Interview, Podcast
Winning Through Losing: When 30% Is Enough · Diego Cortes Lopez
- Violent price moves driven by intuition may result in continued growth, while strategies relying on catching rapid declines are expected to fail in trending markets like the September 5 SPY sell-off.
- Price returns to strong support levels following a violent bounce, particularly when forming a tail bar, are predicted to play out successfully most of the time.
- A retracement target of no more than one-third of a prior move is considered the maximum expected recovery, with potential for further upside if the price reaches that mark after a violent retracement without an initial entry.
- Large bars losing 80% of their range are assumed to have lost their power and are likely to fail, whereas trades retaining more than 80% of the bar maintain potential validity.
- Two-to-one profit targets are anticipated as the primary goal for trades moving violently in the correct direction, with stops set tightly enough to make this ratio achievable.
- Experienced mentors with decades of experience are expected to experience only two to three losing days per year, whereas beginners may struggle to maintain performance without significant experience.
- Maintaining consistent position sizing is preferred to avoid the randomness where a light position might accidentally become the largest mover of the day.
- Trading strategies requiring a 90% win rate are deemed unrealistic, while a 30% to 40% win rate with a three-to-one or four-to-one risk-reward ratio is expected to generate profits.
- Holding onto bad habits such as scalping for high win rates without analyzing losses is predicted to cause regression in a trader's journey rather than progress.
- The speaker plans to exit the trading session early if jobs are not completed within the first 60 minutes, citing a lack of institutional participation in that window as a cause for insufficient follow-through.
- Moving averages (20 and 200) that become too separated indicate a prolonged trend where going against the trend is dangerous, and a wide state where they are separated can continue to widen.
- Support levels formed randomly on a one-minute timeframe are predicted to result in significant losses, whereas more important support levels are expected to work most of the time.
- Beginners are advised to stick to a single time frame to avoid being overwhelmed, while experienced traders can utilize multiple time frames, such as the 15-minute chart, for better confluence.
- Price trading below both the 20 and 200 moving averages is identified as a bearish state, while trading above both indicates a bullish state.
- New highs failing is predicted to occur the majority of the time when reaching major resistance after a long sequence of green bars, and tight consolidation ranges are generally best avoided unless the trader is very skilled.
- Every month and week are expected to remain very difficult, requiring increasing levels of experience to maintain performance, and "shakes outs" will necessitate re-entry strategies limited to two chances.
- Future professional status is a stated goal, with an outlook of continuing to invest profits and enjoy life without focusing excessively on money.
- If a trade does not hit the two-to-one mark quickly or fail to pop violently, the position may be trailed out.
- Getting a better entry price allows for slightly heavier position sizing while maintaining a tiny risk profile.
- Guessing support levels is unlikely to yield valid trades, whereas hitting profit targets straight up without nailing the exact entry is possible.