QULLAMAGGIE Stock Trading Strategy EXPLAINED | $5k to $100m!

If you ever wondered how Christian Kwalamagi turned five grand into a hundred million dollars, and you want to go deep on understanding his systems and processes for how he did it—primarily with a momentum-based swing trading breakout strategy—then this is the video that's going to explain it to you. There are plenty of Kwalamagi videos out there on YouTube and the like, but this is a summary of the systems and processes and thinking about his strategy from five key parts: How does he identify trades? How does he initially control the risk? How does he mitigate risk on the trades? How does he optimize the profit? And then also, have a deep dive into his mindset and also think about things from a deliberate practice standpoint. How on Earth did he get so good at trading, and how can you try and repeat the success that he has had?

MarketSmith are the sponsor of this video. You'll see a couple of charts throughout this presentation, certainly as we're talking about the screening and fundamental side of things. There is a discounted trial available in the comments section below if you are interested. And with all of that out of the way, let's start getting into the systems and processes for how Kwalamagi turned five grand into 100 million dollars. So let's begin with Kwalamagi's returns. This was a print screen from one of his Twitch streams, so you can see in 2011 he actually blew out trading accounts around about three or four times. But you can see from 2011 to 2020, including these big down years, that is an average annual return of 268%. If you take out the two down years and go from 2013, it is around about 350%. So absolutely phenomenal returns. How on Earth did he do it? What are the systems and processes that he used? Well, you're watching the right video. Let's get into it.

Strategy overview: We're thinking about long setups. So Kwalamagi has three main setups; two of those are long, one of those is short. The two long setups are continuation-based breakouts. So that is basically breakouts from flags, VCPs, Darvas boxes, cup and handles, of the like, then auto episodic pivots. One on Earth data are basically gap-up-based breakouts. He also has the parabolic short, but we're not going to go into shorting in this video; we're going to keep it very much focused on the long side. So if I could summarize the strategy in about two sentences, it would be this: Trade leading momentum stocks from these setups with asymmetric risk-reward potential, i.e., little risk, lots of upside. Once in the position, mitigate risk and keep part of the position to ride the short/intermediate-term trend, which Kwalamagi defines as the 10-day and/or 20-day moving average. It gives much more emphasis to the 10-day moving average, certainly for the quicker momentum stock.

This is just a little visual here to give you a flavor of the type of things we are going to be looking at. So you will see throughout this presentation that Kwalamagi refers to setups that just repeat time and time and time again, and he puts a significant emphasis on deliberate practice. If you don't know what deliberate practice is, Anders Ericsson wrote a book called *Peak*, which is absolutely fantastic for how we actually learn and how you master a skill. Trading is a skill set. So by the end of this video, you'll have a much better understanding of the knowledge, but then also the steps you need to take to develop the skill sets. Great to have the knowledge, but you need to have the skill set.

So what are the repeatable patterns that just happened time and time and time again? And Kwalamagi refers to it many times about going back, studying history, and having thousands, tens of thousands of stocks in your chart model database. In essence, it boils down to these—these four. There's a lot of variations, but in essence, it's these four: It's flags, triangles, pennants, VCPs; it's cup and handles; it's flat bases, also known as Darvas boxes; and it's wedges, which is/a volatility contraction pattern. Low mid pivot: They are basically the four—four trial patterns. You'll see these momentum-leaving stocks put in time and time and time again. So let's keep going down and down and down. So remember, we're starting off high, and we're going further and further and further into the weeds.

Identify how stocks move. So while you're looking at this video, I'm just going to read a little bit to you. So these are quotes from Kwalamagi: "Stocks, cryptos, and all asset classes, they move like stairs." So this is the basic premise: How do stocks move? How do cryptocurrencies move? And I've got lots of examples to go through, including quizzes, to try and make it a little bit more engaging for you as we go. This is how they move generally: They make a move, then they go sideways or pull back, make another move, go sideways or pull back, make another move. This is how stocks move. Study any stocks that are up hundreds or thousands of percent over many years; this is how they move. They move in steps. Our job is to buy here. Our job is not to buy here, not to buy here, not to buy over here; our job is to buy it here. So our job is to buy at the exact time it starts to build the next step higher. So here, basically, when it's breaking out of those consolidations. So there's continuation-based patterns: cup and handles, VCPs, flags, wedges, pennants, whatever you want to call it. So our job is to buy as it's breaking out. Now, I'm not going to be 100% correct; my win rate is 25%. That probably threw you off a little bit there, didn't it? The key is all about small losers, bigger winners. So small losers, big winners. We're going to get all into the asymmetric risk reward where you place your initial stop loss as we progress throughout. Then you get the moving averages: the 10-day, the 20-day, and the 50-day. The leading stocks keep surfing those moving averages. This is a continued theme you are going to see throughout.

The next two slides are a little bit text-heavy, but they need to be there for you to start understanding the strategy. Then as we start progressing, we're going to get into lots and lots of slides, as you can see, and the quizzes. It's the same theme: a big move, then a pullback or sideways consolidation, and then the stock starts finding support or surfing one of the moving averages. It could be the 10-day, the 20-day, the 50-day, and many times it's a combination of two of them. You're going to see that when we start looking at setups, usually the 10 and 20-day. Then it gets tighter, and it breaks out of that ridge. It's just the same theme over and over. This is how stocks move. This is how stocks have moved over the past 100 years. Go back and look at charts from the 1920s, 50s, 80s, 90s; they do the same thing over and over again. You just need to memorize these patterns. Remember those patterns I was showing you? Stocks move like stairs: leg higher, sideways, leg higher, sideways. We are trying to identify the areas where the next step higher could be formed. Tight areas. We're looking for tight areas where we can get a tight stop and a good risk to reward. This is how stocks have moved for a hundred years, and there's no reason they shouldn't stop moving like this. You need to build a database. This is thinking about the deliberate practice element. You need to build a database with thousands of stocks. If you don't spend at least 500 to 1,000 hours studying this one single setup—it's super simple, it's not easy, but it's simple—but you still need to study hundreds, hundreds of hours, thousands of hours over the next few years. That's how you master it and make millions, tens of millions with this one setup. You can make tens of millions if you spend 1,000 hours studying these setups. You're going to figure out the variations of the setups as well.

Now, Kwalamagi in a tweet on the 17th of February 2023—I sound like a little bit of a stalker here, don't I?—but he said he now uses the 10-day exponential moving average instead of the simple. So slight change. A slight change that I use 10 EMA as well. Not that you potentially care. I rarely buy stocks below the 50-day moving average. Who wants the stronger momentum stocks, which invariably, when they're building the pivots, when they're getting tighter and tighter and tighter, are actually above their 50-day quite commonly. You will see them around the 10 and 20 moving averages. For this method, you don't need to scale in; you buy everything at once. But you need to scale out. So sell one-third or half of your position after three to five days, and then use the 10-day moving average as your trailing stop. Then when the stock closes below the 10-day, you sell the rest.

Now I know there's a lot of information coming at you very early on in this video. As we progress throughout and you make it towards the end of this video, it's all going to start clicking; it's all going to start making sense. Obviously, you can't determine early in the day whether it—being the stock—is going to have higher volume, especially if you're trading liquid, min large-cap stocks. They always have volume, so you don't need to worry about it. So high volume around the pivot, you need a clean setup, something that keeps surfing that isn't all over the place, choppy around moving averages. So some stocks have really nice, clean moves, as you're going to see; others just chop around, chop around, chop around, and you want to avoid the choppy stocks. As you get into the trade management, you're just going to get chopped around. You'll see some examples. Just because it's a good setup doesn't mean it's going to work. It's quite a mindset. His win rate is around about 20-25% or so. So let's start higher and then work down.

Thinking about the market environment now, the key moving averages to be paying attention to on this chart here are going to be the black line, which on my charts is the 10-day; the blue line, which is the 21 EMA, which you can kind of think of as a 20-day moving average on Kwalamagi charts; and then the purple line is the 50 SMA. So black, blue, and purple are going to be the key moving averages for you to be paying attention to here. So just study this chart, and I've color-coded it to basically show when these moving averages and the market is turning up and then turning down, and then think about this as trading environments, because not every strategy is going to work fantastically well across every single market environment. Sometimes the market goes up, sometimes the market goes down, sometimes the market goes sideways, right? Any type of breaking breakout or momentum strategy is going to work best when the market is in momentum mode. What is momentum mode? We'll get on to it. Sometimes you have to be in cash for weeks and months on end when the market is not good. Think about those red areas. You don't need to trade all the time; it's it's fine to sit on cash for months on end. It's easier said than done. Then the NASDAQ Composite is the relevant index; this is IXIC if you're wondering. You don't need to look at anything other than the NASDAQ. 90% of the stocks I trade are in the NASDAQ generally. You want to see what—what you want to see is the 10-day sloping higher, and the 20-day is sloping higher, and the 10-day needs to be above the 20-day. So you see here I have the black line above the blue line, also trending nicely above the purple line as well. It's fine if it undercuts it a little bit for a while, but that's the general—that's the general rule. So if it's undercutting it a little bit, that's okay, but generally speaking, you want to see it trending up. Here's kind of a good example for where the trend is up, but it does kind of undercut it briefly a couple of times, but moving averages sloping up, 10 above the 20, 20 above the 50 would be an ideal environment. If you get breakouts when the 10 and 20-day moving averages are sloping down in the NASDAQ comp and the 10-day is below the 20-day, there's a high failure rate; you probably shouldn't swing trade on the long side. So kind of indicated that with the red zones. Every year there's usually a three-to six-month period that's challenging; you'll make little or no money, and that's fine. When you get these runs that last for three to six months where you can—but then you get these runs where that last for three to six months where you can double and triple your account, you just have to wait for those periods; you have to wait it out. So what he's saying there is: Wait for the market to be good for your strategy; know where your strategy performs better, performs worse. When it's in a period, it may be a little bit of a kind of a—a trade—trade-aholic like me potentially, but just be trading smaller during those type of periods. Understand it's going to be—it's going to be—um—it's going to be a tougher period.

So let's go into the next slide. Now this is where we're going to start breaking it down a little bit more. We're going to look at breakouts. I'm going to give you quizzes. I've cut off the chart at the actual kind of like trigger point bar, so we're quite like you would then be looking to enter the trade and taking trades that he discussed and spoke about—five-star, seven-star kind of setups—and then we'll be doing quizzes for them. So we're really going to try and help you with your pattern recognition. Again, we're just starting here with a bit of an overview and then working our way down. So what are you looking for? And we're looking at continuation pattern breakouts. So that's going to be your flags, your pennants, your Darvas boxes, your VCPs, your cup and handles, so on and so forth. So on here, obviously the white line is priced; the green line is going to be a trend line; and then for the purpose of this, the yellow is the 10-day, the blue is the 20-day, and then the purple is the 50-day. So number one: A big move high in the past one to three months, anywhere from 30 to 100%, plus; and usually the rally lasts a few days to weeks. Orderly pullback in consolidation with higher lows. So higher lows are like this. So if you look at what price is doing here, see from here—so this is the high here—it pulls down, bounces, makes a lower high, but then it puts in a higher low. So this high here or this low is higher than this low; so it's making higher lows. Very important concept. Orderly pullback in consolidation with higher lows and tightening range in the consolidation phase. It's very similar if you've read Minervini's book, *The Volatility Contraction Pattern*. Volatility contracts from left to right, preferably volume drying up as well. A breakout of the consolidation. The consolidation phase is usually two weeks to two months. So somewhere between two weeks and eightish—eightish weeks, maybe 10-ish weeks as well. During the consolidation phase, the stock surfs the rising 10 and/or 20-day moving average, and sometimes the 50. So this is an important point, and we'll get on to it; I'll explain it on the—on the next slide. So as the stock is going up here, and you'll see this on the examples, ideally you want to see the share price staying above the 10-day and the 21-day. It may come down and kind of test and reverse quickly; that's good behavior as the base is starting to build. You would like to see the stock respecting either the 10-days. It's doing here; see how it pulls down, bounces, pulls around, bounces off, bounces off, and then tightens around the 10-day. So you—ideally you'd like to see stocks that respect the moving averages that you are going to be using from a trade management standpoint. You don't want to have the stocks they're just chopping around like this all over the place; they're going to be an absolute nightmare.

So number one: How to trade it. Enter on opening range highs, and you might be like, "What on Earth? What on Earth is opening range highs?" Don't worry; got slides on it; we're going to be explaining everything. This video is extremely thorough. Enter on opening range highs, so ORH for the first one, five or 60-minute candlestick. The first 60-minute candlestick. Caveat is actually a 30-minute candle set because the six and a half trading hours in the session. You can use whatever timeframe or combination; you don't have to use intraday charts. Enter when the stock is starting to break out. So basically, you're trying to identify these pivot points and enter pretty much as soon as you can when the stock is starting to break out. The stop is always lows of the day, so lows of the breakout day, and should not be wider than the ATR, which is the average true range, or ADR, which is the average daily range. So one is a number, one is a percentage; we're going to talk about that a little bit later. Don't worry. Of the stock to keep the risk versus reward variable, and you might already be going like, "What is going on?" Don't worry; so we're going to make sense. Again, this is detailed stuff; it's in the weeds. You don't go from five grand to 100 million, and it's all kind of broad brush, vague, fluffy, Duffy stuff, okay? Then, so one-third or one-half of the position after three to five days. So once you're in the trade, after three to five days, so one-third or one-half of the position. This comes into the mitigation part. Remember, we're looking at identify, control, mitigate, and optimize; we're going to go deep on all of them. The rest of the position should be trailed with the 10 or 20-day moving average; depends how fast the stock is. If a beginner, stick to the 10-day. Wait for the first close—so not intraday—if price is going underneath. Wait for the first close below the 10-day. Oftentimes you can see kind of shakeout demand tails undercutting the level. So what I've got here, and we've got—well, I don't know, maybe at least 10 examples like this, if not more, and then we're actually going to look at Bitcoin; we're going to look at ETH as well. And I've tried to make this section here interactive for you. I appreciate you'll probably just sat there looking—looking at your laptop board; you're probably surfing Netflix and other things like that. So in this section here, I've really tried to involve you and try and help you train your pattern recognition skills.

So these are then quotes from Kwalamagi, and he's specifically talking about the setup that I am showing you. So this is coming from the horse's mouth. PRTS. This is a seven-star setup on a five-star scale. Big—big move, go sideways, build a tight range. Look how tight it gets; breaks out and boom. Memorize this. So I'll just break down the first couple for you, so you start getting it a little bit more, but I've tried to make some annotations. So if you look at the trend here, the stock goes from a couple of dollars up to a high here of about 9.50. Do you see how not once it closes below it's 10-day moving average, and on my chart here, it's actually—and my jot is actually the 10—the 10U? Do you see how it just trends perfectly along the whole—the whole time? This is really, really, really good to see. It holds here; it holds here; a little shakeout demand tail here, and then it starts going into this tightening range. Holds above the 21 EMA here, then it goes tight, tight, tight, tight, tight, and the volume dries up. So this here—memorize this—seven-star setup on a five-star scale. There's somewhere Kwalamagi refers to it as a six-star setup or a five-and-a-half-star setup, but this is the only one I could find where he says seven-star setup on a five-star scale. This is—this is my interpretation and from my own kind of experience as well. This is pretty much as good as it gets for a high-type flight, but note the cleanness of the move. So this is what you want to see. Now what I've done is then showed you the aftermath—as—um—as well. The aftermath—that's the wrong word, isn't it?—what happened afterwards, basically. So here you go; there's the breakout coming through here. Tight, tight, tight, tight. See how it just surfs the 10-day and then little bounce off near the 21 EMA. The blue lines are 20—I want to email my job; I like the 21 EMA rather than the 20-day; that's from my own evidence, experience, and things like that. But see how tight it gets in it, but for the purpose of this, it's pretty much a 20-day moving average, okay? And then tight, and then breaks out. Let's do another one. AMD. This is a six-star setup on a five-star scale. You've got to memorize this; you don't get many of these. Look how tight it is; bounces perfectly off the 20-day here and then gets really tight here. Look how tight it gets. But do you see here—this is a real subtle point, but a really important point—look how smooth the trend is before the stock even starts basing. So the prior uptrend, you want to see the stock saying above all the key moving averages. It's okay if it comes down a couple of times like this. See how it holds the 10, hits—see how it holds the 10; there's actually a gap down reversal bar underneath the 21. Then it's tight, tight, tight. Look how the volume dries up. Six-star setup on a five-star scale. There it is. See how tight it gets, and then the trend thereafter. Really, really, really good setup. Exceptional setup. APPS. This is a five-and-a-half-star. So we've gone seven-star, six-star, five-and-a-half-star. Okay, this is a five-and-a-half-star setup on a five-star step—on a five-star step. Memorize this startup. Stock makes a big move. See how it holds the 10, holds the 10 and the 10 and the 21 in here and in here as well. Go sideways, surfs the 20-day, which in essence is this blue line here, okay? See how it holds it; it builds higher lows, then a tight range in here. See how tight the stock gets, and then a high-volume breakout. Let's say the next one. There it is; there's the setup in here. See how it comes out of this base, starts trending, high lows, tight bar in there, and then off it goes. Next one: Kodak. This is a six-star setup on a five-star scale. Makes a big move; it gets tighter and tighter, builds higher lows, goes from surfing the 10-day to surfing the 20-day, has a range that gets tighter and tighter, has a really narrow range day before the breakout, and then it breaks out on a higher volume. That's the perfect setup. Does it sound like I'm repeating myself in these slides? That is the whole point of it. Okay, it's a repeatable process. These stocks do the same things, the same patterns, the same behavior characteristics in terms of the price action, in terms of volume, in terms the relative strength where the stock is setting up into in relation to key moving averages, what it does—it's specifically before the breakout, i.e., it gets tighter and tighter and tighter. Bill Tyler is around the key moving averages; the volume, same thing, keeps on happening. Study them, learn, breaks out here, doing it will go at 588 in five sessions, absolutely.

Not, but you're trying to position yourself in front of stocks that can go up 588 in five sessions. And you're trying to study deliberately what did a stock do before it went up 588 in five sessions? What did it do? Are there other stocks that did similar things? Can I profit from that? Can I be um, can I basically profit from that? That's uh, I can't say anything, but I'm not, to be honest, you this one very good setup, XEE XPI.

So see how the stock makes a big move here, pulls into the 10 to the uh 2021 in here, and then it bounces again. It has a nice checkout demand out underneath the 10, reclaims volume, drives up; it's a really good setup there. It is that you could also look at it as maybe a cup and handle with a high handle or a fly type Banner, but see the trend unfold afterwards, and then you want to try and ride the intermediate downtrend fastly; five-star setup right here.

So see how the stock is trending; see how it holds the 10 in here, then it holds the 10 in here. See how it gets really tight; there's this inside bar here. Look how the volume dries up; same things are happening, no, the relative strength line as well. Look at the reaction to the earnings; big volume on the earnings, positive reaction, then the trend thereafter. You'll see those are quite a little bit later than an EP, so an episodic pivot, which is basically a gap up base breakout that can often be the start of the trend.

So what you can have a stock that's been basing for kind of six months, a year, a couple of years, then suddenly this earnings report comes out and it catches a lot of the large operators off guard. So suddenly they then start piling into it, so then you get this really nice post-earnings uptrend, which you'd like to see; do what trend above the key moving averages and bounce off of them, the 10 and the 20, right, and then go and build a high-type flag, at VCP, Carbon handle, whatever it may be.

So here's Fastly; there's the setup, there's the trend there afterwards; that was another very good setup there, um, in my view; perfect setup here; this is a six-star setup on a five-star scale; this is a ridiculously good setup. Okay, this one here; so see how the stock makes a big move; oh, look, notice, notice the reaction to the earnings and the volume coming through in the 52 economic; if you want to use that, it's a free tool; search my name on TradingView and the indicators, you will, you will find it, and then you just pin it to the bottom of your chart like this, where you could have it on your chart, whatever you want to do.

So the stock powers up here, holds the 10, then it pulls back down to the to the uh 2021 in here, and then see how you actually get those of you who've read Darvis's book, Darvis's box, um, Darvis is what he's gonna, his Darvis book, book will be familiar with the Darvis box, which is basically a rectangle; it's quite common to actually see a little Darvis box play out in three sessions, five sessions before. So see how it just tightens up here along the 20; for me, the blue lines of 21 email, just use 21 EMA, but the the 20-day is pretty much where the 21 EM is; there's not much between them for these for these ones here. So see how it just tightens up in here; look at this ridiculously tight bar.

So I'll just go into a little bit of waxing lyrical about supply and demand; why is this really tight bar on low relative volume important? What does it actually tell you from supply and demand? It tells you there isn't much Supply that's coming to the market; that's really good for you to know if you're targeting a breakout. Second fold, it also indicates that you could go in with a very tight stop loss as well; interesting, we'll come to that later. So here it is; here's the breakout, here's the trend, and Qualamagi saying on this docket; this is why I advocate trailing some of your shares on the 10-day because sometimes you can catch something like this. So he's talking about this move here where it goes up 226 percent, something like this; these things are really going to add to the bottom line of your accounts; you catch a few of these now and then, oh man, these are the ones that are going to grow your account exponentially.

Next one, Overstock; this is a five-star setup. So see the run the stock has here, pulls down, bounce off the 21, holds around the 10 21 in here, holds in here, and then look, it's these tight candlesticks coming up again; tight, tight, tight; look how the volume dries up; tight, tight; see how the stock's building higher lows within the base; they look like the same thing keeps happening; it's because it is, right; tight, tight, tight; there's the breakout; goes up 319 before it closes below the 10 and 21-day EMAs. I'm telling you, if you catch some of me, these, these moves, then he's specifically talking about Overstock; this is up 300 from this trigger breakout; you catch these kinds of Trades now and then; these are the ones that are gonna grow your account.

So Quality Monkey, as you'll see as we get into the kind of optimizing profits phase of this presentation, really focuses on getting the big ones right, getting the Home Run trades right; there is no point if a stock is going to go up 300 for a closest blow the the 10-day say, and you sold it out at 20, and you think, oh, that's really good, all right, two percent; I sold it at 20; that's 10 times my initial risk; yeah, but if it goes up 300, you completely miss the point, basically.

Next slide, Codex; oh, I jumped forward too far. So Codex access one here; look at this thing; it's all it always finds support on the 50-day; so the purple line in here, in here, in here, in here; keep surfing the 50-day; these are the only technical indicators you need; the 10-day, the 20-day, and the 50-day moving averages; you don't need to look at intraday charts; this is all you need to make millions, literally. So see how it's building higher lows; it's finding support of action around the 50-day, and then there's the result; powerful breakout; up, up it goes; but then what do you notice here? See how it U-turns? This is why, as I've noted here, the sell rules really, really, really matter; there's the First close below the tender in there.

Etsy; this is a five-star setup; take a screenshot of this; memorize this pattern. So the stock makes a big move, and then it pulls down; fine support around the 21. See how it pulls down higher lows; there's that little Darvis box building again; look how it's a tight bar; nearly an inside bar sitting on the 10 and 21. Look how the volume dries up; look at the 52-week highs, and it goes right; and you could look at that as a those are your study mini Vinnies, were a bit of a VCP, right; one contraction, two contraction, three contraction; tight, tight, tight, tight, tight; really good.

Next one, Fiverr; I can immediately see a five-star setup, and in a couple of slides time I'm going to be giving you a quiz where I put a blank chart and asking you, can you see the setups? So again, trying to really help you dial in training pattern recognition here; five out; I can immediately see a five-star setup; look how the stock makes a really good move, and look how it stays above its 10 EMA the whole time; a little kind of shake out in here, and then it recovers; then it pulls back down, holds on its 21 for my chart here, and then puts in this high-low Darvis box in there, and then see how the volume dries up; interesting, and then there you go; there's the breakout; there's the track. So I will come on to a little bit later on talking about the 10-day and the 21, um, and showing you some stats that I that I ran my um myself.

So here we go; can you identify the three five-star setups? And these are five-star setups as Koala Maggie defines them as you are going to see on the next slide. So here you go; can you find the three five-star setups on this chart? As I said, I want it to be engaging; I'm going to try and um, one try and involve you in this. So those three; can you find the three? I'll show you; three, two, one; there they are; number one here is it; this is Koala Monkey's quite here is a five-star setup; number two; this was an even better setup; look how tight it got; so see how it's building high lows; one contraction, two contraction, three contraction, full contraction; high lows, high lows, high lows; just tightening up on the 10-day; look how the volume dries up; look how tight it got; the tightness is really, really key; number three here; another five-star setup; boom; look at this; see how tight it got before it gaps up and breaks out there; look at the relative shrimp line as well.

Let's do another one; can you identify the two five-star setups and two other good setups? So we're looking for two five-star setups, and then we're looking for two good setups; two five-star, two good setups; three, two, one; there we go; this was a really good setup; these are Koala Maggie's quotes as he was looking at the track; this was a really good setup; not a five-star because the previous days' Canada was kind of loose; so you see how it wasn't; so he's talking about the breakout here; the pry bar; it was kind of loose; it's a pretty good bar, but it's kind of loose; it's not as tight as some of the other ones, and it had been building higher lows; this one in here; this is a five-star setup; see how tight it got; high lows; see how it's tightening; little Darvis box action again; another one here; this is a five-star setup, but it would have stopped you out because three bars later; so this bar later; see how it breaks out here, and then here it took out the loads of the day; so Koala Maggie will buy the breakout opening range highs and then stop loss level today; so this bar here stopped him out, and then the blue arrows I've just highlighted another two; I think they're very good setups; I think this is a five-star setup for me, and I think this also is a five-star setup; this is a really good chart to study.

Let's do another one; can you see the five-star setup and the 3.5-star setup? So there's a five-star setup on this chart somewhere, and there is a 3.5-star setup as per Quality Monkey's criteria; three, two, one; there you go; has a big, big move; look how it keeps surfing the 20-day; this bit in here; this five-star one; then it keeps getting tighter and tighter; look how tight it gets as it surfs the 20-day; then it has a high-volume breakout; this thing needs to be in your watch list when it starts getting tight; so see how it starts getting tight here around the 10 and the 20; watt; as soon as it starts breaking out, that's when you buy it; don't worry; we're gonna go on to how you actually buy them a little bit later on; then he's talking about this one in here; if you were able to find it; well done; this is maybe 3.5-star; another good setup; keep surfing the 20-day; build high lows and puts in a tight range; maybe because you kind of have this bearish day in here; it's not as clean as setup, um, whereas here it's just highlights high lows, high lows, and what chart patterns you see; oh, it's a nice big cabin handle, isn't it? Interesting; look at all the 52E cars, and well, we'll talk about relative strength a little bit later on.

Another one; can you identify the setup on the 10-day? So I use the EMA; so 10-day EMA; my designing is quite a Maggie Newton now uses the 10 EMA instead of the 10-day simple moving average; so can you find the setup on the 10-day EMA plus a bonus setup; three, two, one; there you go; so builds a base and starts breaking out; makes a move; surfs the 10-day, and then you get the two really tight candles in here; tight, tight with higher lows, and then breaks out; there's your breakout; that's a good setup; and I also think this one here; for me, that's the five-star setup; see good reaction to the earnings; a little bit of a common theme here, isn't it? Good reaction to the earnings; then it goes and builds a post-earnings earnings, um, base; builds the high loads; look at this kind of Darvis box action; so I was just basically going sideways building highlights on the base as well, but then it gets really, really tight; you get this extremely tight inside bar; look how the volume dries up, and then see how the stock just Trends; it's also why like the 21 EMA; we'll talk about that a little bit later on.

Let's do another one; can you identify the four good setups? So on this chart here, there's four really good setups; four really good setups; three, two, one; there they are; one in here; see how it just gets really tight; 10, 21; stock is in an uptrend; look at the 52E cars on the RS line; look how the volume dries up; this one pointing to the day before the breakout; look how the volume is drying up below this black line here; this is the 30-day average for the volume; that's what I use on the volume; 30-day average; see how the volume is drying up on; I just call them trigger bars because for me they're the last piece of the proverbial jigsaw puzzle, right? So see how you get this really tight bar; these trigger bars coming through; really tight here, really tight in here; just ridiculously good setups worth studying, but then look how it then Trends; note what moving average is it then transfer; yes, you want to study the setups; how stocks set up, but then how do they move afterwards? This is all the deliberate practice nature of it; this one here; so now we're actually going into how would you trade opening range highs? So how do you actually trade them? So I've got some at the time of filming this, which is um, which is in May; I've picked out, picked out some recent stocks, um, to talk about opening, opening range highs; so how does Koala Maggie actually enter them? So we're going to be looking at on here; okay, stock makes a big move; okay, pulls back in; find supportive action around its 10; stays above its 21; gets really tight in here; inside bar; look how the volume draws; a really good reaction to the earnings; huge sales; I'm going to show you a MarketSmith chart of this stock later on; huge earnings, huge sales, huge estimates; powerful, powerful stock; pretty new in terms of its IPO.

So on the next bars or the next slides I should say, we're going to be looking at the one-minute chart, the five-minute chart, and the hourly chart; so the 16-minute chart as well; so I'm going to explain how would you trade; how do you trade opening range Highs? But remember, it's in the context of we're looking here, and then we're looking at this bar here, okay, and then I also want you to be aware of that average daily range percentage, which is 4.79, which I will explain on the next slide because it all feeds into the risk management. So let's start talking about; remember that price level of 30 9; that was the high of this bar here; so remember I called them trigger bars; for me, I'm very, very visual how I learn; I have ADHD; I have dyslexia; so for me, I have to get things out of my head and just make them very visual; I can't really keep things in my head; I got to get it, gotta get it out in front of me; so concepts for me to kind of then understand things and then try and help me internalize things are really helpful; so trigger bars; that's how I think about them; those really tight bars where the volume dries up; so I'm just going to refer to them as trigger bars; Koala Maggie does not call them drug bars, but for me, for the purpose of this video to try and teach you the best way I possibly can, I'm going to call them trigger bars.

So the high of this trigger bar; inside bar, tight in the basic; now on the ten, thirty zero nine, as we go to the next slide; so this blue level here, okay, 309 was the pivot breakout; so the high of the final Candlestick; so where are on the one-minute chart; so this is the first one-minute Candlestick, and you see how it breaks out above yesterday's high of 30 zero nine; okay, see how it breaks out; so opening range highs, you're looking for the breakout through the pivot, wherever you determine the pivot to be; so for this example here, we're just going to think about the pivot; the pivot being the buy point of the prior day's high, which was that really tight candle; so that I refer to as a trigger bar; so you get the first one-minute Candlestick; it breaks out; Fantastic; look at the volume coming through; I call this bullish synchronicity where you basically get why what you get high relative volume, and you get a widespread Candlestick; okay, volume is basically confirming the positive price action; polishing nasty makes sense, right? And then you get this Hammer type Candlestick; then you get this inside Hammer type Candlestick, and then you get the breakout; so the opening range highs depends on what timeframe you are using; so we're going to look at it on the one-minute chart, the five-minute chart, and the 60-Minute chart, and I've got plenty of examples, and we're going to look at these opening range highs through continuation base breakouts; so IE stocks that are coming out of pivots from VCPs, Flags, pennants, Darvis boxes, cupping handles; we're also then going to look at them for episodic pivots; so where the stock basically gaps up on the earnings and is taking out the highs of the base and preferably above all the key moving averages; this is probably going to be quite hard to understand; I'll do my best at it; put some wraps and stats on the next slide will hopefully start to drill the point out.

So in essence, you are looking for the stock to break out; show that there is there are a lot of buyers there; there is demand there; we can visually see that in terms of the price action and the volume, right? And then you are looking for the highs; if you are using the one-minute chart, the highs of the first one-minute Candlestick, assuming it's taken out the pivot as this stock here has done, you are then entering as price breaks out through the highs of the first one-minute Candlestick; so the high of this first one-minute Candlestick is 30.56; so the entry is then through here at thirty dollars fifty-six; this is the entry; now that's the opening range Highs, but now we've got to start thinking about the controlling risk; so I'm jumping ahead a little bit and bringing in the controlling risk here as well; okay; so I was to kind of explain; I can't just teach you the identified part without the control part; we're bringing in the control part while we're talking about the identified part, but there is a specific section with quotes on controlling risks and thinking about risk, but we're jumping ahead a little bit here, but we'll catch ourselves up a little bit later.

So then you have to be thinking, okay, here is the opening range highs on the one-minute chart; it's through here; so the entry there's probably going to be some slippage, no doubt; 30 56. So then your stop loss is going to be the low of the breakout day, which is where it's the low of this bar here, which is 29.98; what is that percentage, assuming perfect execution, perfect fillage, which is unlikely; okay, but here; 1.89; now I use the average daily range rather than the ATR, but Koala Maggie, he uses the ATR, but he also says you can use the average daily range; in essence, try and understand the point that I'm trying to get across; it; so the average daily range minus set to 20 days; this is the average daily percentage move the stock has made over the last 20 days; you can use a TR as well, which will give you a numerical, a numerical figure; so it will give you dollars or cents or dollars and cents depending on how depending on how much the stock moves; so what this is saying is the average daily percentage move of the stock over the last 20 days on the daily chart is 4.75; now to keep the risk versus reward in check and not getting out of whack, which is quite a monkey's own words; you'll see that in the controlling risk section as we progress a little bit later on; ideally, you want the initial stop loss to be less than the ATR or the ADR percentage; make sense? So for me, I, I use the ADR; so I'm going to teach you with the ADR, but it's pretty much the same thing, but if this here; so let's just say I'll give you the ATR example, right? Let's say your stop is going to be from it's just over 1.50; right; imagine that your stock was going to be 30, and your entry was 30.56; so that would be a dollar, a dollar fifty; okay, a dollar and a half would be your stop; so then you could look at the ATR, and you might see that the ATR, the average true range of the stock over the last 20 days is two dollars; so therefore, your one, 1.50 stop loss is less than the ATR, which we're saying is two dollars; you can do it that way, or if you prefer percentages; I personally prefer percentages; it just works better for me, but if you prefer using actual numerical levels in terms of dollars and thinking in dollars and cents, use that; if you work better with the ADR percentage, use that; it's pretty much of a muchness; you're just trying to get stops that in relative proportion to how much the stop moves; how quick the stock is; looking at the ATR or the ADR percentage; okay; you want it to be less than that; so here we have; that's the last I'm going to kind of touch on ATR; I'm just going to refer to it as ADR percentage; if I keep jumping between them, I'm going to confuse myself; I'm going to confuse you as well; so the average daily range percentage for on, ONO, N is a ticker over the last 20 days is about 4.75; it's a little bit different because it wasn't specifically here because I then took this screenshot about two weeks later, but either way, let's imagine it's 4.75; so if your initial stop is 1.89, is it less than the average daily percentage move for the stock over the last 20 days? Yes; so we're staying in check; that is good to see; so the entry is here; the stop is here; you're in track; you're, you're in, you're in kind of chat now; Koala Maggie will actually like to get his initial stop loss either a third or a half the ADR percentage or the ATR; okay; pretty much, pretty much the same thing when you actually kind of work it out and think it through; okay; so ideally, you want to be a third to half that; that there can actually indicate you've got a really good wrist versus all trade on your, um, on your hand; and remember what he said earlier; it's all about small losses, big, small losses, big ones; so this is a way that you can see and kind of visually gauge; are you, are you in check; you have a nice metric here.

So let's do another one on the five-minute chart; so this is the same, same stock, same breakout; so here you can see 309; so it's taking out the highs of that kind of trigger bar, but this is the five-minute chart; so it's now opening range highs on the five-minute; okay; so we're not on the one-minute chart; we're now on the five-minute chart; does this look like a good first five-minute Candlestick for a breakout? Yes; why? That bullish synchronicity point; you have a widespread candle; so you're volume confirming the move; okay, good; you don't necessarily need volume, but it's good.

It's preferable to see the volume there. However, the five-minute candlestick now closes at 30.87. So remember, on the last chart, the high of the bar, or the higher the five-minute candlestick, is higher than the high of the one-minute bar, which was 30.56. So, on the one-minute chart, the opening range highs entry point was 30.56, whereas on the five-minute chart, it's higher. So if it's 30.87, you can start to see here you're paying a little bit more of a premium, aren't you? Maybe you're getting a little bit more kind of confirmation that buyers are stepping up and they are really stepping in, supporting this stock, and it's powering out. It's a good breakout potentially that you are, um, you're catching on to here, but you're paying a premium in terms of you're having to pay more for the shares, which also means if you're going to stop loss lower the day, so lower the breakout day. Therefore, your stop loss is wider, so you pay a premium for this. Okay, so you have to think about the one-minute, the five-minute, maybe using the combination, um, of them. Maybe you get stopped out on the one-minute and you buy it back on the five-minute. We'll talk about that a little bit later on. But here, because we're buying it at a higher price and our stop loss is going to be at the same level, low of the breakout day, 29.98, our stop loss now is not 1.89; it's 2.88. And if we think about that relative to the ADR, which is 4.79, it's still in check. Make sense? Still good. It's still less than the ADR percentage; it's around about half the ADR percentage. Okay, that's good. Good. It is a little bit over half, but hopefully you're understanding the point. Let's do another one. Let's get forward to her now. This one here, this is using it on the 60-minute chart and the first half an hour. Oh, sorry, well, it is a half an hour candlestick, but the first on, when when you're on the 60-minute chart, there are six and a half trading; there are there are six and a half hours in the session. So therefore, you have the first one-hour candlestick is actually going to be a 30-minute bar, just the way that's kind of played out. But what you see here is you see a breakout coming through, and the high of this bar is 30.18. So if you're using the opening range highs, you're looking for a break through the high of that bar, and would you notice there is no break for the higher bar? So there's no entry. Make sense? And also, when you then think about it, well, 32.18, and if our stop loss is going loads of the day, that means 6.86 percent. Is this a good risk reward trade? Look at the ADR percentage; probably not, right? Interesting. We'll do more and more and more; hopefully we'll start syncing through.

So now we're going to look at Oracle, and I'm going to be quicker on this one. So Oracle, very, so slock, we're going to be talking about that as well. So Oracle, see how it trends up here, pulls back down, find support on the key moving averages, tight, tight, really tight bar, volume drives up, 52-week relative strength line while the stock's still within the base; that is a massive, massive sign strap. So now we're going to be looking here, and the high of that trigger bar is 95.12. Ready? So here's the blue line, 95.12 was the was the pivot, was the entry price. Okay, one-minute chart. So Oracle actually takes it out, pulls back down, closes here. So then you're looking for the opening range high, so you're looking for the breakout through the higher the first one-minute candle set because it is triggered through this level. There it is there at 95.33. Now, stop loss, low of the day is going to be wet; it's going to be underneath the low this one-minute bar, which is 94.83. How much is that in terms of percentages? It's 0.52, so just over half a percent. What's the ADR of the stock? 1.33 is an extremely slow stock, and we're going to be talking about slow stocks later on. You want to be more so focused on the quicker moving stock, stocks with ADRs of three percent, four percent, five percent, six percent and above ideally. But this here is it a good resource wall trade? Yeah, it is. Why? Because well, the initial stop is half the ADR percentage, and it's very low anyway. Five-minute chart. So remember, here's the breakout on the five-minute chart. So then you're looking for a break through the high of the first five-minute candlestick, which is 95.73. So the entry would actually be coming through in here. Now, your stop loss on the lows of the day is going to be wider because price is up, so you're playing a little bit of a premium hit. So 0.94 is going to be your stop loss; that is about what's that, two-thirds of the of the ADR. Okay, still, still kind of in check that it's okay. Let's undo another one.

So now we're looking at Oracle, and this is on the 60-minute chart. Here's the first 60-minute candlestick. You can see the tightness of the proverbial trigger bar yesterday, right, the prior day. See how tight it is in here. There's the breakout volume coming through, but now you're looking for a break through the high of this bar, which is what, 96.64. Stop loss of those of the day, 94.83 is what in percentages? 1.87. What's the ADR of the stock? 1.33. So now the initial stop is greater than the ADR. Is that a good reversible trade? Probably not, right? Interesting. So let's do a couple of others. So we're actually going to do Bitcoin; we're going to do Bitcoin and ETH for a little bit because it's quite fascinating, and you're going to see some of the probably best setups you are probably ever going to see actually in terms of in terms of flags. So this is, and these are quite a QuantaMagi's own words. Okay, this is back in 2012. Back here, it was very, very illiquid; that should say an unknown; pretty much no one knew about Bitcoin back here. Okay, so look at these setups coming through here. This is in 2012, so even when hardly anybody knew about it and it wasn't very liquid, it's still forming the same setups; it is absolutely timeless. And what's interesting is you could go back and look at charts of stocks from 100 years ago; you will see the exact same chart pattern setting up on the exact same key moving averages. It's fascinating, and this is Bitcoin; fascinating, absolutely fascinating. So look at this setup, makes a move, go sideways, find support on the rising 10 and 20-day moving averages, get started, has a breakout. Does this look slightly similar or very, very, very similar to some of the stock setups we were looking at earlier? It does, doesn't it? Look how tight it's getting, and then over here, look how tight it is. Then you get another one, another stair step. Look at this higher lows, go sideways, gets tighter and tighter, surface of 10-day and another breakout. So see this black line here, see how it's surfing it. Okay, you get these little shakeout demand tails; that means intraday prices going below and then pushing up and closing above, going below, pushing up, closing above. Look how the volume dries up; look at the high lows; it's the same things over and over again. Here again, start surfing the 10, 21, and 50-day in an uptrend, gets tight and breakout. I'll show you the breakout on the next slide. Again, trying to help you train your pattern recognition. Look at this; see how it's just surfing the moving averages. You get these shakeout demand tails; they're good to see. Why? Because it's indicating there is absorption of supply; there is accumulation going on; prices going down, bars are stepping up; prices going down, bars are stepping up; good to see. See how it just holds the 50 in here, and then look at that; that is again, for me, I'm very, very visual. So if the trigger bar concept helps you, fantastic; if it doesn't, ignore it. But for me, trigger bar, inside bar sitting there, look how the volume dries up; it's the proverbial final piece of the jigsaw puzzle for me. Next slide, there's the breakout, and it goes up sixteen hundred percent. We're then going to look at this high-type flag here. So the strongest stocks and all cryptos find support on the 10-day, the strong ones, the 20-day, and the slower ones on the 50-day generally. Same principle applied here for Bitcoin, how this was basing. There's also the law of kind of cause and effects; so the bigger the cause, bigger the base, the bigger the bigger the effect to the upside as, um, as well. But there's the breakout, and before it closes, well, how'd you have just stayed in this for the 10-day? Look at this; see how you get these undercuts here, and this is why you'll see there's actually one that there's three significant ones, right? I call the shakeout demand tails. Why? Because again, very visual, they're designed to shake you out. Shakeout demand tail, so price goes down, goes below the 10-day, then recovers. See here, it comes down to the 21, recovers; down to 21, recovers; down to 21, recovers. So this is why QuantaMagi, when he talks about the 10-day, wait for a close below the 10-day because you'll see this time and time again, the shakeout demands intraday; they come down, try and shake out weekends, and then they reverse hard by by the close. Don't happen like that every time, obviously; you can get kind of change characters, and then they turn around. But wait for the close because had you have waited here, you'd still be in this stock up sixteen hundred percent. I'm not selling, saying you're gonna top ticket, but see how well hell it kept you in for the move; that's the point, stay in for the move.

Then we're going to look at this high-tide flag, this one here. So we're now looking at that high-type flag in the context of that move, and this is a quote about this setup. This is a very good setup; it went sideways for a while; it's a high-tight flag; it being the price surface, the 10 and 20-day moving averages, gets really, really tight. This is a five-star setup; it's like a perfect one. From this setup, it goes up being priced four, five hundred percent in a month to Montel. See our price is surfing the moving averages, and then look, tight, tight, tight, tight. Look out; there's no volume. Remember, what does the tightness and the low relative volume tell you? What's it telling you? There's hardly any supply around; that's really good; that's the MinoVini VCP point. You want the tightness; you want the low volume because it tells you very much supply around the stock is getting ready for the next leg higher, the next step higher. Okay, think about the stairs, up, sideways, up, sideways, up, sideways, right? This one hit Bitcoin, March 2013, high-tide flag example. I'm just gonna whiz through this one; it's got loads of examples here. Oh, this is one I was just showing you here; there's the before, there's the after, absolutely textbook, as I punched a mic. Next one here, Bitcoin, November 2013, high-tight flag. All you have to think about are the 10, 20, and 50-day moving averages again here; perfect breakout. Look at this here; it bing price serves a 10-day moving average, goes sideways, boom, break up. Look how powerful this is; triple good drupals in a few months. These setups can be traded on any asset class. Look how perfect this is; hopefully you you take a print screen to this. I'm probably pulling some awkward faces at times of them, um, but look at look at this; this is what you want to dial in and train your pattern recognition to. Ethereum, nothing different here is a good setup; it just keeps surfing the 20-day. So see this blue line here, and it's 21 EMA. My job pretty much every much just check out demand out, check out the manto, check out the manto, check out the Monto, and then see how you get this kind of quote-unquote trigger bar. Look at the volume drive; look how it's just sitting there; that's your breakout coming through here. This is a five-star setup. Now let's go into a little bit of a quiz. So ethereum, let's see if you are learning something in this video. I hope you are, as it took a lot of time to put this together. So if you are enjoying it, please do subscribe to the channel. If you're new, please do press the like button for me; it really helps me grow the channel. So can you identify the three high-quality setups? Can you see them? They're all five-star. I'll give you three seconds. Three, two, one. There they are. Your job is to identify these. These setups have been appearing for the past couple hundred years, and they're probably gonna appear for the next couple hundred years. This is how stocks and cryptos move; they move in stairs. You can clearly see one step, another step. So you see here how it's just going one step, and then it goes sideways, another step sideways, another step sideways; that's how they move. Your job is to identify the next step when it's about to break out. Okay, what does it tend to do? We've been talking about it before it breaks out; tightness in price, tightness in price, tightness in price. Where is the share price? Where is the candlestick in relation to the key moving averages before it do before it does it? What are you seeing time and time and time again? There's a very repeatable kind of nature to it. So hopefully you're stunning it; hopefully you're getting you're not going to have a 100 win rate; you're going to be wrong most of the time. But once you catch a move like this, you're going to make 50 losers in one straight, and that's how you make money. So quality monkey really focuses on keeping losses really, really small relative to where he is targeting and achieving his average gain. He's trying to get these home run trades, these huge trades. Imagine buying youth here; it goes from what's that, 40, 48 something like that, 40, 46, 47 in here, and then look, it goes all the way up to 320-ish, 310 before it starts closing below it's 21 EMA. So I actually like the Tanny men 21; you may even hear from this breakout. So it goes all the way up here before it closes below the tender. So the Stockland goes or the Ether goes well, even from here, it goes from that all the way up there to over 300 from four from forty fifty dollars foreclosed blood test; that's the point, get the big ones right. So that was continuation-type pattern breakouts. Okay, that is your VCPs, your flags, your Penances, your cabin handles, your Darvis boxes, so and so forth, so forth. We're now going to go into EPS. What on Earth is an EP? An episodic pivot, which I also I didn't really understand the name; I don't to me, the dictionary definition of episodic does not really define this, uh, nor do I really think about it as a pivot. So if you don't like the name, like I don't know the name, I think of it as a gap-up base breakout; invariably it happens on earnings as well. So EP, gap-up base breakout, playing kind of things, right? Whatever works for you to describe it, do that pretty much. So what are you looking for in essence? You are looking for a stock that is building a base, and then it breaks out of the base, and invariably it's going to be on earnings, clearing all the key moving averages and preferably all the overhead resistance. Okay, as we do more examples, it's going to be a little bit more clear. I've got some examples as well. So EPS are not always, but many times I'll wear a new trend starts. Good earnings, big beat, and big volume; that's the secret source. So if you re-watch this video later on and then remember at the start of the video I was showing you the before and after of those stocks, note how many of them the beginning of the uptrend pre-bass was on earnings; interesting. So they're basically then post-earnings bases for them, the continuations. So what you could have here is a breakout and then a high-type flag form over the next couple of months or so, something like that, a couple of weeks, who knows. So sometimes if you have a good-looking setup and it gaps on the earnings or news, even if it gaps 5, 10, 15, it could work out really nicely. So let's go through some examples. Probably the best way that you're going to learn this.

So here we have Mphase NG; we have two EPS on the chart; we have one here, we have one here. Which is the better one? Which one do you think is the better one, given everything that I was just teaching you? Well, the first one here, what does it do? The stock's building a decent-sized base, starts building higher lows in the base, albeit a bit choppy, does start to tighten up here; the relative strength is good, and then it EPS on good volume, 52-week highs coming through, clears the base highs, so that's the overhead resistance, and it's above all the key moving averages; interesting; that's a very good EP. Then over here, QuantaMagi actually bought this EP, and he bought the CP as well, this one here. Why is this one not as good as this one? Because it's not clearing all the overhead resistance. Think about all the trap bars up here. Okay, think about all the trap visors; decent volume there as well; there's a lot of trap bars here. So again, imagine the psychology point; a lot of trading is you want to have awareness of both you and your own actions, but also other market participants. So if you're thinking about this here, there could be a lot of people that are trapped up here, and they've ridden this stock down; this decline was about 25, 30, something, something like that. So they've ridden this stock down here, and they have a loss in their portfolio of 20, 25, say. Then the stock gaps on earnings, and suddenly their loss of 20, 25, suddenly they're now break even, and what do they do? I'm gonna sell, why? Because they want to remove the pain that they are currently experiencing of having the loss. So they now have an opportunity to remove the paint, so they do. So a lot of supply then comes in here. So then that kind of makes sense that Stockland has to kind of back and fill, back and fill, back and fill like this, and then there's a breakout attempt here, and then kind of rolls over a pretty darn sharply. But if you think here, okay, there's going to be some trap people within the base here, but suddenly the stock gaps on EP; now they're going from fear to greed because now they go, well, hang on a minute; I had a loss in my portfolio; I was down 10 on this stock; I was down 15 on this stock, but now it's just gapped on earnings; I'm at five percent, ten percent; well, I'm holding on to this one; interesting, right? Very different in terms of the psychology. So the best EPS you'll often find will gap above the base highs that they've been building and above all key moving averages; they won't gap in gap up into declining moving averages and or a lot of overhead resistance, a lot of trap bars. Hopefully that makes sense; we'll do some examples; it'll make sense. So sometimes stocks gap up over the entry point, but you can still have a tight stop on it if you do opening range highs when you have a powerful chart. So look at this setup here; is it oh, I don't flag; it's not far off a high-type flag. See this really nice tight trigger bar coming through in there; that was a really good setup, by the way. When you have a powerful chart, a gap up is okay. This was a pretty decent setup; he's talking about plug here. So this is your episodic pivot, your EP, gap-up base breaker, but see how it is basically gapping above all the highs of the base, and it's above all the key moving averages. So don't worry; we'll go into opening range highs for how to trade these EPS a little bit later on. Melee this one here. So do you see how it's gapping up? It's above all the key moving averages; stocks building a decent base pretty much gaps up to the highs of the base here. So it then kind of makes sense because there are going to be trap bars up here; it's at the top of the base; you'd expect there to be kind of resistance there from actual trap bars, a bit of psychology as well; it's base highest resistance, things like that; it takes a couple of days but didn't take out the lows and then goes on.

A really nice trend, and that's the first close-up here below the um Kuala manga. Actually, use a 20-day melee. I bought on earnings here; then I use the 20 days my trailing stop. It reported great earnings—I mean, just incredible earnings—and I'm filming this currently in May of 2023. Go and take a look at melee; ridiculous earnings are still coming through on this uh on this stock and estimates as well. Crazy.

Uh, Shopify. So now we're actually going going to go into these. These are pretty recent; you can see this is actually um May, which, as I said, I'm currently filming this in May 2012. So Shopify, we're going to look at this stock here, and we're going to look at it on the one-minute chart, the five-minute chart, and the 60-minute chart for opening range highs on the EPS. But here you can just see visually on the daily chart what you see is a stock that's building a big range. It's epping above all the key moving averages to pretty much the highs of the base, trying to EP over the highs of the base. That day is a better setup. Remember here, mphase engine gapping above pretty much the highs of the base, above all key moving averages. It's not really gapping into a lot of overhead overhead resistance. So Shopify, let's now start looking at this and be cognizant of the ADR percentage of 4.29. Here we go. So gaps up, as you'd expect, right? It's an EP on the earnings. So here is the first one-minute candlestick, okay, candle set. Good volume coming through, really good volume coming through. Check out the mantel; decent close, and then it goes tight, tight, tight, and then here it takes out the opening range highs of the first one-minute bar, which is 55.94. So your stop is then lows of the day, which is here underneath this bar, which is 53.88. Now, what percentage risk is that? That is 3.68. What is the ADR percentage of the stock? 4.29. Is that acceptable wrist versus wood? It's pretty darn good, isn't it? It's round two-thirds or so the ADR, which is kind of acceptable. And look at the volume coming for it; it's pretty darn good. It's pretty good candle six volume price action going on.

Next one, five-minute chart. So this is still Shopify, but now we're looking at opening range highs on the five-minute chart. So here's the first five-minute bar; decent first five-minute, but the higher that bar is 56. So as it takes out that high, that's where you're looking to get in. Initial stops underneath the lower the bar 5, 53.88. So that is going to be 3.5, 3.79, which is pretty just under, around about; it's just over two-thirds, isn't it, versus the ADR percentage of the stock? Okay, it's still kind of acceptable, acceptable risk.

Now, the next one here, this is the 60-minute chart, but remember this first bar here is actually a 30-minute candle. So, so really good first 60-minute bar coming through; why gaps up, opens near the low, little shake-out demand tail, pushes a really good volume coming through. So the higher that bar is 59.31; stop low of the day 53.88 would be 9.16. Now, is that a good resource will trade? Look at the ADR; probably not. Why? Because it's about two times the ADR, which you could think about that is ATR if you want to use average 2 range instead. Again, the wrist reverse reward is now out of whack. So on this one here, the one-minute chart, it's in check; five-minute chart, it's in check; one-hour chart, and a check; make sense. Let's do a few more examples. This is another relatively recent one; this is SMCI. The ADR of this stock was 5.77. So here's the gap through the base highs; see how it's epping basically to the base hours and trying to take out the base eyes and above all the key moving averages. 119 27 was the highest of the base. So one-minute chart, so we're gonna do one-minute, five-minute, sixty-minute bar. So here's the EP now on the first one-minute chart; it doesn't actually take out the highs of the base. So I actually think on this one what you could use the highs of the first one-minute bar or you could wait for the highs of the base around 1 19 24. That's my subjective viewpoint, but let's just go opening range highs for the one-minute candlestick to not add too much confusion to this, right? So decent volume coming through, very good volume coming through on a relative basis for the first one man in Kansas City; good strong close; check out to Martel. The higher that one-minute candlestick is 118 22, so opening range high breakout through the higher the first one-minute candle; say that's where you get filled; stop loads of the day 114 32. What is that percentage risk? 3.3. Let's take a look at the a Dr percentage; 5.77. Is it in check? It's in check. Five-minute chart; first five-minute candlestick coming through. So K, it's a doji; there's good volume coming through; higher that bar is 118.76. So stop loads of the day 114 32; percentage risk 3.74. Is that in check with the ADR? Yes, it is; check.

Next one here; now we're on to the 60-minute time frame. Okay, first one-hour candlestick is a good candlestick; yes, it is. Why? Gap, a powerful candlestick; look at the volume coming through; highs of that bar is 128.90; lows of the day 114 32. So the stop loss to go lows of the day would be 11.31. Is that good wrist versus wood? Look at the ADR percentage; no, it's about double; it's out of whack again. So one-minute chart good, we're in check; five-minute chart good, we're in check; 16-minute chart again at a whack. So again, this is going to be feeding into your strategy for thinking about these things. Let's do another one here: Uber. Wraps and sets; reps and sets, as Arnold said; that's the best way to teach it. So if you look at Uber here, okay, it's not great in terms of the stock is potentially building a base, but it's kind of been a downtrend, isn't it? Lower lows, lower highs, lower lows, low highs. It's not great, but something that happens here; here's the gap up; ADR is 3.6. Let's go take a look at it, and it's basically e-pinging into the highs of the best. I think the other two were better than this one because if you just look at the straps kind of EP trying to EP above the highs of the base and look at Shopify as well; it's going to EP above the highs of the base. So I'd say Uber, just on the face of it at the minute on that kind of gap up, is not as strong as some of these other ones. Okay, so we're looking at this bar here. Okay, so there's no kind of I'm really putting a high because would you use this eye, this eye, this eye? It's not very clear and obvious. So just the highs of this bar; let's take a look. So one-minute chart; what happened? Well, it actually gaps up; the open is up here, and then it sells off here. So this is not as good a one-minute candlestick as we saw on the other two examples being Shopify and SMCr. Okay, gaps up; the highs here; sells down here; then you get the checkout to Montel, but the higher this bar is 3510; shake-out demando. So the lower the lower the day is going to be 34.23. So when it takes out the high, your entry is there, and then your initial stop is here; lows of the day; that is a 2.46 stop, which is about two-thirds of the ADR, which is 3.6. Is it acceptable? I'd say it is acceptable.

Next slide, five-minute chart. So it's um overall it's a bearish candlestick, but it's not quite doji, and there's a supply; there's a demand tail, but either way, this is the higher the bar; it's on the five-minute chart 35 24, and then loads of the days 34 20 23. So you've got around about a dollar dollar stop. So again, if you know you've got about a dollar stop, you can then look at the ATR and go, well, the ATR is one and a half dollars or two dollars or whatever; you could do it that way. As I said, I prefer percentages; my brain just works better with percentages. So stop slows a day would be 2.86, which again is about two-thirds or so versus the ADR. Okay, still in check, isn't it?

Next one for Uber; well, now we have one where first one-hour candlestick is more of a hammer type doji bar; highs of the bar is 3524; loads a day 34 22. So therefore, the initial stop if we went through the high of the first first 60-minute candlestick here and then stop loads of the day would be 2.86. Is this good resource what? Well, this time actually is on the one-hour chart, isn't it, because it's about two-thirds versus the ADR percentage. Okay, that's looking a little bit better. Let's now do some EPS. Roku has three EPS; it actually has four on this chart. Let's see if let's see if you can get them; can you rank them as well? So there's three EPS; I really want really want you to focus on; there's four, which is like a dud; I won't even consider it an EP; ready; three; two; one; there we go. Did you get them? Did you rank them as well? So what I would actually say, let's just start with the duck; this one here is a no-go, right? Why? Well, it's gapping up; there's going to be overhead resistance because the stock's in the downtrend; it's gapping up into the 50, the 200s; there; the gray line is the 100; it's bubble; no, no, no, no, no. Okay, this one here now, number three; the reason I put it is number three; well, the stock's not really basing here; it's actually already in an uptrend. So that is just not as good for me. So yeah, it's kind of it's already been trending up for some months; it roundabout and was that nearly eight weeks or so? It's kind of been trending up, but number two, which I rank second, is is building a constructive base here, and then it EPS; it EPS above all the key moving averages; there is some overhead resistance; there's quite a big kind of what I call a resistance cluster where price has been trading in this range for some time in here; it's okay; there's going to be trap buys, but why I think number one, why I rank this number one is well, look at where the stock is finding supportive action prior to this earnings; see, it's in a much more established uptrend, and it holds here around the 50 SMA here; it holds around the 50 SMA here; it's kind of languishing; actually goes below it; reclaims kind of kind of a bit sluggish around here, but here it just looks like a much stronger base to me, and then the EP is actually taking out all overhead resistances; epping above the overhead resistance and above the key moving averages; for me, that there is the best one; that there is the best one.

Next one, so Mellie; there are two setups on this chart; two setups; one's an EP; one's a continuation type pattern breakout; can you find them? Three; two; one; here we go. So here's the EP; see how the stock is in an uptrend here; I don't know why there's this red line here; that was probably from the last one; forgot to say that, but here you go; it's in an uptrend; fine support on the 10; then on the 21 in here; tight, tight, and then it goes; takes out this range above all the key moving averages; good EP; good candle set; now it does then pull back down; it does find support of action around the 10, which is really good, right? So the stock is now staying above it's 21. In here pulls down; fine support of action around the 10, and then what do you notice? Tight, tight, tight, tight; call a magazine word; this is a good setup right here; it's a really good setup.

Next one, so now we're going into a little bit more of the specifics actually. So quote from Crackle malings on some stocks; you don't get good setups; they're just choppy and go higher anyway. So what is a choppy stock? So if you think about what have we been looking for? We've been looking for stocks that are in solid uptrend and have made a smooth move above the key moving averages. Okay, so remember that trend, which can oftentimes start post-earnings, so I.E. something material happens, and then the trend happens; then it goes and trends along the 10 and the 20 day, maybe the 50 day as well, right? But it stays above it, and it holds; it finds supportive action. Well, what quality Maggie is referring to here is a choppy stock is it doesn't respect; it doesn't hold the key moving averages; it just chops around. Now, this is very important; if you've read her Livermore's work; if you've read the um Darvis's work as well; stocks exhibit personality behaviors, and you may not like what do you want about that? No, they do; stocks just move different; stocks move in different ways; don't ask me why; I couldn't explain it; they just have personalities like I have a personality which you may like or not like; like you have a personality which people may like or not like, but you will have those behavior traits, which means in certain situations you will react probably how you did in prior situations. Now that's important to think about when you're looking at a stock; why? Because how has a stock move previously is to my mind the best indication how is it going to act in the future; this is the personality point; if you know someone's personality and you know their behavior, you know how they act in a certain situation; therefore, you can try and take advantage of that; thinking about that as stocks and how they how do they move; how do they act? So if you take a look at hubs here, this was one of the can the canceling winners of 2020 and 2021, but see how choppy it is. So remember you're looking for clean moves along the key moving averages, whereas here, well, just kind of choppy, choppy, choppy, choppy, choppy, choppy, choppy; you getting the idea? Even up here, it's just choppy; even to the downside, it's pretty choppy; see, it's just it's chopping all around all over the place. So if your trade management is going to be, well, I'm gonna buy a tight a a nice tight breakout from a flag or something like that, and then I'm going to ride it along say the 10 or the 20. Well, if the stock has a history of just being able to whip back and forth through the 10 20, you're gonna get stopped out really quickly and probably be very frustrated; that's why you want to look back at the previous behavior of the stock; how is it acted; how is it trended? It's a subtle point, but a really really important point I think.

So this one here, this is now talking about sector momentum. So when you have sector momentum, if it's a leading sector and or hot theme, the setup doesn't have to be really really good; it's okay if it's three and a half star or four-star setup; it still counts like a five-star setup because if everything is running in the sector, there's increased probability of success. Now this then links back to a couple of questions; how do you identify sector momentum? Well, in essence, you identify multiple stocks within a specific sector and or theme that are making big moves; they are showing momentum; they are building flags; they're building cup and handles; they're building VCPs; whatever; they're trending higher; they're riding their key moving averages. So what I've got here and these are lined up; you've got right, and you've got more of them; both of which are North American crypto miners. So this is what Bitcoin was really running in the market; kind of went a little bit crazy, but in the back end of 2020 and then into into 2021, which is when the growth bear market really started; this was kind of the blow-off top for growth stocks, and then it's been a bear market for around about two years or so, um, just over certainly for Grove stocks and more kind of canceling grocery type names, but this it they may not have been the best setups; I wouldn't really say for Riot or Marathon either one was really a five-star kind of setup, um, but they were pulling into the 10 and 21 EMA; they were doing it in here as well; you can see it with um with Marathon 10 21 EMA in here; you can see it in here; see how it goes up; pulls back down; find support on the 21; tightens up a bit in there; you can sit in here as well; they weren't; I wouldn't say any of these are really five-star; some of them are; it's quite Maggie saying they're in the correct three and a half four-star tops, but there was so much momentum there for crypto and crypto stocks; think about what Bitcoin was doing during this time; I think cavi wood was being interviewed um every day about Bitcoin and price targets and stuff like that; like there was a lot of momentum in crypto stocks um that. So on the next slide, we're going to be going into a relative strength; okay, the importance of relative strength, and I'm using monster beverage which built arguably the best kind of volatility contraction pattern you will ever see on the monthly jar, especially given the fundamentals of this stock where it did it in the con in the context of a bear market as well on the relative strength that it exhibited and then the move thereafter as well. So let me take off a couple of points here; the best setups; the best ones; the best setups are those that show relative strength; if you've read the likes of O'Neill's book, you'll know about relative shrimp that can't go lower even if the overall if even if the market overall or the indexes are showing weakness and going lower; these things being the stocks can't go lower; maybe even building high lows; you may have heard the adage of the basketball being held underneath water; so the stock is the basketball being held underneath water, and the water being the market; so the market pressure is pushing the stock down, but every time that pressure is eased a little bit, the stock pops out; boats are high low as the pressure comes back on; that's the proverbial basketball underneath water; if you're not paying attention to relative strength, well, I guess you don't know what you are doing. So see monster beverage here; see how it builds this huge base; think about the cause and effect relationship as well; now this is the monthly chart, and because this is then um just the strength of stock exhibited, you can't really see the power of this relative strength line here, but believe me, it was an uptrend as you can see with the 52 cars coming through, and then you see the tightness. So remember the concepts that we were talking about, and primarily we focus on the daily chart; okay, start getting tight around key moving averages; it happens on all time frames; you can find these setups on the monthly chart, the weekly chart, the daily chart, the one-hour chart, the five-minute chart, the minute chart; whatever chart it is; just supply and demand; it's all it is; it's absolutely Timeless. So see the tightness that comes through and hit; now what I do just want to add in here quickly is the power of earnings growth, sales growth, and margins and breathing as well; okay, really really important; so sales growth, margins growth, and also the earnings growth coming in; really really important. So if you can line up, and we'll look at it a little bit later on of course, if you can line up the technicals with the stock that's showing fantastic relative strength and the fundamentals and potentially the story behind it, you can have a very powerful situation. So relative strap; this is a stock that Conor manga was in here; this was one of the stocks with the best relative strength in the June July pullback in the market; it being the stock barely pulled back; it was back at all-time highs in no time; okay, it's up 900 from the load; when you have a stock that's up 900 in a few months and the market weakness can't bring it down, the stock is trying to tell you something; it's yelling at you; it's literally yelling, hey, I want to go high; if the market weakness stops, I'm going to go higher. So again, this free tool; search my name on the trading view; you'll find it; 52-week car is coming through here; 52-week cars; 52e cars; here's the stock setting up here; and if you get 52-week highs while the stock is still basing, that is the basketball being held underneath water; it is such a good sign of strand; if the stock hits 52 cars whilst it is still basic. So what are the type of stocks that quality is looking for? I'm going to show you some of the market Smith charts to illustrate the point; if you're interested in discount trial, there's a link in the comment section below. So I like to trade the stocks with the biggest earnings; they tend to make the biggest moves, but the only thing you really need to focus on is momentum because all of the big earnings winners are going to have momentum; you're gonna catch them if you just focus on momentum; you've got to be in the momentum leader. So remember we were actually looking at um a little bit a little bit earlier on; I think we were looking at Owen a little bit a little bit earlier on; it's a very strong talk in the market at the minute; certainly got my my attention at the time of filming this; look at the earnings coming through; four quarters of triple-digit earnings; look at the sales coming for as well; and the sales you have sequential growth; one on earth is that; that's a big word; so you basically have growth on a year-over-year basis, but also a quarter-over-quarter basis as well; that's a really good sign to see, especially for the sales; even better if you can get it for the earnings as well; then we take a look over here at the estimates; well, 2023; the estimates for this year 55, and this little green marker means that the guidance is up; chat; good; next year, 2024, 41 with the guidance app; good; really good; so the company has gone from earning three cents a share to losing money five cents air to earning two cents a share to suddenly 30 cents, 47 cents, 66 cents a share with the estimates coming in that it's huge share.

A couple more; this one here is Shockwave. Now quality Maggie is quite here; was he was talking about La Bongo; those of you who are trading through um covid and were focused on counselor names you'll be really feeling really familiar with lavongo; it no longer trades; I think it was actually brought out by teledoc um I think so; I've used chalk Wave Medical, which is kind of another medical-related healthcare stock, um, to kind of illustrate the point that he's making; it; these are the kind of stocks you want to be long; the ones that have triple-digit earnings and revenue growth; look down here; triple-digit earnings; doesn't have triple-digit revenue growth in the most recently reported callers but did have a string of those and still 71 72 is very high; this is the reason lavongo went from like 20 bucks to 150 bucks in four or five months; it then got bought out as well; this is fuel; this is called fuel; rocket fuel is another word for it; most stocks I trade are very liquid; ba Peloton Tesla; so looking for the liquid leaders; so you take a look here at Short web medical; we said about the earnings being high; triple digits; the sales being high; and then the estimates as well; next year especially; plus 29 with the guidance up as well; and what chart pattern do you see here? Oh, cup handle on the weekly chart; look at the RS line; stock has a history of being able to run; interesting.

Got one more for you; so this is Shopify, and we're going to be looking at in this period in here; this one he was talking about; look at shop 2020; look at the numbers; look at the revenue growth; look at the earnings per share growth; if you're gonna get big moves in a stock, there needs to be a reason for it to go up; every stock can go up a short; every stock can go up a short amount of time on some random stuff, but there needs to be something; usually earnings or unexpected earnings is the big driver for long-term moves. So if you take a look at Shopify here; that's quite interesting; if you've seen some of the other um recent videos; I think it may have been the mini beanie video where I talk about kind of

Fundamentals and oftentimes, with these growth stocks, that when the earnings top out, the stock tops out. The stock actually tops ahead of the earnings topping out; it's quite interesting to see, and especially when you kind of think about it from a price cycle perspective. So you've got like your phase one base down here, so phase one base, phase two uptrend, phase three top, phase four decline into a phase one base. And Shopify, you see this bar here, if you remember a couple of slides ago, and we were looking at EPS on the Gap up; see this weekly bar here? That's actually one of the Gap ups that you saw on the earnings, even though the earnings were down minus 50. Interesting, right? Who knows. But looking at this, it so we get the relative shrimp line turning up, and then take a look at the earnings coming through. So these are the earnings coming through here: 33, 100, 999, 467, 300, 900, 109. Huge earnings are coming from on the stock. Then if we take a look here, so from 2016 to 2021, this is the point that I want to make, and then look where the stock starts topping out. So the company goes from earning or losing Ascent to making two cents, four cents, three cents, to suddenly 2020, 40 cents again. It was a little bit of kind of not necessary; you wouldn't think of it as kind of classic stay at home like you would think of like a Zoom and a Peloton and DocuSign, because one of the beneficiaries of kind of the the coronal crisis I would say. But you can see here, huge change in the earnings: three cents to 40 cents to 64 cents. Then here is the peak, and then what happened in 2022? Four cents. Now it obviously didn't help that there was a bear Market in kind of growth stocks as well, but you see the point here that when the earnings stop, the stock actually topped. So again, the kind of the the revenue, the earnings, they are fuel, they are Rocket Fuel, to use while Maggie's quote from from a couple of slides ago. So it's just interesting to pay attention to the earnings, but sometimes you go look at the Zooms, the Pelotons, the A PBS's of the world, the DocuSigns of the world; the stock can actually top out when the earnings are at their Peak, which can confuse most people, which the market is designed to do.

So let's do a little slide on screening. So I recommend you do three scans; he's quite a mangy's word: a one-month Gainer scan, a three-month Gainer scan, and a six-month Gainer scan. You don't need any others on scanning criteria for the one, three, and six month. I use dollar volume, ADR percentage, so that's how, how um, the percentage move the stock has had on a on an average daily range over the last 20 days. So I'll talk about that in a couple of minutes time rather than confusing, yeah, and price growth over a period. It needs to be in the top seven percent of performers or higher. If too many results, TC 2000 to do this, and you can basically set parameters that you can search for the stock that has made the biggest move over the last three months, and then you can set, you can set the ranking. So you could look at stock server and subject to the meeting the other criteria, but you could be looking for the stock that's made in the top seven percent of movers and it meets the other criteria, so the dollar volume and the ADR percentage. Okay, so how, what is the um, what is the average percentage move the stock has had over the last 20 days, say? And you also want it to be a top performer, why? Because he's trying to find the strongest momentum stocks in the market. If you're using the light to Market Smith, then you could be looking, you could use a three-month relative strength rating as well, maybe above 90 or something like that. So you're trying to, trying to get them um, you could be looking for stocks, so basically, you're basically, without trying to confuse you too much, you're basically looking for stocks that are liquid that move a lot and have made the biggest moves over the last one-month, three-months, and six-months period. A symbol, you don't need to confuse it any more than that. You want the strongest stocks on any given time frame. You don't need any intraday scans; all you need to use is the one, three, and six-month momentum scan. Find the setups by running them after the close, then put good setups and watch this, then just watch that watch list; that's all you need to do to make millions.

It's never normally a good thing when you only have one sector that looks good for long setup, so are you, when you're doing your scans, you would actually like to see stocks from lots and lots of different sectors and groups setting up those patterns, those cup and handles, those flags, those VCPs, those diverse boxes, because that's a better indication that there's a lot of shrimp in the market, there's a lot of breadth in the market. If you only see a cricket, there's only one or two sectors that look good here, it's probably indicating the market is a little bit weak underneath the hood, especially if it's kind of in an uptrend or potentially very long in in an uptrend. I follow price action; you you can have opinions, but they need to be loosely held. If price is disproving your opinion, you need you follow price, not your opinion; that's the key. Problem is, most people do it the other way around; that's not a recipe for success for a Trader. Our job is not to predict; our job is to listen. If you want the ADR formula, by the way, I've got it down here, and that's the 20-day um, Eddie EDR formula. If you want to copy that into tc3000, if you want, if it's a slow ADR stock, then it's you shouldn't be trading it. Low ADR stock is equal to high ADR stock is equal to Gold.

So now we are going into the controlling, so that there was the identify section. You'll be happy to hear that the control and the mitigate and the optimize section is not as long as the identification section; that was the longest by far. And I've also, I've already covered parts of the um, certainly the controlling in the optimizing profits, thinking about trailing along along key along key moving averages. The optimize will get into it. So control, these are some quotes I'm going to get, as we did with the identifying section, I'm going to give you some quotes to kind of, kind of outline things, and then we'll start going to start going into it. So the stop is always lows of the entry day. Remember, with the opening opening Range High breakouts, the stop shouldn't be higher than the average true range, so the Ada TR. It's easier to look at the ATR versus the average daily range for when you're doing your stocks. The ATR is the intraday range; it doesn't account for gaps as I explained earlier. I prefer using the ADR percentage; my mind just works better with percentages instead of fixed kind of numbers. I know they're both numbers; for me, I prefer the ADR percentage. If you want to experiment with the ATR percentage, ADR instead of the ADR, use that; whatever works best for you. In essence, don't over complicate it. I usually don't buy the stock if there's up more on the day than it's ATR. Preferably, you want to get in when the stock is only up a third, a half, or two-thirds it's ATR. Remember, we were looking at that with the opening range highs and saying, is this a good reversible trade? My stop are usually around half the ADR, ATR; they are rarely full ATR. I always feel as though I'm chasing when the stock is near full eightier, responding to what chords, blowing up the account four times early in his trading career, lack of strategy, lack of setups, basically lack of risk control, didn't know what the hell is doing. Get used to losing; get used to being stopped out. The best Traders are the ones that can take the best losses. I've got one more slider quote and then we'll get into some examples. If you catch big moves that are multiples of your risk, you're going to make a lot of money, risking very little; it's all about having tight stops and big Winners and obviously a lot of small losses. It's all about risk reward; trading is about getting big multiples on your initial risk. Hopefully, these kind of quotes on controlling risk, it could be a real insight into how qualimagi thinks about trading a new strategy. I've had tradeth where I've made 50 times my initial risk and more on parts of my shares; that's what it's all about. My win rate last year, 2019, was like 25, and yeah, I was wildly profitable. Even this year, 2020, which is my best year by far, my win rate is well below 35. So this is one of the best Traders ever whose win rate is 25 and 35 percent; less is what like coming in average like high 20 tops, isn't that really interesting? That's probably just kind of change your mindset around thinking that you don't need to have 50 women, 60 women, 70, 80 women. The whole point is not to try and be right all the time; the whole point is to take very small losses in relative proportion to where you're targeting and achieving your average gain. Small losses, big Winners; that's what you're shooting for.

So we've got a couple of examples. I've got one which is stop under the pivot, which is a little bit more conventional um, to just kind of illustrate the point to you, and then I've got two which are opening range highs. So we'll talk about this one, what chart patterns you see, but the VCP isn't it? One contraction, two contraction, three contraction. This on the one-hour chart as well. I can take these small losses all week long; that's my trading. I had a 25 win rate last year, 2019, and yet I made like over 100; it's all about small losses, big wins, small losses, big wins. Don't get into the cult, we're thinking you have to be profitable every day; no, you don't. What you need to do is have some really big home run trades and keep the losses small in the meanwhile; that's my philosophy. So see here, one contraction, two contraction, three contractions; see how it holds the key moving averages. Look at the tightness; look how the volume dries out. So this one here, let's just imagine that the ATR of this stock, so this will be the one where I show you ATR, okay, then I'm going to go back to ADR, I just already got, so 80 up. Let's imagine that the ATR of this stock is a dollar, so your initial stop loss is going to be 50 cents, okay. So imagine that you are buying it around 20, okay, let's just imagine, I know it's not quite, but imagine your entry is at twenty dollars, and then your stop is going to be at 19.50. Now this is more of the kind of conventional O'Neill minivini way of being underneath underneath the pivot, so I want to show you this example that you're probably more familiar with, and then I'll show you the opening Range High examples on the next two slides. So imagine it, our stop loss could then go underneath the low of this final contraction, which ties in with being underneath two of the key moving averages, and let's say our stop is 50 Cents, so we're buying it at twenty dollars, which I know it's not quite twenty dollars, and our initial stop is going to be 19.50. I know it's not quite 19.50, but let's imagine that's 50 Cent, and let's say the ATR and the stock over the last 20 days or 20 bars is a dollar, so we are half the ATR for our initial stop is half the ATR; is that a good risk versus Ward kind of checks and balances? Yes, it is. And then here, imagine if you held for the first close below the ten, this is the 10 email on the one-hour chart, so imagine that you got stopped here at around about twenty-four dollars 50, and imagine you did it on your whole position; that would be about nine times your initial risk. You would have sold part of your position on the first couple of bars, so three to five bars; we'll talk about that. So let me give you some examples; you remember this O-N-O-N, so on, and I've got one on the one-minute chart and then one on the five-minute chart as um, as well. So looking at this one here, do you now start to see how you are thinking about the the risk that you are taking, thinking it, thinking about it in terms, and this is what I kind of did earlier, but I've now shaded it red to think about how large is your stock relative to either the ADR percentage in this instant series 4.75 for the um, for the Candlestick on the day, and it would be 1.89 initial stock because you're buying it through the highs of the first one-minute Candlestick, stop loads of the day 1.89 relative to 4.75; that's a nice metric there to be to be thinking about, okay. So tight stops, and then you're looking for the big one; it's tight stops relative to how the stock is trading, because 1.89 on say like we looked at Oracle which had an ADR of 1.33, then that written word it would be and a whack; it wouldn't be kind of checks and balances coming through. If we do another one, so you see this gray shaded area, the sound, we're kind of then thinking about the controlling race. I did kind of cover this off earlier on in the video as well, but see here, the initial stop, well through the high opening range highs 3087, stops lows of the day 29.98; that would be 2.88, so 2 88 relative to the ADR; is that good resources wood? Yes, it's looking pretty, pretty constructive. Let me do another one here for you. So remember that quote by Livermore, men traders who can both be right and sit tight are uncommon. Livermore was all about playing for the Home Run, certainly later on in his career when he was making oodles and oodles of money; it was about sitting tight, it was about getting the big money, sitting in the Home Run trade. So here you go, this cabba, this is from late 2022 into 2023, so the stock moves up here, look at the volume coming through, pulls back down, where does it find sport on that black line, the 10-day, and then pulls back down, fine support where on the black line, 10 day, and then you get that trigger bar coming through, and then from here, imagine if you went stop low at the trigger bar day instead of opening range highs, then from here your risk would be around about 14 cents, and the return was 8.88 before it closed below the 21 EMA. The first close below the 10 day was up here, the 10 EMA being this bar here, which still would have been pretty darn good, but before it closed below the 21, and I'm going to show you some stats a little bit later why I personally use the 21 uh EMA and why you continue to sit on the charts, six through three times the initial risk; they are the kind of ones you are looking thick is about 423 I think. So with swing trading, you're looking to get 5, 10, 20, 30 times your initial risk; the best trades you'll make 20, 30, 50 times your initial risk. You can make a lot of money even if you have a 20 30 win rate. My win rate last year, 2019, was 22 25 something like that; this year, 2020, is maybe a bit better, maybe closer to 30. You can have a win rate well below 15 is 50 and make up a ton of money. If you need a 70, 80, 90 win rate to make money, I'm sorry, but your setups suck, your methods suck, you have very little Edge if you need that higher win rate to wait to make money. Next slide.

So now we're going into control, but thinking about position sizing, you shouldn't put more than 25 of your account in any given stock ever; there's no point. You get the best breakouts in Bull markets, and in a bull market you get hundreds of stocks that make big moves; you can very easily make a lot of money risking just point five percent of total account Equity per trade. I rarely risk more than 0.5 on any trade, and I'm not like 120 on the year being March 2021. Nowadays, I rarely risk more than point five percent of my account on any trade, but when I add a smaller account, I consistently risk like one, two percent. One percent of total account Equity is a lot of risk, so hopefully you're getting a good kind of feel for how much quality money is risking per trade. I'm risking 0.3 to 0.5 percent of my total account per trade; I'm taking smaller risk than I used to, but I'm going for big multiples of risk. If I don't think I can realistically make say 10 times my initial risk, I'm probably not going to take the trade. Many of my swing Longs I can make 20, 30, 50 times my initial rest. Now we're going to go on to the risk mitigation part, so we've looked at identify, we've looked at control, we're now into risk mitigation. For this method, you don't need to scale it; you can buy everything at once, but you need to scale out, sell one-third or one-half of your position after three to five days, and then use the 10-day moving average as your trailing stop. Then when the stock closes below the 10 day, you sell the rest. So we've got AMD, and we've got four different entry examples here, okay. The Black Arrow is going to be the entry, the green is going to be when you sell part in the first three to five days, so one-third, one-half of your position, and then you'd move your stock to break even, and then the red is going to be the exit, either stopped out or exit because it closed below the key moving averages. So see, this would be a breakout entry here; see how tight it got in here, and then you sell one-third, one-half of your position after three to five days, move your stop loss to break even, and then you get stopped out here. Here, see how tight it gets in here; here's the breakout, so one-third, one-half of your position, three to five days afterwards, and then you get stopped out here. Titans back up; here's the entry, and then you get stopped out here; then it makes a big move. Here's the entry; here's where you sell three to five, and then here's where you get stopped out here. Hopefully, that's giving you a little bit of an example; hopefully, it's a bit common sense as well.

Now we're moving into the optimizing profits face, okay. We kind of touched upon the um, the the risk mitigation part; I think it's pretty, pretty straightforward what color Maggie is saying; he's saying basically, sell the one-third to half of your position after three to five days, move your stop to break even; that ain't rocket science, is it? So optimize, after three to five days you sell one-third to one-half of your shares, then you move your stop to break even, then use the 10-day moving average as your trailing slots, which is looking at on the previous side. Good quote here: extended stocks get more extended. The whole point of Swing trading is giving the stocks room to move; in day trading you're always near your entry, always fighting near your entry; swing trading you've just got to let things work out, I.E., give the stock time to Trent. And this is kind of slightly into the mindset part of things which we'll come on to later; it's better to sell a partial a little bit too late than too early; better to sell 10 too late than 100 too early. So this, it now, this is the actual data table that feeds into these results here, but obviously I cannot show this in Clarity that you can actually read the figures. So here's a print screen of it; here is, here is the um, the result. So this is my own test, Mayan data Series, so I looked at 500 of these stocks, and I used the 10 email and the 21 EMA, and I wanted to know from these, these flags, these penalty wedges, these VCPs, these cover handles, these Darvis boxes, these breakouts, how fast do the stocks move, and I looked at 500 of them, okay. So what I have here is I eyeballed the initial stop loss; now for me, I tend to go low, I go low the trigger bar day invariably and try and tie that in with being underneath one or more one or more key moving averages; that's just me. So for these 500 trades, the average stop loss came in at 4.95, which is pretty much what I would be expecting to come in; so that's nice Sub sub five percent there; that's what I was kind of expecting. And again, I was just kind of eyeballing it for where would I have this obviously done in hindsight of looking back at the setup, where would I place my stop losses on and so forth, but about five percent is where I would have expected it to come in, pretty kind of the data anyway. So then I looked at, okay, what was the average percentage move before it closed below the 10 EMA? 28.82. What was the average percentage move before it closed below the 21 EMA? 42. So what was the average risk versus Ward if you're using the initial stock before the stock closed below the 10 EMA? 5.71. For the 21 EMA? 7.82. So for me and my own personal trading, and I would encourage you to do to do your own story study, I would ensure that qualamagi would tell you to do your own study and do your own research as well. I use a combination; that's why I've been talking about throughout this presentation; I use a combination of the 10 EMA and also the 21 EMA for part of my position on a closed blood anyway; part of my position on a close below the 21, you may, it does somewhat depend on the individual stock, and it does depend if the stock got really extended; I will then invariably go lower the bar, Lower the bar, Lower the bar on part all of my position, but I don't want to make this video too much about me, but I did want to show you this data table here as I think is interesting; sheds a little bit more light as well.

Now what I want to show you is some optimize, some simulations. So as we've been making quite clear throughout this thing, quite a Maggie sits for the Home Run trades; he thinks sitting is really, really, really important, as we're going to call him Jeff down here is sitting, and he's quite stunned by these results. So let's do some quotes, then I'll take you through these simulations. Sometimes the hardest thing to do is hold a big winner; it's so hard, sometimes incredibly hard. If you want to make big money, you've got to be in the fast-moving stocks. So I'm going to take you through some different scenarios here, so we've got sitting, okay, sitting one, sitting two, sitting three, and sitting four. What we're saying is the starting account balance is 100 Grand; there's 250 trades; these metrics do not change; the position size is going to be 12 of total account Equity; that's not the risk; that's the position. So with 100 Grand, you're putting 12 Grand into in into the setup; it's then obviously compounding on top of that as well. Your win rate is going to be 40, okay, which out of your 250 trades means you're going to have 150 losing trades and 100 winning trades, and then for this instance we're going to say that the average loss is 10, so you've got a 150 losing trades with an average loss of 10. So what I really want to do here is get you thinking about different uh, different kind of metrics and why you are doing potentially what it is you are doing in terms of your strategy; where are you targeting your average gain; why are you doing it; what are your sale rules about; what are you trying to achieve that; what is the math actually in the case; what is more optimal; is it optimal to try and sit for big moves; is it better to take lots and lots of small winners and have really, really small losses? Let's take a look. So average lost 10, and you're going to have of your 100 winning trades with your 40 hit rate, 80 winning trades, average game five percent, basically nothing, okay, but you're gonna have some big Winners, ten winning trades of a 50 gain, ten winning trades of 100 gain, over the course of these 250 trades, at the end you return 47, okay. Now the only metric we're going to

The change from sitting one to sitting two is we're going to bring your average loss down from 10 to 5. Now, suddenly you return 264. See how losses and keeping your average loss low, so five percent instead of ten percent, you've added over 200 to your return over the course of 250 trades. Then compound that out over 10 years and see what you get to. Interesting.

Sitting three, we're gonna mix it up a little bit, okay. The only difference that we're going to do now from sitting two is we're just going to say, instead of your 80 winning trades averaging a five percent gain, we're going to be a little bit more generous; they're going to come in at a plucky eight percent. Okay, so you now have 80 winning trades of eight percent, ten winning trades of fifty percent, and 10 winning trades of 100. But this is the only metric. You now add another 100 just from bumping up from five percent to eight percent. And obviously, it's not going to come in perfect eight percent on 80 wins; you're gonna have something to come in two percent, eight percent, fifteen percent, twenty-five percent, two percent, three percent, nine percent, seventeen percent, twenty-one percent. Okay, I'm just using this as an average to illustrate. This is really important to actually understand the maths and reverse engineer the process. I'm a big believer in reverse engineering the process. Okay, where do you want to get to in the end? Reverse engineer it; build the strategy to get you to where you want to go. To really simple setting number four now, the only thing we're going to change from sitting three to setting four is we are going to say you now get two monster games, okay. You get one gain of 500 and you have 12 of your account in it, and you get one gain of 700 and you had your account in it. Now, if you're trading the quickest momentum stocks, I don't think out of 250 trades that is unreasonable to think that you could have two extremely big games. I don't think that's unreasonable if you are focusing on the real momentum leaders in the market. I don't think that's an unreasonable expectation. After your 250 trades, you keep the average loss at five percent; your return is quadruple digits, one thousand and thirty-seven percent.

So now, if you ever wondered, well, how do I get to a triple-digit year? What do I actually need to do over the course of 250 trades? What do I need to do to get a thousand percent return? Because I'm a big believer in, if you can see the goal, if you can see it and you can think about it and you can build a strategy to get there, you're much more likely to get there. This is the reverse engineering process, okay, and this is why doing these videos like this where you're really actually going into the systems and the process as well, how on Earth did Koala Maggie turn five grand into 100 million? Starting to see it's getting the big winners. He did not do it like this in not setting one and not setting two where over here we're saying, okay, average loss, it's saying 250 trades, 40 win rate, average loss five percent, and then 100 winning trades, 10 that returned 34. He wasn't playing for the 10 games; he's playing for the home runs. He's coming in down here, okay. This is where he's coming in; he's sitting for the big winners. The big winners have an exponential effect on your bottom line, as the quotes earlier were saying on not setting two. Now we're just changing it; average loss staying five percent, but 100 winners is 15 to their three-to-one trader instead of a two-to-one trader in terms of risk versus rewards, however you want to think about it. Then the return is 141. But to get where Koala Maggie is coming in, okay, in terms of if you actually think about the last eight years, so you take out the first two years where he lost 95 and around about 50, which then had an average annual return of about 268, when he's coming in somewhere here, isn't it? Around 264, if you look at the last eight years, it's actually coming in closer to 350. So this is kind of what the results are looking like now. The win rate is a little bit low; he'll have some again. This is kind of in terms of the maths here; it's not going to come in this perfectly, but hopefully you're understanding the point that I'm trying to illustrate. Getting the big trades right now and then makes a monumental difference. Here's the maths behind the returns to really try and help you a couple of scenarios hit so you can see that we'll say Jeff was on the last side. This is Jesse here; Jesse's very happy, why? Because Jesse is sitting in winners. So scenario one, scenario two, scenario three, scenario four. I don't want to bore you too much, but scenario four, the 10 trader compounded return on investment is 55.9, okay, relative to say scenario two and scenario one where it's 33.95 with 50 win rate for 14 winners, seven percent lose. Scenario two, 40 win rate, 14 winners, and seven percent losses, so they are two to one in terms of their gain versus their loss, 9.27. But look at this; look at the monumental difference here, 55.9. Why? The outsized gain here, 50 win coming in, and then the other ones, okay, 15 gains, okay, but ten percent, five percent, okay, nothing burgers, but then controlling the rest, three, three, five, five, five small losses, big ones, small losses, big winners. Here's the math; here's why it's really important. A couple of quotes, two slides on quotes which hopefully help illustrate this point. So when I feel a stock is getting extended, I'm not going to wait to trail it with the 10-day moving average, but a lot of times that's actually a mistake. And you may have heard Koala Maggie talking, um, podcast, language, chat, chat with traders, um, he actually found that sometimes he thinks he can kind of outsmart his moving averages, but he actually says oftentimes it's a mistake; I should have just stuck with the 10-day moving average. Draw, use the close below the 10-day moving average as a trailing stop for at least one-third or maybe half of your position. The logic behind trailing with the 10-day moving average, these home runs, you catch a few of these, you're going to make a lot of money, as those simulations we're just showing you. And this is what great swing trading is, and this is what is great with swing trading versus day trading; you don't have to sit there and scout for stupid small moves, sit around your entry constantly looking for new trades, new action. You can just sit in it and have patience. I sit in the position; obviously, it's easier said than done, but there's a lot of logic behind all of these things because they work. This is something you'll figure out once you look at thousands of stocks, thousands of leading stocks, big movies, how they act around moving averages and how to develop sell rules. This is all based on how do stocks act; actually studying the stocks, these moving averages work. The 10-day is an incredibly good moving average for the biggest momentum stock; it works so well. It's not perfect, but it works really well. One more slide on optimize, then we're into mindset. So quote, letting one is wrong is the hardest thing ever. So letting winners run is the hardest thing ever; that's why you need to study. I keep saying this; you need to spend hundreds and hundreds of hours studying big winners over many different market cycles. Take the time; you'll realize that stocks can ride the 10, 20, 50-day moving averages for big, big moves. Educate yourself; know how the market operates; it's the same thing over and over. These moving averages, the 10 and 20-day, if you look at the biggest momentum stocks, no matter where you look at the market leaders, you can look at the market leaders from the 90s, the 80s, the 50s, the 20s; they move the same way, they obey the same moving averages, the 10, 21, 50, and 200-day moving averages. They've worked for 100 years, and they're probably going to work for another 100 years. Interesting. Now we're going to go into the mindset. And actually, if any of you know me, know I'm a big football fan; I'm actually a Liverpool fan, so I don't know why I put Marcus Rashford here, but you'll note his celebration, and you'll see a lot of football players doing this actually, um, Darwin Nunez scored a couple of weeks ago, this celebration here. Now this is really interesting. When I see, again, professional trading is not dissimilar to being a professional athlete, whether that is a basketball player, a football player, whatever it may be, the mental side of it, your mindset is absolutely crucial. And any of you know who Marcus Rashford is will know he has been through, I don't want to go into the story kind of too much, um, but he has been through a lot in terms of mentally challenging things, including missing a penalty at the Euro 2020 finals, um, and then being the victim of a lot of racist abuse as well. And again, I sometimes think it's hard having a small YouTube channel if you are a global megastar in terms of a football player and you constantly have people talking absolute nonsense about you mentally; it must be so difficult. So what I find really interesting with Marcus Rashford, uh, he is on absolute fire at the minute, um, playing fantastically well, baton and just back to his best. But the celebration, mental focus, focus, focus, focus. Go and study the things he's been doing, so mentally just really focusing on himself and his whole game is improved significantly. So he was, he's been in some really hard places. I actually really like Marcus Rashford as a human being as well; I think he does a lot of good things. But it's interesting, you see these top athletes doing this, the mental side training is no different. Making millions in trading is not about rocket science; it's all about patience and discipline. What most people don't have is the patience, the temper, just waiting and doing nothing. Most people want the fix, being the action, they need to be doing something all the time. On being asked what a stop might do in a few sessions, I don't think anything. So again, crack my mind is not predicting, uh, does this, does this just listening to the market, focusing on the market. My trading affects my feelings outside of the market; I can relate to that, but my feelings outside of the market never affect my trading. There's no point having any opinions about this or that; you've got to wait for price to tell you. Prices the only thing that pays; nothing else. Me personally, I just want to push my trading size to infinity every year. I want to increase my trading size every year; I want to get better and bigger. I've done it successfully for many years now. You have to push yourself. That last word is so empowering; that gives you a real insight into Koala Maggie's mindset. How empowering is that? Think about that; think about his objectives; think about his mindset that he wants to push his trading size, he wants to get better, he wants to get bigger, he wants to push himself. That there is a much more empowering mindset than many of you may have. Really think about your mindset; why are you doing what it is you're doing? I can't believe how many people I've unfollowed on Twitter because of their bearishness. I started trading here in May 2012, here, and the market keeps on going up and going up ever since. I joined Twitter and started listening and reading financial news media, all of these bears, they always, they always talk about what can go wrong, but no one ever talks about what can go right. It's so stupid. Yes, there will be bear markets along the way; yes, there will be corrections. Shortly after I started trading, the NASDAQ corrected 20 in a few weeks; that's it, 20 correction in here just looks like a blip now, doesn't it? Yes, eventually there will be a bear market, but what good is it to call a bear market if you're wrong for five, ten years? It's just so stupid. Only thing one really needs to do is follow the price. So here's where Koala Maggie's died. He was then where the growth market, the bear market where the bear market actually really started coming around here in Q1 of 2021 for growth stocks and then the market later topped out later in 2020 and 2021. All these worthless opinions, all these expats, no one knows nothing; no one really knows anything. So yes, the market is currently then being in a bear market, but what follows bear markets? Bull markets will follow the bear market; bull market will follow this bear market; bull market. What followed the bear market? Bull market. What followed the 2020 bear market? Will be, it was short-lived, a really, really, really good bear market. Another one on mindset; this is interesting as well. Then we're going to go into deliberate practice and actually think about how you can get better, how to quality mind. You get so good at trading, even the most successful traders are going to be in a drawdown most of the time. I think it's Robert Frey, um, or something like that, found the S&P 500 in YouTube it, the S&P 500 is actually in a drawdown of I think more than 15, about 70, uh, if not 75 of the time, which is quite interesting. Even this year, even though I'm up at least 500, this is 2020. I've spent at least half of the year in a drawdown. So 2020, quality monkey at this point is at 500, and half the year he's been in a drawdown. At least expecting to be at peak equity all the time; it's just not going to happen. You're going to spend most of your time in a drawdown, even on a really good year; that's just how it works. You need to realize it and accept it. Being in a drawdown is normal, so just don't remember on the last side about the acceptance, just listening to the market, but also just accepting the reality of trading as well. A lot of acceptance going on here. Being in a drawdown is normal; I try to limit my drawdowns to 10, 15. I think I've had two 30 drawdowns this year, being 2020. If you want big returns, you are going to have to have drawdowns; if you don't have drawdowns, it means you don't take any risk, and if you don't take any risk, you won't have returns. Then he talks about Amazon here. Look at Amazon, this on the monthly chart for Amazon; it's one of the most amazing stocks ever, history of the world. It's up circa 200,000. I actually think from the low here to the high here is like 270,000, um, game. Obviously, this is gonna splurge us and stuff like that as well, um, look at the amount of time it's been in a drawdown. At one time it was in a drawdown for 10 years here; it is, it's in a drawdown, build high lows for 10 years out of the 23 years it's been public; it's been in a drawdown for about 15 years. So Koala Maggie was then looking at this, I think around about this time up, um, up here, so maybe it was close to 200, 200 rather than the absolute peak here, but this is the point. Look at the move Amazon's made, 200,000 percent, and for 15 years out of the 23 years it's been in a drawdown. These kind of red zones here, it's been in a drawdown. It's been in Jordan. You can go look at the same for Netflix, Apple, Microsoft, whatever stock you want to look at, okay, but Amazon's a really good example stock that's gone up 200,000, 15 out of 23 years it's been in Jordan. Isn't that amazing? Isn't that amazing? Deliberate practice. So deliberate practice, if you follow me for a while, well, no, I'm a big, big proponent of deliberate practice. So if you want to read a good book, and the Xerox on peak, the new science of expertise, I think is the um, kind of the motto underneath it, but Anders Ericsson, Peak, it's a really good book on deliberate practice, especially I'm a parent, and for me trying to teach um, my daughter things, and especially because she is a toddler, to do deliberate practice, understand deliberate practice, actually skill acquisition, how do people learn things? I actually think it's um, fascinating, and it goes back to Arnold's thing of, if you wanna, if you want to grow muscle, reps and sets, there's no shortcut, reps and sets, feedback loops, okay, reps and sets, feedback. So there is a difference between knowledge and skill, okay. Trading ultimately is a skill set, okay; it's not a knowledge quiz; it's a skill set with deliberate practice. Your goal is knowledge, but most importantly, skill acquisition. So yes, you are trying to learn; you're trying to improve your knowledge, but you have to understand there is a difference between knowledge and skill, okay, knowledge and skill as I tried to differentiate here with, this is a proverbial brain, right? You have skill on the left-hand side, knowledge on the right-hand side, don't quite work like that, but knowledge and skill are two separate things. So how do you improve your knowledge, and we're now specifically talking about trading, how do you improve your knowledge on trading? Well, you watch YouTube videos like this; you can read books; you can go to seminars; you can read courses. There's probably other things you can think of, but these are kind of the main thought, right, that's going to improve your knowledge, not necessarily your skill. Let me put this into context. Imagine you play golf, basketball, whatever, right, some sport. Do you think your skill, being your handicap, we're talking about golf, do you think your skill, being your handicap at golf, would improve if you only watch YouTube videos, read books, and visualize success? Did you just have a little light bulb moment there, okay? Do you think your skill, your handicap at golf, would improve if you only watch YouTube videos, read books, and visualize success? Because that's what a lot of people do with trading. I'm gonna watch this YouTube video; I'm going to read these books; I'm going to read more books, okay. It's kind of like self-help porn in a way, right? You just get more and more and more; you think you need more and more and more knowledge; you need more knowledge, more knowledge, more knowledge. No, you need more skill; you need more skill, okay. A lot of you will have, especially by the end of this video, hopefully you have a really good baseline knowledge, and this probably isn't the only trading video you've ever watched, right? You probably have really good knowledge already, but it's now the skill acquisition; it's the skill side that you need to work on. So you have knowledge, and then you have skill, and I see this all the time, people go like self-help pornography, like they just love it; they just think the answer to this, the answer to me getting better at something is more information, more knowledge, more information, more knowledge. No, it's skill. You could read every book you could possibly read on golf or swimming; you won't get better at golf or swimming; your knowledge will improve, but you won't actually get better at it. So down here, I love this, my uncle, you can't learn to swim reading a book. I have a two-year-old that I'm trying to teach to swim, okay. I could show Ella a book of swimming, his front crawl, his doggy paddle, his breaststroke; she ain't gonna get better at swimming. How's she gonna get better at swimming? She gets in the pool, reps and sets, and she gets feedback. I help, I instruct, try this, try that, try that, have you tried this? Obviously, it's a little bit different when you're talking to a two-year-old, but hopefully you can understand the point. So how can you actually get skill acquisition at trading? How can you improve your skill set once you have the baseline knowledge? You need the baseline knowledge; I'm not saying knowledge is not important; knowledge is very, very, very important, but you need the knowledge stacked with the skill set. Knowledge and skill set is what you're looking for. So most of you are really focused over here; you're focused on the knowledge; I need more YouTube videos; I need more books; I need more seminars; I need more courses, okay, to an extent, and but now you need the skill acquisition. So how do we improve your skill set at trade? Let's have a look. So studying historical setups and annotating charts, thousands and thousands and thousands and thousands of them. Train your pattern recognition; it's the same pattern Livermore told you; it's the same bands. Why am I just standing in the same pan? Dan Zang is standing in the same patterns; Minerveini is telling you the same patterns; I'm telling you the same patterns; everyone, William O'Neill, standing insane, bad Darvis is standing in the same patterns down one since then; everyone is telling you it's the same patterns, but you have to read that why in 100 different books that everyone's telling you it's the same patterns. Go study the patterns; really ingrain it; internalize it; build your own chart model database with thousands of specific setups. What is your specific setup? And you may find your own new setup; you may be well, crikey, actually what I've realized is when a stock has its earnings and then after the earnings invariably it will pull back down 20 to 30, and actually it can, the first close below the 21 EMA and then recovery when it's this type of candlestick leads to this move; you may create your own setup or something like that. Or maybe you're kind of like Charles Harris. So Charles Harris will do pullback buys what that he calls an upside reversal. So a stock that's in the strong uptrend that meets ideally the canceling criteria, then he's looking for what I will call a gap-down reversal bar or shake-out demand out around the key moving averages such as 21 EMA to 50 SMA. So it's a different type of setup, but how did he come up with that setup? He studied the market; he studied how stocks act. So all of these traders that you're reading books about, you're watching on YouTube videos and so on and so forth, will you go into their selling horns, you're buying their courses; they all studied the market; they studied stocks deliberately and came up with their setup. It's now time for you to study it and come up with your own setups. I know I'm ranting at you, but sometimes that's the best way to coach it. Then what I think you need to do is bar-by-bar sessions. So you've hopefully seen some of those on the channel, bar by bar. Go bar by bar; now you're not going to have the kind of emotions associated with real trading. I think doing both is important, but if you want to get a lot of reps and sets and a lot of feedback, so remember deliberate practice is trying to create feedback loops. So you're doing the activity, so being trading, this is applicable for bar-by-bar sessions where you're going through bar by bar; you can't see the next bar, and you're trying to identify setups in real time. You're thinking about where's your entry price; how are you initially looking to control the risk; how are you looking to mitigate the risk; how are you then optimizing profits? Logging your results, so by the logging your results, you'll then analyze your trade, so you're getting feedback. The more instant your feedback, the better. So if you think about when you're at the golf course at a driving range, okay, if you're having a one-to-one lesson with a pro or you've got someone watching you or someone's filming you or even, even just filming yourself in your swing, okay, what are you doing? Let's just say you have, you have your iPhone there or your iPad or whatever you've taken it along; you put it behind you in the bay; there's probably making no sense if you're not a golfer, but you're filming yourself, take your golf swing. Now, why on Earth would you film yourself take your golf tournament? Why would you do that? You're trying to create feedback for yourself because you go, hmm, at the minute I'm hitting a slice; I'm hitting a slice, and I don't know why I'm hitting a slice; I know, let me film, and then I'll watch my swing back, and I'll try and identify why I'm hitting the slice. So what you're then doing is you're creating feedback for yourself. Make sense? So you've done the activity; you've now created feedback for yourself; you are analyzing the feedback; and then you are putting in rules and ideas to try for the next activity, being the next golf shot. So activity, feedback, implementation of new ideas and rules to improve desired performance, then you redo the activity, feedback loops, feedback loops like this, okay, feedback.

Loops—that is what you're trying to create with your own trading, so you can do far more trades doing bar-by-bar sessions. Okay? In the space of, if you did an hour bar-by-bar session, you can probably take—I know—50 trades, something like that. How many—how long would it take you to do 50 trades in real time and then get the feedback on those trades as well? So again, we're trying to speed up your skill set. Okay? How quickly you can acquire skills, as Arnold said, reps and sets, reps and sets, reps and sets.

So I think the bar-by-bar stuff, you won't get kind of the emotion of, "Oh, I got money on this," but in terms of actually creating skill sets around trading—thinking about entry setups, controlling risks, mitigation of risk, and then the optimizing profits—is going to be important for that part. It's not going to help you so much with the emotional control. So deliberate practice is very deliberate in different areas of your trading where you're trying to improve your skill set. Okay? So it's not necessarily all-encompassing. So with you, with golf, for instance, okay, it's very hard to work on your putting whilst you're working on improving your seven iron, or improving your throughwood, or improving your driver. You would have deliberate practice sessions for each specific area. So you can have deliberate practice sessions for how you are deliberately trying to improve upon specific areas of your trading. So say if you're a basketball player—I'm a huge—you can probably set over my, um, shoulder here somebody and see Kobe Bryant, rest in peace. I, um, I absolutely love Kobe and Michael—Michael Jordan's up there as well. Interesting, Michael Jordan had ADHD, um, he didn't know when he was playing with the Chicago Bulls, as far as I'm aware, which is quite interesting. Um, but either way, when they're practicing their game, they're practicing specific parts of their game. Okay? I'm practicing the layup, so I came practicing my jumper and practicing my my free throws. Okay? Whatever, whatever it may be. I'm practicing my dribbling with my weekend. So your deliberate practice sessions, you've really got to think about yourself as a kind of an athlete. But this is then hopefully a huge mindset—mindset shift for you—that you probably have a lot of knowledge, you probably have a lot of trading knowledge. This is probably not the first YouTube video you've ever watched. You've probably watched hundreds of YouTube videos, read tens and tens of books, if not hundreds of books on this, gone to seminars, bought courses. But have you really improved? And if you haven't improved, why haven't you improved? It's because your skill set has not improved. We've really got to work on your skill set, improving your skill set. And then a lot of it also Dan's anger quote is, "Right trader, right mentality, right market environment." As we started off earlier on in this presentation, the right market environment is very important for whatever strategy you're trading, okay? Whether that be value investing or whether it be, as we've covered in this video, which is a momentum breakout strategy, the environment you find yourself in is very, very, very important. But that part of it as well is skill—knowing, "Am I in a market environment that is conducive for my style of trading?" And if it's not, don't trade very much or trade very small. And if you're a bit of an addict like me, make sure you're just trading really small. Makes sense? Actually trading and analyzing your results—really important. So like the bar-by-bar sessions, but you can get more reps and sets in quicker with the bar-by-bar sessions. Actually analyzing, actually trading with real money, personally, I think is important. I'm not telling you to trade; it's not financial advice. I'm just saying I think it's quite important, especially with emotional control—getting your emotions involved because suddenly something's on the line, it means something more to you. Okay? Then you're gonna act a little bit differently. Maybe you don't cut the losses because you can't accept being wrong. That's something that you're going to have to look at and really work on.

Receiving feedback on your trades—so that can be from other traders. You probably don't want to ask someone that's never traded for feedback on your trade, so it's probably not going to make—gonna make sense. Um, but it could be kind of your trading buddy; it could be someone who is much more experienced than you. You say, "Hey, look, these, um, these are my last 10 trades. Here's my entries, here's my exit. What do you think? What am I doing right? What am I not doing right?" But also do that with your own trades. You can mark them up on your laptop; you can print them off if you want, mark them up where you buy, what is going on. Are you potentially buying late? Are you not controlling the risk? Have you got really—are you really bad at taking losses? Are you really, really good at taking your losses, but actually you snatch up really small gains? When you print the chart off and you mark it and you kind of see it in the third person, you're going to see your mistakes. "Oh, I'm doing this, I'm doing that. Oh, that wasn't actually a very good setup. Why did I buy it there? I missed that. Why did I snatch that profit when the stock—why did I sell out at 10 and then stock went up 100? Why did I do that? I need to put rules in place around that." It's really, really, really important.

So a few quotes I'm—qualamagi on deliberate practice. Okay? There's two slides on deliberate practice. Quiz. It's been quite a long section. I didn't think it was going to be this longer section, but deliberate practice, honestly, so, so important. Especially if you're a parent or kids, read the book by—in the Xerox, and it's really key. Yeah, volatility contraction pattern, VCP, like minavini. All the successful traders use the same methods. Minovini also like Dan's anger and how I trade; it's the same principle because they work. You find a strong stock that's made a big move, then it goes sideways for a while and it gets really, really tight, and then it has the next leg move—heart. It's the same setup. It's a timeless setup; it's not going to go away. You can go and look at stock charts from the 20s, the 30s, the 40s, the 50s, the 60s, the 70s, the 80s, the 2000s. It's the same exact patterns over and over and over again. It's not rocket science. You guys can pause the video and read the rest of that one. It's not a discipline problem; it's a confidence problem. You haven't put in enough effort to build your confidence. If you study enough examples of a certain breakout or a certain setup, you will build confidence. How many of you have spent 500 hours studying one specific setup, like thousands of historical examples? Be honest. You have no confidence holding for a big move because—but you get shaken out on one downtake. These things happen all the time. You have no confidence because you haven't built it. Let me show you one more slide. You've got to study hard; you've got to—you've got to outstudy most people and combine it with experience. If you make no—nope—trades and just focus on theory—remember that knowledge side—you're not going to be successful. But most people have the other problem: they do no studying and just do random things in terms of trade. There's no real willingness to learn to properly trade. A lot of people think they want to become profitable traders, but most of them aren't willing to put in the effort and the pain that is required.

This is the chart setup. You probably would have known this by now. These are the only indicators you should be using: the 10-day, the 20-day, the 50-day moving averages. Anytime you have a clean bounce off one of these moving averages, that's a nice thing. So hopefully you know what the charts look like—look like by now. But here is a visual example. This is what color rank is saying—the only thing you need on it. I like putting some things on like the RS line, some of the longer-term moving averages, but my charts overall, I'd say, are pretty, pretty clean.

Now we're at the end, so I want to give you six key takeaways. And I would ask, if you made it to the end of this video, please do subscribe to the channel to be notified when I do more videos like this, and also press the like button. It really helps me out to grow the channel. It takes a lot of time and effort to build these videos for you guys, so if you do appreciate them, I would appreciate it if you press the like button for me, especially if you made it all the way to the end, which is now over two hours. So well done you.

Six key takeaways: what can you actually do, I think, to start improving? Let's go: study thousands of historical setups from the past 100 years and create your own setup model books. That's an absolute must. It is an absolute must if you want to take this seriously. That's a must. Be patient with yourself and allow time to develop the required skill set. Remember that golf analogy with the handicap; it's going to take time to build your skill set of golf. You can't just go into a driving range, start bombing a driver 300 yards; it's not going to happen like that. You've got to build up to it; you've got to require—you've got to build the skill set. No one strategy will perform optimally in every market environment. Sit out; power and patience is very, very important to develop the best strategies. Create setups; focus on asymmetric risk-to-reward opportunities and keep you in trend. Even if you're a day trader on the five-minute chart, you need trends. You need trends; you need to sit in the trends; you need the big winners to pay for the small losses. Learn to trade the right stocks for your strategy. That could be, if you're a value investor or if you're a momentum trader, you need to be trading the right stocks for your strategy. The best traders are the best losers, as I said at the start. The best traders are the best losers, by the quote by quality market care. Get really, really, really good at taking losses; the better loser you are, the better trader you are going to be. And on that note, I will wrap it up there. Thank you very much for watching this video, and I look forward to seeing you in the future.