You guys requested it and, of course, I listened! This week, I brought one of our most popular guests, Manz, back to the pod for part two. Not only did we explain charts, numbers, and trading, but we fielded questions from you guys for a Q&A session you don’t want to miss.
Not only is Manz (known as @notmrmanziel on Twitter) one of the best traders on Twitter, but he is the first returning guest of the WOLF podcast. Our follow-up episode is perfect for any beginner who is overwhelmed with the analytical side of stocks and trading. Manz breaks down his strategies and terminologies, while using his real-life experiences to explain his charts.
Here’s a preview of the questions we cover:
- How to identify A+ setups
- How to read QQQ charts
- What to look for when trading during certain time frames
- How to understand and respond to Level 2 data
- Fluctuating bids and asks
- How traders can improve their mindset
- What he wished someone told him early in his career
… and more!
FOLLOW ME:
Twitter: https://twitter.com/WOLF_Financial
TikTok: https://www.tiktok.com/@wolf_financial?lang=en
Insta: https://www.instagram.com/wolfinancial/
Weekly Howl Newsletter: https://marketmadness-newsletter.beehiiv.com/
#investing #chartanalysis
Not only is Manz (known as @notmrmanziel on Twitter) one of the best traders on Twitter, but he is the first returning guest of the WOLF podcast. Our follow-up episode is perfect for any beginner who is overwhelmed with the analytical side of stocks and trading. Manz breaks down his strategies and terminologies, while using his real-life experiences to explain his charts.
Here’s a preview of the questions we cover:
- How to identify A+ setups
- How to read QQQ charts
- What to look for when trading during certain time frames
- How to understand and respond to Level 2 data
- Fluctuating bids and asks
- How traders can improve their mindset
- What he wished someone told him early in his career
… and more!
FOLLOW ME:
Twitter: https://twitter.com/WOLF_Financial
TikTok: https://www.tiktok.com/@wolf_financial?lang=en
Insta: https://www.instagram.com/wolfinancial/
Weekly Howl Newsletter: https://marketmadness-newsletter.beehiiv.com/
#investing #chartanalysis
Category
🗞
NewsTranscript
00:00 Even the best traders, myself included, get chopped up.
00:02 Like this week I got chopped up more times
00:04 than I probably have in three months, right?
00:06 - Welcome back to another episode of the Wolf Podcast.
00:18 It's a pleasure having you on.
00:19 My name is Gav Blacksburg and I'll be your host today
00:22 straight from @Wolf_Financial on Twitter.
00:25 And today we are bringing back,
00:27 for the first time on our podcast, a guest.
00:29 Yes, this was our most watched podcast.
00:31 It was extremely highly requested that we do a part two.
00:34 So I'm very excited to welcome Manz,
00:37 @NotMrManzel on Twitter, back onto the Wolf Pod.
00:40 Manz, how's it going?
00:42 - Doing well, guys.
00:43 How are you guys doing?
00:44 It's awesome to be back.
00:45 You know, second time around is always the best one.
00:48 So very excited to be back.
00:50 - Absolutely, yeah.
00:51 With this opportunity of already being past
00:54 those initial introductions,
00:55 some of those initial insights,
00:56 I was able to collect some of the most top requested
01:00 questions from the audience.
01:01 And I also pulled Twitter a little bit
01:03 to understand, you know,
01:04 what do people really want us to dive into?
01:06 And everybody wanted the charts, the data, the analytics.
01:10 They really want it to be able to see for themselves.
01:12 So last time I was sharing my screen
01:14 and showing a little bit of the charting.
01:15 And this time we're going to be able to dive
01:17 into your screen and take a look.
01:19 So for people that are on here, you can already see,
01:21 we've got Webull pulled up here.
01:23 We've got the QQQ chart, as well as the level two data.
01:27 And we're going to start out with a simple question here,
01:30 but not so simple.
01:31 And that is to man's, how do you identify, you know,
01:34 as your science says behind you, A plus setups,
01:38 and then understand how you're going to position size
01:40 into them based on how strong of a setup it is?
01:43 - Yeah, absolutely.
01:44 Well, I mean, so first off, that's an awesome first question.
01:48 And I think that really my system
01:50 involves confirmation points.
01:52 So in order for a setup to be defined as A plus,
01:56 there has to be confirmation backing the trade.
01:59 So in this case, guys, really, you know,
02:01 an A plus setup for me usually hits four confirmation points
02:05 and so for me, I am a very stick
02:09 to the basics type of trader.
02:11 My goal with the system is to, you know,
02:13 keep things as under complicated as possible.
02:16 And so really, you know, oftentimes
02:19 my first confirmation point is going to be
02:23 a level on the chart that I believe to be a key spot
02:27 that I am looking for.
02:27 So, you know, for example, you know,
02:30 if we're on the QQQ chart right now, right?
02:32 And I was to, you know, kind of figure out a key level
02:34 that I am going to look to, you know,
02:36 take a swing position, for example,
02:39 I'm going to mark out that key support on the weekly chart
02:42 at, you know, in this case, right,
02:44 we have the 275 area, right?
02:46 That I feel like is going to be the key level
02:48 on the weekly.
02:49 And I'm just using this as an example,
02:50 but the first thing would be, okay, hey, you know,
02:53 the setup that in this case is, you know, at the key level,
02:56 this is going to be my first confirmation point
02:58 that I want to look to buy calls for a month out
03:01 at a key weekly support level.
03:03 So that's going to be confirmation point number one.
03:05 And then I'm going to look
03:06 for additional confirmation points as well.
03:08 So for example, I took a trade on BABA this past week
03:12 and one of the key confirmation points
03:14 for that to be an A plus setup for me was the night prior,
03:18 they had earnings this past Thursday morning,
03:20 the night prior, I was going through a Cheddar flow
03:23 and I saw that there was a lot of activity put closing,
03:27 which is a form of flow that I look at.
03:30 And when you see puts being closed,
03:32 that is oftentimes a bullish indicator for a stock.
03:35 So, you know, and I'm using flow as an example
03:38 because that is another form of confirmation
03:40 for me going into the trade, right?
03:43 So it has to be a process of devolving.
03:46 It has to be a process of putting together three
03:49 to four really key points of information
03:51 that are going to lead it to be an A plus setup for me.
03:53 And so flow can be one of those.
03:55 And in that case with BABA, you know,
03:58 having the put closing there the night before,
04:00 understanding that, you know, fundamentally, right?
04:02 Fundamentals is another point of confirmation.
04:05 If a stock has strong earnings
04:07 or it's had multiple price target upgrades,
04:09 or, you know, it's drastically increasing its sales,
04:13 those can all be fundamental confirmation points,
04:15 which, you know, with short-term trading
04:16 are not going to be as important,
04:18 but they're going to be another point of confirmation.
04:20 And I think that's the really important thing
04:22 that people need to understand
04:24 is that an A plus setup isn't just one particular thing.
04:28 It is going to be a culmination
04:30 of different confirmation points that, you know,
04:32 when they come together lead to an A plus setup.
04:35 - Okay, so one of them sounds like key level.
04:38 One of them sounds like flow.
04:40 I'm assuming level two data could be another.
04:43 - Yeah, absolutely.
04:44 So I'm a price action trader at heart, right?
04:48 I've spent, you know, thousands and thousands of hours
04:51 looking at these charts and understanding
04:53 how price action moves,
04:55 what a weak versus a strong tape looks like.
04:58 And so for me, you know,
05:00 especially when we look at individual stocks
05:02 and a good example of this right now would be Tesla.
05:05 And obviously, you know, it's currently after hours,
05:08 but if you guys, you know,
05:11 learn to really read the level two,
05:13 and one of the ways that you're gonna do that,
05:15 and the main way you're gonna do that
05:16 is by looking at the level two
05:19 for hours and hours and hours.
05:21 Level two almost becomes a certain feel, right?
05:24 You can feel when the tape is strong versus when it's weak.
05:27 And oftentimes you'll notice that, you know,
05:29 what you wanna see if you're going long on a stock
05:31 is going to be bids piled up here on the left-hand side,
05:35 where you see this is the bid ask.
05:38 So if you're unfamiliar,
05:39 that's gonna be showing where someone is willing
05:40 to buy a stock.
05:41 So someone is willing to buy, you know,
05:44 3,600 shares of Tesla at 180, right?
05:47 If we were in market hours,
05:49 one of the advantages to trading individual stocks
05:51 is you'll learn what a good bid is,
05:53 what a good, you know, ask is if you're short.
05:56 And when you see large scale bid and asks,
05:59 that can really kind of be another confirmation point
06:03 throughout the day.
06:03 If you see, you know, constantly bids coming in
06:06 on the left-hand side of that level two,
06:08 that can really lead you to say,
06:10 okay, hey, Tesla's got a lot of support here at 180,
06:13 for example, because I keep seeing the bid get stacked.
06:17 If I see a very strong level two on a long, you know,
06:20 long bias trade, that is definitely going to be
06:23 a point of confirmation for me, absolutely.
06:25 - Where's the best place for people to learn
06:27 how to read level two data?
06:29 - Yeah, so I have a video on my YouTube about it.
06:32 It's not as in-depth, it's more geared towards beginners,
06:35 but what I really would say,
06:36 and I'm telling this is coming from someone
06:38 who had no idea how to read level two
06:41 when I started trading,
06:43 level two is going to be one of the most powerful tools.
06:46 I've said that if I had no indicators and just a level two
06:49 and the chart itself,
06:51 that I could probably make some profitable trades
06:53 just using the level two, because at the heart of it,
06:56 it's really the bid and the ask,
06:58 and that's what's going to control price.
07:00 So for me, really the way that I learned, honestly,
07:03 was not by reading a book
07:04 or not by watching any YouTube video.
07:07 The way that I learned how to understand
07:09 what a strong versus a weak level two tape looks like
07:13 is really sitting at my computer
07:15 from at one point nine o'clock in the morning
07:18 until five o'clock at night,
07:19 and definitely soaking in the after hours
07:22 and pre-market level two was just the screen time.
07:25 And I really believe that is the most powerful tool
07:28 in order to read level two,
07:30 is really putting in those hours on the screen.
07:33 And trust me, if you spend enough hours
07:35 looking at that level two,
07:37 you'll kind of, in a sense, become one with it
07:39 and have a huge leg up going into your trades.
07:43 - Yeah, because it does seem to just be data that flies by.
07:46 There's so many orders coming in,
07:47 there's so much going on.
07:49 I don't want to get too far into this topic,
07:51 but beyond just watching it for hours,
07:54 is there a way to kind of,
07:55 any settings that you're using on your level two,
07:58 or anything along those lines
07:59 that kind of makes it a little easier to read?
08:01 - Yeah, so first off, Webull, if you're using Webull,
08:05 it's probably the most commonly used
08:06 options trading platform.
08:08 It's going to have a pretty solid level two.
08:13 If you'd like to get a little bit more advanced,
08:15 I have in the past used TD for level two,
08:19 just 'cause you're gonna get every single,
08:22 a more in-depth experience, we'll say that, to some extent.
08:25 E-Trade is another really good one for level two as well.
08:28 But combining level two with time of sales
08:31 is I think a very, very powerful tool.
08:33 No specific settings for me.
08:34 It's really, like I said,
08:36 I really, I learned how to trade on Webull.
08:38 I still trade on Webull every single day.
08:40 And the level two that it provides has really been,
08:43 like I said, a powerful tool for me
08:45 going throughout my trades.
08:47 - Perfect.
08:48 Let's talk volume.
08:49 What are you looking for when it comes to volume?
08:51 How does it influence how you trade?
08:53 - Yeah, so volume is really one of
08:56 the best confirmation points to use.
08:59 So really a fantastic example of this, I think,
09:02 is if you really see,
09:05 we'll use something like SE.
09:08 They just had earnings this past week.
09:12 And so what I'm gonna be looking for
09:14 is relative volume on the chart that I'm looking at.
09:17 So this is going to be a very important
09:19 confirmation point for me
09:21 when I do my trade plans on the weekends.
09:23 So if you guys have followed me on Twitter
09:25 or you've listened to me previously,
09:27 one of the most important things that I do
09:29 every single week is on Sunday night,
09:32 I am at the desk planning out my trades for the week ahead.
09:36 Because when you plan out your trades on Sunday night,
09:39 during the week it really just becomes
09:40 a robotic execution at some point.
09:42 And I think that that's a really important thing
09:44 to understand is having these trades planned out
09:46 in the future, it really takes the emotions out of trading.
09:50 And one of the biggest things that I'm going to be looking
09:53 for on those weekend scans, I call it the Sunday scan,
09:56 it's always been something,
09:57 it's become an integral part of my trading career,
10:00 is volume, right?
10:01 And because volume is really at its heart,
10:05 one of the most important things when you go into a trade,
10:08 a stock needs to have good volume,
10:10 your trades are going to be smoother,
10:12 there's going to be more volume on those options,
10:14 contracts when the underlying has good volume,
10:16 and volume is really going to drive price.
10:18 We've heard this all the time, but price precedes volume.
10:21 So when you see a lot of really heavy volume coming in,
10:24 so for example, like this week on SE,
10:27 is going to be, as you can see below here on the chart,
10:31 one of its highest relative volume weeks
10:33 that it's had in over two months.
10:36 And that's going to automatically move something
10:39 up or down on my watch list.
10:40 If there's high relative volume on those larger timeframes,
10:43 like the daily and weekly, it's automatically going to be
10:46 at the top of my watch list.
10:48 - Are you looking for, I know you talk
10:50 about relative volume a lot,
10:52 but are there any static numbers that kind of factor
10:55 into the equation when you're doing these searches?
10:58 - Yeah, well, and that's a great question.
11:00 Honestly, every stock is going to trade
11:03 a different amount of shares,
11:04 depending on how large the float is.
11:06 So for a stock like we talk about all the time,
11:08 well, CELH, right?
11:10 CELH has a much smaller float,
11:13 and therefore what is high relative volume for CELH,
11:17 so for example, as you can see just from a basic overview,
11:21 a high relative volume week for CELH
11:24 is 20 million shares traded every week.
11:28 'Cause you look and the average that it's trading
11:30 is around five to six million shares.
11:32 So a 20 million share week for CELH is 4x
11:37 its daily relative,
11:38 or its average weekly relative volume, right?
11:41 So it's all about relative volume
11:42 because every stock is going to have a different float
11:45 and therefore what is high volume to one stock
11:48 could be extremely low volume to another.
11:50 20 million shares traded on, you know,
11:53 Roblox is extremely, extremely low,
11:55 but for CELH it's 4x its relative weekly volume.
11:58 So those are very important concept to understand
12:01 is relative volume is gonna differ
12:03 depending on the stock you're looking at.
12:05 - Do you ever gravitate towards lower floats
12:07 for that reason?
12:08 - I really don't.
12:09 I think that, you know,
12:11 I really think I could trade any float size,
12:14 but, and I can, right?
12:16 I do it on a daily basis.
12:17 I'll go from a billion share float
12:18 to, you know, something that has a 200 million share float,
12:22 right, or Apple, right?
12:23 You have like massive, massive floats, right?
12:26 So for me, I've always found success.
12:28 I think that like 800 million to a billion share count
12:32 is kind of a sweet spot for me
12:34 where I've always found that it's like,
12:36 you can get those, you know, volatile price movements,
12:38 but, you know, price action and liquidity
12:40 is still gonna be very clean.
12:41 So for me, I don't try to discriminate too hard
12:44 against float size.
12:47 - So let's talk about finding those key levels
12:49 once more on the chart.
12:50 You pointed out with the Q before,
12:52 you said 275 might be a key level,
12:55 perhaps on coin you have some or others.
12:57 Maybe you could pull up a couple of those charts
12:59 and walk me through.
13:00 How do you find that key level of interest
13:02 and then go about, you know,
13:03 supplementing it with the other
13:05 confluence factors afterwards?
13:07 - Yeah, absolutely.
13:08 And so I think this is one of the most important,
13:11 you know, aspects of trading is,
13:14 for me, it was learning how to work my way back.
13:17 The reason that understanding how to work your way back
13:19 is so important is because when in doubt, zoom out.
13:23 That's probably a term that you've heard in the past.
13:25 If not, it's a great term to understand.
13:28 When in doubt, zoom out means that
13:30 if you are in doubt about a setup,
13:31 go to the higher timeframe and look at it
13:33 because those higher timeframes
13:35 are going to be relied upon more
13:37 just because you're getting a broader picture
13:40 and therefore more weight is going to be put
13:42 into those higher timeframes.
13:43 So understanding what type of trader you are
13:46 is first off important,
13:47 but if I'm just basically doing my watch list, right,
13:49 on the weekend and I'm looking at Tesla
13:52 and I'm preparing to take a trade on Tesla
13:54 the upcoming week,
13:55 I'm automatically going to come out to the weekly chart
13:58 because I want to understand the broader picture first
14:00 and work my way back.
14:02 So if this was a Sunday night
14:03 and I was just coming to, you know,
14:05 start my watch list for the week ahead,
14:07 I would come over here to Tesla and I would say,
14:08 "Okay, well, we have this key level
14:10 "on the weekly clearly, right?
14:12 "We've bounced off this level multiple times.
14:14 "That's going to be a key weekly support spot
14:17 "on Tesla itself, right?"
14:19 So we can tell that we have this key level at 178
14:23 into this 180 zone.
14:24 Some people like to use demand zones
14:26 where you can have like a three to $4 range.
14:29 For me, I'd rather mark out
14:31 where we've seen these weekly support bounces in the past,
14:34 right, and then I want to come over and mark,
14:36 "Okay, well, where is, you know,
14:37 "my key weekly resistance going to be?"
14:40 Clearly, you know, we had some prior support
14:42 at that 215 zone on Tesla, right?
14:46 And I'm gonna try to do these as like
14:47 a little bit more rangy, not to be too specific,
14:50 but I'm gonna go over to Tesla and say,
14:51 "Okay, we've got a clear, you know,
14:53 "old support at that 215 level on Tesla."
14:57 Great.
14:58 We know that going forward,
15:00 that 211 to 216 area where you see these large wicks down,
15:04 that's going to be a very important area
15:07 and difficult area for Tesla to reclaim
15:10 because what was once strong support,
15:12 and you can see that we bounced here
15:14 for one, two, three, four, five, six, eight weeks.
15:17 That's almost two months worth of support
15:20 at that 211 area.
15:22 So therefore, if we come up in the future
15:24 and try to test 211 on Tesla,
15:26 we know that we're gonna encounter
15:28 a lot of resistance at that point
15:29 because it was a very strong old support.
15:32 So first off, understanding the old support
15:35 into new resistance and old resistance into new support,
15:38 mantra is very, very important, right?
15:40 That's a concept that you have to understand
15:42 when charting out those key levels
15:44 on those larger timeframes.
15:46 And then, like I said, I'm gonna still, you know,
15:48 come out here and say, "Okay, well, where's my target
15:50 "if Tesla comes down under that 180 support
15:53 "on the weekly, right?"
15:54 Well, I can automatically see that
15:56 Tesla had a major breakout, right,
15:59 once it cleared this area right here,
16:01 which is that 154 level on the weekly, right?
16:05 And I know that's going to be a very key level
16:07 because you can tell that we had
16:09 a lot of resistance back here, right,
16:11 because we had a lot of trouble getting over that 154 level.
16:14 Therefore, we can reasonably assume
16:17 that will act as a strong support on the way down
16:20 because that was a major resistance on Tesla two years ago,
16:24 right, so that's very important
16:26 in understanding that concept,
16:27 and that's really going to be at the heart
16:29 of laying out my game plan on the weekly.
16:31 And then I will come over to the daily chart, right?
16:34 And this is where we're gonna get
16:35 a little bit more in depth
16:37 as to, okay, so where are gonna be
16:39 my tighter timeframe levels
16:40 now that I have those really important weekly levels
16:43 charted out?
16:44 Well, we can see here, we had very strong daily support,
16:48 or at least relatively strong daily support
16:50 at this 203 price point, right?
16:53 Now, when you get within $5
16:55 of a psychological number like 200,
16:58 I always refer to the psychological number
17:00 if we're within two or $3,
17:02 but we'll say for now that 200 level
17:04 acted as a very strong daily support.
17:07 And so coming into this week,
17:08 I know that that 200 area is going to act as resistance
17:11 because we are now below it.
17:13 Well, look exactly what happened this week on Tesla, right?
17:16 Tesla, obviously we came down below that 200 support
17:19 last week, and then look what happened this week, right?
17:21 We started the week off, we kind of drifted up,
17:23 and then look at where we encountered resistance,
17:25 right at that 200 level,
17:27 and then we came back down off of it,
17:29 and we found support at last week's low.
17:31 So that's a perfect example
17:33 of coming over to the daily chart
17:34 and understanding on the tighter timeframes,
17:36 how do I identify those key support and resistance levels?
17:40 And that really is, you're gonna be your roadmap
17:42 as you head into the week ahead.
17:44 - So a really good way to go about finding these plays.
17:46 Let's talk about once you're actually trading them.
17:48 You usually are on a 15 minute timeframe.
17:51 What are you looking for
17:52 within that timeframe specifically?
17:54 And then are there any other timeframes
17:55 that you're using when you're actively trading?
17:58 - Yeah, so for me, this is a great question.
18:01 And this one has a lot to do with volume,
18:04 the market you're in, and how much liquidity there is.
18:08 So the market environment that we were in in 2020
18:12 is much different than the market environment
18:14 we're in in 2022.
18:15 In 2020, you had a bunch of Americans at home
18:20 with stimulus checks trading in the stock market, right?
18:22 And therefore, it's going to be
18:24 a much more active environment.
18:25 And when you have a much more active environment,
18:28 you have very high volume.
18:30 You have to usually use a smaller timeframe
18:32 because there is so much happening within
18:35 that condensed period of time, right?
18:37 One five minute candle can really be a huge deciding factor.
18:41 In a quantitative tightening environment
18:43 like we're in right now, personally for me,
18:45 I have found more success using a wider timeframe,
18:48 such as the 15 minute timeframe.
18:51 That timeframe for me has been my bread and butter.
18:54 But that's just because of the type of trader I am, right?
18:56 You have to understand the timeframe that you trade on
18:59 is gonna kind of dictate what type of trader you are.
19:01 For me, I found that the 15 minute timeframe works well
19:05 for intraday moves, and it is going to let me
19:07 let the trade play out to its maximum amount
19:11 of risk to reward, right?
19:12 So for me, the 15 minute timeframe
19:14 has been my bread and butter over the last 18 months.
19:17 - Awesome, and when you're within this timeframe,
19:19 maybe we can pull up a trade that you did this morning,
19:22 which was Walmart, or we could pull up BABA from yesterday,
19:25 and just show me kind of what were you looking at
19:27 when you went and actually took those trades?
19:28 I mentioned those 'cause I think they were both calls.
19:31 - Yeah, absolutely.
19:32 So let's look at BABA.
19:34 BABA was a fantastic example.
19:36 So first off on BABA, yesterday, obviously,
19:40 like I said, guys, we had that bigger move on earnings,
19:45 right?
19:46 And so what I was looking at on BABA is really like,
19:50 the 15 minute timeframe can really take away
19:53 a lot of the deception.
19:55 Like I said, on the 15 minute timeframe on BABA,
19:57 what I was gonna be looking at here
19:59 was looking at how healthy of a first 15 minute candle
20:02 it printed off of the open, right?
20:04 So obviously, BABA had earnings.
20:06 This is sometimes referred to as an IV flush.
20:09 The first 15 minute candle is something
20:11 that I'm usually going to let form
20:13 prior to me taking a trade.
20:15 When I see BABA print a very healthy 15 minute candle
20:18 like this off of the open,
20:21 and retake a key level such as 80,
20:24 that is automatically going to show me,
20:26 okay, buyers are clearly present here off the open.
20:28 This one is in an established trend to the upside
20:31 off of that first 15 minute candle.
20:33 And something that I pay really close attention to
20:36 is candle structure.
20:37 So you can tell that this is a very healthy
20:40 first 15 minute candle,
20:42 just by looking at the body of the candle, right?
20:45 There's very little wick at the top,
20:47 which illustrates that buyers were present
20:49 the entire time through that candle.
20:51 And you can see the continuation that we had, right?
20:54 Following that 15 minute candle.
20:56 We had almost, you know,
20:58 the first five 15 minute candles of the day
21:00 continued in that, you know, very bullish uptrend, right?
21:03 Until we saw some selling come in at the 85 level.
21:06 So for me, I waited until 9.45.
21:08 At the time, I entered the 85 weekly calls,
21:12 little bit of smaller size,
21:13 'cause I was trading a weekly expiration contract.
21:16 And obviously we got really nice continuation
21:19 off of that $80 psychological level retest.
21:22 And then we got that upside move towards 85.
21:24 And I think those ended up printing 338%.
21:27 It was a Thursday.
21:29 So pretty volatile move.
21:30 And like I said, it worked out fantastic.
21:33 - Yeah, those are awesome.
21:34 Okay, really, really good stuff.
21:35 I wanna hit on a topic which was super highly requested.
21:38 And that is the idea of letting winners run
21:42 and cutting losers early,
21:44 and how you go about finding the belief,
21:46 conviction, confidence, patience
21:48 when you're writing out these trades.
21:51 - Yeah, absolutely.
21:52 So again, I really wanna emphasize,
21:54 this is probably one of the questions
21:56 that I get asked the most is scaling in and out,
21:59 and why is it so important?
22:01 First off, letting your winners run is very important.
22:04 And I think that the way that I have developed my system
22:09 is I am big on locking profits
22:13 when trades are hitting my targets.
22:15 But at the same time,
22:16 I want to let at least a portion of my position
22:19 run with a trailing stop loss.
22:21 So the way that I do that is really pretty simple.
22:24 So I treat my position as a pie, right?
22:28 And when I have that pie,
22:29 I wanna cut that pie in thirds
22:31 and take risk off the table accordingly.
22:34 So my general rule of thumb is when I have a trade,
22:38 so for example, here on BABA,
22:40 I had three targets laid out prior to the day, right?
22:44 And this is where it's gonna be crucial
22:46 to have price targets on stocks
22:49 that you plan on trading, right?
22:50 You need to have that done the morning before
22:52 or the weekend before.
22:54 So for example, on BABA,
22:55 you can literally see exactly where I scaled out.
22:57 My first scale was actually pretty early on.
22:59 So I bought this retest of the 79.80 level.
23:03 And then my first scale out was actually right here
23:05 at this $81 level.
23:07 I scaled out 30% of my position, right?
23:09 And so that's the first,
23:11 let's take some risk off the table.
23:12 We are in profit in this trade.
23:15 And then I'm gonna take off,
23:17 usually 65 to 75% of my position at my next price target.
23:21 And then I will let the last one fourth
23:24 or one third of my position run
23:26 to kind of reach towards my reach price target,
23:29 which in this case was that 85 level,
23:31 which is where I scaled the last 20% of my position.
23:33 So having a system is going to be by far
23:37 the most important thing
23:39 when it comes to learning how to let winners run.
23:42 If you have a system for scaling out,
23:45 it's going to be a lot easier to let a portion
23:47 of that position run
23:48 when you have the majority of the position locked in
23:51 with gains already.
23:53 Once I'm usually in profit by 25%,
23:55 my stop loss becomes my entry
23:57 because I don't wanna let a green trade go red.
24:00 - For sure.
24:01 And what about on the other side, cutting losers?
24:04 - Yeah, so cutting losers is probably one
24:06 of the most difficult parts of trading
24:08 because it involves you to face your ego,
24:11 face your emotions,
24:12 because what that is is you're admitting that you are wrong.
24:15 Right?
24:16 And I think that when you start out trading,
24:19 if I could go back and do it again,
24:21 I would probably start with a defined percentage stop loss.
24:25 And once you become a more experienced trader
24:29 and you're trading higher frequency and with more capital,
24:32 everybody's going to tell you,
24:34 and myself included was a big believer in that system
24:37 of a level, a key level on a certain timeframe
24:41 should be your stop loss
24:42 'cause you want the trade to technically invalidate
24:45 before you cut it.
24:46 Right?
24:47 You don't wanna cut it before it technically invalidates.
24:49 But if you're just starting out trading,
24:52 having a defined stop loss like 20%
24:54 is really going to help you conserve some of that,
24:57 you know, market tuition and capital
24:59 that goes into learning how to trade.
25:01 And it really does get you in the practice
25:04 of cutting losers early.
25:05 So really, I'm not gonna sit here and say that,
25:08 you know, I myself don't have, you know,
25:10 sometimes, you know, yeah,
25:12 I'm gonna have a 25% stop loss on a trade
25:14 and I'll let it go to 30%
25:16 and I'll cut a loss for 30%, right?
25:17 Like everybody, no matter how long they've been trading
25:20 is going to deal with that.
25:21 But it's really about getting in the habit of early on,
25:24 if the trade is not working,
25:26 there is another trade on the other side.
25:28 And you really have to get out of the mantra
25:30 that that trade is the end all be all
25:32 and it has to be a home run and it has to be successful.
25:35 It doesn't have to be anything.
25:36 That is just one setup that isn't working in your manner.
25:40 And the way that I like to approach it now
25:42 is if a trade is going against me,
25:44 especially in a market like we're in right now,
25:46 I will absolutely cut it, reevaluate.
25:48 It's better to cut it and be done.
25:51 You know, like today, for example, I took a trade on BABA.
25:54 It went 25% in the green.
25:56 I cut 20% of it.
25:58 I took my first scale out.
25:59 And then it came back to my entry
26:01 and I saw that BABA was kind of working against me
26:03 a little bit.
26:04 And I said to myself,
26:04 it's not worth letting this trade become a loser.
26:06 I've already scaled out a portion.
26:08 I'd rather just cut it here at my entry
26:10 and then kind of move forward
26:11 and look at the market with a whole new outlook.
26:13 So I think that's really important
26:15 to get in the habit of doing.
26:17 - Definitely.
26:18 I think those are some great points throughout.
26:19 And if people have additional questions on that,
26:22 definitely come to some of our spaces
26:25 that we do regularly on a weekly basis
26:27 and we can dig in further to those concepts.
26:29 But I just wanted to get the overarching thoughts.
26:31 - And I would just say also,
26:34 one last thing is really important to understand
26:36 when you're talking about cutting losers.
26:38 In the market that we are in right now,
26:40 it is always better to lock gains earlier.
26:44 This is a market where we are
26:46 in a quantitative tightening environment.
26:48 We're in a market that has less range,
26:50 that has less liquidity.
26:51 It is always better to lock your winners early on,
26:54 leave a few runners,
26:55 and then that is going to help you evaluate trading
26:57 as a whole with a better mindset.
26:59 So if you're newer,
27:00 I would always suggest locking those profits early on.
27:03 It's better to be green by $2 than it is to be red.
27:05 So that's definitely a big one.
27:08 - Yeah, for sure, for sure.
27:09 Especially for people's mentality
27:11 and their continuation in their trading careers.
27:14 Okay, another question that I got
27:16 and then I want to go back to a couple other charts
27:18 is people wanted suggested books
27:21 that you would suggest someone
27:22 who really wants to take their trading
27:23 to the next level should be reading.
27:25 - Yeah, so I haven't read too many trading specific books.
27:30 I'm more of kind of a mindset.
27:35 If I'm gonna read,
27:37 I think it's important to kind of take advantage
27:39 of the literature that is out there
27:42 more from a mental standpoint
27:43 because trading is really 80% mental.
27:46 So if you're going to try to train for trading
27:48 with literature,
27:52 I think your best bet is really taking advantage
27:54 of some of the best authors that are out there
27:56 about working on your mindset.
27:58 All of David Goggins' books are fantastic.
28:00 Volume Price Analysis by Anna Kooling
28:04 is one of the actual trading books that I have read
28:06 and could recommend.
28:08 And you'll see a lot of the people
28:10 that I'm good friends with recommend that book as well
28:12 just because of how impactful it has been
28:15 learning about the importance of volume in trading.
28:17 So I think that that's gonna be
28:19 the one trading related book that I would really recommend.
28:23 - Perfect.
28:23 For these lines, these scale outlines on BABA,
28:26 I know that you were looking at BABA on your Sunday scan
28:29 and you pulled out to the weekly
28:31 and you found different items on it,
28:32 but where did these lines end up coming from?
28:34 Did you implement them on the weekly
28:36 and then go in on the 15 minute?
28:37 How did you end up setting these specific spots?
28:41 - Yeah, so BABA is one of those stocks
28:43 that I trade on a very regular basis.
28:45 So it's a stock that I've kind of been trading
28:49 really since I started trading options consistently.
28:51 And therefore I'm going to have some preset levels
28:55 that are already on the chart itself.
28:56 But to answer your question,
28:58 the night before what I did is I came out and I said,
29:02 okay, we've got this really nice put closing activity
29:06 on BABA, let's see where it really needs to reclaim
29:10 in order to see a big move.
29:12 And so if you come out to the BABA weekly,
29:13 because that's always gonna be the first timeframe
29:15 I look at, I'll come out and say,
29:17 okay, hey, we've got clear weekly support,
29:20 what was weekly support at this $80 zone
29:23 and up to this 81, 82 level.
29:26 So I definitely come out here and say,
29:28 okay, listen, we've got strong resistance on the weekly
29:32 now because this 82 level was such a strong area
29:37 of support in the past.
29:39 And so for me, I knew that the 85 level on BABA
29:42 was a huge area on the daily
29:44 because we had had so much support there in the past.
29:47 If you come out and look at the daily chart,
29:48 'cause remember, we always wanna work backwards,
29:51 you can come out to the daily and say,
29:52 okay, clearly the last time that we ran,
29:56 which was in early October,
29:57 we stalled out at the $86 level.
29:59 So the night before I came out and said,
30:01 okay, my target in this trade
30:03 is going to be that 85 to $86 level.
30:06 And that's why you saw my last price target was that 85.
30:10 That was my reach price target.
30:12 And the reason that it was a reach price target
30:14 was because you can see we had a lot of selling
30:16 coming here at the $86 level on BABA
30:20 the last time it ran, right?
30:21 And we clearly had resistance, which was then support,
30:26 right here at this like 81, 82 area, right?
30:28 So 82.10, that was my first target on BABA, right?
30:33 So in between that 81, $82 zone,
30:36 I was actively scaling out
30:38 'cause I knew that was an area that, again,
30:40 we were going to encounter some resistance at,
30:42 we ended up ripping right through it.
30:44 And like I said, when I saw that,
30:46 I held those last few runners
30:48 up to that most recent daily high,
30:50 which was that 86.29 area.
30:53 We sold out at 85.
30:55 I sold my last few runners right around that level, so.
30:58 - For sure, for sure.
30:59 I think those are some great points.
31:01 One other question that I did have is
31:04 what WICs typically mean to you?
31:06 Large WIC on the top side, large WIC on the downside,
31:08 a series of WICs, what does that mean to you?
31:11 - Yeah, absolutely.
31:12 So candle WICs are very important.
31:14 And I've, again, said,
31:16 candle structure is just so, so important,
31:19 especially when you talk about the daily timeframe.
31:22 I use, actively look at WICs on shorter timeframes as well.
31:27 For example, on BABA, right,
31:28 you see how we have this long upper WIC,
31:30 and then the following day we had an indecision candle,
31:33 and then we had that kind of confirmed downtrend
31:36 set in on the daily, right?
31:37 So when you see large upper WICs like that,
31:40 it indicates selling at a certain level, right?
31:43 And I'm not exactly familiar with what BABA was doing
31:46 at the beginning of October,
31:48 but when you are in a more bearish market
31:51 and you see those long upper WICs,
31:54 that really illustrates sellers coming in
31:57 at that price level.
31:58 And so what that does for me is it allows me to set a area
32:01 where, oh, okay, in the future, right,
32:04 that's gonna help me determine,
32:05 I know sellers are gonna come in at 85 or 86
32:08 because on our most recent daily high,
32:10 we had a lot of WICs,
32:12 a lot of long upper WICs at that price point.
32:14 So for me, if I'm long on the trade,
32:17 I know that that's a great reach price target area
32:20 because I know that we're gonna encounter
32:22 a lot of selling at that spot.
32:24 On the inverse, if I see a lot of, you know,
32:26 like long lower WICs on the daily, right,
32:28 if we have, you know, a lot of buying pressure coming in
32:31 on larger timeframes and that candle body
32:33 is being pushed up,
32:35 that's going to illustrate to me
32:36 that we have a lot of buyers coming in
32:38 and that they're pushing that candle body over,
32:41 you know, whatever it be, a key support, right,
32:44 or a past like weekly support area.
32:46 So those candle WICs are gonna be very important to me
32:49 because they're illustrating where those buyers and sellers
32:52 are really pushing that candle body.
32:54 - Perfect.
32:55 Okay, let's just do a couple more charts
32:57 and then we can wrap up from there
32:59 just so people can kind of see
33:00 how you're taking these techniques
33:01 and applying them across different stocks.
33:03 Rivian.
33:04 - So Rivian is a great one.
33:06 This is going to be an example of, you know,
33:08 some people call it a liquidity sweep.
33:11 I like to call it a daily candle trap.
33:13 So for example, we are looking at the 11.9
33:17 and 11.10 candles on Rivian.
33:19 So they had just gotten through earnings.
33:21 If you look at the candle from the day following earnings,
33:23 which was 11.10, and this is pretty recent,
33:26 so this will be a good example.
33:28 You can see how the WIC of this candle extends
33:31 below a key area of support on the daily, right?
33:34 We knew that this was a key area of support on Rivian
33:37 at that 32.50 area.
33:39 That's been a key level on the chart, you know,
33:41 pretty much its entire life, right, as a stock.
33:43 And so when I saw that daily candle,
33:46 which you gotta give me a second to get back to here,
33:48 but okay, so you can see how the WIC of this candle
33:51 extends below, and then you see how the body of it
33:54 closes back above.
33:56 That for me is going to be a daily candle trap,
33:59 and that's something that I've, you know,
34:00 kind of created as my own saying,
34:02 and it's one of my favorite setups to play
34:04 because what is being illustrated there,
34:06 and some people again call that like a liquidity sweep,
34:10 for me that's a daily candle trap where you are seeing
34:13 the candle or the stock itself sell down
34:15 in the beginning of the day.
34:16 So you get a lot of people in there on the short side
34:19 because, you know, in the past, once it's broken that level,
34:22 it's seen big moves down.
34:23 So you get a lot of people that come in on the short side,
34:25 but what happens is, what this is illustrating
34:28 the long WIC down is illustrating that at the end of the day
34:30 we saw a lot of buyers come in, right?
34:33 And it actually ended up that the body of that candle
34:36 closed above the key daily support level at that 32.50 area.
34:41 And so when that happened, you had a lot of shorts
34:44 in the stock from earlier in the day
34:46 when it was below a key daily support,
34:48 it actually closed back above,
34:49 and then look what happens the following day.
34:52 We get almost a $2 gap above,
34:54 and we get a huge move to the upside on the options.
34:57 And I actually believe I traded that setup exactly
34:59 with an overnight and it ended up printing like crazy.
35:04 I think it was a three or 400% trade
35:06 right off the open the next day.
35:08 So that is one of my absolute favorite setups to play
35:11 is the daily and weekly candle trap.
35:13 - I definitely remember that one.
35:15 That was really good.
35:16 Let's pull up the Walmart maybe 15 minute
35:18 and see what you saw this morning.
35:20 - So right now we're looking at the Walmart daily.
35:23 First off, I need to kind of start on the daily again
35:25 because this is the reason I was looking at this setup
35:28 was because of the daily chart.
35:30 So this is what I like to call,
35:32 you have basically a power earnings gap up.
35:34 So we can see Walmart reported earnings here on 11.15.
35:38 They had that initial gap to the upside, right?
35:41 And then we then pulled back, consolidated,
35:43 and we've kind of formed that post earnings
35:46 type of bull flag setup where,
35:48 okay, we've got a really nice bullish earnings report.
35:52 That's a fundamental confirmation point.
35:54 Coming into today, we retested that breakout level,
35:58 initial breakout level at 147.
36:00 And then today I noticed that we held the prior days high.
36:04 So if you look on this daily candle,
36:06 148.73 was our prior days high.
36:09 And then if you look at the 15 minute candles
36:11 from today on Walmart, off of the open, right?
36:15 And so this is our first candle of the day.
36:17 I noticed that we held that prior days high.
36:20 So if you look at that daily candle from yesterday,
36:22 like I said, it had a high of 148.73.
36:25 That first daily candle, or excuse me,
36:27 that first 15 minute candle this morning off the open,
36:29 we held that level extremely well, right?
36:32 And when I saw that we were gonna hold that level
36:35 on that first candle of the day,
36:38 I actually entered the long side 150 call weekly.
36:41 As a lotto.
36:42 And then once we held that prior days high,
36:45 we actually pushed all the way back up to 150.
36:48 That's a huge psychological level of resistance.
36:50 So I ended up taking the win on the trade there
36:51 at the 150 level.
36:53 But like I said, it ended up being a 60 or 70% move
36:56 on those 150 calls.
36:58 Obviously 'cause they were expiring today.
37:00 But with some small size,
37:01 that was a really nice trade to start the day off.
37:04 - Yeah, for sure.
37:05 Okay, let's take a look at Coin.
37:06 And I know this wasn't one that you traded today,
37:08 necessarily, but just curious from the setup on the chart,
37:11 how you read it.
37:13 - Yeah, absolutely.
37:13 So, you know, Coin is one that I have really loved to trade
37:17 in terms of on the weekly timeframe.
37:20 The reason why is that, you know, for a long time,
37:23 we had this really nice weekly trend from its May low.
37:27 And what I would do, honestly,
37:30 is I would trade this trend line.
37:32 And I'm not a huge trend line person,
37:35 but on larger timeframes, like weekly,
37:38 you know, even like daily or monthly charts,
37:41 I will look at that weekly trend
37:43 as a really important source of confirmation, right?
37:47 I probably traded Coin every single time
37:50 it hit off this weekly trend line
37:51 because we would consistently get, you know,
37:54 an eight or $9 bounce when we touched that trend line.
37:58 And it was almost like every time it happened, right,
38:01 until we most recently broke that trend line,
38:03 obviously the stock saw a big move down when that happened.
38:05 But you can see that weekly trend line
38:07 from its May low had been pretty consistent.
38:10 We would hit it, bounce $10 or $12, right?
38:14 We would hit it, bounce, hit it,
38:16 and then bounce, you know, 15 or $18.
38:18 And then look at long wick down,
38:20 hits right at the weekly trend line.
38:22 And then the next week is the week that it went to 120,
38:26 you know, from like 58 the week prior.
38:28 So I learned to play that trend line
38:30 for really clean bounces each and every time.
38:33 It respected that weekly trend a lot.
38:35 And so for me, I really found that I was able
38:37 to consistently play that weekly trend on a stock
38:40 that I was familiar with the tape,
38:41 I was familiar with the level two,
38:44 and I really had a good feel for it.
38:46 So like I said, that was a way that I, you know,
38:48 kind of would plan out trades on something,
38:50 you know, like a stock I'm familiar with,
38:52 like Coinbase, you know, on a regular basis
38:54 was just using those weekly trend line bounces
38:57 for pretty much easy gains, you know,
38:59 throughout the summer, so.
39:00 - I love it.
39:01 Okay, I think we're good on all the chart stuff.
39:03 I got one last question, and then I'll let you go.
39:05 My question is, there's a lot of traders
39:07 that are frustrated right now, right?
39:09 They feel like they're putting in time on a daily basis,
39:12 but maybe they are getting into a trade,
39:14 it drops down, they sell 'cause they wanna cut,
39:17 it pops back up, right?
39:18 They feel like they just can't do something right.
39:20 Maybe this was, you know, you in the beginning days.
39:22 What do you wish, what's maybe a piece or two of advice
39:25 when you first started trading,
39:26 when you were first going through those initial struggles,
39:28 what do you wish someone had come
39:30 and like really just hammered home for you
39:32 that would have taken your career to the next level?
39:35 - Sure, yeah, I think the, without a doubt,
39:38 unequivocally the most impactful thing
39:40 I wish I could go back and tell myself
39:42 would be to trade with more time.
39:45 So buy, you don't have to trade weekly contracts,
39:48 you don't have to trade SPYs,
39:49 zero-day to expiration contracts.
39:51 Trade with a month of time, right?
39:53 Because one of the most common reasons
39:55 that traders get stopped out
39:57 is because it hits their percentage stop loss
39:59 or they, you know, see a big drawdown in their position
40:02 and they're losing money.
40:03 So trade with more time and allow yourself
40:07 to understand why the trade is happening.
40:09 This is a very difficult environment
40:10 that we're currently in.
40:12 Even the best traders, myself included, get chopped up.
40:14 Like this week I got chopped up more times
40:17 than I probably have in three months, right?
40:19 And so in an environment like that,
40:21 adjust your expectations first off.
40:23 I would go back and tell myself,
40:24 hey, you don't need to 10X or 20X your account right now,
40:27 focus on learning why the trade is happening
40:30 and give yourself a little bit more time.
40:32 Even if you're trading a week or two weeks out,
40:35 having that added cushion is going to reduce that stress,
40:38 is going to reduce that frustration,
40:40 and is really going to accelerate your journey
40:43 into being a consistently profitable trader.
40:46 - Love it.
40:46 Hopefully we can get that sound clip right into the ears
40:49 of all the 18 to 19 year old traders in the world.
40:53 I'll do my best to deliver it.
40:55 Man, it's always a pleasure having you on.
40:57 Our first podcast was a smashing success.
41:00 We obviously do weekly live shows
41:02 where we're bringing in a ton of information.
41:03 I'm glad we got to do this.
41:05 Anything else you want to share before we close out?
41:07 - No, I would honestly just kind of reiterate
41:10 the message that I just gave,
41:11 which is if you're getting discouraged in this environment,
41:13 I totally understand that,
41:14 and I think it's totally warranted.
41:16 But just remember that if you put in the work right now,
41:19 it is going to pay later.
41:20 There's going to be that time
41:22 where the market is incredibly, incredibly hot.
41:24 And like I said, the work that you do now
41:26 is going to reflect a year from now.
41:27 I wish I could have told myself that in the beginning
41:29 is what you do now is going to show in a year.
41:33 So make sure that if you're putting in that effort,
41:35 you're consistent about it
41:36 and understand that it is part of a bigger process
41:38 and you're going to get there.
41:40 - Perfect.
41:41 Love the message.
41:42 To anybody that's listening, if you did make it this far,
41:45 go ahead, drop me your thoughts on Twitter.
41:47 A bunch of people dropped their thoughts last time.
41:49 I responded to every single one of them.
41:51 My @ is @Wolf_Financial.
41:54 Man's is @NotMrMansell.
41:56 We'll throw those on the screen
41:57 in the beginning of this video.
41:59 To everybody that's listening,
42:01 I hope this was super helpful for you.
42:02 Again, if you have any other questions,
42:03 maybe we'll even do a part three
42:05 if enough people DM me important questions
42:07 that they want to listen to.
42:08 To everyone else, safe trading, have fun, keep learning.
42:13 Don't stop.
42:14 This is one of the hardest times ever to be a trader.
42:17 So some days you're just going to need to sit back,
42:19 but never stop learning.
42:21 And with that, hopefully we'll see you on the next podcast.
42:25 (electronic music)
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