$520k Payout Trader Trades His BANNED Orderflow Strategy LIVE

Introduction to Matias Fernhole's Trading Strategy

Overview of Matias' Background

• Matias Fernhole has been banned from five prop firms due to his success, having earned over $500,000 in verified payouts throughout his trading career.

• The session is set in Dubai, where he will demonstrate his live trading techniques.

Live Trading Session Insights

• Matias employs a simple order flow scalping framework that includes market structure for trend determination and VWAP for bias confirmation.

• He combines chart analysis with bookmap data to track liquidity and aggressive order flow, allowing him to make informed trading decisions.

Pre-Market Preparation

Setting Up for Trades

• Before the market opens, Matias assesses the situation by identifying higher lows and confirming they are above the VWAP.

• Being above the VWAP indicates a long bias for Matias, which he considers crucial for entering trades.

Trade Execution Process

Initial Trade Setup

• He quickly opens positions based on strong buying signals observed through bookmap data.

• After scaling into two lots, he sets take profit levels while discussing potential market movements during the London session.

Risk Management Strategies

Losses and Profit Tracking

• During trading, he tracks both losses and profits per account to maintain a risk-reward ratio of 1.5.

• Matias emphasizes that being above VWAP allows him to focus primarily on long trades during this session.

Market Analysis Techniques

Identifying Support and Resistance Levels

• He visually identifies support or resistance levels rather than relying on strict methods; this flexibility aids in decision-making.

• Observing price action around these levels helps him determine when to enter or exit trades effectively.

Adjusting Trades Based on Market Conditions

Recognizing Market Corrections

• When faced with market corrections, he decides to close trades at small losses instead of risking larger ones.

• He explains how aggressive selling can indicate a need for caution in trade execution.

Discretionary Trading Decisions

Evaluating Market Sentiment

• Matias discusses using discretion when observing large red bubbles indicating aggressive selling; this influences whether he continues with a trade idea or exits early.

Liquidity Considerations

Understanding Liquidity Dynamics

• He notes that liquidity acts like a magnet; traders should be aware of its influence on price movement during trades.

Utilizing Bookmap Effectively

Importance of Order Flow Data

• The size of bubbles on bookmap indicates significant market orders; understanding their impact is essential for making timely decisions.

Transitioning Between Markets

Switching Focus from S&P 500 to NASDAQ

• Due to low volatility in S&P 500, Matias shifts his attention towards NASDAQ where more aggressive movements are expected.

Analyzing Order Book Data

Decision Making Based on Bid/Ask Spread

• Before executing trades, he examines the order book closely; entering at bid prices helps minimize costs associated with spreads.

Managing Stop Losses Strategically

Setting Stop Loss Parameters

• His stop loss strategy involves maintaining it within acceptable limits based on account rules while allowing room for potential fluctuations.

Trading Insights from Matias

Overview of Current Trade Status

• Matias discusses the current trade, noting a profit of 350 after initially being down 243 per account, indicating they are above the break-even point.

• Emphasizes his experience as a trader who learned through practical engagement rather than theoretical knowledge, aiming to share his process.

Factors Influencing Trade Decisions

• Identifies three critical factors that could lead him to close the trade: news events, market breakdowns, or reaching break-even points.

• Mentions aggressive selling and liquidity as key indicators for deciding whether to exit the trade.

Market Behavior and Strategy

• Warns against moving stop losses too tightly during volatile periods; small dips can trigger premature exits.

• Describes typical market behavior where prices may go sideways before breaking out again, emphasizing patience in trading.

Liquidity Considerations

• Discusses the importance of observing liquidity levels both above and below current price action when making trading decisions.

• Notes that while there is liquidity above, it is far away; thus, immediate trends are more likely to be upward.

Learning and Practice in Trading

• Stresses that developing a personal trading strategy requires extensive practice and learning from various sources over time.

• Shares his journey of learning through an academy and combining insights from different channels into his unique style.

Performance Metrics for Traders

• Advises tracking win rates (55%-60%) and profit factors to assess trading performance effectively.

• Highlights the relationship between win rate and profit factor; improvements in one should reflect positively on overall performance metrics.

Risk Management Strategies

• Discusses how reward-to-risk ratios impact win rates; higher risk rewards often correlate with lower win rates but can still be profitable if managed correctly.

Entry Points and Trade Execution

• Details specific entry points for trades based on chart analysis combined with bookmap data for better decision-making.

Trading Psychology

• Explains how emotional responses can affect trading decisions; traders should avoid panic during pullbacks by sticking to their strategies.

Profit Taking Strategies

• Suggesting fixed risk-reward ratios (e.g., 2:1), especially beneficial for newer traders to maintain profitability without excessive stress.

Evaluating Trading Success

• Defines success metrics such as maintaining a positive profit factor (around 1.7 - 1.8), which indicates effective strategy execution over time.

Prop Trading Insights

• Shares experiences with prop firms, mentioning earnings close to $500k overall with significant contributions from IQ Capital firm.

This structured summary captures key insights from Matias's discussion about trading strategies, market behavior, risk management practices, and personal development within the context of trading. Each bullet point links back to specific timestamps for easy reference.

Setting Stop Loss Strategies in Trading

Understanding Stop Loss Placement

• The speaker emphasizes the importance of setting a stop loss based on the amount invested, indicating that this is the maximum potential loss one can afford.

• A market structure-based stop loss is discussed, where the trader places it at recent highs to avoid being stopped out by minor fluctuations.

• In trending markets, it's crucial to identify resistance points and set stop losses accordingly to minimize risk while capitalizing on trends.

Approaches for Retail Traders

• For reversal trading, the speaker suggests allowing for re-entry after an initial stop loss is hit due to lower probabilities of accurately catching reversals compared to following trends.

• New traders should look for pullbacks as entry points; placing stop losses just below these levels can help manage risk effectively.

Risk Management Techniques

• The discussion highlights adjusting stop loss distances based on market conditions and personal investment limits, ensuring that potential losses are manageable.

• The speaker shares a personal experience illustrating how strategic adjustments in stop loss placement can significantly reduce potential losses.

Position Sizing and Trade Management

• Adjusting position sizes according to risk-reward ratios is essential; smaller positions may be taken initially with opportunities to add more if trades move favorably.

• The speaker prefers starting with smaller lot sizes in prop trading and increasing exposure as trades progress positively.

Learning from Experience

• The conversation touches on evolving trading strategies over time, including adapting to new instruments like micro contracts which have become popular among traders.

• Reflecting on past mistakes helps improve future decision-making; recognizing bad entries reinforces the need for continuous learning in trading practices.

Analyzing Market Conditions

Entry Points and Market Sentiment

• The importance of timing entries based on market sentiment is emphasized; traders must adapt quickly as conditions change throughout the day.

• A specific trade example illustrates how adding positions during favorable market movements can enhance profitability while managing risks effectively.

Strategy Adaptation

• Clarification about not waiting for major swing highs before exiting trades shows flexibility in strategy based on real-time analysis rather than sticking rigidly to pre-set targets.

Liquidity Considerations

• Observing liquidity levels helps inform decisions about entering or exiting trades; understanding when liquidity might dry up can prevent unnecessary losses.

Developing Trading Discipline

Establishing a Routine

• New traders are advised to limit themselves to three trades per day, promoting discipline and reducing emotional stress associated with frequent trading decisions.

Identifying Trader Types

• Understanding one's own comfort level with different types of trading (day vs. overnight positions), helps tailor strategies that align with individual psychological profiles.

Technical Analysis vs. Volume Trading

Choosing Your Approach

• Traders must decide whether they prefer chart-based analysis or volume/order flow techniques; both methods have their merits depending on individual preferences and experiences.

Current Market Dynamics

Monitoring Real-Time Changes

• Keeping an eye on real-time changes in market dynamics allows traders to adjust their strategies promptly based on emerging patterns or shifts in buyer/seller behavior.

Profit Taking Strategies

Managing Gains Effectively

• After achieving significant profits within a short timeframe, maintaining discipline by avoiding over-leveraging becomes critical for long-term success.