309 · Diego Ivan Cortes Lopez - Winning Through Losing: When 30% Is Enough

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but how it developed, the speed at how it grew, right? So a lot of us that are day trading and really looking at the candles. They behave a certain way, right? Some have uh uh every stock has a very distinct personality. And so when you see that bar after multiple bars down, you might start to see it jitter and then all of a sudden

that velocity starts to come. And that's that violence. And so sometimes if your intuition is is there and you have the experience, you might be able to like oh oh you get that gut feeling. You jump into the violence and it turns out to even grow more.

Welcome back to Chat with Traders. This is episode 309. I'm Tessa doing this show with my co-host Ian Cotton. How's it going? How are you? I hope you're doing well in every way. And I hope you're also finding joy in the little and simple things in life to help keep you grounded no matter what your circumstances are. Let's always try to support and lift each other up, okay? Trading is hard enough, right? Take care of yourself. Our guest today is really special to me for several reasons.

And one of the reasons why he's special to me is because I've gotten to know him in the past several years through the chat with traders community. And he's been one of our influential members in the community, alongside a few others that we've mentioned in the past. But today, this particular trader's name is Diego Cortez Lopez. Diego was basically raised on the tennis courts from around age five. Tennis was his passion in his young life, and by the way, he's still very young.

Eventually, though, a back injury closed the door on him going pro, and so by sixteen he was coaching tennis, successfully coaching tennis. private and group lessons until twenty twenty hit. And then you know what happened in twenty twenty, right? Since then he's been living in Southeast Asia from Bali and Vietnam.

So I guess you can say he's a classic digital nomad style American expat trader. He's one of those one hundred percent trading for a living traders who are just hard to find that are willing to interview. So I guess we're lucky. By the way, he's never missed an open talk about dedication to one's craft. Diego trades large cap stocks using a rule-based approach that he learned from his mentor, Oliver Velez, focusing on certain support and resistance levels and clean reversal signals.

And also very clean charge. I mean simple, simple, simple charts. I've seen them myself. He trades mainly in the first hour of the market open with tight stops and a three to one or better reward-to-risk ratio and cutting risk fast over and over, proving that. Disciplined execution matters more than a high win rate.

In this episode, you'll also hear a few trading terms and concepts from Oliver Velez's methodology, which Diego has drawn from, but over the years he's also blended it into his own trading approach. By the way, Diego explains his strategies in such a way that even without a chart or visuals, you can imagine what he's describing. So pretty cool. Anyway, let's get to it. Ladies and gentlemen, we are so pleased to introduce Diego Cortez Lopez, currently living in Southeast Asia.

Well, first I'd like to welcome welcome you to Chat With Traders. Thank you. Yeah. And tell us a little bit about your early uh childhood, kind of where you grew up and um kind of what interests you early on. So I was born in Mexico City, but I grew up in uh Dallas, Texas. At a very young age, I started playing tennis. Uh I've been playing tennis since I was maybe five years old, somewhere around that. Um I'm 24 today. I'll be 25. September seventh. Well so I've been playing maybe twenty years.

Um, I got to a point where I was pretty close to playing maybe professional. Who knows? I got injured before I I could find out if I could have made it. So I I acquired uh quite a bit of discipline through sports through tennis. I think um that passion then eventually led me to desiring to find something else to get very good at since tennis was something that I just could not keep doing. Eventually I started teaching uh tennis. Young adults, adults, elderly. And uh I did that for a few years.

How old were you at that time when you were teaching tennis? I think I started teaching around I was 16. So at the age of 16, I hit my I was I think I was hitting my prime. You know, 16 year olds. By the time you're sixteen, you should know if you're going professional or not. Um, because most professionals, they go professional around 17, 18. So at that time I was I was pretty good. Um, but my back injury did not uh permit me to to advance.

Um, so I stopped playing tennis um that much and uh I focused on teaching. Turns out that teaching was a a very, very, very good uh business. So we're doing private lessons, group lessons, and uh I did that for a few years. until COVID hit and uh that killed the the whole business and I was like, all right, well Uh I got plenty of money, plenty of savings. I'm gonna move out to some other country, chose Mexico and I was there for a while, came back

to the US mid COVID around twenty twenty one, I believe. Then moved to to Asia a little before COVID happened. So late 2019. Interesting. So you you moved to Asia while you were still kind of figuring out what you wanted to do or or you were temporarily sidelined from the teaching um tenant. Yeah, so tw so twenty twenty killed the tennis business. Made some money, the start of 2020, but late 2019, got into trading through some guy I met in college.

And uh it was I got into Robin Hood like everyone else does. Bought my first stock, Tesla, Bitcoin, and I think some penny stock. I forget what it's called. And um early 2020 around March. Or was it February, March? that before the big recovery. is when I really got into trading. And um I think that was during spring break of college. And I never went back to college. I just dropped out and I said, I like this. This is really, really cool.

So I'm gonna go all in. I had plenty of savings uh because of tennis. So I decided to move to Mexico for a few months, tried it out.

lost everything through trading. Yeah. Tell us, l let's let's get into the weeds on that one. What um what were your early kind of strategies and um what was your style of trading early on? Um it's a bit embarrassing. I I really did not know what I was doing. Um I thought I did, of course, back in the day. But I was uh so-called scalping, going for one or two points trading futures.

Um futures was the cheapest way to access the market because stocks was too expensive. So I was doing that, scalping um micro micro minis. I I think that's what they're called, right? I forget. I haven't traded future in many years. But yeah, I was scalping those, trying to make something happen. I was basically trying to short the lows of previous days. So I was shorting at support and I was buying into resistance. So

I had it the wrong way. I should have been buying at support and shorting at resistance. But I didn't know any better. Um so I was getting smoked, lost. nearly six figures. Um, so that was that was pretty painful. And then uh after Mexico, after losing all that money, I moved back to the US. Started the tennis business back up, did that for about six, seven months, made a lot of money again.

Um and then move to Bali. And I'm still trading during these these times, right? So I haven't missed a single open since. you know, the start of twenty twenty. And so after losing that money, did you um did you make any adjustments or were you learning? Did you have like a mentor or any how did you learn? No, I I did not have any mentor.

Um I thought I could have learned this skill on my own, but I was very wrong. Um I didn't change anything. I thought that I was around the neighborhood of being on you know the on the right path, but I was very wrong. Um it took me sa two years and a half to find the the right approach. I can't tell you exactly what what was it, twenty Twenty twenty two, late twenty twenty two, that things started to turn around. So two years and a half into my training.

Were you doing the same uh strategy of of buying at resistance and then shorting at support or uh any modifications along the way? And and what security you were trading futures, is that correct? Is that at that time? At that time still trading MNQ, M E S. And uh I'm I'm scalping looking for breakouts uh out of yesterday's highs or yesterday's lows. So I would short. the low of yesterday, hoping that it would break down a lot lower, just for it to reverse on me and get smoked.

Now keep in mind that my stop losses are very small. So any any movement will nick me out and I'll lose, you know, 99. percent of the time. So I I clearly did not know what I was doing. And then uh I met um through YouTube, I think in late 2022, I found a uh a gentleman called Oliver Villes. He's been trading for almost five decades. Clearly he knows what he's talking about. Um, so I I gave it a shot.

And uh it it did give me new eyes. I had to unlearn everything I learned. And um it turns out that trading was actually a lot a lot more simple than I could have imagined. So just uh basic risk management.

And uh yeah, so I I developed myself since twenty twenty two uh the right way. And then uh I guess in December I'll be trading for six years more or less. So I'm still a baby in this industry. You know, six years is nothing. Mm-hmm. So um let's dive into the new way of trading. Like what kind of a trader are you in this new type of trading? Are you a scalper or day trader or what? So today, um for the past three years and a half more or less, um I've been trading stock.

So I just trade the big main stock. You know, whatever is popular so Tesla, AMD, MU, Microsoft, Meta, MSTR, um the big ones, as long as they have uh a low spread. And I do the opposite of what I used to do in the past. So I buy at support and I short a resistance. have the appropriate stop loss, aim for a decent risk reward, and uh not worry too much about the win rate'cause

Um, you know, back in the day when I was scalping I I believed that I could achieve a nine out of ten win rate, eight out of ten or even seven out of ten. Um, which I was very wrong. Um now today with my six years of experience and a lot of losing I believe that not everyone is capable of producing a seventy percent win rate.

I think that is extraordinarily high. But I'm sure there's people out there. You know, there's always a Djokovic or a Michael Jordan or something like that. But I'm not that guy. You know, I'm not that smart. Um I'm not that that good, but I can reproduce a 30%, 40% win rate. So as long as my win rate is um 30, 40% and the risk reward makes sense, right? Those two key factors.

Um you can be profitable. So listen that's what I do too. Uh let's dive into uh kind of what you look for, say to go long or go short. Like what are the characteristics of uh of what does the chart look like to you? So all I focus on is the daily. All I focus is at the daily. I look at any major support. So any daily high. So yesterday, for example, yesterday, let's say call it Uh the spy. Yesterday's high and yesterday is low.

If it had a violent bounce off the lows, right? It created a very violent major bounce. then I'll consider it a strong support. And if today opens and it reaches that level, if it gives me, for example, a tail bar, I'll consider a long as long as the the the entry and the stop is small enough to give me a decent reward, then I'll take it. And I just have to be right three times out of ten. Uh so when you're looking at support then, it doesn't

You don't look at uh the preceding um weeks or months to see, oh wow, this level of support is really good going back a number of months. So that would influence my desire to maybe increase my position. at when it gets back down to that support, or do you just totally ignore all prior history prior than the day before? It can go back a few weeks as long as it's obvious to the eye. So it has to be obvious. If you're if you're making it up and you're guessing.

And you're trying to convince yourself that it might be, it's probably not. So everything is is is a self-fulfilling prophecy, you could say. So as long as it's obvious that it's a support. then it's probably gonna play out most of the time. Um you don't wanna be train trading random support levels off of a, you know, one minute time frame.

'Cause you're probably gonna get smoked most of the time. But if you're looking at those more important ones that Maybe so institutions or whatever, big money is looking at. Whatever that you want to call it.

Um it they work most of the time. So daily support and resistance, that's good. If I don't find anything off the daily, I'll go down to uh hourly. Right, to find some key support level um or resistance. But most of the time the daily is always available. I trade usually around ten stops. So there's always something available. But the strategy doesn't work well in trending market. So for example, today, September five, uh this morning the spy sold off pretty heavily.

You know, trying to catch a falling life is probably not gonna work out today. But other days when we're, you know, a little bit more calm, just ranging, um, it's a good time. I see. So you're looking to uh play the um what, overbought, oversold conditions within a a a six cycle? Uh-huh. Yep. Yep. Yep. Yep. Mm-hmm.

So I really want, for example, today, um, uh let's say the spy sold off for the first thirty minutes and there's just you know, on a five minute chart, there's just ten red candles in a row. That's obviously overextended. It's too much. So what I would look for is a buy event. A buy event to me would be a nice little tilt.

As long as it's obvious to the eye that it is a tailborn, not too big because you don't want the wrist to be too big, not too small because you don't want to it needs to be bullish enough. Right. And go for a three to one, four to one, but minimum two to one on the bounce. So you really want it over extension, oversold, into support. Oversold. I see. And and what uh what time frame are you looking at um on your charts? Five minute. That's the main one I look at.

Okay, five minute chart. So when it looks to you So it signifies that um the correction is over when you have what a reversal bar? Is that it? Yeah. So people uh what do they call it? They call it tail bars. Uh so uh Oliver Lesk calls them one eighties. wide range bars, there's a bunch of names to it. But any any reversal bar, any reversal event um that qualifies for a potential um long as long as the location is good. Right. So major support levels.

Uh what if the volume is really light on on the bounce? D does that influence you not to go long because it's the the volume's weak or how do you look at that? I don't look at volume. Um, so I I could not tell you. Um I've learned how to use it, but my day to day trading I don't use it. Um I keep it very simple. As long as it's very oversold, at least, you know, multiple bars in a row.

of the same color. So you can imagine it, you know, spy selling off one, two, three, four, five, six, seven, eight, nine red bars in a row. If you were short, you would probably start to you know, tighten up your trailing uh approach.

So uh but a pullback would be imminent, right? After such a move. So I'd use the five minute and in order to reduce my risk. I'll use a smaller time frame such as the two minute or even the one minute to try to really nail down my entry and find a appropriate stop. And uh a lot of times I might be able to find uh a a very nice entry with a very nice stop that could potentially reward me with three to one, four to one, five to one, sometimes even more.

And how do you calculate I mean, how do you uh what's your target price to get out when you say three to one, four to one uh ratio? What what kind of retracement back up in this case are you expecting? Um the retracement that I'm expecting is no more than a third of the move up. So one thing one third of the decline. So one third one third retracement back up. Uhhuh. Yeah. Uh huh. Yeah.

So I think uh people call those Fibonacci levels or something like that. But I just imagine it's just massive, uh massive move down, a bounce to the one third mark. That is the most I should expect. Now, can it go a lot further? Sure, that would be the home run. But I need to make sure that my profit take is at the one third mark. And by that moment, I should be able to achieve at least one to two.

Um if I can get more then perfect. So when you're looking at the uh potential reversal and then you get one one reversal bar, does it matter to you? Um or how much would it impact your your decision to go long? uh if it's a violent uh retracement, like a like a what we would call an elephant bar. Yeah. So If the retracement happens very violently without me being in it, then I'll wait for the price to come back down to where I wanted to get in and then put the stop at the low of day.

So I imagine The big move down, violent retracement. It hasn't hit the one third mark yet, or maybe it did, but if it bounced if it drops back into that area of that violent retracement, it could still be potentially a good buy. For another move up. to that same one third mark. Does that make sense? So it's like a a second a second attempt to get a second chance to get in the trade. I see. And um in one of your videos you referred to this, I believe, what was called the gift zone.

Yeah. That's what it is. And so w what does this what does this uh bar look like? I mean the this violent bar. How how does it compare to the other bars? So that Traders can can identify uh this when this happens. Are you ready to get serious about trading? Then join Tasty Trade, Investopedia's best platform for options trading in twenty twenty six.

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Yeah, it just has to be a lot bigger than everything else to the left. So it it has to be obvious. It has to be very obvious. Again, if you're guessing, if you're doubting, then it's probably not big. So it it has to be a lot bigger than everything to the left. Um, if you were to ask a child to, you know, circle the big bars, that's how I was taught. Highlight the big bars. That's how Villas taught us. And uh it's just that simple. If it's big, if it's obvious.

then, you know, it's a volume four. Um now you can go more in depth, right?'Cause violence for the more experienced trader might be not only how big it is, but how it developed, right? The speed at how it grew, right? So a lot of us that are day trading and really looking at the candles. They behave a certain way, right? Some have uh uh every stock has a very distinct personality.

And so when you see that bar, you know, let's say after multiple move multiple bars down, you might start to see it jitter and then all of a sudden that velocity starts to come. And that's that violence. And so sometimes if your intuition is is there and you have the experience, you might be able to be like, oh, oh, you get that gut feeling, you jump into the violence and it turns out to even grow more. It's hard to explain. I see. And so but but you said earlier that um normally you you wait.

Uh, even though you see the the violent bar, you wait for it to retrace. How often does it retrace and and how often have you found that it just continues to go on go on up and and you missed out on the trade? I I found it to personally from my stats, it's fifty-fifty. It's fifty-fifty. So sometimes um if you're not in the trade

Right. If you don't nail the entry, um and it goes without you very violently, it might just go straight up and hit the profit target. And sometimes it'll bounce violently, pull back, give you another chance to get in. And then the move happens. But um, you know, it's fifty fifty. And how often do you see these elephant bars with any one particular stock? Or does it hire vary significantly depending on the the stock you're looking at?

It happens every every day. Um every day, multiple times, at least ten, twenty times a day. So it it's that that specific event, the very large bar, um, it's everywhere. Um you can with the same stock? With the same stock, or do you need to be looking at dozens of stocks? W with with the same stocking can happen, of course, depending on the time frame, it can happen multiple times a day. So if you were to look at the spy today on the five minute, I mean there's multiple large bars.

Um, even on the fifteen minute, there's multiple large bars. So today's September 5th for the people listening. Um but yeah, there's there's multiple large bars, multiple of them. You could call it, okay, this is this move is oversold. It's exhausted. So yeah. Now the important ones are obviously. the ones that uh originate

the the origin of the move and the ones that are at the very end, right? The exhausting part. Do you trade um mainly in the morning session or throughout the day, or have you found any particular time times during the day that you prefer over others? Um, I do best after the first 20 minutes go by. So I'll usually trade only the first sixty minutes. That's it. Oh, why why is that uh I mean, what makes the first sixty minutes um better for you than say the rest of the day?

Well I well, one, I'm in Asia, so I have no uh no interest in I want to go to sleep um early. Um but the majority of the volatility is in the first 60 minutes, first 90 minutes. So um, if I can't get the job done by the first 60 minutes. Um, I don't want to be there. So that's just me. Uh-huh. Mm-hmm. Mm-hmm. Uh again, also more participants are in the first sixty minutes, right? So for my events to work.

I need people trading, right? I need the big money to be um there. And so if I if I don't have participants, then there's not going to be follow through on the trades that I'm taking. Right. So I need that institutional participation. I could s you could say.

Do you look at uh moving averages uh and their potential uh aid in helping you go long or go short? Yeah, I use the two hundred. Moving average, the simple moving average, and the twenty. To keep it simple, if the price is above the twenty and the two hundred, you're in a bullish state. If your price is below the twenty and the two hundred,

You're obviously in a bear state. Um, if the twenty and the two hundred get too separated, right, then you could assume that you've been trending for quite a while and be careful Going long. Now Um, that's what we call a wide state. Um or a trending state. Wide state a wide state can always get wider. So be very careful trying to go against the trends. But that's why I say that uh um when I'm going short I'll take a short at a good location that has decent odds of producing a reversal.

Okay. Describe that to us at a good location. Like what was it what would it look like on the chart and with the the moving averages and so that people can imagine what you're talking about? Imagine um imagine I don't know, let's say Tesla. It's been in a range for the whole week. It's Friday. And um right off the open, you get ten green bars in a row up into, let's say, the major high of the week.

Right, which happens to be let's say two days ago, right? On a Wednesday. And that Wednesday happened to be a very violent drop from the top. So the origin of the move was violent. So I can assume that if Friday's move, which is right now green, we're ten bars up, if we can get to that Wednesday high, right, which is just a simple resistance, I could expect, I could predict that there is going to be

some sort of reaction, probably a drop. The majority of the time new highs fail. So I'm gonna bet that there's gonna be some sort of reversal. So let's say now we're 15 green 15 green bars in a row and we get that nice topping tail bar. Um that's a short opportunity, right? Short it. Let's hope that the risk is appropriate and uh the risk reward makes sense. And go for it. Now, I would say that for most traders, they should aim to achieve a 30% win rate. I think that's reproducible.

realistic for the majority of the industry. I think a lot of people go many years trying to achieve uh unrealistic unrealistic uh statistics that it is just it's just not gonna happen. So 30% with a three to one, four to one, Um, math is gonna make money for you. Now it's not cute, it's not impressive, but it's reproducible.

Yeah, where do you set your stops? Is it or have you heard of it being common for traders to set their stops just slightly above the very top of that resistance level? And it creates a uh an area for um trader other traders or manipulators to go do stop loss hunting to blow out those those last little stops. And so where do you place your stop? So if the tail bar appears

Like I said, after fifteen green bars, the tail bar appears, I short at the tail bar, at the lower the tailbar and the stop will go above the tailbar. If I Get shaken out, right? The tail bar gets taken out, and let's say maybe one bar higher, two more bars proceed after that. And then another tailbar appears, then I'll give it an a second shot. But this it's only I'll only give it two chances.

Um and shakeouts happen. I just have to to reenter. Um and I there are reentry approaches that I that I take. Um but uh I I don't like to to give myself a wide stop. I'd rather be wrong more often um and and have good risk management. I I see. So where you place the stop is not based on a percentage. It's based on on uh where it be just above the um the tail bar, meaning you're you're um putting your stop just above the the last highest level of resistance that you saw. Yeah.

Uh yeah. And uh the monetary stop is the most important. So every every trader should have either a percent stop or a dollar amount stop. Mm-hmm. Uh Do you place much importance when the uh two hundred day moving average is aligned or compressed together with the twenty-day moving average?

uh when you see these uh elephant bars appear. In other words, do you are there scenarios where you see uh a confluence of events that are v so compelling that you greatly increase your position size or Uh how does position sizing work for you? So position sizing, um For me, it it's changed over the years. A few years ago I I had the approach where I would have my light size, medium size, heavy size. Um, but nowadays

Um, since my win rate is a lot lower, it's around thirty five percent. I keep my position size relatively the same since I just don't know which which trade is gonna be the winner. So all my position sizing is the same. I I don't want for me to position size lightly and then Because of the randomness of the market, it ends up being a mega trade, like today. Today my the trade that I accidentally position sized too lightly ended up being the biggest move of the day.

Why? I couldn't tell you. The other trade was the better setup, but today this one just happened to to be the major move. So it's it's too random for me to um honestly say yeah, like I know I should be position sizing very heavy here. I just over the years I I can I I admit I just cannot manage to be right seven out of ten times. So I'd rather keep that thirty percent win rate, thirty five, and position size um the best I can.

So let's say today um I take a a trade where the risk on the tailbar might be fifty dollars, but I get a better entry and I can size in a little bit heavier. My wrist might be very tiny, but by the time it starts moving my way, I'm heavily sized in while still losing fifty dollars or less and that turns out to be a big winner. So entries are very important. Um do you do any uh journaling?

Um yeah. I journal every day on my uh I have a a WhatsApp group chat with myself in it. And I'll just screenshot the trade and put it there and uh But uh I don't journal anymore. Um, I used to journal a few years ago, but no, not anymore. Um I think uh I know what I'm doing today. So it's just uh second nature. I show up one minute before the open. I don't really trade the first twenty minutes, so it doesn't really matter. Um it's uh it's a very uh

slow and uh w what would you say nonchalant. It's just laid back. Uh-huh. But um it's become like walking. So it's it's easy now. What do you, um, What's your opinion uh when traders some traders say that they like to look at multiple time frames? uh many time frames to to really nail down, you know, is this move sustainable? Uh so they'll look at maybe the two minute, five, you know, fifteen thirty hour.

um, the quality of of the move. Do you place much value in that or just looking at a two minute or five minute is sufficient for you? For for the beginner, I would say to just stick to only one time frame and learn to read that, because most of the time beginners they they look at too many things.

and they get overwhelmed and um they they don't master one thing. So when I first started, I focused only on the two minute And I I became profitable on the two minute And then I added on, you know, the five minute, the fifteen minute, the hourly, and the daily, and uh used those as confluence, right? No, if you're more experienced then you'll know how to use the fifteen ad. The more confluences you get, the better.

But for the beginner, I'd stick to one thing. Um too much is all is usually not good. Does uh anything in the pre-market activity influence your trading at all or do you place much value uh looking at the pre-market? I don't look at pre-market. Uh I have pre-market turned off. So I only have regular trading hours on. The first thing I'll I'll pay attention is uh yesterday's high and yesterday's low. And if it's if it is like I said a violent

uh drop from the yesterday's high, then I'll consider as a zone to go short. Um, but I don't look at pre market now. Um let's go back to the uh the gift zones. So you say about half the time uh when you get an elephant bar on a reversal, it'll continue on uh in that direction, and roughly the other half

it'll experience somewhat of a correction back into the gift zone, allowing you to get a better uh purchase price. How do you, I mean, when it starts to fall uh after it makes the elephant bar to uh to correct back. Is there a other bar like a somewhat of a reversal to know that

you look at so that it doesn't keep falling, uh that it maintains some level of support within that narrow um within that minute or two minutes timeframe? There's there's no Let's say you have a elephant bar, wide range bar off the five minute and it's retracing back into the gift. Right. There's no way to really know that this is going to be the one that ends up dropping even lower and stops you out and continues down.

or it's the one that goes higher. It's very random. Um the the only guideline that I do have is that ideally you don't want the majority of the bar to be removed. And so you could use, let's say, 80% of it, 80% of the the large bar. If eighty percent of it gets removed, you can assume that most of its power is not holding up and it's over.

Right. Um, but for the beginner, I just keep the stop at the very low and you gain that experience of three, oh, oh, oh, so over time looks like at 80% of the the bar being removed, usually it fails. But there are times where it retraces near the lows and then finally turns around again. So the guideline is. As long as it doesn't take out eighty percent of it. Um if you want to be more aggressive, the halfway mark would be it, but I think that's too much.

So in the years you've been trading, um, and I don't know how many other traders you have met or or talked to, but is there have you witnessed uh the common types of

mistakes that traders make, both for yourself and other people that you've you know. Yeah. I think um off the top of my head, I think one of the most common mistakes is starting off with sculping. I think that's that's a big mistake. Attempting to have a high win rate. I think that's um big mistake because it just it takes so much skill to maintain such a high level of accuracy with good risk management to to stay profitable.

Um, I personally don't know anyone. Well, that's a lie. Of course my mentors, you know, but they've been trading for four or five decades. So but other than that, um people have been trading for about my time, six, ten years. I don't know anyone that has such a high win rate. Um and is scalping for a living. Uh most of them are doing thirty, forty percent.

And they have three to one, four to one risk rewards and and they're doing well. So starting off with scalping, um, I think that's a big mistake because in the long run, for the beginner, they never learn to hold on to a winner. Um, they cut their winners so so quickly. And um just from pure human nature, they they hold the losers. And the opposite happens, right? So the profitable guy, he's cutting the loser quickly and holding on to the big winner.

Um, the not profitable guy and the losing trader, he's uh, of course, taking it too early and holding it too long, the loser. So it's literally the opposite. Um, very funny. Yeah. It's uh as beginners we do the we do things backwards.

So right. Right. So what are the indicators for you, uh, given that you're trading in in a short time frame? To hold on to your winners longer. And do you ever come across situations where things are going so good during the day that uh you decide to hold it overnight? I've never heard no, I don't hold trades overnight. Um, I'm always out of the trades before um the hour ends. Um the first hour. But what what keeps me holding a trade is um is just seeing those violent bars.

Continue and continue and continue. So let's say I'm looking at the two minute chart. If there's just consecutive medium to large size bars, just nonstop. I'll just trail my stop at a decent distance using perhaps a moving average or a bar by bar under every bar until I get um trailed out. But usually I'm I'm able to achieve a two to one.

almost right off the bat. So from my entry, two to one is relatively close because my stops are pretty small. Um, so I I like to see the trade pop violently in my direction. By the time I hit two to one, I'll get my first profit take and continue to trail out. In in uh one of your videos, uh, you mentioned about uh good experience and bad experience trades. Um, what are they? So like uh like a like I was doing uh many years ago back in 2020, shorting at support and buying into resistance.

Um and believing that you're doing the right thing. Um a lot of people are are very convinced. that by using this, this, this, this, this, this, this, they're generating good experience. And most of the time, um, they're creating a lot of uh uh bad experience that it it makes you go backwards. In your journey rather than forward. And uh I've met a lot of dudes that have been trading fifteen, twenty years.

And um not to be rude, but um they're very bad. They're they've gone completely backwards, um, just because of the false beliefs that they have uh um generated like myself buying into support, scalping, trying to achieve ninety percent win rates, holding on to losers and believing that it's going to bounce. while holding it for days or even months. And these are not things that generate good experience.

What if they come back and say, but uh these trades are as long as it's profitable, isn't that a good experience trade? I mean, aren't all trades n uh potentially good experience trades because you're learning something from each trade, whether you're making money or losing money, right? Everything, yeah, every loss can be a good experience as long as you break down the loss and you understand why you lost. But if you don't break it down and analyze it.

and stay arrogant and and tell yourself that it's fine, it's fine, it doesn't matter, and continue to do those same bad habits. I don't know where the saying comes from, but I I think someone says uh uh the definition of insanity is doing the same thing over and over, expecting a different result. Um so that was me many years ago, uh losing in the same way, expecting a different result, thinking that I'm getting better, but I was going backwards.

What is a trap zone? And what can we uh make some good trades in this in this trap zone? Yeah, um the trap zone as I was taught by Velez is just um being stuck between a major high and a major low. Um and in this case with the definition of the trap zone. It's usually using yesterday's um last 45 minutes of data. But the trap zone really can be.

at any time anywhere. So if you're consolidating in a range, in a tight range or medium-sized range, that could be a trap zone. So you usually don't want to be trading inside of a consolidation or ranging um market because you're gonna get smoked. Um now if you're very good then you can trade the range, right? Um but yeah usually you wanna try to stay away from that. Um I personally prefer ranging markets.

Obviously big ranges because I want to be, you know, supporting resistance. But on a smaller time frame, of course, you know, on a two minute, you don't want to be trading inside of a tight range. That's uh not a good idea.

So uh share with us a little bit, um, how has your trading performance been over the years, or how how has it kind of evolved and fluctuated over the years? Yeah, um twenty twenty twenty two was fantastic. Twenty twenty three was was even better. Twenty twenty four was my best year. Um twenty twenty five this year has been slow. Um, but you know, I I still think I'm a I'm a baby in the industry. So a lot to learn. Um, but it's it's over overall it's been um a line up, right?

It's exponential lineup. So it's good. Every month is very difficult. Every month, every week is very challenging. So a lot more experience is needed. Um I have um Mentors that are green every single day. But these guys have been trading 30, 40, or even 50 years like the last. So of course sure they have two or three red days per year, but I mean these guys are incredibly, incredibly skilled. And you've been living uh uh whereabouts in Asia for for some years now.

Yeah. Um I lived in uh Bali for for a while. Um and I lived in the north of Vietnam in a city called Niachang and uh I've been living in a small island in the south of Vietnam for for quite a while now called Fukwa. So it's uh it's a very beautiful island. Uh it's definitely you gotta look it up. Very, very, very beautiful. I think it has some of the most beautiful beaches in the world. Wow, fantastic. Sounds like you're living the life. Yeah, it's it's nice.

Yeah. Uh uh I wanted to go back to um w you mentioned that um some of these guys that you know trading in a similar style that you do, uh, are green overwhelming majority of the time, um, except for a few days here and there throughout the year. What what do you think they do differently qualitatively? What what makes them uh super profitable, uh, much more than say the average trader who follows their same system. Like what could we do different?

to uh get their to their level of experience, to their level above performance. I would say that it's uh the psychology. the psychology, the ability to to reduce risk so so incredibly well. Um they're they're they're very, very good at um losing very small amounts.

Um, that's very impressive. And um I also think that the the the size of your account does matter. Um I think um especially depending on the style that you have, there are traders that are able to to pyramid into trades um and get themselves out of a nasty trade and turn it into a winner. And of course the more money you have, the more you can pyramid and and uh damage control and and get out of a a losing position. Um but of course that also takes an incredible amount of skill.

Um, but yeah, I I think it really comes down to to psychology. Um an amazing ability to to lose well, you know, incredible risk management. Um they're great losers. That's that's I think that's what it is. Excuse the last interruption here. This is Tessa. We hope you're enjoying this episode so far. If you love the podcast.

Please give Chatwith Traders the best review you can on whatever platform you're listening from. This will help us to keep the episodes coming. Also, if you haven't subscribed to our email list, please hop on to chatwithraders.com and click on subscribe. so we can keep you posted of information that may be of importance. Thank you. Now back to the chat with our guests.

Uh uh. Uhhuh. Have you uh shared uh your passion of trading or been able to teach anyone else uh to trade during these years in uh Asia? Uh with uh Tessa when I met her, um I don't know when we met. I think it was uh three years ago. Was it three years ago? Something like that. Um, I was able to to teach um some people that are still with me today. They're my some of my closest friends. So I talk with them um um pretty pretty regularly.

And um sometimes we trade together. Um, so they're great friends. And um most of us do trade the same approach. And uh it it's it's been good. Um I love those guys. They're my friends. Uh and uh it's hard to make friends in this industry sometimes.

Mm-hmm. Mm-hmm. Uh so to wrap things up, uh, what do you struggle with most as a trader? Um I think uh for me is is is obviously the losing. Um I I don't like losing. Um I come from uh um from a a s very successful career, I guess, in tennis. where I was very accustomed to always winning. Um, but uh it it's a everyday struggle to Be okay with losing, going on sometimes ten, ten trade losing streaks. That can happen.

Right. Uh, but staying staying with the method, staying with the approach and uh sticking through those uh those tough times is it's just part of the math, right? Mm-hmm. Mm-hmm. Uh so are you um do you feel that you're now um at a place where you're comfortable with your process, kind of your life? Um is there anything that you're looking forward to next? My my main focus today is uh obviously trading and investing um a lot. Everything that I make, I try to invest it all.

And uh enjoy my life, have fun, not focus too much on money. So yeah, it's good. Great. Things are good. Fantastic, Diego. Uh Diego, thanks for coming on Chat With Traders. Thank you so much.

Oh hi there. Thanks for sticking through the end and I hope you enjoyed Ian's chat with Diego. So if you have a few more minutes, feel free to stay on for my brief chat with Diego. Take care. So regarding tennis, do you still play tennis for fun or yeah, I found a uh a golf club. There's a what do they call it?

Uh country club. There's a country club like uh five minutes away from here by the beach. It's like a big resort and they have tennis courts, pickleball courts, golf. We we go there. Me and my girl go there pretty often. Yeah. Um I'm trying to go to the beach every day'cause you know you get used to it, so you stop going. But um we're going there as often as we can every other day. Yeah. Some days we have lazy days, but yeah, still playing.

That's great. It's great that you're still um somehow involved in in your passion of tennis, your your very first Passion, right? Tennis. Um because of your tennis background and you said that you you taught tennis, I feel like it's really reflected in your explanations, you know, on the way you trade. Especially I was part of your, you know, private group.

your your trading group and I just remember just the way that you you explained things on the chart and kind of your approach based on Oliver Valez's um methods. It was just so clear to me. And one of the the uh things I remember that I use every day in my trading is the trap zone. Um, I think I mentioned that to you. I I swear I use that. That is so helpful for me. Just that one thing I can remember.

And I can use every day to either stay out of it or if I go in it, be really, really um cautious. But that is um something I use every day. So um I just wanna thank you for for sharing that with me. Um And also there's something that you said that really was really interesting. You never missed an open at the market open since you started trading. Yeah. I've never missed an open. How do you do that? Um I I think uh I've made um trading always my priority. It's it's been my ultimate passion.

Um, even though I think it's one of the most frustrating and difficult activities, but also very rewarding. I love it a lot. I don't wanna miss any open. I feel like missing an open is uh Especially since I don't have a a job, right? I don't have anything else to do. So there's no excuse for sleeping in or you know, being out doing something that I shouldn't be doing. Like I I need to be there for the open. Yeah. Especially'cause one day I wanna

be able to say like I'm a true professional. Um, and so I I should dedicate myself as much as I can. It's uh I would say I'm still in my university years, um, late university year. I I feel like you're already a I feel like you're a professional already. But you're so humble and it's a humility that really um is you know is is what brought you here, I think. Um So you mentioned, I remember you talking to me and you taught your girlfriend how to trade as well. Is that true? Yeah.

Yeah, yeah, yeah. She uh she still trades almost every day. She's picked up other hobbies. So she uh she loves cooking, she loves baking, she loves uh um making dresses. And uh working with clay. So Um as as long as I can fund all her hobbies and uh she's happy and entertained. I'm happy. If she wants to trade, uh she can trade. If she wants to do whatever she wants to do, um, you know, I'll be there for her to support it. But uh yeah, every now and then she's trading for fun.

That's amazing. Um it's like it's like you guys are partners in crime. Yeah. Trading. That's amazing. Um and I think it's great that um you know she has other hobbies too, because honestly, if I were to just trade. And that's the only thing I did. I I don't think I can handle it. It's it's yeah, I gotta have other things. Um let's see. There's a one, okay. Trading from a 13-inch laptop screen. That's another very unique. We've never

We have never had a guest on the show that trades from a laptop, one laptop, small laptop. Is that driven by just the lifestyle that you have or convenience or or simplicity. What why is that? Um it's um well I I first started off trading off of uh four monitors. So I had the laptop and then two ultra wide monitors. So I think that's four. So it was it was

A ridiculous setup, but I was losing money in a cool way. And I and then eventually I learned uh Oliver Velez's approach. I realized that it was so simple that I really only needed to look at one screen, one time frame. Um, so my laptop was all I needed. And uh I travel a lot. I travel quite a few times per year. So um I've I've refined um my approach. To be simple enough that I only need one screen. Um, and that's it. If I could trade off my phone.

Um obviously if it if it was swing trading, not day trading. Day trading, I definitely need my my uh hotkeys to be quick. But um I can analyze any chart off of a phone. I mean, you don't need much for reading a chart. Of course, trading you definitely need your

your hotkeys, right? Yeah, to be quick. Thirteen inches. Yeah. Yeah. Um, final question. Well, you mentioned something I think is really important about community. Um that, you know, when when we had the Chat with Traders community uh open at the time, and that's how I met you actually is through the community.

I'm just so glad that you came into our community because I feel like you shared so much, you know, uh with other um community members and like you said, you became friends with some of them. even to this day. And that is just so important because trading is just by nat by its nature, it's just so lonely, right? Yeah. Yeah. Yeah. We're all still keeping in touch. Um, I'm so grateful that you guys made that community. It was uh it was uh life changing, at least for me. Um good friends.

good experiences and uh it's hard to find communities like that. Like I said, it's hard to make friends. So hopefully one day you guys make another one'cause making friends is hard here. Yeah. Well, no promises, but yeah, that's always a possibility that in the future we could reopen the community. Um yeah, just so glad that you're still in touch with us, Diego. And yeah, thanks for coming on the show. Thank you so much. I really do appreciate it.

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