Using price action

[00:00:00] Okay, so today, this is a regular podcast, but I'm going to be introducing some new stuff. I think you guys are going to like it. It's going to be different. It's going to be this same one on the main channel in Spotify or wherever you listen to Apple, the website, it won't matter. You're going to see the same lineup of podcasts, but I'm going to break them into seasons.

[00:00:22] So, the one that you've been listening to forever is just going to keep dropping like it always does, and there's going to be no labels except for the title of the episode. But then the other ones are going to have seasons. The first season is going to be the Mentorship Podcast, which I'm going to start next week, and Brent Nord, who's been trading for 25 or so years, a really good friend of mine, who I met in Chicago, and he coaches traders.

[00:00:45] He's going to join me on that, which is going to be so cool, because we come at stuff from different angles. So, we're going to have him and I on there, and we're going to do these 20-minute podcasts with people who have filled out those forms. I have to choose which ones to do, and if we get enough, that's great. I think I got three or four of them that came in already. So, please send those. Fill out the information as detailed as possible on tradinglifepodcast.com, Mentorship Questionnaire.

[00:01:11] And then I'll get back to you, and we can schedule a time, and we can try to get some work done on some of the problems people are having. So, that's going to be, he loves doing this. I like doing it. I think listeners are going to enjoy it, and it's cool because then I get more content to post for the podcast, which is great. So, everybody kind of wins. There's no charge to anybody because I'm going to reuse the episodes. I can protect your name and stuff, and otherwise, it's just anonymous.

[00:01:36] So, that's really cool. The other one I'm going to do, a little less frequent, but I'm going to do it during the year is another season. It's going to be trade review, and I'm going to take my trades, good trades, sometimes bad trades too, if I think we can learn from them, and all different things that I do, different time frames, and I'm going to post, I'm going to do a podcast on the trades, and since I can't put show notes in Spotify, I'm going to have, I'll do a blog post on my website,

[00:02:02] so you can just go to the website when you're listening, and you can pull up the charts that I'm referencing, and we can go through exactly the thinking process, where the entry happened, where the exit happened, what was wrong, how it can be done better, and hopefully, you guys can learn, and see if there's any things that you want to take from my strategy or my style, and give me feedback, and you can leave comments on Spotify, which would be great. You can leave comments on YouTube. I think you can, not sure on the website though, or I don't know, but engage if you want.

[00:02:31] That would be great, because the more engagement, then it's more fun to get the secondary and third questions, because everyone learns from that. So my goal is to make this more interactive and more practical. I think people enjoy the stories and the psychological stuff and the sharing the experiences, and I'm still going to do that, because I love that. That's my main reason for doing it. Kind of a self-healing tool for me. But with the mentorship thing with Brent, and with the trade thing,

[00:02:57] now there's some serious, okay, how can we make money? How can I figure out what other people are doing that maybe I'm doing, and how to get better at it, or if there's problems that are universal. So that's, I think that's going to be really cool. So you'll see those broken down by seasons, and then when they're not broken down, it'll be the same as these. You'll figure it out. It'll be all in the same reel. You don't need to subscribe to anything new. They're also going to be on YouTube, and if you have to go to the webpage for a chart, I will tell you to do that. So it'll be easy.

[00:03:29] So today, different topic now. So I have a friend who's, he's a really good, he's in the venture capital business, and he does fundamental trading now, so different than a lot of us. And he's taking positions that last a year and a half to two years sometimes. And he doesn't have a lot of technical knowledge. He's pretty good about sentiment. So in some ways, he's kind of the opposite of me and a lot of us, where I have more technical knowledge, a lot of sentiment, positioning knowledge,

[00:03:58] and fundamentals are the thing that I've studied the least, but I'm putting a lot more time and effort into it the last couple years, especially this year. It's one of my goals. So for him, he might be with stuff that just doesn't move, or is a value trap, or some dead money. But since he has fundamentals, he's able to kind of have a belief that things can go to a certain area. And he's worked hard to make price targets for his fundamentals, which he said has been a game changer, and he uses reversions to certain ratios, conservative estimates, things like that, to get a general price target zone.

[00:04:28] But when he and I were talking, he was just like, man, I realize this day and age with all the algos and the computerized trading that I need to have some awareness of technicals. Because if your timing is off, and you have no idea of sentiment and technicals, your fundamentals cannot mean much for a very long time. And everyone knows this forever, but especially now. I think that the topic of this podcast is price action. And it's kind of an example of how he made a blunt, simple, moving average crossover system.

[00:04:58] And this is what I've been encouraging people to do. And it's not like anyone can magically make money with a moving average crossover system, right? But that's not the point. The point is, this guy has all these tools and these skills for analyzing businesses that a lot of us don't have. But when he just can get the boat turned the right way in the water for his bigger picture stuff, with a moving average crossover that he can backtest and say, okay, I trust that my fundamentals are pretty good because that's my skill set. If I can just get this thing to not be totally broken technically,

[00:05:27] my odds of success go way up. And that's basically what he's done. And it's really helped him. So for me, I've done something similar. I made these baskets. Not like, when I say baskets, I don't mean like some materials and energy. I mean, I do have some of those, but it's not really like that. It's like one of my baskets is all the public companies that NVIDIA has invested in. And one of them is like only data center stocks. And one of them is like quantum stocks. You know, it's just, or narratives.

[00:05:54] One of them could be like my friend who's really good at picking stocks, like his favorite five stocks. I'll make a basket of that and track him. And the goal of it is to, you know, the goal of it is to capture, because one of my strengths is being early in narratives and doing a lot of research and being curious. And one of my problems is like waiting for how do I get in that stuff? And is it going to be dead money for a while? Or how do I follow a trend better? So I worked on, I looked at some moving average crossover stuff.

[00:06:23] I did some like McClellan stuff. And I figured out just with GPT encoding, and this is no secret, like anyone can make this stuff. Just a way where I was like, okay, this works pretty good. Like you can prove any statistically significant trend following system. If there's a trend, any of these systems are going to do really well. So the whole key is, well, where's the trend, right? Because I know if there's a trend, I can do really well with my price action system. So it's more about figuring out.

[00:06:50] So when I have these narratives and stuff, and I think that they're coming, or I feel like there's a lot of neglect and a lot of bad news, I'll throw one of these up and just watch it. And then when my dashboard that I made, that I run over more and starts firing, like technically this stuff's looking really good. And I already understand why I kind of wanted to look at it, but now I'm getting the technicals. And I've back tested them, and I know that if I'm right, which I think I could be, it makes more sense to play it this way with the technicals that I made.

[00:07:19] Here I have stops built in, trilling stops. I know what I'm going to get out. Sometimes I'll let something run just kind of wild, like a little piece. But I have a system for how to enter and exit. I added a little bit of structure. So I'm very right-brained, very discretionary, but I've added a little structure to this, and it's really been helpful for me. And even when the market breaks down, I'll see that things are breaking down, and I'll just be like, yeah, it's hands-off right now. And then when it picks back up, I can look to see if the action changes,

[00:07:47] or if the U.S. breaks down, maybe the actions and bonds or commodities or the Middle East, but I'll be able to see all this stuff. I can track all of it. I have interactive brokers. I have foreign stocks on here. I can look at anything. So that's something, and this is just one strategy I use, but it's really helped me because I thought, man, I used to always be anticipating and feeling like people were stuck and getting in early and sitting through the pain, and then all of a sudden it would go, and I'd add more.

[00:08:15] And now it's like, I could have the same idea, but I have a better system of waiting for things to actually start working because we all know that things set up, but they don't work until they work. You know what I mean? It's like, oh man, I had that idea a year ago. Now it's working? Yeah, well, it works when it works. It doesn't work when you think of it. So, excuse me. That's been helpful. I think everyone can do that to put price action more on their side and their time frame, whatever that means.

[00:08:42] Now, if you're really short term during the day, you're using options, it might be a different game. You might be doing something slightly different. There's a different approach. But this is for swing and position trading. This has worked very well for me. Intraday, I have not, actually haven't gone into this deep intraday because intraday is a lot of positioning and explosive movement. I tend to use options, wait for big moves at the end of the day when the time value is low. It's a very simple strategy, but just basically takes advantage of my experience. And that's kind of what I do in that.

[00:09:12] So I'm not, I'm kind of moving a little bit away from that time frame into these other time frames. But if it's juicy and it's busy, I'll do that time frame. So that's kind of my message today is thinking about that. I think a lot of you who listen are day trading futures, but I don't know for sure. I don't really know how many are dabbling in stocks and going overnight more, but your futures trading might be more than a day too. And I just think it's different.

[00:09:38] You have to, it's probably a longer podcast, but futures traders and stock traders are very different and the game is different. And I've gone into the length about how I've traded too big in stocks and lost a ton of money because I had success in futures and how they are not the same. It's totally different animal. So I've not spent enough time in both to kind of be able to play and just use those skills differently. But I'm noticing even in the futures too, when I have an idea, a lot of times it used to

[00:10:06] close during the day, but now it's working like the next day or the after hours. So I don't know if it's these one day options or what, but a lot of times I'm realizing I have to go out two or three days for my idea instead of just the same day, which can be a little tricky. So I'm kind of looking into how that might work and, and just, and just trying to adapt because the biggest thing you can do is be curious and adapt, which is what I've done well in my career. It's just, just kind of by nature of what I, how I am is I love, I love trying the AI

[00:10:36] and I love playing with things and coding things and testing ideas and, and just hearing from other people and seeing what they're doing and seeing if it's useful for me. And I just enjoy that. And it's helpful because it's a game and it's playful and you feel like a kid when it becomes a grinding work mode type thing. It sucks. It's not as fun. And, and it becomes work and that's, you don't do really well when it's work. I mean, you could for a while, but you're not very happy doing it, which is another discussion

[00:11:05] for another podcast is you can be miserable or you can do this and be happy. But, uh, I've done it both ways. A lot happier nowadays than I was back. Even some of my best years, I was miserable. Um, some of my, the recent ones I wasn't, but it's just always looking for things that can get you. And anyways, that's it for today. Just think about the price action thing. Are you always fighting things? There might be an easier way. Um, yeah.

[00:11:33] Fire me an email if you want to hear more about this or if you want to share with me what you're doing and maybe we can do a podcast on something more relevant. Thank you.