Recorded November 21, 2024
During the live webinar, we encountered technical issues and had to pause after addressing the first few questions. Peter then recorded answers to all the submitted questions, and we edited them into a comprehensive recording. We hope you enjoy it!
Overview
Trading for a living vs. trading for a quick fortune
Words from Enrico, a Factor Member
Q&A 19:04
Questions from Members
Is Djia set to reach USD 45009 as per the September report. 19:04
How should I interpret or approach the Factor Report? 21:09
What is a Setup Day? 22:49
I have come across the term "Last Day Rule." I've read various definitions online, but I need clarification on whether I fully understand them. Please clarify. 25:14
I read that Peter uses Swings and/or P&F charts count to develop Targets. How can I learn this method? 25:22
Recently, you mentioned that if you started trading now, you would increase your risk size to 200–300 bps and "be more selective in the trades you take." How would your trade selections differ from those you currently make? What specific criteria would guide these choices? You also mentioned narrowing trade criteria to focus on 20–30 trades per year, which I find particularly intriguing. Could you elaborate on how you'd structure this more selective approach? Additionally, I'm curious about your emphasis on trade setup criteria as the top priority, especially since it seems to challenge the conventional wisdom (including your own advice) that trade selection is the least critical aspect of trading. Why prioritize this over elements like exit strategies? 27:50
Peter, you emphasize trading well-defined chart formations with clearly established breakout levels. You've mentioned taking a maximum of two trades per market if the first one fails. My question is: What criteria do you use for the second trade, considering that the initial failed breakout attempt polluted the clarity of the chart? 35:04
How does Peter roll into the next contract? What type of orders does he use (Market/LMT/Stop); does he get out of the whole position all at once with one order or use several orders spread over time? Is it different for thin markets? Are Buy and Sell orders executed at the same time? Are winning and losing positions handled the same as losing positions? Does he use this as an opportunity to get stopped back into positions that are profitable or not profitable? 36:55
What is your current protocol regarding the ADX indicator? How are you using it now? 38:50
Briefly explain your rules and criteria for entering a 100%, 50%, or less position size. At which point do you divide any trade into tranches (1, 2, or more)? 39:45
When you exit a tranche (reduced to 50% of the original size), do you have rules for adding it back in the future (back to 100% of the original size)? 41:45
How does Peter trade wide opening gaps when long (e.g. opening gaps well below his protective stop and, as is often the case with such gaps, at or near a lower support zone)? Does he have some preferred methods, and if they require day-trading to minimize the slippage from the original stop, how much screen time do they entail? Those opening gaps are incredibly time-consuming. 43:04
When you spot a potential trade because you observe that a breakout is likely, but there isn't an optimal zone to place the stop loss, how do you manage it? For example, you're monitoring an asset because there's still room for a breakout, but then the breakout occurs with a large candle. In this case, knowing your entry point but lacking an optimal stop loss level, how do you approach the trade to place orders and manage risk effectively? 44:29
I know you cap position exposure at 6-8 units max. Still, do you have more stringent rules for closely correlated markets like the petroleum/soybean complex, precious metals, and equities? Do you enter multiple correlated positions in one day, or do you wait for follow-through? I saw that a month or so ago, you went long on both gold and silver. I am curious how close those positions were put on and what precautions you took to make sure you were not left overexposed. 46:12
How does Peter manage trades with home run potential (e.g., clear patterns with distant targets) that are well past the entry point but are only, say, 1/3 of their way to target? Peter has discussed his toolkit (multiple tranches, raising stop to previous support levels, moving averages), but it would be helpful if he could give some examples of how he managed to stay in the trade during corrections. The 18-dMA usually trails pretty close to price and strong rallies often pull back to slower moving averages (e.g. 50d-SMA for equities) before resuming their rallies. 48:24
When Peter wrote in his 10-22-24 post on gold: "exit would be based on eight day crossover of the 18 day moving average with subsequent downside follow through", did he mean 8-day moving average crossover of the 18-day moving average? 50:20
Volatility around key events - Events such as FMOC news conferences are often accompanied by wild price swings. If the price was near a key level and stop, the stop will often be hit during those swings even if it eventually moves favorably. Does Peter sometimes reduce his position or widen the stop until the swings subside? 51:51
When you enter a trade that moves quickly in your favor, how do you manage the stop loss? Do you move it soon to breakeven, and if the price pulls back, would you consider re-entering on the retest, or how do you approach this? 53:19
Triangles recap: I am still confused by how Peter counts triangles despite having reviewed several of his videos (including Best Dressed List) and Schabacker's book. Could Peter illustrate how he counts the number of contact points prior to an upside or downside breakout for various types of triangles (symmetrical, right angle, wedges, pennants), and where he places the first contact point? Idealized drawings on a sheet of paper would work just as well as actual historical examples. 54:58
Regarding the "Completed Chart Patterns" Tweets, how can I interpret them? Specifically, what should the stop-loss (SL), entry points, and profit targets be? How do we pyramid our positions and adjust the stop-loss accordingly? 56:45
https://www.peterlbrandt.com/wp-content/uploads/2024/11/Screenshot-2024-11-28-at-6.59.00 AM.png9821752Peter Brandthttps://www.peterlbrandt.com/wp-content/uploads/2020/04/TheFactorReport-small-logo.jpgPeter Brandt2024-11-28 12:35:582024-11-28 12:35:58Factor Member Webinar November 2024
You released a 1989 MTA Journal article, "Classical Charting Principle". In it, you outlined two trading approaches you had used back then. I'm wondering about the 1st approach, "Every Pattern Trading". You no longer trade it that way. Can you share what the reason is? Is it a change in market behavior, or is it simply you're tired of trading so many signals? 01:06:21
In many creative fields, professional performance slides after the late 40s and declines rapidly after the mid-60s. From your performance, it doesn't seem that way at all. Do you consider yourself an outlier? Or is trading actually age-unrelated? 01:09:06
How does Peter select the contract month for trading, such as choosing the May contract over the April one for the recent Soybean short? 01:12:13How do you decide which rollover method to use when charting continuous metal futures (gold, silver, copper)? The nearby contract is not a useful proxy for spot because of contango, and the charts posted on Twitter and Weekly reports have at times used Trade Navigator 055, 057 and 065. Could you explain your reasoning for choosing between those rollover methods when trading metals?
How do you keep from repeating the same mistakes? I frequently loosen my stops? EG gold today; where were were/are you stops for gold today if you don't mind my asking. 01:15:05
Regarding Avg Gains and Avg Losses on your Metrics page, at what threshold do you bucket breakeven trades into winners or losers? 01:17:41
If we don't trade futures, what ETF would you trade for Japan? 01:18:38
Can you please comment on entering an intra-day breakout as opposed to waiting for the close (as it relates to false breakouts)? 01:19:09
Is there any possibility of Peter explaining ATR confirmation? 01:22:06
Why did you stay in the Robusta trade rather than exiting completely at the target? 01:23:06
How is Factor trading structured? What do you look for in an accountant who knows trading companies? What brokers are used to trade some of the more obscure futures, like those on the London and ICE exchanges? Is this all through IBKR? 01:23:52
Do you have an opinion on AI being able to either compete with or enhance your process? 01:25:49
How do you handle action like in the ZB pattern, with early breakout, which then retests deeply within the pattern, before working again? 01:27:04
Is a pattern retest valid for a first entry, even though it may be a stop-out for an initial breakout position? ie, How will you manage the stop on the Soybeans trade if it retests? 01:28:07
Can you explain why you use 8 MA? 01:29:31
Can you review how you set different ATR Can you review how you set different ATR levels? 01:30:38
Could you talk about trading addiction, and if a trader who has been addicted, could trade normally after working on it? 01:31:07
When you re-enter a position that you were stopped out, do you still enter with a 100% position? 01:34:13
Could you comment on resolving disfunction in following rules, esp related to sizing/risk? 01:34:51
I thought I saw Peter's comment in Chart Wizards that classical charting patterns no longer work. 01:39:52
https://www.peterlbrandt.com/wp-content/uploads/2024/01/Screenshot-2024-01-04-at-9.52.48 PM.png12382204Peter Brandthttps://www.peterlbrandt.com/wp-content/uploads/2020/04/TheFactorReport-small-logo.jpgPeter Brandt2024-01-05 22:40:442024-01-05 22:47:032023 Markets and Best Dressed List Review – January 2024
You have a long-standing stance that Bitcoin has a 50% chance of continuing to increase in value and a 50% chance of going to zero...based on that, in what instance (or instances) would you see Bitcoin going to zero, and if that were the case, how fast could such an event happen? (i.e. zero overnight or would it take more time)? 26:15
Which of your four pillars is the most critical and why? 28:03
Are you still only trading weekly charts, or will you trade daily chart patterns as well? 29:40
Any opinion on stock FLR? 30:51
Any idea why did Edwards & Magee become more popular than Schabacker? 32:20
Has this been one of your toughest years performance-wise? 33:50
Are you looking at Forex pairs as closely as Futures contracts when you are charting and looking for potential positions? 35:57
Do you trade altcoins too? Are you taking chart requests for altcoins? 37:44
How do you decide where to set your stop when you enter a new position? 38:44
In the FLR chart, do such patterns mean retesting the recent lows successfully by making a new Higher High again and again to break out? 43:33
Using technical methods, what are good books for day/swing trading? 45:02
Do you follow only Robusta or KC futures as well? 46:00
In order of your top 3 or 4 preferences, what are your favorite patterns? 47:41
Do you take the continuation pattern or the pattern of the contract month? 51:37
https://www.peterlbrandt.com/wp-content/uploads/2023/11/Screenshot-2023-11-27-at-5.23.21 PM.png11562064Peter Brandthttps://www.peterlbrandt.com/wp-content/uploads/2020/04/TheFactorReport-small-logo.jpgPeter Brandt2023-11-28 01:06:282023-11-28 01:06:28Factor Public Webinar November 2023 – Market Review and Q&A
Factor's underwater curve changed dramatically around 2014. Is this due to measuring DD using closed trade NAV, or due to aggressive risk management? 13:50
What's your most remembered drawdown period? 16:01
How much of the drawdown period is self-inflicted as in we make the period worse ourselves rather than sticking to the trading plan we all should have? 18:01
What is an "acceptable" drawdown for those who have retirement accounts and do not have the ability to do shorter-term trades, hence, needing to hold longer? Whether that be an index fund, BTC, etc. 20:18
What practical steps do you take to deal with mental torment? 25:57
My data over two years shows that if I take every trade my total performance would be 6 X greater with fewer drawdowns. Common reasons for not pulling the trigger are: Pattern extended from MA's, Support/resistance close, pattern looks loose, not text book pattern, looking for more compression before breakout. However, looking back, they have more going for it than not. Do you have any advice here? 29:07
You mentioned "be able to take many small losses", does limiting risk to 1% but not moving stops aggressively satisfy this? 31:38
The first line in your how to have success in trading is having Defineable and Comprehensive trade. Is this a written document that you continually update? If so, is it fairly detailed and includes all of your trading weapons? I would love to see an outline if this is something that exists. 34:23 (BOOK: Thinking in Bets by Annie Duke)
What was the pivot to introducing varied bet size? My struggle is when to increase bet size, and if the next is a big winner then I'm missing out. 42:08
Do you think it makes sense to start cutting trade size if you see lots of tradable patterns to limit the risk in having more signals than normal? 44:44
Experience is the best answer to many trading questions ... Knowing your "edge" & knowing how to calculate that - Before! - placing a bet ... discovering this changed my life ... Thank you, Peter, for this discussion! 48:20
You scale out of trades and less frequently add another traunch. Could you elaborate on when and how to take a second bite? 49:06
Factor Member Webinar November 2024
/by Peter Brandt- Trading for a living vs. trading for a quick fortune
- Words from Enrico, a Factor Member
- Q&A 19:04
Questions from Members- Is Djia set to reach USD 45009 as per the September report. 19:04
- How should I interpret or approach the Factor Report? 21:09
- What is a Setup Day? 22:49
- I have come across the term "Last Day Rule." I've read various definitions online, but I need clarification on whether I fully understand them. Please clarify. 25:14
- I read that Peter uses Swings and/or P&F charts count to develop Targets. How can I learn this method? 25:22
- Recently, you mentioned that if you started trading now, you would increase your risk size to 200–300 bps and "be more selective in the trades you take." How would your trade selections differ from those you currently make? What specific criteria would guide these choices? You also mentioned narrowing trade criteria to focus on 20–30 trades per year, which I find particularly intriguing. Could you elaborate on how you'd structure this more selective approach? Additionally, I'm curious about your emphasis on trade setup criteria as the top priority, especially since it seems to challenge the conventional wisdom (including your own advice) that trade selection is the least critical aspect of trading. Why prioritize this over elements like exit strategies? 27:50
- Peter, you emphasize trading well-defined chart formations with clearly established breakout levels. You've mentioned taking a maximum of two trades per market if the first one fails. My question is: What criteria do you use for the second trade, considering that the initial failed breakout attempt polluted the clarity of the chart? 35:04
- How does Peter roll into the next contract? What type of orders does he use (Market/LMT/Stop); does he get out of the whole position all at once with one order or use several orders spread over time? Is it different for thin markets? Are Buy and Sell orders executed at the same time? Are winning and losing positions handled the same as losing positions? Does he use this as an opportunity to get stopped back into positions that are profitable or not profitable? 36:55
- What is your current protocol regarding the ADX indicator? How are you using it now? 38:50
- Briefly explain your rules and criteria for entering a 100%, 50%, or less position size. At which point do you divide any trade into tranches (1, 2, or more)? 39:45
- When you exit a tranche (reduced to 50% of the original size), do you have rules for adding it back in the future (back to 100% of the original size)? 41:45
- How does Peter trade wide opening gaps when long (e.g. opening gaps well below his protective stop and, as is often the case with such gaps, at or near a lower support zone)? Does he have some preferred methods, and if they require day-trading to minimize the slippage from the original stop, how much screen time do they entail? Those opening gaps are incredibly time-consuming. 43:04
- When you spot a potential trade because you observe that a breakout is likely, but there isn't an optimal zone to place the stop loss, how do you manage it? For example, you're monitoring an asset because there's still room for a breakout, but then the breakout occurs with a large candle. In this case, knowing your entry point but lacking an optimal stop loss level, how do you approach the trade to place orders and manage risk effectively? 44:29
- I know you cap position exposure at 6-8 units max. Still, do you have more stringent rules for closely correlated markets like the petroleum/soybean complex, precious metals, and equities? Do you enter multiple correlated positions in one day, or do you wait for follow-through? I saw that a month or so ago, you went long on both gold and silver. I am curious how close those positions were put on and what precautions you took to make sure you were not left overexposed. 46:12
- How does Peter manage trades with home run potential (e.g., clear patterns with distant targets) that are well past the entry point but are only, say, 1/3 of their way to target? Peter has discussed his toolkit (multiple tranches, raising stop to previous support levels, moving averages), but it would be helpful if he could give some examples of how he managed to stay in the trade during corrections. The 18-dMA usually trails pretty close to price and strong rallies often pull back to slower moving averages (e.g. 50d-SMA for equities) before resuming their rallies. 48:24
- When Peter wrote in his 10-22-24 post on gold: "exit would be based on eight day crossover of the 18 day moving average with subsequent downside follow through", did he mean 8-day moving average crossover of the 18-day moving average? 50:20
- Volatility around key events - Events such as FMOC news conferences are often accompanied by wild price swings. If the price was near a key level and stop, the stop will often be hit during those swings even if it eventually moves favorably. Does Peter sometimes reduce his position or widen the stop until the swings subside? 51:51
- When you enter a trade that moves quickly in your favor, how do you manage the stop loss? Do you move it soon to breakeven, and if the price pulls back, would you consider re-entering on the retest, or how do you approach this? 53:19
- Triangles recap: I am still confused by how Peter counts triangles despite having reviewed several of his videos (including Best Dressed List) and Schabacker's book. Could Peter illustrate how he counts the number of contact points prior to an upside or downside breakout for various types of triangles (symmetrical, right angle, wedges, pennants), and where he places the first contact point? Idealized drawings on a sheet of paper would work just as well as actual historical examples. 54:58
- Regarding the "Completed Chart Patterns" Tweets, how can I interpret them? Specifically, what should the stop-loss (SL), entry points, and profit targets be? How do we pyramid our positions and adjust the stop-loss accordingly? 56:45
Link to Peter's recommended reading list on Amazon Factor Webinar Slides November 2024Read More
CMR Interviews: Peter Brandt On Mastering Long-Term Trading Success
/by Peter Brandt2023 Markets and Best Dressed List Review – January 2024
/by Peter Brandt- Video recorded live on January 3, 2024
- Review of 2023 01:11
- Best Dressed List 19:05
- Lessoned Learned 01:01:59
- Q&A 26:15
Live questions from Members- You released a 1989 MTA Journal article, "Classical Charting Principle". In it, you outlined two trading approaches you had used back then. I'm wondering about the 1st approach, "Every Pattern Trading". You no longer trade it that way. Can you share what the reason is? Is it a change in market behavior, or is it simply you're tired of trading so many signals? 01:06:21
- In many creative fields, professional performance slides after the late 40s and declines rapidly after the mid-60s. From your performance, it doesn't seem that way at all. Do you consider yourself an outlier? Or is trading actually age-unrelated? 01:09:06
- How does Peter select the contract month for trading, such as choosing the May contract over the April one for the recent Soybean short? 01:12:13How do you decide which rollover method to use when charting continuous metal futures (gold, silver, copper)? The nearby contract is not a useful proxy for spot because of contango, and the charts posted on Twitter and Weekly reports have at times used Trade Navigator 055, 057 and 065. Could you explain your reasoning for choosing between those rollover methods when trading metals?
- How do you keep from repeating the same mistakes? I frequently loosen my stops? EG gold today; where were were/are you stops for gold today if you don't mind my asking. 01:15:05
- Regarding Avg Gains and Avg Losses on your Metrics page, at what threshold do you bucket breakeven trades into winners or losers? 01:17:41
- If we don't trade futures, what ETF would you trade for Japan? 01:18:38
- Can you please comment on entering an intra-day breakout as opposed to waiting for the close (as it relates to false breakouts)? 01:19:09
- Is there any possibility of Peter explaining ATR confirmation? 01:22:06
- Why did you stay in the Robusta trade rather than exiting completely at the target? 01:23:06
- How is Factor trading structured? What do you look for in an accountant who knows trading companies? What brokers are used to trade some of the more obscure futures, like those on the London and ICE exchanges? Is this all through IBKR? 01:23:52
- Do you have an opinion on AI being able to either compete with or enhance your process? 01:25:49
- How do you handle action like in the ZB pattern, with early breakout, which then retests deeply within the pattern, before working again? 01:27:04
- Is a pattern retest valid for a first entry, even though it may be a stop-out for an initial breakout position? ie, How will you manage the stop on the Soybeans trade if it retests? 01:28:07
- Can you explain why you use 8 MA? 01:29:31
- Can you review how you set different ATR Can you review how you set different ATR levels? 01:30:38
- Could you talk about trading addiction, and if a trader who has been addicted, could trade normally after working on it? 01:31:07
- When you re-enter a position that you were stopped out, do you still enter with a 100% position? 01:34:13
- Could you comment on resolving disfunction in following rules, esp related to sizing/risk? 01:34:51
- I thought I saw Peter's comment in Chart Wizards that classical charting patterns no longer work. 01:39:52
Mentioned in this webinar:- Three Most Important Ways to Measure Performance: Profit Factor, Gain-to-Pain Ratio, and Closed Trade NAV Curve
- Breakout thresholds – A protocol for entering trades using ATR stop levels
- 2023 Review and Best Dressed List - PDFs
Read MoreFactor Public Webinar November 2023 – Market Review and Q&A
/by Peter Brandt- Peter's background and how he trades 00:17
- Charts on the radar screen 11:45
- Q&A 26:15
Live questions from Members- You have a long-standing stance that Bitcoin has a 50% chance of continuing to increase in value and a 50% chance of going to zero...based on that, in what instance (or instances) would you see Bitcoin going to zero, and if that were the case, how fast could such an event happen? (i.e. zero overnight or would it take more time)? 26:15
- Which of your four pillars is the most critical and why? 28:03
- Are you still only trading weekly charts, or will you trade daily chart patterns as well? 29:40
- Any opinion on stock FLR? 30:51
- Any idea why did Edwards & Magee become more popular than Schabacker? 32:20
- Has this been one of your toughest years performance-wise? 33:50
- Are you looking at Forex pairs as closely as Futures contracts when you are charting and looking for potential positions? 35:57
- Do you trade altcoins too? Are you taking chart requests for altcoins? 37:44
- How do you decide where to set your stop when you enter a new position? 38:44
- In the FLR chart, do such patterns mean retesting the recent lows successfully by making a new Higher High again and again to break out? 43:33
- Using technical methods, what are good books for day/swing trading? 45:02
- Do you follow only Robusta or KC futures as well? 46:00
- In order of your top 3 or 4 preferences, what are your favorite patterns? 47:41
- Do you take the continuation pattern or the pattern of the contract month? 51:37
Link to Peter's recommended reading list on Amazon Read MoreFactor Member Webinar September 2022 – Drawdowns
/by Peter BrandtThis webinar is specific to the Drawdown document issued on August 29, 2022, "The Dreaded “D” Word, August 2022"
Live questions from Members
- Factor's underwater curve changed dramatically around 2014. Is this due to measuring DD using closed trade NAV, or due to aggressive risk management? 13:50
- What's your most remembered drawdown period? 16:01
- How much of the drawdown period is self-inflicted as in we make the period worse ourselves rather than sticking to the trading plan we all should have? 18:01
- What is an "acceptable" drawdown for those who have retirement accounts and do not have the ability to do shorter-term trades, hence, needing to hold longer? Whether that be an index fund, BTC, etc. 20:18
- I started paper trading eight months ago and have had equity vol but no progression; still at around break even. Very difficult to know if this is a natural DD or just not a working system! 23:22 (A Brief Introduction to Probability Theory and the Random Distribution of Results: Understanding the Concept of Sequencing in a Trading Operation)
- What practical steps do you take to deal with mental torment? 25:57
- My data over two years shows that if I take every trade my total performance would be 6 X greater with fewer drawdowns. Common reasons for not pulling the trigger are: Pattern extended from MA's, Support/resistance close, pattern looks loose, not text book pattern, looking for more compression before breakout. However, looking back, they have more going for it than not. Do you have any advice here? 29:07
- You mentioned "be able to take many small losses", does limiting risk to 1% but not moving stops aggressively satisfy this? 31:38
- The first line in your how to have success in trading is having Defineable and Comprehensive trade. Is this a written document that you continually update? If so, is it fairly detailed and includes all of your trading weapons? I would love to see an outline if this is something that exists. 34:23 (BOOK: Thinking in Bets by Annie Duke)
- How do you decide when to move stops and to where? 38:05 (A protocol for Entering Trades Using ATR Stop Levels)
- What was the pivot to introducing varied bet size? My struggle is when to increase bet size, and if the next is a big winner then I'm missing out. 42:08
- Do you think it makes sense to start cutting trade size if you see lots of tradable patterns to limit the risk in having more signals than normal? 44:44
- Experience is the best answer to many trading questions ... Knowing your "edge" & knowing how to calculate that - Before! - placing a bet ... discovering this changed my life ... Thank you, Peter, for this discussion! 48:20
- You scale out of trades and less frequently add another traunch. Could you elaborate on when and how to take a second bite? 49:06
Read More