Verified Trader: I Took $2000 To $12.3M Trading ONE Main Setup!

0:00 This trader went 158 days straight without taking a single loss, turning a $2,000 check to over $9 million. >> There's, super, high, win, rate, strategies that have pretty poor riskreward. And I've always been on the opposite side of that where I would rather sacrifice win rate to have amazing riskreward. A lot of times that happens when I pyramid positions. I might have a position that I could close for a small profit, but I'll add to a winner. I make 10 times as much because I aggressively added to a winner. Introducing David Hanlin, better known as Laptop Legend, a trader who lost nearly a million dollars in an hour. And he didn't just survive. He rebuilt his entire strategy to become one of the most disciplined short sellers in the game. In this episode David reveals how he turned $10,000 to a million dollars in a single trade, as well as his exact three-step process to spot the top of the move with scary

0:46 accuracy. Normally, I like breakouts but they do inherently have a much lower win rate than a mean reversion type strategy. if you know how to time it correctly. >> Explore, that, with, me., I, would, just assume a breakout with the trend would be more favorable and a trying to pick the top seems more dangerous. >> When, you, get, in, a, breakout,, the, idea, is you want to have pyramiding is basically the idea of when the trade is going your way at a certain point, it develops a structure where you can realistically change your risk and move it to a tighter position. You can then add to your position and get up to the same dollar risk level that you had originally. And so if you have multiple opportunities where you can move your stop up and get a tighter stop and then increase your size, you can get to the point where you might have had a 10k initial risk on a trade, but you just get so big that that 10k initial risk

1:32 turns into a million dollars. If you break even a trade or if you move your stops to break even, you didn't trust your analysis. You haven't done the work correctly. Just overall managing a position, it should be a more set and forget thing of like if you made a decision to get in, you got to see it through. What would you say to that kind of belief? >> I, can, understand, that, argument, because I want to take a technical deep dive today and really explore what it took to get here, the specifics. But I want to start off with when you see trading, do you explore it as an art or a science? I think it's a little bit of both. Um there's definitely scientific aspects to it where you have to be very analytical and go through the past and maybe um yeah study what happened and come up

2:18 with a thesis and go through all the charts and figure out exactly what it is to to prove your strategy. But at the end of the day, um the way that I do it is is kind of an art because I'm not one of those extremely systematic people um who can say if a stock goes up 10% for for three days straight and then does X and X then I'll bet this much and cover here. Like that's not what I do. So what I do is I just I look at the past and I take that information and use it to um >> basically, make, a, a, thesis, of, what, I expect to happen. And so that's that's like intuition from the scientific side of of studying it. So I I used to h I had this conversation with many traders and it used to be more in the science category is the conclusion I came to.

3:04 You you make the scientific process to build your edge and then you know you follow the data. It's always about data and then uh this trip on this US tour I've spoken to quant traders who are completely systematic and use their algos and then you know a lot of professional traders and I realized a lot of these guys are intuition and market experience and decades under their belt uh and how they deploy to get super interesting. So, I want to navigate this of like um as you've had years under your belt, how that how that explores in terms of um how you deploy your edge. But before we get there, can we set some foundations on what are your key performance indicators, KPIs in terms of trade frequency, win rate you aim for, profit factor, risk-to-reward and average trade, average hold time just so we can kind of get a framework for the conversation. >> Sure., Um, I, don't, have all of those data things um

3:51 specifically. I mean, I guess I could try to go look them up. Um, I know my win rate right now is about like 41%ish um over the course of my career. Um riskreward, it just depends per trade. Um, profit factor is something that um yeah, I I don't have the the current numbers overall between all my trades unfortunately. But I would say um there's there's different types of strategies. you know, there's super high win rate strategies that have pretty poor riskreward. Um, and I've always been on the opposite side of that where I would rather sacrifice win rate um and have a sub50% win rate to have amazing riskreward. And a lot of times that happens when I pyramid positions. Like I might have a position that I could close for a small profit, but I'll

4:36 add to a winner and then it ends up turning into a loser a lot of the time and that kills my win rate. You know, I could have a 60% win rate if I didn't do that. Um but the ones where it does end up going on to work, I make 10 times as much because I aggressively added to a winner. So that's kind of my philosophy. >> Explore, with, me, uh, this, idea, of pyramiding to be done effectively and if you have any recent trades to share with us around this idea. >> Yeah., So, pyramiding, is, basically, the idea of um you know you put on an initial position in a trade and then the trade begins to go your way. Um, and when the trade is going your way, at a certain point, it develops a structure where you can realistically change your risk from where it was originally and move it to a tighter position. And so when that happens, you can then add to

5:22 your position and get up to the same dollar risk level that you had originally, but now you have a larger position. And then if the position continues going in your favor, you could theoretically do the same thing. And so if you have kind of a big picture trade where there's multiple opportunities where you can move your stop up and get a tighter stop and then increase your size and then the same thing happens. You increase your size, move your stop up, you can get to the point where, you know, you might have had a 10k initial risk on a trade, but you just get so big after adding and moving your stop up that that 10k initial risk turns into a million dollars. Mhm. >> And, that, actually, happened, to, me recently on this Bitcoin breakout. Um that was like I think in the middle of July if I'm not mistaken. Um where I originally took a $10,000 risk on an

6:07 options position. Um and I was able to pyramid that into a million dollar gain after like four days. >> Wow., Wow. Story is crazy. And and when someone hears those numbers, they're like, "Wow I'm going to do that right away." If we can kind of draw a line, maybe it's a blurry line, but just kind of what is the separation between euphoria, greed chasing a trade and you know getting overzealous on an idea and over conviction versus the art of doing this correctly in terms of okay this is scaling in this is a derrisk the principle and then ladder in how do you how do you deploy that differently? It's it's very difficult. Um, you know there's a lot that goes into it. And I think a huge part of it is having put the work in before to know how the stock that you're trading moves and like what

6:53 what the tightest pivot points are that you can be adding on um and not just adding randomly into strength because if you add too much too soon uh into strength and then it pulls back like you're going to ruin your average and you're going to stop out for a loss. Um and so, yeah, I think really you just you have to know exactly where those those pivot points are. Um, and that's something that only comes through experience and just really knowing how these patterns play out and having a bunch of examples of them. >> I, usually, get, to, kind, of, entries, and, and uh break even drills later on, but we can explore it since we're here. Is the is the philosophy here that the first trade you got in with the 10K risk in this example, it's an independent trade with this independent trade idea, entry criteria, and XY Z. And then once that starts to ride into profit, do you have a break even protocol and then reuse

7:40 that principle on the next position? >> Yeah. >> Okay., So, it's, it's, uh, it's, not necessarily increasing risk. It's uh recycling the same risk is what we're doing here when we pyramid. >> There's, different, ways, that, you, can, do it. You know, um as your conviction in a trade grows, you of course could choose to use more risk than you initially had even on the on the first position. Um but typically the best way to do it is is to not do that because obviously the farther the trade goes in your favor. Like theoretically maybe the worse the EV is getting um at that point because it's already so far above your initial uh entry. So, you know, I think it it doesn't always make sense to to risk a lot more on those later entries. >> How, would, you, do, it?, Uh, would, it, be, like following it with an EMA or is it kind of market structure related?

8:25 >> Um, I, think, both., Yeah., I, mean,, me personally, I prefer to use market structure. Um, and just like, you know for example, on the Bitcoin trade, um, I had a trade back in November of last year where I made like I want to say like 300,000ish on on the breakout. Um but I learned a lot because in that one I did a terrible job of pyramiding um overall. And I just I kind of fumbled that aspect of the trade because every time um this that it was working and it would break to new highs, I would be like adding aggressively on those new highs with a really tight stop and then I would just sell those ads on the first pullback. Um and that actually ended up costing me like I think an extra $100,000 and I never got to have that extra size versus if I did it the way

9:11 that I did on this most recent trade, I probably could have made a million on that trade too. But I learned those lessons from that one where like the way that Bitcoin likes to go a lot of times is it will have like a support level and it'll wash out under that support level and then it will go once it flushes everybody out. And so that is specifically what I was looking for on this. Like the daily structure is still intact. It's it got really tight and then it broke out through I believe it was the 112 level, but don't quote me on that. Um and then once it did that then it kind of confirmed my overall thesis on the daily. So at that point, I was looking for these washes and reclaims to be adding size and risk versus the low of that wash that was under the support level versus before I would buy as it's going through resistance and a lot of times it would just clear out over resistance and then come back down into mid-range and I would just puke it at lows because I was you know oversized

9:57 with a bad average. I trade a currency. So a healthy currency market is generally maybe on a long time frame but it's a consolidating market uh unless it's a very weak currency that we're trading. But in the stock market indexes, crypto, generally speaking they're an appreciating asset. So there's a baked in trend when you are entering at all-time highs or extremely high periods, you know, around 100k and beyond on Bitcoin, for example. Um, and I remember off camera you're kind of saying some trades are intraday, some trades can even be swing. Is this idea of like, okay, if this intraday plays works out and I've got this appreciate, I've got this tide on my side, I might as well ride it into a swing trade and beyond, or is there different models for different times of the year? I think when I'm Yeah whenever I'm going into a swing trade, I always have the idea that it's going to

10:44 be a swing trade um just because the way I structure trades are are very different if not for that. Like if I'm in a day trade and I buy something and you, know, it, immediately,, for example,, in the options, I think I was up um by the end of the day on the entry, I'm pretty sure I was up like 100% on the options. You know, if that's a day trade, I would be taking that immediately. Um but because I had the swing trade thesis >> I, ended, up, holding, those, and, selling, for like a five or 600% gain um after three or four days. So uh it's just a very different trade plan when I come in knowing that it's going to be a swing. Let's take a moment to talk about a partner of the show, a leading prop firm that is funded next. And it's important for me to listen to our community to see who are you working with and how can we make your experience better. And the main feedback I heard is trusted payouts, quick payouts, ability to

11:29 scale, and affordable prices. And Funded Next has ticked all of those boxes. Not only being a top three prop firm in the industry, but also having on demand payouts. And every 10% you gain on your account, you will double your capital for free. And because in this industry trust and reliability is the most important factor. An important guarantee that they have is that if you do not receive your payouts within 24 hours they will gift you an additional $1,000 to your payouts just for being late. So to unlock all of these benefits and work with a leading prop firm in the industry, funded next. Check out the link in the description or use the code toot. Is is your main technical driver because I'm familiar with this Bitcoin play recently. is is are you are you kind of waiting for a range, a consolidation, maybe call it an accumulation, and then trying to anticipate the breakout and directional bias, or was this just one trade example

12:16 kind of thing? >> Um,, I, think, that's, just, one, of, my favorite patterns in general is just a a big picture breakout where you get a really nice move and then the stock or asset, whatever it is, um, forms a really tight range and then perks through that range. Um, that's just one of my favorite patterns of all time because especially if you if you structure the trade the right way um before volatility expands, you can just get some incredible risk-to-reward on that. Um, and if you pick the intraday spot because you know that the daily is super primed, like you can I literally risked like on um on one of the ETFs, I risked like 10 cents on BitX. I risked like 10 cents on my entry and ended up getting like $10 a share. CS. >> So, when, when, all, the, time, frames, align, it just you can get some incredible risk-to-reward. >> I'm, with, you., I, think, a, lot, of, people

13:02 steer away from consolidation because they it's noise and and it's choppy and you know this is not the mover and then they'll get into trends because the trend is your friend. Sure. But the asymmetrical gain here is really if you can get in before the you know before the move before the breakout. I want to if you can follow me uh mentally here I want to describe an inflection point and and kind of hear your elaboration on it. So, when you have a range, uh, let's just call it a box where you have equal highs and equal lows and we just got a very static range and then you shoot higher. You're breaking out of the range. Now, you're obviously going to have the breakout traders that are going to be waiting for a pull back into the range, maybe a break test, maybe a Fibonacci, an EMA, and they're going to look to go long. And then you have the other side of it, which is the same breakout, but then this is now intended to be a sweep of the highs, grabbing the liquidity and stops, whatever. And then it pushes to the same mid-range area

13:48 but, then, continues, lower., So,, you, have a point in the market. this this inside the range where the price action prior is exactly the same and then it just ends up in completely different directions. How do you differentiate uh considering yourself being kind of a breakout pattern trader here um to not be on the wrong side of the market? Um I prefer when it gets very tight. Um and I mean I think probably what is it the um I think it's called the ascending triangle is is my favorite type of pattern where you have like a flat top and an increasing slope into there. So it's like a very very tight compression versus if you have um you know a range like this to me that's still fairly loose um and it's just harder to have a defined risk point because it could

14:34 break out above and like come back into the range but it still wouldn't have broken the support and I just that's not really tight enough for me. So >> Bitcoin, was, doing, just, that, in, this period. It was ascending. >> It, was, getting, very, very, tight., Yes. Just like that. >> And, um, is, there, any, telltale, signs inside that compression that will kind of give you an idea of like it's more likely to break out in that direction not that direction? >> Um, I, mean, I, tend, to, think, most, of, the time that when you get um ascending support and like a flat resistance line I tend to think that's going to break up to the upside. Um and when you have a you know, a flat support and descending resistance, I tend to think that's going to break to the downside. And you can get the symmetrical ones where to me it's a little bit more 50/50. Obviously they can end up breaking in whatever direction. But um I love taking breakouts and I love taking breakdowns on the short side as well when you get

15:19 the flat base and the the descending. And how do you how do you go from trade idea for example this technical pattern that we're describing to go from idea to execution? What is your what is your protocol to take this as actually I'm going to enter now today with this entry this stop loss. Um there's certain things you can look at um depending on what the time frame is. Like maybe you need to wait for the EMAs to catch up or the SMAs to catch up and everything to get coiled and very tight. Um and that's usually what I would look for on like a bigger picture trade. But yeah, I mean I think once you've seen the structure of the market enough like you kind of know when price is ready to go and when it's not. Mhm. >> And, that, might, sound, like, hard, to replicate, but there's just like once

16:06 you've looked at price enough, like I've gotten to the point now where for example Ethereum right now, like it's building a nice flag and I think at some point this could break out and go well over 5,000, but um it just the flag didn't look ready to me yet. And so, you know, there's a lot of people who maybe were positioning long thinking that it has to break out. Um but to me, it just looked like the flag needs more time to develop. And so when I see that, I'm just I'm trying to stay out of that because the worst type of market for me uh where I take the biggest losses is a choppy market because I love betting um just on like the continuation whether that is um because you get a huge parabolic move and I'm betting on continuation to the downside or I'm expecting a breakout and I'm betting on continuation to the upside. But if I bet on something and then it pulls back and

16:51 I cut and then I flip short and then it comes back up, like that's where I take the big losses. So I really like to wait for just the price action to get very tight. >> Mhm., So, just, comparing, my, currency trading mindset, uh I I tried to cuz I started investing a lot this year. So moving towards stocks and indexes and I tried to take my price action beliefs there and kind of bring it into this domain and to see if it would assist me and generally speaking it didn't. um which, was, interesting, and, what, what what I would refer to as more primitive or basic technicals which are heavily manipulated I and I see them getting trapped all the time in in currency in the stock market tends to play out and it was very interesting for me to see that just a break test which fails all the time literally a daily basis in forex I'm like oh Tesla just did that and and and Bitcoin in essence just did

17:38 that uh so it's interesting to see the differences here and I want to explore for example an EMA that you're you're referring to here is it an idea that it's, kind, of a, self-fulfilling, prophecy that if all the big players use these technicals, it's not there's nothing inherently powerful about the EMA. It's it's just a line. It's not necessarily a rejection point or something that price should move. But if enough people use that EMA, enough orders get into the market, then price must respect it. Is is this the case that we're basically seeing? think >> I, could, see, that, it's,, you, know,, there's there's some elements of that, but I also think that, um, it's just there's like a certain amount that price can realistically move without having some type of consolidation. And so, uh, I think EMAs just help us to identify like, okay, maybe it's it's done enough

18:24 consolidation and caught up to the point where it's ready to make another move. Um, and I don't know why the math works specifically the way that it does on that, but um, I I feel like it's just as much of that as it is the self-fulfilling prophecy fact. >> Mentioning, here, the, the, kind, of, how, much it could move or what is the ordinary movements. Do you use any deviations average daily range, average session movements inside your strategy? >> Um,, this, is, not, something, that, I've, been huge on, but it's something that I've I've added to my playbook recently. If you're going to be a swing trader, you definitely need to focus on the stocks that have the highest average daily range. Um because if you're focusing on stuff with a 2% average daily range it's just not going to meaningfully move your portfolio like something with a 7 8% average daily range would. Um and

19:10 that's something that you you really need to think about because obviously there's an opportunity cost of sticking your money in stuff that's that's not moving. >> So, the, the, what, you, just, mentioned, here of 1 or 2% in a day in currency, that's wonderful. Yeah. And and the reason being is we can really explore leverage. You can even get 1 to 500 accounts. >> Whereas, in, the, stocks, world,, it's basically one to one, right? >> Um, most, of, the, brokers, that, I, use, give you one to four um up to 1 to four intraday and then usually one to two overnight. >> Um >> have, you, found, that, restricting, in, any way in your career? Because new traders run towards leverage like that's their savior. But you built a career in a in a one to four environments. Did you ever feel like it was holding you back or has it been sufficient? Definitely. It hasn't held me back at all. Yeah. I mean, I guess I've I've been blessed to have enough capital to where, you know I don't really need to use leverage for

19:57 the most part. I think there's certain times where maybe I'm trading less volatile stocks, but that that give a great setup and I'm swinging large multi-million dollar positions and I need to use leverage for that. Um, but for the most part, I haven't really needed it just because the majority of my career has been in small caps. And in small caps or OTCs, you can just get some ridiculous moves. like Octo ran like 5,500% intraday the other day. Um you know, and so when you get moves like that, like why do you need leverage of any kind? Like if anything, I want like reverse leverage. I want like >> tone, it, down, here >> a, quarter, of, 1%, of, my, account, in, in, a stock like that because that's just terrifying. Uh, you know, so if I'm putting 400% of my account in a stock that's making a 5,000% move, like >> just, no,, there's, no, way, to, manage, risk on that. You know >> when, when, we, look, at, the, entire, gain you've had over your career, which

20:42 domain, for example, large cap, small cap, which asset class was the one that contributed the most profits? >> I, would, say, small, caps, overall. Interesting. Yeah. Um, but that's it's definitely making a shift in recent years just because I've been expanding my playbook um and just learning how to profit from similar patterns but on larger cap stocks. So, like um one of my good friends, Jack Kellogg, he told me that like the best time to >> uh, try, to, capitalize, on, these, large caps, which for the most part can be fairly choppy, but like for a day trade is when they start behaving like small caps. And so, one of the patterns that I'm super familiar with is uh like the first red day when you get an overextended chart, a parabolic extension uh and then it has a pullback. And if you know how to capitalize on

21:29 that pullback, you can short it and make some good money. Um, and in general large caps don't really give that pattern very often. And so when you get when you get a large cap that gets really really overextended and starts behaving like a small cap where you get three, four, five up days in a row with expanding range and volume and they're gapping up each of those days. Uh that's when you can actually bet big on these things. And so me learning that is like, okay, this makes sense to me. like I have this experience from small cap land and so I can transfer this over to large caps. When large caps start behaving like small caps that's when I can bet big on it and uh you know actually have decent edge there and so just by utilizing that you know I've been able to have some pretty decent trades on these over the last like yearish since I learned that. Um really

22:14 the first one that I ever tried was SMCI. A lot of people have talked about this but that was an amazing first red day uh back in February of 2024. Uh, and I didn't really do too well on that because it was the first time I'd ever taken this trade on a large cap. Uh, and I think I made like 40K that day or something. Um, and then the same trade showed up again on MSTR in November of 2024. Um, when that had its first red day from like 540 down to like 370 in a day. Uh, and that day, you know, I I scaled up a little more. I think I made like 250K that day. Um, and you know when the next one comes around, I'll be even more prepared and hopefully do even better. So just being able to recognize those patterns for small caps and when they start playing out in large caps is it's just this cool thing and I only noticed that because my friend mentioned it. >> For, the, last, two, years,, a, proud, sponsor

23:01 of the show is a top ranked leading prop firm, Alpha Capital. And for the years that I've been working with them and the thousands and thousands of viewers, you guys that have been working with them through the discount codes of Titans of Tomorrow, it's clear for me to see why they are a top ranked prop firm in the industry. They have also reached a monumental milestone of $und00 million in payouts. And with the multiplestep plans and the multiple package types they have, there's going to be an option catered specifically for what you're looking for. So you can buy an evaluation account catered to your needs at the most competitive prices. And with our discount code toot for Titans of Tomorrow, you're able to get the most unbeatable unmatched prices in the industry with a leading trusted prop firm. And with that being said, let's get back to the episode. It's very interesting to hear. I mean, knowing your backstory and having the $2,000 as your first account size to then be

23:47 throwing numbers around, not even going to talk about the millions in a trade or a million in a trade, but even just 40k 200k. These are huge numbers. H how do you mentally prepare for that kind of size? >> I, don't, think, there's, any, way, that, you can prepare really. I think it's just it it turns into a a number. Um >> through, the, repet, Yeah., You, you, kind, of have to detach. Um just through the years of doing this day in and day out you get a little bit desensitized. You know it's >> this, might, be, kind, of, grizzly,, but, I feel like it's the same reason that like maybe someone who works at like a a butcher shop, like they might be desensitized to blood or if you're like an EMT, you know, you don't care about that stuff as much. It doesn't affect you because you see it every day in and out. And if you're a trader, uh, these

24:34 numbers, they just start to lose meaning because in trading money, like, you know, I was talking about the SMCI trade, like 40k or whatever, like in real world, that is a lot of money. Like I can buy a ton of groceries with $40,000. But in trading money, that to me, that's like >> that's, like, nothing, now., Like, if, I, have a 40k day, I'm not even excited about it. I'm just like, okay, whatever. You know I >> I, think, when, you're, when, you're, placing the trade, you can detach. But when you lose an amount, let's say you lose an amount that you know is you could be like that could be an annual salary for someone or something like that and then you sat and say what could have done with that money. Those thoughts will naturally creep in. Uh how do you number one make sure you're not getting too bogged down in a loss but at the same time uh not getting too carried away and and you know ladering too aggressively and having too much euphoria cuz now a small lapse in

25:21 judgment which would have been maybe 500 bucks or a,000 back then when now we're talking serious laps in judgment in terms of uh account size uh how do how do you maintain groundedness or following the plan when you extend it out to this large capital >> I, think, you, just, it's, it's, about sticking to the process and no matter what kind of numbers you're seeing in front of you, you just keep doing the same thing. And that's for me is is trusting my trade plan, having a set risk that I'm allowed to lose before I enter the trade, having the max losses set at the broker level, and no matter what, you know, I know that I'm willing to lose this amount going into the trade. So, like >> yeah,, it, might, not, feel, great, because, I didn't really want to lose that much going in, but I was willing to do so. Um, so even if it's a much larger number

26:06 than it was when I started several years ago, I'm still okay with that and I know that it's part of the journey overall. Like I had my biggest red day uh in I think like since 2022 uh this week. Um I had a 98k red day. I almost had my my first six figure red day since my blow up on uh onag back in October of 2022. And uh you know it didn't feel super great, but I was able to see the big picture. you know, all I have to do is I zoom out and I look at my overall equity curve and like it literally is the tiniest little blip there on that down tick. >> It's, like, price, action, that, there's going to, be, down, portions. >> Exactly., Um, and, so, that's, I, think, that's the most important thing just like seeing the big picture and sticking to your process regardless of what the numbers are telling you. And something that I have actually been trying to be better about recently is uh

26:52 systematizing a little bit more in terms of risk. And it's something I still need to work on because um to really excel as a trader >> you, have, to, scale, up, risk, accordingly, to the size of your account. >> And, that, is, is, very, tough, to, do mentally. There's very few people who have been able to successfully do that at like the perfect level. Um Jez, I don't, know if, you've, heard, of, him., He's uh I think he's from from Finland. He's um he's a trader who started out uh with an algo and well he just made an al he started out like systematically but he's a really good example of how you can compound your account like crazy. Um he started and I think a couple years ago he was yeah like 30k and now he's about to cross uh eight figures in profits and that's just because he's you know risking a set percentage of his account

27:39 on all these trades and whether his account is 100k or 5 million he's still risking the same percentage amount. And so if you have the edge, you can really scale it up. >> Yeah., A, lot, of, traders, that, I've, seen scale up, uh, they start off in percentages, 1% risk per trade, and then they end up just doing fixed dollar amount um, per trade. And somewhere along the way, the percentage game kind of you it just doesn't feel as comfortable anymore. So I can see your point here, you know, this idea of because what we're really discussing here is psychology, the ability to adapt to the numbers and and whatever emotions that evokes in you. But when I explore this idea of psychology, especially because you mentioned someone systematic and coded into an algorithm, this is a debate I've had and both ends of the spectrum are firm in their belief, which is interesting to see. But I want to I want to explore this with you. This idea

28:25 of like if you gave me your exact strategy and and we spent two years figuring it out so you I could learn everything. In the end, your mine and your performance would be different. And a lot of people do say, well, the reason the difference in performance happens despite maybe an objective strategy or equivalent information is just personality traits or psychology, which is an interesting point. And in your sense, it seems like you didn't necessarily address your psychology. It was just years under your belt. And you like you said, desensitized. You you climatize yourself to any emotion. The greed you maybe felt desensitized. Any big losses you took, you started to get desensitized over time. Would you would you say psychology is something you have to take care of or it's something that takes care of itself as long as you're following the you know the right plan over time? >> It's, not, something, that, I, actively, go

29:11 out of my way to take care of. Definitely. I think if you're doing the right things, I would say the psychology just kind of takes care of itself. But I do know there's lots of successful traders like Lance. He, you know, he specifically sees uh I believe like a trading psychologist/coach Jonathan Katz I believe is his name. and he's done some videos with him and you know I think there's something to be said for that you know maybe to unlock the highest levels of your potential but it's not something that I've personally looked into a ton at this point so maybe that's holding me back >> I, don't, think, so, to, be, honest, in, your stage uh I don't think so but uh if we are to explore because this is kind of if if we can kind of divide a pie between you have your technical edge you can have risk management you can have fundamentals uh and then you have your psychology if we are to distribute that through a pie chart which one would you

29:57 give different waiting things too. >> What, are, the, piles? >> Let's, start, off, with, technicals, uh, and then fundamentals, risk or account management, uh and, then, psychology., Let's split it between these four. Uh how would you weight each one? >> Um I mean probably the most important thing is to have some sort of edge because it doesn't matter to me any of the other things if you don't have edge. So, um >> I, I, would, personally, say, for, me,, edge comes from a combination of technicals and fundamentals >> on, most, plays., Um >> so, to, me,, I, don't, know., I, would, say maybe >> Where, are, you, skewed?, Are, you, more technicals driving or is it more uh fundamentals driving? >> I'm, definitely, more, technicals, driven because I just feel like there's there's

30:44 too many times where technicals and fundamentals don't align. And I think maybe in the end after 10 years, whatever, fundamentals will play out. But there's just, you know the saying, markets can remain irrational longer than you can remain solvent. Um, and we're seeing that play out right now with the quantum sector where you have stocks like RGTI, INQ QBTS, QBT, all of these terrible stocks. I believe most of them have very little to no revenue. Um, and you know, they're multi-billion dollar market caps. And in the last week, they're up like 100% almost. um after a 2,000% run and then going sideways for 9 months. And so this is just an example where you have short sellers betting against these things because fundamentally they're terrible

31:30 companies, but technically it doesn't matter. You know, they made a beautiful run, they got extremely tight and they broke out of a a perfect base. Um and so if you're too focused on fundamentals you can just get absolutely destroyed um >> just, fighting, this, stuff, because, you know it doesn't make sense. But at the end, of the, day,, it, doesn't, matter., So that's why I prefer technicals because if when I listen to those, it stops me from being stubborn on the wrong side of a trade. And on the flip side, like you can have great companies that are super undervalued for a long time just because um you know the technicals just they don't they don't add up. >> Like, UNH, was, was, it, got, absolutely crushed. Obviously there were some fundamental aspects to that but you know it was very undervalued um for a while and if you were buying that aggressively on the front side all the way down like you could have gotten destroyed especially if you had leverage there. Would you would you look at certain

32:16 things like the COT report or would you look at what the big players are trying to do and and try and assess what is already priced in um or are you trying to read sentiment through price action? >> Yeah,, I, I, wouldn't, look, at, a, a, report like that. Honestly, I've never even heard of that report. Um >> yeah,, I, mean, for, me, it's, just, through price action. Um and you can also see what people are saying on social media. Um there's there's some aspect of that. Um but the biggest thing is just yeah looking at price action volume across sectors. Um if institutions are accumulating these stocks like it's very obvious when you look at your scanners and you see all of these stocks in the same industry they're the charts look very similar they're all doing a ton of volume uh regularly consistently day by day. So

33:01 >> an, investor, they, would, obviously, look, at diversification if they're not overexposed on one sector and so forth. Do you try and apply that when you are uh you know day trading or trading uh the stock market in general? >> Um, I, prefer, the, saying, like, uh, I, forget who said I don't know if it was >> one, of, the, great, investors., He, said, I prefer to have all my eggs in one basket but watch that basket very carefully. >> Okay. >> I, don't, remember, who, that, was., I, don't know if, it, was >> that's, a, good, saying. >> Yeah., I, don't, know if, it, was, Aman, or, or someone along those lines. But um that's my personal philosophy like um I would rather have all of my bets in concentrated areas that I'm very convicted in and then just be watching it like a hawk and make sure that you know everything is going according to plan versus trying to diversify um and

33:47 just putting risk on other setups that might not be as good as as other you know the setup that I prefer. I saw it just yesterday. I think it was maybe Ray Dalios uh was quoted in saying that when you are worried, you don't need to worry. And when you're not worried, you need to worry. And that kind of reminds me of if if you watch something enough and obsess over it and and see the the full picture and you're worried about it, you'll probably be okay. You don't need to worry about it. Um what space does crypto hold for you? Because it seems like it's not your main domain but but it seems like you still interact with it. >> Um, yeah,, so, crypto, specifically,, I, don't trade like crypto itself. What I do is I trade uh the ETFs that are listed or the leveraged ETFs or the options for those ETFs um that are listed on the stock market. So I don't Yeah, I don't trade

34:33 actual Bitcoin via, you know, perpetuity or anything. Yeah, I don't I don't trade it. So >> Okay., Well,, we, mentioned, earlier pyramiding, and, and, this, is, kind, of a risk or entry protocol. What other styles of entries or sizing in would you would you or risk sizing uh would you do? Could you elaborate a little bit on that? >> For, example,, um, if, you, have, a, very, high conviction play, would you size up or is it always standardized risk? Maybe not percentages anymore, but fixed dollar amount uh based on conviction. Or for example, if something is sizing up as a swing trade, uh maybe you size up because you know I can pull out an intraday amount and then and then let a runner go. Is there is there any other creative things you may be doing? For example, in my case, I've been standardized my whole career of 1% risk and I thought I was doing the right thing because I I was just taught that

35:19 and it's the way I did it and it's all I know. And then through the show, I've swung to so many traders that do creative things with risk. Uh, and this year I started to change it through inspiration of my guests and I started to, realize, maybe, it, was a, form, of holding myself back when I have an A+ setup that maybe is not that frequent but it's high conviction. The data is behind me. Why not do two or 3% risk? It's not the end of the world. and I tried it first time in June and it was to my favor. Uh so then that became something that was oh this is something I can now continue to test and explore. Pyramiding I've never tried and and there's other things that I've seen people do. So I just wanted to explore here because you've sized up from a from a small amount of money to a lot of amounts of money. Uh was what what was in there to to enable that kind of growth. >> Yeah,, exponential, bet, sizing, is something that has helped me a lot um in my later career to really go parabolic.

36:06 >> Exponential, bet, sizing., What, do, you, mean by that? So, this is also something that Lance Brightstein talks about a lot. Um so I definitely recommend watching his videos on that. Um, but basically it comes down to not betting just 1% on every opportunity when you see it. Um because not all opportunities are created equal. Um, there's >> the, I, think, the, example, that, he, likes, to give is poker hands. Like there's plenty of poker hands that are positive expected value if you play them. Um, but not all poker hands have the same expected value. So, like if you get jack suited, uh, you probably would still want to play those in most circumstances,, but, you're, not, going to bet the same on that as you would on a pocket aces because, you know, did I say jack jack suited? You can't be suited. Um, but my point is like, you know, you

36:53 can't expect to bet the same on something that has a lower EV and get better results overall. So the the point is you want to bet exponentially more when you have these super rare setups that don't come along very often because you know that the vast vast majority of the time you're going to win on them and the vast majority of the time you're going to make a lot more than you would lose if you're wrong. And so when those come around you want to bet instead of like you know one is your normal risk and betting two on this you might want to bet like eight on uh when you get just an absolutely incredible setup because it's just so likely to work. And when you do that, it just juices your gains to a ridiculous amount. >> Okay,, let, me, let, me, push, back, on, this from what other guests have said to me. Um, number one would be if you have high conviction plays and opportunities, and

37:38 then you have a hierarchy of these are my A+ setups. These are my A, B+, and and lower conviction rates. Uh, I guess as a signal of win rate, these have a higher expected value, higher win rate these have lower ones. But like, why even take the ones that have a lower expected value? Why take the worse off setups? If you have these high quality ones, why not only take them? Well again, just because there's still positive expected value in taking those trades, you know, it's like if you see money lying on the ground, would you pick it up? I mean, the answer is I'm in trading still at this point to make as much money as I safely can. Um, and so if I have setups that come throughout the year that are not as good, I still want to be putting risk on those setups because they can add to my bottom line and keep me in the flow of the market versus it's a lot more difficult to execute. In my opinion, there's a lot

38:24 more pressure on you um psychologically if you know, okay, there's going to be two opportunities throughout the entire year that I'm going to put risk on and if I mess these up, like I'm going to have a red year versus, okay, there's going to be 200 opportunities. Two of them are going to be insane, but I'm going to still be green pretty good going into these opportunities and have a cushion and be in flow with the market. So, that's what I would argue. >> Would, you, say, it's, accurate?, Because I've heard traders say this that majority of your profits come from the minority of your year to the effect I've I've heard traders say that uh two months of the year make my whole year. >> Yeah., I, I, looked, at, the, data, for, 2024., I forget the exact numbers off the top of my head, but I believe it was like I want to say like the top 14% of my days accounted for like 82% of my

39:09 profits or something like that. >> Oh, wow. >> Really, an, 80/20, split. >> Yeah,, exactly., Yeah., The, Prao Principles. And was that by virtue of sizing up on those 14 days or it was just um these were my high conviction plays. They don't appear appear that often. Um but these are the ones that contribute the highest risk to reward. >> Yeah., I, mean, I, think, it, was, a combination of both of those. That's when the best >> that's, high, risk, reward, and, high, risk. >> Yeah., High, risk, to, reward,, high, win, rate and that's when I chose to bet exponentially. Um and my year could look very different if I didn't trade like that, >> you, know., So >> now, one, of, the, biggest, ironies, or, or conundrums of the market is uh this idea of being wrong and loss because in general in life if you if you fail at something you go back to the drawing board you try again you you fail an exam

39:55 let me go study more and and this is like a feedback loop whereas obviously in the market you have to realize that losses are baked in and and sometimes a loss means you change nothing. This was a valid loss. This is part of the plan. Uh and the irony here is that the distribution of events will not be nice. It won't be win loss win loss and you could be smashed with a losing period of seven in a row. Uh and the the way the reason I'm bringing this up is because when you are dynamic sizing, you might get a uh a funny moment where the market is laughing at you and basically saying that big play that you sized up on yeah, we're going to lose those two. And then the ones you win on, they're the ones you had low conviction on. You low risk. So even though your win rate might look okay, your risk reward might look okay just by virtue of the sizing that you did, you might be in the hole and an extended period of draw down and if it was in another scenario or equal risking

40:42 just to play devil's advocate, you would have been okay. How do you navigate those? Because I know if you just zoom out, it's going to be okay. But I mean navigating those days or weeks where this ironic uh behavior is happening. I think the the cool thing about the extra conviction setups usually for me that comes on mean reversion setups when you get interesting >> a, hugely, overextended, chart, either, to the upside or to the downside. >> So, why, why, do, you, think, that, is?, I, I would have assumed this accumulation and and a consolidation and then a breakout and you you're running with the trend. You're running with the big movements. A mean reversion or reversal. Why is that the the more asymmetrical play? I think to me it's like a win rate thing. Um so like normally normally I like breakouts.

41:29 Um but they do inherently have a much lower win rate than a mean reversion type strategy if you know how to time it correctly. Explore that with me. I would just assume a breakout or with the trend would be more favorable and a trying to if I'm to use the the phrase pick the top or trying to reverse uh you know uh catch a falling knife kind of term. uh mean reversion is is by nature reversal uh seems more dangerous. >> It, might., Yeah,, I, mean, more, dangerous, I could agree with potentially, but the win rate is just it's just better. Um it's a fact if you if you go look at the data um just because of the nature of how these things play out. So when when you get in a breakout, the idea is you want to have really good risk award. Like you might buy through opening range

42:15 highs versus low of day. Um and that's like a very tight risk. And if it runs you might hold it for a month and get really good riskreward, but you're going to get stopped out when it breaks through low a day, whether that's that same day or two days from now when it fails and then reclaims later. Like there's just a lot of um messiness that can happen in breakouts. And that means that the win rate is just a lot lower. Versus when you get a hugely extended chart like MSTR when it went up to 530 540, the odds that MSTR is still going to be trading there a day from now, two days from now are just incredibly low at that point. And so it's almost like it doesn't really matter where you enter at that point. It's just the big picture chart is just so overextended. The rubber band is so far stretched that at some point it's going to snap and come back down. And so you you don't have to

43:01 be precise with your entry and your win rate is just a lot higher. And so that's where like I just get really convicted on those um because I know this is unsustainable versus a breakout. Like a stock doesn't have to go up. >> You, know,, it, can, get, really, tight, and then just do absolutely nothing. You know, there's plenty of times where that happens. Yes, I'm going to bet on breakouts when they look great, but that doesn't mean that they have to go up. But any stock that goes straight up will have a pullback at some point. It's just a fact. So, and I got a lot of I got a lot to explore and add. I want to start off with if I was a new trader and hearing this, I would be like, cool. I'm going to try and pick the top every time because this gives me the best opportunity. A volatile, you know elastic band popping back. I want to be involved in that. So, first of all let's let's try and clarify uh how to do this in a safe way. And I want to share

43:47 share a story with you. So, I had a uh guest who's a market wizard and you know, he's he's maybe he's in his 60s I'm not quite sure, and he was managing $200 million uh himself as a hedge fund owner and then in his career up to 700 million. So, he's a very competent trader, 30-year track record kind of thing. And his whole career was based on reversal trading. And I was like, this this goes against what we are taught as traders 101, follow the trend kind of thing. And when we explored it, he was like, okay, so when when you see a trend, what is going on? It's like, oh the buyers are getting in and the sellers are getting out. So, you have the the tide on your side. It's like okay. And as you get higher and higher what's going on? It's like, oh, there's more adding, I guess, they're pushing and more people are catching this tide. He's like, what happens when it keeps going all the way to the top? And it's like, okay, now you reach a point where there's like max buyers and then then

44:35 how is it going to go higher? I was like, that's true. You can't there's not an infinite amount of buyers that keep going. He's like, yeah, exactly. So, you reach a point where it's like on an oscillator is reaching 95. It's reaching this extreme. He called it crowded. It's like at some point you're just in your shock event and it's like sometimes it'll even be on a positive news that is just like the buyers start to get out and it's a cascade and it's just like it runs back to the mean reversion as you're saying. So initially my gut reaction would have been like this doesn't sound like it's a favorable play. But when he explained it like this I was ah this makes a lot of sense cuz it's just built up tension and at some point it has got to break. But how do we take this philosophy and and kind of this wisdom behind of what's going on the mechanics behind, and layer it in into, okay, let's just not keep picking highs. How do we know how to sensibly do it? >> That, comes, from, studying, the, past. Again, I mean, that's I'm going to sound

45:21 like a broken record here, but that's just the best way that I have found to accurately pick entries and know when to get in stocks. So, I mean, there's plenty of examples of stocks that go up and might look like they're a decent short and then they just keep going up. But I think the more you study the past and know how the biggest runners in history topped, the better you can identify in real time what these factors look like that make a run unsustainable versus being sustainable. You know, when you have a stock that makes three massive green days and then has some tight inside days, you know, that's consolidation. That's price acceptance. And there's a decent chance that that might not be a great short because, you know, could it break down? Yes. But it could also continue higher. But when you

46:07 get a stock that goes parabolic parabolic and just keeps speeding up on more and more volume at some point like I have seen from the past that that will have a decent red day. The more overextended that it gets. And you can classify this based on how far it is out of the base that it just made. You know how many days has it been running for? How far of an extension is it? How big is the market cap? What is the average daily volume like? How much has the volume increased? all of these factors how far extended is it over its 50-day moving average or its 10day moving average. Um, and when you get all of these factors aligning, uh, that's where the odds just become more in your favor. And you combine that with an intraday entry strategy, which is like, okay, I'm going to enter once this, uh, breaks low of day with a high a day stop or whatever. And at that point, like, you have a very fixed risk-to-reward. Um and you know what that is. And so, if it

46:54 reclaims and makes a new high of day you stop out. Um, and then it gives you an opportunity to get back in later if maybe it goes a lot higher and then it breaks down again. You can short the first 15 minute candle break or 30 minute candle break after high a day. Uh, there's plenty of ways that you can structure an entry, but I think it's just finding the way that you can get an intraday entry based on the conviction of the overall daily chart. >> So,, I, want, to, explore, a, couple, things here. Number one is conviction. Now conviction is a could be a feeling. It's like, oh, I just feel like it's going to reverse. I've seen this play out. my intuition is getting involved market experience and and this is a gray area. So I want to explore that and then pairing it to basically my opening question the reason I asked it is for situations like this is trading an art or a science because now when we're talking about you can add all of these

47:39 confluence or based on momentum and and and deviation and you know an oscillator how overextended it is you can start to say okay at some point this has got to reverse but to your quote earlier it can also keep going. It depends how much liquidity you have how big your account is. How do we safely do it in terms of not to overfitit because then you can add a 20 listings of like okay these are the reasons that market should reverse but then how often is all 20 going to be there. How do you do this in a way that can be as scientific as possible? >> I'm, I'm, not, a, huge, data, guy., Um, so that's it's a question that's difficult for me to answer in that regard. Honestly, I know that there's people who have crunched the numbers and and they know the exact percentage etc that it needs to be overextended. The the reason I ask is because you kind of said "Okay, let's study what happened at previous highs and how they kind of uh

48:26 sprung back. Was there anything you noted that that is worth mentioning?" >> Yeah,, I, mean, the, biggest, thing, is, um, the blowoff volume and the increasing range and typically gaps. Um and that's what I like to see. So maybe that's not really a thing in like the Forex market um which I'm assuming is 24/7. I don't know how that >> uh, it's, 245. >> 245., Okay., Yeah., I, don't, know, if, there's if there's gaps in the in the candles then if they're >> not, not, really, you, have, a, kind, of, an imbalance but sometimes on a market open over the weekend there might be a new gap. >> Okay., Well,, you, know, for, um, for, daily charts on stocks which only show the intraday action on the daily chart between 9:30 a.m. Eastern time to 4 p.m. like all the action and after hours etc doesn't show up. And so when you have a stock that is continually moving higher

49:12 and after hours like there's a huge gap on the daily chart. So, if something um you know, for example, OKLO is one that I'm potentially watching uh for a parabolic short this week because it's starting to really speed up on the daily. Um it in my opinion, it would be a lot better of a setup if it went a day or two higher. Uh but it's starting to get to that point where it's interesting me a little bit. Um and these are just some, of the, factors, I, look, for., But, like if if it gaps up, the gap that it had yesterday, um not yesterday, but the previous day was like three or$4 dollars, I believe. And so, you know, if it starts having much larger gaps, like a $10 gap and then a push off of open like to me, that is that's like a sign of euphoria. Um, especially on if you look at the five minute bar off of open or the 15-minute bar and just see like the volume versus the previous days. If that volume is just like enormous compared to the other days, that's

49:57 another good sign of like this is blowoff euphoria. >> And, I, guess, you, got, to, pair, it, to sentiment and say, okay, there's no intrinsic value. This this is not a this is not something that has been revealed to the market like, oh, this is a bullish factor. It's like, okay, nothing has changed. It's just euphoria in price, not necessarily euphoria or intrinsic value. >> Yeah., I, mean,, they've, gotten, some contracts and stuff like that, but my understanding is they're still a pre-revenue company. Um >> yeah,, see,, I, see. >> Don't, quote, me, on, that., I, just, read, that somewhere. But, I mean, that to me, the main thing that is important is just the extended chart, but you know, all of those factors align. Um >> back, to, this, dynamic, sizing, because that's how we ended up in this topic. um when you have protrend scenarios breakout scenarios, counter trend and then you have the day trades and the swing trades, you know, you have a lot of variety and I can see where it comes from because as you said like not every day is the same and there's only pockets

50:43 of opportunity across the year that are are really, you know, high conviction which is why it makes sense to be dynamically sizing and modifying things. With that being said, uh what is your philosophy in terms of conviction and low conviction and sizing high and sizing low? Is it just a factor of win rates here to to determine conviction or is it overall assessment? >> Um, because, it, could, be, a, lower, win, rates play but you just see it's a 1 to 7R. So it's like okay this could be high conviction by virtue of riskto-reward. So how are you defining what is high conviction and worth sizing up on? >> I'm, not, systematized, about, that, either to be honest. Uh I think it's just kind of a gut feeling. Um, okay. Based on my experience in the markets, you know, uh I don't think >> always, I'm, only, betting, larger, on, high

51:30 risk I mean on on higher win rate setups because there's there's certainly breakout setups that I'll bet more on. But like for example, the Bitcoin breakout like the original risk was 10K >> um,, which, is, extremely, low, for, me because if I get an amazing first red day setup, I'll be willing to risk 100 150 maybe even 200k on. there's a huge deviation in risk. It's not like a 1% becomes 2%. It's it's a factor of 10. >> Yeah., And, that's, that's, the, whole exponential sizing thing. >> Okay., Ah, super, interesting., Okay., Uh, go going into the actual entry whether it's a high conviction or low conviction. Maybe there is a difference here. I want want to talk about trade management. Uh the reason I I ask is because my philosophy has been I'll get into a trade even if it's lower conviction, but I'll be very quick to break even that trade to to to derisk. And if I get

52:17 wicked out, so be it. But some the way I'm trading is like I'm trying to capture when the momentum is getting in. So it should ideally be a tap and go. And if it's hanging around, it's not a good factor for me. So I will be very aggressive to break even. What is your philosophy on trade management? Uh and specifically around break even. >> Yeah,, I, I, do, that, a, lot, as, well., Um there's certain people who I'm probably fairly unique in terms of larger uh small cap traders in this. Most people that I've talked to, they have like a specific risk level um that they just

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