How to develop the perfect trading strategy with Akil Stokes

So welcome back to the Edge One podcast. We are here today with Akhil Stokes. Very happy to have you on. Thank you for taking the time. It's been a few years since we talked the last time. So thank you for spending another 45, 60 minutes with us today. Yeah, I appreciate it, guys. Pleasure to be here. Always love talking to you and always love talking trading in the markets, as you guys know. And Moritz is as well with us here today. Hello, Moritz. Yes. Hello.

So I want to go right into the topics. There's a lot of things that I've written down that I would like to pick your brain on. Let's start with what is your trading style and how would you describe your trading strategy? So I'm a price action trader. I guess if I had to describe it kind of a classical price action trader. So looking at. classic chart patterns. I do some advanced patterns as well, but mainly my trading strategy revolves around support and resistance. So structure. So for me,

Structure is the most important clue in the market. It tells you a lot about where price action came from, where price is likely to go, which levels the markets are interested in, which levels the markets may not be interested in.

it's trend continuation going with the trend whether it's counter trend um you know playing reversals or something like that it all revolves around structure and then kind of within that there are different little patterns flags head and shoulders on double tops double bottoms a lot of the classic stuff

All right. Yeah. Remember you used to trade more like a Fibonacci and those Gartley and those symmetry patterns, right? So there was a shift going on. Yeah. So I still trade those for me.

Those were the easiest, easy in quotes, I guess, the easiest to pick up and start trading. Because when I was taught them, it was something that was very rules-based. And as a newer trader, i was all over the place i didn't like rules i didn't follow rules i kind of just wanted to come into the market and you know go off like a feel like oh i think it's gonna do this i think it's gonna do that and i got into a lot of trouble so i had to take i don't know how many steps back and you know

do something that was very straightforward, black and white or as black and white as possible. And they're still a staple of my trading strategy. They're kind of slow, boring, methodical at this point, but they're consistent, which. I love. But something that I have done is go back to the stuff that I really enjoyed, which was like actually reading and analyzing a price chart. So it was a pretty cool transition.

as i got better with one thing i was able to do that kind of just on autopilot and it opened up more time and energy to focus on kind of the i guess the next evolution of my trading which was pretty cool

Yeah, that sounds interesting. I definitely want to get more into this, but how did you, in the beginning when you were just new to trading, how did you choose your strategy? Did you go through multiple strategies and how did you then settle on this one? that you started with and you're still using well i was all over the place um it's it's

A little bit shameful, but I guess most of us are like this. When I first started trading, I was looking for the thing that would make me money the quickest. Even my transition from the stock market to the Forex market was because someone told me that the Forex market is. bigger it offers more opportunity you can start with less money it's higher leveraged and everything in my brain was like i can take a little bit of money and i can make a lot of money now i wasn't kind of

You know, I wasn't as blinded as those traders that think they're going to become like millionaires in one day. But I thought success would be pretty simple. And I knew nothing about technical analysis going into Forex. So when I first started, I would just. go around the internet watching videos reading books and like picking up strategy after strategy that everyone made seem good and i would try it and fail then move on to the next one then try it and fail to move on to the next one and

There was pretty much a lot of trial and error. I did I played around with a few mechanical strategies, which at the time, I just wasn't mature enough to trade, meaning that I would trade them because they worked. But psychologically, I wasn't good enough to kind of consistently trade them. So every time they would lose, I would be.

like oh the strategy sucks and i'd throw it away um so going through a long journey of that eventually i got to something that was price action related which is something i wanted but didn't require, I guess the... the discretionary skill, meaning me being able to kind of analyze and judge, I needed something more strict and harmonic patterns, Fibonacci bass patterns were very, very strict. It was pretty much.

black or white for the most part. And that was something that kind of kept me grounded and kept me straight and allowed me to actually follow my rules without breaking them. So that's how I got started in them. And obviously I fell in love with them as well.

Would you say that these patterns, because they took out the discretion from your game, it was easier for you as a beginner? And also, because you've trained so many people now over the years, would you say this is the... easiest way to go for beginners like with a strategy that has way less discretion and then as they get better introduce more discretion into the trading yeah i agree 100 i think as a

newer trader we need to kind of be as babied as possible meaning we we need as little freedom as we can get and so i'm a big believer in trading intuition um i'm also a big believer that most traders that believe they have intuition at the beginning stages don't really have them so like intuition being like that feel that sense like i see that and like i know it's going to go short where a lot of new traders kind of like

see that and they're just you know recklessly gambling i think a lot of experienced traders actually have that and the reason that we have that is because we've seen probably millions of different patterns at this point in the market over and over again and even if we can't quite put our finger on it we know it's like hey i know when the market does that that's a sign of this as a newer trader

We don't have that yet. We don't have that experience in the market where we've got all those repetitions of seeing the same things over and over again. So we need to kind of be on a very straight line of like, look at this, look at that.

Only this, only that, whether it's price action. I think mechanical systems are good for newer traders because there is black and white and possible. They take the discretion and subjectivity out of it. But I think as newer traders, we need to start with that to kind of get our feet wet. And then as we. gain experience in the market, we can start kind of, I guess, earning our discretion, earning our intuition, and we can start kind of loosening up the rules on how we trade. Makes sense.

How do you help traders when they come to you? Because you've been working with traders for many, many years. How do you help them to... ditch trading strategy when they hit their first three, four, five losing trades, or maybe just two losing trades in a row. How do you help them stay on track? Are there any techniques or tips or how do you, how do you help them?

Well, it all starts with belief. And, you know, obviously you guys are big into backtesting. You're big into acquiring data. And I always tell them that. That data is purposeful. Like if you've spent time backtesting, if you spent time acquiring data, if you spent time proving that your system or strategy works and you have the numbers, trust the numbers, right? Your numbers will show you that.

over time this is profitable it'll show you what your edge is it'll show you biggest winning streaks biggest losing streaks max drawdowns all that stuff and when you get into a little bit of a rut where you're maybe on a losing streak and you're starting to leak confidence i always say refer

to the data, right? Click it open, look at it and ask yourself, hey, I'm on a five trade losing streak right now. And you go through your data, you know, find what is the biggest losing streak. Oh, this system or strategy routinely takes. seven trade losing streak so you're still in kind of a normal area you're not in an unnatural drawdown and that should give you confidence that hey although it sucks at the time that i'm going through this

This is normal. This is supposed to happen. And my numbers have shown me that if I can fight through these times, that eventually I'll get back on the profitable path. So I think having that belief in yourself is key. When you have experience in the market, when you've been doing it for years and years and years, you kind of, you know, you know it within yourself because you're like,

Been through five trade losing checks before. This is going to be fine. But as a newer trader, you don't have that experience of working through them. So that first one or those first couple ones are extremely hard. And the best thing that we can do is look at the data, look at the work we put in and use. that to give us some confidence.

That and surrounding yourself with other traders. I can't tell you how many times I've been in the drawdown and I've reached out to another trader that, you know, I've known for a while and they're like, yeah, trading sucks for me right now, too. And I'm like, yes, like we both suck together. And it's just sometimes, you know.

especially with everyone talking about their P&L on the internet and stuff like that. It seems like you're the only one that's in a drawdown or only one that's kind of going through a bad period. And having someone else that's kind of in the suck with you.

misery loves company it kind of makes it feel a little bit better where it's like hey i'm not alone i'm going through this with someone else as well yeah totally it gives you also a little bit more of the realistic perspective on what trading is it is compared to what you see on social media

When we talk about data, did you tweak your system over the years? Meaning, did you play around with different take profit levels, reward risk ratios, trade management, and how did you go about this? Yeah, so data is everything. And I think that we talk about the backtesting process before you start trading, you're going through and you're getting historical data to prove that your system is correct and make tweaks and stuff there.

it's very important that we continue to track data and we should be doing that anyway with our live journals and whatnot to see if we're profitable but The markets change over time. And as traders, we change as well. And having that data tracked over time can allow you to make adjustments. I would say the biggest change that I made in my trading over the years.

has been two things you know one it was becoming a little bit more aggressive with my entries and that was because of what i saw in the market i saw that hey i'm missing a lot of trades like a lot of trades would come to certain levels i'm like okay i'm gonna get involved i'm gonna get involved i'm gonna get involved i just need this

And it would never come. But I would see an alternative reason. I'd be like, man, if I would have done that, I could have gotten to the trade. You write it down, stash it away for later, write it down, stash it away for later. And then in the future, you start looking at it and you're like, hey.

maybe this is a way I can enter a trade and it allows me to have more opportunities or get into a move quicker. And we can make that adjustment to our strategy. Another thing that I did, again, without really changing the bigger... philosophy of how i trade is just i got better with stops and targets um i got better with understanding like how big or how small of a stop loss i need like

Can I take a smaller stop loss and still have the same pretty much win percentage, meaning that I can lose less per trade and it doesn't really keep me out of winning trades? Yes. Check. Can I take a little bit more profit? Right. Do I get better of technical analysis and understand?

profit levels and can I get a little bit more out of each win and it's amazing if you just take if you're let's say your win percentage remains the same if you can just kind of minimize your stop loss by a little bit or your average loss by a little bit and increase your average profit by a little bit, you're working it on both ends. And that does wonders for your return on investment at the end of the month, quarter, year, whatever it is that you're tracking. Right.

Yeah, it's going to boost your reward to risk ratio a lot. But you need to do it with data. As you said, I see it a lot in the journals that I review that traders do a lot on guesswork and they don't listen to the data. So that's really important that you do the things that you have a feeling about, the intuition that you talked about, which probably a lot of traders mistake for just gambling, as you said.

that you back it up by data. Otherwise, there's no way of verifying if it actually works. Because we talked in the beginning a little bit before we started the podcast.

You made a transition from a more, because last time we talked, you were more into short-term trading. Now you transitioned a little bit more. How was the transition for you? It was lovely. I'm not going to lie. It was... So I never intended. to be a day trader. I wanted to be a swing trader, intraday trader, hourly and up. And I got into day trading when I started teaching because I'm working with students and we're going through live markets in our live trading room.

like a lower time frame session and day trading was fun but the thing that i didn't like about it was that it was a a big time commitment like i had to be locked in front of my charts from this time to this time every day if there was a trade that was still on the board i had to kind of cancel plans and be around my computer to manage it and make sure i'm rolling stops and sharing uh

trailing stops and stuff like that. And I started to ask myself, why did I get into trading in the first place? And yes, we all want to make lots of money. I'm not going to deny that. Really, it was time freedom. Trading was cool because it allowed me to really have complete freedom around my day, meaning I can, you know, I have to do certain things for trading. Yes, we have to do that, but we can travel at will. We can go to stuff we don't have necessarily.

a set schedule, like a normal nine to five. And that's what I love, especially with having kids where I can go see soccer practices or go see recitals or like I help out every year with field days at my kid's school because I can be there at. 12 o'clock in the afternoon if I want to. And I kind of lost track of that and got sucked into being a slave to the charts. So I made the adjustment.

After COVID, because COVID was big where all the kids were home and like my kids want to go play with me and I'm on my computer. I'm like, get away. I can't do it. And I kind of rethought about my values. So going. getting away from the lower timeframes and sticking strictly to the higher timeframes has been amazing because it opens up so much time. And I think as traders,

If we understand what we're doing in the market, meaning we're following a plan, we have a strategy, we're not just recklessly gambling. I think it's surprising that a lot of traders how how little time you actually need to spend on the chart. You don't need to be locked in for 10 hours a day at all. I can literally come in probably about a half an hour, see everything that's on my radar for today, set alerts or whatever I need to do and then kind of.

go off and do whatever i want to do and just make sure i come back to check it if something is is close um so it's been refreshing it's been refreshing i do miss it sometimes i miss the action of day trading you know sometimes you guys know trading gets boring you're like you're waiting on something for like a week and you're like come on man let's let's get on with this um but the the benefits well outweigh that

Would you say that, I mean, I 100% agree with you, especially now that I have a newborn as well. Time is everything to me right now. And it's insane how much time these little... things eat up. I've always been a day trader traditionally but also swing trading on the side and right now I'm also thinking about making some adjustments to my approach just to free up some time.

Would you say there's more profit potential in day trading versus swing trading? This is always the question that I get all the time from all the students. other people as well uh like which trading style makes the most money what's your experience that's a good one um man i I don't know. I don't want to say one over the other because it's different. You have much more frequency in day training, so a lot more opportunities.

But a lot more opportunities doesn't always equal profit. A lot more opportunities, a lot more chances to make mistakes. If a trader isn't good, a lot more opportunity to take losing trades. Swing trading, the opportunities are less, but they're typically a little bit bigger. Your risk management, your position sizing approach is going to greatly impact that as well.

I want to say even it's it's it's there's not one over the other that can make more. I would tell you this. If if you are a really good trader and. probably day trading just because if you're really really good and you have more frequency um you can probably produce a little bit more day trade on a consistent basis but ultimately it all depends on the trader all depends on their strategy all depends on their position sizing strategy as well um but that's uh

That's a good one. I like both. Do both. Make money on both ends. Me too, yeah. I've done some research, actually. Talked to some friends in prop firms as well. looked at their data, etc. And for them, interestingly enough, most of their successful traders, they are more on the one hour, four hour daily charts. yeah so day trading while it can be really incredibly profitable um it produces a lot more losing traders than swing traders and i think that is a

Probably because of the commissions. Obviously, they impact your trading a lot. But also because the requirements, time requirements, you need to focus. The trades come way more often. You go easier on tilt, all that stuff. So psychologically, it's probably a little bit harder, I would say. And because the margins or the edges in trading are so razor thin, that little bit harder can completely ruin your edge in the end.

So, yeah, it's interesting. You say that about the commissions. I was, I think it was trading view had a competition, I think over the winter and they share over the winter and they shared like their, I think they were top five and there's all different types of traders. And one of them was like,

you know you could tell they were a day trader because everyone else had like maybe 20 trades taken or 30 trades taken within like a month and there's one person that had like like 100 or something crazy like that and the commissions that were taken out were just like

It was so much. It sunk them where they probably should have been like the number two finisher and they were already fifth. But just because commissions, commissions, commissions, commissions. And that's something that, like I said, a lot of traders don't think about that, especially with a razor thin edge. Edges aren't.

super big they're very small so that's a really good point do you think there's a there can be a strategy misalignment between the strategy and the trader i just reviewed a journal from a trader who sent it into us for edge wrong and He's trading a swing trading approach, but he has a lot of problems with FOMO. So he wrote in his notes for the trades often that he just wanted to get into a trade and he needed to trade.

He had the feeling and then jumped onto trades. Do you think certain people are more aligned to a specific strategy or is there something else going on? I 100% agree. And I got a personal story about that as well. But something I always tell the traders I work with is like. you want to align your strategy with your belief system and with your personality so like

If you're not like, you know, if you're going to be a day trader, right, you need to be locked in. You need to be able to take trade after trade after trade after trade, have a short memory, forget all that stuff. If that's not you, then you're probably going to struggle if you don't have patience.

Probably going to be very hard to be a trader in general, but especially a swing trader on the four hour or one hour who's waiting hours, days, weeks for opportunities. But I told you guys earlier, I started with mechanical systems because I thought it was the quick. plug and play so i had a mentor that gave me a system he said it was profitable it was as simple as pretty much like

following a red arrow and following a green arrow. When a green arrow came, you pushed a buy button. When a red arrow came, you pushed a sell button. And I'm like, okay, this is the quick fix. And it was a trend continuation strategy, which... at the time i didn't know that i was more counter trend base so i would sell on a red arrow and the profit target would be like let's say like a couple hundred pips away like really really far away but you're supposed to kind of ride this trend and

time after time it would like it would go it'd be like up 100 pips then back up 50 then up 150 and back up to 50 like this you know the the normal roller coaster rides that trades take you on and i found myself like always stopping myself out of trades early because I was getting afraid that my stop loss was going to get hit or like taking profits early because I didn't trust it to get all the way down there and like a million other things. But I kept sabotaging my edge. There were also.

signals that came where it would tell me to like buy and i'd look at the chart and be like no i want to sell because like my my counter trend brain is saying we're at resistance like sell but the system is saying buy and it was just this this conflict of interest there and that's what led to you know again me not trusting the system and sabotaging it

So I found out the hard way that, you know, at the time, like I didn't, especially in the Forex market, I wasn't a big trend continuation believer, nor does my personality fit with someone that can kind of. sit in trades for a very long time and ride those waves of being yo-yoed from profit to loss profit to loss um and that's something that

made me go to advanced patterns, made me go to a more counter-trend trading style. So yeah, I certainly think that. I think it's up to the trader. And we don't know what we're doing in the beginning. But as you're trading a strategy and as you're taking notes, like you mentioned, If you feel that you just can't...

trusted or you just don't believe it, it may be worth investigating another type of style that's more aligned with kind of your personality and your belief system. Because I think it's only a matter of time before you shoot yourself in the foot if you're trying to trade something that you don't.

So what I find off, because I was drawn to counter trend trading in the beginning, and I now have seen over the years that a lot of new traders seem to be drawn towards it. It's not about the system. I think it has a lot to do with how the charts are looking. When you see that the price is already in the top right corner of your screen, then you don't believe that there's a lot more to go and you see all the free space that is at the bottom.

That's how I always felt looking back now that this might also be related to that because I was never comfortable with the trend following in the beginning, but it has shifted over the years as well. That's a good point. I never thought about that. That does visually. You're right. You see it there. There's no space here. Lots of space down there. That's a.

And then people believe it has gone so far it has to turn around. But I think that's a very important belief that you need to work on. And then the more you see it, then you realize, okay, price can keep going actually for quite a long time. It's actually the... Biggest thing I think we see in Edgewonk that traders get out of their profitable trades too early. I think it's besides jumping into FOMO trades, I think that's the number to a close second.

people jumping out of profitable trades way too early and they leave so much on the table is there did you struggle with that as well yeah yeah a lot and and again this is when i was when i was younger less mature less educated on the market um didn't really worry about

data collection and backtesting and trust and all that stuff. Yeah, for me, and this is one of the dumb terms I always hear, it's like, you can't go broke taking profit. So I would justify doing like that, where it's like, oh, I'm only halfway to my projected profit target.

but i'm gonna get out because it's a profitable trade like that's all that matters and you know back then i wasn't worried i didn't understand risk reward or and risk ratio and all that fun stuff and how like hey my wins need to be full so they make up for my losses it was just like any type of winning trade is good like higher win percentage i'm awesome i remember working with a guy um his whole goal was to have a 90 win percentage

And I kept trying to tell him like, hey, like, that's a cool goal. Like, but like, it doesn't, why? Like, dude, does it like, does it really matter? He's like, I just want to get it. I want to get it. I want to get it. Okay. So I only worked with him for probably like a month or so. And then, you know, our philosophies didn't kind of mesh.

I remember getting an email from him like a couple months later. He's like, Akil, I don't know if you remember me, but I finally did it. I had mine like a 95% month. I'm like, dude, that's awesome. Blah, blah, blah, blah, blah, blah. I'm like, you know, what was the return on investment like? He was like, I lost money.

and i'm like what and the dude was taking he would take profit every time he was like two pips in the in the green but then he would take full losses so like he only had like two losing trades all month but like those two losing trades wiped out all of his profits because he never like let them go to where they were supposed to be um but he was happy with his 95 win percentage which makes zero sense but it's yeah it's it's tough but i think being

Being educated, being knowledgeable, understanding how the full picture works. And again, that goes back to your backtesting. When you have your data, you can see your average wins and how they make up for losses and how the whole pie works together. You start to understand more where it's like, hey, like.

i have to let this ride like i i chose this level for a reason trust myself trust my analysis um just get away from my charts don't look at it and and and you know i need to follow the rules of this plan to be successful

Talking about trading personality, are you more of a risk reward or win rate guy? More of a risk reward, win rate to a certain level. And it's funny, a couple of years ago, I almost invented the strategy, but I had the strategy using like Keltner channels and stuff like that. And it was a really profitable strategy. The problem was it.

only won about 30 in the time and knowing myself over the years like my threshold is probably about 40 if i'm 40 win rate like i'm fine um obviously anything above that is great um but Under 40% is where I get kind of like fidgety. And I'm telling myself, Akil, you know, that was like many years ago. Like, you know the game more now. This is going to be a little bit different. So I started trading a strategy that had 30% win rate. And this thing would routinely take like.

10 to 12 trade losing streaks in a row. But I'm telling myself, like, OK, you know, you got this. You know, you know how trading works. You'll handle it. You're a different person now. And even then, it was still uncomfortable. Like the psychological battle of like.

coming in every day and like losing like 12 times in a row and then having like two wins and then like losing again like 12 times like it just it tore me apart like I can I didn't make any mistakes but I can feel myself like wanting to ignore signals and or do dumb stuff just to get just to get the winds going again and so I ended up ditching it just because it didn't

I knew I was going to get myself in trouble. So definitely win percentage matters. But for me, I would say 40% is probably my floor. Anything under 40% is... i probably would start getting a little a little fidgety and that would open up the door to some mistakes but um me personally i'm like 55 55 60 max like i don't need a 70 80 women percentage um i'm fine if i can win a little bit more than i lose mentally

Same for me, 50%. Yeah, that's, yep. 50% with a good risk reward, that'll get the job done. It cuts down the pressure too. Now it's like, my expectation isn't like I have to come in and win every trade. It's like, hey, I'll win a few, I'll lose a few. And I'm very comfortable knowing that I can win half the time and make money. It's a very comfortable place to be in for me personally. Yes. When you see that your strategy is underperforming...

Is there something like you track market data? Do you think your strategy is maybe out of alignment? The market is different. Is there any way how you assess your strategy during a losing streak? Yeah, so I'm always journaling. I'm always reviewing trades. I think that's something that a lot of traders don't do enough is reviewing trades. I'm reviewing them to see if I did everything right. I'm also reviewing them to see like.

what could i have done better so i like i like reviewing like the perfect trade meaning like in hindsight looking back and saying this is what i did Is there any way I could have gotten here earlier or got out sooner? Just to see if there's any clues in there. And in that review process, I start to learn a lot about.

the tendencies in the market, because the market conditions do change, as you mentioned, and sometimes, but not sometimes, your strategy will perform differently. For me, a lot of it doesn't necessarily come with the entry technique or the actual trade, it's more so like the profit target or the stop loss. So I've noticed that

In low volatility times, I think one of the last ones that I had that was bad was like 2016 or 2014, where the volatility was sucked out of the market. And my performance numbers weren't as good as I thought they should be. But my win percentage was about the same. And so it didn't really make sense. And what I noticed is that, especially with my secondary targets, right, price action just wasn't moving enough to hit them. So the location was good. The entry was good.

It just wasn't getting to the level that I thought. And I was able to catch that by reviewing it and just journaling on a consistent basis, make some changes about halfway through the year and end up surviving the year. It wasn't my best year in the world, but I.

stopped it from being a negative year. So I think that consistent review process is key because markets are different. They will change. And I'm not saying you need to make a complete overhaul of your strategy. You don't want to ditch it. But you should be willing, in my opinion, to make small tweaks to adjust with the times if you need to. Totally. Yeah, just this week, we actually introduced an Edgewonk, a new metric showing you...

how many times the price is hitting your stop loss and how many times it's hitting your target. Because that's, I think, I see it often when I review the journals that they are too aggressive or too aggressive with their targets. They set it too far. Price moves in their favor quite a bit.

because they're shooting for so wide targets, price doesn't make it there. So looking at your target placement and how price is moving into your targets is, I think, really, really can be really helpful because the entry, there's only so much you can do. before you get into formal or missing traits but to take profit and the stop loss i think there's a lot of room for tweaking i agree it's funny you mentioned that because i it's i agree 100 i think that

I don't want to say most traders because there's a lot of traders. Most traders that I work with and probably a lot of traders that you work with, the entry isn't the issue. It's just like you're making the right prediction. You're calling it in the right place.

you're just shooting for too much of targets. And for me, there's nothing worse than the market doing everything you thought it was going to do, but not going to where you thought it would be. But I think too many people spend time worrying about... magic entry the magic entry how do i get in how do i get in and i don't want to say it's irrelevant but like there's so many there's different ways to do it there's only so many ways to do it like i think the prediction

of where you think that move is going to happen and where you think it's going to go to i think that's much more important than just like the entry right yeah it's such a big mindset mindset shift if you can get away from this entry focused trading and look at

your strategy as a whole with a lot of different moving parts instead of only at the entry. Talking about that, What is your take on setting take profits versus simply letting the market take you out of your trade when you're trading your stop until infinity? So I think it depends on your trading style. I think it depends on the market as well. So I was just having a conversation with this with a trader yesterday who...

You know, so let's say you're investing in an index, let's say like the S&P, where the S&P, the FTSE, something like that, like we're the DAX even, right? We're at all time highs right now. If you're in like an index where they traditionally kind of. go higher that's just what they do um i don't think it's a bad strategy to kind of put a position in obviously if you're going with the trend

And then letting it ride, trailing stops and trying to get as much as you can out of it, kind of like an old school train continuation way. On the other hand, you can also get into a lot of trouble doing that, because like we just mentioned. If you're trailing stops, you're going to get stopped out when the market goes against you. So at some point, you're going to reach a profit level that's higher than what you end up taking. And it may be more efficient to try to project where that high.

is going to be at or where the highest point of profit is going to be at and getting out there or close to, never going to have to be very high, but close to instead of waiting for the market to come all the way back down and take you out. But again, I think it depends on what type of market you're in. If you are a trend trader in a heavily trending market,

then yes, it's much safer to kind of do something like that. If you are a counter trend trader in a market that is consolidating, you probably don't want to let it ride. Me personally, what I do in situations like that, where I think there's kind of this extended move, I do a combination of both. Right. I'll split my position up into two or three or something like that. And I'll always have a take profit at.

a level where I think price is likely to go. I call it my scaredy cat level, where it's like I'm not super aggressive of targets. It's like I want a nice target level where I think price action will go. I want to get some money. I want to put it in my pocket, move my stops to break even, and I know it's a freebie trade.

With the second half of that position, though, now that I've already made money off the trade, that's where I could be more aggressive, where I can say, hey, I'm going to let the second half of this position ride until the trend takes me out. So I do like doing a combination of both.

Mentally, it's much better for me because at least in the back of my mind, I know that, hey, at least I made something out of the trade and I don't have to worry about kind of getting stopped out for break even or less than what I desired if it were to retreat.

You have been working with traders for so long. And by the way, the links to your program, your Twitter, everything will be in the video description and the podcast. The traders who come out of your program with the best results and the biggest progress? Do they have something in common? Is there something that you see among them just for how they approach trading, the way they're thinking? Yeah. So the ones that are most successful are usually the most annoying.

I mean that in the most respectful way possible. I know what you mean, yes. I was annoying to my mentor, Jason Greystone. When I taught him, he was annoying to me.

and it's like these are the ones that are always asking questions they're always emailing you they're always sending you messages on the chat and it could be like about the smallest simplest things there's one guy i'm working with now who like it seems like he's asking me the same question every day and it's like it's i told him like it's annoying but don't stop because to me it just means like he's

double checking, triple checking, and he's doing his work. You tend to see those people have the most success because they're just putting in the most effort. I also see a lot of success from people who are, well, obviously the most disciplined traders um so a lot of sports people a lot of ex-military people um anyone that is just like very Very strict in discipline. I see a lot of success from them because they just don't fall into those psychological battles.

So I would say that, yeah, the ones that ask, ask and honestly just put in the work, they do all the small things, they pay attention to the details. I tend to see those have the most success. The ones that are kind of like. they're doing it but not fully doing it they kind of stay in that like break-even bubble forever until they kind of you know

figure out that, hey, trading isn't for me and they quit or they understand like, hey, if I want to actually be successful, like I've got to start doing all of these small things. Yeah. We interviewed Dr. Steenbarger a while ago and he said the number one. trade that he sees and the best traders that he's working with is curiosity. And I had to think about just what you said. It's just asking and asking and just being curious to just don't be afraid to ask.

I know, especially when you're in a group setting, it can sometimes be intimidating. But asking questions, I think, is so important whenever something comes up because it can lead you to a new place, give you new impulses. I think that's so important. Yeah, I think curiosity is key, 100%. I love, I still spend time, even after, what, 18 years of doing this, like just...

Going on random charts, like loading up random indicators, just like looking around and I call it like playing in the sandbox where I'm like, ooh, what is that? I don't use that. That looks cool. And just like, you know, I love the backtesting process of like trying new things again, especially with indicators since I'm newer.

newer indicators or what started with indicators just like most traders just throwing like a bunch of my chart and thinking they would work and kind of coming back to them and seeing like hey what happens if I tweak this setting or do this and just like it's fun and uh most of the stuff doesn't work but every once in a while you find one thing it's like huh

like that could be helpful and like you said before with razor thin edges in the market if you can find one thing that just like increases it by a little bit like that's a massive win um so yeah staying curious is is key don't get too locked in it's also one of my favorite uh times on the weekend when i dig into my edge wonk and review the week because especially after a month or after a quarter

you can sometimes find these golden nuggets like you repeat a mistake two or three times that quarter which doesn't sound like a lot when you take 50 60 trades in a quarter but then you you know you see how much those mistakes cost you and then you add it up over the year there might be like 12 15 or so at the end of the year when you're making 40 50 a year that's that's a massive increase in your baseline and

Finding, digging for those gold nuggets in Edgefong is just, this is my sandbox. It's always amazing. Curiosity. And the data is all there. We have, if you're doing it, the data is all there. It's like it's... I don't want to say it amazes me that more traders don't take advantage of stuff like that, but we know that a lot of people were.

are lazy and they're just like, I don't want to track it. I just, you know, I just, you know, I don't want to dig into it and look at it. Just, you know, but it's, that's where the nuggets are, man. I agree 100%. That's so true.

I want to ask you a question because I think you're the perfect person to ask this because you have a family, you have a very busy life. I see you're into athletics and sports. People who have limited time, they have a day job maybe still, and they want to get into trading. What are some tips that you can give them to use that time that they have in the best possible way? Schedule it out. Start by taking, you know.

all 24 hours of the day and schedule it out so schedule start off with the things that you have to do so like you you have to sleep so fill in your sleep time you have to go to your day job so fill in that time um maybe you put in like hey i have to spend at least two hours with the wife and kids the family that time and then see first see what's left see what time is available to work on your trading um and then make adjustments so you know for example it's

If you can go to bed one hour later or if you can wake up one hour earlier, you just opened up one extra hour of time. I remember talking to a guy a while ago. I call him the Xbox guy. We're asking the same question. He's like, hey.

i have a day job i don't have a lot of i want to learn how to trade but i don't have enough time i'm like hey okay um walk me through your schedule and he's walking me through his schedule and he's like yeah i spent about three four hours a day playing video games and i'm like cool like

i used to love games i used to be a gamer um trading and kids both kind of crushed that although my kids are getting older so i maybe i can get back into it but i'm afraid they'll embarrass me um but i told him i said hey like those three four hours of xbox time you have each day like Take that away. That could be your trading time or take half of it away. And unfortunately, he was like, no, I'm not willing to give that up, which tells you your priorities.

you know you can always find time in a day so i think schedule out your day find those little pockets that can give you time of you know when can you work on your trading and if you're at the point where you are trading it's going to help tell you what type of trader you can be like

If you don't have a good pocket of time, you can't be a day trader because you need to be in front of your charts. Maybe you're a swing trader. If you're on a four hour chart and you see that, hey, I have a time block every four hours where I can take a break and look at the charts. Maybe that's the better style for you.

But I think it's important to remember that, especially in the beginning, you always want to work your trading around your life, right? Your real life is what matters most. That's what pays the bills, right? So work your trading around your life. And then if you're fortunate enough, then you can kind of start. changing your life as your trading gets better and kind of doing the the opposite right and i've seen it's not always the right answer to become a full-time trader we work with a trader

I don't know, seven years ago, he had very good results, but he had a day job. Then he quit his day job to become full-time profitable trader. And he immediately started becoming a losing trader. And I talked to him, he said, He was also missing the social interactions and he didn't feel like sitting at home all day. Then he made the adjustment to work half-time and trade the other half of the day at home.

And that was such a massive improvement for him because he also felt better. So I think it's really important that you find out who you are. People put this on a pedestal to say, I want to sit at home all day by myself and just click the mouse.

i don't think it's the the right answer for everyone there are people who are social and people who maybe don't even know that they're social and it's not the right approach for them yeah i agree it's uh and i'm not the most social person in the world but it's like

Yeah, I couldn't imagine. So I coach track and field still. I started doing that about the same time I started trading. And I always get asked the question where it's like, you know, why do you do that? And it's not, you know, track and field coaches don't get any money, but it's like.

what it does is it takes me out of the house for three four hours a day gets me around people in an athletic setting where i'm more likely to kind of work out or do something to stay in shape um and it gives me that time away that that relief time to clear the mind and what i found in my training especially in comparison to when i first started and i was doing like 12 hours a day and just getting like mind melted

is that when i come back to the charts like i'm more inspired like it's because you know it's like your your your partner going away And then like they come back and you're like, oh, man, like I'm excited to see you again. It's one of those type of deals. And I feel like it's a new spark when I look at the charts or do anything trading related because I had that time away. When you go through those sessions, like a backtesting session where you're.

in the charts for like multiple hours it kind of gets bland and boring and like you can kind of get on autopilot and just like like you said you need that break we all need a break as human beings and i think it also shows you why or how trading can benefit your life when you have those chunks of time where you can just in the middle of the day do something that you absolutely love. And I think then you start to appreciate it much more. Agreed.

What advice would you give someone who is coming to you, new, interested in trading, maybe has a little bit of experience, how to make the most or how to make the biggest progress and where should they start?

um so coming to like our our program specifically or just like in general um you or yeah um I would always say no matter where you're at um start with the basics um i believe that the advance is nothing more than a mastery of the basics even myself in my trading career i went back to like learning the simple stuff like candlestick patterns and simple patterns like a lot of stuff that you guys talk about

in your book and i found that once once i went back and really mastered those small things the things that seem insignificant to like the bigger strategy i became better at my analysis because now i can see different clues that the market is giving because i think especially if you're doing technical trading

The market gives a lot of clues just hidden between like a bunch of junk. So the better knowledge you have at seeing those clues, the better chance you have of kind of creating your edge. So. I would say start at the beginning, even if it's review, review it. There's nothing wrong with that. And then work up and see how work up and see how you can use those small basic things.

in your bigger trading. But in general, I kind of say this, I say, learn everything the first time, but just to experience it. So understand this, understand different strategies. mechanical strategies, price action strategies, Fibonacci based patterns, moving average, like experience it all and try to get a feel of what you think works well with you. Like, oh, man, like.

this trend continuation thing using the moving average like i really like that that felt good like i picked it up pretty quickly or oh this strategy over here that was confusing i don't quite understand it and then you can kind of start separating and kind of figuring out hey i like this this was easy to understand this didn't make sense and you can kind of lock in on what type of trader you think you're going to become then do everything again right but now when you learn the stuff

Learn it in reference to kind of the strategy that you plan on approaching. So instead of just learning like, hey, this is a moving average and it does this and does that, learn it. But kind of in the mindset of, OK, I'm learning moving averages. How does this directly relate to this moving average base strategy or learning candlestick formations? How does this pin bar directly relate to entries? And then you kind of like.

have a different appreciation for the beginner knowledge in respect to the strategy that you're trading um and then after that after you kind of locked in on a strategy go through the back testing process i always say do um

Kind of two rounds of backtesting. There's a pre-backtesting. This is just like you have an idea. You're looking through the market. You're not really taking too much detailed notes, but you're looking for different ideas like, hey, stop loss ideas, different type of entry filters, exit filters like that. And then once you kind of have in your notes everything you want to test, lock in, test it.

if it works well after all the adjustments and everything go through some demo trading uh experiences that way you can make sure you can actually trade it live because sometimes you can Do things in backtesting that you can't actually execute in the live markets. And then start small. Start with a little bit of money. And as you progress and set some goals, whatever it may be, allow yourself to trade more and more capital as you have time to kind of iron out those mistakes.

love it talking about that how how what is your approach to scaling up capital once you are profitable um i mean how how would you approach it maybe with prop firms adding your own capital what's your would you increase your trade your risk per trade how would you approach that so from

From a personal capital perspective, I would start small. So if you have, let's just say a $10,000 account, maybe start with trading a quarter of it and say that for the first... three months six months depending on your you know your your style if you're a day trader maybe a little bit smaller than that but for the first x amount of months i'm only going to trade a quarter of my available capital because we have to understand that

At the beginning of our trading, especially our live trading, that's probably when we're going to be at our worst. Like we're most likely to do the dumb stuff in the beginning and mess up. So it's like, why mess up when you have. the most amount of capital available to mess up with right mess up when you have like a little bit of money and then whatever that time frame is for you and i always like judging it off of not just profitability

but good trades. Because you can be profitable taking bad trades. We all know that. You can just get lucky in the market. It happens. But base it off of a good trade percentage. uh meaning trades that you followed your rules and then also base it off kind of profitability and once you've achieved whatever that goal is after the blank amount of months period

then maybe add another quarter of your capitals. Now, instead of trading, what, 2,500, maybe you're trading 5,000 and then do that for another blank amount of months and then work your way up to your full allotment. So I think that's the best way to scale up if you're just talking about personal capital. As far as prop firms goes, I would have loved if I knew about prop firms, online prop firms, when I first started trading. I went into managing money.

um because i didn't have enough money to to trade just with my own capital once i kind of realized that i wasn't going to turn you know ten thousand dollars into a million dollars in a year i was like okay well i gotta do something else so i I did the old school route of like going to people and giving presentations and begging them to give me money to trade. And it was.

Horrible experience, but it's fun. It hardened me, I guess you can say. But I like the prop firm idea. The goal is to build a bigger account. right so we can use the power of compounding how you build that bigger account is Up to you. You can trade your own capital. You can work for a prop firm, do a challenge, win the challenge and get paid off the prop firm capital. And then that capital gets or your profits from that get put back into your personal account. You can even do stuff where.

you right out of plan where it's like, hey, I'm on a five year plan. I'm going to pick up a part time job and the money I make from this part time job is simply to go right back into my trading account. Because again, the goal is to grow that account. Our return on investment. probably isn't going to change too much. Like, I don't think you're going to go from like a 10% trader to 1000% return on investment. But let's say you're locked in at like a 50% return a year.

Well, the question is, how do you grow that? Well, 50% return a year with $1,000 is like no big deal. And people are like, oh, that stinks. I only made, what, $500. Think about the future. If you can get a 50 percent return with thousand dollars, you can get a 50 percent return with ten thousand dollars, twenty thousand dollars, thirty thousand dollars. And then that profit is much bigger.

so the goal is to grow that a trading that trading account and you know i was gonna say by any means necessary but i don't want people going out there like robbing and killing people for money but like um just ruin ruin your podcast this trailer says killed for money uh but aside from murder and stealing um try to grow that capital by any means and i think prop firms are a great way that you can use a skill to supplement your your trading income

um it's it's brilliant it gives hope to traders that don't have a lot of capital but are really really good and there are a lot of people out there like that who are really really really good they just don't have a lot of money to trade with i agree yeah i i mean

I always say just because, for example, there are some people that have a nice chunk of savings, say 50,000 US or so, then just because you have that kind of money doesn't mean that you should immediately risk 500 bucks per trade or so. That's obviously insane.

um what i always tell my students is um it should hurt a little bit when you lose but when you win it should also feel a little bit good you know so for me that amount in the beginning was like 50 bucks because losing 50 bucks a student really sucked but if you make 100 bucks like two to one then oh fantastic you know And then you can pay yourself sometimes, take your girlfriend out to dinner, etc.

and then you think oh okay my friend he has to work um how many hours 10 hours in the library in the university to make 100 bucks so fantastic i just made that on one trade you know and that that motivates you right you don't have to shoot for the for the to the moon immediately that will come with time right

So I want to be mindful of your time. I think we covered a lot of ground. I think this was a masterclass in strategy development and building a strategy and getting to the next level. So thank you so much for taking the time today to talk to us once again.

Everything will be in the show notes about you if people want to connect. I love your content. I've been following you for, I think, over 10 years. It's been a while. But thank you for being here with us today. I appreciate you guys having me. Always love what you guys do. Geniuses in the trading community, man. I think everyone should look into what you guys are doing if they haven't already. Thank you. Appreciate it. Thank you.