Breakouts, Home Runs & Exponential Returns · Kristjan Kullamägi

markets speculation and risk this is the chat with traders podcast hosted by aaron field what's good my friends welcome to yet another episode of chat with traders this is number two one two now my guest is someone who several listeners have requested and also the person who stan gluesman made reference to in the previous episode it's swedish swing trader christian kulamagi christian's been trading the u.s equity market full time since 2011 and although he got off to a rocky start he's arrived at a very rare level of trading success i guess you could say christian

is a member of the eight figure club having realized tens of millions in trading profits which is only more impressive given the fact that he's a self-funded independent trader well trader gamer i know christian thinks of it more as a video game nowadays so things we talk about to start with we go back to 2011 and discuss christian's beginnings which includes his origins as a day trader from there we get into how he evolved into a swing trader how he discovered and researched profitable setups and then we do a deep dive into one of his

setups a breakout strategy last of all links to everything mentioned and referenced throughout this episode can be found in the show notes at chatwithtraders.com two one two all right here we go ladies and gents my guest christian kulamagi christian i wanted to ask you first thing uh when did you actually start trading what year was it it was uh in 2011. okay i started investing in 2010. okay and when you started trading did you go like straight into it full time or was it just sort of a bit of a a side hustle it was

uh i i went into it full time pretty much uh from the beginning it was um just um i was uh in the final months of my uh like getting my degree in biomedical laboratory science and then i got into this trading thing and uh it completely took over i i just focused 100 on that so i kind of just dropped out of school just in the end uh to focus on the trading thing so yeah you could say i went all in oh so you didn't even finish your degree no oh wow okay that's

that's a real commitment did you have a part-time job or anything like that at the time yes i actually have a i was working as a security guard like a mall cop or something similar um as uh yeah some part time while i was studying so i had uh options in case the trading stuff wouldn't work out so i had you know security net you know i could you know just finish my degree or i could you know do the security guard work yeah you had a little bit of income is some support yes so

how much money did you start out trading with about 5 000 us dollars was my first attempt that was your first attempt okay so i presume there was probably multiple attempts then yes in the first couple of years i blew up three or four times and i started with the first time i started with 5000 and the other times i had like three three four thousand us dollars something similar how long did it take you to blow up each of those accounts like were they each short-lived or was it just kind of uh small losses

over time just slowly grinding away at your account yeah so the first time it's kind of funny i actually paper traded for a week or two because you know i read around that everyone said you should paper trade in beginning so i paid for traded and i doubled that at my paper trading account in uh in two weeks and then i started uh trading with real money and i was like yeah i'm gonna be rich this is like may 2011. and i i was thinking hey i'll be rich uh by fall uh what happened in

reality i lost most of that money in the first two months then i went back to my security guard uh job and for six months or so saved up money started again with a few thousand three thousand maybe blew up again and uh a few months to six months of intervals and it actually the first one was the shortest but every time i blew up i learned something new i improved a little bit and it took a longer longer between the times to blew up and did it rattle your confidence when you were losing this

money oh yes absolutely absolutely it was a horrible experience that was my life savings at that time i was maybe 21 years old and i had saved up for you know three years so as i understand it today you're you're mostly a swing trader if not entirely a swing trader but when you first got started you were day trading so i'm just curious to hear a little bit about what was your experience like when you were day trading i got into day trading because the people i found on the internet on social media they were

mostly day traders so that's what i did too and that i didn't really know there was any other types of trading and so i thought trading was day trading and in the beginning i really didn't have any method or a system or anything i had no idea i just followed what other people did that i perceived to be good at trading but i really had no con like i didn't really know what else in the beginning what a stop loss was i didn't know position sizing i just went all in on all trades and i

didn't know anything about like trailing stops or like profit taking and what to expect from a certain setup as i in the beginning i really didn't know anything i just did things randomly and it was obviously very stressful and scary were you trading the u.s market right from the get-go or did you experiment on your local market there yes i did start with the us markets i i realized early that's that's where the uh that's where the action is so i never actually bothered with a swedish stock market um at all when it comes to

trading i just focused completely on the u.s markets that's where that's my trading software and all of that it was just u.s markets only i didn't even bother getting anything for the swedish stock market okay so what point did you begin gravitating towards swing trading it took if it was uh maybe a couple of years after it became profitable or maybe a year after i became profitable in 2013 about two years exactly two years after i started trading i realized i looked at a lot of stocks i looked at charts and i actually went through

all this uh stocks in the u.s markets and i realized that the big moves take months weeks and months and years to play out day trading is you know it's it's really hard to catch like a hundred percent move or fifty percent move unless you're lucky and get into one of these micro small cap high flyers really early and you know that have to double on the day but it's it's very hard to catch those so i realized i i and i also found other people on social media that were actually swing trading so i

learned about swing trading and i also read some books where that talked about swing and position trading which is a little bit longer term swing trading so that's how i gravitated into it i realized it's has better risk reward and you're not fighting near your entry all the time in day trading you're always near your entry most of the time but in swing trading if you get a really if you catch a big one you know it's gonna be the stock is gonna be above your stop for a long long time you don't have to

worry about it you don't have to constantly look at look at the stock and monitor it i realized that it's also much more scalable like back then i still had a very small account but i i realized it that you know if my accounts would grow it's easier with a with a bigger account because in day trading especially the types of stocks they traded mostly micro and not micro caps norm yeah micro cap studs micro and small caps they weren't many of them weren't super liquid and even i had some issues with liquid and slippage

and some stocks they traded so that's also something i i realized kind of early that gravitated into swing trading but the process took a couple of years before i went from a 95 day trading to 95 swing trading it wasn't an overnight thing it took it took it took time one step at a time it was very uncomfortable um in the beginning holding stuff overnight because i had been brainwashed with that oh holding stocks overnight is very dangerous you can't control your risk but it's it's not true you can control your risk it's called position

sizing and also if you check out if you check the like the earning states and if you if it happens to be like a biotech company make sure there's no pending data or fda decisions you know it's not that dangerous the iterating is much more hazardous i would say okay it's interesting that well from the sounds of it that you did actually start to see some consistency and some profitability uh day trading before you actually did make that switch across to or eventually switch across to swing trading absolutely i i i i probably made my

first million mostly day trading all right yeah yeah but everything after that has mostly been swing trading so yeah yeah absolutely i was profitable uh consistently profitable for uh for a couple of years before i went uh mostly swing trading obviously it was a hybrid approach for a while there in between okay that really is quite interesting actually i mean if you've made a million dollars day trading and then but you still see bigger opportunities in swing trading you know when you did make that first million dollars how did your mindset towards trading change like

did you did you envision that you would go on as you have done today to make tens of millions of dollars like did you see that as like sort of your your trajectory now like you knew that was coming it was now just a matter of time or did you still have some doubts about how big you could get as a trader yes in the early years when i um in the first few years after i started making money i it was still like i it was still at times hard to believe it since the

first two years when i was mostly losing money it was such a horrible experience like i got scars for life i was constantly depressed and and when i started consistently make money it felt like unreal it's like is this really happening like i can actually make a living off of this is it just pure luck but after a while i realized like okay no i mean it's the same i'm what i'm pretty much doing i'm just trading the same patterns that occur over and over again and if i can you know find the same patterns

that applies to swing trading i i can i can scale it up and uh me and the the way i saw it was i would make the same amount of money but with less effort because day trading is really a lot of effort but the way i didn't maybe really see it scaling up [Music] as like it wasn't really my first priority what i wanted to do was like make the same amount of money but with less less effort uh because i was really i was getting tired of sitting like you know from open to

the close in front of the computer looking for trades when i saw some other people who were swing trading who were mostly doing their entries maybe first hour of the day and then it was just monitoring their positions the rest of the time they really didn't do much the rest of the day or they and uh yeah so that's really what i was after like i'm i'm a lazy person so what can i say gotcha i'd like to know a bit about when you did kind of make that that transition across to more of a

swing trader [Music] like how did you seek out how did you discover the setups that you were going to trade like what was that process like the i'm talking about the research and the studying here to find the sort of patterns that you would go after yeah so the setup ideas i got from from a guy a stockpi that's where i got the step setup idea and i also read a book by william o'neill how to make money in stocks uh and that's where i really got these set up ideas that these you know stocks

move in the same patterns as they have done for a hundred years so what i did i i went into my uh shouting software and pretty much went through every single u.s stock and i looked for those specific patterns that i had uh stumbled upon thanks to the book and that this guy stopped me and i realized wow i mean it's the same patterns like nothing is different it's to say it was the same patterns in the early 1900s and even late 1800s it was the same patterns in the 50s same patterns in the 80s

in the 90s and it's the same patterns now that was maybe what could it be maybe 2015 or something so i realized wow this is if i learned this if i really mastered this these setups like this one setup which is a just breakout setup and the variations of those of that setup i i can really wow like it felt like i had stumbled upon a gold mine really and how did you begin to build confidence in those setups it was a combination of studying the patterns what i did i built the data database in

evernote which is pretty much a note-taking software i took screenshots of all the setups before after uh both on the daily and like the intraday time frames just to look at how what what how does a good setup look like at the start of the move or before the move when it starts breaking out and like a few weeks a few months after like how does it how does it act um and i looked at all these variations and that's how i built the confidence and i started uh trading the setup myself too and i

saw some success and and it felt like i was always improving i was always learning a new variation or you know something something new so that's really how i built the confidence it really like i say on my stream too like everyone should do it whatever setup if you stumble upon a setup and you want to trade it like back test it like like look through like look through hundreds if not thousands of examples of that setup and build a database and go through that database once in a while uh just scroll through it that's

how you memorize this it's so it's all about pattern recognition really trading is all about pattern recognition and you can it could be just purely technical and you can also combine it with fundamentals like i do i also look at theme what's the theme what's the earnings revenues i look at the news overall like what's driving what what's driving the stock so i found some similarities there too it's the same things that have worked for a 100 years really that's how you build the confidence that's how you do it there's no other way well let's

go into this a lot further i'd love to do a deep dive on this particular strategy i mean as i understand it i think there's there's kind of three different setups which are your main types of plays nowadays um i mean we we could go through and we could talk a little bit about each of those setups but i think it would be most beneficial just to pick on this one particular setup and go and go deep on that so before we do just summarize for me the objective of this strategy like what is the

goal here what is it trying to achieve yeah so the simplest of the uh three methods i use is it's just a breakout on the on the daily daily time time frame you really don't need any intraday to look at the intraday time frame for that i usually do i use the 60 min charts too just to get a little bit of a zoomed in view if you look at the stock like any stock that say doubles or triples or quadruples or whatever period of months or years it's pretty much the same patterns you have

a leg higher obviously not every stock moves like this there is but but a lot of them do they they move like stairs okay so let's say you you have a stock or a stair with say 10 10 steps okay let's looks like something it's like any stock that's gone up for three four years so you have a leg higher and then it usually goes sideways or pull backs pulls back and uh many times what happens is the volatility contracts like it gets tighter and then you have the next step higher and the same thing

happens goes sideways or pulls back and it gets uh like builds a range where volatility ideally not always but the volatility usually like the range gets tighter [Music] so our goal is to identify that those stair steps and buy it just as it is about to break out uh into the next uh into the next step obviously you can have different time frames on these uh things you can you know hold them for maybe three to five days or and just settle into strength or you can try to hold for bigger moves uh like even

try to hold through the next several steps uh and maybe use the moving averages like i do the 10 and 20 day moving averages trailing stops and try to go for a bigger move uh do fewer trades that way um or do more trades by just buying breakouts and selling after three the day three or five because that's how they that's how stocks move they move in momentum bursts as uh this guy stopped me where i learned to set up from and you you know and i verified it myself this is really how stocks move

if you identify the right right stocks obviously like abs like momentum is a big thing the stronger the stock the better which is counterintuitive for many people but that that's true uh like the stocks that make the biggest moves are usually that keep doing the biggest moves and i'm talking about like real stocks that go like like mid and large caps mainly uh not these like pump stocks that are really really popular right now these like micro small gaps that go up on total hype and make a 200 move in a day that's not really

the types i i trade even though if i still was a day trader those are the stocks i would trade because those are the ones are the biggest intraday range but just to clarify that that's not really uh what i what i do anymore uh i look for stocks that have look like like this like when i talk about the first leg higher those moves are usually several weeks and sometimes even several months and there's obviously many variations of that but that's uh that's how stocks move pretty much like you can look at any stock

look at tesla that's a perfect perfect stair-step platter and look at look at nio like just take some big flyers big you know some of the leading stocks recently look at something like apple over the years or google obviously those are maybe a bit slower type of movers but it's the same patterns just you can choose to we what uh how fast of a mooc of a stock you want to trade and obviously you want to be in the fastest moving stocks what do you typically do do you hold for that uh kind of initial

burst of momentum and sell after a few days post breakout or do you generally try and write it through a few steps as you describe yes i do it it depends on the stock like if there is um like if a stock has a run up into catalyst like an earnings or or anything a presentation um if it's a very hot stock in a very hot sector um i usually i like my core uh belief like i want to hold stocks for as long as possible i really don't want to sell them until i absolutely

have to or feel like it'll feel like i have to for any any type of reason uh but i usually sell some like the first move higher if you buy a successful breakout that's the most like that that's uh the most predictable part of the move so what i usually i always sell some into that first burst uh to lock in a little bit of profits maybe i sell 20 or 25 or it can vary a lot uh just lock in some profits and and uh now i can now it's a stress-free trade pretty much

even if it would stop me out i i would still worst case scenario break even or maybe even make money depending on how much i move the stop higher but sometimes if it's an earnings are just a few days away and i still buy it because it looks really good um i and if i don't have a big profit padding i really don't like to hold all my positions into earnings sorting to any type of catalyst i just sell it i don't want to risk it like you know things could go anyway you never know

and uh yeah i just want to control my risk as much as possible i don't really like to gamble over over earnings for example if i really don't have a big profit padding already right um now you briefly touched on stock selection there i just like to go into that a little more um you said you mostly trading these these larger caps um how do you scan and how do you identify the stocks like what exactly are you looking for in a company yes so i scan for uh i also like uh like i like

you said i mostly take large caps nowadays but uh just a few years ago i traded a lot of when my accounts were much smaller i traded a lot of mid caps and small caps too i'm just forced to trade the large caps nowadays because they are the most liquid um but it's the same it applies to any uh market cap stock really so what i scam for is the strongest stocks with a certain uh with a certain liquidity like i use 150 million dollar cut off but just like two years ago i had i

think i had like 20 million dollar dollar volume cut off on my scans and what i do i scan for the strongest stocks the strongest two percent of stocks in different time frames like the one month three month six month 12 month and 18 month time frames to cat to find all the biggest movers over these time frames like i said before it's the biggest move uh movers the strongest stocks that make keep on making the biggest moves so that that's how i find those the most liquid stocks that i can find that are that

are the strongest in an ideal scenario like what criteria do you want checked off before you actually get into the market like before you hit that buy button what exactly do you want to see yes so obviously i want the big absolute momentum and also a big relative momentum towards other other stocks it has to be a very very strong stock um over any time frame let's say a stock has trip sorry doubled over the past three months yeah so so that's like that's a lot of momentum in a stock so what i want to

see is like it's very hard to describe this um like it's it's very intuitive you can't really scan for this like i always you know people i always ask if you could like scan for these patterns and i always say just scan for the strongest moving stocks the patterns you have to learn yourself but like linearity like how orderly is the pullback or the sideways consolidation after the previous leg higher in the stock it's very hard to describe it but what i usually want to see is let's let's say i've stopped doubles in three months

and then it pulls back maybe it retraces a third of its move and usually when stocks pull back like these momentum stocks they pull back to the 10 and the 20 day moving averages and i want to see how they act around those moving averages what i want to see is they start building like either they bounce dire off the moving average let's say the 20 day or if it starts building higher lows above the 20 day and then just getting like the short gets tighter over the next few weeks or the next few months

uh that that's that's called linearity um like people post like on my stream people post setups all the time like do you think this is a good setup or or is that a good setup and like and this is this is the hard part like identifying a good setup like a really good setup versus something that's random and mediocre because that's also going to reflect on your results if you trade the random setups your results are going to be random too you want to find really fun the outlier stocks like you also want to see

if did it does it have relative strength like the best um time to trade this breakout method is after a pullback in the markets you want to see the stocks that held up the most that had big moves previously and held up the most and if you mastered this setup if you trade this setup like coming out of a small correction or a like say a 5 10 15 correction in the overall indices that's almost like free money for this type of setup because if you can identify these stocks that held up the most during

the correction that maybe went down initially in the correction but after as the correction went on these stocks stopped going down and actually maybe started building higher lows and that's that's telling you something if you have a stock that's gone up a lot and then it stops going down when the market goes down you know the stock is trying to tell you something um and that that's that's what leading stocks too like every bull market this is obviously i'm gonna talk more about it later you obviously need uh uh up trending or sideways market to

trade this method um you have leading stocks like leading stocks and stocks that go up the most and are the most liquid and those are really the stocks you want to trade um and they are they're mostly mid and large caps but even a small cap can be a leading stock uh and those are really the stocks that they they don't go down when the market goes down it's like you try to push uh uh like uh like a tennis ball underwater it just pops back up and that that's really those are the type of

stocks you want to find when trading this method i know another thing which you like to look for because you kind of said it a little earlier and i think i may have read this on your twitter this isn't a word for word quote but it was something to the extent of you don't want to be blindly trading momentum and chart patterns you also want to see or have a fundamental angle to the trade as well um would you mind explaining that a little more yes now to clarify you can make a just trading of

momentum and shock patterns you can make a very good living but i think if you can combine some type of fundamentals because at the end of the day there are some type of fundamentals that drive these stocks like the fundamentals are fuel and momentum is like what happens after the fuel if like so if you can identify what the fuel is many times like if you go back like like i did study the biggest winning stocks most of the time uh for big big moves multi-year moves it's usually fundamental related like you can clearly identify

the fundamentals it may have a lot of like big earnings and or revenue growth uh so that's something that's if you can find the fastest growing stocks and combined with this method you will have a big edge a lot of stocks don't have any earnings or revenue at all they're more like story stocks concept stocks and right now we see a lot of these types of stocks it could they they could be anything like battery related anything uh like battery metal related like lithium stocks are really hot right now and a lot of these stocks

have very little or no earnings right now but if you know what the driver is we know we know that obviously like electric cars are a very big thing and electrification is a big thing and that's that's a piece of fundamentals you can add if you if you know what these stocks are like the group and you you trade those stocks you know these uh these these uh patterns and these stocks you will have a big edge versus trading something that's like super random just random stock you don't even know what it is like i

i think if you can identify these groups that are hot they may be hot because of earnings and revenue growth big earnings and revenue growth or they could be hot because of something else for example like this lithium and battery stocks that most most of them are really like concept and storage stocks they many of them don't even have a product like this qs is a battery stock in the us markets and they they don't they won't have any revenue for at least five years but they have this exciting battery technology and that's something identified

early like wow like i read up on it i knew all these electric car stocks were super hot and other battery related things were hot so i kept track of this thing and once i saw it getting a lot of momentum and volume and i ended identified my type of setup on it like i i did some decent size on it and that gave me conviction versus let's say i would have traded it and i didn't know what it was oh what a nice uh momentum stock with a perfect little flag breakup i wouldn't have

done as much size on it and i also tried to hold it for longer so i i think like if i would take the fundamentals out of my trading my profitability would drop a lot so like fundamentals can they they they do play a big role at least for me personally i it it helps me give a conviction it's really what it comes down to now when you get into these positions are you timing your entries intraday like how are you how do you approach that part how do you actually get into the market i

buy everything at once uh very aggressively i would add i'm a very aggressive trader with entries and exits that causes some problems with the size i trade because i i create these big weeks even on some pretty liquid stocks just because i'm so aggressive with my interest exits but that's how i trade like i don't want to bother with you know use spending several minutes getting into a stock trying to get in between the bid and ask and get these uh ecn rebates and like i don't i don't bother with that i just want to

get in and out in a few seconds and that yeah and i i just with a breakout method i just buy everything at once and then i scale out i usually scale some into strength and then i use a like a trailing stop it's usually a 10 or 20 day moving average for the rest okay and if the trade doesn't go your way for whatever reason i guess here we're sort of moving on a little bit to risk and sizing if the trade doesn't go your way where are you going to stop out of the

day so what i do is i i buy the opening range highs and the opening range highs is when the stock takes out uh obviously it has to be a breakout first um so it's not like like so the opening range size could be the first one minute on the one-minute candle five-minute candle or or the 60-minute candle so whatever like let's say a stock uh breaks a range it happens to be on the first one-minute candle so i wait for that one first minute candle to uh finish and then i brought uh by when

it takes out the highs for the day and then i use the low sorry day as my stop and it goes for the 5 and the 60 minute candles also sometimes let's say a stock breaks it breaks the first one minute opening range highs but it may not be a breakout it may not still be in a range and then it keeps on going and maybe it goes up another three five percent or something uh and then it's obvious that it's a breakout then i made by the five minute breakout instead because that's when a

breakout happens so those are really like very simple entries and exits it's just a one minute first minute range the five minute range and 60 minute range and the stop is always at lowest of the day sorry would you mind just clarifying that a little bit are you looking for a breakout on the the one minute five minute or 60 minute okay so okay yeah so the breakout has to be obvious on the daily chart but let's say a stock is in a range like you are watching stock like for for a potential breakout and

it opens up let's say it opens up break even and then it goes up a few percent um on the first one minute on the first one minute candle so the first one minute candle finalizes but this is a stock may still be inside of that range and you're talking about the range on the daily chart yes exactly exactly it's not a breakout on a daily chart yet so you don't know it's going to break out right so you're not going to buy that first one minute candle because it looks just another day inside of

a range like i buy breakouts i don't anticipate them i don't like i i buy them as they break out um so to make it like to simplify it like i i mostly buy uh like when it's when it's obvious it's starting to break out just as it's starting to break out preferably many times i also buy when it's obvious it's already breaking out and i wish i was in from earlier but i used this like opening range highs the one minute five minutes 60 minute like candles and the lows of that those candles too

to manage my stop okay so even though you're a swing trader there are often times when you'll buy the breakout so you know presumably the high of the day at that point um and then you may also get stopped out within the same day does that happen quite frequently oh yeah it can happen you know sometimes i buy something and i'm i get stopped at two minutes later that happens all the time especially if you use like the first one minute opening range highs the failure rate is a bit higher actually much higher versus the

five minute and 60 minute but uh the pros are that you get in earlier on the ones that work so there's pros and cons uh but but yeah yeah it happens all the time like my win rate last year and i had insane returns last year was only about 35 and the year before 2019 it was 25 so yeah you you have to get used to get stopped out a lot and sometimes within many times the same day and many times within a few minutes that's the name of the game that's that's really yeah that's

how it is let's say you do get stopped out on a particular name are you i mean i presume you don't take that off your your radar all together you you re-watch that for or you continue watching that for a re-entry yeah absolutely if it's a good-looking like it happens a lot that they especially when i buy the first one-minute opening range highs when it breaks out on the first one minute uh the like i said it just said the failure it is a bit higher on the one minute breakouts and what happens a lot

of times is you know i get stopped out and just few minutes later the stock takes out the highs again so you know i get back in it takes it it takes out the highs so yeah it happens a lot i can i can buy stock it stopped out and re-buy it you know within a few minutes uh sometimes no it doesn't happen that often but you know it happens so and you can't you can't hesitate if it's a good setup you gotta you gotta get it back in even if it means you have to

re-buy it higher but that's that's just yeah that's how it is but you also have to you know i'm also very aggressive and you know if i get stopped out i get stopped out i don't i don't think i just get out i've seen i i've seen too many scenarios you know when things just keep going uh lower and uh you know you hesitate and now suddenly your stop is twice as big as it would have been and now it's three times as big and it's just you know free supplemental power not overthink things i

just get in and i just get out so how do you manage your positions let's say you've bought a breakout it's successfully moving higher how do you manage it going forward like i know you use uh trailing stops you've spoken a little bit about um taking partial profits into strength which is great but what about the stop management yes so initially my stop is always low low sodium day uh and once the moving averages the 10 and the 20 uh the moving averages it depends on the stock the faster moving stops are you stocks i

moved uh i used the 10 day and the slow we're moving once i use the 20 day and sometimes i you know it depends it depends really um on a lot of things but once the moving averages start to catch up i also start to trail let's say i've decided i'm going to use 10-day on a certain stock and once it starts moving higher like the 10-day catches up to my initial stops and moves higher then i start moving in my stop uh with the 10-day so what i do i wait for the first close

like i have one absolute stop where i like okay i get out no matter what and the trailing stop is for like if it violates it intraday i'm not worried um i only wait for the close like let's say um if it's like 10 15 minutes before they close and it's kind of obvious it's gonna close below that moving average that's when i close the rest of my position but intraday violations are very common and that that's something that got me all the time previously when i was still learning and experimenting with this method like

as soon as the price uh like undercut the the moving average my trailing stop i i just closed it and then the stock just went straight up from there and closed green on the day like it it it touched the moving average or undercut it a bit and then it just rebounded and yeah so very important wait for the close um for that trailing stop and then you also have that stop where you're like i'm gonna get out no matter what do you ever add to a winning position only if there's a good setup i

don't that just because something is you know going my way like i said i just you know buy everything at once i know some people who trade similar setups than this like breakout type of setups uh like dan sanger uh i'm sure you heard about him like he that's that's also a guy that trades these types of setups i learned a lot from like i know he scales in he buys like fifty percent and thirty percent and twenty percent uh as the stock goes higher so there's many different ways to do it i i really

don't i only do it if if i'm in for a longer move i use maybe the 20-day moving average which is a bit slower and the stock builds the next uh step let's say i've been in a stock for a month or two already and uh it has a new a new setup develops and uh you know that i would buy it and i would treat it as a new a new position even though i'm already in it so those ads let's say i double my position in the stock that that new position i i

treat it as a new trade with the same with the same rules for that new uh like i used like a described earlier so it's a new trade and the position i had earlier i treated that trade separately if that makes sense that does make perfect sense i'm following okay i have some questions just around swing trading in general when you're swing trading you're you know you're holding numerous positions for weeks and even months at a time sometimes uh you're much more susceptible to moves of the broader market how do you deal with that yes

um absolutely so it helps getting into at times where the market already had a correction like for example uh early november uh last year uh the nasdaq had been uh in a correction for a couple of months uh it had a correction bounced a little bit had an another leg lower and uh there were a lot of stocks that that other leg lowered they were just holding uh they were just screaming at me they wanted to go higher so that that's that's the best time to uh buy these things and usually when you had a

correction multi-month correction it usually takes a few months before you get another pullback in the markets um unless obviously on a bear market my point is you want to get in the stocks that show relative strength to the market that are stronger than the overall market and that really helps holding through these these corrections you you know corrections always happens uh and it really helps you and these stocks you know if you buy the stocks that already proven they're stronger than the market and shown relative strength they're gonna keep showing that relative strength usually uh

for uh for some more time uh but yes this is a this is a very the market overall market is very important for this type of trading uh like all this like breakouts you know they don't exist in a in a falling market like even if you happen to get one just you know don't don't touch it it's gonna fail most likely uh so it's very important also to study when this type of trading works and when it doesn't and in up trending and sideways markets this type of trading works really really well and down

trading markets not so much um that's that's when it's time to sit in cash do less and uh do trade with smaller size if you're trading this particular type of setup so the market where market is super super important to be aware of um at least the market sentiment um like you don't have to look at day-to-day moves in the markets like i rarely do i i most of the time i don't know if the market is up or down on a day i just look at my the stocks on my watch list and my

scans and my portfolio and that and they're usually not telling the same story sometimes the markets like the nasdaq can be down on a day and everything in my portfolio is green and sometimes the market is up on the day and everything my portfolio is read so when i say be very aware of the market i'm talking more about the overall sentiment and the trend of the market and that's also something you kind i have to learn with experience it's not something you really read into a book you just have to go through it through

a few cycles you have to see a few set ups you have to see a few crazy bull runs you have to see a few sideways shopping markets to really understand these uh relationships it takes time yeah yeah because i mean that's going to be one of the most frustrating things as a swing trader to have you know what you think is a great position on it's been going well and then all of a sudden there's a few bad days in the the broader market and um you know you get stopped out purely as a

just for neither reason than the market's coming off but as you said like if you're in stocks which are generally stronger than the market that's that's less of an issue you know on a portfolio level do you limit the number of open positions you have at any one time i don't really have a limit uh what usually happens coming off a correction um like all the methods i trade i i usually don't uh trade much when the market is a correction but let's look at an example like last year with a kobe sell-off that lasted

about four weeks in from like mid mid february to mid march if i remember correctly so i so when the market bottomed uh mid-march i think it was i really didn't have a lot of things going on in my portfolio i may have had a few positions here and there so and then the market started this big big big bull market that started from from that point and i was a little bit late to it i really didn't believe the bounce at first but then i started seeing this enormous amount of setup so i got

into them i i went from a couple of positions to seven positions to 15 positions and what happens when the market is on a multi-month run uh usually is i end up with a lot of positions because i take some partial profits and some and then i roll that money into new positions new breakouts and i can end up with you know 20 25 and i've had 30 positions sometimes actually so far every time i ended up with 30 positions it happened three times in the past 12 months every time in the next few days

the market pulled uh you know started uh like a multi-week or month multi-month pullback or sideways consolidation so that's a really good proprietary indicator i have so yeah no i really don't have an upper limit but i have a i've had 30 positions a few times but ideally i try to keep it between 15 20 after 20 it starts getting a little bit hard to keep track of them all but again like i said before in swing trading and especially when i have a lot of positions it means they are all working very well some

some of my positions may be up hundred percent two hundred percent even if it's some some of these uh crazier smaller caps like right now the uh crypto related stocks that make big big moves i've i had a i have a few double doubles in my portfolio right now and when they're up that much and already you know you sold some uh to lock in profits the partial positions you really don't even have to look at them you can look at you can look at them you know a couple of times per day like you

don't have to monitor them and that's that's uh that's the good part about swing trading if you you know and you have this uh bull runs yeah it's it's a low effort type of trading you also have obvious have to put in a lot of effort at first to learn all of these things um these patterns the fundamental drivers of the stocks the overall market it takes many years to put it together but once you get it it's a fairly low effort type of trading you don't have to fanatically look for trades and uh you

know constantly getting not get out of stuff like you have in day trading as you just said you've got a couple positions in your portfolio there which are up 100 to 200 it made me think i should ask you earlier you said that your win rate was around about 34 uh last year what's kind of the the the ratio obviously it varies greatly here but what's that you know you yeah your ratio of we're talking average win to average loss you know that's a very good question and i have no idea i i i gave

up uh doing doing that type of stuff many years ago like looking at the micro stuff in my trading um i i really don't have an idea i i get i get that question a lot on my stream too and i i really only know my win rate because so many people kept asking me about it so i went back to my journal and looked it up and i think i think if you get the big stuff right you don't have to worry about the little stuff and yeah i i yeah i i honestly i

don't know okay no i appreciate the transparency let me ask you this question then i might phrase it a little differently you know come the end of the year if you look back at the majority of your gains do they come from just a few big winners like you know i can't think of what the name of it is but it's kind of like that 80 20 rule like do you find that absolutely oh yeah yeah yeah it's so all about the small losses and big winners and there's maybe you know i don't again i

don't have any data on that but i i know intuitively there's a few few big winners that where most of my money comes from most of the other stuff they kind of break even but maybe i don't know 10 to 20 of my trades that's where maybe not 10 but definitely like maybe 20 of my trades that's where all my money comes from uh really uh the big ones and those are like i i've said it also in my stream a lot like i'm a home run trader i don't i know a lot of traders

they try to make you know go for a higher win rate and try to make money on more trades uh but you know that's that's the style i've chosen it works for me like try to catch the big ones and uh have a very high uh or actually a very low win rate have a very very low win rate so most of my trades uh just you know even themselves out and then go for that i again i don't have any numbers but maybe that 20 or 15 percent of the trades that really that's that's

where the money is for me yeah low win rate high payoff yeah christian i'd like to ask you just a couple i guess more general questions about you as a trader even at your level what challenges do you still deal with on a daily basis i've gotten a rid of a lot of challenges over the years but the things i still struggle with are i would say over trading because i do i'm a little bit addicted to trading um i'm not gonna lie i i do i do like i do like to trade even when

i know i shouldn't uh so that does take that uh you know that that's something that takes a chunk of my returns every year and also patience uh is something like i i'm like i know i should use the 10 and the 20 day moving averages um as my trailing stop so many times when a stock just goes straight up and especially it's been an issue the past uh 12 months or so or 11 months since we've had this big big great bull market after the code sell-off like the moves are insane like everything is

super charged versus earlier years versus you know the eight previous years i had been trading before that or nine um and it's kind of been hard to adapt to those like everything just keeps going up and up and what i do is i just you know i'm like oh [ __ ] [ __ ] it this stock is up so much it can't go higher uh like for example i had to straighten nvx which is one of these vaccine stocks i it went up i think it doubled or so in two weeks and i'm like

this it's not gonna go higher so i just sold the position it got it it started getting a bit stretched from the 10-day moving averages average which i was intending to use as my trailing stop and at first the stocks actually went lower after i sold it and a few weeks later it doubled again and now i was like okay um yeah like overriding these like i try to override these moving averages trailing stocks stops like outsmart them but i just can't do it like like but no i i wish i was a robot that

just followed the method 100 i just can't my entries are so good like i'm so good at the entries but my exits are just so bad i just can't follow my own rules and it's it's costing me money in the past you know this great me bull market we've had it's just yeah that's yeah it's kind of annoying but the issue is i guess sometimes it it pays off to override those rules and then sometimes not so much yeah but most of the time it doesn't pay to overwrite those rules um i i would say

again i don't have an exact data but just intuitively three quarters of the time it doesn't pay so the logical thing to do would be to not override my own cell rules but i still keep doing it and the people in my chat they're gonna make it fun of me because they know like hey christians just sold because uh he thought it was overextended let's buy it it's probably gonna double again you know so right so those are my two biggest struggles overriding my cell rules and over trading i never like i know a lot

of people have problems with taking taking their losses like they they have very hard times scaling out when they get stopped out they they just hope it comes back that's something that's an issue i never really had i only remember a few times in my career that i've done it just and i got really burnt a few times and after that really i've never had an issue taking taking losses and i know that's a big issue a lot of people have and people also write to me on twitter and ask me about it all the

time those are my my struggles still those two in what ways has your attitude to risk changed as your buying power has you know obviously massively increased over the last few years yeah so something i have done really like i i i've done successfully is i've managed to scale my trading up massively like if i double my account my risk and my size will double also it's there's a lag there but it's usually a few months but it will eventually double too so i'm always bringing my my my my risk and my size up in

relative it's in relative terms and percentage terms it all stays the same the position sizes and the percentage risk relative relation to the account but i know a lot of people they just take money out of their accounts all the time to put it away and other stuff but i've never done that i've always i only take out money when i really have to like to pay living expenses or to pay taxes and other than that i just use the the account to grow my account all the time and i also i i should mention

i use marching quite a bit um and i only i only use it when things are going well when i deserve the use margin i think marching is something you have to deserve it's not a privilege just because it's there doesn't mean you should use it unfortunately a lot of people do use it and they use it the wrong way they start using margin when things are not they may use in margin when things are not going well but that's not how you do it you have to gain some ground let's say every year but

no matter where you reset this but let's say in the beginning of the year if if you if you if you do if you do well that's when you start using some margin uh because if things are going well you should you should push those periods and then there are periods you shouldn't uh trade a margin at all and maybe you shouldn't even be trading at all so this taking it's it's all very relative this um risk approach i have oh my attitude risk yeah i think it has matured um i was a bit more

reckless in the beginning like like i said before i went all in um on all stocks because i didn't know better and but that was also when i was much i had a much smaller account like i wouldn't be able to trade you i mean if you have a small account and want to do swing trading obviously you can't be holding 15 20 positions like i do uh it's maybe smarter to hold fewer positions um but again like position sizing i realized yeah especially when you kind of hold things overnight you can't have everything in

two or three stocks you gotta diversify a bit more because i've seen too many stocks up and down fifty percent and it's just not worth it so and also the margin related things when i first got a margin account in the beginning i traded with swedish brokers these u.s markets with swedish brokers there was no march in there and i opened us accounts and then suddenly i could use margin i really didn't know how to handle that like oh my god i'm a insane amount of buying power let's use it um but i got burned

a few times and you know i kind of matured and i realized like you kind of can't trade that way you kind of you kind of have to deserve the risk um and also even if you're not using any leverage or margin in your trading which is fine you can have incredible returns never using any type of leverage i just like to you know spice it up a little bit when things are going well um because you know again i studied from history i know that bull runs again lasts for a long long time and

you you wanna you really want to capitalize it if you if you're a swing trader because as swing trader you you know you gotta sit think mostly in cash for long long time so periods too so you you got to make the fun more fun while it lasts last question for you why do you think your level of trading success is so rare obviously everyone sets out with the the ultimate dream of uh making as much money as you have from the markets but very few are able to achieve it um and you know from

what you've described here and your strategy it all sounds fairly simple not to discredit any of the the hard work you've put in but no you know why do you think so few make it to the big time i'm glad you i'm actually very glad to set it that it all it's very simple because it is i'm always trying to take things away i think there's an inverse correlation between the amount of indicators and profitability for example um i think people focus a lot on the wrong things instead of they look at a lot of

indicators instead of focusing on a price and what's really really moving a stock and how the stock is moving like i really focus on the it's just purely a price a lot and try to listen to what the market what the stocks are trying to tell me uh a lot of people uh they just focus on a lot on other people's opinions they they may be watching cnbc and they you know there's maybe some bear porn going on or you know some uh hedge fund manager that's panicking on cnbc and you know that that's gonna

affect you right and what what and that's gonna affect your trading too like oh wow the professionals are really scared maybe i should be too scared too and vice versa and i i think if you can tune all of it out everyone's opinions out like even even the billionaires the hedge fund managers what i realized over the years they're like they had they are wrong a lot too but they have to say they use they they do it the same way like i do when they're wrong they lose small and when they're right they win

big so i really can't pay attention to all any of opinions just focus on what the market is doing focus on what the leading stocks are doing or whatever method you trade like just focus on how is that method working is it working well or is it not working at all are there setups are there no setups that's really what you should pay attention to that's that's one big part i see a lot of even successful traders struggle with they these this other opinions do snuck in instead of just listening purely on the market and

also i think also just purely education i think a lot of people even some pretty decent successful traders i think they would do even better if they really went back and looked at thousands of examples of the of that oh that setup they trade or the setups they trade and really nail down all the variations of those and look at it look at also maybe the overall market like what was the overall market doing when there were a lot of setups and when there when when that setup worked really well versus what was the market

doing when there weren't any setups and the setups weren't working any well i think that that's gonna improve your edge by by significant margin looking at all these variations um and then there's also the the leverage part uh you can either hurt yourself or you can supercharge your returns uh by using leverage but you gotta do it the right way um uh and also scaling your trading that's also something like i've seen there's a i know i know a lot of traders that say pretty much trade the same size they've been trading for 10 years

they trade the same setup like they mastered their setup they really know what they're doing but they haven't been able to scale their trading and that's also a big thing that i think sets me apart from i see a lot a lot traders too and that's how you really can make a return especially in the crazy bull market we've had in the past year like it's gonna make a difference of you making 100 versus making 900 it's you know scaling it up as account as your account grows um it's not going to happen instantly like

if you double your account uh let's say in a month uh i know that's a maybe no that's unrealistic maybe even though you can't do it especially if you're a day trader and use like a margin um but you know let's say double your account in a certain time frame like eventually your size should double to your size and your risk and i i see a lot of people too they just they they can't they can't like they can't push it like um obviously every time you size it up and you take that first big

loss after you sized your trading up it all it hurts but you also you always have to think in percentage terms like i always cringe when people also another reason to never pay attention to any type of financial media like i always cringe when they when they talk about points oh the tao is up to a thousand points it's such a useless thing to say it doesn't really you know there's no context at all like why don't you just say percent because one percent is always one percent no matter if what if the dow is

at 5000 or at 50 000 right but a thousand points like a thousand points meant a very different thing five years ago versus today um so always thinking in your trading too in percentage terms like think about percentage risk like oh i'm going to take a percentage return oh sorry a risk on this trade and the and since my accounts have grown a lot that percentage risk is going to be higher than it was say a few weeks ago but it was always thinking percentages i think that's a very useful exercise that may take your

training to another level instead of maybe thinking about points um it's just you know instead of thinking about like points or in in dollar terms like absolute taller terms uh like let's say you risk a thousand bucks usually on your trades but your accounts have doubled and you're scared to take and you're scared to even risk 1500 bucks but actually in percentage terms if your accounts have doubled you should be risking 2 000 bucks so maybe get used to that 1500 bucks risk first and then you push it to that 2000 bucks risk just as

an example so those are the three or four things i think that may improve most traders uh returns um the you know three four concepts that really really help yeah very wise i love that actually one more question i lied i promise this is the last one since you've seen this type of success that you've had in trading how has your life changed not much really [Music] like i used to like in my earlier years like between 2013 when i started my evernote project or 2014 i started just you know just saving articles like i

started um like i started everything trading related i read a lot of books i read a lot of articles i studied a lot of these successful traders like dan sanger like i studied everything he had written this all his newsletters back to the 90s i read through them i looked at the patterns he was looking for so i spent a lot of time on on especially on the weekends like studying like i tried to absorb everything i looked at every single angle every single method i don't know how many thousands probably 10 000 hours plus

that i've spent just doing studying uh over the years and now i feel like i i i don't do that as much anymore because there's just not much new ones it's the same patterns it's the same concepts and i feel like i have a pretty good grasp grasp of these things and i don't have to spend this much as much time doing like just studying um like i do it uh but not as much so you asked me when uh when we started this call what i did yesterday since yesterday was a day off in

the markets and i spent the whole day playing computer games that's how my life has changed i went from studying everything market related to doing things that i enjoy doing on my days off okay well that's a pretty simple answer yeah more free time on the weekends and uh more time for video games absolutely more social life and more more uh time spending on hobbies okay okay well christian it's been an absolute pleasure speaking with you and i greatly appreciate your time for anyone who's listening who might want to uh find out more about yourself

uh where's the best place to go you know twitter etc yeah you can pretty much go to any of my social media but twitter um there's also a link in the in in my bio where you get to my blog and you can read up on uh you know there's a you know blog posts about me and my methods my setups and also my twitch stream um where i stream uh every market day i should usually stream the first hour and a half or so you can see me trade real time i talk about the

setups you can ask me questions um and uh yeah close to twitter and twitch okay and what's the link for your blog because i think for anyone who's you know listened this far through the podcast it would probably be a good idea for them to actually uh put some visuals to you know some of the things we've been speaking about here and and those are definitely on your blog what's the link yeah it's uh shorts and stories.com chartsandstories.com okay and your twitter handle is uh at the caller maggie q-u-l-l-a-m-a-g-g-i-e and that's also the handle my

twitch handle and my youtube handle okay excellent uh and folks listening those links can also be found at chatwithtraders.com two 1 2 as this is episode 212. christian once again very much appreciate it thanks a lot for doing the podcast let's chat soon thank you very much i'm very grateful uh that you asked me to be here and i'm very happy thank you so much aaron my pleasure you've reached the end of this episode of chat with traders but rest assured there are more episodes loaded with real market insight and zero hype on the way

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