong bearish day yesterday. We're gapping down between here and there. If we get under there, literally, you know.

This whole zone is one zone.

This whole zone is another zone. So depending on how it reacts at the open, if we gap down and it goes down, I know I've got two areas in which I can look for a short, right? Yeah. If it doesn't, if it goes up, then I'm, I'm either going to sit out or I'm going to wait for the whole candle to be, you know, engulfed to the upside, which it doesn't look like it's going to happen.

Yes, it looks so.

So this is, this is where you've got to work out where you want to trade or not. Like I, I would if we're so far opposing, I wouldn't. If it looks like a really bullish candle that's running away, I would need to wait for another auction type that looks like that before I'd be interested in. And that's going to take a bit of time on a day like today. It probably, probably will. Yeah. So. So I would just go to the F. Dax is the Dax futures. Right. So let's look at the Dax. So like today, look, Dax is in a long trend. Right. It's looking really, really nice and strong. So if I just bring up where the open is. So on the Dax, you know, you really want to be looking at the 7:00am, the 7:00am open there.

Yeah.

You can see it's been a bit of a struggle. It's not been easy. Right. Having said that.

Did it. Right. So that level came in tested where the opening was pushed off. Nice little trade in there. So it's not big. What we're trying to capture isn't big, but it's above the moving average.

Is that something you would look to take?

Yeah.

How would you go about the stop loss in this so that you can get your one to two in that range?

Yeah, let's draw. Let's just actually physically draw it so we can make it as clear as possible. Possible. So on a long trade like as we get in here, I would look for the confirmation of that, that fractal pattern that we were talking about. So this would be that type of a trade. Right. And I don't know if it hit 2 to 1. So let's just go and have a look at what risk to reward that actually managed to get.

Yeah, it would have two to point.

Yeah.

2.54.

Yeah. So it like, look, odds are stacked against you. You've rejected the moving average. You come up auction has started to become positive. This auction area at the open, odds.

Are stacked with you in this case.

Yeah, sorry, correct.

This auction area showed you that look, we dipped below the moving average. It rejected it. It's come above the moving average again, which is the same thing that happened there.

Is this why you say it's as simple that a child can do it?

Yeah.

In terms of looking daily time frame, where are we moving average to help with in terms of, you know, being above that reaction period, being above on that trend and then straight to five minute auction area. As long as they coincide above auction area, you look for your one to two.

Correct. And the two charts look like each other. That was the other thing. So I wanted the daily chart to look up and long like that with a 45 degree angle. I wanted the 5 minute chart to look up and long above the 45 degree angle and then look any long that's above that and any long that's above that. That, that stacks the odds in your favor. Yeah, that's it. So, so when I did say like. Yeah.

So if you were taking just a fractal, you know, just to go into detail in terms of let's say like day trading, swing trading wise.

Yeah.

If we're looking at an auction on a higher time frame, would you say that it's very similar to this one? Like you said, they look very similar. Would you say your auction would be this area just here where you're seeing that inter action?

Correct.

So therefore once you're above, you get the close, let's say on the daily, maybe similar, maybe slightly higher than it is now on the dax. Yeah, that would then be. If we're going fractal, that's where you then look to enter 2 to 1 to the upside. Is that generally what we're looking at?

Yeah, yeah, it's simple.

If I can do it.

Yeah, if you could do it, a 5 year old could do it. Yeah, but. So yeah, I'll run, I'll run right the way through the chart. So like in. Interestingly I know you've got a lot of, you got a lot of crypto guys, right? Yeah, so I've got it in already for crypto. So I'm just going to increase the size of this. This because we have a few people that like crypto. So look, we broke down off that auction, look at how that auction came in.

So auction people could say support resistance.

Yeah.

Auction is kind of just breaking it down into what it actually is. How that support resistance is formed. Why it's support resistance.

It's exactly that. It's why support and resistance in there. So this, this blue level is another one. Look, it's another one that's in there, right?

Yes.

And then. But this was the main one. So if we zoom in, zoom out for like however we get there, I've got another one hanging around and that's.

Probably where we're headed.

This is the thing, like I don't mind if it works or if it doesn't work, but because we're short. Right. I'm only going to take shorts and into that level.

Yes.

So you know, intraday I'm going to look at what's confluencing with the, the higher one and you know, below Moving averages short above moving averages long, just, just like that. And I don't really need the moving averages. I, I just put them there for, for simplicity's sake and just to give people a good idea.

Now you could imagine if you were to overcomplicate.

Right.

And you. Instead of daily in five.

Yeah.

As you've shown, if you were to still have the same mindset but then you're going daily, four hour, one hour, 15.

Yeah.

By adding all those layers it sounds like, you know, on the surface you could look at that and go, that's more information. That's great. But equally, I can very easily find how you would have very strong conflicting biases and by trying to take in all that information by the, the end, fail to execute, especially when you need speed. Yeah, fail to execute because, you know, you could have a daily that looks as you said, actually it's very interesting you said that the daily and the five look similar. I can very easily, even though that's the case, see how the 1 hour, 4 hour could look different.

Yeah, yeah. Because that's the thing, I think being that far apart in the timeframes, it helps you because remember I was saying the daily auction for me, if, when a price opens and closes on a day, day, I'll know when people are going to sleep, how they feel about that market, when they wake up in the morning, what they're going to do with that market. That's key because you know, on a week, for example, at the moment it's also, it's also key because nobody wants to hold risk into the weekend with Trump around.

Of course.

Yes. So, so if you're trading a swing trading time frame and I would do weekly four hours because the weekly is enough information to know how people feel for that for that week. Then going up to even like pension funds and investment funds going even higher, I would go quarterly because if they're high dividend yielding stocks, like how crap is the stock market at the moment? Right. Look at this stock, Altria. It's a high dividend yielding stock.

Yeah.

So a lot of pension funds and stuff are going to want to hold this and you know, not, not being, you know, too silly about it. Why did that hold? It seems so obvious when you know, Right. But this is where we're trading this, we're trading in Altria. And there's also another one, I think it's Johnson and Johnson. Look, they're defensive stocks, they're high yielding, you know, pension funds are looking for somewhere to place their money. This is where in, in times of tough, you know, where we're going to go. And it does the same thing over and over again.

I think one thing we didn't touch on was that I think it might not be important in terms of. I think it is important because I know it is something that you are really tapped into in terms of the fundamentals, as you say, just having that bit of deeper understanding of the yields. For this, for example, how important is that for your strategy as a whole to understand the fundamentals and understand that data? Or would you say that it's helpful, but it's not necessary? It's up to you that statement.

The sentiment on the day for how we feel like the auction is going to go, that is key. So right the way as we lead up to the US Open, we go over where fixed income is. So yields, we go where gold is, we look at the news. So we want to work out how the market is feeling about sentiment today. So we're bullish leading into today's session. Right. But the market is bearish. That gives us a better understanding. So like if the market is generally bearish, but we're bullish today, I'm not going to hold positions for a long time.

Okay.

You know, because we're going to hit a wall somewhere. And also on the downside, if something's sold off so, so heavily and we're nearing levels to the downside. So the, the average pullback that we look at for the S&P 500 since the great financial crisis, the COVID crash and the rate hiking cycle, they've moved anywhere between 50% to the downside to roughly about 17%. So if we're getting near 17%, you know, 20% somewhere around there we've got a box that we use for it. I'm not going to keep going short. If we've got space for shorts, I'll go short. So that sentiment leading up to it, plus that averaging of the statistics of the waves or the moves down gives me a really good indication. But that's why I think giving away strategies for free and stuff, that's why I say to everyone is 33. 33, 33. I could talk about strategies all day. If you don't have the psychology, you don't have the risk management. These are things that we pick up in the community and they need coaching. A trade is not going to be successful just by learning a strategy and they need to understand that. That's why in that video, when we had all those comments some people were writing in There. Oh, look, you missed the point if you're asking him about your strategy. And I do believe that they did miss the point. But, yeah, but it's good to cover it for them anyway because everybody's at different parts of their journey.

No, definitely. I feel like for me, that was a really, really in depth podcast. Into terms of, like, the minds. Not just mindset. When I say mindset, I don't want it to feel like psychology, but more so like the processes, the structure to your trading and the mindset you're meant to bring towards your trading to be profitable. And that's why I was happy with the title myself. But now we've actually seen the strategy as well. And this is one of those strategies. People do ask me, like, riz, do you ever feel inclined to trade, you know, like some of your guests? And I'm like, yeah, this is one of those where I'm like, this sounds great, you know, and, you know, I might do it, I might not. Like, a lot of the time I try not to, simply for the case of, like, otherwise I'll be jumping strategy. Especially with the, the guests I speak to, you know, I'll be jumping strategies a lot. But this is a strategy that I think, you know, as you say, a child could do it. And when we say that, it's not to say a child will do it. It's more so it's very simplistic in its nature. And I remember you saying that as well. Like how you didn't used to be simple. Like you went through the strike struggle of trying to use complex systems, not getting the results.

Yeah.

And it's amazing to see how if you strip it all back, and I always say, as you said, actually, you know, the candle matrix, I love that because I've always said the candles are the language of the markets.

Yeah, right.

And essentially, regardless of what your debate is, whether you think there's an algorithm that moves the market, or whether you think it's buying and selling pressure, or whether you think it's whatever you think in the end it is, buyers or sellers, like, that's all. If it's an algorithm, algorithm, what's the algorithm going to do? It's going to buy or sell.

Yeah, right.

If it's, you know, the buying, selling pressure, obviously it's buying. So if it's supply and demand, if it's. Whatever it is, they're buying and selling. Right. If it's bankers, if it's hedge funds.

Yeah.

They're buying and selling.

Yeah.

And that's essentially Again, this is kind of what the foundation is. That's where we started, right? It's the understanding, the auction.

So I went full circle. So, like, I went down that rabbit hole of footprint charts, price ladders, you know, multi charts and Sierra charts and all this kind of stuff. I went down that rabbit hole. I was a technical analyst and I was good at it. So. But then after understanding and seeing that all for what it is, it took me back to something so stupid and simple. So that doesn't make a difference. Like, the more complex you make it, he go gets involved a little bit more because you're like, oh, I have to be that smart to win? You don't have to be that smart to win. Stupid people are rich.

I love that. That's a great line, Rajan. I really appreciate you being here with us today and really going into this in such depth. And everyone at home. Links for Rajan and DND Capital will be in the description below, so make sure you check those out as well.

Drop a comment of your biggest takeaway.

Any questions? I'm sure Rajan will be happy to answer them as well in the comment section below. Hit subscribe. Hit like and until next time, we've been chart fanatics. Take care.