Becoming the 9%

8/15/2019 Becoming the 9%

http://slidepdf.com/reader/full/becoming-the-9 1/50

In Trading, 91% lose. Become

One Of The 9% Now. This Is

How.

Hi, good day. You're with Francis Hunt, the Market Sniper.

Thank you for your interest in Hunt Volatility Theory. I'm going to be sharing with you the lessons

learned on a long trading journey (over 26 years in fact) that has led to my developing a personal

trading strategy and, more importantly, in terms of how it affects you, how you can benefit from

those lessons taken by me and quantum leap your trading performance in a fraction of the time

it's taken me.



How To Become One Of The 9%ers

So, join me in a snapshot of my journey……

My ‘Lucky’ Window on the World

…….. I'm extremely fortunate. I have a ‘lucky’ window on the world. In some senses I'm uniquely

positioned. I've benefited from trading and a love of the market since 1987 when I first began my

involvement. I was a technical analyst and chartist almost from inception. In the last 3 years I've

been involved in a teaching and mentoring role at a trading academy here in London where the

students are fresh-faced students. Beginners just starting their trading journey.

Simultaneously, I run a private mentoring program that I oversee personally for intermediate

traders in the 35 to 55 year age group. These traders are being honed and refined on my unique

Hunt Volatility Funnel strategy, which is a 6 month Trader Metamorphosis Program dedicated to a

single approach. This is part of my trading metamorphosis program.

Also, 3 days a week in the environment of the academy, I get to interact with a room full of equity

and Bloomberg screen effect transfixed hedge fund managers. In other words, real, quality,longstanding warriors of the trading game, managing between 5 and 25 million +

One of the great benefits of seeing this mix of both early starters and market ravaged warriors is

that i’m reminded of all the mistakes and errors that I made when I first commenced my

journey….and most importantly to you, how we can faster circumvent those errors, yet getting

the influence and the stimulus of engaging with seasoned veterans at the same time, and the

benefit of teaching in an environment where I seek to learn that which I'm teaching, it has further

developed me as a trader. This has been incredibly beneficial.

Who am I and what am I known for .

First, a little bit more about what I've done in the trading market and what I'm known for. I was

part of the Cantos Charts technical analyst team largely one of the biggest names in technical

analysis in the UK and we were involved in a series of programs for Cantos Charts that went out to

a large audience of traders. My big calls, I was looking at some macro calls during the period of

2007, 2008, running through 2009. Some of them are detailed here amongst many, so I've been

involved in the markets on all time frames, but broadly speaking the ones that tend to capture

people's imagination and almost get a lot of derision when you make them, are the big time frame

calls, the macro moves.

During a time when everyone was anticipating a major element of deflation and for the west to go

on the path of the Japanese deflation and shrinkage, I called for the gold market to actually run inexcess of 35 percent. In fact, I gave a very specific trade that led to a 1:19 risk reward that I felt

would take 14 months to complete and would see all time new highs for the metal by some way.

The Market Sniper - Trader Metamorphosis Programme

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https://www.eventbrite.co.uk/e/hvf-trading-metamorphosis-program-6-month-program-2-month-training-4-month-implementation-tickets-21008695574




Additionally, I made an even bolder call on silver, which involved a 63 percent move running from

$19 dollars to $31. This was an all-time high for silver.


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EURCHF 1500 PIP CALL

On the FX front during the course of November of 2009 my strategy identified an incredibly

interesting macro pattern on the Euro Swiss Franc pair, and using this particular methodology I

came to the conclusion that we were going to see a substantial re-rating in the Euro Swiss Francpair, and that it was going to be to the downside. In other words a major loss of value in the Euro

relative to the Swiss Franc. I placed my pending orders at the key levels, so I was not in the

market, and - coincidentally - I had a holiday booked and went away, completely neutral to the

trade: the market would either hit my orders and I would enter the market, or it wouldn’t. Either

way, it didn’t matter to me as I was too busy soaking up some UV’s and partaking in some of my

favourite outdoor pursuits.

While away all my stocks and my targets were in and by the end of a very good holiday I was

substantially in profit in a move that ended up totally in excess of 1500 hundred pips. This was

later to be known as the Greek crisis rolling into the larger Euro Zone crisis.

How To Get The News Before The News

The interesting element of that is that it illustrates how technical analysis, when you see the big

moves, can often give you the news before the news. It only came out in 2010 - January, February

and March - that there was the beginning of a problem in Greece that then later escalated and

brought in a lot of the southern European states and is the crisis as we know it today.


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Here's the gold weekly chart from that call.

A very simple diagram with some simple lines to give a very basic illustration of what the call was.In fact we got in a whole bunch tighter on this. We got in at the 966 on a pattern within a pattern

and that's why we got a 1:19 risk reward, and we had a stop loss there. This was an incredibly

powerful trade and it ran exceedingly well. That was the gold weekly chart that I've just shown

you.

Silver weekly was almost more explosive. It took a while before it got going, but once it got going

it got rowing that boat and it flew all the way up, up, up, up, up, and in a similar way we were able

to get in even tighter than this green line illustrates with a tighter stop. It gave an incredible risk

reward. That particular trade all done very, very briskly once it broke. Interestingly enough I put it

on a monthly chart that does compress it slightly but what you'll actually see is at the point of the

break there, they're already in 1 month, 2 months, 3 months, 4 months, and by the 5th month thetarget had been run. That was, in terms of time frames, it was far quicker than gold although a

later starter with a substantial increase in value.


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There's the Euro Swiss Franc, the weekly 1500 pip call. You can see this particular setup in a similar

way was a downside break and this was, once again, a trade that moved with great conviction and

momentum. The value of this is psychologically you get the benefit of the market moving strongly

in your favour from the minute that you entered. That's an incredibly powerful thing and you cansee well north of 150 levels we ran all the way down to just above the 135 levels to the 136 where

we got out, giving you a better part of 1500 pips. I've drawn other levels in there that show where

the SNB, the Swiss National Bank, actually intervened and I've got other slides on that later on to

show you, so stay with me.


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Can You Guess Where The SNB Intervened?


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HVF Theory & The Ruble

For a more recent large-scale example of HVF Theory in practice, here’s the call we made on

USDRUB - Russia being a major key emerging market. This was prior to the Ukrainian conflict. We

said we don’t know what’s going to be happening in the news, but the ruble is going to be losing

an immense amount of value. We had a major, weekly, big time-frame set-up here for the ruble

to the upside against the USD, implying USD strength and massive RUB weakness.

This is the chart as it broke out and made its first interim target. It’s all about interim levels in HVF

Theory.


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USDRUB - 2nd Chance

And why after interim levels are met you often get a pull-back in this instance the train has

reversed back to come and fetch you. You could re-enter on the green line for fresh longs for

upside performance with expected overperformance, looking at it on the monthly chart:

USDRUB - 2nd Level Interim Target

That’s how it progressed after that return move to your funnel there. Strong each month,

significantly forward on the next one until eventually melting up.


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USDRUB - Melt-up I

Here you’re seeing it go through 55 into a shooting star just shy of 80. We said at this juncture

after we made this expansive, super - expansive, lift-off you should be getting out and that it’s

hyper volatile and the overperformance period will now see a temporary period of relapse. The

shooting star, the pull-back to 54 on a key emerging market like the ruble.

USDRUB - Melt-up II


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Be Early - Brent/Oil $103 Was Our Break

Then on energy if we go and look at oil you can see how back in 2011 we called the top and said

this is going to be the beginning of a new trend. This is the first inverted HVF in a new trend and

we were breaking the $103 level that this key move as you can see at $102.41 down there was

going to have overperformance through the target to the downside.

Be Early - Brent/Oil Overperformance


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The key big macro energy call trade theme that literally for this 2014 mid-period right the way as

we are going well into the heart of 2016 being one of the predominant news-based themes. There

it is rolling over 69.82 after running the target area where you would have done a partial close and

rolled a bit over for a little bit more.

Brent/Oil – Understanding The Role of Volume & OBV In The Sell Signal

This is the kind of analysis we do. We LOVE charts. If it looks bewildering at first, don’t worry.

This is an On Balance Volume Indicator where we’ve done technical analysis. Look at the orange

squares where we identified and shown this was always going to be a downside break, all these

orange squares angling up on a grindline (we’ll teach you about grind lines) and then you can see

the orange squares on the OBV flat-lining, indicating that it was no longer going up on strong

buying volume and that the selling days were actually the ones on heavy volume……

……..pointing to that the volume precedes…….pointing to the downside move that you then see.

Look at that huge dip and break there and you could have got short as you took out those levels.

Look at the descending tops here while we still have a nice squeeze up top there, OBV helping you

get short earlier. You could have got in at $110 on the break of that grindline on confirmation ofthe OBV having peaked already. Isn’t that interesting? Is it of interest to you?


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Brent Oil - Keep On Keeping On

So you could have known that it was in the water before anybody else. Why? Technical analysis,

charting and understanding HVF Theory. Look at the Brent. We said it’s going to go lower at this

juncture, it’s not bottomed out. Why? HVF Theory. So many people were calling bottoms. We

said lower, lower, BOOM...there it goes. Lower still. You could have even gone short at $55 even

if you’d missed the major move and it’s traded below $30.

This is the Macro view in a monthly chart of what’s gone on.


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Gulf Sands Petroleum (Short)

Drilling down deeper and keeping in line with the oil narrative, here’s Gulf Sands Petroleum (GFX)

on the daily chart. We called this way back in 2013 prior to the Oil collapse and the War in Syria.

This, dear readers, is the epitome of news before the news (and contrary to a number of

newsletter circulars recommending it as a buy).

We suggested an early sell at 100p was triggered suggesting the trade at that level, resting at 79p

and giving a second chance selling opportunity at that level for those who missed it the first time

around.

It’s now trading at 6.75p - a 93.25% capitulation from the point of entry at 100p!


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My Window To The Trading World

This was my lucky window in the world and it remains to this point in time. Working towards

capturing this methodology in a book has got me thinking about all the benefits. I get to see the

mistakes people make again and again (and again). Traders make the same mistakes. Over andover again - and they wonder why they don’t become profitable, consistently.

I get re-reminded of them and I get re-reminded of my own history and trading journey and how

long it took me to overcome those mistakes and how regularly I smashed my head against the

same wall before actually coming to the realization that I needed a better way. I needed a better

way. I needed to stand back and go around the wall. This, combined with all the perspective that

I've got from the people around me and my own personal trading as it's developed over an

extended period of learn and fall, trial and error…..this is what’s going to lead to you potentially

getting an excellent fly past of everything I consider critical to my personal success in trading and a

number of things that I don't consider useful at all, which can help you avoid many dead ends

-thereby saving you a lot of time and money!

An Inconvenient Truth

However…. bad news, facts, inconvenient truth….You are all losers at the moment - broadly

speaking….in a trader’s sense, I hurry to add!

But that is a hard and pretty harsh fact.

Another fact is that 91 percent of Spreadbet accounts are, in the long run, net losers. Trade

Station statistics have stated under the obligation of law in the US, and this often has intermediate

and more advanced traders as it's quite a robust and intricate back testing tool, has hardly much

better with 87 percent being net down across all active accounts. Largely you are in a positionwhere you're most likely one of the 91 or 87 percent.

Either way, you’re feeding the 9 or 13% - because as you know, trading is a zero sum game: for

every winner, there is a loser!

I’m assuming you’re reading this because you want to move into the 9%?

My bold and shocking promise to you…..

So, my bold and shocking promise from me to you is this…..if you take on board that which is

going to be delivered to you during the course of this e-book, YOU apply it and YOU look to makestructural, genuine changes to how you have typically traded previously…. If YOU appreciate the

fullest extent of what I'm going to give you here, it is quite possible that I can elevate you to the

top quartile, even potentially the top 10 percent of that 9 or 13 percent that are the winners.

In three years time, with consistent adherence, you can potentially even have an audited trade

P&L with the discipline that could get you and qualify you for institutional management. That is an

incredible statement to make. Not everybody, as you can well understand can all have the skill

sets, but without having to be exceptional, if you apply in a discipline sense, that is indeed

possible.

Because as Einstein says, if you keep doing what you've been doing, you're going to keep getting

the same results. That is the definition of insanity.


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Disclaimer Alert!!!!

However, changing longstanding trading habits is never going to be easy. It's hard. Containing

emotional urges is also hard. Becoming consistent is tough and requires focus and discipline.

The Hope and Good News

The good news is, having said all of this, the most significant trading truths I know are about to be

revealed to you and pulled together for you in this short e-book. Applying just a small amount of

these will already move you substantially forward. In other words, if a large essence of what I'm

saying still passes you by, but you grab a decent segment, you will significantly change your

potential performance on your trading. The strategy will automatically help you focus on the new

good habits and will go within itself a long way to containing and controlling those elements that

often undo us and ruin our trading consistency.

Dead ends, major headaches and where it all goes wrong

At this point it's valuable to actually point out some of the dead ends, some of the points that took

me down a path I need not have gone, that ended up seeing me having to turn around and come

back, with frustration, loss of money, loss of equity, and loss of time. Often leading to

demotivation and spells of inactivity, stalling you on your dream and journey to being a successful,

high performance trader. In my view, those pitfalls are an over fascination in indicators,

incomplete strategies, the consistent belief that a trailing stop loss is a suitable exit strategy, and a

whole smorgasbord (yes, I did say smorgasbord) of various money management failures. That

stems from position sizing, stop loss placement, absence of targeting, and no real basis for a trade

therefore.

In other words no structure for which to exit in the first instance with a profit.

When it comes to indicator fascination, indicators invariably are lagging. There is no clairvoyance

from price behaviour and you cannot ever get an answer from a computer generated line that is

derived from a mathematical formula on price data. However, we can develop probabilities. And

we can understand and exploit the consistency with which human nature evolves and how that

plays into something technical like patterns. People have incomplete strategies. They fail to have a

take profit, they fail to have a trigger, and they fail to have a level where they accept the trade is

wrong.

Of course the failure of a proper strategy, is like using a handbrake on a car. It's there only for

absolute emergencies and very, very poor in performance relative to using the proper tools.

Most instances when it comes to position sizing people are sizing too large. In other words, they're

too aggressive. Stop loss placement and its determination should always be technical not

mathematical. Some people work, "Oh I'll be 1 percent away or 50 pips away." As if the market

cares about what percentage of equity your account is. Some of them don't even determine that

and it becomes a pain based exercise. Sticking to your guns, how ‘man’ are you and other ego

based nonsense. Are you macho enough? Of course those are fatal emotions that will do immense

damage to you.

Greed Keeps You In A Trade, Pain Takes You Out


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Greed keeps you in a trade. Pain is the thing that takes you out in the absence of targets. This

means targets are critical. Critical for containing emotions and critical for understanding a money

management and risk reward calculations.

The other element that many people simply don't grasp is the failure to truly understand themathematics of a draw-down…...and I'll be covering that further on. The larger the draw-down,

how much you have to make back to get back to where you started. I call it the recovery ladder,

and it's worth reiterating.

Is The Juice Worth The Squeeze?

Other various money management failures continued would be the risk reward ratio. There is a

complete lack of people bringing the risk reward ratio into their money management. It goes so

far in helping you determine the viability of a trade. Should the trade even be selected? In other

words, what's the probability of outcome and given that probability of outcome, is the juice worth

the squeeze? How else can you do that if you do not have a complete risk reward ratio

calculation? Of course the targets themselves. The intrinsic necessity of having them there to

meet the mathematics of risk and reward.

The Trend Is Your Friend. Are You Sure?

Another element that regularly comes up for traders is time frame confusion. In short we see

something set up on a shorter time frame but it's counter trend to a larger time frame. What are

we doing? What time frame are we trading? We get misaligned. We end up taking short trades

against the trend, counter trend trading without even realizing we're counter-trend trading.

I Made The Most Money When I Just Sat

One of the biggest elements and one of the most difficult and one that stymied me for an

extended period is containing the pressure of compulsion, the need to be in the market. Great

quote from Jesse Livermore in the Reminiscences of a Stock Operator, "I made the most money

when I just sat." Learning that patience, learning to stand by your plan, not feeling the need that

trading is consistent, regular, order entry, and tampering and tinkering. Ronald Reagan said it best

when he said, "Don't just do something, stand there." Particularly when you think of government,

I can see the reality and value in that, but it has a great parallel in trading. Do your analysis, do

your research, spend most of your time outside of the market analyzing, determining your high

probability trade. Then you place it, you let it trigger, and it's for all the right reasons and you

stand by it. You don't tinker.

In other words it's the right not to be in the market. We have power over the brokers and the

market makers. They have certain benefits, they might even have inside information and

knowledge that we are not always privy to, but do we as individual traders have any power? Yes

we do. A market maker has to offer a bid or a spread. The pressure is continually on him. He must

offer a bid in an offer. In highly volatile times he can stretch it a bit, but at the end of the day he

has to be in the game. He has to be equally prepared to buy or sell and underwrite. If you are a

market maker, that is the pressure that is on you.

As a trader we have the right not to be in the market and to choose the exact moments and the

exact terms and conditions under which we will engage. Think of it as a fisherman. You don't want

to enter into the ocean when the storm is on and it's coming in for dusk, you want to be able tochoose the best conditions for catching fish and nice, safe, stable seas. Learning to be highly


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selective is a massive art, skill and science. A wait for ideal criteria, and we'll get further into what

is ideal criteria as we move our way along.

Many of us don't understand the nature of the game. What is a truly rounded winning result? Is it

just the most or the highest number in an absolute sense per annum that can be attained as

percentage growth? Does the man who gets 36 percent at the end of a year beat the man whogets 11 percent? Well, it depends. There's so much more to that assessment and I'll be giving you

some detail on that.

Lack of charting, proper charting based homework. In other words, go and do the research, draw

your lines, key levels of support and resistance….look historically where the underlying market has

reacted and the depth of trade assessment. We must look at a trade before putting it on at a far

greater level. Do you draw all your lines, look for all your patterns historical going forward, assess

your trends across multi time frames, across markets, intra-market analysis with all other

correlated markets? Are you the kind of person that does that level or degree or work each time

you are preparing for a key trade? In many instances the answer is you come in light on your

trading homework.

When we talk more about the nature of the game it's not necessarily about the absolute

maximum in any given year. Firstly you have to survive every year and stay in the game. It's a case

in the footballing analogy is not letting the others score any points against you. A great defence

means you get to come back and fight another day. This keeps you in the game for those special

days when you are well positioned and ready to exploit the market opportunity.

Draw-down and Volatility of your Equity Curve – What is the Nature of the Game?

You've got to consider draw-down and volatility of your equity curve. How many traders are truly

assessing their own equity analysis curve? Are you looking at the curve it's generating and how

deep those draw-downs are? We will return to that when we talk about the recovery ladder ondraw- down. Extreme volatility of your equity curve is a weakness and is essentially a warning of a

crash.

As an example of equity curve, I've actually put two versions of equity curves out there. For

example, let's say this one in the red finishes on 36%.


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The green curve illustrates that at the end of its year, has grown 11%. If you're sitting in front of

four fund to fund hedge fund managers and you produce two separate performances, investor A

and investor B and you are A with a green line and somebody else is B with an outright return of

36%, which one do you think the people that have hundreds of millions to allocate to a fund are

going to elect to give funds for going forward? I can tell you the answer is slightly different to

many people's expectations.

The 11% with the stable equity curve and the minor drawdowns and consistent

incremental growth is far more attractive. This person has tight money management, is not taking

excessive losses and is controlling consistently his progress up.

The next person that invested may have been better part of 25% up in the first quarter and back

down to nearly nothing would have lost an immense amount of investors in this fund coming

through here and would have gone through a massive emotional rollercoaster in losing that

amount of equity in such a short period, even though it would have been giddy with excitement

on the way out. This personally is too much of a rollercoaster ride will make many investors

extremely uncomfortable and would see lots of redemptions occurring.

We want to prepare you in the mentality that we're almost setting you up to become

macro hedge fund managers. In other words you have a responsibility to a stable equity curve,

both for your own emotional state and for that for anybody else's money that you might end up

managing one day. This is the mentality we have to take in outright performance. Actually, it has

to be taken into context with drawdown. This is a very, very important point.

Focus on One Thing .And Do It Very, Very, well

“He was a jack of all trades, and a master of none”


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One of the key elements of measuring and I believe this is really integral to the generalization, was

a narrative that I got, funny enough out of a book, absolutely nothing to do with trading. There are

many lessons or learnings to be taken from all of life, many activities. This one came out about a

four hour body of workout book. There was in fact a small chapter on an individual that was both

lazy and overweight and he decided that he both wanted to lose weight but he refuse to changewhat he ate…..he quite enjoyed the way he ate.

He didn’t want to exercise. He didn’t like exercise. He stated so explicitly. He's overweight and he

understands that he doesn’t like exercise. So he set himself in extremely winnable goal. In other

words he didn't try to conquer the world. If you set yourself the target of becoming a millionaire

by the end of this year, on the basis of your trading, you are probably setting yourself up to fail

and you will take too big a risk.

He set himself a very winnable goal and he also did something else, he established a range of

tolerance . Obviously you're not going to walk exactly the line to that highly attainable goal. When

you set this highly attainable goal over a sustained period, 18 months he took to get down to his

ideal weight. This was not any crash diet. He didn't want pain or suffering of any kind. In fact, he

wanted very little change to his life. "You would punish", he said, over performances. In other

words if he was losing weight beyond his band of range on either side of his line that was

projected into the future measurement of his weight that should be lost, he would punish over

performance in a similar way as underperformance.

This is actually a very interesting trading analogy, because we do the most damage to our account

after we've had many wins in a row or single big win. Overconfidence kicks in, and in fact we undo

all the good work we’ve done and often take a bigger hit beyond that win we have achieved. Over

performance can be as dangerous to you as underperformance in trading. Be warned, it sets the

seeds of future destruction and that is something I learned. Anyway, this very interesting story

about the individual who wants to lose weight and doesn't want to change anything about his life,

in what he does, both eating and in not doing any great exercise.

How are you going to do this? It was really, really interesting. The one thing he did commit to do

was this…..

Thou Shalt Measure

…….he was in the IT industry and he was quite tech illiterate. And he had an exceedingly good

measurement system as he’d bought himself one of the most expensive set of scales he could get

his hands on. He wanted to have really accurate measurements of his weight every single

morning.

What did he do? Every morning he commits to doing one single act. He would get totally naked,

have a pint of water and then take a pee. Then he’d weigh himself so that he was comparing like

for like, same scale, same spot, same time every single day. He did this consistently without fail,

regardless of whether he’d binged and wasn’t looking forward to the weigh-in, or he was tired.

Whatever the circumstances, it was done, captured and put through his spreadsheet with these

bands of performance and off he went.

In fact, if ever he over performed, he went out and specifically binged. Interestingly enough, this

actually helps with weight loss because it messes up your metabolic sensitivity. Anyway, the point

of this was that at the end of this 18 month period, by just psychologically hinting to his mind thathe intended to lose weight and by consistently focusing on the measurement, he achieved his


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goal. He didn't believe that at any point he made any major changes to his lifestyle. The only way

he could explain it is that he possibly, without realizing it, because he had focused his

subconscious mind on weight, he may have taken a few more staircases rather than lifts, without

even noticing he was consciously making that decision.

He may have waived a dessert, when not really feeling that hungry where he just automatically,habitually used to have ordered it. Purely now because he'd flagged to his subconscious mind that

he no longer wished to do this. This is the power of focusing your mind and measuring. You are

and you become that which you made to measure. This is what I will introduce to you for your

trading. In other words, you shall measure and you shall do so accurately.

We will measure, we will size with all money management spreadsheets and we shall do so

accurately and we will plan every trade. If you implement this you will never have an oversized

loss ever again, only a plan for loss, an acceptance of the loss and an emotional neutrality to that

loss. If you do all these things and you focus on your equity curve measurement, you will become

a better trader just by flagging to the ultimate power of your subconscious mind where we use so

little of that brain and you will improve your track record performance immensely. Just by natureof the focus there.

Indicators Indicators EVERYWHERE

Having mentioned that, we have to also discuss everybody's indicator fascination. It is one of the

most annoying elements that I find with new technical analysis programs or beginners (not the

annoyance - it’s not their/your fault). The first thing that happens is to be introduced to

indicators.

Indicators feed us emotionally, our weak emotions. In others we crave clairvoyance. We come

here just wanting the answer and they offer us a computer generated line, which gives us the

answer to the trade we should be taking. It even gives us the trigger, when that line crosses that

line, then that is your signal to enter a trade. The indicator has spoken. We are often not that

interested in doing our homework of technical analysis, we just want someone to give us the

answer.

What is an indicator? A mathematical formula applied to the hard data of price, invariably. Of

course it lags and it is totally not clairvoyant! We want those absolutes, we want those exactitudes

in terms of answers, we set up there, we have this lust for clairvoyance. Is the market going up,yes or no, if so how far, specific levels.

We've got a mortgage to pay, the countless amount of times I've had people ask me for my view

on the market and they want to know, is it up and how far, and what point do I buy? Why not just

give me the trade, it's essentially the mask of the individual. In actual effect, we have to do our

own homework. We have to get our own degree of confidence in the trade and we have to find it

ourselves. We have to learn how to do that. There is no indicator which will come close to giving

you a trade. Here's your stop-loss, here's your entry, here's your target.

In fact, the system I'll give you will do all those things and it will even give you an idea of the

journey on the way to stop-loss, it will be high risk reward ratio.


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In other words the risk will be low for the reward that potentially you are actually getting.

Unfortunately there is no indicator that does those things for you. The fallacy of indicator

confirmation is almost a case of, “we actually are looking to make a trade and we are waiting for

something in the computer to tell us it's okay to go ahead”.

My tendency is to say, "Stop being a wimp." If you've done your research and you like the look of

the trade, don't wait for some lagging mathematical based formula to generate conformation.

Take the trade. It's is not a new reason for going long or short. It is based on the price action,

which you've already been looking at. The indicator is just another manifestation of the price

action being represented in a lagging slow form and often there to give people that extra little bit

of confidence to push themselves into the trade.

Why Fools rush In

.Why People Buy At Market - And Why They Lose Money. Again and Again.

Don't be a fool, it's not a new reason, it's the same reason being re-presented in another way and

coming late. Why rely on it? Many people look at the actual price section and say, "The indicatorsays X, Y and Z." In truth it says nothing, we project our interpretation or our view upon it. If you

feel the trade is good from the price action, you don't need a lagging indicator. We don't trade the

markets, we trade our beliefs about the markets.

Like our beliefs, we like to feel that we get a nudge in the back that tells us it's okay to go ahead

once we have an inkling that a market may do a certain move in a certain timeframe. We trade

our beliefs about the markets, not the markets themselves. We have to learn how to become

aware of those beliefs and have a template for managing that. Here's an example on indicator,

this is an ongoing, up moving, underlaying. The sell only signals on an RSI and RSI is the most

popular of utilized technical analysis indicators.

Every time you break down through the black line, this is meant to represent your trigger for a sell,

that would in a sell at that point, that would be in sell at that point, that would be in a sell at thatpoint, that point, that point, that point, and that point. In short, you would have sold the whole


22









Only marginally profitable if you take brokerage fees out if it. It's hardly a good use of my time

and barely profitable in the end. In fact I got out on target someway away up there with a far

better result. In other words, every time you exit on the trailing stop you are getting out at the low

part of the price range, usually on a substantial degree of pullback from the recent highs. For

example, on that move there and that is clearly giving you back almost all of the move in this case.Had you got out at this level, 90% of your profits would be taken away. Markets have substantial

counter trends.

Trailing stop as planned exit is a big fail for me. It takes a long time for many to realize that.

Size Does Matter (But You Knew That Anyway, Right)

The next important point is position sizing.

Get it wrong and this is an absolute killer. Money management is quite often the biggest mistake

(perhaps it’s yours?). In brief, it’s about being far too aggressive with the size of your position.

What's actually happening here is I've drawn up a ladder (below), a drawdown and recoveryladder. What I'm showing you here is if you go down on your account buy a single percent, the

growth required to return to where you were before is 1% and a small fraction of further

hundreds of a percent. That is far from critical.

Drawdown % Growth required to recovery %

1.00% 1.01%

5.00% 5.26%

7.50% 8.11%

10.00% 11.11%

12.50% 14.29%

15.00% 17.65%

17.50% 21.21%

20.00% 25.00%

22.50% 29.03%

25.00% 33.33%

30.00% 42.86%

35.00% 53.85%

40.00% 66.67%


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45.00% 81.82%

50.00% 100.00%

60.00% 150.00%

75.00% 300.00%

90.00% 900.00%

95.00% 1900.00%

If you drop by 5%, you need five, just over five and a quarter. If you drop by 10%, you need

11.11%. If you drop 20% and you allow your equity drawdown to go down by 20%, to return to

where you were before, you now need a quarter, a full 25%. If you lose a third of your account

35%, you're in north of 42% plus degree of return, just to return your account to breakeven. That

is absolutely critical. And most people don't fully quantify and understand the utter

destructiveness of drawdown.

What do you think happens to your psychology if you allow a 35% hit to occur on your account

and you suddenly need 42% just to get back where you were? To earn 42%, people up their sizing

and take even bigger risk. What happens when you up your sizing, you're already oversized? If you

are losing 35%, you now up your sizing to be more aggressive to just get back to breakeven, this is

the psychology, these are your emotions and this is incredibly destructive. Try one 42% and you

will lose the rest of your account, the other 65% that was left from the 35%, very, very quickly.

The orange and red zones denote likelihood of recovery very, very low. I put your recovery

likelihood at my estimation, in other words the odds of getting back to your starting point

(breakeven) at 15%, the minute you allow your account to drawdown 35%. I put at 20% if you

drawdown a quarter. You simply should never allow drawdown to get out of hand. The ideal

drawdown maximums would be in this light green area, between 1% and 5%. The minute you

draw from even 7.5% and 10%, you're letting too much go on. Possibly being slightly aggressive

saying you've earn your half of recovering 10%, but if you’ve got to that you don't up your risk.

Recovery, Recovery, Where Art Thou Recovery?

Drawdown Growth required to recovery Recovery likelihood

1.00% 1.01% 95.00%

5.00% 5.26% 70.00%

7.50% 8.11% 60.00%


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10.00% 11.11% 50.00%

12.50% 14.29% 45.00%

15.00% 17.65% 40.00%

17.50% 21.21% 35.00%

20.00% 25.00% 30.00%

22.50% 29.03% 25.00%

25.00% 33.33% 20.00%

30.00% 42.86% 15.00%

35.00% 53.85% 12.50%

40.00% 66.67% 10.00%

45.00% 81.82% 8.00%

50.00% 100.00% 5.00%

60.00% 150.00% 3.00%

75.00% 300.00% 0.005%

90.00% 900.00% 0.001%

95.00% 1900.00% 0.000%

Here is from when you recover. If you have anything larger than 20%, I start to think that is highly

unlikely and I selected that and above. Bear this in mind, the drawdown and recovery ladder,

make sure your losses are taken small on individual trades, you could have a number in a row that

all go against you.

The other law that I tend to apply very, very strongly, which favours continuation is the fact that

trends largely persist. Don't try buying the low and selling the high. Typically people are overly

compelled by this old saying, essentially buy the high and sell even higher or sell the low and sell

even lower. It’s a fantasy.

It will prove exceptionally difficult to repeat with any regularity, picking bottoms and selling tops.

Forget about it. Go about intelligent strategy. Accept that the market may continue to move up

once you're up, providing you've got a very good risk reward out of the trade, you can take pride

in it and sell into strength. Accept that the market may continue going down when you've closed

the short trade.

You will, by law of averages, occasionally get the bottom or the top, but don't actively set out to

do so. Trade the continuation not the counter trend. This is the major problem with indicators….


27





they try to get you into trading the counter trend. They say it's overbought or oversold. Be wary of

the tendencies and compulsions that lots of indicators prompt in you. If something is overbought,

they try get you to sell it short. It may be overbought for a sustained period.

Guess what, I used to find, feel, exceptionally unlucky when trading counter trend in trying to pick

the tops and trading with indicators, trying to sell these overbought equities. It just seemed thatthe market didn't like me and that I was always getting small little moves in my favour and then

bang! Back against me.

The minute I got more prone to trading continuation, I suddenly felt my luck was changing slightly.

You can decide if you want to swim upstream or downstream, I'll leave it to you. In the end I'll

certainly find it far more profitable to swim downstream with the river.

The second law and I've highlighted the “PRE” in PREparation, is that the work gets done before

the trade.

It's imperative that the work gets done before the trade. The better and more detailed the plan,

the better the trader. That is why I capitalized it.

I want you to understand, you must do all your thinking before while mentally neutral, not while

in trade and having to make decisions on the hop. This is when a reasonable effort can be made at

neutrality. After entry, any decisions you make at that point, you lack the impartiality and you are

loaded with emotions, especially if you have the PNL and trade sizing and money lost and made

flashing in front of you, green numbers, red numbers, all sorts of emotions of fear and greed begin

to take over.

In other words, beforehand you should have done multi timeframe analysis. I talk about the law of

three, which is three time-frames joined together, that's why the three. You look at the macro

trend assessment, which is the general flow of this river, up or down? Get with the macro trend.Wait for your base timeframe and the setup that you're looking for. What is your setup, what are

your reasons for the time on your primary timeframe?

Move with the macro trend, choose a setup that will be triggering in it, an event in the direction of

your macro trend. Both are green lights for longs. Then go down to your micro timeframe for

timing and ensure that the short time-frame is also giving you a green light, if you're looking to go

long or all three are red if you're looking to go short. Get the alignment of all the timeframes

together. We talk about the relationship between these extensively on my program and course, so

the law of three. (Details HERE)

People suffer from time-frame analysis confusion, they don't understand which direction themarket is….are you dropping different timeframes to have a look at it? How do you control and

correlate? Do you have an organized structure for managing the larger trend, the base timeframe

and the micro timeframe? Yes, you should have and your success will improve substantially by

applying this alone. The other element is key levels of significance, support, resistance, Fibonacci

levels, round numbers and all the key levels. Some of which go through the price action and the

price action pivots around.

This is the big unspoken key aspect that is unique to Hunt Volatility Theory, hence the phrase “key

levels of significance (KLOS)”. It goes beyond just support and resistance, the traditionally

well-known element of horizontal levels in technical analysis. I'll show you how you can spot these

other slightly more difficult to see levels for which the price action is reacting to, both above andbelow. This is a major, major revolution for your trading and will take you forward immensely just


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grasping these two concepts. Other elements that we'll go into, all that you need to do for trade

preparation in advance of placing any orders is obviously you're directional assessment, that's the

key. Where are we going? Is it long or short?

That's what we will do in your macro timeframe and then ensure that your base setup is tying that

in. We want that trigger entry level. It wants to be a pending order. You are waiting for the keyevent, for the market to tell you when you should be trading, not just activating an order, because

you happen to want to be in the game. We let the market take us in. Let the market confirm that

what you're doing is right. That is a very key element.

Before we even allow that order, that pending order to be placed, we have to though, have

decided where the market has changed its mind…..are new forces entering the supply and

demand equation that overwhelm the original reason for the trade that took you in? At what

point is that force deemed so strong that it has nullified your trade settings? In other words, we

have to ascertain our loss stop levels. Also geometrically we use methodologies for attaching and

attaining a set target level. You have to have a point where you say, "I'm happy with this level of

return." Greed keeps you in the market, pain will take you out.

In other words, if you don't have an agreed contract in your mind as to what point you say this is a

great return and a good result and the market might stall for some period after this and I am

seeking to engage and I'm going to get mentally neutral again and plan my next trade. Mentally

neutral is the most powerful point you can be in as a trader. In other words the position of not

having a position. Remember the market makers, they may have information on you, they may

have lots more technology, but they always have to be in the market, always expressing a

particular view.

One of our key benefits as a trader is that we get to decide the terms under which we engage with

the market, so have that plan target level and then be ready to be standing back. You get your

trade sizing totally in line with your trading constitution. We actually draw up a trading

constitution, this is how we behave, this is how we are and we live up to that constitution. You

have to have written it down and be committed to it. Otherwise, you do what you want as your

whims take you.

If you've had a lot of coffee that day and you're a little bit over tired, hey you'll be aggressive and

you'll do damage. Risk reward ratio is clearly, utterly relevant and by determining a target in

advance, we can do a whole bunch of genuine value based assessment of the trade idea. Is the

juice worth the squeeze? How much are we risking? How much will we get?

That trade attractiveness also allows us to assess what is the likelihood of the trade coming off

and closing for profit?. If you have a trade with a 10 to 1 risk reward, but you think it's one in fourto make it, even though the odds of success are quite low, the risk reward makes the trade an

absolute gimme every time. In other words, you should take it on the basis that even if you're only

correct one in four times, the reward will more than compensate you for the marginality of the

probability. However, if a trade is 50-50 and you're only getting 0.75 for every one that you're

putting on, you will slowly whittle your way down to the poor house. We have to have an

understanding of trade attractiveness with respect to its probability assessment for success.

If you have all these, you're suddenly now putting yourself on the other side of the equation. No

longer are you allowing the lowest common denominator like the bulk of traders to be that, which

determines your trading decisions. In other words, “it's been emotional” (I love Vinnie Jones). You

are now having a structure and template. You will then potentially be setting yourself up for the


29





top quartile of the 9% or the 13%. YOU actually make the money. This is a massive, massive

change in the game.

Your whole nature, the whole way you enjoy your trading, your degree of emotional control, the

person you all have become when you get to this point will be completely different to that, which

you recognize today. It can be done in exceedingly short time. But it's not necessarily all that easyand hard change takes effort, but we'll come back to that.

Here's an example, gold, macro timeframe. Now, I'm a long run gold bull, let me tell you, but I've

traded gold long as you saw, right away through the 1300 level all the way down from 1000.

Expecting to see it all-time highs and I've also been trading it short.

This was down trend, clearly as you can see from the two orange lines and then we had a

capitulation down. We had this price action coming now. You, if you are learning the mechanism

by which I trade, will quickly realize that we will come to recognize these setups. Going back to

that chart, this was your macro timeframe and we assess these as a bear trend. Quite

understandably, so that trend is down. Then we have a look at our base timeframe. I'mintroducing to you the quick example of the law of three using the three timeframes.


30





This is now at H4, so we were on the daily chart on the trend analysis. We're looking at the four

hourly now. You can see the key pivot levels pinned. I'm modeling my primary setup, the Hunt

Volatility Funnel. You'll see more about that later right here. In other words my stop is going to be

sitting on the other side of this green line and my entry short will be xxxxx and there's a target

right off the chart. That is the base timeframe, my key pattern. Then I drop down a chart, right

down to the shorter timeframe and look at that final H3 and that L3.

You'll notice there's an element of volatility. Our pattern previously was swinging quite wildly up

and down really hard. Back up, down hard, grinding up, down fairly hard but not as far and then

there's weak sideways action. You can sense that the volatility is shaking out. We now have to

zone in and concentrate on the key trigger levels. That was the high three and the low three of

that bigger pattern on the four hourly.


31





We're now down on the one hourly chart. In fact what I'm showing you is two things. Apart from

looking at our trigger timeframe and getting a good understanding that we want to enter short

here and have our stop there. We've actually realized we've got a pattern within a pattern. There

is in fact a little low one, high one, low two, high two, low three, and a high three right over there

and we've gone totally quiet. Look at the little candles. These are called spinning tops. This is acomplete volatility iron out. We've gone totally quiet, compared to these bigger candles over here,

which are in their own right, quite small compared to these massive candles here.

We're comparing those to these. You can see what's actually happening in the market…..it’s

almost going quite bored, it's going to sleep in around this key level. What of course does this

allow us to do? This actually is a primary pattern and there's a “pig-out” technique that I will teach

you on my program and I'm introducing to you today in this e-book. You will put your stops on

that side and you will see a seller there. In actual effect you will have a tighter funnel, this green

line to that red line as oppose to the dotted red to the dotted green. This is about a fifth of that.

If you get your funnel a fifth tighter, what does that allow you in terms of position sizing?

Remember each trade is allowed to take the same loss. While you think about that, you should

realize that in fact if you're allowed to lose a thousand pounds, you would have an £100,000

account, let's say with 1% drawdown on any one given trade idea? You could in fact be five times

bigger on this trade for the same £1000 pound loss if the distance is one-fifth thereof, in which

case you would have been triggered short over here with us and we took this trade. This is actually

traded bias.

You would also have had some of your funds on the bigger trade pattern. You don't have to be all

in on the primer or all in the major pattern, you can have a partial allocation of your £1000 pound

loss, say £750 or £500 and £500 over here. You would have been triggered short initially there and

you would have been triggered short again there. We had a small bear flagging grind along and

further capitulation. This trade I will revisit for you, but this is the first introduction of primer, how

we use sub-patterns within patterns.

Just about every major breakout that I trade has on a smaller timeframe, providing you're looking

for it (the market loves you and it does actually want to give you gifts). The problem is, we don't

pay attention. Everybody thinks the market hates them and wants to hurt them. We don't put in

the work, it's giving you the information and talking to you. Don’t go looking for it. It's setting you

up for an unbelievable risk reward trade. The primary risk reward trade was 4.1 and in fact if you

got a first tighter entry you turn this into well north of 20 to 1 which you would trade and it's

performed all the way to target.

In this chart below, I'm just showing you the differential between the gap, the tightness of entry tostop, which allows you to trade far larger as opposed to the bigger pattern. In terms of dollars

there was 94 to 65, call it $30. Over here you're at 87 to 80 roughly $7. Powerful stuff this. If you

understand the mathematics of trading you will realize it. What else about this goal breakdown

while we're at it?


32





Not only does the strategy help you with set-ups, pigging out with patterns within patterns, an

incredible technique, but it also tells you at what point the key levels you are likely to lose a bit of

progress on your down-side break. Look at this beautiful chart:

1,375 all the way down to 1292. You are laughing, you have the better part of 75 plus another $8.

You have the better part of $83 in the bank already. But then what happens? It bounces, bounces,

you stall, days go by.

This was 20th of June, in fact, and here you go. We didn't resume breaking until back here on the

25th of June. Five days, five trading days, that's enough to make people anxious and have them


33





get out of the market. Why? Because you're an emotional being, you panic, you kill good trades.

We all do.

The HVF strategy, however, with the interim target tells you there was an expectation that this

underlying will have progress decays, how I refer to it. In other words, time elapses and no real

new progress occurs, which can imply a pull back up if you're short, which means giving back someof your profits or flat lining, or in this amazing case, a further set-up within a set-up with the

volatility squeeze. Look at that little squeeze in there - beautiful little spinning top. What do we

do? We go again. You can trade within the trade on shorter timeframes.

Once you have the macro trade on and you have your primer trade on, you're in a great position,

the 20 to 1 that perform, that did the better part of $165 move. Even on shorter timeframes, now

that you're in profits and you have new equity, you can actually trade the shorter patterns.

Getting short, there again on this dotted line, with a stop there, with a target down there. You can

close the bulk of that position and even let some of it roll and add it to your new larger position on

the macro trade. How can you do that? Because your account equity has grown, all within the

principle of money management, I will show you how we do this.

In the end, that was the final result, the 1213 target was made. We actually traded through the

1,200 level. The line of efficiency is the line from entry. This is not on our prime entry, this is just

on the basic pattern. Now that I've drawn this, the line of entry all the way down to when the

target was made. Look how steep that line is. If your trailing stops, trailing stops… well have

getting you out somewhere over here, and here in a much flatter line.

Why To Trade The Breakout Strategy. Big Moves, Short Period Of Time .

The clearest idea of a good breakout strategy is fast, quickly taken profits. In other words, bigmoves in your favour in a short time. The benefit of this is you're in the market for this time period

and you've gained a substantial return. Short from 1364 down to 1213. Wow, better part of $150.

Of course if you got in at the 80 on the primer as we did with part of our position, you would be in

from 80 down to 1213, $160 with a stop, barely $7 away. That is proper trading.


34





How many times have you landed a trade with a risk reward like that? Well? Ask yourself that

question. If I can do it, it’s perfectly possible for you to do it too. The system allows it. The Hunt

Volatility Theory teaches it. We can show you about the law of market geometry. Pay attention,

for every action there's an equal and opposite reaction. Remember the same participants are

usually in the market every day, the big players determine the market size and they are usuallyusing the same amount of leverage.

When they go overboard and they overbuy, that's usually the scale to which they will overreact to

the downside. They have to get out of those same leveraged positions to the downside. There is a

natural geometry that is created by charts. Also patterns and waves. If I shout fire in the cinemas

and there's the larger belief that I'm right, everybody does the same thing. Yes, we are all

individuals. Yes, we all have different personalities. But given certain circumstances we all hit the

exits in the same way for fear of feeling the same pain.

That is what happens in trading. Patterns and waves work. We look at all sorts of other

traditional, technical analysis elements and we don't disregard them, we make use of them and

they give us lots of useful information and this is the basis of one which double tops, heads and

shoulders, triangles, flags and all these others are based. I want to talk about the case for

breakouts. In other words I'm going to move you towards my great learning which is this: It’s one

of the best ways to trade. It’s the way that will take you from being one of the traders that feeds

the top 9%. I can't think of a better way. First of all, it's fast moving and self-confirming. The

market must take you in.

In other words there must become imbalance in the supply and demand, whether it be for a

news-based reason or for some reason as yet undisclosed to you. But if it's deemed that the

previous price behaviour is in relevance to a level and it is overcome, then there is a great

opportunity for a trade. You move quickly into profit. This is comfortable. This is emotionally

comfortable. When you get a green number not a red one in front of your face. You feel better.

You're less prone to be jumpy and fearful when making difficult decisions.

You're more likely to let it run high rewards for tight risks. You’ll get big rewards. Note how I say in

the volatility situation as for the goal charts, the volatility slowly ebbs away with each swing

getting slightly less, slightly less. But when it returns it spills. In other words volatility bursts back

onto the scene after going quiet. That leads to big moves and high rewards.

Trade goes against you? Losses are identified and taken quickly. You don't sit there and have

weeping wounds, itching and scratching and bleeding you away. In other words if we are wrong

and the market idea has failed, it is closed quickly, there's a value to that. Remember you will

always have losses, even the best traders have losses. Forget the fantasies. One of the greatquotes from Jesse Livermore in the book by Edwin Lefevre on the Reminisces of a Stock Operator

(which is recommended reading by many traders and trading schools, including myself) is,

"Experience has proved to me that real money made in speculating has been in commitments in a

stock or commodity showing a profit right from the start." - It is my mistake that Jesse Livermore,

for that reason alone, was a breakout trader - as you are about to become.

In other words, rarely is it that you have a great trade that draws you down and starts hurting you

from the beginning and then later turns around and becomes a home run. It is typical that when

you’re right you're catching the timing, the market is taking you in and it's running you into gains,

almost from the outset. Trust me, that's emotionally comfortable. Trust me, it's more likely you’ll

stay with it. That is my personal experience. I found it as the greatest standout piece of wisdom on


35





actual trading success and early indications of whether our trade is a good trade - this single point.

I wish everyone could understand this to the degree that I believe in this point.

In the case for breakouts, obviously this is the most compliant. I actually believe that Mr.

Livermore himself had made himself a millionaire a number of times over after getting back his

stake once or twice. I personally believe he was a breakout trader of sorts. Remember the case forbreakouts also indicates and can proceed potentially bigger moves. It gets you looking at the right

markets and ones that are possibly going to persist for a long time in trend. While you may not

stay with the entire trend, with HVT, you take the break and take the target. Often new

opportunities are presented, again, in the same underlying market, in the same direction. In other

words trend is persisting, you can catch the capitulation points or the fast moving melt up points

consistently, by using breakout strategies.

The top of trading where volume is obviously very indicative, so it's the nature of the trading that

gives you additional tools that add value. Volume can precede in many instances, key moves. We

can start to use one of the genuine value indicators in volume. It’s a set of data, it's not price

crunched in a mass formula, it is a separate set of data. This can add immense value as well.Volume often can be the canary in the gold mine. Giving you a little clue in advance as opposed to

lagging.

Directionally, well the key thing is you can have a high probability of getting the directions right

when you trade breakouts. Because you have understanding for what the macro trend is, you

have understanding for the trade set-up, which is continuation, which means on balance or

probabilities. The likelihood is when it moves, it moves in the direction as a continuation pattern

of the previous trend. We get more of our direction course right. That doesn't mean you get 100%

right, it means you get a high percentage right.

Getting The News Before The News

Often, the breakout is supported by fundamental news. Often you don't know that news, you get

to trade it and find it out later. You get to move with the insiders and the big money. Often, by

the time it's well exposed and documented, the key part of the move has already occurred and

that's usually when the smart money is taking some of its profits and invariably it uses the power

of patterns.

The Gift That Is Volatility

The other element that I've touched on a few times and I've given you a hint at is the absolute gift

of volatility. So underappreciated by technical analysis, traditional technical analysis, unless you're

talking to option traders, you just don't get to hear of people talking about the value of volatility in

trading.

Hopelessly underappreciated while indicators grab headlines and there's hundreds and thousands

of them now and everyone worthy is generating five or six and naming them after himself. The

truth of the matter is, this one is the big elephant in the room that everybody walks right pass. It

reoccurs as every fresh big move takes foot. It's basically its DNA. Right there, on the chart,

before your very eyes. As I've said already (but good to re-emphasise), it dissipates slowly so youcan watch it happening until all goes very, very quiet. Without exception you know when volatility


36





dissipates to the extent where it has almost entirely disappeared, it is invariably about to return

and it returns with a bang that gives you a massive move. If you're on the right position you get

taken into the market, very, very strong entry taken to profit. You allowed also the option of

getting an exceptionally tight stop, because the market is at its most docile.

Tight, But Not So Tight That It Suffocates You

Stops kill good trades. Let me tell you, most traders’ stops are too tight. Why? Because the market

conditions did not justify the tightness of the stops There is too big a range of movement and

stops are too tight. There is only one point when you can get away with that and that's when the

volatility is totally gone out of the market and then can you get very tight. Providing you’re on the

right direction, which as I've said in probability, if you know your setup in the macro trend you can

position yourself for, you can get exceptionally tight.

The key value of this is the financial mathematics of trading and risk reward. The tighter the stop

with the same reward the better the risk reward. The more times you can afford to be wrong the

far bigger the returns you make, because of position sizing being able to be bigger for the same

size of loss. If you can justifiably have a strong well supported stop, that is quite close to entry,

you're in a powerful position, especially if volatility is returning. Why? You’re going into an

explosive move. Why do you want to trade under any other circumstances?

Options To Consider

If you do happen to be an advanced trader and involved with options, in the money value of a

volatility, a high volatile move. Apart from your option getting intrinsic value with the value of the

option going up as you go from at the money to in the money that increase of volatility also,

enhances the value of the option immensely. This is a very, very, key point and it will help those of

a slightly more advanced position.

This is an example, GBPCAD, this is the HVF at work.


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Can you see the explosion in the volatility? Can you first see the quiet candles getting quieter and

quieter, the spinning tops, this little range? Really, really, tight…….then BANG, the explosiveness

that runs a key level, the market took me in……..the market took me in (worth saying again!).

I didn't have to be there, the market took me in. This is what we call an impulsive break. All our

entries have impulsive move in their favour. That means you get taken quickly into profit. The

market is moving with conviction. There is imbalance in the supply and demand.

God's chosen set up for all traders? You trade. It's a big statement. Trade with the prevailing trend,

improved probability, trade with the trend, swim to the sea with the river, rather than against it.


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Let's look at the GBPCAD in the daily.

What was the trend? Upside. The macro timeframe is upside and more recently even steeper so.

We had a recent high, that's of course being a resistance point, that was resisted. Now we have

pop above it and we are sitting on it. This is classic basic technical analysis of support and

resistance.


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Previous resistance, we have brought in sellers, once broken with momentum, see this bias come

in and pulverize it in the opposite direction as support. Resistance turns support. This was holding

this entire setup while it took its breath, following a big move up, captured its breath for further

upside. The macro trend was up, you saw the base pattern over here. Let's have a look at what

else I've got to show you. Here's the other, the gold trade again.

Once again, the macro trend is down. That was a case of the macro trends, trading with the

trends.

What else can we do about God's chosen setup for traders? Such a big statement. Tight stops, I've

just touched on that. Be in a position where you have low risk and high potential return.


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In other words we must capture low volatility environment. This was a low volatility environment.

These candles went really quiet. They went even quieter still later on, on the chart. Let's see how

it applied in gold.

See how it was getting tighter and tighter in this rising waves then a little spill over and an even

smaller rising waves, tighter and tighter and tighter.

Look at these little candles again, tighter and tighter. The tighter stops. I've shown you the trend,

the green line. I'm now showing you the tighter stops, how it works. We're getting both these

forces working in our favour. A third force, the pattern based predictability and target generation.

Okay, we're getting a lot of ducks lining up in a row for us here.


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We are getting a pattern that is a high probability occurring. We are making use of the trend, we

are making use of the tight stops, plus we're getting a pattern. Telling us, on balance we should be

going up and this is where we're going to go down, go all the way to in terms of our target. Up top

here you can see my orders, my bio orders, second chance entry. I'll talk to you about the five

stages in any given breakout. Big wind-up to break out, small bit of exhaustion after this firstinterim level made.

We expected it to give back, it gives back. Beautiful hammer, fills you again, new trades taken,

even cheaper at a lower level and we're waiting for long, we're wanting you to go back up and it is

obliging us. How did I know that? I didn't. I'm applying the template. I'm applying the template,

target, probabilities. Whatever we got next?

There's other forces in our favour, the purple arrow. What else is this telling us? Volatility's

explosive return, ride the supply and demand imbalance and that's what happened. Perfect

example here in the gold. Absolute smash down. Absolute smash down. A [inaudible 00:53:06]

being offered and the bios on there to hold it up, smash down. Look at that sell, absolute volatility,

spill over, quick move, in your favour, giving you tons of profit, very, very quickly.

First interim run, bash, straight down to the second interim, small amount of, buying coming in.

What else have we got? What's this yellow line about? Number five, specialization. Be anchored

by experience in a specific strategy. Learn at a very deep level how to do one thing exceptionally

well Remember Bruce Lee, “I don’t fear a man that has learned 10,000 kicks. I fear a man that has

learned one kick 10,000 times”.

“I don’t fear a man that has learned 10,000 kicks. I fear a man that has learned 1 kick and

practiced it 10,000 times”. Bruce Lee

Don't be a generalist that has a little play and has a basic idea on certain aspects. Do one thingexceptionally well. I'm talking about the five stages of a breakout, second chance, advance

strategies, primer patterns. We are doing one thing at an exceptionally acute and high level of

understanding and getting all the tools in our favour, getting them all in our favour, high risk

reward. Look at the line of efficiency. There's our entry, all the way up.

Our line of efficiency is actually quicker and the chart went up, because we saw that the relative

high, yes, it went higher. We don't care, we got our return. Look at that return, four times. Four

times and that's without using the secret that I'm going to show you in there that there was a

primer pattern in it, but we'll come back to that. Four times on the base pattern, from there to

there. This was taken and closed. You can see the orders are shut now on those charts.

This was taken and closed on the number of my platforms and accounts. That is high probability.

What a great gift. Look at this, this trade was taken and closed. Look at that line of efficiency, look

at that on balance volume, showing you that it was drifting down. In other words there was

greater selling on the volume, greater volume on the selling. Look at that. A dip lower there and

that coincides with the break.

Look at the volume spikes, falling away, falling away. Then at this point progress decay. We don't

care, we were already out. In a shorter time-frame we got an excellent return. Later on, we would

have got less reward and we would have been stuck in the trade for longer. How do we know

when to get out? The target. The geometry of the target is the best and it is tied to price action.


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Profitable, consistent and emotionally comfortable trading. That is what this is all about.

Geometry and pattern based targets. Interim levels. You saw how the interim levels have worked

for us, you saw how they work here, look at this bounce and the store for a sustained period at

the interim level. Isn't that interesting and it's emotionally comfortable. If you have to watch the

market move against you for a short round, take back some of the profits. Isn't it nice to know thatwas expected and is part of the plan and patience will eventually see it reassert itself to the

downside in the gold's case in the original trends direction? Because it is doing exactly what you

expected to do.

Therefore you are slightly more emotionally comfortable. We're giving some of the profit back.

But we expect it. Great, and that's the value of the interim levels and you’re emotionally

comfortable. Plus you're a specialist. You're used to this now.

What else happened? I'm going to show you now that in that GBPCAD there actually was a primer

set up.

There was a primer set up, there was high one or low one, or high two or low two. But then we

were getting these key levels of tightening. I'm trying to show you the volatility squeeze here. That

was the primer, just right down to a 15 minute and what was a four hourly right down to a 15minute. There was a high one, low one, high two, low two, high three and low three.

Actually you could have got long at this level instead of that level and had your stop over there.

That looks about one-sixth or one-seventh and I missed this particular primer. This looks about

one-sixth or one-seventh. What was essentially a four to one trade could have been a 28 to one

trade. Safety, I could have played it. Safe, look there's not a big distance here, you could have

gone for the round number, the entry at 6,325 on the take out there and put your stop the other

side of 63 all around zero.

How Many RRR 12:1 Trades are you getting? And would you like some more?


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It would have still been three to four times better off than the one is to four. Three times is a 12 to

one trade. How many 12 to one trades are you landing? I could help you get a whole bunch more .

Pick out strategies, multiply your way to gains instead of adding your way. How many people are

taking 50-50 trades with one is to one, where we are getting one is to eight plus type returns.

Incrementally adding small amounts and giving back most of it and trying to go forward, million

meters at a time and then having to give back couple of centimeters. There are opportunities

where you can be right.

When You Are Right, Be Very Right

Miller said, you had a pig on this table. “when you are right, be very right." Pig out. But how do

you do that? With respect to money management and without ever risking taking an outsized

loss…….I have an answer for that.

You've seen some of the reasons how……..that is using patterns within patterns, my primer

pattern within the larger pattern. Also other techniques, advanced techniques, multiple entries,early entries, how we pledge profit from an early entry and roll it into the primary just in time

entry. So much to carry here, but only so much time in this ebook. Lots to show you, lots to teach

you. These are the advanced strategies and the primer was one of them which I have shown you

in the previous slide.

I’m going to give you an example, a little bit of maths now…..

…..If you had taken that gold trade and you’d done 50% of your potential stake you’re allowed to

lose, so I've said, let's say you work 2.5%, you can lose on £100,000 account. I'm not saying that’s a

good percentage, it's little, too little or too large. I'm just using a basic example, the potential loss

would be £2,500. Obviously if you had £10,000 account that would be £250. You can scaleaccordingly. If you put 50% of your allowable loss on the primary pattern and you'd put 50% of

your allowable loss on the sub primer pattern, in other words, if I go back here, this one, so you

would have to stop-loss there and an entry there.

On the other one, you would know the stop-loss up top here and an entry down there. I hope

you're following this…..need your concentration a wee bit. What would have happened? You

would have gone short at 1,365. You would have had your stop-loss at 1,394 and your target

would have been 1,214. Your profit pips would have been 1,510. If you use this primer pattern you

would have gone short at 1380. You would have had your stop-loss at 87, just $7.2 away and you

would have the same target.

Because the smaller pattern does just enough to trigger the bigger pattern. Note how the target

here on the smaller pattern triggers the larger one. Hence, we don't close on this target because

we're not into a breakout on the bigger timeframe. We roll it onto the target of the bigger pattern.

Important point I never made…….Total profits here is 1,660, it's clearly more - an improvement of

almost 10%. But the key thing is we got tighter, we can't trade bigger size.

Risk per pips is 299. If I'm losing 1,250, I can only trade £4.18 per point. Risk pips here is $7.20, 75

pips. I can trade $17 to lose 1,250. I am 315% bigger on the smaller patterns entry than the other

one. By being 315% bigger, in other words, four does to 17, I get to make a much bigger return

when it made target, yes indeed, it made target, it made 1214 all the way. In fact it had a wind up

pattern and we were able to get out of 1211, it gave us an extra $3. I'm not included there.


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The total return on the smaller trade, I say smaller trade on the big pattern with smaller size was

£6,000. Not bad, hey it's 6%. We're 2.5% on risk, and actual in fact you've only had, 1.25 of risk.

But look at this primer, what it's dropping onto, bottom line, advanced strategies. You've got to

look into this, guys, 28,000. 28,000 into 6,000, 35,000 total trade. If you aggregate that for your

2,500 loss, you actually have a 14 is to one, total risk reward for that trade. When did you last landa 14 to 1 trade? Just to be clear, what I’m saying is……for every £1 you risked, you could have

made £14 back in reward.

I can help you do it and more. Just as an aside on this, while we're looking at mass and I've got you

in mass mode. I'll run through this quickly, all the entry levels are exactly the same. But what if you

can re-balance this? What if you took the view that you just wanted to trade your primary pattern

to make enough money to cover you if you are going to be wrong on your smaller pattern. In

other words, the smaller pattern might fail.

Let's say it bounced through the stop but then eventually did break on the bigger pattern and go

all the way to target. You don't want to lose, you don't want it all on the primer, so you want to

put a little on the big pattern with the further away stop, because it is still the higher risk if you

haven't tried to stop. I'm not going to tell you, there's not a higher risk without both performed

here and one gave you a much larger reward, but there is marginally a high risk.

If your sub primer fail, you want to still be breakeven or even a little bit up on your bigger pattern

if the bigger pattern performs. What do we do? The winnings here have to be bigger than what

you risk on the primer patterns. If this one lands you get 2,093 and you offer 2,085 of your

allowable loss on your primer trade. That changes the dynamics quite a bit. You put 2,085 on your

primer trade and you allow 450 loss on here.

That only allows you £1.39 on the big pattern, but never mind it's still a great risk reward. At £1.39

you still win 2,093, £2,093 total return. That will cover you if you lose here, because you will lose2,085, you'll end up £5 or £6, in fact you'll end up £8.58 to the good, so you won't be down. You

won't be rich but you'll be £8 to the good. However, it allows you to use the bulk of your loss and

the bulk of your size on the key maximize of this particular trade.

72 pips, so you get to be 28 pips, 96. Remember last time there was in and around, let's check it

last time, 17. Now you're quite a bit bigger, you're now 1,900% bigger than on the other pattern

size. Yet you will only lose money, your 2,500 if both of them fail and that is your manage loss of

2.5%, which is recoverable. What was the type of return? 48,000 made on the sub primer, 2,000

here.

Let's get this straight, the total average return, 2.5 to 50, is obviously 20 times. But the bulk of it ismade on your primer, you made 50,000 that could have got you a 50% change in the equity on

your account. By the way this performed and this was traded. This trade performed and was

made, 50% on your account equity. That is super big. I've done the same thing for the GBPCAD, I'm

going to run through it quickly because you're probably losing your eyes with all this mathematics.

The GBPCAD, it had its primer as well, I showed it to you here on the chart.


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Here we go, let’s show it to you one more time, save you finding the page again you can see the

charts again. There it is. This one I missed. This one I missed and I didn't trade. I saw itretrospectively because I was late to the trade. I can't claim it, I'm afraid. But it demonstrates the

validity of the trade structure and execution, that of Hunt Volatility Theory.

But let's do the maths on the list. Here we are. If you’d done the same, the maximum amount on

the primer pattern and just covering your loss. In other words, this will pay 1,934, if it was

successful. That will cover the 1,925 if the sub primer was not successful. Both were successful,

both ran to target. With the 2.5% on your 100,000, you would lose 575 on your primer pattern,

your larger pattern and 1,925 on your smallest sub primer pattern.

What was the total return? You get to trade huge on this one, because you got it so tight, 11 pips

stop. Guess what, that 11 pip stood. Had you traded that 175 to the good, you would have made£60,000. £6.53 on your primer pattern, just to cover the possible loss on your primer, so that you

breakeven essentially with the couple of pound in your pocket, buy you one beer and the war

story down at the pub and actual effect it would have been 62,309 to the good, 62,309 to the

good. That's 62% change in your account equity for risking 2,500.

Yes, you saw it. That's how you pig out. Guess what, we never broke our rules, we would never

have lost more than 2.5. If both these failed, the total loss is 575 plus 1,925, bang, 2.5%,

recoverable loss. Yes, indeed. Okay, so this is what I want to say to you, I've got a number of

extremely powerful keys to the kingdom that I've given you here, but this is a flyby. The truth is

change is difficult, you need application, you need to truly grasp these concepts.

Think about your ideal loss trading environment. Think about the last time you had a major

outsized loss. We will kill the beast that is outsize loss. You can be in a beautiful bay window at

your home, home trading in three years' time. If you truly take on board the lessons that are in

this e-book…….the patience of waiting for and taking only your specialist entry, that will give you

high multiples of that risk.

That Is The Key To Being Successful In Trading. No More Boredom, Give It All Back Trades

Most traders sit in there, thinking trading…..feeling the pressure of compulsion. Feeling as though

you have to be in the market, so you have a goal. I want to make x pips today or x amount of

money. The market doesn’t care. Trades that are snatched mean you give back all that hard work

on a well-planned earlier trade. These things are appearing up in between the good ones, becauseit doesn't feel like trading to do nothing.


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We'll have a strategy and a template that will take that tendency away. A system that has to be

applied before each trade, criteria that needs to be met. In other words, you'll learn all that, you'll

also learn the key to picking out strategies. Some of which I haven't given you in any detail, like

the advanced entries. Of course the five stages to any breakout. May I have your template for

where any given traders at as certain point so that you know exactly where you are and what'scoming.

Guess what, it's just too much. But I'll give you a quick run through the five stages. I'll apply it for

the gold.

Stage 1: The Feign & Break

First is the feign and break stage. Here you can see it, we drip, we have our first run, it tests the

level, breaks through it, it's a sensitive level, almost like an electric fence and has a wee little pop

above it.

Stage 2: The Second Chance Stage

That thing takes you into second stage, the light green stage, second chance. You could grabsecond chance shorts here if you miss the trade at the beginning.

This system, even allows you to get in and make money on high risk reward trades, even if you

miss the initial break. Why? Because of five stages of a breakout and the fact that there's a second

chance. You get a second chance. People think the markets hate them. They're trying to give you

gifts, they give you a second chance to get it. What comes next?

Stage 3: The Capitulation Stage

The third stage - capitulation stage. This is the best part. This is the bit where the market runs and

you just make profit. Total imbalance in supply and demand, sell, sell, sell, sell, sell, sell, sell. Nobias to be found, capitulation, big, big moves. You're moving from 1,365, you are right up almost


47





back up to 1,379 over here and next thing when you wake up and in a couple of hours you are

right down at 1,273. Boom, profit straight away in your bag.

Stage 4: Weak Buying Overcome

Fourth Stage, weak buying overcome. Key at this interim level. See how this ties in. Weak buyingovercome. Some buyer showing them. Some people saying, "Surely, it's going too far. Let's get in."

No, sorry trend is still your friend, there is still a capitulation on, the target it is, it has to be made.

Capitulation, capitulation, bang.

Stage 5: Counter-Attack & Progress Decay

Fifth stage – the counterattack and progress decay. No problem, you're out on the strength and

one of the strong sell of bars buying back into a selling frenzy. Money’s made, cash is in the bank

and you’re relaxing after having enjoyed the process. It’s closed and the likelihood is you weren’t

even watching the trade.

Then eventually the counter attack once the target is made and you get a bit of a pullback, eventhough the trend was down, there would possibly be further forces down and we did trade it a bit

lower again.

But by this time, you don't need to be in. You take your high efficiency trade straight down there,

five stages of the breakout. Just giving you a crash course in that, so much here today, so much …

Positive Slippage

I get positive slippage. Everyone else I know gets negative slippage. I get positive slippage. Why?

Because I'm buying what everyone else is selling. If it gaps, I get out even higher than I plan and

thought. I get bonus profit. Have you even heard of someone getting a bonus profit? Why? Whenall my targets are in, and when the price gets through my targets, I get given gifts.

Why?

It's the nature of my trading template. People who are selling what everyone else is selling, they

get slippage….they think their broker is a cheat. They blame everybody else and think everybody

is cheating them. Perhaps you’ve even felt that way yourself?

I don't know so much, maybe you need to think about the strategy. So those are your five stages

of a breakout. Just giving you a crash course in that. There’s only so much I can get through in an

e-book.

Offer To take You Forward

Making deep-seated and lasting change to your trading is hard. Unquestionably, it is. That’s why

so many people fail at learning to trade consistently and profitably. And there’s only so much I

can go over with you in an e-book. And if you’ve read to the end – and I thank you for that – then

you’ll no doubt have many questions.

If you truly are interested in taking your trading to the next level, and want to see a quantum leap

in your trading performance, then this is likely to be of some interest to you….

Click through here to see full information of our flagship trading programme, the 6 Month TraderMetamorphosis Program which will see you transformed into a consistently profitable trader.


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