The GOAT Teaches You How To Master Price Action (Ep 5: Al Brooks)

hi Dr albrooks uh such a pleasure and an honor to have you on the podcast today um I really appreciate you being here it was really nice to to meet you finally at the Orlando conference and I just wanted to say that I'm extremely grateful I think I speak for the entire price action Community when I say that we're extremely grateful for all the work uh that you've done and all the knowledge that you've shared with us uh for surgery kind words and I really appreciate the opportunity to be able to speak to your group

and I'm very grateful for all the help you provided at the workshop you know like I couldn't talk to everyone as much as I wanted and you talk to us so many people and you did so many other things and you answered so many questions you know I think everybody was very happy that you were there thank you I appreciate that so just get to get started I kind of want to start with your origin story um how did you get introduced to trading I know you started as an eye surgeon so what intrigued you

about day trading and how did you make that transition over well you know it goes way back to when I was a kid you know I grew up in a poor family and um there were six of us in a two-bedroom house with one bathroom and no shower I didn't get my first shower until I was in high school my mother and my father he was born in 1904 which is crazy to think of of that and he stopped going to school when he was eight years old so I didn't have a lot of um

Parental Guidance as far as professional career choices go my mother told me when I was young that she thought I should be an eye surgeon and I never asked why an eye surgeon you know you know why a doctor you know why not a lawyer we're not a businessman and I just never questioned it back then in my community you just do what your parents said and my mother told me that she wanted to be a very nice surgeon so I decided I was going to be an eye surgeon which is by the way there's

no small task it's very it's very difficult to get into medical school and then when you're in medical school becoming an eye surgeon Ophthalmology it's one of the most difficult residencies to get into so um you know I did what she wanted and it was hard to get there but I was at the University of Chicago and all the while I was there I just kept thinking about the Chicago Board of Trade and Chicago Mercantile Exchange and my friends in the business school I also knew some guys getting economics phds and I just felt like

I was I was just doing the wrong thing so you know I just felt like it's my life and you know I I know I'm making my mother happy but it's my life and I really got to do what I want to do and my heart was training I really wanted to be a Floor Trader nobody's a floor trainer anymore but back then I really wanted to be a Floor Trader if not a Floor Trader than any kind of a Trader you know I just like the intellectual stimulation of it and it took a number

of years for me to get the courage you know and the confidence to make the switch I made a lot of money as an eye surgeon I had a surgical center I was a young guy it was my 30s and I started trading at home before I went to work and you know I it was frustrating you know when you become a doctor the way you become a doctor is you watch somebody who's already good at it and you learn you learn what they're doing or you read books and you and you you learn that

way and I assumed and that's what I did all the way up to becoming a doctor that's how I became a doctor so it was an approach to life that was very effective when I started trading I tried to apply that same approach and it was failing and what I soon discovered is those who know don't talk and those who talk don't know and back in the 80s it was incredible how dishonest so many people were on websites and selling software back then it wasn't websites it was magazines and you know and I I just

couldn't believe that people could be that dishonest so I trusted them and it took years for me to realize that the people who are publishing Stuff books and magazine articles on conferences and tutors um it was all garbage it was all it was all lies and it took me a long time to have the confidence to ignore these people who were supposed to be experts and just go up on my own you know anybody who looks at a chart you know you look at this chart you say oh it's down here and later in the

day it's up here this is a five minute chart of the e-mini and you say well if I buy them I'm going to make money right and every you can just look at that and you know that's what you have to do and it took it just took a long time for me to look at a chart and trust that what I'm seeing um makes sense and that I should do what and what I believe is um I should be doing um you know I I when I was following all these people and I hired

tutors I went to conferences and you know I you know I took all kinds of courses and I was not making money you know when I was talking to the people the experts I realized that a lot of what they said was not consistent with what I was seeing on the charts so I decided to instead of relying on them to tell me what to do I would just look at a chart and um figure out what to do you know as I said when you look at this you know you know the only thing

to do is buy or do nothing especially once you have this you know you have to buy and uh so you don't need indicators to tell you that you don't need an expert to tell you that you can just see it's going up and it's accelerating up and you just have to buy and you know you have to look at a lot of charts to have confidence in your ability to predict every day you know back in back in the 80s when I started I used to print out charts every day and I used to

draw lines trend lines and support and resistance lines and measured moves and I look at bars you know I'd look to see how big the tails you know the Wicks are on top and on the bottom I'd look at Bear bars bull bars and I try to get some sense of repeating patterns and I knew they had to be repeating patterns because I knew some people were consistently making money and to make money consistently you have to be repeating behavior and if you're repeating your behavior and making money that means what you're seeing on the

charts is repetitive Behavior and that means patterns so you have to get a sense of what patterns are and um you know what what is going to follow so when you see this what will the bars to the right look like and um over time as you know I have an encyclopedia of of patterns and basically about 100 basic patterns and then there's a bull version and a bare version so that's 200 patterns and then there's a failed version and a successful version for example you have a head and shoulders top here left shoulder head

right shoulder instead of the market going down it went up right so it's a failed Head and Shoulders top and on television you always hear experts talking oh it's a head and shoulders top and when I hear that I think well if it's a good looking one there's a 40 chance the market will go down there's a 60 chance it won't go down 60 chance it'll either keep going sideways or it'll go up so just because there's The Head and Shoulders top does not mean that it's a short you have to understand more about Head

and Shoulders tops than you have to realize that only 40 percent of the best looking ones will actually lead to a trend reversal 60 will not um one of the interesting things is um how simple it is you know right now you and I are talking on our computers and it's being sent up through the internet and everything that we're doing is basically either a positive charge or a negative charge every you know you know every every piece of software is based upon a strings of zeros and ones zeros and one zeros and ones and

it's really you know so the building blocks are really simple you know you hear binary stuff you hear um you know hexadecimal stuff and you hear of megabits and megabytes and kilobytes and you know all that stuff it's all just basically based upon positive or negative just a string of them and a chart it's the same thing either a bar is bullish or it's bearish and you have to have a sense of uh you know is it bullish or bearish is the market going to go up is it going to go down it's actually a

third thing it could be fairly neutral um you know maybe the market will go sideways and so the patterns are all based upon you know really simple stuff you know I'm always looking for double tops double bottoms I'm always looking for wedge tops wedge bottoms I'm always looking for strong breakouts you know like this I'm always looking for the market going sideways you know in markets like this I'm much more inclined to trade with limit orders selling at a high selling more higher and taking quick profits or buying at a prior low and um being

willing to buy more lower and then taking quick profits so all right a long answer yeah no that makes sense and I actually wanted to ask something about what you said when you when you started to notice stuff on the chart how did you know that it was meaningful like were you doing a lot of categorizing and comparing the charts because something can happen on a day and it might be a low probability event the only way to know that is to have enough data to know that it happens often or it's a it's a

low probability event so at a in a situation where you notice something on a chart how do you go from noticing it to then building um probabilities around it you know it's really hard you know it takes a long long time to develop confidence in what you're doing you know in your list of questions you talked about that 40 to 60 percent probability that would live in a 40 to 60 percent probability world and by that what I mean is at any moment there's a 40 chance the market will go up you know a quarter

of a percent uh between a forty and sixty percent that will go up a quarter of a percent before it goes down a quarter of a percent then it'll go up Five Points before it goes down five before it'll go up ten before it goes down 10. so you know this 40 to 60 percent of the time and 46 of the chance of buying or selling you know you know that's your probability of making money you you're you're not going to be more certain than 60 and you don't have more than a 40 chance of

being wrong 95 of the bars on the chart five percent of the bars on the chart are this and the probability is 70 or more the Market's going to do something it's going to go up so yeah so you've got 81 bars here and you got four or five of them you know about five percent of the bars there's a really high probability that the Market's going to go up five points or ten points before it goes down five points or ten points right so you know this is what I love but most of the

bars on any chart are that or like a channel where the probabilities are 40 to 60 percent and um The More Bar the more charts you look at and the more patterns you train yourself to see the more confidence you'll have in relying on those patterns going forward you know I've looked at um the five minute chart pretty much every day since um 1987. and if you do the math you know I've told you this before that is um you know over a half million bars you know five minutes at a time you know we've

been talking for what 10 or 15 minutes so I'll multiply that by um several hundred thousand and that's uh how many bars you know how long I've looked at bars and you know you don't have to be a genius to see patterns right you know you see them all day long you know here you look at this low and that low about the same price and there's a big tail at the bottom the market went up quickly after testing that load that's a double bottom and here you go three pushes up the market three times

try to do something that's a wedge you get a bear bar beer bar it's probably going to go down for a couple legs one pullback two here you get another double bottom here you get a breakout above that high you're probably going to get a second leg sideways to up here here you get a bigger breakout and this low right here stayed above these highs so therefore there's a gap between that low and these highs maybe it'll lead to a measured move up and it did and then you have another breakout here and this low

held above that high so maybe this rally will go up for a measured move based on maybe the start of this move from here to here maybe all the way down from here to here um measured moves um I'll show you something interesting I don't know if I can okay this is a daily chart of the e-mini and um you see this high and then this low there's a bull flag instead of leading to a new leg up it failed and we broke to the downside so you have to wonder oh it's going the wrong

way so maybe it'll lead to some kind of a measured move so if I connect that high to this low you can call this a double top with this high you can call it a lower high double top with that high in any case it was a bull flag instead of going up we broke to the downside so maybe we'll go down for a measure move measure move from that high to this low is right there okay today's low I'm going to put up a five minute chart here and look at the pink line on

the five minute chart right there look at today's low you know to the tick it's exactly at the measured move right and so that is a type of pattern that I'm looking for you know I I was looking for that measure move and very often it's exactly you know Carter worth on Fast Money always says to the tick and he doesn't mean it he means approximately this is to the tick that low is exactly at that line and the computers bought and they bought all day and here they accelerated up another pattern the market was

in a very tight range all day and the range was only about 25 points about half the size of an average day's range so what are you thinking you're thinking the range is probably going to double and get up to an average day's range so whenever I see a really quiet training range day I'm always looking at the middle of the day sometimes later in the day for a breakout in either direction and then an attempt at some kind of a measured move so I was ready I was ready for this you know and that's

because I've looked at a lot of charts and that's a pattern that you see so if you have a small range for several hours and it's about half of an average day's range there's a probably a 60 chance you're going to get a breakout and a measure move based upon the range doubling the range and make it back on back to the average and we ended up having bigger than an average range where we went outside up yesterday's low went below it yesterday's high went above it so you know right now I pretty much know

you know what's going on all day long and I know it's you know what the probabilities are you know is the market likely to go up is it likely to go down um is it basically a 50 50 Market a 40 60 market and be ready for anything you know I you know once you've done it a lot you know you you know you just know and um you know I've you know I I know the stuff to look for and you know when I talk about living in a 40-60 world a lot of what

I see is a lot higher than 40 60 right you know the higher probability than 60. and um but I don't I don't say that you know because for most people you're better off just thinking 40 60. and um because that you know that's true for most people and there's something magical about 40 60 mathematically and uh you know you you know it I talk about Trader's equation right um anytime you take a trade you know you're in you're in some kind of a gray fog you're never certain you're never as confident as you want

to be you know you want to be 70 80 90 well you're not going to be it's more like 50 50 40 60 something like that but if you figure out where your stop has to be when you take that trade and you go for a profit that is twice as big as your risk you know you're going to make money because if it's 40 60 even if you're wrong 60 of the time and right 40 of the time um if you go for a reward that's twice your risk um the worst you're going to

do is break even and if you manage your trade well and if there are a bunch of other factors I talk about them in the course as well you know you can actually make the math better than that you know a lot of times it's you know 45 or 50 and not forty percent a lot of times the reward will be greater a lot of times you can add on so um that 40 60 is really helpful in in terms of structuring Trades because as long as you go for a reward that is at least

twice your risk mathematically you're good I'll tell you another thing um ninety percent of days have at least one swing trade with a good signal bar either a sell single bar or a Buy Signal bar that leads to a profit of 40 of an average day's range and the average Day lately has been about 50 points today it's a little bit more than 60 right so 50 points 40 or 50 points is 20 points that means 90 of days will have a 20-point swing trade that begins with a good buy or sell signal bar okay

and today we didn't have that and these are not good bicycle bars that's not a great sell signal bar and if you took it you certainly would get out either here or a second reversal up this is a good buy signal bar we're getting near the middle of the day we know the day's range is going to double right so you either buy that or you wait and you buy that this is a triangle we have a lower high and then we have three lows that are essentially the same price so that's a triangle and

we broke out we tried to make a failed breakout we tried again and we formed another triangle so that's another buy so this is a good candidate if you exited below that you could buy again here and you would have made your 20-point swing so if you patiently just look for a 20-point swing every day and look for a good signal bar um you know I think it's a really good really good strategy so it's just one of those things that you see you know when you look at a lot of charts yeah that makes

sense and to your point about sometimes it's more than 60 I guess that also means that it's sometimes less than 40. so as long as a Trader avoids those times like they don't turn it through this bro you know there's going to be a breakout in this case is a very big bull break and I say wow look at that bar that's very different from all these other bars something that's changed this bar has changed right uh so when you see that you got to think you know I Gotta Buy and even if you bought

the clothes and get uploaded the spare bar if the market is in a trending mode or possibly a trending mode and you exit in this case a bull Trend as soon as you see a bull bar closing of near its high or above its midpoint you buy again so you buy above that bar you buy above that bar you buy above that bar you buy Above This Bar you buy above that bar bull bar closing there is high you buy above that bull bar closing air is high by above that if you get out below

this Bear bar you buy again you buy again you buy again probability yeah and so when it when it comes to because that seems really clear um and you talk about the forest gum trade but now so that seems very clear but then how I noticed for myself when there's a 40 to 60 chance and you're always convincing yourself of like if you're a bull and you want to buy but you're convincing yourself of the bare case so that you know that there's a range never be too certain how does a Trader develop the conviction

to to take the trade and and to trust it is that does that come with just seeing it over and over again because I feel like it leads to analysis analysis sometimes and you just can't do anything because you see both sides it takes a long time to trust yourself all right and anything it just takes a you know anything that's important or serious or uh life-threatening or anything you know it just takes a lot you know rock climbing climbing up half dome in Yosemite it takes a long time to develop the confidence that you

can do something and you know you have to look at the large shards and recognize patterns and and then I talk about the Forest Gump trade or the Walmart trade you see this you see the setup you put the trade on and um if you find yourself getting out either the small profit or a small loss um you know the next time you take a trade like that put a stop in you see how many points you have to risk maybe you have to risk eight points for that stop so two times eight is sixteen

put a limit order to exit at 16 points and have it order cancel order if one gets filled the other gets canceled and go to Walmart and come back in an hour or two and um you know sixty percent of the time uh 60 well change that at least forty percent of the time you're going to have your limit order your profit order filled and your stop order not filled and the the times that you can come back from Walmart and your limit order has not been filled a lot of those times your stop order

will not have been hit either the market will do something like this right so you're not necessarily losing the full eight points 40 of the time right so this is something where the trust comes through trial and error it comes through making mistakes and over time you see that you know if I had held if I had gone to Walmart actually gone to Walmart for two hours um I would have made money and you just constantly see that you're making the same mistakes and that your initial instinct or your initial analysis was correct and I

guess it's just building that that trust in yourself that comes over time when you just constantly see it over and over again one of the difficult things when people are starting out is they make a mistake they make it again they make it on another day and then they say aha okay every time I do that I I lose money and then they keep doing it even though they know that's not supposed to do it they'll keep doing it and um you know it's just a psychological thing you know maybe this time it'll be different

and no it's not going to be different it's going to be the same you're going to lose money again stop doing that you know if the market is doing this don't sell only buy right um if you see sell signals don't think of them as cell signals signals think of them as exits from lungs don't think of them as the start of something to go short and then just wait for a bull bar closing near its high like this and you buy again so if you exit below that bear bar you buy again you just

below that bear bar you buy again so and you know if you if it looks like the Bears are having a very difficult time making money don't sell all right okay um you get this breakout do the Bears make money below this no so do you really want to sell below that no and did the Bears Who Sold below that make money no so do you really want to sell below this no right and you know here you want to sell below that it's a wedge well have the Bears been making money no so do

you want to do something bearish no uh until long you get out but you buy again if you see a bull bar closing near as high yes and that kind of goes along with what you you often mention in the room which is don't be the first person don't don't expect it to happen for the first time if Bears haven't made them yet don't try to be the first bear to make money just wait till they're making money consistently and then start trying to make money with stops yeah in this case the Bulls you know

if you're not doing any trading here that's fine right but then you see wow the Bulls were able to make money here and they made money here so you don't have to take the first buy here or here you know once you see the bulls making money with stop orders you know they can make not just five points they can make 10 or 15 points you're saying wow it's really good for the Bulls I want to be a bull you don't want to see the Bulls clearly making money and making a lot of money only

look to buy so and you know what does Al say and how to buy if you don't know anything wait for a bull bar closing near its high and it won't enter on a stop one take above the high of the bar and you can put your stop below the low of the bar so you buy Above This Bar and put a stop below you buy Above This Bar put a stop below you buy above that bar stop low if you get stopped out of here you can buy again I'm sorry go ahead no I

was gonna say um can you briefly talk about like because we're talking about this chart now can you briefly talk about how a swing Trader and a scalper would manage these differently so for example the breakout on bar 50 the surprise breakout when they see 51 are they going to look to exit at the 50 close or are they going to is a scalper going to exit at the 50 clothes or is the scalper going to stay long or is a scalper going to exit below 51 and then buy again above 52 what would a

scalper be doing here and what would a swing Trader be doing okay fifth year is a really special bar right um sometimes you get these really really big bars that close somewhere in the middle and your first reaction is oh my gosh that's terrible but on a small time frame that big tail might be a bull flag right and it was here I don't know I didn't check a one minute chart and I can't get it here I'll try it here I can I can show it um okay um let me go back over there

right yeah it's very clear the bar you know um does it look all that bearish here no it looks like a wedge Bowl fly three leg Zone one two and three right right so sometimes you get the big tail on the five minute chart and it's a full flag on a lower time frame chart so um if if you remember on a bar like that if you're experienced you can just buy the market and put a stop below the most recent low down here right I don't want to risk that much yeah well if you

don't reverse that motion just trade small you know and trade small 20 of your normal position if you trade um five micro e minis 20 is one micro immunity if you trade one e-mini twenty percent is two micro e minis right and you can add on afterwards so but whenever I see a big bar like that with a big tail on top and it's a really special bar you know I the odds are really high it's going to go up it could be it could have been a trap right but I knew the range was

going to double and that's a really special bar so I would not take the fruit I would not short the first reversal down I'd wait to see if we get two or three bear bars hey I bought during 50. I'm going to scalp out you know five points is probably a scalp today because I was tight on the ranges so the Bible 49 scalp out five points if you buy during 50 you scalp out five points and you might sell below 51 if you're a scalper hoping it's a failed breakup I would not because um

that it's really an exceptionally big bar and if you're wrong if you're long during if you're along on the 15 clothes and then you see 51 and you're a scalper what would you do uh either get out below 51 the Bear bar but I would not short or hold with a stop down here and hope for the best all right and I I know the math of this I know I know it's like 70 that we're going up even with that bear bar and if you did get out you buy again above 52 you buy

again about 53 by again about 54. above 58. and as soon as you get in um you put a stop um below the most recent low 52 or the size of a scalp below let's say you bought 54 you get out the size of a scalp below 54 or um we'll lower Bear bar on 56 so swing Trader could put a stop below the most recent low but let's say he bought let's say he bought him a 49 and the Market's up here and he's still long right so now he has 25 points profit um

and he's 25 points risk right that's too much to risk so he'll take some partial profits and lunch Traders did that and I created these two bear bars all right and you wait for a bull bar closing yours high like that and then go back to your full-size position right so excaliber is more quick to exit but they have to be quick to get back in when they see a bull bar closing on its high whereas a swing Trader can use a stop below the prior low but they're going to want to take part off

when the risk gets too big and then add it back on um above a bull bar or when when another setup presents itself is that accurate that's accurate and a swing Trader often has to risk more than a scalper so for example if you're taking trades on the daily chart and the average bar is 50 points tall you're going to be risking at least 50 points right right you're not going to trade the same size as you would on a scalp where you might risk six or seven points right so the the the bigger your

time frame the more the longer you're planning to hold on to the bars the smaller you have to trade and if you trade um and you get in early on where your risk is small and then the market goes your way you know if you bought above 49 and put a stop below 48 your risk is small but then the market does this you know you have to take profits because now your risk is from here the current price down to here and you can say well I sell the people's money no it's not other

people's money look at your account it's in your account it's your money and you know you cannot risk that much so you have to take profits and that's why you get this you know the computers are taking profits and they wait to see um if an other computers start to buy and if they do and form a bull bar closing near its high the people who exited here go back to the full size position there right so so a scalper is constantly exiting and getting back in a swing Trader is holding and and uh and

lessening their position size based on the profits that they have in their account um what would you have to see if you were a swing Trader and you got long above 49 or doing 50 what would you have to see to exit based on the premise changing uh it depends depends you know some swing Traders will be very quick to get out and those are swing traders who are quick to get back in if you find that you get out below 51 and you do not buy again above 52 or 53 right you're going to

change what you're doing right right and that's one of the big problems with scalpers and trends they take the first scalp and then they never get back in right right and that's why Traders should focus on swing trading because they'll miss too many trades and how do you get back in um you can see where to get out if you're wrong you don't upload 50 you upload a bear bar closing below spin point below 51 below um 56 or 57 below 61 right and where do you get long again I've said several times already today

if if the market is if it's not if it's not a good short then it's probably still long and you have to just wait for a bull bar close in there as high and place an order to buy one take above the high of the bar and just do it and hold on and if you find yourself doing it exiting with one or two points profit you know go to Walmart go out and take a walk for 10 minutes do do something just stop yourself from doing that right if you're a spring Trader you know

you cannot be scalping if you're a swing Trader then swing trade and once the market is going a while you know let's say you bought a 52 in the Market's up here uh you may tighten your stop maybe you'll put it the size of a scalp let me just talk a little bit about that I said you can get up below a bear bar closing below its midpoint and then buy again above the next Bull Bar closing there is high all right or you can also get up a little Bull Bar if the market goes

far below a bull bar you cannot hold forever because sometimes it'll go below a bull bar and go really far below that bull bar if you're short you can get out above a bull bar closing above its midpoint above 23 or you can get out the size of a scalp above 22. so if 23 was a big bull bar closing up here 10 points above 22. you don't want to get up here you know the size of a scalp above 22 and why the size of a scalp because if it went up the size of

a scalp then a bull buying with a stop above that bear bar made money okay and you want to be holding short at the low in a market where Bulls are making money with stops Okay no Okay so you're willing to buy at the high of all these boulevards at the high of the day as long as the market continues strong like that and if you see Bears making money with stop orders okay then the market is not as strong as you thought and you cannot be holding long from the high right but if you

see bears not even making money with limit orders then it's really good to get long so let's say a bear sold on a with a limit order at the high of the day betting this breakout would fail right and so you sold and sold more Five Points ten points higher over here he places a limit order to get out break even at his first cell at this price hoping to get out break even on this first cell and with this a profit on the second and third cell and the market came down but look at

the 52 low did it go one tick below the breakout point the 19 High it did not so those Bears who sold at that high with the limit order and sold more higher got screwed okay so limit order Bears we're losing money same thing here let's say a bear sold at this high they get filled here sold more Five Points higher 10 points higher and they placed a limit order to get outbreak even here and with a profit on their higher buys and then you get this bar 60 uh was it 1558 okay it gets

near the price they needed but did not get one tick below it had to get one tick below it for them to get filled right the limit order bears are not making money all right it's easier to make money with limit orders than stop orders right you can even in Trends you can bet against a trend with limit orders right but if if you're if you if if you're selling in a bold friend with stop orders and you're making money the bull trend has probably become a much weaker bull Trend like a bull Channel or

has probably become a trading range or possibly even a bear trend so if you're a bull and you've been buying at the market or at the high and now you see stop order beers making money you know you cannot be buying at the high anymore you have to switch and buy pullbacks right that's what I'm saying that you get out the size of a stop order scalp below any bar including below a bull bar because if the Bears are making stop order money with stop orders then the bull trend is not the bull Trend that

it was it's no longer a really strong bull Trend and therefore you cannot belong at the high of the at the high of the day right that makes sense okay I want to I want to come back to the charts but I wanted to ask you um a question about uh your journey and um in the in the you mentioned that it took you 10 years to become consistently profitable um do you was there ever a time when you felt like you weren't going to be able to do it and that you felt like you

were going to fail and if and if you did feel that how did you get through those times I I never I always believed that I would succeed because I knew that some somebody was making money consistently I just I I never worked for Goldman Sachs I never worked for Morgan Stanley I never worked for uh BlackRock uh and you know so I have no personal knowledge of that but I had to I just strongly believe that somebody out there is consistently making money you can look at the stock price of Goldman Sachs they're making

money but that's not necessarily from Trading you know they they do IPOs they do public offerings so they do a bunch of other stuff but um you know I just honestly believed that someone was understanding how to make money by looking at charts and I I that there was just you know an unshakable belief I'd look at charts and I'd see a chart doing that or the opposite going down and there must be some way to make money out of that so I just totally knew that somebody can do it and if somebody can do

it why can't I it's not like they have some secret thing going on that Goldman Sachs is secretly buying well if Goldman Sachs is buying it's not a secret this is what happens when they buy okay you know so if Goldman Sachs Morgan Stanley and you know all the other hedge funds buy this is what happens I can see it on the chart so they're not doing anything secret it's there and I can see what they're doing I want to do the same thing so I want to buy and you know I'll make money just

like they're making money so I always felt that um I could figure out and figure it out and um you know it's an eat which you kill business right I still have to be out there um you know killing stuff every day right so it's not like you know you you at some point you get on Easy Street and you just it just you know like like a savings account and you get interest every day that's not the way it is every day you have to be out there uh working and trying to be good

and you never have to be perfect and you never have to be great and you never have to be a lot smarter than everybody else you know you just have to be consistently good some of the best surgeons were not necessarily the smartest guys but they're they're just really consistently good you know so you look at you just look at their skills and their basic judgment you know they're wise they're not necessarily high IQ but they're you know they're able to say objective and they're able to consistently do what they need to do you look

at the chart you know on a chart like this I probably see 50 reasonable Scout trades with stops or limit orders and um you know I've never once traded a a day perfectly you know sometimes I've traded perfectly for a couple hours right but stuff happens you don't have to go to the bathroom I gotta eat you know I get distracted I got to do a podcast with Faisal you know what happens and and plus it's just hard to be that connected to the market for six hours and 45 minutes so 81 bars so but

you know a lot of times I trade perfectly for spurts but I've never once traded 81 bars perfectly yeah you don't need to you don't need to be perfect you just need to be good and consistent and unemotional objective and you know comfortable with the math but it takes a long time to get comfortable with the math it takes a long time on getting used to the idea that losing regularly is part of the job you know most days I will not win on 90 of my trades you know you know some days I you

know some days I'll go several days in a row scalping and I'll win on every trade 100 of the trades but you know you know I don't worry about winning 100 of the time or 90 of the time I know if I just do what I what I know how to do I'll win often enough so that I'll end up with money and so other other than that unshakable trust that you could do it what do you think is another a personality trait that you would that you feel is most responsible for you becoming as

successful as you become yeah I think this is maybe the single you always hear about discipline but I think more something more important is just honesty you know just be honest you with yourself you know um you know look at what you're seeing and you know be honest don't don't say that it's going down when it's going up right it's going up you know just be honest you know it's not going down it's going up it's going up right and don't don't say oh maybe maybe this time it'll be different no it's it's going up

all right so you just you know see which is you just be honest you know just you know look at it you don't you don't come up with these crazy theories that somehow it's not going up it's going up you know I don't know yeah yeah and there's also there's another there's something you said in the room a few years ago that really stuck with me uh it's incredible life advice but for trading specifically you mentioned that um you know when you make a mistake or um you mess up at something there are so many

people out there who want to put you down they're gonna they're gonna make you feel like you you deserved it they're gonna want dates some people want you to fail and you said I'm never going to join that party I'm never going to be one of the people who puts myself down that's right and like because if you think about it there's you need you need Capital preservation but if it's gonna take seven or ten years you need self-preservation you need to make sure that your emotional state stays stays preserved and that thing you said

to me or the thing you said in the room really stuck with me because I realized that you know you have to be an advocate for yourself totally totally absolutely you know you have to you have to never be hard on yourself that's everybody else's job you know so many people in the world enjoy you know seeing other people suffer right so you just have to just realize just accept your shortcomings except that sometimes you're going to screw up you're often going to screw up and don't get hard don't be hard on yourself just say

yeah you know I screwed up I'm trying hard and you know tomorrow I'll try to be better or try not to make the same mistakes and um you know and just and just trust that you'll be able to you know to to do it well enough to consistently make to make money I want to say one other thing you know you're talking about scalping and swing trading um I want to show a slide here you know I talk about this slide every now and then and so I can find it it's probably one of these

yeah okay this is the Dow Jones Industrial Average um going back 100 years okay and the point of this slide is um you know you're asking about scalping and swing Trading anybody can make money trading and you don't have to be a genius right you just buy and hold so if you're 25 years old you have a thousand bucks on your IRA just buy uh and hold you where do you have what do you buy buy an ETF that you know buy spiders or buy some you know you know any of the ETFs that follow

in indices and even if you bought at the high of the 1929 crash and you're 25 years old and you held through the market dropping 89 percent you know 20 years later you made money and 30 or 40 years later you doubled your money this is a log chart and um so you don't have to be a genius to trade you know I mean you know especially if you're young and with your retirement accounts um and you just buy and hold just keep adding and never exit and look at this you know we've had 56

Corrections 49 you know 48 60 Corrections and you know and we had a 34 correction during the pandemic you know you're going to have them but you know just you know in your retirement accounts that you just take um an index fund and just hold it forever and you can and you'll make money so what about day trading well if you make money um on a yearly chart um the better the the smaller time frame chart that you have the the more well let me do this go back over here right on a um you

know five minute chart you know if you add up all these legs it comes off to a lot more and then the range of a day and if you add up all of these legs on a five minute chart over the course of a year it comes out to vastly greater than the total points from the low of the year to the high of the year right so the shorter the time frame the more profit potential you have and and for everyone there's a sweet spot you know some people and only trade the yearly chart

you know they just buy and hold and Exit 30 years later and those people are absolutely going to make money and other people can you know Buy and Hold and get out in three years other people can buy and hold or sell a whole short on in three days or on you know or a week or two right and the better you are the shorter the time frame that you can trade the more money you're going to make if you're trading well the short of the time frame the more money you're going to make and

and everybody has a sweet spot you know for me I like the five minute chart you know I feel very comfortable with the five minute chart but if I put up a 15 second chart um I'm probably not going to make money and plus I'm not going to have fun so it's a balance you know I always talk about how you're training to make money but you have to be in your comfort zone you have to be uh happy you know the goal of life is happy you know having money makes you happy right but

you know earning money you have to if you're going to be doing this a long time you have to be happy with what you're doing so not only do you have to find a way to make money you have to be find a way to make money that you enjoy um doing so and for some people uh it's five minute chart some people might be a 60 Minute chart some people might be a daily or weekly chart it doesn't matter you know if you get good at it you're going to make money you know you'll

make more if you're really good at trading a one minute chart and taking 100 trades a day but you know nobody you know nobody's going to do that you know computers might do it but people are not going to do that right so there's a sweet spot where if you can capture or the the meat of the legs then that is holding all the way through if you can capture it on the way up and then pot and then by lower and capture it on the way up and buy lower if you can split it

into the legs and capture most of that you'll make more than a swing Trader but you have to find the sweet spot for yourself right you know if you look at any chart on any given day they're usually 10 to 20 reasonable stop entry scalps and at least 20 or 30 limit order scalps so you know so the trades are there but you're going to take them and you got to manage them correctly and you can't screw up so it sounds simple but but it's not so most people should wait for the best setups the

ones that are most likely going to lead to a swing and manage those correctly right now speaking of that I think that's a really important topic that I wanted to touch on um so I see I see different forms of technical analysis as like different languages telling the same story or telling the story of the market and there are some simple languages that explain it very briefly and just give you an overall picture like they might say the price is above the moving average it's in a bull trend and there are other languages that are

much more complex like BPA and they tell a much more compelling story so they might say BPA might explain the chart as a small pullback will Trend above moving average and two open gas and a measuring Gap above bar 17 and then even if it gets the measured move Target we should still get three lows below the moving average one close below the moving average because we haven't touched moving average all day so the information present is the same but the language that tells a story can determine how much information you get from it and

so the obvious benefit of BPA as um as a storytelling um method is that it gives you so much more accurate information but by the same token it's also so much more um difficult to learn because there's so much complexity you pretty much talk about the theory and the probabilities of everything and so parabolic wedge you know the fade breakouts in trading ranges you know breakouts does follow through you know bull Flags bear Flags but then once you have all the information how do you turn it into a workable system for yourself uh administrators they

should patiently wait for what appears to be a reasonable swing setup you know for example a double bottom a wedge bottom double top a wedge top or for a strong breakout especially a strong breakout with follow through and then trade with a swing and usually the best swing trades are going to have um good signal bars so you wait for a pattern and you wait for a good signal bar and if it's a buy you buy Above the good signal bar put a stop below the most recent low so if you buy Above 49 put

a stop below 48 if you buy Above 35 you put a stop below 34. and um and then you swing trade you just hold on until it no longer looks uh and it's no longer doing what you want it to do and then you exit and do you think Traders should focus on all available swing setups or should they just focus on like one Trader would say I'm going to focus on both flags and bear Flags only would you recommend that or would you say would you recommend that you take every reasonable swing setup that

you see yeah I don't think it matters it's personal preference you got to find your comfort zone you know some Traders like breakouts some Traders like the major reversals some Traders like pullbacks bull Flags some Traders take it all so yeah I don't think it matters whatever you're comfortable doing and like like I said don't be hard on yourself so if you're if you if you're pretty good at trading bull Flags but terrible at trading breakouts don't worry about it just trading the bull Flags nobody's going to take most and most people are going to

see them a bar or two late and they'll miss them but if the trade is really good you can interlate remember I said just trade small so if you don't buy Above 49 or above 52 you could buy about 54 right you stop initially might be the low 52 but um you buy Above 54. and just trade small um you know once you see I think one of the mistakes that Traders make is if they don't take a trade or if they if they miss a trade and then the market starts to do what they

thought it was going to do they start saying oh I get away for a pullback well if the trade is really good you ain't going to get a pullback it's just going to keep going on without you so as soon as you tell yourself oh I gotta wait for a pullback as soon as you have that feeling buy at the market and trade very small and use a wide stock you know if you're hoping for a pullback that means the market is really strong and everybody is looking to buy pullbacks even really tiny pullbacks so

you're going to have to wait a lot of bars before you get a pullback that you want you know everybody else is buying you know one point pullbacks two point pullbacks while you're waiting for a 10 point two-legged pullback um you're going to wait a long long time and you're missing a great Trend so you know once you look at something and say boy I wish I took that by by the market you know buy small 20 of your position but buy the market you know anytime anytime you look at a chart and say boy

I wish I was loan you know you've got to just just buy all right don't wish and don't wait for the pullback just buy that makes sense and actually I wanted to ask you um you often um mention that you think beginners should stay away from scaling in because the mistake that they make is that they trade way too big on the first entry and then when it's time to actually add they they get scared because they traded too big on the first one right so my question for you was if a Trader is is

managing their risk appropriately and using the appropriate size do you think scaling in is actually beneficial for beginners because what I noticed for myself is that when I started I felt a lot of pressure to get that entry perfectly right and when the market was going up I thought I don't want to buy here because I only have one I only have one bullet I only have one shot at this so I don't want to buy a position here I'll wait for a pullback and then it doesn't come and so I thought if I could

split my one order of let's say five contracts into five orders of one contract it might actually take the stress off of me and be beneficial for me would you agree with that and what would you recommend for for Traders I think most beginners you know most people who trade um their Ira accounts or invest in their array accounts are scaling in you know they might put a thousand dollars in every month right right they're scaling in so everybody scales in right you're talking about scaling in as a day trader great and the issue is

can you trade small enough right and you know as you know I always you know you brought up the illustration you know yes there's a good example we had those really big legs up and down but then so if you bought the close of four um you know you buy all the way down or you give up right if you sold uh 22 um do you sell more as it's going up well it got back down there again but it went up you know 30 points before I get back down to that bad bicycle bar

22. right so you know most traders who sold 22 sold more Five Points higher 10 points higher would not keep selling um you know they would they would get out and take a big hit and they wouldn't reverse too long usually if you're wrong usually if you're taking any trade whether or not you're scaling in and the market does the opposite of what you think and you switch positions you're going to make back what you lost so for example yesterday let's say you bought the close of that bar at some point you you've got to

decide you're wrong maybe below that bar maybe below the spare bar so if you let's say you buy the clothes of that bar right there and you decide you're wrong below this bar right here and only if you reverse you can make just about what you lost on your first right here you would not have made it you would have gotten out there you would have made back some of your loss but um in general if you take a trade that seems reasonable and the market does the exact opposite um instead of scaling in you

should think about changing directions and because usually you can make back just about what you lost um well here's a better example let's say you're selling below bear bars sell below that sell below that sell below this and you get a bull bar especially if you get two bull bars you know I would I would get out instead of scaling into shorts hoping that it will come back to the high of that bar this beer bar is a bad bicycle bar and normally if you have a bad bicycle bar and the market goes up it'll

come back to that high but sometimes it takes a long time to get there right so instead of holding short and scaling in um I would get out above a bull bar closing room above us midpoint or I'd get out the size of a scalp above the high of that bear bar and get out around there and then you can look to sell again up here expecting it to come down there well most most beginners um you know they buy the market and they buy more Five Points lower 10 points lower um can they double

their position above a bull bar closing near as high you know most beginners will say no I can't do that in fact I'm just going to get out right so you got to trade really small if you normally trade one e-mini right and you trade small you're like um let's say you bought two micro immunities and two more and two more right so now you're getting along six you know and then you get a bull bar closing there is high you're expecting to come back up and test this area and you buy six more a

little bit more than normal size position right um but really hard to do so in in the appropriate contexts if a Trader is willing to trade small enough um like in a in a broad trading range do you think that if they're willing to trade small enough it is worth it to to scale in in like for ninety percent of the bars when it's okay if you buy it or sell yeah you know it's a trading range if you're scaling in the Longs at the bot in the bottom third um and scaling into shorts in

the top third I think that's perfectly fine but what happens with these bad trades is um the one time you lose let's say you win 80 of the time the one loss is usually so big that it wipes out all your losses let's say here you're selling with limit orders at today you sell limit orders at the height of the prior bar it comes down you make Five Points right you solve a limit order high of the bar sell more higher sell more higher and then it comes down but it doesn't you know it doesn't

a lot it doesn't get back to your first cell and then it does this you know you got to make decisions you know are you going to get out Above This Bar are you going to say it's not bullish enough you get out Above This Bar you know what happens is at five minute bar sounds like if I got five minutes that's a lot of time it's not a lot of time you know you you know you're not as certain as you want to be and you'll tend to hold on to the position of too

long and you'll end up losing uh a lot you know and wiping out a lot of um your past winners so you know stuff like this or losses um if you don't know what you're doing the losses are so big that you know here you are you know using scaling in scalps um and you won the last five in a row and you're thinking wow I'm pretty good all right and then you get that and it just wipes you out so the low you know kind of Black Swan type things low probability uh but huge

risk um they can really wipe you up so um if you do well not just scaling in any kind of trading once you see something that tells you that you're probably wrong you get you got to get out and take your loss and not add to the position and hope that eventually it'll come back far enough for you to make money right yeah I think that's that's an important point because when you're scaling in your first entry is so small that even if you win four or five when you take the full loss on all

your contracts it'll wipe out way more than what you made so you what you're saying is if you're going to do that you have to be very good at switching your bias and realizing when the premise is no longer valid so that you don't take those massive losses yeah it's hard let me give you another example here so you sell this High you sell more five and ten fifteen points higher right and say oh that's bad it's probably not going to come back below this high so instead of decide trying to get a break even

on the first trade it was a profit on the other trades you just decide maybe I better just get out break even on the entire trade and it did come down far enough if you did sell that high and sold more 5 and 10 points higher right it did come down far enough for you to get out break even on the entire trade right and so you'd get a loss of five points on your first cell you get a profit of five points on your third cell and you cannot break even on your second cell

you know most people are not going to do it it happens too fast and it's too emotional and it's it's emotional because people are training too big they think they're trading small but you know they'll soon discover that they didn't do what they should do and the reason they didn't do what they should do is you they're training too small they're thinking about their money and instead of analyzing what the market is doing right you know one of the I understand the argument that you know I want to get rich I really want to get

rich I want to become a Trader I want to get rich but you know that's not you know you're jumping ahead the first goal is I got to learn how to trade I got to stop losing money I have to start consistently making money I have to start to grow my account I have to start to increase my position size and then you say I'm going to get rich right and people just think I'm a Trader I'm gonna get rich but there are these other goals that you should really focus on and you know getting

rich that'll come naturally right first you got to consistently make profit and then grow your position and you don't have to have a huge position to make a pretty good living as a Trader you know if you simply take that one 20-point trade a day that's a thousand dollars per e-minning contract right and if you get three of those a week that's three thousand a week that's under fifty thousand dollars a year and if you go up to three contracts you know you're around a half million dollars a year you know you don't have to

trade 100 contracts to uh to do pretty well yeah right and and what would you say So based on that idea that the beginner is like your expected return as a beginner is just don't lose money like zero percent return um what would you say are good expectations for beginner intermediate and expert Traders so beginner is just trying not to lose what is a reasonable return that an intermediate Trader should expect what's a reasonable return like daily in terms of percentages that an advanced Trader should expect well what happens is um the more successful you

are the more accounts you have and all of a sudden you got a bunch of money here and a bunch of money there and you're not trading all you know you're not trading all your accounts you might be trading one or two accounts let's say you trade one account let's say you have 15 accounts right and um you know so what's my return on that one account or what's my return on my trading portfolio which might be 10 times bigger all right so um and you know so if you have a whole bunch of accounts

you may um trade maximum margin on one account which is still only you know tiny compared to all your accounts so it gets really complicated um you know when I used to trade I traded online with guys I don't know 15 years ago a long time ago and 20 years ago I don't know a long time you know when the internet started coming out and instead of talking about percentage returns we talked about points uh compared to a day's range and um a good consistent Trader wants to be making about a quarter of a day's

range so if the average range is 40 points they want to be averaging 10 points a day right and that that that's kind of like a satisfactory minimum or a really good Trader and um some days they'll make a full day's range so 100 100 so if the day's range is 40 points they make 40 points on the day and sometimes you'll get big big swing days and if you're a really good Trader you might make twice the number of points in the day's range so if the days average day is 40 points you know

some days you might get 80 points all right so instead of thinking about what percentage of your account right um you know it's it's better to think about what percentage of the day's range and um beginners should be trying just trying to make anything right 10 or 20 of the day's range but when you're starting to become pretty good if you're an active day trader you're thinking about yeah I really want to make at least a quarter of the day's range um consistently and then if you become when you your goal for like the ultimate

goal is like the full days range or some in some cases double and and that goes to your earlier point where if you're trading the individual legs then you can make more than the day's range because you're making money on the way up and then you're waiting for the pullback with making money you can actually make more than days also you know as I said on an average day there are probably 10 reasonable stop entry scalps so a five-point scalp and 10 times 5 is 50 points so you know if you just if you just

scalp you can do that and you can make it in a day's range and I said you you're looking for a swing trade that's equal to 40 of an average day's range so if you just take one swing trade um and you're consistently good at that you know that's 40 of a day's range which is really good and if you do it three out of five days a week maybe you're averaging 25 of a day's range right that makes sense um from from the room you seem very matter of fact about the trades that you're

in like you never know if you're in a trade or not or it's just like you're very calm do you think that has come over time because you're just so confident about the probabilities or have you constantly been working on that great of yours to stay calm is it something that you just developed because now you just know what's happening on the chart or were you were you actively working on staying calm no I never you know I mean we've been doing this for a long time you've tried everything and I've I've you know I've

done psychology courses I've talked with psychologists you know like way back when I was fashionable in the 80s and I think it's a bunch of it's a crock of well I don't think it's helpful and um you know what happens is you just you know if you trade small enough I always talk about training the I don't care size in that size obviously gets bigger the more money you have right but that's the key you have to stay objective and calm and peaceful to consistently make money and to do that you know you're going to

lose you know regularly every day you're going to lose on some trades and but you you know it can't be big enough that you start focusing on it oh my gosh I can't believe I lost you know three trades today or you know or three in a row or something you're going to be trading small enough so that you you can just keep doing the right thing trusting the math trusting that if you consistently do the right thing you're going to win you know in football American football you know Tom Brady was really good at

um you know comebacks you know he had more comeback victories than any other uh Team fourth quarter coming back so he's losing the fourth quarter you know he's out there doing anything special he's just you know consistently doing um what he does all game and he's just trusting that if he's consistent at it you know the math is going to work out um you know and if you're losing in a game and you start trying to do you know 80 yard passes all the time you're going to lose but if instead you just keep doing

what you've been doing consistently you know you have a much better chance of winning and same with trading um I remember I've come across guys not not recently who when they well tennis you know sometimes some guys are just really easy to beat they have some great shots but if they start to mess up they just start hitting harder and harder and harder hoping that they'll blast it by me and all they start doing is hitting it into the net or hitting it out right you're just going to stay calm and just you know consistently

just try to um to play well and not and not try to do something that is a much lower probability you know and the same with trading you don't try to start to take a whole bunch of low probability trades to quickly make back what you lost you know because you're just going to lose there's more probability you're going to lose more so would you say that it was it wasn't it wasn't necessarily and correct me if I'm wrong but it wasn't necessarily working on your psychology that helped you but it was the probabilities that

guided you and just trusting doing the right thing every day and that's what gave you the this kind of level of certainty of the probabilities and the calm demeanor do you feel like it's more about the numbers and the probabilities for you the math the math the math cures the psychology stuff right so like because I always I always thought that about you that you know in every situation it's 40 to 60 percent but you have 30 plus years of certainty that you know that if I do this over 30 years I'm going to make

money so even with the uncertainty of each trade you have the certainty of edge of of the long term and so that gives it seems like that gives you this piece for every trade that you take yeah let me see for the fullest 10 years when I was losing I was incredibly miserable you know I can't tell you how stressed out I was and how frustrated I was and how angry I was at myself and you know I you know I was so confused it was just a miserable existence especially those first few years and

um and how do I get rid of it I just you know started getting comfortable you know every day at the end of every day um I print out charts now I don't print them out now I just draw on them every day you know Richard who runs on my course website and he said Ali you keep making all these charts you know why don't you cut back I tell them I'm not going to cut back you know that's my practice and do it every day I look for all the major patterns every day and

you know and I've always done that and I'm going to keep doing it because it keeps everything fresh you know for example today I knew the odds were very high that we were going to break out one way or the other right I knew that because I regularly see this and you know I I look for it and I categorize and I you know create a chart and I save it in the file for called trading range breakouts um let me just see if I have this is my Encyclopedia of charts SO trading range day

TRD and now just for the record you you've been doing this for a lot longer than the encyclopedia has been around right like you've been doing this as your daily practice for many many years since the 80s yeah I used to print out the charts and I used to have folders and uh and I had you know thousands of pieces of paper and here a trading range today with the late bull Breakout you know turning me today with a light bulb Breakout trading range day not so much of a breakout but different way different ways

to look at it right trading range the label breakout so it's not like today did something that I've never seen before I have lots of examples of it and I have examples of bear Breakout um you know that's that's why I do it it's it's you know to keep you know it's practice so so that if I see something I quickly recognize it and I immediately know you know what to do a lot of times I'll look back at the slides in my encyclopedia to get a sense of probabilities you know if the market breaks

out at you know with two hours left in the day is that different from breaking out in the middle of the day if it breaks out in the final 90 minutes is it different you know what happens on all right let's say one other thing on are talking about how that bar with a big tail on it that big breakout bar today yeah um it was a really special bar I remember the there's an fomc bar that has that or that big tail on top a couple of those yeah and but that's that's a good

memory on your part I was in your room for a while so it's not but one I had a big tail on the bottom oh look at this yeah that's the one yeah big Bill blar the big tail on Top This Bar was a big bear bar briefly and it ended up closing back at the open and you look at that barn and say wow that's very different from all of this stuff so it's a special bar yeah so you know you just know if you trade long enough you see stuff and you know just

like you're familiar with that bar you know because I've shown it several times and you've probably looked at it on your own you know I knew this bar was that kind of a bar you know it's a heck of a lot bigger than all these other bars I knew we were going to get a breakout or that we probably would get a breakout you know some trading range days stay as a training manage day all day you know you get about two of those a month that they stay very small and sideways but most you

get a breakout and when you see a bar like that you say yeah that's that's the kind of bar I want to see and the tail and tail you know it's probably a bull flag on a smaller time frame yeah and that's I think that's a really good point because if you're looking at the breakout and you see the tail that might frighten you if you don't have 100 examples saved with the tail on top knowing that it's not a problem so right the fact that you have all that data to be like no the

tail is not a problem it's probably a little flag I'm going to stay long I know that this is a dominant surprise it's going to get continuation so I think that's important is to have that that bank of data in your mind or in a folder or somewhere so that you can refer to them and know what the probabilities are even if there's a tail and even if you don't know that you know it's a bold breakout and you have to be looking to buy above a bull bar closing near its high so you just

wait for a bull bar close to nearest high this bar or that bar or that bar and just take the why right and and you mentioned in your 10 years that it was it was a tough time for you and you still believe that you you'd make it but it was you said it was a miserable experience um it was unbelievable it was you know I cannot I cannot make you or anyone understand just how unhappy and how stressed out I was no I I I get that I think I'm feeling feeling something similar um

but um if you could if you look back at those 10 years um what would you what do you think you would focus on to help speed up the journey if you could just focus on a few things and what would you avoid what do you think you wasted time on that you didn't that now in retrospect you realize you know that was a waste of time I should have should have focused on this this and this I would just focus on you know like I said honesty you know just being objective looking at the

chart and trusting the math and trading small right and what I would not focus on is desperately hoping to get rich quickly you know I Gotta Buy I got I got to make money to pay the mortgage I got to make money to pay the car loan or buy food you know that that is that's deadly because you'll end up trading too big and taking too many low probability trades hoping to win a lottery ticket you know um with a lottery ticket and that's that's a losing strategy you know how many people do you know

who have made a lot of money from lottery tickets compared to those who have lost regularly huh no no don't you know just accept where you are and try to work through the steps you know stop losing money um you know consistently make money grow your account and then increase your Precision size right so so Focus sorry go ahead oh sorry yeah be patient and don't be hard on yourself right you're just constantly trying to be objective and do what you need to do and if you're consistently unable to do it on this time frame

trade smaller and go to a higher time frame right were there losses in your career that um that took a while to get back from emotionally and psychologically and how did you overcome those big losses I never really had big big losses I always trade small traded small enough so that it was a never disaster you know I've had you know strings of the losses you know like sometimes I'd lose every day you know or several times a day for several days back in the 80s or early 90s and you know sometimes I take a

day off you know I would still wash but not trade um but now you know that doesn't happen you know you know I never lose enough so that you know I you know when after the market I think about it I don't think about it you know I just you know you know I just I just move on I never Look Backwards like I'm just confident that there'll be plenty of opportunities tomorrow and the next day and the next day so whenever I lost I'll make back right and I guess just the the consistency that

you've had over the last 30 plus years I feel like that also makes you more patient because you're not rushed to take this trade today because you know that if you don't get in on this pullback you can buy aboveable bar and if this doesn't happen you know you'll get it set up in five minutes or in 10 minutes and just knowing that seeing it over and over again you just never you never seem rushed so right I guess that that's what adds to to your patience yeah yeah and there's always another trade uh I

one of the fears I had way back um a long time ago was uh that the market would never you know that we get a series of training each days and it was just going to stay sideways forever and it's not going to happen sometimes it's sideways sometimes it's up sometimes it's down and it's all it's always going to change it's always the market is constantly probing in every which way you know not just in terms of support and resistance but in terms of the size of bars the size of legs you know it's always

doing something different once everybody starts seeing what it's doing there becomes fewer and fewer people to do take the opposite side of the trade so it can no longer do what it has been doing it's going to do something different right what are the most important differences in how a Trader should trade the am session versus the PM session you know I've traded in the same I just look for the same patterns support and resistance same stuff if I trade them the same is it open it opens the most important time of the day because

you have the highest probability of getting a 20-point swing trade right because a lot of times the market will make a quick quick move and then just go sideways the rest of the day so um but you know if you get a big move late in the day I trade it just as the same as I would if it came back here right I think one one thing you mentioned in the room is that you have to be um you should be a little bit more careful on the open because sometimes the bars start off

really big and then they get really small later on so yeah right so you mentioned that um not to be like be very careful about how much you're risking on the open because you may not have a chance to make it back right right right trade small don't worry about getting rich just worried about doing the right thing because you know like you said a lot of times on the open you get really big bars so if you get a loss it's a real really big loss and then later in the day um when you're

making the money back you're finding that the bars are small and you're making very little per trade so you always have to trade small it's you know whenever the bars are big and you think oh I can't trade um if you if you if you're confident about the pattern just trade twenty percent your normal position size and if even that is too big then you just wait right is there a general rule for how long a correction should last so like a high tubal flag or a legible flag and a bull Trend so for example

the bull flag today after the breakout on 50. the the flag on 51 is just one bar and then 52 is the buy Above So that one that bull flag didn't reach the moving average even buying above 68 didn't reach the moving average so how should it how would a Trader know how long a bull flag should last and if they're okay to buy far above the moving average or if they should wait for a deeper longer pullback the stronger the trend the more you're going to have to buy far above the moving average right

and the more it's a channel and the the bigger the legs in the channel the more you're going to be buying at the moving average but a really strong Trend like this [Music] um you know you're not you know look at this it was above the moving average for 30 bars right so if you wait for a pullback to the moving average you're not going to trade right so so it has to be based on the context and the strength of the trend right and as I said if ever you look at a trade and

you start hoping for a pullback bye just buy small if you're hoping for a pullback that means you believe the market is very very strong and just buy small and you add to it as it goes your way right do you see any value in using level twos in your trading no zero because you're that was that was fast uh that's because you just I I could I could point out 50 reasonable trades on this chart you know um by the low of one by the low of five by above three maybe by above six

um sell above uh nine place a limit order to buy around the sixth low buy the reversal up you know almost every bar there's something to do and is level two going to give me that many uh trades no yeah so you already know where where there'll be buyers below where there'll be sellers above so you just yeah yeah you know you know you know you you know and if you can't tell then you know there are sellers above and buyers below right awesome and last last question is kind of just to close it off

if someone is struggling um right now they're they're trading I don't care size they've gone through all the material um they're still trying to find their path to profitability what would you say to stop doing everything you're doing and start doing this now what would that be I just go to the minimum position size like one micro e-mini and wait for a reasonable pattern like a double bottom on the open or a wedge bottom was a really good signal bar and then I'll just trade that and swing trade it take your trade put the stop

below go to Walmart and come back in two hours now uh thank you so much for your time really really appreciate it um just I just really appreciate everything you've done in terms of sharing knowledge and especially for for coming on the podcast and uh sharing your thoughts uh thanks Faisal for giving me the opportunity you know it's always fun you know you're always smiling I always like to say happy happy person I hope that your audience finds this is helpful thank you