Full transcript (14673 words)
These are the things that are just
imperfect with the market, but over time, you're going to start to see that you
can start to feel the pulse of the market. You know, it's like, I
understand I'm in the uptrend. I understand the concepts of
this 60 and here's another example. It's just not to say
markets in a nice uptrend. I can't write on this chart, but if I
would, I would put a trend line under here and kind of on top here and
then the kind of topped out up here. But what's happening is you see the bottom
stochastic and how it's embedded up there. You only get that look during this type
of market and aggressively strong market. If you could recognize that
you could make a lot of money. So now once again, with John
Krusko, the man is back on the podcast. Good to have you here, John. Today, we had a few videos together that
apart from we do well, I think you always like, like shared a lot of value,
show your stuff, share how you trade. I've been living in
the market for multiple years now and kind of
doing this every day too. So welcome back on the podcast. Good to have you here today. Oh, it's great to be back at the end. I'm so excited. I've been preparing this because I've
gotten so much good response from your podcast and I thank
everyone out there for the great comments I've been reading
the comments in the last video. So I would first say prerequisite to this
video is to watch the last video because a lot of the material that I
went over, it's very important. That's basic material. I want to bring it up a level this time. So we're going to add some things to that. I want to, I want to, I want to, what do
you call go back and kind of review the important things and cut it in because
what I noticed was from all those people that came and started
learning the methodology, I got a lot of questions
on certain things. So I'm answering all those questions. So this is the first time I'm
going to release some of this stuff. There's two great techniques
that I didn't cover the last video. So I want to do those in detail today. So that's what I'm here for today. I'm excited. Awesome. But I will leave the interviews
we did last time linked below the video so you guys can check it
out and go watch that interview. It's been a lot of massive stuff. It's been John releasing and kind of
talking about his strategy step by step and everything looks out on the
Stochastic Hathas Calptus. So really cool stuff. And today we can go, of course, like you
said, beyond you learn a new strategy and how he's doing things these days in the
market and look forward to, to hear that too. Well, anyway, just a little bit
about myself for those out there. I started trading in 1996. I started, my first trade was
92 and then I, I quit my job in 96. I was working at the post office. This was kind of, we
went over this in some old videos too, and it was
a great, great little ride. I quit $12,000 and I started
trading, trying to learn how to trade. This is back in the days when
the Internet was just coming on. I was using the Mozilla
Netscape browsers and we were dialing in to
get our trades going. You know, we had actually, our
commissions were 30 to $40 one side. That's like $80 round trip. And it was different back then. It was chat rooms, a lot of
scams, boiler rooms and everything. And, you know, you kind of
look, you didn't learn much. You just kind of rode the markets
and that's what most people did. And for probably the first
10 years of my existence as a trader, I didn't
know what I was doing. You know, it wasn't really until
actually 2006, which is, what is this? It won't be 19 years ago, maybe. All right. That I really started to understand the
markets and put all that past, you know, failures and just not, don't, not having
a plan, realizing what I was missing. And that was an organized
business plan for the markets and taking all
that information I had. And knowing certain things work,
but I'm still a gambler, gambler. And I started developing a style of
trading that, that fit my personality. Cause I was, I was a very reckless trader. I would chase the markets on a dime. I would overtrade. I had no discipline. And the more you're in the
markets, the more that market's going to probably get you,
you're not going to get the markets. It's going to get you. So, you know, I realized the
less I trade, the better I would do. And there's a lot of stories
between stock trading option. We're going to focus on futures right now. And I don't want to spend
too much time on the past. I want to show you
how to set up the system and take, and take this
one good trade here. So let's start off here. The first thing is the market discipline. One of the, we've, we talked before
Etienne and I asked you, I said, if I could show you a setup in the markets
that works 90% of the time, but it only possibly comes out maybe one or two times
a day, and it requires you to sit in front of the computer and wait for
that, would you be able to do that? And you said, no, it's not worth my time. My time is more valuable. And exactly right. That's, that's true. You have to have the balance
to be a successful trader. I could show you what works in this
market, but unless you're there in front of it, when it's happening, it does you
no good, and that's a problem with a lot of traders, and I, I wrote this down
and I said, let me write this down. I want to, what am I saying? I said, you know what? You can't trade around your life. And every time I coach
someone, it's, I always ask them, how much time do
you have to trade and stuff? Well, I get the kids off to, off the
bus at nine 30, I'm in front of the computer 11 to one, and then, you
know, I'm doing this and I'm doing that. And I said, oh, all right. So you're trying to make
money between 11 and one. Well, what if there's no setups there? What do you just want to find it? What's your business plan? What's your, what's your plan of action? What are you looking for? No one knows, you know, and
this is not the mental fortitude or the mental, you know, the capacity or the, the,
the characteristics of a winning trader. You know, the winning trader
is going to have a battle plan. He's going to know it's exactly what to do. It's going to be a piker in the market. Exactly know what he's going
to get in and what to get out. And I realized that was the change in
me when I started doing this in and out, you know, finding the most important
part of the market, the pivot areas in the market, taking those trades and taking
them off, taking them off at a key level, which I will describe that's,
that's new information too. So you can't trade your, you
can't trade around your life. You must design your life around trading. All right. And that's a hard thing. That's going to knock out
over 50% of traders right there. So now we're down to the last 50%. Most traders will over trade
for whatever emotional reasons. We're human. I over trade. Sometimes you go off
tilt, you're not perfect. And because of that,
you're going to have losses. But if you develop your
strategy and understand that and give yourself, you know,
every business has losses. Every business has profits. As long as your profits are ahead of your
losses, that's what counts to the business. So you can approach trading like that. And I do. All right. So we're going to get
into the methodology now. Um, you're going to be trading. We're going to be just, it's
just a breakdown of method. We're going to be trading
one to five minute timeframes. So basically our trade is going to
be, we're going to be in our trade between one minute and five
minutes, about five minutes in a trade. That's not bad for a scalper. Uh, it could be longer and
that's going to be based off one of the indicators
we're going to look at. It's that 60, 10 indicators really going
to help me decide if I'm going to stay in that trade longer, or I'm going to
get out on average, you're going to get about five to seven setups a
day on this type of divergence stuff. You're going to see. Wait, but this is the important thing. You have to wait until you have a
recognizable channel and a quad rotation. And that's what we're going to learn today. We're going to go over the quad
rotation and the recognizable channel. And then we're going
to add why we're going to get out, which, uh,
and there's other things. So that's the, that's the main
thing we're going to learn. How to recognize the channel. Do you have a quad rotation? What does that mean? And then is there a divergence there? All three of those things
that happen right there are ultimate super single,
and we want to take that. But if that comes out at 11 o'clock
and it comes out at two 30 and there's one at four o'clock and you're not in
front of the computer, it doesn't do you any good, this will work, this will work,
but you have to be committed to take this. This, and if it's not, it
doesn't work for you. That's fine. It really that's fine. That's, that's a decision
everyone has to make, but it's not like you get up
every day and hit a home run. You know, it takes
practice to be professional. It takes practice and dedication
and discipline and Patience to be a successful trader. It's just, it's just, just too much
money involved for anything other than the best to make money. Before we go into the
strategy itself, I'm curious to know why you like the
five minute chart so much. Why not like a one minute
or why not like a one hour? I do trade the one minute. Let's just show you what I do. This is the one minute timeframe. Now the one minute timeframe, of course,
each candle is formed after a minute. And what you'll notice on this
is just, this is just Friday or, you know, or today or yesterday, you know, this
is my markings and this is how I trade. So what we do is we're
identifying the, basically a trend and the trend's usually going
to have a range bound trade. And we know that by what's
called the one, two, three pattern. Now just take it that, that if you know
a little, little math, you know, you might have, let's say you have, you have a
point here and you have a point here. Right. And that point represents
just two points, but you have to have two points
to make straight lines. So basic math is that you need
two points to make a straight line. That in fact is actually
one side of a channel. And now if you have another
point or another, what I call pivot, manipulate my thing, it doesn't matter
where it's at, but it's usually actually going to be underneath the two on one side
that is called a one, two, three channel. What you do is you take
your channel, you, you clone it and you drop it
down to the third pivot. Now this is before the channel even
formed, but you know where the channel is going to form now because
you've already been able to identify it. Why three pivots. So when I identify a channel
and there's reason, and you might say, well, this
channel is all over the place. How do I know where to put my candles? Where do I put my trend line? Now there's rules for all of this. And it's just something you have to
learn, you know, in the market, when you have volume coming in and usually
get an overshoot, it's always about the balance and the retest and where
it settles in, like the opens, close or any type of news that comes
out will usually move the market aggressively through an area. And that's sometimes hard for a
trade who's learning a style and all of a sudden that style gets messed up,
but you have to kind of realize, all right, there's a reason why that messed up. It resettles in. The great thing about trend lines
is that algorithms pick up on this. So we have three lines and now we have an
extent, honestly, we have a nice channel. And this channel, even though the
price might be going up, oh, actually, the price might be going up and
coming down inside that channel. All right. It came down and then it
went back up and it's gone. That's probably going to
be the range of this channel. And we'll start to see that. So each time the price gets up
there, we're going to be measuring it. This is on the one minute timeframe. We're going to be measuring it with
what's called the nine, three stochastic. This is this down here is the nine, three. Now the nine, three stochastic
is a George Lane oscillator. He invented in 1950s. And I've went over this and
this is an important concept. So I want to go into detail on this. The stochastics are, I
have four bands here. Typically they have two lines. You could see if I
overlay my mouse on that, you could see the
second line underneath it. But, and one's called the percentage K
line and one's called the percentage D line, percentage K line
is the amount of periods that goes back and
counts in the formula. So if it's nine, it would take nine
candles of, of, of data basically. And each, each of those nine
candles would be added into the formula. And then, the, the three, or actually
there's a percentage K and a percentage D, the D line is actually a little
moving average that smooths it over. It smooths it out by three, a factor
of three, and then it prints it or plots it using the same D line, it plots it on
a graph between zero and a hundred. And that, that graph between zero and a
hundred represents how many, you know, that one major candle that encompasses
the last nine, nine highs and lows. And if we're trading at
the high of the last nine periods, we're going to
be up around a hundred. If we're trading at the low, then we're
going to be the, so it's the momentum as it continues to climb, it's the
momentum that's being measured with stochastics and George Lane didn't make
it for an overbought or oversold, but he meant it that's, and I want
to jump over to a slide here, George Lane meant it to
represent the energy of a rocket. So the rocket's going up and what happens
is the energy drops off on the rocket. It just, you could easily, if I was
measuring a stock going up, I would measure the height of the,
how far the stock went up and how, and the energy behind
what was pushing that stock. And you can't really
measure that by looking at your eyeballs, but you can
measure it with the oscillators. The oscillators are actually measuring
momentum based off the previous candles. And those candles are slowly turning over,
even though the price is going higher. So the engine is cut off, but as anything
has momentum, it's going to go a little bit higher and turn it over
and start coming back down. That's what stochastic divergences tell us. They tell us exactly
when we start to top out. And I used a one minute
timeframe on this, right? What we're talking about to identify that. But remember, I have the
nine, three stochastic, nine, three and 14, three are your most
common stochastic parameters. You'll see these
defaulted on a lot of charts. So if you grabbed your, whatever chart
you're using and you go to stochastics, you're going to see a bunch of them. You might see full stochastics. You might see fast stochastics. You might see fast, full, and then
just one more slow stochastics. Each one was came after the
fast George Lane developed fast. And then he said, all right, we're going
to, we're going to add another moving average to it and now we're going to
make it slower and then we're going to have full, which is going to
be three parameters that we can put another moving
average on the K line. So they kind of change it throughout
this, but if you could use it and you don't have the choice, use the fast
stochastic oscillator, if you have a choice. If you don't, and you have three
parameters that K smoothing should always be a one, all right, because
it's going to be used as a one. You're going to divide by one. It's not going to do anything. So make sure if you have
three parameters, it's going to be nine, three, one, 14,
three, one, 44, one 60, 10, one. That's what a full, I show
that as an example on the bottom, because you'll have
three parameters versus two. So if you have three, always put a one
in the last one, just a little, not just something that, you know, again,
trying to hit questions I always get. Um, so the, the big thing was, all
right, I understand the concept of the divergences, but now how do I
determine when a chance, I said, I looked at, I remember when I was
developing this, I developed this 2007, 2008, this, um, I was looking for
reversals and I said, well, I got my reversal on the one, one minute timeframe,
but if I could overlay it to the five minute timeframe and have a reversal
on the one minute and five minute, and maybe even the three minute,
that would be even better. And I started doing
all the testing and stuff, and I actually started
doing visual tests on it. And I had a, I had a little, um, a
different charting service that was able, I was able to tune the 40, all
the bands until they all came into sync. And I realized that the 60 candles
really calculated out to be a five minute timeframe, if you placed it on,
on the five minute and used a nine, three against it, and that's very, I can't, I
can't even explain so deep, you know, this is kind of so deep that I have a
hard time sometimes explaining it, but the, if, if we're to look at the 50, if I
would look at the five minute timeframe now, and, and I, and I put it on this
chart, I can't really, cause it messes it up, this nine, three would be
at this level, coming down to 20. So I would know that the
five minute was oversold. So I know the five minutes
almost oversold here. It's oversold here, oversold here. This is what I call, you know, or
very close to a quad divergence. So this is all our
timeframes are lining up. Now that alone is the, is a great trade. You know, when all four stochastics now,
when I zoom out of a chart like this, I call it the bird's eye view, cause you
could zoom out and you can actually take a look when you're, and I put a
yellow line down here on my 20 line. Now, remember the most important stochastic
oscillators here is going to be the top one is the nine, three
and the bottom one, which is the 60, 10, those
two work well together. All right. The other two is a 14,
three George Lane kept that. I kept it in honor of him. The 44 is something I put kind of bridged
a gap between the 14, three and the 60, 10. It wasn't a three minute
timeframe type of thing, but what I found out is
something really big on this. When I got a divergence on the 40, when
I got a 40, 44 divergence, when the market was coming a little lower and this,
this did it gave us our divergent signal. It would never fail. It was, it was a magic thing. Like back here, this is a, actually
I'm showing you one right here. So I'm, you know, I'm looking at
the market coming down in a trend. All right. And what we're not watching is, and
this is, I'm getting into the technique a little, I'm watching all four stochastics
and when all four stochastics get oversold, now I'm in what's
called my trading environment. That means our five
minutes oversold, our three minutes oversold, our
one minutes oversold. And I, I like, I want the five minute to
be oversold because you know, the five minute, if a stock rotation on the
stochastics usually takes five to seven candles, that means if I trade the one
minute timeframe, my trade is usually maybe five minutes long
as a scalp I'm trading. And in this environment,
if you do the, if I, if you trade futures in a minute,
you can get 10 points now. I mean, the volatility, the volatility in
the market was really extreme, especially today, I was just watching some of these
candles or over 10 point candles in one minute, which is extreme because this
signal in itself works so well, that, you know, you have, you have to
understand how important it is and you can make a lot of
money on it if you wait for it. Most people can't wait for this. And what we're looking at is a quad
rotation when all four stochastics are oversold and that's just not the trade,
you know, actually under the 20 line. When I say oversold,
it's all under the 20 line. So that's why I kind of keep a little
20, I want to see a space under there. Now that's just not the trade,
but that's beginning of the trade. So when we have a quad rotation,
we have half of a super signal. That means all of our
timeframes are lined up. Now we have to figure, identify the bottom. The bottom comes in just like a divergence. George Lane said momentum bounces. All right. We kind of bounced here and then
we sold off quickly and we retested the lows, but the stochastics
turned back up higher. So the momentum shifted, even though
the price came back down to the lows. So that was our signal. That's the signal, that's
where you buy right there. You buy on that turn back up. You put your stop underneath the
lows, right underneath those kind of lows. What kind of win rate do you
expect on these kinds of setups? I don't believe in backtesting. So because the technique requires
you to understand the channel. Understanding the channel, the
pulse of the market is very important. To be a professional trader, to be
someone who's making money each and every day, you have to kind of be
in touch with them or you can't just randomly come in there and understand
what's going on because you want to know where the bigger trend
is and what kind of pressure is on the market, pushing
it up or pushing it down. That way you start to measure
it out with your stochastics. There's a lot underlying things, but these
setups alone, I would say if you got 10 of them, eight of them
would be in the money. Now that doesn't mean that you're
going to make money with them. Edhyan, this is the
hardest part of trading. I could show you the setup, but most
people will say, all right, and I want to, again, in the comments, there's one
thing I was telling Edhyan before, the one thing I didn't do in your last
video is answer the comments. So in this video, I want
to answer the comments. So if you have any questions or
clarification, this is important stuff. Just ask that question and
I'll try to answer it for you. The setup is a visual confirmation. It's a scientific, like
there's no missing it. All right. So you have to take it. And if you took it each time
and it was no news around it, there was nothing that
would give you a profit. Most people get in there and they say,
or a lot of people I talk to, they say, why, the problem is I
get in, but I don't get my target or my, it turns
over before I get my target. All right. It turns over before I get my
target or, I get in too late or, you know, some excuse like that. And that's, that's because in
trading, you have to be perfect. All right. You have to be perfect. The market, you will never buy
the bottom unless you buy the fear. Meaning we're, we're trained
to feel good, to get into a stock. The stock probably has to be moving
in our direction to feel good about it. You know? And if it's going down, you're scared
and you're like, I'm not buying that, not, but you're never going to buy
the bottom if you're away from it. So when you see a setup, you
have to jump on it at the bottom. By the time you're, most people
are in, you should be getting out. And how to time that is
very important because you want to take the
decision away from you. You want to take the
decision away from you. The rotation of the nine
three, once it gets above 80, this line right here,
you take your trade off. I don't care if it continues to go up here. I don't care. Most likely it's going to
come back down nine out of, I would say seven out of 10
times, it's going to retrace back. All right. Seven out of 10, you're holding
on for those three out of 10 times. It continues because you don't want,
you have FOMO, your fear of missing out. And you, you know, and traders have
to get over this because if you want to be successful and live the life that you're
living, like traveling around and stuff, you have to, you have to be
serious enough to take your profits when you have, you're going
to have profits in all these trades. The thing that's going to stop you is
you're not going to take those profits because you're going
to, you're going to be not improperly, it's not going
to be enough for you. If I get a rotation, I get an entry
and I get a rotation up to 80. And just for argument's sake, I have
three contracts on and I got a point and I have like, what is that? 15 $15. And I'm like, all right, I got over. So I'll take that off. I'll take it off because that's the rule. But you know what, it'll
probably come back and I'll be down $20 and that's
when I'll end up taking it off. And that's how things go wrong. You have to be aggressively
disciplined to take the trade on, which is
your divergence trade. Now there's a lot more that,
you know, that goes with this. You know, there's this,
you have to understand that the channel
line is very important. And I always want to take sure, make
sure the trade is inside the channel. That way, because my job, my product
that I'm teaching, or at least I'm trading, that's in my, I kind of
put it into a business way because mentally I
could deal with that better. You know, I understand there's a
rule book and if I apply these rules, it's going to take that edge off of me
wanting to gamble or over trade. I know something works. If you start, it starts to get addicting. That's the exciting part of this. Try this and try to not stray from this,
you know, because what happens is once you stray from it a little, you're
going to stray from it a lot more. And it's just going to, it's
going to mess up the statistics. When we go back to your thing,
what are the statistics of this? It really depends. If you are perfect in your entries, it
would be probably close to 85, 90%. Let's do an experiment right here. I believe in this method, this
signal that I developed so much. I built a bot around it. I said, all right. Because what was happening
is I was missing these overnight. I wasn't, I was dealing with the daily
grind of the US markets and the news and the volatility, and that's still very
dangerous, you know, because if you're not a perfect entry, you
could be up in that volatility four or five points,
you're getting scared out. So I found out that these setups
work just as good overnight. Even better because
you don't have that news. So I'm just going to put in, we're
going to put in Bitcoin right now because Bitcoin's active,
this works on everything. It works on Forex. It works on gold. It works. I had a lady the other day, she was in
South Africa, working on a gold chart. I was working with her. I said, you know what? I don't trade gold. But after I sold the, you know,
I was showing her the setups. I said, I want to start trading gold. This thing is unbelievable in gold. Anyway, you're probably going
to see my indicator start up on this. Now this is, this measures out divergences. By the formula, remember I said the
quad rotation, what do you see here? And again, I have these templates for you. So if people want these templates on
TradingView, you know, you'll have some links. Yeah. I'll put the link below in the
description of the podcast and the video as well, so we
can just grab it there and yeah, hopefully apply
this to your own charts. This is a quad rotation and a divergence. So again, the signal is basically all four
stochastics getting under that 20 line, and then a divergence on
the one minute timeframe. That way you're combining
the five minute bigger entry with the one minute timing
tool of the divergence. Very, very powerful. So powerful. Now I don't know what this, I just, I
haven't looked at Bitcoin and see 83,000. So, but I'm looking at
the signals and do you see something about these
signals that are on the bottom? Now I didn't check. I think, I don't know if you could backtest
this just to see what, what this is. I don't use this too much. Let me see. It took 156 trades, 98% profitable trades. Now I don't go by this stuff. I don't believe in this. I don't know what that, what,
what that is even counting. You know, this is the first time we're
looking at this, but I was just going to say, well, what, what, what this
is telling me, and I don't have the parameter set of Bitcoin, this is
probably, this is running the ES. This is running. I want to remember this. Other remark. Yeah, no, let me just bookmark that. This is running an ES, this is the
signal, but I usually run it on the ES. So if I put this on the ES, you
probably see a little bit different. Anyway, the fact is it's going to give you
the great setups, but it requires a great trader to take advantage of
that and know when to get out. The easy part is identifying these setups. This is a, what we call
a bottom and a return to the bottom or double
bottom divergence. It's a higher rotation on the nine three
and all four stochastics here are oversold. That is our super signal. If we come over here, the first thing
I want to identify is a one, two, three channel, once we have the first thing out
of the gate today, we've talked about the channel and how to identify three
pivot channel when at our job here. And if I would ask you, and I know if you
were looking at this chart and you would say, I would say, where
do you want to trade? You have three trades to take. What trades are they going to be? Hopefully you say, I want to go long
here, you know, right around here. I want to go short here. And I want to go long here. You know, that would be
a good, acceptable answer. You know, I have three trades to take. I want to go long here,
short here, long here. That's what I want too. And that's what I realized. I said, that's the only
time I really want to trade. I don't want to try to get the best meat. I want to get the whole meat, all the meat
from the bone, but I know if I'm wrong, I'm going to have a lot of
meat on the bone a lot. So what was these areas all had in common? And that's when I started
putting all our stochastic together. And what I realized is
boom, what do we have here? Well, we have a quad
rotation to the sell side. Now that means all four
stochastics are oversold right here. And when we have that, then we have a much
better chance of a pullback, but that's not even the guaranteed pullback, the
guaranteed pullback when it comes, when it diverges it, here we come back
down, we get the quad rotation. Now that, well, now that we have all four,
what I'm looking for is that higher low price made a low there. And what now that I'm oversold, I'm just
watching this low and I'm watching this. So I teach for kind of traders who are
trading new, new to the style trading. The pay to respect that 20 line,
you know, I like to see our first low underneath the 20 and then it bounces
above it and then it comes back and holds above the 20, even though the price
comes back and it doesn't matter if, you know, there's some things that
you're going to learn that are next level. Like you don't have to worry too much
about details as much as you want to worry about the bodies and the lowest body. So when we do divergences,
we really count the body lows. All right. And if it's a double bottom
body, it doesn't matter. Even if this was a big candlestick
down there, it doesn't even matter. It's about the bodies and
that the bodies are equal or the right body is a little
bit lower in the higher route. That is a pure divergence
and that is your thing. And then you put your trade,
your stop underneath that low. All right. And then you're going to see that
once you identify a pivot, that the trend, what pivots are, pivots
are changes of direction. So my job is to identify pivots in
the market and to identify pivots in the market, you're looking for
that quad rotation divergence. When you have that quad rotation
divergence, you're going to take that trade and you're gonna
put a stop underneath it. The hardest part of people
saying, well, I want to capture all this. Why didn't you leave it on? But don't be a, don't, you know, there's
fantasies out there that people think they could take a trade from
here to here and get out and get in here and get out
there, you know, that's all BS. You know, you'll be lucky enough to
get out with your pants out of the markets. Um, you have to have that,
you have to be disciplined. You have to be a professional. This is money, right? This is, this is something
that you're serious about. You do it the right way
and you have that discipline. I can't stress that enough. So now you start to see that
the market shows these patterns. And when you have a pivot,
when you have a pivot, that's usually at the beginning of a new channel. So the low part of a
pivot always becomes our first pivot of a
one, two, three channel. So that would be one. And then when the market, we're
going to look at micro channels and I don't want to even go into that,
but you're looking for a, it's hard to, there's a concept that I wanted to
introduce for the first time on the show. And before I do that, I'm going
to have to go back over here. Let me, um, this is world
premiere stuff right now. I was realizing it wasn't
maybe a year or two ago, something about
the divergence signal. Channel width identification. So the most important, important
thing about this type of trading is understanding that the market moves
in channels and directional channels. And our job is to
identify when a channel switches from one
direction to another direction. And when we have that directional move,
like up here that we had this nice little move up, we had a stage one,
we had a high, and then we had a higher high and we had a high
and a lower high on the divergence. That was our divergence right there. High, higher, high, low, high, lower high. You see him going opposite, right? It was like something
there in front of me for years. And I just never really picked up on it as
much, uh, that remember when we have a divergence, there is a move up and then
a pullback and then a follow through move higher, that pullback, that first pullback,
the low point between the two highs, the higher high and the
high and the higher high, the low point between
that is our first pullback. If you take the low of that
pullback and take the high of the divergence, that will give you
the width of the new channel. So in the beginning, we only had one, we
had to wait for a one, two, three channel. Now I only have to wait for
two points and I already know how the, how the width of
the channel is going to be. And every, all my back tests, you
know, you're going to see it right now. Now, again, you'll have that slide,
just kind of identify the channel. Once you have a divergence and you have
a low and a lower low, that bounce goes up that low, that becomes
the new channel line. And it's sometimes hard to see, um, if
you're, you know, maybe new at trading. Um, but just, just kind of remember these
rules, you know, write them down, soak it in, send me, you know, I'm going to say,
send me a chart, I'll confirm it for you. But, um, so I want to go back
to the chart there, because I think we got a lot, we're
getting a lot done here tonight. So when we have a,
a, a low and a lower low, that little bounce is
the high of that bounce. This lower low is the low
and that's, that's the width. So I would put a, that automatically
I would put a line up here. Even before this is even formed. All right. Even if we went all the way over
here and I started, this is the market. We just got a little divergence here. And at this point, let me see. I don't know if you can
see it on the edge there. At this point, I know that this is a
divergence and we have that higher. So we go long and it starts moving up. I have a low and I
have a high, I know that. And there's an angle to this. It's going to be, there's
going to be an angle to it, but you're going to
have this typically an angle. So I did all my testing
and, just to kind of feel what angles the
market usually gives us. And on these divergence, starting
a new channel, it's usually above 20, 25 to 35 degree angles on these channels. That means our underlying trend line
is going to be at a certain degree angle. And you could see
sometimes it's, you know, I think it's between 20
and 30, I pay attention to. Not that, you know,
that's just my mind, like just kind of getting
all nerdy and stuff. I wouldn't even pay attention to
that, but just understand that width. If you extend it out there, you
start to look for targets up here. Automatically. You don't have to worry about it. You know, in this case,
it did get up to that level, but you probably could have
adjusted it to candle here. This looks like a bad candle
and it came right back down. I don't know what that was. Might've been something. But again, the market will sometimes
have news out and you'll see these candles that spike higher
and then settle back in, and this is something
that you build over time. You're not going to learn to, you
know, be a perfect trader overnight because you know, you're going to
forget some of these things and some of these things you're
going to learn as you continue to learn, you know,
basically continue to trade. So now you see, basically every time
we have it up and again, easy enough to backtest or show things after
they've already happened, but you'll notice when I sit down, sit down at
my desk in the morning and I'm trading, I'll start to identify these channels. This is what I do every day from eight
o'clock to four o'clock on day trading radio, I'll identify these channels
and then I'll say, all right, we have our channel and I was mentioning this to
you at the end, you know, not everyone could be here, you know,
not everyone could say, all right, John says
there's a divergence, 8.30. The kids aren't getting on the bus. I want to miss this whole thing. You know, not that it was, it wasn't quad. But it was very close and it probably was
a divergence here because of the slight. Remember I teach, I teach beginners
to really look for that bigger balance, but as long as there's a low and
a higher low and a low and a lower low, that's a, that's
a mathematical divergence. All right. But again, happened at 8.30. Don't want to trade at that point. That's a gamble because that
was economic news coming out. So we can't count that as a viable trade. Here, the market's coming back down. Good divergence here. We come down, we bounce
and then we come back down and you can see,
we kind of held that low. And right when we turned back
up aggressively and it was, it wasn't a quad, but it was a divergence. Now quad divergence is our best
setups, but divergences must be taken. All divergences must be taken. And we always talk about like,
how do you know when to get out? Well, back here, just for
argument's sake, you took that. You took that. When this nine three rotates up to the
80 line, I don't care where that price is. You know, mate, it's right. In this case, it's right up here. That's, that's what I want to happen. I, you know, I'm always
taking it off because this, this move right here is
almost 80% successful. You're going to get that move. If you're inside the channel,
when you identify the divergence, your exit is
going to be outside the channel. And if it gets that, you know,
half of the things that you're going to be looking at is
taking it off into that strength. Remember, you're never
going to get the best, the highest price unless you're
selling as it's going up. You don't, most traders are going to say,
and this is, I got on my notes right here. What's one of the biggest
things that traders have? Well, they get in and then they
say, well, I put my target here and I put my stop here. All right. And it's starting to go up and say, they
got in here and it starts to work out for them and it's going up, it's going up,
but your stochastics also rotated up to 80. All right. If that rotates up to 80,
that's a warning signal to me that we're probably
going to rotate back down. But most traders say, well, I
need to get my $200 on this trade. That's not how to trade. You know, you have to take the signal. It's very easy to take the signal. It's all there for you. Everything is there. The whole system is laid out. It's you, the individual trader, that's
going to F this up in a kind way of saying it, because
you're going to over trade, you're going to take trades
that are not divergences. You're not going to take
your trade when it gets to 93 rotation, because
you're afraid of missing out. All right. These are all things that traders
have to go through all the time. It's just, but the one
thing that's going to be constant in the
market are these channels. And the reason channels is because
algorithms are underlying this market and two points make a straight line
and that straight line goes to infinity. And when a price comes down to
that, all those algorithms and those supercomputers are all calculated and
said, well, this is an interesting level. You know, and we know that. And it was, as are we're going to react,
whatever it's staying within our thing. I'm only looking for one thing. I'm looking for a divergence here. A doubt I'm looking for it. And sometimes not
every channel is pretty, you know, sometimes they're
not the prettiest channels. Um, but they have a
directional means to them. And if you start to see a low,
especially on a, on the buy side, you're more concerned
with the lower channel line. Your trades want to happen
at the lower part of a channel. That's going to give you your
best bet of getting a bigger move. You're buying into weakness. You're buying because this is
going to show you right here. All right. This, this low and this higher low
is really just an inside the channel and that high rotation back up. You want to get in plus the quad rotation. All right. That's really one of the bigger
setups and that's a five minute rotation. So if I, again, this is, if we looked
at this chart on the five minute timeframe, because the one minute
is understandably, but this would be oversold on the five minute and
that would be a good entry either case. But look at all these candles you got. I mean, first of all, let's
remember we're in this, we're in this trade, maybe
five minutes at most. Usually by the time this gets
up to 80, I'm getting out, which is guaranteeing me this move, you
know, outside the channel guarantee. That's what I want. I want to be walking down the sidewalk,
picking up 20, $50 bills all day long. Are there times where the
Stochastic wouldn't go to 80? Like it would just keep
dropping or stay very low. How do you get out in that case? That's a good question. Now, for me, I have rules for everything. You know, I have, I've
been doing this for so long. If I see a situation and I
probably, you know, I said, Hey, what if I don't get the rotation
and what am I going to do? Of course I have to
deal with that all the time. I said, well, I don't have the rotation. You look at your 6010, if your 6010
is embedded underneath the 20 line or anywhere close to the embedded line,
which means for three candles or more, that, that means that you're in, you're
going to probably roll over faster than fast, you're going to, you're going
to confirm downtrend and if you're, if you're down here in
this kind of flat lining, your trend is probably very
strong to the downside. So if I start to see anything down
here and it's not turning back up, like, you know, coming
up above the 20 or turning, I know we're looking at this
and it's not as clear as day. But for me, there's two things I look for. What, what are we in? Are we in a channel? Maybe this channel is
actually could be here. This was a, remember
this was the ugly channel. This channel could actually be out to here. It might be a little bit prettier and
that's probably where it should have been. The rotation here. Great question. Cause that's going to
bring us to the next thing. This is what we call a bear flag. And even though bear flag could end
up being a divergence, there's a rule. And I said, what defeats a divergence? What defeats the
divergence is a bearable flag. Meaning you have a low
and a lower low and a pop, but it turns that pop gets
overbought and this stays down. That bear flag is
going to turn into a flag. It's not going to continue up. It's going to be a flag. Then we set up another bigger divergence. That was our real divergence. But a flag is, you know, if you
were going to take this perfect setup, the divergence setup, that was
the number one, if you were going to look for a comparable trade to kind
of keep you busy, you would do this trade right here and
we're going to introduce this. Um, I didn't talk about it
too much on your last thing. So this is kind of new stuff I want to. All right, here it is. There is a question. I knew you're going to ask this question. Divergences are used in a market that
is reversing from one direction to another. What do you do when
you have a trending market that does not give a
signal of reversing? So we have this kind of a little chart
here that represents our four stochastics. Now remember if our 6010, which represents
the five minute timeframe, if we think about our different timeframes, do we want
to pay attention to the one minute and the five minute, think about the
nine, three represented the one minute and think about the
6010 represented the five minute. If the 6010 on the bottom is
slightly moving up, that means the big channel is slightly moving up. The nine, three is inside the big channel. So that's going to go up and
down, up and down, up and down as the big channel goes up. So this is very, this worked
tremendous together. So now you have a five minute or a
very bullish that 6010 represents the five minute, a very bullish
five minute channel and your nine, three
represents the pullback. When the nine, three gets down to
that 20 line and this stays above 80. And again, this is not an exact science. I apply the same rules I apply in
horseshoes and hand grenades. You just got to be close. The thing is, once you start to realize
certain things in the market, like the current trend and the relationship of the
pullback of the nine, three, as it rotates down towards that 20
line, and this continues to hold strength, this is
your stronger signal here. The bigger trend is in charge. These little pullbacks are
pullbacks in the bigger trend. When we see the 6010 stay
above that 85 level, it's very bullish. If it's above 90, it is frigging the
most bullish, very, very, very bullish. Now with a flag and people, you know,
simple thing, but just in case you don't know that some of the people in the
audience, a flag is only flag is because it has a flagpole, you need a flagpole
for a flag and what a flagpole is, as a burst of momentum. So you need that, you
need that momentum that really shows the
bullishness for a bull flag. And then it settles in and then we're
able to, we're seeing that short-term momentum get oversold
quickly, but the long-term momentum, remember this is,
this is measuring momentum. The long-term momentum hasn't even shifted. It's pinned to the highs. That means we're going higher. So all we have to do now is just time this. I love when this pulls back to
the 20 and it's just that easy. Sometimes it doesn't
get to the 20, just like sometimes it doesn't
get to the 80 to take it off. These are the things that are
just imperfect with the market. But over time, you're going to
start to see that you can start to feel the pulse of the market. You know, you don't, it's like, I
understand I'm in the uptrend. I understand the concepts of
this 60 and here's another example. It's just not to say
markets in a nice uptrend. I can't write on this chart, but if I
would, I would put a trend line under here and kind of on top here, and
then the kind of topped out up here. But what's happening is you see the bottom
stochastic and how it's embedded up there. That only looks that you only get
that look during this type of market and aggressively strong market. If you could recognize that
you could make a lot of money. And how do you recognize that? You have to have your 60. No one else is going to do this. This is my 60, 60, 10. This is a quad rotation. All right. Now, now it's out in public, but, um,
the, um, if that 60 is up here above the 85 level, when you
get those rotations back to 20, like a, like a bullet,
it will shoot higher. It is, it always works until it doesn't. But when I say it does
it, there's going to be one point where you're not
going to get the full rotation. You're going to get, you're going to get
the, um, you know, again, with trading, if you can identify a trend early in
the trend, the flags tend to be stronger. And as you continue to get
longer into trend, longer in the tooth, actually you start to flag out longer
and eventually it will break down. So your object is to actually
identify these one, two, three. I like to do two flags and
then I start getting a little cautious, but it really comes
down to the 60, 10 here. This is just something that if you have a
60, 10 embedded, you get a nine, three rotation, you're above the
20 period moving average. You take that trade, you take
it, you put your stop underneath the, you know, just a couple
of points underneath this. You're going to know it's going to work. You know, in the nine, three, this works. I, I'm not going to say
it's not going to work. Maybe there's some bad news out there. I'm not going to tell you exactly on a
flag where you're going to put your stop, but make it relative to what the market
is trying to, you know, if it's moving aggressively and given
big candles, then you kind of give it a little, a
little room, you know, So as someone that's watching this
and kind of getting confused with a bit of everything you share, can you walk
us through the strategy and kind of what you'll be looking at, where
you would buy, uh, where you try to get out and kind of
all this all works together? Yeah sure. So let's take a look at three. Oh, here's European markets. All right. That's really good time to trade. I like European markets. This is, this is the opening of the market. So I get in early in
the morning, um, say eight o'clock, eight,
eight, not that early. I'm like, and what the first thing I'll
do is I sit down with my one minute timeframe, you know, to kind of go
over the news, get a feel of the market. It was up, down, flat, whatever. Um, and then I'll start back. Like I'm at this point, I'll go
back and I'll just put in fast lines. I said, all right, let me
take a look at the market. And then what I'll do is I'll actually put
in some lines and see how the ranges are and what works and
just by putting these in. And I know, you know, um,
this is a market opening up. There's a bigger channel. There's a one, two, three line. Um, I don't want too many lines there. I want to get rid of them so I
could show you a little bit better. All right. So I'll just say we're started here in
the morning and we just started off and let's say I had this
one, two, three channel. Now we had one, two, three, that counts
as a one, two, three, one, two, three. Whatever you have,
the parallel trend line, you grab it and you drop
it up at the top pivot. One two one two three four. And it gets very close. So now while the trade is
happening, I'm relaxing, I'm hanging. What I'm starting to wait for is when
our nine, three, our 14, three, our 44 and our 60, 10, all get oversold. All right. At that point, we're
probably right at that point. Now that's not necessarily a trade for me. I prefer putting out what's
called a super signal. Now I know that a super signal
requires two things to happen. It requires me to have multiple indicators. It requires the quad rotation to happen. All right. But it also requires a
divergence to happen too. So I know that's why I
call it the quad divergence. It means I would like to get a low,
a lower low, a low and higher low. This was not one. This was not one. And you know, not
every trade, I don't need to be in the markets every
single minute of thing. If it doesn't give me a
trade, I'm not taking it. I'm just so comfortable and confident
in something that works that I'm at the point now that I know it's a waste of
time to do something other than that. Or I could just, or if I am
going to do it, then I consider myself like, all right, I'm
doing this, it's a gamble. I want, you know, I'm bored. I want to play the game and do what
everyone else is doing and stuff like that. But what keeps you busy is
just identifying these channels. So again, we had a low here at one, two,
three, and then you could just see that once you've got that one, two, three
channel tends to stay within that range. Even when we came back down here and
this is not something that I'm looking for, except there is a divergence right here. Now this becomes, this is, you know,
kind of a, an ex, just a little bit more advanced because we're talking about
candlesticks, this, this area right here. So if I have this
channel and I'm extended out there and I know
that I have overbought, overbought, overbought, and overbought
and up against a trend line, all right. Cause we had that one, two, three channel
line from that point on and we're up here. But the most important thing is whenever
I get that a quad rotation and we're inside of a channel line, I'm
looking for a pullback. If I look, I'm looking for a pullback. If I see that pullback,
you know, I, this is what I call, and I'm trying to get
this across to everyone. This is what's called my environment. If I was a hunter and hunting
these things, these divergences show up at this point in a chart. There'll be an arising channel. There'll be in the top part of the channel. You'll be oversold. You'll pull back a little, move a little
bit higher to where you're not, you're, you're not, you know, this is, like
I said, this is a little more difficult because of what I call a closing
price or that high divergences. It's just, everything is equal
except the stochastics are not equal. When we talk about a pure divergence,
typically we're looking at, you know, something more like a low, lower, low,
a low, higher, low, but this is actually a very good divergence
because it's a high with a lower high and a
high with an equal high. So if I have an equal divergence like this
on an upper trend line, that's my signal. I take that trade right away and I put
a stop in here about a tick higher than that, whatever the highest candle tail is. I just put that, that's the
only time I use the tail is if it does give me a
better place to put a stop. So I'll put my stop right there. All right. And what, what I'll happen is
I'll, you know, I'll let this play out and I'll, I'll kind of manage
it, but I'm watching this. I'm watching this rotation. And as I get down to that 80 line,
it's probably right around the 20 period moving hours, right around the 20
line here, everything lining up right here. Just as we're just
approaching that, I'll take profits. Now it might not be a lot. It might be, you know, depending on where I
get in, I should have a pretty good entry, but whatever it is, that's
what it's meant to be. You know, a bigger divergence
will give me a bigger move. I can't even deal with
this pullback because most likely you might
have a bad entry here. And most people will say, well, I
want to put my target down here. Uh, that, that way it guarantees
me a hundred dollars on this trade. I want to get it. No, that's not how the market's
not just canning out money like that. Just because you want it there. No, it's going to, it's going
to mess up everyone's plans. You're going to get shaken
out here because you think you're in the channel and then
it's going to drop back down. It's really, you know, you have to have a
system that works and you have to apply it, um, like you've never
applied anything else, because if it works, you gotta be
trust, you have to trust in it. You can't just stray from
something that works. Sometimes it's going to give you a bigger
move, but there's a reason why this gets oversold and then you get
a small rotation back up, you know, then you had a breakdown
and finally it came back down. And once we start to
identify that the market continues to kind of
give us these rotations. I mean, remember if we're
in a downtrending market, I'm looking at more of
our rotations down here. And once we get down there,
I'm just measuring this down. There's nothing really there. Um, I might not trade that. I might not trade, trade that. Um, again, what I'm doing during
the day is I'm also looking at charts. I'm looking at stocks. I'm doing my research and I'm, um,
managing the, uh, you know, these trades. If we get into them or at least looking
for them here, we had a low I'm watching anytime we get a low, I'm also
watching for that divergence. So here we have a divergence. It's a low with a higher
low and it takes off. So let's be realistic and say,
you're not going to get in any better. Maybe you're getting in here. Let's be realistic. Most people are going to chase. All right. You're not going to start to you. What I want you to
do is start to realize, Hey, we're in the
environment for a diversion. We had a low it's pulling back. I want to look for that pop. You should be able to maybe get
in at the beginning of that candle. Either way, you're still going to
get, have a lot of rotation here. And then in this case, you can kind of
went much higher, you know, than this. I mean, that's not a big trade. You had this much better,
but this is also typical. You know, this is also in this environment
right now, these are big points. This is 65 to 75. That's a 10 point move right here. This is a five point move here. You know, this, that, and that, you
know, a year ago, you'll be, you know, actually dying to get five, five,
10 points on a candle like this. So I, you're going to get faster rotations. Now it's more volatile. You have to be a
little bit safer and stuff. I would prefer to hold onto this, but
like I said, most likely on the occasion, occasion that does get some follow
through, most likely the market will, you know, give you that balance. And if you have a, once you get
overbought, it'll come right back on you. This is, if I identify what we were just
talking about before, a down trending market, I'm waiting for a quad,
which everything is oversold here. And now what I'm waiting
for is that divergence. Now I'm always watching the bottom. I'm watching that low and I'm watching
that higher low versus the price here. But what happens is you get in here. Now, this is the, this is
the genius of this because you're trading alongside
in a down trending market. It's probably not the best thing
in the world, but you decide to go anywhere because you're
Jones in the trade and just, you have some FOMO
and you think it's going to go. But what, what's happened is you see
the rotation here and you see the 60, 10. And you said, what
do I, what if, what, how do I know the trade's
not going to work out? Well, if you're 60, 10 is embedded
and your nine, three rotates, you're not, you're just going
to come right back down. That is our 2020 bear flag. And why is it 2020? Well, I'll tell you why you have
the 20 period moving average. We're going to be underneath it. Typically we trade up to the 20 before
turning over this 60, 10 has to be under 20. So if this is under 20, the
price is under 20 and this hits 80. That's our 2020 bear flag. That that's the only
combination right there, right here. It's it's, it is what it is. You know, it doesn't show
up for any reason other than short-term momentum
in a long trend downtrend. You know, this is embedded every
time this is embedded down here under it's under 10,
it's really, really weak. You, you short each of
these nine, three rotations. It is, is shooting fish in a barrel. It is, but you have to be
conscious of that happening. You know, this is again, a tough thing
to wait for, you know, cause you think, well, I want you to get in here. I'm going to get out here. Nah, I don't, I don't believe that
that traders are going to do that. Some people can, you can go to lunch
and come back and have a nice profit. Uh, or maybe, maybe
your timeframe is different. Maybe you're trading
the 60 minute timeframe. That's fine. That's fine. But for one minute, I guarantee you
that if you take it off on the nine, three, you're going to have better
success than then put in a trailing stop in and seeing
if you get anything more. Nine times out of 10, my trailing
stop gets hit and it always, even if it's a break-even trailing stop, it will
come back down to the break-even. I will give up the profit I had. So I can't add that profit I had,
which would have added on. Cause all these will give me a little
profit if I take it off and not worry about what it could give me, but
I take it off for what it will give me. These might not be
exciting trades, you know, but believe it or not, you get
five to six points on this. And what happens is,
and I know you probably, a lot of your traders, you
prop accounts and stuff. You, you trade this consistently. You'll start to qualify
in your prop accounts. And, and then you get to
scale what you scale up. You scale up on, if you could do this
with one or two, three MES contracts, it'd be very safe about it and start to
feel that when you have a great setup, you could always, what becomes what
I call a $50 trade, you know, trading for $50 bills and trying to get
four or five of those a day and just very low stress
trades, they're not hard to do. You just have to be in the market at
the right time and you have to be there. Not everyone's there like I am, but if
you're, if you could, you know, do that for a while, there's, it's only
a matter of putting some more contracts on before that $50
trade turns into a $500 trade. There's no reason why this trade right
here, who makes you $50 can't make you $500 just by putting an
extra zero on your contracts. That's, that's you know, that's
the beauty of this, you know? And then again, we come down to this level. I'm always channeling, you know, if I
see pivots, I'm putting pivots in and I'm always looking down for these
lows and the higher lows and once we have those inside
channels, they're going to be great. Great. I wasn't here today in the
market, so I'm just going to go today and take a
look at today's thing here. I think I left, I left my office at
1130, so this is, we were trading this. All right. So this was 1040. I think this was our big level today. We, there was actually
a little divergence here. It was a quad divergence. You can see that, that angle of that trade. See how it says 17.6 there. You know, even though I prefer to have a
divergence, the first low to be underneath the 20 line, the second low to be above
it, it's more important to have a steep line that's above 20 degree angle
between the low and the higher low. I'm just a stats guy, you know, just,
you know, that's just again, some nerd stuff, not really paying
that much attention to it, but the bigger the angle,
the stronger the move. Again, not paying
attention to the candle wicks. You're paying attention to
the closing candle bar, the bodies, not even the closing,
but the low of the bodies. And if that's lined up and
you're on a lower trend line, there's probably another
big trend line back here. From something, I don't know. It's just, it was a multiple, there
were multiple channel lines here and it was a divergence. So once you have that,
you get that big move. And again, that big move
brought us up to here. All right. So that would be a trade
that probably pretty easy. We'll, we'll give it the benefit of
the doubt that we get at the worst position, 53, but, and you get
out 50, 66, that's a 13 point move. That's a 13 point move. That's just getting
a little meat off the bone and being realistic
about it, 13 points. How would you have
known when to get out of this base, the trend line or
based on the stochastic? Okay. This right here, this is telling you
why to get out and you're getting out. I have a rule. You'll get this in the PowerPoint. If you're trading underneath the rule
is if you're trading underneath the 200 period moving average in the VWAP
at any point, and you take a long, you want to sell it on the
nine, three rotation. If you're trading above the 20, I mean
the VWAP and the 200 period moving average, and you get a trade and,
and most likely your 60 periods going to be moving higher, so your
bigger trend is going to be higher. So the one, you know, if I'm underneath
this, I know, and I feel like we're in a downtrend, which we
probably are, probably are if we're underneath the
200 period moving average. The odds are that we're going to turn over. I'm not going to be a, I'll tell
you, I want to know exactly the level, but I know exactly
the level I'm getting out of. I know that's going to guarantee
me locking in my money there. I'm not worried about this extra money. You know, I'm worried about the
consistency or the discipline of being there, understanding the setup,
getting in and getting out of that setup. Cause it will always be another setup. You know, that's the
beauty, beauty of this. The beauty of it is like the hard part. And again, I can't, can't stress this
enough is what you're going to do between here and, and the
watching this market rally. Now here we have a situation, you know,
I, like remember we said, if we have a nice little rally, we want to buy the
rotations back this one, we never really got any very, this was our
only rotation back right here. That was our only flag and
a strong trend market here. That nine, three rotation that this is
above 85, that represents our flag. So that's our flag. And again, you would buy into the flag. You'd buy into that 20 line. If this is above the 80 and this comes
down to 20, you buy as it's coming. It's that way you're buying down here. You don't want to ever buy
a flag as it's breaking out. I don't know if people
tell you about breakout. That's such a trap because you're
not going to deal with this pullback, especially in this market,
which just could be 10 points. So as you see, this is embedded. You're in a strong trend way above
the 2200 and this is above the 85 areas. 88, 90, the higher, the better you buy. These two situations,
when the sick, when the nine, three hits the 20, you're
buying as it goes into it. All right. Because this is very strong and this
has no place to go, but up because a bigger trend is going to pull
it right up and it's going to pop. It might come back after and do its thing,
but we're trading this setup right here. That we're trading that moment from
this level to this level, from that nine, three rotation up to the 80 level that
tells us to get the hell out of Dodge. Right. That, that point, remember
I'm getting out right there. Cause I, that, my nine, three got up there. I don't have to deal with this pullback. Maybe I'm in here. Maybe I'm not in a good book, but
this is going to guarantee me profits. And I can always scale my profits. If this is not, you know, as long as
you kind of understand, buy into that weakness, buy it, there's only, this
only sets up like this, I mean, this is not going to be hard to identify after
you do it a few times, it really, it's not. You're going to, you're
going to start to see it. The beauty of this problem is you're
going to have, you're going to have to adjust your life to be able to be in
front of this or here comes my thing. So this was a big thing for me. I said, God, no one could sit
around and wait for these setups. You know? So what I did is I said, well, I want
to get the signal out to everyone. So I developed an app that a walkie talkie
that the futures trade alert network. So if I see this setup, I pushed the button
and it goes out to everyone on their phone. That way they don't have to
be at the computers right away. But that is money in the bank. When you get that, you know, that is, that
is worth it's, it's, it's weight in gold. And I told you, I said, offer
it to your, your subscribers. Cause I love them so much. And you guys, I, I,
I have it for, I'll give you the information,
but it's dirt cheap. It's $20 a month. I don't know. You know, and you don't even have to, you
know, just try it out and see if you, if you're set up to time up with
mine, I kind of rotate these out. I'll tell you when that quad rotation
setting up, I tell you where that super signal is and probably
about five, I trade about five to six, maybe
seven setups a day. But these are the areas you want to be in. You want to be able to be
in a recognizable pattern, a pullback, a quad
rotation inside of a channel. I want to know each
time that this is set up. I, so this is another setup when we have
a, what we call a one, two, three channel. All right. So we had a high up here. We have a pivot. We have a bounce from at that point. I'm probably throwing in my trend line. And even if we come down
through it, you notice I don't change it. I don't change it. I kind of keep it originally where I
normally see it in the beginning, because it's going to always be a little bit
sloppy in that area, but once we get a push back up, all I'm doing is I'm
waiting for a, what's called a trend line quad or quad trend
line is when all four stochastics are oversold
and we're on a trend line. All right. It happens there. And then we balance it. We come back to that trend line right here. And here we have another quad rotation. All right. Quad rotation, trend line,
big bounce, rotation off. All right. Big bounce rotation off. Look at that. Where did it go from there? Down. Where did it go from there? Down. This, this works. If you have the discipline, if you could
be in front of these things really well now, this, that seems
too, that seems too pretty. Right. That seems like that's
the ultimate perfect setup. Does that break down? Yeah. You know, I'm not saying that you need
to trade a four o'clock in the afternoon, but right at the close or trade at FOMC
rate decision or a jobs report or anything like that, these things will
eventually run into bumps and stuff. But if you have a good, easy to trade
market and you have these clean signals, especially, like I said, even
I'm from New York and I trade the U S markets, I love
trading the overnight markets. I sometimes trade two in the morning,
you know, let the Asian markets open up because the setups
overnight are not as there. I think they're easier to
spot and they're just this. Let me see here. I like here. It's just the same thing. You know, I'm still
looking for my channels. I'm just, I'll start to
identify a channel overnight and then you will start
to see these divergences. And then once you start to like, all
right, one, two, I'll start to see that. And I'll say, well, double top here. What's, what's going on here. And then, you know, maybe now that I
wouldn't have probably taken that, but there's a little divergence
here on the rotation, you'll start to, they'll
pop like mushrooms. You'll just start seeing
them all over the place. If you start to understand what
you're looking for on these timeframes. And I remember that this works
on everything works on Bitcoin. Um, it works on, you
know, gold futures, Forex. Uh, it's all about,
it's, it's really science and math of multiple
timeframes, uh, setting up. So we'll let people comment below and
let us do the, let us know the questions. And hopefully you can
maybe come back and address these questions or you also
be active in the comments. That'd be awesome. Uh, but tell me what people
can find you and connect with you and kind of what
they can learn from you. I do a show every single day. I broadcast, this is what I do every day. I, I, um, I trade the markets
live and I trade futures. Um, and we have a
nice community of traders. It's daytradingradio.com. And I do a lot of trading overnight too. You know, we have actually a lot of
people from Europe tune in, New Zealand, Australia, um, cause I do like,
we're just talking about overnight hour, specialized in stocks, options, and
futures, S and P futures, but I'm a teacher. You know, I I've made my way in the
markets and I, I, um, I love teaching. I love having people reach
their goals and their dreams. You know, you inspire me too. At the end, you know, what you're
doing, traveling around, doing your thing. I think everyone wants to do that in their
life and they need a, they need a path to get, they need something
to help them get there. And the hardest thing that I found as
a beginner trader back in 92 is I had no one, I was all over the place and it was
probably a good 10 years before I really understood anything in the markets that
the simplicity of it, it really comes down to the simplicity of the
market and don't overthink things and buy into
fear, sell to profits. You know, the, the
easiest things in the world are the things that we
don't pay attention to. Um, and that's, you know, that's
why I stress discipline so much. I stress the importance of
the psychology of a trader and how important that is to be
successful in anything you do. It's just, that's, that's the key. I could show you where these are. You can be great at this. It's not that hard to do. It's just that you have to
have your ducks lined up. You got to have your business plan. You have to, you have to have a team,
you know, take this serious, you know? So that's, I love people trading with us. We have a big trading community. If you want to trade during the day,
big fans of Etienne, I welcome them. This is, you know, welcome,
welcome you guys in. Appreciate it. Awesome. I mean, it's just funny. I had, I had someone I see come
up in your video, uh, the interview we did last time said something
about like, oh yeah, you just showing yourself in like retrospect and it's
easy to look back at the charts and show setups, but you're actually
doing this live like every single day. So people can watch you. They can see how you do
it every single day live too. It's not always like only on recap. It's really actually like in the market. So it's kind of cool to see that. Plus you're doing this full-time. It's your, your main income. So it's kind of, kind of
amazing to see that too. Yeah, no, this is live. This is, you have to, I mean, it works. It's exciting. You know, it's exciting. It's, it takes a different
breed of person though. It takes, it takes a lot of discipline
and Patience and not everyone has that. And that's the, that's the sad part. You know, that'll, people are not
going to make it just because of that. And you gotta be truthful with that. Your, your situation or is your
situation, are you going to trade? You're going to, you're going to
trade around your life or you're going to, you know, or you're
going to make your life around trading, you
know, and that's a big thing. You have to make that decision. And once you do, and you start to
put it all together, it'll start coming and slowly build up and then you scale
up and then life will, then you'll learn. You know, that's it. At least we below, there's a lot of stuff. People can chat to you there directly and
look forward to having you back here again. It's been a lot of fun. Yeah. Any questions on the, like I
said, I want to, I want to make it my point to answer some
questions on YouTube this time. I didn't do that in
the last time, but I, you know, I want to do
that as an experiment.