The EXACT Trading Strategy That Made Me $1,200,000 in the Last 12 Months

Overview of Trading Strategy

Introduction to the Strategy

• The speaker introduces their trading strategy that has generated over $1.2 million in payouts over the past year.

• The video will provide proof of these payouts, key elements of the strategy, and insights into fair pricing theory.

Proof of Payouts

• The speaker shares screenshots from their Discord server showing various payouts from different prop firms, including Topstep and Alpha Futures.

• They mention specific payout amounts from several firms: 172k from Eight Futures, 75k from Lucid, and 100k from Trade F7.

• A total of $200-$250k was spent on evaluations across multiple prop firms during this period.

Key Components of the Trading Strategy

Trading Methodology

• The strategy involves high time frame mean reversion and low time frame continuation trades focused around the New York session open.

• Continuation trades are executed within the first 10 minutes after market open; mean reversion trades occur between 10 to 90 minutes post-open.

Risk Management

• Emphasizes strict risk management as crucial for profitability; traders should avoid over-risking in unfavorable situations.

• The strategy is designed specifically for prop firms due to lower risk compared to live accounts where larger capital is at stake.

Understanding Market Dynamics

Prop Firm Specificity

• Each prop firm has different rules affecting how traders should manage risk; adapting strategies based on market conditions is essential.

• A+ setups require alignment between high time frame reversion and low time frame continuation with clear displacement signals.

News Impact on Trading

• Discusses how news events can alter fair pricing; understanding these dynamics helps in making informed trading decisions.

Fair Pricing Theory Explained

Conceptual Framework

• Fair pricing theory posits that early moves away from opening prices are often driven by liquidity imbalances rather than true value changes.

• Highlights that Nasdaq futures represent actual companies with inherent values determined through auction processes, unlike cryptocurrencies.

Practical Application

• Traders should focus on price movements relative to opening prices as unfair deviations present opportunities for mean reversion trades.

Weekly Trade Recap

Trade Execution Examples

• Analyzes specific trades taken during a week, illustrating both continuation and mean reversion strategies based on market behavior at open.

First Trade Example

• Describes a short trade initiated after observing a red opening candle indicating bearish sentiment among overnight orders.

Subsequent Trades

• Continues detailing additional trades focusing on break of structure and displacement candles as entry points for both long and short positions.

Handling Losses in Trading

Emotional Resilience

• Stresses the importance of managing losses effectively since emotional responses can significantly impact decision-making in trading scenarios.

Trading Strategies and Insights

A Setup and Market Behavior

• The speaker identifies an "A setup" as a strong trading opportunity, emphasizing the importance of entering every A setup while also considering B+ setups for broader account management.

• The decision against taking continuation shorts is based on the initial green opening candle, indicating a preference for long positions after upward displacement.

• Despite not having ideal entry conditions, the speaker opts to enter trades based on displacement candles that close above previous ones, acknowledging potential risks.

Trade Outcomes and Reflections

• The speaker reflects on their trade outcomes, noting a mixed result of three wins and two losses in one day, highlighting the learning process involved in trading.

• As they continue through their trading days, they express hope that viewers can understand and implement these strategies effectively.

Analyzing Candle Patterns

• The speaker critiques the opening candle's large wicks which hindered optimal long entries; they express a desire for cleaner price action to facilitate better trades.

• They discuss taking a long position at an all-time high despite reservations about market conditions but remain committed to following their strategy.

Displacement Candles and Mean Reversion

• The discussion includes missed opportunities for mean reversion shorts when displacement candles close below key levels; this highlights the need for vigilance in recognizing trade setups.

• After experiencing losses followed by wins, the speaker emphasizes that not every day will yield favorable results but stresses consistency in practice.

Trading During Low Volume Days

• Monday is described as particularly challenging due to low volume and poor wick formations; only one short trade was executed under these conditions.

• When faced with low volume scenarios, the speaker adapts by switching to higher timeframes while maintaining their established trading strategy.

News Impact on Trading Strategy

• The importance of news events is discussed; specifically how pre-news candles are used as reference points for fair pricing before significant market movements occur.

• The speaker explains that news often leads to unfair price movements due to uninformed retail traders being taken advantage of by larger funds.

Backtesting Methodology

• Emphasizing backtesting's significance, the speaker warns against relying solely on equity curves without considering specific prop firm rules that may affect live trading performance.

• They recommend simulating prop firm challenges during backtesting by limiting trades per day to accurately reflect potential drawdowns experienced in real accounts.

Conclusion: Effective Backtesting Practices

• To optimize success rates with prop firms, traders should focus on pass rates rather than traditional metrics like win rate or average profit per trade.

• The final advice centers around adapting backtesting methods specifically for prop firm strategies rather than general live account approaches.