Pre-Market Preparation and set up

[00:00:00.06] - Speaker 1
Foreign.

[00:00:06.06] - Speaker 2
So today. So thank you guys for joining, first of all. So any questions, please feel free to paste them in the chat. So today what we're gonna do is Steve is gonna run us through kind of like his process when preparing for the market. We have just less than half an hour, so he's going to show us what he looks at it in the morning, how he prepares himself, the type of chart he has, the type of asset he's using. And so to give you some idea on how he would approach the trading day. So I'll pass it on to you, Steve.

[00:00:44.18] - Speaker 1
Perfect. Thanks, Fabio. My name is. Hi everyone, my name is Steve. I lead the futures trading floor with Patrick, my good friend. And yeah, so like the main thing that Patrick and I always try and focus on is our confluences. And our main confluence has always been S P and of course the VIX here to keep it just, you know, keep it straightforward. And of course we can include other things later on, but yeah, just straightforward. Right now I'm using the SPY in the esu, but before I get into the levels, before I get into price action quickly, I just want to just give a little background on myself and kind of the reason and the importance why us as professionals always need a, a plan and always need to do our homework before the market and why it's so important. So for me, I always, I always like to clear that name or that title as a trader because for myself I always like to, I come from a professional background, turn entrepreneur. So I always like to call myself portfolio manager instead of a trader because I'm personally funded under my own corporation and working towards building on my own investment index.

[00:01:59.04] - Speaker 1
So the key word here has always been manager with both Patrick and I. And I like to make a good quick comparison first. That could also help with everyone once they can get to that next level, leave their nine to five and start building their portfolio. So yeah, there's always. Yeah. So the main reason why market preparation is so important not only for beginner traders, investors, but also experts because, you know, like diving into this billion, trillion dollar money machine is very complex and competitive. That requires an elite mindset. So which is why I always like to compare what we do to athlete, athletes or you know what, better yet, let's say an elite club manager for, let's say European football, American football, it doesn't matter any sport on that elite level because every manager before every match or even practice is always required to plan, to assess the risk management, assess their injuries, who's healthy, who can play Same with when you're approaching the market. Right. So in order to achieve that success, it's always key to implement a plan and to prepare your players, in this case your capital pre market. Right. So first things first, when we look at the charts, we always assess, we try and assess the volatility and we try and assess our margin and requirement in case our first second idea is incorrect.

[00:03:26.23] - Speaker 1
And we always have enough, plenty where we can unemotionally recover, which is what always hedge funds do because they're not always right. They're, you look at the statistics, they're probably less than 50% right with their trades but they manage their margin and they calculate everything so efficiently where they can easily recover within a few hours, within a few days, weeks, depending how, how long. And you guys always see what I post sign. Sometimes I'm a loss, but I'm able to recover quickly because as a day trader I always like to recover every day. I hate losses of course, but end of the day, as, as long as end of day or end of next day, I recover my losses and I always prepare myself to have enough margin and capital to make those decisions. Then I'm fine. Because you know we're all going to take a loss, we're all going to take the chin or the loss on the chin. And that's, that's the reality of trading and that's the reality of any elite management role whether it's in professional athletics or whether it's in managing like a hedge fund in the markets. So, so yeah, so let's go straight into it.

[00:04:31.23] - Speaker 1
I showed you guys, I'm showing you guys Spy esu. ESU is a new I think ticker we're going to use since the rollover for S P. So sometimes I like to. Or not sometimes, sorry, all the time I like to have a zoomed out chart, the 5 minute and the 30 minute and also the 1 hour. But right now I'm just going to show you the 5 and 30 minute. But before we dive into the charts, first things first, you always need to be aware of what is going on pre market globally. Always. Right, Because a lot of, a lot of news can be hit Asian session, London session all the time. So more so I don't really like to look too much in price action but more so what is going on. Any big news going on with either the mix 7, with Apple, with Microsoft or with individually with indices. But indices usually get affected when something goes on of course globally, whether it's like war tensions, whether something with oil and Gas energy. So that's first things first. Be updated, be aware. Because as traders yeah we always have to be prepared for that volatility.

[00:05:30.00] - Speaker 1
So they I got a list here of not only the high impactful news but also the medium and low. Because the medium and low could can also give us a little shift of momentum. So people are sometimes a little too focused on high. So today we had retail sales come out hour before this mountain time and later on, yeah like later on we got a few things coming out. Main thing will probably be the Fed speaker coming out the one hour close after New York open. Patrick and I we always look at the one hour close because you always see a little momentum shift with algorithms. So just being, just having that, just being aware, knowing that there could be a possible shift in volatility especially if you're live in live in trade. If I'm not live I'm not looking at as much. I look for kind of the reactions especially if we're in an important zone important level provided by Mentor Q. So yeah so after that's kind of analyzed that's in back your mind either you can write it down or you can just memorize it. Whatever is easier. Next thing I'm always inputting the levels, inputting the levels, kind of getting a clear picture what is going on.

[00:06:31.07] - Speaker 1
Where is price currently floating? Currently ranging pre New York open or also a lot of times what I do is when we have let's say a big news event NFP CPI where price is floating around maybe before a big volatility event. And where the levels are it's always important because these levels are always recalculated every day. That's the beauty about it. It's the beauty of day trading as well. The exposure is always recalculated. The hedge funds, the market makers always need to reassess each day and kind of bring price to certain areas because you can always watch within the first half an hour, hour, two hours of the session. Market likes to, likes to magnetize towards certain areas and maybe have a reversal unless it's a trending date. There's really three days that people need to realize on markets I've traded this long enough. There's the kind of the trappy days where price likes to these levels or these high exposed areas like the bring price up as a reversal for you know the big money managers, the hedge funds, the market makers to fill their orders completely reverse and we get our major move.

[00:07:35.12] - Speaker 1
Or like yesterday where we had just a complete trending day where price came down Was consolidating for about half an hour, an hour right into lunchtime and then boom we just, we just had a straight up trend like this. This was just a complete trend where you wouldn't want to be on the wrong side of the market. So you, you got your, you got your fake out trend reversal, you got your pure trend date where it kind of squeezes above all levels and then you have a consolidation and usually a consol validation comes right after a strong trend day like today or like yesterday. Sorry. So as we see all the daily levels were broken, all the weekly and all time highs were broken. So keep that in mind. S P Boom. All time high was broken, weekly level, everything was broken. So now it seems like pre market London session we were just able to hold these levels. Consolidation mode. Call this a bull flag, whatever you call it pattern wise I don't like the trade patterns but I can, everyone can easily see what's going on here on the five minute, on the 30 minute.

[00:08:35.01] - Speaker 1
We just been consolidating. So today could be a ranging consolidation day which easily sometimes a lot of times can be my favorite day because whether wherever I put a trade, whether a longer short and it goes against me, I have plenty of margin to start recovering. Sometimes I add in, sometimes a hedge, it all depends. So on these days it can be a lot easier to trade the top or bottom but it doesn't always have to happen like that. But probability wise today could be a just a consult like a consolidation phase after the trend higher. So as we can see not too much news coming out. We had retail sales pre market low volatility that kicked in market expanded about. Yeah not too much, about quarter fifth of a percent. So yeah no surprise there with retail sales. So after we see where the trend is, where price is currently located now we have the levels and I always mark out the most important levels. Most important levels are usually the call resistance 0dt as well as the one day min or the one day max. So we can mark this out. I don't expect us to get this high but you never know, right?

[00:09:41.00] - Speaker 1
So you can set your alerts, see how price can range and react. So on a day like today I would just wait, I would just wait a few minutes. I like to wait 15 minutes after. I don't usually set orders pre market. Maybe happens one times, twice out of 10. I've been trading long enough where I can, I can see a strong trend incoming pre New York open. But on a day like today I would just wait, maybe set the alerts wait for a better positioning. So on spy, this is what we see right now. Easy support resistance. Price can easily break it. Retest it. I don't, I don't expect this to fall this fall this deep today. But you never know. Always expect the unexpected. So just always be ready. On comparatively on futures levels we have something very similar, right? So we had the breakout but this is a zoomed out chart. So we got the breakout here, we got the consolidation and the one day max and the one day man are in similar positions here. So of course if Price can get the one day minute, one day max would be nice because right now I did some editing, I can bring out some GEX levels as well.

[00:10:49.21] - Speaker 1
But from what I see, Price is just consolidating. It's not doing much. No surprise especially after that rip that we saw yesterday. Price came up but just completely on ES, about 1 over 1%. Of course on NASDAQ I think we saw a move greater than 2%. So yeah, I have my, I have my trading brokers open as well. Usually I'm trading the NASDAQ or the Dow, sometimes S P, I have those ready on the side. Usually I trade my MT5 or my TradingView account through ACAP through my CFT brokers. Reason people always ask me why do you trade CFDs not futures? For me, honestly, while I can trade CFTS, I'm from Canada, I'm fine because the customization, the lot, sizing the risk parameters, I got the tools on there. It's always been much easier for me. And only fee and that and I pay no fees because I know a lot of people complain about futures and the fees they pay but at the same time they don't pay the spread. I pay the spread, that's the fees. But because my spread is so tight, my overall the fees I'm paying are very minimal. So everyone had each their own.

[00:11:55.21] - Speaker 1
Of course in the US they would have to, you would have to trade futures. And of course everyone knows with the funded Prof. Firms, whatever you call it, the hammer came down. So a lot of people are being forced to trade futures and of course you know you're getting the exact price, it's a lot more regulated. So when you're, when you're putting in a lot more capital, fifty hundred to a million, it's a lot more secure comparatively putting to like unreligate, unrelegate regulated broker as well. Which is why I always have to spread my capital. Maybe one day I'll come into futures. I know Fabio and Patrick are Trying to get into futures. But every time I see the fees and every time I see Patrick's fees every time he trades, because of course he's trading huge contract sizes, it always brings me back a bit. But I know it's the much more secure than the other brokers. But we'll, we'll see. But for now I'm using cfts and of course using the spy, the options and the, the futures charts to kind of give me a picture of what could potentially go on in the future.

[00:12:51.20] - Speaker 1
So right now we're just trending. You could always set your pivots for me. Some people put hourly pivots. I like to only put daily pivots. But because we broke out so high from the previous day, this would be, this would basically be the daily pivot from, from yesterday. And because we, yeah, we just pumped out so, so heavily from yesterday, I guess you can't even use any daily pivots from the other day or even weekly pivots because we're at all time high. Again, Fabio, how many times are we going to say it? We're at all time high, all time high, all time high. It's crazy. It's crazy. It's crazy times that people say, oh, it's not a bull market, but it is a bull market. And they're confused because we keep breaking all time highs. But the thing is we can't continue that squeeze higher. We always come down consolidated back into the weekly levels. So it's, it's very, it's a very shaky environment right now. Elections coming up, people afraid of, you know, the recession coming in next year, the rate cut. Because also remember the market doesn't want a rate cut. People are getting it the other way around once the rate cut comes.

[00:13:55.05] - Speaker 1
That's not good for the markets. That a lot of times you got to see as well. There's always a shift before a rake, right before a rate cut. Anytime you look in the past, whatever, 2016, 2020, 22008, right before they initiated the rate cut, there was a bit of a correction or a crash. So, so rake. So we don't want to rate cut for, for markets that continue higher, a rakeout would be bad. Rumors of a rake, that's a different story. But an actual rake at, to come in. And of course Jay Powell, the first time he talked about the last meeting, sometimes I looked at Fed meetings, but not too much. That's more fundamental swing trading. But I think that that's also important as well to maybe read, read the tape and this was the first time Jay Powell was hinting towards a rate cut. So that's something we need to think about as well. So yeah, we got the levels we got the previous day. We got, sorry the mentor Q levels we got previous day pivots. Right now we're no man's land once again. I just kind of marked out the most important levels here from the queue and then yeah, just kind of wait and see.

[00:14:52.06] - Speaker 1
I don't expect this to hit any of the outer ranges here since we're in full consolidation mode after yesterday's rip, which is no surprise. Too bad we couldn't do a little pre market session yesterday. That would have been much more interesting because we had some high volume levels, your TTs like right below, which could have been possible, like an idea for move higher. But also an interesting hedge area as well, which I like to use if it goes the other direction because I always expect unexpected. I'm never hopeful. For me it doesn't matter. Go up or down, doesn't matter. But for me it's always about positioning and leaving yourself enough margin for it to bring yourself back into profit. Because if Patrick and I, we hate closing the day with profit, we hate it. But we also measure ourselves to not over, over trade either, to increase, increase that level of losses as well. So that's, that's, that's all it is at the end of the day. So. And a lot of times people ask for myself like why am I spreading out my, my bids to like five, 10 times on average? Why not just set one, let it ride.

[00:15:53.06] - Speaker 1
Because if I set a one, because for me it's, you're never going to get the be best, you're never going to, you're never going to get the best price ever, right? So for me, if I'm able to spread it out, let's say five times at first, using maybe 5% of my margin, maybe half a percent, 1% of my risk. Because remember margin percentage and risk is, is, is a little different and I keep it that low, then I'm always, I'm always able to kind of let the price do its thing, let it consolidate, let it, you know, whip around. And if it goes much deeper, I also have my level set if I want to either average down or if I want to hedge. So that's always important for myself as flexibility. Of course, when you swing trade you don't have to be as precise and you can just set one big order and let it ride for a few days or a few weeks is much different. So everyone's time frame is different. For me, I'm able to trade the first few hours, so I'm always staring at the screen. Of course, my what's.

[00:16:47.04] - Speaker 1
For me, what's most enjoyable is to be done early, be done early, create that freedom for myself. Because end of the day, nothing beats freedom of time and the freedom you have of life comparatively to make more money. Of course. Did I, did I catch the entire move yesterday? Of course not. Did I sell, did most people sell too early? Of course. You know, like we were coming up to the. We're coming up to call resistance. 0tt price was consolidating here for about, I think, yeah, for about 45 to 60 minutes. Took my profits. I saw, you know what, it's lunchtime, it's the euro. I would enjoy my life. Of course I could have made five, six to one. It was like it was a great trade to keep holding or to keep trailing. But a couple of my trails got hit. That's another way I, I like to strategize my take profits because I, I truly think people's focus should be strategizing how they're live into a trade and taking profit comparatively like they're set up. The setup is easy. If you split your bids, you have your idea, you have your risk. It's the, you know, it's, it shouldn't take you longer than a few minutes to kind of create a bias on that based on where price is moving, where it's entering a level.

[00:17:59.18] - Speaker 1
But once you're live into a trade and your money's at risk, that's when the real pressure comes in. That's where the real skill and strategy comes in, I think. So there's different ways to do it with either trailing, you can use atr. I use the SMMA on the, on the, sometimes the 30 second, the one minute and I just let it ride. So yesterday it was taking out my trail. Sometimes I zoom out to the 5 minute to trail it as well. Took it out on that as well. And that's it. I was out and I was able to enjoy my day. Of course I saw the market after and I was messaging Fabio and Patrick. And the thing is Patrick, he's a scalper. So he's, he's always looking for that volatility spike each time. So with him being able to scalp a lot quicker, he's in and out and he's able to catch each move like that. But also he's glued to the computer much more. So end of the day, depends your Lifestyle depends what you want in life. And yeah, this is how I trade. So. Oh, and also the vix. Sorry the vix.

[00:18:49.20] - Speaker 1
So here I like to spread out the spy. The future is also the SPX of multiple screens. I like to keep it on like higher time frames as well. See what's happening. We're in consolidation mode right now and I got the levels mapped out. And then also with the vix. VIX I like to Mac map out on candlesticks because I found especially yesterday where we got the high, the low of the day, high low of the week. Those are always important levels on the vix. And then of course you match them up with the levels and it's perfect. Look, the highs and lows coming with the put support coming with the guest level one. The guest level one and the zero are the heaviest exposure levels that you can have. So I always include those on the chart. So very important. So yeah, so just kind of see how price bounces right now more so on price action. Probably not going to watch price action action as much. I'm probably going to watch the VIX also throw in a DXY and see how they react on the zones and then go back on S P and then go back on NASDAQ and and figure out a trade on stack.

[00:19:43.14] - Speaker 1
So yeah, any questions, let me know. It's pretty, pretty straightforward. Of course I wish I could share multiple screens but just to make it easier, I just showed the s P the 5 to 30 minute and the Vix right here just to kind of see what's going on. Set your alerts and just go from there. So.

[00:20:10.04] - Speaker 2
Yeah, that's great. Steve, I think we have a couple of questions. One is easy. Are you and Patrick trading partners or do you trade together? I believe you, no.

[00:20:21.24] - Speaker 1
So yeah, so our capital is completely separate. For me, majority, I would say probably 80 of my capital is my personal that I have spread across brokers. I used to trade the prep from space but I closed everything out about a year ago. For me it was just too distracting. I had enough capital on my end and then it was just too stressful. Keeping track of all the rules all in and all the fake outs and every and all the closures. Especially because at the end of the day it's a business, right? So people of course to start out, it's fine. You start managing some, you know, some capital. If you're able to invest 500 and then you, and then you're able to gain. And remember it's not a hundred thousand dollar account that you get if the max drawdown is 10,000, it's a $10,000 account. And people got to remember when they're risking 1%, they're not risking 1% of the 100,000. They're risking 1% of, they should be risking 1% of the 10,000. This is a completely different story. So anyways we don't have to get into that. But for me it's majority my private capital under my corporation which is why how I handled my taxes.

[00:21:23.23] - Speaker 1
So like since I'm able to have it under my corporation, my the way I pay taxes is much different than like the capital gain tax through the US or Canada. So we could always get into that later. Patrick, of course is investment capital but it takes time. It takes time to build your track record. It could take up to a decade for big, big investors. Because I'm not looking for the small time investors, I'm looking for the big time investors. And it could take years and slowly I'm building my index and my track record to be able to get to the next step. And once you're able to attract that big capital then your personal capital can be used for other things to deploy into like other sources of like passive income and all that kind of stuff. So yeah.

[00:22:02.07] - Speaker 2
Nice. Okay. Do you guys have any other questions?

[00:22:16.14] - Speaker 1
So yeah, like yeah, it's on a day like today I think it's important not to over leverage especially since we already had that strong trending up move from the other day. And I think it's best to just kind of watch the Vix, watch the DXY, also watch the Make 7 as well. Always keep these in mind. See what Apple's doing. Microsoft, Tesla. Tesla. It's tough to look at because Tesla of course has lower market share and it's its own beast. And it's, it likes the, it's, it's like the great divergence here. Tesla. Whenever Apple and Microsoft is doing something else so it's. But I always keep this in mind and of course the Dow as well. Watch what the Dow's doing because the DAO is it's more like an FX international trade. Its volume is a little different than NASDAQ and S& P. But it's always good to look at as well as confluence. Sometimes I look at Bitcoin, but not so much just to see what the crypto market is doing. And then golden oil is its own complete different animal. But gold I think is also important to, to look to watch once there's a big economic print.

[00:23:17.12] - Speaker 1
Today we didn't of course, retail sales, I wouldn't say it's highly, I would say more it's like medium impactful. But when, whenever we have a high print of, let's say cpi, nfp, then I think it would be important to watch gold because a lot of times what gold does and the way it reacts on these strong economic news fronts dives right in. It dives right into that trend right away. It's not like S and P and Nasdaq where you get the nfp, you can get the reversal, some consolidation afterwards and then, then it makes its move, but gold makes its move right away. So sometimes gold can be a nice indicator of what's to come with anything that's affected by the US dollar, which is of course the major indices. So but I, I used to, I used to trade gold but for me I don't get it. I, I don't, I don't get enough right now on gold unless I'm trading maybe the news on gold. But for me overall I've always made the most money off nasdaq. So I stick with what I'm good at, stick with, makes money. And also for me, not only of course it's my main source of income, but it's my main source of passive income as well.

[00:24:21.10] - Speaker 1
So whatever I deploy or whatever I make off my personal capital, I redeploy into other like business adventures, investments, ways that can passively make me like a dividend each month or each quarter. So that's always my plan.

[00:24:37.16] - Speaker 2
That's great, I think. Steve, we have a questions from Kulu in the chat. I don't know if you want to go through that. So it's basically like how do you manage your trades? Do you aggressively with retest, limit order or do you wait for confirmation before entering the level?

[00:25:01.01] - Speaker 1
Yeah, so for me I never set limit orders. I would only set limit orders if I'm holding longer term because then I have much, much more room. Well, of course I would like for, well for me in the rule number one, if I was, if I was to ever set a limit order, I would have to automatically set the stop loss as well. But I don't like to set stop losses because I never put myself in so much risk where a 20, 30, even 50 point move is gonna bring, bring myself in trouble margin wise. That's why I always, that's always like spread it out. But let's say if I, if I do. But yeah, sorry. So limit orders, I would only do swing trading where the, where the stop loss is preset. But day trading I wouldn't because there, because when, right when price reaches, let's say a certain level, let's say price, let's say I said like a short limit order at this gamma wall, S and P comes up. But at the same time, remember the market shift in S P is much different than nasdaq. So this is why I need multiple charts.

[00:25:59.15] - Speaker 1
I need to see what S P is doing. I need to see what NASDAQ is doing because the volatility and there could be a little divergence but also the velocity is much different from NASDAQ comparative to S P. This is why I always need to see the chart of S P. And when S P comes to this like large gamma wall, see maybe where NASDAQ is, see where the VIX is because, because if you set a limit or possibly it's all about time as well because the timing of it is different. It reach, if it reaches this level, let's say three hours from now, the market shift or the market could be much different and we could come into lunchtime keep coming into like a consolidation zone. So that's why I don't like setting limits because if it doesn't reach this area for another few hours or end of day I, I like I should be done and the volatility could be dead. And as that could be in some, in like a different position as well. So the confluences I think are better to just set alerts and then I'll, and then get, and then grab your idea once that alert is hit instead of putting limit orders.

[00:26:49.22] - Speaker 1
So then, and then also and then start initiating. Maybe If I have 10 bids, put in one bit, put in one, two bits. So if I'm at 20% of my risk parameter and a lot of times like you know, people like to set like risk rewards. For me I always set it to like let's say one to one. But for me the one to one is if I was maxed out on my 10 bits. So that's how I always set it. And on MT5, on MT5 I have a like a risk calculator that sets like my level here for example, right here. Second where we're coming, we're coming up to open right now but for me we're coming up to open about my stress, we're in consolidation. I don't have any orders set just yet. I have an idea but I'm just going to be patient right now. Usually I like to wait until the first 15, 30 minutes but for now I'm calm Calm in the market. Let it come to you. That's it. So for me on my 1mt5 right here. So for me I have this risk calculator. Yeah, right here. So I have this risk calculator.

[00:27:51.06] - Speaker 1
And let's see on this MT5. That's the beauty about MT5. MT5 has, has all, all these nice tools and it sets it completely. So if, let's say if I'm, If I'm risking one and a half, one and a half is about 7,800 on this account. I set the level and it, and it gives me the exact lock size. So divide 3 by 10. So I put let's say 0.3. And then, and then, then I know that I can, I could spread my risk one to one much greater. So I already have like one. I already have one risk parameter right there or one bid, bid size. And I can easily just come into the market. So right now I'm just going to close this because that was just for an example. So if I split my bids out 10 ways and my risk reward, let's say is one to one, then have plenty of room to run on that idea and have plenty of room to start hedging or go the other way if the market starts flushing as well. So I hope that helps with the flexibility because if I just put in like, let's say one big order, like three lot size, if I just put in like three lots and I already had to, like, I already already had to put down my risk reward down here and the market does something funny, S P breaking VIX is doing something else, then I would have to start, you know, taking those partials off and hedging with greater size.

[00:29:02.22] - Speaker 1
So that's why it's all about patience and it's all about flexibility in the market.

[00:29:15.19] - Speaker 2
Great. So I think we're coming up to the open.

[00:29:19.23] - Speaker 1
Yeah, yeah.

[00:29:21.02] - Speaker 2
So I think, yeah, we can close it here, Steve, and you know, really appreciate your help and we'll do more session like this over the next few, few weeks as well. But yeah, thank you guys for coming and please send any questions in the chat. We are always here.

[00:29:38.17] - Speaker 1
Perfect. Thanks Fabio. Thanks everyone.