Transcript for:
Trading Strategies with Lance Bretstein

So this was a seven-figure day for me, both with the trend on the news, then the counter trend. It becomes more powerful when these trends are aligning on multiple time frames. I'll never be long if a stock is steadily holding below VWAP unless it capitulates. Because what happens is when everyone's being liquidated, when everyone's scared, that leaves everything so skewed the other way.

This is an A setup for this, this is a B setup, this is a C setup. Then I'd have set risk amounts. This is one of those stair-stepping, as beautiful patterns as you can imagine. To build this awareness and this consciousness, I'm going to go ahead and do a quick quick look at the chart. you need to be drilling yourself in real time that's so often what i look for is my number one probably favorite thing to signify an end of a trend so that's how you avoid a rip that's how you stay with the winner and that stuff adds up big time all right welcome back everybody it's my honor to introduce our next speaker lance bretstein he is an ex-trillium top trader he's also an advisor over at smb capital and we're really excited to have him here today I'm talking about more than just friends, a trend love story, introducing a new perspective to our conference.

So Lance, thank you so much for taking the time and really looking forward to this one. Thank you, Rich. Very happy to be here for my first TraderLion presentation.

I think at the least, I should probably get at least one star for like the witty creative presentation title. For sure, for sure. As Rich said, Lance Breitstein.

You can follow me on Twitter at the one Lance B where I drop a lot of fire knowledge. And because I come from the prop side, of course, it comes with compliance and legalese. A lot of disclaimers, essentially, you know, my presentation might cause dizziness, headache, loss of capital, loss of everything, you know, everything you could ever blame could happen.

But hopefully I make it all worthwhile. But this does entail risk and everything else. More disclaimers. And nevertheless, we will jump into this. So here's what we're going to cover today.

I'm going to share with you why you all need to live and breathe and trade with the trend. But in order to do that, we're going to define trends themselves at a very basic level. We're probably going to analyze them deeper than you have ever analyzed them before.

And once we've defined them, we're then going to talk about how you can build trading rules around them and how those trading rules can help you capture big moves or also stay out of trouble. And then we're going to analyze what causes trends to begin or end. All of this together is going to help in a very practical application of how to use this knowledge and implement it into your trading. Every single presentation I do, I want to make it as actionable as possible so that come Monday, you all have something that you can do to elevate your trading game.

So let me help you. I understand your style of trading. I understand what you guys are looking to achieve through this. We all want success in the markets. And some of you might be newer, some of you might have already found some level of success.

There's always a step higher and part of trading and part of growth is always getting there. So whether you're frustrated or whether you're feeling good, we're still going to find room to improve. And, you know, no matter how good you get, trading is never easy. It's this never ending journey.

But hopefully I'm going to push you forward one extra step. So here's how it started. Nothing short of swimming upstream. I started my career in 2011 at Trillium Trading and despite where I am now speaking to you all, it was not an easy start. I was one of the slower learners in my trading class.

All evidence pointed that I was likely going to wash out. Despite having one of the best trainers and probably one of the best day traders on the street at the time, I was not gaining any ground. I was...

interviewing for other jobs and I was losing faith and hope on myself and this was even having a pro trader kind of feed me some of his strategies I had an environment for success I had this incredible technology but really what would happen is even though I would have some decent trades I would always have these big losses and I kept improving I kept improving and this was really a trait even of my trainer having some of these Really epic wins just because some of what we did had so much edge, but a lot of it would just be sent into the ether, just millions of dollars burned in dumb places. And when I started to analyze that and really go deep at that point in my career, I was starting to really excel. I was even approaching the top 10 at that time. But what would really keep me out of kind of the top of the leaderboard was every year I would just have millions of dollars in kind of big losses. And nobody else in the firm was kind of really doing that.

And it's like, wait a second, man. It's like, this isn't so normal. Like if I can just remove.

Obviously, losses are a part of trading, but if I can just avoid some of these bigger ones, that's going to have such a disproportionate effect on my trading. And so I did this very big deep dive on my whole career at that point. And one thing became abundantly clear is that on my best trades, my best trades immediately went in my favor. And my absolute worst trades and biggest losses, those were all trades where I was fighting the trend. And they essentially never, ever went to my favor.

and it sounds paradoxical and almost like it's hindsight but it's not right there's trades that immediately work and there's trades that don't and so often that's because we're fighting the trend and as i've now worked with probably hundreds of other traders seven figure traders eight figure traders beginners whatever every experience level it's such a commonality that our best trades tend to work in our favor not all of them but definitely most and it's a heuristic that we can start to then kind of work with So how did this end for me? Nothing short of world domination. What I really wanted to do today was kind of share some of the P&L stats.

Compliance ended up nixing that, but I did end up sending P&L screenshots to Richard. You know, you get so many just haters on Twitter. Oh, Lance is a scammer, which I always laugh at because I have no sold product.

Oh, you know, Lance blew up or Lance let. Nope. I just run a nonprofit. Now to try to give back to the world, I promise you, you know, Rich has seen some awesome eight figure P&L and these trophies, I like to think, speak to themselves. So Rich, can you verify to the public that I am who I say I am?

Yeah, I can attest to what I saw. And yeah, I can attest to that for sure. I also like to think, you know, while people probably can buy their own trophies, it would be a very sad day if I ended up taking trophies.

And so what you see here is I had Pretty much the highest annual trading P&L ever in Trillium's history. They're one of the oldest firms on the street. And you see a lot of Trader of the Year trophies and Top 10 trophies.

So, you know, really I left on top and I did it so I can share some of this knowledge and help you all get better. And that's what really kind of excites me these days. So let's do it.

The trend is your friend. One of the most famous sayings in trading and probably my favorite one ever. honestly and it's attributed to jesse levermore uh famously known for reminiscences of a stock operator and so let's dive into this like the beauty of a trend is your friend is it's a principle that i've really verified through my own experience so many cliches in trading are just total nonsense but in my own experience none held up stronger than that the trend is your friend in fact the more and more experience i gained the more i sought to live true to this mantra When I was trying to elevate to the really big leagues, it's really the one conclusion that I came to.

And I've spent so many years where my sole goal for that year might be to live with the trend, to never fight it, to always consciously ask myself, am I with the trend or am I fighting it? And so many of these trades, it held true to that heuristic. The best ones went to my favor.

Then the millions of dollars were incinerated when I was fighting it. So I really wanted to live and breathe, spent every moment of my trading. And really, that study is what transformed me to really reach number one.

And knowing what you all kind of do and your style of trading, it became clear to me this was the most value I could offer and give you actionable insights. Oops. Uh-oh. We're falling apart here. So why live with the trend?

I think part of the beauty of living with the trend is when you're trading with the trend, not only does it increase your win rate. because you're no longer fighting and you've got all these market participants on your side. But being with the trend really increases your reward. Like we were hearing in that prior presentation with Chris, so many times you can end up capturing some really surprising epic, epic moves when that trend is going in your favor. In fact, you're opening yourself up to all that positive asymmetric skew that traders traditionally love.

The other beauty is that trading with the trend tends to minimize the drawdowns and the heat you need to take on a position. No longer do you need to really average down positions against you. No longer do you need to trade with a stop. So often when you're really going with that trend, just by the fact that you are kind of riding that wave, even when trades fail, your losses will be less than they would be otherwise.

And I know what you're thinking. Can everything even be structured with the trend? And I'm going to show you how the answer is yes.

Even mean reversion trades and trades that I like to call with the counter trend can be structured to be with the trend as well. And that's one of the things that really, really helped me because so much of what I did was mean reversion. So let's start from scratch. What even is a trend? Have you taken the time to ask yourself this?

How do we define it? How do you personally define it? It's so important to ask that question because without doing that, you then can't go to the next step of what the implications are to your trading. So let's keep it simple.

Trending stocks, what I would call being in an uptrend, are moving in a generally upward direction, encountering new prices. A downtrend would generally be in a downward direction. Another way to think about that is just going back to basic math and algebra, kind of just the slope of the line. So if something is sloping upwards, regardless of what it's doing, generally it's in an uptrend opposite for the downtrend. So this is in contrast to what I would define as range bound or consolidating stocks.

Those are staying within a band of past prices, often have a slope of zero. And really those two groups just doing that simple categorization can have really big impact. implications for how you treat and trade these. I see so many traders churn, churn, churn away and take so many paper cuts when stocks are consolidating or range bound rather than just waiting for the true break when they then begin to trend. So let's go one step further than that general uptrend definition.

So I really like to look for anything that's upward sloping, and we're going to start to add more nuance. But this spider chart, it's a 10-year chart. And as you can see, like we have some really deep pullbacks, right?

Like especially during COVID here. But nevertheless, our slope, if you were to graph this, is clearly positive. So another way or a further way, I guess, of defining trend is making higher highs and higher lows.

So what does that look like? And so the way I view stocks like this micron chart from February of this year to present, I drew these yellow lines. So you could. all see how I kind of view these stocks and legs.

And we have one initial leg higher, we have a lower high on that pullback, we kind of retest those highs, we have another lower high, retest the highs, lower high, retest the highs, lower high, and boom, we break out. And so this subsequent pattern is something that I would say is not just in an uptrend, but it's in an uptrend making higher highs and higher lows, which is one of the nicest patterns you can really see. This is another example, Nvidia.

It's funny, I clipped this chart prior to their earnings release, but what do you know, that pattern kind of really continued. And it's so funny, I knew people that were shorting the stock prior to those earnings. And it's one of those things where it's like, at the end of this presentation, some of those people, they should be asking themselves why. Because what we had here was a stock that was going up, very shallow pullback, another leg higher, beautiful consolidation, right?

Like the stock went from 140 to 280. That's a double in a matter of a couple months, and it's not pulling back a dime. This is one of those stair-stepping, as beautiful patterns as you can imagine. Sure enough, they get earnings, and the rest was history.

This was fatefully the one stock and chart I chose, which then happened to just really ignite the whole market rally, especially in the semis. Not so coincidental, given where the momentum was headed on this. Another way of defining trend, I think this is a common one for a lot of people, is holding above VWAP.

So NVIDIA on May 18th, this was again before the blowout earnings, but it's not coincidental that the market was a little strong this day and this thing just took off. And VWAP, volume weighted average price, we held above it the whole time. I know people might short this type of thing.

I'm going to give you rules that help you avoid this, because at least for my system and my way of viewing stocks, Nowhere on this chart was this a short. We're holding above VWAP the whole time. Another way is holding above a moving average.

We're going to use First Solar here. It's just a one-year weekly chart, and I think it's important that I'm showing you all different time frames. Everything I'm teaching here is applicable to all time frames. My view of technical analysis is much like fractals.

It can be infinitely zoomed out, infinitely zoomed in. The concepts hold, and so First Solar was holding this 20-period moving average. Beautiful, beautiful, beautiful.

Maybe you get stopped out at 180. It reclaims, but nevertheless, wonderful chart. And so probably the most micro or the tightest way of viewing trend, as opposed to a light general slope. But this is a very tight thing for stuff that's trending strongly. And this is when something is holding prior bar lows, or in the inverse, holding prior bar highs. So this is FRC, the now defunct FRC.

And so this was in play. It breaks down. And sure enough, we hold prior bar highs in what's a very, very aggressive downtrend. And so if I'm trying to catch trends, especially in something that's super hyper in play, that's a very, very common trailing stop that I'll use, as you'll see when I get into more specific and real world examples.

Another thing is holding a trend line. So someone on Twitter actually kind of tagged me with this chart because of so much I do about trading on the right side of the V once the turn is in. This is Bank of Hawaii.

This held a trend line all morning. I know it's pasted a little bit off, but close enough. We end up breaking the trend. Then boom, counter trend is in.

We're off to the races. No reason to be long prior to that. If you're holding a short, no reason to cover prior to that as well. The final example I'm going to give, or the final kind of subset of identifying trend, is what I would call holding above a reference price.

What is a reference price? This is essentially the unaffected price prior to breaking news or a key catalyst. So it might be the price of a stock at the close before their earnings after hours.

It might be in the case of this AMD, which had breaking news during the day, that 83.50 or so would be the unaffected price. So the way I would look at this chart, is one way of viewing it is as long as we held above 83.50, that news would be viewed as quote unquote good, and it would be a positive signal. If we get below that 83.50, that would be a sign, uh-oh, maybe this news isn't as good as the market expected, or maybe I'm missing something here.

And so doing that, we can start to then build rules that we're later going to do. And so much of this stuff becomes more powerful when these trends are aligning on multiple time frames. A lot of people discuss the multiple time frame stuff.

I know Brian Shannon discusses it, so many people, because it's important. And the way I like to think about it is the more people you get on your side, the better. I want the Chris's on my side. I want the Lance's. I want the hedge funds.

Every time frame, whether it's monthly, weekly, yearly, day traders, swing traders, I want everybody on that trade. And so this Tesla. This is pre split the $900 breakout back in October of 21. This was one of those things where this stock made a beautiful huge move up went up 6x made highs at 300 bucks, then we make a higher low. We then make another higher low, we come back to those highs and we break out on an earnings catalyst.

This chart is as textbook as you can get, which is why I felt the need to include it. You have weekly breakout, you have a daily breakout, you have an intraday breakout, all with an earnings catalyst. So all of those trends are aligning and we want to be capturing moves just like this.

And then regarding the trailing stop I discussed, if you use even like a weekly chart, you're catching a good chunk of that using the prior bar lows to get you out. And so now, as I alluded to before, there's ways to go with the trend and still be on kind of that counter trend, right? So With this GME on January 28th, this is intraday of 2021, the stock was just melting in huge volatility. So where it gets scary is if you're fading on the downside, right? If you buy 210, thinking this is overextended, man, guess what?

It went down another 100 points. And so I'm sure a lot of people were getting liquidated, a lot of people were blowing up in this. And so the key to do is just wait for that counter trend.

And so people might say, oh, the trend is down, but I would define the counter trend is still trend trading. because you're waiting until that reversal. And I would define that again as the break of prior bar highs.

So I'd be buying in this bar if possible and trying to catch this move higher. So much of my mean reversion was so elevated once I waited for that counter trend. I stopped drawing down.

I stopped taking so much heat. That's one of the big things that transformed my big losses into bigger gainers. And so here's my first challenge to you all.

I want you to make a list of all the ways you define a trend. Much like the examples I gave, but what are some other ways you can think up? But then the most important part is to document it with example charts and ticker write-ups. As I'm going to say again and again, the more detailed you do for this little challenge, the better it's going to be. And so once you've really defined trend for you and your system and your style of trading, you can then make rules and systems based on this.

So one rule that all kind of... give you all that I've found other eight figure traders also use like one of my good friends, Kenny at SMB, we kind of both stumbled upon this rule independently. And it's probably one of the key tenants to our trading.

That's not coincidental that we both stumbled upon this, but it is, I will never be long if a stock is steadily holding above VWAP or sorry, I messed this up. I'll never be long if a stock is steadily holding below VWAP unless it capitulates. vice versa i'll never be short if a stock is steadily holding above vwap unless it capitulates so in those examples i gave like that nvidia chart we're holding above that vwap I have no reason to be shorting it unless it capitulates, which it didn't do. And that can really help you avoid a lot of losses. Another thing is I will not take trades in range bound or consolidating stocks.

And I'll give you an example of that. But so many people end up in what I call no man's land, where the stock isn't currently trending. Volatility is compressing. I often use Bollinger Bands to demonstrate that for that reason. And when volatility is compressing, the range is compressing, so many people will tend to turn themselves there.

and all their nice gains when stocks are trending, then get overshadowed by some of those losses. Another interesting rule that I think is a great one to think about is I will size 25% bigger or some amount bigger when the intraday and daily trends are aligning. So what happens if you have something capitulating on the daily as well as the intraday?

What happens if you have something breaking out like that Tesla breaking out? intraday and breaking out on the daily, the weekly, the monthly. How do you handle that? Are you getting bigger and taking advantage of having all those players on your side?

And that's where when you identify these trends properly, you can really start to take advantage and apply it into your trading with these rules. So this is a great chart. This is Avago. Well, I guess Broadcom used to be Avago, AVGO. And this was just May 26th.

This stock exploded as part of the NVIDIA earnings explosion on the AI guide. And a lot of people on Fintwit were fighting this stock. This was its second huge day in a row. But what we find here is this was steady as she can go, right?

So we were talking about the slope. If I were to do a best fit line, this slope is very, very steady, right? And at no point do we get away from it.

I have this simple moving average. we're just hugging this thing the whole day. There is no reason to be short this thing while it's holding above these trends. And again, my one exception would be if it capitulates to the upside, but I don't see that anywhere.

We don't have any crazy volume spikes. We don't have any crazy price spikes where things just really whoosh higher. We start to get a little bit off the moving average towards the end of the day, but really nothing to get me interested.

So that's how you avoid a rip. That's how you stay with the winner. And that stuff adds up big time.

And now I'm going to give you an example of no man's land. This was in IEP, the Icon Holding Co. May 25th. This stock was obviously getting beat to crap on the Hindenburg report.

And so the way I look at this stock is essentially off the open. We made a down leg. We try to put in some type of a bottom and kind of stall out. And so what we'll see is at this point, we aren't making lows here. We try to make highs.

We don't get... get anywhere so a lot of people if you're taking in kind of this blue circle if you're shorting in here that's going to be a bad idea but just because you're still in the range right so i don't want to short anywhere in this blue circle um i really want to wait for it to break this bottom yellow line because now we're in a new price range now we're starting a new trend and so all of this is what i would call consolidation if i am going to play anything i might consider a long out of that range If you take these, you don't really end up in too much trouble. But again, at least in my view, shorting in here while kind of this counter trend is attempting to bounce, those are going to end up being very low probability and probably take away from the trades where it does consolidate, then break later.

So my second challenge for you all, make a list of rules to follow based on whether a stock is trending or range bound. I gave you a couple examples of real ones I use, especially. not taking anything counter to the trend unless it capitulates. And then, of course, you define capitulation and everything else. Stuff like that is really game changing to your trading.

Even simple things like sizing up a little bit bigger when the trends align. That can be the difference between starting to really add skew to your trading so that when you get those pocket aces or those good hands, you really make it count versus otherwise. And that's what really helped me kind of not just avoid those losers, but start to really ramp on the big gainers. As always, charts and tickers with details, the more the better. And so now diving into when trends tend to start so we can spot them.

A couple of big reasons, first of all, is breaking news or a fundamental catalyst. I'll give you a bunch of examples, but immediately that comes to mind is that NVIDIA earnings guide. Loyal Boy was that a big whopper. Another thing is breaking out of consolidation or ranges.

So if we want to start combining these, the more the better, of course, right? So if we think about Tesla on that $900 pre-split level break, we had a huge breakout. to all-time highs out of a range and we had a fundamental catalyst right so you have all the momentum technical traders buying it you have the hedge funds that are bullish on the stock like the kathy woods buying it you have shorts that are saying oh my god if if 900 was my stop i need to get out of this thing so every single person small or large is on your side when we combine these these things that start that trend um another thing that people might tend to overlook following the exhaustion or capitulation of a trend, you tend to get one in the opposite direction, like that GME chart I showed.

And, you know, some other examples, like to tie it into the prior one, that AMD chart, we had a news catalyst, the Tesla had the $900 breakout, the GME was the capitulation. I'm trying to give you guys real world to think about this and tie it in. These are the charts I was previously mentioning as a little refresher.

And so when do trends tend to end? This is just as important, I think, and it really touches on a lot of what Chris was talking about in the prior presentation, although he definitely had insights very unique and different from mine. But what I tend to look for are, in one way, huge volume and price exhaustion, a.k.a. capitulatory signals showing that things got a little too hot or a little too bearish, euphoric or pessimistic, and that real flush out. That's so often what I look for is my number one probably favorite thing to signify an end of a trend.

Another thing that tends to change trend is after there's been multiple large legs, the more legs in one direction and the larger these legs are, especially if they're accelerating in size, that's when you tend to also get more probable signs of a reversal. And then, of course, breaking news or fundamental catalysts that are counter to the trend. Another thing is when no consolidation occurs.

So really consolidation to me is kind of that price acceptance, especially if something's made a large move. You need this equilibrium time period where the people that want to sell are able to get their sales, the people that want to buy and establish new price, get their buys in. And so it's really just people found a little equilibrium where prices agreed upon.

And that's really what sets the foundation, much like those phases Chris was talking about. where you have those those set ranges that things can either break out from or then break down from so one example of this chart is um alibaba so this was kind of a darling stock up a couple hundred bucks but then as we all know it got crushed um last year and what we found was around the uh president she kind of re-election and everything we had that massive puke out where everyone said you know, China's done for, nobody can own any of these stocks. And what's so notable is look at that volume bar, because we had some big kind of volume earlier in the year, but this was just so many multiples of that. The price was a massive dump. So that's really kind of all the signals you want to see for peak pessimism that then kind of made the foundation of that move higher.

So here's my third challenge to you all. Take some of the groundwork I laid and systemize reasons why you feel trends begin and end. I've not given them all, there's so many other ones.

There's stuff that's going to be unique to you and your system, your observation, much like Chris had and other presenters have had. Though that's going to make it even more powerful is when you personalize all these. As always, charts, ticker write-ups will do you good.

So now what we're going to do is dissect some of my big losses and big gainers. So I can show you kind of how I applied this to my own trading and how this led to kind of some of those big wins. Again, like I said, so often I wouldn't wait for that counter trend to be in place. I think most traders, myself included, were never perfect.

I still sometimes fall for this, and that's going to be one of my examples I discuss. And also, a lot of times you can think you're just stubborn and smarter than the market and not listen to that price action. So.

One of the examples where even me, right, nobody's perfect, I still got in trouble was Tesla late 22. Tesla had been holding up exceedingly well, especially versus the market. Despite so much of tech having sold off, Tesla held up well, but then it starts to crack with some of the Elon Twitter stuff, and we start to hold this downtrend. I wasn't interested anywhere too early.

Like, yes, it's a big move on a percentage basis. We're going from. 300 to 160 in a matter of a couple months. But really, we're not making so big of a move. We're not extended below the lower Bollinger.

We're not so far away from the moving average. We're not so far away from this trend line. But then what starts to happen where I really get caught, and I think a lot of traders kind of felt for this too, was in late November into December into the year end.

Tesla finally started to puke out. And what happened is if we take that slope, we start to now accelerate. But the issue is we never had this real multi-day flush out.

We have a lot of these inside bars where it's kind of price acceptance. So we're going to go one big down day inside bar, one big down day inside bar, one big down day inside bar. So yes, we're accelerating, but we're not really getting that flush. Another huge indicator of this, is in our volume so this trend is certainly starting to accelerate but it's not capitulating and i really want to wait for that turn and i was fighting it i did not wait for the turn shame on me broke a lot of my rules and that led to a lot of losses you know it's some of that that fomo where it's like it's getting there it's such a mega cap stock making such a big move and you wanted to kind of do that puke that just wasn't happening and when you kind of settle on your um your i guess compromise on your rules and and break those that's what led to me getting into a lot of trouble when guess what this never did end up like mega capitulating and what you could have done is just kind of waited for that trend break where you're no longer making right and it's worth pointing out we kind of have the lower lows lower highs lower lows lower highs lower lows lower highs a little bit lower lows then we kind of make i guess a lower high but then it gets broken right and so that's where um that's where you want to start to initiate and um that that you break your rules you end up in trouble and uh you learn your rules after a decade and we all still mess up so now i want to show you the opposite of messing up what living with the trend looks like so most of my trading was intraday based um really the huge bulk of it i was essentially a day trader and i would do a little overnight some swing trading but i really want to zoom into february 23 2021 this was an awesome day for trading with the counter trend um the market overall was panicking big this day the queues were gapping down big uh i highly recommend you all going back and studying this day there were more tickers than just these but i wanted to highlight some of the big ones and the beautiful thing about this day is there was also a breaking news catalyst where i traded that with the trend and so really this day was a pretty diverse opportunity set where if you followed these there was a lot of money to be made particularly the news catalyst um so this was a seven figure day for me um both with the trend on the news than the counter trend so let's let's dive in first things first uh workhorse uh you know it's it's funny looking back with with the with the uh passing of time because we know workhorse is now in the dumpster but this stock was already pulling back we had huge breaking news this day about its uh kind of financial viability going forward a lot of what i did was news catalyst trading so when that headline came out boom you know shorted as much as i could we go limit down we end up halting halting halting so now look at the range of the stock right it started in 30 bucks so if you try to analyze this thing like so many people are going to end up covering early my my job is not to be that analyst I know Chris, for example, works from the fundamentals in, but I'm not smart enough for that. I try and just trust my system.

And so this is clearly a sharp trend. We've got a big catalyst. So I was just going to do my two-minute bar prior bar highs like we discussed on some of those other things. And I end up having some incredible covers for almost all my size.

There is no chance I ever would have been able to hold this trade if I just didn't have a simple system. And yes, that system won't always work. it won't always be perfect but the goal is to find a system that in the aggregate works and when you're trading with the trend on these catalysts i took no heat on this you know much like if you bought amd uh a month ago when it came out with their their their news when you short workhorse on some of this news if you're quick and that's your game you're with the trend you're never taking heat on this you have a clear stop beautiful beautiful trade on the other side of the spectrum This was buying stuff that panicked and flushed out on that market down day.

So I was trading with the counter trend. This ticker SOS, this was not a huge winner, but a decent example. And what we have is the stock panics off the open. We then kind of start to firm up. You know, two minute bars are holding prior bar lows.

We have like a little break of prior bar highs, very clear entry and very simple system allows you to capture that move. And again, because you're waiting for that turn, I'm not buying the $7 here. I'm buying it on what I call the right side of the V after that turn is in. And I'm taking no heat on that. Easy peasy.

I have a tight stop. That is just a textbook trade for me. Some of the bigger winners, it's also laughable to see this chart, which was in the 140s.

Stock really panics, flushes out right around the open. I again wait for that turn just based on a very simple system of prior bar highs being broken. And we make a really nice counter trend and capture that.

And so the other key for people watching this is, why am I trading these tickers? It's because these tickers were the most in play. The workhorse had a huge fresh news catalyst. The SI, the SOS, the Tesla, which is going to be my next chart, these stocks were making the biggest, most extended moves. So if the stock market is panicking, I want to find the stocks that are panicking the most and flushing out the most biggest price ranges.

And of course, that's tickers that don't have fresh news. So then I can capture that counter trend when they're bouncing. Final ticker, Tesla, more of a household name. this trended week into the open uh we break the trend and so now once we break that trend um catch a really nice leg we're kind of testing up towards the highs like pullback it's totally acceptable to have another buy there because you're still going with the trend a little continuation play um why didn't i sell on this bar it's a little bit too early to sell because we just broke out at that point i might want to just give it to the breakout level allows me to catch just a little bit more so The beauty of this day was stocks were hyper in play between both the market and the breaking news. I took no heat anywhere, right?

So there were days in my career where I'd be putting up six-figure days, seven-figure days. I'd be doing that on really tight stops because so often if I was ever drawing down, that would be a signal to me that Lance, odds are you're structuring this trade wrong, right? It's one thing if you take a trade for size and it doesn't work.

but so often if i was like really really fighting or really really drawing down and it wasn't just up trade failed that's a signal to me there's probably a smarter way to structure this i don't need to be buying on the left side when things are still going down and we're holding um prior bar highs as we head lower i don't need to buy there i can wait for that turn and so my fourth challenge to you is for you to do the same project that i did the same project that let me really break out dissect your own trading to find where in your strategies you could better optimize by always being with the trend. We're finding ways to not fight the trend. Then with all those rules and everything, I want you to document with the charts and write-ups, and it really will change your trading. It did for me, and it's such a worthwhile project.

I can't think of any trader, regardless of timeframe, regardless of specialty, that wouldn't benefit from this. So in summary, you're going to find all the ways to define the trend. You're going to make a list of rules that you should be following. based on whether a stock is trending or range bound then you're going to systemize reasons why you personally feel trends begin and end then dissecting your trading over the last couple years all the winners and big losers where can this thinking better help you optimize your strategies so look guys i'm not i'm not a jealous man we can all fall in love with the trend it's got a lot of love to give because i know it's helped so many people throughout history right from from jesse livermore until now Thousands, tens of thousands, maybe hundreds of thousands of traders have all found that living with the trend, loving the trend has rewarded them and done them so well.

So I want you to really take the time to reflect on this. Are there places where you can avoid losses by being with the trend? Are there ways where you can hold on to the trend longer and find more reward?

Are there ways that you can size up when the trend on multiple timeframes is confirming? Thank you all for listening. And I'd love to now open. it up questions yeah awesome lance thank you so much for that and there are a few good ones coming in i've got some as well um thank you so much for taking the time to put that together um this is the perfect time if you do have a question for lance drop it in the live chat as i go through these first few ones uh first um there's a good one from uh perk i believe um about that 223 day he was wondering if you could elaborate more about how you found the big movers to short or buy on the bounce were you really looking for stocks that had catalysts where were you looking to find those catalysts or were you doing any screens for high volume something similar to that yeah great great great question um so when i'm trying to do those meme reversion plays where the stock flushes out and then i'm buying that counter trend so i'm looking for stocks that in an ideal world don't have news Right, the market's down. I can't remember at this point, you know, two or three percent, whatever, maybe more.

I want to find the stocks down the most without news. It's not that I won't ever do mean reversion for a stock with a catalyst. I might do that, but I need to.

It's much more difficult. In an ideal world, I want the stocks with no fresh news. They're just the ones that are panicking more than the market. Somebody's scared.

Somebody's dumping. Someone's getting liquidated. So part of finding the right tickers is, for starters, doing the pre-market prep.

and figuring out what does and what does not have news. So I mean whether it's trade the news, Bloomberg, briefing, there's a zillion different news sources. A lot of them help you find out with like pre-market reports what's moving.

Then the other thing, the other tool that helps is there's a lot of scanners you can you can use or build or program. I've mostly been on the prop side so I've had pro software that's not available to the public but I'm sure people on Twitter or elsewhere can help you out with the names of public software. It does exist.

I know a lot of people use it. But with a lot of these scanners, what I'm looking for is what's gapping down the most, what's doing the most pre-market volume. And a lot of software places also have just price spike filters.

And you can, again, if you have programming background, you can kind of construct all this stuff yourself anyways. But there is definitely packages out there that offer this. And so what I'm looking for is that. what are the stocks down the most pre-market then off the open what are the stocks really making lows um you can have filters for for breaking new lows and showing you what percent they're down and so i try to find those charts where it's like whoa cues are down three i i've done the work so i know what what tickers have news on them why why everything's moving and why this ticker it's been weak now we're really really panicking um so a lot of is it is a mix of free market prep then having uh those those tech scanners to identify that yeah perfect um before i get to my quite my next question i do want to touch on risk management a little bit because it's such an important part of you know a long-term career in trading uh can you discuss you know uh the different ways that you manage risk to make sure that you know any one trade can't you know take you out completely out of the game yep so risk management actually was one of my um biggest weaknesses, which is surprising to a lot of people that I could have had such a strong career.

And part of my poor risk management, I mean, the only reason I had a career was because I was doing stuff with a lot of edge. So I could get away with some of these big losses. But that doesn't mean it was fun.

So around this time, like, and this kind of is that story of like, wow, like, I need to really tighten my ship up. And I can't I can't take these losses. They're just not fun. They're demotivating.

like part of the issue with big rips is it's just they spur such a negative feedback loop um so i kind of had had my moment of reflection and a lot of those big rips came when i didn't have a stop and it sounds like trading 101 but a lot of what i was doing was mean reversion when things were really panicking and so part of those big losses came because i didn't have a stop in some of these trades because i wasn't waiting for the turn and so the first thing i did was i removed any type of trading where I didn't have a stop. And like, look, there can always be flukes where a stock gets halted or a stock has fluke news on you. Like there's nothing that can ever take that black swan risk away.

Like that's happened to me multiple times. But so step one, I'd really dissect any trade you have that doesn't have a stop and find again, there is a way to structure it so you can have a stop. So that's step one. Step two for risk management then is knowing how much you want to risk in different types of setups.

And also based on the quality of setup. And so I actually tweeted this out yesterday. It came up from a great question with one of the traders I work with. And he said, how do you kind of really choose those risk amounts?

Like if you know a setup is great or whatnot. And my answer was, you want to risk towards what would be an optimal amount. But you never want to risk so much that if some trades go wrong or a couple trades go wrong, you never want to lose enough that it becomes demotivating.

or anywhere near the amount that can take you out of the game. And so that's kind of how you roughly find how to do that. And then I'd say, okay, these are my setups.

These are how I would rate. This is an A setup for this. This is a B setup. This is a C setup. Then I'd have set risk amounts, okay?

If I'm going to risk maybe 10K on an A, I want to risk 3K on a B. I might only want to risk 1K. honesty whatever is the right amount for you there's no perfect answer but it's really about kind of systemizing your playbook always having a stop in there and kind of really reduce like deducing what am i okay taking that won't mess me up and won't bother my motivation and demotivate me and all that Yeah, perfect. And I just want to say before I ask my next question, I really love the challenge idea.

I think that's perfect. It really emphasizes the need that you need to, you know, establish rules, but also put in the work, find examples. And that's how you kind of build, you know, not only the rules, but also kind of the mental intuition about a setup and, you know, recognize different characteristics. So I think that's really important. Would you be able to go back to one of the examples about, it might be the Tesla one.

where you're you're talking about the turn and the star the right side of the v uh because my question is if you go a little bit deeper yeah i think this is good um what are the characteristics you look look for to identify that the right side of the v is beginning you you definitely touched on a bunch but just to re-emphasize that point because i think that that is a really key aspect of of your expertise yep so let's let's dive down a little bit more into that um Trading really is a game of nuances. And so people will say, oh, like, you know, this is death by a thousand paper cuts or whatever. And so, so much is the more nuanced and detailed you become.

When you start to play the very, very best hands, that's what gets your win rate much, much higher. And so I didn't want to just drown people in charts. But if you were to pull up the daily charts for these tickers here. what you're going to find is these daily charts were so exceptionally extended.

These stocks were puking out huge moves in a matter of a couple of days. So what we have is we have something that's totally puking and capitulating on the daily chart. We have something that's totally puking and capitulating on the intraday. I cut off the volume on this chart just for, I didn't know how much viewers would be able to see if I made things too small. But in all these charts, volumes capitulating big.

And so if you try to do this in stocks that aren't really in play, right, like my personal belief is 99% of stocks most of the time, 99% of the time are just noise, right? And in a lot of the timeframes, there isn't edge unless something is trending or making an exceptional move, right? If you told me, if you told me, Lance, you need to spend your career trading Sirius or GE or this or that stock.

you know like everything rotates whether it's in play or out of play and i want to move to the markets and the tickers that are the um most trending the most in play and so the first step for everything is to be in the right names and it doesn't matter your time frame right like there's years where if you were to trade oil or nat gas or gold or whatever it's not going to move more than a half percent today it's going to go nowhere it's just range bound years but if you traded nat gas you know, last year or oil, you know, the last couple of years, it's like you were going to do exceptionally well because it was in play. So then within that, really what I want to find is, and again, like those details that I'm touching on, like, so volume, what does volume capitulation like? So one simple heuristic I'll throw out is in an ideal world, I want to see 2x volume on that bar than the prior bar. So that might be at a daily timeframe.

that might be at the intraday time frame, ideally both. And so when you get something that's doing huge puke out volume on the daily, then intraday it does huge puke out volume. That's what starts to really align those things to increase those odds.

So those are some of the nuances I'm looking for, right? And again, like it doesn't mean I won't trade something if it doesn't align, but that might affect my sizing. It might affect how many attempts I choose to give it. And so then the bigger and more extended the better, right? So let's say this Tesla didn't work because people will say, oh, Lance, how do you know?

Like maybe you could have bought here, right? And that's totally true. And if you stop out, which I do all the time, that's fine, right? But if something kind of gets better where it's a faster move, it's more capitulation, it's gone further now, that's what you really want where all those things are just getting better. And so I'm really trying to get my odds as high as possible on my side where like, you know, those moves where the price is just skipping and it's like, oh, my God, like, how are we here now?

We were just we were just there like like a Vago. Sorry, Broadcom, AVGO. That buyout still messes me up. But like Broadcom, when that went to 920 that one day, that unlike the prior days in Broadcom where I had those charts up, it was it was steady Eddie, right?

Slope of one. That stock just ramped off the open, right, after multiple days, where that stock on the daily chart, if you got Chris up there, he would have said, oh my god, look how extended this is above the 200 moving average. So you get all those swing traders saying, oh my god, this is becoming a sell.

Then you get all those day traders that are saying, oh my god, this just went too far too fast. And so it's aligning the confluence of all these nuances that really kind of make it happen. Yeah, that's super helpful.

And there's a kind of a similar following question from the short bear. What do you look for to really size up? What are some of those nuances that would tell you this is an A++ setup and you'll commit more capital to that trade?

Yep. I mean, really, we should have Lucas answering that question as the real goat. So I think this is also where it's so important to be very systematic.

Some people like systemizing, some people don't, but I think most people would be better moving further towards that. And I think what's so cool about those challenges I gave is it really forces traders to get things down on paper. So what you can do if you want, you can write down for each trade category you have. Maybe it's breakouts, maybe it's mean reversion, maybe it's a breaking news catalyst.

And what I would recommend you do is start to write all your different categories down. Right, so let's take breaking news. With breaking news, we can have strength of the headline. How big is this headline potentially? You know, is it something like they fired one employee?

Or is it Workhorse saying, we're screwed, it's the end of the world, it's over? Or is it NVIDIA saying, guess what, AI is off the charts, we're guiding up some huge massive amount. So one variable is strength of the catalyst. for this case we can also say how in play is this ticker um something like gold on a big catalyst is not going to move anywhere close to an nvidia right gold i like to think is probably never never say never but the odds of it having a 40 update much lower so how in player volatile is the stock we can also do another variable is this stock breaking out into new prices how many people do we have on our sides with those trends um what does the volume look like in this? How is the chart setting up so that I can have a tight stop, right?

So if I'm able to get that NVIDIA on that headline and how I mentioned that reference price is defining trend, if I can get my stock really close to that reference price, if I can get that within five points, that's a way different trade than if it's 10 points away from that reference price. So we start to have all these different variables, right? Maybe the stock has massive short interest.

If it is massive short interest, I'm going to think that can go way, way higher, right? What is the positioning and the sentiment? NVIDIA was a little bit overextended going into that, right? There were people that were very short that name.

When that fundamental catalyst comes in and blows out that sentiment, oh my God, those people need to cover. And so what I would urge people to do is take each of their trade categories, systemize all the different variables, rank them as far as importance. And so then when that trade comes with more and more practice, you can know your most important variables, how strong that catalyst is on them, and then you can size it accordingly based on that. And so there's a lot of people I know that crush that Nvidia earnings headline because they knew all those variables and they did that work.

And so I think that is what really helps people size. And but what I always say is do gradual, right? Do gradual and build up over time.

You don't need to be a hero. um the worst thing you can do is size up too much take a big loss and then take a step back because you're scared right never push your comfort zone so much that a couple losses are going to demotivate or mess you up thank you lucas yeah awesome um there are a few questions about uh your your specific entry points um are they typically above uh it looks like this one the two bar high uh on that turn how do you decide basically that pivot point that that that specific spot on the chart where you're going to enter your position? Yep. So a lot of people ask me, why do I use two-minute bar? It's not magic.

Again, I personally view that technicals are all fractals. I can apply this to one minute, five minute, daily, week, month, year, whatever. It's all kind of the same.

There's pros and cons to each. The reason why I use two-minute bars is simply because for me being a day trader it was the right level of granularity and i was able to catch the type of leg that i wanted to catch right uh it would be kind of silly to be a day trader and use like a monthly chart where i'm getting in making an entry then i don't do anything for the next month they would kind of kind of defeat the purpose and so one thing that's interesting especially with the mean reversion plays is a lot of this stuff doesn't need to be backwards looking And so often when stocks are really, really in play and melting, they're going to hold those prior bar lows. And so when stocks are holding and trending. the the sorry prior bar lows or the prior bar highs in this case the prior bar highs um so in this case you can without the benefit or let me rephrase that you have the benefit of hindsight where in this moment in time i can see that this stock's largely been holding uh prior of our highs in that frc chart that i gave i have the benefit of hindsight where i can look and i can see that that stock on the way down is holding that I don't need to know the rest. I know that this was trending down cleanly.

In the GameStop example, that stock was melting and holding those prior bar highs. And so in real time, I can recognize, whoa, this is making a really huge trend. And as it's trending, this is trending cleanly.

Cleanly defined as holding that, right? And so last week, I posted this chart of SDA, Sierra Delta Alpha, made a beautiful clean trend. um higher kind of capitulated and sure enough it breaks and we hold a super clean trend down and so many people say oh that's hindsight that's hindsight but it's not right like in real time at that moment when it turns i can see how huge that trend was and that it's not coincidental right that's the point if you all trust me i'm telling you that given something makes a huge in-play trend lower cleanly the probability of it turning cleanly is way way way higher than noise otherwise and i think that's what people conceptually miss and that can be a very game-changing concept for people yeah i think that's a key a key nugget there um i also saw a few questions about um how you decide to uh sell your position after it's moved out the right right hand side of the v so i hear i see you've got a cell mark there uh did that take out a a two minute bar low or what's basically your decision exactly yeah yeah and so so for the most part like i do tend to intentionally simplify things for these presentations um the reality is my training was a mix of system uh you know in science but also a little bit of of an art um but i found when teaching people right i probably you know had a handful of trainees dozens of people I've mentored over the years.

When teaching people, you want to give people the simplest system possible to remove discretion and to in real time when all this is happening, as easy as possible. So when I would train people, I would say, look, this is your rule. Your trailing stop is going to be those two minute bar lows in this example. And then they'll see my training.

They'll be like, Lance, why'd you take a little off here? Or why'd you do that? And it's like, look, that's part of the art.

And so to give people a simple rule of when there might be the exception to my normal one is if something, let's say I'm riding a trend higher and then it capitulates in my favor. If something's capitulating and getting euphoric and it's pulling away from that trend, I might take off some or even all. So on Twitter, I have a write-up of this like MSTR Carvana tech panic day last year, I think in May, and I discussed why I sold. my MSTR into kind of a upside capitulation. So in general, I try to simply either use the level and then that prior bar trailer.

But look, there are exceptions. And it's the simplest one I can give is if something capitulates in my favor and gets overextended, I'll definitely start to take some off. Yeah, I think perfect. That's helpful. Another good question from the short bear.

How does Lance include sentiment? into a capitulation trade? Does he wait until everyone is vocally on one side? Yep. So I think sentiment is so important.

And so what I really get people at SMB to do, or really anyone I work with, is to have a running dialogue in your head of where sentiment might lie. So let's say, and again, you can use any scale you want, but let's say like, Zero is neutral. The stock is just dead flat, doing nothing.

And let's say positive 10 is bullish, slope of one, like very sustainably bullish. And let's say 20 is like euphoric, where it's so bullish, like you don't even want to be long anymore. And vice versa, bullish, negative slope of one is negative 10. Then just like pure puking panic, end of the world is negative 20. I try to always have a running dialogue. of what the stock, whether it's the intraday chart, whether it's the daily chart, whether it's reading the tape, right?

If something is negative one, I keep in mind, wow, Lance, like, okay, this is steady bearish. If I'm doing a mean reversion, I want every chart to really become the negative 20, panicking, puking, everyone's scared. And that's so important because what happens is when everyone's being liquidated, when everyone's scared, that leaves everything so skewed the other way. An example of that is the Tesla chart that I went over, right?

Like when... When Tesla goes from 300 holding up strong and then boom it goes to 100 in a matter of a month or two everyone's saying oh my god this is the end blah blah blah if anyone's gonna panic they're gonna panic then and what happens is you get this massive volume turnover and at that peak sentiment moment you get people establishing new prices right so all those people that are puking their shares at 100 you get this whole new wave of buyers that are now new longs and that leaves this very asymmetric thing as far as the market participants and so i'd say i'm always trying to think like where is sentiment and am i trading it correctly right like if if something ever becomes you know positive 15 or close to positive 20 where it's euphoric and i'm long i recognize i need to get out that's where i might start to scaling some out so like that's also a really good task for people is to have this internal dialogue that as these charts are moving you're constantly saying like okay you know we're consolidating you know we're actually holding up like really really well so we might even be you know positive three positive four like up we break out how strongly how quickly are we going is it a sustainable breakout are we kind of puttering around and like that dialogue is is really important to help you um kind of gain a sense of this and it's all based on like that sentiment yeah great and a question i wanted to ask you was After you've identified a stock that you see it's flushing down, you're looking for that mean reversion trade, what are you specifically doing as you're watching it develop that setup where you're waiting for the turn? What kind of mental processes are you going to to prepare yourself for the trade?

And what are you physically doing? Are you setting alerts right below those highs as it's flushing down? Just kind of walk me through as you're right ready to prepare for a trade.

what are you going through what steps are you taking totally so so one one simple thing i would do is um i would use a hundred shares for this but like the more important point is like you can use one share or whatever is going to be kind of a rounding error for you so from one of the prior questions i talked about having a watch list of stocks down the most and so what i will always do is if markets are weak and things are panicking i'm gonna throw like I would do 100 shares, but again, you can use one share, like 100 was just, you know, pretty small. But like, I would throw these limit orders way deep, low in the market where I might be interested if a stock really, really panicked, right? Because some of these opens can be really hectic or some of these trading days when stocks are panicking. So I always try to have like a little kind of just starter position way below the market where it's like, if this gets spilled, like, okay, Lance, you need to watch your attention.

And. So when these moves are happening, I'm really just going through that checklist, right? So I can avoid the Tesla losses.

And so I'm not falling into the trap. And it sounds silly. Like at this point, I don't need a checklist just because I've done it so many times. But when I was learning and developing these skills, I would do the system, systemizing of everything like I described in this presentation.

And I would build this little checklist. And on my desk, I'd have all these little note cards. Okay, if this is going to be. uh mean reversion counter trend play this is my checklist if it's breaking news this is my checklist if it's a breakout this is my checklist um and when these things are panicking I'd just be rereading that and going through that and going through that because that allows you it helps you make uh or avoid unforced errors and so it's it's so important to know that criteria dead cold because I think so many people end up falling for these traps because they don't do the work to know what everything is they're not conscious like to build this awareness and this consciousness you need to be drilling yourself in real time it needs to be the stream of consciousness in your head to help you avoid those errors and if that means having a little paper checklist that you're running through as you're typing these and you have your little alerts lower it's it's it's so important you know and like any little mantra um you know like on these big days i'd have on my my daily report card you know wait for the turn wait for the turn wait for the turn you know live with the trend because it's it's That internal dialogue is essential when the pressure's on.

You need to perform and this game moves fast. And it sounds like some of those steps are to, you know, really make sure you're being disciplined and help with the mental side, too. So you're confident and ready when you finally do get the turn that you're waiting for. Yep. And your job during the day is really just the real progress and work happens after hours.

During the day, if you're decently experienced, your job is to execute. And part of executing is making sure, like, if you've got the system and this game plan, your sole job is. to follow it and make sure you follow it. It's not to think about what tweaks can I make.

It's not to be studying other stuff. When you're playing the game, right, you know, like if you're playing in the pros in the NBA, nobody's thinking about tape and what they're going to do and what drills they're going to do. They're just saying, I need to execute.

This is what I need to execute. This is our game plan to win this game. You know, and when the Heat play tonight, right, that's what they're going to be thinking about is just what are the things. that we decided is going to make this a success i need to keep that front of mind i need to not get emotional i need to not get fomo i need to not worry about the scoreboard i need to execute based on what we decided yeah perfect um there's some other really good questions coming in uh first from uh this person after capitulation sometimes the low is breached before the real move happens uh does lance set a stop at prior bar low or does he give it a little bit more room?

So I guess in the circumstance where you've got that capitulation, maybe a structure forms there, it undercuts a little bit and then takes off. How do you kind of handle that situation? Yep, so that's a great question.

And well, I think most of all, I have a great point to make on this, is I am always getting out at my stop if that gets breached, right? It's just, again, it goes back to that risk management. Even if I think like, oh my God, could this stock really do another lag? So often, if those lows are getting breached, the answer is yes.

And I think the more important point here is if you're in the really, really best setups, your win rate goes up. And so, yeah, I'm not saying like that never happens where you kind of just get just whipped out and then it kind of just goes. Like I tend to, if I end up missing that, kind of so be it.

But like. The best thing I would equate is I like using poker analogies. Sometimes you might have what you think are pocket aces and it just doesn't work.

It kind of gets whipped out. At that point, that's the equivalent of Jack, Queen, 10 or something coming on the board and you're just like, oh no, my hand looked awesome, but if anybody just caught three of a pair, if anybody just caught a straight, now I'm in trouble. And so I tend to not beat myself up. too much when i get stopped out but what i will say is the absolute best trades where everything is aligning in your favor so so often you avoid those situations because it's just everybody's recognizing oh my god that was a flush out that was a panic and you're gone and it allows really this cushion in your trading where like when prices move so fast and the volume is just so high you really tend to avoid a lot of those little chop outs Like, again, I'm not saying it never happens, but in the really best setups where when you have your variables, you're like, oh, this was eight out of 10, eight out of 10, nine out of 10, 10 out of 10. Most of them tend to just be gone. And it's not coincidental when you when you go through the data like that.

Yeah. Yeah. Perfect.

There's another good question here from Alan. Does Lance have any tips for overtrading or having having the confidence? to wait for proper setups i think over trading you know is an issue that a lot a lot of traders deal with so yeah what are your thoughts on that and how how how would you encourage patience and the ability to wait for those eight plus eight out of ten nine out of ten ten out ten setups yep so this is this is a big one i've done a really good tweet i think on this so if you advance search um the one lance b on twitter over trading but essentially what i say is the number one thing i not the number one but the first step is to figure out why are you over trading what leads to that, not just what the trades you're doing.

Because if a trade falls into your system and you take it and it doesn't work, that's not over-trading, right? That's just your system needs refinement. Over trading is where you're trading things that are not in your system.

And then the question is, is that because you don't know clearly what is and is not in your playbook? Is that because you're getting FOMO? Is that because you're trading out of boredom? Is that because you're trying to make something happen when it's not there? Is that because somebody else in your chat room is involved in it and they're a good trader, but it's not in your playbook?

So the first step is to really diagnose why. Why are you getting involved in these setups? Yes or no. are they in your playbook or not then once you've dissected them you need to find the commonalities um one thing at smb capital is you know there's there's a lot of great collaboration and everything but for so often especially once traders have some experience under their belt it's it's i find it these traders don't recognize that like they've reached the point where they just need to trust themselves and they might get involved um because the ticker is in player because someone else is involved and it's like no you're at the point in your career where it's time to go without the training wheels and just trust yourself.

And they haven't recognized that yet. And that's actually what's slowing them down is they're still making, they don't need to key themselves off to others. They can trust themselves now. And so then once you've figured out why, the most important step is to then build systems to avoid that. So what does that look like?

It might be, okay, how can I reduce FOMO? How can I reduce noise? um maybe you only allow yourself a certain number of of trades in slower markets what I would do is I would call it the three golden bullets uh I have a friend that that ended up doing this and he has like he's kind of like a gun fan and he has like little literal bullets he's like I get three of these a day I only get more if my three trades were all in my playbook and everything else and so there's little rules you can make um or literal uh literal systems you can put in place to avoid the cues that make you make these mistakes If you tend to do 10 trades during lunch, okay, maybe it's time to just like step away, eat lunch, keep an eye on the market just in case anything crazy happens. You know, maybe if you've lost twice in a ticker and you tend to overtrade at that point, maybe you can just, you know, X out, you know, do zero share tier that ticker. So that final step is really once you've identified why you're doing it, how can I build a system that allows me to avoid this?

yeah excellent and earlier you mentioned the daily report card uh at Trillium uh could you dive into some of the criteria that was a part of that report card what what would you grade yourself on every day and maybe just you know as a larger topic the importance of having something like this and and the importance of journaling and tracking everything yeah yeah great question if there's any super easy thing people can do to start elevating their game like this is this is another great thing um so I've posted on Twitter and I've even done an SMB Capital video on this uh it's kind of I think Mike kind of really got the trend going for a lot of this but I've shared my template of what my daily report card looked like I would fill this out every single day without exception and people people take this up on fin twit they'll do it for a week they'll do it for a month they fall off I did this for years never, ever missing a day, right? And so first thing is the daily report card consists of one most important thing you're working on to elevate your game. For me, like I said many times, it was I am going to live with the trend.

Every trend I do today, well, is my goal is to make it not fighting the trend. And then you also have your rules and your system for how you're going to follow that. You know, maybe it means I need to wait for prior bar highs.

I need to do this. I need to do that. I'm going to be conscious in the trade. And then so what you grade yourself each day is whether you followed.

It's not whether you made money or not. You grade yourself on whether you followed that objective. So if it was trading with the trend, I might give myself an A if every trend followed with it. And then it would also include kind of you can make it however you want.

But I would include a detailed write up of each important chart that day. only the best ones it also include during the day i would do a pre-market temp check meaning like am i well rested am i focused uh or am i feeling fomo am i sick am i under the weather am i frustrated am i in a hole and that would actually dictate how much i might risk that day so if the market's super in play and i'm feeling great and i've been trading really well i'm going to push my risk that day and each um every couple hours i would check in and kind of do um Just I would take a mental break and say like, okay, have I been following my rules? Have I risked the amounts I should be risking?

Have I avoided what I should be avoiding? And this just, it's all a tool to really increase consciousness and awareness each day and to make forward progress. Because so many people slog around aimlessly when every single day I want it to be better, even if just a little bit than the prior day. And so no day would go by where I didn't analyze the charts and figure out some way to make myself better. and really do the deep review work yeah i was gonna ask a follow-up on that uh of the trades you do take or the ones you didn't take but you should have what type of post analysis do you do to you know take away something from that trade so you can be a little bit better the next time the next time that situation arises yep so i was i was a real active trader i might trade on an active day 25 30 tickers maybe maybe five to ten on a slower one so it would just be impractical impractical and not the most value for me to write up every single one.

So I would really find like, what are these standout tickers, whether I traded them or not, like some people are like, oh, should I study my missed trades? And it's just like, well, do you ever want to hit them in the future? You know, I would hope so.

And so whatever the big tickers were, I would, I would use Evernote, people use all Notion, whatever, there's all sorts of things. I would take the chart. I would annotate the chart with what the proper entries were, any other notes I wanted to notice, and then I would do a very detailed write-up. The more important the play was, like if this was potentially a play of the year or a play of the month, that is going to get a multi-paragraph deep study from me.

If it was a slow day, but hey, this was the one op I could have made 5k, 10k, maybe it gets a little paragraph. If I'm burnt out or lazy, look, maybe I'm just going to clip the chart at the least. This stuff does not take a lot of time. And the beauty of it was then, over the course of years, I had this amazing database.

I have, if I look back in my Evernote, I have the 2021 top ops, I have the 2020 top ops, the 2019. I can go back all these years and find like the 20, 30, 40, 50 best charts of each year. And to be able to run through that and get reps and restudy that, it's just such an effective way of studying. It's incredible.

yeah and you know obviously just like creating that resource for yourself that's going to cement in your mind exactly what you're looking for and help build that even if you never review it ever again it's it's in there exactly uh there's a really good question from a reef uh Lance do you trade this type of capitulation trade if it seems to occur during lunch hours uh what time period of the market provides the best outcomes for capitulation trade setups yep great question I think without a shadow of a doubt, the most capitulation tends to occur off the open. Why is that? The reason why is obviously a lot of stuff happens overnight, and the market really hasn't had the price discovery mechanism until that open.

So, so often what might happen is news comes out or the market panics overnight, the market's gapping down 2%, 3%, 4%. And yeah, like the indices and the futures have been able to trade. But if you're trying to panic out of, I know Tesla made this great panic on some of the, when the Russia Ukraine war was escalating.

And it's like, look, if, if this stuff escalates overnight, you don't have the chance to sell your Tesla. You might be able to sell Q's or whatever, but you can't sell the Tesla. And so off the open is where you tend to get the most flush out.

You tend to get the most people that need to liquidate. So I would say the open is definitely the best. One thing that you do need to be wary of, especially midday, especially around the lunch hour, is most stocks are kind of range-bound and consolidating then.

And so if a stock is doing some weird move around lunch, I would be a little worried. Is there news out there, right? Because I'm really trying to do this in stocks without news. So it's one thing if the whole market's rolling over and everything's flushing out.

If it's just one stock doing this kind of idiosyncratic move. I'm extra cautious of making sure there's no news. I guess that would be my one warning. Then, of course, we tend to also get panics into the close, especially if there's like big Fed days or big panics or in 2020. The open and the close tend to be pools of liquidity, especially the close.

So those are kind of the times where I think you're most likely statistically to see them. And if there's a major announcement that's going to be. coming on, you know, FedMinutes, something similar to that.

What do you do to prepare for that event? How do you basically, do you have a list of tickers that you're ready to go to if there is a flush potential for a mean reversion play? What's kind of your process for prepping for a potential, you know, game changing news event? Yep, sure. So for most news things, I want to be with the trend.

So with the Fed, or any big kind of, even call it like CPI, whatever else, any macro event, any news catalyst, I'm largely thinking, how can I go with this trend? What are the tickers that are going to be in play? And there's essentially two ways, right? Well, not really two ways, there's many ways. But the two big things I look for is first, the breaking news headline.

Will the Fed say anything offsides? First of all, you need to prep and know what is offsides. Where does sentiment lie going into this? Have stocks really, really run up expecting one message? What would be the offsides for where the market's positioned?

We talked about that pendulum again, like the question Lucas asked. If stocks are maybe like a 13 or a 14, we're starting to get a little euphoric into this meeting, and then the feds just rug pull everyone, I am going to be super prepared to go real aggressive on that short. So that breaking news headline is the first way I might play it.

The second way is waiting for something to set up where we make that initial move. We then have a really nice consolidation. And then I want to find the stocks holding up the most.

What are the stocks that made the really big move but then are barely pulling back, consolidating super tight? I don't want to play it in there because that I consider the range bound consolidation. But boom, once they break out, I might want to hop on and really look for that. that move.

I really won't for me to fade and do mean reversion with a catalyst, especially something like the Fed, CPI, whatever, it would need to be really, really exceptional, meaning, okay, the market's going from 2% to Q's plus three, and something just really capitulated to like plus 10%. I would need a huge, a huge spread versus the market for me to want to get involved, it would need to be a real big flush out on. on either side yeah perfect just have a few more questions here uh first um let's see i saw a good question here um oh here's what it was i remembered so how would you classify the types of steps you trade the most um and of those which which is kind of your preference which you tend to trade the most and uh what's like uh your most profitable type of setup yeah that's a great question um So I had a lot of, I know I get kind of pigeonholed into things, rightly so, but I kind of really traded everything from merger ARBs to imbalances, from low floats, mean reversion, with the trend, breaking news, swings. So I really did a lot of everything, but the bread and butter would probably have been probably the mean reversion plays when things did panic.

Or... That would have to be number one, just because there were some really crazy days, whether it's like a GME AMC panic or during the COVID panics or some of the flash crashes. So that was huge.

Breaking news would probably have to be my second category. I don't think I was probably the, I think I was probably one of the best in the world at the capitulations. I think I was probably, there were a couple people better than me with the breaking news, but I was pretty damn good and would just do the size.

So I think that's number two for me. And a lot, I would also say, depends the market. Like what I really talk about is finding the broken slot machine and like not getting too stuck in your ways. So there's some years where you have certain themes, right?

Last year was CPI. This year is banking crisis. 2020 and 2021 were meme stocks.

2000. Was it 18 or 19 where the Trump tariffs, but you always have these themes that are really driving markets and the biggest moves. And I really want to move to wherever that volatility is. Like I saw so many people say, oh, stick to one product and one type of thing, you know, watch gold trade every single day. It's like you can watch gold trade every single day. But let me let me break you the bad news.

Ninety nine percent of the time, GLD spiders, all these super liquid efficient instruments, 99 percent of the time it's noise. I'd rather find like the 1% in play thing each day and study that and you're going to learn so much faster. And so every year I try to ask myself, what is the theme? What is the market offering the most rewards trade? Some years are hot IPO years.

You want to know what I do that year? I'm an IPO trader that year, right? Because that's what's in play, right?

You know, there's been, like when Fiverr IPO or Alibaba or when those Chinese IPOs were going nuts, like you need to find whatever's in play. And that's what I'm going to adapt myself to. And so many people are like, oh, I've never traded CPI before.

Well, guess what? Nobody has. CPI was never in play. And the people that did the best were the people that recognized CPI is going to be the theme this year. I'm going to adapt to this as quick as possible.

And because they're adapting faster, they're able to hit it harder before the trade goes out of play, right? Because the more attention and attraction you get. boom starts to become more efficient and out of play um i don't know what the next thing will be this year was clearly financial crisis and a lot of that was you had huge breaking news headlines you had huge capitulations um you know i'm trading all that but whatever's whatever's a crazy thing um you know as i like to say whether it's socks or stocks i'm going to be there perfect do you have any tips for you know helping identify that theme early for you know paying attention and being ready I think being open-minded. You never really know where it could be, but I think if you're open-minded, it's not really a secret. What are they talking about on CNBC?

They were talking about CPI all of last year, the banking crisis. If I had to take a guess, what might be the next theme? We could be seeing AI now just with the NVIDIA, and you don't necessarily need to be like Nostradamus predicting all this stuff, right? Yeah, you can sometimes take a guess, but a lot of times, like trends don't last a day or a week. Like I can see that in video earnings and I can be like, oh my, you know, AI could become the theme for the rest of the year.

So it's not so much about being some, some people are great at that. Like I know a couple of traders that are incredible predictors like this dude Raf, but like it's for normal folk like me, I just keep my head on a swivel. And look, AI could be next or it could be some idiosyncratic black swan, you know, like who saw COVID?

Nobody. Right. But when that happens, you've got to just keep your head on and pay attention to what people are talking about. Yeah, great.

Lance, just one more question before wrap up. This has been fantastic. How do you handle a halt in stocks that you're trading?

How do you how do you analyze that when it's part of the down leg? And then also if you get in it and it's halted. How do you manage that situation?

Yep, totally. And so part of being with the trend and trying to live with the trend is I really try not to be on the other side of a halt. Meaning if something's going limit down, I probably want to either be short or flat and definitely not long.

Again, like that's my general rule. There are exceptions. If something's just so, so panicked and so, so capitulating, and I don't think I'm going to be able to get stock because it's going to halt and just... gap up a zillion. I will get some stock, but I would say the amount of times where things go so much further than you expect has made me create the rule.

I mean, we saw Kodak, was that 2020? I can't really remember. I mean, we've seen some things really go super, super nuts. And so I try to never be on the same side.

In fact, I always tend to be with the trend. And what a halt effectively is, it's an imbalance between supply and demand, right? um the reason why it's halting is because the clearing price based on all the selling should really be lower so i don't want if the clearing if the market's saying the clearing price in this moment in time should be lower i don't really want to be on the wrong side of that um unless it's really really special um and the other thing is vice versa if i'm long into some of those like if you want a great example there was wal um the day it went from like 30 to 8 or something then bounced back back to like 32 or whatever A lot of people took sales too early, even though the trend was so strong, because they had a price target in mind, rather than riding the wave.

I just want to ride the wave, whichever way it is. As long as that wave is going to take me, I want to be a part of it unless it really starts to go nuts. And stuff like WAL, where it's limit up, limit up, limit up, that stuff can really go and surprise you.

And I want all that asymmetry. I almost never want to be selling into those upholds because you might you might really get some some really nice, nice legs from that. Yeah, great. Perfect glance.

This has been awesome. Where can people learn more from you about your style and also any last words of advice, encouragement, motivation for for all the traders watching? Sure.

Well, as as all the haters would say, this this blown up, washed up, you know, fake scammer trader. I run a nonprofit called the Impact Competition, impactcompetition.org. And what I do is I host competitions at colleges where students get to tackle local social issues in their community. I give them cash prizes.

I give them seed money to the winning team. So we have students tackling gun violence in Chicago. We have students in Houston helping food insecurity.

We have youth mentorship. We're at a dozen schools. Always appreciate any support there. For all my trading content, you can follow me on Twitter.

at the one lance b uh my tip for those struggling is i'm kind of a big fan of buddhist philosophy and and uh you know there's this one chinese farmer parable um what might seem bad in the end you know might be bad might be good what seems good might be good might be bad and i i'm just a true believer in having faith that everything works out in the end and so whether it's through trading or something else um have faith in yourself uh life is special life is beautiful uh just just enjoy the ride man for for whatever it is enjoy the process and uh when you do that it takes care of the rest one way or the other so uh feel free to reach out always trying to help and thank you all for listening yeah Lance this has been really great and it's a different perspective than a lot of what the other chairs are offering uh but you know there as we mentioned you know we were chatting beforehand there's a there's a foundational truth to all the training styles that are successful so i thank you for sharing yours to everybody watching i hope you enjoyed please go ahead and leave a like down below for lance subscribe to the channel